Sitting of 25 June 1999

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

  Health Products
  9.33 am
  Mr. John Bercow: I wish to present a petition on behalf of 77 of my constituents, headed by Susan Walters of Back to Nature, of Cornwalls place, High street, Buckingham, as part of the petition of Consumers for Health Choice, the Health Food Manufacturers Association and the National Association of Health Stores. The petition declares:
  We believe that the Government proposals which give the Medicines Control Agency (MCA) virtually unlimited powers to classify safe products as medicines, are wrong. This would mean that the MCA could remove at a stroke products that are vital to the good health of many consumers and are currently sold under the Food Law. This is an abuse of the democratic process and a denial of freedom of choice. We actively seek the creation of a new law appropriate to the special needs of safe, natural health products.
  The petitioners therefore request that the House of Commons urge the Secretary of State for Health to grant an immediate moratorium from the Government and the MCA that will prevent them from declaring these safe products to be medicines except on the grounds of illegal claims for safety.
  To lie upon the Table.

Innovation and Enterprise
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert Ainsworth.]
9.34 am
The Minister of State, Department of Trade and Industry (Mr. Ian McCartney): Good morning, Madam Speaker. I welcome the hon. Member for Rutland and Melton (Mr. Duncan) to his Front-Bench duties as shadow Department of Trade and Industry spokesman. I look forward to future debates and discussions with him in this forum and during Question Time, and perhaps in Standing Committee. This is the first time that there has been a shadow spokesperson to whom I can speak eyeball to eyeball. If the trend continues, the House may have to provide a couple of high chairs.
Today's debate is on innovation and enterprise. I shall set that in context, in case the hon. Member for Rutland and Melton has forgotten the situation before the last general election, and I shall set out the Government's positive and progressive agenda in partnership with business and the enterprising parts of the economy.
We inherited from the previous Government a boom-and-bust economy, with a company going bust every three minutes of every working day. Interest rates reached 15 per cent. and stayed there for more than a year. We underwent the longest recession in the second half of the century. A million jobs were lost in manufacturing. Unemployment peaked and remained at more than 3 million for a considerable period. More than 1 million home owners were in negative equity. We were a nation with no confidence in our economic future.
Against that background, the Government have spent the past two years developing macro-economic strategies and micro-economic policies to show our commitment to innovation and enterprise in the economy generally, and in British business in particular. I am happy to have an opportunity this morning to set out, together with my hon. Friend the Minister for Small Firms, Trade and Industry, the Government's robust policies for achieving those goals. Those policies have been developed not by Ministers in isolation, but with industry, on behalf of industry and for industry. Consequently, they will succeed.
The Government believe that only by fostering a strong entrepreneurial business culture can we create the wealth that we need to improve everyone's quality of life. That goal will not be achieved just with words and good intentions. Only by creating wealth can we tackle social exclusion and poverty, solve our social problems, and build and expand public services such as the national health service and our education service.
Governments do not create wealth. Only businesses and the people who work in them can do that. However, business will succeed only if we foster a spirit of enterprise in our society and help those who run or work in businesses to seize their opportunities. We must work in partnership with businesses, higher education, trade unions and local authorities to create a culture of enterprise and innovation.
We have discarded the uncritical laissez-faire philosophy of the previous Conservative Government. The hon. Member for Rutland and Melton was proud to wear the badge of the laissez-faire strategy, and I think

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that he still wears it. We believe that the Government have an important part to play in ensuring that those with the will to succeed have a fair chance. We can do that by creating a supportive and stable economic environment, by helping the academic and business community to exploit knowledge to everyone's advantage, and by helping to promote an entrepreneurial culture in the United Kingdom and across the European Community.
The Government's policies to create a stable macro-economic framework are already paying dividends. Inflation and interest rates are at their lowest for more than 20 years. Employment has increased by more than 400,000. Long-term unemployment has fallen by 50 per cent. and youth unemployment has been halved. Industrial harmony is in evidence, with only 23,000 man-days per month lost due to industrial action since the election, compared with 100,000 in the last year of the Conservative Government.
We recognise that the level of the pound is causing some difficulties for exporters, but we must not over-emphasise the issue of sterling. Manufacturers across Europe are struggling as a result of the global downturn. Thankfully the latest survey suggested that things are starting to improve for our manufacturers, and yesterday the pound was at its lowest level for two years against the dollar.
Since coming into office, the Government have moved decisively to encourage both new businesses and the enterprise investment culture. We intend to do more to give all who create wealth a greater stake in the wealth that they generate, which is why we introducing a new programme of shares for all in which employees will be able, for the first time, to buy shares in their own companies from their pre-tax income. Every employer will be able to match, tax free, what the employee buys.
Next year, we will introduce a new enterprise management incentive, which will provide help for smaller companies with potential for rapid growth that are seeking to recruit or retain key personnel by offering them equity remuneration. The scheme will allow tax relief for incentives of up to £100,000—but there is more to supporting business and encouraging innovation and enterprise than tax measures, important though those are.
That is why we will be setting up the Small Business Service in April next year. The new body will have three main functions: improving the quality and coherence of Government support programmes, helping firms to meet the demands of regulation and, most important of all, acting as a strong voice for small business at the heart of Government. Next week, we will be issuing a consultation document setting out our proposals in detail.
I pay tribute to my hon. Friend the Minister for Small Firms, Trade and Industry, who has been the champion of that proposal in the Government, and the co-ordinator across Departments. He knows all about small businesses and being enterprising and successful, and having him on the Front Bench has paid dividends. We are the first Government to bring people from the enterprise culture into government at policy-making level to manage the work of the Government day to day and to promote our strategy on the economy in support of innovation, enterprise and the development of the small and medium-sized enterprise culture.
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The Government cannot meet all the needs of small firms, nor should we attempt to try, but we want to ensure that Government support programmes offer a ladder of opportunity for small businesses at all stages of development—from the initial conception of a business idea, through start-up, taking on employees for the first time, and managing growth and movement into new markets. We also need to ensure that business is not constrained by other Government action, especially in relation to regulation.
That is why we announced a tougher approach to regulatory control in the modernisation White Paper in March. For the first time, we are compiling a forward programme of regulatory proposals that will enable Ministers to decide collectively on how to minimise regulatory impacts and burdens, and how to manage and reduce the cumulative impact of regulation. That is being done in partnership, involving the stakeholders at each stage in agreeing on whether regulation is required in the first place, determining whether a regulation is viable, considering what the impact of regulation will be and agreeing on how best to introduce it non-disruptively.
By listening to business, we have become aware that too many small United Kingdom businesses with good ideas have problems finding affordable finance. Small business people are workers without capital. They have intellectual capital—their ideas—but there is a disconnection somewhere and many entrepreneurs are unable to gain access to capital to help them to develop and grow their businesses.
The United Kingdom venture capital industry is the largest in the European Union, and it is growing. However, when we compare this country with the United States, very little venture capital goes into early-stage and technology-based investment. The Government are looking at ways of stimulating venture capital investment in such businesses.
Mr. Alan Duncan: Does the Minister accept that one of the best ways of encouraging small businesses is to reduce the social costs that they face in their infancy? Although assisting them with gaining access to capital would be helpful, the removal of those social costs would achieve far more.
Mr. McCartney: The hon. Gentleman is masking his laissez-faire views; he is obviously embarrassed by them. By reducing social costs, he means removing people's right to be paid a national minimum wage and their rights to take paid holidays for the first time, to investment in their skills and to workplace development. He should realise that the small business community does not want to be smeared by the Conservative party as a poor employer; it wants to be, and in the main is, a good employer.
The Government, working together with the small business community, have introduced a national minimum wage in a non-disruptive way. It has become one of the most popular policies with small businesses in Britain because, for the first time in the past 20 years, they can enter the marketplace in the sure and certain knowledge that they are competing on the basis of their ability to produce good-quality goods and services without

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worrying that some firm down the road is undercutting them by paying workers £1 or £1.20 an hour. That was the hallmark of the previous Conservative Government.
Mr. John Bercow: Will the right hon. Gentleman give way?
Mr. McCartney: I thought that that would get someone to their feet.
Mr. Bercow: I am grateful to the Minister of State for giving way. Of one thing we can be sure: he certainly cannot hide the fact that he is the left-wing troglodyte in his Department. Is he aware that the Secretary of State said in his speech to British Chambers of Commerce on 3 June that he intended to make three significant statements on deregulation in June. He regarded that speech as the first; what are the other two?
Mr. McCartney: If the hon. Gentleman had been at the conference, as I was, he would know that my right hon. Friend set out the framework of the Government's strategy on small and medium-sized businesses and the issues surrounding regulation and deregulation. I will outline that strategy in the remainder of my speech. My right hon. Friend's speech was received by the small business community with acclamation; indeed, when Ministers travel across the country to discuss such matters, we are all received with acclamation. Thank God small businesses have a Government who believe in and promote business. Our policy is not to close a business down every three minutes of every working day.
Let me make the hon. Gentleman an offer: next time I attend a business community event, I will look to see whether he is in the audience. I will invite him to join me and co-operate in promoting entrepreneurship in the British business community—
Mr. Bercow: I promise to stand up.
Mr. McCartney: I thought that the hon. Gentleman was already standing up.
Mr. Geraint Davies: Before my right hon. Friend was so rudely interrupted, he was talking about venture capital Although our venture capital industry is the most developed in Europe, does not it have some way to go? The vast majority of the venture capital industry in Britain is focused on re-engineering large enterprises through management buy-outs and leverage buy-outs. Its United States counterpart is much more diversified and focuses on new, high-tech small business enterprise growth.
The challenge for the venture capital industry in Britain is to achieve wider diversification to take advantage of the emergent opportunities in a new Europe and the single market. Unless we get our act together, there will be danger of a competitive threat from United States operators.
Mr. McCartney: My hon. Friend is absolutely right. I have been setting out the Government's strategy for turning round the Titanic that is the venture capital industry, successful as it is. The industry needs to play an effective, hands-on role with the small and medium-sized
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business community. It is also crucial that the Government have strategies for working with the financial community and the small business community, and bringing them together to deal with the equity gap in respect of technology-based investments and other investments which are important in achieving growth in such businesses.
The enterprise fund is a £180 million Government fund designed to increase the availability of finance for SMEs, particularly those caught in equity gap, as my hon. Friend the Member for Croydon, Central (Mr. Davies) said. New funds will be used to lever-in private finance and we will work with the private sector to maximise our resources and expertise. Early discussions have indicated support in principle from several major United Kingdom and European institutions.
We expect the fund to be operational by the end of the year. It will provide four key elements of assistance: continued support through the small firms loan guarantee scheme; support for regional venture capital funds specializing in the provision of small-scale equity to potential businesses, which is the area in which my hon. Friend the Member for Croydon, Central is keen for us to work; a national venture capital scheme to support early-stage, high-technology businesses, for which an additional £20 million was promised in the previous Budget; and flexible support for innovative proposals from the finance industry to meet the needs of fast-growing businesses and ensure that our SMEs have access to the widest possible range of funding options.
I shall now discuss ways in which we can promote an entrepreneurial culture. The Government can also foster a broadly based culture of enterprise so that people of all ages and from all backgrounds have the desire, confidence and skills to exploit an opportunity to turn new ideas into successful products and services—creating a society where people are willing to take risks and are rewarded. The Government will help to do that by supporting a national enterprise campaign led by British Chambers of Commerce. The campaign is designed to ensure that entrepreneurs are valued for the jobs that they provide and the opportunities that they bring, not just envied for the money that they make.
Young people's understanding of business is crucial to the creation and development of businesses in the future. The Department of Trade and Industry and the Government as a whole strongly support the young enterprise programme, which has been very effective in developing that understanding among schoolchildren. So impressed are we by young enterprise's achievements that we want to extend that understanding and the opportunity to development entrepreneurial skills among higher education students. Therefore, from October, 16 universities will participate in a scheme setting up 55 student companies.
Unlike the previous Government, we do not believe this country can compete as a low-wage, low-skill economy. We believe that the way forward is to produce high-value goods and services, but we will do that only if we raise the skills level of all our people—if we can bridge the skills gap and ensure that everyone has a higher level of skills than they previously needed.
Our strategy will not ensure a job for life; it is designed to ensure employment for life. The principle behind our drive is that people should be in a position to be employed

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for life because of the skills that they possess, their capacity for re-skilling and lifelong learning and their capacity to operate in an ever-changing labour market with companies that must meet constantly changing global demands. We need to be involved in and to develop that process.
When the Government came to office, one in three workers in Britain did not receive a single minute of training during their working lives. That is our inheritance from the Conservatives. It is impossible to compete in a global marketplace with such a poor record of investment in the skills development of our nation's greatest asset—its people, the work force. It is important that we bridge that skills gap, and that we do so in a partnership consisting of the primary, secondary, higher and further education sectors, Government and industry.
Mr. Duncan: What appropriate training did the Minister have for his job?
Mr. McCartney: I almost give up when faced with such a silly question, asked by an equally silly person. The hon. Gentleman should know—[Interruption.] Well, if the hon. Member for Buckingham (Mr. Bercow) wants to know, I spent a lifetime in work in the public and the private sectors. I was one of the first people in local government to help create a venture capital company. I was the first person to help create a single partnership between the public and private sectors. Mine was the first local authority in Britain to enter the process of inward investment. What more does the hon. Member for Rutland and Melton want to know? When I was the first Minister for inward investment, a record 600 new inward investment projects were attracted into the United Kingdom. Now what more does the hon. Gentleman want to know? I hope that the Prime Minister is listening to the debate. We are in a period when one must impress one's masters, so I thank the hon. Member for Rutland and Melton for that intervention. I ask him to make more during the debate. God almighty! Where do they find them? I got so excited I nearly lost my place, Mr. Deputy Speaker.
The intellectual property of our work force has a high value. Under the Conservatives, especially in the 1980s and throughout the 1990s, efforts were made to force a strategy of removing from the labour market a huge number of skilled workers—a million in manufacturing alone. Those people lost their job and their sense of self-worth and value; the economy lost the vast reserve of knowledge that they took with them. We should never, ever allow that to happen again. The combined knowledge of our work force is a strength that we need to build on and facilitate. That is why the culture of change, in providing an infrastructure for lifelong learning opportunities, is crucial to the success of this venture.
In 1997, the university for industry was a commitment in the Labour party's election campaign. By autumn next year, it will be open for business, transforming the availability and accessibility of learning opportunities for everyone. The university for industry will target those without basic skills; those trying to improve their information technology skills; and managers of small businesses, seeking to enhance their firm's performance. We expect that, by the year 2002, more than 2.5 million
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people a year will be using its range of information services and 600,000 people a year will be pursuing its learning programmes.
We are also conscious of the need to find jobs for those people who have the skills, but cannot find the right initial opening. There are excellent examples throughout the country of initiatives that enhance the employability of individuals and at the same time help businesses improve their competitiveness.
One example, in whose development I have taken a keen interest, run by Liverpool university, has helped create 500 jobs, has helped 2,000 graduates find full-time employment and has helped 1,000 small businesses to become more competitive. Companies large or small will succeed in exploiting knowledge only if they are innovative in the way in which they interact with their employees and others with whom they work. It is therefore crucial that, in local labour markets, skills and knowledge are matched with the needs of local enterprises.
Companies increasingly depend on the knowledge and skills of the people in their business to gain a competitive advantage. The DTI and Department for Education and Employment "Partnerships with People" report found that companies of all sizes, from all sectors of the economy, achieved sustained success by creating shared goals in culture, by continuously improving the skills of their work force and by sharing knowledge and information.
Hewlett Packard is an example of a company that has seen its success grow by this means. Its management style rests on the belief that the contribution of its employees is the most important factor in the company's success. All employees have targets relating to the company's goals, which encourage them to put into practice innovative ideas that will benefit the company. The Government will shortly launch a £5 million partnership campaign to stimulate many more such innovative partnerships at work.
However, Government cannot solve the skills gap by themselves. Upskilling is a challenge for everyone. It has the potential to deliver great benefits. A culture of continuous improvement, in which the contributions of individuals are valued, benefits both individuals and the company. [Interruption.] Does the right hon. Member for Haltemprice and Howden (Mr. Davis) want me to give way? Does he want to make a contribution to the skills gap of Britain?
Mr. David Davis: No.
Mr. McCartney: Fair enough. Perhaps he is just talking to himself. No one else would listen to him.
The DTI will shortly publish a best practice guide to help spread learning through business networks. That publication is built on partnership. The business community sat down with Ministers and officials to develop this approach. Business is feeding in ideas, and the ownership of the document will be in business itself, because it is essentially the work of business people, working together to identify best practice, sitting down with the DTI and then developing that best practice and ensuring that every enterprise in Britain has the opportunity to operate those best-practice models to

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improve, through business networks, opportunities for business investment and jobs growth. We want to encourage more businesses—
Mr. Geraint Davies: I am especially interested in the university for industry because some of the original ideas that gave rise to it were formed before the general election in the Labour finance and industry group, which I chair. Will there be a link between regional development agencies, which will establish regional strategies for specific industrial strengths in each region, and the university for industry, which can guide skills in the direction in which the region is moving industrially, so that training takes place and the pool of skills in a relevant area reflects the industrial strategy for that area?
Mr. McCartney: I can reassure my hon. Friend that the ideas have been the engine room of this change, and that the ideas are on-going in our extensive consultation process with the business community in each region, from which will emerge the piloting areas for each regional development agency. At every step in this regeneration of the United Kingdom's entrepreneurial culture, its business culture, its investment culture, business is working hand in hand with Government to get the maximum benefit from this process of change. It is critical that we provide local development partnerships that can affect areas of competitiveness.
I should like to refer briefly to the Wigan borough partnership. I declare a constituency interest, as a Member of Parliament for Wigan. Hon. Members can tell from the Lancashire accent—the elocution lessons did not go quite as well as I had expected.
Mrs. Angela Browning: The Minister needs a bit more training.
Mr. McCartney: Perhaps I could join the lifelong learning process.
Mr. David Davis: A bit of upskilling.
Mr. McCartney: As I understand it, Scotland has many call centres because people like the Scots accent. It has a truthful and honest ring to it. I think that that is true. [Interruption.] Mr. Deputy Speaker knows what I am talking about. Indeed, we sound just like each other. I shall keep my accent, and shall not take up the suggestion of the right hon. Member for Haltemprice and Howden of a bit of upskilling. I shall remain with what I have got and count my mercies.
Wigan borough partnership brings together TECs, chambers of commerce, business links, the careers service and the local authority. The breadth of the partnership has enabled all the stakeholders to establish a common economic vision for the future of the borough, and it adds up to real success on the ground. Through this partnership approach, Wigan borough partnership has taken the competitiveness agenda one stage further, and has made the links between physical development, skills and enterprises.
The European Union is now the UK's major market: it is a home market of more than 200 million people. If we are to make that market work, we must exploit the strengths of Europe and offer something to the global
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market that others cannot. Europe needs to undergo some fundamental changes in the way in which it treats business and enterprise. We need to encourage entrepreneurship in Europe by developing a European venture capital industry to match that in the United States, and by dealing with unfair taxes that distort real competition. Promoting economic reform must be an essential part of that strategy.
Europe has already come a long way, and we have a sound platform on which to build, but more progress is needed to improve the functioning of Europe's product, labour and capital markets. Europe needs to maintain the momentum of reform so that it has the necessary strength and adaptability to make job creation easier and growth more dynamic.
Building on the investment in our science base, the reach-out fund, launched on 15 June, has been jointly created by the Department of Trade and Industry and the Department for Education and Employment in partnership with the Higher Education Funding Council for England and the Department of Education in Northern Ireland.
The fund is worth around £20 million a year. It is intended to initiate an important third stream of funding for universities, alongside research and teaching funds, to recognise the importance of working with business, and to develop the capability in universities to respond to business needs. That in turn will help to stimulate more informed demand from business for greater innovation and competitiveness. The fund will be open to all universities in England and Northern Ireland, complementing measures in Scotland and Wales.
As today's publication of the 1999 edition of the DTI's research and development scoreboard indicates, we also need to do more to encourage firms to invest in R and D. The scoreboard focuses on the important role that R and D can play as part of a company's innovation process and business strategy.
The scoreboard celebrates the great strengths we have in pharmaceuticals, aerospace and defence. It also provides graphic evidence of the determination of some of our smaller companies in investing considerable amounts in R and D—they will be the Glaxos and Intels of the future. However, it is encouraging that many large United Kingdom companies recognise the crucial part that effective R and D plays in the innovation process.
It is good to see that the UK pharmaceuticals sector still continues to lead the world on R and D investment levels as a proportion of sales. However, it is worrying that many other United Kingdom companies still invest less intensely than their overseas competitors.
The Government are acting to improve UK investment in R and D through a new tax credit to encourage small business investment in this area. That should help more than 3,000 companies to invest in R and D, and help to support at least £700 million of R and D spending among small firms.
Companies can be innovative only if they look to the future. The UK foresight programme helps them to prepare for the challenges that lie ahead by bringing people who know about markets together with people who know about technology.
The DTI is increasing its innovation budget over the next three years to some £230 million. The extra money will be used to drive forward many new and large programmes, and to promote a fundamental change in the

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UK's climate for innovation. For example, we are increasing the funding of the teaching company scheme. The scheme not only helps to facilitate the transfer of technology and knowledge between the science base and businesses of all sizes, especially SMEs, but provides industry-based training for graduates intending to pursue careers in business.
Last year, 77 per cent. of all graduates who completed their two years in a teaching company scheme were offered permanent employment by their host company. Every one of them is likely to have been an agent of innovation and change within those companies.
We shall continue to support Shell's technology enterprise programme, under which 1,600 undergraduates undertake an eight-week project-based work placement. Last year, the student selected as the most enterprising STEP student in 1998 undertook a project in a company manufacturing chemicals and supplying the electronics industry. That important project was carried out by a woman graduate. Her work resulted in alternative materials being used in a process with significantly reduced environmental effects, and achieved recurring savings of at least £30,000 for the enterprise concerned.
To remain truly competitive, UK companies can learn from examples of business practices both at home and abroad. They need to benchmark themselves against leading businesses around the world for new ideas, new technologies and management best practice.
Mr. Bercow: The Minister said that the Government would oppose tax measures that would damage the competitiveness of British businesses. Given that the London eurobond market faces a threat to its competitive pre-eminence and to jobs from the proposed European withholding tax, will he give an unequivocal guarantee that, if that withholding tax remains unamended, the Government will veto it—I repeat, veto it?
Mr. McCartney: The hon. Gentleman knows full well that the Government are absolutely committed to ensuring that nothing—but nothing—is proposed that will damage the process of work in the City. We have said that time and again. We are getting weary of Conservative Members wanting Aunt Sallies to knock down because of their anti position on Europe and on all matters relating to Europe.
Mr. Duncan rose—
Mr. McCartney: Just a second. I shall give way to the hon. Gentleman, but I want to finish this point. I knew that Conservative Members would not be able to contain themselves, and that their anti-Europeanism would well up inside them. A few cracks are appearing in their facades and in their view about business succeeding in Europe.
The CBI "Fit for the Future" campaign is critically important to us. It aims to help business to learn about and adopt more efficient and effective business practices used by others in the United Kingdom and beyond. The campaign's mission is to achieve an increase in the number of companies engaged in the transfer of best practice. That will be done by promoting success and linking people
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with experience with people who want to learn, working through a network of partners and champions, and signposting valuable sources of information and advice. This is a simple and comprehensive approach in the drive towards achieving a step change in UK competitiveness. To date, 35 partner organisations—such as trade associations—and 49 leading business champions have signed up to the campaign.
Mr. Duncan: I know that the Minister is well-equipped to roll over from time to time, but will he answer the question? Does he believe that the withholding tax would or would not harm business?
Mr. McCartney: The hon. Gentleman knows that, from the Prime Minister and the Chancellor downwards, this Government will do nothing to allow the European Union, or anyone else, to damage UK business in the City. I cannot be straighter than that. The hon. Gentleman wants to acquiesce in, and agree with, his party's views, and to treat the issue as an Aunt Sally. In fact, over the past 20 years the only giving way in terms of taxation and European issues has been done by a Conservative Government.
Mr. David Davis: My hon. Friend the Member for Rutland and Melton (Mr. Duncan) will know the position with regard to the withholding tax. Essentially, the Europeans have given the British Chancellor an opportunity to generate proposals that will be in the interests of the financial markets in Europe, and will protect British jobs. We are waiting for our Chancellor to present those proposals. He reserves the right to use the veto if necessary, in order to protect Britain in the endgame. I really do not see the problem that the Labour party is engendering.
Mr. McCartney: The right hon. Gentleman is struggling. There is no evidence, in this or any other context, that the Government are other than four-square committed to the interests of the United Kingdom.
This Government are listened to in Europe. No one listened to the Conservative Government. Even if anyone had wanted to listen, the Conservative Government were never there. They had an empty-chair strategy. They would turn up, sign in and get on to the plane back to Britain. Then they would sit in a huff in their ministerial offices while decisions about Britain's future and a range of other matters were made. They had no positive input at all. We will take no lessons from the Conservatives about the principles of Europe, the strategy of negotiation or how this country's interests are defended in Europe. They scored nought out of 10 each time on all those issues, and so far today they have conveyed no sense of urgency in regard to the development of a policy in opposition.
Mr. Bercow: Will the right hon. Gentleman give way?
Mr. McCartney: The hon. Gentleman should not dive in too quickly. He has had numerous opportunities to inject at least a smattering of intellectual activity into the debate. I may have to stay around to establish whether there is even a chink of light on the Conservative Benches, and whether the Opposition have any sense of direction. I fear that they have not.

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Does the hon. Gentleman still want me to give way?
Mr. Bercow: When I listen to the Minister's speeches, I always feel that he is pricking himself with a needle. It would be much easier if he would answer questions directly, rather than giving a long, roundabout, circumlocutory response to my hon. Friend the Member for Rutland and Melton (Mr. Duncan). If he will not consent to any tax measure from the European Union that is injurious to British business, will he just confirm that any such injurious measure will be vetoed, vetoed—for the third time—vetoed?
Mr. McCartney: I do not know how many times I have to tell the hon. Gentleman that the Chancellor has already successfully negotiated with our European colleagues on proposals to tackle tax evasion and protect the legitimate interests of the British financial markets. We are ahead of the game. The hon. Gentleman is talking about an old agenda. The agenda has moved on, and, as I keep saying, at last the country has a Government to whom our European colleagues listen with respect. The Chancellor's proposals are moving the agenda further forward, and there is no possibility that our financial interests will be dealt with other than in a rigorously supportive way. The hon. Gentleman has demonstrated again that the Conservatives are not just behind the game, but out of the game. His is an old party with old policies to which no one will listen.
I hope that the hon. Member for Rutland and Melton will give us some inkling of whether the Opposition have learned from their 18 long years in government, during which they dismantled the British economy. Do they recognise that, over that time, tremendous errors were made in macro-economic policy? Do they realise how much social dislocation they caused through their lack of investment in training and research and development, and their failure to involve educational establishments with the business community? Throughout the sphere of innovation and enterprise, the last Government were found wanting.
Mr. John Butterfill: Will the Minister give way?
Mr. McCartney: The hon. Gentleman should wait a while. He should listen to the debate. He has only been present for about 15 seconds. Well, perhaps 30 seconds. I am prone to exaggeration. [Interruption.] I knew that would get them going. The Conservatives only wake up when we make a joke. When the serious stuff starts, they switch off.
The Department of Trade and Industry has worked closely with the Department for Culture, Media and Sport to create the national endowment for science, technology and the arts. NESTA will shortly announce details of its policies and programmes to support talented and enterprising individuals in science and technology, as well as the arts.
During their first two years in office, the Government have gone a long way towards ending the poverty of ambition that was prevalent under the Tories. We have gone a long way towards improving our science base, and giving people both the incentives to take risks and the rewards for taking them. We realise that there is much
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more to be done if United Kingdom companies are to compete in the new knowledge-driven economy, but I believe that the policies that I have outlined will help our companies to succeed at home and abroad.
This morning we shall hear a bit more of the old Tory boom and bust, but we should always remember one thing: at the next general election, the Tories will be an out-of-Europe, out-of-a-job party. They will lay to rest 3.5 million jobs in Britain because of their policies in respect of the business community. Every worker in Britain should understand that the Government's attitude to Europe and the business community puts at risk all those 3.5 million jobs, and our home market.
The Tory party is an out-of-Europe, out-of-a-job party. Ours is a party that wants to be at the heart of Europe, making decisions and leading Europe into an enterprising and innovative economy: an economy that reduces unemployment, and creates new opportunities for entrepreneurs, new job opportunities, new research and development and new markets, in Europe and elsewhere. This is a Government with a vision and a strategy, and a Government with the tenacity to see it through.
10.18 am
Mr. Alan Duncan: I acknowledge with gratitude the warm welcome extended to me by the Minister. Let me also say on behalf of us all that it is a pleasure to see him fit and well again, and in rumbustious and entertaining form. Long may that continue. The Minister is clearly enjoying his brief, and Conservative Members will enjoy sparring with him over the coming months.
If there is one thing on which the Minister and I agree, it is that the world is really run by those who are under 5 ft 6. I think that my hon. Friend the Member for Buckingham (Mr. Bercow) will agree with that. I am sorry that I do not have the Minister's mellifluous Scottish accent; I am afraid that my family lost that a generation ago. I shall have to be upskilled to get it back.
I look forward to carrying out my own brief. Perhaps I should adhere to the traditions of the House, and begin by making a full declaration of my interests. They are all registered, but the modern rules are a minefield. I want to make it absolutely clear to the Minister and the House that I shall not speak on matters pertaining to the motor industry, as I retain a shareholding in a Land Rover franchise overseas. I have some interests in oil and telecommunications, also overseas. Although I think that they have no bearing whatever on United Kingdom policy, I shall declare—indeed, over-declare—them as necessary.
I am also a non-executive director of a United Kingdom-based investment fund—a private venture capital fund that will concentrate on high-tech infant companies. In as much as any declaration is required on that, I shall endeavour to comply with the rules of the House to the highest possible standard.
Just a moment ago, I was thinking that it was exactly 20 years ago that I started seeking my first permanent job, on leaving university. I joined Shell, a big and successful—massive—Anglo-Dutch corporate concern. Looking back to 20 years ago, one can but realise that, in the intervening years, much has happened in our economy. I am pleased to say that much has happened in the Labour party, too.

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In 1979–20 years ago—when the Conservative Government first took over, the United Kingdom was a very sick economy; we were regarded as the sick man of Europe. Quite simply, we were going down the plug-hole. Trade unions were seen to be dominant and overpowerful, and strikes were reported daily in our newspapers and on television. United Kingdom inflation was probably the highest in Europe, touching 27 per cent. Amidst all that macroeconomic disaster, we saw the stifling of enterprise and the crushing of innovation.
The human spirit, however, endured. Now, we realise and appreciate much more clearly that the individual qualities of enterprise and innovation are the engine of prosperity, and that they are the justification of the capitalism that harnesses private endeavour for the public good. It took a Conservative Government more than 18 years to give enterprise and innovation the freedom that they needed to flourish.
I acknowledge, however, that the Labour party has also changed. It has been forced to admit that the previous Government were right, and that it was wrong. Indeed, the Labour party has adopted much of our language—the language of enterprise, innovation and of business. No one can deny that Labour says many of the rights things. At best, however, Labour is only halfway there: although it may have learned its lines, it does not really understand the meaning of the lines it utters.
Increasingly—particularly in the past few weeks—we have seen that, now that it is in government, Labour is schizophrenic and divided. As on other issues—such as proportional representation, Europe and welfare—it is gradually crumbling and dividing into groups composed of the old rebels—[HON. MEMBERS: "Who?"]. I am talking about Labour Members who are in the Chamber, although, on days when the House is fuller, the division between the old rebels and the new robots is much starker.
Some Labour Members actually believe in something, such as socialism, social justice, equality, redistribution, intervention and everything that goes with that.
Mr. Hilton Dawson: Will the hon. Gentleman give way?
Mr. Duncan: I shall in a moment.
There are also those Labour Members who—I do not know in which category the hon. Member for Lancaster and Wyre (Mr. Dawson) falls—slavishly merely follow a Blairite script, with little thought and even less respect.
Mr. Dawson: Does the hon. Gentleman accept that many Labour Members are deeply committed to manufacturing industry? In his eulogy of the Conservative years, will he acknowledge that, in constituencies such as mine, the manufacturing industry was decimated during that time, and that we are still struggling to recover from that problem?
Mr. Duncan: There is no doubt that, in the difficult years of the 1950s and 1960s, the manufacturing base was undermined—so that when reality dawned and hit the United Kingdom economy, there were some very hard times. We are seeing the same process under way, although much more extremely, in the former
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Soviet Union and in other east European countries. Economic reality in those countries is causing great hardship as the illusion of the past is being shattered.
If the hon. Member for Lancaster and Wyre really believes in manufacturing industry, he should come clean and tell us in which economic climate he believes that manufacturing industry will flourish—I should like to talk about that in the few moments in which I have to speak. We should then, perhaps, be able to see on which side of the Labour party divide he sits. Manufacturing industry is currently having a very hard time, despite the golden economic legacy that we left the Government in 1997.
The fact is that, 20 years ago, innovation and enterprise were words that the Labour party could not even spell. I welcome the progress that Labour Members have made, but ask them to understand more than they do.
Mr. Geraint Davies: Would the hon. Gentleman be interested in knowing that the number of work days lost per month as strike days is now down to 23,000, whereas, in 1996, there were about 100,000 such days? Any suggestion that there was industrial harmony and success under the Conservatives is therefore quite false.
Mr. Duncan: I am grateful to the hon. Gentleman for demonstrating the extent to which the previous Conservative Government succeeded in bringing the United Kingdom into reality. I am also pleased to say that there is now a climate in which there are fewer strikes. That is our legacy, and long may it continue. I also hope that the hon. Gentleman will realise that, in a climate of increasing global competition, future strikes will cause enormous damage, as will so many of the other burdens that the Government are placing on business.
Mr. Jim Murphy: Will the hon. Gentleman comment on that golden economic legacy in the light of the number of business failures under the previous Government? Only five years ago, there were 20,000 more business failures each year than there are now.
Mr. Duncan: The hon. Gentleman will know very well that the Government inherited a fantastic combination of low inflation, rising tax receipts and other factors, putting us in a perfect position to compete well with our European partners. The Government seem to be doing everything possible to destroy much of that competitive advantage.
This annual debate used to be entitled the "Small Business" debate. Sweeping that subject under the carpet is perhaps an interesting indication of the Government's priorities. They are not a Government who are friendly to small business. However, small businesses are enormously important, employing about 90 per cent. of United Kingdom employees. They are also the main innovators—the seedcorn of future commercial success. In fact, enterprise is usually more about taking that first risky step—as an individual, with an idea and a plan—than about the great corporate plans of larger concerns already present on the commercial map.
The small business is the embryo of a lifetime of commercial success. Microsoft started in a garage, as did Amstrad. Small businesses are the key matter, as they are our future. They are the ones on whom we should be directing so much of our thought and policy.

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Despite the language that the Government use, they still do not understand what it takes to run a business and to manage risk. Instead, they look on all business as some great sector that can—or so they think—cough up more money, assume costly social responsibilities and support the Government's continuing collectivist approach to life. Ministers have a lot to learn.
Quite often, at the root of all enterprise and innovation is one simple decision that has to be taken time and again and made at the margin, so that one small Government action might push the decision one way or the other. Often, the decision is very finely balanced, and will make a difference not only to the enterprise and its progress, but to society generally. Which issue must be decided by small businesses? It is, "Should I employ another person?"
The Opposition say that the willingness of one person to employ another is something to be encouraged and admired, and supported by creating a climate in which that is likely to happen. The Government, however, still think that it is something to be milked in the sense that employers are compelled to fulfil a wider series of social and economic obligations, so that the person who wants to take a risk and is prepared to commit his own money becomes obliged to fulfil many responsibilities that should lie elsewhere.
Those who run small businesses have to count their pennies. They have to borrow and struggle. They, perhaps, have to send the wife out to work, or live in a smaller house. Those people really have to put their lives on the line.
The Minister for Small Firms, Trade and Industry (Mr. Michael Wills): The hon. Gentleman was talking about the problems that small businesses face when trying to find the right finance, but under the Conservative Government, interest rates rose to 15 per cent. What does he think that did to small businesses?
Mr. Duncan: I admit quite openly that high interest rates did a lot of harm to small businesses and everyone else. I do not want a regime of high interest rates; I welcome the current regime of low interest rates that the Government were fortunate enough to inherit from us.
There is no doubt too that in the past, the industrial sector has been too reliant on interest-variable debt. I welcome the ability to borrow at fixed interest over several years as that is very good for business. It is a welcome development which the free market in capital has delivered over the past few years to the business community. The present Government could not have done that and will never be able to do it in such an effective way.
Mr. Jim Murphy: I listened with interest to quite a revealing insight into modern Conservative thought when the hon. Gentleman said that many small business men send their wives out to work. In my constituency, 36 per cent. of small businesses are owned and run by women. Whom do they send out to work?
Mr. Duncan: I was hoping that the level of debate would be a just little higher than that.
Mr. Geraint Davies: The hon. Gentleman suggested that the reduction in interest rates was somehow a
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Tory legacy. Does he accept that that is a product of the independence of the Bank of England and that when that decision was made, long-term interest rates went down overnight? Given what he said, can he confirm that, unlike many of his hon. Friends, he is in favour of the independence of the Bank of England?
Mr. Duncan: In its current role, the Bank of England must respond to economic conditions. It is responding to the economic conditions which, I repeat, his Government were fortunate enough to inherit.
The best way to encourage innovation and enterprise is simply to ensure a stable, low tax, low regulation environment for business. The Government speak that language, but deliver the opposite. There has been a massive increase in the tax burden placed on businesses since the Government were elected in 1997. They have done everything that they can to do it by stealth. They gave their promises and pledges in a way that was specifically designed so that they could be circumvented. They said that they would not increase certain rates, but they have slammed business with all sorts of other taxes, not just by stealth but by deceit.
Mr. Ian McCartney: The hon. Gentleman is completely wide of the mark. In each Budget, the Government have consistently reduced taxation. We now have a 10p starting rate for small businesses and a 20p rate of corporation tax—the lowest ever rates—and we are committed to those rates for the rest of this Parliament. We have introduced new potential taxation releases for companies that invest in research and development and capital equipment. Across the board, where taxation impacts on the viability and competitiveness of a company, the Government's strategy is to reduce it, not to increase it.
Mr. Duncan: I fear that the Minister requires some serious upskilling on tax economics. The Government may have reduced some tax rates, but they tend to go for the headline and cheat behind the scenes. A significant number of companies now have to pay their taxes quarterly. Large corporate concerns will have to pay five years' worth of tax in four years. That is a massive burden on cash flow and the financing costs of those big concerns, and represents an increase in their tax burden.
Mr. Bercow: My hon. Friend is right to educate the Minister of State in the distinction between tax rates and the tax burden. Frankly, the Minister ought really to be aware of that distinction. In considering the tax burden, does my hon. Friend agree that we ought properly to take account of the proposed climate change 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? The cumulative impact of the Government's imposts is, as Sir Clive Thompson, the president of the CBI recently pointed out, to increase the tax burden on businesses by £20,000 million in the lifetime of this Parliament.
Mr. Duncan: My hon. Friend is absolutely right and proves—as if proof were needed—that he is rather more firmly rooted in real life than the Minister.
Mr. Ian McCartney: I am quite enjoying this debate. I apologise to the hon. Gentleman for failing to mention

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one tax—the windfall tax. We introduced an increase in tax on the profits of the privatised utilities. It has led to a huge investment in small and medium-sized companies in the private sector to take on new labour. It has enabled us to reduce by half youth unemployment and get more than 100,000 young people, who under the Tories were walking around the streets with their hands in their pockets, into work, giving them a future and a sense of self worth. We have reduced long-term unemployment by 50 per cent. as well, so one taxation increase has produced massive opportunity for the business community in Britain and helped a generation of young people and older workers who the previous Government had abandoned.
Mr. Duncan: I apologise to the Minister, because when I say he is not firmly rooted, I should not be so rude to the bonsai tree.
Businesses also have to cope with the national minimum wage, which some estimate will cost firms £8 billion over the lifetime of this Parliament and the working time directive, which could cost more than £6 billion and the loss of up to 200,000 jobs.
Mr. Butterfill: I am anxious not to restrict my hon. Friend's flow of rhetoric as he is making an interesting speech, but before we leave the issue of tax rates, can we look once again at the effect of the changes to advance corporation tax and the timing of the payment of tax? Does my hon. Friend agree that most investment by companies is funded out of retained profits and that, over the next two years, changes in the timing and the payment of tax will have robbed British industry of retained profits to invest? The Government do not seem to understand that.
Mr. Duncan: I am grateful to my hon. Friend as he has put that point much better than I did. He always speaks good sense on these matters and perhaps that will help the Minister upskill himself in a proper understanding of those matters.
Several hon. Members rose—
Mr. Duncan: I must make some progress, as I have been generous in taking interventions. I shall happily take some more in a moment.
One key issue that the Minister did not touch on is the vexed question of compulsory trade union recognition. In many respects it is a litmus test for the Government's conversion. Are they just saying what they feel people want to hear but doing something different behind the scenes, or are they genuine converts to the cause of enterprise and innovation? If they are genuine converts, they will remove the measure that would compel businesses compulsorily to recognise a trade union. Does the Minister share my view that small businesses should not have that requirement thrust upon them?
Mr. Ian McCartney: I put that down not to the hon. Gentleman's anti-trade union views, but to his job. The Employment Relations Bill includes an exclusion from the dispute resolution process which can lead to recognition by a ballot. Companies with 20 or fewer employees are
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excluded from that process, but they can agree to voluntary recognition. Since the introduction of the Bill, there has been a change in the business climate and many companies are reaching voluntary agreements with trade unions. However, there needs to be a process to deal with the dispute resolution and that is precisely what the Government are providing.
Mr. Duncan: The Minister will know that the matter was the subject of a Government defeat in the Lords. Will that be overturned when the measure returns here?
Mr. McCartney: The matter in the Lords did not relate specifically to the principle of union recognition; it was a technical amendment concerning the process. We are considering whether or not the amendment was effective and in due course the Government will decide whether to change that amendment or to remove it. It was not a defeat on the principle. The hon. Gentleman should realise that the Conservative Opposition did not move an amendment on principle against the concept of union recognition. If they did that and defeated the Government, we would certainly reverse that decision.
Mr. Duncan: We look forward with great interest to seeing what the Government finally decide to do about that.
Mr. Bercow: I am sorry to trouble my hon. Friend further. Is he aware that the Minister was the victor against the forces of modernity in his Department on trade union recognition? For the purposes of the Employment Relations Bill and trade union recognition, there is an exemption for firms of fewer than 20 employees. Does my hon. Friend think it extraordinary that for other purposes, such as the legislation on the late payment of commercial debt, the Government opted to define small firms as those with fewer than 50 employees? Why the inconsistency?
Mr. Duncan: As always, my hon. Friend is well informed and makes the point clearly—a point that the Minister is unready to admit. The Minister is also unready to admit the truth about the withholding tax. He refused to answer questions from my hon. Friend the Member for Buckingham and from me about whether that tax would be bad for business and whether he is against it. He equivocated in response to three interventions. He talks of principle and he gives us fudge. Will he give us a clear undertaking that the withholding tax will not be introduced and will he clearly admit that if it were introduced it would be harmful to business? I do not—
Mr. McCartney rose—
Mr. Duncan: Oh, I have caught a fish.
Mr. McCartney: The hon. Gentleman has not caught a fish. I have explained the issue until I get to the point of boredom. The Tory Opposition do not have a case. The Government are not only ahead of the game, but four-square in defending the interests of the City in all circumstances. We are also providing leadership in dealing with the issues that are important to the City. As a consequence, European policy has moved towards ours.

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I am certain that the Government's position will prevail. Our policy will always be to put the interests of the British business community in the City first.
Mr. Duncan: The Minister has just done for a fourth time what he had already done three times. Would he veto the withholding tax? He will not say. Would it be harmful to business? He will not say. Is he against it? Would he bring it in? He will not say. All that we get is fudge.
Mr. Gareth R. Thomas: On the question of fudge, will the hon. Gentleman clear up where he stands on the independence of the Bank of England? He has written about the need for an independent Bank of England. Will he give us an unequivocal statement that he still supports the independence of the Bank of England? While he is clearing up that issue, will he also tell us whether he intends to campaign within his party in favour of the abolition of the national minimum wage?
Mr. Duncan: I am pleased to say that I support my party's policy in both respects.
The state of the economy is mixed. The Minister declined to admit that manufacturing was having a difficult time. There is a big squeeze on profits and orders. We have a double-headed economy in which some sectors are doing well and others are having a hard time. We are in the middle of a technological revolution. Fifteen years ago, I thought that I was a big shot because I had a car in my phone. [Laughter.] Sorry, a phone in my car. I wanted to check that the Minister was still listening. I was pressing the test button and it worked. That is good.
Mr. McCartney rose—
Mr. Duncan: I shall allow the Minister one waggish witticism as a final salvo.
Mr. McCartney: If it is such a big phone, perhaps in the interests of competitiveness we could share it.
Mr. Duncan: I was clearly wise to give way. I look forward to our many encounters in the months ahead.
Conservative policies over the past 20 years have allowed Britain to keep ahead of many other countries and up with the United States in the fast-developing technologies. The UK has been made attractive for business and investment. Only Conservative policies—to which the Government now seem half committed—have made that possible.
Some of the Government's policies are putting a lot of that at risk. Inland Revenue press release IR35 threatens a crucial part of the progress of high-tech industries. A new pattern of employment is developing, with a dramatic shift away from big manufacturing concerns with lots of unionised employees clocking on at nine and clocking off at five. Big companies now look to little entrepreneurs for crucial support in the development of ideas and software—people with fantastic brains who do not need much plant and can do their work with a computer, a laptop and knowledge. They sell their services at a high price to add significant value to large corporate concerns.
The effect of IR35 is to say to those entrepreneurs, "To hell with that enterprise that you are showing. To hell with your plans and the way you have structured yourself
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and your energies and the risks you are taking. The advantages that you have derived from a free commercial regime in which you can set yourself up as a limited company, selling your services to a large corporate concern to add value to yourself and to them will be threatened." There is a risk that the hand of Government will reach into those concerns and cut off the life blood of innovation and enterprise that the Minister is pretending to champion. The Inland Revenue directive—or whatever we want to call it—risks doing an enormous amount of harm. I want an assurance from the Minister that it is being fully reviewed, that he will listen to the concerns and that it might be reversed.
Mr. McCartney: It is going out to consultation. Perhaps the hon. Gentleman could tell us whether he is opposed to tax evasion.
Mr. Duncan: Of course I am opposed to tax evasion. I am also opposed to a tax regime that will harm innovation and enterprise and hold back Britain's progress in developing frontier technology and innovative, pioneering companies in today's competitive world.
That is not the only threat to our competitive model. There is also a risk that many of the patterns of commercial activity that we see across the channel in other European countries will be imported to this country to our cost. We have our own model and structure. We have a different sort of economy in many respects. Given the Government's attempts to chum up with their European friends, we are likely to have many costly directives and structures brought into this country in the interests of some specious harmonisation that would lead not to competitiveness, but to uncompetitiveness.
The Institute of Directors speaks for clear-thinking people who understand business. In a recent press release, the institute acknowledged the need for an efficient regulatory framework. We are not talking about people whom the Minister would critically describe as laissez-faire capitalist anarchists.
Mr. McCartney: To be fair, I was talking about the hon. Gentleman, not the Institute of Directors.
Mr. Duncan: I am not one either. The Minister should read my books. He might upskill himself a bit more.
The Institute of Directors identifies several key issues for many companies. The Minister should listen carefully and put the issues on his agenda to ensure that we have innovation and enterprise. The first point in the press release is that
"the introduction of fresh legislation or new regulations should be avoided unless all alternatives have first been exhausted."
I wonder whether the Minister can give the House that pledge.
Mr. Gareth R. Thomas: Will the hon. Gentleman give way?
Mr. Duncan: I want to go through the press release first. I shall come to the hon. Gentleman afterwards if he wants.

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The IOD says:
"More time is needed by small firms both to respond to consultation documents and to familiarise themselves with new regulations."
The IOD also calls for sunset clauses. Does the Minister think it sensible that regulations should last for a finite time and not be renewed unless they have been proved to work satisfactorily?
The Minister seems unprepared to consult on this matter, but the IOD still wants an
"exemption for firms of fewer than 50 people from the Employment Relations Bill",
which is something that the Government should deliver. It wants the the parental leave directive to be scrapped—another burden on business imposed by the Government. It thinks that the
"introduction of National Works Councils across Europe must, in particular, be resisted in the UK."
That is quite a shopping list. If the IOD has such a shopping list, the Minister cannot in all good faith stand up and say that the Government are not placing new burdens on business.
Mr. McCartney: I cannot remember the date of the press release, but it is somewhat out of date. On national works councils, our policy in opposition and in Government has been to oppose any directive that would impose works councils on companies that operate wholly within the United Kingdom. We are in favour of the European works councils directive, which is being implemented with the support of British industry. The Government's negotiating strategy has led to a position where, so far, there is no proposal for national works councils—a success for the Government, working with business.
On consultation, the Government have set in place a framework of consultation with industry and across all stakeholders in relation to regulations.
Mr. Deputy Speaker: Order. I have been trying to give both Front-Bench spokesmen some leeway, but interventions must be brief, and the Minister's intervention is far too long.
Mr. Duncan: Let me make one thing clear. My hon. Friend the Member for Tiverton and Honiton (Mrs. Browning), my colleagues and I will do our utmost to scrutinise every regulation that looks as if it is winging its way here. In return, will the Minister guarantee that no EU directive will ever end up tougher than its original form, and that, when incorporated into UK law, it will be no more onerous than its legal form and implementation in competitor countries? Can he give such a guarantee to the House now, or are we condemned to have tougher regulations here than the parallel ones implemented in other EU countries?
Mr. McCartney: It was the previous Conservative Government who failed industry in terms of implementing directives. They refused to negotiate, be involved or even to sit down at the table in the interests of British business. They opted out. This Government have a clear strategic approach to directives. We will
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judge whether they will create or lose jobs; whether they assist in the free movement of labour; whether they assist the modernisation of the labour market; whether they assist entrepreneurship; whether they assist investment strategies; and whether they assist in a framework of basic minimum standards. If they meet those requirements, we will, working with industry, develop appropriate measures for implementation. Where they do not, we will oppose them.
Mr. Duncan: Some might think that that was a good answer to a completely different question. I was asking about the equity of implementation of a directive. Clearly, I will not get an answer today. When we are in government, the Conservative party will not introduce any regulation without finding another one to abolish.
Mr. Gareth R. Thomas: Is the hon. Gentleman aware that, according to the House of Commons Library, the number of regulations imposing costs on business was 223 in 1994, 209 in 1996 and 199 in 1998? If he is such an opponent of regulations that have a cost on business, can he explain why the two years of most regulation were under a Conservative Government?
Mr. Duncan: It may be a three-letter answer—QMV, or qualified majority voting. Anything that achieves less regulation is welcome on this side of the House.
The Minister did not mention the single currency. Those people, including business men, who support a single currency believe genuinely that it will reduce their risk and make for a less risky climate in which they will have to work and sell their products. However, if one locks into a currency, other economic variables will move, and probably move more violently. It could be interest rates, pressure on wages, pressure on labour mobility or capital flows. Big business will be able more readily to adjust to those pressures, at least in some respects.
The key thing about a domestic small business is that it cannot adjust. Therefore, there is a risk to all small businesses of having to face macroeconomic pressures to which they cannot adjust and to which they can only respond. I hope that the Minister will realise that small businesses will be at much greater risk than big businesses if the stringency and inflexibility of the single currency and its effects on the domestic economy come into play.
Mr. Butterfill: I do not know whether my hon. Friend has heard the breaking news this morning. Italian industry is now saying that in order to keep within the constraints of the euro, it may be forced to ask workers to give up their pension rights.
Mr. Duncan: My hon. Friend, as ever, is fully up to date. Even if those people have to suffer a reduction in their pension rights, and not their total abolition, that is a very heavy price to pay and is damaging to the long-term prospects of any employee.
The Labour party often talks about the long term. In opposition, it paraded itself as the champion of the long term. The one thing that Labour hopes for is that the long term is long enough for it not to be found out. Within months of coming into Government, the Labour party damaged the existing savings culture—it has hit pensions with a bill in excess of £5 billion. Individual savings

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accounts are an inferior savings vehicle to those previously on offer. Labour is attacking the savings culture that was in place before it took over. Labour has not done things for the long term—it has damaged the long term.
Economic lesson No. 2 is savings equals investment. If one attacks savings, one attacks investment.
Mr. Jim Murphy: What was economic lesson No. 1?
Mr. Duncan: Opportunity cost is the answer, and the hon. Gentleman should go away and learn what that really means and work out how Government policies always have an opportunity cost.
The Government talk about enterprise and innovation, but what have we seen in the papers this week? We saw the extraordinary headline in the business section of The Times on Tuesday:
"State-backed bank for PFI gets the go-ahead."
Mr. Wills: What a good idea.
Mr. Duncan: The Minister—and his Parliamentary Private Secretary, the hon. Member for Stevenage (Barbara Follett)—both agree. Some of us remember the days of the National Enterprise Board, a not-so-little outfit in the 1970s which was a disaster. We all remember the De Lorean gull-winged motor car; not the greatest commercial success in the history of industry, and the product of a poor decision by a Labour Government. The article says clearly that we are to have a state-backed bank—an announcement made not in the House of Commons, but in a press release to The Times—and states:
"The Government have given the go-ahead to radical plans to create a new state-backed bank, UK Capital—
it even has a name—
"aimed at injecting fresh enthusiasm into the Private Finance Initiative."
Not only does it have a name: it looks as if it has someone to head it. [Interruption.] The Minister clearly agrees. A Mr. Montague, the head of the Treasury-led PFI task force, will head it. The plan is to "inject fresh enthusiasm" into the private finance initiative. How can a private finance initiative still be a private finance initiative if it is to be financed by a state-backed bank? That means that it is not a private finance initiative, but a public finance initiative. The Minister shakes his head, but he will have to explain. He clearly has a clever scheme which, one day, he might have the courtesy to explain to the House.
The money will be off the Government balance sheet, which will help them to fiddle the figures. The subordinated debt will probably rank below private enterprise debt, so the risk is greater for the taxpayer and the state than for the private sector. The last paragraph of the newspaper article is the most telling. It says:
"The plans have caused alarm in the City, where the prospect of public money competing directly with private cash is viewed as unwelcome."
Will the Minister come clean and urge the Secretary of State to give the House a clear statement of what is intended and what will happen to what is said to be £1.2 billion of public money?
Mr. Gareth R. Thomas: The hon. Gentleman obviously has something of a selective memory. Does he
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recall that under the previous Government, about £30 million was spent on consultants' fees for PFI without one scheme coming to fruition?
Mr. Duncan: We launched PFI, which is very successful, and I suppose that that is why the Government are continuing to pursue it in one form or another, even though they said that they would get rid of it.
The Government have mastered the language but not the thinking. They say one thing and do another. I want to attach a permanent health warning to their use of the word "partnership". Beware the Labour word "partnership". It is not what they want people to think it is. It is a cover for collectivism, corporatism and, as we see elsewhere in the Government, cronyism. What really lies behind the use of the word is more Government interference and intervention.
We want small Government, less Government, less intrusive Government, fewer regulations from Government. I look forward to sparring with Ministers in the months ahead and showing that they are not delivering the enterprise and innovation culture that they pretend they are.
11.2 am
Mr. Jim Murphy: I am delighted to take part in this debate—the first Friday morning debate in which I have participated. It is rather cosy and intimate, but that does not disguise the strong differences of opinion on the issue. I am pleased to follow the hon. Member for Rutland and Melton (Mr. Duncan), who made quite a long speech.
Mr. Dawson: Endless.
Mr. Murphy: Fortunately, there was an end; no point, but an end.
I am also pleased to follow a fellow Scot, my right hon. Friend the Minister of State, who has now emigrated to Wigan. In a debate on enterprise and innovation, which includes invention, my right hon. Friend should not have been ashamed of his accent, whether it be Glaswegian, Ayrshire or with a hint of north-west England, because it was Scots who invented many of the great modern equipment and techniques and much that we now take for granted, such as the television and electricity.
My right hon. Friend spoke about call centres and Scottish accents. It was a Scot who invented the telephone, without which call centres would not exist. Without Scottish inventions, the hon. Member for Rutland and Melton could not have had a car in his phone and, more than that, if McAdam had not invented tarmac—tarmacadam—he would have had nowhere to drive his telephone with his car in it.
As my right hon. Friend said, we have a Government not only of economic competence, but of innovation. They have introduced a whole raft of policy innovations to deliver economic stability. In week 1, the Bank of England became independent. That was much criticised by the official Opposition, but much welcomed by business and others outside the House.
In the two years that I have been a Member of Parliament, I have not heard a proclamation or even a whisper from the Conservatives on whether they would

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reverse that policy. The hon. Member for Rutland and Melton was invited by my hon. Friend the Member for Harrow, West (Mr. Thomas) to tell us, but he refused. He said that he supported Conservative party policy. What is Conservative party policy on the issue? Is it to reverse the independence of the Bank of England or to stay with the stable environment created by the correct decision taken in the first week or so of the Labour Government?
Independence for the Bank of England has helped us to deliver low inflation and provide an economic framework to guarantee long-term investment. Labour is the champion of long-term investment because we know that we must invest in our people and our infrastructure.
Mr. Butterfill: The hon. Gentleman has referred several times to the independence of the Bank of England. There are independent central banks elsewhere in the world, but they are truly independent. There is a big difference between independent banks with an independent system for appointing their governors and the system introduced by the Chancellor, whereby the Governors of the Bank of England are appointed by him. That must call into question, at least to some extent, their true independence.
Mr. Murphy: The Government will decide what is in Britain's best economic interest. There are other models in the world, but I find it slightly odd that Conservative Members should encourage us to mimic European examples, when they are so hostile to much else that is European. The structure of the Monetary Policy Committee and the way in which the Bank operates seem to be very popular among the business community.
Mr. Geraint Davies: Long-term interest rates are at their lowest for 40 years. Long-term interest rates are an expectation on the part of the financial markets of future inflation. The markets are saying that they accept the current structure of the Bank of England as independent of political interference and believe that it will generate stable and low levels of inflation in the long term. That is precisely what the Government and the country want.
Mr. Murphy: My hon. Friend is characteristically accurate, and furthermore, if the Conservatives intend to reverse the Bank's independence if they come to power, it is clear that the business community has faith that they will not come to power, even in the long term.
My right hon. Friend the Minister of State talked about the skills gap and upskilling, and Conservative Members talked about downskilling. I was delighted to hear him reaffirming the Government's commitment to the university for industry, and telling us how many people will benefit from it and on what time scale.
We have had the traditional jousting on the one issue in which the Conservatives seem interested in this Parliament: the single European currency. I was pleased to hear again that the Government are committed in principle to joining a successful euro. That is important because it will set the economic framework and give advance notice to those who compete in business, in this country and internationally. We have laid down five economic criteria that will stand the test of time, in contrast with the Opposition, whose only test is time. That is an important difference between us.
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My right hon. Friend the Minister eloquently described new Labour's belief that social justice is the natural partner of enterprise and innovation. Social justice is not in competition with enterprise and innovation, although the hon. Member for Rutland and Melton gave the impression that he thought that that was the case when he said that small businesses must have their social costs cut. In his mind, every great social advance that the Government have introduced seemed to be a hindrance to small businesses and the economic competence and innovation of this nation.
Mr. Gareth R. Thomas: Is my hon. Friend aware that many small businesses campaigned for the introduction of the national minimum wage because they did not wish to be undercut by other employers?
Mr. Murphy: My hon. Friend is right, and I am sure that he talks from his experience in Harrow. In my constituency, it is my experience from the many events that I organise with my local business community that the national minimum wage is indeed popular, with businesses and with the many thousands of people who benefit from it.
Mr. Butterfill: To suggest that small businesses are in favour of the national minimum wage is extraordinary. I would like to know which small businesses the hon. Gentleman means, because the National Federation of Small Businesses is implacably opposed to it and has claimed that it will do its members immense damage.
Mr. Murphy: In tests of opinion, small businesses have shown their support for the national minimum wage. I know from my experience and from talking to hon. Members from both sides of the House that small businesses have been ahead of the game in preparing for the national minimum wage, adapting to it and benefiting from it, because it has given a boost to our economy.
In discussions about the national minimum wage, I am always reminded of a hustings held during the general election campaign in Barrhead in my constituency, at which a security guard said that he was paid less than £1.50 an hour. He was married with a family, but it is not acceptable for anyone to be paid £1.50 an hour. It is not acceptable that the market allows that to happen or that a Government allow that to happen. I hope that the gentleman comes back to the hustings in a couple of years and asks me again what we will do for the low paid. I also hope that he is no longer doing that job and that his economic position has improved, but I will look him in the eye and tell him the truth: we made a commitment to introduce a national minimum wage, and we have done so. What I do not know is what my Conservative opponent at those hustings will say. Will he tell the audience that his party would abolish the national minimum wage, adjust it or leave it alone?
Mr. Dawson: In an earlier exchange, the hon. Member for Rutland and Melton (Mr. Duncan) studiously avoided answering that question about the national minimum wage. One of my local employers said that the national minimum wage and the trade union legislation were important because they cut out the cowboys, but the hon. Gentleman seemed to be proposing a cowboy culture in British industry.
Mr. Murphy: My hon. Friend is right. The vast majority of small businesses—the honest, hard-working

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ones—are eager to compete on an equal footing and to pay quality wages to quality staff. There is no future for those businesses, or for our country, in paying £1.50 an hour to people with families who cannot survive on such wages.
At the hustings in two years' time, I will say that the national minimum wage has been a great success and it has benefited many thousands of people in Scotland and in my constituency. However, I still do not know what my Conservative opponent will say. I will ask the question repeatedly throughout the campaign, but perhaps the hon. Member for Rutland and Melton can give us the answer now. He was asked repeatedly today, and we have asked the Conservatives repeatedly in the past year, what their position now is on the national minimum wage. It is not good enough for the hon. Gentleman to say that he supports the Conservative policy on the issue when no one knows what that is. I invite him to intervene to give us an inkling about that policy. It is not a hard question—would the Conservatives keep the national minimum wage or abolish it?
We have heard much criticism of the national minimum wage because, it was claimed, it would lead to wage inflation and unemployment. I do not know whether Conservative Members have had time to reflect on those predictions of doom and gloom, but we still have low levels of inflation and of unemployment. I accept that unemployment levels are still too high, but we are working to bring them down, and they are at a 20-year low. Will the Conservatives now admit that their gloomy predictions about the national minimum wage were wrong?
The Conservatives also predicted that the new deal would not work and would cause economic disaster, but we heard only this week that 100,000 young people have benefited from it. Youth unemployment has been halved. We had a five-year plan to reduce youth unemployment and to achieve it in two years is a better performance than that of any Government in history. The Government should be given the respect and credit they deserve for that.
Mr. Gareth R. Thomas: My hon. Friend is right to say that the new deal is helping to combat youth unemployment. He will also be aware that it is beginning to combat the huge skills gap that hinders enterprise and innovation. We need to continue to focus effort on that skills gap, because the 1998 London employer survey revealed that some 83,000 people are considered by their employers to lack skills, especially in computer literacy.
Mr. Murphy: My hon. Friend's point illustrates the difficulties that the Government inherited 100 or so short weeks ago. We are trying to meet the challenge of upskilling and the new deal is achieving that for those who have been vulnerable and neglected in the past. A generation was forgotten and ignored. Many hon. Members have experienced unemployment, and, when I was a teenager, I was unemployed for two years. What was offered to me was a very poor relation—if it was a relation at all—of the new deal. Young people felt alienated from what the Conservative party was offering them as an opportunity. It was not a pathway to a skill to get them out of unemployment.
I know that from first-hand experience. I went to college as a mature student with many people who had been unemployed and they took that route because the
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schemes offered by the Conservative Government—unlike the new deal—were not worth the investment of their time and energy. Many young people went to college to gain the formal qualifications that they were not able to get the first time. Social justice is the partner of enterprise and innovation, although Conservative Members seem to think that it is their competitor.
I am delighted that the working families tax credit—another aspect of our social justice policy—will benefit 1.5 million working families throughout the UK, increasing the income and support available to 3 million children. Add that to the record increase in child benefit, and we can see how much has been done to help working families.
I do not want to be too party political, but it is incumbent on the Opposition to say whether they will abolish WFTC or whether they will, when they meet working families in their constituencies who used to receive a poor deal, remind those constituents of Conservative opposition to WFTC, which gives an average £24 more to every working family. Will they tell their constituents that they voted against that, and that they think that it a bad idea? I shall certainly remind mine of Labour's view.
Social justice is a cornerstone of domestic enterprise, but our social justice agenda can also help international innovation and enterprise, particularly by helping to write off more than £100 billion of international debt through the G8. We can help to free countries to provide opportunity and to benefit from innovation and enterprise.
I have spoken about the great Scots inventions of the past. We all know, however, that invention is not always as creative or as helpful as it might be. In some cases, Governments or enterprises may even be too supportive of inventors. Governments must support science and innovation, but they must be careful. Some unusual grants have been handed out, and we have all read that the Institute of Food Science and Technology received £200,000—£100,000 of it public money—to investigate why cornflakes become soggy when milk is poured on them. I am not interested in that, even when I am having breakfast, and the grant was perhaps not absolutely sensible.
In comparison with some international examples, however, that project equates in importance to Einstein's theory of relativity. A Scandinavian research grant was given to scientists examining the impact of wet underwear on thermo-regulatory responses and thermal comfort in the cold. Perhaps the Minister can tell me what that was all about. I mean no slight to our Scandinavian counterparts in saying that we should not become involved in aiding such research. The university of Minnesota was given funding to investigate patient preferences for waxed or unwaxed dental floss, another debate that excites me not at all.
Many challenges face enterprise, and much necessary research can be done. We must provide finance and seedcorn support if we are to remain at the cutting edge of world invention. We should learn from international experience. We should seek to turn today's school children and students into the entrepreneurs of tomorrow. Some 50,000 young people set up in business every year, although the proportion of women who run small businesses is lower than it should be, perhaps because support has not existed in the past.

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Analysis of the attitudes of young people is revealing. More than 40 per cent. are willing to work 60 hours a week, undercutting oft-quoted criticism of the youth of today. Many felt that they were not taken seriously because of age discrimination and the view that young people should work at junior jobs in business rather than owning one.
I pay tribute to the Prince's Youth Business Trust, which provides seedcorn finance and professional support for those aged 18 to 25. In Renfrewshire, more than 300 young people have established businesses with that support. Nor have those businesses proved short-term operations: 83 per cent. of them remain in business after a year, and more than half are still in business after more than three years. The PYBT enables young people to put down lasting roots in the business community. The average age of the people involved in my constituency is 23, and just over a third of them are women. Many people may just have left university at that age, and it is remarkable that they are in successful business.
Before those people received the support of the PYBT, 80 per cent. of them were unemployed. It has provided them with a pathway out of poverty and unemployment into work, but, far more, a pathway towards ownership of their own businesses. Some 20 per cent. of those people had no formal school qualifications, but they have set up and run their own businesses.
The Government are providing, I think, £50 million in matching funding for the Prince's Trust over the next five years to support 30,000 young people who are setting up their own businesses. My right hon. Friend the Minister for Employment, Welfare to Work and Equal Opportunities has said that the Prince's Trust is remarkable in providing support for people who had not previously had economic breaks, perhaps coming from families with lower income backgrounds. The Government have undertaken several initiatives in Renfrewshire. Renfrewshire Enterprise is supporting families from poor backgrounds, particularly in Barrhead, a town famous principally for one business—Shanks and Co., the world-renowned producer of toilets. Indeed, when I first mentioned that business in the House, I almost prompted an unprecedented intervention in a maiden speech. Unfortunately, Shanks no longer produces toilets, but we are trying to reignite the entrepreneurial spirit in that industrial town.
Renfrewshire Enterprise is doing much through the Leven Valley Partnership, which is aimed at motivating children about what is possible in the world of business. One of the most interesting initiatives, for me and for people in Barrhead, is the involvement of Watt Nicol as a motivational speaker for those youngsters. Perhaps not everyone would recognise the name, but if I say that she was the successor to Eileen Drewery, the English football team guru, it may seem more relevant. Eileen Drewery was used by Glenn Hoddle in his period of failure as England manager and Kevin Keegan enlisted the support of Watt Nicol. Renfrewshire Enterprise is doing the same. Since the News of the World revealed Watt Nicol as Kevin Keegan's secret weapon, England have not won a match. I hope that my young people are more successful than the England football team.
Mr. Dawson: Hear, hear.
Mr. Murphy: My hon. Friend may say that, but it is not every day that I wish the England football team well. In its current predicament, my best wishes are appropriate.
The Government's White Paper "Targeting Excellence: Modernising Scotland's Schools" identified the need to encourage the involvement of young people in the world of enterprise. It stresses that we must invest in our youngsters to invest in our future. Much is being done, but I believe that more can be done. There are some good examples throughout the country and in my constituency.
The education for work initiative, piloted and supported by East Renfrewshire council and Renfrewshire Enterprise, has provided many opportunities for young people. I would be interested to hear whether hon. Members have had similar success with that initiative in their constituencies. The achievers international initiative is about setting up companies in schools so that young people can experience the spirit and responsibility of enterprise. St. Luke's and St. Ninian's schools are involved. I attended the launch at St. Ninian's. It set up a trading company for jewellery, exporting Charles Rennie Mackintosh jewellery to Nigeria and importing ethnic Nigerian jewellery. It did well and led to a thriving business in the school. Learning from that experience, 11 primary schools in my area have signed up to achievers international next year. I look forward to visiting primary schools to watch, listen and perhaps learn from young children aged 9 to 11 with the responsibility and opportunity to run their own company. That will be a liberating experience.
Under the education for work initiative, all senior pupils will be given a chance of work experience. There will be industry awareness days. Many schools in my constituency have been successful with the young enterprise initiative.
A key factor has been teacher placements in industry. I want continued Government support for that initiative. It is crucial that young people experience industry and enterprise, but it is imperative that teachers and, in some parts of the country, classroom assistants, get first-hand experience—if they do not have it already—of business and enterprise to pass on to pupils. We all pay tribute to the vast majority of teachers, who work diligently and hard. If we expect schools to become involved in the initiative to any great extent, we must support the teachers. I know that, in my authority, that is already happening. We expect nearly 4,000 teachers to be involved over the next three years.
I am keen on the agenda of encouraging young people to become involved in business and I am proud of the Government's efforts so far. The schools enterprise programme in Scotland operates under the banner "From Primary to PLC". Eighty per cent. of primary schools and 60 per cent. of high schools in Scotland are becoming involved. Seven of Scotland's universities offer modules in enterprise and entrepreneurship, regardless of faculty. They are trying to imbue the entrepreneurial ethic into our students. The programme has led to a 35 per cent. increase in the number of people interested in starting their own business in Scotland. It involves not only students with a marketing background, but engineers, social scientists and arts students.
So much is happening within this agenda. There is good news about what young people are doing, when given the opportunity. It is incumbent on any Government,

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particularly this one, to provide the economic opportunity in the community and the business world by providing a stable economic environment. We have done much to achieve that nationally, but we must also provide support locally in community and youth groups and schools.
We talk about lifelong learning. Rightly, we are turning that slogan into a policy and, beyond that, into a reality. Lifelong learning does not mean only literacy and numeracy. We accept that the weakness has been that we did not encourage young people to become literate and numerate early enough. That is not a controversial point of view, and we are now building on that. If we are to deliver enterprise success in lifelong learning, we have to start early by involving primary and secondary schools and universities.
For me and the new Labour Government, enterprise and opportunity are equal partners with social justice. We deliver economic opportunity simultaneously with the achievement of social justice.
11.37 am
Mr. David Chidgey: The hon. Member for Eastwood (Mr. Murphy) gave us a thoughtful and detailed view of life in his constituency, for which I am sure we thank him.
I am pleased that we are having this debate. We spend much time in this Chamber passionately debating how much or how little we should spend on the great things in our society such as health, education, social support and welfare. Although we can argue at length about how much or how little we should tax and spend, we must first generate the revenue, however. We have to be able to raise taxes. I suggest that taxes should come from highly skilled and highly paid workers, and from highly successful and profitable businesses. There is not much point in arguing about how much, how little or how well we should distribute wealth unless we have first created it.
The Government's role in business is straightforward. It is not to impose the centralist command and control structures that have failed dramatically in other parts of world. Nor is it their role entirely to ignore business by taking a libertarian or laissez-faire view relying totally on market forces. Any Government who are serious about creating wealth must concentrate on the key areas in which they can create the right framework. We could start by looking at the skills gap, and the need for Government to help nourish and nurture the essential seedcorn of human resources. Government must consider investing in research and development, the green shoots of innovation for our industry and commerce. Most importantly, we need to support our growing companies—our small and medium-sized enterprises. We need to develop a climate in which expertise and enterprise can flourish. Only then will we start to reap the benefits of sustainable economic growth; we can then start to improve—perhaps beyond any conceivable measure—the investment that we need in health, education and social services.
As the trade and industry spokesman for the Liberal Democrats, I have the opportunity to meet many company managers in different types of organisation throughout the United Kingdom. There are many shining examples of successful enterprises in our aerospace and pharmaceutical industries—both are world—class industries. However, at the other end of the scale, there are many small firms—often employing
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fewer than 50 people—tucked away in the corners of industrial estates, creating and producing advanced products. From seemingly small beginnings, those products are capturing world markets. However, the basic problem is that there are not enough of such enterprises to create wealth sufficient to sustain the level of economic growth that will meet the aspirations of the people whom we represent in all the corners of the kingdom.
To date, the Government's macro-economic policy has not been of particular help. In yesterday's Financial Times, it was reported that the United Kingdom's traded goods deficit widened from £1.91 billion in March of this year to £2.18 billion in April. The first quarter of this year is looking pretty disastrous. Further analysis of those figures reveals that, in April, the deficit in our trade with the European Union rose to £812 million. That is double the level at which it stood six months ago, and is the worst figure since August 1990.
In response to those figures, the chief economic adviser to the CBI said that those data highlighted one of the consequences of staying out of monetary union. She stated:
"Exchange rate volatility is the price you pay for being out of the euro."
That is a salient point in our continuing argument as to the benefits of EMU.
Mr. Butterfill: Will the hon. Gentleman give way?
Mr. Chidgey: I thought that that might raise some interest from the Conservative Benches. I am delighted to give way to the hon. Gentleman.
Mr. Butterfill: Does the hon. Gentleman think that the euro, which has fallen by about 11 per cent. since it was launched at the beginning of this year, has been an example of successful monetary integration to date, or does EMU still have some progress to make?
Mr. Chidgey: I know the hon. Gentleman well enough to realise that he makes a serious point, so I shall give him a serious answer. On reflection, I am sure that he will acknowledge that, over time, there are significant changes in currency exchange rates—one finds examples of that with the dollar and with sterling, both of which have moved in value by about 50 per cent. over a 20-year period. One has to consider the euro in a longer-term context. Yes, 11 per cent. is a significant change, but that is not a serious problem if we take a long-term view of the fluctuations in exchange rates.
As a further response to the hon. Gentleman's intervention, I point out that, since August 1996, the pound has risen by 23 per cent. on a trade-weighted basis. That has been a disaster for UK exporters. It is no good blaming that problem on the crises in the economies of Asia, Brazil and Russia. It is important to remember that the UK exports more to the Netherlands than to those three trade areas put together.
We should pay close attention to the Treasury's own forecasts of business opportunities for the UK. According to the Treasury's figures, opportunities to get more business for the UK in our key markets overseas are growing at 6 per cent. a year, yet the take-up of those business opportunities by UK businesses is growing at

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only 0.5 per cent. That is most worrying; it illustrates the problems faced by our business and commerce. We are not grasping the opportunities that exist in our key, strong markets.
The Government have to take some of the blame for allowing the pound to rise to the levels to which it has risen during the past few years, and for the growing trade deficit that we are experiencing this year. However, we must be fair. The problem did not start with the Labour Government; it can also, in quite large measure, be laid at the door of the previous Conservative Administration. Figures produced by the Library in relation to trade deficits over the past 25 years show that, since 1974, our balance of trade has been in surplus for only seven years. That has resulted in a net deficit in trade that is in excess of £80 billion at current prices. If that is merely part of the economic cycle—as we often hear when we discuss trade deficits and surpluses in this place—25 years must be the longest trade cycle recorded in history. That legacy reflects the lack of understanding of previous Administrations, over a long period, of the importance of innovation and enterprise to our economy's ability to achieve sustainable growth. Long-running trade deficits underline the long-term ills of the UK economy, the long-term problems for UK trade and Britain's failure to match our competitors in innovation and enterprise.
In relation to the problem of innovation shortfall, an interesting survey was produced for the European Commission. I am sure that the Minister will have seen it. It is a survey of 12 countries in the European economic area entitled "Eurostat Statistics in Focus, Research and Development, No. 2/99—Community Innovation Survey 1997/98". I am sorry to be so pedantic, but I am sure that the Hansard reporters will want that in detail. The survey shows that the largest proportion of innovative enterprises is in manufacturing. It offers the following definition:
"An innovative enterprise has either introduced new or improved products on the market or introduced new processes during the last three years."
The survey found that large enterprises—those with more than 250 employees—were the most innovative. That illustrates the point that, although we realise that the engine for growth in our economy is the small to medium-sized enterprise—the smaller firm—such firms have huge problems in grasping opportunities to be innovative, to show enterprise and to succeed.
The real point of mentioning the survey is that, in its results, it is apparent that the UK is behaving and performing poorly in relation to our competitor nations in the EU. We came a poor fifth for innovation in both the manufacturing and the service sectors. When it came to spending on innovation—innovation intensity, to use the phrase in the survey—the UK again came fifth in manufacturing. However, there was a ray of light in respect of services where we came first in innovation intensity, so we are getting something right.
Mr. Butterfill: The hon. Gentleman should consider other comparisons with the EU, such as unemployment levels and the rate of growth in the economy. In those matters, the UK appears in a rather better light.
Mr. Chidgey: I do not disagree with that comment for one moment. However, as I develop my speech, I shall
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illustrate my concern that we shall not be able to achieve growth in our economy unless we grasp the key issue that we must be more innovative and more enterprising. It is important to make comparisons with other nations with which we compete, not just in Europe but elsewhere. I shall come to that as I develop my point.
The survey showed that the key indicator of impact on innovation was the relative share of turnover in new or improved products. In that respect, the UK could manage only eighth place out of 12. That shows the scale of the problem. We in the United Kingdom are chugging along behind most of the European Union in innovation, but even the best in the EU lag far behind Japan. For example, for every 1 million ecu spent on research and development in the EU, Japan files twice as many patents as European industry. That is a measure of the lack of development of innovation in our economy and that of the EU, compared to our major competitors in the world marketplace.
Since 1985, the level of production in Europe has risen by only 10 per cent., whereas in Japan it has risen by 80 per cent. That is a severe handicap to business and employment, especially to the high-tech businesses, as the links between innovation, competitiveness and employment are becoming ever closer.
Finally, the survey confirmed that the companies that invested most in research were the ones that created the most jobs over the past 20 years. There is a pressing need, therefore, to step up innovation in this country.
From research, it is clear that we need to take action in three areas. The first is the promotion of a genuine innovation culture. The second is the establishment of legal, regulatory and financial frameworks that support innovation. The Government have been making noises this morning about how they hope to tackle regulation and set up a Small Business Service. I hope that that will go further than helping small business to understand and unravel the new legislation on the working families tax credit which, as the Minister for Small Firms, Trade and Industry knows, has not exactly been received with rapt enthusiasm in all corners of the House. We need a little more than that if we are to make regulations that help rather than hinder commerce. The third area that the Government must look to is how to gear research more to innovation, products and outcomes.
I shall deal briefly with the UK's business scenario and investment in research and development. The "Today" programme this morning quoted from a report from the Department of Trade and Industry that highlights the problem. If I understood what was being said at that early hour, it was reported that the UK's competitors were investing some 5 per cent. of GDP in research and development, whereas we invest only 2 per cent. of GDP in R and D. Worldwide, a quarter of all investment in research and development is in information technology, but in Britain very little is invested in IT, because we have very few firms that are still active in that sector. That is a cause for major concern.
Statistics provided by the Office for National Statistics "Business Monitor" for 1996 showed that, relatively speaking, only a small proportion of total investment in research and development is made by our smaller firms. That is extremely worrying. For example, 9 per cent. of investment in R and D is made by companies with fewer than 100 employees. For firms with a work force of 1,000 to 5,000, the level of investment is 38 per cent.

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That is an interesting difference. We clearly need to take action to nurture small and medium-sized enterprises so that they spend more on research and development. I recognise that the Government's proposals for tax credits will help, but we must do far more.
To Britain's cost, the vital role of science and engineering has been neglected. Within limits, levels of research and development expenditure remain the best overall measure of innovative activity. Figures from the Organisation for Economic Co-operation and Development show that over the past 20 years, at a time when most advanced industrial countries have been increasing their commitment to R and D, in Britain investment has been falling.
The fall in investment is widely based. Government support for academic research in science and engineering fell from 0.4 per cent. to 0.3 per cent. of GDP. The Government's own spending on research and development has been cut, and many departmental research facilities have been closed. Even more damaging, spending on innovation—the take-up and development of new technologies in industry—has been reduced. The DTI's innovation budget has fallen by more than three quarters, from £280 million in the mid-1980s to £66 million at 1996–97 prices.
The biggest failure to invest in research and development lies with industry. Whereas in most industrialised countries there has been an increasing commitment from industry to invest in R and D, the contribution made by British industry has fallen to 0.9 per cent. of GDP, lower than at any time since 1975.
Above all, there has been no clear-cut political strategy for investment in R and D over the years. The previous Administration's attempt in 1992 to provide a strategy through the appointment of a Cabinet Minister responsible for an Office of Science and Technology withered on the vine, apparently amid departmental wrangles. That office has been incorporated into the DTI. Despite the present Government's rhetoric about competitiveness and innovation, we are still not clear where the responsibilities lie and what the strategy is.
Mr. Butterfill: Will the hon. Gentleman give way?
Mr. Chidgey: Just one more time.
Mr. Butterfill: The hon. Gentleman has been extremely generous. Does he agree that, given the Government's rhetoric and their claim to be increasing research funding, it is extraordinary that last year, grants to the research councils were cut massively, to the point where many universities could not take on students taking masters degrees or PhDs in research-based subjects because the research councils' budgets had been cut so savagely?
Mr. Chidgey: I cannot confirm the hon. Gentleman's suggestion that student places have been cut, but I take issue with the Government on the way in which science and research funding has been cut across the board.
Although I welcome the commitment in the comprehensive spending review for an additional £1.4 billion over three years to be spent on research and development in the science base, that sum is not as great as it may seem. The £600 million to be spent on capital
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projects, of which half is to come from the Wellcome Trust, will begin to make good part of the backlog in re-equipping our universities, but we should not rely on the largesse of the private sector to make good what should be primarily a Government responsibility. Claims that the new money will provide £200 million extra each year for the science budget are wildly exaggerated. Once we adduce the allowance for inflation for the whole budget—approximately £60 million a year—we are left with £140 million of new money in the kitty.
Even after that injection of new money, United Kingdom science is still poorly funded compared with that of our competitors. Moreover, a good part of the money is directed to such schemes as the university challenge scheme, which is aimed not at pure research, but at encouraging industry and university links and other initiatives. I welcome those schemes, which are all good, and I am not criticising them, but I am worried about the fragmentation of effort, and that the process will do little to tackle the fundamental problem of industry's poor research and development performance. I am worried that the Government have yet to show my hon. Friends that they have a perceptive, pragmatic and progressive strategy for science.
I listened to the Minister of State with great interest. Much of what he said is welcome, as his words of enthusiasm often are, but I am still concerned about how far that will take us down the road that we need to take if we are to improve our competitiveness and enterprise. I refer Ministers to the statement made by the Secretary of State in the House on 10 March, in which he set out a raft of measures that would be introduced by the Government. Although I listened carefully to the Minister of State, I had difficulty in discovering whether the list outlined by the Secretary of State was being ticked off three months later—perhaps because of the Minister's accent, of which he is so proud.
Mr. Bercow: Is not part of the problem that, although the Minister of State—sadly, he is not in his place—stuck loyally to the Government line, he displayed not a smidgen of enthusiasm for the cause of deregulation? Does that not differentiate him, at least rhetorically, from the Secretary of State?
Mr. Chidgey: It is not for me to pass judgment on that analysis. I recall that the Minister of State showed great enthusiasm for deregulation, although I do not recall his being too specific about what he will do about it.
I do not want to delay the House for too long, although this is an interesting debate and a welcome opportunity to look at the real issues. For the benefit of the Minister, and if he will tolerate it, I shall outline a checklist. I may have missed something in passing—and if I have, I apologise—but we want to know how far the Government have got with their programme.
We were promised a strategy to encourage
"knowledge transfer"
and
"stimulate the flow of scientists and engineers into industry".—[Official Report, 10 March 1999; Vol. 327, c. 368.]
We are still waiting for that strategy. We were promised a Small Business Service. I shall return to that point, because we have made some progress this morning.

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Moving down my list, we were promised a study into international price comparisons, a framework for utility regulation, a modernised merger regime and a consumer strategy, to be published before the summer. We have recently had the longest day of the year, so we can declare that summer is truly with us. The Secretary of State's statement was long on what the Government would do, but we are still rather short of things that have been done. The House deserves a little more information and a progress report on how well the Government are doing.
The Small Business Service is a good idea and I welcome the Government's proposals, but I want more detail—something I can get my teeth into. We need to follow the American model and establish a national network of genuine one-stop shops. An alarming situation was revealed in the community innovation survey, which took in 5,000 firms of different sizes throughout the country. It asked about their involvement—[Interruption.] I hope that the Minister will listen to this point. I know that he has other things to do, but I hope he is taking this on board.
I repeat the point for the Minister's benefit. The survey asked 5,000 firms about their involvement with Government programmes aimed at encouraging innovation. Only 6 per cent. were participating in those programmes. We need a genuine one-stop shop based on the American model, which has 900 small business development centres across America serving more than 500,000 small firms in partnership with federal, state and local government and community and private sector groups. That ensures that small businesses get a fair share of Government contracts and, through working with banks and investment companies, that they have access to affordable finance. We can learn a lot from that practice and I hope that we will see some action from the Government, not merely a shopping list that is yet to be delivered.
There are many key issues with which we need to be concerned in respect of innovation and enterprise, but let me emphasise a few of them. We need to promote a genuine innovation culture. That will call for creativity, an enterprising spirit, a taste for risk-taking and a willingness to be socially and geographically mobile. We need innovation and enterprise in our manufacturing industry.
What action will the Government take to promote best practice, to encourage the development of efficient supply chains, to promote application of new technology and to develop beneficial regional relationships? The Secretary of State spoke of those intentions in March. I want to know how far we have got.
For small and medium-sized enterprises, we need to create a climate of easy mobility for key workers, such as researchers and engineers. Young researchers and engineers must be able to work and gain experience in other countries—initially, perhaps, within the European Union. I welcome the Government's promise of new availability of finance for SMEs, but what SMEs really need are fewer hidden taxes, less regulation and lower business transport costs. In that context, hiking up the national insurance contributions of the self-employed is especially unhelpful.
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What can the Government do? They can establish a legal, regulatory and financial framework that is conducive to innovation. They can seek improvements to the European patent system to reduce confusion and to prevent conflicting decisions being taken by different national authorities. The Government must really get their teeth into that.
The Government can extend help to enterprises and to researchers to protect intellectual property and combat counterfeiting. The opening arguments of the Minister of State were going the right way. I also welcome his comments on easier financing of innovation and encouraging venture capital funds to invest in the early stages of investment and innovative projects.
We also need robust information services to help individuals and enterprises to find out about sources of financing. I was horrified to find from the European Commission survey that only 6 per cent. of the firms surveyed in this country were taking part in Government programmes. If that is the best that we can do, what a waste of money and effort.
Finally, and most fundamentally, the Government can gear research to innovation. Too often in this country we develop a good idea, but never get it embodied into a product. The Government must find ways to step up research carried out in business; to encourage the setting up of technology-based businesses; and to intensify co-operative projects involving public research bodies, universities and industry, encouraging spin-off activities locally, regionally and nationally. The Government must address those key factors.
I have been speaking for more than half an hour. That may have become customary in this debate, but I believe that other colleagues would like to contribute, so I shall try to keep my closing remarks fairly short.
The Liberal Democrats have long recognised the importance of science and engineering in promoting competitiveness. In a world of global competition, the development of science-based industries is essential. Continuous adaptation and change are vital. When products quickly become out of date and skills and machinery become obsolete, we must adapt; we must change. The application of science and technology are integral to the search for sustainability. New technologies not only are more often research and energy efficient, but can be harnessed to develop more sustainable processes. We have a chance in this country to take a lead in developing such products and engineering processes.
We all know that high-quality education and training are essential to our competitiveness if we are to be part of the group of knowledge-based economies of the 21st century. However, we must put in the investment. As the Minister said, we must ensure that members of the work force—our human resources—have the skills to provide them with the opportunity to work for life.
We must support academic research as well as the bid-based research that seems so popular at the moment, because leading-edge research is not only the source of new ideas, but a training ground for those who can translate those ideas into innovative products and processes, and a strong science basis is an essential underpinning for the industries of the future. Governments should not shirk their funding responsibilities for science research.

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The Government should make a commitment to aim to increase the science budget for the United Kingdom, so that we again invest in science research to the same level as our industrial competitors in other parts of the world. We have sadly fallen behind in the past few years.
The evidence is clear: we are lagging behind in innovation and enterprise, and we have done so for at least the last quarter of the century. We are creating and developing an ever-deepening trade deficit. We need to address the key issues, and to promote genuine innovation in our industrial culture. We need to establish a legal, regulatory and financial framework that helps and does not hinder business. We need to gear research to innovation, so that ideas develop into products.
The Government have promised us action in these areas. Some of their proposals are welcome, but we shall reserve judgment until the promises and proposals are turned into policies that are in place and working to embrace fully the challenge of improving innovation and enterprise. No Government, whatever their political complexion, can afford to ignore that challenge any longer. The Government at least realise that there is a lot more to do. They will be judged on how well they do it.
12.11 pm
Barbara Follett: I welcome the opportunity to speak in this debate, but I must apologise because I shall have to leave before its conclusion. A long-standing constituency engagement calls me.
It is not often that the House has the chance to debate issues such as enterprise and innovation, which are more often the subject of academic debate. When I was at university studying economic history, we spent a lot of time learning about enterprise and innovation. Those concepts baffled and fascinated economic historians, who wanted to recreate circumstances similar to those that occurred in this country in the mid-18th century and gave the world its first industrial revolution. At that time, enterprise and innovation came together and were combined with an unusual run of good luck, which for Britain included good weather—highly unusual at any time in this country.
In the 20th century, there has been no lack of innovation in Britain. As my hon. Friend the Member for Eastwood (Mr. Murphy) reminded us, we owe much of today's technology to the British talent for innovation. Listening to my hon. Friend, one would think that all that talent was confined to the northern part of these islands rather than spread throughout them. In the past 60 years, Britain has given the world the computer and antibiotics, and has pioneered the life-changing work on the DNA helix.
Unfortunately, that innovative genius has not always had sufficient entrepreneurial follow through. That is why Europe's largest pharmaceutical research and development facility, which is situated in my constituency, is not British owned. That is why the huge computer defence and satellite companies, which are also housed in my constituency, are only partially British owned. We are good at innovation, but not very good at creating the climate of enterprise in which innovation can flourish. As the hon. Member for Eastleigh (Mr. Chidgey) emphasised, that is the challenge that we face today.
Only once in this century in Britain have we seen the cluster of circumstances that allows innovation and enterprise to combine to create a British-based boom. That
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was the boomlet in the 1960s, when innovative young people in the music and fashion industry transformed this country and its capital: it went from being lethargic to swinging. For a brief moment, they made the economy swing. Despite that mini boom, for Britain, the 20th century has been a century of relative decline. The challenge facing us is to reverse that decline by raising the sustainable rate of growth in the economy.
As my right hon. Friend the Minister pointed out, if we are to do that, we must foster innovation and encourage enterprise by creating macro-economic stability and an entrepreneurial culture. That is Government's role. I do not agree with much that is said by the hon. Member for Buckingham (Mr. Bercow), but I do not think that, in this instance, Government can do more than provide a stable framework in which that entrepreneurial culture can develop.
So far, the debate has concentrated on what is happening nationally. Let me say a little about the progress that has been made in my region, which is in the east, and which is one of the most prosperous and densely populated parts of the country. Over the past two years, there has been a change in its macro-economic stability. As any economist will confirm, such changes result from a combination of good luck and good management. I believe that we have had the good management, along with a certain amount of good luck.
The economic indicators for the eastern region show the results of both factors. We have the lowest interest rates for the past 22 years, employment is rising steadily and unemployment is continuing to fall. In January 1999, 73,000 people were unemployed in the region. Although that figure is still bad, it is 87 per cent. lower than the figure that obtained at the peak of unemployment under the last Government—573,000. Eighty thousand more people are in jobs than at the end of last year, and 100,000 people have been helped into jobs, work experience or training under the new deal. That is good for my region and particularly good for Stevenage, where unemployment has fallen by 60 per cent. over the past two years.
We must create an entrepreneurial culture. In the eastern region, we have pockets of terrible deprivation, some of which are housed by my constituency. We must give people the opportunity to innovate, and we must make the investment to back that innovation. I join my hon. Friend the Member for Eastwood in praising the work of the Prince's Trust; but the new deal has made a huge difference to the mood and the economy of my constituency. In Stevenage, 1,126 young people have already embarked on jobs, work experience or training.
Mr. Bercow: I note what the hon. Lady says about participation in the new deal and, presumably, the benefit derived from that participation. Given that people who take part in the training and education option are twice as likely not to find a job as to find a job, and given that youth unemployment has risen in every quarter since the introduction of the new deal nationally in April 1998, why cannot the hon. Lady admit that this flagship has sunk?
Barbara Follett: Because it has not sunk—particularly in my constituency, where most of those who took advantage of the new deal needed a great deal of training and work experience. Those people were very unlikely to

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obtain jobs without the new deal; they are now very likely to obtain jobs as a result of it. Indeed, many have already obtained jobs.
The entrepreneurial culture in the east of England has been greatly helped by several Government initiatives, some of which came from the last Government. The East of England development agency has been particularly helpful in developing a vision of the eastern region as one of the leading knowledge-based areas in Britain. The Business Link in Hertfordshire has helped firms to become internationally orientated, information technology-literate and innovative. That strategy has been developed within the framework of the strategy of the regional development agencies.
In my constituency, the Stevenage business initiative—which was established by Hertfordshire university, Hertfordshire county council and Stevenage borough council—has provided a wealth of information to small businesses. Each year, it helps between 50 and 100 businesses to set up in Stevenage and north Hertfordshire, bringing employment to the region and providing the mentoring that so many entrepreneurs need.
The Stevenage business initiative has also started a business incubation project, in which we are helping—with help and money from the Department of Trade and Industry—small businesses to develop their businesses on premises owned by Stevenage borough council. We are helping people to learn how to manage their businesses. Britain's main failure has been that, although people may be sufficiently innovative to develop a new product, they probably will lack the managerial skills necessary to ensure that the product is manufactured. In Stevenage, we are doing a great deal to counter that.
The Stevenage business initiative also makes annual enterprise awards to businesses that succeed. This year, I was lucky enough to present an award to 30 young people who had succeeded in a variety of businesses, making a difference not only to their lives, but to the life of their communities.
Innovation and enterprise are vital to our country's future. For far too long, we have derided those who have taken risks—taken their lives in their hands—by not only inventing new and wonderful things, but showing the courage to take their products into the marketplace, to try to sell them.
Britain has very few statutes dedicated to entrepreneurs, just as we have very few statutes honouring engineers. I hope that one consequence of the change in our entrepreneurial culture will be an end to some of our stuffy traditions and ways of looking at enterprise, so that we can start to honour some of those who have helped to make Britain great.
12.22 pm
Mr. John Bercow: It is a pleasure to be called to speak in this debate. I am particularly delighted to follow my hon. Friend the Member for Rutland and Melton (Mr. Duncan), whom I should like to congratulate both on his appointment to the shadow Trade and Industry team and on his outstanding opening speech for the Opposition.
My hon. Friend is a formidable and forensic critic of the Government, and an equally formidable exponent of the Conservative case. I think that both Government Front
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Benchers and Government Back Benchers will discover that, to their cost, in the months ahead. He flayed them this morning. If precedent is anything by which to judge, he will flay them before breakfast, before lunch, before tea, before dinner and before he consumes his cup of Horlicks or Ovaltine before retiring to bed at night. I am also delighted to follow the hon. Member for Stevenage (Barbara Follett).
It is essential to put the debate in context, not least for small firms—which is why the presence of the Minister for Small Firms, Trade and Industry is so welcome. We talk about small firms, and everyone says how critical they are, but none of us adequately emphasises their centrality to enterprise and innovation.
Specifically, we should recognise that companies employing fewer than 100 people constitute 99.6 per cent. of British firms, employ 50 per cent. of the private sector work force, and produce two fifths of the nation's output. That is the measure of their centrality within the British economy. They are the key engine of economic growth, the major source of new employment, and the seedcorn of our current and future prosperity.
The second point that needs to be understood about small firms is that they are in difficulty. Lately, there has been an exponential rise in business failures, which must be a source of concern to hon. Members on both sides the House.
The Minister will be aware that in the first quarter of this year, relative to last year, based on the findings of the respected credit information agency Dun and Bradstreet, there has been a 9 per cent. rise in company liquidations. That in itself is a matter for anxiety, but when the House reflects on the fact that for small businesses the increase in liquidations is 32 per cent.—three and a half times the rate of increase in liquidations generally—the serious plight of small companies becomes abundantly clear. On one hand they are important because they employ so many people, are the engine of growth and are crucial to our future prosperity; on the other, they are suffering disproportionately from a general increase in liquidations. Therefore it is important for us to focus not just on what the Government can do to assist small businesses by active measures, but on what they can refrain from doing and thereby assist the development of small businesses.
I want to focus on one particular aspect of public policy that has been touched on by other hon. Members. I shall elaborate on that feature, namely regulation and the burgeoning over-regulation of British small and medium enterprises.
Conservative Members differ fundamentally and conceptually from Labour Members. The Conservative party takes the view best expressed by my right hon. and noble Friend Lord Lawson of Blaby that the business of government is not the government of business. That is the fundamental distinction.
As my hon. Friend the Member for Rutland and Melton so appositely observed, the trouble with Ministers is that they mouth the words, but they do not understand them; they utter the sentiments, but they do not will the means to translate those sentiments into practical policies of benefit to the enterprises on which our prosperity depends. That is the problem. My hon. Friend characteristically, with that self-effacing charm for which he is renowned, understated his case. I have had words with him before about his unfailing tendency to understate his case, to be

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a little on the modest side and a trifle too generous to Ministers. I hope that I do not have to upbraid him again on this point—I do so now in front of the whole House—but his gentle instincts got the better of him again and he was a bit soft on Ministers.
The problem seems to be that many Labour Members do not believe in anything in respect of enterprise, innovation and small businesses. Some of us entered public life because we have passionate beliefs, intellectual convictions and gut instincts. None of that is evident from Labour Members and that is part of the problem. Because they do not know quite what to do, they tend to go back to what Labour Administrations have always done in the past.
I draw attention to two aspects of regulation: the rhetoric of Ministers and the reality of policy. I should like to dwell on the rhetoric of Labour Ministers. That rhetoric is important; we have to understand it and see whether policy matches up to it or contravenes it.
The first statement to which I draw attention is in the form of a foreword to Labour's business manifesto entitled "Equipping Britain for the Future" and published on 11 April 1997, pretty well at the start of the general election campaign. It was composed or at least signed by the Chancellor of the Exchequer, the right hon. Member for Dunfermline, East (Mr. Brown), then shadow Chancellor. For the delectation of my hon. Friends, I shall quote him. He said:
"We will not impose burdensome regulations on business, because we understand that Successful businesses must keep costs down."
We are grateful for that. The right hon. Gentleman is a sinner who repenteth. He underwent an apostolic conversion, suddenly discovering what the Conservatives had been saying for a long time. We must not be narrow, ungracious or unwilling to recognise the possibility that Labour Members can see the light, change their minds and chart a better course for the future. My hon. Friend the Member for Rutland and Melton was ready to acknowledge that and so am I. I took that statement at face value and waited to see whether it was put into effect.
On 7 November 1997, the hon. Member for Hornsey and Wood Green (Mrs. Roche), who was then the Minister for Small Firms, Trade and Industry—the predecessor of the hon. Member for North Swindon (Mr. Wills)—said:
"We are moving purposefully and very speedily to bring about simpler government and cut red tape, which is a real barrier to growth for small businesses."—[Official Report, 7 November 1997; Vol. 300, c. 483.]
That was an unexceptional comment that many of us could have made some years earlier, but I welcomed it. The problem is that it was not in accordance with what the Government were doing.
The right hon. Member for Hartlepool (Mr. Mandelson), the former Secretary of State for Trade and Industry, who unfortunately is not favouring the House with his presence, made a similar statement almost 19 months into the term of office of this Administration. In one of his last pronouncements from the Dispatch Box, on 25 November last year, he said:
"we have no intention of introducing any legislation that presents a burden on business and reduces the competitiveness of British firms."—[Official Report, 25 November 1998; Vol. 321, c. 214.]
The trouble is that the Government have been burdening business with additional regulations, costs, legislation and red tape since they came to office.
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Approximately 2,500 additional regulations have spewed forth from the machinery of government in that time. That is a classic illustration of the point that my hon. Friend the Member for Rutland and Melton made earlier that Ministers mouth the words, but do not will the means. Worse than that, they do not merely leave a vacuum, but directly contradict those words.
I would like to be charitable and think that the right hon. Member for Hartlepool was blissfully ignorant of the fact that his words were contradicted by the reality. That would be charitable in one sense, because it would mean that the right hon. Gentleman was innocent of bad motives, but it would be uncharitable—and probably inaccurate—in another respect, because it would imply that he was stupid. There are many sins of which I accuse him, but political stupidity is not one of them. He must have known that what he said was not true and that the Government were implementing measures that directly contradicted the reality.
The second feature of the debate is the reality of the Government's record. My hon. Friend the Member for Rutland and Melton dissected the record earlier. I should like to develop that dissection.
The first example is the working time directive, which will cost British businesses approximately £2 billion a year. British businesses received from the right hon. Member for Hartlepool 45 days' notice of the requirement to implement that directive. If that was not a calculated insult to small and medium-sized enterprises in the United Kingdom, it is difficult to know what is—a mere six and a half weeks' notice of implementation, and wholly inadequate consultation on the regulations.
Moreover, the regulations accompanying the measure, and necessary to give effect in British law to the working time directive, took up 71 pages of A4 paper. It is frankly abominable that a Labour Minister should commit that folly in 1999, and then have the chutzpah to talk about believing in the cause of enterprise, innovation and the growth of small businesses.
The second example is the national minimum wage. That will cost British businesses approximately £2.7 billion a year. British businesses were given three weeks' notice of the requirement to implement the national minimum wage. The regulations governing the implementation of that wage took up fully 112 pages of A4 paper. Small businesses were expected to contend with, and give effect to, those regulations with only three weeks' notice. We all know that regulations are disproportionately burdensome for small companies—in terms of compliance with tax regulations, for example.
Mr. Dawson: Is the hon. Gentleman saying that he would advocate strongly with his party that the Conservatives should go into the next election calling for the abolition of the national minimum wage? Does he support the cowboy economy that has been so graphically described to me by one of my business constituents, where people are exploited at work?
Mr. Bercow: No, I do not support exploitation at work. Regrettably, I did not have the pleasure of the company of the hon. Member for Lancaster and Wyre (Mr. Dawson) during the Committee's consideration of the National Minimum Wage Bill. It would have been a delight to welcome him. Had he been on the

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Committee—I accept that it was not his fault that he was not—he would have heard me explain at some length how, when I was in the private sector, I took great pains to ensure that a colleague who was wrongly denied a bonus by her employers, and was too cowed to pursue the point, got what she was entitled to receive. Some of my hon. Friends went so far as to suggest that I was a champion of the under-privileged. It is not for me to overstate my case to the House. However, most good employers who can afford to do so pay decent wages and afford their employees decent conditions, and that is right.
It was the specific point about the enormously burdensome application of the minimum wage and the poor notice of the imminent burden on which I was focusing. I understand the eagerness of the hon. Member for Lancaster and Wyre, eagerness to know how the Conservative party intends to fight the next election but, with great respect, we are only two years after the last election. The hon. Gentleman is a person of good intentions, but it is a bit rich of him to expect us to provide him with an advance copy of the next Conservative election manifesto. If that is what he is requesting, I am afraid that I must politely decline.
Mr. Wills: We want to know the Conservative party's policy on the national minimum wage. I am sure that the hon. Gentleman knows what he thinks about the national minimum wage. Would he repeal it if the Conservatives ever came back to power?
Mr. Bercow: I am disappointed. I thought that the Under-Secretary had got the point the first time, but he did not. The Conservative Opposition have made it clear that we thought that it was unwise to introduce a national minimum wage of a statutory character. We were joined in that by the Federation of Small Businesses, the Forum of Private Business, the Confederation of British Industry, British Chambers of Commerce and the Institute of Directors. If the Under-Secretary wants to know now what we intend to say at the general election, he is inviting me to do something that it is not reasonable to expect me to do.
We will make clear our intentions at the next election. The Under-Secretary is ordinarily a patient fellow, but I know that there are beads of sweat upon his brow in eager anticipation of discovering what we intend. However, I hasten to assure him that, if he is patient, Pandora's box will be opened in due course. He need not be concerned on that point. We will have a policy, clearly set out, to appeal to the electorate, to business and to all reasonable-minded people who know the cost of what the Government are doing.
The Minister sought to assuage the concerns of the House about works councils by saying that there is no proposal on the table. He and the Under-Secretary ought to know of the enthusiasm of Padraig Flynn and others in the European Commission for introducing proposals for national works councils. It has been variously suggested that such councils would apply to firms with fewer than 50 or even as few as 20 employees.
It is no good the Minister implying that the Government would successfully fight works councils by use of the veto, as I hope that he is sufficiently well informed to
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know that they do not have a veto, because they foolishly signed up to the social chapter, the opportunity to do which the previous Government wisely eschewed. Much of the legislation arising from the social chapter is determinable by qualified majority voting, so we have no veto.
The first President of the Board of Trade in this Government, now the Leader of the House, told the Select Committee on Trade and Industry that she was opposed to national works councils. She then went into the lions' den and appeared on the BBC's ""On the Record", where she was interviewed, if memory serves me correctly, on 9 November 1997 by Jonathan Dimbleby.
There was a most interesting exchange. Mr. Dimbleby pressed her on works councils and she reiterated her opposition to the plans being mooted in the Commission. He asked what she would do if the Commission pressed ahead and she was outnumbered, given that the matter was determinable by qualified majority voting. It is only right to record for posterity her legendary response. She said, "Well, er, we shall see how things go."
Mr. Wills: The hon. Gentleman has just said that about the national minimum wage.
Mr. Bercow: I thought that my answer was a little more lucid, and it did not include an "er".
The right hon. Lady had no idea what she would do. The concern that my hon. Friend the Member for Rutland and Melton raised about works councils remains very real and very worrying for businesses the length and breadth of the United Kingdom.
The administrative regulations relating to the working families tax credit will have a damaging impact on small businesses. Then we have the child care credit, the disabled persons learning credit and the student loan repayment administration regulations. Whatever the intrinsic merits or demerits of those measures as public policy, they all entail a shuffling off of responsibility from Government agencies to beleaguered small businesses.
On top of everything else with which those businesses have to contend—including the macro-economic climate, international trading conditions and local employment markets—they are faced with damaging imposts from a Government who are insensitive to, and usually unconscious of, their needs.
Even if firms do relatively little cross-border trade, they have to comply with the regulations on self-assessment for transfer pricing, and the perverse manner in which the Inland Revenue operates is such that the normal principle that one is innocent until proven guilty does not apply. It is necessary for small firms to demonstrate compliance with the regulations and they are assumed to be guilty unless they are able to demonstrate that they are innocent to the satisfaction of the bureaucrats.
I have mentioned several serious issues and there are many others with which I could favour the House if only there were time to do so.
Mr. James Gray: Go on!
Mr. Bercow: My hon. Friend is cheekily encouraging me to dilate upon those matters, but that would be unfair. I had an exchange with the hon. Member for Croydon,

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Central (Mr. Davies) earlier, and he was perturbed about whether he would have the chance to contribute to the debate. I would like him to do so and I would also like to hear from my senior colleague, my hon. Friend the Member for Bournemouth, West (Mr. Butterfill), so I will not focus on those other issues.
I have given practical examples of measures that are injurious to small businesses. There is an extraordinary mismatch between what Ministers say in their speeches and the truth about what is happening.
Mr. Gray: I had hoped that my hon. Friend would address a damaging press release—IR 35—put out by the Inland Revenue, which bears down heavily on contractors in the information technology and telecommunications industries. It will put most of them out of business on the assumption that, as contractors, they are merely trying to avoid national insurance. Interestingly, that policy was announced in a press release, not announced by a Minister in a speech. Is that how the other measures that my hon. Friend mentioned were announced?
Mr. Bercow: That is a growing tendency, and Madam Speaker has expressed concern about it on several occasions. I would not seek to take the name of Madam Speaker in vain, because that would be improper, but I do not need to look into a crystal ball when I can read Hansard. Madam Speaker has many times said that it is grossly unsatisfactory that Ministers disclose policy intentions via press conference, written answer or leak to favoured journalists, instead of paying this elected House the respect of announcing policies in the House and subjecting themselves to interrogation on them. That practice is emblematic of the arrogance, the presidentialism and the sneering disdain for alternative viewpoints that is regularly exhibited by Ministers and, not infrequently, by Labour Back Benchers.
Mr. Butterfill: I was until recently a director of the Delphi Group, which is this country's largest placer of information technology contractors, and I can confirm that the damage that is being done to industry is incalculable. The United Kingdom used to be the largest suppliers of IT contractors in the world, apart from the United States of America, and what is happening is driving those people abroad to Europe or the USA. The UK economy is losing an important source of talent, energy and innovation.
Mr. Bercow: My hon. Friend is right to underline how serious the situation is. When Ministers talk, as they regularly do, about encouraging exports, it is horrifying to think that that is what they mean. We want to export products to make money, to keep staff, to increase employment opportunities and to generate wealth to make UK plc more successful and better able to provide the quality of public services that a civilised community is entitled to expect. We do not want to export talent. We do not want a brain drain or to find that businesses cannot operate here and choose instead to go elsewhere. The fact that that is happening on a significant scale in an industry with which my hon. Friend is closely acquainted is very serious and I ask the Minister to guarantee—a simple nod of his head will suffice—that he intends to deal with that point in his reply to the debate.
Mr. Wills indicated assent.
Mr. Bercow: I am grateful to the Minister for that confirmation.
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I attempted, as a modest Back-Bench Member, to improve the situation by introducing a ten-minute Bill on regulation on business. I wanted to call it the Lifting Burdens from Small Firms Bill, but was advised by the esteemed officials of the House that that would have been too evaluative a title. Those in a position to advise me suggested that it should be the Regulations on Small Businesses (Reduction) Bill, and I had the great pleasure of introducing it on 27 April.
The Bill was intended to be constructive and reflected many constituency representations. It made six proposals to improve the regulatory situation. First, it requested, for the benefit of enterprising and innovative businesses, that there should be an annual statement to Parliament of the cost of regulation on business and of the Government's plans to reduce the cost in the following year. I was horrified to learn from a written reply from the Parliamentary Secretary, Cabinet Office that the Government made no such statement in any form, and had no intention of doing so. I therefore emphasised the first point in my eminently reasonable Bill with particular force. Clearly, we need to know what the costs are, whether or not the Government plan to reduce them, and if they do, by how much.
Secondly, I asked that Parliament should be apprised every six months of the progress of any deregulatory initiatives, the steps taken by the Government and their calculation of the effect of those steps. Thirdly, I requested a review of existing regulation to see where gold-plating of European directives and regulations was taking place and where there might be scope to remove or simplify regulations. Fourthly, I suggested exemption from the most burdensome regulations for the smallest firms.
Fifthly, I proposed a system of sunset regulation under which regulations would automatically expire after a given period—three or five years—if they were not of sufficient merit to be re-enacted by Parliament. That proposal was based on the American model, which applies successfully at state and federal level. I drew the House's attention to the basis of the American model—the Regulatory Flexibility Act 1980 and the Small Business Regulatory Enforcement Fairness Act 1996.
Sixthly, my Bill proposed a minimum of three months' consultation on proposed regulations, and a minimum three months' notice of a requirement to implement them. The proposals were sensible, and I received warm support in my constituency and encouragement from a range of business organisations. Members of the public who had listened to the presentation of the Bill wrote to say that it was good sense and that it should not be a matter of party political dispute. I had addressed a problem and proposed a solution. People hoped that the Government would accept it as a non-partisan solution.
There was no frothing at the mouth in my proposals. The Minister of State regularly portrays my hon. Friend the Member for Rutland and Melton and me as right-wing firebrands, but my hon. Friends know that we are consensually minded figures who hold relatively middle-of-the-road views on many matters of public policy. We were simply seeking to identify a problem in detail and propose an effective solution. I hoped that I would get a helpful response.
Regrettably, the signs have been confusing. On 25 March, the Minister wrote to me in response to queries that I put to him in the Employment Relations Bill

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Committee about the American model. He described it somewhat dismissively as "highly prescriptive", and talked about the importance of rooting British policy in British traditions. That is so vague as to be largely meaningless. He inferred—I put no more strongly—that the Government did not propose to adopt my model.
Mr. Wills: Implied.
Mr. Bercow: I thought that the Minister inferred it, but if he wants to say that he implied it, I am happy to accept that. Moreover, a month later, on 27 April, after the presentation of my Bill, I had a brief chat with him. He said to me, "Right diagnosis, wrong prescription." That was explicit. It seemed obvious then that Ministers did not intend to heed my words or apply the measures recommended in my Bill.
Since then, the situation has become curiouser and curiouser. We have now had pronouncements on this important matter from the Secretary of State for Trade and Industry. My Bill was commended to him by my right hon. Friend the Member for Wokingham (Mr. Redwood) and, in the course of a parliamentary exchange, the Secretary of State invited me to send him a copy of my Bill and the speech accompanying its presentation with a view to him considering its proposals. It is now 36 days since I wrote to him and, while I have not yet had a response, I feel sure that one is winging its way to me. I shall soon be put out of my misery and learn whether he was impressed.
We have had some anecdotal evidence in the interim that is important for the future of small and medium-sized enterprises that want to prosper and seek to innovate. To his credit, the Secretary of State has admitted that the Government have not got it right on regulation. He gave an interview to The Daily Telegraph or The Sunday Telegraph on the subject and repeated the point on 20 April to the Select Committee on Trade and Industry, of which I happen to be a member. He admitted that the Government have not got it right and would have to do better.
I have still had no response to my letter of 20 May. I then chanced upon the Secretary of State's seminal speech to British Chambers of Commerce on 3 June. Whether it is indicative of a likely improvement in Government policy, we do not yet know. It would be premature to say that Government policy has changed for the better because, although there were encouraging words, they were only words. We do not know whether action to match them will follow. Interestingly, he said that, too often, regulations had been introduced with too little consultation and too little warning. I felt vindicated. A mere Back Bencher discovers that his words are echoed by one of the mightiest men in the land. Suddenly, the Secretary of State says with all the authority of his high office to a large audience at British Chambers of Commerce conference what I have been saying for some time to a not-always-packed House and to other audiences. He went on to say that we had to think small first—I must emphasise that I think that he was referring to small businesses rather than to my hon. Friend the Member for Rutland and Melton (Mr. Duncan) or to me. We had to think of small businesses first.
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I was supremely encouraged when he said that he found the idea of sunset regulation attractive. At the meeting of the Trade and Industry Committee on 4 November last year, in response to questioning from me, the right hon. Member for Hartlepool (Mr. Mandelson), then the Secretary of State for Trade and Industry, somewhat pooh-poohed the notion of sunset regulation. Indeed, I am sure that the Under-Secretary will not mind if I point out that, in the first instance, the right hon. Member for Hartlepool did not even know what sunset regulation was. I was astonished. I was flabbergasted. I was under the impression that he knew all about the American model. He talked regularly about his visits to the United States. A few days before his appearance before the Select Committee, he had made a speech in which he talked about US enterprise and dynamism. I asked him about sunset regulation, to which he replied, "By which you mean?" I had to explain to the most illustrious representative of new Labour exactly what sunset regulation meant.
One cannot accuse the present incumbent of such woeful ignorance. The Secretary of State knows what sunset regulation is. In his most recent speech on the subject, he said that he found the idea attractive. That is most confusing, because the Under-Secretary gave the distinct impression—obviously not inadvertently, but deliberately—that the Government did not intend to emulate the American model. There is a split between the Under-Secretary on one hand and the Secretary of State on the other.
Mr. Wills rose—
Mr. Bercow: I readily give way to the Under-Secretary. I can see that he is in a state of some perturbation.
Mr. Wills: I hate to see the hon. Gentleman suffering in this way. Let me try to put him out of his misery. Perhaps that will enable him to move on to something else in his most interesting speech. To clarify the point, I suggested that we were not going to adopt American legislation in this country, for the reasons already cited by the hon. Gentleman. Let me make that quite clear: American legislation in this country—not.
Mr. Bercow: I fear that the hon. Gentleman digs himself deeper in. He is wobbling. The idea that American legislation could be directly implemented in the United Kingdom is patently absurd. We are not talking about the transposition of European Union directives and regulations into British law. The issue was whether we would follow the American model. I counsel the hon. Gentleman—for whom I have considerable affection, because he was immensely courteous during the Committee proceedings of the Employment Relations Bill—to take note of the old adage: better to remain silent and look a fool than speak and remove any lingering doubt. The hon. Gentleman is on weak ground; he knows perfectly well that he was against the American model. The Secretary of State is now making noises that give the impression that he is in favour of that model. What we do not know is whether the words about the American model will be translated into practical reality. That is what we want to know.

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The second, potentially fatal, split in the Department of Trade and Industry is between the Secretary of State and his Minister of State. I mean no disrespect to the Under-Secretary when I say that it is one thing for the Secretary of State to have a minor tussle with his junior Minister—I do not suppose that the right hon. Gentleman takes umbrage at that; he probably feels that he can contend with the fact that a junior Minister in his Department holds a different view to his own—but to have as his Minister of State a left-wing troglodyte, who is fundamentally opposed to the deregulatory initiatives that the Secretary of State now claims to support, is grave indeed. It is not clear what progress we can make in those circumstances.
We hear words from some Ministers about enterprise, deregulation and the minimising of burdens. We do not hear those words from other Ministers.
Mr. Geraint Davies: In relation to the minimising of burdens, the hon. Gentleman assured me earlier that he would be brief. So far, he has spoken for more than 40 minutes, so, in respect of burdens, perhaps he would like to bring his comments to a close before we fall asleep.
Mr. Bercow: I thank the hon. Gentleman for his intervention. First, I did not say anything of the sort to him. It is characteristic of new Labour to twist and turn and misrepresent in every conceivable fashion. Secondly, although I have the highest regard for the hon. Gentleman, I was not aware that he had yet reached the lofty height of either Speaker or Deputy Speaker. If he will forgive me, I shall take my cue from the Deputy Speaker in the Chair. I am not inclined to be guided by the hon. Gentleman's benevolent counsel about the length or content of my speech.
I am concerned about reducing regulations on businesses. The Government are lacerating small businesses. I and my right hon. and hon. Friends want to liberate small businesses. My ten-minute Bill on 27 April this year was a small step in a positive direction at an opportune time. The Government should have supported it. They should not be dithering. They should be introducing their own practical and detailed proposals.
Are the Government blissfully unaware of the sheer scale of the anger of British businesses about the imposts upon them? Do they not know that, on 3 November last year, the president of the Confederation of British Industry, Sir Clive Thompson, described the regulation flowing forth from the Government as a "creeping paralysis", and that he went on to say that, unless action was taken to arrest and reverse the phenomenon, regulation would be the only growth marker in the British economy in 1999?
Is the hon. Member for Croydon, Central (Mr. Davies) proud of the fact that the president of the CBI so strongly disapproves of the anti-business, anti-enterprise and anti-profit-making culture that is being spawned by a combination of errors of commission and omission by the Government? If he is proud of it, let him defend that stance in front of his electors.
I am not proud of such a stance. I intend to carry on criticising it. I favour a better stance, a Conservative stance, a deregulatory stance, an enterprise-oriented stance—a stance that offers the prospect that small businesses will continue to be, and increasingly be,
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the engine of economic growth, increased employment and enhanced prosperity for all our people long into the future. At present, the Government do not offer that prospect; the Opposition assuredly do.
1.7 pm
Mr. Geraint Davies: I thank the hon. Member for Buckingham (Mr. Bercow) for completing his comments within 45 minutes. He seemed to speak not so much about business as about regulation and deregulation. I shall deal with some of those points.
My background is in multinational business; I then started a number of businesses myself. I mention that in response to some of the Opposition comments about Labour Members not having a business background.
I shall not spend a great deal of time speaking about the general economic environmental benefits that have allowed enormous growth in small and medium-sized enterprises in the British economy since the present Government took power. Hon. Members are aware of the extra 400,000 jobs, the lowest inflation in six or seven years, the lowest long-term interest rates in 40 years and the low short-term interest rates, all of which have come about under this Government. The overall environment of stability and job creation has been extremely successful.
Enterprise is in the mind of the entrepreneur. The Government have taken numerous structural and fiscal steps to encourage entrepreneurial activity in small business. When people leave school or university, they should not ask, "Who will give me a job?" They should be thinking actively about how they might become involved in creating new jobs, products and opportunities, rather than walking into a job. We have not quite cracked that problem, but the Government are moving quickly towards resolving it.
The attitude towards risk in Britain is not as ambitious as in the United States. There, on average, every millionaire has gone bankrupt three times. The Government are rightly encouraging responsible risk-taking, which is what we need. However, people are still reluctant to move from a cushy environment to one in which they are taking risks and creating wealth.
The financial situation for small businesses in Britain has historically been difficult, because they have tended to rely on high street banks, which want the collateral of the business man's house, and pull the rug if anything goes wrong. The banks will not consider orders to be guarantees of future cash flow income and have often forced small businesses into bankruptcy on that basis. That is not the situation in continental Europe, where banks often take equity in small businesses.
Fortunately, the Government have been responding to that agenda by trying to establish and encourage venture capital funds, but the difficulty is that venture capital in Britain tends to be focused on big re-engineering—management buy-outs and the like—and not on small business start-ups, which are seen as irrelevant to getting the big bucks. We need to confront the issue of making that culture change, especially if we are to avoid competition from the United States for venture capital opportunities in the single market.
Mr. Butterfill: I must declare an interest. For many years, I have been an adviser to the British Venture Capital Association. The hon. Gentleman is not exactly

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correct. Although funds are used predominantly in larger businesses, this country's venture capital industry, which is the second largest in the world, supports a much greater number of small businesses in respect of the number of transactions—that is what should be looked at—and that trend is increasing.
Mr. Davies: My point is that the share of cash invested is biased enormously to the larger transactions and the re-engineering of big corporations. There is a great difference between the situation here and that in the United States. The expertise that has been built up in the venture capital industry to enable start-ups is not as developed as that in the United States, although it is growing and the Government are increasing it. We want that expertise to be targeted regionally on the strategies emerging from the regional development agencies.
It is important that the Government consider getting rid of regulations as well as introducing them, and my right hon. Friend the Secretary of State rightly made a big play of that in his speech to British Chambers of Commerce. In a sense, regulation is a poll tax on all businesses. Although big businesses such as Asda, which has been mentioned in many of our debates, have been progressive in introducing regulation, which is all well and good for them, the administrative burden is small compared with that for a small operator.
We should all bear that point in mind, because big retail and manufacturing operators often want to get rid of small competitors. One way to do that is to encourage more regulation. Although that sounds peculiar, it is the case.
Mr. Bercow: Will the hon. Gentleman give way?
Mr. Davies: I will take a brief intervention, even though the hon. Gentleman gave us a 45-minute monologue.
Mr. Bercow: The hon. Gentleman should be grateful that the substance of his speech is such that it has inspired an intervention from me. I am listening to him intently. I have two points to make. First, will he confirm that he accepts the calculation that the smallest firms—those employing one to four people for the purposes of compliance with tax legislation—face an annual cost of £288 per employee, whereas the largest firms, with 5,000 or more employees, face a cost per head of only about £5?
Secondly, can the hon. Gentleman clear up a smidgen of confusion resulting from the Minister of State's contribution? Given that the Secretary of State said in his speech to British Chambers of Commerce on 3 June that he intended to make three significant statements on deregulation in June, and that that speech was the first of the three, what were the other two? Have we had them yet, did we miss them or have we a treat awaiting us next week?
Mr. Davies: I must confess that, unfortunately, the Secretary of State has not disclosed his particular intention to me. I am not in a position to answer that question, as the hon. Gentleman may have guessed.
Mr. Wills: Perhaps I can give the House two other examples. First, we have launched a consultation
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document on the automated payroll service which, as the hon. Member for Buckingham (Mr. Bercow) will be aware, will help small firms with one of the most onerous burdens on them—administering a payroll. Secondly, as he will also be aware, next week we are launching the consultation document on the Small Business Service, which is specifically tasked with helping small firms to cope with regulations. Those are but two examples.
Mr. Davies: The Small Business Service, which we are all about to enjoy, is of paramount importance in focusing the eyes of civil servants and others on the needs of small business in terms of the overhead of regulation. I do not want to take too much time because I have criticised the hon. Member for Buckingham for taking a great deal of time, but I want to cite as an example of regulation what happened when I started a tour operating company.
In VAT law, there is something called the tour operators' margin scheme. The tour operator would receive some money from people who were going on holiday. After deducting the cost of flights to leave the gross margin, one would pay VAT on that part of the gross margin associated with accommodation. That was fine. Then, suddenly, it was decided that a company must pay VAT on both the accommodation and the flight element of the gross margin unless it owned an airline. That was unfair to small businesses without an airline. Small business responded to that effect. The advice from Customs and Excise was, "In that case, start up your own airline company."

So, I then had to start another company—an aviation company—which simply bought from the people from whom I was buying flights in the first place. The new company sold to the original one with a margin, then paid back a management fee to equalise the impact on VAT. The costs of that process, and the fact that entrepreneurial and management time is being diverted into that, are ridiculous.
That is a simple example of structures that can come from Europe, or from the Government—that change took place under the previous Government—which can have a very difficult impact on small businesses that are competing internationally against very large operators. Such problems are now well known to Government, which is why the issue has risen to the top of the agenda—hence the statement made by the Secretary of State to British Chambers of Commerce.
Inward investment, which tends to be from larger companies, has a direct spin-off effect on small and medium-sized enterprises servicing them. Recently, I attended a meeting of Japanese industrialists and financiers in Britain. They discussed the prospects for future investment and the fact that, increasingly, they were looking for added value in Britain rather than mechanical assembly work. That emphasises the need, of which the Government are aware, for our focus on education, education, education, to be about adding value to the things that we do in this economy and generating decent wages in a competitive way. We are not competing on a very low skill basis with the developing world, which would be in no one's interests.
Europe and the euro have been alluded to. As is known, the Government's position is that we should move forward as and when the conditions are right for Britain to enter. That is an important point, because although

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Japanese investors are happy to invest in Britain as a platform into continental Europe, if they thought that we would never join the single currency—which is the view of some people—they would simply move their investment into continental Europe. In the meantime, those people who feel more risk averse about our eventual intentions are hedging their bets, and some of their production is going over to the euro.
A similar process is evident in the financial markets. Institutions such as the Industrial Bank of Japan must decide where to site their administration—Frankfurt, Paris or London. We need to think about that in the context of innovation and enterprise, which cannot simply be about small business. We are talking about enterprise and innovation in large business, and the relationship between large and small business. Investors are attracted by the English language, access to the European markets, and the more flexible and less-regulated market in Britain. To be competitive, we need to preserve that.
Training and added value are key issues. The difficulty for any company in the business culture in the United Kingdom and the United States, which is different from that in Japan, is that people do not stay all their working lives in one company, so it cannot freely invest enormous amounts of money in human capital and productivity in the knowledge that people will stay for life and it will not lose that investment. In Britain, companies invest in management and productivity, but people then go to another company. There is a danger of poaching, which is a disincentive for companies to invest in higher productivity.
We must devise strategies for transferring the training risk. We have already begun to create links between universities and industry so that the risk is shared. More productive people will emerge from that, which will be good for the economy and the Exchequer, and will create additional jobs. That is to be welcomed. I was involved with the university for industry in its infancy, and it is good that the Government have such high ambitions for the success of that idea.
Hon. Members have not mentioned the internet as a means of generating more prosperity for small business. Small businesses, by their very nature, tend to trade in a small area, not internationally. The internet offers a new opportunity for small businesses in Britain to find market niches anywhere in the world. The single currency will make that easier. We have sterling, but there is a single currency in Europe, so there is no need to have many transactions.
Complementary products and compatible markets can be found on the internet. That will enable small businesses to grow. There are new opportunities to generate products by sourcing products from foreign markets. There is an argument for import substitution. People buy products that are exported to Britain and are not produced in this country. Why are they not produced in Britain? Could they be produced here? Do the Government have a role to play in helping to facilitate the production of competitive products? Perhaps the regional development agencies could be involved. I should be interested in the Minister's thoughts on that.
Products emerge in other markets that are not yet prospective imports into this country. If we were quick enough, we could create similar products and establish export businesses in that market. Does the electronic age provide partnership opportunities to enable us to do that?
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The Government have created the conditions for success in Britain: a stable environment, stable interest rates, and an increase in the number of people in work. They are committed to containing regulation so that it is not a hindrance to successful business, and are creating an enterprise and innovation culture. As we approach the millennium with new confidence, Britain can be proud to be leading the field.
1.23 pm
Mr. John Butterfill: I shall follow the example of my hon. Friend the Member for Rutland and Melton (Mr. Duncan) and declare my interests as recorded in the register. I am a partner in a family firm of consultancy on finance, corporate affairs and real estate. I am a director of Miller Non-Marine Ltd., which is one of the leading Lloyds insurance broking companies. I have a residual interest in Curchod and Company, a firm of chartered surveyors of which I was a senior partner before I entered the House. I have for many years been the parliamentary adviser to the British Venture Capital Association. I hope that, in some small way, I have contributed to the growth and success of the venture capital industry.
I have listened with great care to the speeches of Labour Members. Not everything that the Government have done to encourage industry and commerce has been entirely bad—some of their proposals have been helpful in principle. The changes to the capital gains tax regime are a step in the right direction. However, the abolition of indexation and the introduction of a 10-year taper will mean not just that an entrepreneur will be locked in for far longer, but that in most instances he will end up paying more tax. The taper is far too long, and the definition of business assets is far too narrowly drawn. I welcome the principle of a taper for capital gains, but I hope that the Government will look at the length of the taper, because it is not encouraging new investment at present. That is the view of the British Venture Capital Association, and the view of all other serious commentators.
I am worried about the general direction of policy in other respects, and I shall expand on that shortly. First, however, I think it worthwhile to consider the direction in which the country has moved since the last Labour Government. At that time, the British economy was largely a command economy. Huge swathes of industry were nationalised and in public hands. That economy was regarded as the sick man of Europe. Trade unions had massive power, and at the same time we had appalling industrial relations. We had one of the worst strike records among the western economies.
As a result of all that, our economy was steadily going down the tubes. If we had continued with the policies that were being pursued then, we would still be in that sorry state now. Fortunately, even this Labour Government no longer believe in most of those policies, but there are worrying signs that they are turning back in that direction.
The last Conservative Government changed everything. We reformed trade union legislation. We now have the best strike record in Europe, and the lowest levels of unemployment in Europe. We have privatised all those massive state industries. Who would want to return to the days when telephones were obtained from the Post Office? We could have any phone we liked, as long as it was black and had a funny circular dial. Today, we have an industry that is a world leader.

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Who would want to return to the days of the old BEA and BOAC? The service was appalling, and the cost of the subsidy from the taxpayer was massive. Today's modern, dynamic industry boasts not just British Airways—probably the world's leading airline—but plenty of deregulated competitors, such as Virgin Airways, British Midland and easyJet. They have been an enormous success, and they have liberated the British economy.
The last Government's abolition of exchange controls, which was vehemently opposed by the Labour party, was probably the most important deregulatory step that could have been taken. No one would reverse that today. Indeed, all the deregulatory reforms undertaken by the last Government are being earnestly emulated throughout the world, even in the former Soviet bloc countries. In fact, many of those countries are deregulating rather more quickly than we are under the present Government.
I must confess, as a long-time enthusiast for the European Union, that my initial enthusiasm was born of two things. First, I felt that the EU's political objectives were highly desirable, in that they combined the free economies of Europe and would prevent our ever going to war again. The vision of people such as Mr. Schuman was outstanding in that respect. Secondly, during the days of the Labour Government—I have described the position of our economy under that Government—we saw the countries of the European Union, as it is now, as a bastion of free enterprise, innovation and harmonious working relations. We did not have that in this country. One therefore thought that, by joining the European Union, we could perhaps prevent the slide into state socialism that we were experiencing and, by that association, improve our economy.
Sadly, the situation in the European Union has rather changed. In various European countries, profoundly interventionist legislation has followed the election of a succession of socialist Governments. Those countries maintain very large parts of their economy within state control, andregulation has grown and grown. Today, a comparison between the European Union and the United Kingdom is not such an attractive prospect—certainly not the one that it was 20 years ago.
The change is perhaps exemplified by the non-wage costs imposed on employers in the European Union. In the United Kingdom, non-wage costs are 19 per cent. of wages, but, in France, they are 44 per cent.; in Spain, 35 per cent.; and, even in Germany, they are 27 per cent. Such costs are making the economies of those countries increasingly less competitive, which would not be totally disastrous were it not for the regulatory burden being imposed on European Union employers.
Year after year, more regulations are dreamt up by the Commissioners and imposed on industry and commerce across the EU. Now, the United Kingdom has adopted the working time directive, a minimum wage and the parental leave directive; and the Government are increasing trade union rights and enacting their Employment Relations Bill. All those changes are designed to increase the burden on employers, making industries less competitive.
If Labour Members do not believe that that is true, they have only to consider what has happened to United Kingdom inward investment—which has surpassed inward investment to all the other European Union
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countries combined. Why have we received so much inward investment? It is not because we have an especially low-wage economy, or a particularly attractive climate, but because we offer a business climate that is far more attractive than that of the other EU countries.
Mr. Wills: I wonder whether the hon. Gentleman is aware that, last year, under a new Labour Government, we had the best year ever for inward investment. Is he aware that that shows that those inward investors do not share his concerns?
Mr. Butterfill: No, I am not aware that they do not share those concerns, because many of them say that they do share them, as do many leaders of British industry. Of course we are continuing to receive inward investment. The golden legacy that the Government inherited from the previous Conservative Government has created conditions that still make United Kingdom inward investment extremely attractive. I am concerned that the Government's actions are making it increasingly less attractive to invest here. If they continue down that road, they will achieve the end result of making it very unattractive to invest here—which is not their objective, I hope.
If the Minister doubts that, he has only to consider what has happened in the other countries of the European Union. German manufacturers, for example, are moving their manufacturing progressively out of Germany. Volkswagen is establishing itself in the Czech republic; BMW is investing in the United Kingdom and in the United States; and Mercedes-Benz is creating new plant capacity in the United States. French industries are acquiring British companies in ever growing numbers. Indeed, the French centres of learning such as ENA—Ecole Nationale d' Administration—and Science Po are extremely concerned. In the past, their brightest and best graduates used to go into French industry and commerce, now increasing numbers of them go to work in the United States or the United Kingdom. One has only to look around the City of London to see how many graduates of the prestigious French academic institutions are employed here rather than in France. The French Government are extremely worried about that.
I hope that Labour Members will heed those warning signals, because if they take us ever further down the road that certain people in the Commission, the European Union and certain political leaders in EU countries are advocating, they will achieve their objective of making us all suffer equally the misery suffered by employers in the EU. As a result, we shall become increasingly less competitive and lose the enormous advantage that the previous Conservative Government bequeathed to the country.
One particular measure that is especially worrying is the energy tax that the Labour Government intend to impose on British industry. The climate change levy is unnecessary as Britain has already done more than any other leading economy to reduce emissions. Of course I am sympathetic to the idea that we should continue to reduce emissions worldwide, but not unilaterally or in a way that will damage the British economy.
The United States has no intention of making serious moves in that direction—as was confirmed to me by an American business man only yesterday. Most of our

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competitors are doing far less than we have already done. We need to look at the burdens that the proposed measure is likely to impose on British industry. According to British Steel, it will mean fuel price increases of 49 per cent. for coal, 40 per cent. for gas and 20 per cent. for electricity.
According to the CBI, the tax will add 8 per cent. to electricity prices for small users and 15 per cent. to gas prices. For larger uses it will add 15 to 20 per cent. to the price of electricity and 40 per cent. to that of gas.
The statistics are enormously worrying because they mean that critical industries such as British Steel, which is going through a difficult time because of world market conditions, will become increasingly and unilaterally less competitive at a time when it needs to be ever more competitive if it is to survive in the current world environment.
Mr. Bercow: I recognise the figures that my hon. Friend has just given to the House. Am I not also right in thinking that British Steel calculates that its costs will increase as a result of this measure by something in the order of £200 million? I believe that that is an annual figure, but perhaps my hon. Friend knows better than I do.
Mr. Butterfill: My hon. Friend, in his customary way, is extremely well informed and accurate. Those are the figures that were quoted by British Steel.
I really do not see how, at this very delicate time for British Steel, the Government can realistically contemplate increasing its costs by £200 million a year. It is enormously difficult to see how the company can make savings in other areas to compensate for that level of imposition. It is not just British Steel, of course. The director of policy at the Engineering Employers Federation is immensely critical and has said:
"This is more than a bit of a scare. If you end up with an asymmetric position on energy taxation you will find that either UK based companies will move their production facilities to other countries or they will simply close down."
That is a fairly apocalyptic prediction from such a person as the director of policy at the Engineering Employers Federation. Can the Government really contemplate that sort of action when they claim that they are particularly supportive of engineering and manufacturing industry? It just does not add up.
There will be odd regional effects. Representatives of Transco and some of its partners in the energy industry in Northern Ireland came to express their concerns to me yesterday. They said that the programme of modernising the energy production industry in Northern Ireland that they are committed to would be severely prejudiced by the measure. The fine margins that they calculated for their investment would be almost entirely eroded. Under the rules that the regulator has to follow they would not be permitted to recover a significant proportion of the cost from their consumers. They estimate that the increased burdens placed on Northern Ireland businesses as a result of the levy would make them increasingly uncompetitive, particularly in comparison with their rivals in the Republic of Ireland.
We are trying to increase prosperity in Northern Ireland. There are sensitive negotiations about the future and economic prosperity is probably the one factor that can help to bind the parties together in a common
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objective. Destroying that burgeoning prosperity would cause profound damage and may be a considerable contributory factor if the Government's political efforts—which I praise—fall apart.
It is mad to impose a unilateral burden on British industry that will not fall on our competitors. I urge the Government to think again.
1.41 pm
Mr. Hilton Dawson: It is good to join in the debate at this late stage. I have very much enjoyed the past four hours of discussion. There have been some worthy contributions from hon. Members on both sides. The hon. Member for Bournemouth, West (Mr. Butterfill) has just made a balanced and interesting speech.
In just under 12 hours' time I shall still be out at a rather nice do in Lancaster. When I am celebrating with my constituents, I shall enjoy an extra little frisson at the thought of the hon. Member for Buckingham (Mr. Bercow) sitting up in bed with his Ovaltine learning copious amounts of Hansard so that he can quote it back at us on another occasion.
Mr. Bercow rose—
Mr. Dawson: It is only a joke. I shall not give the hon. Gentleman further opportunity to entertain us. He has done so for long enough.
I particularly want to talk about Lancaster and the opportunities for business development of research expertise and ideas from higher education. That is the most important development that the Government are trying to introduce. For decades under successive Governments, British industry has failed to make anything like the most of the opportunities presented by some of the best and most innovative and inventive brains in the world. I greatly welcome the range of Government initiatives, including partnership with the Wellcome trust, increased investment in scientific research, the new round of the foresight programme and the new opportunities for investment created by the provision of capital for small business innovation.
The key concepts of enterprise and innovation, taken with the opportunities presented by the Government, will galvanise Lancaster's economy. We can establish Lancaster as a regional centre at the heart of the north-west, but with potent economic links to the world, to attract business investment to our superb environment. Our communications links to the north and south are important, and those to the west—to Northern Ireland and the Republic of Ireland—are increasingly important. We have excellent educational resources, particularly—but not solely—the world-class university of Lancaster, the engine for the future of Lancaster.
I profoundly believe that the small and beautiful city of Lancaster has the potential to build a great knowledge-based economy. The university has first-class resources across the board, but the resources in applied science, computing, biochemistry and management are world class. Academics and students are attracted from around the world to study in Lancaster.
I am talking about a knowledge-based and environmentally sustainable economy. Enterprise, innovation, development and investment in our

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knowledge, expertise and skills could provide a good model on a small scale for the whole country, and could certainly transform the economy of Lancaster, which is important to the north-west, but which needs transforming in many respects.
We have heard much today about the golden economic legacy, but I have not seen that in Lancaster over the past 20 years. Lancaster once led the world in the manufacture and production of floor and wall coverings. However, only about 10 per cent. of people in employment in the city are now employed in manufacturing.
Lancaster has pockets of high and endemic unemployment and is being denied the investment that it manifestly needs for its transport infrastructure. The city requires radical measures and major investment to deal with congestion and to develop integrated and sustainable transport. Lancaster has large areas of industrial dereliction.
Frankly, Lancaster was comprehensively failed by the Conservative party which, for 27 years, exerted political dominance in the city and represented it in this House. The Tories took the place for granted and let slip our assisted area status. They had no ambition for the area and allowed it to run down. I believe that, with our resources, our local people's ability to work together and the opportunities provided by the Government, we have a chance to put all that behind us.
Last week, I was at Lancaster royal grammar school to witness innovation and enterprise at first hand. There is unique collaboration between that school, one of the country's best; Lancaster university; British Energy, from Heysham nuclear power station; Linklaser, a software firm; and an extremely bright ex-student, John Fawcett. They are using the national grid for learning and have developed a programme that makes live data about the operation of the power station immediately accessible to schools on the internet.
I quit physics as soon as I could, but even I can see that that could transform science education. The knowledge, experience and skills at Lancaster university and in local colleges, schools, business and the local authority can produce business innovation and enterprise and the skilled well-paid jobs of the future.
At a recent business breakfast, we considered a vast range of Government initiatives to develop science and enterprise and incubate business from higher education research, encouraging investment and innovation in small business. There are plenty of bright ideas that can be transformed into future opportunities. That is the great hope for the city of Lancaster and for the national economy.
I have witnessed the development of robots at Lancaster university and heard of small businesses setting up all along the coast around Morecambe bay, from Lancaster up to Sellafield. There is the embryonic network of a mechatronics coast, linking innovative industry with business and university research and development, developing new applications and pioneering the use of robots under the sea and in hostile industrial environments.
There is a growing initiative in applied sciences, with engineering students being placed in local companies and gaining experience of the real working world. In a few
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short weeks, there has been a complete revamping of the IT systems of a small local firm, DMS Meters, which from humble beginnings—in someone's shed, I think—is ploughing into worldwide electric metering markets in the middle east and Asia.
My favourite example is of two local farmers, Ken and Colin Newsham, who, with intelligence and courage and through their sheer willingness to engage with people, listen and learn, are linking with one of the best management schools in the country, at Lancaster university, to turn a traditional north Lancashire family farm into a management training centre and a model for sustainable development and diversification in the countryside.
Those are but a few examples of how the university can be the engine of the new economy in Lancaster. That is where our competitive future lies. We are building the knowledge-driven economy and transcending the devastation that was bequeathed to us in the 1980s. That is not an easy process. Although all sides are willing to work together to grasp the many opportunities being provided by the Government, we have a long way to go. The cultural differences between the academic and business worlds can be profound and we need to marry them together to achieve a change. As Professor Richard Davies of Lancaster university has said, we need to put the D firmly back into R and D.
We are also struggling with decades of under-investment. We have not had objective 1, objective 2 or assisted area status to help with technology transfer. We have the land for the business park, the ideas and the enthusiasm for the knowledge-based economy, but we need real resources to push it on. We need time, commitment and people, as well the opportunities to build and develop. The Government are dealing with the big issues of higher education, and we need more students, especially women students, to study technology, science and mathematics. We need more bright people, perhaps from backgrounds without a tradition of further and higher education. In Lancaster, we are developing good access arrangements and we can make progress from there.
We desperately need the Government to sustain their initiative and drive and ensure that all the benefits of their excellent policies make a difference at the grassroots. I have a vision for Lancaster that incorporates ideas, innovation and enterprise into our glorious historic setting and beautiful city, freed from traffic congestion and offering real opportunities to those who have been denied them for so long. We can provide a dynamic setting for research, imagination and enterprise in the heart of the north-west, in green countryside between the dales, the lakes and the sea, and a resource for the world that will draw people in. I am pleased that the Minister is replying to the debate, because we are hoping to draw him to Lancaster soon. We have a good tale to tell, and we would appreciate some special help with innovation and enterprise so that we can grasp the future that is not so very far away.
1.58 pm
The Minister for Small Firms, Trade and Industry (Mr. Michael Wills): We have had an interesting debate today on an important subject and I thank all the hon. Members who have taken part. The hon. Member for

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Rutland and Melton (Mr. Duncan), whom I welcome to the Front Bench, gave a fascinating display of ideological zeal. I look forward to hearing more of his interesting visions in the coming months.
My hon. Friend the Member for Eastwood (Mr. Murphy) highlighted the importance of the minimum wage and spoke of the need for seedcorn support for R and D. He also spoke passionately about the need to support young entrepreneurs. The hon. Member for Eastleigh (Mr. Chidgey) agreed that the role of the Government was to find a third way between the old-fashioned interventionism of the post-war period and the crude laissez-faire approach that the Conservative party seems still to espouse. He spoke eloquently of the importance of R and D and mentioned the trade deficit. However, he omitted to mention that, in the late 1980s, the deficit was 4 per cent. of gross domestic product and is now down to 1.5 per cent. of GDP, but perhaps that would have ruined his argument. The hon. Gentleman also inquired about various policies and I am delighted to say that they are either on their way already, or they will be shortly. I welcome his support for the Small Business Service, consultation on which will be launched next week.
My hon. Friend the Member for Stevenage (Barbara Follett) spoke of the British genius for innovation and of the need to continue to combine it with entrepreneurial talent and drive. She gave a compelling picture of how her constituency shows the need to give everyone the opportunity to innovate and to grow a business.
We heard a remarkable 45-minute monologue from the hon. Member for Buckingham (Mr. Bercow), who began with effusive congratulations for the hon. Member for Rutland and Melton. I noticed that the hon. Gentleman used no notes, and I congratulate him on that. He gave a sparkling defence of zealotry. He was against the right to a decent minimum wage, against the right to paid holidays, against help for children and against help for child care. He has not yet written his manifesto, but I look forward to reading all that again.
Mr. Bercow: I feel sure that the Minister's misrepresentation of my speech is entirely inadvertent, but I challenge him to identify in Hansard on Monday morning the column at which I object to paid holidays. If he can do so, I shall happily donate £100 to charity. If not, I hope that he will do the same.
Mr. Wills: I had misunderstood the hon. Gentleman, and I now understand that he favours the working time directive.
Mr. Bercow: No.
Mr. Wills: The hon. Gentleman is not in favour of the working time directive. I look forward to continuing this discussion with him.
Mr. Gareth R. Thomas: The hon. Member for Buckingham (Mr. Bercow) mentioned Hansard on Monday morning, so I would take him up on his bet, because we were not sitting then.
Mr. Wills: I thank my hon. Friend.
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The hon. Member for Buckingham spent a lot of time rehearsing the arguments of his ten-minute Bill. I am happy to agree that regulations can be burdensome for business. Indeed, the Government led by the right hon. Member for Huntingdon (Mr. Major), whom the hon. Gentleman supported, added 10,000 regulations in their final three years. With the greatest of respect to the hon. Gentleman, I have to say that his remedies are either mere debating points or already on their way. I shall not delay the House now, but shall happily explain later to the hon. Gentleman which of his remedies fall into which category.
My hon. Friend the Member for Croydon, Central (Mr. Davies) rightly drew attention to the needs to encourage responsible risk taking and to develop regional venture capital funds, as we are doing. I was pleased to hear him highlight the central importance of new information and communication technologies and the importance of the internet to the growth and prosperity of small businesses.
The hon. Member for Bournemouth, West (Mr. Butterfill) offered welcome support for Government policy, and I am pleased that he shared his views on the European Union. He mentioned the climate change levy—the so-called energy tax—on which I should like to reassure him. We are aware of competitiveness issues, but we must take every measure to produce sustainable development and preserve the environment. First, the new levy will entail no overall increase in the burden of tax on business. Secondly, we intend to set significantly lower rates for the energy-intensive sectors. We are in negotiation with the sectors involved, including steel. I hope that the hon. Gentleman can take some comfort from all that.
Mr. Butterfill: The Minister says that there will be no overall increase, and I assume that he is referring to the offset from national insurance changes, but British Steel estimates that only 4 per cent. of its costs will be met by the national insurance reductions.
Mr. Wills: I can only repeat what I have said. There will be no overall increase in the burden of tax on business. To take one company as a negation of that point is to miss the point.
I welcome the support of my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson) for Government policy on science, innovation and enterprise. He gave a glowing description of his beautiful constituency. I was interested by his cogent analysis of how what the Government are doing will help his constituency.
The most interesting feature of the debate was the way in which it revealed a stark dividing line between the Government and the Conservatives about how best to promote innovation and enterprise. They are motherhood words; we all accept that they need to be encouraged. The difference is about how to do it. The Conservatives still rest on their record in government. They hanker after a largely mythical 19th century vision of laissez-faire. That was encapsulated in the contemptuous rejection by the hon. Member for Rutland and Melton of the idea of partnership. I was surprised by his scorn for something to which I thought that we could all subscribe. It reveals the extremism rooted in the Conservatives that they can reject partnership as incompatible with their laissez-faire vision.
Mr. Duncan: Does the Minister accept the Conservative view that innovation and enterprise in commerce are predominantly private sector phenomena?
Mr. Wills: I am happy to enlighten the hon. Gentleman about our view of the respective roles of Government and the private sector. We differ on the role of Government. We all agree that business must do what business does best, but we believe that there is a role for Government.
Some Conservative Members mentioned IR35 but they did not mention that it is a measure to tackle tax avoidance. I would have hoped that Conservative Members could have joined us in agreeing that we should try to reduce the scope for tax avoidance—indeed, that is the job of Government. When taxes are levied democratically through this House, we should all agree that people should pay them. Nor did Conservative Members mention that there is nothing in IR35 to stop agency working or individuals setting up service companies, which lies at the root of their objections. I am happy to be corrected, but they appear to be against any Government action to reduce the scope for tax avoidance. That is typical of their dogmatic, extreme approach.
Mr. Duncan rose—
Mr. Wills: If the Conservatives are prepared to support us in trying to reduce the scope for tax avoidance, I shall happily give way.
Mr. Duncan: We are against the Government deeming something to be tax avoidance to make people pay more tax.
Mr. Wills: I am not sure that I am wholly clear about the hon. Gentleman's position on tax avoidance. We will return to the subject in the months ahead.
The fundamental dividing line between us is the role of Government. The hon. Member for Rutland and Melton has intervened on that already. We believe that the Government have a clear and necessary role in supporting business and promoting innovation and enterprise. The Government cannot absent themselves from the field. They must underwrite the essential conditions for growth and prosperity and tear down the barriers to growth that inevitably arise in any market. They must help create the conditions in which business can flourish.
The Government must first create the essential platform for innovation and enterprise: a stable and supportive economic environment. Under the Conservatives, Britain was probably the most volatile economy in Europe, as a Lloyds bank survey showed before the last general election. Interest rates rocketed to 15 per cent. in the early 1990s and inflation to 10 per cent. Boom and bust is the worst possible environment for business to plan ahead.
The hon. Member for Rutland and Melton mentioned investment. Between 1990 and 1993, business investment fell by 18 per cent. That is the worst possible environment for innovation and enterprise. This Government have taken the tough action needed to create the stable and supportive environment that business needs.
We have given the Bank of England operational independence to set interest rates. As my hon. Friend the Member for Eastwood so cogently pointed out, the Tories still cannot make up their minds whether they support that
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or whether they will reverse it. Over the past two years, we have reduced public borrowing by £32 billion. As a result of the measures that we have taken, inflation has remained at, or around, the Government's target of 2.5 per cent. for the past 11 months. Base rates are now at 5 per cent.—that is the lowest level for 22 years. Mortgage rates are now at their lowest level for 33 years. Last year, business investment rose by 7 per cent.
We have also acted to give back to business the resources needed for innovation. The hon. Member for Rutland and Melton mentioned tax. As my right hon. Friend the Minister of State, Department of Trade and Industry pointed out, the hon. Gentleman omitted to mention the fact that corporation tax has been cut to 30 per cent.—its lowest ever level. The starting rate for small firms has also been cut to its lowest level ever—10 per cent. The ratio of tax to gross domestic product is lower this year than it was last year; over the next two years, it will be lower than it is this year. The total corporate tax burden on business in this country is lower than in most EU countries.
Of course, Government must do more than that. We must help to create the essential infrastructure of knowledge and skills. The value placed on that by the Conservatives is demonstrated by the fact that, when we came into office, we inherited a science budget—the underpinning for innovation—that was due to fall by 5 per cent. over the following two years. We took the necessary action. We made available for the science base an extra £1 billion over the next three years. By 2001–02, the science budget will be about 15 per cent., in real terms, above its value in 1998–99.
The hon. Member for Eastleigh spoke about DTI support for innovation. I am glad that he raised that issue. We have given a £100 million boost to the smart scheme for small and medium-sized enterprises to undertake research and development and technology development. The research and development tax credit that we are introducing will underwrite almost one third of R and D costs for SMEs. That will give a crucial boost to innovation in a sector that Members on both sides of House will agree is a critical motor for our future economic development.
Mr. Chidgey: I welcome the hon. Gentleman's comments. Does he share my concern that, in our economy, over time, the amount of investment in R and D as a proportion of GDP has fallen compared to the nations with which we compete? Is the Government's policy to try to restore, over time, the level of R and D investment as a proportion of GDP to one that at least equals that in our competitor nations?
Mr. Wills: The hon. Gentleman is right. We inherited a desperate situation when we came into office. I agree with him on that point. We are taking the necessary measures to put right that situation. There is now a Labour Government and we are moving forward—at last. We are investing in the skills of our people—the crucial underpinning for the enterprise economy. We are providing £21 billion new money for education; we are setting up the university for industry to encourage lifelong learning. By 2002, we shall give every school in the country access to the unique learning opportunities afforded by the internet—95 per cent. of those schools

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will be connected by a high-speed ISDN line. We are using the best technology that is available; we shall carry on doing so for our children's future.
Mr. Bercow: I suspect that the hon. Gentleman's compendium of knowledge on that latter point is not as comprehensive as it might be. Does he think that it is right that Gawcott county first school, a very small school in my Buckingham constituency, should pay the same for line rental, for the purposes of internet access, as a large comprehensive? That is the current position.
Mr. Wills: As always, I am astonished by the hon. Gentleman's knowledge of his constituency. If he gives me details about that school, I shall be happy to look into it.
In relation to the general point about line access, we realise that, if we are to build the essential electronic infrastructure, it is a fundamental goal that we must roll out those technologies as quickly as possible; that means considering the whole question of internet access.
Oftel—the Office of Telecommunications—published a consultation on the matter and is digesting the results. We await Oftel's proposals. I assure the hon. Gentleman that these matters are close to my heart and to that of the Government.
We have launched the £20 million reach-out fund which will help to foster closer links between universities and business. We are also increasing the DTI's innovation budget over the next three years to some £230 million.
We all agree that small firms will be the crucial motor for growth and prosperity in the years ahead. We are launching the Small Business Service to create a ladder of opportunity for all small businesses, to help people move from employment or unemployment into self-employment, to help them over that critical stage in self-employment when they take on their first employee, and all the way up the ladder.
When small firms face critical barriers to growth, the Government will offer help if they want it. We are not thrusting it down their throats. We are leaving them to get on with it, but sometimes businesses need help and support, because markets do not always work perfectly. With his in-depth knowledge, the hon. Member for Rutland and Melton knows that the markets can be lumpy and patchy, and small firms often face particular barriers to growth. The Government will be there to help them if they want.
One of the most onerous administrative burdens that small firms face is administering the payroll. We will help them with the automated payroll service. We will help them with the burden of regulation, in the way that has already been discussed. We will help small firms with access to appropriate finance. There is a critical equity gap for many small firms—
Mr. Chidgey rose—
Mr. Wills: I will make progress, if I may.
We will help small firms with the critical equity gap by rolling out regional venture capital funds, which will help with the smaller packets of venture capital that are so lacking at present. [Interruption.] I know that Opposition Members are talking among themselves and are not very
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interested in what we do for small firms. They should be more concerned than they are. It is all very well talking the talk now, but when they were in government, they did not walk the walk.
I remind Opposition Members that the average net loss of small businesses in every year of the 1992 to 1997 Government—that is, the surplus of companies closing over companies opening up—was 72,000. In 1992, more than half a million companies closed down. That represents half a million heartbreaks for the people who risked everything, worked hard and were let down by the Government.
By way of contrast, in the first full year of a Labour Government, there was a net gain of 36,000 businesses opening up. That is the difference between us and them. There was a net loss, on average, in every year of the John Major Government, with 72,000 companies closing. Under new Labour, there has been a net gain of 36,000 companies opening.
Mr. Duncan rose—
Mr. Wills: I give way.
Mr. Deputy Speaker (Mr. Michael Lord): Order. Before the hon. Gentleman intervenes, I remind the Minister that he must refer to hon. Members by their constituency.
Mr. Wills: Indeed, Mr. Deputy Speaker. I apologise.
Mr. Duncan: What concerns us is that the Minister's long litany of action that the Government will take—he got quite animated when he was citing it—smacks of Government intervention and Government intrusion. Is he saying that the regional venture capital funds will be state funds, or will they be entirely private enterprise funds?
Mr. Wills: The hon. Gentleman should recognise the difference between intrusion and support. I hope that, as the months unfold, he will grow to learn and appreciate the distinction between them. On regional venture capital funds—
Mr. Chidgey rose—
Mr. Bercow rose—
Mr. Wills: I will deal with that point, if I may, and then give way to the hon. Gentlemen, who are obviously desperate to intervene again.
Regional venture capital funds will be a private-public sector partnership. We are putting in public funds to lever in considerably greater sums of private sector capital. We have been working closely with the private sector on the matter.
Mr. Chidgey: I have listened with great interest as the Minister has expressed enthusiastic support for small business in particular. Will he address a particular issue? A recent survey has shown that there is only 6 per cent. take-up of Government programmes by business. What, precisely, will he and the Government do to improve that?
Mr. Wills: I again make the point that we are there to offer support for business if and when it wants it. We are

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providing that support and make no secret of it. We intend constantly to improve the quality of that support. We are not thrusting it down the throat of business, as the hon. Member for Rutland and Melton seems to be suggesting, nor should we do so, as the hon. Member for Eastleigh seems to be suggesting. We are providing support for businesses when they want it—the support that they need and deserve.
Mr. Bercow: In waxing lyrical about the fortunes of small firms under the Government, the Minister exudes alarming complacency. Does he accept the findings of the Dun and Bradstreet survey, which shows in the first quarter of this year a 32 per cent. increase in small company liquidations relative to the same period last year? In particular, does he acknowledge that the percentage increase in his—[Interruption.] I do hope he is attending to the point; it is of the utmost significance. The increase in small company liquidations in his own south-west region is 40 per cent. Does he accept that? Is he worried by it? Will he show a bit of concern? Above all, will he do something about it?
Mr. Wills: I had hoped that the hon. Gentleman knew me well enough by now to know that I am never complacent about anything. Governments can always do better and we will not take things for granted, which is the trap that the previous Government fell into. Businesses, too, can always do better and everything the Government have done shows that we are not complacent.
One reason for rolling out the Small Business Service is that we think that business support can be made better still. We will welcome all views on that, including those of the hon. Member for Buckingham. We want to make sure that mechanisms are in place to provide business with the support that it deserves and needs. If he wants to come up with further suggestions, I can assure him that they will be gratefully received, if not necessarily acted on.
If I may, I shall move on to Europe. Given the visceral instincts of the Conservative party towards the European Union and the European single market, it was perhaps inevitable that a debate about innovation and enterprise would somehow end up on that issue. Labour Members believe that the innovative genius and enterprise of our people could run to waste unless this country is actively engaged with our trading partners to ensure that our companies can sell as easily overseas as they can at home.
We are a great trading people. [Interruption.] Does the hon. Member for Rutland and Melton disagree?
Mr. Duncan: So far, so good.
Mr. Wills: I am delighted that, from a sedentary position, the hon. Gentleman has agreed with that proposition. We are a great trading people and we need to engage actively with our trading partners overseas, so I am unclear why Conservative Members lash out at the EU and at the single market, where we do more than 50 per cent. of our trade. [Interruption.] The hon. Member for Rutland and Melton disagrees with me that the Conservative party is opposed to the European Union, the European single market and everything that goes with them. Would he like to clarify his position?
Mr. Duncan: I am perfectly happy to confirm that the Minister is wrong when he says that we are opposed to the European Union and the single market.
Mr. Wills: I am grateful for that. The hon. Member for Buckingham said that he deplored politicians who speak rhetoric, but do not deliver the means to deliver on the rhetoric. Perhaps the hon. Member for Rutland and Melton will explain in a little more detail how the constant carping about and sniping at Europe, the constant removal of Conservative Ministers from any discussion on European issues when they were in office, opting out of the social chapter and the contempt that Conservative Members so often show for the policy measures put forward by our European partners will further the integration of the single market.
Mr. Duncan: Because we wish to be in Europe, but not run by Europe, and because we wish to preserve the right to make our own law, we urge the Government to discuss more widely the dangers of the single currency, on which the electorate recently delivered a damning verdict.
Mr. Wills: I wondered when we would get to the soundbites; I have now found out. I believe that the most recent opinion poll suggests that the verdict in the European elections had absolutely nothing to do with anything except the low turnout. The Conservative party managed to mobilise its core support with a rather extreme manifesto based on a misunderstanding of what is going on in Europe, but that is a matter for that party. At the general election, we shall see what verdict the British people place on our respective policies towards Europe.
Mr. Bercow: The hon. Gentleman seems to labour under the misapprehension that he has a strong case on the subject of the European Union. First, it is important that he should not exaggerate the figures and get them wrong. Will he now acknowledge that he was wrong to say that more than 50 per cent. of our trade is conducted with the European Union? That is simply factually wrong; the figure is below 45 per cent. Secondly, will he acknowledge that the share of Britain's trade with the European Union is declining and that the share of Britain's trade with countries outside the European Union is rising? Will the hon. Gentleman conduct an honest debate and stop giving credence to untruths?
Mr. Wills: I am baffled about how the hon. Gentleman thinks that this will advance the argument. Even he must concede that the European Union is a crucial trading partner of this country. The single market is a key part of our economic future.
I still have not received an answer to my basic question. How does the hon. Gentleman think that the co-operation and partnership that are necessary to make that single market work, and to enable our companies and businesses to take advantage of the single market, to be in Europe, to shape Europe and to reform Europe, while not being run by Europe—[Interruption.] No, we are not being run by Europe. How is all that helped by standing on the sidelines and shouting, as the previous Government did, and as the Conservative party is threatening to do,

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should it ever return to government? If any Conservative Members want to try to illuminate that point, I shall be happy to give way again, but they—
Mr. Bercow: I am obliged to the hon. Gentleman for wanting me to favour the House with my further views on this matter. I should have thought that it was abundantly clear. It is what the late Enoch Powell would have said was a point so obvious that only an extraordinarily clever person could fail to see it. The answer is that we have a conviction about the nature of the relationship that we should enjoy with the European Union, and believe that the policy of the Government should be to fight for being in Europe and not run by Europe, whereas the Labour Government just believe in supine acquiescence and me too-ism. That is the difference. They believe in being told what to do; we believe that if we have self-respect and fight our corner, we have a better relationship with the European Union. That is the distinction between us.
Mr. Wills: I am not absolutely sure that that is the difference between us. The hon. Gentleman talks about having a conviction about the approach to Europe. With the greatest respect to him, I would categorise it differently. I would describe the Conservative position as a visceral antipathy to Europe. I believe that the Conservative party is embarking on a slippery slope towards withdrawal.
One question that the Conservatives have not yet answered in their new European policy—they have had several European policies since 1997; there may be more to come—is what will happen if the European Union does not accept their plans to renegotiate and only to take part in things pertaining to the single market. It is interesting that the Conservatives think that they will be able to confine their activities to that. However, leaving that point aside, what will they do when the rest of the European Union refuses to have anything to do with the fantasies that they are currently promulgating?
It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Denbighshire County Council (Funding)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hanson.]
2.30 pm
Mr. Gareth Thomas: Denbighshire county council is one of the smaller unitary authorities in Wales. It is a creature of the Local Government (Wales) Act 1994 and local government reorganisation. Its birth and early years have been particularly difficult as a result of local government reorganisation, and the disastrous legacy of debt that Denbighshire inherited from one of its predecessor authorities, Rhuddlan borough council.
Many of my constituents live within Denbighshire county council's area. It is a diverse county embracing a large rural hinterland, which includes the historic markets towns of Denbigh and Ruthin, the latter being in my constituency. It also has a populous coastal belt centred on the seaside town of Rhyl, so vigorously represented by my hon. Friend the Member for Vale of Clwyd (Mr. Ruane), who unfortunately cannot be present today. However, I know that he would support fully the case that I propose to put on behalf of Denbighshire county council. My colleague, the Assembly Member for Clwyd, West, Mr. Alun Pugh and Mrs. Ann Jones, the Assembly Member for Vale of Clwyd, would also wholeheartedly support my case, as would the Chairman of the Select Committee on Welsh Affairs, my hon. Friend the Member for Clwyd, South (Mr. Jones), part of whose constituency includes an area of Denbighshire.
I am sure that the Minister will know that my hon. Friend the Member for Vale of Clwyd and I have been actively involved in this vexed issue since we were elected in 1997. He will also know that the Rhuddlan legacy has been the subject of an inquiry by the Select Committee on Welsh Affairs. Minutes of evidence of that inquiry have been published, and the report is awaited. The subject has also been dealt with by the district auditor on a number of occasions. A public interest report has been produced in view of the grave public disquiet about the matter. That report has, itself, been subject to a review.
I have met the Minister several times to discuss this matter. He has given a positive and helpful response to the crisis—I call it a crisis—with which Denbighshire has had to deal. However, a bad position has got markedly worse in recent weeks.
The purpose of this debate is, first, to spell out just how serious Denbighshire county council's financial position now is, especially in the light of fresh evidence of mismanagement of European regional development funds by Rhuddlan borough council.
Secondly, on behalf of my constituents, I shall underline the practical effect this problem has and will have on the services that Denbighshire county council provides, particularly in relation to schools, highways and other essential features of the work of a local council. Thirdly—I suppose that this was my main purpose in raising the issue—I invite the Government, in the form of both the Welsh Office and the Welsh Assembly, to give renewed and urgent attention to the need to devise a long-term solution to the county's problems, so that its finances can be put on a sustainable basis. I emphasise "long-term".

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The problem concerns the allocation of capital, rather than revenue. There is concern in Wales about what is described as the formula for allocation of revenue support grant, but I am not concerned with that today. The council has inherited what its chief executive, Mr. Huw Thomas, has rightly described as a "crushing and unexpected" burden of debt.
I am not talking about Denbighshire's position in absolute terms, or its position in the league table of local authority debt that the Minister may have in his possession, which might put a rather less damaging gloss on the situation. I am talking about the position of what, on any view, is a small county with a small capital base: a county that is experiencing serious repayment difficulties. I am just as concerned about the manner in which the debt is expected to be repaid as I am about the size of that debt.
At present, it seems that the debt inherited from the predecessor authority may well be as much as £10.7 million. It is unrealistic to suppose that that will not have a disastrous effect on the council's functions. This is how the debt is made up: Rhuddlan's capital deficit in 1995–96 was £3.9 million, and the carry-over payments for its capital schemes amounted to £3.3 million; Ffrith beach's clawback in regard to the European regional development fund—the amount that is now due—is £0.8 million. A further amount of £0.3 million is likely to be payable on the scheme. According to a report produced by Deloitte and Touche the accountants, at the behest of Denbighshire county council, there is likely to be further ERDF grant clawback totalling £2.3 million. The total inherited debt therefore amounts to £10.7 million.
Those figures should be seen in the context of Denbighshire's basic credit approval and its power to raise and spend capital: about £6 million per annum. However, when ring-fenced elements such as housing revenue accounts and housing improvement grants have been taken into consideration, the general element of the basic credit approval—in other words, what is available to finance capital expenditure—is £3.29 million. That is the starting point.
From that amount, Denbighshire must find money to finance highway repairs, school refurbishments, council house repairs and so forth. Moreover—crucially—it must find money for an increasing array of schemes provided by various grant agencies that are in a position to give the county much-needed capital resources, but only if the council can match the funding. That is an increasing feature of the way in which capital is provided for county councils. A small local authority unit with a modest BCA—on any view, even without inherited problems—would be hard pushed to maintain an adequate capital programme.
I commend to the Under-Secretary the minutes of evidence of the Welsh Affairs Select Committee's inquiry into the Rhuddlan legacy for a fuller account of the funding gap that arose shortly after the reorganisation, when it became apparent that Rhuddlan had overspent to the tune of £3.9 million—which is the first element of the legacy.
About two years ago, after lobbying by my hon. Friend the Member for Vale of Clwyd and me, the Welsh Office responded to the gap by devising a package through a
1488
special credit approval enabling Denbighshire to borrow an extra £2.5 million. The important point is that this money is repayable from Denbighshire's basic credit approval—its core capital and spending power—at the rate of no less than £500,000 per annum for five years, commencing in 2001–02. That is the major concern.
In the light of subsequent events, the repayment schedule is untenable. I ask the Minister, most earnestly, to take on board that fact. I should also add that Denbighshire county council has dealt with the balance of the overspend by recyling housing grants and by other action.
The second element of the legacy is what has been described as the carry-over of excess capital liabilities inherited from Rhuddlan, amounting to £3.3 million, and representing bills due that were incurred by Rhuddlan—which had led Denbighshire officials to believe that they would amount to no more than £400,000. As time wore on, however, the full scale of the carry-over became apparent.
I pay tribute to the officers of Denbighshire county council, particularly its chief executive, Mr. Huw Thomas, and its finance director, Mr. Nigel Thomas. I have no quarrel at all with them, but am entirely supportive of their efforts to do the best of a very bad job. They have sought to regularise Denbighshire county council's accounts, and have taken valiant steps to do so by devising ingenious methods of diverting capital resources, maximising resources and managing payments. The £3.3 million carry-over is being dealt with by such methods. Consequently, however, Denbighshire has had to forgo pursuing many of its objectives, and to concentrate largely on servicing its inherited capital commitments.
The third element of the legacy—as if all that were not serious enough—is the dire problems that have arisen as a result of the gross mismanagement of ERDF funds by the predecessor authority, putting Denbighshire in the invidious position of having to repay moneys to the ERDF by way of grant clawback. In the light of the new circumstances, the real fear is that unless there is a creative package of aid or—quite frankly—debt relief, that grant clawback will have to come out of basic credit approval.
Denbighshire county council needs to be able to repay the clawback from its revenue accounts through a special credit approval, payable not through the BCA over a short period, but over a much longer period, thereby putting its affairs on a much more sustainable basis.
The Minister is well aware of the problems associated with the Ffrith beach development. The council now considers it likely that the full extent of the grant—£1.1 million—will be repayable. I spoke to the chief executive recently and he feels that that is almost inevitable. However, the Deloitte report was referred to in Denbighshire's evidence to the Select Committee. It indicated that further steps would be taken to assess the size and extensiveness of the problem of the mismanagement of EU funds. The report was published last month. It is likely that no fewer than three schemes are not capable of being signed off or certified as conforming with the original grant claims. I refer to the children's village, the Rhyl station gateway and the Rhyl high street pedestrianisation. Consequently, there is a very real prospect that £2.3 million will have to be paid back by way of grant clawback.

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In my view and that of the chief executive, this latest development puts the council in a critical position. There are issues as to how the predecessor authority could ever have got itself into a position whereby EU funds and grants from other agencies were mishandled, misspent and abused. I shall not pursue it now, but in my view there is certainly a moral and political case that the Welsh Office should be held liable to Denbighshire because it can reasonably be argued that inadequate control was exercised over the manner in which Rhuddlan and other councils in Wales administered ERDF funds. I may wish to pursue that point at a later stage, but at the moment I am more interested in the way forward.
It is important for the public to know that Denbighshire finds itself in an invidious and difficult position not as a result of its own actions, but as a result of actions taken by the predecessor authority, because in law the successor authority stands in the shoes of the predecessor authority. I am asking the Minister—and the National Assembly—to give the most sympathetic consideration to that point.
The size of the capital debt problem is beyond what is reasonable for an authority to manage alone, especially when it is not responsible for its inheritance. I am not expecting the Minister today to give me any firm indications as to what he or certainly the Welsh Assembly would propose to do. First, I am seeking an indication that the Government realise the exceptional nature of Denbighshire's predicament. As far as I am aware, no other authority in England or Wales has experienced similar problems. Secondly, in due course I hope to have meetings with the First Secretary and other Secretaries of the National Assembly, together with fellow Members of Parliament and Assembly Members representing Denbighshire, to discuss the issue. I seek a way forward to relieve the pressure on Denbighshire's basic credit approval by allowing a flexible package whereby an SCA could be granted to cover the debt, particularly in relation to the clawback.
The original rescue package is totally inadequate in the light of the new evidence. I am making a plea on behalf of my constituents. I have been provided with a long list of capital projects that the county would like realised. It amounts to £26 million of much needed work. There is an enormous backlog of highway repairs and council house repairs. I am particularly concerned about the state of the fabric of Brynhyfryd school in my constituency. The pressures on its resources are greater because it is a bilingual school. It does excellent work, but the physical environment is disgraceful. Little can be done for the school unless the pressure on Denbighshire's capital budget is relieved. I hope that my hon. Friend the Minister will take that on board and will carry the message to Cardiff and the National Assembly.
2.51 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Jon Owen Jones): I congratulate my hon. Friend on securing the debate. Today was almost his last chance to raise the subject here, because within six days it will be a matter for the National Assembly for Wales.
I recognise the importance of the issue. From the moment that it became evident, after the reorganisation of local government in 1996, that Denbighshire county council would be facing financial difficulties as a result of the capital spending of the former Rhuddlan borough
1490
council, the Welsh Office began to work closely with the council. By early 1997 it was clear that the council had inherited a substantial, unanticipated debt, although its precise level is still unclear.
On the basis of the figures that I have looked at, the outstanding loan debt of Denbighshire is in the lowest third of all Welsh unitary authority debts. All Welsh unitary authorities inherited debts. That relative position takes into account the council's relative size. It is difficult to accept that the problem is particularly acute in Denbighshire in an absolute or a relative sense. However, I sympathise with my hon. Friend on the potential and uncertain increase that could confront the authority as a result of possible clawback that may be required by the European Commission owing to the apparent poor control exercised by the former Rhuddlan borough council.
Those problems are highlighted by the fact that the district auditor had considerable difficulty in tracing papers relating to the accounts. Denbighshire was offered a financial package that helped the authority to service its capital debt and to minimise the effect on service provision and the level of council tax. The package allowed the council to use £1 million of supplementary credit approval, originally issued for home renovation grants, for unfinanced capital expenditure. The package also gave the authority an additional SCA of £1.5 million towards unfinanced expenditure. That SCA was issued on the understanding that the authority would repay it by accepting a reduction of £500,000 a year in its basic credit approval over three years, starting in 1998–99.
In August 1997, following the publication by the district auditor of a public interest report, the then Under-Secretary, my hon. Friend the Member for Bridgend (Mr. Griffiths), authorised an enhanced financial package, which included a supplementary credit approval of £2.5 million, with a repayment period of five years beginning in this financial year.
Because of the particular circumstances surrounding the financial position of Denbighshire and the public interest that it evoked, the Welsh Affairs Committee has been investigating the problems caused by the inherited debt, and has sought to establish what lessons could be learned for the future. The Committee is expected to issue its report in a few weeks' time.
In giving oral evidence to the Committee, Denbighshire's chief executive took a positive approach, saying that now that the authority has
"brought the Rhuddlan accounts into Denbighshire's and obtained assistance from the Welsh Office, we can actually put this behind us and create something new for Denbighshire."
The district auditor, in summarising his evidence, said:
"Given Denbighshire's positive approach, the assistance provided by the Secretary of State and the Council's position relative to other Welsh authorities, if further problems do not arise, with careful planning and monitoring, Denbighshire should be able to manage its financial position."
The financial packages had been offered against a background of uncertainty as to the precise extent of the debt. Earlier this year, my right hon. Friend the Secretary of State issued Denbighshire with a further supplementary credit approval to enable the council to complete a review of its capital programmes, and particularly the capital projects that it had inherited from Rhuddlan. This review,

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conducted by Deloitte and Touche, has recently been completed, and highlighted various matters that needed to be addressed.
Among those matters—as my hon. Friend the Member for Clwyd, West (Mr. Thomas) has indicated—are certain issues concerning four European regional development fund projects sponsored by Rhuddlan borough council. My officials have already held informal discussions with chief officers of Denbighshire about these projects, and are now urgently considering in greater detail the various options that might be open to us to handle the apparent difficulties.
The Commission has also become aware of the review and the possible implications for its ERDF investment, and has been sent a copy of the report. Arrangements have been made for my officials to meet the Commission on Monday to discuss the report and its possible implications.
This is not the only ERDF-related issue facing the authority. In October 1997, the European Commission informed the Welsh Office that it was considering, under article 24 of the co-ordination regulations, reducing, suspending or cancelling assistance to the Ffrith beach project on the basis that there had been a significant modification of the conditions on which the grant was awarded to it.
Having consulted Denbighshire about this approach, the Welsh Office responded to the Commission that, as action by the authority to attract private investment to the site was continuing, it was not unreasonable to expect substantial progress towards meeting the project outputs by 31 December 1999 so action under article 24 was inappropriate.
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The Commission does not at this stage appear to be convinced by that response and is currently seeking the repayment of £768,000 of ERDF grant, with the caveat that it is prepared to leave the remaining £357,000 with the authority until 31 December 1999—the programme's closure date. At that point, it will wish to consider whether the original outputs have been achieved. The Commission will decide at that time whether or not to seek repayment of the £357,000 from Denbighshire.
Both we and the authority are continuing to resist the Commission's demands over Ffrith beach, but whether we will ultimately be succesful is impossible to predict. To provide the authority with the wherewithal, if necessary, to make any repayments, we have agreed with Denbighshire that if the Commission reclaims grant, we will reduce the amount of supplementary credit approval that the authority has to repay.
I trust that it will be evident to my hon. Friend the Member for Clwyd, West that I fully recognise the gravity of the financial position confronting Denbighshire and that we have done all that is possible and reasonable to assist the authority either to avoid potential repayments or, where those are inescapable, to assist, as far as we can, with the necessary resources to facilitate the repayments. My hon. Friend will realise that the Welsh Office has to be seen to act fairly with Denbighshire, but also with other local authorities.
From next Thursday, these responsibilities will pass to the National Assembly for Wales, which I am sure will continue to work closely with Denbighshire to help it resolve its problems.
Question put and agreed to.
Adjourned accordingly at Three o'clock.

EDUCATION AND EMPLOYMENT

  New Deal (Over-50s)
  Mr. Ben Chapman
  To ask the Secretary of State for Education and Employment if he will make a statement on progress on the introduction of New Deal 50 plus. [89006]

  Mr. Blunkett
  The New Deal 50 plus, announced by my right hon. Friend the Chancellor of the Exchequer in his Budget speech, 9 March 1999,Official Report, columns 173–90, will offer real and substantial support to people over 50 who wish to find jobs.

  The New Deal will be voluntary and will offer people 50 and over who have spent six months on either JSA, Income Support, Incapacity Benefit or Severe Disablement Allowance help with jobsearch through individual advice from an employment adviser and programme centre provision. When an eligible 50 plus client finds a job they can claim an employment credit of £60 per week for full-time work or £40 per week for part-time work for 52 weeks and training support of up to £750. The Employment Credit, when taken with the minimum wage, will represent a minimum income guarantee of £9,000 for people taking full-time jobs. I believe this represents a huge step in providing real help to older workers who face greater difficulties in finding sustainable employment.

  We have confirmed the following New Deal units of delivery as pathfinder areas for the launch of New Deal 50 plus in October:
  Black Country; City Pride; Dorset; Durham; Edinburgh East and Midlothian; Hull; North Derbyshire; North East Wales; and Oxfordshire.

  The pathfinders will enable us to learn lessons about the operation of New Deal 50 plus and spread good practice before national roll out in early 2000.

  Correspondence
  Sir Brian Mawhinney
  To ask the Secretary of State for Education and Employment when the right hon. Member for North-West Cambridgeshire will receive a reply to his letter of 11 May on behalf of a constituent, Mrs. Hallam. [88409]

  Mr. Mudie
  A reply will be issued on 28 June 1999.

  New Deal (Young People)
  Mr. Maclean
  To ask the Secretary of State for Education and Employment if he will provide a breakdown of the percentage of participants in each of the New Deal for Young People options who have left for unsubsidised employment up to the most recent date for which information is available; and what assessment 468
  he has made of the performance against Government targets on improving employability through undertaking New Deal options. [87179]

  Mr. Andrew Smith
  The latest Government Statistical Service figures to the end of April 1999 show that 23,900 young people have left one of the New Deal options. Of these 8,860 (37 per cent.) are known to have found sustained unsubsidised employment. This breaks down to 56 per cent. of young people leaving the Employer option, 35 per cent. from the FTET option, 41 per cent. from the Voluntary Sector option and 35 per cent. from the Environment Task Force.

  These figures under-estimate the true proportion of young people finding work because many of the clients recorded as having "unknown destinations" will, in fact, have found work although they have not notified the Employment Service.

  A recent large scale quantitative survey of young people who left the New Deal for unknown destinations showed that at least 43 per cent. have moved into work.

  A quantitative survey of individual participants was launched earlier this year which will assess improvements in employability. Initial results from this survey are expected in September 1999.

  Mr. Maclean
  To ask the Secretary of State for Education and Employment if he will estimate how many participants in(a) the New Deal for Young People and (b) the New Deal for over 25s have left the New Deal to be transferred from unemployment benefits to incapacity benefit in the categories of those leaving for (i) other known destinations, (ii) unknown destinations and (iii) transfers to other benefits. [87177]

  Mr. Andrew Smith
  People who leave New Deal to transfer to Incapacity Benefit are recorded as "transfers to other benefits" in the published statistics as it is not currently possible to break the statistics down to specific types of benefit. The latest Government Statistical Service figures to the end of April 1999 show that 19,170 young people had left New Deal to transfer to other benefits and 7,100 clients left the New Deal for long term unemployed people aged 25 and over for other benefits.

  A quantitative survey of individual participants was launched earlier this year which will assess movements into other benefits. Initial results from this survey are expected in September 1999.

  Mr. Maclean
  To ask the Secretary of State for Education and Employment if he will estimate the proportion of those individuals leaving the New Deal for Young People for unknown destinations who have left to work in the black economy. [87178]

  Mr. Andrew Smith
  It is difficult to make any reliable estimate of the number of young people who have left New Deal for unknown destinations who have left to work in the "black economy". People who were working and claiming benefit until caught out by the New Deal are unlikely to declare that when they cease claiming Jobseeker's Allowance. Anyone who attempts to reclaim Jobseeker's Allowance within 13 weeks of leaving New Deal will automatically re-enter the New Deal at the point which they left. That reduces significantly the risk of young people working and claiming benefits.

  Disabled People (Employment Opportunities)
  Mr. Llew Smith
  To ask the Secretary of State for Education and Employment what assessment he has made of the implications for employment opportunities for the disabled of the withdrawal of the Green Card DP21, version 1/93. [87493]

  Ms Hodge
  The arrangements now in place to improve employment opportunities for disabled people are more effective than the previous system based on registration as a disabled person under the Disabled Persons (Employment) Act 1944 giving access to a "quota" of jobs in larger organisations. Experience showed that the registration process leading to the issue of the Green Card (DP21) and quota system failed to secure job opportunities for disabled people.

  The Disability Discrimination Act 1995 (DDA) provides a framework of rights for disabled people which are enforced through Employment Tribunals. We have already demonstrated our commitment to comprehensive enforceable civil rights for disabled people through a reduction in the threshold for employment rights to 15 bringing in an extra 70,000 disabled employees within the scope of the DDA; and by introducing the Bill to establish a Disability Rights Commission. The Disability Rights Task Force will be reporting on what further is needed to strengthen employment rights.

  Equally, many disabled people are benefiting from the New Deals introduced in the last two years. The New Deal for Disabled People is testing a range of initiatives, to help disabled people and those with long-term illness into work at a cost of £195 million. We have also expanded the specialist disability employment programmes run by the Employment Service. These include help from Disability Employment Advisers, the Supported Employment Programme, Access to Work and the Job Introduction Scheme.

  Remploy
  Mr. Llew Smith
  To ask the Secretary of State for Education and Employment (1) what consultations he had with trades unions in the preparation of the Remploy Corporate Plan; [87491]

  (2) what plans he has to review Remploy's Corporate Plan in respect of its potential effect on the skill levels of Remploy employment; [87492]

  (3) what guidelines exist to promote the replacement of employees of Remploy with other disabled persons. [87501]

  Ms Hodge
  There have been no discussions between the Remploy Trade Unions, which represent the weekly paid employees, and the Remploy Management in preparing the Remploy 1999–02 Corporate Plan. I understand that the Remploy Trade Unions were invited by the Remploy Board of Directors to a meeting to discuss the Plan in April this year. The Remploy Trade Union, MSF, which represents the majority of the monthly paid employees, was the sole union to attend the meeting. The Remploy Board have made clear that they would welcome discussions with the Trades Unions before, and during, the development of the next Corporate Plan.
  470
  As the Corporate Plan 1999–02 has just been published, there are no plans to review it. I understand that Remploy are not expecting deskilling of employees as a result of planned changes. Remploy has necessarily had a long experience of retraining its disabled employees to adapt to changes in the labour market and increased competition from other countries. By taking the initiative in this way, Remploy continues to best protect the interests of its disabled workforce.

  The Government have set the Remploy Board of Directors a range of annual performance targets that are the parameters within which Remploy operates. The targets for 1999 have been announced recently in the House, and include a target to increase the number of disabled people employed by the Company. This year's target is to employ an overall total of 10,150 disabled people. How this will be achieved is a matter for the Remploy Board, but the chief means of doing this will be by recruitment through Remploy's interwork programme.

NORTHERN IRELAND

  Further Education Lecturers
  Mr. John Cryer
  To ask the Secretary of State for Northern Ireland if she will list the changes made in Northern Ireland further education lecturers' conditions of service between 1993 and 1998. [87784]

  Mr. McFall
  In 1996 a revised contract for full-time FE lecturers was introduced. The working year was increased from 190 to 200 days and the number of vacation days reduced to 49 days plus public holidays. The working week was increased from 30 hours to 36 hours and the maximum number of student contact hours within the working week was increased from 21 to 23 hours. A copy of the contract will be placed in the Library.

  Decommissioning
  Mr. Moss
  To ask the Secretary of State for Northern Ireland if it is her policy that Sinn Fein should be allowed to hold an executive position in the Assembly before the IRA has started decommissioning weapons. [87901]

  Marjorie Mowlam
  The Government's policy is to implement the Belfast Agreement in full. The Agreement requires the establishment of an Executive Committee on a proportionate basis dependent on the number of seats each party has in the Assembly. The Agreement also commits all parties to the total disarmament of all paramilitary organisations and to use whatever influence they may have to achieve decommissioning of all paramilitary arms within two years of the referendum and in the context of the implementation of the overall settlement. Decommissioning, though not a prior precondition to the establishment of the Executive, is a requirement of the Agreement. In order to achieve the successful implementation of the Agreement, everyone must be confident that all aspects will be implemented.

  Criminal Justice(Terrorism and Conspiracy) Act 1998
  Mr. Donaldson
  To ask the Secretary of State for Northern Ireland how many individuals have been(a) arrested and (b) charged with offences under the provisions of the Criminal Justice (Terrorism and Conspiracy) Act 1998. [87890]

  Mr. Ingram
  [holding answer 22 June 1999]To date no one has been arrested or charged under the provisions of the Criminal Justice (Terrorism and Conspiracy) Act 1998.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Fuel Tax Escalator
  Mr. Paul Marsden
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the impact of the fuel tax escalator on car users in rural areas. [87865]

  Ms Glenda Jackson
  My Department always keeps under review policies that impact significantly on the areas of transport, environment and other policy areas for which it is responsible, including on any specific sectors, and continues to monitor the impact of the fuel duty escalator. We are, of course, concerned to ensure that a balance is struck between legitimate environmental concerns and the transport needs of rural motorists. Increasing fuel taxation by itself will not be sufficient to achieve all our environmental objectives. People ultimately need real alternatives to the car, and this is one of the reasons behind our development of an integrated transport policy —the framework for which we published in July 1998 in our White Paper on the future of transport,A New Deal for Transport. We are also seeking to improve transport choice through the £170 million of additional funding which we have made available for public transport in rural areas.

  Car Safety Equipment
  Mr. Paul Marsden
  To ask the Secretary of State for the Environment, Transport and the Regions if he will introduce measures to make the carrying of a warning triangle, first aid kit and spare set of vehicle bulbs, compulsory for all car owners; and if he will make a statement. [87873]

  Ms Glenda Jackson
  The carriage of warning triangles and first aid kits is already recommended in the Highway Code. However, as it would be dangerous to walk on some roads to place a warning triangle the recommended distance behind the vehicle, the Highway Code advised that they should never be used on motorways.

  Most fuel stations carry replacement bulbs and in many cases the motoring rescue and recovery organisations would be able to supply and fit replacements when necessary.

  We therefore have no plans to require the carriage of warning triangles, first aid kits or spare bulbs in cars.

  Pollution (Older Vehicles)
  Ms Walley
  To ask the Secretary of State for the Environment, Transport and the Regions what research his Department has(a) commissioned and (b) evaluated on pollution caused by older cars, lorries and buses. [87898]

  Ms Glenda Jackson
  Research into the emission performance of older vehicles is regularly undertaken by my Department, to inform the National Atmospheric Emission Inventory and other air quality models. This involves the comprehensive testing of in-use vehicles of different ages, under different driving conditions. The Cleaner Vehicles Task Force has also been looking at the contribution of older vehicles to traffic pollution, in order to identify the most cost-effective options for reducing emissions from vehicles already in use.

  Ms Walley
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make it his policy to support the development of new technologies which can be fitted to older vehicles to reduce their emissions; and if he will make a statement. [87899]

  Ms Glenda Jackson
  The Government are pleased to support the use of technologies to reduce the environmental impact of older vehicles. We provide a VED incentive of up to £1,000 to hauliers and bus operators whose vehicles meet high environmental standards. These standards can be reached through conversion to run on alternative fuels, or the fitment of technologies like particulate traps. Through the Foresight Vehicle LINK programme, the Government are providing £12 million to support the development of a wide range of automotive related technologies. These include exhaust after-treatment systems which can be retrofitted to existing vehicles, as well as hybrid drive systems and lightweight materials for use in the next generation of vehicles. The Cleaner Vehicles Task Force has also been looking at what the most cost-effective solutions for reducing emissions from vehicles in use are.

  Correspondence
  Sir Brian Mawhinney
  To ask the Secretary of State for the Environment, Transport and the Regions (1) when the right hon. Member for North-West Cambridgeshire will receive a reply to his letter of 28 April to the Minister of State on behalf of a constituent, Mrs. Bamsley; [88408]

  (2) when the right hon. Member for North-West Cambridgeshire will receive a reply to his letter of 28 April to the Minister of State on behalf of a constituent, Mrs. Boyall. [88410]

  Mr. Meacher
  I wrote to the right hon. Gentleman on 22 June about his constituent's concerns regarding urban trees.

  District Line Closure
  Mr. Woodward
  To ask the Secretary of State for the Environment, Transport and the Regions what studies are in progress into the feasibility of the proposed closure next year of the London Underground District Line between Earl's Court and High Street Kensington. [88428]
  473
  Mrs. Liddell
  London Underground are building on the lessons learned from the review of this month's Circle Line closure into the planning process for next year's District Line closure between Earl's Court and High Street Kensington.

  So far, two options have been modelled and additional modelling is being commissioned by London Underground to forecast the impacts on passenger flows across the whole Underground network.

  Recycled Newsprint
  Mr. Paul Marsden
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the Recycled Content of Newsprint Bill. [87798]

  Mr. Meale
  One of the aims of this Bill is to increase the amount of recycled newsprint used in newspapers and magazines. We support that aim. We are giving serious consideration to what measures will need to be taken to achieve this, including an assessment of the impact and practicalities of a statutory scheme such as the one my hon. Friend the Member for Bury, North (Mr. Chaytor) has proposed.

  We have not ruled out the possibility of introducing legislation ourselves, perhaps under existing powers.

INTERNATIONAL DEVELOPMENT

  Serbia
  Mr. Streeter
  To ask the Secretary of State for International Development how her Department will differentiate between humanitarian aid and aid for reconstruction in relation to Serbia. [88117]

  Clare Short
  Humanitarian assistance is clearly different from reconstruction and development assistance throughout the international system. We have no plans to support reconstruction as long as Milosevic is in power. We believe this approach is widely shared by our partners and allies.

  Montenegro
  Mr. Streeter
  To ask the Secretary of State for International Development what help her Department is planning for Montenegro. [88116]

  Clare Short
  [holding answer 24 June 1999]We have allocated £90 million for humanitarian assistance in the region, including Montenegro. We shall continue to provide humanitarian assistance there whilst refugees remain and needs exist.

  Before the crises we were providing advice on the Government's programme of privatisation. We will review our support in the context of political developments in the region and the plans of the international community.

  We are also providing support through the EU, which has donated 13 million euro for refugee-related budgetary assistance to the Government of Montenegro.

HOME DEPARTMENT

  Stop and Search
  Mr. Gerald Howarth
  To ask the Secretary of State for the Home Department, pursuant to his answer of 8 June 1999,Official Report, column 264, on stop and search, if he will list the figures for stop and search nationally. [88228]

  Mr. Boateng
  Statistics on stop and search are collected centrally only on a quarterly basis. Figures are not yet complete for the period January to March 1999.

  Statistical bulletin "Operation of Certain Police Powers under PACE, England and Wales, 1997–98" (Issue 2/99) contained stop/search figures on an annual basis. A copy is in the Library.

  Prisons (Drugs)
  Mr. Malins
  To ask the Secretary of State for the Home Department how many prosecutions against persons taking drugs into prisons have taken place in each of the last five years; how many resulted in conviction; and of those, how many resulted in a custodial sentence. [88231]

  Mr. Boateng
  The Home Office Court Proceedings Database identifies prosecutions, convictions and type of sentence given for offences under the Misuse of Drugs Act 1971, as amended. But it does not identify the location of the offence.

TRADE AND INDUSTRY

  Correspondence
  Mr. Winnick
  To ask the Secretary of State for Trade and Industry when the hon. Member for Walsall, North will receive a reply to his letter of 27 April, regarding a constituent. [88230]

  Mr. Ian McCartney
  I replied to my hon. Friend on 24 June 1999.

  Parcelforce
  Mr. Fallon
  To ask the Secretary of State for Trade and Industry what data he has collated on the extent of the cross-subsidy of Parcelforce by Royal Mail in the financial years from 1994 to 1998. [85734]

  Mr. Ian McCartney
  The losses incurred by Parcelforce in recent years have been covered by loans from the Group Centre.

  Sub-Post Offices
  Mrs. Ray Michie
  To ask the Secretary of State for Trade and Industry how many sub-post offices in Scotland have closed(a) in total and (b) on a temporary basis since 1997; and how many have subsequently been reopened. [87902]

  Mr. Ian McCartney
  I understand from the Post Office that, since 1997, two sub-post offices in Scotland have closed permanently, 77 have closed temporarily, 39 have reopened and three new offices have been opened.

  Post Office Pension Scheme
  Mr. Fallon
  To ask the Secretary of State for Trade and Industry (1) what actuarial advice was received on the employee contribution rate to the Post Office Pension Scheme; and if his approval was sought for the rate chosen; [85736]

  (2) what discussions he has had with the Post Office about the future of the Post Office Pension Scheme and Post Office Staff Superannuation Scheme. [85735]

  Mr. Ian McCartney
  None. Issues concerning the Post Office pension funds are primarily a matter for Post Office management and the trustees of the funds who include representatives of the workforce.

DEFENCE

  Peacekeeping
  Mr. Ivan Henderson
  To ask the Secretary of State for Defence when the Government intend to sign the Memorandum of Understanding with the UN in relation to peacekeeping operations. [88805]

  Mr. George Robertson
  The Memorandum of Understanding with the UN will be signed in New York today. Our Ambassador to the UN and the UN Under-Secretary General for Peacekeeping will sign on behalf of the Government and the UN respectively. The MOU, which declares the UK forces potentially available for UN peacekeeping operations, reflects the priorities established in the Strategic Defence Review for improvements in our Armed Forces: a larger and better rapid reaction capability; additional strategic lift; and better logistics support. These capabilities are those most relevant to the UN and will enable the UK to make a more effective contribution to UN peacekeeping and humanitarian operations in future.

  Submarine Spent Fuel Cores
  Mr. Corbyn
  To ask the Secretary of State for Defence when the contract for the new Used Core Transport Package for transporting submarine spent fuel cores was awarded; and what was the cost. [87705]

  Mr. Spellar
  [holding answer 22 June I999]I refer my hon. Friend to the answer I gave to the hon. Member for Lewes (Mr. Baker) on 31 July 1998,Official Report, column 714.

TREASURY

  Correspondence
  Sir Brian Mawhinney
  To ask the Chancellor of the Exchequer when he will reply to the letter of 6 May from the right hon. Member for North-West Cambridgeshire on behalf of Mr. Lee, a constituent. [88407]

  Mr. Gordon Brown
  I have now responded.

SCOTLAND

  Forestry Commission
  Mr. Etherington
  To ask the Secretary of State for Scotland what is the current Government policy in relation to the sale of land by the Forestry Commission; and if he will make a statement. [87443]

  Mr. Macdonald
  We have stopped large scale sales of forest land by the Forestry Commission. Our policy is that the Commission may only sell agricultural land, land associated with houses and other buildings, unplantable land and relatively small and isolated blocks of forest land which do not make a significant contribution to its objectives and which are surplus to its requirements. The Commission may also sell areas for development where this is in the public interest. Areas of forest land which are important for public access will not be sold unless an access agreement is in place.

  Abattoirs
  Mrs. Ray Michie
  To ask the Secretary of State for Scotland when he expects the review of the costs of abattoirs and producers to be completed. [87690]

  Mr. Macdonald
  The review was established earlier this year, in response to widespread concerns, to assess the impact of meat inspection costs on abattoirs and producers and to look at the efficiency of the Meat Hygiene Service. The work is currently underway, the Government hope to complete the review quickly and will announce its conclusions in due course.

HEALTH

  Cancer Services
  Dr. Gibson
  To ask the Secretary of State for Health (1) when the Commission for Health Improvement will review and report progress made by the NHS across the country in cancer services; [87367]

  (2) when he will publish new standards for the treatment of certain cancers; [87369]

  (3) When he plans to set up a cancer action team to improve cancer care in hospitals; [87364]

  (4) when he will set up the NHS on-line guide to cancer symptoms and advice. [87370]

  Mr. Hutton
  On 20 May at a seminar attended by Health Ministers and leading cancer clinicians, my right hon. Friend the Prime Minister announced a plan of action to tackle cancer and save lives. This included the establishment of a Cancer Action Team to work with the National Health Service in raising standards of cancer treatment and care in all hospitals to that which is already being achieved in the best. A Director for the Cancer Action Team has now been appointed and will take up the post in July.

  The Commission for Health Improvement, working with the Audit Commission, will look at cancer as an early priority. Although the establishment of the Commission depends on legislation currently awaiting

  477
  Royal Assent, the intention is that the Commission be established later this year and make a start on its first full year programme of work from April 2000.

  In response to concerns expressed about the different regional approaches used in the implementation of Calman/Hine, we are developing a set of common national standards and performance measures. We plan to test them this year and roll out nationally next year.

  The Government fully support the need for patients to have clear information about cancer services. NHS Direct on-line will be launched in November this year. It will include a range of information about diseases and their treatment including access to good quality accredited information about cancers.

  Adoption
  Mr. Hunter
  To ask the Secretary of State for Health what assessment he has made of Hampshire Social Services record in respect of the processing of applications from aspiring adoptive parents relative to that of other social services departments. [87846]

  Mr. Hutton
  A survey will begin in July, to be carried out by the Social Services Inspectorate, of adoption services provided by each local authority in England. This is part of a planned assessment of progress made by local authority in implementing guidance we issued last August under circular Local Authority Circular (98) 20: "Adoption—Achieving the Right Balance". The survey will be followed later on in the year by a more detailed questionnaire and an inspection of a number of authorities. The results will be published in 2000.

  Mr. Hunter
  To ask the Secretary of State for Health what measures he proposes to take to accelerate social services departments' processing of applications from parents to adopt. [87847]

  Mr. Hutton
  I announced to the House on 16 June 1999,Official Report, columns 353–54, our intention to give responsibility for the regulation and inspection of adoption agencies to the commissions for care standards which are to be established as part of the Government's proposals for improving social services, and which were envisaged in the White Paper "Modernising Social Services". These inspections will cover all aspects of the adoption service including the process for handling adoption applications.

  Medicines (Advertising)
  Dr. Iddon
  To ask the Secretary of State for Health if he will list the circumstances under which(a) a notice, (b) a threat of notice and (c) a request to cease advertising would be made by (i) him and (ii) the Medicines Control Agency under the Medicines (Advertising and Monitoring of Advertising) Amendment Regulations 1999 (SI 267); and if he will make a statement on the powers of the Independent Review Panel concerning such actions. [88003]
  478
  Ms Jowell
  The Medicines Control Agency undertakes its statutory role in the control of medicines advertising on behalf of Health Ministers. Any notice issued by the Agency is therefore issued for, and on behalf of Ministers.

  There are specific circumstances under which notices may be issued to advertisers under the procedures in the amending Regulations. These are:
  Under paragraph 1—to request a copy of an advertisement,
  Under paragraph 3—to advise an advertiser that Health Ministers are "minded to" make a decision that an advertisement is in breach of the Advertising Regulations,
  Under paragraph 4—to advise an advertiser that an advertisement would not be in breach, and
  Under paragraph 5—to advise an advertiser that, after consideration of the advice of the Independent Review Panel Health Ministers have decided an advertisement is in breach.

  Notices under paragraphs 1 or 3 may require an advertiser to cease advertising on an interim basis. At any stage the recipient of a notice can seek judicial review of the decision to issue that notice.

  The issue of notices under the Schedule will not be automatic—the Medicines Control Agency will continue, as now, to discuss problems with advertising with the company concerned so as to secure acceptable changes. The formal procedures will come into play only when informal negotiation fails to reach an appropriate outcome.

  The remit of the Independent Review Panel will be to consider written representations from advertisers who have been issued with a notice under paragraph 3 and advise Health Ministers on the compatibility of the advertisement in question with the Advertising Regulations. The panel will not consider the issue of notices or other procedural matters. The amending Regulations provide for the making of written representations by the company concerned but do not preclude oral hearings where these are considered appropriate by the Panel. We have no objection to the reports of the Review Panel meetings being made publicly available. Furthermore, the Medicines Control Agency has already established a working group, the Medicines Advertising Liaison Group, to provide a forum for all regulatory and self regulatory bodies concerned with the advertising of medicines to exchange information and opinions on advertising issues.

PRIME MINISTER

  Special Advisers
  Mr. Swayne
  To ask the Prime Minister if he will list the travel expenses of the special advisers to his Department's Ministers since May 1997. [86454]

  The Prime Minister
  I refer the hon. Member to the answer I gave to the hon. Member for Chichester (Mr. Tyrie) on 13 April 1999,Official Report, column 1. I also refer the hon. Member to the further answer I gave to the hon. Member for Chichester today, Official Report, columns 482–83.

  Mr. Matthew Taylor
  To ask the Prime Minister if he will list the current paid special advisers to Ministers and the Ministers whom they advise. [87409]
  479
  The Prime Minister
  For details of the Special Advisers employed in my office, I refer the hon. Member to the answer I gave to the hon. Member for Wantage (Mr. Jackson) on 8 December 1998,Official Report,

  Appointing Minister

  Name of appointee

  Chief Whip

  Ian McKenzie

  Sue Jackson

  Minister of Agriculture, Fisheries and Food

  Tom Greatrex

  Kieran Simpson

  Secretary of State for Culture, Media and Sport

  John Newbiggin

  Andy Burnham

  Secretary of State for Defence

  Bernard Gray

  Alasdair McGowan

  Secretary of State for Education and Employment

  Conor Ryan

  Tom Engel—part time

  Sophie Linden—part time

  Deputy Prime Minister and Secretary of State for the Environment, Transport and the Regions

  Joe Irvin

  Paul Hackett—part time

  Joan Hammell

  Darren Murphy—part time

  Secretary of State for Foreign and Commonwealth Affairs

  David Clark

  Andrew Hood

  Secretary of State for Health

  Joe McCrea

  Simon Stevens

  Secretary of State for the Home Department

  Ed Owen

  Justin Russell

  Lord Chancellor

  Garry Hart

  Secretary of State for International Development

  David Mepham

  Dee Sullivan

  Leader of the House of Lords and Minister for Women

  Clare Cozens

  Jo Gibbons

  Secretary of State for Northern Ireland

  Nigel Warner

  Andrew Lappin

  Minister for the Cabinet Office

  Tim Walker

  Anna Healy

  President of the Council and Leader of the House of Commons

  Sheila Watson

  Nicci Russell

  Secretary of State for Scotland

  Richard Olszewski

  Secretary of State for Social Security

  Andrew Maugham

  Elsbeth Johnson

  Secretary of State for Trade and Industry

  Dan Corry

  Jo Moore

  Chancellor of the Exchequer

  Ed Balls

  Ian Austin

  Chief Secretary

  Ed Millband

  Spencer Livermore

  Secretary of State for Wales

  Julia Crowley

  Andrew Bold

  In addition, the Minister for the Cabinet Office has appointed Mr. Keith Hellawell as the UK Anti-Drugs Co-ordinator and Mr. Michael Trace as his Deputy. Professor Michael Barber has been appointed as the Standards and Effectiveness Adviser to the Secretary of State for Education and Employment. The Chancellor of the Exchequer has appointed Mr. Chris Wales, Mr. Paul Gregg and Ms Shriti Vadera as members of the Council of Economic Advisers. All are employed on Special Adviser terms.

  Policy Unit (US Visits)
  Mr. Matthew Taylor
  To ask the Prime Minister on how many occasions members of his Policy Unit have 480
  column 143. Since then, I have appointed Bill Bush. At 21 June, my ministerial colleagues had appointed the following Special Advisers.

  visited the United States of America on official business since 1 January 1998, indicating the name of the member and the dates of travel in each case. [87433]

  The Prime Minister
  Members of my Policy Unit have accompanied me or other Ministers on visits to the United States of America on 4 occasions since 1 January 1998. Separately, individual members of the Policy Unit have travelled to the United States of America to attend official engagements on three occasions since 1 January 1998 (6–9 December 1998, 29–31 January and 21–28 March 1999). All visits have been undertaken in line with the rules set out in the Ministerial Code.

  Kosovo
  Mr. Winnick
  To ask the Prime Minister (1) what action Her Majesty's Government plan to take to publicise throughout Europe the war crimes committed in Kosovo; [87308]

  (2) if he will consult with the other allied political leaders on the preparation of a joint White Paper to be issued on the war crimes in Kosovo and placing of such a paper to be placed before the parliaments of all the countries that took part in the allied campaign. [87311]

  The Prime Minister
  [holding answer 17 June 1999]We are appalled at the evidence which has emerged and continues to emerge day by day of the atrocities committed in Kosovo. We always warned at what we would find inside Kosovo. Now cameras can enter Kosovo, the full horror of Milosevic's ethnic cleansing is clear to everyone.

  We are doing all we can to support the International Criminal Tribunal for the former Yugoslavia with their investigations into the atrocities. We are doing all we can to support the work of the Tribunal, in particular we are seconding a police team to investigate scenes of crimes. The first priority must be for the Tribunal to gather the information which would be needed to sustain any prosecutions.

  Mr. Dalyell
  To ask the Prime Minister what steps(a) the United Kingdom and (b) other NATO Governments are taking to assist gypsies (i) suspected of having been informers for the Yugoslav authorities and (ii) who have moved out of Kosovo into other parts of Yugoslavia. [88078]

  The Prime Minister
  [holding answer 24 June 1999]KFOR is tasked to provide robust and even-handed protection for all the people of Kosovo, regardless of their ethnic, religious or cultural background. It is the responsibility of the host Governments to provide security for those who have fled Kosovo. UNHCR is trying to help with security arrangements in refugee camps and we support those efforts.

  Under UN Security Council Resolution 1244, a main responsibility of the UN civilian mission in Kosovo is to protect and promote the human rights of all the inhabitants of Kosovo.

  Mr. Dalyell
  To ask the Prime Minister, pursuant to his oral statement of 21 June 1999, on Kosovo, with reference to the question from the hon. Member for Islington, North (Mr. Corbyn),Official Report, column 772, if he will list the claims of environmental damage in Yugoslavia which had been exaggerated. [88077]

  The Prime Minister
  [holding answer 24 June 1999]Mr. Klaus Toepfer, the Executive Director of the UN Environment Programme (UNEP) said, when he met my right hon. Friend the Secretary of State for International Development on 15 June, that the claims about the extent of the pollution of the Danube and the impact of the use of depleted uranium weaponry had been exaggerated.

  We believe that objective information is needed to combat rumours about the environmental impact of the conflict. We welcome the joint task force set up by UNEP
  482
  and the UN Commission on Human Settlements to assess the environmental and health effects of the conflict. We remain, as ever, ready to co-operate with the task force.

  Separately, the EU commissioned a report from the Regional Environmental Centre for Central and Eastern Europe. The Centre's preliminary assessment was that there was no evidence of a large-scale ecological catastrophe in the region, although some local environmental damage may have occurred.

  Mr. Dalyell
  To ask the Prime Minister if he will place in the Library a copy of the agreement on the demilitarisation of the KLA made between its leadership and Lieutenant General Sir Michael Jackson. [88421]

  The Prime Minister
  I refer my hon. Friend to the answer given by my right hon. Friend the Secretary of State for Defence on 23 June 1999,Official Report, column 396, to the hon. Member for Buckingham (Mr. Bercow).

  Wal-Mart
  Mr. Redwood
  To ask the Prime Minister what meetings he has had with Wal-Mart; and what subjects were discussed. [88120]

  The Prime Minister
  I refer the right hon. Member to the reply I gave to the right hon. Member for Suffolk, Coastal (Mr. Gummer) on 6 May 1999,Official Report, columns 451–52.

  Armed Forces Pay Review Body
  Mr. Gareth R. Thomas
  To ask the Prime Minister if he will make a statement about appointments to the Armed Forces Pay Review Body. [89005]

  The Prime Minister
  I am pleased to announce that I have today appointed Mr. John Davies and Mr. Michael Ward as new members of the Armed Forces Pay Review Body and re-appointed Mrs. Kay Coleman, OBE, for a second three year term. These are the first appointments to this Pay Review Body conducted under the Peach Code of Practice on appointments to public bodies. I should also like to inform the House that Baroness Dean of Thornton-le-Fylde has assumed the Chairmanship of the Armed Forces Pay Review Body, having previously served as a member.

  Overseas Visits
  Mr. Tyrie
  To ask the Prime Minister, pursuant to his answer of 13 April 1999,Official Report, column 1, how many overseas visits he made between 1 May 1997 and 3 March 1999; what was the average cost per head for each accompanying official; and if he will list the number of occasions on which his chief press secretary and chief of staff travelled abroad without the Prime Minister in the same period, giving the costs of each visit. [81142]

  The Prime Minister
  For details of visits made by me overseas costing more than £500 during the period 2 May 1997 to 31 March 1999, I refer the hon. Member to the answer I gave to my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) on 17 June 1999,Official Report, columns 196–97. This information includes numbers of officials accompanying me and the total cost. During this period, my Chief of Staff travelled

  483
  overseas without me on four occasions at an average cost of £375 per visit; my Chief Press Secretary made no such visits.

FOREIGN AND COMMONWEALTH AFFAIRS

  Special Advisers
  Mr. Matthew Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs on what dates special advisers from his Department travelled abroad on official business since 2 May 1997; which countries were visited; and what were the names of the special advisers in each case. [87400]

  Mr. Robin Cook
  Special Advisers in my Department have visited the following countries on official business since 2 May 1997:

  Andrew Hood

  Date

  Country visited

  18–20 May 1997

  USA

  20–23 June 1997

  USA

  25 June 1997

  France

  27 June-1 July 1997

  Hong Kong

  28 July-3 August 1997

  Egypt

  Occupied Territories

  Israel

  21–25 September 1997

  USA

  20 November 1997

  Luxembourg

  Switzerland

  13–16 January 1998

  Israel

  10–13 February 1998

  Oman

  UAE

  Egypt

  15–18 March 1998

  Cyprus

  Egypt

  Jordan

  Israel

  Syria

  Lebanon

  5–9 December 1998

  Israel

  14–18 December 1998

  France

  Belgium

  Germany

  5–7 March 1999

  France

  8–11 March 1999

  Nigeria

  Ghana

  Cote d'lvoire

  David Clark

  Date

  Country visited

  1 May 1997

  France

  Germany

  19–20 May 1997

  Netherlands

  5–6 June 1997

  Sweden

  16–17 June 1997

  Netherlands

  25 June 1997

  France

  7–9 July 1997

  Spain

  28–30 July 1997

  Croatia

  Bosnia and Herzegovina

  7–8 October 1997

  Gibraltar

  20 November 1997

  Luxembourg

  25–28 November 1997

  Hungary

  Czech Republic

  Poland

  14 January 1998

  France

  18–19 May 1998

  Turkey

  10–11 December 1998

  Austria

  19–24 April 1999

  USA

  Cambodia
  Jane Griffiths
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking to ensure that the recommendations of the UN Group of Experts on Cambodia for the establishment of an ad hoc international tribunal outside Cambodia to try senior Khmer Rouge leaders are implemented; and if he will make a statement. [88189]

  Mr. Hoon
  The Government strongly support efforts to bring the Khmer Rouge leaders to justice and therefore welcomed the report by the UN Group of Experts earlier this year. We have made clear to the Cambodian Government our support for an international tribunal, and have encouraged them to co-operate with the international community on this issue.

  EU General Affairs Council
  Mr. Hood
  To ask the Secretary of State for Foreign and Commonwealth Affairs what was the outcome of the General Affairs Council held in Luxembourg on 21 and 22 June; and if he will make a statement. [88334]

  Ms Quin
  My right hon. Friend the Foreign Secretary and I attended the General Affairs Council in Luxembourg on 21 June 1999. Accession Conferences with the six applicants engaged in negotiations took place on 21 and 22 June. An EU/South Caucasus Summit took place on 22 June. The Council adopted the A points listed in document 9362/99 and 9367/99. Copies of the documents listing the A points will be placed in the House Libraries as soon as they become available.

  Comitology The GAC gave political agreement to a Decision on Comitology. This sets out procedures for overseeing implementation by the Commission of legislation delegated to it by the Council and European Parliament.

  Modern Means of Communication The GAC discussed proposals to test a multilateral video-conferencing system and to establish a secure phone/fax network between Foreign Ministers' offices. It was agreed that work should begin on both proposals.

  Association Agreement with Egypt After four and a half years of negotiations, the Council agreed the terms of an Association Agreement with Egypt. The Presidency and Egypt will now initial the final text and the Commission put a formal proposal to the Council.

  EU/Mercosur and EU/Chile Trade Negotiations The Council reached agreement on how to take forward trade liberalisation negotiations with Mercosur and Chile. The agreement provides for talks to start this year on regulatory issues and on the removal of non-tariff barriers to trade, as well as for co-operation before and during the forthcoming WTO Round of multilateral trade negotiations. Negotiations on tariff issues will begin not later than 1 July 2001, with their outcome taking into account the results of the multilateral trade negotiations.

  Western Balkans The Council welcomed the adoption of UNSCR 1244 and urged all parties to co-operate in implementing it. It called on all Kosovo residents to remain in Kosovo and work for a democratic, multi-ethnic Kosovo. It welcomed the agreement on Russian participation in KFOR. It emphasised that the EU would participate fully in the UN mission in Kosovo. It invited
  485
  the Commission to report further on the region's humanitarian and reconstruction needs. It condemned the mass killings in Kosovo and emphasised that EU member states would co-operate fully with ICTY.

  The Council agreed that the EU would create a new category of Stabilisation and Association Agreements for Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and Macedonia. Countries would be eligible once they met the relevant conditions. The Council reviewed performance of individual countries and agreed on next steps, including preparation of a feasibility study on opening negotiations for a Stabilisation and Association Agreement with Albania, and examination of the feasibility study on an Agreement with Macedonia and of the proposals for upgrading the trade regime with Albania.

  Reports on Summits with Third Countries The Presidency and Commission reported on the recent Summit meetings with the US, Canada and Japan.

  Black Sea Economic Forum The Council discussed a proposal for strengthening relations between the EU and the Black Sea Economic Forum.

  Enlargement The third round of Ministerial Accession Conferences took place after the GAC and noted progress made in negotiations during the German Presidency. Of the 31 chapters in the acquis, all of the candidates have opened 15 and closed between six and 10. The Conferences looked forward to further progress during the Finnish Presidency.

  EU/Switzerland After several years of negotiation, seven bilateral agreements between the EU and Switzerland were signed in the margins of the GAC. The agreements cover Free Movement of Persons, Air Transport, Land Transport, Agriculture, Mutual Recognition of Standards, Public Procurement and Science and Technology.

  EU/South Caucasus A Summit was held with the Presidents of Armenia and Georgia and the Prime Minister of Azerbaijan on 22 June to mark the entry into force on 1 July of Partnership and Co-operation Agreements with all three countries. A joint declaration issued at the meeting stressed the political and economic importance the EU attaches to the South Caucasus and looked forward to a closer partnership.

  EU Latin America/Caribbean Summit
  Mr. Maclean
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will publish the agenda for the EU-Latin America/Caribbean summit of 25 to 29 June prior to the meeting. [88332]

  Mr. Tony Lloyd
  The EU/Latin America/Caribbean Summit will take place in Rio de Janeiro on 28 and 29 June. It will be preceded by meetings of Foreign Ministers and officials on 25 to 27 June. The agenda for the Summit will be as follows:28 June 1999
  Working Session I—Political Dialogue

  A) Democracy, pluralism and good governance, human rights, regional integration processes, co-operation in international fora, including the reform of the UN system.

  B) The rule of law, combat against terrorism, combat against organised crime and the drug problem.

  486

  C) Sustainable development in all its aspects, combat against poverty, protection of the environment and social equity.

  29 June 1999 Working Session 2 —Economic and Trade Themes

  A) The international financial situation: evaluation and prospects (the new "architecture"); consequences of introduction of the Euro.

  B) The importance of trade negotiations and liberalisation: multilateral and bilateral.

  C) The challenge and opportunities of globalisation and development.

  Working Session 3—Education, Culture and Human Dimension

  A) Education (including co-operation on basic formation, vocational training and among higher education institutions), Science and Technology.

  B) Cultural dimension, media and cultural management; preservation of cultural heritage and diversity.

  C) The human dimension: women's participation in all spheres; protection of children; the role of civil society in interregional relations.

AGRICULTURE, FISHERIES AND FOOD

  Beef (Intervention Stores)
  Mr. Beggs
  To ask the Minister of Agriculture, Fisheries and Food how many tonnes of beef have been released from intervention stores in(a) England, (b) Scotland, (c) Wales and (d) Northern Ireland on to the United Kingdom beef market in each of the last 12 months. [87185]

  Mr. Rooker
  The tonnage of intervention beef released from UK intervention stores during the period 1 June 1998 to 31 May 1999 is as follows:

  England

  Scotland

  Wales

  Northern Ireland

  Total

  1998

  June

  789

  121

  0

  200

  1,110

  July

  954

  242

  6

  558

  1,760

  August

  418

  40

  0

  950

  1,408

  September

  1,329

  176

  0

  1,111

  2,616

  October

  1,560

  117

  0

  882

  2,559

  November

  1,250

  28

  0

  1,126

  2,404

  December

  1,665

  78

  0

  838

  2,581

  1999

  January

  1,769

  82

  0

  509

  2,360

  February

  1,705

  38

  5

  1,856

  3,604

  March

  2,470

  442

  4

  3,898

  6,814

  April

  1,749

  350

  4

  2,208

  4,311

  May

  2,324

  359

  1

  4,508

  7,192

  Total

  17,982

  2,073

  20

  18,644

  38,719

  Thailand
  Mr. Nicholls
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to his answer of 11 May 1999,Official Report, column 129, on Thailand, if he will publish the findings of his Department's inspectors who visited Thailand to inspect the welfare and hygiene standards relating to locally raised poultry. [87408]
  487
  Mr. Rooker
  A report of the inspection visit can be found on the Ministry's internet site, the address of which is http://www.maff.gov.uk. The full document is also available to all Members in the Library of the House.

  Linseed Fibre Flax
  Mr. Cox
  To ask the Minister of Agriculture, Fisheries and Food what was the tonnage of linseed fibre flax produced in the United Kingdom in each of the last three years; and what was the total financial subsidy paid on this crop in each of those years. [87651]

  Mr. Rooker
  Payments made under the EU fibre flax scheme are based on the area of flax grown. The area of fibre flax grown in the United Kingdom in 1996, 1997 and 1998 was 20,200 hectares, 19,200 hectares and 16,800 hectares respectively. Based on the average yields achieved in those three years the tonnage of fibre flax produced would have been in the region of 27,000 tonnes in 1996, 16,000 tonnes in 1997 and 25,000 tonnes in 1998.

  The total amount of subsidy paid out under the EU fibre flax scheme in the United Kingdom in 1996, 1997 and 1998 amounted to some £11.6 million, £12.5 million and £10.7 million respectively.

  Sheep
  Mr. Gordon Prentice
  To ask the Minister of Agriculture, Fisheries and Food what steps he is taking to ensure that sheep grazing on upland areas affected by radiocaesium contamination do not enter the food chain. [87860]

  Mr. Rooker
  Affected areas are subject to orders made under the Food and Environment Protection Act 1985 which restrict the sale, movement and slaughter of sheep. Sheep to be moved off restricted farms must be monitored, and if found to be over the action level of 1000 becquerels per kilogram (Bq/kg) of caesium, are marked as ineligible for slaughter. Marked sheep can be moved to clean grazing and released for slaughter three months later when the radiocaesium has decayed to safe levels. Random check monitoring of sheep carcases at 488
  slaughterhouses serving the restricted areas has confirmed that no animals over the action level are getting into the food chain. The highest radiocaesium level ever found in a carcase was 533 Bq/kg (in 1991).

WALES

  Energy Efficiency
  Mr. Alan Simpson
  To ask the Secretary of State for Wales how many households in Wales would meet the eligibility criteria for the New Home Energy Efficiency Scheme if it were to be applied in Wales. [88153]

  Mr. Jon Owen Jones
  There is no information readily available on the number of households in Wales who would meet the eligibility criteria for the new HEES scheme if it were to be applied in Wales.

  Following the transfer of functions, this issue will be a matter for the National Assembly. Consultation proposals for the new HEES in Wales will be published on Monday 28 June 1999.

  Local Authority Debt
  Mr. Ruane
  To ask the Secretary of State for Wales if he will list the debt inherited by each unitary authority in Wales from the predecessor authorities; and what estimate he has made of each authority's exposure to future financial liabilities from those authorities. [88400]

  Mr. Jon Owen Jones
  Information on the outstanding loan debt of county and county borough councils at 1 April 1996 is set out in paragraph 6 of the notes to Table 1.2 of the Local Government Finance Report (Wales) 1997 –98, which was approved by the House in February 1997.

  I have made no estimate of any financial liabilities that councils inherited from their predecessor authorities because information on such liabilities is not held centrally.

  Following the transfer of functions, this issue will be a matter for the National Assembly.

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

Parliamentary Government Bill [H.L.]
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Viscount Cranborne: My Lords, I beg to move that this Bill be now read a second time.
I am extraordinarily grateful to noble Lords who are taking part in this Second Reading debate. A hot Friday in late June is hardly an alluring time to discuss any Private Member's Bill in your Lordships' House; to discuss a Private Member's Bill on Parliament and making some changes to the way it is ordered, after two full Sessions already on constitutional matters, is perhaps trying your Lordships' patience rather high. I am grateful that Peers of such very great distinction have been kind enough to put down their names to speak, including noble Lords from both Front Benches.
I hold what the Government feel to be a rather unfashionable view. I feel that the day of the nation state is very far from over. Indeed, I would go further. It seems to me that there is an increasingly clear correlation between prosperity in the modern world and nations with effective systems of representative government. Increasingly, economic growth will he stimulated within policies which allow the maximum liberty to citizens and the minimum amount of interference in the individual's affairs from the bureaucracy. This principle mirrors the nature of growth in the digital age, where an individual can found enterprises with an idea and a bit of IT alone; in an astonishingly short time, one has companies such as Microsoft, to take one example.
It seems to me that the days of feudal bureaucracies of the kinds that still exist in Brussels and Whitehall should be over. Bureaucracies can no longer pick winners; all they can do is to hold the ring and adopt the same principle that I am told Vita Sackville-West adopted for her garden; the maximum amount of informality inside the maximum amount of formality. Under these conditions, parliamentary institutions become more important than ever.
The basis of our system as it has developed—perhaps I can put it personally—is this: the reason that I do as the Government tell me to do—especially, dare I say it. when I disagree with them—is that they derive their authority from a Parliament whose dominant Chamber, the other place, the electorate has a right, to throw out
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at least once every five years. If Parliament holds the Government continuously and effectively to account, and the Government survive that experience, their authority is surely strengthened and I am constrained more than ever to do what the Government tell me, especially when I think that the Government are an ass. Government is rather like Antaeus, returning strengthened to the fray after contact with his mother.
For Parliament to perform its central task—giving the Government the authority to govern—it must appear to the electorate to be fully up to its own task; otherwise both it and the Government will lose the authority that they both need. My fear is that even before the communications revolution struck, Parliament was beginning to fail us; another place was already overwhelmingly and inevitably dominated by a powerful executive through the agency of an effective Government Whips' Office. During my brief time in another place, it sometimes seemed to me to be the only effective part of the House of Commons.
This House felt, and still feels, that it no longer had the authority to use its theoretical powers of delay to force another place to do its job properly. Governments crammed far too much legislation through Parliament, much of it ill prepared and hurriedly drafted, through no fault of the parliamentary draftsman. Parliament already looked unresponsive to the electorate's needs and seemed increasingly the poodle of the executive before the digital age struck. It seemed increasingly that other institutions—such as the European Union and the European Court of Human Rights—were taking its place.
With the digital world now upon us, Parliament and Whitehall look perhaps even more flat-footed and inadequate. Parliament's reduced standing is reflected in the negligible number of column inches that the press devotes to its affairs. Whitehall, which derives its authority from Parliament, as I have already said, looks to the courts and to Europe at least as much as to us, and is pleased to find itself. I would suggest with the greatest respect to the learned and noble Lord, serving a government who find it more and more possible to treat Parliament as an non-optional add-on.
The Government have said that they want to modernise Parliament. It seems to me that there is no evidence, either in their White Paper on in their various pronouncements, that they have any clear idea yet of what they think is the purpose of this place and what they want to do with it.
As for reform of another place, even Peter Riddell, who tends to speak for the Government—he is what one might call "Lord Columnist in Waiting"—in his column in Parliamentary Brief in March 1999 described the Government's proposals for reform in another place as, mainly desirable, but cosmetic.
It was for that reason that it seemed to me well worth floating a number of proposals in a Bill to stimulate debate on what is surely a central constitutional theme, but one which has rather surprisingly been neglected in the avalanche of constitutional measures that threaten to overwhelm us. The theme is how we restore the standing of Parliament in our national life.

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The Bill makes a number of proposals which, taken together, might begin to do so. Of course, they are far from comprehensive, however broadly they may range. Part I of the Bill contains in Clauses 1 to 12 a number of provisions, few of them original, that are designed to reduce the flow of legislation, to improve the preparation of legislation and to improve parliamentary scrutiny of legislation, so that Parliament can assess both the probable impact of legislation and how effective it has proved after coming into force.
Clause 1 provides that every Bill should be published in draft before introduction, and that the Select Committee procedure should apply unless the House determines otherwise. Clause 2 provides that the Comptroller and Auditor General should assess the possible impact of the proposed legislation before it is introduced. There are also provisions for wide public consultation on proposed legislation.
Equally, Clause 4 gives noble Lords the power to remove excessive delegated powers from any Bill. Clause 5 gives your Lordships the right to express an opinion on excessive delegated powers in any legislation proposed in any of the three devolved assemblies. There are provisions in Clauses 6, 7 and 8 to prevent the hurried introduction of secondary legislation before extensive consultation, and before reporting to Parliament the results of that consultation.
There are two other areas in Part I to which perhaps I may draw your Lordships' attention—Clauses 9 and 10 on Community legislation and Clause 3 covering Bills affecting the constitution. On Community legislation, the Bill, if passed, would probably conflict with the doctrine of the acquis communautaire in that Clause 9 provides for no new Union directive to be moved by a British Minister unless he has consulted widely on its provisions, and that it cannot come into effect until Parliament has approved it.
Clause 10 provides that any gold-plating of Community legislation by Whitehall—a source of great muddle when apportioning the blame for increased bureaucracy—should be embodied in legislation separate from that strictly confined to implementing EU directives.
As far as concerns legislation affecting the constitution, Clause 3 gives this House the power to delay the bringing into effect of Bills which substantially alter the constitution—it will be for your Lordships to decide whether or not the alteration is substantial—until such Bills have been approved by a referendum (to be held under the rules of the Neill Committee) after their passage through Parliament, but before they have received Royal Assent.
Part II of the Bill gives the Comptroller and Auditor General, and therefore the House of Commons, a more powerful droit de regard, if I may put it that way, over matters supervised by the Audit Commission, a body which, as your Lordships will know, reports to the Secretary of State. I believe I am right to say that about 25 per cent of public expenditure is local government expenditure, and that more than 80 per cent of that expenditure is nowadays centrally funded. It seems to
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me odd that another place does not take a greater interest than it does in local government affairs and in the expenditure of centrally provided taxpayers' money.
Clause 14 provides for a number of important Crown appointments, to be made only after appointees have appeared before parliamentary committees and a resolution of both Houses of Parliament has been passed, in effect giving approval to those appointments. I have no doubt that this provision would be strongly resisted both by Sir Humphrey and Mr Jim Hacker. Perhaps that is reason enough for giving favourable consideration to the suggestion. It has some merit, in view of the experience of the United States in a similar case.
Parts III and IV are closely interlinked. I am convinced that our public administration is excessively cumbersome and serves very ill both its customers and those it employs to provide its services. It institutionalises public squalor at enormous public expense. It ensures that the poorest have a sad view of what the public purse does for them. As a firm sceptic on the introduction of any kind of gizmo, it seems to me that in this case the use of technology—both ancient and modern—should be able to make enormous improvements to public administration, particularly if applied with imagination and ruthlessness. For example, I am told that simply by making its social security and benefits payments available through the commercial banking system, New Zealand cut its social security administrative costs by around 75 per cent. By those and other more elaborate devices, we could reduce the size of the Civil Service and amalgamate a substantial number of departments of state which are at present engaged primarily in supplying government services.
That idea will initially be extraordinarily unpopular with civil servants and, I dare say, with Ministers, for obvious reasons. However, once it was accomplished, those who remained would be far better paid, which should be of some attraction to them; more concerned with policy—a perennial complaint of civil servants, as those of us who have been Ministers know—and they would be able to spend more time in providing sensible and helpful advice to the Government's customers of both services. The customers themselves would be better served, and would certainly feel far less the victims of a vast system that is unresponsive to their needs.
Both the previous government and this one have tinkered with these ideas, primarily through the central IT unit of the Cabinet Office, an organisation for which I briefly had some tangential responsibility. I hope that the noble and learned Lord the Lord Chancellor, to whom I am hugely grateful for his kindness in taking part in this debate, knowing how extraordinarily busy he is, will take the opportunity to acknowledge that the recent White Paper was as disappointing in that regard as our own performance was in this area before the last election.
In that respect—and perhaps one of the main reasons why Parts III and IV of the Bill are so closely interconnected—the House will be aware that any Government Chief Whip in another place will acknowledge that a smaller number of government

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departments, and therefore a smaller number of Ministers, also provided for in the Bill, is a disaster from his point of view. How is he to satisfy the rows of eager Back-Benchers panting for office, and so keep them untainted by thoughts of rebellion? For that reason alone, he would strongly disapprove of Clause 18 of the Bill, which among other things reduces the maximum number of serving Cabinet Ministers to 15—in spite of the fact that the Cabinet would function far better as a result.
So for that reason alone, it would be sensible to help the unfortunate patronage secretary and reduce the number of Members of another place as well. Some mauvaises langues have suggested to me that for a Member of this House to suggest the reform and composition of another place in this particular Session of Parliament is descending to mere brawling. But I am sure that that is not right. There are already far too many MPs, particularly now that the Scots and Welsh among them have very little to do. With better public administration as a result of Clauses 15 and 16 of the Bill, all MPs will have less to do. As a result of Clause 20, the Scots, Welsh and Northern Irish MPs will have even less to do, since they will not be allowed to vote in another place on matters which in their own countries are devolved to the local Assembly or Parliament but which are not devolved in England.
Noble Lords will have noted that the reduction in numbers is to be achieved gradually, at a rate that is slower than the average rate of retirement of Members of another place over the past 50 years. That gradual approach might just persuade turkeys to vote for Christmas.
Perhaps I may mention two other clauses. The first, I suggest, will also be most unwelcome to all sitting governments. Clause 20 provides the admirable practice, discontinued in 1926, of forcing a newly appointed Cabinet Minister to submit himself to re-election by his constituents in a by-election, but in a slightly different form from that faced before 1926. There is method in this madness. The noble and learned Lord may disagree, but he, like me, has no need to submit himself for re-election—although that time may come.
As the 20th century has developed, the Prime Minister has had far too much power over his Cabinet. He is no longer primus inter pares, but increasingly presidential. Not unnaturally, all Prime Ministers tend to behave accordingly, however charming and modest they may be in private life. This provision would discourage frequent reshuffles and give much more power and endurance to the Cabinet in consequence. It would rebalance the situation in a highly desirable way.
Finally, the digital revolution should enable all of us to watch both Houses of Parliament on television on dedicated channels. Clause 21 so provides. I am the first to admit that, initially, the audiences would be minuscule. But that would enable those policy wonks and political freaks who were interested enough to watch to see us in all our glory, unedited. If the Bill were to become law, I believe that the viewing figures
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would increase, thereby showing that its provisions were achieving their objective in making Parliament more effective and stimulating more interest outside.
We should be holding the Government better to account. We should legislate better. As a result, our respect as a nation for government itself would increase. I submit that that is a worthy cause, even for a Friday morning in June, and one that is well worth supporting in principle. I commend the Bill to the House.
Moved, That the Bill be now read a second time.— (Viscount Cranborne.)
11.26 a.m.
Lord Simon of Glaisdale: My Lords, not for the first time your Lordships are deeply indebted to the noble Viscount for bringing forward a Bill of profound constitutional importance in a constructive way and for explaining it with exemplary clarity. In the noble Viscount, we have the advantage of a former member of the Cabinet, a former Leader of the House and, particularly important in this context, a former Member of another place. I do not suppose that he will expect all of us to agree with everything in his Bill. That is hardly necessary to secure a Second Reading. Indeed. I shall be anxious to see how far my noble and learned friend the Lord Chancellor is enthusiastic about the preamble, or the proposal that newly appointed Cabinet Ministers should submit themselves to a by-election. That was formerly the practice, and it provided a great deal of innocent fun—fun that was not always so innocent, as it was a wonderful opportunity for the electorate to give a jolt to a government.
Parliamentary representative government is not, as I have ventured to submit in discussing the House of Lords Bill, the sole method of democracy. The great achievement of the previous government was their vindication of the market economy, whereby every shopping day is a general election, every shop a polling booth, and every penny laid out on the counter a vote for the various candidates for custom.
Nor is one limited to the economy for democracy. If the decision which affects the individual can be vouchsafed to the individual, if we vindicate the old proverb that every Englishman's home is his castle, if we can vindicate subsidiarity, which was the great achievement of John Major, inscribing it in the Maastricht Treaty, if we can apply subsidiarity, like charity, to begin at home, we shall have gone a very long way towards establishing a democratic society.
But that is not to say that representative government is not important. It is true that there are many things the individual cannot decide himself. The late Lord Jay was probably right when he said that the man in Whitehall does know best. However, there is one thing the man in Whitehall does not know: it is where the shoe is pinching when other people are wearing it. That is why we give influence in politics not only to the mandarin on his high horse, but also to the footsore pedestrian. We do it by representative democracy.

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The preamble indicates a number of concerns about the way representative democracy works at the moment. The noble Viscount mentioned the Glorious Revolution which we celebrated a decade ago. The revolution was glorious because it vindicated parliamentary government against executive government. The modern equivalent is presidential government. The Glorious Revolution managed to see off a government that legislated by ordinance, by decree, by executive order. The noble Viscount's Bill deals importantly with that matter. Today a great deal is done by subordinate legislation. There have been notorious examples with this Government, but perhaps the worst was the Child Support Act of the previous government, which was virtually a skeleton Bill and worked out disastrously.
The noble Viscount puts us in a debt by bringing forward in a constructive way various methods by which representative government can be improved. It would not be right to be entirely pessimistic. There have been some valuable and positive developments; the select committees in the other place, the development of judicial review, and so on.
On the other hand, there is the deplorable but characteristic example of the European election measure. It was deplorable in two ways. First, the party list meant that power was in effect taken away from the electorate and vouchsafed to the party managers. Secondly, a whip was imposed in the other place and afterwards the Parliament Act was invoked. Many Members of the other place who disagree entirely with the party list method must have been profoundly disturbed by what was done. They were whipped into the Lobby, and the Parliament Act was imposed on a measure for which it was entirely inappropriate.
Having said that, there is much in the Bill which is of value. I attach great importance to the proposals on subordinate legislation. It is now so important that Parliament should have the power to amend it. I imagine that that is a breaking point with the Civil Service. On the other hand, the noble Earl, Lord Russell, has achieved a way of getting round it; and, having conceded his method, we may as well face directly the right of Parliament to amend subordinate legislation.
This is not the time to go through the Bill in detail. I regard with some hesitation the proposal not only that Cabinet Ministers should submit to re-election but also that senior civil servants and the very senior part of the judiciary should go before a parliamentary committee and be approved by the committee. It is limited to the Appellate Committee of your Lordships' House, the Lords of Appeal in Ordinary. Even so limited, it would be deplorable if our judiciary felt that they were being subjected to a political test. One saw the damaging and humiliating experiences of two judges, candidates submitted by the President for the American Supreme Court. One had to withdraw his candidature after a press campaign against him. The other, Justice Thomas, went through a most excruciating and improper grilling before the Senate Judiciary Committee.
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Despite all the hesitation on detail, we can wholeheartedly welcome the proposals which the noble Viscount lays before us, which will be a valuable source of discussion.
11.40 a.m.
Lord Renton: My Lords, the noble and learned Lord, Lord Simon of Glaisdale, has given us the advantage of his judicial experience and constitutional wisdom. I do not believe that I have ever said—I should have done—that I and members of the Committee on the Preparation of Legislation, of which I had the honour to be chairman, are deeply indebted to the noble and learned Lord for the way in which a quarter of a century ago at this time of year he welcomed the report of that committee and has supported it frequently ever since. His reference today to the Preamble to this Bill reminds me that what we most wanted parliamentary draftsmen to do was to state the purposes and principles of Bills so that the contents could be better understood by everyone and more easily interpreted by the courts.
The Preamble to the Bill states vividly the purposes as matters of principle. We have not had Preambles as a regular matter for over 70 years. However, I believe that in this particular case it has been an advantage to us to have the Preamble. One hopes that the noble and learned Lord the Lord Chancellor, with whom one disagrees on some matters but who has some good ideas about the drafting of legislation, will bear in mind that advantage.
My noble friend Lord Cranborne, who was an admirable Leader of the House and Leader of the Opposition, has done valuable service to our parliamentary democracy by introducing this Bill. I need hardly mention, although we should bear in mind, that we have a flexible and "unwritten" constitution. I put that word in inverted commas because parts of our constitution have passed into statute and therefore can be said to be partly written. That differs from so-called "written" constitutions which, thank God, we do not have. It is difficult to reach agreement on their amendment and they fail to keep up with changing times, and if possible we should avoid them. Our constitution, being flexible, can change as experience requires or public opinion desires. By proposing various detailed changes my noble friend's Bill would help to bring our parliamentary government up to date.
Clauses 1 to 12 in Part I aim to improve our primary, devolved and delegated legislation and give us the control that we need over Community legislation. Those changes will no doubt be discussed in detail in Committee, but perhaps I may make a general comment. Our legislation needs to be improved in the way suggested by my noble friend, and the Government should seriously consider that. I draw attention only to Clauses 6 to 8 which suggest ways in which subordinate legislation should be considered. As the noble and learned Lord, Lord Simon of Glaisdale, said, the Government use delegated legislation more than it has been used in the past, certainly, as far as I can remember, since World War II. In war time it must be used; it cannot be avoided. But it is most unfortunate that neither House of Parliament has power to amend

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delegated legislation. The practice in both Houses is to debate these matters either late in the day or early in the night when they have much less chance of being properly considered; and they cannot be amended.
In Part II Clause 13 proposes some useful strengthening of the powers of the Committee of Public Accounts to consider recommendations of the Comptroller and Auditor General. I regard that as one of the most important provisions in the Bill. But, alas, as I have told my noble friend, I cannot agree with Clause 14. That clause requires parliamentary approval of a wide range of important public appointments, including Law Lords, ambassadors and chairmen of many important public bodies. For years all of these appointments have been made by members of the Cabinet, each with his own responsibility, who happen to be politicians. But those appointments are made after consultation with civil servants and others who can give advice as to the best people to fill those posts. Some of the appointments require Royal approval. I consider that the present system works well. If party politicians, especially those in another place, had to give their approval all kinds of undesirable pressures would arise, and that is something to be avoided. The administrative cost of making these appointments would also be considerably increased. At Committee stage I intend to move to omit Clause 14 and the schedule from the Bill.
Part III proposes a commission to review government administration. That is a very sensible proposal. Part IV is a hit controversial in places, but I shall try to keep an open mind until Committee stage and I have heard further justification from my noble friend for his proposal. Meanwhile, I doubt the need for by-elections after the appointment of new Cabinet Ministers. That, too, would add to the cost to the taxpayer.
Clause 21 in Part V requires the BBC to broadcast proceedings of each House. That is an excellent proposal, for it means that people can be better informed. We used to be reasonably well informed by The Times, Daily Telegraph and Guardian, but regrettably those newspapers have not performed that task for many years. I hope that I shall not be thought to he too egocentric if I say that I fought and won 10 general elections and never had a majority of less than 5,000. Looking back to those times, it occurs to me that no more than one third of those who voted had a real understanding of the issues. I doubt whether today the proportion is any higher, because people do not have an easy opportunity of becoming well informed. If the BBC had an obligation to broadcast the whole of our proceedings, democracy would be much improved, and people would be better informed and more able to make a judgment. I regard that provision as being of great importance.
I believe that my noble friend has done a great service in putting forward the Bill. I know that it is late in the Session, but I hope that we shall have the Committee stage very soon. If, as some would say, a miracle occurs—I believe that it is a necessity—and the Bill reaches the statute book, it would be in the interests of our parliamentary democracy.
11.49 a.m.
Lord Rathcavan: My Lords, with due humility in the presence of so many noble and learned. Lords, I intend to make only a brief contribution to the debate on the Bill which I broadly welcome. From these Benches, I often admire the nimble footwork of the noble Viscount, Lord Cranborne, on legislative matters on which he has as much experience and historical knowledge as anyone here today. I do not see any hidden agenda, however, in the Bill. It is clear what it intends to achieve: more democratic government. which we badly need at present; more accountability; more parliamentary control; and more scrutiny of government and in particular the scrutiny of the devolved assemblies and Scottish Parliament.
I wish to speak in particular on Clauses 4 to 8 which are concerned with parliamentary control over the delegation of legislative powers and the exercise of those powers in Scotland, Wales and my own province of Northern Ireland, and which would require the Northern Ireland Assembly, for example, to send all its Bills to Parliament here for scrutiny at the least.
During the few years in which I have been a Member of your Lordships' House I have had the advantage and experience of being a member of Sub-Committee D of the European Communities Committee to which government give the informal power to scrutinise and comment on any legislative measures or directives from Europe before they are agreed by the Council of Ministers. In Clause 9 the Bill goes much further, and I very much welcome that. The sub-committees of the European Communities Committee do not have power at present, but I hope and believe that we have influence. Government take into account our recommendations, as they have done recently on the report produced by Sub-Committee D on genetically modified crops and food. More important perhaps is what would happen if the scrutiny process of the committees was not there to request government to account for what they are doing and to debate the issues involved.
In the case of the Northern Ireland Assembly and the Scottish Parliament there is no revising chamber and no scrutiny reserve. There are concordats which I understand are written but which are informal arrangements concerning departmental matters, produced more often by officials than Ministers, such as, for example, on the rules for competition on inward investment incentives between the different regions and the DTI—a very contentious issue. But if I remember correctly, the Government, at least at Third Reading of the Northern Ireland Bill, rejected any legal obligation to lay these concordats before Parliament. In Clause 5 the Bill would require the Northern Ireland Assembly and the Scottish Parliament to send all Bills to the Delegated Powers and Deregulation Committee for scrutiny and a report to be laid before the Assembly or the Scottish Parliament. It is a reasonable enough request and a move towards the checks and balances and public discussion which should take place.
At one extreme one can imagine a coalition in Northern Ireland of the Presbyterian ethic with the abstemious style of Sinn Fein to introduce prohibition

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in the Province. That reminds me of my time as a young member of the editorial staff of the Irish Times when that paper published an April Fool's day editorial during a general election criticising the inclusion in the manifesto of the Fianna Fail party of a proposal to introduce prohibition for the Republic of Ireland. This led to a serious sense of humour failure by the Fianna Fail party which accused the Irish Times editorial of being in the hands of crypto red communists.
On a more serious note, I urge the Government to take more seriously now the Bill's proposals and to take this opportunity to make the regional assemblies and the Scottish Parliament more accountable and more open to scrutiny by central government and Parliament, which is, after all, providing most of the money for them to spend, as the noble Viscount mentioned. Perhaps it requires a beefing up of the Public Accounts Committee. That is covered in Clause 13.
I congratulate the noble Viscount, Lord Cranborne, on introducing the Bill. I strongly support the themes of the Bill and look forward, I hope, to the Committee stage when the Bill can even be improved.
11.54 a.m.
Lord Norton of Louth: My Lords, I, too congratulate my noble friend Lord Cranborne on introducing the Bill. It is an important Bill and I join in welcoming the fact that it is the noble and learned Lord the Lord Chancellor who is to reply for the Government and my noble friend Lord Strathclyde for the Opposition.
The Bill deals with the fundamental relationship at the heart of our political system. There is an inherent conflict within that relationship. Most members of the elected Chamber are returned to support and sustain the Government, yet they are Members of a House expected to subject to scrutiny the actions and measures of that very Government. The nature of this inherent conflict raises two important questions. First, what are the most effective means of parliamentary scrutiny? Secondly, how can those means be put beyond the immediate reach of the majority which exists to sustain the Government, a Government which may not be too keen on being the subject of close and sustained scrutiny?
The Bill deals with the means of scrutiny and the form of protection. I shall address each briefly. On the content, I very much welcome many, indeed most, of the provisions of the Bill. I congratulate my noble friend especially on the provisions for strengthening the role of Parliament in the scrutiny of primary and delegated legislation. I welcome Clause 1 providing for the publication of Bills in draft. I acknowledge how far the previous administration went and how far the present one has gone in providing for the publishing of some Bills in draft. But I believe that it is vital to lock the provision into the system and not leave it to the discretion of Government.
I also strongly support the other provisions of Clause 1. I have long advocated the use of evidence-taking committees, especially in the other place, as standard practice; the provision that Bills automatically stand referred to such committees, unless the House resolves
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to the contrary, will, I believe, serve to increase enormously the quality of parliamentary scrutiny, offering as it does the potential for more informed and less partisan examination.
I am delighted by the attention given to delegated legislation and would probably wish to go further and to incorporate more of the proposals contained in the report from the Procedure Committee in another place in its Fourth Report in the 1995–96 Session. I very much endorse what the noble and learned Lord, Lord Simon of Glaisdale, and my noble friend Lord Renton said. The legislative process in Parliament is still the weakest area of parliamentary scrutiny and anything that serves to strengthen Parliament in its scrutiny of public legislation is to be applauded.
I congratulate my noble friend on the proposals for greater use of the National Audit Office, itself of course established through the medium of a Private Member's Bill. The provisions of Clause 2 are novel and potentially far reaching. I recognise that there are important implications in terms of resources for the National Audit Office, but the provisions merit serious consideration.
I also welcome and strongly support Clause 12 dealing with uncommenced legislation, and have great sympathy with what my noble friend seeks to do in respect of European legislation, public appointments, the number of Members of the House of Commons in Cabinet, and the broadcasting of proceedings, although I take the view that a reduction in the size of the Cabinet should be a consequence of reduction in the size of the House of Commons rather than the other way round. I am not sure that I necessarily agree with the detail of each proposal, but I think that my noble friend has got the principle right in each case.
Where I part company with my noble friend is in respect of Clause 3 providing for referendums on legislative provisions which affect substantially the constitution. I have a practical objection to subsection (1) and I am opposed in principle to the provisions of subsection (2). The practical objection is that it is not always possible to distinguish clearly between a measure which affects substantially the constitution and one that does not. There is an enormous grey area. There can also be a marked difference between a Bill which affects substantially the constitution and a Bill which has an important and contested impact on the constitution. I note also that the Bill does not define a constitution.
I turn to my more fundamental objection. I have a longstanding and principled objection to referendums. The best argument against referendums was made by my noble friend Lady Thatcher in her first major speech as Leader of the Opposition in 1975. Although she may have changed her opinion since, I have not. She recognised that referendums conflict fundamentally with the concepts of parliamentary sovereignty, collective responsibility and a representative of Parliament. As another Labour Member said in that 1975 debate, a referendum perpetuates a confusion of government by

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debate, thought, reflection and decision in the House of Commons with a head count of the people. Although I recognise that there is a counter argument, I subscribe to the view that referendums undermine crucially and perniciously the very notion of parliamentary control that my noble friend seeks to protect by this Bill. Clause 3 is the equivalent of a computer virus and if it is left in, it will serve to wipe out and destroy the valuable provisions embodied in the other clauses. I should like to see it eliminated.
I turn now to the form of the Bill. I very much welcome what my honourable friend seeks to achieve by embodying the mechanisms of parliamentary scrutiny and control in statute. By putting the provisions in statutory form, they are protected from the passing whim of a majority in either House. They can be changed only by another statute, not by a simple vote to change or suspend a Standing Order. Given the power at the disposal of the government of the day, such protection helps to ensure a more balanced relationship between the Executive and Parliament.
I can anticipate the argument that the Government will employ against using a Bill for this purpose; namely, that it is too rigid. In some countries, provisions of the kind embodied in this Bill are to be found not in statute but in the constitution. That, I think, is to provide for a little too much rigidity. This Bill lies between the two extremes. It is not overly rigid and it is not too flexible. It provides for a modest degree of statutory protection. For the reasons I have given, I believe that it is necessary protection.
Although I oppose certain provisions of the Bill, I very much support its purpose and I believe that my noble friend has done a great service by introducing it. I often tell my students that the real value of Private Members' Bills is to be found in the debate they generate. They can bring issues on to the political agenda. They can prompt the Government to act. They can help to keep important issues to the fore. I hope that my noble friend's Bill will serve to do all these and more.
Finally, good government needs an effective Parliament. A confident government will have no difficulty in embracing the spirit of this Bill. A government lacking in confidence will not embrace it. I look forward to the response of the noble and learned Lord the Lord Chancellor.
12.2 p.m.
Lord Weatherill: My Lords, I, too, welcome the opportunity to discuss this important matter on a Friday morning. However, I am not totally convinced that we need a Bill to make Parliament more effective. In saying that, I do not disagree with many of the suggestions made by the noble Viscount. What I believe is wrong is the way in which we are using Parliament at present. There is not much wrong with the institution of Parliament in itself.
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The noble Viscount, Lord Cranborne, mentioned that the only effective power in the other place at the moment are the Whips' Offices. I fully agree. I was a Whip for some 12 years—
Viscount Cranborne: My Lords, particularly in view of the noble Lord's presence here this morning, perhaps I ought to have added, and put first, the Speaker's Office.
Lord Weatherill: My Lords, I wholly agree. I was Speaker only for 10 years, but I was a Whip for 12 years. By the end of my time, in 1979, I had reached the conclusion that as Deputy Chief Whip I had far too much power. If we had used the 1970s tactics in 1964, when I first went to the Whips' Office, on Colonel Sir Walter Henry Bromley-Davenport or on Captain Lancaster or on Nigel Birch, I do not believe that I should be standing here today addressing your Lordships' House.
The trouble is the ambition of Members these days to become Ministers. That gives the Whips far too much influence. I wholly agree with the noble Viscount that what is wrong is that the Government are not being held to account, particularly in the other place. There is not time to go into that in detail in the gap, Put one of the actions we must take is to return to local government the powers taken from it during the past several years and free Members of Parliament to come into the Chamber and hold the Government to account It was Mr Gladstone who said to his own supporters, "It is not your job to run the country. It is your duty to hold to account those who do".
The trouble is that Members of Parliament are in their offices answering the 40,000 letters which come into the Palace of Westminster every day. Frequently, when I was Speaker, I received letters of complaint which were hardly ever about bad behaviour but nearly always about the way in which the Chamber was so badly attended. I want to see the Chamber become once again the forum of the nation. If one turns on the television today, one sees that it is nearly empty. That sends a bad message to the public who watch it, or fail to watch it and do not take account of what is happening. I should make the Select Committees much more influential. That is where the Government really are being held to account. For instance, there is a good case for paying the chairmen of Select Committees.
I shall not enlarge on these matters today, but I hope that we shall have an opportunity to return to them at a later stage. I welcome the opportunity provided by the Bill to reform the whole of the parliamentary system. I hope that after the Bill to "reform"— and reform should be better—your Lordships' House, we shall move on to look at the whole of the parliamentary system, which includes the other place. I welcome and congratulate the noble Viscount on giving us this opportunity today to discuss this very important matter.
Lord Renton: My Lords, before the noble Lord sits down, will he say why he believes that attendance in another place has fallen so much? Is it not due to the ever increasing amount of correspondence which

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constituents send to honourable Members, plus the fact that the departmentally related Select Committees, which were established 20 years ago by a committee of which, I must confess, I happened to be a member, now take up so much of the time of Members and prevent them being on the Floor of the House?
Lord Weatherill: My Lords, the noble Lord is absolutely right. Part of the trouble is the constituency surgeries, which are now held every week. Members are largely canvassed about constituents' problems. Two-thirds of them are matters for local government, which is why I say that we should return powers to local government and let local councillors deal with many of the problems. That would free Members of Parliament to spend more time in the Chamber.
It is true that Select Committees take Members away from the Chamber. When I was Speaker, Members would regularly ask me whether they would be called by five o'clock. I had to say, "It is unlikely that the Front Benches will have finished by five o'clock. Is it because of your Select Committee?". They would reply, "Yes, Mr Speaker". They have no option. If you can go to a Select Committee and be seen on television holding witnesses and Ministers to account, why stay in the Chamber hoping to catch the eye of the Chair?
12.9 p.m.
Lord Jopling: My Lords, I am provoked by my noble friend Lord Cranborne's flattering remarks, about the efficiency of the Government Whips' Office during the years in which he was in the House of Commons, to offer a few remarks. I wish, however, that his enthusiasm for the Whips' Office had been shown on some of those occasions when he was not quite as helpful as I might have wished. However, on this occasion I congratulate him warmly on introducing this Bill. It brings together many of the thoughts that we have had over the years as to how Parliament might be improved.
My noble friend Lord Cranborne came very clean when he said that one purpose of the Bill was to make it more difficult to get legislation through. It would certainly have that effect. When I was Chief Whip, I hated some of the scrutiny arrangements for legislation. They made my job much more difficult, as it took longer to get legislation through. I well remember when there were Cabinet Committee meetings to decide what should be in the Queen's Speech. Ministers would come with torrents of legislation to propose, even though our party had been elected on the basis of reducing the amount of legislation. Whenever I plaintively said that we might be pushing far too much legislation through, nobody seemed much prepared to listen. The Bill might thus prove to be a good way of stemming the flow of legislation from which we have suffered during at least the 35 years in which I have been around this building.
I much agree with the proposal for a smaller House of Commons and fewer Ministers. I had the honour to be chairman of a committee on the Sittings of the House in the 1990s, and I wish that I had had the opportunity
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to make such proposals, but that was precluded from its workings. I also agree with the noble Lord, Lord Norton, that these things should be done together, rather than in two stages, as the Bill proposes. I hope that the Bill may be changed in that regard.
I am unhappy about the proposal in Clause 9 that Ministers should not sign European legislation until there has been wide consultation. I shall explain why. During negotiations late at night, new propositions often come up in the Council of Ministers, which can prove particularly advantageous to the national interest. For example, I was once involved in the middle of the night in the annual agriculture price fixing. I was determined to maintain the beef support system, which we then enjoyed. We were the only country to do so. I had no friends, and I badly wanted a friend to support me in maintaining the beef support system, which had to be renegotiated every year. At about 4 a.m. the Italian Minister said, "Michael, I have been looking carefully for the first time at your beef support system, and I think it has much merit. But I wonder whether you would be kind enough to look at my tomato pulp regime". I said that I did not need to look at it, as I was sure that it was an admirable scheme. We agreed to stand up for each other's schemes, and so I immediately obtained my beef support scheme. I should hate to tell your Lordships what the commissioner called us when we told him what we had done.
I hope that the Bill will reach the Committee stage, and that we can try as the noble Lord, Lord Rathcavan, said, to improve it in the weeks ahead.
12.15 p.m.
Lord Hankey: My Lords, I have only just returned from abroad, and have not studied the Bill in the detail that I should have liked. However, its content is enormously important. The Mother of Parliaments is closely watched by the rest of the world for the manner in which we achieve our democracy and transparency, and for how we involve our people, as the primary stakeholders, in government.
What we do in Parliament is of great importance for the primary stakeholder, the electorate. All too often, the electorate has been alienated, and that is borne out by the poor turnout at referendums. The devolution of power which the noble Lord, Lord Weatherill, and the noble Viscount, Lord Cranborne, emphasised is vital. We must ensure that devolution involves people so that our open society, which often stands in contrast to the closed societies that lead to corruption and centralisation, can lead to involvement, inclusion and the proper devolution of power.
I have just returned from the Yemen where the law of local administration has attempted to open government to local people. Such issues are fundamental to countries such as India and China, which watch our parliamentary democracy closely. The Bill's importance is underlined by the way in which the "Mother of Parliaments" is so highly visible to the rest of the world. In times of prosperity, alienation is less significant, but we need systems of control and contract for when times are tough, and that also applies to the way in which we organise ourselves in Parliament.
12.17 p.m.
Lord Monson: My Lords, I congratulate the noble Viscount, Lord Cranborne, on this ingenious, thought-provoking and constructive Bill. I agree, in principle at any rate, with virtually everything proposed. The exception is Clause 17. The number of Members of Parliament may have crept up somewhat in recent years, but he has perhaps overlooked the fact that once Scottish over-representation at Westminster has been remedied and Scotland has been brought into line with England, Wales and Northern Ireland—a necessary move which I trust will not be long delayed—the number of Members of Parliament will fall to about 644. Of course that is still a long way short of his ultimate goal of 400. But I understand that many people value the chance of personal contact with their Member of Parliament, and the greater the number of constituents, the smaller the opportunity of making that personal contact will be.
Moreover, as my noble friend Lord Weatherill has pointed out, Members of Parliament have to some extent had to step into the shoes of local councillors, and their postbags are at least 10 times larger than they were a generation ago. The hands of Members of Parliament are therefore already fairly full. I doubt whether, for example, the deputés in the Assemblée Nationale have to cope with quite so much correspondence, but I am open to correction on that.
I wholeheartedly agree with the proposal in Clause 18 to reduce the number of Ministers. But it is surely just as important that their numbers should be reduced proportionately as that they should be reduced in absolute terms. Yet under the Bill's proposals, from the year 2020 onwards, 15 per cent of Members of Parliament, and up to 29 per cent of Members of Parliament on Government Benches, could be Ministers. In addition to that 29 per cent, there would be several unpaid parliamentary private secretaries.
Surely, if we want greater parliamentary scrutiny of the executive, as we must all do, we want the maximum possible number of independent-minded Back-Bench MPs who have little interest in scrabbling for office and are therefore not afraid to vote against the dictates of their Whips whenever they judge it right to do so. With that exception, I think that the Bill is excellent, and again I congratulate the noble Viscount.
12.21 p.m.
Lord Bruce of Donington: My Lords, I shall not detain the House for more than a couple of minutes. I thank the noble Viscount, Lord Cranborne, for bringing forward this particular subject, which is very appropriate at this time.
I draw your Lordships' attention to Clause 9, which deals with the whole question of Community legislation. I am not entirely convinced that Members of another place, or, indeed, quite a number of noble Lords, are aware of the amount of Community legislation which goes through both Houses of Parliament without proper parliamentary scrutiny.
For many years I have endeavoured to acquaint your Lordships with the extent to which that has intruded into our national life. Perhaps the Government will give us
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an indication of their views on the validity of the conditions set out in Clause 9. Will the Government indicate whether they are aware of the extent to which legislation from Brussels avoids proper scrutiny? That does not necessarily happen by design, but perhaps through our administrative negligence: or perhaps through the views of our own bureaucracy here, which is not free from blame in that particular respect, and which quite willingly connives at the avoidance of parliamentary views being expressed prior to any particular enactment.
I have no particular rancour in that matter. I do not even resent being ignored over those questions during the past 15 years. But I assure your Lordships, with as much passion as is proper for me to express in this House, that I am deeply disturbed about the way in which the authority of Parliament to deal with its own affairs in this country is being progressively and deliberately undermined.
12.23 p.m.
Lord Strathclyde: My Lords, it is a great pleasure now to have an opportunity to join in the debate. I very much welcome those noble Lords who spoke in the gap and joined our deliberations. The fact that they were urged to their feet by the speech of my noble friend Lord Cranborne and by others who spoke earlier shows the strength of the power of debate. I say to my noble friend Lord Cranborne that it is right that we should debate this matter, even if it is a sunny Friday in June. I for one am happy to give up my morning in the sun to be here debating one of the most important issues that faces us. I entirely agree with what my noble friend Lord Norton of Louth said in that respect. Indeed, if we had spent as much time in this Parliament debating the provisions in my noble friend's Bill to strengthen Parliament as we have spent debating a Bill to reduce the independence of Parliament, then we should have hope of better governance. The Bill to which I refer is the one that seeks to make so many changes to this House.
The Government claimed that they would govern for the many, not the few. Yet look at the way in which they have treated Parliament over the past two years. It has been a story of the subjection of the elected many by the executive few. Month after month we have seen announcements made outside Parliament; MPs sent away from Westminster and another place shut down while this House is still working hard:, changes in another place to tighten the executive's Op on procedure; expressions of impatience with any spark of independence in your Lordships' House or elsewhere. In this House I hardly need mention the tawdry Bill designed to open the road to a second Chamber.
I see in this House—only just over the horizon—changes in procedure that may erode the right of every Peer in this House to be heard, and the right for debate never to be blocked or curtailed. I hope your Lordships of any and every party will resist such changes to the utmost. That is the last corner of our Parliament into which the clammy hand of the executive has not reached entirely. It must stay that way.

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The independence and authority of Parliament have been steadily and dangerously eroded. An openly presidential manner of government is emerging, in which a Cabinet meeting is an optional excursion from the flat upstairs, and the second most powerful man in the country is a former journalist on a tabloid newspaper, who has never submitted himself to election by the people, or even, so far as I know, by members of his own party.
On the other hand, my noble friend's Bill represents a way to begin to rebuild the authority of Parliament. It is a far-reaching and audacious Bill, betraying that elegance of mind and seductive vision for which my noble friend is rightly renowned. We on these Benches support the Bill, although I agree with the noble and learned Lord, Lord Simon of Glaisdale, that not all of my noble friend's ideas will work, desirable though they may be. We should like to see aspects of the Bill become law, and we offer co-operation to the Government, in both Houses, in helping it on its way to the statute book.
I turn to some of the specific provisions in my noble friend's Bill. It is difficult to decide which clause of the Bill most merits attention. But there is no doubt that the provisions in Clause 1 to put a presumption in favour of consultation on a Bill before it is presented to Parliament are wise. We have seen far too often, both under this Government and their predecessors, truncated consultation, or often none, resulting in bad law. My noble friend is wise to suggest a presumption in favour of a committee on a major draft Bill that would take evidence from affected parties. One only needs to cite the draft financial services Bill currently being considered—and the remarkable work being done by many Members of this House in pointing out its defects—to show the value of that. I hope that the Government will be able to indicate their support in principle for this clause.
I was touched by the piety of Clause 3, which would enact the referendum principle for which my noble friend's distinguished ancestor Prime Minister Salisbury was famous. It would enable this House to require a referendum on a constitutional Bill of special significance. That would provide protection against the abuse of elective dictatorship. It would ensure that any referendum would be held on the basis of the detailed proposals of a government. It would not be held, as this Government's referendums have been, on the basis of outline ideas and before detailed legislation had been published. Such pre-legislative referendums are a disgrace and should be prevented. No doubt the implications of that idea require careful discussion in Committee. My noble friend Lord Norton of Louth has usefully explained why we should have some reservations about it.
I am very interested in the provisions of Clause 4, which would enable this House, on the advice of the Delegated Powers and Deregulation Committee, to veto sections of legislation taking excessive secondary powers. The growth of secondary legislation, effectively beyond the control of either House, is a curse of modern government which has flourished equally under both
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parties, but has taken a new leap forward in the last two years. The Pollution Prevention and Control Bill, recently before this House, was one of the more outrageous examples of a skeleton Bill. My noble friend's proposal would directly confront that problem. It would require governments to account properly to Parliament, and it would put real power behind the authority justly acquired by your Lordships' Delegated Powers and Deregulation Committee, since it was created largely on the initiative of the noble and learned Lord, Lord Simon of Glaisdale, and that of my noble friend Lord Cranborne himself.
My noble friend in Clause 5 imaginatively suggests a way in which the valuable services of the Delegated Powers and Deregulation Committee in scrutinising legislation could, at the request of those bodies, be put at the service of the devolved assemblies. The relationship between this Parliament and the devolved assemblies will take time to bed down. That is one way in which a constructive link can be retained between those devolved assemblies and Westminster. I was much impressed by what the noble Lord, Lord Rathcavan, said on the subject and on the lack of a revising Chamber in the devolved bodies.
Clauses 6 and 7 require more formal consultation on secondary legislation generally, and I welcome that. I can see great attractions in Clause 12 which would automatically cause any legislation not commenced within five years to lapse.
I am glad to see that the noble and learned Lord the Lord Chancellor is to reply to the Bill. Perhaps in so doing the noble and learned Lord would undertake to send me, and to lay before the House, a list of all enactments that would currently be caught by this provision.
A number of Bills that have come before your Lordships' House lately seek to address the question of improving scrutiny of European legislation. It is a serious problem, which has become far worse because of the uncritical acceptance of new European commitments by this Government since May 1997, which, taken together, bear down heavily on UK employers, particularly smaller businesses.
So I see great merit in requiring Ministers to consult Parliament on draft directives, long before such directives come to the point of a vote. I also find intriguing the prospect of an affirmative vote in both Houses being needed before a Minister could sign an undertaking. I wonder on how many occasions the noble Lords, Lord Bruce of Donington and Lord Stodart of Swindon, would be seen in the same lobby as this carelessly trusting Government. However, I recognise what my noble friend Lord Jopling said about sometimes needing to take decisions urgently and at short notice.
I very much like the proposals in Clause 10 which will need to be examined carefully in Committee. The clause strikes directly at the pernicious practice of "gold-plating", rife in departments of state, under governments of all colours. Time and again extra elements are grafted on to what purports to be Community-based legislation. Perhaps the noble and

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learned Lord will effect a response to this question—almost certainly by letter—as to which elements in legislation presented to the House since May 1997 have been "gold-plated" by government departments before they were introduced to Parliament.
Of course, I cannot deal with every aspect of my noble friend's Bill. Indeed, a difficulty of the Bill—when it comes to winning the attention that it deserves—is that it addresses so many fundamental questions so incisively. The proposition to give Parliament authority to examine the holders of key public offices prior to appointment—as is done in the United States—may seem a far-reaching one. My noble friend Lord Renton mentioned his opposition to that.
I believe that there is much to be said for the proposition. Perhaps the noble and learned Lord the Lord Chancellor could indicate whether there are any circumstances in which the Government would consider proceedings such as those proposed by my noble friend and, if so, in which areas. I look forward to the response of the noble and learned Lord.
Part IV of the Bill has some deeply intriguing proposals as regards another place. Ministers in another place have been kind enough to send us some fairly questionable proposals for the alteration of this House, substantially without any consultation. It may be only equitable for my noble friend to send a fireship of this kind back down the corridor.
I have never hidden my view that the current House of Commons is large and unwieldy. The same could be said of the payroll in government. My noble friend proposes a limit of 400 eventually on the size of another place: a limit of 75 on the number of Ministers and a limit of 15 on the Members of the Cabinet. I believe that is extremely wise and that the proposal should receive widespread welcome. I particularly endorse the welcome given by my noble friend Lord Jopling.
I do not have a firm view on the suggestion of my noble friend that the practice of Cabinet Ministers having to fight a by-election when first appointed to the Cabinet should be revived. However, I understand that in 1964 Patrick Gordon-Walker lost his seat in Smethwick, was made Secretary of State for Foreign Affairs, stood in the subsequent by-election in Leyton and lost. No doubt that is a lesson that the Government may wish to keep uppermost in their minds when responding to my noble friend.
Clause 20 addresses the shamefully unresolved West Lothian question, in the most direct way possible. Perhaps the noble and learned Lord would cast his mind on this proposal. Does he see it as an option for resolving this question and, if so, can we expect legislation from the Government on this matter? For our part, we do not believe that this issue can safely be ignored.
Part V of the Bill is perhaps the most unlikely, but it is also the most reasonable. It proposes asking the BBC to involve itself further in broadcasting our proceedings. I welcome that and I hope that the BBC will take up the proposal. I look forward to its progress.
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If the noble and learned Lord the Lord Chancellor were to give a positive reply to many of the ideas proposed by my noble friend that would be greatly welcomed, not just in the House but more widely. This has been a useful debate and no doubt that is partly due to the lack of interference, or any contribution from the Liberal Democrat Party! I look forward to the reply of the noble and learned Lord the Lord Chancellor. If the Bill is not enacted, my noble friend will not give up. If he survives the culling process, he will return, in the next Session, with a Bill that deals with some of these issues so that they can be fully debated again.
12.36 p.m.
The Lord Chancellor: My Lords, anyone reading the opening words of the preamble to this remarkable Bill may be forgiven for forgetting which party was in power for 18 of the past 20 years. The preamble boldly intones:
"Whereas the sovereignty of Parliament has been progressively diminished".
I am sure that the noble Viscount, in his various roles as a government Back-Bencher in the other place, as someone who took voluntary retirement from there to be accelerated into this House because of the multiplicity of peerages which abound in his great family, and as someone who became Leader of this House, fought tirelessly from within that government to restore the sovereignty of Parliament and to reform the constitution. However, the right honourable gentleman, Kenneth Clarke, told a different story in the other place:
"With hindsight, I believe that the Government of whom I was a member for so long were mistaken in becoming so immovable on the constitution. We should not have allowed ourselves to be put in a position where we seemed to be defending the constitution for every part of the United Kingdom as though it could never change".—[Official Report, Commons, 30/11/98; col. 577.]
I must not fall into dangerous habits of mean spiritedness. I must not countenance the notion chat this amazing Bill is the product of many flows of blood to the brain after good dinners in White's Club. No, I must welcome the passion, the zealotry, of the convert to the cause of constitutional reform. Only yesterday the noble Viscount welcomed me to the ranks of high Tories for my defence of the office that it is my privilege to occupy. I welcomed him to the ranks of the rationalists, which high Tories occasionally join, although usually by accident.
The preamble goes on to say that,
"the obligation of governments to be held continuously to, account by Parliament has been honoured more in the breach than in the observance, and the obligation of governments to remain accountable to the electorate through their representatives has in consequence declined".
I expect that noble Lords who have served in another place will have many fond memories of being held to account. Few will forget how the electorate held the previous government terminally to account on 1st May 1997. Equally, there are among my noble friends in this House those who will also recall painfully being held to account by the other place on 28th March 1979. when the then Labour Government lost a confidence Motion there.

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This imaginative Bill contains a range of measures which the Government are already putting into effect without the need for legislation. The merits of other parts will no doubt be debated in detail in Committee.
The noble Viscount argued that Parliament generally, and the House of Commons in particular, ought to have been reformed before the composition of this House was addressed. He presented his Bill just before the House of Lords reform Bill was given a First Reading. Well, that is a battle long ago. The noble Viscount and I have been cutting deals for the transitional House, and nine-tenths of the hereditary peerage, to whose services and their forebears' services I have previously paid tribute, are already in the departure lounge from this House.
The Government have taken steps to achieve some of the purposes of the Bill. On primary legislation, we produced five draft Bills for pre-legislative scrutiny. A Joint Committee, chaired by the noble Lord, Lord Burns, and referred to by the noble Lord, Lord Strathclyde, reported on the draft Financial Services and Markets Bill. It has now been introduced in another place. Another Joint Committee has been established to consider the draft Local Government (Organisation and Standards) Bill. A draft Bill on freedom of information is being considered by Select Committees in both Houses. The Government intend to produce more Bills in draft in future Sessions. This goes a considerable way to meeting the objectives of Clause 1 of the Bill. These measures are designed both to improve the quality of legislation and to provide an early parliamentary input into the legislative process.
From the start of this Session, fuller explanatory notes have been published with each government Bill. These provide much of the information sought in Clause 1 of this Bill. They also provide a detailed commentary on individual clauses. I believe that the development has been widely welcomed both within and outside Parliament, not least among lawyers. The noble Viscount's Bill sadly appears without explanatory notes, but that is because this imaginative Bill does not command the support of the Government.
I shall not be tempted by Clause 3 to weary the House with a reprise about constitutional Bills and referenda, but the Government have gone out of their way to ensure that the views of the electorate are taken into account in constitutional reform. The devolution settlements and the Greater London assembly plans have been endorsed in referenda. Any change in the electoral arrangements for the House of Commons, or adherence to the single currency, would also be subject to referenda.
No one who has had anything to do with the Pollution Prevention and Control Bill could be unaware of the concern in this House about delegation of powers, referred to in Clause 4. This Government pay close attention to the views of the Delegated Powers and Deregulation Committee and wherever possible seek to amend government Bills to meet its concerns. I did just that myself in the Access to Justice Bill in my positive response to every point made in the committee's report on that Bill.
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On parliamentary scrutiny of delegated legislation, the House will recall that we brought forward amendments to the Human Rights Bill to set a time-frame for parliamentary scrutiny of remedial orders. The number of sitting days involved in that procedure bears an uncanny resemblance to the periods listed in Clause 6 of this Bill. We are also consulting on an extension of the Deregulation and Contracting Out Act 1994. The procedures in both Houses for deregulation orders under that Act arguably provide better parliamentary scrutiny than Bills or other statutory instruments receive in either House.
The Government have already carried out their manifesto commitment to overhaul scrutiny procedures for European Union documents. Scrutiny procedures have been extended to cover the second and third pillars of the Maastricht Treaty. The scrutiny reserve has been expanded to include European Council decisions. Clauses 8 and 10 would take us further. No doubt we shall discuss in Committee how they would work in practice.
The Government have been active in extending the principles set out by the noble and learned Lord, Lord Nolan, and his Committee on Standards in Public Life, for public appointments. It is a tribute to him to know that "Nolanisation" has entered the Whitehall argot as prescribing that all appointments are to be made on merit. That is something on which I have always insisted for judicial appointments: merit—not social balance, opinion balance, gender balance, or any other kinds of balance. Merit must rule.
The Committee on Standards in Public Life considered whether Parliament should be given a role in the process of making public appointments, which is the effect of Clause 14, but concluded against. The system in the United States shows the potential pitfalls of appointments being delayed and politicised, and of good candidates being deterred from applying. The noble Lord knows that I would have no truck here with the confirmation hearings in the US before Supreme Court justices are appointed. Once appointments have been made, of course, Parliament has considerable powers to hold office holders to account, but subject, in the case of the judges, to the important constitutional convention of judicial independence.
In March, the Government published a White Paper Modernising Government. This set out plans for continuous improvement in central government, including greater use of new technology and a commitment to delivering services which are of high quality and efficient. We have also set up a performance and innovation unit within the Cabinet Office, designed to improve the capacity of government to identify and address strategic, cross-cutting issues and to promote innovation. I think the House will find that these measures, along with the public service agreements, the Government's annual report, annual departmental reports and the output measures involved in resource accounting, will go a long way to meeting the aims of Clauses 15 and 16.
The Scotland Act 1998 already provides for a modest reduction in the size of the House of Commons, but not on the scale envisaged in Clause 17 of the Bill. As

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someone who has not sat in the other place—unlike the noble Viscount—it is difficult for me to judge how reducing the number of MPs—and therefore increasing the number of constituents each represents—will affect the workload of MPs. But I say this: if we had a Bill before us calling for a reduction in the number of judges but an increase in access to justice, some of your Lordships might spot a problem. Clause 18 of the Bill seeks a reduction in the number of Ministers and an increase in accountability to Parliament. I suspect that any reduction in the number of Ministers would not improve accountability, and certainly not in this House. As the Minister responsible for a department of state which feels rather under-resourced with Ministers, I have difficulty in being persuaded by the noble Viscount's proposition.
Clause 19 is surely the most entertaining in this enjoyable Bill. No doubt we all want our Prime Ministers to have maximum flexibility in composing their Cabinet. No doubt we all want to see young blood brought on, although preferably not at the expense of our own seats in Cabinet. But, as I understand the clause, first-time appointees to the Cabinet would have to give up their seats in the other place to fight a by-election. Is it to allow their constituency to judge their suitability for Cabinet rank? I don't know. Or is it to allow the electors to express interim assessments of government performance every time someone enters the Cabinet for the first time? I rather think that it might lead to some Cabinet Ministers remaining in office perhaps for a little longer than might be in the public interest.
Then, in this Bill's breathless canter across our constitutional affairs, we come to the crescendo: Clause 20, the West Lothian question. Now that we have devolution up and running, I think the best thing to do about the West Lothian question is to stop asking it. More or less the same question was addressed in the two failed home rule Bills for Ireland of 1886 and 1893. In the first, Irish Members were excluded from the Westminster Parliament. After many months of argument they were brought back in, hut for imperial purposes only. That also became part of the 1893 Bill. But the distinction between what was, and was not, an imperial question proved so impossible to define that, at Committee stage, the Government changed their mind yet again and left it that the Irish Members could vote on anything.
So that is the historic precedent for my proposition that the best thing to do about the West Lothian question is to stop asking it. But the West Lothian question never really was a question any way. It was a challenge: "You can't answer this one; and therefore you can't have devolution." For myself, I regard the so-called West Lothian question as addressing what is a consequence of devolution. We do not want two classes of MPs. A modest price to pay for the maintenance of the Union is to have the wit and wisdom of the Scots inform the legislative counsels of the English nation. On careful reflection, I am sure that the noble Lord, Lord Strathclyde, will agree.
So I fear that we cannot support the Bill. However, the thanks of your Lordships' House are due to the noble
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Viscount for enlivening this already sunny Friday morning, although he cast a cloud over my Thursday evening when my noble friend Lord Carter made a late request to me to stand in for him—but, of course, it has all been worth it in the end. I fear that this Bill will not reach the statute book, but it will certainly add to the gaiety of the nation.
12.51 p.m.
Viscount Cranborne: My Lords, I am enormously grateful to noble Lords who have taken part in what, rather to my surprise, I found to be an extraordinarily enjoyable morning. In particular, I am delighted that I contributed to lightening the noble and learned Lord's day. However, I must say that I cannot help feeling that this entire debate has been justified for one reason only in that it has provided us with a revelation about the true nature of the noble and learned Lord, which was not only "laid" before your Lordships' House yesterday but also today. In his closing remarks, when discussing Clause 21 of the Bill, the noble and learned Lord revealed himself to be one of what we had always suspected the Caledonian members of this Government to be: Scottish supremacists. I think that the English section of the country has been warned that the reverse takeover by the Scots of the United Kingdom is not only in full flow but is now irreversible.
I enjoyed the contribution of the noble and learned Lord and I take a little comfort at least from the modest amount of support that he gave to the spirit behind some parts of my Bill. However—dare I say it?—he did commit one error. As I listened to the noble and learned Lord, he seemed to imply that he thought we could trust the Government to carry out those parts of this legislation with which they agreed. I say this knowing that the noble and learned Lord is probably the most trustworthy member of this Government; and I speak from personal experience. But I do not feel that I would say to him that Parliament exists to trust the Government. That is why it seems to me that legislation might be required, even for those parts with which the Government agree.
I am delighted that the noble and learned Lord, Lord Simon of Glaisdale, and my noble friends Lord Renton and Lord Norton agree with substantial parts of the Bill. Indeed, rather more than I dared to hope, your Lordships have, in principle, supported large parts of what I propose. For the reasons given, I firmly support the idea that we should look at ways in which we could make secondary legislation amendable.
On the matter of appointments, I am all too aware of the horrors experienced by candidates for membership of the Supreme Court in the United States, and of the appalling inequity visited on one of them in particular. However, because of the incorporation of the ECHR, judges will now be increasingly called upon to make

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political judgments in a way that they have not been called upon to do hitherto. Those political judgments are bound to drag judges increasingly into the political forum. It was for that reason that I was highly sceptical as a non-lawyer about the good sense of incorporating the ECHR. If judges are to become political, I fear that, as a consequence, we shall need to know a little bit more about them before they are appointed. If we were to disincorporate, I should be the first to advocate that judges should certainly not be examined in that way.
I should tell my noble friend Lord Renton that I drafted Clause 5 as a tribute to him. His contribution in this area over many decades is, I am glad to say, very much recognised by the House. In so far as progress has been made, it is to him and to the late Lord Rippon that we ought to pay most generous tribute.
I should like briefly to mention part of the contribution of my noble friend Lord Norton. As he is such a great constitutional expert, I was pleased that he agreed with parts of my Bill. I was also very touched that my noble friend Lord Jopling does not resent too much the often absurd way I behaved to him when I was one of his very junior Back-Benchers and he was the great and august Chief Whip. I am grateful to him for that. However, I should like to say to both my noble friends that I should very much prefer to take these reforms together. The reason that I propose we should stagger them is that, unless we do so, it seems to me that it will be very difficult to persuade Members of another place to vote in large numbers for their own demise. Nevertheless, if my noble friends can find a better way of doing this, I shall be only to delighted to listen to them in Committee.
As far as concerns referendums, I instinctively agree with my noble friend Lord Norton. But, as long as we do not indulge as the Government do—this is where I disagree with the noble and learned Lord the Lord Chancellor—in pre-legislative referendums, which seem to me to be a constitutional outrage, as pointed out by my noble friend Lord Strathclyde, we shall be faced with a number of very great, fundamental changes which are inevitably irreversible. It seems at least right that such matters as EMU and devolution should be submitted to the judgment of the electorate, but only when it has had the opportunity to see what Parliament has decided and Parliament's own discussion of such matters has not been emasculated by pre-legislative referendums, in the way that the Government did in the first Session of this Parliament.
I should also like to say how much I agreed with the noble Lord, Lord Hankey, about the importance of visibility. I hope that we may return to the matter of the numbers in another place. If we are lucky enough to have a Committee stage for this Bill, perhaps I shall be able to cross respectful swords with the noble Lord, Lord Monson. As I said, I am most grateful for the contribution of all speakers on a warm Friday morning. I reiterate my thanks to all noble Lords who have taken part. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Breeding and Sale of Dogs (Welfare) Bill
12.59 p.m.
Lord Soulsby of Swaffham Prior: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Soulsby of Swaffham Prior.)
On Question, Motion agreed to.

Road Traffic (Enforcement Powers) Bill [H.L.]
1 p.m.
Earl Attlee: My Lords, I beg to move that this Bill be now read a second time. In doing so I should declare an interest as I am president of the Heavy Transport Association, whose members will directly benefit from this Bill if it is passed. In addition, I have friends in the road haulage industry, and next year I may have to join them!
I believe in social mobility and free enterprise within a competitive market. The road haulage industry is relatively easy to enter but it is highly competitive. In order to enter the industry an operator needs to have a suitable operating centre, suitable maintenance arrangements, reasonable financial resources, sufficient knowledge of the industry and the relevant law: evidenced by a certificate of professional competence. Finally, he must be of good repute. What is not necessarily required is a high level of education or qualifications that are difficult to acquire. In other words, it is not a closed shop as are many "professions".
For this reason, people of relatively modest circumstances can and do succeed in the industry. However, an operator must have an operator's licence (an "O" licence) issued by the Licensing Authority (LA). The licence is granted to those who meet the standards that I have already mentioned. If an operator fails to meet the standards, the LA can revoke the licence, reduce the number of vehicles authorised, or impose special conditions on the licence.
The very aspects of the industry that make it so conducive to free enterprise and social mobility also make it highly competitive and, unfortunately, attractive to undesirables. In fact a new operator will often have to, at the least, sail close to the wind. If his business plan is not robust and he has underestimated his operating costs, he will almost inevitably end up operating illegally and eventually he will become bankrupt. During one of my previous speeches in your Lordships' House, I referred to new operators looking through rose-tinted spectacles.
Many advocate raising the entry levels for the industry; in other words, putting greater hurdles for the aspiring operator to jump through. I do not subscribe

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to that view. The problems in the industry can best be overcome by making it impractical to operate illegally. Illegal operation of goods vehicles depresses the market rate for road haulage. Commercial Motor magazine's table of operating costs indicates that the lowest possible charge-out rate for a 38 tonne artic is 110p per mile and it is thought that any rate less than about 100p per mile probably indicates sailing close to the wind. Some operators are charging out at 65p per mile. Your Lordships will recall that we enjoy a rate of about 50p per mile for our motorcar travelling expenses.
It may be helpful if I give some indication of the modes of illegal operation that come to the attention of the Licensing Authority and the Vehicle Inspectorate. It is a pretty depressing story. It includes overloading offences; vehicle excise duty offences; driving excessive hours; interfering with the operation of the tachograph—the device that automatically records vehicle activity; failing to maintain a vehicle so that it cannot be operated safely; employing drivers who are claiming social security benefits; using red—that is, agricultural—diesel; or using an unauthorised operating centre and thus tormenting residents.
I should like to give your Lordships some idea of the deviousness that exists. Many tachographs, the driver's hours recording device, are driven electrically. It is not technically difficult to insert a switch to stop recording vehicle activity. This enables the driver to drive excessive hours without being detected by examination of the tachograph records. For instance, if on coming out of the Channel Tunnel one evening the driver switches the tachograph off, he can then drive to Felixstowe, pick up a load and take it back to Dover. In the morning, he can then carry on driving having done an extra six hours' work for what he thinks is "free". But it is not. For example, in April this year an unlicensed vehicle went off the M.4 motorway. There was no paper recording disc in the tachograph and there were strong indications to the police that the driver was engaged in illegal trading with the Continent. The police were unable to interview the driver as he was dead. He was killed as a result of illegal operation.
Tipper operators are particularly prone to unlicensed operation. In North London, a tipper truck loaded with 20 tonnes of gravel ran over and killed a dispatch-rider who had fallen off his motor bike. The driver of the tipper truck had allowed enough stopping distance but, unfortunately, his brakes were seriously defective. Of course, the vehicle was unlicensed.
The problem is not confined to old vehicles. Fleets of new vehicles are also involved. This class of unlicensed operator would specialise in running overloaded or, more usually, flouting drivers' hours by means of the tachograph interrupter switch that I have already described. When an operator flouts the law, the LA can revoke or refuse a licence. Unfortunately, it is quite practical to operate without a licence at all! Typical fines are only £300 and the culprit can carry on until he is caught again. This is most depressing for the authorities. The authorities know who the illegal operators are, but they are virtually powerless to stop them.
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This Bill will provide for the impounding of goods vehicles found being used on the highway without an "O" licence. It should be noted that vehicles which are in a dangerous condition would not be impoundable, although they can be prohibited from being moved under existing legislation. It is not a wholly new power; indeed, I was tempted to lift the relevant clauses from the Excise Acts as they relate to using illegal fuels. However, I am extremely grateful to the Minister for his advice regarding the better drafting of the Bill. Without his advice, it is doubtful that the Bill would be workable. It is not expected that many vehicles would have to be impounded. The fact that the power exists would be enough to deter unlicensed operators.
Noble Lords may be concerned about the load which may well be the property of an innocent party. There are provisions in the legislation for the consignor to be able to reclaim his load unless it is impractical. I accept that impounding could be extremely inconvenient to the consignor. On the other hand, the traffic clerk who contrives to have a load moved by an unlicensed operator at an uneconomic rate—the 65p a mile rate—will not look so smart if the load is delayed under the provisions of the Bill. If consignors use only reputable operators, they will be unaffected by the legislation. On that point, can the Minister assure me that he would not expect a reputable operator to have his vehicle impounded on a technicality?
A further matter addressed by the Bill concerns drivers' hours. Currently, the authorities can insist that the driver of a foreign-registered vehicle immediately takes a rest period if he is found to have driven for excessive hours. At present, this does not apply to UK-registered vehicles, but the Bill corrects that anomaly. This need not create much excitement as there are already similar provisions in place should the authorities detect a vehicle that is overloaded or in a dangerous state. They can impose an immediate or a delayed prohibition and stop the driver endangering himself or other road users.
On these occasions, it is usual to give a detailed explanation of the operation of the Bill, but I have taken much of your Lordships' time explaining the need for the Bill. I am grateful to the Minister for producing the explanatory notes that are available from the Printed Paper Office, which no doubt are also available on the Internet. I do not want to weary your Lordships, so I shall be brief. Clauses 1 to 3 remove the anomaly regarding prohibition of drivers who are out of hours. Clause 4 increases the fines for operating without a licence from level four to level five in order to reflect the seriousness of the offences and the danger to the public.
Clause 5 and the schedule provide for the actual power to impound. There will also need to be detailed regulations made by the Minister under the negative procedure. Very briefly, after the necessary double checks, the vehicle will be impounded. This will require improvements to the IT systems and the Minister might have something to say about that. It may be that the operator can clear up the problem, possibly by proving that the vehicle does not require an "O" licence. There is an appeal procedure, but in the absence of a

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successful appeal, the vehicle would be sold after a period of 28 days. The proceeds would return to the operator, less costs.
Clause 6 removes what is known as the "margin concession". The operator will still be able to be authorised on his licence for more vehicles than he has specified. However, he will not be able to use the vehicle until he has notified the LA. This will require some improvements to the authority's IT systems before it will work. I hope that it will not be too long before notifications can be made by Internet, and I shall be pushing for that in my Front Bench role.
Clause 7 covers the short title and commencement provision. I hope the Minister can assure the House that he will not take advantage of the legislation until the necessary new IT systems are up and running.
I understand that there are some residual concerns within the vehicle leasing industry and that amendments may be tabled in Committee in order to obtain reassurances from the Minister. I am sure that proper debate would be helpful, but I should not like to see any noble Lord attempt to wreck the Bill or insert an amendment, as it is very vulnerable to the parliamentary timetable.
I apologise for speaking at length, but this is an important Bill which the road haulage industry would dearly like to see on the statute book. If the Bill is passed, it will provide greatly increased safety for the public and at the same time make it possible to enter the industry without having to break or bend the law in order to be competitive. That would no longer be an option. I beg to move.
Moved, That the Bill be now read a second time.—(Earl Attlee.)
1.12 p.m.
Viscount Simon: My Lords, this Bill, introduced so fully by the noble Earl, Lord Attlee, would fill a gap in our legislation. I make no apology for slightly overlapping the areas which the noble Earl has already covered, but I think it might be worthwhile doing so.
Drivers from other countries will not be able to complain that our HGV, PSV and LGV drivers have an unfair advantage in respect of enforcement. I am at a loss to understand why one section of the road haulage industry is said to be against it. After all, if this Bill improves the enforcement of drivers' hours and operators' habits, that should be applauded, and the removal from our roads of rogue operators should be encouraged. I have been with the police when they have stopped vehicles for the Vehicle Inspectorate where some trucks were found to be without operators' licences; others had exceeded their hours by a considerable amount, with many other offences being detected. It is a pity that there are not more sites available to the Vehicle Inspectorate, because they can do no more than scratch the surface at the moment.
So this Bill could be said potentially to improve safety on our roads. I have a couple of questions and one comment which concern goods carried on an impounded vehicle. Working on the assumption that the ownership
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of an impounded vehicle and the goods carried are not the same, as it is the vehicle that is impounded, how does the owner of the goods obtain delivery? Also, whose insurance covers any damage or spoiling of the goods? These might include frozen foods, and if the vehicle had not been impounded the damage or spoilage would not have occurred. I would not be surprised if the cargo owners' insurers, the police or the Vehicle Inspectorate deny any claim, due solely to the failure of a vehicle driver or owner to comply with the appropriate legislation.
A further concern that I have come across fairly recently is of drivers working for two companies, whereby they work their complete hours for one operator and then go to their second job and work their full hours for the second operator. That is completely abhorrent to me and, I am sure, to many operators. But because the tachographs will not show that the driver has been working for two operators each for full hours, it is very difficult to stop the practice. This is an issue that must be addressed at some stage in the future, and I hope that the Minister will be able to comment on it. I hope that this Bill will receive a free and rapid passage through your Lordships' House and the other place: it deserves to come into force as soon as possible.
1.15 p.m.
Baroness Thomas of Walliswood: My Lords, the noble Earl, Lord Attlee, has given a very comprehensive introduction to this Bill. I am not even going to attempt to repeat the detail of it. This is a very important industry: that is the first point to make. The vast majority of goods that we use in daily life arrive in our shops and offices by HGV or van.
As the noble Earl said, in a very sympathetic passage in his speech, I thought, the road haulage industry has a relatively low level of entry and as a result it is plagued by a "cowboy" element which, by not conforming to the regulations quite properly imposed on the industry, can undercut more law-abiding hauliers. So big business requires sensible and properly enforced regulation, which helps them as well as the community as a whole.
The two Acts which this Bill seeks to amend in detail cover two major aspects of the regulatory machinery of the industry and the Bill attempts to make them work better. Better enforcement of non-compliance by drivers in relation to the regulation of driving hours is most welcome, for all the reasons which the noble Earl has given us. The details of his Bill seem to be well worked out, as we would all expect from its author. The whole sequence envisaged by Clauses 1 and 2, the circumstances in which an authorised person can prohibit the driving of a vehicle on the road, the possibility of a process of what could be called "impounding" vehicles and the summary fines applicable to those who do not comply seem very easy to understand and are appropriate in the circumstances.
I now move to operators' licences in Clause 3 and the schedule. I am more familiar with this matter as a former member of a highways authority and I am well aware of the ability of HGVs to "torment" local residents. Again, I quote the noble Earl. I welcome the

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tightening of enforcement by an increase in the level of fines and the detention of vehicles. I also welcome the noble Earl's comments on the deterrent effect of the new penalties. I was interested to hear the noble Viscount, Lord Simon. make a most important point in relation to the attitude which the insurers of goods carried by road haulage may well take. I thought that was an interesting aspect. It too will add to the deterrent effect on hauliers.
In conclusion, this is a welcome Bill which makes a valuable contribution to the better regulation of this important industry. In fact, it is an excellent example of the proper use of a Private Member's Bill. It has the support of the department and of the haulage industry. The noble Earl has asked us not to attempt to amend the Bill. I was concerned on reading it to find that it did not mention out-of-date or fraudulent tax discs on goods vehicles. However, I shall consult with others and with the noble Earl before Committee stage. I welcome the Bill.
1.18 p.m.
Lord Brabazon of Tara: My Lords, I join with other noble Lords in congratulating my noble friend on the introduction of this very worthy Bill. As he has said, it will indeed have a direct impact on safety, which is very important, and it should lead to the further discouragement of the "cowboy" operator who to some extent plagues what is otherwise a most important industry in this country.
I also congratulate the Minister and the Government on the excellent Explanatory Notes that they have produced, which have done a great deal to clarify the position, certainly as far as I am concerned, and which in fact have enabled me to shorten my speech considerably. I would like to make just a couple of points. My noble friend commented in his speech on the part of the Bill that deals with illegal operations. That might include an operator using drivers who were claiming unemployment benefit or some other kind of social security benefit. I wonder whether that really is the case. If so, it is probably a very good idea, but it seems to be a little far away from other illegal operations in the road haulage industry. However, I shall be interested to know more about that.
It is also the case that the threat of impounding or prohibiting further movement of the vehicle is often very much more effective than a straightforward fine. It takes away the livelihood of the driver—particularly an owner driver—straightaway. In many cases that can be more effective than the threat of a fine, which may not occur for some time.
Generally speaking, I hope that the Bill succeeds. I am well aware, as my noble friend has said, of the perils that beset a Private Member's Bill, especially at this stage of the Session. I understand that there is only one more Private Member's Friday in the House of Commons. If this Bill is to become law, it will have to go through on the nod—and we all know how difficult that can be. I have personal experience of how difficult that can be because I steered a Bill through this House two or three years ago.
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I ask the Government, first, whether they intend to give this Bill as fair a wind as possible in the House of Commons; and, secondly, if it does not succeed, whether they will themselves take the earliest possible opportunity to introduce it as a government Bill in the next Session. Finally, if the Bill succeeds—I hope it does—when do the Government intend to bring it into force?—otherwise, I very much welcome the Bill.
1.21 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, I congratulate the noble Earl on introducing the Bill and on the concise and very effective way in which he introduced all its aspects; it is quite a technical matter. It is a very important Bill in relation to illegally operated heavy goods vehicles, which are a problem for both safety and environmental reasons, and for the well-being of the road haulage industry as a whole. It is very important that the powers to allow goods vehicles to be impounded and to tighten up the enforcement of rules on drivels' hours are pursued. It is clear from the contributions that have been made that there is considerable support for the Bill. I certainly echo the view of the noble Lord, Lord Brabazon, that we should give it a good wind in this House and in another place.
The public consultation exercise carried out by my department on these issues last year shows that there is overwhelming support for an impounding scheme. Road haulage bodies such as the Freight Transport Association and the Road Haulage Association, as well as road safety groups, the police and the traffic commissioners strongly favour these measures.
The licensing by the traffic commissioners of operators of goods vehicles over 3.5 tonnes gross-plated weight is intended to ensure safe and responsible use of such vehicles and fair competition between operators. As the noble Earl said, in deciding whether to issue an operator's licence, the traffic commissioner will need to consider whether the applicant is fit to hold a licence—that includes maintenance facilities and sufficient finance to keep the vehicles roadworthy; a proper operating centre, suitably equipped and physically and environmentally appropriate for his vehicles; and that proper arrangements exist to ensure that the rules on drivers' hours are followed and that the vehicles are not overloaded.
Those who operate heavy goods vehicles without an operator's licence put themselves outside these vital checks and cannot therefore easily be inspected for professionalism, safety or their environmental effect. To carry goods on the road in a heavy goods vehicle without an operator's licence is an offence under the Goods Vehicles (Licensing of Operators) Act 1995. As the noble Earl said, conviction currently carries a liability to a level four fine of £2,500; the Bill would increase that to £5,000. It is also true that the average level of fines is around £289. If an illegal operator has also committed other offences, such as running an unsafe vehicle or breaching drivers' hours, he will be liable to penalties for those offences as well. Nevertheless, an average fine of that level—or even

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approaching the maximum level—may tempt many unscrupulous, undesirable operators to be prepared to risk these fines.
As long as he remains unlicensed as an operator, the traffic commissioners are powerless to use against him the kind of sanctions they can use against a reputable licensed operator who commits some offences, serious and persistent offences in particular. Clearly, by definition the revocation, suspension or curtailment of the operator's licence and the disqualification of a person from holding such a licence is not available. In addition, illegal operators do not pay the fees for the operator licences which fund the whole licensing and enforcement system. They fall completely outside it, if they get away with it.
Moreover, to obtain an operator's licence, an operator has to show that he has a suitable operating system. That takes into account factors such as the effect on the local environment, the safety of access roads and the use of the operating centre, which can then be reviewed by the traffic commissioner every five years. Local authorities, local residents and others can object or make representations on grounds of road safety, suitability and the environment.
None of this applies to illegal operators, who do not have their operating centres vetted. This not only presents a danger to persons, vehicles and the environment but gives the illegal operators a serious financial advantage over legal operators and removes the statutory rights of local authorities and local residents. As the noble Earl said, this seriously undermines the position of law-abiding operators—small operators particularly—in the industry and tempts others into illegality.
That is why the power of impounding is so important. We must be concerned that any group in society which so openly flouts the rules is subject to sanctions. Illegal operators pose the most blatant threat to safety and environmental standards within the road haulage industry. At present, if caught and prosecuted they usually escape with relatively modest fines. Impounding or detaining illegally operated HGVs at roadside checks would provide the first truly effective sanction against these illegal operators by straightforwardly preventing them from continuing to operate.
I hope and believe—as does the noble Earl—that it will not be necessary to impound a large number of lorries to make an impact. We would have a high-profile launch followed by the first detentions. I believe that that would have a significant deterrent effect throughout the illegal fringe of the industry and bring about a substantial improvement in compliance.
Before introducing an impounding scheme we need to be sure that it would work in practice and that it would affect only the illegal operators; that is, those who operate without an operator's licence and thus outside the control of the traffic commissioners. To reassure the noble Earl, we interpret the Bill to mean that legal
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operators, operating under a licensing system, would not have their vehicles impounded for a technicality or other such offence.
Following our consultation exercise last year, we have devised a practical system for impounding illegally operated HGVs and we have discussed this with the industry. The schedule to the Bill sets out a framework for the practical scheme and provides for my right honourable friend the Secretary of State for the Environment, Transport and the Regions to make regulations based on this framework for the detailed operation of the scheme. Before these regulations were laid before Parliament, we would need to engage in further consultations with all interested parties in order to refine them.
As to the point made by the noble Lord, Lord Brabazon, about when we will bring this into effect, the regulations would have to be subject to this consultation and the measures would not be introduced until the necessary systems were in place. I fear, therefore, that I cannot give a precise date at this time; we will need to go through these processes first.
My noble friend Lord Simon raised the question about the impounding of loads. Loads will not be impounded in the legal sense; every effort will be made to return them to the owner. The exact arrangements will be covered by the regulations and will probably involve issuing a form to the driver and notices in the trade press. However, the load would be sold or disposed of if not reclaimed after a specified period. Decaying or dangerous loads would need to be disposed of immediately if the owner could not be located. That of course would give pause for thought to the consignors and to the insurance industry. I can assure my noble friend that we would not bring the scheme into effect until adequate systems were in place to ensure it would work effectively in terms of impounding.
The question of insurance is one which would need to be addressed in the regulations. Those regulations would be subject to consultation which will no doubt involve the insurance companies in that respect.
The noble Earl raised the question of modernising the system. He will know that the traffic area network, which presently operates a not entirely up-to-date system, is about to embark on substantial and comprehensive modernisation of its business processes and computer system. That programme of work will include direct links with the Vehicle Inspectorate IT system and will provide facilities for the electronic delivery of services to operators. If we follow that route, we could bring the scheme into full effect.
I now turn to the part of the Bill dealing with drivers' hours. Existing EU regulations, Regulations 3820 and 3821/85, set out maximum limits on driving time and minimum limits for breaks and rest periods. They apply to drivers of most heavy goods vehicles and around half of all buses and coaches. Domestic driving hours regulations govern the drivers of certain

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categories of vehicle which are exempt from the EU regulations. These rules are intended to harmonise conditions of competition. Therefore, from the enforcement point of view, it is essential that drivers of U K and foreign-registered vehicles are dealt with on an equal footing.
At present the Vehicle Inspectorate and the police have no formal power to prohibit drivers of vehicles registered in the UK who have exceeded their permitted driving time from continuing their journey. They do, however, have powers, under the Road Traffic (Foreign Vehicles) Act 1972, to prohibit the drivers of foreign-registered vehicles. For vehicles registered in the UK, the remedy is prosecution, which does not necessarily prevent the driver from continuing the journey. For reasons of road safety, it is important that enforcement officers are able to prohibit a driver who is found to have reached or exceeded the daily driving time limit and has taken inadequate rest.
For other infringements—for example, the tachograph infringement referred to by the noble Earl, where the driver fails to produce or falsifies record sheets and so forth—we need to be able to use prohibition. Our intention is to issue guidance so that enforcement officers use this power with discretion, consistency and in proportion. In many cases proportionality will be direct. For example, if a driver should have taken a minimum 45-minute break, the prohibition will last for 45 minutes. If he fails to take a day's break, the prohibition will last for 24 hours. Other examples may be more complicated; nevertheless the power should be operated flexibly and with discretion.
In some cases prohibition will be a more effective action than prosecution. Such a power should therefore act as a significant deterrent and remove any grounds for complaint of discriminatory treatment of British-registered vehicles as against foreign-registered vehicles. That should be of assurance to the road haulage industry. Above all, the aim of the provisions is to ensure that exhausted drivers do not continue to drive when they are a menace both to themselves and to others.
My noble friend Lord Simon raised the question of moonlighting. I recognise that this can be a difficulty. The Vehicle Inspectorate has powers not only to carry out tachograph checks, but also to obtain company records in order to ensure that drivers' hours are complied with. Nevertheless, this is a difficult area of enforcement and there are concerns which I am prepared to raise with the Vehicle Inspectorate as to how we can deal with the problem.
Both on the impounding of vehicles and on the question of drivers' hours, the Bill provides additional powers of enforcement which are intended as deterrents. There are of course other problems in this area. The noble Baroness, Lady Thomas of Walliswood, raised the issue of fraudulent tax discs. The Bill is designed to deal with those who operate outside the operating licence system. Once operators are within the system they will
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also come within the scope of the full range of powers of the traffic commissioners and the police. However, there are wider problems in relation to the enforcement of tax discs which are beyond the scope of even this Bill.
The Bill provides additional powers whose prime effect will be felt through deterrence. It will be a form of deterrence which will not only improve road safety and our environment but will also protect the interests of reputable operators within the industry who often have to operate at the margin in highly competitive markets, and in some cases against foreign competition. That is why it has been welcomed by all the reputable elements of the road haulage industry.
This is a good Bill. I hope all concerned will give it a positive wind. Once again I congratulate the noble Earl on introducing it.
1.35 p.m.
Earl Attlee: My Lords, I am extremely grateful to all noble Lords who have contributed to the debate. The noble Viscount, Lord Simon, asked about the load on the vehicle when the vehicle is impounded. The Minister also touched on that point. It is inconceivable that the authorities would not take all possible steps to locate the owner or consignor of the load, especially if it was a perishable load. I do not believe that the authorities would deliberately allow a load of ice-cream to melt.
The noble Viscount also raised the issue of drivers moonlighting and touched on what could be a little difficulty. The person who needs to have the operator's licence is the person who pays the driver. If one vehicle is shared between two operators, each operator needs to have the vehicle specified on his licence. Unfortunately, a vehicle cannot be specified on two different operators' licences. That is why there is a need for a certain amount of flexibility. I understand that when the licensing authority is aware of this arrangement, it is flexible.
The noble Baroness, Lady Thomas, raised the question of amendments. I shall be pleased to have the opportunity to debate amendments, particularly the amendment to which she referred. She also referred to tax discs. One scam is to register a vehicle that should have a tax disc for £5,000 as a private light goods vehicle, which can be taxed for £150. Another difficulty involves concessionary rates of tax. A three-axle tractor towing a three-axle trailer has a very low concessionary rate of tax. However, for a five-axle 38-tonne vehicle, the rates of tax can best be described as "punitive". If an operator deliberately and fraudulently taxes the vehicle at the wrong rate, he should lose his good repute. The problem is that the licensing authority has been reluctant to take away people's good repute and therefore their operator's licences because then the operator will leave the licensing system altogether. If the Bill becomes law, the licensing authority will have teeth and will be able to pay much closer attention to someone who fraudulently taxes his vehicle. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Adoption (Intercountry Aspect) Bill
1.38 p.m.
Lord Meston: My Lords, I beg to move that this Bill be now read a second time.
The Bill comes to this House from another place where it was introduced by my honourable friend the Member for Winchester. It passed through that House with general approval on all sides and with only minor amendments.
The main aim of the Bill is to enable the United Kingdom to ratify the 1993 Hague Convention on Protection of Children and Co-operation in respect of Intercountry Adoption. Twenty-six other countries have already ratified the convention, a further eight have acceded to it, and 11, including the United Kingdom, have signed it without yet ratifying.
The Bill introduces specific provisions to regulate intercountry adoption and to make it clear to local authorities that they have a responsibility to provide an adoption service which extends to intercountry adoption.
The Bill regulates adoption to prevent and deter trafficking in children and to enable a child lawfully adopted from overseas to enjoy the same legal status as a child adopted in the United Kingdom.
The Bill, in other respects, seeks to improve the adoption process and its efficiency. It provisions can be measured against the requirements in Article 21 of the United Nations Convention on the Rights of the Child to ensure that the child concerned by intercountry adoption enjoys safeguards and standards equivalent to those existing in the case of national adoption.
The Bill emerges from a long review process on substantive adoption law culminating in the more wide-ranging draft Adoption Bill attached to the consultative document that was published in March 1996. It is timely, in that there is a more general awareness of the problems of the cross-border movement of children. Indeed, the Official Solicitor has set up a working group to deal with that whole area, of which adoption is just one aspect.
Clause 1 provides for implementation of the 1993 convention, the text of which is set out in the schedule. Only the last six articles of the convention, which are essentially administrative, do not appear in the schedule. Indeed, it is a useful and refreshing feature of the schedule that it includes the preamble to the convention. The recitals in that preamble emphasise that the focus of the convention is on the welfare of the child and include the following expressions, to be found on page 10 of the Bill:
"Recognizing that intercountry adoption may offer the advantage of a permanent family to a child for whom a suitable family cannot be found in his or her State of origin.
"Convinced of the necessity to take measures to ensure that intercountry adoptions are made in the best interests of the child and with respect for his or her fundamental rights, and to prevent the abduction, the sale of, or traffic in children".
Sometimes concern is expressed about delay in the adoption process. That matter is addressed by the
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convention. Article 9 imposes a duty on central authorities, among other duties, to,
"facilitate, follow and expedite proceedings with a view to obtaining the adoption".
Article 35 also specifically provides that,
"The competent authorities of the contracting States shall act expeditiously in the process of adoption".
At the same time, the convention provides machinery for efficient communication between the child's state of origin and the state which will receive the child.
Returning to Clause 1, the substantial regulations to follow enactment of the Bill will implement the convention in a way that is consistent with our domestic procedures and will cover all intercountry adoption.
Clause 2 provides that the functions of the central authority will be exercised by the Secretaries of State in England and in Scotland, and in Wales by the National Assembly. Certain responsibilities will be delegated to local authorities and accredited bodies. In practice, agencies will have responsibilities equivalent to those that they now discharge.
Clauses 4 and 5 provide for the recognition of convention adoptions and convey to such adoptions the status of domestic adoption. These clauses also provide mechanisms for recognising simple adoptions. That is a difficult topic. I shall not take time to explain it in detail, but refer noble Lords to the very helpful Explanatory Notes that have been produced with the Bill.
Clause 6 provides for annulment. In effect, it implements Article 24 of the convention, which gives a discretion to refuse recognition of adoption which is manifestly contrary to public policy. Typically, those might be cases where there has been fraud or duress, or some other improper inducement. Article 24 expressly takes into consideration the best interests of the individual child.
Clause 7 provides for the acquisition of British citizenship by the adopted child.
I should like to draw attention to only three more clauses. Clause 13 makes clear that references in the existing legislation to arrangements for adoption include assessments for the purpose of indicating whether a person is suitable to adopt a child.
Clause 14 meets our obligation under Article 8 of the convention to take all appropriate measures to prevent improper financial or other gain in connection with adoption, and to deter all practices contrary to the objects of the convention. Clause 14 provides for a criminal offence for people habitually resident here to bring into the United Kingdom a child who is habitually resident elsewhere unless they comply with the requirements of the regulations. The purpose is to deter trafficking in children and the short-circuiting or circumventing of procedural and other safeguards for the benefit of the child. There will, of course, be consultation on all the regulations. Clause 16 specifically provides for the National Assembly of Wales to be consulted.
The need for the Bill arises from the fact that our existing legislation comes from a time when intercountry adoption was rare, and from the fairly poor

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regulation presently in place. I suggest that the Bill provides a valuable framework for the future for all varieties of intercountry adoption. Above all, it will protect children in all forms of adoption with a foreign element. On that basis, I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Meston.)
1.46 p.m.
Lord Laming: My Lords, perhaps I may begin by thanking the noble Lord, Lord Meston, for his clear and helpful introduction to this important Bill. Only two weeks ago the noble Lord initiated a debate in this House on adoption and fostering. We were all assisted then by his understanding on this topic. I also congratulate Mark Oaten for securing a good place in the ballot for Private Members' Bills in the other place, and more particularly for choosing this subject.
I greatly welcome the opportunity that the Bill affords to the United Kingdom to ratify the 1993 Hague Convention on the protection of children involved in intercountry adoptions. That is long overdue. I wish to impress on the Minister that there should be continued pressure on Northern Ireland to legislate accordingly.
We must constantly have in the forefront of our minds that adoption is a service to children. I emphasise that because, sometimes, the focus seems to shift to the needs of the adults, and particularly so in the case of intercountry adoption. Of course, successful adoptions meet the needs and hopes of both the children and the adults. But the primary focus should be on the long-term welfare of the child.
I stress that point only to emphasise how important it is to get right both the legislation and the procedures. Happily, the Bill addresses both. Although the number of intercountry adoptions in the United Kingdom remains fairly small, nevertheless, the state in each case is charged with doing everything possible to secure the long-term well-being of each of these children and, at the very least, protecting them from harm.
In an ideal world it would be possible to achieve those objectives in the child's own country and culture. Alas, the reality of life for many children is awful. We have seen the horrific pictures on our television screens of children caught up in wars or abandoned in vast orphanages, with little or no prospect of experiencing family life or achieving anything of their potential. Working for change in these countries is good, but we should not in the meantime rob the children of today of new opportunities for a more secure and fulfilling life. For that reason, I welcome the fact that the Bill clarifies that there will be a duty on local authorities to include intercountry adoption in their adoption services. I hope that this will remove the allegations that some local authorities have an ideological objection to intercountry adoption.
Of course, the rights of birth parents need to be respected and the procedures need to be followed with care. But the years of childhood pass all too quickly and I cannot believe that the agencies involved in these processes should feel that they have either precisely to predict the future or to seek to eliminate all dangers of
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possible failure. None of those matters should he dealt with in a cavalier or casual way, but nor should caution and doubt rule out the hopes of many children for a secure life in a loving family. It is, of course, a question of balance. I believe that the Bill achieves that balance and I wish it well.
1.50 p.m.
Earl Howe: My Lords, this is one of those happy occasions when a Second Reading speech from these Benches can not only be brief but also entirely supportive. Like the noble Lord, Lord Laming, I congratulate the noble Lord, Lord Meston, on introducing this welcome measure which I am convinced will be of very significant benefit to children adopted from overseas, as much as to the parents in the UK who adopt them. I thank him for explaining the purport and content of the Bill with his usual exemplary clarity.
Ratification of the 1993 Hague Convention is overdue. The last government put in a great deal of effort to bring the convention into being in the first instance and followed that up with much detailed work, including a consultation document and a draft Bill in 1996. Sadly, that Bill was not presented to Parliament before the general election in 1997.
Both the draft Bill and the consultative document reflected widely held concerns on three fronts: a desire to reduce the delays and frustrations commonly experienced by couples wishing to adopt children from abroad—delays which do nothing but harm to the children involved; the need to equalise the legal protection afforded to overseas adoptees with that enjoyed by adopted children from the UK; and, as the noble Lord, Lord Laming, rightly emphasised, the need to establish a clear legal framework for the regulation of intercountry adoptions. Such a framework is absolutely vital, not only to achieve the practical benefits to which I referred, but also to minimise covert and unauthorised trafficking in children which bypasses all the safeguards we take for granted in the context of domestic adoptions. It is not acceptable to have two different sets of rules for adopted children, according to their country of origin. We owe it to those children, wherever they come from, to do our utmost to ensure their well-being. That means having a proper process of assessment and approval of prospective adopting parents as well as ensuring that in a child's country of origin all the right questions have been asked and answered on the appropriateness of adoption in each and every case.
I am happy to say that the noble Lord's Bill addresses all those concerns. As a result, the areas of it that cause me a measure of disquiet are, in the context of the whole, relatively minor. I hope he will allow me to run through some of those briefly. I question the desirability of allowing new criminal sanctions to be introduced by means of subordinate legislation. Statutory instruments cannot, by convention, be amended or voted down. At will be interesting to see what your Lordships' Delegated Powers and Deregulation Committee thinks of that. In the meantime, I should be grateful for the noble Lord's comments.

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Secondly, I have a question about the role of local authorities. I shall be interested to know whether the local authorities have been consulted over the responsibilities placed upon them in Clause 2(4). That is not an idle question. We all know that there are many local authorities—some estimate up to half the total in the UK—where an active policy exists to block trans-racial adoption. Almost by definition, that policy is at odds with intercountry adoption. It is hard to see how the noble Lord's worthy ambitions for the Bill will be realised if couples wishing to pursue the possibility of an intercountry adoption will be stopped at the first hurdle. It is not simply a lack of sympathy on the part of the local authority which might do that. There is also the question of resources. Many local authorities simply do not regard that type of service as a priority, even though they have the power to charge for home study assessments. They do not have the trained staff to deal with them. Under the draft proposals issued by the last government, it was intended that legislation should include a new duty on local authorities to provide or arrange for assessments of parents wishing to adopt from overseas. Can the noble Lord say in what way the Bill increases the onus on local authorities to respond positively and promptly to requests for assessment from prospective adopters?
One of the ways of facilitating the process effectively would be by giving an enhanced role to suitably registered voluntary agencies who would develop the necessary skills in this specialist field. Can the Minister say what plans the Government have to encourage local authorities to make use of such agencies?
I mentioned that many local authorities make a charge for home study reports where they relate to intercountry adoptions. Domestic home studies, by contrast, are free of charge. The surprise to me was not the charging itself but the wide disparity in the amounts being charged. The London Borough of Greenwich, for example, levies a fee of £1,000. In Hampshire, the fee is £3,600. Can the Minister say whether departmental guidance is likely to recommend a suitable and reasonable range of charges so as to try to iron out those very high figures? We should not forget that the total cost of adopting a child from overseas can be as much as £10,000, if one takes into account not only the home study fees but also travel expenses and legal costs.
I mentioned the need to ensure that social workers receive adequate training for adoption work. The decisions they take are of great significance and the public needs to have absolute confidence in what they are doing. Can the Minister say whether the Central Council for Education and Training in Social Work is seized of the need to focus attention on the special issues that arise in intercountry adoption? Can he also say whether the helpline set up by the last government for those interested in intercountry adoption is still in operation? If it is, who is funding it?
One point needs to be made about the Bill. It is not designed to encourage a mushrooming of intercountry adoptions. It is designed to ensure that when adoption takes place, it is properly regulated with effective safeguards and efficient administration. I echo the
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comment made by the noble Lord, Lord Laming, that we should always bear in mind that uprooting a child from his or her country of origin and culture to an environment of relative affluence abroad is not something to be undertaken lightly in any circumstances despite the material benefits that would appear to ensue and certainly not unless it is clearly in the long-term interests of the child.
Nevertheless, it is interesting to compare the number of intercountry adoptions taking place in other developed countries. In France, there were 3,666 in 1997, compared with a mere 258 applications made in the UK last year. I do not have the figure for completed adoptions in the UK, only the number of applications. In the US, a country with a population five times larger than our own, admittedly, there were 15,774 intercountry adoptions last year. One cannot help wondering whether all those were as rigorously vetted as they should have been. At the same time, the minuscule number of applications recorded here should cause us to question whether our systems are as efficient as they should be. It strongly suggests to me that the shortcomings in the system identified by noble Lords in our recent debate on domestic adoption and fostering have had a detrimental impact on intercountry adoptions also. I hope that this Bill will make a contribution towards remedying some of those shortcomings. I wish it well
1.59 p.m.
Lord Hunt of Kings Heath: My Lords, I too thank the noble Lord, Lord Meston, for bringing forward this important Bill; few, if any, Members of your Lordships' House are better qualified to do so. The Government recognise that there is a need for legislation to regulate intercountry adoptions. These have been growing steadily in recent years. They provide an option for people who cannot have children of their own or who wish to extend their existing families. It is the Government's view that the opportunity for families to adopt from overseas should continue to be facilitated, while at the same time placing the process on a firm legal footing. The Government believe that the Bill will achieve this.
Adoption offers a positive alternative for children who cannot live with their own families. This applies to all children, whether they live in the United Kingdom or overseas. For some children, adoption provides a fresh start and gives them perhaps their only opportunity to experience family life. Over 850,000 children in the United Kingdom have benefited from adoption since the first adoption legislation in 1926. Since 1993, almost 1,300 applications have been processed by the Department of Health to adopt children from 42 different countries.
The Bill provides two important measures to protect children who are available to be adopted by families in these islands. First, it enables the United Kingdom to give effect to the 1993 Hague Convention. Secondly, it provides sanctions against those who bring children, or arrange for them to be brought, to the United Kingdom without authority. Regrettably, as the noble Earl, Lord Howe, pointed out, experience in the United Kingdom

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in the past decade makes sanctions necessary to deal effectively with unacceptable practices in intercountry adoption. People who have not been approved as suitable to become adoptive parents bring children into the United Kingdom at regular intervals.
In addition, it is not unknown for fraudulent documents to be used to secure an adoption order in a child's country. There are often concerns about the validity of a mother's consent to the adoption of her child or whether the mother has received money, or has been enticed in some other way, to relinquish care of the child. The operation of the convention will eliminate such practices, as will the requirement that every person seeking to adopt a child from overseas must be assessed by an adoption agency.
On the positive side, this small but important Bill is essentially about children and measures to protect them. These children, however, do not live within the United Kingdom, but in countries that may be unable to provide adequately for their welfare. For many children abroad who need new families, there is no alternative to a childhood spent in some form of institutionalised care. Adoptive families are simply not available and only in a small percentage of cases are relatives able to care for them. But experience shows that institutions do not always make good parents. Some children run away from these institutions to live in public sewers or on the streets and survive by stealing, prostitution, drug trafficking and acting as pimps. The life expectancy of most of these children is estimated by UNICEF to be about six years. Death often comes to these children as a result of drug overdose, murder, hypothermia, AIDS and so on. The noble Lord, Lord Laming, correctly described the conditions in which some of those children live. Intercountry adoption offers some of these children an opportunity for a fresh start. But I emphasise the point made by the noble Earl, Lord Howe: this is not an action to be taken lightly.
For families adopting under the convention the Bill provides a mechanism to enable them to be satisfied that the child is in genuine need of a new home. The competent authorities in the child's country will be required to establish to the authority in the adopter's country that the child has no parent able to care for it, has no relative able or willing to do so and is unable to be placed with an adoptive family in that country. The Bill also provides for adoption orders to be recognised within England, Scotland and Wales automatically when adoptions take place under the convention. This means, therefore, that the adoptive parents will no longer be required to apply to a UK court for a second adoption order. Their adopted children will also enjoy the same legal status as children adopted in the UK. This will include having their adoption registered. Equally importantly, the Bill closes the door firmly on those who seek to adopt children without going through the proper process.
Because these children are to be adopted by people who live in different countries, two sets of laws and regulations must be met: those of the child's country of origin and those of the adopter's country of residence. It was with this in mind, together with the knowledge that intercountry adoption was frequently linked to
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abuses against children and their families, that the Hague Conference began its work on intercountry adoption in 1990. The convention is a framework that contains minimum standards to be applied by countries that seek to ratify it. It is not a comprehensive adoption manual, but a document upon which countries can build and improve their own legislative measures.
The United Kingdom is fortunate in that there already exists a comprehensive framework to operate the majority of the requirements set out in the convention articles. The Bill fills the remaining gaps and provides an opportunity for the UK to meet an important international obligation by giving effect to the convention's articles. In ratifying the convention the Government will provide a clear signal abroad that they take seriously the protection of children adopted from overseas.
In answer to a number of points made in the debate, I should like to take this opportunity to assure your Lordships' House that the Bill is not about frustrating the wishes of people who want to adopt children from overseas; it is about setting out clearly, and for the first time, the correct procedure to be followed. Continued co-operation between the relevant competent adoption authorities in both the adopter's country and that of the child will ensure that only those children who are in genuine need of a new family are placed for adoption.
I am aware that some prospective adopters are critical of the adoption process both within the United Kingdom and overseas. I should like to respond to the noble Earl's point about the attitude of local authorities and social workers to intercountry adoption. I believe that the attitude of the great majority of social workers who are engaged in intercountry adoption is highly professional. However, some social workers are thought to be opposed to intercountry adoption on a point of principle. Where such views cause difficulties for prospective adopters and are brought to the attention of the Department of Health, they are investigated.
Guidance issued by the department last August made it clear that it is not acceptable for applicants to be denied the opportunity to be assessed by an agency on the grounds that the agency does not agree with the practice of intercountry adoption, or that the applicants do not share the same ethnic or cultural background as children from their country of choice. This wording clearly places a responsibility on senior managers to be satisfied that assessment of the suitability of applicants to adopt children living abroad is carried out by qualified and experienced social workers in a professional manner and that personal views do not prejudice the eventual outcome of an assessment.
At the same time, I recognise that such a process has to be thorough to enable to the adoption agency to be able to state with some confidence that the applicant is suitable to become an adoptive parent. That applies even more when a person is applying to adopt from overseas and the child is unlikely to share the same race. culture, religion, language, traditions or even climate of the adopter. Other important issues must be explored: for example, diet, skin care and any special needs a child may have, particularly one who has been deprived of

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their family from an early age. Prospective adopters should be given plenty of time to consider carefully such issues and the implications that they will raise, both for themselves and their families.
What is unacceptable, however, is prospective adopters having to wait many months before an adoption agency begins work to assess their suitability to become adoptive parents. Perhaps I may say how much I share the views of the noble Earl, Lord Howe, and the noble Lord, Lord Meston, on the matter of delays. The Bill makes it a requirement for each local authority to provide an intercountry adoption service under Section 1 of the Adoption Act 1976. Proposals for the inspection of adoption services announced in another place earlier this month will be an effective means for ensuring that intercountry adoption is given the appropriate priority as well as meeting the equivalent standards which apply to domestic adoption. I hope that that meets the noble Earl's point.
As regards the timetable, once the Bill becomes law, officials will prepare consequent regulations and guidance to local authorities, adoption agencies and other interested groups. I should like to assure your Lordships' House that we shall be consulting widely on the contents of both. It is intended that this will take place before the end of the year 2000.
As well as guidance, the Department of Health will arrange a series of training seminars to inform adoption agency staff, lawyers, administrators and others about the new legislation and their part in making the new provisions work effectively. Such training will be in addition to programmers arranged by adoption agencies. Also, the department's Guide to Intercountry Adoption will be brought up-to-date at the same time. This publication will facilitate the work of social workers who will be able to use it as a point of reference in their intercountry work.
Perhaps I may take the opportunity to respond to a number of points raised during the debate. First, perhaps I may say to the noble Earl, Lord Howe, as regards the helpline, that my understanding is that it is no longer funded by the Department of Health; it is now an independent source of information, funded by the sale of its literature and run as a registered charity.
On the issue of consultation with local authorities, I made it clear that we shall consult in future about guidance and so on. Local authorities have not objected to any of the points in relation to their duties which have been widely canvassed over some years. I refer in particular to the work done in relation to the 1996 draft Bill which was mentioned.
On the issue of delegated powers, I understand that the Delegated Powers and Deregulation Committee has given the Bill a clean bill of health. I understand that it quite usual to create offences in secondary legislation.
The noble Earl, Lord Howe, asked whether we could encourage voluntary adoption agencies to come forward to work in this area and on the question of charges. Perhaps I may reassure him that we want to see more voluntary adoption agencies coming forward for approval to work in intercountry adoption, thereby
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providing prospective adopters with a genuine choice of whom they may approach to be assessed. However, when it comes to fees, unless the voluntary agency is able to charge a fee which covers its legitimate expenses, it is unlikely to want to take on such work.
The department will prepare guidance for local authorities, adoption agencies, and other interested groups to accompany the new Act and its consequent regulations. In relation to the point about the variation in charges throughout the country, this will include advice about charges, including the need to keep the level of charges within modest boundaries and for agencies to provide prospective adopters with a breakdown of any charges made.
The noble Lord, Lord Laming, asked about the position with regard to Northern Ireland. I understand that Northern Ireland intends to introduce the necessary legislation to ratify the Hague Convention and will be preparing separate legislation in due course.
The Bill is compatible with the European Convention on Human Rights; and similar legislation is being considered, if not already enacted, by many of our European partners.
The children whom we seek to protect by the Bill cannot plead for themselves. We must act on their behalf. I therefore recommend that your Lordships give the Bill a Second Reading.
2.14 p.m.
Lord Meston: My Lords, I am grateful for the support for the Bill from the speakers in the debate. I am beginning to recognise them as a small and select group of Friday speakers in the House.
I agree with the noble Earl, Lord Howe, that this Bill should neither encourage nor discourage those who seek to adopt children from abroad. However, it recognises that that is a growing phenomenon and by means of ratification of the convention will set internationally accepted standards. I question the noble Earl's comparison with the amount of intercountry adoption undertaken in countries such as France. The correct approach must be that we should be confident in our own standards of fairness and efficiency rather than worry too much about some kind of international league table.
As the noble Lord, Lord Laming, said, properly the convention and therefore this Bill focuses primarily on the child. I am grateful to the noble Lord for emphasising that the Bill will set out duties on local authorities.
I am grateful to the Minister for responding to some of the points raised by the noble Earl, in particular his point about the criminal sanctions to be imposed under Clause 14. I hope that I indicated in my opening remarks what I understand to be the mischiefs aimed at by Clause 14. The regulations which will come forward and underpin Clause 14 must be clear enough to justify the criminal sanction which will be imposed. I am also grateful to the Minister for confirming my belief that consultation and guidance will be given to local authorities.

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The noble Earl also raised the difficult issue of attitudes to trans-racial adoption. That is a serious point, but I have the impression that the attitudes to trans-racial adoption which have been reported publicly have largely been reconsidered by those who have held them. In that context, I emphasise the point that under Article 4 of the convention:
"An adoption within the scope of the Convention shall take place only if the competent authorities of the State of origin … have determined, after possibilities for placement of the child within the State of origin have been given due consideration, that an intercountry adoption is in the child's best interests"
In other words, the child must have been considered for adoption within his or her own country before an intercountry adoption is taken up.
I am grateful to the Minister for dealing with the issue of charging and confirming my understanding that there will be guidance to bring some standardisation to the fee structure. But underpinning that are the words of the convention, to be found in Article 32, emphasising that there should be:
"No … improper financial or other gain from an activity relating to an intercountry adoption",
and that fees charged should be at a reasonable level.
I renew my thanks for the support the Bill has received and I renew my request that it be granted a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Protection of Children Bill
2.18 p.m.
Report received.
Clause 2 [Inclusion in list on reference to Secretary of State]:
Earl Howe Earl Howe moved Amendment No. 1:
Page 2, line 47, after ("applies") insert ('and shall use all reasonable endeavours to notify the individual accordingly")
The noble Earl said: My Lords, Amendment No. 1 is a redrafted version of an amendment I tabled in Committee. It arises out of my concern that under the procedures set out in the Bill there could easily be circumstances in which an individual might not discover that his name had been included on the Secretary of State's blacklist of people considered unsuitable to work with children. There is no requirement in the Bill for the Secretary of State to notify his decision to an individual. My concern was that without that we would be enshrining in law a provision which comes perilously close to breaching the spirit, if not the letter, of the European Convention on Human Rights.
The noble Lord in responding to me expressed his opinion that it was inconceivable that a person could not know from the outset that allegations were being investigated which could lead to his name being included on the list. Furthermore, he said that the Department of Health and the Department for Education and Employment, as a matter of normal procedure, go to considerable lengths to ensure that people
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are informed of the outcome of any decision made. I completely accept that what the noble Lord said is correct in the majority of cases. I entirely take on board the procedures that are followed by both government departments as a matter of routine. But that was not my point. The replies of both the noble Lord and the Minister failed to recognise that Clause 2(3), which was inserted as an afterthought in another place, introduces a new dimension, namely, the possibility of referring and listing someone many months or years after the alleged misdemeanour.
In those circumstances, the person might be long gone and his whereabouts unknown. In the nature of things, he would not have been involved in the investigations from the outset. It was, therefore, incorrect to describe such a scenario as inconceivable. The Bill explicitly allows for it. The question that I posed was, given that both the Department for Education and Employment and Department of Health consider it important to try to inform an individual of the Secretary of State's decision in all cases, is it sufficient for this to be dealt with in departmental guidance or should it be on the face of the Bill. The case for it being on the face of the Bill is that conformity with the European Convention on Human Rights and with the rules of natural justice—which may be the same thing—may be better met by an explicit provision.
When the Minister replied in Committee, he suggested that this approach would complicate matters by allowing a vexatious appellant to deploy a bogus line of defence with the tribunal to the effect that the Secretary of State's efforts to notify him had not been good enough. That is why I have now reworded my amendment so that it speaks of the Secretary of State using "all reasonable endeavours" to notify the individual, as opposed to his "best endeavours" which formed the previous wording. If the Minister's view is still that this is a matter that should not appear on the face of the Bill, I should be glad to hear his explanation as to why. It attempts to do no more than encapsulate what the two departments already do as a matter of course.
Lord Elton: My Lords, I apologise for being slightly taken by surprise by the Bill, although it is my own fault. I have risen, therefore, to raise a point that I would have been happier to raise in Committee.
It occurs to me that considerable injustice could be done to an individual if steps are not taken to inform him. Those steps may not always go well. I therefore wonder whether it is in the Minister's mind to impose in Clause 7 a duty on a childcare organisation that refuses employment to an applicant on the grounds set out in Clause 7(1)(a) and (b) to inform the individual of the reason for that refusal. That solution would come close to having the same effect as has been proposed but may have fewer holes in it.
Lord Stewartby: My Lords, I shall be interested to hear the Minister's response to this amendment. However, my reason for rising is to apologise for not having attended debates during the Bill's earlier stages. I compliment my noble friend Lord Laming on his

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efforts and thank him, in retrospect, for his contribution to social services and related issues in Hertfordshire, where I for many years represented a constituency in another place.
Although I am sure that I am out of order, I hope that I shall be allowed to pass on that compliment.
Lord Hunt of Kings Heath: My Lords, I thank the noble Earl, Lord Howe, for allowing us to debate this matter again. He is right; it is important. The amendment is similar to that tabled by the noble Earl in Committee and would require the Secretary of State to use "all reasonable endeavours" to try to inform an individual when confirming his inclusion on the Department of Health list.
I understand that the concern behind the amendment flows particularly from the provisions of Clause 2(3) which deal with referrals relating to past events only recently discovered. Someone could be included in the Department of Health list without his knowledge because his current whereabouts were unknown. Although such an eventuality is not likely to occur with any frequency, it is certainly possible, and might conceivably occur, in cases arising under Clause 2(2), where contact had been, perhaps deliberately, broken between the employer and the individual. Accordingly, I hope that it will help the House if I explain how notification is conducted and how the Bill's provisions will operate where individuals do not immediately, or possibly for some time, learn that they have been included in the list.
In the normal way, notifying letters will be sent by recorded delivery to last-known addresses. If those do not reach their target, inquiry will be made through the last employer and matters pursued as far as is practicable. I am sure that it will be understood that there can be no guarantee that individuals may be contacted in every case. It is also necessary to face the fact that there are limits to what may be done in Clause 2(3) or any other cases where, for whatever reason, there is broken contact. In such situations there seems no good reason why protective listing should not occur, provided that the Clause 2 criteria are met. The interests of the children must be overriding, but at the same time there is no question of the rights of individuals being taken away. Individuals may resurface at any time, and if they are not included in the list, an employer could be misled and children needlessly exposed to avoidable risk.
I know that in previous debates concern was expressed that current notification practice may come to be regarded as dispensable, especially in awkward cases. That is not the current intention. Nor, as I shall explain, is it at all likely in future. Not only would that involve a serious and unacceptable deviation from good administrative practice of a kind the parliamentary commissioner would certainly not approve, but the courts in any judicial proceedings would clearly be hostile to any such failure on the part of the Secretary of State. That would particularly be the case since failure to take reasonable steps to attempt to notify the outcome
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of deliberations may enable an individual to mount a claim for infringement of his rights under Article 6 of the European Convention of Human Rights.
However, where notification for whatever reason has not taken place, the cardinal point I should register with the House is that no one in that position will have their appeal rights curtailed. That is because it is intended to use the regulation-making power under Clause 9 to provide that an individual's ability to appeal to the tribunal from a decision by the Secretary of State will run from the time when he may reasonably be deemed to have learned of the decision.
Moreover, without having to appeal, the individual will also have recourse under Clause 1(3) to invite the Secretary of State to remove his name from the list on the grounds that he should not have been included in it. For example, the individual may be able to bring fresh relevant material before the Secretary of State to consider of which the department had not previously been aware because the individual had not been aware of the proceedings. Following such representations, the Secretary of State could, if he considered it appropriate, remove the name from the list without any necessity for an appeal.
The noble Lord, Lord Elton, raised the point relating to Clause 7(1) about the potential duty to inform an applicant why employment is refused. I am advised that no specific duty is necessary. There is certainly no ECHR requirement. An individual will be informed that the positive check has been made, but that will also occur when the criminal record bureau one-stop shop is running.
The noble Earl, Lord Howe, raised—
Lord Elton: My Lords, my anxiety was not to satisfy the requirements of the ECHR provisions but to protect individuals who may not have benefited from the letter which was sent by registered post to the last-known address if they were not pursued by it to another address.
Lord Hunt of Kings Heath: My Lords, I hope that the point has been met by the fact that an individual would be informed that a positive check had been made.
In relation to the question raised by the noble Earl, Article 6 of ECHR requires the Secretary of State to apply a fair and reasonable procedure when determining civil rights. If we fail to inform the individual of the Secretary of State's decision, that arguably may enable that individual to commence a claim under the ECHR. I hope that clarifies the point for the noble Earl.
Perhaps I may take this opportunity to repeat the offer made by the noble Lord, Lord Laming, in Committee. I know that the Secretary of State will be glad to ensure that steps are taken to consult the noble Earl, or any other Member of the House, over the way in which these matters may be dealt with in the detailed guidance that it is intended to prepare on the implementation of the Bill. The best way of doing that may be at the draft stage of the guidance preparation, so that there may be satisfaction before the event over how this area of difficulty, and any other, is to be tackled.
2.30 p.m.
Lord Laming: My Lords, I am grateful to the noble Earl, Lord Howe, for allowing this further debate on such an important issue. I am also grateful to the noble Lord, Lord Stewartby, for his generous comments. I do not know whether he was out of order at the time, but he provided a nice counterbalance to the criticism that the noble Earl quite rightly made about my earlier comments, when I used the word "inconceivable". That was an ill chosen word, as I readily accept. I should have said "very rare" rather than "inconceivable". The Bill allows for people disappearing and resurfacing at another time. It also allows for new information to surface at a later stage leading to inquiries that the individual may not be aware of at the time.
That takes me to the heart of what I wanted to say: we need to remind ourselves that the purpose of the Bill is to protect children from harm. As was said in earlier debates, some people who prey upon children, who seek to take advantage of children and who misuse their power and authority over children are also capable of some extremely devious behaviour. Deviousness can lead to people disappearing from the scene and re-emerging at a later stage, sometimes pretending that they have been engaged in purposeful activity of a perfectly reasonable nature when they have not. For that reason, as the Minister has said, we need to strike a balance between being fair to such individuals, but also keeping before us the overriding need to protect children.
I am grateful to the Minister for his lengthy response to the points made by the noble Earl. I hope that it will be possible for the noble Earl to accept that the details of the procedures, which will be covered by regulation, will make sure that the Secretary of State is not put into a position where he could be challenged for having failed administratively to deal with these matters in a proper and thorough manner. The last thing that the Secretary of State would want to do would be to find himself or herself criticised for having failed to address normal procedures. By putting the procedures in regulations, the Secretary of State's position would be made that much more difficult if those procedures were not followed.
While repeating that the procedures will be subject to consultation and welcoming the views of the noble Earl, Lord Howe, at the consultation stage, I hope that the noble Earl will feel able to withdraw his amendment.
Earl Howe: My Lords, I thank both the Minister and the noble Lord, Lord Laming, for their replies, and both my noble friends for their constructive interventions. The main point to have emerged is that conformity with the European Convention on Human Rights need not be seen as requiring an explicit provision in a Bill or indeed even in guidance but is dependent on what is actually done by the Secretary of State in practice. That is helpful.
I am grateful to the Minister for offering to let me have sight of a copy of the draft guidance. I welcome that. In the light of what both noble Lords said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Howe Earl Howe moved Amendment No. 2:
Page 3, line 1, leave out ("of the opinion") and insert ("satisfied")
The noble Earl said: My Lords, in moving Amendment No. 2, I shall speak also to Amendment No. 3. In Committee I asked the noble Lord, Lord Laming, whether he could explain to me why there is a difference of terminology between Clause 2(7) which covers the considerations underpinning the Secretary of State's decision to list an individual and Clause 1(3) which gives the Secretary of State power to remove a person from the list in circumstances that demonstrate that there has been a clear miscarriage of justice in the initial decision to list.
Clause 2(7) specifies that the Secretary of State must be "of the opinion that" and Clause 1(3) uses the term, "satisfied that". My understanding from the noble Lord's reply and from the letter kindly sent to me last: week by the Minister—for which I thank him—is that when the Secretary of State takes the decision to remove someone from the list, he sits in a quasi-judicial role, weighing up all the evidence on both sides. The word "satisfied" is appropriate in that context, as it is for Clause 4(3) which covers the role of the tribunal. The initial decision to list, on the other hand, does not involve a process of quite that nature. The noble Lord, Lord Laming, said,
"He [the Secretary of State] does not consider the merits of the case … He will form an opinion about the way in which the matter has been handled and whether the person is, therefore, unsuitable to work with children".— [Official Report, 11/6/99; col. 1679.]
Two points arise from that. One is the significance of the words, "is of the opinion". What deliberative process is required of the Secretary of State when he takes a final decision to place someone's name on the list? How is that different from the process required of him under Clause 1(3)? In what sense does he not consider the merits of the case?
The noble Lord, Lord Laming, kindly wrote to me on this issue on 22nd June, and I am grateful to him for that. He explained that what he meant was that the Secretary of State would not undertake a fact-finding role. By that I take him to mean that the Secretary of State will not be required to set about gathering evidence for himself outside that which is furnished to him by the parties. Perhaps the noble Lord will confirm that interpretation.
I shall be grateful also if the noble Lord can elaborate further on the implications of Clause 2(7) as a whole. From the noble Lord's reply in Committee, it sounded as though the key determinant of a decision to list is the Secretary of State's opinion with regard to the matters set out in subsection (7)(a),
"that the organisation reasonably considered the individual to he guilty of misconduct … which harmed a child or placed a child at risk of harm".
The conclusion which follows from a literal interpretation of the noble Lord's remarks, especially his use of the word "therefore". is that once the test in subsection (7)(a) is passed, there is very little more to be done, because that will be both a necessary and a sufficient condition of a tick in the box under subsection (7)(b). I find that explanation slightly surprising. It is

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not how I read the Bill. Subsection (7)(b) seems to me quite distinct from subsection (7)(a) and not dependent on it in any way.
In the light of the noble Lord's earlier comments I shall be grateful to know what it is that subsection (7)(b) adds to subsection (7)(a), given that, as I understand it, the Secretary of State does not undertake an independent fact-finding exercise. If subsection (7)(b) involves him doing something over and above subsection (7)(a), can the noble Lord explain what it is? I beg to move.
Lord Elton: My Lords, I apologise again for asking a question to which I almost certainly ought to know the answer. But from my standpoint it is important. For the legislation to come into effect, two things have to be satisfied: first, the Secretary of State has to consider that a person is not fit to work with children; and, secondly, that person has to be employed by a childcare organisation. In the interpretation clause, a childcare organisation is described under three headings, the first of which includes the provision of social services or the "supervision of children". My question is: under what category does the function of "mentoring" come? It is not normally described as a "social service" and a mentor does not in fact supervise.
If one then looks further into the clause, one sees that "employment" is defined as "whether paid or unpaid", with various other qualifications being set out thereafter. Again, I cannot quite accurately place within that the position of a person who is working voluntarily and unpaid as a mentor of children under arrangements made by a charity, which does not actually employ him but which keeps a close eye on his work and very often trains him. My interest in this is that I am chairman of the DIVERT Trust. I repeat my apology for not having discovered this point before I came into the Chamber.
Lord Hunt of Kings Heath: My Lords, I thank the noble Earl for allowing us to discuss this matter again. He has identified differences in language. I hope that I can persuade him that the different emphasis in language actually helps to draw a useful distinction between the various actions that have to be taken.
On the basis of the Bill as drafted, the Secretary of State will initially examine the quality of the information referred by an employer and may decide to list provisionally the individual involved under Clause 2(4), while observations are invited from both parties. The Secretary of State must then include the name in the list on a final basis if he is of the opinion that the employer has reasonably considered the individual to be guilty of misconduct which harmed a child or placed a child at risk of harm and that the individual is unsuitable to work with children.
If carried, the amendment would impose a much higher standard for inclusion on the list, implying a fact-finding role for the Secretary of State. I believe that this would risk prejudicing the protective effect of the referral and listing procedure, while pre-empting the full fact-finding role given to the appeal tribunal. I would consider this to be wholly inappropriate.
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Clause 4 provides that there should be access to a tribunal. The tribunal will undertake a fact-finding role to determine whether the person was guilty of the misconduct which harmed a child or placed a child at risk of harm and whether the person is unsuitable to work with children. This amendment would mean that that exercise would be undertaken twice. It is, therefore, unnecessary.
It may also be helpful if I explain that the role the Secretary of State carries out in Clause 2(7) is also distinguished from the test that he carries out in Clause 1(3) in the context of being satisfied that an individual should not be included in the list, such as when new evidence comes to light or a criminal conviction is overturned. In such cases, the relevant evidence must be looked at afresh in the light of the new evidence which has been presented. To that extent, the Secretary of State's role would appear to be more in line with a quasi-judicial function, hence the need to be "satisfied" rather than "of the opinion". As your Lordships will consequently see, there exists a hierarchy of somewhat different tests within the Bill which, in turn, reflect the various functions being carried out within it at a given point, including that in Clause 2(7).
In addition, it has to be seen that Clause 2(7) provides two stages of a test. In answer to the point that the noble Earl raised, I can say that the second test is important. If the first test in subsection (7)(a) is met, it is not a foregone conclusion that the second stage will also be met; that is to say, that the individual is unsuitable to work with children. That will involve a separate and additional consideration.
I turn to the second amendment. Essentially, the purpose of Amendment No. 3 is to impose upon the Secretary of State a more restrictive criterion for deciding whether finally to list an individual than that currently catered for in the Bill. I emphasise that point. First, he has to be,
"of the opinion that the organisation reasonably considered the individual to be guilty of misconduct (whether or not in the course of his employment) which harmed a child or placed a child at risk of harm"
However, as I have said, this is not enough to warrant listing. He then has to decide that the above actions make the individual,
"unsuitable to work with children".
Great efforts have been made in the Bill to balance the overriding need to protect children with the need to introduce safeguards—as far as that is reasonable—to protect the rights of the individual.
As this part of the Bill currently stands, when forming an opinion over whether an individual should be listed, the Secretary of State will consider whether the misconduct in itself is sufficient to warrant banning the future scope for an individual to work with children. This is a serious decision bearing in mind all that the ban carries with it. Clearly no two cases will be alike. There will invariably be instances—perhaps few in number—where misconduct, while putting a child at risk of harm, or indeed leading to harm, exceptionally took place in circumstances which led the Secretary of State to form an opinion that the door on future employment with children should not be closed.

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The noble Lord, Lord Elton, referred to mentoring. If a mentor has access to children and satisfies the conditions of being engaged in a childcare position, he or she will fall within the provisions of the Bill, although I think that that would need to be assessed on a case-by-case basis. Conceivably mentors will be included in the definition, and probably rightly so, but I would be happy to write to the noble Lord with fuller details and discuss the matter with him if he has further concerns on that matter.
2.45 p.m.
Lord Elton: My Lords, I thank the noble Lord for putting that on the record. I point out that this is a large, growing practice. It exceptionally puts children and adults together in positions in which the child can be exploited. If the Bill does not cover that point, that is a matter for concern.
Lord Meston: My Lords, the Minister mentioned differences in language. I well understand what he was saying. Can he confirm my understanding that the exercise which the Secretary of State has to undertake under Clause 2(7) would itself be capable of judicial review? Clearly the exercise is futile—as the noble Earl indicated—if the Secretary of State merely "rubber stamps" an organisation's decision. I assume that that is not the intention of the Bill and that, whatever the phraseology, the Secretary of State will reach his opinion independently.
Lord Hunt of Kings Heath: My Lords, I confirm that judicial review would be available.
Lord Phillips of Sudbury: My Lords, I ask the Minister whether I have the matter right or wrong because this is an important issue. In answer to the noble Earl, Lord Howe, he seemed to be saying that as between a complete and thorough-going review of the evidence at one extreme and rubber stamping at the other Ministers could engage in some kind of middle way. I think that at the beginning of his reply the Minister talked about the Secretary of State looking at the quality of the evidence that was brought before him by the informing organisation. I think the consequence of that would surely be that—as indeed the Minister indicated—he would be quite content to leave the tribunal to judge more fully, and with greater sensitivity, whether or not the person concerned should be on the register. That in turn would surely mean that the risk—if I can use that term—of innocent adults finding themselves on the register is greater rather than lesser precisely because the involvement of the Secretary of State in looking at the information that has been put before him—as I understand the matter, but this is what I query—is on a kind of middle level rather than a more intense level.
That in turn has huge importance for those who may be the subject of all this, because if they ever get to the point where they must make an appeal to the tribunal, the expense and the public pain of being in that position and having to appeal will be extremely serious. If no legal aid is available, as appears to be the case, the
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consequences in turn are very extreme for an individual adult in that position. I am sorry to have asked such a tortuous question, but there is a secondary issue here in terms of doing justice to those who are potentially in danger of being on this list and in terms of the manner in which it is being dealt with.
Lord Hunt of Kings Heath: My Lords, perhaps I may gently point out that we are on Report stage at present. The whole construction of this Bill is delicately balanced between the overriding need to protect children and the need to ensure that an individual's rights are also protected. This Bill introduces a very important right: to appeal to a tribunal against the decision to include a person on the list. I do not think that we should forget the safeguard that that right entails.
As regards the hierarchy of decision making, which the noble Earl pointed out, in paragraphs (a) and (b) of Clause 7(1) the Secretary of State is not making a finding of fact. He is forming an opinion, first, as to the reasonableness of the employer's position and, secondly, as to whether the individual is unsuitable to work with children. He is not mounting a full investigation into the facts. That is for the tribunal to do, if an appeal is so made, and the tribunal will then undertake a fact-finding role. That is the reason for the difference in language. I hope that it helps to show how the distinction is drawn between the two functions.
Lord Laming: My Lords. we have had a very helpful debate, and there is not a great deal more that I would wish to add except to reassure the noble Lord, Lord Elton, that if mentors operate through a corporate body, as in the example that he gave, they would certainly be covered by this Bill, as would Boy Scout leaders and many other people who voluntarily give their time as part of an organisation which has frequent and regular contact with, and provides services to, children.
Turning to the points raised by the noble Earl, Lord Howe, on paragraphs (a) and (b) of Clause 7(1), I think it is important, as the Minister has made clear, to have these two tests because it is possible for an organisation to have considered very reasonably and properly the misconduct of an individual. But there is a second test as to whether or not that behaviour is of sufficient severity to make the individual unsuitable to work with children. I have hesitated throughout these discussions to give examples, because that is always dangerous, but perhaps I may offer two examples as illustrations.
There are detailed regulations about bathing vulnerable people and protecting them from harm. It is conceivable that somebody may ignore the regulations and place a child in a bath of scalding water, causing immense harm to that child. It may well be shown that that person disregarded important regulations that had been designed to protect children from harm, so that the. facts may not be in dispute as to either the event happening or the regulation being ignored.
The second test is whether or not that person behaved in such a way as to make him or her unsuitable to work with children. That would depend upon a whole range of other matters being considered. A similar example

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would be someone taking children sailing or canoeing without having first checked the availability and effectiveness of the safety equipment. There are proper regulations to prevent disasters occurring. If a disaster occurred, that would be tested under subsection (7)(a); and whether or not a person was suitable would be considered under subsection (7)(b).
The test is to make sure that these two elements are properly considered. As to the wording "satisfied" or "of the opinion", I support what the Minister said. It is very important that the Secretary of State should not pre-empt the work of the tribunal and that we should hold to the distinction of their respective roles. Having said that, I hope the noble Earl will not press the amendment.
Earl Howe: My Lords, this has been a useful debate which has served to clarify a very important aspect of the Bill and the way in which its provisions will work in practice. The Secretary of State is clearly neither a rubber stamp nor a tribunal in his own right; nevertheless, he will exercise his judgment and will form an opinion on the information placed before him. I am particularly grateful for the explanations which have been given about the force of subsection (7)(b) and for the useful examples quoted by the noble Lord to illustrate the process. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
Clause 4 [Excessive delegation of powers]:
Earl Howe Earl Howe moved Amendment No. 4:
Page 4, line 15, at end insert ("; or
() with the leave of the Tribunal, his continued inclusion in the list following the dismissal of an appeal under subsection (3) below.")
The noble Earl said: My Lords, in moving Amendment No. 4 I shall speak also to Amendments Nos. 5 and 6.
We had a lively and interesting debate in Committee on the very important issue of whether it is right for the Bill to contain no mechanism whatever to enable a person who has been listed and who has lost an appeal to the tribunal to apply to have his name removed from the list on the strength of his subsequent good conduct. The main point I made then was that putting someone's name on a blacklist for life may be further than we would wish to go in certain exceptional cases—I stress not in a case involving a wilful child molester but rather in a case involving a man whose conduct amounted to inexcusable inadvertence or gross incompetence.
The noble Lord said in debate last time that he felt the term "misconduct" denoted something that was deliberate and determined. He has kindly written to me since then to make it clear that "misconduct" could involve an act of omission as well as commission, which was my previous understanding of the term. A thoughtless act or one committed in ignorance of the likely outcome could in some circumstances amount to misconduct.
The example to which the noble Lord has alluded was given in another place. It concerned the owner of a business providing adventure training holidays who allowed a group of children to go out to sea without proper training, without life-jackets and in boats that were unseaworthy; several children drowned. It was said that this man was guilty of criminal negligence—and that may certainly have been so—but his employee, the man who accompanied the children out to sea, was said to be incompetent because he did not realise the seriousness of the situation and did not question his own actions. That is a very interesting example. It does not involve someone wilfully harming a child or wilfully placing a child at risk of harm. There is no deliberate intent; it is a serious act of omission. In a case such as this it is quite possible to imagine the employee being dismissed for misconduct and subsequently being listed.
If, after an unsuccessful appeal to the tribunal, that man were to demonstrate over the next 15 or 20 years that he had matured and gained in experience and, having spent time in helping children's voluntary groups such as the scouts, he had proved himself to be thoroughly reliable and trustworthy, what ought we to say to him if he were to come to us asking for a chance to prove to the tribunal that he should no longer be considered a risk to children? Under the Bill as drafted he would have absolutely no recourse to the tribunal, let alone to the courts. The stigma of being included in the list is his for life.
I recognise that all examples are to an extent artificial, but I seriously question whether the situation I have described is consistent with natural justice or the high standards of civil liberty on which we rightly pride ourselves in this country. The noble Lord may say that the kind of provision I have allowed for in my amendments, which essentially create a further ground of appeal to the tribunal, would open the floodgates to all manner of inappropriate appeals, from child molesters and so forth. I believe it would be possible to obviate that difficulty by making leave to appeal dependent on the prior agreement of the tribunal, exactly as already set out in Clause 4(1)(b). That is what I have proposed.
I remind the House that the Bill provides for an employment blacklist to be established by means of an administrative rather than a judicial procedure. It is a convenient system and we can justify it in the interests of children. But there have to be proper safeguards. The tribunal, whose importance I in no way belittle, at present has a role only in hearing an early appeal. There is a strong case for broadening its role in the way I have described. I beg to move.
3 p.m.
Lord Phillips of Sudbury: My Lords, I associate myself very strongly with the remarks of the noble Earl, Lord Howe. The impact on someone put on this register will be little different from, and in some cases worse than, being convicted before a criminal court. The consequences in terms of reputation and livelihood could not be more acute. To that end I was disappointed by the fact that the previous amendment was not carried.

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The interests of children are paramount, but the interests of justice are no less paramount. Therefore, to give someone put on the list the opportunity in the circumstances described to, in effect, clear his name after the passage of time must surely be right. I strongly support the amendment.
Lord Hunt of Kings Heath: My Lords, this is a serious point. I agree with the noble Lord, Lord Phillips, that to appear on the list is a serious matter for the individual concerned. However, as he also said, the interests of the child are paramount. The Bill as drafted reflects those concerns. The very inclusion in the Bill of a right to appeal to the tribunal is a reflection of the ability of the individual to appeal.
Clause 1(3) contains provision that the Secretary of State may at any time remove an individual from the list if he is satisfied that the individual should not have been included in it. That reflects the fact that if new evidence came to light which suggested that the original decision should not have been made the Secretary of State could remove that person from the list.
I turn to the point raised by the noble Earl. He was concerned—he gave an example—about the position of those who may have found their way on to the list early in life, perhaps because of some youthful indiscretion or momentary act of immature carelessness. He asked whether it is right that they should never be able to have such a decision reviewed, even years later when they claim that they have developed into solid citizens. If that were likely to happen, there would indeed be justifiable concern. However, I shall seek to show that that is not the object of the Bill and that it is not expected or desired that its provision should operate in that way and that there are means to prevent it doing so.
It may be helpful if I describe how the process of inclusion in the list works. An individual may only be listed where, in the first place, the employing organisation has, on grounds of misconduct which has harmed a child or placed a child at risk of harm, dismissed, transferred or suspended the individual. The Secretary of State has decided from the information submitted by the referring organisation that it may be appropriate for the individual to be included in the list. Thereafter, observations of the individual and, as necessary, the observations of the referring organisation are sought and considered by the Secretary of State, together with any information which he thinks relevant; and the Secretary of State is of the opinion both that the referring organisation reasonably considered the individual to be guilty of misconduct which harmed a child or placed a child at risk of harm and that the individual is unsuitable to work with children.
If fresh evidence comes to light, individuals listed may at any time ask the Secretary of State to remove their names from the list on the grounds that they should not have been included in it. There is a right of appeal to the tribunal, which must consider merits afresh, both against decisions by the Secretary of State to include an individual in the list and against decisions by him to refuse to remove names on the grounds that they should not have been included in it.
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I hope that I have demonstrated that listing for what amounts to no more than acts of youthful indiscretion is neither a desired nor a likely outcome. On the contrary, the whole character of the changes made to the Bill following its introduction in the other place have been to adjust the balance so that that kind of outcome would be the least likely, especially granted the reliance now on the single misconduct test, backed up by the statutory consideration processes and an independent, strong and thorough-going appeal system.
It may also be helpful if I refer to the purpose of the guidance that the Department of Health intends to issue. It will indicate, among other things, how referring organisations may approach their task. Such guidance would include advice which, for example, could explain that Parliament's concern on the same point made in another place had led to the dropping of "incompetence" from the grounds for referral, and that although the remaining misconduct criterion was able to comprehend gross incompetence, it was clear that Parliament, on the basis on what had been said in this House as well as in the other place, did not expect the provisions to lead to listing for trivial matters.
The guidance could then be expected to spell out some of the features of misconduct which needed to be considered before reference was made, such as the relative experience, as well as the age, of the staff concerned, the extent of the training given and the quality of management supervision and control.
Further, it is intended that the guidance should be made available to interested parties in draft. That will provide an opportunity for it to be reviewed and changed as necessary to reflect any remaining reasonable concerns. What cannot be said at this stage is that there can never be circumstances where persons, let us say, thoughtlessly harming a child or placing a child at risk of harm could find themselves on the list. Acts of omission, as well as commission, could conceivably justify inclusion on the list.
As the noble Earl, Lord Howe, indicated, the problem with hypothetical examples is that they are just that. It would be wrong for Parliament to seek to fetter the future discretion of referring organisations, Secretaries of State and tribunals while simultaneously instructing them to consider each case according to its particular merits in an overall structure in the rest of the Bill which Parliament does not seek otherwise to disturb.
I hope that the noble Earl will recognise that this matter has been given considerable thought and that safeguards are present to ensure that a person who appears on the list will only do so after very careful consideration.
Lord Laming: My Lords, the Minister has given a full reply to the points that have been raised. I should like to make a couple of brief comments in addition. The noble Lord, Lord Phillips, is quite right in saying that appearing on one of the lists or the list, when it becomes the list, is a serious matter. It is for that reason that the debate we have just had in relation to paragraphs (a) and (b) of Clause 2(7) is part of the way in which

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the Bill provides a balance between the protection of children and providing safeguards for members of staff against whom complaints or allegations are made.
It is a serious matter. Therefore, the procedures that will be linked with the Bill will have to demonstrate that matters have been handled with great care and thought and that the safeguards that are built into the Bill in relation to appeals will also be properly handled by a tribunal. That tribunal will be independent and its members will be appointed by the Lord Chancellor.
I emphasise that the Bill is not a bar to employment; it is simply a bar to people working with children. All the cases will be handled on a case-by-case basis, taking into account the circumstances. But I emphasise that the Bill aims to ensure that only serious behaviour—I do not need to go into detail—will fall within the purview of the Bill. For that reason, in another place, the issue of incompetence was dropped from the Bill. In those circumstances, I hope that the noble Earl feels that the points he raised have been adequately responded to and that he will feel able not to press the amendment.
Earl Howe: My Lords, once again, I thank all noble Lords who have taken part, including the noble Lord, Lord Phillips. I very much appreciated his supportive remarks.
I remain uneasy about the absence from the Bill of any provision to allow an individual to apply to have his name removed from the list, having initially failed in his endeavour to do so, but in the light of subsequent good behaviour.
As I read it, Clause 1(3) covers the case of a miscarriage of justice, if I may encapsulate the example that the Minister gave. It is where fresh evidence comes to light to show that a person's name should never have been included in the list in the first instance. My example related to a different kind of case where a person's inclusion on the list was clearly justified in the first instance but his subsequent behaviour had redeemed him.
I also take the noble Lord's point that the Bill does not create a bar to employment for individuals; it merely prevents unsuitable people working with children. Nevertheless, we must bear in mind that to be on the Secretary of State's list is a serious stigma. For those who feel, as a matter of natural justice, that their place on the list is wrong and can no longer be justified, the burden is a heavy one to bear.
I do not propose to press the amendment. All I urge on the Minister and his department is that they bear in mind what he and I have said to each other on a number of occasions. The Bill is a building block and should be seen as one measure among, perhaps, many to come which will address the extremely important area of protecting children and balancing that protection with civil liberties. If, as the Bill takes effect, it is seen that natural justice is not served by the absence from the Bill of the kind of measure I have proposed, I hope that the omission can be addressed in future legislation which I know the Government are minded to introduce at some point. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 5 and 6 not moved.]
Clause 12 [Interpretation]:
Earl Howe Earl Howe moved Amendment No. 7:
Page 9, line 39, after ("mind") insert ("or degenerative mental illness")
The noble Earl said: My Lords, this amendment can be dealt with briefly. I simply seek clarification from the Minister as to the definition of "mental impairment" in Clause 12. I am not sure that when we debated Clause 10 in Committee the Minister entirely took my point. At no time did I seek to suggest that the Bill should be extended to cover all types of vulnerable adults. However, having opened up the possibility of extending its remit to those particularly vulnerable adults who might be seen as corresponding most closely to children, I believed that it was not unreasonable to look a little further than the definition in Clause 12 appeared to do.
My understanding is that,
"arrested or incomplete development of mind",
does not encompass those conditions which are characterised by a degeneration of mental faculties, such as dementia, but rather what are usually termed severe learning disabilities. For example, if one thinks of an adult woman with dementia or Alzheimer's disease there is little to separate her from an adult woman with severe learning disabilities in terms of the other half of the definition in Clause 12, which refers to,
"a significant impairment of intelligence and social functioning".
In terms of vulnerability, which must be the key measure, there is a very close parallel.
These are people who often cannot express themselves and whose very lives are dependent on the help and support of others. I have tabled this amendment to ask the Minister whether my interpretation of this definition in Clause 12 is right. At one point in the debate in Committee I thought that the Minister was leaving open the possibility that the definition as drafted was capable of being stretched so as to accommodate the type of case to which I have referred. I should like to think that that is so, but I should be grateful for any further clarification that the Minister is able to give. I beg to move.
Lord Hunt of Kings Heath: My Lords, I say at once that I have a great deal of sympathy with the purpose behind the amendment but I cannot recommend that the House supports it. The Bill is targeted on improving the child protection system. I do not think that it would be practical to expect the system to encompass satisfactorily the needs of a very diverse group of adults as this amendment proposes. Before any such extension can be considered along the lines suggested by the amendment further work is necessary to identify the most appropriate way to proceed.
I recognise that the Bill envisages extending protection to mentally impaired adults, but they are the one group whose position is most similar to vulnerable children and whose circumstances are clearly set out in the Mental Health Act 1983. If I gave the impression to

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the noble Earl at Committee stage that it could be widened in the way suggested I should not have done so and in that sense I am sorry to disappoint him. But he will be aware that the interdepartmental ministerial group under the chairmanship of the Home Office is looking at the whole question of the best way to carry forward work on protecting all groups of vulnerable adults. Given the current work that is being actively carried forward in this area, I hope that the noble Earl agrees that it would be inappropriate to pre-empt the findings of that group in the way that the amendment proposes. We have taken note of the noble Earl's
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remarks both today and in Committee and shall ensure that the substance of what he says is reflected to that group.
Earl Howe: My Lords, I am very grateful to the Minister and look forward with anticipation, and some optimism, to the work of the interdepartmental group. In thanking him for his explanation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
House adjourned at eighteen minutes past three o'clock.

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