Sitting of 17 April 2000

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

    Meteorological Office
    Jane Griffiths: If he will make a statement on the future of the Meteorological Office. [117879]
    The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): As a trading fund combining the best of the public and private sectors, the Meteorological Office will continue to build on its success as a world-leading meteorological service. Its aim is to enable individuals, society and enterprises everywhere to make the most of the weather and the natural environment.
    Jane Griffiths: I thank my hon. Friend for that reply. When Ministers consider the future location of the Met Office, which I understand will have to relocate from its current site, could they consider the economy of the entire country and the fact that the south-east is immensely congested? That makes it difficult to locate such an office in the Reading area as has been suggested.
    Dr. Moonie: To move forward successfully, the Met Office must harness the benefits that go with a modern building and its associated infrastructure. Redevelopment or refurbishment of the main Bracknell site would not be cost-effective. No decisions on the final location have yet been taken, but a move to Shinfield park, near Reading, would have attractions in developing the Met Office's long-standing relations with the European Centre for Medium-Range Weather Forecasts. Other locations that meet the Met Office's future strategic and business needs will be considered. An application for outline planning approval for Shinfield park will be submitted to the local planning authority at the end of May 2000, and that will address a range of environmental issues, including traffic management.
    Mr. Andrew MacKay: The Minister will be aware that the Met Office is based in my constituency, not in Reading, East. Does he accept that the people of Bracknell greatly appreciate having the Met Office in Bracknell, and that the town has had a long association
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    with it? The people of Bracknell are appalled to learn from the hon. Member for Reading, East (Jane Griffiths)—this morning, on local radio and now in the House—that they should all lose their jobs and that the office should relocate to Liverpool. Is that official Labour party policy?
    Dr. Moonie: As I said in my initial answer, our current intention is to consider the Shinfield park site as the office's preferred option. Eighty per cent. of the Met Office's staff are mobile grades. Although most of them would be expected to relocate to the new site, it is likely that, if it were at Shinfield park, most would commute.
    Mr. Robert Key: The Met Office's latest annual report states:
    relationships with the Defence Evaluation and Research Agency are key to future service developments.
    Can the Minister say whether the remote sensing branch and the meterological research flight, which are currently at Farnborough, will find themselves partners of core DERA or privatised new DERA under the new arrangements sneaked out today in a written parliamentary answer to a compliant Labour Member, who is not even in the Chamber for Defence Questions?
    Dr. Moonie: The hon. Gentleman will be well aware that that matter has already been considered in the consultation document.

    Aircraft Carriers
    Ms Linda Perham: What progress has been made with plans to procure replacements for the current Invincible class of aircraft carriers. [117881]
    Mrs. Linda Gilroy: What progress has been made in the Government's plans to procure replacements for the Invincible class of aircraft carriers. [117889]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): Competitive contracts, each worth about £30 million, for the future aircraft carrier assessment phase were awarded, on 23 November 1999, to BAE Systems and Thomson-CSF Naval Combat Systems. The assessment phase will investigate options for carrier design and, by 2003, will deliver proposals for the manufacture of the two vessels. The carriers, which will be built in the United Kingdom at a likely cost of some £2 billion, are scheduled to enter service in 2012 and 2015 respectively.
    Ms Perham: I thank the Secretary of State for that answer and welcome his assurance that the aircraft carriers will be built in the United Kingdom. Does he agree that that is excellent news not only for the shipbuilding industry, but for the Royal Navy, with which I am very proud to be on secondment this year under the armed forces parliamentary scheme? Does he agree that the two design contracts give the lie to Opposition Front Benchers who continue to insist that the carriers will never be built?
    Mr. Hoon: I am grateful to my hon. Friend for her observations, and I can certainly confirm that the carriers

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    will be built in the United Kingdom, at a cost currently estimated at £2 billion. That should demonstrate to Opposition Members that the Government have a consistent and determined approach to ensuring that the Royal Navy has the equipment that it requires not only for today, but for the long-term future.
    Mrs. Gilroy: I, too, thank my right hon. Friend for that response, which will be very welcome news for my constituents in Plymouth, Sutton. When does he expect the Royal Navy to start considering basing options for the new carriers?
    Mr. Hoon: I would be delighted to help my hon. Friend in her determined efforts to secure re-election at the general election, whenever that may come, but, unfortunately, I am not in a position to do that. However, in response to her specific question, as soon as the carriers are built, we shall be in a position to determine where they should be based.
    Mr. Julian Brazier: Will the Secretary of State confirm that the aircraft of choice to be the carriers' main armament is the American joint strike fighter, into which millions of pounds of British money have already gone? Would he like to tell the House how the prospects for developing the joint strike fighter for the carrier programme will be affected by the likely privatisation of Boscombe Down as part of DERA?
    Mr. Hoon: The joint strike fighter is certainly a strong candidate for the future airborne carrier system, but the Government will also consider various other options. It is important in this procurement that we consider at the same time both the type of aircraft carrier that the country will require and the nature of the aircraft that will fly from it. Too often, we have considered those two issues separately. That has not been a sensible way of resolving our requirements for aircraft carriers or aircraft.
    Mr. Menzies Campbell: Does the Secretary of State agree that if we are to be confident about building the new carriers, we must be satisfied that there will be adequate shipbuilding capacity in the United Kingdom? In view of the unholy mess that has been caused on the Clyde with the roll on/roll off ferries, what confidence can the House and the country have that there will still be adequate shipbuilding capacity to allow us to build the carriers, which are fundamental to the expeditionary strategy embraced in the strategic defence review?
    Mr. Hoon: A number of yards throughout the country have the potential to participate in the construction of the carriers, although which yard is awarded the eventual contracts will depend in large part on the nature of the final design that is selected. When I first arrived in the House, I was always impressed by the right hon. and learned Gentleman's determination to approach issues fairly and reasonably. I regret that he appears to have become a victim of the press release tendency. If he had given a few moments' thought to some of his recent comments on the legal implications of the order in
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    Glasgow and applied his fine legal intellect to the problem, he would not have produced such half-baked material lately.
    Mr. Frank Field: I welcome my right hon. Friend's statement. Does he accept that, while there has recently been an increase of 2.5 million jobs in the economy as a whole, some regions, particularly those dependent on older manufacturing industries, have a huge jobs deficit? Does he agree that it would be in the best long-term interests of taxpayers for the Government, when they think about placing the orders, to pay some attention to reviving the economy in certain areas?
    Mr. Hoon: I agree with my right hon. Friend to the extent that, under World Trade Organisation and European Union rules, we can direct where the work on our warship programme should be completed. However, as he will know, for purely commercial contracts, we are not free to direct where work should be undertaken.
    Rev. Martin Smyth: I appreciate the difficulties of British shipbuilding. It will be some time before the ships are ordered. Can the Secretary of State give an assurance that we will have the capacity? Will Harland and Wolff be involved? Has the shipyard responded to possible orders from the Ministry of Defence?
    Mr. Hoon: I said earlier that there were a number of shipyards in the United Kingdom capable of constructing the carriers. Harland and Wolff in Belfast is certainly one of them.
    Mr. Quentin Davies: The Secretary of State keeps saying that there are a number of shipyards in the country capable of building major naval vessels. How many shipyards are there going to be in this country once he has let all six roll on/roll off ferry contracts to foreign yards? Does he believe that metal bashing is no longer a national asset and simply not care?
    Mr. Hoon: Before the hon. Gentleman bursts a blood vessel, he should bear in mind the fact that in January 1997, the then Conservative Government specified a requirement for two ships in an advertisement in the Official Journal of the European Community, stating that those ships were of a commercial character and would be subject to the European Union rules on public procurement. They also told potential contractors that they would decide the matter according to value for money, having regard to price, quality and delivery. Rather like the right hon. and learned Member for North-East Fife (Mr. Campbell), the hon. Gentleman should check his facts before issuing tendentious press releases.

    RAF (Kosovo)
    Mr. David Kidney: What assessment he has made of the RAF's performance during the Kosovo campaign. [117882]
    The Minister for the Armed Forces (Mr. John Spellar): The Royal Air Force made a highly effective and widely respected contribution to the Kosovo campaign, helping NATO to achieve its objectives.

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    Lessons are of course being learned, and they will be highlighted in a report that we intend to publish next month.
    Mr. Kidney: Is my hon. Friend aware that this year's annual presentation by the RAF to Members of both Houses of Parliament was exceptionally successful? One of the reasons was the vivid report of the air campaign over Kosovo, informed by video footage. Some of the audience may have been fascinated by the accuracy of the targeting of RAF weapons, but my heart was in my mouth listening to the cool and professional voices of the pilots and navigators describing the ground-to-air missiles coming towards them and the life-saving evasive action that they had to take. Bearing that in mind, will my hon. Friend assure the House that, when the review has considered the needs of the brave members of the RAF for improved protection of their lives when they carry out dangerous operations on our behalf, any such needs will be met?
    Mr. Spellar: Yes, I join my hon. Friend in congratulating the RAF presentation team. I forbear drawing any comparison between that and the equally good presentation from the Royal Navy. The House has been given a very good indication of the enormous quality of the young men and women who serve us.
    On the substance of the presentation and the work undertaken in flight, I was equally impressed. We are considering how to upgrade defensive mechanisms. That is why we are upgrading the Tornados from GR1 to GR4. Of course, the front line and the sharp end are important, but so is the logistics tail that supports those young men and women, not least at the base and depot in Stafford.
    Mr. Nicholas Soames: What steps are being taken to overcome the obvious shortcomings of what was in any event a formidably fought campaign by the Royal Air Force, including the inability to conduct precision bombing in bad weather? Is the Minister satisfied with secure communications between aircraft?
    Mr. Spellar: We are certainly examining how to extend global positioning capabilities for bombing. Of course, laser designation has problems in cloud and we are considering ways in which that could be improved. The hon. Gentleman is right to draw attention to communications, but he should also draw attention to communications between our Air Force and other allied air forces and the ways in which we could enhance it. Those are all expensive items. We have to get the balance right. That is what the report on lessons learned will address, and we look forward to discussing it after its publication next month.
    Mr. Tom Cox: What action is the Ministry of Defence taking on the location and destruction of unexploded bombs in Kosovo, especially cluster bombs?
    Mr. Spellar: Allied forces have made a considerable effort to remove unexploded ordnance, including cluster
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    bombs. We had the very unfortunate experience of two members of the Gurkha Regiment dying in that effort. The first priority was to try to ensure that schools could open in Kosovo. We are also working with other agencies to undertake that effort on a more sustained basis, as we do in many areas throughout the world.
    Mr. Iain Duncan Smith: The Minister talks about capability, but does not much of what he said hinge on the capability of the Defence Evaluation and Research Agency? That brings us to what the Government plan to do about DERA. Is not the reality that we have learned today that, if the Government are about to spend £100 million on what they call their heartland vote, that is worth a statement, but if they are about to dispose of a massively important asset such as DERA, that is worthy of no statement whatever?
    The Minister must answer two questions about DERA. First, is not the reality that, in accordance with his earlier answers, the Ministry of Defence will now lose much of the impartial advice that it would have received through the overlap with private industry in assessing the RAF's capability? Secondly, in their attempt to provide a golden blocking share to ensure that DERA will not face problems with its future prospects, the Government are likely to run head on into the EU, which has already expressed the opinion that such golden shares are not acceptable.
    Mr. Spellar: I knew that the hon. Gentleman could not fail to get the EU in somewhere. This is a less than appropriate question on which to raise his point, but I accept that if the hon. Member for Runnymede and Weybridge (Mr. Hammond) had turned up to muster, the hon. Gentleman could have come in at a more appropriate point.
    The announcement is about a consultative document which will, therefore, be available for full public consultation. A statement will be made after that consultation when full and proper decisions have been taken. The hon. Gentleman is right, however, to draw attention to the imperative need for the Ministry of Defence to receive impartial advice from a proper, appropriate Government agency. That is why parts of the agency will be retained within full public control to provide that advice, while other elements will be able to take advantage of commercial expertise and a necessary injection of private capital.
    Mr. Duncan Smith: The Minister says that we should contrive some other method to ask questions, but do not the Government have a responsibility to bring an important measure such as their proposals for DERA to the House for discussion and questioning? He mentioned consultation and perhaps he can now tell us—there is no word on it in the consultation document—what the US Government have said about the issue, given their unique relationship with us over DERA. Have not the US Government made it clear that nothing should proceed, especially in the case of Boscombe Down, that risks jeopardising that relationship, until they have had another chance to discuss that arrangement? In failing to mention

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    the US Government, do not the Government show more and more that they know the price of everything and the value of nothing?
    Mr. Spellar: The old jokes are the best.
    We value our strategic relationship with the US through NATO and the technical relationship through DERA with the US and with several other laboratories around the world. Of course, the US is far and away the most significant of those, and that is why Ministers and officials have been in extensive discussion with the Administration in the US regarding the proposals on DERA. We wish to value, maintain and enhance those relationships between our Government laboratories and Government scientific facilities in the US. That is why we have evolved the proposals so that they take account of concerns that were rightly and properly expressed to us. Now those proposals will go out for public consultation. That is the right approach, and when we come to make decisions, we will have a full statement on what the Government propose. We have now made the initial proposals and we look forward to receiving representations from all areas, including from the Opposition.

    RAF Museum, Hendon
    Mr. Andrew Dismore: If he will make a statement about the future development plans for the RAF museum, Hendon. [117884]
    The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The RAF museum trustees' plans for development at Hendon are dependent on an imminent stage 2 bid for heritage lottery funds. The Ministry of Defence has provided funds in support of that bid and we have given a commitment to provide further funds should the bid be successful.
    Mr. Dismore: I am grateful to my hon. Friend for that assurance of support. However, the scheme is also dependent on the plans for the former RAF East camp site, which are presently with the Department of the Environment, Transport and the Regions. Will he use his best endeavours to ensure that DETR gets on with making a decision on that planning issue, because without it the full scheme cannot go ahead?
    Dr. Moonie: My Department is committed to the success of the RAF museum and to its development plans. The question of the related East camp planning inquiry is a matter for my right hon. Friend the Secretary of State for the Environment, Transport and the Regions. While I cannot comment on a planning inquiry, I am sure that my right hon. Friend will have noted my hon. Friend's remarks.
    Sir Geoffrey Johnson Smith.: Has the Minister any plans to donate funds to enable more Tornados to be stored at the RAF museum? I know that there is a shortage of pilots, and that might help.
    Dr. Moonie: That was a very helpful question. I have not received any inquiries about the possibility of putting more Tornados there, but I am sure that any such inquiry would be given serious consideration.

    Weapons of Mass Destruction
    Miss Julie Kirkbride.: What recent reports he has received concerning the development of weapons of mass destruction by (a) Iraq and (b) Yugoslavia; and if he will make a statement. [117885]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): Since inspectors from the United Nations Special Commission were expelled from Iraq in December 1998, we have continued to monitor the situation there. We remain concerned that the development of weapons of mass destruction programmes is taking place. We therefore strongly support the early deployment of the United Nation's monitoring verification and inspection commission in Iraq.
    The Government receive declarations and reports about a number of other countries, including the former republic of Yugoslavia, concerning weapons of mass destruction, and continue to monitor developments.
    Miss Kirkbride: I am sure that the House will agree that what the Minister has just described is extremely worrying for the prospects of nuclear proliferation. What is the Department's view of the anti-ballistic missile system being developed by the United States? If the Department considers that to be a good idea, why is he not working with the United States to provide that defence umbrella for the United Kingdom?
    Mr. Hoon: We are in regular dialogue with the United States about that but, unless and until the United States decides to employ the system, there is little that I can say to the hon. Lady to resolve her concerns. There is not much point in trying to anticipate the United States' decision on that matter.
    Mr. Iain Duncan Smith.: Is not the Secretary of State avoiding the question? He must have a view, one way or the other. For example, we discovered recently that Yugoslavia has 48 kg of enriched uranium. We also know, from an institute in the United States, that Iraq needs only enriched uranium to make a nuclear device. The two countries have started talking to each other about just that. Is not it time for the Government to get off the fence and take a view, for or against the proposal? What are the Government saying to the US Government?
    Mr. Hoon: I have listened to the hon. Gentleman carefully on this question, and he has an interesting approach to international negotiations. He appears to agree to requests before they are made. He rolls over before he is asked to do so: in those circumstances, it is difficult to see how he could defend Britain's best interests. In my experience, even performing poodles in circuses usually require an order before they do anything.

    New Zealand
    Mr. Andrew Mackinlay.: What co-operation there is between his Department and the Defence Ministry in New Zealand on matters of common interest. [117886]
    The Minister for the Armed Forces (Mr. John Spellar): Our defence relations with New Zealand remain very good, and are based on strong and traditional links between the armed forces of our two countries. Our main ties are through the five power defence arrangements, but British and New Zealand forces have also worked together in UN operations, including in Iraq and Bosnia, and in East Timor and the Gulf.
    These strong ties are reinforced by a number of exchange programmes between the UK and New Zealand, the provision of training for members of the New Zealand armed forces, visits by Royal Navy ships, and, where the opportunity arises, exercises—both bilaterally and as part of FPDA. The naval task group deployment to the far east this year will include an FPDA exercise off Malaysia which will involve elements of the New Zealand navy and air force. It is planned that elements of the task group will visit Wellington.
    Mr. Mackinlay: Has the Minister noticed reports that the Prime Minister and Defence Minister of New Zealand's very radical Labour Government are proposing to announce formally on ANZAC day posthumous pardons for the New Zealand soldiers executed in world war one? I wholly applaud that action, but it is unilateral. Should not the British Government revisit this matter, given that, in strict legal and constitutional terms, the power to pardon all soldiers in the British Empire forces still resides in London? Would not it be silly and grossly unfair to the other 300-odd executed soldiers if the New Zealanders were to be pardoned, and they were not? Will my hon. Friend have a chat with the other Commonwealth countries involved, and revisit with an open mind this important and popular issue?
    Mr. Spellar: My hon. Friend rightly draws attention to an issue that is very strongly felt, not just by himself but by others Members of the House and many others in the country. He will be aware that my predecessor, my right hon. Friend the Member for Hamilton, North and Bellshill (Dr. Reid), made an effective and moving statement to the House on 24 July 1998. He went through the very difficult arguments about the first world war executions. Subsequent to that announcement, a number of decisions have been made locally about adding to war memorials the names of some of those who were executed. There are differing views on that, but I think that it has been very well handled by all those concerned.
    Having reread the statement by my predecessor, I find it immensely persuasive. I think, therefore, that we should stick to that policy, unless there are overwhelming reasons for not doing so.
    Mr. Michael Fabricant.: On the Minister's first answer, does he agree that we should pay tribute to the New Zealand defence forces, particularly for their deployment in East Timor which, I believe, was their biggest since our involvement in Korea? Is he aware that New Zealand forces worked alongside the Royal Marines,
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    Canadian forces and Australian forces? Does he agree that when English-speaking nations get together, their common interest and heritage, as well as a common language, mean that they work well for the future safety of all the world?
    Mr. Spellar: I pay considerable tribute to those who were involved in many combined operations, not only with the countries mentioned by the hon. Gentleman but with the countries of NATO. He will be aware that English is also the operational language of NATO.

    Falklands
    Mr. Gordon Prentice.: If he will estimate the cost of garrisoning the Falklands (a) since the restoration of democratic Government in Argentina and (b) for the last 12 months for which figures are available. [117887]
    The Minister for the Armed Forces (Mr. John Spellar): Our best estimate is that some £2,263 million was spent on the Falklands garrison between 1983 and 1999. That includes the cost of constructing the Mount Pleasant airfield. In 1998–99, expenditure on the Falklands garrison came to £69 million.
    Mr. Prentice: Two billion pounds is a huge amount of money, and so is £69 million a year. Can that be justified, given the restoration of democratic government in Argentina? In these days of overstretch, is there a greater perceived threat to the Falklands than there is, for example, to Gibraltar from Spain, which also has a territorial claim'?
    Mr. Spellar: We very much welcome the restoration and development of democracy in Argentina. Indeed, my right hon. Friend the Secretary of State recently visited Argentina, and had very constructive discussions with Ministers there. He also visited the Falkland Islands and, again, had very useful discussions there, reinforcing our policy that the Falkland Islands are British and that sovereignty over the islands is not for negotiation. Accordingly, it is right that we should maintain a military presence as long as Argentina claims sovereignty over the islands.
    Mr. Owen Paterson.: Can the Minister guarantee that the air bridge will be maintained at its current frequency when discussing the cost of garrisoning the Falklands?
    Mr. Spellar: We always look at sustainability, and how to undertake that most cost-effectively. The mechanism by which we do that is to consider and discuss it with the armed forces. The key thing is to ensure that we maintain an effective and viable presence and, indeed, that that is quite clear to the Argentines. We learned from a previous Government, who dropped their guard and perhaps gave the wrong signals to the Argentines.
    Mr. Barry Jones.: Does my hon. Friend agree that garrison costs could be lower if he had available to him a heavy lift aircraft such as the A400M?

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    Can he say when there will be a decision? Is it not best to go for the short-term Antonov solution rather than the ruinously expensive C-17?
    Mr. Spellar: I think we shall have to institute a competition on how my right hon. Friend will manage to raise the subject of the A400M in any possible Defence questions. Once again, I congratulate him on his ingenuity. As he is aware, Ministers are considering the matter closely and hope to make an announcement shortly.

    Weapons of Mass Destruction
    Dr. Julian Lewis.: What is his policy on giving up all British nuclear weapons while other countries still retain some weapons of mass destruction. [117888]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): As we made clear in the strategic defence review, our minimum nuclear deterrent will remain a necessary element of our security while large nuclear arsenals and risks of proliferation remain.
    Dr. Lewis: Does the Secretary of State realise that the reason for my concern is the quiet and subtle shift on that matter in the previous two Labour election manifestos? In 1992, the Labour manifesto categorically stated that until "elimination" of the
    world's stock of nuclear weapons … is achieved, Labour will retain Britain's nuclear capability.
    Does the right hon. Gentleman recall that?
    However, the 1997 manifesto stated only:
    When satisfied with verified progress towards our goal of the global elimination of nuclear weapons, we will ensure that British nuclear weapons are included in multilateral negotiations.
    Will the right hon. Gentleman categorically rule out, once and for all, any question that a situation will arise in which Britain would give up its entire stock of nuclear weapons while other countries retained some weapons of mass destruction?
    Mr. Hoon: I am grateful for the hon. Gentleman's comments on the process of drafting a Labour manifesto. It is the first time in the manifesto's history that it has been described as "quiet and subtle". I assure him that we stand by the commitments set out in the manifesto on which we were elected and that we shall take fully into account the existence of nuclear arsenals elsewhere. That would certainly be the most important factor that we would consider before any change in our own strategic security position.
    Mr. Steve McCabe.: Surely we should all welcome the ratification of the START 2 treaty as a major breakthrough. Despite the concerns that many of us may have about some of Mr. Putin's other policies—especially in Chechnya—does my right hon. Friend agree that further multilateral arms negotiations are a real prize that we must pursue?
    Mr. Hoon: I agree with my hon. Friend. My right hon. Friend the Prime Minister will make precisely that point to the Russian president-elect when he meets Mr. Putin today.

    De-mining
    Helen Jones.: What steps his Department is taking to assist those involved in humanitarian de-mining. [117890]
    The Minister for the Armed Forces (Mr. John Spellar): The Government were among the first to sign and ratify the Ottawa convention and we are committed to humanitarian de-mining and the clearing of land mines. The Ministry of Defence works closely with other Whitehall Departments and non-governmental organisations. Ministry of Defence personnel provide technical expertise, management and specialist skills to support mine action programmes worldwide. In the UK, the mine information and training centre at Minley remains the focal point for information on de-mining and mines awareness advice. The Defence Evaluation and Research Agency is examining ways in which mine detecting technologies would be suitable for humanitarian de-mining. In addition, we have gifted surplus military equipment to NGOs for use in their humanitarian mine clearance operations.
    Helen Jones: May I thank my hon. Friend for that reply? I especially welcome his comments on DERA. Does he agree that there is a huge potential for exploiting the technological expertise of that agency to produce low-cost de-mining equipment that can be used for humanitarian purposes? Will he tell the House when he expects to be able to make an announcement on whether the agency has been successful in obtaining further money for such research from the Government's capital modernisation fund?
    Mr. Spellar: I shall certainly write to my hon. Friend on that matter. I join her in paying tribute to some of the innovative work being undertaken by DERA. However, we must consider how we put that work into practice; the donations that we have made to several NGOs enable them to work actively, with local labour, on de-mining in many areas that have been particularly affected to the enormous detriment of the population and local economies.
    Mr. Peter Viggers.: The United States Government take the view, which I share, that land mines have a part to play in certain special circumstances, such as the denying of land to potential aggressors in the Korean peninsula. May I congratulate the Government on supporting the American position by allowing land mines to be stored in ships off the territorial waters of Diego Garcia?
    Mr. Spellar: The hon. Gentleman rightly draws attention to the position of one of our allies. In fact, other allied countries take that view. It is not a view that we share, and we are campaigning and working with those Governments to try to spread the Ottawa convention. As has been graphically illustrated on television and in newspapers, in many areas land mines have an enormous effect on the populations that are left behind, often when conflict is finished, and—as I said in my previous response—a considerable effect on their economy and their ability to regenerate their society and become part

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    of a modern society once again. We are working hard on that, and on persuading other countries of the correctness of this position.

    Weinberg Estate, Germany
    Sir David Madel.: What is his Department's policy in relation to the future development of the Weinberg housing estate near Fallingbostel, Germany; and if he will make a statement. [117893]
    The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The Weinberg estate comprises 474 flats, of which the British forces lease 392. On expiry of two of the current leases at the end of 2001, it is planned to hand back 158 properties to the respective landlords to reflect a reduced housing requirement. For the remaining 234 properties, my officials are actively involved in negotiation with both the landlords and relevant German authorities with a view to effecting improvements both to the overall condition of the estate and to individual properties.
    Sir David Madel: Does that answer mean that part of the estate will be knocked down and rebuilt, possibly with a private finance initiative arrangement with a German construction company? Can the Minister give a bit more detail on the time scale for making the very necessary improvements to those flats which house service men's families?
    Dr. Moonie: I can assure the hon. Gentleman that I share his concern about the quality of our accommodation; I made it known during a debate last week that that is one of our highest priorities for improvement. With that in mind, I have to say that all the service families accommodation on the Weinberg estate is categorised as below the ideal standard set by the Department. Upgrades to the properties already effected include double glazing for all, the provision of new kitchens for 222 flats, new bathrooms for 258 flats and replacement hot water and heating systems for the same number. Four blocks of flats have been reclad externally; the remainder are to be completed within two years.
    The hon. Gentleman may be interested to know that a survey of residents on the estate showed that 80 per cent. of those families surveyed would prefer to remain there than to move to other service families accommodation. On the specific point that the hon. Gentleman made, as far as I am aware, there are no plans for such a scheme.

    Atomic Weapons (Safety)
    Mr. David Rendel.: What reduction will take place in the number of safety-related jobs at AWE Aldermaston and AWE Burghfield during the 12 months from 1 April. [117894]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): In the event that the contractor's proposals lead to a reduction in the number of safety-related jobs, the contractor will need the separate approval of the independent regulators—the nuclear installations inspectorate and the Environment Agency—and of the Ministry of Defence compliance office. Neither the
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    Ministry of Defence nor either of the agencies will give its approval if it judges that the changes will have an adverse impact on safety standards.
    Mr. Rendel: The Secretary of State does not appear to know how safety will be managed over the next year at AWE. What on earth were the Government doing handing over AWE to two firms like BNFL and Lockheed Martin, which have such appalling safety records, if he does not even know how they will manage safety?
    Mr. Hoon: I have just made it clear in my answer to the hon. Gentleman that we monitor safety standards, and that any change in safety standards or in the number of personnel will have to be considered carefully both by the Department and by the two agencies in the light of its effect on safety. Before the initial bids for managing AWE were considered, any bidder had to satisfy safety criteria involving 28 separate components, 20 of which were regarded as crucial to the process. Not only did the successful contractor meet those criteria, but theirs was the best of the three bids in that area.
    Miss Anne McIntosh.rose—
    Madam Speaker: Does the hon. Lady want to ask a question now?
    Miss McIntosh: No.

    Aircraft Carriers
    Ms Dari Taylor.: What progress has been made in plans to procure replacements for the current Invincible class of aircraft carriers. [117896]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): I refer my hon. Friend to the answer that I gave to my hon. Friends the Members for Ilford, North (Ms Perham) and for Plymouth, Sutton (Mrs. Gilroy) earlier today.
    Ms Taylor: May I thank my right hon. Friend for the announcement that he has given the House today, because it is excellent news for British shipbuilders? Given the time delay before construction, is there any chance that he might indicate which shipyards will be considered? As I represent Stockton, South, may I persuade him to consider giving work to the excellent shipbuilders on the Tees? We believe that 30 or more warships will be built; will he give us some idea when and how they will be built so that our shipbuilders and workers are again given hope?
    Mr. Hoon: I have certainly made it clear that an extensive programme of shipbuilding is under way. It could amount to 30 large ships and, certainly, they will all be built in the United Kingdom. As there are yards around the country, I would risk creating difficulties if I picked out some and not others. However, I assure my hon. Friend that full consideration will be given to all

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    British shipyards and all will be given the opportunity to tender. I look forward to that work providing for a revitalised British shipbuilding industry.
    Miss Anne McIntosh.: I apologise, Madam Speaker, for confusing you earlier.
    I am most grateful to the Secretary of State for his earlier reply suggesting that BAE Systems will contribute to the replacement for Invincible and I am delighted that it has a base in Sutton-on-the-Forest in the Vale of York. Will he put the minds of those who work there at rest by assuring them that a merger with Boeing will not compromise the contract that he has in mind?
    Mr. Hoon: I have seen press speculation about the prospects of a merger between BAE Systems and Boeing but, as far as I am aware, it is no more than press speculation.

    Balkans
    Mr. Desmond Swayne.: What plans he has to increase the United Kingdom forces serving in the Balkans. [117900]
    The Minister for the Armed Forces (Mr. John Spellar): We believe that flexibility and capability are the keys to successful operations in the Balkans. We keep our operational commitments under constant review and have the flexibility to adjust our commitment to match the security situation.
    We have agreed to deploy to Kosovo a Phoenix battery of some 170 personnel to operate unmanned aerial surveillance drones, and two additional Gazelle helicopters equipped with specialist surveillance equipment to reinforce our contribution to KFOR.
    Mr. Swayne: On the very question of flexibility and the need to maintain flexibility, will the Minister reflect on the evidence produced last year that, in the first nine months of last year, 40 per cent. of the reservists supporting our forces in the Balkans theatre were infantrymen? As the decision in the strategic defence review was to cut the fighting capability of the infantry reserves by half, will he now review that decision in light of the need to maintain the flexibility to which he referred?
    Mr. Spellar: As I have told the hon. Gentleman previously, we hope that a higher percentage of the reserve forces in Kosovo will come from the specialist arms. That reflects shortages elsewhere in the availability of those groups and the economic pressures on some of them. I pay considerable tribute to those not just in Kosovo, but in Bosnia who are engaged on the infantry side. I met some of them a couple of months ago when I was there. They perform an excellent job, which is well appreciated by their counterparts in the regular forces, and they thoroughly enjoy doing it.
    On the overall picture for the reserve forces, we have to consider all the arguments that we gave when we restructured the Territorial Army, in particular, and examine where the priorities lie. Home defence is no longer the reserve forces' key priority. As the hon. Gentleman rightly identified, their priority is to form part
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    of the overall force and to play their part in the more expeditionary nature of our forces. They are doing that well, but that does not undermine in any way the restructuring and reshaping of the Territorial forces.
    Mr. Paul Keetch.: Given that the Allied Command Europe Rapid Reaction Corps, which was in control of Kosovo until recently, has now been replaced by the Eurocorps, will the Minister join me in congratulating ARRC on the excellent role that it performed in Kosovo, which I saw when I was there a few weeks ago? How is the transfer to Eurocorps going, and does the Minister agree that the role played by Eurocorps will demonstrate the ability of European forces to work together in co-operation, without American support being necessary?
    Mr. Spellar: I join the hon. Gentleman—and, I am sure, the whole House—in paying tribute to the role played by the Allied Command Europe Rapid Reaction Corps under British leadership, not only in the immediate past, but during the Kosovo engagement. I also welcome the introduction of Eurocorps; the transition is working well. The important message is that it is not only ARRC that is capable of undertaking such tasks. That is welcome, because it reduces the pressure on our armed forces. It also helps to reinforce the main argument that we have advanced in the context of the European security and defence identity, which is the importance of the defence capability initiative in ensuring that European forces can undertake such roles. Demonstrating their ability to do so will be critical in maintaining the long-term stability of the alliance.

    Departmental Land
    Sir Sydney Chapman.: If he will estimate the total square mileage of land owned by his Department (a) 10 years ago, (b) five years ago and (c) now; and how much of this land is surplus to requirements. [117901]
    The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie): The total area of land owned by the Ministry of Defence was 240,600 hectares in 1990, 240,300 in 1995 and 238,800 in 1999. That equates to 928.96 square miles in 1990, 927.80 in 1995 and 922.01 in 1999. The figure for the total area of land in disposal is not maintained centrally. However, I will write to the hon. Gentleman once that information has been collated, and a copy of my letter will be placed in the Library of the House.
    Sir Sydney Chapman: I am immensely grateful for those numbers, which I shall try to remember—I may have to consult Hansard tomorrow. However, the Minister did not deal with the fourth part of my question, about land surplus to requirements. May I take it that some of us have scored a 100 per cent. successful campaign in ensuring that the Ministry of Defence no longer holds any land that is surplus to requirements? Is not the central point that we must be flexible about the land we retain, especially for training purposes, in view

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    of a development that the Minister might be able to confirm, which is that significantly less land is now available in Germany for training our armed services?
    Dr. Moonie: In the riveting excitement of reading out the figures, I overlooked part of the hon. Gentleman's question. Land in disposal is, by definition, land surplus to requirements. Such parcels of land come up fairly regularly at present, and this year we are on target to meet the sales requirement that we have placed on ourselves. We retain land only to support the delivery of operational capability and for other essential purposes. We keep the size of the estate under constant review, to ensure that it is no larger than is required for those purposes. However, it is true that, because of the change in distribution of our armed services, we have been putting greater pressure than we did formerly on much of the land that we use in this country.
    Mr. Peter L. Pike.: What is the target for disposal of land? Large areas of land, including many beauty spots, have been held for many years for training purposes. How much land is surplus to training requirements?
    Dr. Moonie: We dispose only of land that is genuinely surplus to our requirements. We use land in national parks because that is, and will remain, essential to our requirements. Our target is to sell £700 million worth of land from the estate by 2001–02, and I am happy to say that we are now ahead of target.
    Mr. Gerald Howarth.: If Major-General Palmer's review of training establishments leads to a reduction of training establishments in Aldershot and the surrounding area, will it be the Government's intention to contract the Aldershot garrison and to sell off some of the land that falls inside the garrison premises?
    I have just seen the consultation document about the Defence Evaluation and Research Agency. If DERA is to be cut by three quarters, will it be the Government's intention to maintain the headquarters of the new public-sector operation at Farnborough, where £70 million has recently been expended on brand-new buildings?
    Dr. Moonie: On the latter part of the hon. Gentleman's question, the answer is yes. On the former part, we have made no plans yet for the disposal of land at Aldershot, nor for reconfiguration of our forces there. However, as I have said, that is under constant review.

    Roll On/Roll Off Ferries
    Mr. Julian Brazier.: If he will make a statement on progress on the purchase or leasing of roll on/roll off ferries for sealift for the forces. [117903]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): On current plans, we intend to place a contract this year, under private finance initiative arrangements, for a long-term managed sealift capability equivalent to six ships to support the joint rapid reaction force. A final decision will not be made until we have fully assessed the bids that we have received.
    Mr. Brazier: As a former secretary of the parliamentary maritime group, may I join other Members
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    on both sides of the House in expressing extreme concern that an order of this importance could be placed with a yard abroad, when we have lost so much shipyard capacity? We had a cheap shot earlier about a contract for two ships placed by the previous Government. Did the Secretary of State take legal advice on whether the contract could be framed in such a way as to fall within the EU' s exemption for military projects? If he sought such advice, may we have a copy of it in the Library?
    Mr. Hoon: The hon. Gentleman referred to my earlier observation as a "cheap shot". However, the requirement for sea-going lift for the rapid reaction force was the same in January 1997 as that which the present Government identified as part of the strategic defence review. On the strict legal advice that we received, it was concluded that if these vessels were to be available for commercial purposes, that commerciality must by necessity be reflected in the procurement process. The previous Government came to the same conclusion.
    As the hon. Gentleman conceded, we are operating under relevant European and World Trade Organisation public procurement rules. Those rules prohibit preferential treatment for the United Kingdom industry because the vessels concerned are clearly non-warlike; they are available for commercial purposes. By that definition, they must be considered under the relevant EU rules. The hon. Gentleman knows that, his colleagues on the Opposition Front Bench know that, and not only did the previous Government know that but they operated under precisely the same rules.
    Mrs. Gwyneth Dunwoody.: Would my right hon. Friend like to undertake a short, sharp study of how often our European compatriots have managed to pass on what are basically defence contracts under existing rules to nationalities other than their own and to work forces other than those of their own nationalities?
    Mr. Hoon: The British Government are careful to ensure that all relevant EU rules are observed by our partners in the EU. The contracts are published in the Official Journal That is the transparent process that the EU requires. We ensure that other countries participate in those rules as effectively as we do.
    Mr. Jonathan Sayeed.: My hon. Friend the Member for Canterbury (Mr. Brazier) talked about six ships. As I understand it, two of them will be available for trade and four will be used only by the Royal Navy. Is it legally possible for those four ships to be built only in this country?
    Mr. Hoon: The hon. Gentleman misunderstands the nature of the contract. The essence of ensuring that the ships are commercially useful is to have them available to the Government at different periods of notice when a crisis requires their availability. Some will be available at very short notice and others will have rather longer notice periods. In the interim, therefore, they will be available for commercial purposes. As they are available for commercial purposes, they cannot be described as "warlike". Therefore, they do not fall within the exception that is set out in the EU procurement rules.

    France
    Mr. John Bercow.: When he last met the French Defence Minister to discuss defence co-operation. [117905]
    The Secretary of State for Defence (Mr. Geoffrey Hoon): I last met the French Defence Minister to discuss bilateral defence co-operation on 25 November 1999 at the UK-France summit in London. We have also met more recently at multilateral meetings where more general issues were discussed.
    Mr. Bercow: Given President Chirac's description of the United States as a hyperpower that requires to be counterbalanced, the modest financial commitment of the French and their notorious unreliability, why does not the right hon. Gentleman stop sitting on the fence and simply
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    accept what is apparent to most right-thinking people: that the rock of American defence co-operation is infinitely preferable to the shifting quicksand of French defence co-operation?
    Mr. Hoon: Certainly, the hon. Gentleman represents rightward thinking.
    Mr. Bercow: Right thinking.
    Mr. Hoon: "Rightward thinking" is what I said. That is a reflection, sadly, of the anti-European attitudes of large numbers of those who sit on the Opposition Benches. What is important for Britain is not only that we maintain the strength of our excellent alliance with the United States through NATO, but that we can bring together the European nations to make an effective contribution to NATO as an alliance.

Energy Policy
3.31 pm
The Secretary of State for Trade and Industry (Mr. Stephen Byers): With permission, Madam Speaker, I would like to make a statement to the House on energy policy.
The central objective of the Government's energy policy is to ensure secure, diverse and sustainable supplies of energy at competitive prices.
In 1998 the Government published a White Paper on energy sources for electricity generation. The White Paper identified significant distortions in the operation of the electricity market. In particular, there were distortions in the operation of the electricity trading pool. These distortions had artificially encouraged a rash of new investment in gas-fired generation, mainly at the expense of existing coal-fired plant. There was also inadequate competition in the electricity market, particularly in the coal-fired generation sector. These distortions in the market meant that electricity prices were higher than necessary. The White Paper set out a programme of reform to remove the distortions and create a competitive market that could operate more vigorously and effectively.
While the reforms identified were being implemented, the Government decided to apply a stricter consents policy for gas-fired stations. We made it clear at the time that this policy was a short-term, temporary measure, aimed at protecting diversity and security of supply while the distortions in the market were removed.
This policy has been in place since October 1998. It created a temporary presumption against the approval of any new gas-fired power stations. It was a tough policy, but one that we felt was justified.
Under the application of the policy proposals, 15 gas-fired power stations were refused clearance. As I know from the representations received from a number of hon. Members, those decisions often meant that employment opportunities were denied and economic regeneration was not created. The White Paper set out a radical reform programme that would need to be implemented before we lifted the stricter gas consents policy. The main elements of the programme were, first, reform of the trading arrangements in England and Wales; secondly, seeking practical opportunities for the sale of generating capacity by the major coal-fired generators; and thirdly, pressing ahead with competition in electricity supply for all customers, including domestic customers
Good progress on the reform programme has been made. We have opened the domestic market to competition, giving choice to all consumers, and there has been a substantial degree of divestment of coal-fired generating plant, increasing the number of coal-fired generators. Our programme for reforming the trading arrangements is well under way. There are already signs that the electricity market is becoming more competitive, and that wholesale electricity prices are considerably lower than they were at the time of the White Paper.
In the White Paper, we made it clear that we expected to lift the stricter gas consents policy as soon as we concluded, on the basis of advice from the Director General of Gas and Electricity Markets, that the reform programme had been implemented, and that the market distortions had been removed.
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Last Thursday, the director general reported to me that, in his view, substantial progress had been made in the areas of reform outlined in the White Paper. I have placed a copy of his report in the Libraries of the House and in the Vote Office. In short, his report concludes that the reform programme is almost complete. The sole remaining element are the new electricity trading arrangements. I expect them to be in place by October this year. As soon as that has been achieved, I intend to lift the stricter consents policy.
Lifting the stricter consents policy will represent an important step forward in the Government's energy policy. It will provide for full competition in the electricity market by allowing new entrants to challenge existing players. That will ensure that electricity prices remain as low as possible to the benefit of all consumers, including businesses, who need low electricity prices to compete internationally.
It will also enable new power station developments to go ahead if they are viable in the reformed market, thus providing new job opportunities, especially through the creation of new energy parks, which have been proposed by some potential developers.
Today's announcement will be welcomed by the offshore oil and gas industry and its contractors. It will also allow new gas stations that are genuinely competitive, especially combined heat and power stations, to contribute to the enhancement of the United Kingdom's energy efficiency and carbon saving.
Lifting the stricter gas consents policy will mean that the existing presumption against new gas-fired generation will no longer apply. The new initiative for proposals for power stations will remain for private sector companies to consider, to meet the evolving needs of the energy market. That market will be influenced by measures such as exemption from the climate change levy for combined heat and power and enhanced capital allowances.
The Government strongly support CHP and we will expect developers to be able to show that they have explored opportunities to use it. We shall discuss with developers information that needs to be submitted as part of notifications under section 14 of the Energy Act 1976 and applications under section 36 of the Electricity Act 1989.
I have given careful consideration to the impact of lifting the stricter consents policy on the coal industry. From 1985 through to the early 1990s, the coal industry suffered a steep decline, with employment falling from 270,000 people to fewer than 20,000. That was a severe blow to workers and their families. It had a devastating impact on many small—and in some cases isolated—communities. The Government have put in place a major regeneration programme for those coalfield areas. My right hon. Friend the Deputy Prime Minister announced in December last year that some £354 million would be invested over three years in coalfield regeneration. That was in addition to the more than £1 billion that is devoted each year to regeneration of local authority areas containing coalfields.
Our coal industry is by far the most efficient in Europe. Germany, which has the largest coal industry in the Community, produces about 20 per cent. more coal than us with nearly ten times our labour force. The German industry benefits from massive Government subsidies, as do the French and Spanish coal industries.

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Our coal industry faces stiff competition not only from gas generation but also from imported coal. The Government's policy remains that it is for the coal industry to find its own place in a competitive energy market. However, we recognise that ending the stricter consents policy will create a new market and new challenges for the coal industry.
We cannot block international competition. Indeed, we do not wish to do that. However, it is the task of Government to lead people through the process of change, to create a framework which enables the coal industry to move forward, to help it manage change rather than be submerged by it and to respond positively to the challenges ahead.
In those circumstances, the Government have been discussing with the European Commission the potential for state aid to the coal industry. Any proposal to pay aid will, of course, be subject in advance to approval from the European Commission. Any aid would be temporary—during the transitional period—and would end with the termination of the European Coal and Steel Community agreement in 2002.
Of course, the Government cannot give absolute guarantees about the future shape of the industry. It will be for the owners to determine the future of any individual pit. Although it is too soon to give an indication of the total cost of any aid over the two years before we have spoken to all the parties and had further discussions with the Commission, we need to identify eligible mines that might be entitled to aid. The cost would also be affected by movements in world coal prices. There has been speculation that the total aid to the coal industry could be as high as £100 million. I am not ruling out the possibility of expenditure at that level.
Our arrangements will treat coal producers in a fair and non-discriminatory way. My Department is developing an appropriate scheme of state aids for the coal industry in discussion with the European Commission. We will consult the coal industry and other interested parties and invite interested parties to make their views known to my Department.
In relation to the continued development of our policy for energy, we faced a choice: uncontrolled change, forced by markets and commercial pressures, or a process of reform that delivers economic efficiency and social justice so that individuals and the communities in which they live can be partners in change. The Government have chosen the latter approach.
Lifting the stricter gas consents policy, coupled with the new trading arrangements, will complete our reforms of the electricity market, provide cheaper electricity and lead to economic regeneration and job creation. Today's announcement will allow the coal industry to compete in the new markets that we are creating. It is a vital part of our programme of modernisation and reform and will be good news for hard-working people and their families and communities. I commend it to the House.
Mrs. Angela Browning.: In three years, the Government have failed to produce a coherent energy strategy, and nothing that we have heard today suggests a long-term strategy. They introduced the moratorium on gas-fired power stations, but were quick
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to make an exception for south Wales when the Welsh Assembly elections were looming. The Secretary of State's rationale in his 1998 energy White Paper was bogus, because no one believed that companies would invest in new power stations based on a temporary hike in electricity prices.
We welcome the Secretary of State's U-turn on gas-fired power stations, but his policy was wrong in the first place. On coal, the former Secretary of State, the right hon. Member for Derby, South (Mrs. Beckett), said:
Our aim is to put all fuels on a level playing field, and not give priority to any one. We do not propose to subsidise any part of the UK coal industry. Coal producers themselves have asked for fairness, not favours.—[Official Report, 25 June 1998: Vol. 314, c. 1171.]
What action has he taken to ensure fairness for our efficient UK coal producers, bearing in mind that France, Germany and Spain subsidise their industries by some £3 billion a year? He referred to it, but what action have the Government taken to address the concerns expressed by RJB Mining and others at the unfair subsidies given by European Union grants? Does he believe that many of those are illegal? If so, what has he done about it?
What approaches has the Secretary of State made to the Commission to date? He mentioned that he is speaking to the Commission, but will the aid be approved swiftly or will we be treated to another fiasco like Rover? Is it true, as reported in The Guardian today, that he removed two civil servants from key posts because of their opposition to the Government's energy policy?
How does today's announcement fit into an overall energy strategy? What plans has the Secretary of State made to achieve a reduction in nuclear components by 2020, and then to meet environmental targets? Surely an energy strategy must cover the whole energy mix.
Is not the announcement contingent on the separation of distribution and supply of electricity for which the Utilities Bill provides, together with the new electricity trading arrangements in the Bill—a Bill whose drafting and passage have been handled with unprecedented incompetence?
As the Secretary of State has now clearly indicated that the Government intend to subsidise the coal industry, may we hear from him the broader strategy for subsidising industry in general? Will he explain why one sector is deemed to be eligible for subsidy, while others are not? What is the rationale behind subsidising coal and not, for example, shipbuilding? It is important for the House to understand what the overall strategy is.
This Secretary of State runs a Department that works on a piecemeal basis, producing policy on the hoof. Given what we have heard today, energy is included in that piecemeal approach.
Mr. Byers: It is unfortunate that the proposals have not received a warm welcome. They reflect important progress in the development of an energy policy that is comprehensive and allows the market to work effectively. It is worth reminding the House of the mess that we inherited in regard to electricity trading arrangements. That is what happened, and Conservative Members know it.
There has been no U-turn. We clearly stated that we would ask the director general to report. He reported to me last Thursday on the progress made towards reform of

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the electricity trading arrangements, and a copy of his report is in the Vote Office. The report makes it clear that the reform programme is almost complete, apart from the new trading arrangements. They will be introduced in October, which is why we shall be lifting the stricter gas consents policy then. That is entirely consistent with what we said at the time of the White Paper.
The hon. Member for Tiverton and Honiton (Mrs. Browning) asked about Baglan bay in south Wales. We have always said that our policy in that regard is a stricter gas consents policy, not a block on any new development. When considering our proposals for Baglan bay, we noted that it had exceptional technology and was developing an energy park according to a high-quality plan, which we were prepared to approve in the circumstances. I was pleased that we were able to do that.
The German, Spanish and French Governments are able to subsidise their coal industries under the European Coal and Steel Community agreement, which the Conservative Government signed in 1993. [Interruption.] Both the right hon. Member for Wokingham (Mr. Redwood) and the hon. Member for Tiverton and Honiton were members of that Government. It was agreed that the arrangement would hold until 2002. The other countries are simply using the powers that the Conservative Government agreed they could use.
As for the question of civil servants, there is no truth in what was said in the Guardian article.
Environmental objectives are important. That is why we strongly support combined heat and power, and why we feel that gas-fired power stations will make an important contribution.
On the wider issue of subsidy, let me point out that the Government support shipbuilding through the shipbuilding intervention fund. I introduced a degree of flexibility to the arrangements that had not been there before, as a result of which orders have been secured for our shipbuilding and ship repair industry that would not have been secured otherwise.
The Government will provide subsidy where appropriate, but we will not do so in a way that props up failing industries. We will support industries that have a real future. Some of the industries that Conservative Members say have no future, such as shipbuilding and coal mining, do have a real future. People in those industries, and local communities, need to know that they have a Government who are on their side.
Mr. Dennis Skinner.: Is my right hon. Friend aware that the Tories have a cheek to talk about subsidies because, a fortnight ago, there was an announcement that the farming industry would get several hundred millions and the Tories' answer was that it was not enough?
Will my right hon. Friend take it on board that, instead of handing over a big cheque to Budge, who got the industry for a song from the previous Government, it would have made much more sense to have taken the coal industry back into public ownership? Does he accept that some of us, especially in Derbyshire, where there is not a single pit left—they were all closed by the Tory Government—and where there is mass unemployment, will not take kindly to the idea of some of that money
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enabling Budge and his allies to exploit opencast operations? It would be much better to ensure that all that money goes to deep mines only.
Mr. Byers: My hon. Friend will be pleased to know that, when the paper was submitted to us on the various options in relation to the coal industry, option number 15 was renationalisation of the coal industry, but we did not take it much further than that. On the significant point about support for the coal industry generally, we will have to introduce a scheme that does not discriminate against one sector over another. However, within the scheme, we will be able to give greater emphasis to particular parts of the industry. When we work up the scheme, we will be particularly mindful of the need to improve productivity, particularly in deep-mine pits.
Dr. Vincent Cable.: I am sure that all Members representing mining constituencies, particularly my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who has led the fight for Ellington colliery, will welcome the Secretary of State's support for the industry.
More broadly, I welcome the lifting of the moratorium on gas-fired power stations. Can the Secretary of State quantify some of the effects of that on the Government's Kyoto targets? Today's statement gives rather contrary indicators. It would be useful to know by how much the statement will contribute to the saving of carbon emissions, bearing in mind the fact that every unit of energy produced by gas produces 40 per cent. less carbon than coal.
How important is the high value of the pound for the difficulties of the coal industry, given that the pound has appreciated against the Australian dollar by 20 per cent. and against the South African rand by 40 per cent.—they are some of our major competitors? Does he not accept that the Government's inability to deliver a stable and competitive exchange rate is a major factor for the industry, as it is for other manufacturing enterprises?
Will the Secretary of State comment on this morning's Rowntree report on the effectiveness of Government aid to mining communities? It appears to suggest that much of the aid has been ineffectual and needs to be refocused in a radically different way.
Mr. Byers: Today's statement is primarily about the lifting of the stricter gas consents policy and deals with the consequences of that. It would have been foolish not to recognise that that significant change—which we want to introduce from October—will have an impact on the coal industry. The Government will not walk away from their responsibilities to the coal industry and to the communities that depend on coal mining.
On the specific points in relation to the Kyoto targets, the fact that more energy will be produced from gas-fired power stations will obviously make a significant contribution, but it will need to run alongside programmes that the Government are already introducing, particularly to develop cleaner coal technology, which we think will help, as we maintain the coal burn at least at present levels—I hope that those levels will rise as a result of our support—to make an important contribution to achieving those environmental objectives.
The hon. Gentleman mentioned the value of sterling. One of the key issues in coal importation, particularly from European countries, has been the subsidy received

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by industries in those countries. The German coal industry, for example, receives from the German Government the equivalent of £56 million a week in subsidy. The United Kingdom coal industry has asked us for fairness, not favours. Fairness is achieved by providing a level of subsidy which—even at the modest £100 million that we may be prepared to spend—will still enable the UK coal industry to be competitive against German coal, as the UK industry itself is highly efficient.
Like the hon. Gentleman, I have today read the Rowntree report with great interest. It contains important messages, but it also states that the particular needs of some of the communities that have been affected by pit closures will have to be met. I know that the Deputy Prime Minister will be considering very carefully the lessons that we can learn from the Rowntree report's findings and proposals.
Mr. Bill O'Brien.: May I express my thanks and appreciation to my right hon. Friend for his statement on energy policy? For far too long the coal mining industry suffered, particularly from Tory policies. His statement on help to the mining industry is therefore particularly welcome.
Is my right hon. Friend considering a long-term policy on the mining industry? If so, will he examine the possibility of introducing the fluidised bed system for generating electricity from coal? Introduction of such a system would be one way of ensuring a long-term future for the mining industry.
In considering the issue of combined heat and power, how much attention has been paid to using domestic and industrial waste in CHP programmes? Use of such waste would serve the dual purpose of generating electricity and heat and of disposing of waste that would otherwise go into landfill.
We have to address those issues. Doing that, and some assurances on a long-term programme for the coal industry, would be a major step forward in reassuring my communities in the Normanton constituency.
Mr. Byers: I thank my hon. Friend for his welcome of the measures that we have been able to announce today. He is right to say that the arrangement for the state aid that we wish to provide for the coal industry is transitional. We intend that the aid should end in July 2002, when the current European Coal and Steel Community agreement itself ends. We shall therefore have to consider other ways of planning for the industry's s future.
I have no doubt that we will have to consider new ways of developing programmes. There will also have to be greater innovation in the coal industry if it is going to be in a strong position to compete in the years ahead. I have no doubt that, by providing this breathing space for the industry, it will be able to seize those opportunities.
My hon. Friend makes a very important point about combined heat and power and the use of waste. We are developing a policy on renewables, and the use of waste will make a very important contribution within that context. We have set a challenging but achievable target on amounts of energy generated from renewables. The opportunity of linking that policy with combined heat
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and power offers some very real prospects of meeting both our environmental concerns and our energy objectives.
Several hon. Members rose—
Madam Speaker: Order. I have 30 Members seeking to question the statement. Questions to the Secretary of State must be very brisk, and I rely on the Secretary of State to give me brisk answers, please.
Mr. Gary Streeter.: The Secretary of State will be aware of a specific application to build a new gas-fired power station in Langage, in my constituency, right next to 45,000 houses on the edge of Dartmoor, overlooking the rolling beauty of the South Harris. The application is opposed by everyone in my constituency, including me. Will he undertake to look at that application, which is on his desk, before the moratorium is lifted, consider it carefully on its merits, and then reject it point blank?
Mr. Byers: I am sure that we shall take those representations into account in considering the matter.
Mr. Harry Barnes.: My hon. Friend the Member for Bolsover (Mr. Skinner) pointed out that the Conservatives destroyed the mining industry in Derbyshire by closing all the Coal Board pits. However, one small mine—Moorside mine—is left in Eckington, in my constituency. What will be the position of the small mines when state aid is provided? The money is not just for Budge. The 29 jobs at stake in Eckington also need to be protected. What will be done, and when will it be delivered?
Mr. Byers: I invite the owners of the mine at Eckington to get in touch with my Department. The scheme that we want to introduce applies to all coal producers. Even small mines such as that referred to by my hon. Friend will come within the state aid schemes. If the owners contact the Department, we can discuss what methods will need to be put in place to support improving productivity.
Mr. Peter Atkinson.: The coal industry will be disappointed that more details of the subsidy scheme have not been given. How will it help Blenkinsopp colliery in my constituency? It employs nearly 100 miners and is threatened with closure in 18 months unless the management can raise £200,000 to £300,000 to open new seams. They have been unable to do that because of the low price of coal. Will the scheme help such collieries?
Mr. Byers: It is worth reminding the House that the price of coal has recovered over the past few weeks. Our scheme will go from pit to pit. Blenkinsopp will be able to discuss it with the Department. If it meets the criteria, it will be able to qualify as well as other pits.
Ann Clwyd.: My right hon. Friend's announcement is excellent news for Wales and for my constituency, particularly for Tower colliery, which remained open despite the best efforts of the Conservatives—with the exception of the right hon. Member for Wokingham (Mr. Redwood), who gave us

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every assistance when the miners bought out the pit. The pit has made a profit year on year, despite the fact that the then Secretary of State for Trade and Industry told us that the mine should shut and I should tell the men to throw in the towel. We did not throw in the towel and the pit has been a success. That shows that there is a secure future for coal and that the Government care about the social consequences of restructuring our older industries, again unlike the Conservatives. What can Tower hope to get from the announcement? Under the previous Government, I took the case to the European Union and the Energy Commissioner told me that the EU thought that the pit should get a subsidy, but the British Government were against it.
Madam Speaker: Order. Questions must be very much to the point now.
Mr. Byers: The scheme that we have been able to announce today covers Wales and Scotland as well as England. Pits such as Tower will be able to qualify under the criteria that we intend to develop. Given the efforts made by my hon. Friend and some Conservative Members to save Tower, I hope that the colliery will see greater opportunities in the scheme and that the commitment of the work force and the community to Tower colliery will reap long-term rewards.
Mr. Dafydd Wigley.: I welcome the lifting of the moratorium and the contents of the statement not only for Tower, but for north-west Wales. The Secretary of State will be aware of representations made by my hon. Friend the Member for Ynys Môn (Mr. Jones) about a scheme that is vital for the future planning of industries such as Anglesey Aluminium. What criteria will be used to decide on the exemption of combined heat and power projects from the climate change levy?
Mr. Byers: I welcome the right hon. Gentleman's comments, particularly about the benefits that may well come to north-west Wales from the lifting of the stricter gas consents policy. We had to defer a decision on an application in relation to Anglesey because of the policy that was in place. That was not a rejection. The application still lies on the table in the Department. If the promoters wish to come forward, we shall be able to consider it again. I am conscious of the important role that the Anglesey Aluminium plant can play. My right hon. Friend the Chancellor has already said all that he wants to say about the climate change levy as it affects combined heat and power.
Mr. Kevin Barron.: I welcome my right hon. Friend's statement. After all the years of seeing neighbouring coal mines being closed, the coal miners at Maltby colliery in my constituency will be heartened to hear that the Government are standing up for the coal industry. The British coal industry cannot compete against heavily subsidised coal not only from within the European Union but from countries such as Poland. Will coal's share of the electricity supply in the balanced energy policy be met by coal mined in the British coalfield?
Mr. Byers: I understand my hon. Friend's concerns. We have to ensure that our anti-dumping rules are vigorously enforced. We have raised with the Polish
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Government the subject of the amount of coal coming in from Poland, and we hope that action will be taken in the near future.
Mr. A. J. Beith.: Does the Secretary of State believe that Ellington colliery is likely to be saved under the terms of the statement, especially given its tremendous importance to the local economy of Northumberland? If so, does he realise that people will be grateful, and that he has moved from believing that it would be impossible to give such aid under European rules to recognising that we can actively pursue such state aid?
Mr. Byers: The situation has moved on since November 1999, and we have considered carefully the opportunities that are available to us, but any scheme will still need to be approved by the European Commission. We must work with the EC to ensure that any scheme that we propose satisfies the Commission. I am very much aware of the important role that Ellington plays in the local community. My constituency is a little more than 25 miles away, and I am acutely aware that Ellington is the sole deep mine remaining in the north-east of England. Decisions about individual pits will be taken by the owners—in this case, RJB Mining—but, in the light of today's announcement, the company may have something to say about its proposals for both Ellington and Clipstone.
Mrs. Linda Gilroy.: I warmly welcome my right hon. Friend's statement, particularly in respect of the lifting of the stricter gas consents policy. He may know that, in Plymouth, the city council, the chamber of commerce and the regional development agency will be keen for this to pave the way for the go-ahead for the Langage energy park, which is opposed by the hon. Member for South-West Devon (Mr. Streeter). In addition to considering the important environmental aspects, will he take into account the £600 million investment for jobs and the effect of bringing in the only generator west of Hinkley Point, which, through black start-up, will protect industry, attracting jobs and business to the south-west?
Mr. Byers: My hon. Friend is clearly already making strong representations on behalf of the development. We will need to take those into account when we consider the application.
Mr. John Redwood.: Given that every time the Secretary of State signs a consent for a new gas station, he will effectively be signing the redundancy notices of a large number of coal miners, what is his forecast of how much gas capacity he will license over the next year and how many coal miners' jobs will go as a result? Is not the statement a smokescreen to try to delay the P45s for the miners until after the general election, and does it not in practice mean the death of a large number of mines? Will he come clean and tell us?
Mr. Byers: That is a bit rich from someone who was a member of the Cabinet in 1993, when 33 pits were closed. I have announced a balanced approach. We will lift the stricter gas consents policy, so we will provide state aid to the coal industry to overcome the challenges that it will face over the next two years or so. I do not

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agree with the right hon. Gentleman, who seems to think that, because a policy decision is taken, redundancies must follow. That was the case under the Government of which he was a member. Tories made decisions and jobs were lost. That will not happen as a result of our policy, which will ensure that there is a viable future for the coal industry within a competitive energy market.
Mr. Ronnie Campbell.: This is obviously a policy through which new Labour will begin to work in the heartlands, and I hope that that continues. The miners of Ellington colliery, and their families, were delighted to hear the news this morning, as I heard it on the wireless on my way here. There was a whisper of it yesterday, but they were delighted by the confirmation that the Labour Government have decided to save Ellington colliery, because their jobs would have gone at the end of the month. I congratulate my neighbour, my hon. Friend the Member for Wansbeck (Mr. Murphy), who has spent enormous energies on the fight to save Ellington colliery. He is not here today, because he is at the pit, addressing concerns about the future. May I also say that it is good to see a Minister, not civil servants, taking decisions?
Mr. Byers: I look forward to continuing to try to convince my hon. Friend that a new Labour Government can act for all our people. This is a new Labour decision, which will help markets work effectively and lead people through change. I look forward to further debates with my hon. Friend on the subject. On a serious point, this is an important development of our energy policy. It will lift the stricter gas consents policy, which stood in the way of the market working effectively. To overcome the difficulties that might be caused as a result, we are also providing state aid to the coal industry. The combination of the two will ensure that we have employment creation through the lifting of the stricter gas consents policy and can maintain levels of employment in the coal industry.
Sir Teddy Taylor.: As the exciting new Labour Government cannot do anything until Brussels allows them to, can the Minister give us some idea when he is likely to get approval? Bearing it in mind that the opencast industry provides jobs in areas of unemployment and now works to strict environmental rules, will he make it clear that there will be no discrimination against opencast in his new proposals?
Mr. Byers: The scheme will be run on a non-discriminatory basis.
Mr. Ted Rowlands.: Let us pursue that issue. Is my right hon. Friend confident that the European Commission will approve his scheme promptly, given the short-term nature of the coal aid, which will be made available only until 2002?
Mr. Byers: Discussions that we have had already with the European Commission indicate that it has no objection in principle to a scheme starting now and lasting until July 2002. We will obviously have to continue those discussions, and I hope that we will be able to put the scheme in place as soon as possible. In the discussions
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that we have already had, we have been able to assure the coal producers that finance will be available during this financial year, and that is the important element as far as they are concerned.
Mr. Tony Baldry.: Can the Secretary of State confirm that the whole purpose of this announcement today relaxing the gas consents policy is that more gas-fired power stations should come on-stream? Will he return to the question put by my right hon. Friend the Member for Wokingham (Mr. Redwood)? If the Secretary of State intends to lift the gas consents policy, how much more gas-fired capacity does he anticipate authorising during the coming year or two years? The only sector that will lose out from that policy will be the coal sector. Therefore, it is disingenuous to relax gas consents policy at the same time as giving £100 million to the coal industry. The Government are leading the coal industry into believing that it has a secure future, when it has anything but.
Mr. Byers: I made it clear in my statement that the coal industry will need to compete in the new market that we are creating, and that is the reality of the situation. The coal producers are acutely aware of that, and they have said that they would have difficulty competing in the short term without some state aid. That is why we are making those proposals. We will get the balance right and the coal producers have indicated that, with the support that we are able to provide, they will be able to compete effectively against any new gas-fired power stations that come on stream. No restriction will be placed on the number of gas-fired stations, and we will approve those projects that we feel are appropriate for the energy market that we intend to create.
Mr. Michael Clapham.: On behalf of the all-party coalfield communities group, may I welcome the package announced to the House by my right hon. Friend today? It will be good for the industry and for mining communities, but especially good for the mining machinery manufacturing industry. My right hon. Friend spoke about lifting the moratorium on gas-powered power stations, but will he consider allowing the electricity pool reforms to bed in before that happens? Collieries in areas such as Ellington Lynemouth are likely to close in four or five years. Will he ensure that miners in such areas are given further training, so that they have the skills to move on to other industries when the collieries eventually close?
Mr. Byers: The decision to lift the stricter gas consents policy from October was based on the report that I received last Thursday from the Director General of Gas and Electricity Markets, which was very much in line with the proposals in the White Paper. We intend to lift those consents when the new trading arrangements come into force in the autumn of this year.
My hon. Friend points out that employment levels might decrease in five or six years. We do not know for certain that that will happen, but it is clear that proposals for retraining and for economic regeneration must be in place. We will need a period of time in which they can develop, and the Government will be responsive to any proposals in that direction.
Mr. Peter Brooke.: The question from my right hon. Friend the

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Member for Suffolk, Coastal (Mr. Gummer) to the Prime Minister last Wednesday seems to have provoked a remarkably—and admirably—rapid response from the Government. Its underlying theme was the climate change levy: does today's announcement have any implications, besides combined heat and power, for that levy?
Mr. Byers: As I said in response to the right hon. Member for Wokingham (Mr. Redwood), I do not think that my right hon. Friend the Chancellor will make any significant changes to the way in which the climate change levy will be introduced or implemented.
Shona McIsaac.: As the Member of Parliament whose constituency probably has the most gas stations in it—other developments there have been held up by the moratorium—I certainly welcome the fact that the stricter consents policy has been lifted today. That is good news for job creation and industrial growth on the south bank of the Humber. About 7,000 jobs are at stake, and it is good to know that lobbying pays off in the long run.
However, will my right hon. Friend say how quickly consents will be given after the stricter policy is lifted in October?
Mr. Byers: At the moment, 15 consents have been submitted, and deferred. We will have to talk to the promoters of those consents to see whether they wish to maintain them as originally proposed or whether they want to change certain specifics. Over the next few months, we will study the timing of new applications in relation to the lifting of the stricter gas consents policy.
Mr. Michael Fabricant.: The Secretary of State said in answer to an earlier question that there is no objection in principle from the European Commission for the grant that he has announced. Does that mean that there was such an objection to the grant for Longbridge, which was never granted by the European Commission? If there is no objection in principle to today's announcement, when will permission for it be given?
Mr. Byers: Two quite distinct schemes are in operation. Any state aid for the car industry is covered by the vehicle framework, which has separate procedures and is administered by a different Commissioner. The state aid proposed today comes under the European Coal and Steel Community's agreement, and the methods involved are quite different. We will need to work out the details of the scheme with the United Kingdom industry. When that is in place, an application will be made to the European Union. However, we expect funds to be made available during the course of this financial year.
Ms Rosie Winterton.: My right hon. Friend's statement today will be of great help in maintaining continuity in the mining industry. Will he and his colleagues in the Department of the Environment, Transport and the Regions therefore reconsider the closure of the mining inspectorate office in Doncaster?
Mr. Byers: I will certainly draw that issue to the attention of my colleagues in the Department of the Environment, Transport and the Regions, who I think have policy responsibility for that matter.
Miss Anne McIntosh.: The announcement will certainly be good news for the coal
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sector. The Secretary of State has also said that there is greater competition in the electricity market. Can he tell the House why he therefore still perceives a need for the overhead line transmission from Lackenby to Shipton in the Vale of York? What will happen to those coal-fired power stations in the constituencies of his hon. Friends—particularly Selby, Ferrybridge and Drax—when those consents are further applied for south of Shipton? Will he admit that there is no need for those pylons to be built?
Mr. Byers: I know that that issue is of great concern to many people in the hon. Lady's constituency. She has been a doughty campaigner, raising the matter and drawing it to our attention. My understanding is that the matter will be subject to an inquiry to see whether it is an appropriate development. It is probably best that we leave the inspector to conduct that inquiry.
Mr. John Grogan.: Is my right hon. Friend aware that today's most welcome announcement should provide the opportunity for the signing of a new five-year deal for Selby coal between RJB Mining and AES, the new owner of Drax, the largest coal-fired power station in Europe? Does he think that there is every prospect of British coal, which is now a flexible, modern industry, being able to compete in international markets in a couple of years, particularly with the price of coal rising in those markets?
Mr. Byers: My hon. Friend has been a strong campaigner on behalf of the Selby coalfield. I am pleased that he believes that today's news will be of real benefit to Selby. He is right to point out that RJB is near to concluding an agreement with AES to provide coal to the Drax power station. I hope that that can be concluded in the near future, because, as he says, that will bring some long-term security to the Selby complex.
Mr. Andrew Robathan.: In the interests of efficient energy generation and usage, I generally welcome the encouragement given to combined heat and power schemes. However, why will the Government not similarly encourage other renewables, or renewables in micro-CHP, by adopting net metering? Why have they specifically ruled this out in the Utilities Bill? Does the Minister understand that that would encourage the development of many renewable energy schemes?
Mr. Byers: As the hon. Gentleman will know, the Government are neutral with regard to net metering. However, we think that the 10 per cent. renewables target is the best way of encouraging people to use renewables in energy production.
Mr. Jon Trickett.: May I assure my right hon. Friend that many of my constituents will contrast favourably his actions with the brutal actions of the previous Government when they closed the pits and rigged the energy market against coal? May I also urge him, when he has the time, to look at another part of the Tory legacy? The interconnector seems to be a one-way device, by which continental electricity is pumped into this country, but we seem unable to send back electricity generated here.
Mr. Byers: My hon. Friend makes an important point. Under the Conservative Government, more than 40 pits

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were closed in the five years between 1992 and 1997. That is the Conservative legacy. They rigged the energy market against coal. That is the situation that we inherited. It is why we introduced a stricter gas consents policy—to ensure that we began to have a market that was working effectively—and why we are able, this autumn, to lift that stricter gas consents policy.
My hon. Friend raises an important point about the way in which the interconnector operates. I know that there are concerns, among many of my right hon. and hon. Friends and Members of other parties, about that. We will do what we can to make sure that the interconnector works in a way that is favourable to the British coal industry.
Mr. John Bercow.: Given that the Secretary of State has supposedly been pressing for the liberalisation of the European electricity market, can we take it as evidence of his poor power of persuasion that the French have now committed themselves to a liberalisation of only 26 per cent. and that, thus far, Belgium, Ireland and Greece have committed themselves to precisely nothing?
Mr. Byers: The improvements that we are beginning to see are far greater than those that we saw under the Conservative Government. I welcome the fact that the French Government are taking through their National Assembly the legislation that will open up the market for energy in France. We need to continue to ensure that the other markets are opened up. The real challenge in the context of Europe is to make a reality of the single market. That will benefit businesses in the United Kingdom and throughout Europe.
Mr. Andrew Miller.: I remind my right hon. Friend that, within five miles of Ellesmere Port, 11 gas-fired power stations are in operation or are going through the application process. I think that eight are awaiting consent. Will he ensure that he does not grant consent on a first-come, first-served basis, but that he considers the strategic needs of industry in the area so that the approaches are co-ordinated?
Mr. Byers: My hon. Friend raises an important and practical point; we shall need to take a close look at how we deal with the large number of applications that were deferred pending the lifting of the stricter gas consents policy. I have no doubt that many more applications will
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be made over the next few months because we have indicated that the policy is to change. My hon. Friend makes the important point that we need a strategic over-view of how we can develop gas-fired power stations in the light of the new market that we want to create.
Mr. Owen Paterson.: Before committing himself to a large sum of taxpayers' money, will the Secretary of State say what is his best estimate of the number of pits that will be viable once the scheme has ended and mines have to work in open competition with new gas-fired stations?
Mr. Byers: Ultimately, that will obviously be a matter for the owners to decide; it is not for the Government to determine. However, with targeted support, we can ensure that we provide the coal industry with the opportunity to meet those challenges. I regret that the hon. Gentleman would clearly not want to make such a subsidy available. However, that is wholly compatible with the policy adopted by Conservative Governments over the years.
Mr. Bob Blizzard.: As chairman of the offshore oil and gas industry all-party group, I wholeheartedly welcome the lifting of the stricter consents policy on gas-fired power stations. There are thousands of jobs in the offshore industry, with 10 times more onshore. Such jobs are often concentrated in coastal towns, such as Lowestoft, which I represent, where there is high unemployment. Today's announcement is a hugely positive signal for the industry, as well as good news for the environment.
Has my right hon. Friend received any indication from the offshore operators as to the possible additional investment in gas-field development that might arise from the announcement? Will he try to obtain commitments on such expanded future investment from those operators?
Mr. Byers: I congratulate my hon. Friend, who has been a strong campaigner on behalf of the offshore industry. I am delighted to hear of his support for today's announcement. I have no doubt that the offshore industry will benefit as a result of the proposals that we have made—as indeed will those fabrication yards throughout the country that will have greater opportunities as a result of the lifting of the stricter gas consents policy. I am unaware of any specific proposals from the offshore contractors, but there is no doubt that the announcement will make a real difference to them.

Orders of the Day

  Finance Bill
  [Relevant documents: The Fifth Report from the Treasury Committee, Session 1999–2000, on The 2000 Budget, HC 379.]
  Order for Second Reading read.
  Madam Speaker: I have selected the amendment in the name of the Leader of the Opposition.
  4.28 pm
  The Chief Secretary to the Treasury (Mr. Andrew Smith): I beg to move, That the Bill be now read a Second time.
  This Finance Bill continues to deliver on Labour's promises, enacting Budget decisions to deliver opportunity and security for the hard-working families of Britain. Through measures for enterprise and fairness, it takes further action to achieve our long-term goals—including new measures to encourage work, to improve productivity and to protect the environment. We are working hard for a stronger and fairer Britain, releasing substantial new resources for health and education, and for tackling child poverty, supporting pensioners, improving transport and tackling crime.
  That is possible only because we are delivering a platform of stability and steady growth, leaving behind the boom and bust of the past. Inflation is now—
  Sir Peter Tapsell.: Will the right hon. Gentleman give way?
  Mr. Smith: I give way to the hon. Gentleman on boom and bust.
  Sir Peter Tapsell: On stability, does the right hon. Gentleman recall that, when he was winding up the Budget debate, I put to him the fact that the greatly increased public expenditure under the Finance Bill would result in higher interest rates being imposed on us by the Bank of England, and that he denied that the Budget was expansionary? Indeed, he claimed, in effect, that it was a "contractionary" Budget. Has he noted that, since then, almost every economist has disagreed with him—including the International Monetary Fund?
  Mr. Smith: As I pointed out to the hon. Gentleman when I was winding up the Budget debate, the Budget locks in the fiscal tightening since last year to the tune of 0.3 per cent. of GDP and then 0.2 per cent. of GDP. Moreover, I point out, as I did when I responded to the hon. Gentleman in the Budget debate, that we are looking at a current surplus of £17 billion, followed by £14 billion, followed by £16 billion, followed by £13 billion, followed by £8 billion. That Budget and that fiscal position are prudent. They lock in the tightening—by, I think, some 5 per cent. of GDP since before the general election—which the Government have achieved on the basis of following our sound and prudent rules for fiscal policy,
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  the sensible arrangements that we have set up for monetary policy, and our firm grip on public spending. Therefore, I do not accept that—
  Mr. Robert Sheldon.rose—
  Mr. Quentin Davies.rose—
  Mr. Smith: I give way to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon).
  Mr. Sheldon: I did of course agree with my right hon. Friend generally on the Budget judgment that he made, but of course the Red Book omitted the amount paid for telephone licences, which I had estimated would be between £7 billion and £10 billion, but which is likely to be nearer £20 billion. That is obviously a very large increase in the revenue. Not all of it will come in this financial year, but it should have some impact on the expenditure or even, possibly, the revenue side. Will my right hon. Friend give us some idea of his thinking on these matters?
  Mr. Smith: The prudent thing to do with such a large income is to use it to reduce debt, and that is what we plan to do with it.
  I was saying that inflation is now low and stable.
  Mr. Davies: Will the Chief Secretary give way?
  Mr. Smith: I will give way to the hon. Gentleman when I have made a little more progress.
  There are 800,000 more people in work than at the general election and, as I have said, the public finances are under control. It is worth reminding the House that we inherited from the Conservative party a public sector borrowing requirement of some £28 billion, and yet now, with our fiscal framework in place, we have the stream of current surpluses that I was just drawing to the attention of the hon. Member for Louth and Horncastle (Sir P. Tapsell).
  Moreover, we inherited national debt that had doubled, and a debt to GDP ratio of 44 per cent. With our commitment to prudence, we have cut that ratio to 37 per cent. this year, and the Red Book shows it decreasing to 33 per cent. in the years ahead, cutting the millstone of debt that the Conservative party strung around the necks of the British people and saving £4 billion a year in debt interest.
  Mr. Davies: Will the Chief Secretary give way?
  Mr. Smith: In a few moments.
  The Bill maintains our commitment to sustainability and prudence, locking in the fiscal tightening to an even greater extent than projected in last year's Budget, ensuring that we remain on track to meet the fiscal rules and to deliver steady growth. This, as we have said, is prudence for a purpose. Through the Budget and the Bill, we are not only locking in fiscal tightening but releasing substantial new resources for our key public service priorities.
  Mr. Davies: The Chief Secretary keeps on saying—rather irrelevantly and, I am tempted to say,

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  rather disingenuously—that the present Budget locks in last year's Budget's fiscal tightening. Does he agree that it represents a discretionary fiscal loosening from this year forward to 2003–04?
  Mr. Smith: I have already cited to the House the extent to which this is fiscal tightening—the 0.3 per cent. of GDP followed by the 0.2 per cent. of GDP. The hon. Member for Louth and Horncastle referred to what various commentators have said about the Budget. It is important to point out that the Monetary Policy Committee has twice had the opportunity to examine the assumptions and forecasts surrounding the Budget—Mervyn King himself has commented on this. Having examined them, the committee saw no reason to change its policy or to change interest rates. That is a matter for members of the committee, but I believe that the House will want to take that judgment very seriously.
  Mr. Edward Davey.: On fiscal loosening, will the Chief Secretary confirm that the fiscal position has been tightened only in relation to what it was planned to be in the pre-Budget report of November 1999, but that it has been loosened with respect to fiscal policy as it was on 20 March 2000?
  Mr. Smith: I have already cited several figures on that point. If the hon. Gentleman is looking further ahead, I commend to him—I do not often do this—the words of Professor Patrick Minford. When he unwrapped the assumptions around the Budget, he described it as unprecedented fiscal tightening. The hon. Gentleman might like to consider that point.
  As a consequence of the stability and prudence and the sound public finances that we have put in place, working families are able to see the benefit. Thanks to sound economic management, we can cut taxes for working families—not only introducing the working families tax credit and the new 10p rate but, in clause 31, cutting the basic rate of income tax to 22p, its lowest level for nearly 70 years. By April next year, personal tax and benefit changes in this and previous Budgets will mean that households will on average be £460 a year better off and that families with children will on average be £850 a year better off. The tax burden on a single-earner family on average earnings with two children will be at its lowest since 1972.
  Coupled with low inflation and economic growth, that adds up to substantial increase in living standards which is what really matters to people. For a single-earner family on average earnings with two children, living standards will rise by more than 10 per cent. over this Parliament. For a single-earner family on half average earnings, living standards will rise by 30 per cent. this year—the biggest annual rise for more than 25 years. A single-earner family on half average earnings will be £2,600 a year better off over the Parliament.
  Our measures will also help achieve our goal that every child should have the best possible start in life. As the Prime Minister has said, child poverty is a scar on the soul of Britain. That is why we set out in the Budget our ambition to halve child poverty by 2010 and end it altogether by 2020.
  Mr. John Bercow.: In the light of what the Chief Secretary has just said about the working
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  families tax credit, will he tell me why Nicole Wanford, a low-earning, single parent constituent in Buckingham who has a salary of little more than £10,000 a year after tax, should pay an effective tax rate of 78 per cent. on a modest £600 bonus that her employer paid her? Does the right hon. Gentleman understand that her view of the Government's operation of the policy would not constitute parliamentary language?
  Mr. Smith: When Members raise individual cases in the House, the best thing that I can do is undertake to examine the circumstances of those cases. However, such a marginal rate of reduction should not arise from the working families tax credit. Indeed, one of the things that it and our other reforms do is reduce marginal rates of reduction, because our policy is all about helping and encouraging people to move from welfare to work. That is what it has done very successfully.
  I referred to the issue of tackling child poverty and was about to point out that 1.2 million of Britain's children will be out of poverty as a consequence of measures already introduced in this Parliament and in the Budget. By April next year, personal tax and benefit changes alone in this and previous Budgets will mean that a single-earner family on average earnings with two children will be £370 a year better off. A family on half average earnings will be £2,600 a year better off and, for that matter, the poorest two-child family on income support will be £1,500 a year better off. What is more, the Bill will take further steps to increase support for children. An additional 50p a week will be added to the children's tax credit when it is introduced in April next year, so that it will be worth up to £442 a year—more than twice the value of the married couples allowance that it replaces. We are introducing a £4.35 a week increase in the child credit in the working families tax credit from June this year, and the same increase in child allowances in income support from October.
  Mr. Michael Jack.: On the working families tax credit and while the Chief Secretary is in generous reviewing mode, will he take a look at the case of lone parents who work in, for example, the field of nursing care for what he and I would regard as unsocial hours? The child care arrangements available at those unsocial hours do not currently qualify for assistance under the working families tax credit. Will he examine the case of that small but important group and see whether some assistance can be provided?
  Mr. Smith: I shall certainly examine that case. I should point out that, through our national child care strategy, a huge expansion in child care provision is under way, stimulated not least by the provisions of the working families tax credit. However, as I said, I undertake to look at the point the right hon. Gentleman raises.
  The improvements I have described and their impact on tackling child poverty and helping working families will be reinforced by further improvements to public services that will be made, thanks to our commitment to average real growth in health spending of more than 6 per cent. a year over the next four years—the longest period of sustained high growth in expenditure in the history of the national health service. The immediate boost of £2 billion for health this year is in part funded by the real increase in tobacco duties set out in clauses 12 to 15.

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  The Conservatives' decision not to vote for the tobacco tax provides further confirmation that their sums do not add up and that they could not deliver on Labour's pledges on health and education.
  Our additional boost of £1 billion for education this year is accompanied by the introduction in clause 57 of a new training relief for employees. It will make employers' contributions to education or training undertaken by holders of individual learning accounts exempt from tax and national insurance where they qualify for grant or discount and are available to all employees on similar terms.
  Businesses and jobs will benefit from our commitment to enterprise. We have already cut main and small business rates of corporation tax to their lowest-ever levels—the lowest of any major industrialised country. The Bill contains several measures designed further to promote enterprise and help business. Those include the cuts in capital gains tax in clause 37; the research and development tax credits in clauses 67 and 68; the permanent 40 per cent. capital allowances for small and medium-sized enterprises in clause 69, which will help manufacturing businesses in particular; the new all-employee share ownership plan in clause 47; the enterprise management incentives in clause 61, which will help high-risk companies recruit key personnel; and the corporate venturing provisions in clause 62.
  Those measures have been widely welcomed by business. Together with the introduction in the Budget of three-year, 100 per cent. capital allowances for investment in information and communications technology equipment and an extra £100 million for the new £1 billion target umbrella fund for regional enterprise growth, they comprise a huge commitment to business success on the part of a Government who believe that enterprise must go hand in hand with fairness.
  Mr. Andrew Tyrie.: The Chief Secretary makes great play of the tax breaks that have been given to business, but will he tell us what the overall burden on business of the changes in business taxation since 1997 has been?
  Mr. Smith: We have been helping businesses to invest, expand and create an enterprise culture in this country. Let me quote the Institute of Directors news release commenting on the Budget. It states:
  The Institute of Directors welcomes the pro-enterprise flavour of the Budget, coinciding with the Institute's own recommendations. The cut in capital gains tax on business assets, plus the moves to encourage wider employee shareholding, will be a welcome boost to enterprise. We are delighted to see businesses being encouraged to seize the opportunities offered by e-commerce, where moving quickly will have a big effect on our international competitiveness.
  Mr. Dafydd Wigley.: The right hon. Gentleman was referring to the regional dimension of creating new businesses. He will be aware that in the areas that are lucky enough to be getting objective 1 status—Cornwall, South Yorkshire, Merseyside and a good part of Wales—there is concern about the adequacy of finance during this financial year, whatever happens in the comprehensive spending review, to enable advantage to be taken of the opportunity to create development funds of the sort that have already been created on Merseyside. Is he able to give an assurance that if it is found in the
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  areas to which I have referred—I am obviously concerned about Wales—that there is a need for more than the £25 million in our budget under the Barnett formula for meeting the European and match funding aspects of objective 1, he will be able to go to the contingency reserve, given that he has a good reserve, and help us out if need be?
  Mr. Smith: As the Government have said on a number of occasions, we fully appreciate the importance of objective 1 status for west Wales and the valleys and the regions within England, which are benefiting from it. The Administration in Wales have stated that the money this year is adequate to get the programme started. I have said many times that the future is properly a matter for the spending review. Anyone who has tangled with these issues will realise that they are of some complexity.
  It is a mark of our recognition of the importance of objective 1 status for west Wales, the valleys and Wales as a whole that it is being dealt with in the spending review. Full consideration will be given to how the funds and the public expenditure cover can be provided to ensure that the programme goes ahead. We realise its importance for the regeneration of parts of Wales and for regions in England as well.
  Sir Brian Mawhinney.: Bearing in mind the Bill's positive aspects for business, will the right hon. Gentleman tell us whether the tax burden on business has increased or decreased since the 1997 general election?
  Mr. Smith: I have recently pointed to a string of ways in which tax on business is falling. Moreover, there are measures in the Budget that will encourage business to invest further by extending reliefs, which have been widely welcomed throughout industry, by its representative organisations and by individual firms. We shall take no lectures on business from Opposition Members, who presided over the two deepest recessions since world war two, which resulted in the decimation of business, with hundreds of thousands of firms going bust and 1 million jobs lost, in manufacturing industry. That must be contrasted with the stability, sound finances and prospects of business growth that we now have.
  I must make progress on the Bill itself. The new optional ring-fenced regime in clause 81 is another measure that will help business.
  Mr. Geraint Davies.: Would my right hon. Friend be interested to know that when tax and borrowing are put together as a share of gross domestic product—in other words, what the Government are spending on behalf of the public—they were 38.2 per cent. in 1996–97, and are due to decrease to 36.4 per cent. in 2000–01? That is a difference of about £17 billion, or an extra 7p on income tax. As Baroness Thatcher has pointed out, at the end of the day all business tax is paid by individuals. Does my right hon. Friend agree that the burden of tax on business and everybody else is decreasing under the Government?
  Mr. Smith: I thank my hon. Friend for his helpful intervention. He always makes interesting observations on our proceedings. I welcome them, even when they involve quoting the baroness.

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  I was referring to clause 81, which will introduce the so-called tonnage tax regime, whereby shipping companies can opt to work out taxable profits on the basis of the tonnage of ships operated. This innovation, which I know a number of my hon. Friends and Opposition Members have called for, and which follows Lord Alexander's inquiry, is part of the Government's commitment to encourage the British shipbuilding industry and will, I am sure, be welcomed.
  The Bill modernises the tax treatment of corporate groups and international operations. Clause 96 extends group relief to UK branches of non-resident companies. Clause 100 enables groups to bring together chargeable gains and allowable losses on asset disposals, without having to go through the rigmarole of transferring asset ownership within the group. Clause 103 improves the fairness and the effectiveness of anti-avoidance rules for controlled foreign companies.
  I shall say a word about the Budget provisions in clause 102, which limit the use of so-called mixer companies to shelter low-taxed foreign profits from UK tax. It is important to understand that under the old rules, the UK taxpayer is currently underwriting the cost to business of investing in countries that have not reduced their tax to the UK level. In that sense, our changes promote international tax competition. Perhaps even more important, they level the playing field among groups that invest directly from the UK and those that adopt mixing structures.
  Taken together, our measures align tax treatment with economic rationality, tackle avoidance, and help sustain the United Kingdom as a competitive base for international operations.
  Mr. Oliver Letwin.: Is that why the Inland Revenue consulted for a long period on enshrining the previous regime?
  Mr. Smith: There has been extensive consultation about the regime from which these changes result. The changes have been widely welcomed—there has been criticism but there has also been a substantial welcome—and they make the United Kingdom a more attractive base for international and multinational operations.
  Mr. Owen Paterson.: Can the right hon. Gentleman name three groups that have welcomed the measure?
  Mr. Vernon Coaker.: Labour Back Benchers, for one.
  Mr. Smith: Labour Back Benchers certainly welcome the measure. I was at a post-Budget breakfast where an array of luminaries commented on the Budget. The measures which, for example, avoid the need to transfer assets before pooling chargeable gains and losses were welcomed. I shall be happy to send the hon. Gentleman details.
  Mr. Jack: If the measure is supposed to increase the competitiveness of UK companies in terms of their overseas investments, can he explain why I have received
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  no representation from any UK overseas investor pointing out that his tax bill will be lower by virtue of the Government's proposals?
  Mr. Smith: The package of measures does make the UK more competitive. If people write to the right hon. Gentleman, they are far more likely to do so when they have something to complain about than when they have something to praise in the Budget.
  Mr. Nick St. Aubyn.rose—
  Mr. Smith: I have given way sufficiently.
  The Bill will also help us meet our international commitments to the environment. Following last year's Budget, the Bill is an important part of the largest-ever package of environmental tax measures to be introduced in the United Kingdom. Clause 30 introduces the climate change levy. Clauses 20 to 23 reform vehicle excise duty for cars. Clause 58 fundamentally reforms company car taxation, providing an incentive for low CO2 emissions and removing the perverse incentive for drivers to clock up business mileage simply to reach more generous thresholds.
  Clauses 136 and 137 increase the landfill tax rate and clarify liability. Moreover, the changes to the affordable warmth programme in clause 78 and the reduced rate of VAT on the installation of energy saving materials and on the grant-funded installation of heating systems for which clause 131 provides will help ensure that pensioners feel the benefit of warmer homes and cheaper fuel bills as well as that of the £150 winter allowance. The programme takes forward the Government's commitment to combating fuel poverty by supporting the installation of energy efficient central heating systems and insulation. It will benefit up to 1 million low-income homes.
  The affordable warmth programme will be funded through a public-private partnership with commercial lessors. Capital allowances will reduce the cost of leasing and allow the scheme to reach many more households than would otherwise be possible. Those provisions, taken with the Budget announcements of an incentive for ultra low sulphur petrol, the aggregates levy and the consultation on stamp duty relief for brownfield developments, make this a Finance Bill for the environment as well as for working families and enterprise.
  The Bill also backs charitable giving. Clauses 38 to 46 implement our radical package of measures to boost donations to charities and improve the operation of the tax system for charities. The Bill abolishes the minimum limit on tax relief for donations, boosts payroll giving through the three-year, 10 per cent. Government supplement and abolishes the maximum limit on donations.
  Clause 40 cuts red tape on corporate donations. The Bill also introduces new income tax reliefs on gifts of shares and securities, frees charities from the need to set up subsidiaries for small trading and fundraising ventures, and broadens the VAT zero rate for the sale or hire of donated goods. It is a good package, which is widely welcomed by charities. Simon Hebditch of the Charities Aid Foundation described the provisions as radical. He estimated that they would mean £350 million extra a year in tax relief.

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  Together with our on-going consultation on the establishment of a network of children's funds, our measures on charities show how Britain can make the most of one of our greatest strengths: the readiness of our people to give so much of their time and money through voluntary and community activity for the benefit of all.
  The Bill promotes enterprise and fairness. It looks to the future while the Conservative party remains locked in the past. It shows the Government keeping their promises, whereas the Conservative Government broke theirs. Labour stands for the many as we provide sound public finances, low inflation, higher living standards, help for working families and pensioners and employment opportunities for all. By contrast, today's increasingly extreme Conservative party makes reckless tax pledges for the few. Those policies would deny health and education investment for the many, and return Britain to the bad old days of boom and bust.
  The Bill means more enterprise, opportunity and fairness in a Britain that is better off with Labour. I commend it to the House.
  4.59 pm
  Mr. David Heathcoat-Amory.: I beg to move, To leave out from 'That' to the end of the Question, and to add instead thereof:
  'this House declines to give a Second Reading to the Finance Bill because its 558 pages impose more complex regulations, introduce further taxes and fail to reverse the increasing burdens of taxation on families, on homeowners, on motorists, on consumers, on savers and on businesses.'
  The Chief Secretary to the Treasury omitted to mention one of the records that the Bill breaks: it is the longest Finance Bill that the House has had to consider. It runs to 558 pages in two volumes. It will cost any member of the public £27.40.
  Mr. Barry Gardiner.: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: Not yet. The Bill begins encouragingly by stating that it conforms to the European convention on human rights.
  Mr. Andrew Smith: For the record, the right hon. Gentleman should accept that the Bill is 54 clauses shorter than that which the Conservatives introduced in 1996.
  Mr. Heathcoat-Amory: That is a wholly bogus way in which to measure the length of the Bill because volume II and half of volume I are made up of schedules. It is not difficult to cut the number of clauses if the number of schedules is increased. This is easily the longest Bill so it is not surprising that the Institute of Chartered Accountants spokesman said:
  This is out of all proportion to anything we have seen before…I do not know how ordinary people have a hope of understanding their tax affairs. Even accountants are struggling.
  There is a democratic point: the public and taxpayers should at least understand the taxes that they are asked to pay, even if they do not approve of them. Apart from that, the Bill's sheer baffling complexity and length is bad for business because an arbitrary, illogical and complex tax and benefits system creates a national overhead of unavoidable costs that all businesses and taxpayers have to bear.
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  Instead of boasting about the temporary Budget surplus, which has largely been achieved through three tax-raising Budgets, the Chief Secretary should attend much more closely to the economy's long-term productive capacity, on which we shall have to rely to pay for our public services long after the Budget surplus has disappeared. That productive potential is being eroded and undermined by the Bill, which is particularly damaging when combined with the ever higher tax burden being levied on taxpayers and businesses of all sorts.
  The Chief Secretary was coy when my right hon. Friend the Member for North-West Cambridgeshire (Sir B. Mawhinney) asked a straight question about the additional burden on business. The Confederation of British Industry Budget briefing refers to
  the increase in the business tax burden which we have estimated at over £20 billion over the five years of this parliament.
  It would be helpful if the Chief Secretary could confirm that that figure is correct.
  The argument about whether the Government have broken their pre-election promises not to increase the tax burden has, in essence, been settled. Before the Budget, the Prime Minister's personal press officer, Mr. Campbell, let the cat out of the bag, or reaffirmed what the rest of the country knew: the tax burden has increased sharply since the election and, at the end of this Parliament, will be substantially higher than at the start.
  Mr. Geraint Davies: Following my intervention on my right hon. Friend the Chief Secretary about the combination of borrowing and tax, does the right hon. Gentleman accept that the global level of borrowing and tax has decreased? Will he support the right hon. Member for Haltemprice and Howden (Mr. Davis), the Chairman of the Public Accounts Committee, who has called for the Tories to introduce a borrowing guarantee, which would reveal the high borrowing and tax levels that the right hon. Gentleman oversaw?
  Mr. Heathcoat-Amory: The hon. Gentleman has it all wrong again. I refer him to the Government's own Budget document, which clearly states on page 200 that the tax burden has risen, continues to rise and will be higher at the end of this Parliament. If he does not believe the Government's literature, no wonder he is in denial on the tax burden. The arithmetic is absolutely clear, but the Government have invented a new trick: a hypothetical average family that pays no indirect tax at all, spends no money and does not drive, smoke, drink, insure anything or move house. That family, supposedly, now has a lower tax burden. Perhaps he was referring to that.
  Kali Mountford.: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: I will finish the point first.
  The worst of it is that the Government have put their claim about a lower tax burden on this "typical family" in a propagandist leaflet, printed and distributed at public expense, which gives an entirely misleading and one-sided view of the Budget. I am glad to say that the Select Committee on the Treasury—whose distinguished Chairman is present—has pointed out that that is in itself a misleading way of portraying what is happening in regard to taxation. The Committee rightly suggests that if

  723
  the Government repeat that bit of propaganda at state expense, it should be independently audited by an outside body.
  Mr. Jack: Will my right hon. Friend give way?
  Mr. Heathcoat-Amory: I will give way first to the hon. Member for Colne Valley (Kali Mountford), as I promised.
  Kali Mountford: I hoped that the right hon. Gentleman would further develop his theme of productivity, which I thought made an interesting beginning to his speech. I agree with him that productivity is the best way forward. Does he agree with me that the families to whom he refers benefit most when they work, and does he not welcome the injection of 800,000 new jobs into the economy on which our success should be based?
  Mr. Heathcoat-Amory: I shall return explicitly to that point. I shall also return to the way in which the Government are eroding the competitiveness that they inherited from their predecessor.
  Mr. Jack: Before my right hon. Friend leaves the subject of disclosure, may I ask whether he has ever got to the bottom of the facts that lie behind the unwillingness of the present Treasury team to answer a question first tabled in 1981 by the now right hon. Member for Blackburn (Mr. Straw)? Each year, the right hon. Gentleman sought to put on record the full effect of the Government's tax proposals, both indirect and direct. Has my right hon. Friend ever been given a reason for the fact that that information is not now made available to us?
  Mr. Heathcoat-Amory: It would be highly embarrassing. That is not a very good reason, but it is the real reason. As my right hon. Friend may know, the Treasury Committee drew attention to the deficiency and called for the Government to make the calculation again, as we always did—my right hon. Friend was part of our Treasury team—so that the public could know exactly what was happening to the tax burden on families of all sorts.
  Mr. Bercow: Is it not significant that the Bill will do nothing to change the fact that taxes are rising but, at one and the same time, class sizes are bigger, waiting lists are longer, police numbers are smaller, the plight of agriculture is more and not less severe, and the transport system is more and not less congested? Is that not proof positive that under the present Government we get rotten services at rip-off prices?
  Mr. Heathcoat-Amory: My hon. Friend is absolutely right: we pay more taxes, and services are getting worse. What is happening to all the money is a complete mystery. It must be going into some black hole in the Treasury.
  Mr. Christopher Leslie: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: I will give way once more, but then I must move on.
  Mr. Leslie: Why did the right hon. Gentleman say on Sky News on 22 March that the increases in health spending were "unwise and irresponsible"?
  Mr. Heathcoat-Amory: The hon. Gentleman is entirely wrong. I did not say that the increases were unwise in any way; I said that the mechanism for taking the increase in public expenditure outside the comprehensive spending review mechanism was unwise.
  It was the Chancellor himself who said, in last year's Budget statement, that in no circumstances would he unravel a three-year expenditure commitment until the end of that three year period. So why—I think I know the answer to this question; I think the reasons are entirely political—have the Government, in the middle of that period, lurched into an uncomprehensive spending review, doling out a bit of money here and a bit of money there before the spending review period ends in July this year? That is the question that I asked on the television programme, and I was right to ask it.
  What we already see in the Bill is a picture of not just higher taxes but more taxes, and more complicated taxes. The best illustration is the new energy tax—the so-called climate change levy to which the Chief Secretary referred. As the more alert Government Back Benchers will know by now, the tax does a great deal of damage to manufacturing industries, especially those that are exposed to international competition. It is also completely unnecessary. The reductions in carbon dioxide emissions could be achieved at a fraction of the cost by many other means. Earlier this afternoon, we heard that the moratorium on gas-fired generation is to be removed. If that is the case, that will be a better, more efficient and cheaper way in which to achieve the reduction in greenhouse gas emissions.
  It is an unnecessary tax in another sense. Only certain industries will be able to negotiate rebates; that privilege will be given only to certain sectors of British industry. What should concern the House is that the rebates will be agreed not by the House, or even by Ministers, but by civil servants, so we are, in effect, asked to delegate to civil servants the right to tax.
  Dr. Nick Palmer.: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: Will the hon. Gentleman forgive me? I shall make a little more progress.
  The main point about the energy tax is its sheer complexity. I declare an interest. I am a company director and will be affected by that part of the Bill, but I am in good company. Every other business in the country, of whatever size, will have to pay the tax.
  Schedule 6, which brings in the energy tax, runs to 83 pages, so every business in the country, from ICI to the corner shop, must somehow make sense of a schedule running to that length. It is not just the length of it, but the language. Almost at random, I picked out the following provision. I have mentioned electricity rebates. They are to be calculated by treatment of supply
  as a reduced-rate supply to the extent (if any) that the exempt renewable supplies made by the supplier in the averaging period would have been reduced-rate supplies if they had not been made on the basis that they were exempt.

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  I defy anyone to make sense of such a provision. It is pure gobbledegook, but everyone will have to understand it. Everyone will have to calculate that ludicrous and unnecessary levy, and that example was pulled out at random.
  The tax is complicated, unnecessary and damaging. There are many other examples.
  Mr. Andrew Smith: Is the Conservative party prepared to repeal it, then?
  Mr. Heathcoat-Amory: We are absolutely committed to meeting the Kyoto target for carbon dioxide and greenhouse gas emissions. We will not support a tax that does it in an entirely unnecessary and damaging way. We will fight the tax to the Report stage, when it comes back to the House and beyond that. We are adamantly and completely against unnecessary and complex taxation on that scale.
  Mr. Geraint Davies: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: No. I will not give way again.
  What we get from the Government is all the waffle about working with business—all the talk of partnership. Partnership is the word of the moment, but their idea of partnership is similar to that of the black widow spider. Zoologists in the House will know that it gets what it wants and then the partner is dead—like the British motor industry, as it is discovering to its cost. I shall not discuss the goings-on at the Department of Trade and Industry—they are almost beyond parody—the farcical attempts at a competition policy, the substantial withdrawal of the Utilities Bill, or the goings-on over Rover, but the point is that the Treasury has adopted the same attitude towards business.
  As the House will remember, last year, the Treasury smuggled out a proposed change to the self-employed status of those working in so-called service companies: IR35. Instead of announcing it on Budget day, or in the Budget speech, the change appeared in the 35th press release: that is why it is called IR35. It is highly and hugely damaging to the British high-tech labour market.
  It is therefore not surprising that the British Chambers of Commerce has added the cost of IR35 to its burden barometer. It calculates—it gets its figures from the Government' s regulatory impact assessments—that the cumulative regulatory burden on British industry over this Parliament totals just over £10 billion. That is a terrifying indictment of the Government's attitude towards industry.
  Dr. Palmer: In view of the right hon. Gentleman's strictures on IR35, will he explain why the Conservative party did not divide the House when the matter came up at the end of the Budget debate? Will he give a commitment that a Conservative Government would repeal it?
  Mr. Heathcoat-Amory: Perhaps we took the Government at their word when they said that they were reviewing and consulting on IR35. In retrospect, we were wrong to do so. Not only have the employees concerned been let down; we have been betrayed by Government
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  assurances that they wish to work with businesses. Yes, we shall be opposing the clauses that seek to implement IR35.
  Kali Mountford: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: If the hon. Lady will forgive me, having given way to her already, I should like to make some progress.
  Following IR35 last year, the Government are in this Finance Bill attacking controlled foreign companies and double-taxation relief, to which the Chief Secretary referred. The trouble is that, although that was cooked up in the Treasury, people in the accountancy profession know a great deal more about the matter and have shown that the cost to British industry will not be the £300 million in the Budget document but many billions of pounds.
  As Governments all over the world are discovering, if a tax jurisdiction is run to the detriment of internationally mobile businesses, such businesses simply disappear. Perhaps that is how the Government square their arithmetic. Perhaps the small additional revenue is because the companies concerned will leave the country and not pay tax at all. Is that what the Government really understand by a partnership with British industry? I want confirmation from the Government this afternoon: will they proceed with such damaging proposals or will they withdraw them? We need an answer because the very uncertainty is damaging.
  There is an important wider issue. The Government inherited from us three years ago a world-class economy. People came here to do business; we were a magnet to global business. That is not a permanent state of grace; it has to be worked at and kept in repair. The Government simply do not understand that one cannot run a taxation policy without regard to such wider global dimensions. The Government's little Englander approach on tax is unsustainable. I shall give the House another example.
  Let us consider excise duties. The Government's endless increase in hydrocarbon fuel, alcohol and tobacco duties has at last, in one sense, been stopped. They have at last ended the fuel escalator of 6 per cent. in real terms, but the damage has already been done. Those of us on the Opposition Benches cannot be the only ones who receive letters from haulage firms that have been made uncompetitive—at least in European terms.
  More than that, we are losing revenue. Instead of filling up in this country, vehicles do so in Calais. Not only are the Government undermining the British haulage industry, they are losing revenue. They have cheated on that, too. The Chancellor said in his Budget speech that he was going to increase road fuel duty only in line with inflation. He did not, however, say that he had changed the definition. Rather than increasing the duty in line with actual inflation, he is now predicting an inflation rate of 3.4 per cent. When we were in office, we always used an actual inflation rate. Now, the Government are using a predicted inflation rate, of 3.4 per cent. This year, that change will net the Treasury an extra £500 million.

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  Therefore, even when the Government come off the fuel escalator, as we have been demanding, they cannot resist pocketing an extra £500 million.
  Sir Brian Mawhinney: I have noticed that the Chancellor has been using that 3.4 per cent. inflation rate. However, I thought that the Government's policy was never to allow inflation to exceed 2.5 per cent.
  Mr. Heathcoat-Amory: Exactly; I think that we are owed an explanation. The Chancellor said in his Budget speech that the duty will increase in line with inflation. He has an inflation target of 2.5 per cent. Why is the duty increasing by 3.4 per cent? My right hon. Friend has asked a good question, to which we need an answer.
  Mr. Gardiner: Will the right hon. Gentleman give way?
  Mr. Heathcoat-Amory: I shall give way one more time.
  Mr. Gardiner: Does the right hon. Gentleman not know—if he does know, will he not accept—that different sectors of the economy have different inflation rates? Specifically, when he talks of inflation in the health service, he carefully does not use the same inflation rate that he uses when talking about the retail prices index.
  Mr. Heathcoat-Amory: That is one of the feeblest explanations that I have heard. I think that we should all expect a slightly more convincing explanation from Ministers.
  The point that I wish to raise now is the excise duty increases on beer and tobacco. Smuggling of those products has become an epidemic. The Government's own figures show that more than one in five of the cigarettes smoked in the United Kingdom are smuggled in, and that 80 per cent. of the hand-rolling tobacco smoked here is similarly illegally imported. The Government have said in their own review document that
  Smuggling is on a strong upward trend.
  Last year, revenue from tobacco decreased by £2.5 billion. The Government say that they want to give some extra money from that source to the health service. It is just as well that they were not planning to do it last year. If they had, this year, there would be a cut in the allocation to the national health service budget.
  The Revenue is being undermined, and so is the health strategy. Smoking is on the increase, particularly among young people. Moreover, the trade is now being taken over by criminal gangs, who are selling in uncontrolled outlets. The Government—or at least the Home Office—lectures the licensed trade about responsible drinking and tobacconist shops about not selling tobacco to minors, but, because of their own excise duty policy, they are undermining that legitimate trade.
  We therefore have a failed tax policy, a failed health policy and a failed crime policy. What are the Government doing about it? They are increasing the duty on tobacco products by another 5 per cent. in real terms, making a bad situation worse. That is what we mean by
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  saying that the Government are pursuing a little-Englander tax policy, in defiance of the logic of the single market in Europe.
  Mr. Martin Taylor was commissioned by the Government to report on that very subject. His report has never been published. Why? It is leaked that the report has not been published because Mr. Taylor drew the obvious conclusion that, if we are to tackle the smuggling epidemic, we must tackle the cause—which is the wide and growing duty differential between the United Kingdom and the continent. The Government will never solve the smuggling problem until they recognise that fact and do something about it. However, Mr. Taylor's report—which is too embarrassing to publish—has simply been suppressed.
  The Government, rather than tackling that cause of crime, will try to tackle the crime itself by deploying another 1,000 Customs and Excise officers. I tell the Government that that will simply not work unless and until the Treasury recognises the logic of the single market in Europe. We will not agree to the duty increases until the Government not just commission, but publish an independent study into the causes and consequences of the smuggling epidemic.
  There are plenty of other examples of how the Government are defying the international tax facts of life, such as stamp duty on shares. We read that the London stock market may merge with the German stock market. That will be handicapped and undermined unless the Government take seriously the problem of us having stamp duty on share transactions and the Germans not having it. Equally, everyone knows that many people bet on horses through telephone or internet betting in a jurisdiction with no betting tax. The Government have refused to face up to the problem, or even to study it.
  We created a low-tax jurisdiction in this country. That is part of the golden economic legacy that the Government are demolishing. They—or rather the country—will pay the price of lost revenue, lost business and, because of their efforts to shore up the tax system, increased regulations and complexity.
  The Government's answer to everything is more officials, more rules and more civil servants. Maybe that helps to answer a question that one of my hon. Friends asked earlier: what is happening to all the extra tax money? It cannot be just Conservative Members who are asked that. When people are paying all those extra taxes, they want to know why public services are not only not getting better, but getting worse? Why do people now have to join a waiting list to get on a waiting list to see a consultant? We now have at least part of the answer. The cost of central Government has risen under this Government by £2 billion a year. In case the Government are inclined to dispute that, it is spelled out in the Budget documents.
  Mr. Leslie: Where?
  Mr. Heathcoat-Amory: The hon. Gentleman need only go to the Vote Office, get out Command Paper 4601 and turn to page 60, where he will find helpfully laid out the gross administrative expenditure by Department. If he glances at the bottom line, he will see that the cost of

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  central Government was flat in our last three years. Since then, it has risen by £2 billion a year. That is the cost of a Labour Government.
  Mr. Leslie indicated dissent.
  Mr. Heathcoat-Amory: The hon. Gentleman shakes his head. He is taking issue with a document produced by his own Government. It is all here in black and white—an extra £2 billion a year. There may be no more policemen in our constituencies, but there are more special advisers in Government Departments. There may not be enough nurses in the NHS, but there are plenty of politicians in it, and they are all being paid for out of that extra £2 billion a year.
  We have got to the secret in the Bill. Among all the verbiage, all the extra schedules and all its 500 pages, the truth is that it is a summary—practically an embodiment—of the Government. It taxes more and delivers less. That is why we shall oppose it.
  5.29 pm
  Mr. Giles Radice.: The Treasury Select Committee report is tagged to this debate, so I hope that hon. Members will forgive me if I say something about it. In the Budget debate, I warmly welcomed the measures proposed, including the increases in health and education spending, the working families tax credit, child benefit and winter fuel allowances. I repeat that welcome this afternoon, particularly because the measures have strong support in my constituency, which, as hon. Members will know, is in Labour's heartlands.
  I want to speak in my role as Chairman of the Treasury Committee.
  Mr. Quentin Davies: Will the hon. Gentleman give way?
  Mr. Radice: I have hardly said a word yet.
  Mr. Davies: That is precisely why I wanted to intervene now: I do not want to throw the right hon. Gentleman off when he has got into his stride—not that it is easy to do that. As Chairman of the Treasury Committee, will he note that paragraph 25 of the Committee's report on the Budget explicitly confirms the point that I put to the Chief Secretary, which he refused to acknowledge and tried to run away from? It says:
  there will be a discretionary loosening of the fiscal stance in each financial year over the period 2000–01 to 2003–04 …
  Is it not extraordinary that a Labour Chief Secretary refuses to acknowledge the clear, explicit conclusion of a Treasury Committee with a majority of Labour members?
  Mr. Radice: I shall come to that point in a moment. The role of the Treasury Committee is not to provide opposition to the Government—which many political commentators think that we should do, because the official Opposition are not making much of a fist of it—but to make Ministers and civil servants open, transparent and accountable. That is what we try to do.
  This is our third report on the Budget in this Parliament, and our fifth report this Session. We congratulate the Government on the effectiveness of the pre-Budget report
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  process as an aid to openness and consultation. The Government consulted on the 12 measures in the pre-Budget report, and all are in the Bill. Some changes have resulted from the consultation. That, I believe, is open government in action.
  We also congratulate the Government on "Analysing UK Fiscal Policy". That document is a useful background paper on which both supporters and critics of Government policy have drawn heavily. The Government have been questioned on their fiscal stance precisely because people have been able to read that document and see how the calculations are done. We asked the Government to show the distributional effects of the Budget. There are gains for families, but we would have liked the Government to go further and display the impact on all households.
  I want to return to that hoary annual—the tax burden. Table 5 in our report showed clearly that, taking into account the Budget, the pre-Budget and last year's Budget, taxes are falling. The figure for the tax burden—the tax take as a percentage of gross domestic product—depends on whether we count working families tax credit as a tax. If we do—and the Government's preferred measure, the net tax and social security contributions, does—the burden falls between 1998–99 and 2000–01. If we do not count the working families tax credit, and use the measure of current receipts, which are in the Red Book, the tax burden rises.
  To put that in context, and bearing in mind the presence of the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), his plan in the November 1996 Budget was for taxes to rise higher, on the measure of net taxes and social security contributions, in 1999–2000 and 2000–01, than is predicted in the most recent Budget.
  Mr. Geraint Davies: Did my right hon. Friend agree with the right hon. and learned Member for Rushcliffe (Mr. Clarke), the former Chancellor, when he described borrowing as deferred taxation in an earlier Budget debate? If we take borrowing and taxation together, that clearly shows that levels of taxation have gone down. If we were at the same level as in 1996–97, we would have had to raise income tax by 7p.
  Mr. Radice: That is an interesting theory.
  Mr. Davies: It is a fact.
  Mr. Radice: To put it more charitably, it is an interesting way of looking at the issue. It is also legitimate, and I have no objection to different ways of calculating the tax burden as long as they are laid out in the Red Book, as they are.
  The working families tax credit is not counted as tax, according to present accounting conventions. However, as it is a new scheme and as the plan is to extend it to children and pensioners, in a move to what might be better termed a negative income tax, we say in our report that there is a strong case for reviewing accounting conventions and for considering whether it should be scored in as a tax.
  We have not included my next point in our report, but to put the debate in context, the fact is that if one is going to bring down the public sector borrowing requirement, as the right hon. and learned Member for Rushcliffe did

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  and as my right hon. Friend the Chancellor has, taxes are bound to go up, as they did under the right hon. and learned Gentleman and—in the case of indirect taxes—in the first two years of this Government. Following on from that, it is obvious that fiscal drag and economic growth put up the tax burden and the tax take as a percentage of GDP. So we should not make such an issue of that point and, in our report, we tried to put it into context. After all, our job as a Select Committee is to try to shed some light on the debate.
  If one reads the background document that the Government produced, which analyses fiscal policy, one realises that there is a difference between a relative change and an absolute change. The relative change is the difference between the Budget stance this year and what was forecast in last year's Red Book. The absolute change is the difference between the Budget stance and last year's outturn. On the first measure, we will undoubtedly see fiscal tightening in 2000–01 and 2001–02, but on the second measure we will see what Kate Barker of the CBI, who gave evidence before our Committee, described as a "slight loosening" in 2000–01 compared with 1999–2000.
  The question then arises of whether we can afford the increase in public spending that has taken place. My answer is yes, because since 1996–97 we have experienced a 4.2 per cent. tightening, which is the equivalent of £40 billion. The public finances are unquestionably in good shape. The further question arises of whether the fiscal stance is supporting the monetary policy. It is on that issue that some City economists and the IMF have raised some questions, although they have been a matter more of qualification than of outright criticism. If one accepts that some loosening has occurred, it has only been very marginal. Indeed, the Monetary Policy Committee did not change interest rates in March or April. As my right hon. Friend the Chief Secretary to the Treasury said, the deputy Governor of the Bank of England believed that the impact of the Budget on monetary policy was slight.
  The debate was best summed up by Peter Riddell in The Times. Likening it to the question of whether a glass was half full or half empty, he pointed out that the relaxation was very small—much less than the tightening that happened each year since 1997, which the right hon. and learned Member for Rushcliffe, the former Chancellor, has described as too severe. That perhaps sets the matter in context.
  Mr. Edward Davey: Will the right hon. Gentleman confirm that the specialist advisers to the Select Committee said that fiscal policy was not supporting monetary policy and that it was going in the other direction?
  Mr. Radice: Some did, some did not: like special advisers everywhere, their opinions were divided. A slight divergence between fiscal and monetary policies may not be that important, and I assume that that is why the deputy Governor said that the Budget's impact on monetary policy was slight. We should probably heed his voice even more than the voices of our advisers—but that may be unfair to everyone involved.
  The Select Committee report shows that fast growth has been combined with low inflation, and that the public finances are still in good shape. It supports the idea of
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  setting an inflation target for the Monetary Policy Committee of 2.5 per cent., which should be the MPC's prime objective. It is concerned about the strength of sterling and its impact on manufacturing—as anyone who studies the situation must be—but believes that most of that strength is due to the weakness of the euro, rather than to anything that the Government or the MPC have done, and that the problem may right itself over the next 18 months or so.
  Mr. Geraint Davies: Did the Select Committee support the Liberal Democrat party's alternative Budget, whose main proposal was that income tax should be raised by 1p, regardless of the level inherited?
  Mr. Radice: I do not think that the Committee considered the proposal. No doubt we would have considered it if it had been brought to our attention.
  The Select Committee's report found that the Bank of England's Monetary Policy Committee must take into account the exchange rate when coming to a decision about inflation. That is very sensible.
  In conclusion, some commentators—usually in newspapers that are hostile to the Government—have said that the Select Committee report is critical of the Government. However, although Labour Members form the majority in the Committee and the rest of its membership comes from Opposition parties, it broadly supports the Government's economic policy.
  5.43 pm
  Mr. Kenneth Clarke.: I begin by declaring a personal interest to the House. Not only do I pay income tax, smoke, drive a car and occasionally have a drink, but I am also, as the Register of Members' Interests shows, a non-executive director of four limited companies in this country. Those companies are affected by various proposals in the Bill. I do not think that that marks me out particularly, as almost every company in this country is likely to be adversely affected by the Budget. The Budget statement and the Bill show that the Government's claims to be business friendly are looking very frayed indeed.
  The Government took over a very good economic environment for the real economy—we had striven to enable British companies to make themselves competitive in global markets. At times, the Government's positively anti-business stance has steadily undermined that, as I think that this debate will make clear.
  The Budgets and resulting Finance Bills produced by the Government are difficult to penetrate. I accept that the process has never been totally comprehensible to ordinary members of the public. However, we always answered embarrassing parliamentary questions. We acknowledged when we were increasing taxation and when we were reducing it. We produced the fiscal judgment in a clear and comprehensible form, and we exposed ourselves to criticism, sometimes on that account.
  Budget speeches, as given by the Chancellor, are extremely uninformative and, quite often, misleading. They are short political speeches. The Red Book is completely obscure, and much parliamentary questioning is straightforwardly avoided if the result is to give an embarrassing answer. The Finance Bill itself is quite enormous. I remember how we struggled to move towards

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  expressing a Bill in plain English, and to ensure that the drafting was such that it would eventually produce shorter Bills. The only thing that is clear from the front page of this Bill is that it apparently complies with the European convention on human rights—unless accountants have any claim, through being required to pick up heavy loads. The thing is utterly incomprehensible and impenetrable to ordinary members of the public, and it does not shed much light on what the Government will do.
  I said that the climate for business was worsened by this. The overall effect of the Budget is to carry on the Government's policy of increasing the burden of taxation. The Government have increased the overall burden of taxation on most ordinary families, although I accept that families on low pay, probably with a single parent, have benefited. They have also increased the tax burden on business, and are continuing to do so. What is most alarming, when one looks at the judgment behind the Budget, is that the Government almost certainly intend to continue increasing the tax burden on both the public and business.
  We have reached a stage where the economy is recovering from a near-recession at the end of 1998 and early 1999, and recovering quite strongly. The Government boast that there was no recession; they are extremely lucky to be able to make that boast. We had six months in which there was no growth at all, but we did not have the two successive quarters of negative growth that most people were anticipating.
  Recovery is now quite strong, but business is facing substantial difficulties. One is the tax burden; another is the mounting pile of red tape and bureaucracy that all sectors of business face. Another difficulty, on which the Budget and Finance Bill have a bearing, is the excessive strength of the pound. We are plainly going to have a floating exchange rate for the next two or three years at least. The exchange rate has floated upwards to a quite unpredictable level, and no one expected to see that. When I was Chancellor, the pound was usually at DM2.50 against the German currency. Much of British manufacturing and agriculture and many British exporters find the present exchange rate of DM3.25 quite insupportable. It is no good the Chancellor lecturing us about the need to raise productivity to cope with the strength of the pound. I accept that a strong currency has a beneficial effect on encouraging people to raise productivity, but one cannot possibly raise productivity to cope with the extraordinary increase in the value of the pound. Therefore, we must consider what the Government's tax and fiscal policies are likely to do to the exchange rate.
  I challenge the frightful hand-wringing about the exchange rate, sometimes from the Bank of England but equally strongly from the Government. It is no good saying that one understands how much many parts of the country and many sections of business are suffering because of the strong pound, if one implies in the next breath that, although one is aware of it, there is—sadly—nothing that can be done. I do not agree with that.
  Mr. Christopher Gill.: I am most grateful to my right hon. and learned Friend for giving way. Does he consider that, as our trade with the European Union represents less than 12 per cent. of gross domestic product, it would be more appropriate and significant to consider the strength of the pound relative to the US dollar? For example, will he tell us what the exchange
  734
  rate with the US dollar was, when he was Chancellor? Would he explain by how much, or—more significantly—by how little, it has changed since then?
  Mr. Clarke: I am taken by surprise by my hon. Friend's figure. I suspect that its source lies in some remark made by the present Chancellor; it has the ring of some of his more popular slogans on the tax burden and other matters. Our major market is the EU; it is significant that we have a strong pound. I was steering away from the question of whether we shall continue to have a floating pound, but we should all agree that it is no good going into a state of denial about the damaging effect that that has on farming—in my hon. Friend's constituency and in mine—and on manufacturing across great swathes of the country.
  Mr. Roger Casale.: Will the right hon. and learned Gentleman give way?
  Mr. Geraint Davies rose—
  Mr. Clarke: The hon. Gentleman has already made many interventions; I give way to the hon. Member for Wimbledon (Mr. Casale).
  Mr. Casale: I am grateful to the right hon. and learned Gentleman. Given his well-known pro-European views, what I am about to say does not apply to him. However, does he not despair at the incoherent voices of the Opposition, who berate the pound for being so high and for having a negative effect—supposedly—on manufacturing, while saying that they will never see Britain join the euro, whatever the economic costs?
  Mr. Clarke: I am sure that the hon. Gentleman does not want to draw me into a dispute with any of my right hon. and hon. Friends. I merely point out that, as long as one has a floating pound, it is not sensible to maintain a policy of complete neglect as to its level. That matter must be borne in mind by a Chancellor, when he makes his Budget judgments—as it must be by the governor of the central bank and his colleagues when they make judgments on monetary policy.
  Liz Blackman.rose—
  Mr. Clarke: I shall make a little more progress; I know which subject I shall be drawn into if I give way.
  In any view, the present situation is undoubtedly damaging. People are out of touch with farmers or manufacturers if they do not believe that. It is also quickly producing a deteriorating balance of payments position. Our balance of trade was positive in 1997, but it is now rapidly deteriorating. That, too, has a negative effect on growth and thus a negative effect on our ability to create wealth and to make jobs secure.
  Mr. Andrew Love rose—
  Mr. Clarke: No, I shall not give way.
  Behind the Budget lies the question asked by the right hon. Member for North Durham (Mr. Radice), in his customary erudite fashion, as to whether the Budget is supporting monetary policy. The extremely tight monetary

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  policy maintained by the Monetary Policy Committee of the Bank of England is one of the things that is keeping the pound so high. Our interest rates are almost double those that prevail on the continent. We can see how tight our monetary policy is in real terms when we consider the fact that we have the lowest inflation rate of any member state in the EU. Our real rates are extremely high; that is one reason why the pound is so very strong.
  To use the right hon. Gentleman's phrase, does fiscal policy support monetary policy in the Budget? The two must have a relationship, so we would hope that the Chancellor would pursue a fiscal policy that discourages the MPC from making monetary policy any tighter and thus postponing even further the date at which the pound might return to a level that was nearer to trading realities.
  The Chancellor can bring down the rate of exchange in two ways. The best way would be for him to stick to his former girl friend, Prudence, and to maintain a prudent fiscal policy—to keep fiscal policy tighter than it might otherwise be—in order to signal to the Bank that it does not need to tighten monetary policy and raise interest rates so fast to keep inflation down.
  The worst way would be to have a lax fiscal policy, so that the signal to the markets was that control of the balance between spending and taxation was being lost, that borrowing in the medium to longer term is likely to start to soar and that the rate would be brought down in that way.
  At least the Chancellor prefers to talk about the first option, and seems—just about—to be holding to it, in the judgment of the MPC. However, he uses rather meaningless phrases to describe what he has actually done. He overstated the point in the Budget speech. On Budget day—relying, as I did, on the Budget speech—when I heard his descriptions of how the fiscal position was even tighter than it had been in November, I was quite impressed.
  However, as has already been revealed, in an intervention from the hon. Member for Kingston and Surbiton (Mr. Davey) and—if one listened carefully—in the speech of the right hon. Member for North Durham, that does not quite stack up when looks at the matter more closely and asks by what comparison the fiscal position is becoming tighter. All the talk of locking in fiscal tightening and prudence turns out to be fairly meaningless, because there is no doubt that, on balance, and especially in the medium to longer-term, the Budget represents a considerable loosening of policy.
  The IMF warning was couched quite modestly; it should be taken seriously. It is no good for the Government to wave it away. I applauded what they did just before the Budget. They took a step further towards the policy that I had introduced, on behalf of the previous Conservative Government, of openness on the IMF report. We initiated the policy of exposing the article IV reports by the IMF on British economic management. Just before the Budget, the Chancellor did the same thing and, for the first time, published the complete statement. He was full of pride in that achievement. He stated:
  The publication of the IMF's report on the UK economy clearly demonstrates our commitment to open up the IMF's scrutiny process. Today marks an important step forward by the UK in economic policy making.
  736
  The IMF made an extremely sensible comment on the overall effect of the Budget. The IMF plainly believes that fiscal policy no longer wholly supports monetary policy; that also seems to be the conclusion of the Select Committee on the Treasury. Suddenly, the Chancellor is dismissive. He gave a radio interview during which he returned to that meaningless string of phrases—about locking in fiscal discipline and prudence—that he always employs whatever the question, but he has not done that.
  To be fair, the immediate outlook is reasonable, if fiscal policy is fairly tight; we are at the stage in the cycle where we are running into a surplus. That was always predictable. The policy of the previous Conservative Government was, first, to reduce the then excessive borrowing and, then, to aim for a policy under which one balanced budgets over the cycle. That is a wholly desirable policy. The Government are running a surplus because they inherited the benefits of that policy. They have roughly maintained the course that was projected; indeed, they have speeded it up slightly—by raising taxation and by underestimating their tax revenues. It looks as though they will run a large surplus for the next year or two. However, the intervention made by the hon. Member for Kingston and Surbiton is unanswerable. Although we are entering that desirable surplus, there is absolutely no doubt that the Budget and the Bill make that surplus smaller and shorter than it would have been.
  The right hon. Member for North Durham, on behalf of the Treasury Committee, offered us two ways of considering the matter. The first was the Chancellor's way, in which one made a comparison with his forecast in November. The second way, which the rest of us prefer, would be to compare the situation with what it would have been without the Budget.
  The Chancellor fooled me on Budget day; it is true that, compared with his forecasts, the policy looks tighter, but that is because he got his forecast wrong. He had underestimated the revenues that he would produce. He found that revenue was pouring in on a greater scale and he used it—he spent it. The result of the Budget is that the Chancellor has actually loosened policy. The Bank should be looking two years ahead, so members of the Monetary Policy Committee may say, "For the time being, this does not cause us to think about raising interest rates any more than we previously would have done." They should be looking at a two-year time scale—I hope that they are, for the sake of British industry. However, there is absolutely no doubt that, looking further ahead, this is a loosening of policy, and a serious one, because the Government are losing control of public spending.
  Under the influence of questioning on the David Frost programme, a well-known consultant who has become a Labour life peer admitted that the Government have abandoned their previous approach to public spending and are producing popular announcements—desirable announcements, which no one can be tempted into opposing—of future levels of expenditure on health, education and transport, with no indication of how they might accommodate those within an overall total of public spending that might make sense in two, three or four years' time.
  The difficult question of, "How are you going to fit this in?", is no longer being addressed in the context of a three-year spending review; it is being addressed in the context of, "Do not ask that question. Let us think of

  737
  answering that after the next general election, once we have got back. Meanwhile, let us hold out these goodies for the future and see what happens as we go along."
  Mr. Matthew Taylor.rose—
  Mr. Radice rose—
  Mr. Clarke: I give way one more time, to the hon. Member for Truro and St. Austell (Mr. Taylor).
  Mr. Taylor: I very much agree with what the right hon. and learned Gentleman says about fiscal loosening. In view of his kind comments about the Liberal Democrats, it feels unfair to ask the question, but is there not a problem for the Conservative Front-Bench team, given that it has now announced that it will adopt the Government's spending programme—which the right hon. and learned Gentleman has just described—and cut tax on top? Therefore, if there is a problem with fiscal loosening on the Government side, there is undoubtedly one on the Conservative side.
  Mr. Clarke: I hope and believe that my party has addressed this subject in the context of a structured approach to public spending. Anyone who makes it one of their objectives to reduce the level of taxation during the life of a Parliament is placing on themselves some constraints when it comes to taking a proper, sensible approach to judging public spending priorities across the board. If one promises to do so, one may face some tight public spending rounds occasionally. If one commits oneself—as we always committed ourselves—to increased spending on health and education, one faces some difficult global choices in other areas, depending on how the economy goes. The Government have given that up entirely.
  In July 1998, the Chancellor lectured the House about his structured approach to public spending. He announced the three-year comprehensive spending reviews—of which I, and I think the Liberals, always said, "He will never stick to it. It is not possible. It is all nonsense." However, the Chancellor addressed the subject on a serious basis. He assured us that two things were essential. As he moved, foolishly, from an annual cycle to a three-year cycle, he said, first, that he would stick to it and no new resources would be added during the three years; and secondly, that, when he reached the comprehensive spending review for next three years, any new resources would be conditional on reforms—
  money, but only in return for modernisation—[Official Report,14 July 1998; Vol. 316, c. 187.].
  All that it required was the Frost programme and the Prime Minister in a panic, and both of those rules were abandoned.
  Mr. Andrew Smith: Does the right hon. and learned Gentleman accept that, even with the additions to expenditure for the last two years of the three-year spending period announced in this Budget, total managed expenditure, on comparable figures, is lower than the amount originally announced in the comprehensive spending review?
  Mr. Clarke: I will study that delphic sentence because I suspect that, like many others, it disguises the facts.
  738
  First, it disguises the fact, which was the basis on which the first announcement was made to the House, that substantial increases in public spending have already been made within the previous three-year period, despite the fact that no modernisation has been delivered—and with no policy on how to achieve any more reform, because the Prime Minister and the Cabinet Committee are working on that and will let us know by June.
  The best forecast that I have seen for the three years thereafter, before the comprehensive spending review has started for most Departments, based on what has been announced, is the PricewaterhouseCoopers forecast that total managed spending will rise by 3.7 per cent. a year in real terms over the next four years. That figure is well in advance of any likely growth in the economy, and certainly well above the trend growth that the Government adhere to.
  That is why the Chancellor is raising taxes and why, in my opinion, he will continue to do so, especially after the next general election, because, if he carries on like this, he will certainly need to raise taxes after the next election. And he raises the wrong taxes. My party has always called them stealth taxes. Anything that cannot be understood in the hundreds of pages of the Finance Bill is used to raise revenue. He raises taxes on fuel, which went far too high last year, and he has misled a lot of people this year into believing that he has not raised them again. He has made our haulage industry extremely uncompetitive and we are saddled with the highest taxes in Europe.
  The taxes on business do particular harm. I shall not discuss the tax arrangements for foreign dividends at length because two companies with which I am involved undoubtedly have an interest, but there is no way in which that change could be described as anything other than unfriendly to British companies doing international business. It was not consulted on properly. No one anticipated that the arrangements for mixing foreign dividends would be re-opened. The Treasury grossly underestimated the impact of the change; it got the likely revenue all wrong. The change will actually raise substantial sums, and I have no doubt that it will emerge that that is having a marked effect on many British companies with an international business. It makes this country, in yet another way, a less attractive place than it was as a base for international companies, makes it less attractive to make overseas investments and places some companies at a competitive disadvantage to international companies based in other countries.
  The climate change levy is a disgraceful way of raising revenue, using an environmental cloak. I am all in favour of environmental taxes. We introduced the landfill tax. We were contemplating more. We were so anxious to avoid increasing the burden on business that we always offset any increases by reducing the employer's national insurance contribution. We cut a tax on jobs to relieve a burden on business at the same time as we raised the landfill tax. That has now been abandoned. The climate change levy, the increases in the landfill tax, and the aggregates tax are good little earners for the Treasury. The Government are using them as revenue raisers. They know that they can dress up the revenue raisers with an environmental cloak. As a result, extraordinary damage is being done to industry.
  Even the stamp duty changes, which were obviously popular with the Labour party because they seem likely to affect wealthier individuals, have an adverse economic

  739
  effect. One of the things that we need in this country is more mobility. In the new economy, it may be necessary for people to move in and out of, let us say, the south-east of England. The effect of the stamp duty is extraordinary. All the changes to stamp duty on housing since the Government came to power have tripled the stamp duty on houses over £250,000 and quadrupled the stamp duty on house sales of over £500,000. That is just the taxation of envy, and it will have some adverse effects as well.
  The likely effect of all this will come home over the next few years, and we shall see an end to prudence. Prudence has not been locked up; Prudence has been let out and is gone and, after the election, from 2002 onwards, the Government will face more difficulties because the Government's economic inheritance will be steadily dissipated.
  Mr. Gardiner: Will the right hon. and learned Gentleman give way?
  Mr. Clarke: I am in my last few sentences, so I will not.
  The Government are slowly losing control. They took over an improving situation—a good situation. They have not wrecked it, which has surprised the electorate because Labour Governments usually did wreck these things quite quickly, but it is steadily eroding.
  The Government are turning into an old tax-and-spend Government after all. At first, they taxed a lot and did not spend very much. Now they are spending more and they will have to tax some more and, as they go along, they keep finding ever more ways of taxing that damage business, and therefore employment and wealth creation. It is tax now, promise to spend later—and perhaps they will sort out how to run a proper macro-economic policy when the time comes if they are still in office in 2002. That is the irresponsibility that lies behind the Budget and this Bill.
  6.10 pm
  Mr. Denzil Davies (Llanelli): I will not be tempted to follow the right hon. and learned Member for Rushcliffe (Mr. Clarke), the former Chancellor, in his rather rambling speech. Towards its end, he told us that he was rather worried that Prudence was going to be let out. Some Labour Members think that Prudence should occasionally have fun, but we are confident that my right hon. Friend the Chancellor of the Exchequer, being a good, solid son of a Scottish manse, will ensure that Prudence does not have too much fun. That perhaps sums up the Budget.
  The right hon. and learned Gentleman was right to some extent about the strength of sterling, and it is not easy to know what to do about that. My right hon. Friend the Member for North Durham (Mr. Radice) made the good point that we must also consider the weakness of the euro, but I shall not pursue that point because I want to make a short and boring speech about a small provision in one of the Bill's schedules. However, the euro is in difficulty because of structural problems in Europe. Those problems are not related to inflexible labour markets, but the financial community and those who shift large sums of capital around the world have moved money out of
  740
  Europe because they see structural problems in Europe and with the euro. They are probably one of the main reasons for money going into the dollar. The Japanese bought far too many euros and burned their fingers doing so. They are moving money out as well, so there are real problems. Of course, the counterpart of the strength of sterling is the weakness of the euro.
  I shall be boring and brief as I consider a small provision in the Bill. It is foreshadowed by clause 102, but my point is not about controlled foreign companies so I do not want the Opposition to get excited about that. The clause foreshadows schedule 30, which is as long and rambling—and perhaps even more complex—than the speech of the right hon. and learned Member for Rushcliffe. It is certainly as long and rambling because it deals with a few provisions relating to double taxation relief in its various forms.
  I refer briefly to paragraph 4 of schedule 30. I will not say much about it except to point out that the notes on clauses are very helpful. [Interruption.] The hon. Member for Kingston and Surbiton (Mr. Davey) guffaws, but paragraphs 8 and 9 of the notes on clause 102 are very helpful. Paragraph 8 states that paragraph 4 of schedule 30 amends two sections of the Taxes Act 1988
  so as to provide for the allowance of credit relief for foreign tax to non-resident persons (companies and individuals) who have branches or agencies in the United Kingdom.
  Paragraph 9 of the notes adds:
  In future, credit relief will be available to all non-resident taxpayers with United Kingdom branches or agencies, in respect of taxes paid other than in the taxpayer's home state.
  Clause 102 is a consequence of a decision taken by the European Court of Justice. I am glad to see that my hon. Friend the Paymaster General accepts that point even though it is not made clear in the notes on clauses. On 21 September 1999, the court held that a French company that was not resident for tax purposes in Germany—it was resident in France even though it had a branch in Germany—could have the same rights to foreign tax relief as would be given to a German resident company. That sounds boring.
  A case was brought by a French company against the German tax authorities, which the court held were acting contrary to European Union treaties because they were deemed to be discriminating against the French national company even though it was not resident in Germany but merely had a branch there. It decided that because the French company had a branch in Germany, it was entitled to have credit for all foreign taxes from all over the world in the same way that a German resident company would. The European Court of Justice considered that the provision upheld by the German tax authorities was discriminatory, so it struck it down.
  Several points need to be made about that judgment. First, it gave the lie to the belief—if some people still held to it—that European Union treaties have no jurisdiction over direct taxation, by which I mean income tax and corporation tax. Before the court will act, there must be an infringement of what are described in the treaties as the four freedoms: the freedom of movement of labour, the freedom of capital, the freedom of establishment and the freedom to provide services. The French company was certainly well established in Germany and provided services. Because it operated within the four freedoms of the treaties, it fell within their remit and the court was then able to strike down a tax provision in a member state.

  741
  There was no question of the Councils of Ministers making a decision about jurisdiction on tax; no vetoes were used and no directives were made in Brussels. The case is a clear example of a member state's sovereignty on direct taxation being overridden—not just challenged—by the European Court of Justice. Consequently, the Government had to introduce this provision.
  This is not an isolated case. I have examined the jurisprudence of all the cases that the court has considered since it examined its first case—one involving France—in 1987. In at least a dozen cases, taxpayers have challenged national tax authorities about their provisions for income tax and corporation tax, and in all but two cases those challenges have been successful. The cases divide more or less equally between those involving income tax and individuals on the one hand and those involving corporation tax and companies on the other. As I said, only two national tax authorities have won their case against a taxpayer.
  I do not advise it, but I have read some of the judgments and the opinions of the Advocates General. Some of those opinions are Talmudic in their complexity, but it is clear—we should not be surprised by this—that a European court, the main purpose of which is to secure ever increasing union, has bent over backwards in most cases to try to strike down member states' legislation on direct taxation.
  Mr. Kenneth Clarke: I am sure that the right hon. Gentleman is explaining accurately that treaty obligations do not allow member states to discriminate in their tax laws between nationals or residents of different countries. Indeed, this Government and the previous one have spent much time on that, and the Paymaster General chairs a committee that we joined and that tries to set aside discriminatory tax arrangements for nationals and residents of different states. However, I am sure that the right hon. Gentleman would not join the more unscrupulous campaigners who claim that that means that the European Union has jurisdiction over levels of corporate tax or personal taxation.
  Mr. Davies: I shall come to that point shortly. However, the right hon. and learned Gentleman should not assume that it is a side issue of discrimination that can be considered by the committee chaired by my hon. Friend the Paymaster General.
  The European Court is not only challenging the sovereignty of the member state; the second consequence of those decisions is that it is challenging the basic cornerstone of income tax and corporation tax—the concept of residence. The court is saying to member states, "Your legislation is based on residence, but if it can be shown that you are discriminating against a non-resident, your law can be struck down." As the right hon. and learned Gentleman knows, residence is not some quaint little concept dreamed up by we Euro-sceptics to make life difficult for the Commission. The concept of residence lies at the heart of the taxation legislation of all the countries of western and eastern Europe and of the United States of America; more important still, it forms the basis of the hundreds of international double taxation treaties that have been signed since the end of the 1940s.
  That is not merely an issue to be examined by a committee. A basic challenge has been thrown down by the court—albeit within the scope of the four freedoms,
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  I concede. With more trade, more people moving around, more establishments in different countries and more provision of services, such cases will arise more often. The court is challenging the whole concept of residence, which lies at the heart of each member state's system of taxation. Let me cite a Dutch professor writing in the 1994 edition—things have moved on since then—of a publication called The Common Market Law Review. He went so far as to suggest—I do not subscribe to everything he suggests—that the court's actions could easily result in the disintegration of national tax systems.
  That is the argument that has been advanced by many member states—not by Britain, which has been involved in only two such cases, but by France, Germany and Belgium, between which there is a great deal of cross-border trade and movement. The argument has been advanced, not by Euro-sceptics and little Englanders but by the national tax authorities of several European countries, that the court is arrogating the concept of nationality above that of residency by telling member states that they can have their residency rules, but if the court finds that one country is discriminating against a national of another country, nationality becomes more important than residence for the purposes of direct taxation. That is a real clash—not a minor matter, as the right hon. and learned Gentleman attempted to imply in his intervention. A challenge has been made to the very concept of residency and many people are extremely concerned about it.
  Mr. Clarke: Is the right hon. Gentleman arguing that within a single market a British Government should be able to discriminate in the treatment under British tax law between companies domiciled in this country and companies domiciled elsewhere in the European Union? We set our rates of corporate and personal taxation, but the European treaties have always ruled out discriminatory provisions which are contrary to the four freedoms. That is not a sensational new discovery. I repeat: the Government whom the right hon. Gentleman supports continue to work within a committee, to which the Government of whom I was a member also contributed, trying to get rid of discriminatory tax provisions—
  Mr. Deputy Speaker (Mr. Michael J. Martin): Order. I remind the right hon. and learned Gentleman that interventions must be brief.
  Mr. Davies: With respect, the right hon. and learned Gentleman misses the point. It is a question not of discrimination but of a nation state being unable to provide different tax treatments for residents and non-residents. It has always been accepted in international taxation law and beyond western Europe that countries will provide different tax regimes for residents and non-residents. That has always happened and it still happens, but the European Court says that that is discrimination because the treaties are concerned with nationality, not residence.
  Let me return to paragraph 4 of schedule 30. It is not retrospective—it does not apply to previous tax years. Except in that it applies to accounting periods ending on or after Budget day, it is not retrospective for six years. Will an EU-resident individual or company be able to claim six years back from the passage of the Bill for relief

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  against foreign taxes, based on the way in which the European Court has decided previous cases? From my reading of the professional journals, I understand that the Inland Revenue has said that if an individual or a company is resident in the EU, that individual or person can claim relief six years back from this legislation—even though the clause itself does not allow a six-years-backdated claim. If EU residents are entitled to make such a claim, what about non-EU residents? What about companies in the United States that are not resident in the United Kingdom but that trade through a branch or agency in this country? Presumably, such companies will not be entitled to claim the six-years-backdated relief.
  I see that the members of the European movement are engaged in a serious confab on the Conservative Benches. The right hon. and learned Member for Rushcliffe talks about discrimination, but the discrimination in the case I have described is against the non-EU resident. Let us take our major partner, the United States of America. Does it follow from my analysis—I am sure that the Paymaster General's officials will provide an answer by 9 o'clock tonight—that a United States resident would be denied a six-years-backdated relief, despite the fact that an EU resident would be granted the relief, albeit not under the Bill?
  I do not want to prolong the debate but I have to ask, what about the cases that are in the pipeline? There is a case in which a large German multinational company is challenging the entire imputation system of corporation tax. That system has now been abolished, or at least changed to a substantial extent. The imputation system provided different rates of tax relief or tax credit in respect of underlying corporation tax to residents and non-residents: usually, non-residents received half the relief that residents received. That case is now going through the courts, and my reading of the jurisprudence is that the European Court might strike down our imputation system. In fact, it has been struck down already, so that fox has been shot. I do not know why the Chancellor did away with, or at least changed substantially, the old imputation system of corporation tax. I am sure that there were many good reasons. However, I and others cannot help thinking that he had better shoot the fox once and for all, before the European Court does it for him.
  Finally, let me deal with the point raised by the right hon. and learned Member for Rushcliffe about different tax rates. I forget the name of the case, but one of the arguments advanced by the taxpayer—I forget whether it is a Belgian, French or German taxpayer—in one of the cases that came before the court was that that taxpayer had been denied the same tax rates in Germany as applied to a resident in Germany because that taxpayer was resident in France. I believe that the taxpayer lived in France and taught in Germany. The challenge was based on the fact that German tax rates differ from French tax rates, which was, in itself, discrimination.
  The court was a bit wary of taking that approach and, in the end, it did not do so. The Advocate General, in rabbinical guise, managed to find a way not to challenge the nation state on the issue of tax rates. However, the right hon. and learned Gentleman is a lawyer and he knows how cases are built up; he knows that there will be another case—another challenge to differential tax rates. It may well be that, in a few years' time and in a different
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  climate, and once it has developed its jurisprudence, the court will feel more confident and will decide that the very fact of a French tax rate of 30 per cent. and a German tax rate of 35 per cent. discriminates against the person who has to pay the 35 per cent.
  At that point we shall have moved into a harmonised system of direct taxation laid down by the European Court of Justice. The Council of Ministers will not be able to do anything about it. There will be no point in trundling out the veto. The court will have introduced the system of its own accord as it has the power to do. The Council of Ministers will be outflanked, and we may find ourselves with a harmonised system of income tax before we realise it.
  6.30 pm
  Mr. Edward Davey.: I think I am not the only Member who is not entirely convinced by the argument advanced by the right hon. Member for Llanelli (Mr. Davies). In the United States, the Supreme Court examines various decisions made by the various states: jurisprudence in the United States has not gone down the route that the right hon. Gentleman suggests. There are various rates and systems of taxation in the different states. I favour the arguments of the right hon. and learned Member for Rushcliffe (Mr. Clarke) over those of the right hon. Gentleman.
  Mr. Denzil Davies: The hon. Gentleman falls into a fallacy. Residency in one state or another does not make any difference to United States income tax and corporation tax. It is residence in the United States that counts. In Europe, we have residence for tax purposes in different states—that is the difference.
  Mr. Davey: The right hon. Gentleman has failed to deal with the point that there is variability of rates between the states of the United States—and that will remain the position within Europe. Again, he fails to make his point.
  I pay tribute to the right hon. Member for North Durham (Mr. Radice) for his chairmanship of the Select Committee on the Treasury, on which I have the privilege to serve. He gave the House a fair representation of the Committee's report. However, he failed to mention that it was not unanimous because Conservative Members were split. I regret that as, I know, he does.
  The right hon. Gentleman talked about openness and accountability, which we discussed in the sittings of the Select Committee and in producing the report in regard to presentation. Some members of the Committee, including me, felt that the Chancellor could have been far more open in dealing with our questions. On many occasions, he failed to answer direct questions directly. That limited the scope of the Committee's inquiries rather too much.
  It is difficult to welcome a Finance Bill of such length and complexity. Rather than prudence with purpose, we have prudence with pages—558 of them. The Chief Secretary, in exchanges with the right hon. Member for Wells (Mr. Heathcoat-Amory), said that there are only 152 clauses. Perhaps there are, but there are 40 schedules. The Bill comes before us in two volumes—and that is before the Government have started amending it in Committee as they undoubtedly will. It is a very long and complex Bill.

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  Ministers are right to say that the present Government are not the first Government to introduce such Bills. Unfortunately, the Conservative Government, when the Treasury was under the chancellorship of the right hon. and learned Member for Rushcliffe, introduced very long Finance Bills. Indeed, in 1996 the Finance Act ran to 618 pages—even more pages than that of the Bill that preceded it. That has sadly become a trend, and it is an unwelcome one. In 1955, the Finance Act contained 24 pages; in 1965, it had increased to 270; in 1985, it contained 241 pages; and in 1995 it had reached 511. As I have said, the current Bill has 558 pages. Such growth is unwelcome not only because it increases complexity but because it increases compliance costs for business.
  We are having to consider longer and more complex legislation. The proposed capital gains tax legislation is incredibly complex. There are five schedules dealing with CGT changes alone—and that from a Government who introduced CGT changes two years ago which were supposed to be about promoting long-termism.
  Two years ago, long-termism meant taper relief of 10 years. In the pre-Budget report in November 1999, the Government proposed taper relief of five years. Moving on from a CGT regime to promote long-termism, they are now saying that there should be taper relief for only four years. As a result of these changes we have inconsistency and complexity. That is bad tax legislation.
  The number of tax rates in the personal and corporate tax systems since the Government came to power has ballooned. With more than 50 tax rates, there are now three times the number that applied in 1997. The Bill does nothing to reduce their number. Increased complexity means increased costs on business.
  Mr. Gardiner: The hon. Gentleman complains of the complexity of the five capital gains tax schedules, but does he not accept that their effect will be dramatically to reduce the complexity of CGT? As he has said, we are changing from a 10-year taper moving the rate down to 20 per cent, to a four-year taper moving it down to 10 per cent—the lowest ever rate. The move has been widely welcomed throughout the accountancy world and by business.
  Mr. Davey: The hon. Gentleman would have a point if the Government had not introduced 10-year taper relief in the first place. The change has meant that the accountancy profession and businesses are having to deal with two sets of legislation, the interaction of which is incredibly complicated. We welcome the fact that the Government are at last seeing sense, but if they had done so in the Finance Act 1998, we would not have the present complexity and the time-wasting and expensive procedures for business.
  Mr. Howard Flight.: May I draw to the hon. Gentleman's attention the example of an individual who might have bought some shares in the business for which he worked in 1995, who will now face three different CGT calculations? There will be the earlier one with indexation; followed by one on the 10-year taper; and, following this year's Budget, one for a four-year taper to bring the rate down to 10 per cent.
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  That is a ludicrously complex calculation for someone to face simply for being virtuous enough to have some shares in the company for which they work.
  Mr. Davey: The hon. Gentleman is exactly right. There are three starting dates for the different CGT regimes. As I have said, the proposal has increased complexity and costs for business. It is a serious matter.
  The Government talk about wanting to remove the regulatory burden on business: they cannot try to meet that objective if, within the tax system, a key part of the regulations with which business has to comply is becoming increasingly complex because the Government are increasing the amount of tax legislation. The process diverts resources from the job of business, which should be to promote the prosperity and growth of business. Increased legislation means that there is more work for accountants and more work within business as it focuses on various tax schemes and various possible tax avoidance schemes. That is not good tax legislation.
  It is time for reform. We could start by separating the finance legislation that comes before the House. The tax measures that are needed to raise significant sums to keep the Government's finances running could be set out in a short Bill, which could come before the House shortly after the Budget to ensure that the Government had statutory cover for their tax-raising powers.
  There could then be a second Bill called, for example, the Tax Technicalities Bill, which would be published in draft form. There would be wide consultation, and an effort would be made to adhere to various codes of simplicity so as to reduce complexity. An effort would also be made to ensure that tax changes were not for ever happening—there could then be continuity within the tax system. With such a Bill, we could begin to change the culture of the Treasury and the way in which successive Chancellors of all persuasions have gone about introducing their tax legislation.
  I suggest that Treasury Ministers refer themselves to a very good report produced by the tax faculty of the Institute of Chartered Accountants in England and Wales, entitled "Towards a Better Tax System". It refers to 10 tenets that a Government should adopt to try to ensure that they reduce the regulatory burden of the tax system on business. I commend the report to Ministers and Back-Bench Members alike.
  Let me move on to the terms of the fiscal policy that the Bill will put in place for the forthcoming year. There are some real problems.
  There are always two questions that one can ask about fiscal policy for the forthcoming year—first, does it leave the Government with enough money to fund their programmes without excessive borrowing, and secondly, does it complement monetary policy by keeping the economy growing in a sustainable way, without having knock-on effects for interest rates and the exchange rate?
  On the funding aspect of fiscal policy, there can be no doubt that the Government can fund their programme. They have an incredibly strong fiscal position. Here I part company from the right hon. and learned Member for Rushcliffe. I do not believe that the Government are losing control of public spending. Yes, there has been a loosening of fiscal policy, with which I will deal shortly, but to say that they are losing control is an exaggeration.

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  The Government have huge fiscal surpluses, continuing into the future. No objective analyst could fail to conclude that it is one of the strongest fiscal positions that any Government have had in living memory. The Liberal Democrats unreservedly welcome that development.
  The question is why it has taken the Government so long to realise that. The Liberal Democrats have been speaking about the Chancellor's war chest and the healthy state of the public finances since the start of the Parliament. The right hon. and learned Member for Rushcliffe referred to that. It is no surprise that the Government finances are in such a good state. They should have used the healthy public finances early in the Parliament to invest in our public services, to make sure that our schools and hospitals had the money that they so desperately needed.
  Those of us who serve on the Select Committee on the Treasury heard City economists telling us that. Geoffrey Dicks said:
  With the benefit of hindsight, I would have spent the money on health and education two years ago.
  Those were his words. [HON. MEMBERS: "With the benefit of hindsight."] The Government had the benefit of Liberal Democrat foresight. We gave them that advice, and Ministers failed to take it. That is why there was the crisis in the NHS this winter.
  The Paymaster General (Dawn Primarolo): Is the hon. Gentleman telling us that his middle name is Mystic Meg?
  Mr. Davey: No. One did not have to be Mystic Meg to realise that the public finances were in a good state two years ago. After the 22 tax rises introduced by the Conservatives and the tax rises announced early on in the present Parliament, it was clear that the public finances were in an extremely good state.
  The Conservative Opposition may have predicted recession a year or two ago, but the Liberal Democrats did not. We believed that the economy was healthy and that the public finances would remain healthy. We were responsible in arguing for targeted, sensible and early investment in the public services.
  Mr. Gardiner: I am grateful to the hon. Gentleman for giving way once again. Does he accept that at that stage, the sensible thing to do was to pay off the £28 billion of public sector debt? That means that the revenues into the Exchequer are now that much greater. Does he also accept that at every stage, what he was calling for in public sector expenditure has been trumped by a multiple of approximately six in the steps that the Government have taken?
  Mr. Davey: I do not accept that. No one is suggesting that in the early years of this Parliament, the Liberal Democrats were arguing for £28 billion in public expenditure. Of course some of that surplus should have been used to pay back the debt, but other moneys were available to the Government early in the Parliament, which they should have invested. Because they failed to do so, people died as a result of lack of treatment by
  748
  the NHS. People did not get the service that they needed. It was open to the Government to make those decisions and they failed.
  The political problem facing the Government is evident to everyone. We saw this Christmas a huge crisis in the national health service. The Government had to react. That is why, at long last, they went against what they had set out in the comprehensive spending review and put extra money into the NHS for the forthcoming year. We unreservedly welcome that. It should have come earlier.
  Mr. Bill Rammell.: Will the hon. Gentleman give way?
  Mr. Davey: No. I want to explain to the House what is happening at the coal face. Last Friday, I visited my local hospital, Kingston Hospital NHS Trust, and spoke to the chief executive about the extra money that was found for the coming financial year. He welcomed it, as we have, but he said that because of the underfunding in the previous years of this Parliament, it will go to pay for the deficits. It will not pay for expansion of services; it will pay for the deficits. That was not needed. The Government could have chosen a different path, and I regret that they failed to do so.
  There is a profound issue relating to the fiscal surpluses that have built up and how that changes the nature of economic and policy debate in this country. I hope the Chancellor will take this on board as he approaches the comprehensive spending review.
  We have left behind the years of high unemployment under the Tories. With high employment and a growing economy, the public finances are in a much better state than they have been for decades. We are back to the era of the 1950s and 1960s, when the problem for a Chancellor is how he spends the money, rather than how he affords the programmes. That is a welcome development. It is time that we started focusing on that argument.
  As other hon. Members have said, the Budget must be judged by whether the way in which the money is to be spent is affordable for the macro-economy, or whether it has the potential to destabilise the macro-economy. The Select Committee was clear that if the fiscal stance is judged in absolute terms, the Chancellor has undoubtedly loosened fiscal policy.
  In our alternative Budget, the Liberal Democrats clearly and openly advocated extra spending, but we covered much of that by extra taxation, believing that this was not an appropriate time to loosen fiscal policy because of the high level of real interest rates and the high level of the pound. That is where we believe the Government are going seriously wrong in their management of the macro-economy. They have loosened fiscal policy for 2000–01, but they are not getting the balance right. That is a shame.
  The International Monetary Fund was right to criticise the Government. It stated:
  In this regard—
  that is, in respect of fiscal policy—
  the recently announced budget for 2000/2001 appears to be regrettably pro-cyclical.
  That means, in short, that there will be higher interest rates as a result.

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  It was interesting that in the Red Book, the Chancellor tried to hide his largesse, but we uncovered it in the Treasury Committee. On Budget day, the Chancellor announced £3.1 billion for 2001–02 for the NHS, but he failed to tell the House that there is another £5.9 billion in the Red Book to be allocated to other public services. He did not announce that because he is worried about scaring the markets. He knew that he had loosened fiscal policy; he just did not want to admit it.
  Mr. Radice: I remind the hon. Gentleman, who has been fair in his description of what the Treasury Committee said, that we also said that Monetary Policy Committee had met twice and had not put up rates. We could have added—it has just happened—that the deputy Governor said that the impact of the Budget on monetary policy was slight. In fairness, the hon. Gentleman should say that as well.
  Mr. Davey: What the right hon. Gentleman says is true. The impact may be slight, but it is certainly positive. That means that interest rates are likely to be higher than they would otherwise have been. For a struggling exporter or farmer, that slight change and the fact that the exchange rate and interest rates will be higher, are significant. It is no use Ministers wringing their hands when manufacturers and farmers come to them. The Government failed to make the right decisions in the Budget.
  Liz Blackman: Will the hon. Gentleman give way?
  Mr. Davey: No. I need to make progress.
  The problem is that fiscal policy has been loosened not just in 2000–01. It will be loosened significantly up to 2004. The Treasury official, Mr. Gus O'Donnell, gave that away when he gave evidence to the Treasury Committee. He said that we need to get back to current balance as the golden rule dictates, but that the Treasury had decided to go back slightly more slowly than the rule would suggest. He admitted that there was significant loosening in prospect.
  Although we welcome the extra public spending, we must not take risks with the stability of the macro-economy. If that means funding extra public spending through taxation, the Government should not shy away from that. They must be prepared to make tough decisions to ensure that we do not return to boom and bust.
  When deciding priorities for public spending in the next few years, Ministers should consider pensioners. The national insurance fund has a huge surplus of billions of pounds, yet some pensioners are in serious need. Yesterday's Sunday Times reported that Ministers now admit that they made a mistake. A senior Minister was quoted as saying that it was a mistake to grant an increase in the state pension of a mere 75p this year and that the Government would suffer a backlash. That is deserved, especially when they send hon. Members glossy, laminated propaganda about their achievements for older people. They should acknowledge that 75p is an insult, apologise to the House and pensioners throughout the country and start to put matters right.
  Mr. Rammell: Will the hon. Gentleman give way?
  Mr. Davey: No, I will not.
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  I want to examine one or two provisions. First, let us consider the climate change levy, which is a new tax. Many people have pointed out that the tax will not achieve its objective. It taxes energy, not carbon. We are faced with a global environmental catastrophe because of greenhouse gases and global warming, and should not try to suggest that the new tax will help tackle that problem. We need a proper phased carbon tax, which ensures that industry adjusts and makes the changes necessary to reduce greenhouse gases. The climate change levy will not achieve that.
  Many details in the climate change levy are wrong. For example, combined heat and power schemes have only a partial exemption. Some good CHP schemes will not go ahead because of the way in which the climate change levy is designed. Earlier today, I spoke to representatives of a large United Kingdom public limited company, which had planned to introduce a CHP scheme, but will not do that because of the description of the climate change levy in the Bill.
  The Bill is a missed opportunity for the environment; it fails to develop the green tax agenda. Chart 6.2 in the Red Book shows the effect of that failure. Greenhouse gas emissions will increase in the next few years. The Government have reneged on their pre-election target of a 20 per cent. cut in greenhouse gas emissions. If chart 6.2 provides a true picture, they may miss even the Kyoto target. That would be a disgrace.
  There is great anger in the information technology, engineering and offshore oil industries about the way in which IR35 will hit many people, especially single-person contractors. The Government may be right to tackle avoidance, but they are using a sledgehammer to crack a nut. We will argue that vigorously in Committee because we believe that the Government should withdraw the provisions on IR35 and consult widely again to get it right.
  Dawn Primarolo: Why do the Liberal Democrats advocate an increase of 1 p in everyone's taxation rate while defending a position whereby some people avoid paying the proper rate of tax or national insurance?
  Mr. Davey: The Paymaster General could not have been listening. I argued against tax avoidance. The hon. Lady should consult officials and the industry and try to devise more targeted provisions which tackle the avoidance problem but do not create genuine difficulties for important sectors of British industry. When we debate the matter fully in Committee, I shall ask the Paymaster General how she will monitor the impact of IR35 to ensure that key people do not leave these shores and work elsewhere.
  I shall also ask the Paymaster General to ensure that the IR35 provisions are implemented flexibly, especially in the early years, to ensure that tax officials give the benefit of the doubt to businesses that make legitimate mistakes in interpreting unclear provisions, and help them to comply. We shall argue that if Ministers stick to the IR35 provisions, the Government should provide for more generous allowances, especially for administration and training.
  Liberal Democrats cannot support the Conservative amendment because it is irresponsible. It proposes reducing taxes when the economy is growing fairly fast

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  and when, to quote the right hon. and learned Member for Rushcliffe, a loosening of fiscal policy is planned. It would therefore be irresponsible to agree to the Conservative suggestion of reducing taxes all round. That would lead to higher inflation, a higher exchange rate, higher interest rates and a catastrophe for the United Kingdom economy. Indeed, it would mean a return to boom and bust. We shall therefore not support the Conservative party in the Lobby tonight.
  We shall oppose the Bill because it is too long, creates too many complexities, provides for a fiscal policy that is too loose and is far too niggardly to pensioners, the health service and schools.
  6.56 pm
  Mr. Roger Casale.: I am pleased to speak in support of the Finance Bill and against the amendments tabled by the Liberal Democrats and by the Conservative party.
  The Bill builds on the work of previous Budgets. It establishes a new and stronger framework, which will safeguard the future prospects of the British economy. It builds further a platform of stability, locks it in place, extends employment opportunities for all and lifts millions of hard-working families out of poverty. The Bill sets out strong but realisable ambitions for the British economy; we should accept nothing less. However, they were unthinkable under the boom-and-bust policies of the Tory Governments of the past.
  Step by step, the Government are constructing a platform of economic stability. The platform is an effective metaphor: it has sound and solid foundations, which are based on the independence of the Bank of England and the new fiscal rules. The Bill will rightly lock the new stability into place. We reject the boom-and-bust economics of the past for the simple reason that Britain cannot afford to repeat the mistakes of the previous Tory Government. Reckless borrowing led to swingeing cuts in public services; scarce resources had to be siphoned off to pay the interest burden on the public debt.
  It would not be right to accept the Liberal Democrats' suggestion and abandon prudent management of the economy for the sake of short-term gain. That would also take us back to the boom-and-bust economics of the past that the hon. Member for Kingston and Surbiton (Mr. Davey) and his party rightly reject.
  Boom-and-bust economics took Britain through two of the most damaging recessions of the post-war era; it led to millions of men and women losing their jobs and their livelihoods; it destroyed hundreds of thousands of businesses and broke the dreams and aspirations of a generation.
  It is right to remind the House of the economic legacy of the recent past, not least because the right hon. Member for Kensington and Chelsea (Mr. Portillo) said that specific groups of people in Britain would be under attack because of the Budget. What about the damage that the Tory years of boom and bust did to Britain? We can celebrate only one victim of boom and bust: the Tory party's reputation for economic credibility and competence.
  Is it a surprise that the man who argued in the House for the privatisation of the health service one week was appointed shadow Chancellor the next? Is it a surprise that
  752
  we heard soon after of reckless proposed tax cuts for the privileged few, packaged as a tax guarantee? Those are reckless promises because the country will remember broken Tory tax promises and 22 Tory tax rises in the previous Parliament alone. That appointment is no surprise because the Tories are still in the business of making rash policy gestures based on a horizon that stretches no further than the next general election. Apart from its record in government and the posturing that has gone on since, the Conservative party should examine the economic figures that it suggests, which simply do not add up.
  I welcome the fiscal tightening represented by the Budget. Putting to one side the debate about whether there is tightening or loosening, tax revenues are increasing because of the Government's policy, opposed by the Conservative party, of increasing employment and participation in the labour market. That is boosting tax revenues. As a result, we are able to spend more on much needed public services such as education and health. Contrast that with the previous Government's record: the generation of mass unemployment, the huge social costs of carrying it and public services starved of the resources that they needed.
  The Budget locks in place the platform of stability that we need to build a new economic framework to safeguard Britain's future. On that platform the Government seek to build three lasting and interrelated elements of the new economy.
  Mr. Geraint Davies: On stability, does my hon. Friend agree that the comments of the right hon. and learned Member for Rushcliffe (Mr. Clarke) were ridiculous? He said that there would be no independence for the Bank of England, interest rates would be lowered unilaterally and inflation would rip. Perhaps he should be known as the Chancellor ripper. Does my hon. Friend agree that stability has been the key to our success—800,000 jobs—and that the Opposition would jeopardise that?
  Mr. Casale: I have some respect for the right hon. and learned Gentleman and for his views on Europe in particular, which are out of kilter with those of his party. However, in 1996 he had to strip hundreds of thousands of pounds of much-needed investment due for London Underground out of the last Tory Budget—with deepest regret, I am sure—and public services in my constituency, especially the Northern line, have been run down ever since. As a result, South Wimbledon station's refurbishment, which was due in 1997, has been carried out only this year. He is as much to blame as the others, but whether he wants to learn from those mistakes is an open question. The Conservative Front-Bench team seem to want nothing more than the opportunity to repeat them.
  The first and foremost of the three elements is modernisation of the public services. We rightly want to provide a massive injection of new funds, especially into the health service, and to achieve far-reaching reforms to deliver best value and raise productivity. We want extra money for schools and for other public services such as transport and the fight against crime. However, we can contemplate such reforms only against the backdrop of economic stability.
  The second element is welfare reforms that focus on reconnecting the lives of many people who have become completely disengaged from the labour market. However,

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  the reforms will also provide security and dignity for all those for whom that is not an option and encourage people to save and to make more provision for retirement.
  The third related element is labour market reform based on putting a floor under wages through the national minimum wage and making resources available for training and for lifelong learning. That will not only enable us to bring people back into the labour market, but allow them to contribute more productively once they are back in. Their work will be of greater value and they will be able to move up the labour market value chain and raise productivity for the whole country.
  These reforms are closely interrelated; we cannot reform welfare without reforming the labour market to make it more flexible. If we can get people off welfare and into work, there will be greater resources for the public services. They could be invested in education, which would increase skills. That would raise productivity, which would help people to become more productive in the labour market later on.
  In contrast to the vicious Tory cycle of boom and bust and neglect and decline, and built on that platform of economic stability, we are starting to see a virtuous circle of increased productivity and increased long-term productive capacity in the British economy.
  In office, the Tories made the mistake of believing that the economy could grow and Britain could succeed while millions were left out and forgotten. Their Government thought that it did not matter in economic terms if thousands of young people left school without a job and no immediate prospect of getting one and were given no chance in life. Promoting fairness and bringing individuals back into the labour market is precisely how we build the foundations for long-term prosperity, which is why the steps in the Budget aimed at creating a fairer Britain are also part and parcel of building a stronger economy.
  The Budget is lifting children out of poverty—it aims to halve child poverty in 10 years and eliminate it in 20—and delivers extra support for pensioners. More than 15,000 in my constituency of Wimbledon will benefit from the increase in the winter fuel allowance. It also rewards working families through the tax system with the working families tax credit. Step by step, a broader vision of how Britain could be in future is emerging. Contrast that with the narrow attack on individual Budget measures or the Liberal Democrat position that this visionary Budget is simply too long.
  In that vision, Britain's long-term economic prospects are more secure. All who want to work are able to, which is perhaps a modern definition of full employment. In that Britain, child poverty will be halved, hard-working families will be lifted out of poverty and public services will be modernised, reinvigorated and working for the good of all rather than a rump serving those who cannot afford private provision.
  Contrast the Bill's strength and vision with the pathetic spectre of a Tory party that has lost its reputation for economic competence and hides behind criticising the proposals as too complicated—the Tories' proposed simplicity would result from privatising public services, borrowing against future revenues and reckless tax cuts—and a Liberal party that has again become entangled in the complexities of its own contradictions. Once again, the Liberals have failed to see the wood for the trees.
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  The Bill is substantial. Taken together, its measures represent an important new step in the creation of a framework for a fairer and more prosperous Britain. I commend it to the House.
  7.9 pm
  Mr. Michael Jack.: I have listened carefully to the hon. Member for Wimbledon (Mr. Casale) and hope that he will volunteer to serve on the Finance Bill Committee. Once he has had the opportunity to wade through 588 pages and examine some of the more Byzantine and complex ways in which the Chancellor seeks to translate his proposals into law, he will be less enthusiastic about condemning simplicity and more on the side of Conservative Members, who speak with the voice of experience and reality.
  I strongly support the Conservative amendment, which asks the House to decline to give the Bill a Second Reading, because of its 558 pages and its content—the extra taxes that it imposes on the citizens of Wimbledon and the rest of the United Kingdom, on the businesses of Wimbledon and the rest of the United Kingdom, and, importantly, on home owners in Wimbledon. I intend to say something about business taxation later. I remind the House that I have properly declared my declarable interests—principally, my interest as a non-executive director of a quoted public company.
  Before we talk about the size of the Bill, we must reflect on how a Finance Bill is put together. It is always interesting to observe the creative tension, and the battle that takes place between Inland Revenue officials, Treasury officials and Ministers as they decide just how big a Bill they think they can cope with—and, more importantly, what measures need to go into it. I think that this Bill is so long—its length has already been mentioned—and so complex for two reasons.
  This is likely to be the last full-length Finance Bill before the next general election. All the evidence suggests that certain people are sweeping every possible bit of legislation into a large pile, on the basis that next year they will not be so lucky. As for the Bill's complexity, I think it reflects the fact that this Chancellor likes to fiddle with the tax system. The Red Book contains a series of measures—small measures—dealing with small and medium-sized enterprises. It continues a trend that the Chancellor has followed ever since taking office: the introduction of a series of small measures that are not terribly well thought out, and are certainly not crafted with care in the sense of evaluating the real effect on the economy—measures whose whole purpose is to give the impression of an active Chancellor who is doing all kinds of things, probably to very little effect. That is the sort of trend that leads to a long Finance Bill.
  Another reason for the fact that our Finance Bills have become longer is that the financial community has become more adept at finding ways around the drafting of legislation. I warmed to the theme of the hon. Member for Kingston and Surbiton (Mr. Davey), the Liberal spokesman, who spoke of the need to separate the parts of the Bill that deal with the Taxes Management Act 1970 and the parts that deal with the more contentious elements of the Budget. I made that point last year, and I make it again this year. If we are to have any meaningful reform of our tax laws, it is important to make that separation in the legislation and the concurrent consultation.

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  If I am selected as a member of the Standing Committee, I hope to table an amendment asking the Treasury to go one step further than the tax law rewrite exercise. I have been on the steering committee dealing with that exercise. It is interesting not only to observe the results of the rewrite of our tax law in plain English, but to note the frustration of those who have been involved. They are frustrated by the dearth of resources to support the exercise; but more interestingly, they are frustrated by the fact that, although measures to smooth the operation of our existing law are already emerging, they cannot be enacted because of the inevitable strictures of the rewrite exercise. I do not apologise for that, because I was partly responsible, but I think it fair to say that the exercise is doing a good job in showing better ways in which the existing tax law could be developed.
  If we are talking about reform, we must be certain about whether we want better, clearer legislation of the current type, or less tax legislation in total. If we want to reform the tax system fundamentally, how would we do that? I do not think that question has been properly answered, but practitioners cry out for an answer. I hope that the Treasury will look kindly on the idea of a report showing how the tax law rewrite could be taken into territory allowing a real reform of the system. That might take a decade, but we need to think about it. We should ensure that size does not necessarily determine whether a Finance Bill is good or bad, and that quality and clarity become the benchmarks.
  Some of the proposals feature niggling complexities. We have already heard today about changes in the Government's energy policy. I was interested to note that the Secretary of State for Trade and Industry chose today to announce some easing of the moratorium on gas-fired power stations. Having tabled parliamentary questions, I learned from the Government that there was no need for the climate change levy as currently proposed. While I entirely support the idea of saving 2 million tonnes of carbon dioxide as a contribution to our Kyoto target and to a reduction in global warming, the proposed method is unnecessarily complex.
  Horticulture, in which I earned my living before coming to the House, has survived because it has saved energy over the years, but the best that that industry—which has a superb record on energy saving, and which is carbon-neutral in terms of the job that it performs—can get out of the Government is a 50 per cent. rebate. If the Paymaster General considers the implications of an end to the moratorium on gas-fired power stations, and also reads the parliamentary answers that I have secured from my colleagues so far, she will find that a 13 per cent. reduction in coal-fired electricity generation, coupled with a 14 per cent. increase in generation from gas, will save 2 million tonnes of carbon dioxide a year. The climate change levy, as such, is thus not needed.
  If the hon. Lady would like an even more environmentally friendly example, I can refer her to a letter placed in the Library by the Minister of State, Ministry of Agriculture, Fisheries and Food. In the England rural development plan, the Ministry was able to point out the benefits of carbon absorption by the planting of miscanthus grass or short rotational coppice—energy crops. I asked the Ministry what would happen if the horticulture industry increased its plantings: could it
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  absorb its own carbon dioxide output? I was told that if 41,000 hectares were planted, that could be done; but much more tellingly, that the planting in the United Kingdom of 108,000 hectares of short rotational coppice would take away all the 2 million tonnes of carbon dioxide. That complies with Government policy.
  I estimate that the cost would be £150 million. If burning that short rotational coppice required, as it would, the construction of more appropriate power stations, the cost could be recovered through the cost of the energy itself. If necessary, the Government could recoup any upfront moneys that they had to invest to encourage that form of activity.
  We have 18.6 million hectares under cultivation; the 108,000 hectares that I mentioned represent about 0.5 per cent. of our cultivatable land area. In a simple, straightforward, environmentally friendly, job-creating way, we could do away with the levy, and provide a solution to the complexities in the Bill. It is time that the Government looked for some energy-saving carrots, instead of always looking for sticks with which to beat people, and imposing additional costs on UK industry that will not be imposed on our continental and world-based competitors.
  Just as the Government refuse to consider such simple ways of dealing with climate change, they reveal themselves as the authors of complexity on page 147 of Red Book, in the Financial Statement and Budget Report, which deals with the parts of the Bill that introduce variable rates of vehicle excise duty on new cars. There is nothing in the Bill or the Budget praising motor manufacturers for their technical ingenuity in reducing noxious emissions, nor anything that recognises the fact that Europe's car makers have already voluntarily agreed to exceed Government emission standards by means of their own technology and agreements throughout Europe.
  I do not know what the table in page 147 is supposed to say about future emissions because there has been no environmental impact study. There are four VED bands and three levels of taxation: for cars using cleaner fuels, for petrol cars and for diesel cars. We are supposed to find that all sorts of magic things will occur because of a spread in VED—it will be between £90 and £160. In terms of influencing people's car purchase, it is for the birds. To be introduced, such a system requires complex legislation, but it is against a background of no measurable environmental benefit because no study has been done. It is about time the Government looked more carefully at the way they introduce legislation, because it is complex indeed.
  In the Budget, attempts are made to bring the same environmental schemes to the field of company car taxation. The Government have seen fit to amend the previous arrangement, which may have induced people to drive unnecessarily long distances to try to get over the 18,000-mile barrier to pay a discounted rate of company car tax, rather than the full rate. However, the Government seem to have introduced a full, head-on charge for the man who takes home the company van, the genuine company car user, the person for whom the company car is a proper tool of the trade.
  That person has in no way been assisted by the proposal. Again, there is no effort to try to work out whether company car purchase schemes will be influenced by that mechanism, yet in its own way, it adds complexity to the Bill.

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  One thing confuses me above all else. If, through those two measures on motor vehicles, the Government are trying to encourage a reduction in carbon dioxide emissions, why are they penalising the most carbon dioxide-efficient type of engine: the diesel? They seem to have imposed a penalty on such cars. They say that they will consult and do something about it later, but why wait until later? Why not do something about it now and back companies such as BP Amoco, which are introducing their own very clean fuels? One of the benefits of the fuel will be to take away sulphur dioxide emissions. It will be burned by the most energy-efficient engine.
  I do not see the logic in what the Government are doing, introducing unnecessary complexity in that whole area. There is very little to encourage the take-up of liquified petroleum gas, which in terms of non-carbon dioxide emissions is one of the cleanest fuels in the country. The Government's policies in that area are confused.
  I comment next on the Government's arrangements for non-controlled foreign companies, so-called company mixer schemes, and the tax arrangements for companies trading abroad. I well understand why companies have become concerned about that form of taxation. It is true that there was consultation with business on double taxation over the two years before the Budget, but nowhere in that consultation exercise was there any indication of the proposal to change the nature of those companies and their tax position—that was not part of the consultation exercise. All of a sudden, the competitive position of United Kingdom companies trading on a world basis has been put at risk by the proposal.
  I held a conversation with one such company last Thursday to establish beyond peradventure whether it would be trading at a disadvantage. The answer is very clearly that it would. In a tax sense, it will be treated worse, for example, than its German counterparts.
  The company has a subsidiary. The mixing of revenues under different tax regimes takes place in Luxembourg. It can maintain its competitive position, for example, compared with German companies, by mixing streams of incomes, which have borne a different rate of taxation. As a result, it can maintain a competitive tax regime compared with its continental counterparts and sustain a regular flow of investment to new enterprise in Europe.
  Dawn Primarolo: Will the right hon. Gentleman explain why he believes that multinationals should be able to use offshore structures to mix foreign tax and thus deny the Exchequer the right level of tax in the UK?
  Mr. Jack: Perhaps the hon. Lady would like to explain what she means exactly by "the right level of tax." If UK companies are using legitimate methods of safeguarding their tax position, whatever income is eventually remitted to the UK can be taxed appropriately. That seems the right way in which to tax.
  Dawn Primarolo: Will the right hon. Gentleman accept that that is precisely the point? Some multinationals are bringing their profits back to the UK to be taxed at the tax rate in the UK and others are using offshore arrangements not to do that and to mix. Does he think that fair to the multinationals that are bringing back their profits to be taxed here at our rate?
  Mr. Jack: If we talk to companies that are active in business, they will point out that, sometimes, because of
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  their investment strategy abroad, they need to maintain investment income on a world basis to carry on investing, particularly if that investment was originally funded by seedcorn capital from the UK. Once that capital starts to generate interest and dividends, which can then be returned to the UK, there is a stream of income which could be taxable. Every other major G7 member of the Organisation for Economic Co-operation and Development has the ability to mix tax. What the hon. Lady has put forward clearly leaves UK companies at a competitive disadvantage compared with their G7 counterparts.
  Dawn Primarolo: I am looking forward to discussing the matter in Committee with the right hon. Gentleman; I hope that he gets on to the Committee. Does he accept that, when we compare how we tax our multinationals and, in particular, the use of our controlled foreign company legislation, with the practice of our European partners, we find that the Government's proposals are to bring us into line with the competitive practice of other countries, not the reverse?
  Mr. Jack: I find that very difficult to accept, particularly in the light of the letter that was sent to the Chancellor by Dame Sheila Master. Perhaps the hon. Lady will, in her winding-up speech, comment on Dame Sheila's points, some of which I have drawn on. It is always a mark of the sensitivity that those on the Treasury Bench feel about remarks by Conservative Members when the Paymaster General chooses to intervene on the remarks of a humble Back Bencher on three separate occasions. I can only assume that my comments are hitting home.
  The Government's proposals will effectively change the regime on the qualifying arrangements for non-controlled foreign companies, which currently enable them to take advantage of the different taxation regimes throughout the world in mixing their incomes. The proposals will make it more difficult for them to remain competitive. The hon. Lady should concentrate on addressing business's concerns about international competitiveness, rather than take swipes at me because I choose to raise what business experts are saying.
  Mr. Gardiner: May a humble Back Bencher intervene on a humble ex-Minister? The right hon. Gentleman talked of companies that were taking the opportunity to safeguard their tax position. Can he clarify precisely what he meant by the word "safeguard"? Does that simply mean, in common parlance, paying minimal taxes in this country?
  Mr. Jack: No, that is not what the type of company to which I am referring is about. The company to which I have referred is in direct competition with European rivals in a retail business. In order to maintain its competitiveness, it must use the same mechanisms as are available to its European competitors. I am referring to its safeguarding its relative competitive position. It is a pity that the Paymaster General did not offer the possibility of onshore tax mixing in order that she might have more direct jurisdiction over such flows of income, and at the same time, maintain British companies' ability to take advantage of differing rates of taxation that are levied on their earnings in different parts of the world. It is clear that companies feel an injustice, a subject to which I hope we shall return.

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  I should like briefly to raise two other points before I conclude. The question of IR35 has been raised. People from all over the country who are affected by IR35 came to a meeting in my constituency. Subsequently, I have contacted some companies that provide the Government with information technology practitioners. They confirm that, because of IR35, they envisage problems retaining staff and staff going abroad to practise their skills; and that, in spite of changes to the employment test that the Paymaster General and the Inland Revenue have introduced, the provision bears unfairly on such workers.
  Kali Mountford: The right hon. Gentleman says that there is a risk of people going abroad to avoid tax. He is talking about tax avoidance. Will he name countries to which he thinks people are likely to go, because he will find that most countries levy such tax?
  Mr. Jack: I did not use the words "tax avoidance". The Treasury and the Inland Revenue became twitchy on the matter because the Government created a tax regime in which small-scale companies could legitimately take advantage of UK laws. People are so concerned about IR35 because as a group of, effectively, self-employed practitioners, they are unfairly penalised compared with other enterprises.
  A corner shopkeeper may pay himself in dividends and take advantage of the Government's changes to corporation tax law, but an individual who supplies services in IT or other industries will not receive the same tax treatment. We are talking not about avoiding tax but about people who want to pay tax. We are talking about the self-employed person who takes risks—the very entrepreneurs whom I thought the hon. Lady's party was supposed to support. With respect, her question shows her ignorance of the matters.
  I thank the Chief Secretary for his kindness in agreeing to consider the effects of the working families tax credit on lone parents who work unsocial hours in, for example, the health service and social care and find it difficult to secure appropriate registered child care to enable them to work. That is a small failing in legislation. I hope that Treasury Ministers will make representations to the Department for Education and Employment and perhaps table an amendment to ensure that parents who want to work 24 hours around the clock and are in need of child care may benefit from the working families tax credit.
  7.33 pm
  Mr. Eric Illsley.: I will not detain the House long; I seek only to make a few comments on issues that affect my constituency and constituents. I declare at the outset that I am a paid adviser to the Caravan Club. I make that declaration because one of my comments will relate to motor car taxation, which has many affects on caravaners.
  I welcome the Budget and the Finance Bill, especially measures on relieving child poverty. I welcome the working families tax credit and the extra money that has been allocated to the national health service. Like other hon. Members, I cannot understand the Opposition's amendment, which simply complains about the Bill's length and complexity.
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  The first area that I will raise briefly relates to our treatment of pensioners. As hon. Members, we have all been lobbied by pensioners who are somewhat unhappy with the increase in their retirement pension. I am aware of the Government's letter, which has been circulated in the past few days, setting out the help that the Government have given pensioners. I very much welcome the minimum income guarantee and relaxation of the limits on savings, from which more people will benefit.
  I also welcome the £150 winter fuel payment—but, so far, that has not been paid. I receive many complaints from pensioners who want to know, bearing in mind the small increase in their retirement pension, when that money will be made available. As they constantly point out, their council tax, council house rents and various other household costs have risen, but benefits have not increased to meet that.
  Another example, to which I have referred before, relates to the provision of free television licences for all those over the age of 75. Quite a lot of housing association tenants will not qualify because their television licences are included in their rent. I have seen nothing yet from any housing association suggesting that they will pay pensioners the equivalent of the licence fee. Therefore, the Government could have done a little more with the money available to them to provide for the welfare of pensioners.
  I also want to make a point about tax allowances. I fully appreciate the reasons behind the Chancellor's moves to cut the married couples allowance and to introduce a children's allowance in order to target the cost of bringing up a family. I have been heavily lobbied by my constituents on tax allowances, especially by one person who, two years ago, suffered an accident which left him paralysed. He is wheelchair-bound, living on the occupational pension from his previous employment—he was a qualified engineer on a considerable salary—and incapacity benefit. Over the past week, his tax bill has increased by about £11 a week. I find it strange that we are targeting tax increases on people who live in such unfortunate circumstances.
  I turn to one of my old favourites: tobacco taxation and smuggling. I have raised this issue on a number of occasions and my hon. Friend the Paymaster General knows my views. She is aware that my area has suffered greatly from smugglers—people who operate on an organised basis, bringing contraband tobacco, alcohol or whatever into the country on a huge scale.
  I fully support increases in tobacco tax to discourage smoking, which results in a huge cost to the NHS and society. We should do as much as we can to decrease smoking, which, as has been pointed out, is sadly on the increase, especially among young women. I agree that we must take measures to combat smoking, but my worry is that such measures are defeated by smuggling.
  In my constituency, it is very easy to buy cheap cigarettes; they are on sale all over the area. I have been lobbied constantly by tobacconists and newsagents, who inform me that it is not worth their while even trying to sell tobacco products because they cannot compete with smugglers. When I talk of smuggling, I mean the arrival of contraband goods in articulated lorries so many times a week. A smuggler will sell to his runners at a £1 profit cartons of cigarettes that he has bought for £12 or £13. They, in turn, will sell them at £1 profit, and that is how the stuff is distributed throughout the constituency.

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  The issue is whether we continue to increase tax on tobacco products without addressing smuggling. Regardless of the difference in taxation rates, whenever there is a financial incentive for people to smuggle tobacco into the United Kingdom, they will do so. We have to determine how to deal with smuggling. I welcome the action that the Government have already taken and the extra money that they have provided to prevent smuggling, but it seems that that action is not yet working and that we shall have to re-double our efforts. The same arguments apply to alcohol. However, although the dangers of alcohol are real, they are not as bad as those of tobacco.
  I am a member of the Caravan Club and, as I said, represent it in the House. Increased motoring costs are a major concern for the club's 300,000 members, who usually have to use a larger car, with a larger engine, to tow their caravan. In a recent survey, the Caravan Club established that 11 per cent. of its members had a company car. Club members are therefore being targeted by the Budget and Finance Bill's measures to increase company car taxation. That increase is having an affect on the leisure industry, as people are having to decide whether they should continue with that leisure pursuit.
  Increased taxes on diesel fuel also are affecting caravaners, who often choose to use diesel cars because of their better fuel consumption and performance. Caravaners, the Caravan Club and the tourism and leisure industry feel that they are being unfairly discriminated against by increased diesel fuel duty.
  I have often raised the issue of the climate change levy with Ministers, both in private meetings and in the House. I feel that the levy is not the correct way of meeting our Kyoto emissions targets. I accept that we have to deal with CO2 emissions. I was also a member of the Select Committee on Energy that, in 1990, produced a report on greenhouse gases. As I have often said in the House, that report is still on the shelf, and its recommendations on greenhouse gases and emissions have been ignored.
  The climate change levy will be a tax on high-energy users. Consequently, it will be a tax on manufacturing. It will also be a tax on jobs in my constituency, particularly in the glass industry and in another industry that I shall deal with later. The glass industry uses a great deal of energy. As my constituency has one of western Europe's largest glass bottle producers, the industry is a major employer in my constituency.
  Luckily, the glass industry can take advantage of the agreements made by energy users under the integrated pollution prevention and control regulations, and will therefore qualify for the discounts available to industries entering energy saving agreements. However, some industries and companies—particularly the British Oxygen Company, which has a distribution centre in my constituency—will not qualify for the discounts.
  In his statement today, my right hon. Friend the Secretary of State for Trade and Industry promised about £100 million in the next four years for the coal industry, and said that he will lift the stricter gas consents policy. The decision to end the current consents policy will result in the removal of our coal industry from Britain in the next two years. Because of the gas consents that have already been approved, and those that will be allowed in October 2000, there is no way that our industry will be
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  able to compete with gas. Our coal industry will be eclipsed, and we will have ever more gas-fired power stations.
  Consequently, even without a climate change levy, we will be able easily to meet the Kyoto targets. I agree with the right hon. Member for Fylde (Mr. Jack) that we really do not need the climate change levy, which will be a tax on jobs in my area. If it is imposed, money will go out of my constituency and jobs will be cut. National insurance rebates will not compensate for those losses.
  Recently, the BOC Group—which, as I said, has a distribution centre in my constituency—wrote to me, as I presume it did to many other hon. Members, on the climate change levy. Each year, BOC spends £60 million—which is 78 per cent. of its production costs—on electricity at its largest sites. Although it cannot qualify for any of the exemptions from the climate change levy, it uses more electricity than do some of the industries that can qualify.
  BOC is involved in the process of air separation, but that process is not covered by the integrated pollution prevention and control regulations. BOC therefore cannot qualify for the 80 per cent. rebates provided to the glass industry, for example. Similarly, processes that do not melt, but bend glass—such as those used by Pilkingtons in the manufacture of car windscreens—do not qualify for the 80 per cent rebate. The regulations therefore have different effects in different sectors of the glass industry. Although some are able to qualify for the rebates, some cannot. As the automobile components market is very competitive, Pilkingtons vehicle windscreen division will suffer greatly from uneven application of the regulations.
  In most of the letters that I have received on the climate change levy, companies make the point that, as they are burning so much energy and their energy costs are so high, they pay very close attention to energy consumption, which they try to reduce by installing the most energy-efficient plant that they can afford.
  The aggregates tax is another environmental tax. Although it is not dealt with in the Finance Bill, it has already been mentioned in the debate.
  Mr. Jack: Before the hon. Gentleman moves on to the aggregates tax, could he summarise his precise personal position on the climate change levy? Does he think that, as currently formulated, it should be dropped?
  Mr. Illsley: Yes, I do. As I said after today's announcement on the British coal industry, there is no need for the climate change levy. It now takes about two years to build a gas-fired power station. We are providing assistance to the coal industry to compete with gas-fired power stations. However, since 1912, gas production has been increasing and coal production has been decreasing. The time has just about come when the gas industry will simply do away with coal. Removal of the stricter consents policy will achieve whatever emissions level we need. I am sad to say that, as my area's industry will be hit, first, by the climate change levy and, secondly, by the loss of our coal industry.
  Sand, silicates and other aggregates are used in the glass industry, much of which is located in my constituency. My glass producers will be hit both by the climate change levy and by the aggregates tax. Their raw materials costs will increase.

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  Recently, the Quarry Products Association wrote to me, and presumably to other hon. Members, to point out that it was dismayed that its request for a voluntary agreement to deal with the Government's environmental concerns was rejected in favour of the tax.
  Mr. David Heath.: I am glad that the hon. Gentleman is dealing with the aggregates tax. Does he agree that the tax, because of its bad design, will not promote recycling materials rather than using virgin stone, and that it will attack the very companies that are installing the infrastructure necessary to improve the environment? Will they not be worse off for taking that action?
  Mr. Illsley: The hon. Gentleman anticipates my point. The tax will not promote good practice in the aggregates industry. The good operator and the bad operator will be equally affected.
  Although the glass industry can recycle waste glass, it cannot use recycled quarry materials, as the Government would like it to do. I fully support the protection of national parks and the sites of quarries and minimising the use of raw materials through voluntary agreements, but the proposals will be a tax on jobs in my constituency. We talk a lot about the north-south divide. Here are two examples of a northern heavy industry manufacturing constituency being affected by Government policy.
  I welcome the thrust of the Bill and the Budget. I very much welcome the extra money for the national health service and other services and the fact that our economy is strong and our public finances are in good shape. I just wish that the Government would look again at the climate change levy; the aggregates tax; what we are doing for our pensioners; and smuggling.
  7.51 pm
  Mr. Christopher Gill.: It is a great pleasure to follow the hon. Member for Barnsley, Central (Mr. Illsley). I should like to say across the party divide how much I agreed with his comments on bootlegging, the climate change levy and the aggregates tax. I have the same experiences in my constituency.
  The Government speak of working for a stronger and fairer Britain. That is an admirable aspiration, but after that I part company with them. I imagine that many Conservative Members agree that a stronger economy cannot be built through the imposition of additional taxes on the wealth-creating sector. We have listened to Government rhetoric. Ministers have said that businesses and jobs will benefit from the Budget. A reasonable test of the Bill is to examine how it will impact on businesses in my constituency, just as the hon. Member for Barnsley, Central assessed its effects on his constituency.
  As the hon. Gentleman rightly said, the aggregates tax will be a tax on jobs. There are many jobs in quarries in my constituency, including those operated by Aggregate Industries at Much Wenlock, the Bromfield sand and gravel company at Ludlow, Hanson at Clee hill and Lafarge Redland at Bridgnorth. The Quarry Products Association is not best pleased that, having spent the best part of 18 months working up a partnership agreement and hoping to persuade the Government to accept a package
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  of 30 regulatory and voluntary proposals that it maintains would have guaranteed a much better deal for the environment, its proposals have been rejected in favour of a tax.
  It seemed rather unprincipled of the Government to encourage the Quarry Products Association to believe that if it came up with satisfactory answers that addressed the Government's objectives, no tax would be imposed. The other disappointment is that the tax will undoubtedly have serious ramifications throughout the economy. The tax will not differentiate between good and bad operators and provides no incentive to improve environmental performance.
  I say that with some feeling, because the quarry on Clee hill last year won the civic trust award and a national quarry reclamation award for doing a very good job restoring quarry workings after they have been worked out. It is a slap in the face for the operators of that quarry and others who have worked hard to do the right thing by the environment to find that the proposals that they spent a lot of time, money and effort on have been rejected. They were given no reason to suspect that, like many other interest groups, they were being taken for a ride by the Government, who eventually imposed an aggregates tax on Budget day of £1.60 per tonne. The Quarry Products Association points out that many small operators working on a small profit margin will be at serious risk of closure, which would lead to job losses. I am concerned about that, because those jobs are very important in my constituency.
  Where is the sense in the tax? Henceforth, every construction project in the land will cost more. Every new factory, every new house and every new Government building will cost more. Every mile of farm track or forestry access road will cost more. Maintaining and improving the permanent way on our railways will cost more. If they had one, the Government's roads programme would also cost more. Once again, the Government demonstrate their failure to understand that increased taxes and other cost and regulatory burdens imposed on the wealth-creating sector have consequences for the whole economy. I am sad that the Government have failed to recognise that imposing increased taxes on industry puts up costs and makes British companies less competitive.
  The Clee hill quarry produces a category of stone that is shipped to south Wales, where it is converted into rockwool. As many hon. Members know, that is an insulating material. There seems to be a contradiction. The Government are imposing a tax on the quarrying industry, but at the same time they are intent on reducing VAT on energy-saving materials. The left hand does not know what the right hand is doing. That is an example of the law of unintended consequences.
  Mr. David Heath: The hon. Gentleman is putting a powerful case that is shared by many of us who represent quarrying constituencies. Does he agree that his point could have been foreseen, because the Environmental Audit Committee drew attention to such perverse environmental consequences when we looked at the design of the tax?
  Mr. Gill: I have a lot of sympathy with that point. As we get into the detail of the Bill, it becomes clear that the

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  imperative is to raise more revenue. I shall give an example in a moment of another industry that has argued a sound case for several years and thought that it was going to persuade the Government to see sense, but fell at the last hurdle.
  The biggest employer in my constituency is the Lawson Marden Star aluminium factory at Bridgnorth. It will be subject to the full climate change levy, whereas the smelters in the aluminium industry will get a rebate. That is very much like the situation that the hon. Member for Barnsley, Central described in the glass industry, where the makers will get rebates but the benders will not.
  It will be very difficult to draw hard and fast lines in the sand for individual industries that will be meaningful and, more to the point, fair and that, even more to the point, will not prejudice the jobs that the hon. Gentleman and I value so much in our respective constituencies. Very few businesses indeed will find that the reduction in employers national insurance comes anywhere near compensating them for the amount that they will have to pay out for the climate change levy. It is a bad tax and should be withdrawn.
  I want to say a word about small independent brewers—including pub breweries—of which I have not a few in my constituency, such as the Three Tuns and the Six Bells at Bishop's Castle, the Sun at Corfton, the Crown at Munslow, Hobson's brewery at Cleobury Mortimer and the Wood brewery at Wistanstow. They might all have expected that the case for progressive beer duty put by the Society of Independent Brewers was so powerful and reasonable and such sheer common sense that the Government would accept it.
  A letter from the general secretary of the Society of Independent Brewers shortly after the Budget said:
  We have overcome all the objections from government departments as to why PBD—
  progressive beer duty—
  should not be introduced…
  Just like the quarrying industry, the brewing industry found at the final hurdle that it could not persuade the Government to recognise the sound common sense of its case.
  The Government are not friendly towards small businesses, as further evidenced by their obdurate refusal to listen to the voice of the Brewers and Licensed Retailers Association, which made the case that bootlegging of alcoholic drinks and tobacco is putting its members out of business. That was another point eloquently made by the hon. Member for Barnsley, Central.
  Let us face facts. Six rural pubs per week are closing. They are not going out of business because of market forces but are being driven out of business by a Government obsessed with political correctness and spin, who have a cynical disregard for the bona fide traders who are entitled to believe that the law of the land—the criminal, civil and fiscal law—is on their side. There is a dawning realisation that, under this Government, it is not. I trust that that will be reflected in the ballot box at the next general election.
  The quarry owners, the small brewers, the publicans, the newsagents and tobacconists and the sub-postmasters and mistresses are not the only ones to have been sidelined by the Chancellor. In his Budget speech, there was not a mention of farming, Britain's second biggest
  766
  industry and one that is crucial in my constituency. After three years of Labour dither and delay, that industry is in desperate straits.
  The Chancellor might have seen the good sense of reducing the duty on beer, to encourage its production and consumption in this country, as against all the alcoholic drinks that we import. Let us consider the spin-off to the farming industry. If it was required to produce more hops and malting barley, that would be a win-win situation for the brewers, the farmers and the consumers—it would be a virtuous circle—but instead we have the opposite and the Labour party is returning to tax and spend, and the devil take the hindmost.
  The inexorable hike in road fuel duty does nothing to improve the rural economy. The Bill contains nothing for people in rural areas. The Chancellor may bluster that corporation tax and the standard rate of income tax have been reduced, and I applaud him for that, but that is no consolation to the road hauliers whose profits have evaporated, to the farmers who are driven to claim income support, or to the retailers who are forced to put up the shutters for the last time because the Government, far from running the bootlegger out of town, are driving the bona fide trader out of business.
  I have deliberately concentrated on the effects on business, because there is no escaping the fact that without business there is no wealth creation, without wealth creation there are no jobs, and without jobs and wealth creation there is no money for the public sector.
  8.5 pm
  Liz Blackman.: I commend the Bill to the House. The Budget cannot be viewed in isolation from earlier Budgets. There is an interaction between this Finance Bill and those that have gone before it. Each Bill is a building block. Building blocks need firm foundations, and I want to hammer home the point that although when we took office in 1997 a frustrated electorate had tremendous aspirations and expectations that the Government would deliver all kinds of policies, it would have been very foolish to set off on a course that we could not deliver because of the weak footings that we inherited.
  I was very interested to hear the speech of the right hon. and learned Member for Rushcliffe (Mr. Clarke). I fear that he was suffering from selective amnesia. When we took office in 1997, debt as a share of gross domestic product was far too high, at 44 per cent. He had made an attempt to bring the deficit down, but it was still £28 billion: inflation was rising, and he should have put up interest rates before the general election in May, but the issue was very politically sensitive at the time. I see a Conservative Member nodding in agreement.
  Mr. Tyrie: Will the hon. Lady give way?
  Liz Blackman: Not just yet.
  Inflation was rising when we took office, and we had to follow a more painful track in interest rates as a result. The House will recall that rates had been bobbing up and down furiously over many years leading up to 1997 and had reached the heady height of 15 per cent. How could businesses have operated in that climate? The fact is that they did not operate very successfully.
  Mr. Tim Loughton.: As the hon. Lady would not give way to my hon. Friend

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  the Member for Chichester (Mr. Tyrie), who was nodding, can she point to a single speech made by her Labour colleagues before the general election suggesting that interest rates should go up? Will she acknowledge that interest rates have changed about 15 times over the past three years? What stability does that offer for business?
  Liz Blackman: First, at the time to which the hon. Gentleman refers, we were not in government. On his second point, although interest rates have bobbed up and down recently, they have done so by quarter points within a very narrow band; at no point have they got anywhere near the 15 per cent. that we endured during the late 1980s and early 1990s. We will take no lessons from him.
  Mr. Tyrie rose—
  Sir Teddy Taylor.rose—
  Liz Blackman: I want to make a little progress before I give way.
  Before we could move forward on our priorities, we had to put the house in order. In three years, we have reduced debt as a proportion of GDP to 35 per cent. and what was then a deficit is now a surplus of £14 billion. We have substantially locked in those surpluses, and rightly so, given the strength of the economy.
  Mr. Tyrie: Will the hon. Lady give way?
  Liz Blackman: No. The hon. Gentleman can make his own speech shortly.
  In tandem, the Monetary Policy Committee, which was appointed early in the Government's life, has kept inflation bang on target at an average of 2.5 per cent. and has also kept interest rates within a narrow band. The shape of the economy is good—and that despite the fact that in 1998 we faced a severe contraction in economic activity in Asia, which is something that Opposition Members forget. The Opposition predicted recession, but it did not happen. That was not an accident: it was because the economy, and our fiscal and monetary policies, were working properly to ensure that we stayed on course.
  Several hon. Members rose—
  Liz Blackman: I shall not give way, because I would like to make some progress. [Interruption.] I seem to be getting under the Opposition's skin, so I judge myself to be succeeding.
  We are now three years down the line and into our third Finance Bill, and we have flagged up our priorities. The priority that is nearest and dearest to my heart is education. The state of education resourcing in Derbyshire in 1997 was diabolical. The reason for that was the vicious spending restrictions placed on the local authority by the then Government. Class sizes were at a record high and were some of the worst in the country. Buildings were falling apart and the situation was at rock bottom.
  In recognition of Derbyshire's dire straits, it was the only authority that this Government allowed to breach its spending cap in the first year of this Parliament. It has
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  since had generous slabs of ring-fenced funding: classrooms have been built; we have more teachers; roofs have been mended; the majority of schools in my constituency now have indoor toilets; and the literacy and numeracy strategies are working well.
  The differential in funding between Derbyshire and other authorities is still of concern, because we are still at the bottom of the league. However, I congratulate the Government on re-examining the issue and on their commitment to try to get greater parity between authorities. That is not only an issue for me as a Derbyshire MP, but for other hon. Friends and Opposition Members.
  Mr. Bercow: If the Government are doing as well on education expenditure as the hon. Lady claims, why is it that they have reduced the proportion of GDP spent on education from 5 per cent., as it was under the previous Government, to 4.7 per cent?
  Liz Blackman: All I can say is that when I go round my constituency I see real and tangible results from spending, for the first time in many years. I see new classrooms, more teachers, new and renovated buildings. What is more, I see children following curriculums that are making progress for them so they will not reach secondary schools with poor reading and writing skills, as they were allowed to by the previous Government. That is the difference, and I can see it working in my constituency.
  I also welcome the money that is to be given to the NHS. Again, my local health authority has done well out of the settlement in capital and in revenue. My constituency has two hospitals, and both are beneficiaries of the private finance initiative. That would never have happened under the previous Government, because not one hospital contract had been signed when we came to power in 1997.
  The other NHS funding that I especially welcome is the money that is going direct to primary care groups, for which I have much sympathy because they are being asked to deliver the lion's share of the Government's agenda. The PCGs in my constituency have certainly welcomed the extra funding that will allow them to do that.
  We have heard much about industry today, and of course it is the engine of a successful economy. The Treasury Committee has taken a lot of evidence about productivity, because it is strongly linked to business success. All our witnesses came to the same conclusion—the reason for the existence of such a wide productivity gap between this country and some of our European competitors and the United States was a structural lack of investment over many years. The policies in the current Finance Bill and in our previous Finance Bills, as welcomed by the Institute of Directors, will help to reverse that lack of investment. That is at the heart of raising productivity. I welcome the lowering of corporation tax, the permanence of the capital allowances, the reforms to the capital gains tax system, the research and development credits and the regional venture capital fund, of which the east midlands will now receive its share.
  Underpinning all those factors is a stable economy. Businesses will not invest in an economy in which they have no confidence. Businesses have not invested

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  structurally in the past because Government policies did not encourage them to do so and also because they had no certainty about what the economy would be doing from one year to the next. That certainty now exists, so business investment has increased significantly since 1997. It is up 16.5 per cent. and inward investment is up 45 per cent.
  Much has been said tonight about the manufacturing sector and the hard time that it is having exporting because of the level of the pound. However, Opposition Members cannot explain why when interest rates went down last year the level of the pound stayed the same. Neither the right hon. and learned Member for Rushcliffe nor the hon. Member for Kingston and Surbiton (Mr. Davey) could explain that. According to their argument, the pound should have fallen when interest rates were that bit lower last year, but it did not. The fact is that the euro is weak, but euro economies are recovering, especially France and Germany.
  Mr. Edward Davey: Is the hon. Lady saying that fiscal policy has no effect on the exchange rate?
  Liz Blackman: If any hon. Member can explain why the pound stayed at exactly the same level when interest rates went down last year, we might be able to have something of a debate, but the movement of the pound in relation to the euro is inexplicable not only to all the experts who have appeared before the Treasury Committee but to the Governor himself. If monetary policy had been relaxed with a significant impact on the level of the pound, we could argue some kind of cause and effect, but that has not been demonstrated.
  Sir Teddy Taylor: Will the hon. Lady give way?
  Mr. Bercow: Will the hon. Lady give way?
  Liz Blackman: No, I will not. The hon. Gentlemen can make their own speeches.
  I turn now to the supply side and to the skills that are vital to improved output and productivity. The game is a long one, and I have talked already about investment and the effects that our policies and resourcing strategies are having. However, I also welcome the significant training programmes that the Government are putting in place, and the policy on lifelong learning.
  My constituency has a skills shortage that was identified many years ago. I am delighted with the Government's new deal policies, under which youth unemployment and long-term unemployment have each been cut by 65 per cent. My right hon. Friend the Chief Secretary visited my constituency not so long ago and met a new dealer who was 58 years of age. Between the ages of 50 and 57, he was out of work and he never thought that he would work again. However, he got on the pilot new deal 50-plus scheme, and is now a really valued employee of the firm for which he works. I welcome the additional proposals to roll out the new deal 50-plus scheme across the country. It should be recognised that every section of society has a contribution to make, and my constituent has certainly made his.
  All the measures that I have mentioned, together with the enhanced working families tax credit and the lower marginal rates of tax and national insurance, help to
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  ensure that people are supported back into work. The 800,000 new jobs that have been created are testimony to that.
  Mr. Bercow rose—
  Liz Blackman: Finally, I want to say a few words about pensioners. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) congratulated the Government and welcomed the measures in the Bill that are targeted at pensioners. Some are aimed at poorer pensioners but others—such as the winter fuel allowance—are more universal. I have had discussions with pensioners in my constituency, and a couple of other points arise out of the representations that they made. I believe that the measures that we have taken are absolutely right, but even with the new savings thresholds that have been introduced, those pensioners just above the minimum income guarantee who have modest savings will not get the same benefits as those on the minimum income guarantee. I want more to be done for them, but the Government recognise that and I know that they are consulting on introducing more pensioner credits for that particular group. That is absolutely right.
  Finally, when the Government flagged up the priorities of education and health, the Opposition said that our proposed investment in public spending was reckless. They were wrong. They foretold recession during the Asian crisis, and they were wrong. Some Opposition Members now endorse an investment strategy in public services, but they also urge the minimum tax guarantee—exactly the combination that will take the country back to the dire recession of the late 1980s: it would lead to the same disaster.
  A well-managed economy allows us to pursue economic success, productivity, better public services, and fairness. All those objectives are inextricably linked.
  8.24 pm
  Mr. Dafydd Wigley.: I shall not pick up the speech from the hon. Member for Erewash (Liz Blackman) in detail, but I agree with what she said about the Government's treatment of pensioners. That story was told very dramatically by the hon. Member for Barnsley, Central (Mr. Illsley), who is not in his place now. Some Labour Back Benchers are feeling very strongly the pressure being applied by pensioners. No doubt they will make known to the Government the dissatisfaction and unhappiness felt by pensioners at the weekend press reports about the Government abandoning the pensioner vote.
  Where will that vote go? The Conservative party broke the link between pensions and earnings in 1981 and is unlikely to reap the harvest from pensioners. Clearly, my party will have to put up candidates throughout the United Kingdom.
  During the Budget debate, I had the opportunity to touch on a number of issues. I described the effect on rural areas of increased petrol prices: I spoke about pensions, and I welcomed some of the provisions in the Budget, such as the policy for children. Today, therefore, I shall concentrate on three or four matters only.
  Before I do so, however, I want to echo what some other hon. Members have said about the ridiculous size of the Bill. There are 558 pages, 150 clauses and

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  40 schedules. Schedule 6 alone covers 83 pages. It takes up about 4,000 lines and amounts to about 30,000 words. The Government say that that is not a problem, but it will be one in Committee: if only a minute is devoted to each line, consideration of the schedule would take up about 67 hours. Perhaps Labour Members want to spend their time in Committee like that, but I think that their enthusiasm will soon run dry.
  We must think also of the people who have to live with the consequences of the Bill. There is a need for some stability and simplicity in the legislation, so that people can get their lives on a more even keel.
  The hon. Member for Erewash presented the novel idea that interest rates have no bearing on the value of the pound. I am afraid that I do not entirely share that view.
  Liz Blackman: Will the right hon. Gentleman give way on that?
  Mr. Wigley: No, the hon. Lady was not all that generous about giving way. I shall not be either.
  The value of the pound is a central question, and the indications following the Budget are that the pressure on interest rates will be upwards. The hon. Member for Erewash may disagree, but I believe that that will cause the pound to strengthen. There is no doubt that a high pound is bad for the Welsh steel industry, which is facing a difficult time in the coming months, but it is bad too for the motor industry and for other industries throughout the country.
  The high pound also has a devastating effect on farming. Imports are being sucked in, and it is impossible for our farmers to export goods. It is also very detrimental for tourism, an industry that is important to me and to many other hon. Members. The Government must deal with the problem and not just shrug it off and pass it over to the Bank of England.
  The transfer to the Bank of England of responsibility for the level of the pound is all very well, but that responsibility ought to cover levels of employment as well as inflation. Both elements are important, and they should be dealt with side by side. I know that that conviction is shared by Labour Members, and perhaps by some in the Opposition parties.
  Earlier in the debate, Labour Members boasted that public expenditure now takes up a smaller proportion of gross domestic product than in the past. I would like public expenditure to rise—on pensions, transport and housing, for example. Everyone knows that there is a need for money to be spent on renovating houses. I do not therefore consider falling public expenditure to be especially commendable.
  However, the burden must be spread fairly throughout the community. Conservative Members continually refer to the wealth-creation sector of the economy, as if only businesses create wealth. Everybody who is in work is part of the wealth-creating sector of the economy. It is no use saying that people working in the national health service are not part of the productive wealth of the
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  economy because it is a service, so called—of course they are. They make it possible for other people to do their work.
  Mr. Geraint Davies: Will the right hon. Gentleman give way?
  Mr. Wigley: Let me finish my point first. A doctor in the private sector could be regarded as being in business and therefore wealth creating because he is paid out of profits, while a doctor in the public sector, who does not get paid in that way, could be regarded as a drain on the economy. That is clearly nonsense. We must consider the whole economy and everyone in it who is undertaking worthwhile work, whether it is productive or in the service sector, is part of that economy. It is not simply a question of the wealth-creating side of the economy in business, but of the whole economy, a fair burden of taxation and a fair level of expenditure on public services.
  Mr. Geraint Davies: My point was that real increases in public expenditure can occur at the same time as a proportion of gross domestic product rises because the economy is growing. By how much does Plaid Cymru want to increase income tax so that public expenditure is increased to the desired rate?
  Mr. Wigley: I will be coming on to that in a moment. However, I certainly would not have taken a penny off income tax at this time. That £2,600 million, or whatever such a move generates these days, would have been better used to help pensioners, transport and housing.
  Mr. Bercow: The right hon. Gentleman talked about his desire for increased expenditure on housing. What assessment has he made of the effect of the change in the rules on the use of capital receipts from the sale of council houses on the size of interest repayments on local authority debt?
  Mr. Wigley: That is one element, but a more fundamental question faces people who are waiting for renovation grants in the old industrial areas, not only in Wales, given the reduction in the money spent on housing by central Government. Obviously, there is an effect from the change mentioned by the hon. Gentleman in the funds that are available, but that is one among a number of elements which have undermined the rolling programme of house renovations. People in houses that are virtually unfit to live in may be waiting six, seven or 10 years, given the present level of expenditure, for renovation grants. They are often elderly people who do not, and will not, have the resources themselves. We need a new mechanism to bring finance into the housing sector, both public and private, to ensure that people have decent housing.
  I shall turn briefly to regional policy. At the heart of what has been happening with interest rates and the higher level of the pound that has resulted has been the question of the differential heating up of the economy. There has been a problem in south-east England and no doubt in other parts of the country, such as south-east Wales. The economy in the Cardiff area may be heating up more than in other parts of Wales. That underlines the question of whether it is possible to have a mechanism, through

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  taxation of some other means, to stimulate economic development in slow areas and damp it down in areas that are overheating.
  There was an attempt to do that in the 1960s, although it was not altogether successful. However, it is worth revisiting some of the ideas, such as the regional employment premium and selective employment tax. I am not sure about the selective employment tax, because that ossified industries in one direction. [Interruption.] I see the Chief Secretary putting his thumb down.
  Mr. Bercow: It was the Labour Government—Harold Wilson.
  Mr. Wigley: Yes, it was the Wilson Government, from 1966 to 1970, who introduced those proposals. The regional employment premium was, in concept, a devaluation, because it resulted in more purchasing power in the region. If we are not to have the strong investment programmes that many of us would like, there must be some fiscal approach along these lines.
  Within the rules of the European Union, if it is possible to have plus or minus 2 per cent. around value added tax rates, is it possible to consider having differential VAT rates as one way of stimulating the economy a little in some areas and damp it down in others? I believe that such a mechanism needs to be considered if we are to make progress. It is possible in areas with objective 1 status, some of which are lived in by the poorest people in these islands. I refer to Merseyside, South Yorkshire, Cornwall, west Wales and the valleys. It is possible to use operating aid—as has happened in other parts of Europe which have objective 1 assistance—to have a lower level of employers' national insurance premium as a mechanism with which to stimulate the economy in those areas. I know that the Department of Trade and Industry and probably the Treasury were looking at that idea last year, and I think that it was rejected. However, I believe that similar mechanisms should be considered if we are to avoid an even worse polarisation between areas doing relatively well and those in parts of Wales, the north of England and Scotland that are not doing so well. I hope that such mechanisms will be considered by this time next year, even if it is not possible to do so in the context of this Finance Bill.
  How do we pay for such adjustments? If I want to spend more money in certain areas, I need to put forward funding proposals. For example, I would remove the cut-off on the top level of employee national insurance premiums. It is ridiculous to have a cut-off that means that the marginal rate, taking the combined rate of income tax and national insurance, for someone earning £10,000 is 32 per cent., whereas for somebody earning £28,000 a year, the rate is 22 per cent. That is not sensible, and a combined upper rate of 50 per cent. rather than 40 per cent. for those on higher earnings would be acceptable and would bring in resources. Such steps need to be taken.
  The provisions for the climate change levy have been mentioned by a number of speakers and are clearly causing considerable worry. The measure will not achieve what it was meant to achieve. The levy is not a carbon tax, and it is too blunt an instrument to result in the benefits in climate change at which it should be aiming. A number of right hon. and hon. Members will have received a letter from the plastic industry saying that the measure's impact
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  on electricity alone would cost the industry £60 million a year. We need to reconsider the issue. It will be a body blow to many companies, and they will not be able to change overnight.
  Following the statement this afternoon by the Secretary of State for Trade and Industry, I asked what criteria would be used to decide on the exemptions of the combined heat and power projects from the climate change levy. He referred me to the Treasury Front Bench. I have looked carefully through schedule 6 and at paragraphs 20 and 21. All I can find is a provision in paragraph 20(1) stating:
  The Commissioners may by regulations make provision for giving effect to the exclusions and exemptions…
  There is no clarification on that issue.
  Mr. Letwin: Does the right hon. Gentleman agree that the main deficiency of the climate change levy is that, for the first time in British taxation history, an arbitrary tax—the discounts for which will be decided by individual civil servants in negotiation with particular companies—has been introduced by a Government?
  Mr. Wigley: Much work will be needed in Committee on the 83 pages of that schedule. The most worrying aspect of the tax is its impact, but there is also its uncertainty—for example, whether exemptions will be allowed or not. That is open-ended—to say the least. The matter will need clarification. People have a right to know not only who is administering the tax, but on what basis such taxation will be undertaken. We need some certainty in planning for the future.
  The Chief Secretary to the Treasury would be surprised if I did not return to the point that I made earlier during an intervention on his speech: I referred to the way in European structural funding would be carried out. Understandably, in his reply, the right hon. Gentleman pointed out that the matter would be sorted out in the comprehensive spending review. I am sure that the Government have good intentions in that regard; we all look forward to its being sorted out during years 2 to 7 of their programme. However, that still leaves this year—2000–01 will not be covered by the CSR.
  In Wales, £25 million was built into our budget for this year's spend, against a possible spend of up to £368 million. Clearly, that would not happen, but there is the expectation of a spend of between £50 million and £100 million. For example, a development fund could call up 7 per cent. of the total structural funds for Wales—£1.2 billion under objective 1—within the first two years; that would be about £40 million a year. That money could be available for small businesses in Wales. However, there is only £25 million in our budget, which has to cover not only the match funding but the European money itself; under the present mechanism, the European money goes to the Treasury. Yes, it is passed over when projects are developed, but the amount is knocked off the Barnett block. We gain with one hand, but we lose with the other so we are no better off.
  This year, if we find that expenditure runs beyond that £25 million in our budget, will it be possible to go into the contingency reserve—not only for Wales, but for other areas that might be affected—to ensure that we do not lose out on the objective 1 programme? The Government have worked hard to obtain that programme for Wales;

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  we certainly need it in areas of high unemployment and low per capita income. It would be a tragedy if we missed out. I hope that the Chief Secretary will reflect on that during the coming weeks, and that he will be able to give a positive response in due course—for this financial year and not just for the next.
  8.41 pm
  Mr. Christopher Leslie.: Hon. Members have the opportunity on too few occasions to consider the broad sweep of economic and public finance policy. However, the Second Reading of the Finance Bill provides just such an opportunity. During the many hours of debate, I have been struck by the fact that Opposition Members have apparently forgotten some of the fundamental tenets of economic policy—one of which must surely be that, to spend money on public services, revenue must be raised.
  The right hon. Member for Caernarfon (Mr. Wigley) and the hon. Member for Kingston and Surbiton (Mr. Davey) seemed to want to stop fiscal loosening. On the other hand, they said that we should spend much more money on pensioners and health, but failed to point out how on earth such measures would be funded. Such irresponsibility persuades no one of the merits of their case.
  Conversely, the Conservatives suggest that, somehow, they can reduce taxation—to stop raising revenue—while magically continuing to maintain expenditure on vital public services. My constituents—indeed, the wider public—are neither stupid or naive; they will not be fooled by that poor arithmetic. They know about the basic sums in public finance and that, to pay for important services, we must have a secure revenue base.
  Building on the progress that we have already made, the Finance Bill goes a long way towards securing a healthy set of public finances to pay for those important public services that we all need and that Labour Members are ensuring that we deliver, step by step.
  I have a few brief observations on the Bill; the first focuses on the vital public service of health. The Budget measures on tobacco duty have come in for some criticism. However, I am proud to defend such measures, which use policy to target a demerit product—one that has a greatly adverse effect on our many constituents who smoke. The 5 per cent. real increase in tobacco duty will discourage people from smoking. Furthermore, that expenditure will bolster expenditure on the national health service—it will go towards the extra £2 billion allocated to the NHS during the financial year 2000–01. In my health authority area, the Bradford and Airedale hospitals will receive a 9.3 per cent. cash increase in one year. That is a massive increase; it will take local spending to £344 million.
  All this will have a considerable impact. The money will not be set aside; it will be spent on cancer services, on reducing waiting times, on vital services provided by doctors and hospitals, and at the front line. The Bill well illustrates cause and effect—where the revenue is raised and the purposes for which it is spent.
  The Bill will bring significant benefits to business. The 100 per cent. allowance for small firms for information technology will be broadly welcomed throughout
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  industry, but there are also small but significant measures such as the abolition of stamp duty on intellectual property transactions and the simplification of the capital gains system.
  These are important measures. While Opposition Members criticise the length of the Bill, we should be focusing on its outcome. That is what matters most, and I do not at all mind standing here, even though it might be a quarter to nine at night, enacting these measures and putting the Finance Bill on the statute book.
  Many important measures in the Bill, such as the closure of several tax loopholes, illustrate the fact that the Government are anxious to achieve fairness across the board for taxpayers, and to ensure that a few people cannot get away with paying less than their fair share.
  The other side of the coin is that the Bill provides a package of very significant new measures to help charitable giving, such as those making payroll deduction much easier and lifting the threshold on gift aid. Those measures will have a real impact.
  I have heard criticisms tonight about the climate change levy, but we must not forget the wider environmental context in which these measures come into being. My mailbag does not contain as much criticism of the measure as do those of Opposition Members. However, people are writing to me about the floods in Bangladesh and Mozambique and the famine in Ethiopia—areas where adverse weather conditions have created devastation for very many millions of people—caused, we can now safely assume, by emissions of too much carbon into the atmosphere.
  We must do something about that, and that is what the climate change levy is about. It is not imposed for and of itself. Moreover, it is revenue-neutral; the money is paid back through the national insurance system. I am glad that the Government have made concessions, especially to energy-intensive industries. The aim is to reduce our carbon emissions, meet our environmental commitments and, ultimately, do the right thing for the world. It is unwise to lose sight of those important aspects.
  When the right hon. Member for Wells (Mr. Heathcoat-Amory) was criticising the Government on several grounds, he mentioned that an extra £2 billion was being spent on central Government administration. When I—from a sedentary position, I admit—balked slightly at the scale of his allegation, I was castigated for not referring to page 60 of Command Paper 4601, which he thought proved his case.
  I have taken the liberty of referring to the Library and asking for an opinion on the matter. The figures in the document show that the right hon. Gentleman was referring to the cash figures, without taking into account inflation in wage costs. He tried to imply that we could consider the matter purely in cash terms. If we consider the figures in real terms, which we should all accept as the best way of measuring such matters—[Interruption.] That is interesting; Conservative Members seem to be suggesting that they do not believe that we should use real-terms figures to consider such matters. The figures for the final year of the Conservative Administration, when compared with the figures for central Government

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  administrative expenditure projected for next year, show that the Labour Government will spend £137 million less in real terms.
  Mr. Letwin: Will the hon. Gentleman read out what happened in cash terms under the Conservative Administration?
  Mr. Leslie: I shall read out the fair terms, which are the real-terms figures. For example, in 1994–95, the figure was £15,000 million compared with £14,186 million for the financial year of 2001–02. That represents a reduction in real terms. It does Conservative Members no good at all to scrabble around to try to find ways to pay for their ridiculous tax guarantee, or spending cuts guarantee as it should be called. They suggest that somehow they can stretch expenditure to cover myriad issues. The hon. Gentleman suggested that they would not only spend on health and education, but that he wanted additional expenditure on defence and to prevent crime. Those areas make up 40 per cent. of public expenditure, yet he believes that we could see a real growth in expenditure on them above the rate of increase in the GDP. He believes that he can sustain such increases in expenditure while simultaneously reducing taxation. That is not feasible unless there are swingeing cuts in other services.
  Mr. Letwin: Has the hon. Gentleman had the opportunity to look at the Red Book? If he has, has he noticed that that he has described precisely the oddity that the Chancellor of the Exchequer predicts?
  Mr. Leslie: If the hon. Gentleman is suggesting that my right hon. Friend the Chancellor of the Exchequer is working in line with the Conservative party's distorted policy of a tax—or public service cuts—guarantee, he cannot have been paying too much attention. Given his suggestion that public expenditure should increase significantly in real terms and that tax should be reduced by enormous amounts, what would he cut? As he has said that he does not agree with borrowing, there would have to be cuts in international development aid, the transport budget, pensions, child benefits, disabled benefits and myriad other services.
  Mr. Letwin: Is the hon. Gentleman now denying the proposition that the Chief Secretary has repeatedly made in the House: that, in the Chancellor's plans in the Red Book, tax will fall as a percentage of GDP for several years?
  Mr. Leslie: The hon. Gentleman should realise that his proposal is for the lifetime of a Parliament, but I know that there is a rumour that the shadow Chancellor is considering changing that proposal so that it falls into line with the economic cycle. The hon. Gentleman is right in so far as the Government will reduce the burden of taxation, but we correctly consider such matters over cycles and by examining the needs and the demands of the public sector and what we need to spend. We are not driven by the ridiculous dogmatic guarantee that would set in concrete a notional level of revenue reduction regardless of economic circumstances. That would continually force enormous cuts in the public services that the Conservatives say are not crucial. However, many of my constituents would say that public expenditure on
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  matters such as international development, agriculture and trade and industry is important. We all know that the Conservatives would cut that enormously.
  When I examined other statements on expenditure made by the Conservative party, I noticed that it had made significant new spending—and not just tax reduction—commitments. For example, the Conservative Front-Bench spokesman on education wants to reinstate the assisted places scheme, albeit in a new form, which would cost many millions of pounds. The Conservatives want to restore the married couples allowance. Their home affairs spokesman wants to increase the police fund grant by about 6.1 per cent. They want to increase funding for ambulance services: the Conservative Whip here now, the hon. Member for Beverley and Holderness (Mr. Cran), has said in the past that he wants greater expenditure on ambulance services in his area. The shadow transport team wants higher spending on train station car parks, and has even spoken of free shares for all who live in London under the privatisation of London Underground.
  All those commitments have implications for public expenditure. People will not believe that the Conservatives could deliver their promises while simultaneously reducing taxation, without resorting to borrowing and adding to the national debt. That was their strategy during the 1980s, and we experienced the consequences of that.
  Mr. Edward Davey: Does the hon. Gentleman share my concern that the Conservative Front-Bench spokesmen do not appear to know whether their tax guarantee is a guarantee to reduce taxes over the lifetime of a Parliament, or over an economic cycle? Would he care to comment on that?
  Mr. Leslie: For once, I agree with the hon. Gentleman. The Conservatives' confusion is somewhat disturbing, even though it is also quite hilarious from our point of view. It demonstrates how there is no chance that the Conservatives will be trusted by the electorate, who will not have the wool pulled over their eyes. The electorate know about the balance of public finances and they know the difference between a realistic pledge and an unrealistic one. It is all very well for the Conservatives to give guarantees, but it is a sorry sight for voters to see the Conservatives trying to wriggle out of those guarantees only months later.
  My constituents will benefit significantly from the Budget and the Bill. We shall be able to deliver results locally. Progress will accelerate on a new road scheme worth £60 million in my constituency: the Bingley relief road. Thanks to the Government, there will be new school buildings at Cullingworth school, Beckfoot school, Bingley grammar school and Salt grammar school, paid for out of public funds. There will be new train rolling stock with extra carriages so that people are not crammed together at peak times. There will be a new accident and emergency wing at Bradford Royal infirmary. All those important local services will be delivered, thanks to the Government's careful and prudent management of the public finances.
  The Government have focused on stability and on ensuring that we get the fiscal balance right, while targeting assistance through tax cuts. They have always borne in mind the fact that a responsible Government have to balance revenue against expenditure. That is what my constituents want. I hope that the Bill receives the support of the House.
  8.58 pm
  Mr. Andrew Tyrie.: Originally, I was going to say something about macro-economic policy and take only an oblique look at the fiscal measures. However, having had a good look at the Bill over the past 48 hours, I have decided to spend some time talking about the climate change levy.
  Without a shadow of a doubt, the levy is the most astonishing measure that I have ever seen in a Finance Bill. Set out over the 83 pages of schedule 6. it is a most unusual provision. No clear explanation has been provided of why the measure has been introduced, nor of how it is to be applied. It is a poorly designed levy and poorly thought through. What was the ostensible reason for the levy, and what is it designed to achieve? I can only assume that it has been introduced because the Government have swallowed whole every assertion made by those who argue that we must act now to arrest climate change.
  I have asked the Library whether, since the general election, the Government have produced a study setting out their view of the conclusions of the Kyoto summit, the extent to which they agree with them or the extent, perhaps, to which they feel that we should go further. The Government have published nothing on those lines. Nor have they called together a group of scientists to publish an independent report, as far as I know.
  I do not know whether climate change is a serious problem. However, over the past 48 hours, I have started to read up about it again. With the Finance Bill, we could find ourselves at the start of what will amount to a fundamental alteration of the shape of the economy to take account of climate change without many of the basic questions about it being answered. I shall ask a few of those questions now.
  My interest in these matters was first triggered 10 years ago when I went to a lecture by Sir John Mason, the head of the Meteorological Office, who more or less destroyed the argument that climate change was occurring as a consequence of carbon dioxide emissions. Since then, he has modified his views somewhat, but, apparently, he still holds to many of his basic points. As I have said, I do not know the answers to these matters, but as I think that they are pertinent to schedule 6, I shall ask six or seven basic questions and make some brief allusions to them. I urge the Government to produce a thorough study of these matters before putting the Bill on the statute book.
  Let us try a really basic question. Is global warming occurring? That might be thought a most absurd question because the answer is so obvious. Over the past 20 years, statistics have shown that the surface temperature of the planet has risen between 0.3 and 0.8 points of a degree celsius. However, reading over the weekend, I discovered that satellite measures of the temperature of the earth show no rise. There are many scientists who think that such measurements are more accurate than terrestrial measures. Balloons called radiosonde are also used to measure temperature. They, too, have failed to find any increase in global temperature over the past 20 years. If I had to guess, I would say that the planet probably is increasing in temperature, but I really do not know.
  I shall try another basic question. Has the planet been warmer than it is now? I quickly discovered that it has been much warmer. In the middle ages, grapes were apparently cultivated along the south coast to produce
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  wine. There is overwhelming evidence to suggest that this part of the world, and probably the whole world, has been warmer than it is now. It was probably warmer in Roman times. There was also a mini-ice age in the 17th century.
  Even if the earth is warming, is that necessarily bad? I have seen no convincing evidence to suggest that it is. It is clear that there will be a distributional effect from one region to another. However, it is not clear that, overall, the earth will be worse off if temperatures rise.
  Will warming lead to more unstable weather? The Deputy Prime Minister has been unequivocal about that. He has stated that
  we can expect extreme weather events to become more frequent…as temperatures rise.
  When I read the evidence of the experts at the Intergovernmental Panel on Climate Change, I discovered that some of them strongly disagree with that view. They think that increases in temperature will lead to a smaller differential between the poles and the equator and that that will reduce extreme weather events. Again, I do not know whether that is true. I merely beg right hon. and hon. Members to read some of the literature that is available, which is by no means clear cut on these matters.
  Mr. Love: I thank the hon. Gentleman for giving way. Is he disagreeing with the right hon. Member for Wells (Mr. Heathcoat-Amory) who, in his speech this afternoon, committed the Opposition to the Kyoto targets?
  Mr. Tyrie: Commitments, once made, should be honoured. The Kyoto targets are probably quite manageable, possibly without a levy, as several Labour Members have said this evening. The question that I am raising is whether the general philosophy behind the objective that the levy is designed to achieve is right. I am not suggesting for a moment that I have the answers. I am suggesting that we should not rely exclusively on work done by a United Nations working group. There should be intensive study and debate on climate change by the Government before we fundamentally change the structure of British industry to take account of it, which is the long-term implication of a levy.
  I shall ask a few more questions, to which I also do not know the answer. If there is global warming, is it caused by human activity—in other words, is it anthropomorphic? The former Economic Secretary was clear about that. She said unequivocally:
  We cannot doubt that climate change is the result of human activity.—[Official Report, 20 July 1999: Vol. 335, c. 1040.]
  She was presumably referring to the only solid statement made on the matter by the IPCC, which noted in its report:
  Observations suggest a discernible human influence on climate change.
  That is rather weak wording on which to base a drastic change of economic and industrial policy.
  As far as I can tell from the literature, there is no clear evidence that humans are the exclusive or even the major cause of climate change, if indeed it is taking place. There are many learned tracts suggesting that variations in radiation from the sun are the main cause of variations in the weather. Moreover, a good number of models are being developed suggesting that climate change is endogenous to the planet.
  Kali Mountford: The hon. Gentleman is advancing an extraordinary thesis, which I have not often heard before.

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  What amount of evidence would satisfy him that measures are necessary? Even if he has doubts, is it not reasonable to err on the side of caution, before we lose atolls, islands and icebergs all over the world?
  Mr. Tyrie: The hon. Lady mentions icebergs. The evidence that the polar ice caps are disintegrating in the long run is weak. Sir John Mason made it clear in his lecture that he found the evidence extremely unreliable. If I had time, I would read his lecture out to the House.
  I suggest to the hon. Lady and to the House that we need to think carefully about these issues, before making drastic changes. I have not yet been convinced that the right course is to try to lower CO2 emissions to the point at which the models would start to predict that the earth was no longer warming. There may be other courses of action that we should take. I shall come on to those in a moment.
  It is clear that the planet has changed temperature many times, both up and down, well before any power stations were built, so we know that climate change can take place endogenously, as I suggested.
  Let us now make a few assumptions. Let us suppose that there is global warming, which is a reasonable assumption. Let us suppose that we are causing it, which looks a little less reasonable; that we are causing it through carbon emissions; and that it is resulting in a great deal of net harm to the planet. We ought to examine all those assumptions carefully.
  The next question, which again does not seem to have been asked by the Government, is: should we adapt to the change in climate or should we try to reverse it? As I mentioned, the main effect of a change in the climate is likely to be distributional—it impoverishes some areas and enriches others. There is a deal of evidence to suggest that an increase in the temperature of the planet will increase overall precipitation, and therefore increase the overall fertility of the inhabited areas of the globe, even though there will be some land loss, as the hon. Lady suggested when she envisaged sea levels rising.
  I do not know the answer to all those questions; I am not an expert. However, it is worth asking whether we should respond to such an event by accepting that some land loss will occur and deciding to build better sea defences, or by trying to devise some distributional mechanisms whereby the impoverished regions benefit from the areas that are enriched by global change. We should also consider whether it is worth trying to change the climate of the planet. That is a big undertaking, which we need to be clear that we need to achieve.
  If we conclude that we want to change the temperature of the planet, it is important that most of us are on side and working on the same project. There is a major problem with the CO2 emissions project. Although the Chinese have signed up to Kyoto, it is widely argued that they are not likely to implement it; the United States, which is responsible for the most CO2 emissions, has not even agreed to sign it. Upwards of half of the total global emissions of CO2 are from those two large countries, which do not seem to support the policy. It is dangerous to take such a step almost alone. As in other matters, Britain will honour its commitments more vigorously than many other countries that have signed agreements.
  The Bill introduces a massive new tax; in the long term, the Government plan to restructure British industry. If they are not planning to do that, they are not tackling the
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  problem but paying lip service to it. Therefore, one can assume that the measure creates a new tax base on which the Government clearly intend to build in the long run.
  I implore the Government to establish a high- powered committee, possibly a royal commission, to examine urgently the issues that I have raised, and to develop a British, considered view of global warming and ways in which to tackle it. No British Government have done that, but such action is urgently required.
  We have accepted too many arguments on the nod, without further careful examination. I stress that I do not claim that global warming is a load of nonsense. I genuinely do not know the answers to the questions that I have posed, but I believe that we should work on the best evidence available before implementing the tax. That is the biggest single reason for my caution about the levy.
  Let us consider the levy in detail. What does it propose? It does not directly affect carbon emissions. It is a downstream levy because the Government want to avoid a direct effect on consumers. It is an energy, not a carbon tax. Its guns are therefore pointing in the wrong direction. It will damage several successful industries, including British Steel. Brian Moffatt said:
  It will close plants, which will be replaced by inefficient plants in other parts of the world.
  In other words, net global CO2 emissions from the steel industry are likely to increase as a result of the proposals.
  Let us consider the liquid petroleum gas industry; the Calor gas industry. It will be badly hit, despite being the most CO2 friendly industry in the sector. It would be replaced by burning hydrocarbon oils; CO2 emissions will consequently increase.
  The list of potentially affected industries is endless. Several have already been mentioned. They include the renewables industry, aluminium, glass—the hon. Member for Barnsley, Central (Mr. Illsley) mentioned the effect on the glass industry in his constituency. In my constituency, I have a horticulture industry, which would be badly hit. It is ironic that the levy will hit those industries that are most exposed to international competition. It is therefore likely that we will force the industries offshore, and the net effect on global CO2 emissions will be zero or even negative. Eastern Europe, which has inefficient plants for a wide variety of industries, will benefit from that.
  Most extraordinary of all, the tax will be collected unlike any other, without a degree of certainty and on the basis of negotiation. It is discretionary and subject to what are described in schedule 6 as "umbrella agreements". There is no precedent for such negotiations on the collection of a tax or for empowering civil servants to negotiate with firms and agree their tax liabilities. Nor should politicians have that power. Therefore, I am deeply concerned about the Bill on that point of principle.
  Altogether, the structure of the tax is a right mess. In fact, I have not seen such a right mess since I looked at the poll tax in about 1985. I do not know whether we need the tax to fulfil the Kyoto targets, but my guess is that we probably do not, given that the Government have shown the common sense today to drop the gas moratorium. If more is needed—I said that we should fulfil our international obligations—we could think of far better ways, far less damaging to British industry, than the Government's extraordinary proposals.
  I said that I would say a few words about macro-economic policy, and there will be only a few, given the time available. I want to make two points by asking

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  questions. First, is fiscal policy tight enough to enable monetary policy to be relaxed? Everyone feels that, if we could engineer it, we should like some relaxation. That is the current mantra. I am not entirely convinced, but there is a case for it. If looser monetary conditions were achieved, the exchange rate could fall and the imbalance between the service and manufacturing sectors would be easier to handle.
  My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) argued in his first speech after the Budget that the Budget was tight. In his second, he argued that it was loose. He was more or less right the second time; it represents a loosening of policy. I cannot help feeling a resonance from events in the late 1980s when I was in the Treasury. What do we have? A brittle stock market, a bit of a housing boom after a long period of growth and some talk from the Government about how to end the business cycle—the end of boom and bust. There was talk of that then, but there is more now. I regret that Nigel Lawson let that phrase slip on one occasion, although he quickly tried to back-track later. Labour has not yet realised that it will have to do that. There was a debate about whether fiscal policy was too loose. We were addressing exactly those questions in the late 1980s. The situation is not so primed for as big a boom and bust, but several of the conditions are evident right now.
  No Government can afford to ignore the value of the exchange rate for ever—at least, no Government of a small or medium-sized country. At any rate, it is extremely difficult to manage an economy without giving some consideration to the exchange rate. I am sure that, sooner or later, the Government will realise that they will want to tighten fiscal policy to get the exchange rate to an appropriate level and to enable the Monetary Policy Committee to find the room to make the necessary changes to interest rate policy that would enable the exchange rate to fall.
  Mr. Love rose—
  Mr. Tyrie: I give way to the hon. Gentleman for a second time.
  Mr. Love: I thank the hon. Gentleman for giving way again. How does he square the fiscal tightening of which he talks with the Conservative amendment and the tax guarantee about which Conservative Members talk so much?
  Mr. Tyrie: I do not have the amendment in front of me, but the Red Book suggests a loosening of policy. If anything, fiscal policy should be tightened. If the hon. Gentleman will forgive me, in my remaining minute I shall not go into the territory of the tax guarantee, although I am fascinated by tax guarantees and would love to debate them on another occasion.
  I want to make another brief point by asking a question. Could the announced spending increases be sustained in the event of a downturn in economic activity? That is the other big question about the Budget and there are two pointers as to why that might not be the case. The first is the growth forecast. The whole Red Book is based on a forecast of above-trend growth, followed by our slipping back to trend growth; nowhere is there even the hint of an idea that we might be below trend.
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  Some Front Benchers are mathematicians, and will know that trends are averages: there must be a period a bit below the trend for there to be a period a bit above it. The Government's, it appears, is a unique trend, in that there is never anything below the line. That is a problem for the Government. If there is any downturn below trend, the numbers in the Red Book simply will not add up.
  The second factor that should be taken into account in an assessment of whether the spending can be afforded is the net borrowing figure. [Interruption.] If the hon. Member for Nottingham, North (Mr. Allen), who is grunting on the Front Bench, looks at page 146 of the Red Book, he will see that the rise in net borrowing is very fast over the planning period. That, I think, gives cause for concern.
  The structure of the economy is still sound, but it is slowly being chipped away. The Chancellor has taken risks, partly for electoral purposes. He is fuelling the beginnings of a political cycle with his fiscal policy, and in that sense he is undermining the good work that he did when he tried to dissociate politics from the business cycle by making the Bank of England independent.
  9.21 pm
  Mr. Howard Flight.: I am sure that all Members will join me in welcoming the tremendous improvement in the performance of the UK economy since 1992. As I think everyone knows, and as the Prime Minister has implicitly admitted, this is essentially the result of the supply-side reforms of the 1980s, the development of a venture capital industry, the return to entrepreneurship, and the key measures introduced by the Thatcher Administration.
  Mr. Geraint Davies: Is the hon. Gentleman aware that between 1990–91 and 1996–97 net debt as a percentage of gross domestic product grew from 27 to 44 per cent? Am I not right in saying that if the Tories ever returned to office with their tax guarantee, all that would happen would be more and more borrowing, more and more debt, and the indebtedness—again—of the British economy?
  Mr. Flight: It is about time that the hon. Gentleman matured a little. I was referring to the growth rates that have been achieved and the new industries that have developed. Indeed, comments made by the Prime Minister—the leader of the hon. Gentleman's own party—underline much of what the Government have done and most of the reasons why Labour has changed its spots so dramatically.
  What has happened in this country and in America, and to a lesser extent in Europe, has been very much the result of supply-side improvements.
  Mr. Davies: Will the hon. Gentleman give way?
  Mr. Flight: No. [Interruption.] I ask the hon. Gentleman not to interrupt. I said that I would not give way.
  The Chancellor has made an ill-conceived attempt to take credit for the good performance of the UK economy and for what we all hope will continue to be good growth rates during forthcoming years. He is also unwise to believe that he has abolished the business cycle, for

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  reasons that have been illustrated by recent events in the stock markets, and also for reasons given by my hon. Friend the Member for Chichester (Mr. Tyrie).
  I feel that the general thrust of the Budget is somewhat mistaken. The International Monetary Fund has said that it is uncomfortable about the Government's decision, at this stage in the cycle, to increase fiscal expenditure by some £4 billion over 2001–02, and by £15 billion by 2003–04. The IMF is saying implicitly that the Government run the risk of creating a return to boom and bust. That, too, was mentioned by my hon. Friend the Member for Chichester.
  I am, however, more worried by the fact that the overall thrust of the current Administration continues to be more Government involvement, more Government expenditure and higher taxes to finance this. In July 1998, the Chancellor lectured us about the great virtues of prudence and said that he would stick to his three-year spending targets, but, as my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said, he has thrown that out of the window with the current Budget without a by-your-leave.
  I also point out to the hon. Member for Shipley (Mr. Leslie) that the last Conservative Administration did freeze Government expenditure: it was at £13.3 billion in cash terms in 1994–95 and £13.29 billion by 1997–98. It has increased by £2 billion in cash terms since then.
  Mr. Leslie: Will the hon. Gentleman give way?
  Mr. Flight: No, I will not. We have debated the issue.
  Mr. Leslie rose—
  Mr. Flight: Come on then.
  Mr. Leslie: Will the hon. Gentleman admit that, when looking at central Government expenditure, it is better—he should suggest it to the right hon. Member for Wells (Mr. Heathcoat-Amory)—to use real terms than cash terms? They show that the present Government are reducing those costs.
  Mr. Flight: It is rational to look at both, but the point that I was making was that in the last three years of the previous Administration, there was prudent economy in managing Government expenditure: we held the sum in cash terms.
  The truth, as the electorate is becoming increasingly aware, is that the Government have put up taxes by the equivalent of 8p on income tax. The average family is paying some £13 a week, or £670 a month, more. Perhaps they would not mind if the delivery of services improved, but, as women in our community in particular are well aware, class sizes and waiting lists are up, police numbers are down and crime is rising. It is the failure to deliver which we attack and over which the Administration are increasingly being rumbled.
  The pledge was simple: taxation was not going to be increased at all; education and health were going to have a lot more spent on them and to be greatly improved; and the economies were going to come from reductions in the social security budget. The reality is that the latter is going up by some £30 billion over the current Parliament.
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  Both the Chancellor of the Exchequer and the Chief Secretary to the Treasury have continued to reveal a somewhat compulsive addiction to presenting incomplete data—and indeed, on some occasions, perhaps unwittingly, an addiction to misrepresenting data—and to hiding fiscal nasties as far as possible from Parliament. It is no accident that the director general of the British Chambers of Commerce commented on the recent Budget:
  It is becoming incredibly difficult for Business to match the Rhetoric with the Reality.
  The Budget is again full of stealth taxes. There are the double tax treaty treatment of proposals relating to mixer companies, the further increase in stamp duty, and the new car tax, which is almost impossible for anyone to understand but adds significantly to taxation where employers provide cars. There are the coming aggregates tax, the climate levy tax and the extra duty on tobaccoes and fuel.
  The biggest of the lot is not even in the Bill: IR35, which is budgeted to add some £900 billion of revenue. [HON. MEMBERS: "£900 billion?"] Would that the Government were so lucky—I mean £900 million of revenue. There are also national insurance contributions applying to venture capital companies on the exercise of employee share options.
  The Government have taxed pensions, business, insurance contracts, the self-employed and enterprise. As the hon. Member for Kingston and Surbiton (Mr. Davey) has pointed out, through their changes to the capital gains tax regime they have created something that is impossibly complicated for ordinary citizens to deal with. Allegedly, the Government are providing incentives to companies to make available shares to individuals who work in those companies, which Conservative Members welcome greatly, but the tax effects of the Bill as it stands are mind-blowingly complicated for such individuals.
  Mr. Gardiner: Does the hon. Gentleman not accept and welcome the fact that capital gains tax has been cut to the lowest level not only that this country has ever seen but in the western economy? Does he not recognise that the simplicity of planning over a four-year cycle—knowing that capital gains tax will be at 10 per cent. after four years—is welcomed by businesses up and down the country?
  Mr. Flight: Germany has no long-term capital gains tax and the rate in the United States is lower. I certainly welcome the cuts, but my criticism was of the complications.
  I turn to the change in the double taxation treaty. The last time that the issue was raised, I felt that the Chief Secretary cast an improper slur on Mr. Peter Wyman. It has emerged since that the mean of the forecasts of all the leading accounting firms is that the tax will raise at least £3 billion as it stands and make the United Kingdom the least attractive place among the main economies of the world to base multinationals headquarters.
  Is the Paymaster General aware that a main story in The Times tomorrow is that Allied Zurich plc will be moving its headquarters from the UK and that there will be a loss of £100 million of taxation to the Revenue as a result? I would be interested to hear what the Government have to say to that.

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  More particularly, and following Dame Sheila Masters' comments, we would like to know whether the Government will stick with the proposals or whether, as virtually all industry, accountants and so forth have advised, they will be going back to the drawing board. If they do not do so, they will simply succeed in driving multinationals from this country. Indeed, almost as if we are returning to the days of Harold Wilson and the brain drain, this Government seem determined to drive small businesses out of the country with IR35, and large businesses out of the country with the double taxation proposals.
  I turn to fuel duty and allowances. At the most recent Treasury Question Time, I asked the Paymaster General why the inflation indexation applying to fuel was 3.4 per cent. but for pensions and allowances it was only a 1.2 per cent. She responded—I felt slightly patronisingly—that as I had not been in government, I would not understand such things. The truth is that, right down to the last Conservative Budget, the same inflation base was used for both allowances and the fuel escalator. It is only as a result of this Administration increasing the duty on fuel four times over three years that they have moved the inflation index for fuel to the forecast rate. Indeed, I discovered another stealth tax in that, where the forecast has proved to be larger than the actual, no adjustment has been made in the following year's duty.
  There have been four increases in stamp duty for properties worth more than £250,000 over the past three years. As my right hon. and learned Friend the Member for Rushcliffe pointed out, that is a virtual tripling and quadrupling of stamp duty. The Government no doubt like to think that that is a pleasant major stealth tax on the well-off, but I remind them that £250,000 is the average price for a normal, family semi-detached home in London. The duty is an unfair tax on people in the south-east, who may have to move because of their job. It will discourage older people from vacating larger properties, thus adding to the demand for more houses on greenfield sites. It is similarly a burden on business.
  Mr. Love: Does the hon. Gentleman accept that the increase in stamp duty for houses worth more than £250,000 applies to only 4 per cent. of residential property?
  Mr. Flight: The main point is that the tax covers businesses, but as I pointed out and as the hon. Gentleman is no doubt aware, the cost of an average, perfectly unfancy family home in London is now around such a price.
  Opposition Members welcome the Government's proposals to increase the tax breaks on giving to charities. However, the value of those proposals is a good deal less than the full cost to charities of the abolition of advance corporation tax, which will come into effect in 2004. Additionally, the Government have failed to deal with the major problem of value added tax paid by charities.
  We broadly welcome the Government's venture capital and enterprise measures. It is a pity, however, that the impact of those measures is substantially undone by measures in other spheres, particularly IR35.
  I should like to tell the Paymaster General of the case of one of my constituents and the reason why IR35 is not merely a tightening-up on tax avoidance arrangements.
  788
  My constituent is typical of the 60,000 information technology subcontractors who have been persuaded to subcontract at the prompting of the main company for which they work. His complaint is that the limit on expenses will cost him an extra £5,000 annually. He has annual revenues of £60,000, and his legitimate expenses—depreciation, accounting, travel and supplies—amount to £11,000 per annum. At the 5 per cent. limit, he is permitted only £3,000 per annum of tax-deductible expenses. He will therefore have to find £8,000 of expenses out of after-tax income. That has to be wrong. No other business structure is obliged to meet bona fide business expenses out of after-tax income.
  My many right hon. and hon. Friends on both sides of the House—for Caernarfon (Mr. Wigley), for Wells (Mr. Heathcoat-Amory), for Rushcliffe, for Kingston and Surbiton, for Fylde (Mr. Jack) and for Barnsley, Central (Mr. Illsley)—have all criticised the crackpot climate change levy proposals. The crucial point is that the levy will tax energy, not carbon. The levy is not a necessary environmental tax, but simply an excuse for raising revenue.
  The Budget's measures on transport expenditure are likely to prove inadequate, especially with the approval to introduce 44-tonne lorries, and particularly in the south-east.
  My right hon. Friend the Member for Wells and my hon. Friend the Member for Ludlow (Mr. Gill) rightly criticised the tobacco duty increase, which will simply increase bootlegging. I commend to the House, in the recess, a read of Parson Woodforde's diary, which described an entirely similar phenomenon in the 18th century, when coffee was overtaxed and people's integrity was undermined by coffee smuggling.
  More seriously, the tobacco duty increase bears hardest on the least fortunate members of society. I should perhaps declare an interest in the matter and in the Bill as a whole, both personally as a smoker and as a director of companies. Hon. Members will know that, although some people can buy cigarettes or wine abroad, single parents and many others who smoke and are at the bottom of society will suffer most from the increase.
  Rarely has a Chancellor been in such a strong position to present his last Budget, or last Budget but one, before a general election. It is surprising that this Budget has been a relative flop. It has been criticised by business and by the International Monetary Fund. It has also been resented by ordinary citizens, who are now aware that their mortgage interest relief at source and married couples allowance are going as their new tax codes are being introduced. People are increasingly aware that they are paying £670 a year more in tax.
  As the director general of the Confederation of British Industry commented:
  This is not the Budget for Business that we were hoping for.
  The head of the Federation of Small Businesses commented:
  Overall this was a Social Budget and a lost opportunity for small business.
  The Chancellor has sidelined over 80 per cent. of small firms by ignoring the unincorporated self-employed sector. I believe that the Budget reveals Labour's visceral response towards both the self-employed and pensioners. The Government think that, politically, neither of those groups is on their side, and, therefore, that neither of those groups is to be helped.

  789
  The real criticism—this is where my right hon. Friend the Member for Wells and I began—is that the Government have loaded taxes and regulations on the economy. Their regulations cost business £5 billion per annum and there will be £30 billion of extra taxation on business over the Parliament, as well as higher taxation on average families. But the Government have failed to deliver in the key service areas of health and education for which they were elected. That is why the House should refuse to give the Bill a Second Reading.
  9.40 pm
  The Paymaster General (Dawn Primarolo): This has been an interesting debate. I congratulate my right hon. Friends the Members for North Durham (Mr. Radice) and for Llanelli (Mr. Davies) and my hon. Friends the Members for Wimbledon (Mr. Casale), for Shipley (Mr. Leslie) and for Erewash (Liz Blackman) on their contributions, which I shall attempt to cover, as well as those of the right hon. and learned Member for Rushcliffe (Mr. Clarke), the right hon. Members for Fylde (Mr. Jack) and for Caernarfon (Mr. Wigley), and the hon. Members for Kingston and Surbiton (Mr. Davey), for Ludlow (Mr. Gill) and for Chichester (Mr. Tyrie).
  My hon. Friend the Member for Shipley dealt effectively with the comments of the right hon. Member for Wells (Mr. Heathcoat-Amory) about Government spending on administration. My hon. Friend made it clear that administrative costs last year accounted for 4.1 per cent. of total Government spending, compared with 4.4 per cent. in 1996–97.
  The purpose of the debate is to deal with the measures in the Bill. I shall try to respond to the concerns that have been expressed. My hon. Friend the Member for Wimbledon talked about fairness in the tax system and the need to create a platform of economic efficiency and success on which to build social progress and stability. He highlighted the enterprise agenda in the Bill and echoed again that full employment is possible and we can deal with the structural unemployment that we inherited from the previous Government.
  My hon. Friend the Member for Barnsley, Central (Mr. Illsley) made several points, some of which I shall return to. He will not be surprised to hear that I did not always agree with him. I shall deal in particular with his points about the smuggling of tobacco and alcohol. I remind him and the House that the Government have announced that we will spend another £209 million over three years and that there will be nearly 1,000 more staff tackling the issue. We are dealing with smuggling on three fronts: first, we are improving our intelligence collection and targeting those who finance smuggling; secondly, we are targeting those who transport the goods into this country; thirdly, we are targeting the gangs who distribute the products. My hon. Friend focused on duty, but the problem is far worse than that. The systematic criminal activity of smuggling goods into this country that do not carry the cost of duty means that whatever we do with our duty rates, we will still
  790
  have to tackle the serious problems of smuggling. Hon. Members should not underestimate the problems of that systematic criminal activity.
  Mr. Tyrie rose—
  Dawn Primarolo: I shall give way to the hon. Gentleman before I move on to his points about climate change.
  Mr. Tyrie: Does the Minister accept that the most intelligent thing to do is to accept that the Government are creating a criminal class through the huge differential? The answer is to reduce the differential and kill off the smuggling. The Government would probably get an increased yield in the long run as a result.
  Dawn Primarolo: I do not think that the hon. Gentleman heard what I said, so I will repeat it. The problem is with goods on which no duty has been paid, smuggled in from beyond the European Union, at a price that we simply could not compete with, by systematic, organised criminals, not Jack-the-lads. The hon. Gentleman does the cause no good by continuing to peddle a simplistic answer to what is a very serious problem in all our communities.
  Several hon. Members have spoken about the climate change levy. The hon. Member for Arundel and South Downs (Mr. Flight) seems a little confused—I hope that he will not take that as patronising, as I would not dream of patronising him—about exactly what happens with the levy. The levy package will cut CO2 omissions by at least 5 million tonnes by 2010. He said that it raised taxes, but in fact it is revenue neutral. All the proceeds will be recycled back to business. The package will be broadly neutral for the manufacturing sector, too. There will not be a transfer to the service sector, as some have suggested today.
  The hon. Gentleman should say whether, in opposing the climate change levy, his party is opposing the employers national insurance contribution cut that will result from these measures.
  Mr. Paterson: Will the Minister give way?
  Dawn Primarolo: No, because I want to answer the points made by others who have been in the Chamber for the whole evening.
  The hon. Member for Arundel and South Downs should be clear about what is in the Bill. He referred to the aggregates levy, as did others. They are wrong in thinking that it is in the Bill. It is a future consideration.
  My right hon. Friend the Member for Llanelli talked about group relief, the European Court of Justice rulings and the changes in the Bill. There are two separate rulings: ICI-Colmer and another case, the name of which has just slipped my mind. The ECJ ruled, in relation to the single market, that double tax relief had to apply to branches. That means that it would be backdated for six years in the case referred to, because the ECJ has ruled that it would apply for the whole time.

  791
  I will look closely at what my right hon. Friend said. He also referred to profit and loss for branches. That was not covered in the ECJ ruling and would not be backdated for six years. That is a change that the Government have chosen to make.
  Mr. Denzil Davies: My point—my hon. Friend has half answered it—was that it is possible to claim back for six years, but will the claiming back be restricted to residents within the European Union?
  Dawn Primarolo: It applies not to residents but to companies. We are talking about branch relief. There is a difference, and my right hon. Friend spoke very particularly about the difference of residence and whether one must be in the European Union to qualify. The changes that we have made are part of the package of improvements that we are making in this year's Budget.
  I want to speak about double taxation relief and the controlled foreign company measures to which several hon. Members have referred. Budget 2000 introduces changes to the corporate tax rules covering the treatment of foreign profits, including limiting the use of so-called mixer companies to shelter low-tax foreign profits from UK tax. Multinationals will no longer be able to use offshore structures to mix foreign tax rates of, say, 60 per cent. and 5 per cent. when they bring foreign profits into the UK as dividends. Currently, they do that to shelter low-taxed foreign profits from UK tax. That means that the Exchequer underwrites the cost to business of investing in countries that have not reduced their taxes to the UK level. Companies would not be able to get relief for higher foreign tax if they held overseas subsidiaries directly from the UK.
  The reality is that companies have been attracted to the UK in recent years primarily as a result of the climate of economic stability that the Government have fostered through the low corporate tax rates and, most recently, by the abolition of advance corporation tax, which has made the UK a much more attractive location for companies that have activities outside the UK. The problem for international business and UK companies investing abroad is not the abolition of mixer companies, but that the tax rates in countries in which they are investing, including Germany, the US and Japan, are higher—
  Mr. Flight: Will the Paymaster General give way?
  Dawn Primarolo: No. The hon. Gentleman can sit down to allow me to make my points. He will have plenty of time to debate these points with me, in Committee and in the House again.
  In some cases, the taxes are much higher, but changing the rules for mixer companies will get rid of the subsidy that the UK taxpayer provides for those other tax systems. The use of mixer companies has made UK investors more or less indifferent to the high tax rates in countries in which they invest, and we need to change that focus to ensure that we receive the correct amount of tax.
  The fundamental point is that the Government do not believe that companies should be able to roll up profits offshore, in many cases out of the reach of any normal tax system. This is not about competitiveness, but about
  792
  fairness. Opposition Members wish to focus only on that one issue. They do not wish to consider the wider issues of double taxation relief, but that is only one of the considerations that companies take into account when considering where to set up their groups. The changes to the double taxation relief need to be considered with the other elements of the tax and non-tax environment.
  Other elements within the tax environment consist of taxation of capital gains made by companies on selling their subsidies and the tax relief for interest on loans to fund overseas investment. The changes made to the double taxation relief system may tighten the rules in that area, but when the proposals in the Budget are taken into account, the UK will remain competitive in the future in the international arena.
  The background is simple. The relief for foreign tax extended to overseas companies mergers is part of the double taxation relief. Allowing foreign tax to be carried backwards and forwards for use in another year is also part of the double taxation relief. The Government are legislating for a number of practices to improve the transparency and certainty of the relief, as companies requested. The other changes, to which Opposition Members never wish to refer, make up the complete package, including the reduction in the corporation tax rates, the abolition of advance corporation tax, the extension of the group rules, and the abolition of stamp duty on sales of intellectual property to boost research and development to create an environment favourable to the innovation and invention of our companies. These provisions represent a broader rationalisation and modernisation of the double taxation reliefs, and Opposition Members should look at them carefully before making wild accusations about how much money is going to be saved. The hon. Member for Arundel and South Downs could not even tell the difference between £900 million and £900 billion—but I am not surprised at that.
  I shall turn briefly to the question of what is known as IR35, which covers people using service companies. The House must be clear that we are not talking about entrepreneurs or employers. We are talking about employees who want a better deal from the tax system than their status says they are entitled to. Opposition Members must say why a nurse should pay more national insurance on her income than an IT specialist who uses a service company to reduce his income before making those payments.
  Our intention is not to prohibit service companies—nor to touch those who work legitimately through them. We want to make it clear that people who are really employees but who seek to disguise their employment status through a service company should pay the correct amount of national insurance and tax. That is what every hon. Member in the Chamber does, and all the 26 million employed people in the tax system do.
  Opposition Members continue to try and make it sound as if the people at whom the Bill is targeted are to be denied what other people get, but it is not possible for people simply to say, "I want to be self-employed." The rules on terms and conditions in the tax system dictate whether a person is categorised as self-employed or as an employee. Opposition Members argue for a 5 per cent. reduction in payments for training costs. The implication is that only employees in service companies are so entitled, and that ordinary employees are not.

  793
  There have been endless statements in support of the Government's action in bringing forward these proposals. There has been a vocal and effective campaign against them but, as The Daily Telegraph stated on 3 April:
  Many…people were merely taking advantage of a loophole in the tax rules. They were by most normal definitions employees but found a legitimate way of reducing their tax.
  That is what IR35 seeks to deal with.
  An article in Scotland on Sunday on 2 April stated:
  Every bar-room regularly knows at least one smart kid with a six figure income who has slashed his tax bills simply by calling himself self-employed and charging for his work through
  a personal service company. Such practices cannot be allowed to continue.
  As I said to the hon. Member for Kingston and Surbiton, the Liberal Democrats advocate that everyone else's tax must go up by 1p in the pound; he must therefore explain why he believes that those few people who use service companies should be allowed to pay less tax than anyone else simply because that is what they want to do.
  The Bill is about business and jobs, which will benefit from our commitment to enterprise. The Bill contains a number of measures to promote enterprise and help business—cuts in capital gains tax, research and development tax credit, the permanent 40 per cent. allowance for small and medium-sized companies, the new all-employee share ownership plan, the enterprise management incentive and the corporate venturing proposals.
  The Bill promotes enterprise and fairness. It looks to the future, whereas the Conservative party is still locked in the past. Conservative Members have put forward no coherent proposals this evening: there is no indication that they have an understanding of what the problem is, let alone a glimmer of what the solution should be.
  The Bill shows that this Government are keeping their promises where the previous Government broke theirs. Labour is standing for the many, as we deliver sound public finances, lower inflation, high living standards, help for poorer families and pensioners, and employment for opportunities for all, while the Conservative party continues to make reckless pledges that sacrifice future security. I commend the Bill to the House.
  Question put, That the amendment be made:—
  The House divided: Ayes 136, Noes 342.

  Division No. 169]

  [10 pm

  AYES

  Ainsworth, Peter (E Surrey)

  Chapman, Sir Sydney (Chipping Barnet)

  Amess, David

  Ancram, Rt Hon Michael

  Clappison, James

  Arbuthnot, Rt Hon James

  Clarke, Rt Hon Kenneth (Rushcliffe)

  Baldry, Tony

  Bercow, John

  Collins, Tim

  Beresford, Sir Paul

  Cormack, Sir Patrick

  Body, Sir Richard

  Cran, James

  Boswell, Tim

  Davies, Quentin (Grantham)

  Bottomley, Peter (Worthing W)

  Davis, Rt Hon David (Haltemprice)

  Bottomley, Rt Hon Mrs Virginia

  Day, Stephen

  Brady, Graham

  Dorrell, Rt Hon Stephen

  Brazier, Julian

  Duncan Smith, Iain

  Brooke, Rt Hon Peter

  Emery, Rt Hon Sir Peter

  Bruce, Ian (S Dorset)

  Evans, Nigel

  Burns, Simon

  Faber, David

  Cash, William

  Fabricant, Michael

  794

  Fallon, Michael

  Nicholls, Patrick

  Fight, Howard

  Norman, Archie

  Forth, Rt Hon Eric

  O'Brien, Stephen (Eddisbury)

  Fowler, Rt Hon Sir Norman

  Ottaway, Richard

  Fox, Dr Liam

  Page, Richard

  Gale, Roger

  Paice, James

  Garnier, Edward

  Paterson, Owen

  Gibb, Nick

  Pickles, Eric

  Gill, Christopher

  Portillo, Rt Hon Michael

  Gillan, Mrs Cheryl

  Prior, David

  Gorman, Mrs Teresa

  Randall, John

  Gray, James

  Redwood, Rt Hon John

  Green, Damian

  Robathan, Andrew

  Greenway, John

  Robertson, Laurence

  Grieve, Dominic

  Roe, Mrs Marion (Broxbourne)

  Hague, Rt Hon William

  Ruffley, David

  Hamilton, Rt Hon Sir Archie

  Sayeed, Jonathan

  Hammond, Philip

  Shephard, Rt Hon Mrs Gillian

  Hawkins, Nick

  Shepherd, Richard

  Heald, Oliver

  Simpson, Keith (Mid-Norfolk)

  Heath, Rt Hon Sir Edward

  Soames, Nicholas

  Heathcoat-Amory, Rt Hon David

  Spelman, Mrs Caroline

  Hogg, Rt Hon Douglas

  Spicer, Sir Michael

  Horam, John

  Spring, Richard

  Howarth, Gerald (Aldershot)

  Stanley, Rt Hon Sir John

  Hunter, Andrew

  Steen, Anthony

  Jack, Rt Hon Michael

  Streeter, Gary

  Jackson, Robert (Wantage)

  Swayne, Desmond

  Jenkin, Bernard

  Syms, Robert

  King, Rt Hon Tom (Bridgwater)

  Tapsell, Sir Peter

  Taylor, Ian (Esher & Walton)

  Kirkbride, Miss Julie

  Taylor, John M (solihull)

  Laing, Mrs Eleanor

  Taylor, Sir Teddy

  Lait, Mrs Jacqui

  Tredinnick David

  Lansley, Andrew

  Trend, Michael

  Leigh, Edward

  Tyrie, Andrew

  Letwin, Oliver

  Viggers Peter

  Lewis, Dr Julian (New Forest E)

  Walter, Robert

  Lidington, David

  Waterson, Nigel

  Lilley, Rt Hon Peter

  Wells, Bowen

  Lloyd, Rt Hon Sir Peter (Fareham)

  Whitney, Sir Raymond

  Loughton, Tim

  Whittingdale, John

  Lyell, Rt Hon Sir Nicholas

  Widdecombe, Rt Hon Miss Ann

  MacGregor, Rt Hon John

  Wilkinson, John

  McIntosh, Miss Anne

  Willetts, David

  MacKay, Rt Hon Andrew

  Wilshire, David

  McLoughlin, Patrick

  Winterton, Mrs Ann (Congleton)

  Madel, Sir David

  Winterton, Nicholas (Macclesfield)

  Malins, Humfrey

  Yeo, Tim

  Maples, John

  Young, Rt Hon Sir George

  Mates, Michael

  Maude, Rt Hon Francis

  Tellers for the Ayes:

  Mawhinney, Rt Hon Sir Brian

  Mr. Geoffrey Clifton-Brown

  May, Mrs Theresa

  and

  Moss, Malcolm

  Mr. Peter Atkinson.

  NOES

  Adams, Mrs Irene (Paisley N)

  Bell, Stuart (Middlesbrough)

  Ainger, Nick

  Benn, Hilary (Leeds C)

  Ainsworth, Robert (Cov'try NE)

  Benn, Rt Hon Tony (Chesterfield)

  Allan, Richard

  Bennett, Andrew F

  Allen, Graham

  Benton, Joe

  Anderson, Donald (Swansea E)

  Bermingham, Gerald

  Anderson, Janet (Rossendale)

  Best, Harold

  Armstrong, Rt Hon Ms Hilary

  Betts, Clive

  Ashton, Joe

  Blackman, Liz

  Atherton, Ms Candy

  Blears, Ms Hazel

  Austin, John

  Blizzard, Bob

  Ballard, Jackie

  Boateng, Rt Hon Paul

  Barnes, Harry

  Borrow, David

  Barron, Kevin

  Bradley, Keith (Withington)

  Bayley, Hugh

  Bradley, Peter (The Wrekin)

  Beckett, Rt Hon Mrs Margaret

  Bradshaw, Ben

  Begg, Miss Anne

  Brake, Tom

  Beith, Rt Hon A J

  Brand, Dr Peter

  Bell, Martin (Tatton)

  Breed, Colin

  795

  Brinton, Mrs Helen

  Gerrard, Neil

  Buck, Ms Karen

  Gibson, Dr Ian

  Burden, Richard

  Gilroy, Mrs Linda

  Burgon, Colin

  Godsiff, Roger

  Burstow, Paul

  Goggins, Paul

  Butler, Mrs Christine

  Golding, Mrs Llin

  Byers, Rt Hon Stephen

  Gordon, Mrs Eileen

  Cable, Dr Vincent

  Griffiths, Jane (Reading E)

  Caborn, Rt Hon Richard

  Griffiths, Win (Bridgend)

  Campbell, Mrs Anne (C'bridge)

  Grocott, Bruce

  Campbell, Rt Hon Menzies (NE Fife)

  Grogan, John

  Hain, Peter

  Campbell, Ronnie (Blyth V)

  Hall, Patrick (Bedford)

  Cann, Jamie

  Hamilton, Fabian (Leeds NE)

  Casale, Roger

  Hancock, Mike

  Caton, Martin

  Hanson, David

  Cawsey, Ian

  Harman, Rt Hon Ms Harriet

  Chapman, Ben (Wirral S)

  Harvey, Nick

  Chaytor, David

  Heal, Mrs Sylvia

  Chidgey, David

  Healey, John

  Chisholm, Malcolm

  Heath, David (Somerton & Frome)

  Clapham, Michael

  Henderson, Doug (Newcastle N)

  Clark, Rt Hon Dr David (S Shields)

  Henderson, Ivan (Harwich)

  Clark, Paul (Gillingham)

  Hepburn, Stephen

  Clarke, Charles (Norwich S)

  Heppell, John

  Clarke, Eric (Midlothian)

  Hesford, Stephen

  Clarke, Rt Hon Tom (Coatbridge)

  Hewitt, Ms Patricia

  Clarke, Tony (Northampton S)

  Hill, Keith

  Clelland, David

  Hodge, Ms Margaret

  Clwyd, Ann

  Hood, Jimmy

  Coaker, Vernon

  Hoon, Rt Hon Geoffrey

  Coffey, Ms Ann

  Hope, Phil

  Cohen, Harry

  Hopkins, Kelvin

  Coleman, Iain

  Howarth, Alan (Newport E)

  Colman, Tony

  Howells, Dr Kim

  Connarty, Michael

  Hughes, Ms Beverley (Stretford)

  Corbett, Robin

  Hughes, Kevin (Doncaster N)

  Corbyn, Jeremy

  Humble, Mrs Joan

  Cotter, Brian

  Hurst, Alan

  Cousins, Jim

  Hutton, John

  Cox, Tom

  Iddon, Dr Brian

  Crausby, David

  Illsley, Eric

  Cryer, Mrs Ann (Keighley)

  Jackson, Ms Glenda (Hampstead)

  Cryer, John (Hornchurch)

  Jackson, Helen (Hillsborough)

  Cunningham, Jim (Cov'try S)

  Jenkins, Brian

  Darvill, Keith

  Johnson, Alan (Hull W & Hessle)

  Davey, Edward (Kingston)

  Jones, Rt Hon Barry (Alyn)

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Helen (Warrington N)

  Davies, Geraint (Croydon C)

  Jones, leuan Wyn (Ynys Môn)

  Davis, Rt Hon Terry (B'ham Hodge H)

  Jones, Ms Jenny (Wolverh'ton SW)

  Dean, Mrs Janet

  Jones, Jon Owen (Cardiff C)

  Dismore, Andrew

  Jones, Dr Lynne (Selly Oak)

  Dobbin, Jim

  Jones, Martyn (Clwyd S)

  Donohoe, Brian H

  Kaufman, Rt Hon Gerald

  Doran, Frank

  Keeble, Ms Sally

  Dowd, Jim

  Keen, Alan (Feltham & Heston)

  Dunwoody, Mrs Gwyneth

  Keetch, Paul

  Eagle, Angela (Wallasey)

  Kemp, Fraser

  Eagle, Maria (L'pool Garston)

  Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

  Ellman, Mrs Louise

  Ennis, Jeff

  Kennedy, Jane (Wavertree)

  Etherington, Bill

  Khabra, Piara S

  Fearn, Ronnie

  Kidney, David

  Field, Rt Hon Frank

  King, Andy (Rugby & Kenilworth)

  Fisher, Mark

  King, Ms Oona (Bethnal Green)

  Flint, Caroline

  Kirkwood, Archy

  Flynn, Paul

  Kumar, Dr Ashok

  Follett, Barbara

  Ladyman, Dr Stephen

  Foster, Rt Hon Derek

  Lepper, David

  Foster, Don (Bath)

  Leslie, Christopher

  Foster, Michael J (Worcester)

  Levitt, Tom

  Foulkes, George

  Lewis, Ivan (Bury S)

  Gapes, Mike

  Lewis, Terry (Worsley)

  Gardiner, Barry

  Linton, Martin

  George, Bruce (Walsall S)

  Livsey, Richard

  796

  Lloyd, Tony (Manchester C)

  Raynsford, Nick

  Llwyd, Elfyn

  Rendel, David

  Lock, David

  Robinson, Geoffrey (Cov'try NW)

  Love, Andrew

  Roche, Mrs Barbara

  McAvoy, Thomas

  Rogers, Allan

  McCabe, Steve

  Rooker, Rt Hon Jeff

  McCafferty, Ms Chris

  Rooney, Terry

  McCartney, Rt Hon Ian (Makerfield)

  Ross, Ernie (Dundee W)

  Rowlands, Ted

  McDonagh, Siobhain

  Roy, Frank

  Macdonald, Calum

  Ruane, Chris

  McDonnell, John

  Ruddock, Joan

  McFall, John

  Russell, Bob (Colchester)

  McGuire, Mrs Anne

  Russell, Ms Christine (Chester)

  McIsaac, Shona

  Salter, Martin

  McKenna, Mrs Rosemary

  Sanders, Adrian

  Mackinlay, Andrew

  Sarwar, Mohammad

  Maclennan, Rt Hon Robert

  Savidge, Malcolm

  McNamara, Kevin

  Sawford, Phil

  McNulty, Tony

  Sedgemore, Brian

  MacShane, Denis

  Sheerman, Barry

  Mactaggart, Fiona

  Simpson, Alan (Nottingham S)

  McWilliam, John

  Singh, Marsha

  Marsden, Gordon (Blackpool S)

  Skinner, Dennis

  Marsden, Paul (Shrewsbury)

  Smith, Rt Hon Andrew (Oxford E)

  Marshall, David (Shettleston)

  Smith, Angela (Basildon)

  Marshall, Jim (Leicester S)

  Smith, Rt Hon Chris (Islington S)

  Martlew, Eric

  Smith, Miss Geraldine (Morecambe & Lunesdale)

  Maxton, John

  Meacher, Rt Hon Michael

  Smith, Jacqui (Redditch)

  Meale, Alan

  Smith, John (Glamorgan)

  Merron, Gillian

  Smith, Llew (Blaenau Gwent)

  Michael, Rt Hon Alun

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

  Michie, Bill (Shef'ld Heeley)

  Snape, Peter

  Michie, Mrs Ray (Argyll & Bute)

  Soley, Clive

  Miller, Andrew

  Southworth, Ms Helen

  Mitchell, Austin

  Squire, Ms Rachel

  Moffatt, Laura

  Starkey, Dr Phyllis

  Moonie, Dr Lewis

  Steinberg, Gerry

  Moore, Michael

  Stevenson, George

  Moran, Ms Margaret

  Stewart, David (Inverness E)

  Morgan, Ms Julie (Cardiff N)

  Stinchcombe, Paul

  Morris, Rt Hon Ms Estelle (B'ham Yardley)

  Stoate, Dr Howard

  Strang, Rt Hon Dr Gavin

  Morris, Rt Hon Sir John (Aberavon)

  Straw, Rt Hon Jack

  Stuart, Ms Gisela

  Mountford, Kali

  Stunell, Andrew

  Mudie, George

  Sutcliffe, Gerry

  Mullin, Chris

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Murphy, Jim (Eastwood)

  Oaten, Mark

  Taylor, Ms Dari (Stockton S)

  O'Brien, Bill (Normanton)

  Taylor, David (NW Leics)

  O'Hara, Eddie

  Taylor, Matthew (Truro)

  Olner, Bill

  Temple-Morris, Peter

  Öpik, Lembit

  Thomas, Gareth (Clwyd W)

  Organ, Mrs Diana

  Thomas, Gareth R (Harrow W)

  Osborne, Ms Sandra

  Timms, Stephen

  Pearson, Ian

  Tipping, Paddy

  Pendry, Tom

  Todd, Mark

  Perham, Ms Linda

  Tonge, Dr Jenny

  Pike, Peter L

  Touhig, Don

  Plaskitt, James

  Trickett, Jon

  Pollard, Kerry

  Turner, Dennis (Wolverh'ton SE)

  Pond, Chris

  Turner, Dr Desmond (Kemptown)

  Pope, Greg

  Turner, Dr George (NW Norfolk)

  Pound, Stephen

  Twigg, Stephen (Enfield)

  Powell, Sir Raymond

  Tyler, Paul

  Prentice, Ms Bridget (Lewisham E)

  Tynan, Bill

  Prentice, Gordon (Pendle)

  Vis, Dr Rudi

  Prescott, Rt Hon John

  Ward, Ms Claire

  Primarolo, Dawn

  Watts, David

  Prosser, Gwyn

  Webb, Steve

  Purchase, Ken

  Wicks, Malcolm

  Quinn, Lawrie

  Wigley, Rt Hon Dafydd

  Radice, Rt Hon Giles

  Williams, Rt Hon Alan (Swansea W)

  Rammell, Bill

  797

  Williams, Mrs Betty (Conwy)

  Wright, Anthony D (Gt Yarmouth)

  Willis, Phil

  Wright, Dr Tony (Cannock)

  Winnick, David

  Wyatt, Derek

  Winterton, Ms Rosie (Doncaster C)

  Wood, Mike

  Tellers for the Noes:

  Woodward, Shaun

  Mr. Mike Hall and

  Worthington, Tony

  Mr. David Jamieson.

  Question accordingly negatived.
  Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on second or third reading), and agreed to.
  Bill accordingly read a Second time.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 63 (Committal of Bills),
  That Clauses Nos. 1, 12, 30, 31, 59, 102, and 113 be committed to a Committee of the whole House.
  That the remainder of the Bill be committed to a Standing Committee.
  That when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.—[Dawn Primarolo.]
  Question agreed to.
  Committee tomorrow.

  EUROPEAN COMMUNITY DOCUMENTS
  Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),
  EUROPEAN COMMUNITY DOCUMENTS

    WHITE PAPER ON FOOD SAFETY
    That this House takes note of European Union Document No. 5761/00, a White Paper on Food Safety in the European Union; and supports the Government's view that consumer concerns and the complexity of current arrangements demand urgent action to develop a coherent EU policy for the foodstuffs sector: to this end, welcomes the establishment of a European Food Authority; and notes the Government's commitment to identifying the most appropriate terms and structure for such an Authority with the objective of improving and enhancing food safety and the associated EU regulatory process.—[Mr. Dowd.]
    The House divided: Ayes 305, Noes 170.

    Division No. 170]

    [10.19 pm

    AYES

    Adams, Mrs Irene (Paisley N)

    Bermingham, Gerald

    Ainger, Nick

    Best, Harold

    Ainsworth, Robert (Cov'try NE)

    Betts, Clive

    Allen, Graham

    Anderson, Donald (Swansea E)

    Blackman, Liz

    Anderson, Janet (Rossendale)

    Blears, Ms Hazel

    Armstrong, Rt Hon Ms Hilary

    Blizzard, Bob

    Ashton, Joe

    Boateng, Rt Hon Paul

    Atherton, Ms Candy

    Borrow, David

    Austin, John

    Barnes, Harry

    Bradley, Keith (Withington)

    Barron, Kevin

    Bradley, Peter (The Wrekin)

    Bayley, Hugh

    Bradshaw, Ben

    Beckett, Rt Hon Mrs Margaret

    Brinton, Mrs Helen

    Begg, Miss Anne

    Buck, Ms Karen

    Bell, Martin (Tatton)

    Burden, Richard

    Bell, Stuart (Middlesbrough)

    Burgon, Colin

    Benn, Hilary (Leeds C)

    Benn, Rt Hon Tony (Chesterfield)

    Butler, Mrs Christine

    Bennett, Andrew F

    Byers, Rt Hon Stephen

    Benton, Joe

    Caborn, Rt Hon Richard

    798

    Campbell, Mrs Anne (C'bridge)

    Heal, Mrs Sylvia

    Campbell, Ronnie(Blyth V)

    Healey, John

    Cann, Jamie

    Henderson, Doug (Newcastle N)

    Casale, Roger

    Henderson, Ivan (Harwich)

    Caton, Martin

    Hepburn, Stephen

    Cawsey, Ian

    Heppell, John

    Chapman, Ben (Wirral S)

    Hesford, Stephen

    Chaytor, David

    Hewitt, Ms Patricia

    Chisholm, Malcolm

    Hill, Keith

    Clapham, Michael

    Hodge, Ms Margaret

    Clark, Rt Hon Dr David(S Shields)

    Hood, Jimmy

    Clark, Paul (Gillingham)

    Hoon, Rt Hon Geoffrey

    Clarke, Charles (Norwich S)

    Hope, Phil

    Clarke, Eric (Midlothian)

    Hopkins, Kelvin

    Clarke, Rt Hon Tom (Coatbridge)

    Howarth, Alan (Newport E)

    Clarke, Tony (Northampton S)

    Howells, Dr Kim

    Clelland, David

    Hughes, Ms Beverley (Stretford)

    Clwyd, Ann

    Hughes, Kevin (Doncaster N)

    Coaker, Vernon

    Humble, Mrs Joan

    Coffey, Ms Ann

    Hurst, Alan

    Cohen, Harry

    Hutton, John

    Coleman, Iain

    Iddon, Dr Brian

    Colman, Tony

    Illsley, Eric

    Connarty, Michael

    Jackson, Ms Glenda (Hampstead)

    Corbett, Robin

    Jackson, Helen (Hillsborough)

    Corbyn, Jeremy

    Jenkins, Brian

    Cousins, Jim

    Jones, Rt Hon Barry (Alyn)

    Cox, Tom

    Jones, Helen (Warrington N)

    Crausby, David

    Jones, leuan Wyn (Ynys Môn)

    Cryer, Mrs Ann (Keighley)

    Jones, Ms Jenny (Wolverh'ton SW)

    Cryer, John (Hornchurch)

    Cunningham, Jim(Cov'try S)

    Jones, Jon Owen (Cardiff C)

    Darvill, Keith

    Jones, Dr Lynne (Selly Oak)

    Davies, Rt Hon Denzil (Llanelli)

    Jones, Martyn (Clwyd S)

    Davies, Geraint (Croydon C)

    Kaufman, Rt Hon Gerald

    Davis, Rt Hon Terry (B'ham Hodge H)

    Keeble, Ms Sally

    Keen, Alan (Feltham & Heston)

    Dean, Mrs Janet

    Kemp, Fraser

    Dismore, Andrew

    Kennedy, Jane (Wavertree)

    Dobbin, Jim

    Khabra, Piara S

    Donohoe, Brian H

    Kidney, David

    Doran, Frank

    King, Andy (Rugby & Kenilworth)

    Dowd, Jim

    King, Ms Oona (Bethnal Green)

    Dunwoody, Mrs Gwyneth

    Kumar, Dr Ashok

    Eagle, Angela (Wallasey)

    Ladyman, Dr Stephen

    Eagle, Maria (L'pool Garston)

    Lepper, David

    Ellman, Mrs Louise

    Leslie, Christopher

    Ennis, Jeff

    Levitt, Tom

    Etherington, Bill

    Lewis, Ivan (Bury S)

    Field, Rt Hon Frank

    Lewis, Terry (Worsley)

    Fisher, Mark

    Linton, Martin

    Flint, Caroline

    Lloyd, Tony (Manchester C)

    Flynn, Paul

    Llwyd, Elfyn

    Follett, Barbara

    Lock, David

    Foster, Rt Hon Derek

    Love, Andrew

    Foster, Michael J (Worcester)

    McAvoy, Thomas

    Foulkes, George

    McCabe, Steve

    Gapes, Mike

    McCafferty, Ms Chris

    Gardiner, Barry

    McCartney, Rt Hon Ian (Makerfield)

    George, Bruce (Walsall S)

    Gerrard, Neil

    McDonagh, Siobhain

    Gibson, Dr Ian

    Macdonald, Calum

    Gilroy, Mrs Linda

    McDonnell, John

    Godsiff, Roger

    McFall, John

    Goggins, Paul

    McGuire, Mrs Anne

    Golding, Mrs Llin

    McIsaac, Shona

    Gordon, Mrs Eileen

    McKenna, Mrs Rosemary

    Griffiths, Jane (Reading E)

    Mackinlay, Andrew

    Griffiths, Win (Bridgend)

    McNamara, Kevin

    Grocott, Bruce

    McNulty, Tony

    Grogan, John

    MacShane, Denis

    Hain, Peter

    Mactaggart, Fiona

    Hall, Patrick (Bedford)

    McWilliam, John

    Hamilton, Fabian (Leeds NE)

    Marsden, Gordon (Blackpool S)

    Hanson, David

    Marsden, Paul (Shrewsbury)

    Harman, Rt Hon Ms Harriet

    Marshall, David (Shettleston)

    799

    Marshall, Jim (Leicester S)

    Sedgemore, Brian

    Martlew, Eric

    Sheerman, Barry

    Maxton, John

    Simpson, Alan (Nottingham S)

    Meacher, Rt Hon Michael

    Singh, Marsha

    Meale, Alan

    Skinner, Dennis

    Merron, Gillian

    Smith, Rt Hon Andrew (Oxford E)

    Michael, Rt Hon Alun

    Smith, Angela (Basildon)

    Michie, Bill (Shef'ld Heeley)

    Smith, Rt Hon Chris (Islington S)

    Miller, Andrew

    Smith, Miss Geraldine (Morecambe & Lunesdale)

    Mitchell, Austin

    Moffatt, Laura

    Smith, Jacqui (Redditch)

    Moonie, Dr Lewis

    Smith, John (Glamorgan)

    Moran, Ms Margaret

    Smith, Llew (Blaenau Gwent)

    Morgan, Ms Julie (Cardiff N)

    Snape, Peter

    Morgan, Rhodri (Cardiff W)

    Soley, Clive

    Morris, Rt Hon Ms Estelle (B'ham Yardley)

    Southworth, Ms Helen

    Squire, Ms Rachel

    Morris, Rt Hon Sir John (Aberavon)

    Starkey, Dr Phyllis

    Steinberg, Gerry

    Mountford, Kali

    Stevenson, George

    Mudie, George

    Stewart, David (Inverness E)

    Mullin, Chris

    Stinchcombe, Paul

    Murphy, Jim (Eastwood)

    Stoate, Dr Howard

    O'Brien, Bill (Normanton)

    Strang, Rt Hon Dr Gavin

    O'Hara, Eddie

    Straw, Rt Hon Jack

    Olner, Bill

    Stuart, Ms Gisela

    Organ, Mrs Diana

    Sutcliffe, Gerry

    Osborne, Ms Sandra

    Taylor, Rt Hon Mrs Ann (Dewsbury)

    Pearson, Ian

    Pendry, Tom

    Taylor, Ms Dari (Stockton S)

    Perham, Ms Linda

    Taylor, David (NW Leics)

    Pike, Peter L

    Temple-Morris, Peter

    Plaskitt, James

    Thomas, Gareth (Clwyd W)

    Pollard, Kerry

    Thomas, Gareth R (Harrow W)

    Pond, Chris

    Timms, Stephen

    Pope, Greg

    Tipping, Paddy

    Pound, Stephen

    Todd, Mark

    Powell, Sir Raymond

    Touhig, Don

    Prentice, Ms Bridget (Lewisham E)

    Trickett, Jon

    Prentice, Gordon (Pendle)

    Turner, Dennis (Wolverh'ton SE)

    Prescott, Rt Hon John

    Turner, Dr Desmond (Kemptown)

    Primarolo, Dawn

    Turner, Dr George (NW Norfolk)

    Prosser, Gwyn

    Twigg, Stephen (Enfield)

    Purchase, Ken

    Tynan, Bill

    Quinn, Lawrie

    Vis, Dr Rudi

    Radice, Rt Hon Giles

    Ward, Ms Claire

    Rammell, Bill

    Watts, David

    Raynsford, Nick

    Wicks, Malcolm

    Robinson, Geoffrey (Cov'try NW)

    Wigley, Rt Hon Dafydd

    Roche, Mrs Barbara

    Williams, Rt Hon Alan (Swansea W)

    Rogers, Allan

    Rooker, Rt Hon Jeff

    Williams, Mrs Betty (Conwy)

    Rooney, Terry

    Winnick, David

    Ross, Ernie (Dundee W)

    Wood, Mike

    Rowlands, Ted

    Woodward, Shaun

    Roy, Frank

    Worthington, Tony

    Ruane, Chris

    Wright, Anthony D (Gt Yarmouth)

    Ruddock, Joan

    Wright, Dr Tony (Cannock)

    Russell, Ms Christine (Chester)

    Wyatt, Derek

    Salter, Martin

    Sarwar, Mohammad

    Tellers for the Ayes:

    Savidge, Malcolm

    Mr. Mike Hall and

    Sawford, Phil

    Mr. David Jamieson.

    NOES

    Ainsworth, Peter (E Surrey)

    Bottomley, Peter (Worthing W)

    Allan, Richard

    Bottomley, Rt Hon Mrs Virginia

    Amess, David

    Brady, Graham

    Ancram, Rt Hon Michael

    Brake, Tom

    Arbuthnot, Rt Hon James

    Brand, Dr Peter

    Baldry, Tony

    Brazier, Julian

    Ballard, Jackie

    Breed, Colin

    Beith, Rt Hon A J

    Brooke, Rt Hon Peter

    Bercow, John

    Bruce, Ian (S Dorset)

    Beresford, Sir Paul

    Burns, Simon

    Boswell, Tim

    Burstow, Paul

    800

    Cable, Dr Vincent

    Lidington, David

    Campbell, Rt Hon Menzies (NE Fife)

    Lilley, Rt Hon Peter

    Livsey, Richard

    Cash, William

    Lloyd, Rt Hon Sir Peter (Fareham)

    Chapman, Sir Sydney (Chipping Barnet)

    Loughton, Tim

    Lyell, Rt Hon Sir Nicholas

    Chidgey, David

    MacGregor, Rt Hon John

    Clappison, James

    McIntosh, Miss Anne

    Clarke, Rt Hon Kenneth (Rushcliffe)

    MacKay, Rt Hon Andrew

    Maclennan, Rt Hon Robert

    Collins, Tim

    McLoughlin, Patrick

    Cormack, Sir Patrick

    Madel, Sir David

    Cotter, Brian

    Malins, Humfrey

    Cran, James

    Maples, John

    Davey, Edward (Kingston)

    Mates, Michael

    Maude, Rt Hon Francis

    Davies, Quentin (Grantham)

    Mawhinney, Rt Hon Sir Brian

    Davis, Rt Hon David (Haltemprice)

    May, Mrs Theresa

    Day, Stephen

    Michie, Mrs Ray (Argyll & Bute)

    Dorrell, Rt Hon Stephen

    Moore, Michael

    Duncan Smith, Iain

    Moss, Malcolm

    Emery, Rt Hon Sir Peter

    Nicholls, Patrick

    Evans, Nigel

    Norman, Archie

    Faber, David

    Oaten, Mark

    Fabricant, Michael

    O'Brien, Stephen (Eddisbury)

    Fallon, Michael

    Öpik, Lembit

    Fearn, Ronnie

    Ottaway, Richard

    Flight, Howard

    Page, Richard

    Forth, Rt Hon Eric

    Paice, James

    Foster, Don (Bath)

    Paterson, Owen

    Fowler, Rt Hon Sir Norman

    Pickles, Eric

    Fox, Dr Liam

    Portillo, Rt Hon Michael

    Gale, Roger

    Prior, David

    Randall, John

    Garnier, Edward

    Redwood, Rt Hon John

    Gibb, Nick

    Rendel, David

    Gill, Christopher

    Robathan, Andrew

    Gillan, Mrs Cheryl

    Robertson, Laurence

    Gorman, Mrs Teresa

    Roe, Mrs Marion (Broxbourne)

    Gray, James

    Ruffley, David

    Green, Damian

    Russell, Bob (Colchester)

    Greenway, John

    Sanders, Adrian

    Grieve, Dominic

    Shephard, Rt Hon Mrs Gillian

    Hague, Rt Hon William

    Shepherd, Richard

    Hamilton, Rt Hon Sir Archie

    Simpson, Keith (Mid-Norfolk)

    Hammond, Philip

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

    Hancock, Mike

    Soames, Nicholas

    Harvey, Nick

    Spelman, Mrs Caroline

    Hawkins, Nick

    Spicer, Sir Michael

    Heald, Oliver

    Spring, Richard

    Heath, David (Somerton & Frome)

    Stanley, Rt Hon Sir John

    Heathcoat-Amory, Rt Hon David

    Steen, Anthony

    Hogg, Rt Hon Douglas

    Streeter, Gary

    Horam, John

    Stunell, Andrew

    Howarth, Gerald (Aldershot)

    Swayne, Desmond

    Hughes, Simon (Southwark N)

    Syms, Robert

    Hunter, Andrew

    Tapsell, Sir Peter

    Jack, Rt Hon Michael

    Taylor, Ian (Esher & Walton)

    Jackson, Robert (Wantage)

    Taylor, John M (Solihull)

    Jenkin, Bernard

    Taylor, Matthew (Truro)

    Taylor, Sir Teddy

    Keetch, Paul

    Tonge, Dr Jenny

    Kennedy, Rt Hon Charles (Ross Skye & Inverness W)

    Tredinnick, David

    Trend, Michael

    King, Rt Hon Tom (Bridgwater)

    Tyler, Paul

    Kirkbride, Miss Julie

    Tyrie, Andrew

    Kirkwood, Archy

    Viggers, Peter

    Laing, Mrs Eleanor

    Walter, Robert

    Lait, Mrs Jacqui

    Waterson, Nigel

    Lansley, Andrew

    Webb, Steve

    Leigh, Edward

    Wells, Bowen

    Letwin, Oliver

    Whitney, Sir Raymond

    Lewis, Dr Julian (New Forest E)

    Whittingdale, John

    801

    Widdecombe, Rt Hon Miss Ann

    Yeo, Tim

    Wilkinson, John

    Young, Rt Hon Sir George

    Willetts, David

    Willis, Phil

    Tellers for the Noes:

    Wilshire, David

    Mr. Geoffrey Clifton-Brown

    Winterton, Mrs Ann (Congleton)

    and

    Winterton, Nicholas (Macclesfield)

    Mr. Peter Atkinson.

    Question accordingly agreed to.

Police Firearms
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Dowd.]
10.31 pm
Mr. Brian Sedgemore.: On 22 September 1999, Harry Stanley, one of my constituents, was walking home minding his own business, carrying with him in a blue plastic bag the leg of a coffee table which had just been repaired, when he was gunned down round the corner from where he lived. It was as swift and clinical as any contract killing, except that the killing was carried out not by professional criminals, but by two armed S019 police officers. It ought not to happen like that—[Interruption.]
Mr. Deputy Speaker (Mr. Michael J. Martin): Order. There is still far too much conversation in the Chamber. An hon. Member is addressing the House.
Mr. Sedgemore: Thank you, Mr. Deputy Speaker.
It ought not to happen like that—Harry Stanley trashed virtually on his own doorstep by the very people who are paid to keep the peace and to protect us. Undoubtedly, this was the worst and most tragic case of its kind ever to take place in the United Kingdom. For heaven's sake—Harry had been diagnosed as having cancer of the colon and was recovering from an operation.
Harry Stanley never asked for much. When he left home that morning, his last words to his wife Irene, who asked him what he wanted for dinner, were, "I'll have stovies"—a reference to a traditional Scottish dish of sausage, potatoes and onions. Hours later, Mrs. Stanley heard a noise—bang, bang—but had no idea that her husband was lying dead in a pool of blood around the corner.
When something like that happens and a wholly innocent person is killed, the system goes into denial. Inquiries are held, these days under the auspices of the Police Complaints Authority. The inquiry takes for ever, lasting three, four or even 10 times longer than a murder inquiry, often exceeding the 120-day deadline set. The papers are sent to the Crown Prosecution Service, where they are dealt with at a leisurely pace by the few Treasury counsel capable of handling them. Charges rarely ensue, and that is that.
My inquiries reveal that 22 people have been shot dead by police officers since 1990, some of them found to be unarmed and some armed with a toy replica gun. Prosecutions have been virtually non-existent. Indeed, in only two of the cases has anyone been charged. In one case, the jury acquitted; in another, a trial is pending. Although each case must be considered on its merits, when the cases are examined collectively, the signal that goes out to the public is that the police have a licence to kill.
In London the role of the police authority is performed by the Home Secretary, who is answerable to the House. The House, as far as I am aware, has not given the Home Secretary the power to grant police officers in London, openly or covertly, licences to kill.
Bizarrely, the identity of the killers in such cases is kept secret for as long as possible. Even today, Irene Stanley does not know who killed her husband. Why? If police

803
officers had not been involved, she would have known a long time ago. Why has Mrs. Stanley received no word of apology from the two officers involved? Surely she has a right to know who killed her husband; surely her son Jason has a right to know who killed his dad. It was insensitive—to put it mildly—that the officers were not suspended pending an inquiry. That sends the wrong signals: namely that police officers have a licence to kill and that their identities will be protected.
Of course there are guidelines for the police on the use and issue of firearms. They are contained in an Association of Chief Police Officers document, which was issued in 1987, and which may have been reissued recently. The ACPO guidelines state that, first, firearms should be used only when there is reason to believe that a police officer may have to face a person who is armed or so dangerous that he could not be restrained without the use of firearms. Secondly, only reasonable force should be used. Thirdly, a proper briefing should be given to armed police officers before they set off. An officer of appropriate senior rank and, I presume, someone who has satisfied himself that an operation by armed police officers is justified should give the briefing. Fourthly, firearms should be used only as a last resort when conventional methods have been tried and failed. Fifthly, only properly trained police officers should bear arms.
I am told that the provisions of the ACPO manual are a Government secret, subject to a public interest immunity certificate. If that is true, the veil of secrecy should be lifted so that the public can know what the procedures are, and ascertain whether they are adequate and how they could be improved to avoid further death.
All the cases that I have examined raise the question of police training in the use of firearms. Too often, those who use guns seem deficient in detective skills and training. Surely it is important that officers who carry guns should be capable of detective work, which can shatter the preconceptions that they held when they set off on their mission, often in a highly charged and pumped up state. Uniformed police officers who carry and discharge guns must be capable of thinking quickly and intelligently for themselves as well as responding to the unexpected.
Harry Stanley's mistake when going home on that fatal day was to go into the Queen Alexandra pub for a glass of lemonade. When he left, some idiot from the pub telephoned the police and told them, without a shred of evidence, that the table leg in the plastic bag was a sawn-off shotgun. Sadly, the strength of that evidence was never tested in the recorded telephone conversation or by the police officers who subsequently shot Harry in the street.
One expects sensitivity from the police when innocent people have been killed through the use of firearms by their own. Even more sadly, the police failed to identify Harry as he lay dead in the street although he had a passport and other evidence from which he could easily have been identified.
Rule 7 of the coroner's rules 1984 requires the coroner to notify the relatives of a deceased person in advance of a post mortem examination so that, if they wish, a representative may be present. By the time the post mortem of Harry Stanley took place, Brian Craddock, the
804
officer in charge of the inquiry, had discovered Harry's identity, but could not be bothered to inform Mrs. Stanley that her husband had been killed and that she had the right to a representative at the post mortem. We need more respect from the police than that: they should not feel that they can ignore us or our rights just because we are working class in Hackney.
At first, the Metropolitan police offered to pay for Harry's funeral—a small recompense, you might think, Mr. Deputy Speaker—but, in an act as nasty as any I can remember, the organisation that employed the killers who shot Harry withdrew the offer. Imagine what Mrs. Stanley's feelings must have been when she heard that. I can only suggest, in the strongest possible terms, that the Commissioner of Police of the Metropolis, John Stevens, pay Mrs. Stanley a visit to apologise in person for that appalling behaviour. What about a touch of common humanity from the commissioner?
Meanwhile, we still do not know why Harry Stanley died. The only ballistic expert capable of dealing with such cases, Chief Superintendent Alan Bailey, slowed the inquiry down by a month, developing questionable virtual reality reconstructions on video. I understand that that is some kind of new technique. The Surrey police are investigating the Metropolitan police. The Suffolk police are investigating the investigators, the Surrey police. It all seems a bit incestuous. It is not for me in the debate or for the House to pronounce on what happened in this dreadful case, but too much time has passed and there has been too much secrecy.
A daft suggestion was originally put around that, in walking home and minding his own business, Harry Stanley was on a suicide mission, hoping that police officers would turn up out of the blue and shoot him dead. Another silly suggestion was that he was Irish—so what else could he expect? From what I know of the case, my considered opinion as a barrister is that a jury should be asked to decide on the evidence whether the two police officers are innocent or guilty of manslaughter or, worse, murder.
10.42 pm
The Minister of State, Home Office (Mr. Charles Clarke): As my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) has said, this is indeed an appalling case. I congratulate him on obtaining the debate. He was my Member of Parliament for a long period of my life, so it is a particular privilege to respond to his debate. I want to make a number of general points, but shall start with the specifics of the appalling incident that he described.
I express my sympathy and that of the Government to the family and friends of Harry Stanley over this sad death. That sympathy needs to be expressed not only for the reasons outlined by my hon. Friend in his eloquent address, but because any such terrible occasion must be properly acknowledged.
The shooting of Mr. Stanley occurred at about 7.54 pm on 22 September 1999 in Fremont street, Hackney—a street I know well. Following a call from a member of the public, police believed Harry Stanley to be armed. They challenged him. He raised a bag that the police believed to contain a firearm and the two officers each fired a shot. Mr. Stanley was fatally wounded and pronounced dead at the scene. It was subsequently discovered that he was not carrying any firearm.

805
The Metropolitan police reported the shooting to the Police Complaints Authority and it was agreed the next day—23 September—that the Surrey police should investigate the incident described by my hon. Friend. It remains under investigation by the PCA and we understand that that investigation is due to be completed shortly. However, as the matter has yet to be considered by the Crown Prosecution Service—my hon. Friend raised important issues about charges that might or might not be brought—and by the PCA in respect of any criminal or disciplinary matters, it is important that I do not say anything that might be held to prejudice those important decisions. I am grateful to him for acknowledging that.
I well understand the family's concern at the time taken by the investigation. The time that it takes to deal with complaints of this kind has been one of the most distressing aspects of this job, which I took on in August last year. Such investigations are time consuming and, in my opinion, very legalistic; moreover, they do not satisfy victims. I am talking not just about complaints of the type that we are discussing, but about all complaints about the way in which the police operate—particularly those involving death, of course, but others as well. We are actively considering the best way in which to deal with the problem. A report to be published shortly will, I hope, shorten the time taken by investigations. If an investigation takes time, however, it may mean that a thorough and rigorous inquiry has been undertaken, as is happening in this instance. Everything possible is being done to ensure that the truth is established.
I am glad that my hon. Friend dismissed some of the "silly suggestions"—I think that was the phrase he used—about what might or might not have been the motivation in this case. He did, however, raise a number of other matters, which the inquiry will decide. He asked what authority had been given. He also asked what briefing and instructions had been given, and correctly pointed out that there were clear guidelines. It will be for the inquiry to establish whether they were fulfilled. He raised the question of firearms being used as a last resort, which is a requirement of the guidelines. That, too, will be inquired into and reported on. More generally, he raised the question of proper training, which will be an important feature of the inquiry. He mentioned the failure to identify Mr. Stanley, and the extent to which the coroners rules were or were not obeyed. That, too, will be dealt with.
I am appalled by what my hon. Friend said about the withdrawal of the offer to pay for the funeral, and I will look into that specifically; but all the matters that he raised will be considered in the inquiry, and a full report will be made.
The use of firearms by police has been and remains a rare last resort. Neither in this case nor in any other have the police had a licence to kill; nor has the Home Secretary, any police authority or anyone else given them a licence to kill in any circumstances, general or particular. I feel I must rebut the suggestion that any police have a licence to kill, because it is simply wrong. The policy is that the police should not generally be armed, but that specialist firearms officers should be deployed when an operational need arises.
The protection of officers and members of the public is clearly the highest priority whenever there is a firearms risk. It is against that background that chief officers must decide whether, in any given circumstances, the
806
deployment of armed officers is justified. I think there is a consensus that that is far preferable to the routine arming of patrol officers, which happens in some countries.
Decisions about the deployment of armed officers are the responsibility of individual chief police officers. They are, however, guided by a manual issued—as my hon. Friend said—by the Association of Chief Police Officers, which provides guidance on the selection of armed officers, training, tactics and equipment. It is intended to ensure that all matters concerning police firearms are subject to the tightest control and discipline, while aiming also to ensure that the police are properly equipped for the dangerous conditions that they must sometimes face. The report will deal with the extent to which those requirements were or were not fulfilled in the case of my hon. Friend's constituent.
As my hon. Friend said, the manual—which is currently being revised to take into account the Human Rights Act 1998—is confidential, because it is deemed to contain information that could be useful to armed criminals. However, I am glad to tell my hon. Friend that the police are actively considering whether parts of it, at least, could be made public. I agree with him that this is an important issue of public concern.
It may be of interest to the House to know how it is all moving: what the statistics are. Last Wednesday, we released figures to show that the number of firearms operations had fallen from 11,842 in 1997–98 to 10,942 in 1998–99, a decrease of more than 7 per cent. There has been a 4 per cent. decrease in the number of authorised firearms officers in police forces and a 3 per cent. increase in the number of operations involving armed response vehicles.
The number of authorised firearms officers continues to fall because of a trend towards concentrating police firearms capability in a smaller number of highly trained officers, and the replacement of many divisional firearms officers with a smaller number of armed response vehicle officers. The small rise in the number of operations involving armed response vehicles may have been due to more of those units being available to police. Many forces are increasing their numbers of armed response vehicles.
The number of operations in which firearms are discharged by police remains very low. The number of operations in which firearms are issued has decreased again. Chief officers are continuing to concentrate their firearms capacity in a small number of highly trained officers.
Obviously, any operation involving the use of firearms carries risks. If the operation goes wrong in any way, the consequences can be devastating for all those involved, but there will be an investigation process to be followed if incidents occur.
As my hon. Friend acknowledged, investigations are supervised by the Police Complaints Authority, which has the power to approve the choice of investigating officer and to give directions on the course of the inquiry. At the end of the investigation, the PCA must issue a statement indicating whether the investigation has been completed to its satisfaction.
I emphasise—it is a critical point, particularly in the light of the remarks about licence to kill—that police officers are not above the law. They need to abide by

807
section 3 of the Criminal Law Act 1967, which is the golden rule on the use of force by officers of the law, or by anyone else. It says that
a person may use such force as is reasonable in the circumstances in the prevention of crime, or in the effecting or assisting in the lawful arrest of offenders or suspected offenders or persons unlawfully at large.
That is the legal definition, which will be one of the aspects that is assessed in the inquiry to which my hon. Friend referred.
Of course, the degree of force justified will vary according to the circumstances of each case, but the responsibility for the use of the firearm is an individual decision which may have to be justified in legal proceedings. It is for the courts to decide in any particular case whether the force used was reasonable.
As part of the Home Secretary's action plan on recommendations of the Stephen Lawrence inquiry, the Home Office commissioned a feasibility study of possible arrangements for the independent investigation of police complaints. That report will be published shortly. The House may be interested to know that Liberty has also commissioned such a report, which will also be published. The Government will consider in the light of that work whether to introduce legislation to establish a new independent complaints investigation body.
808
I mention this because my hon. Friend, who spoke entirely reasonably, raised the doubts and concerns that individuals might have about the independence or otherwise of the complaints process. The Government believe that it is important that any complaints process on the operation of the police carry the confidence of those who have been affected by it. That is why we are looking very positively at the recommendation and have commissioned detailed work on how such an operation might work and provide reassurance, which is tremendously important for the future of policing as a whole.
I have endeavoured to explain the situation around the shooting of Mr. Stanley as I understand it and to extend, as strongly as I can, my sympathy and that of the Government to the family and friends of Harry Stanley. I have endeavoured to give some context to the overall situation and to indicate that many of the trends on the use of arms in those circumstances are going downwards at the moment. I hope that the result of the inquiry will be published shortly and that that will give everybody involved some purchase on the important issues at stake. I am grateful to my hon. Friend for raising this subject and for airing what I think the whole House would agree is an important issue.
Question put and agreed to.
Adjourned accordingly at five minutes to Eleven o'clock.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Local Authority Newspapers
  Mr. Bob Russell
  To ask the Secretary of State for the Environment, Transport and the Regions what monitoring his Department undertakes of the content of local authority newspapers; and if he will make a statement. [118782]

  Ms Beverley Hughes
  My Department does not monitor the content of local authority newspapers.

  Mr. Bob Russell
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make it his policy that newspapers published by local authorities should be subject to the complaints procedure of the Press Complaints Commission; and if he will make a statement. [118781]

  Ms Beverley Hughes
  The Press Complaints Commission is part of a self-regulatory regime for the newspaper industry. All local authority publicity, including newspapers published by local authorities, is subject to the statutory regulatory regime provided by the Local Government Act 1986 and the Code of Recommended Practice on Local Authority Publicity issued by the Secretary of State thereunder.

  Telecommunications Masts
  Mr. David Atkinson
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make it his policy not to grant permission for the siting of telecommunication masts in residential areas until the Independent Expert Group on mobile phones has reported; and if he will make a statement. [119185]

  Ms Beverley Hughes
  The Independent Expert Group on Mobile Phones, set up at the instigation of the Government and chaired by Sir William Stewart FRS FRSE, is currently considering the possible health effects of the use of mobile phones, base stations and transmitters and is conducting a comprehensive assessment of existing research. The Group is expected to finalise its report shortly. The Government will consider the Group's recommendations and issue a response.

  Planning (Flood Alleviation)
  Mr. Harvey
  To ask the Secretary of State for the Environment, Transport and the Regions if he will issue planning policy guidelines to planning authorities indicating how they should handle planning applications for development in areas known to be at risk of flooding but in which the necessary flood alleviation works have not been undertaken. [119474]
  316W
  Ms Beverley Hughes
  My hon. Friend the Minister for Housing and Planning announced on 13 April 2000,Official Report, columns 249-50W, the publication of a consultation draft of a new Planning Policy Guidance Note 25, "Development and flood risk". This sets out all the considerations to which planning authorities should have regard when handling applications for development in flood risk areas. Copies are available in the Library.

  We will consider the responses to this consultation with a view to issuing the new PPG in its final form later this year.

  Mr. Harvey
  To ask the Secretary of State for the Environment, Transport and the Regions what powers planning authorities have to(a) defer and (b) reject planning applications for development in areas known to be at risk of flooding pending the completion of flood alleviation works. [119473]

  Ms Beverley Hughes
  Local planning authorities have powers under the Town and Country Planning Act 1990 to impose conditions on a grant of planning permission requiring the carrying out of necessary flood alleviation works as part of a development where such works would form part of the development. Where the necessary flood alleviation works would be required elsewhere than the development site, local planning authorities may impose a condition requiring that the development should not proceed until those works have been carried out, whether by the developer or by any other body. In addition, a developer and local planning authority may enter into an agreement under section 106 of the Town and Country Planning Act 1990 to ensure that the necessary works are carried out as part of the development.

  Flooding issues are important considerations in the determination of applications for development in areas known to be at risk of flooding. Local planning authorities have powers under the Town and Country Planning Act 1990 to refuse applications where that risk outweighs other material considerations in the absence of flood alleviation works. Where such works are planned, local planning authorities may refuse an application for development on the grounds of prematurity pending the completion of such works.

  Second Homes (Council Tax)
  Mr. Key
  To ask the Secretary of State for the Environment, Transport and the Regions by what mechanism and to what value his Department compensates for loss of council tax income to local authorities resulting from the 50 per cent. discount on second homes. [119181]

  Ms Beverley Hughes
  [holding answer 14 April 2000]: I refer the hon. Member to the reply given on 15 February 2000, Official Report, column 469W.

  Online Services
  Mr. Robert Jackson
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list the services which(a) his Department and (b) the executive agencies responsible to his Department (i) provide on-line and (ii) expect to be deliverable on-line by 2002. [119443]
  317W
  Ms Beverley Hughes
  So that the Cabinet Office can publish the spring 2000 report monitoring progress towards delivery of all Government services electronically by 2005 we are currently collecting data which will include our progress on delivering 25 per cent. of Government services electronically by 2002. I do not want to pre-empt that report but I can say that we currently provide a range of services electronically that include:

  Service

  Currently on-line

  On-line by 2002

  (a) DETR(C)

  Local Government Grant Settlement

  Yes

  —

  Dissemination of Hourly Air Pollution

  Yes

  —

  Port Traffic Statistics Collection

  Yes

  —

  Supply of International Haulage Permits

  —

  Yes

  Electronic Procurement Programme

  —

  Yes

  Applications to Import/Export Wildlife

  —

  Yes

  Bird Registration

  —

  Yes

  Touring Caravan Exemption Certificates

  —

  Yes

  HGV/PSV Operator Licensing

  —

  Yes

  Local Bus Registration Yes

  —

  Yes

  (b) Executive Agencies

  Highways Agency—Consultation

  Yes

  —

  Highways Agency—Information Line

  Yes

  —

  Highways Agency—Website

  Yes

  —

  DVLA: Registration of a First Vehicle

  Yes

  —

  DVLA: Duplicate Driver Licences

  Yes

  —

  DVLA: Exchange of Driver Licences

  —

  Yes

  DVLA: Duplication Vehicle Registration Documents

  —

  Yes

  DVLA: Re-Licensing Vehicles Subject to Vehicle Test

  —

  Yes

  VI: Submission of Vehicle Model Details

  —

  Yes

  VI: Issue of HGV/PSV Certificates

  —

  Yes

  HSE: Health and Safety Notifications

  —

  Yes

  MCA: Ship Registration

  —

  Yes

  Regeneration Programmes
  Mr. Tony Lloyd
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what plans his Department has for merging the New Deal for Communities into the Government's regeneration scheme; [119027]

  (2) what plans he has to fund the Single Regeneration Budget beyond Round 7. [119029]

  Ms Beverley Hughes
  [holding answer 14 April 2000]: The level of funding for regeneration programmes beyond March 2002 and the respective future role for each
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  programme, including the Single Regeneration Budget and New Deal for Communities, is being considered in the current Spending Review. The outcome of the Review and the Government's new expenditure plans for the period to March 2004 should be announced in July.

  Dr. Stoate
  To ask the Secretary of State for the Environment, Transport and the Regions how much money from the Single Regeneration Budget 5 Programme, "Gateways to Community Success",(a) has been and (b) is due to be, provided to fund skills development and training in the Dartford area. [118843]

  Ms Beverley Hughes
  "Gateways to Community Success" was approved last year under the Single Regeneration Budget 5 Programme. The scheme aims to develop the capacity of organisations to equip local residents with personal and vocational skills relevant to the needs of the local labour market. Total SRB funding of £4.3 million will be made available to the scheme over a seven year period from 1999 to 2006. In the first year, £200,000 (mainly for set-up costs) was provided by the South East England Development Agency (SEEDA), which is now responsible for Government SRB fundings.

  Most of the specific projects supported under this scheme will benefit residents across the whole of the Thames Gateway area in North Kent. It is difficult therefore to break down how much funding will be targeted specifically at Dartford. However, one project under this scheme (Making Connections) is aimed at residents in and around the Temple Hill area of Dartford. Within the overall scheme, this specific project will receive total SRB funding of £809,000. In the first year, £30,000 (again mainly for set-up costs) was provided by SEEDA.

  Regional Development Agencies
  Mr. Tony Lloyd
  To ask the Secretary of State for the Environment, Transport and the Regions what factors determine the budget allocation formula for regional development agencies. [119028]

  Ms Beverley Hughes
  [holding answer 14 April 2000]: The allocation methods vary for the RDAs eight main programmes and for their administration. Many factors are taken into account. These include: levels of deprivation; existing legal commitments; opportunities; value for money; Structural Fund responsibilities; regional population totals; and likely receipt income. There are also some allocations for common costs and account is taken of the RDAs' corporate plans and of other relevant information supplied.

  Local Government Bill
  Mr. Mackinlay
  To ask the Secretary of State for the Environment, Transport and the Regions if he will place in the Library the opinion on which he based his decision that he was unable to make a statement, under the provisions of section 19 of the Human Rights Act 1998, that the provisions of the Local Government Bill [Lords] are human rights compliant. [119160]

  Ms Armstrong
  [holding answer 14 April 2000]: The Government do not normally publish their legal advice. However, I can clarify that there are doubts as to whether section 2A of the Local Government Act 1986 is compatible with Article 10 (freedom of expression) of the

  319W
  European Convention on Human Rights (ECHR), and with Article 14 (freedom from discrimination) when read with Article 8 (respect for private and family life) and Article 10.

  The Bill on introduction to the Lords was, in our opinion, compatible with the ECHR. However, clause 91 of the Local Government Bill amends, and thereby reaffirms, the provisions of section 2A. By extension, this amendment casts doubt on whether the Bill is now compatible with the ECHR. On this basis, the Secretary of State made a statement under section 19(1)(b) of the Human Rights Act 1998.

  The Government have already said that they intend to remove clause 91 of the Bill and, in its place, provide for the repeal of section 2A of the 1986 Act. In our view, the Bill will then be compatible with the ECHR.

  Rail Franchises
  Mr. Burstow
  To ask the Secretary of State for the Environment, Transport and the Regions when a rail franchise passes to the successful company in the event of an existing train operating company failing to secure the renewal of its franchise; and what extra monitoring of service standards will be put in place during the transitional period. [119483]

  Mr. Hill
  The shadow Strategic Rail Authority will agree a date with interested parties. Normal monitoring standards that are contained within the terms of the franchise agreements will apply.

  Asylum Seekers
  Mr. Evans
  To ask the Secretary of State for the Environment, Transport and the Regions how much his Department spent directly or indirectly on asylum seekers in(a) 1995, (b) 1996, (c) 1997, (d) 1998 and (e) 1999; and what estimate has been made of expenditure in the year 2000. [119484]

  Ms Beverley Hughes
  The Home Office will be responding to this Question on behalf of Government as a whole, using information that we have provided to them.

  Cycling (Mileage Rate)
  Dr. Tonge
  To ask the Secretary of State for the Environment, Transport and the Regions if he will provide funding for local councils to pay a mileage rate on cycle use by their employees. [119337]

  Ms Beverley Hughes
  The Government do not provide funding specifically for this purpose. It is for individual local authorities to decide whether to pay cycling mileage allowances to their employees, and to meet the cost from their general budgets. We would certainly encourage all councils and other employers to promote the use of cycles; mileage allowances are one way of doing this. The Government have already increased the taxable allowance on business travel by bicycle to 12p per mile.

  If cycles are used on official journeys by employees instead of their cars, councils stand to make a considerable saving on mileage payments.

CULTURE, MEDIA AND SPORT

  Energy Efficiency
  Mr. Brake
  To ask the Secretary of State for Culture, Media and Sport what is his Department's energy efficiency performance target, expressed as a percentage change in comparison with 1990–91, for each of the next five years; and if he will make a statement. [118991]

  Janet Anderson
  The Department's target is to reduce energy consumption by 8 per cent. from a base year of 1994–95 to 1999–2000 and 1 per cent. per annum thereafter. This later base year reflects the fact that the Department was not created until 1993.

  My Department is investigating further measures to reduce energy but opportunities are limited as we already occupy energy efficient buildings which are air conditioned and have intensive IT usage.

  Mr. Brake
  To ask the Secretary of State for Culture, Media and Sport what has been the percentage change compared with 1990–91 in his Department's energy efficiency in each year since 1990–91; and if he will make a statement. [118990]

  Janet Anderson
  The percentage change compared with the base year of 1994–95 is as follows:

  Year

  Percentage change

  1995–96

  0

  1996–97

  3

  1997–98

  7

  1998–99

  -7

  These are provisional data as recording errors mean that the consumption figures have been recalculated back to the base year. The latest data have still to be confirmed by DETR.

  My Department is investigating further measures to reduce energy but opportunities are limited as we already occupy energy efficient buildings which are air conditioned and have intensive IT usage.

  Museums (North-west)
  Mr. Fearn
  To ask the Secretary of State for Culture, Media and Sport what funds museums in the north-west of England will receive from the amounts which his Department has allocated to cut museum entry fees; and which museums will receive the money. [119101]

  Mr. Alan Howarth
  In 1999–2000 to enable free admission for children at the two museums funded by my Department in the north-west which are affected, the National Museums and Galleries on Merseyside (NMGM) received £719,000 and the Museum of Science and Industry in Manchester (MSIM) £188,000. In 2000–01, to enable free admission for children and people over 60, NMGM has been allocated £188,000. The allocation of funds to cut museum entry fees at the museums and galleries funded by my Department in 2001–02 is still under consideration and no detailed figures are available yet. An announcement will be made in due course.

  SIMA TV
  Mr. John D. Taylor
  To ask the Secretary of State for Culture, Media and Sport what monitoring the Independent Television Commission carries out of programmes on SIMA TV; if SIMA TV broadcasts the statements of Mojahedin Khalq Organisation of Iran and the National Council of Resistances of Iran; when SIMA TV was last fined by the ITC; and if he will make a statement about the future licensing of SIMA TV. [118942]

  Janet Anderson
  Monitoring is regularly undertaken by the ITC on the broadcasts of all its licence holders. For broadcasters, like SIMA, who have breached the ITC's Programme Codes, this monitoring would be more intense.

  Broadcasting statements by groups such as Mojahedin Khalq Organisation or the National Council of Resistances of Iran are not in themselves a problem, provided they carry no incitement to crime, and that they form part of a wider range of views. SIMA was fined £20,000 in November 1999 for not adhering to these points. SIMA may retain its licence as long as it complies with the ITC's Programmes and other Codes.

  Turf Football Pitches
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Culture, Media and Sport if he will take action to ensure that there is public access to artificial turf pitches for football in each parliamentary constituency; and if he will make a statement. [118956]

  Kate Hoey
  There are 577 sites in England providing full size, synthetic turf pitches for community or club use. A further 12 sites have, in principle, been awarded funding from the Lottery Sports Fund. Sport England will shortly be carrying out a detailed analysis of the provision of synthetic turf pitches. Any gaps in existing provision will be assessed on the basis of the size of the population served, rather than by parliamentary constituency. The adequacy of the provision of pitches in Scotland, Wales and Northern Ireland is assessed in the same way.

  Canoeing
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Culture, Media and Sport what action he is taking to(a) encourage increased public participation in canoeing and (b) assist Britain's elite canoeists to prepare for the Olympic Games. [118957]

  Kate Hoey
  The Sports Councils, through which public funding for sport is channelled, are providing a total of £5.5 million to encourage participation in canoeing and to assist elite canoeists. Sport England has made 31 awards worth £4,071,474 from the Lottery Sports Fund to canoeing projects. It is also providing £220,000 in 2000–01 towards the English development programme of the British Canoe Union (BCU). This will help fund: a network of development officers whose key objective is to generate greater youth participation in the sport; the development of a network of Access Officers whose role will be to open up additional waterways for canoeing; and the delivery of the BCU' s equity programme for England which targets the recruitment of more disabled and women participants into the sport. For the period April 2000—March 2001 the BCU will receive 322W
  from UK Sport World Class Performance Programme Lottery funding of £1,221,471, which includes support for British Canoeists preparing fro the Olympic Games.

  I will be meeting my hon. Friend the Minister for Water and Coastal Policy soon to discuss how to improve provision for water-based recreation, including canoeing. In addition, my officials will be discussing these issues with the Department of the Environment, Transport and the Regions, the Countryside Agency, the Environment Agency and British Waterways.

  UK Sports Institute
  Mr. Faber
  To ask the Secretary of State for Culture, Media and Sport, pursuant to his answer of 14 March 2000,Official Report, column 155W, on the UK Sports Institute, when he will make a decision on the venue for the London Institute of Sport Network Centre. [119041]

  Kate Hoey
  [holding answer 14 April 2000]: It is hoped that the decision will be taken by the end of June.

  European Athletics Championships
  Mr. Faber
  To ask the Secretary of State for Culture, Media and Sport what is his policy towards the proposed bid by Gateshead to stage the 2006 European Athletics Championships. [119043]

  Kate Hoey
  [holding answer 14 April 2000]: The responsibility for preparing and lodging a bid for a major event rests with the appropriate national governing body, in this case UK Athletics. UK Sport is meeting UK Athletics on 18 May to reassess the athletics major event strategy in light of the International Amateur Athletics Federation's decision to award the UK the 2003 World Indoor Championships and the 2005 World Championships. The Gateshead bid is one of the items to be discussed.

TRADE AND INDUSTRY

  Regional Selective Assistance
  Mr. Redwood
  To ask the Secretary of State for Trade and Industry (1) when he plans to submit a new map for regional selective assistance to the European Commission; [118087]

  (2) what changes he plans to make to the regional selective assistance map. [118089]

  Mr. Byers
  [holding answer 7 April 2000]: I refer the right hon. Member to the reply given to my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) on 10 April 2000, Official Report, columns 38–39W.

  UK/USA Meetings
  Mr. Tyler
  To ask the Secretary of State for Trade and Industry what meetings have been held between United States Government officials and his Department in(a) the USA and (b) the UK in the last 12 months, indicating the dates and locations of the meetings and the subjects discussed. [118625]

  Mr. Byers
  [holding answer 11 April 2000]: There have been a large number of meetings between United States Government officials and officials of the Department of Trade and Industry over the last 12 months.

  323W
  These meetings have been at many levels and have covered a great range of subjects including multilateral and bilateral trade issues.

  Competitiveness Development Fund
  Mr. Tony Lloyd
  To ask the Secretary of State for Trade and Industry what plans he has to review the DTI's provision of Competitiveness Development Fund resources to the North-west. [119026]

  Mr. Caborn
  [holding answer 14 April 2000]: For the financial year 2000–01 the DTI is making available £440,000 of funding under the Competitiveness Development Fund (CDF) to the North West Development Agency. This represents an increase in funding of over 75 per cent. compared to the previous financial year.

  In addition, my right hon. Friend the Secretary of State for Trade and Industry announced on 27 March 2000 details of further measures to encourage innovation and enterprise by businesses, including a new £50 million fund for promoting the development of clusters and business incubation in the English regions. The £50 million will go to the Regional Development Agencies (RDAs) in England over this and next financial year (2000–01 and 2001–02). £15 million is to be made available in this financial year split equally between the eight current RDAs and the London Development Agency when it is established. This, together with CDF funds, will provide a combined allocation of over £2 million of funding for each RDA in 2000–01 for work on competitiveness and enterprise.

  Motor Industry (State Aid)
  Mr. Mitchell
  To ask the Secretary of State for Trade and Industry if he will list the dates of(a) explanatory memoranda presented to Parliament by the Government and (b) agreements in the Council of Ministers concerning the Community Framework for state aid to the motor vehicle industry, OJ No. C279, 1997; and what application has been made within the specification of the Framework to the Commission by Her Majesty's Government in respect of the Longbridge plant. [118922]

  Mr. Alan Johnson
  Neither an explanatory memorandum or Council agreement exist for the motor vehicles framework. Frameworks are produced by the Commission without reference to the Council, as they (the Commission) have sole competence on the state aid rules and their interpretation.

  Conforming to the requirements of the Community Framework for state aid to the motor vehicle industry, HMG formally notified the £152 million Longbridge package to the European Commission 20 August 1999. The clearance process by the Commission was still on-going at the time of BMW's decision to divest itself of elements of the Rover Group (including Longbridge).

  New Deal (Job Creation)
  Mr. Sayeed
  To ask the Secretary of State for Trade and Industry how many jobs the New Deal has created; and at what cost. [117328]

  Ms Jowell
  I have been asked to reply.
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  The New Deal is not a job creation programme. The strong economy means that 800,000 people are in work compared with May 1997. 191,600 young people who had faced unemployment of at least six months have been helped by the New Deal move from benefits to work.

  Pension and Benefit Payment Methods
  Mr. Lilley
  To ask the Secretary of State for Trade and Industry if pensioners in receipt of state pension paid via automated credit transfer will be protected from(a) bank charges and (b) withdrawal charges if they choose to draw their pensions in cash from a post office from 2003. [119419]

  Mr. Rooker
  I have been asked to reply.

  I refer the right hon. Member to the written answer I gave my hon. Friend the Member for Leeds, Central (Mr. Benn), and the hon. Member for South-East Cambridgeshire (Mr. Paice) on 7 March 2000, Official Report, columns 613-14W.

  Mr. Truswell
  To ask the Secretary of State for Trade and Industry what methods of cash payment benefits he is considering following the introduction of automated credit transfer in post offices and against what criteria they will be evaluated. [119204]

  Mr. Rooker
  I have been asked to reply.

  We have made it clear that people will still be able to collect their cash from post offices if they wish to do so, both before and after the move to ACT in 2003.

  We are currently working with the banks and the Post Office on the detailed arrangements. The Post Office already offers banking services on an agency basis for a number of banks. The new Horizon technology currently being installed will give the Post Office the opportunity to offer banking services on an agency basis for a wider range of banks and building societies; and the Post Office have already said that they intend to install 3,000 cash machines.

  We are also inviting banks to work with the Post Office to offer a basic banking service to people currently without bank accounts.

  However, we recognise that there will be some people who will be unable to pay by ACT. For these, we are considering what alternative simple electronic money transmission system, which could also be accessed at post offices, may be commercially available.

HEALTH

  Community Hospital, Sheppey
  Mr. Wyatt
  To ask the Secretary of State for Health how much public money has been spent by Thames Gateway NHS Trust on consultants' and lawyers' fees in respect of the PFI contract for the hospital for the Isle of Sheppey. [105196]

  Mr. Denham
  [holding answer 17 January 2000]: Since 1996–97 the amount spent by Thames Gateway National Health Service Trust on advisers costs for the proposed private finance initiative scheme for a new community hospital for Sheppey are:
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  £

  Expenditure type

  Amount

  Legal advice

  379,000

  Financial advice

  198,000

  Other advice

  122,000

  Total

  699,000

  Of these costs, £87,000 were incurred prior to April 1997.

  Health Professions Council
  Mr. Harvey
  To ask the Secretary of State for Health (1) when he plans to start consultation on a draft order to establish a health professions council; [118313]

  (2) when he expects new professions to be able to register with the health professions council; [118314]

  (3) what plans he has to repeal the Professions Supplementary to Medicine Act 1960; and if he will make a statement; [118315]

  (4) what plans he has to implement a regulatory framework to enable further professions to obtain state registration; and if he will make a statement. [118312]

  Mr. Denham
  We are currently considering the proposals for consultation on legislation to replace the Council for Professions Supplementary to Medicine. We hope to be able to publish these shortly.

  Helen Jones
  To ask the Secretary of State for Health what progress has been made on introducing a statutory registration scheme for operating department practitioners; and if he will make a statement. [118854]

  Health authority

  2000–01 allocation including additional £660 million (£000)

  2000–01 recurrent weighted capitation target (£000)

  Distance from target (£000)

  Distance from target (Percentage)

  Avon

  641,970

  649,321

  -7,351

  -1.13

  Barking and Havering

  281,533

  278,960

  2,573

  0.92

  Barnet

  228,234

  227,788

  447

  0.20

  Barnsley

  171,018

  176,397

  -5,379

  -3.05

  Bedfordshire

  344,490

  358,470

  -13,980

  -3.90

  Berkshire

  484,623

  500,470

  -15,847

  -3.17

  Bexley and Greenwich

  318,047

  299,950

  18,097

  6.03

  Birmingham

  749,780

  745,390

  4,390

  0.59

  Bradford

  343,313

  347,166

  -3,853

  -1.11

  Brent and Harrow

  341,633

  334,582

  7,051

  2.11

  Bromley

  201,306

  201,092

  214

  0.11

  Buckinghamshire

  407,599

  419,598

  -11,999

  -2.86

  Bury and Rochdale

  275,877

  276,925

  -1,049

  -0.38

  Calderdale and Kirklees

  402,907

  403,578

  -671

  -0.17

  Cambridgeshire

  442,411

  453,098

  -10,687

  -2.36

  Camden and Islington

  356,225

  349,524

  6,701

  1.92

  Cornwall and Isles of Scilly

  344,828

  339,322

  5,506

  1.62

  County Durham

  452,736

  461,460

  -8,724

  -1.89

  Coventry

  221,753

  227,926

  -6,172

  -2.71

  Croydon

  223,107

  225,624

  -2,517

  -1.12

  Doncaster

  216,207

  216,634

  -427

  -0.20

  Dorset

  487,298

  478,263

  9,035

  1.89

  Dudley

  200,507

  203,550

  -3,044

  -1.50

  Ealing, Hammersmith and Hounslow

  524,548

  524,681

  -133

  -0.03

  East and North Hertfordshire

  318,662

  322,721

  -4,059

  -1.26

  East Kent

  431,841

  420,809

  11,031

  2.62

  East Lancashire

  384,249

  387,072

  -2,822

  -0.73

  East London and the City

  545,950

  566,894

  -20,945

  -3.69

  326W
  Ms Stuart
  Section 60 of the Health Act 1999 provides power to regulate new health professions. This is one of the subjects for consultation on proposals to create a new Health Professions Council.

  Biomedical Scientists (Trainees)
  Mr. Hesford
  To ask the Secretary of State for Health how many trainee biomedical scientists there are in the NHS. [118588]

  Mr. Denham
  Trainee biomedical scientists are graduates. The length of their vocational training varies depending on the entry route and the ability of the individual. Accurate figures for the number of trainee biomedical scientists employed by the National Health Service are not available as the information is not collected centrally.

  Health Authority Budgets
  Mr. Lidington
  To ask the Secretary of State for Health if he will list for each health authority in England and Wales,(a) its total allocation for 2000–01, including its share of the expenditure announced on 28 March, (b) its total allocation if the allocations for 2000–01 had been made on the basis of full weighted capitation and (c) the amount by which its total allocation differs from weighted capitation. [118932]

  Mr. Denham
  [holding answer 13 April 2000]: On 28 March my right hon. Friend the Secretary of State for Health announced details of extra allocations to health authorities for 2000–01. This additional £660 million has brought health authority average increases to 8.9 per cent. in cash terms (6.2 per cent. in real terms). The information is given in the table.

  Information on allocations for Welsh health authorities is available from the National Assembly for Wales.
  327W

  Health authority

  2000–01 allocation including additional £660 million (£000)

  2000–01 recurrent weighted capitation target (£000)

  Distance from target (£000)

  Distance from target (Percentage)

  East Riding

  394,083

  394,242

  -159

  -0.04

  East Surrey

  267,914

  262,137

  5,777

  2.20

  East Sussex, Brighton and Hove

  551,376

  538,304

  13,072

  2.43

  Enfield and Haringey

  356,859

  355,395

  1,464

  0.41

  Gateshead and South Tyneside

  277,321

  280,211

  -2,889

  -1.03

  Gloucestershire

  364,311

  353,746

  10,564

  2.99

  Herefordshire

  108,512

  108,830

  -319

  -0.29

  Hillingdon

  169,434

  170,397

  -963

  -0.56

  Isle of Wight

  100,622

  94,019

  6,603

  7.02

  Kensington, Chelsea and Westminster

  321,111

  348,987

  -27,876

  -7.99

  Kingston and Richmond

  237,277

  231,483

  5,795

  2.50

  Lambeth, Southwark and Lewisham

  636,437

  624,184

  12,253

  1.96

  Leeds

  515,080

  511,966

  3,114

  0.61

  Leicestershire

  570,114

  586,393

  -16,280

  -2.78

  Lincolnshire

  429,691

  433,424

  -3,733

  -0.86

  Liverpool

  378,330

  371,727

  6,603

  1.78

  Manchester

  378,849

  371,351

  7,498

  2.02

  Merton, Sutton and Wandsworth

  455,914

  447,669

  8,245

  1.84

  Morecambe Bay

  224,098

  216,807

  7,291

  3.36

  Newcastle and North Tyneside

  364,236

  361,030

  3,206

  0.89

  Norfolk

  504,549

  504,363

  186

  0.04

  North and East Devon

  328,698

  324,303

  4,395

  1.36

  North and Mid Hampshire

  320,050

  318,438

  1,612

  0.51

  North Cheshire

  217,660

  215,460

  2,200

  1.02

  North Cumbria

  217,218

  216,784

  434

  0.20

  North Derbyshire

  249,371

  250,461

  -1,090

  -0.44

  North Essex

  555,679

  556,115

  -436

  -0.08

  North Nottinghamshire

  260,428

  266,191

  -5,763

  -2.16

  North Staffordshire

  334,233

  340,030

  -5,796

  -1.70

  North West Lancashire

  352,074

  352,020

  54

  0.02

  North Yorkshire

  474,576

  477,038

  -2,462

  -0.52

  Northamptonshire

  356,996

  353,917

  3,079

  0.87

  Northumberland

  214,665

  215,326

  -661

  -0.31

  Nottingham

  427,441

  437,686

  -10,245

  -2.34

  Oxfordshire

  364,378

  372,544

  -8,166

  -2.19

  Portsmouth and South East Hampshire

  364,591

  364,531

  60

  0.02

  Redbridge and Waltham Forest

  323,694

  311,792

  11,902

  3.82

  Rotherham

  173,727

  175,697

  -1,970

  -1.12

  Salford and Trafford

  339,047

  333,322

  5,725

  1.72

  Sandwell

  223,644

  225,704

  -2,060

  -0.91

  Sefton

  211,212

  205,523

  5,688

  2.77

  Sheffield

  398,432

  393,746

  4,686

  1.19

  Shropshire

  270,975

  274,590

  -3,616

  -1.32

  Solihull

  133,724

  133,228

  496

  0.37

  Somerset

  318,840

  316,997

  1,843

  0.58

  South and West Devon

  419,315

  413,317

  5,998

  1.45

  South Cheshire

  443,804

  439,798

  4,007

  0.91

  South Derbyshire

  375,652

  381,611

  -5,958

  -1.56

  South Essex

  463,389

  470,629

  -7,240

  -1.54

  South Humber

  216,561

  212,381

  4,180

  1.97

  South Lancashire

  206,248

  201,999

  4,249

  2.10

  South Staffordshire

  352,315

  352,822

  -508

  -0.14

  Southampton and South West Hamptonshire

  359,457

  359,279

  178

  0.05

  St. Helens and Knowsley

  257,406

  259,579

  -2,173

  -0.84

  Stockport

  193,464

  192,538

  926

  0.48

  Suffolk

  434,142

  430,192

  3,950

  0.92

  Sunderland

  218,745

  221,000

  -2,255

  -1.02

  Tees

  404,069

  408,692

  -4,624

  -1.13

  Wakefield

  231,631

  230,600

  1,031

  0.45

  Walsall

  179,022

  181,848

  -2,826

  -1.55

  Warwickshire

  320,497

  315,320

  5,177

  1.64

  West Hertfordshire

  346,924

  345,135

  1,788

  0.52

  West Kent

  618,824

  612,850

  5,974

  0.97

  West Pennine

  325,991

  331,585

  -5,594

  -1.69

  West Surrey

  401,226

  391,077

  10,150

  2.60

  West Sussex

  513,306

  515,915

  -2,609

  -0.51

  Wigan and Bolton

  410,052

  422,403

  -12,351

  -2.92

  Wiltshire

  380,058

  372,333

  7,725

  2.07

  Wirral

  247,545

  240,159

  7,386

  3.08

  Wolverhampton

  175,452

  178,762

  -3,311

  -1.85

  Worcestershire

  329,672

  327,690

  1,981

  0.60

  328W

  Day Centres
  Mr. Burstow
  To ask the Secretary of State for Health how many local authorities levy a charge for day centres. [119482]

  Mr. Hutton
  Information on the number of local authorities levying a charge for day centres in England is not collected centrally. However information on the recoupment of fees and charges by each local authority is available at the Department of Health website at www.doh.gov.uk/public/pss—stat.htm.

  Mr. Burstow
  To ask the Secretary of State for Health what representations his Department has received on the introduction of charges by social services departments for the use of day centres. [119481]

  Mr. Hutton
  During the six-month period to April 2000 the Department received an average of two representations per month on the introduction of charges by social services departments for the use of day centres.

  Glenthorne Youth Treatment Centre
  Mr. Corbett
  To ask the Secretary of State for Health if he has reached a decision on the future of Glenthorne Youth Treatment Centre; and if he will make a statement. [119424]

  Mr. Hutton
  In my reply to my hon. Friend on 15 December 1999,Official Report, column 223W, I announced that I would be consulting on the future of Glenthorne Youth Treatment Centre, including its possible closure.

  That consultation has now been completed and I have considered the representations made to me by the staff of the Centre and their representatives, by Members of Parliament; by local authorities; and by others, especially those representing young people accommodated in the Centre. The Centre has made a valuable and important contribution to the treatment and care of some of the most difficult and disturbed young people in the past, and these representations have paid fitting tribute to that contribution.

  When the Youth Treatment Centres were first developed over 20 years ago, there were no comparable facilities for accommodating and treating such difficult and disturbed young people. Things have moved on considerably since then. Local councils have developed their own secure accommodation and have become skilled and experienced at dealing with young people requiring secure care, including young people like those accommodated in Glenthorne. In recent years, the Department of Health has undertaken a major expansion of local authority secure accommodation by providing an additional 170 places for young people. Providers in the voluntary and private sectors have also established their worth. In these circumstances, I have concluded that it is no longer appropriate for the Department to run such a child care facility and that we should therefore withdraw from providing such a service.
  330W
  We have looked carefully at the option of someone taking over the Centre as a going concern, but, unfortunately, no suitable proposals have been put forward, and 18 of the 30 young people who were in the Centre at the time of my announcement in December have been moved by their placing authorities to alternative facilities. The whole question of the financial viability of the Centre is affecting the morale and welfare of both the staff and the children. It is, therefore, time to bring to an end the uncertainty which has inevitably existed over recent months.

  However, the welfare of the children currently placed in Glenthorne is of paramount importance and no decision will be taken on when the Centre will finally close until suitable alternative placements have been found for them. The Department will be working closely with the local authorities and the Prison Service to identify the most appropriate places. Once that transition has been achieved, the Centre will close.

  The Department will also be working closely with the Department Trade Union Side to identify posts elsewhere in the civil service to which some of the staff of the Centre could be re-deployed. However, given the specialist nature of some of the posts in the Centre, re-deployment may not be possible in all cases. In those instances, redundancy terms will apply.

  This has been a difficult time for the staff of the Centre and I am grateful for the professional manner in which they have continued to conduct themselves.

NORTHERN IRELAND

  Accumulated Service Medal
  Mr. Peter Robinson
  To ask the Secretary of State for Northern Ireland how many members of the Royal Irish Regiment whose claims for the Accumulated Service Medal were reviewed because of insufficient evidence were(a) successful and (b) unsuccessful in claiming the medal. [119345]

  Mr. Spellar
  I have been asked to reply.

  A total of 273 such cases have been considered by the Army Medal Board to date. Of these, 226 have been successful, 30 proved to have no entitlement and were rejected, and 17 have been returned to the Regimental Headquarters of the Royal Irish Regiment for further investigation. An additional 624 applications have still to be prepared for Army Medal Board consideration.

AGRICULTURE, FISHERIES AND FOOD

  Farm Aid Package
  Mr. Yeo
  To ask the Minister of Agriculture, Fisheries and Food what was the value of the farm aid package announced on 30 March, and if he will publish a breakdown of the components of the farm aid package,
  331W
  listing for each component (a) its value, (b) its funding source, (c) eligible recipients, (d) conditions of eligibility, (e) time of availability, (f) budgetary year, (g) whether it has previously been announced by (i) the Government and (ii) the European Commission and (h) if it has been approved by the European Commission and, if not, when he expects such approval to be given. [117970]

  Action plan for farming (13 April 2000)

  Measure

  Value (£ million)

  Funding source

  Eligible recipients and conditions of eligibility

  Time of availability

  Previously announced

  EC approval

  Introduce a scheme to encourage the restructuring of the pig industry in order to improve its long term viability

  126

  UK

  To be announced

  To be announced

  No

  An aid notification has been submitted to the EC

  Pay to dairy farmers all the agrimonetary aid that EU rules permit this year only

  122

  UK (£ 11 million) and EU3

  Aid will be allocated in proportion to milk quota held on 31 March 2000

  To be announced

  No

  An aid notification will be submitted to the EC this month

  Pay agrimonetary compensation to beef farmers of £22 million this year only. Payments will be made in connection with Beef Special Premium, Suckler Cow Premium and Extensification Payments for the 2000 scheme year

  1,222

  EU3

  Payments will be made in connection with Beef Special Premium, Suckler Cow Premium and Extensification Payments for the 2000 scheme year

  The majority will be payable in November, and the remainder in the second quarter of 2001

  No

  An aid notification will be submitted to the EU this month

  Agrimonetary compensation to sheep farmers of £22 million this year in respect of 1999 scheme year claims

  122

  EU3

  Paid to Sheep Annual Premium claimants in respect of the 1999 scheme year

  Payments will be made with the first advances of Sheep Annual Premium in Jul y/August

  No

  An aid notification will be submitted to the EC this month

  Increase support for hill farmers beyond the level specified in the Rural Development Plans submitted to the Commission

  160

  UK

  The majority of the moneys will be added to the budgets for the LFA compensatory allowances, which will be modified to assist restructuring so as to strengthen the industry and to make it better able to deliver the social and environmental benefits provided by extensive sheep and beef grazing. The remainder will finance a consultancy programme to improve hill farmers' access to business skills

  LFA support payments are made in the early months of each year.

  No

  The scheme has been submitted to the EC for approval under the Rural Development Regulation; the changes will need to be discussed with the EC

  Seek from the Commission an increase in the maximum weight per animal on which compensation is payable under the Over Thirty Months Scheme

  420

  UK

  Payable in respect of cattle slaughtered under the Over Thirty Months Scheme

  To be determined

  No

  The Over Thirty Months Scheme for cattle is an EU scheme and thus changes to its rules require the EC to make a proposal to be adopted by the Beef Management Committee on which all member states are represented. A formal request to that effect has been made to the EC

  332W
  Mr. Nick Brown
  [holding answer 6 April 2000]: The Action Plan for Farming discussed at the Farming Summit on 30 March outlined a programme of measures to help provide a proper, structured plan for the future. The aid measures amounting to over £200 million are listed. Many of the other measures within the Action Plan will also have considerable benefit to the farming industry, though it is not as yet possible to quantify these.
  333W

  Action plan for farming (13 April 2000)

  Measure

  Value (£ million)

  Funding source

  Eligible recipients and conditions of eligibility

  Time of availability

  Previously announced

  EC approval

  Remove charges for dairy hygiene inspections in England as soon as the necessary legislation can be put in place

  11

  UK

  All dairy production holdings in England

  To remove the charge, the Dairy Products (Hygiene) (Charges) Regulations 1995 will need to be amended, which we estimate will take three months

  No

  EC approval not needed

  Hold the increase in meat inspection charges for 2000–01 to the rate of inflation

  14.5

  UK

  All operators of licensed meat plants in GB

  2001–01

  Confirmation that the increase in Meat Hygiene charges will be kept to the level of inflation and announcement that this is equivalent to £4.5 million in 2000–01

  EC approval not required

  Increase the rate of grant under MAFF's Farm Waste Grant Scheme from 25 per cent, of eligible expenditure (under which uptake has been low) to 40 per cent.

  23.5

  UK

  Payable to farmers in Nitrate Vulnerable Zones installing improved manure storage and handling facilities to comply with regulatory measures

  As soon as EC approval is obtained

  No

  Existing scheme is an approved State Aid. Approval is being sought for an increase in rate

  The Government will double the Regional Development Agencies' Redundant Building Grant Programme, which operates in Rural Priority Areas, to £8 million in 2000–01

  14

  UK

  Redundant farm building owners

  To be announced

  No

  Existing scheme is an approved State Aid

  The Government will allocate £2.3 million to create in England a European Centre for organic fruit and nursery stock

  52.3

  UK

  UK Capital Modernisation Fund

  The European Centre will be located at Horticulture Research International in East Mailing, Kent

  No

  EC approval not required

  A single charge for authorisation to dispose of used sheep dip, equivalent to the current application charge of £85, should cover the full four-year period of the initial authorisation. This means that the current annual charge of £107 will not be payable during the first four-year period

  64.7

  UK

  Small dischargers including farmers who dip sheep and need to dispose of sheep dip to land

  For first authorisation

  No

  EC approval not required

  Business Restructuring in England:

  The Government will pump-prime the drive to improve the competitiveness of farmers by providing funding for business improvement, on a challenge basis, following the model of the Agricultural Development Scheme 1999

  11

  UK

  Industry, organisation and partnerships

  Scheme will be launched in the next few weeks

  No

  Existing scheme is an approved State Aid. Approval will be sought for changes to the scheme

  The Government will provide funding of £1.2 million to Lantra (National Training Organisation for the Landbased Sector) to promote the economic benefits of training and to analyse the training needs of 20,000 farm businesses

  11.2

  UK

  Farmers in England

  July 2000

  No

  Existing scheme is an approved State Aid. Approval will be sought for changes to the scheme

  334W

  335W

  Action plan for forming (13 April 2000)

  Measure

  Value (£ million)

  Funding source

  Eligible recipients and conditions of eligibility

  Time of availability

  Previously announced

  EC approval

  The Government will help farmers develop better business practices through tailored business advice. As farmers increasingly diversify their businesses, they will be able to draw on the wider expertise and services of the Small Business Service

  16.5

  UK

  Farmers in England

  The new service is being planned to start on 1 September 2000

  No

  Need for EC approval to be confirmed

  The Government will continue to support the Rural Stress Information Network by extending for at least a further year the secondment of a MAFF official to that organisation. MAFF will also increase the provision of free advice to those farmers referred to it by certain organisations. The Government will increase its support to voluntary bodies dealing with rural stress on the basis of an action plan it will draw up with them by June

  10.5

  UK

  Farmers in England

  Funds for rural stress support groups will be available in the summer

  No

  Need for EC approval to be confirmed

  Launch an electronic portal for farming

  10.4

  UK

  The whole industry will stand to benefit

  The first phase is planned to go live by December 2000

  No

  EC approval not needed

  Business restructuring aid for Scotland, Wales and Northern Ireland

  12

  UK

  Details are to be announced in due course by the devolved Administrations and Northern Ireland

  Details are to be announced in due course by the devolved Administrations and Northern Ireland

  No

  Will depend on measures to be announced

  Total

  203.5

  —

  —

  —

  —

  —

  Note:

  In addition the Government will pay this year agrimonetary aid to arable farmers (£57 million, to be paid from mid-October 2000), sheep farmers (£10 million, being paid now) and beef farmers (£21 million, to be paid from mid-October 2000) which was previously announced by the Minister of Agriculture, Fisheries and Food on 22 September 1999.

  1 In 2000–01

  2 In 2001–02

  3 7 1 per cent, of the EU funding is borne by the UK because of the application of the Fontainebleau abatement

  4 Estimate in 2000–01

  5 Over 2 years: £0.3 million in 2000–01 and £1.961in 2001–02

  6 Over 4 years

  Organic Food
  Mr. Tyler
  To ask the Minister of Agriculture, Fisheries and Food what percentage of the food consumed in the UK is organically produced; and what estimate he has made of the amount that will be so produced in 2006. [118573]

  Mr. Morley
  Precise information is not available. We estimate the share of organic food in the overall UK market as in the order of 5 per cent.

  We have made no estimate for future years.

  Mr. Tyler
  To ask the Minister of Agriculture, Fisheries and Food what is the total amount of money paid under the Common Agricultural Policy to organic farmers in the EU; and what percentage this represents of the total CAP spend. [118577]

  Ms Quin
  The information requested is not available in the format required.
  336W
  Mr. Tyler
  To ask the Minister of Agriculture, Fisheries and Food what targets other EU member states have set for organic farming. [118574]

  Mr. Morley
  The information available is not complete but we understand that Austria, Denmark, Finland, France and Sweden have set targets for the conversion of agricultural land to organic farming. In addition several of the German Bundesländer have set such targets. These targets range from 3 per cent. to 10 per cent. of agricultural land.

  Mr. Tyler
  To ask the Minister of Agriculture, Fisheries and Food how much money his Department has spent on research into(a) organic farming, (b) biotechnology and genetic modification and (c) all areas of agriculture, in each of the last five years for which figures are available. [118568]
  337W
  Ms Quin
  MAFF spending in these areas over the last five years, is shown in the tables. The figures for 1999–2000 are provisional.

  (a) Organic farming

  Year

  £ million

  1995–96

  0.931

  1996–97

  1.116

  1997–98

  0.908

  1998–99

  1.481

  1999–2000

  (2.027)

  The organic farming sector also benefits from much of the other research the Ministry undertakes: for example, its planned spend of over £8 million in 1999–2000 on biological control techniques, plant health, animal welfare and wildlife conservation on farms.

  (b) Biotechnology and genetic modification

  Year

  £ million

  1995–96

  20.09

  199–97

  22.94

  1997–98

  25.22

  1998–99

  28.91

  1999–2000

  (ca. 26)

  (c) All areas of agriculture including organic farming, biotechnology and genetic modification

  Year

  £ million

  1995–96

  88.94

  1996–97

  87.14

  1997–98

  89.74

  1998–99

  90.58

  1999–2000

  (90.78)

  West Dorset
  Mr. Letwin
  To ask the Minister of Agriculture, Fisheries and Food if he will classify West Dorset as an area qualifying for hill farming compensation. [118623]

  Ms Quin
  [holding answer 17 April 2000]: To qualify for hill livestock compensatory allowances, West Dorset would have to be designated as a Less Favoured Area (LFA).

  LFAs in the UK were first designated under Council Directive 75/276/EEC, and last amended by Commission Decision 91/25/EEC. For any additional area to be designated as LFA it would need to meet the general criteria set out in Council Regulation (EC) No. 1257/99 (Articles 17-21) and the specific criteria set out in Council Directive 75/268/EEC (Articles 3 (4) and 5) as adopted by Council Directive 84/169/EEC.

  Proposals for any extension of the LFA area in England would need to be submitted to the European Commission for approval as part of the England Rural Development Plan. No such proposals have been included.

  Lindane
  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food if he will list the approvals for products containing Lindane which have been suspended, withdrawn or revoked from market authorisation in the 338W
  last five years, indicating the crops for which use of the products had been approved, including off-label approvals. [118804]

  Ms Quin
  [holding answer 12 April 2000]: Those products containing Lindane which have been suspended withdrawn or revoked from the market since 1 November 1995, and the crops for which they held approval, are:

  Product name

  MAFF No.

  Crops

  Atlas Steward

  03062

  Apple

  Barley (spring)

  Barley (winter)

  Beetroot

  Blackberry

  Broad bean

  Broccoli (seed crop)

  Brussels sprout (seed crop)

  Cabbage (seed crop)

  Calabrese (seed crop)

  Cauliflower (seed crop)

  Grassland

  Kale (seed crop)

  Lettuce (protected)

  Loganberry

  Maize (spring)

  Maize (winter)

  Mustard (seed crop)

  Oilseed rape

  Ornamental (including bulb and corm)

  Ornamental shrub

  Ornamental tree

  Pea

  Pear

  Raspberry

  Spinach

  Strawberry

  Sugar beet

  Swede (seed crop)

  Tomato (protected)

  Turnip (seed crop)

  Wheat (spring)

  Wheat (winter)

  CDA Castaway Plus

  04758

  Turf

  Gamma-Col

  00964

  Apple

  Blackberry

  Brassica

  Cereal

  Christmas tree

  Chrysanthemum

  Cucumber

  Elm

  Grass

  Loganberry

  Maize

  Oilseed rape

  Ornamental

  Pear

  Plum

  Raspberry

  Strawberry

  Sugar beet

  Vegetable

  Gamma-Col Turf

  05450

  Turf

  Gamma-Col Turf

  06826

  Turf

  Gamma-Col Turf

  07868

  Turf

  Gammalex

  00965

  Oilseed rape (seed)

  Gammalex

  06396

  Oilseed rape

  339W

  Product name

  MAFF No.

  Crops

  Gammasan 30

  00969

  Barley (seed)

  Oat (seed)

  Wheat (seed)

  Gammasan 30

  06671

  Barley (spring)

  Barley (winter)

  Oats (spring)

  Oats (winter)

  Wheat (spring)

  Wheat (winter)

  Hydraguard

  03278

  Brussels sprout

  Cabbage

  Kale

  Oilseed rape

  Swede

  Turnip

  Hydraguard

  08877

  Brussels sprout

  Cabbage

  Kale

  Oilseed rape

  Swede

  Turnip

  Hysede FL

  02863

  Brassica seed (including broccoli, brussels sprout, cabbage, oilseed rape, swede)

  Broccoli

  Brussels sprout

  Cabbage

  Oilseed rape

  Swede

  Turnip

  Kotol FS

  06968

  Barley

  Barley (seed)

  Oats

  Oats (seed)

  Rye (seed)

  Wheat

  Wheat (seed)

  Lindane 20

  01553

  Apple

  Artichoke (Jerusalem, globe)

  Aubergine

  Bean (broad, navy, runner, soya, dwarf, French)

  Beetroot

  Brassica (named)

  Broccoli

  Brussels sprout

  Bulb

  Cabbage

  Chinese cabbage

  Cauliflower

  Collard

  Fennel

  Forestry

  Kale

  Kohlrabi

  Oilseed rape

  Ornamental

  Pea (mange-tout)

  Pear

  Pepper

  Plum

  Pot plant

  Raspberry

  Sugar beet

  Tomato

  Lindex-Plus FS Seed Treatment

  03934

  Chinese cabbage

  Oilseed rape (seed)

  Lindex-Plus FS Seed Treatment

  08212

  Oilseed rape (seed)

  Murfume Grainstore Smoke

  05575

  Food storage practice (fumigation of empty bins, chutes, conveyors, ducts and buildings used for storage of raw grain pulses and oilseeds)

  340W

  Product name

  MAFF No.

  Crops

  Murfume Lindane Smoke

  05576

  Glasshouse crop (edible + ornamental)

  Food storage practice (grain store, silo)

  Mushroom

  New Kotol

  05081

  Barley (seed)

  Oats (seed)

  Rye (seed)

  Wheat (seed)

  New Kotol

  06212

  Barley (seed

  Oats (seed)

  Rye (seed)

  Wheat (seed)

  Sentry

  06209

  Sugar beet

  Unicrop Leather Jacket Pellets

  02272

  Barley (spring)

  Barley (winter)

  Grassland

  Oats

  Rye

  Sugar beet

  Triticale

  Wheat (spring)

  Wheat (winter)

  Vitavax RS

  02310

  Oilseed rape (seed)

  Vitavax RS

  06029

  Oilseed rape

  Oilseed rape (seed)

  Vitavax RS

  08040

  Flax

  Linseed

  Oilseed rape

  Wireworm FS Seed Treatment

  05640

  Barley

  Oats

  Wheat

  Wireworm Liquid Seed Treatment

  05641

  Barley

  Oats

  Wheat

  Pesticides
  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food for what reason, in the 1998 survey of the working party on pesticides residues, aldicarburas was not among the pesticides actively sought in retail samples of speciality potatoes. [118803]

  Ms Quin
  [holding answer 12 April 2000]: This was the first time speciality potatoes had been analysed as part of the Government's annual residues monitoring programme. The potatoes were therefore tested against a standard multiple residue screen to give an indication of the residues present. Aldicarb is not part of this general screen. However, processed potato products were also surveyed in 1998, and aldicarb was included in this analytical suite. The results of this survey are due to be published later this year. A special survey on the variability of aldicarb residues in potatoes (including new potatoes) was published in August last year, the results of which are available on the Pesticide Safety Directorate's (PSD's) internet website (http://maffweb/aboutmaf/agency/psd/psdhome.htm), or direct from PSD. The full document is also available to all Members in the Library of the House.

  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food what criteria were used in the 1998 survey of the Working Party on Pesticide Residues to select the countries of origin from which samples of imported speciality potatoes would be tested. [118807]
  341W
  Ms Quin
  [holding answer 12 April 2000]: The surveys of the Working Party on Pesticide Residues (WPPR) are not, except in certain circumstances, directed towards produce of particular countries. The samples of speciality potatoes purchased as part of the 1998 survey were representative of what was available on the UK market at the time of purchase.

INTERNATIONAL DEVELOPMENT

  Third World Debt
  Dr. Tonge
  To ask the Secretary of State for International Development (1) what progress has been made with the launch of a joint IMF and World bank fund to focus on alleviating the debts of the heavily indebted poor countries by the end of 2000; [119049]

  (2) what progress has been made with proposals to speed up the HIPC II debt cancellation programme. [119336]

  Clare Short
  So far, five countries have qualified for relief under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative. This is disappointing because the target was for 11 countries to have qualified by the Spring Meetings of the World bank and the IMF. The Government remain strongly committed to the G7 target of three-quarters of eligible countries getting to Decision Point by the end of 2000. We are pressing the bank and Fund to speed up the process.

  Discussions are also continuing to agree the financing arrangements for the multilateral development banks' participation in the Initiative. Further contributions to the HIPC Trust Fund will be required. UK has made the largest commitment to date—over $350 million. This includes our share of European Community contributions to the Trust Fund.

  Primary Education
  Dr. Harris
  To ask the Secretary of State for International Development, pursuant to her answer of 2 February 2000,Official Report, column 619W, on primary education, how much each heavily indebted poor country received from the UK's bilateral aid budget for the provision of primary education for each of the last three years. [118350]

  Clare Short
  The following table indicates UK bilateral development assistance expenditure on primary education in heavily indebted poor countries over the last three financial years for which data are available. These data refer only to projects and programmes aimed solely at primary education. There is also expenditure on this area included in wider projects and programmes, or funded through NGOs, which cannot be separately identified.

  £ actuals

  1996–97

  1997–98

  1998–99

  Ethiopia

  114,930

  10,283

  405,152

  Ghana

  0

  42,373

  4,833,831

  Kenya

  1,154,093

  2,004,629

  2,721,644

  Malawi

  2,571,480

  2,420,122

  3,924,906

  342W

  £ actuals

  1996–97

  1997–98

  1998–99

  Mozambique

  0

  136.018

  77,679

  Tanzania

  46,168

  41,382

  70,095

  Uganda

  0

  0

  11,000,000

  Zambia

  6,688

  10,429

  32,505

  Total

  3,893,359

  4,665,236

  13,065,812

  1 Initial expenditure against DFID's commitment of £67 million to Uganda's Education Strategic Investment Programme (1998–2003), one of the prime objectives of which is to achieve universal primary education by 2003.

EDUCATION AND EMPLOYMENT

  Departmental Properties
  Mr. Baker
  To ask the Secretary of State for Education and Employment if he will list those properties held by his Department and agencies responsible to him which are(a) wholly and (b) mainly unoccupied at present, giving locations and when they became so unoccupied in each case. [105308]

  Mr. Wills
  [holding answer 19 January 2000]: A list of those properties which are wholly, or have been mainly, unoccupied that are held by my Department and agencies has been placed in the Library.

  Jobseeker's Allowance
  Sir Brian Mawhinney
  To ask the Secretary of State for Education and Employment how many claims under the special payments category of the Jobseeker's Allowance were made in 1999; and how many of these were refused on the grounds of inadequate contribution payments. [108450]

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

  Letter from Leigh Lewis to Dr. Brian Mawhinney, dated 17 April 2000:
  As the Employment Service is an Executive Agency, the Secretary of State has asked me to reply to your question concerning special payments relating to Jobseeker's Allowance in 1999. This is something which falls within the responsibilities delegated to me as Chief Executive of the Agency.
  The Employment Service has arrangements to consider claims for compensation from jobseekers who claim to have suffered a financial loss or severe worry and distress, gross inconvenience or embarrassment as a result of errors by our staff, under the terms of a Department of Social Security compensation scheme.
  In the period 1 January 1999 to 31 December 1999, we received 391 claims for special payments as a result of alleged error in connection with Employment Service administration of Jobseeker's Allowance. Of these claims for compensation, 16 were in connection with advice concerning the National Insurance Contribution conditions for Jobseeker's Allowance, of which two were refused.
  I should add that the Benefits Agency also make special payments as a result of alleged errors with their administration of Jobseeker's Allowance. Therefore, I have asked for the Chief Executive of the Benefits Agency to reply to you direct on the number of special payments they have made in relation to Jobseeker's Allowance.
  I hope this is helpful.

  Lawyers
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Education and Employment how many lawyers are employed by his Department; and how many were employed in 1995. [117814]

  Mr. Wills
  The Department for Education and Employment (DfEE) does not directly employ lawyers but obtains them from Treasury Solicitor's Department (TSD). The lawyers are employed by TSD and allocated to DfEE. The figures given represent the number of lawyers allocated as at 31 March for the years in question.

  As at 31 March 2000, 24 lawyers were allocated by TSD to DfEE.

  DfEE came into existence following Machinery of Government changes in July 1995. The figures given for 1995 are for the number of lawyers allocated by TSD to its two predecessor Departments: the Employment Department Group (EDG) and Department for Education (DfE).

  As at 31 March 1995, 13 lawyers were allocated to the former EDG and 10 to the former DfE, making a total of 23.

  Meaningful comparisons between the numbers for 1995 and 2000 will be difficult to establish as DfEE's responsibilities do not precisely equate with those of its predecessor Departments.

  For example, the Health and Safety Executive and the Advisory, Conciliation and Arbitration Service were both part of EDG in March 1995 but transferred to the Department of Environment and the Department of Trade and Industry respectively as part of the Machinery of Government changes later that year.

  Pilot area

  Communities covered

  Numbers of personal advisers per pilot area

  Caseload

  Average caseload per PA per pilot area

  Lanarkshire: Clyde Valley and Coatbridge

  Hamilton, Motherwell, Coatbridge and Bellshill

  11.6

  284

  24.5

  Eastern Valleys

  Aberdare, Blackwood, Caerphilly, Ebbw Vale,Merthyr Tydfil

  10.7

  408

  38.1

  Sandwell

  Smethwick, West Bromwich

  7

  224

  32

  Bolton

  Bolton

  7.6

  285

  37.5

  Central Sussex

  Brighton, Hove

  9.3

  184

  19.8

  Bristol East and Bath

  Bristol East and Bath

  8

  262

  32.8

  Newham

  Plaistow, Stratford, Canning Town

  9

  243

  27

  South Tyneside

  Gateshead, South Shields

  12

  661

  55.1

  Mercia East

  Boston, King's Lynn, Skegness

  8

  281

  35.1

  South Devon

  Plymouth, Saltash, Torbay, Tavistock, Totnes,Kingsbridge

  10

  349

  34.9

  Bedfordshire

  Bedford, Luton

  8

  117

  14.6

  North Yorkshire

  Harrogate, Scarborough, York, Northallerton

  10

  343

  34.3

  Mr. Pickles
  To ask the Secretary of State for Education and Employment how much the personal adviser section of the New Deal for the Disabled has cost in each month since the start of the scheme. [118608]

  Ms Hodge
  The information requested is shown in the table.

  Vulnerable Adults
  Mr. Martyn Jones
  To ask the Secretary of State for Education and Employment what plans he has to introduce police checks on employees in education working with vulnerable adults. [118739]

  Ms Hodge
  My right hon. Friend the Home Secretary has announced his intention to implement part V of the Police Act 1997. As a result, criminal records information will become more readily available to employers recruiting people to work with children or vulnerable adults. Details of how this is to work in education are being developed currently and announcements will be made at a later date.

  Disabled People
  Mr. Pickles
  To ask the Secretary of State for Education and Employment when he will make an announcement about the national implementation of the personal adviser service part of his New Deal for the Disabled. [118599]

  Ms Hodge
  I refer the hon. Member to the reply I gave to the hon. Member for Daventry (Mr. Boswell) on 12 April 2000,Official Report, column 186W.

  Mr. Pickles
  To ask the Secretary of State for Education and Employment how many personal advisers work for the personal adviser section of the New Deal for the Disabled; and what the average care load is in each(a) constituency, (b) local authority area and (c) county. [118609]

  Ms Hodge
  The information is not available in the precise form requested. Personal advisers are not allocated to specific constituencies, local authorities or counties. The table sets out the coverage and average caseload per personal adviser (as at 25 February) for each pilot area.

  £000

  September 1998

  31

  October

  45

  November

  80

  December

  103

  January 1999

  90

  345W

  £000

  February

  138

  March

  788

  April

  32

  May

  513

  June

  603

  July

  567

  August

  918

  September

  932

  October

  626

  November

  765

  December

  842

  January 2000

  921

  February

  1,008

  New Deal (Advertising)
  Mr. Bercow
  To ask the Secretary of State for Education and Employment what has been the total cost to date of publications on, and advertising of, New Deal programmes for the unemployed. [118512]

  Ms Jowell
  [holding answer 10 April 2000]: A sum of £1,849,405 has been spent on publications and a sum of £9,697,576 has been spent on advertising New Deal. These figures exclude the cost of VAT but include amounts incurred for New Deal for Young People, New Deal 25 plus, New Deal 50 plus, New Deal for Partners of Unemployed People and New Deal for Disabled People.

  The sums do not include expenditure on the promotion of New Deal for Lone Parents, as the Department of Social Security takes the lead on this programme.

  Deputations
  Mr. Hancock
  To ask the Secretary of State for Education and Employment how many requests for meetings with deputations of hon. Members and groups from their constituencies, his Department has received in each year since 1997, on issues relating to(a) further and (b) adult education; how many have (i) he and (ii) other Ministers in his Department (1) seen and (2) refused to see; and if he will make a statement. [118924]

  Mr. Wicks
  This information is not centrally available and could be collected only at a disproportionate cost.

  Pre-school Sector
  Dr. Stoate
  To ask the Secretary of State for Education and Employment how many pre-schools and playgroups in Dartford(a) have benefited and (b) are expected to benefit from the special Government grants made available to relieve financial pressure on the pre-school sector. [118821]

  Ms Hodge
  Our records for the 1998 and 1999 schemes to assist pre-schools and playgroups facing financial difficulty show that no applications for grant were received from pre-schools and playgroups in Dartford.

  Arrangements for the administration of the new scheme, which I announced on 29 March 2000, will be discussed with the voluntary pre-school and playgroup support organisations. Among the main issues to be taken into account in deciding applications for grant will be the
  346W
  financial position of the group, quality issues, longer term viability and any comments received from the local Early Years Development and Childcare Partnership.

  Ofsted Inspections
  Mrs. Dunwoody
  To ask the Secretary of State for Education and Employment what has been the total cost of Ofsted inspections since their inception for(a) the county of Cheshire, (b) the constituency of Crewe and Nantwich and (c) the town of Crewe. [119013]

  Ms Estelle Morris
  [holding answer 13 April 2000]: This is a matter for Her Majesty's Chief Inspector of Schools, Chris Woodhead. I have asked him to write to my hon. Friend and to place a copy of his letter in the Library.

  Energy Efficiency
  Mr. Brake
  To ask the Secretary of State for Education and Employment what is his Department's energy efficiency performance target, expressed as a percentage change in comparison with 1990–91, for each of the next five years; and if he will make a statement. [118999]

  Mr. Wills
  I refer the hon. Member to the reply given by my right hon. Friend the Minister for the Environment on 22 March 2000,Official Report, columns 548-49W. It was explained then that a new target had been set across the Government estate, to apply from 2000–01, of a one per cent. per annum reduction in greenhouse gas emissions. The base year will be 1999–2000 as it was the final year to which the previous target applied. My Department will aim to meet this target. It represents a change against the previous cross-Government Target to 31 March 2000 which was expressed in terms of reductions in energy expenditure. Measurement in greenhouse gas emissions provides a much better fit with the current climate change programme and the UK's Kyoto targets.

  Mr. Brake
  To ask the Secretary of State for Education and Employment what has been the percentage change compared with 1990–91 in his Department's energy efficiency in each year since 1990–91; and if he will make a statement. [118998]

  Mr. Wills
  I refer the hon. Member to the reply given by my hon. Friend the then Parliamentary Under-Secretary of State, the hon. Member for Mansfield (Mr. Meale) on 22 July 1999,Official Report, columns 580-84W, which reported progress for all central government departments to 31 March 1998. The Department of the Environment, Transport and the Regions expect to publish results for the period up to March 1999 shortly.

  School Milk
  Mr. Breed
  To ask the Secretary of State for Education and Employment (1) what recent discussions he has had with the Secretary of State for Health regarding the reintroduction of free milk for school children; and if he will make a statement; [119009]

  (2) what recent representations he has received regarding the reintroduction of free milk for school children; [119011]
  347W
  (3) what assessment he has made of the feasibility of reintroducing free milk for school children. [119012]

  Jacqui Smith
  The law already requires that those local education authorities and schools that choose to provide milk must make it available, without charge, to pupils whose parents receive Income Support or income-based Jobseeker's Allowance. My right hon. Friends the Secretary of State for Education and Employment and the Secretary of State for Health have not had any recent discussions about extending eligibility for free school milk. In the last six months we have received only three letters from members of the public pressing for the re-introduction of compulsory free school milk for all school children.

  The Government have no plans to extend eligibility for free school milk or to make the serving of free milk compulsory. We have not therefore assessed the feasibility of doing so. We have however legislated to allow free drinking milk to be served at any time during the day, rather than only at lunchtime.

  Milk is one of many foods that play an important part in a balanced diet. Milk and dairy foods are part of our proposals for minimum nutritional standards for school lunches, which will come into operation next year. We will be recommending in our guidance to school caterers that drinking milk should be made available every day. We also encourage schools to claim existing subsidies for school milk, such as those available through the European Community School Milk Subsidy Scheme.

  Early-years Education
  Mr. Willis
  To ask the Secretary of State for Education and Employment (1) what additional resources were allocated to maintained nursery schools as part of the Chancellor's Budget; in which Government publication reference to these additional resources is to be found; and by what means the information was communicated to maintained nursery school headteachers and governors; [119193]

  (2) what additional resources have been allocated to those early years educational providers that form part of local education authorities' Early Years Childcare and Education Development Partnerships to provide early years places for all four year olds, as a result of the recent Budget announcements. [119195]

  Mr. Blunkett
  [holding answer 14 April 2000]: I have written to the headteachers of all schools in England who will benefit from the extra £290 million we are making available following the Budget. This includes maintained nursery and primary schools. The money is part of a real terms increase of over 10 per cent. this year. Copies of the letters, including those sent to nursery schools, are being placed in the Library. The final allocations are subject to approval of a special grant report which was laid before Parliament on 6 April and is being debated on 17 April. No additional resources have been allocated directly to Early Years, Childcare and Education Development Partnerships. I have, however, made an additional £0.5 million available for pre-schools' groups and playgroups facing financial difficulties. This follows a similar scheme last year, and will give groups time in which to consider their longer term plans.
  348W
  Mrs. May
  To ask the Secretary of State for Education and Employment what definition of nursery places is used by his Department in providing funding for nursery places for four-year-olds. [119492]

  Ms Hodge
  A nursery education place consists of five 2½ hour sessions per week over three terms of 11 weeks each.

  Mrs. May
  To ask the Secretary of State for Education and Employment how many Early Excellence centres have been set up in the last three years; and at what cost. [119493]

  Ms Hodge
  We have designated 29 Early Excellence Centres in the last three years. Specific DfEE funding of £6 million has been made available during that period.

  Leeds LEA
  Mr. Truswell
  To ask the Secretary of State for Education and Employment how many times his Department's officials have met the team of consultants appointed to evaluate Leeds Local Education Authority; and what future meetings will take place and for what purpose [119249]

  Ms Estelle Morris
  DfEE officials and Leeds officers met with PricewaterhouseCoopers' Leeds LEA team when interviewing them for the work in Leeds, and meet them at the regular steering group meetings which check on progress. Three such meetings have taken place and two further steering group meetings are planned for May. Individuals from the team will also continue to meet officials from the Department for the range of purposes set out in the answer which I gave to my hon. Friend on 11 April 2000,Official Report, columns 89-90W.

  Maintained Nursery Schools
  Mr. Willis
  To ask the Secretary of State for Education and Employment if he will list the maintained nursery schools that have closed in(a) 1997–98, (b) 1998–99 and (c) 1999–2000. [119198]

  Ms Estelle Morris
  [holding answer 14 April 2000]: The maintained nursery schools that have closed in the academic years 1997–98, 1998–99 and 1999–2000 are listed in the following table. There are no proposals for nursery school closure currently under consideration as far as the Department is aware. All the nursery school closures were linked to the establishment of alternative nursery units at other schools except one where the nursery school was closed as there were surplus nursery places in the area. Since 1997, four new nursery schools have been established.

  Nursery school closures for years 1997–98,1998–99,1999–2000

  LEA name

  School name

  September 1997-August 1998

  Cheshire

  Hilary Howarth County Nursery School1

  Kirklees

  Saville Town Nursery School2

  Leeds

  Hunslett Nursery School2

  North Tyneside

  North Shields Nursery School2

  Northumberland

  Ashington Hirst North Nursery2

  Salford

  Dorning Street Nursery School2

  Salford

  High Bank Nursery2

  Salford

  London Street Nursery School2

  Salford

  The Lakes Nursery School2

  Sandwell

  Cradley Heath Nursery School2

  349W

  Nursery school closures for years 1997–98, 1998–99, 1999–2000

  LEA name

  School name

  Staffordshire

  Dragon Square Nursery School2

  Stockton on Tees

  Billingham Nursery School2

  Stoke on Trent

  Meir Nursery School2

  Stoke on Trent

  Abbey Hulton Nursery School2

  Sunderland

  St. Colomba's Nursery School2

  September 1998-August 1999

  Durham

  Clarence Nursery School2

  Manchester

  Mayfair Nursery School22

  Manchester

  Barnes Green Nursery School2

  Manchester

  Gresty Nursery School2

  Manchester

  Shakespeare Nursery School2

  Slough

  William Penn Nursery School22

  Southampton

  Aldermoor Early Years Centre2

  South Tyneside

  Elizabeth Diamond Nursery2

  September 1999 onwards

  Derby City

  Beechwood Nursery School2, 3

  Nursery schools established since September 1997

  Croydon

  Thornton Heath Early Years Centre

  Croydon

  Selhurst Day Care Centre

  Wolverhampton

  Bilston Nursery

  Wakefield

  Sandal Agbrigg Pre-5 Centre

  1 Nursery school closed as there were surplus places in the nearby nursery unit at Lache Primary School

  2 Closures linked to establishment of nursery units at neighbouring schools

  3 Proposals in italics have yet to be implemented

  Capital Modernisation Fund
  Dr. Naysmith
  To ask the Secretary of State for Education and Employment what plans he has to make further allocations from the Capital Modernisation Fund which will benefit disadvantaged communities. [119655]

  Mr. Wills
  We are pleased to announce that £10 million is being allocated from the Capital Modernisation Fund to help bridge the digital divide in the most disadvantaged communities. The initiative will do this by wiring up communities to enable people living in them to use the new information and communications technologies to access jobs, learning opportunities, Government and other services, and to help individuals and their communities fulfil their potential.

  School Funding
  Mr. Willis
  To ask the Secretary of State for Education and Employment by what means each school will receive the additional direct funding announced in the Budget; and what conditions will be applied as to how the resources are to be spent. [119199]

  Ms Estelle Morris
  [holding answer 14 April 2000]: My right hon. Friend laid a special report, under section 88B of the Local Government Act 1988, before the House on 6 April. Once it has been approved, it will empower him to make payments to local authorities on condition that they pass those payments to schools, within a specified time period. The additional funding will be part of schools' delegated budgets, so they will be free to decide what to spend it on. It will give extra support to secondary schools in raising standards as part of the new Key Stage 3 programme, which will include: the setting of challenging school-level targets, and development of strategies to meet them, by all secondary schools with Key Stage 3 pupils for performance in the Key stage 3
  350W
  tests in 2002; and new Year 7 tests for pupils who have not yet achieved level 4 in English and maths. The tests will be available free in 2001 so that all secondary and middle schools can test all eligible pupils. The additional funding will help primary schools to meet the challenging literacy and numeracy targets they have set for both 2001 and 2002.

  Community Learning
  Mrs. May
  To ask the Secretary of State for Education and Employment if he will make a statement on the future of community learning, its funding and the bodies that will be responsible for determining the provision of community learning in each local education authority area. [119494]

  Mr. Wicks
  In our Prospectus for the Learning and Skills Council (LSC) we made it clear that adult and community learning is a vital part of the Government's plans to drive up achievement, widen participation in learning, and strengthen community confidence and capacity.

  Our first consultation document on the funding of post 16 learning, published in January, confirmed the strategic contribution that local authorities, together with local Learning and Skills Councils, can make. The Learning and Skills Bill (Lords) now before Parliament includes the necessary provisions to allow this. The Secretary of State has already recognised the importance of local education authorities in adult and community learning by guaranteeing them a minimum level of funding in the first two years of the LSC, provided they maintain their spend in this area and effectively implement their lifelong learning plans.

  Our second funding consultation document, to be published in May, will set out the roles of all those concerned in post 16 learning and invite comments on our proposals for funding, including the funding of adult and community learning.

  ConneXions Service
  Mrs. May
  To ask the Secretary of State for Education and Employment how many staff will be employed by his Department, additional to the current establishment, as a result of the introduction of ConneXions. [119497]

  Mr. Wicks
  The ConneXions service will largely be staffed by existing civil servants, but will draw as necessary on secondees from other Government Departments, the voluntary, youth and private sectors where appropriate. We do not anticipate any significant increase in the current establishment.

  Mrs. May
  To ask the Secretary of State for Education and Employment if he will make a statement on the funding of the ConneXions service and its impact on local education authority budgets. [119496]

  Mr. Wicks
  The funding for the ConneXions service will come from the bringing together of existing resources devoted to youth support and guidance. We are also considering what additional resources will be needed and can be made available as part of the Government's Year 2000 Spending Review.
  351W
  Mrs. May
  To ask the Secretary of State for Education and Employment how much time on average he estimates that a personal adviser will spend with each young person under the ConneXions service. [119500]

  Mr. Wicks
  This will depend on the needs of each individual young person.

  Mr. Boswell
  To ask the Secretary of State for Education and Employment how he plans to screen mentors in the ConneXions Service for their suitability to work with young people. [119144]

  Mr. Wicks
  The ConneXions service is responsible for the physical and emotional safety of all young people coming into contact with mentors. ConneXions partnerships will have responsibility for ensuring that personal checks have been completed on mentors working with young people.

  Mrs. May
  To ask the Secretary of State for Education and Employment how many personal advisers will be employed in the ConneXions service. [119499]

  Mr. Wicks
  The ConneXions service will ensure that every young person, whatever their needs, has local access to appropriate high quality guidance and support during their teenage years. A key factor in achieving this will be to ensure that all young people have access to a personal adviser. It is too early at this stage to give precise information on the numbers of personal advisers to be employed by the ConneXions service. The service will be phased in from April 2001 and the ConneXions partnerships will be responsible for deciding how best to deliver the service in their area, in the light of local circumstances.

  Piloting of the service which is due to start shortly will provide helpful information on the number of personal advisers needed.

  Contracted-out Services
  Mrs. May
  To ask the Secretary of State for Education and Employment how many youth workers, careers officers and education welfare officers are employed by(a) local education authorities, (b) careers services and (c) other contracted-out services. [119498]

  Mr. Wicks
  There are just under 8,000 full-time equivalents employed on work delivering careers service contracts. This includes careers officers, assistant careers officers and staff employed in management and support functions. The number of careers staff employed outside careers services is unknown.

  Numbers of youth workers are not collated centrally but the audit of youth services in local authorities in England based on 1996–97 data indicates that the number of full-time professional youth workers employed by local education authorities is about 3,200. In addition there are about 7,900 professionally qualified working part-time and about 16,000 not professionally qualified working part-time. The number of youth workers outside local education authorities is unknown but there are likely to be significant numbers in the voluntary sector.
  352W
  The precise number of education welfare officers employed by local education authorities is not collated centrally but for England is estimated to be around 3,000.

  School Sixth Forms
  Mrs. May
  To ask the Secretary of State for Education and Employment how capital funding for sixth forms will be allocated under the new funding arrangements for post-16 years education. [119495]

  Mr. Wicks
  Arrangements for capital funding for school sixth forms will be unaffected by the new post-16 funding arrangements. Central capital funding by the Department for Education and Employment will continue to go directly to local education authorities and to schools.

  Class Sizes
  Mr. Clappison
  To ask the Secretary of State for Education and Employment (1) what was the average size of sixth form classes taught by one teacher in maintained secondary schools in each of the last five years; [119409]

  (2) how many pupils were taught at Key Stage 4 in classes with 30 or more pupils in maintained secondary schools in each of the last five years; [119412]

  (3) how many sixth form classes taught by one teacher in maintained secondary schools had (a) 25 or more and (b) 30 or more pupils in each of the last five years.[119418]

  Ms Estelle Morris
  The information requested is shown in the tables.

  Provisional national estimates of class sizes in maintained secondary schools, which were published on 12 April, found reductions between January 1999 and 2000 in the numbers of pupils in classes of 35 or more taught by one teacher. Overall, only 0.2 per cent. of pupils in maintained secondary schools in England were in classes of over 35 pupils. For 14 and 15-year-old pupils, only 0.1 per cent. of pupils are in classes of over 35, representing a fall of nearly one half between January 1999 and 2000. Similarly, within the same time period, the number of pupils aged 16 or more in classes over 35 also fell to only 775 pupils, a reduction in the number of pupils of about one third. These figures were published in a Statistical First Release, "Class sizes in maintained schools in England: January 2000 (15/2000)".

  Number of classes in maintained secondary schools for pupils aged 161 and over taught by one teacher, by size of class in England: 1996–2000

  Position as at January each year

  Year

  Number of classes with 25 or more pupils

  Number of classes with 30 or more pupils

  20002

  287

  86

  1999

  238

  73

  1998

  260

  86

  1997

  251

  72

  1996

  262

  80

  1 Ages as 31 August (start of the academic year)

  2 Provisional

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  Average size of classes for pupils aged 16 or more1 taught by one teacher in maintained secondary schools in England: 1996–2000

  Position as at January

  Year

  20002

  10.7

  1999

  10.5

  1998

  10.7

  1997

  10.8

  1996

  10.6

  1 Ages as at 31 August (start of the academic year)

  2 Provisional

  Number of pupils in classes of 30 or more for pupils aged 14 and 151 taught by one teacher in maintained secondary schools in England: 1996–2000

  Position as at January each year

  Year

  20002

  133,717

  1999

  125,077

  1998

  116,325

  1997

  105,038

  1996

  106,350

  1 Ages as at 31 August (start of the academic year)

  2 Provisional

  Mr. Clappison
  To ask the Secretary of State for Education and Employment how many classes taught by one teacher in maintained secondary schools had more than 30 pupils in each of the last five years. [119416]

  Ms Estelle Morris
  The information requested is shown in the table.

  Number of classes with more than 30 pupils taught by one teacher in maintained secondary schools in England: 1996–2000—position as at January each year

  Year

  30 pupils

  All classes

  20001

  10,466

  134,457

  1999

  9,790

  132,283

  1998

  8,842

  130,859

  1997

  7,695

  129,663

  1996

  7,351

  127,719

  1 Provisional

  In respect of classes with more than 35 pupils taught by one teacher in maintained secondary schools, provisional national estimates (published on 12 April) found reductions between January 1999 and January 2000 in the numbers of pupils in such classes. Overall, only 0.2 per cent. of pupils in maintained secondary schools in England were in classes of over 35 pupils. For 14 and 15-year-old pupils, only 0.1 per cent. of pupils are in classes over 35, representing a fall of nearly one half between January 1999 and 2000. Similarly, within the same time period, the number of pupils aged 16 or more in classes over 35 also fell to only 775 pupils, a reduction in the number of pupils of about one third. These figures were published in a Statistical First Release "Class sizes in maintained schools in England: January 2000 (15/2000)".

  Mr. Clappison
  To ask the Secretary of State for Education and Employment what was the average size of classes taught by one teacher in former grant-maintained secondary schools in each of the last five years. [119417]
  354W
  Ms Estelle Morris
  The information requested is shown in the table. Class sizes in former grant-maintained secondary schools are generally smaller than those in local education authority maintained secondary schools.

  Average size of classes taught by one teacher in maintained secondary schools in England: 1996–2000—position as at January

  Local education authority (LEA) maintained secondary schools

  Grant maintained (GM) secondary schools

  Overall secondary

  20001, 2

  22.2

  21.4

  22.0

  1999

  22.1

  21.1

  21.9

  1998

  22.0

  20.9

  21.7

  1997

  21.9

  20.9

  21.7

  1996

  21.8

  20.9

  21.7

  1 Provisional

  2 Includes schools who, under the new framework, were redefined as Community or Voluntary-Aided schools

  Provisional national estimates of class sizes in maintained secondary schools were recently published in Statistical First Release "Class sizes in maintained schools in England: January 2000 (15/2000)" on 12 April 2000.

  Mr. Clappison
  To ask the Secretary of State for Education and Employment (1) what recent research he has(a) commissioned and (b) evaluated on the effect of large class sizes, including in sixth forms, on secondary schools; [119413]

  (2) what recent representations he has received on class sizes in secondary schools; [119414]

  (3) what plans he has to reduce class sizes in secondary schools; and if he will make a statement; [119415]

  Ms Estelle Morris
  My right hon. Friend the Secretary of State receives representations from time to time on various issues related to class sizes. The evidence, including from Ofsted, indicates that class size is most important at Key Stage 1. That is why we pledged to reduce the size of infant classes to 30 or below, ensuring that all children benefit, and helping to give young pupils the important start they need. We are well on track to deliver our pledge by September 2001 at the latest.

  The average number of pupils in secondary classes is 22—about five fewer than in primary schools. The pupil/teacher ratio in secondary schools is 17.1—more than six lower than in primary schools. Class sizes in secondary schools have been rising steadily since 1998, when the figure was 19.9.

  In the recent budget, secondary headteachers each received between £30,000 and £50,000. It remains for headteachers to decide how to use this money but, spent on teachers, the secondary pupil/teacher ratio could be reduced by 0.4. More generally, between 1997–98 and 2000–01, overall funding per secondary school pupil has increased in cash terms by some £580—an increase of around 20 per cent.

  Mr. Clappison
  To ask the Secretary of State for Education and Employment how many pupils were taught(a) English, (b) maths and (c) science in classes with 30 or more pupils taught by one teacher in maintained secondary schools in each of the last five years for which figures are available. [119411]
  355W
  Ms Estelle Morris
  Information on the size of classes by subject area in maintained secondary schools in England is not collected by the Department.

  Provisional national estimates of class size in maintained secondary schools were published in a Statistical First Release, "Class sizes in maintained schools in England: January 2000 (15/2000)", on 12 April 2000. This release is available from the Library.

  Mr. Clappison
  To ask the Secretary of State for Education and Employment if he will list each local authority with pupils in classes of 36 or more taught by one teacher in maintained secondary schools, indicating the number of such pupils in each such local authority. [119410]

  Ms Estelle Morris
  Information on classes of size 36 or more for secondary schools by local education authority area has been placed in the Library.

  Provisional national estimates of class sizes in maintained secondary schools, which were published on 12 April, found reductions between January 1999 and 2000 in the numbers of pupils in classes of 36 or more taught by one teacher. Overall, only 0.2 per cent. of pupils in maintained secondary schools in England were in classes of over 35 pupils. For 14 and 15-year-old pupils, as few as 0.1 per cent. of pupils are in classes over 35, representing a fall of nearly one half between January 1999 and 2000. Similarly, within the same time period, the number of pupils aged 16 or more in classes over 35 fell to only 775 pupils, a reduction in the number of pupils of about one third. These figures were published in a Statistical First Release, "Class sizes in maintained schools in England: January 2000 (15/2000)".

  Special Educational Needs
  Mrs. Curtis-Thomas
  To ask the Secretary of State for Education and Employment how many children had statements of special educational needs by age in each year since 1995; and what percentage of the total school under 18 years population this represented. [119536]

  Jacqui Smith
  Information on the number of children with statements of special educational need (SEN) by age has been published centrally since 1997. The latest information available is as follows:

  Age

  1996

  1997

  1998

  1999

  Under 5

  8,440

  8,999

  8,631

  9,167

  5-15

  208,204

  215,909

  —

  —

  5-10

  —

  —

  94,826

  97,150

  11-15

  —

  —

  126,508

  134,162

  16-19

  12,545

  13,650

  14,763

  15,105

  These figures relate to all children for whom LEAs maintain a statement including children not placed in schools. The table reflects the years in which the information was collected and a change in the age bands used to collect it from 1998.
  356W
  The percentage of the total under 18 school population with statements of SEN in each of the years 1995 to 1999 is 2.6 per cent., 2.8 per cent., 2.9 per cent. and 3.0 per cent. respectively.

  Mrs. Curtis-Thomas
  To ask the Secretary of State for Education and Employment how many children with statements of special educational needs were in designated special units within(a) primary schools up to and including year six and (b) secondary schools from year seven onwards in each year since 1995. [119537]

  Jacqui Smith
  Information on the number of children with statements of SEN in designated special units within primary schools and secondary schools is not collected centrally.

  Mrs. Curtis-Thomas
  To ask the Secretary of State for Education and Employment which local authorities in England and Wales have(a) adopted and (b) implemented the form of assessment recommended in the Qualifications and Curriculum Authority document "Supporting the Target Setting Process-Guidance for effective target setting for pupils with special educational needs". [119535]

  Jacqui Smith
  The information requested is not collected centrally.

  The Qualifications and Curriculum Authority (QCA) commissioned Durham University to undertake a monitoring exercise last summer to ascertain the extent to which the P scales, the assessment framework proposed in the publication 'Supporting the Target Setting Process—Guidance for effective target setting for pupils with special educational needs', are being used in schools. 313 schools, including 116 mainstream and 197 special schools, took part in the survey. The exercise was supported by the 63 local education authorities (LEAs) in which the schools are situated.

  A further monitoring survey on the P scales planned for next summer will specifically examine the use made by LEAs of the P scales, as well as school take up and use.

  Mrs. Curtis-Thomas
  To ask the Secretary of State for Education and Employment (1) what percentage of the primary schools in England and Wales have been placed on special measures in each year since 1995; [119540]

  (2) what percentage of primary schools with local education authorities designated special needs units have been placed on special measures in each year since 1995 in England and Wales. [119534]

  Ms Estelle Morris
  The percentage of primary and maintained and non-maintained special schools which have been placed in special measures since 1995 is contained in the table. While there are some special schools which cater for pupils wholly of primary school age, or wholly of secondary school age, there are many others which cover age ranges bridging part or the whole of the primary and secondary phases. The attached table does not distinguish between special schools covering the wide number of possible different age ranges. The figures in the table represent the proportion of all primary and maintained and non-maintained special schools which were inspected by Ofsted during that academic year and deemed to be in need of special measures.
  357W

  Percentage

  Academic Year

  Primary

  Specials

  1994–95

  0.20

  0.50

  1995–96

  0.40

  2

  1996–97

  0.80

  3

  1997–98

  1

  3

  1998–99

  0.80

  1

  Higher Education
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what information he has collated on admission to higher education institutions broken down by the nature of the educational establishment previously attended in each of the last five years. [119145]

  Mr. Wicks
  The information is given in the table, based on students gaining places on full-time and sandwich undergraduate courses through UCAS. Equivalent data for admissions to part-time undergraduate courses are not available.

  UCAS UK-domiciled acceptances to higher education institutions by previous educational establishment

  Year of entry1

  Accepted applicants

  1995

  1996

  1997

  1998

  1999

  Grammar School

  16,935

  17,048

  18,643

  18,954

  19,285

  Sixth Form Centre

  3,574

  3,800

  2,720

  2,732

  2,913

  Comprehensive

  68,322

  71,803

  77,241

  79,584

  81,050

  Other Secondary School

  1,243

  1,398

  1,622

  1,729

  1,782

  Independent School

  29,441

  30,006

  31,342

  30,602

  30,910

  Sixth Form College

  23,787

  25,182

  29,978

  29,548

  29,829

  Other FE/HE

  72,466

  68,871

  81,809

  75,561

  73,019

  Other

  9,092

  10,073

  9,066

  7,639

  7,480

  Not known

  40,676

  40,108

  50,897

  51,871

  56,797

  Total

  265,536

  268,289

  303,318

  298,220

  303,065

  1 Figures for 1997 and later years include students applying for Art and Design courses which were included in the UCAS scheme for the first time in 1997.

  Learning and Skills (Humberside)
  Mr. McNamara
  To ask the Secretary of State for Education and Employment what provision has been made for representatives of the Humber colleges to be members of the Humber Task Force overseeing the transition from TECs to learning and skills councils. [117832]

  Mr. Wicks
  The role of the Humber task group is not to oversee the transition of the TEC into the Learning and Skills Council but rather to collect information from current funding bodies (such as TECs, FEFC, and Local Education Authorities) on the range and volume of provision currently being funded in each area. The aim is to ensure that sufficient funds will be available in each area to at least maintain current levels of provision and to avoid disruption for learners resulting from the introduction of the new arrangements.

  Since they are not funding bodies there is no requirement for a direct representative of Humber colleges on the Humber task group, although a college principal who is a chair of one of the four Local Learning Partnerships has been invited to join the task group.
  358W
  Mr. McNamara
  To ask the Secretary of State for Education and Employment in how many TEC areas in Yorkshire and Humberside local further education colleges are not directly represented on task forces overseeing the transition from TECs to learning and skills councils. [117833]

  Mr. Wicks
  There are nine TEC areas in Yorkshire and the Humber region. Four Learning and Skills Councils are planned for the region and there are, therefore, four task groups in the region. The role of these task groups is not to oversee the transition of the TECs to the Learning and Skills Council but rather to collect information from current funding bodies (such as TEC, FEFC, and Local Education Authorities) on the range and volume of provision currently being funded in each area. The aim is to ensure that sufficient funds will be available in each area to at least maintain current levels of provision and to avoid disruption for learners resulting from the introduction of the new arrangements.

  Since they are not funding bodies there are no representatives of local colleges on any of the task groups in each region, although a college principal does sit on the South Yorkshire task group because of the wider remit that the group has identified to link LSC development with objective 1 status for South Yorkshire.

  Waltham Forest LEA
  Mr. Duncan Smith
  To ask the Secretary of State for Education and Employment what publication date has been set for the Ofsted report on the London Borough of Waltham Forest local education authority; and if HM Chief Inspector of Schools has power to publish Ofsted local education authority reports without consulting the local education authority concerned as to the publication date. [119408]

  Ms Estelle Morris
  This is a matter for HM Chief Inspector of Schools and I have therefore asked Chris Woodhead to write to the hon. Member and to place a copy of his letter in the Library.

  Basic Skills Agency
  Mr. Boswell
  To ask the Secretary of State for Education and Employment if he will make a statement on(a) his quinquennial assessment of the Basic Skills Agency, (b) his plans for its continued public funding and (c) its relationship with work to improve adult literacy standards being conducted within his own Department. [119146]

  Mr. Wicks
  The Department's quinquennial review of the Basic Skills Agency is now in its final stages; the resulting report will be placed in the Library of the House. We anticipate that the Agency will continue in its present role at the forefront of innovation and development in basic skills and will continue to receive public funding to support that role.

  Work has already begun on a number of new measures to tackle the problem of poor basic skills among adults, and my right hon. Friend the Secretary of State plans to announce a full national strategy for the longer term later this year. To manage the implementation of this national strategy we are setting up a new Adult Basic Skills Strategy Unit at the Department for Education and Employment. The new Unit and the Basic Skills Agency

  359W
  will need to work closely together in carrying out their separate but complementary roles in support of the national strategy.

  LEA Funding Bids
  Mr. Oaten
  To ask the Secretary of State for Education and Employment if he will list for each local education authority in Hampshire the(a) number and (b) value of funding bids made to his Department in (i) the financial year 1979–80, (ii) the financial year 1990–91 and (iii) each financial year from 1992–93 to 1998–99 for the repair of school buildings. [116021]

  Jacqui Smith
  The three tables answer the hon. Gentleman's question for the financial years from 1995–96 to 1998–99. We have no access to records for any years before then.

  £

  Year

  Number of bids

  Value of bids

  Hampshire

  1995–961

  17

  4,600

  1996–971

  12

  5,893

  1997–98

  40

  12,949

  1998–99

  171

  23,970

  Southampton2

  1997–98

  12

  3,946,000

  1998–99

  86

  4,421,205

  Portsmouth2

  1997–98

  9

  2,776,000

  1998–99

  125

  2,864,862

  1 Figures for 1995–96 and 1996–97 do not include bids made under the Schools Renewal Challenge Fund.

  1 Before 1997–98, all Portsmouth and Southampton schools were maintained by Hampshire LEA.

  Student Loans Company
  Liz Blackman
  To ask the Secretary of State for Education and Employment (1) what guarantees of minimum service he has set for the Student Loans Company; [119039]

  (2) what monitoring procedures he has put in place to measure the efficiency of the Student Loans Company; and if he will make a statement on performance to date. [119040]

  Mr. Wicks
  We set the Student Loans Company challenging performance targets each financial and academic year, which are detailed and reported on in the Company's Annual Report. Targets for the financial year 1999–2000 and academic year 1999–2000 cover lending, tuition fees, collections, customer services, managing the sold loans portfolio, and the Company's operating costs.

  The latest published performance against our targets is set out in the Company's 1999 Annual Report, copies of which are available in the House Libraries.

  Education Maintenance Allowances
  Mr. Lepper
  To ask the Secretary of State for Education and Employment what proposals he has to extend Education Maintenance allowances beyond the pilot schemes currently in operation; when he will announce a timetable for extending the scheme; and what 360W
  criteria local education authorities must satisfy to qualify for inclusion in the Education Maintenance Allowance scheme. [119037]

  Mr. Wicks
  My right hon. Friend the Secretary of State announced on 29 March 2000 that an additional £50 million will be allocated from September 2000 to expand the education maintenance allowance (EMA) pilots. The new money will allow us to expand some of the original pilots and to introduce EMAs in 40 new areas (which were set out in the Secretary of State's announcement). We will shortly announce the model that each new area will be testing.

  We have chosen a selection of new areas where we believe the EMA has the potential to make the most difference. They have relatively low post-16 participation, low GCSE attainment and high deprivation. The choice of areas also includes some additional rural areas where we will be concentrating on transports costs.

  The new pilots will mean that EMAs will be available in almost a third of the country. We will be monitoring the new pilots carefully to inform future decisions about EMAs, including whether to expand further.

PRIME MINISTER

  New Zealand Honours List
  Mr. Gordon Prentice
  To ask the Prime Minister what discussions he has had with the Government of New Zealand concerning the possible discontinuance by New Zealand of the practice of making nominations for knighthoods and damehoods. [119032]

  The Prime Minister
  None. This is a matter between the Government of New Zealand and its Head of State.

  Pig Farmers
  Miss McIntosh
  To ask the Prime Minister if he will visit Parliament Square to meet the protesters there; and if he will ensure that the state aid available to pig farmers is processed and paid as a matter of urgency. [119447]

  The Prime Minister
  Under state aid rules, the European Commission must approve a scheme before it can be introduced. The scheme we announced at the farming summit on 30 March has already been formally notified to the Commission, which has two months to respond. The scheme will be introduced as soon as possible following Commission approval.

  WWI Executed Soldiers (Pardons)
  Mr. Mackinlay
  To ask the Prime Minister what plans he has to discuss pardons for soldiers executed in the First World War when he next meets the Prime Minister of New Zealand. [119159]

  The Prime Minister
  [holding answer 14 April 2000]: There are no such plans. The Government's position was outlined by the then Minister for the Armed Forces, my right hon. Friend the Member for Hamilton, North and Bellshill (Dr. Reid), in a statement on 24 July 1998, Official Report, columns 1372-75.

  Ministerial Meetings
  Mr. Flynn
  To ask the Prime Minister on how many occasions in the past two years he has met representatives of(a) farming unions, (b) the Country Landowners Association, (c) the Country Sports Organisation and (d) the Old Age Pensioners Association. [118888]

  The Prime Minister
  Over the past two years I have met farmers, countryside representatives and pensioners at a number of events. Specific examples include meetings with farmers representatives at the farming summit on 30 March 2000, countryside representatives on 11 November 1999 and pensioners at a reception for older people held on 14 June 1999. In addition, during the course of my visits throughout the country I meet and talk to a wide range of people, including pensioners and people from rural communities on a regular basis.

  Colombia
  Mr. Tony Lloyd
  To ask the Prime Minister (1) if Her Majesty's Government will discuss with other donor countries the Plan Colombia mechanisms for monitoring progress on human rights, including contact with Colombian non-governmental human rights organisations; [119450]

  (2) if he raised human rights improvement during discussions on Plan Colombia with President Pastrana. [119449]

  The Prime Minister
  Following his talks with President Pastrana on 13 April, my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs announced that the United Kingdom would be willing to convene a gathering of interested countries at official level to study the proposals in Plan Colombia in advance of the donors conference planned for July in Spain. Monitoring progress on human rights will be one of the areas discussed. During the talks on 13 April, President Pastrana reaffirmed his commitment to ensure respect for human rights.

  Dr. Tonge
  To ask the Prime Minister what recent discussions he has had with the President of Colombia concerning British assistance for Plan Colombia. [119050]

  The Prime Minister
  I met President Pastrana on 13 April. We exchanged views on a number of issues, including how the international community might help President Pastrana take forward the peace process in his country. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs announced that the United Kingdom was willing to convene a gathering of interested countries at official level to study the proposals in Plan Colombia in advance of the donors conference planned for July in Spain.

DEFENCE

  Weapons of Mass Destruction
  Mr. Hammond
  To ask the Secretary of State for Defence what recent assessment has been made by his Department of the threat to the United Kingdom from(a) nuclear, (b) biological and (c) chemical weapon attack. [117880]
  362W
  Mr. Hoon
  As of today, our assessment is that there is no current significant threat to the UK from weapons of mass destruction. Obviously, however, we continue to monitor developments closely in conjunction with our Allies.

  Royal Navy Ship Orders
  Dr. Godman
  To ask the Secretary of State for Defence when he last met management and trade union representatives from the shipbuilding industry to discuss the placing of contracts for the construction of vessels required by the Royal Navy. [117904]

  Dr. Moonie
  My right hon. Friend the Secretary of State for Defence and my noble Friend the Minister of State for Defence Procurement have met both management and trade union representatives from the shipbuilding industry within the last two weeks.

  Mr. Field
  To ask the Secretary of State for Defence when he will announce the next round of orders of ships for the Royal Navy. [117899]

  Mr. Hoon
  We hope to be in a position to announce a preferred bidder to meet our long-term strategic sealift requirement later this year. We also expect to place contracts for Survey Vessels during the summer, for Demonstration and First of Class Manufacture of the new Type 45 Anti-Air Warfare Destroyer in the autumn, and for the Alternative Landing Ship Logistic (ALSL) in late 2000. Over the longer term, our plans call for the manufacture of over 30 new major warships with contracts being placed at the appropriate time.

  Kosovo
  Mr. Bradshaw
  To ask the Secretary of State for Defence what assessment he has made of the security situation in Kosovo. [117906]

  Mrs. Mahon
  To ask the Secretary of State for Defence if he will make a statement on the military situation in Kosovo. [117909]

  Ms Osborne
  To ask the Secretary of State for Defence if he will make a statement on the security situation in Kosovo. [117897]

  Mr. Spellar
  KFOR and UNMIK face a challenging security situation in Kosovo. Ethnic intimidation and violence continues, often orchestrated by a small number of extremists. British forces are making a major contribution to addressing these problems. We will ensure that British forces committed to KFOR are at the right strength, and have the necessary equipment to do their job.

  We decided recently to deploy additional helicopters and unmanned aerial reconnaissance vehicles to improve KFOR's intelligence gathering capability. We are also deploying 60 members of the Ministry of Defence police to reinforce the UNMIK police, joining some 100 United Kingdom police officers already serving in Kosovo.

  European Defence Co-operation
  Mr. Plaskitt
  To ask the Secretary of State for Defence what progress has been made since the Helsinki summit in improving European defence co-operation. [117907]
  363W
  Mr. Hoon
  We continue to make excellent progress on the European defence initiative. At the recent informal European Council in Lisbon, EU member states agreed the process for taking forward the commitment to improving capabilities made at Helsinki. The interim bodies necessary for the EU to decide on military matters were established in March.

  MOD Employees (North-east)
  Mr. Cousins
  To ask the Secretary of State for Defence what percentage of his uniformed and civil employees are based in the North-east region; and what percentage of his uniformed employees were recruited in the North-east region. [117910]

  Mr. Spellar
  As at 1 October 1999 the Ministry of Defence had one per cent. of its uniformed and civilian employees based in the North-East region. These are the latest figures that are available.

  The three Services recruited the following numbers of uniformed personnel in the North-east region in the financial year 1999–2000:

  Royal Navy Rating Entrants 8 per cent.

  Army Officers and Other Ranks 8.36 per cent.

  RAF, Officers and Airmen 15.39 per cent.

  There are no statistics available for Naval Officer entrants for the region as these were calculated on a different basis.

  The figures represent entrants who joined through recruiting offices in the North-east region and do not necessarily mean that they are from the region.

  Child Support Agency
  Caroline Flint
  To ask the Secretary of State for Defence what progress is being made on reforming the service restrictions affecting deductions from service personnel pay to ensure that Child Support Agency deduction of earnings orders can be fully implemented. [117911]

  Mr. Spellar
  The purpose of Minimum Rates of Pay is to protect Service personnel and their families from hardship. Of the Child Support Agency maintenance awards made against Service parents, 99 per cent. are met in full. In only one in a hundred Service cases is less than the full amount of a maintenance award being paid. This contrasts with the current Child Support Agency average of only 40 per cent. of parents paying in full, with 30 per cent. paying nothing at all. Nevertheless, consideration is being given to reforming minimum Service pay regulations.

  Defence Medical Services
  Mr. David Heath
  To ask the Secretary of State for Defence if he will make a statement on recruitment and retention of staff in Defence Medical Services. [117912]

  Dr. Moonie
  As we have previously acknowledged, there are serious shortages of manpower in the regular Defence Medical Services. Manning levels over the last year have been fairly stable although the numbers leaving on premature voluntary retirement continue at higher levels than we would wish. Recruitment into training is 364W
  generally satisfactory, with nurse training places and medical cadetships having been increased. Direct entry recruitment of qualified personnel is difficult, particularly of qualified doctors. Measures to improve both retention and direct entry recruitment are under consideration.

  Bulgaria and Turkey
  Mr. Viggers
  To ask the Secretary of State for Defence what contact his Department has had with(a) the headquarters of the South-East Europe Brigade at Plovdiv in Bulgaria and (b) the Partnership for Peace study centre at Ankara, Turkey. [117913]

  Mr. Spellar
  The United Kingdom Ministry of Defence has had limited informal contacts with the Headquarters South-East Europe Brigade, Plovdiv, Bulgaria, and the Partnership for Peace study centre in Ankara, Turkey. In the case of the Headquarters, a visit was made on 21 March by a group of Staff and Students from the Joint Services Command and Staff College during a regional tour, accompanied by the British Defence Attaché, Sofia. There has been contact between the Commander and Staff of the Partnership for Peace study centre, Ankara, and the UK Officer attached to the Regional Training Centre, Bucharest, which also has recognition as a Partnership for Peace training centre.

  Representatives from the UK Armed Forces are due to attend two events at the Ankara centre later this year.

  Air Transport
  Mr. Ben Chapman
  To ask the Secretary of State for Defence what plans he has to procure new transport aircraft to meet his Department's short-term strategic airlift requirement. [117914]

  Mr. Brady
  To ask the Secretary of State for Defence if he will make a statement on the RAF's air transport capabilities. [117916]

  Mr. Evans
  To ask the Secretary of State for Defence what plans he has to procure heavy-lift aircraft in the short and medium term. [117878]

  Mr. Hoon
  We are continuing to assess the proposals for both our short-term and longer term airlift requirements and hope to be in a position to make a decision in the next few weeks.

  RAF Scampton
  Mr. Leigh
  To ask the Secretary of State for Defence what units, apart from the Red Arrows, will be based at RAF Scampton. [117915]

  Mr. Spellar
  Currently, there are no plans to base other RAF units at RAF Scampton. However, following my recent announcement that the Red Arrows will be based at Scampton, (subject to TU consultation), we will consider ways of maximising MOD use of the retained estate. In addition, we have agreed that the firm of Bombardier can use one of the surplus hangars for aircraft maintenance, which will create job opportunities in the local area. There should also be scope to market surplus hangar capacity on the airfield site.

  Recruitment
  Mr. Robathan
  To ask the Secretary of State for Defence if each armed service has fulfilled its recruiting targets for 1999–2000. [117917]

  Mr. Spellar
  The latest available figures for recruits against the 1999–2000 intake targets for each of the Armed Services are:

  Intake

  Percentage of target

  Naval Service

  4,954

  99

  Army

  15,671

  95

  RAF

  4,130

  96

  Total Services

  24,755

  96

  Defence Logistics Organisation
  Mr. Jim Cunningham
  To ask the Secretary of State for Defence if he will make a statement on progress in establishing the Defence Logistics Organisation. [117883]

  Mr. Spellar
  We have met the Strategic Defence Review commitment to create a single unified Defence Logistics Organisation (DLO) on time, on 3 April this year. The DLO is committed to reducing its costs by 20 per cent. by the year 2005, and these savings will go towards our continuing programme of modernisation for the UK's Armed Forces. DLO key initiatives include a lean support programme; a reduction in non-explosive stocks; about 20 per cent. reduction in current storage capacity; the introduction of the Government Purchasing Card and the development of a Defence Electronic Commerce Service.

  Balkans
  Mr. Edwards
  To ask the Secretary of State for Defence if he will make a statement on the role of the reserve forces in supporting the regular Army in Bosnia and Kosovo. [117891]

  Mr. Spellar
  We continue to value the significant contribution which the reserve forces make to operations in the Balkans.

  The reserves have consistently provided between 10 and 14 per cent. of the manpower for the UK's contribution to NATO operations in the former Yugoslavia since operations commenced in 1995. Currently, reservists represent some 13 per cent. of the UK force in Bosnia and some 10 per cent. in Kosovo; indeed, 18 personnel from the Royal Monmouthshire Militia based in my hon. Friend's constituency have volunteered for service in the Balkans since July 1998.

  Mr. Hancock
  To ask the Secretary of State for Defence how many personnel have been(a) injured and (b) killed, in (i) Kosovo and (ii) Bosnia since NATO land forces have been involved; how many have left the UK armed services as a result of injuries sustained while there; and if he will make a statement. [119151]

  Mr. Spellar
  Since NATO land forces have been involved, four personnel have been killed in the Kosovo theatre of operations and 26 in the Bosnia theatre of operations to date. Injuries have been reported in respect of nine personnel in the Kosovo theatre of operations and 366W
  261 in the Bosnia theatre of operations in the period up to the end of 1999. All figures are in respect of regular armed forces personnel.

  Information in respect of the number of personnel who have left the armed forces as a result of injuries sustained in Kosovo and Bosnia is not held centrally and could be provided only at disproportionate cost.

  Military Equipment Contracts
  Mr. St. Aubyn
  To ask the Secretary of State for Defence if he will estimate(a) the number of contracts for the (i) repair and (ii) modification of military equipment and (b) their cumulative value which in 1998–99 were subject to (a) an open and (b) a restrictive tender. [117895]

  Dr. Moonie
  In 1998–99 there were 2,307 contracts awarded for repair activities. Of these, 1,211 with a cumulative value of around £278 million were awarded as a result of competition, and the remaining 1,096 (valued at around £676 million) were non-competitive.

  In the same year, 224 contracts for modification of equipment were awarded. Of these, 120 contracts with a cumulative value of around £14 million were awarded as a result of competition. The remaining 104 contracts (valued at around £66 million) were non-competitive.

  De-mining
  Mr. Browne
  To ask the Secretary of State for Defence what assistance his Department is giving in the clearing of land mines. [117898]

  Mr. Michael Jabez Foster
  To ask the Secretary of State for Defence what steps his Department is taking to assist those involved in humanitarian de-mining. [117892]

  Mr. Spellar
  I refer my hon. Friends to the answer I gave to my hon. Friend the Member for Warrington, North (Helen Jones) today,Official Report, column 688.

  US National Missile Defence System
  Mr. Corbyn
  To ask the Secretary of State for Defence what co-operation his Department is having with the US Department of Defense concerning the National Missile Defence system. [117908]

  Mr. Hoon
  We have dialogue with the US Administration on their possible deployment of a National Missile Defence system. The US has not asked for UK assistance in the deployment of the system, nor would we expect them to do so until after a US decision has been made on whether or not to proceed with its deployment.

  DERA
  Mr. Sheerman
  To ask the Secretary of State for Defence what steps he is taking to ensure that the effectiveness of the Defence Evaluation and Research Agency will be maintained if the proposals for its part-privatisation are implemented. [118987]

  Mr. Hoon
  The Government concluded in the Strategic Defence Review that, in order to guarantee the ability of the Defence Evaluation and Research Agency (DERA) to continue to conduct world-class research, we would harness the opportunities offered by a Public Private
  367W
  Partnership. Last year's consultation exercise on a potential PPP proposal produced a wide range of useful comments from stakeholders.

  As a result of this process, I announced in October that we would be widening the scope of our discussion to take these comments into account. That work is now complete and has led to the development of two revised models for potential PPP structures, known as "Core Competence" and the "Public Sector Option". A detailed evaluation of these options indicates that Core Competence best meets the PPP objectives while also responding to the views of stakeholders. Both models are described in a consultation document which has been placed in the Library of the House and which is also available on the internet at www.mod.uk/commercial/ppp/dera/.

  The essence of Core Competence is a clear separation of those functions which are best developed within a PPP, and those which are best performed wholly within Government. Around three quarters of DERA would be turned into a company, which we would hope to float on the stock market as soon as its potential is judged to be suitably developed. A core of staff would be retained wholly within the MOD to provide a high level overview of defence science and technology. This ensures that MOD would retain access to in-house impartial advice and allows management of the defence research programme and international research collaboration. Specific very sensitive areas and programmes would also be retained.

  I believe that this approach would create two vibrant sustainable organisations. The new company would have the freedom to flourish, to grow its business and to diversify the wealth of knowledge it has built up over the years to the benefit of the wider UK economy while still providing the MOD with the essential services we will continue to need long into the future. The retained organisation will be a small but also world-class organisation offering rewarding careers within MOD and the wider civil service.

  This approach is good for DERA, good for MOD and good for the wider UK economy. It will provide the UK technology sector with added impetus and ensure we are well placed to take on the challenges and opportunities offered by the 21st century.

  All stakeholders are now being invited to submit their views on the revised proposals. As the exercise has proved, we are willing to listen and to respond to comments before taking a final decision.

  Army (Drugs Offences)
  Mr. Öpik
  To ask the Secretary of State for Defence if it is the practice that soldiers convicted of serious charges relating to drugs offences and who(a) are facing or (b) have served custodial sentences are dismissed from the Army; and if he will make a statement. [118879]

  Mr. Spellar
  [holding answer 14 April 2000]: All soldiers, wherever they are serving, are liable for Compulsory Drug Testing (CDT). CDT is primarily an administrative, not a disciplinary matter. Following a positive test result or the refusal to provide a specimen, an Army officer would be required to resign, and a soldier
  368W
  will normally be administratively discharged. A commanding officer does, however, have the discretion to retain soldiers of the rank of Lance Corporal or below if:

  (a) It was the first occasion on which drug misuse had been detected, or the first occasion on which he or she had refused to undergo testing, and

  (b) In the case of a positive test result, no trace of Class A drugs was detected and,

  (c) In all other respects the individual is considered a good serviceman or woman whose retention would be in the interest of the service.

  To serve a custodial sentence a soldier would need to be found guilty of a disciplinary offence following which the rules contained in Queen's Regulations 9.404 would come into effect. The rules state that a soldier is to be discharged if he has been sentenced by a civil court or by court-martial to imprisonment or to detention or to any other form of custodial sentence. If in the opinion of the commanding officer there are exceptional reasons that make retention of the soldier desirable then the case is to be submitted with valid and explicit reasons to the Director of Manning (Army) for a decision.

  Defence Estate Review
  Mr. Wilkinson
  To ask the Secretary of State for Defence when he will publish the conclusions of his Department's review of the Defence Estate in Greater London. [119317]

  Dr. Moonie
  I refer the hon. Member to the answer my right hon. Friend the then Under-Secretary of State gave the hon. Member for Salisbury (Mr. Key) on 18 January 2000,Official Report, columns 405-06W.

  Mr. Wilkinson
  To ask the Secretary of State for Defence if he will make a statement on the future of the Lime Grove site owned by his Department in Eastcote, Middlesex. [119319]

  Dr. Moonie
  The Eastcote site was formally transferred to my Department by the Department of Trade and Industry on 31 March 2000. Its future is being considered as part of our wider review of the Department's estate holdings in London. If it is determined that the Eastcote site is surplus to defence needs, the property will be disposed of.

  Married Quarters
  Mr. Cox
  To ask the Secretary of State for Defence how many military married quarters were sold in the UK during 1999; and how much revenue was raised by the sales. [118833]

  Dr. Moonie
  The majority of Service Families Accommodation (SFA) in England and Wales was sold to Annington Homes Limited (AHL) on 5 September 1996, on a 999-year lease. The Ministry of Defence leases back those properties it requires to house Service families on a 200-year lease. Those properties not required for Service use are released to AHL, as they become available. 1,472 properties were disposed of in this way in 1999 calendar year. The amount raised from these sales is a matter for AHL.

  In addition, Defence Estates remains responsible for a small number of SFA's in England and Wales and all of those in Scotland. Of these, 478 have been disposed of in the period providing revenue of £10,437,516.

  RAF Neatishead
  Mr. Prior
  To ask the Secretary of State for Defence if he will make a statement on the future of RAF Neatishead. [119283]

  Mr. Spellar
  As I explained in my letter of 5 April to the hon. Member, work in relation to the future of RAF Neatishead is ongoing. It is hoped that this work will be completed by late spring, when I will write to the hon. Member again. A copy of the letter will be placed in the Library of the House.

  US-licensed Anthrax Vaccine
  Mr. Dalyell
  To ask the Secretary of State for Defence, pursuant to his letter of 19 March, Ref. D/Min/(AF)JS/0906/00/P, what conclusions he has drawn from his scrutiny of the report of the Congressional Committee on National Security which reviewed the US Department of Defense's policy on the use of US-licensed anthrax vaccine and the way in which that policy had been implemented. [117973]

  Mr. Spellar
  We have studied the Committee's report and a response by the US Department of Defense refuting the Committee's findings. These concerned both the safety and efficacy of the US anthrax vaccine and the scope of the US Department of Defense's mandatory immunisation programme. The anthrax vaccine produced in the UK differs from the US product and is administered in a different way. Independent advice in both the UK and the US has confirmed that vaccination against anthrax is safe and effective. Against this background, it remains our policy that vaccination against anthrax has an important part to play as one of a range of measures to provide protection against biological weapons for our armed forces.

  RAF Bruggen
  Mr. Key
  To ask the Secretary of State for Defence what has been the expenditure on(a) runway resurfacing, (b) hardened bunkers and (c) other capital expenditure at RAF Bruggen over the past five years. [119182]

  Mr. Spellar
  No expenditure at RAF Bruggen has been incurred on the provision of runway resurfacing or hardened bunkers over the past five years. Other capital expenditure on facilities at Bruggen over this period amounts to £9.295 million, including VAT. These facilities will be used by the Army, who will be transferring units there when the RAF withdraw.

TREASURY

  Minimum Wage and Working Families Tax Credit
  Mr. Paul Marsden
  To ask the Chancellor of the Exchequer when definitive estimates on the number of people who have benefited from(a) the national minimum wage and (b) the working families tax credit by parliamentary constituency will be available; and if he will make a statement. [114569]

  Dawn Primarolo
  The information requested on the national minimum wage falls within the responsibility of the Office for National Statistics (ONS). I understand from ONS that definitive estimates by constituency of the 370W
  number of people that have benefited from the national minimum wage are not yet available. Up to the end of March 2000, there had been 1.03 million awards made of the Working Families Tax Credit (WFTC) in the United Kingdom. Available figures by constituency are given in the tables which have been deposited in the Library.

  C154 Certificates
  Mr. Pickles
  To ask the Chancellor of the Exchequer how many C154 certificates have been issued since the start of the scheme; and how many requests for C154 certificates have been rejected. [118605]

  Dawn Primarolo
  The Inland Revenue has issued 781,742 registration cards. This includes not only permanent cards but also temporary cards and replacement cards. The Inland Revenue does not keep a record of applications where registration cards are refused.

  Mr. Pickles
  To ask the Chancellor of the Exchequer what checks on eligibility are made in respect of an applicant before a C154 certificate is issued. [118604]

  Dawn Primarolo
  Where a person works as a subcontractor on a contract to which the Construction Industry Scheme applies they must register with the Inland Revenue if the contractor is to comply with the rules of the scheme when paying them for the work they do. If the contractor does not comply with the rules of the scheme they may incur a penalty.

  Subcontractors who are not eligible to receive a certificate entitling them to receive payment gross will be issued with a registration card. This card must be presented, in person, to the contractor before payment can be made. Payments to registration card holders are made after deduction of 18 per cent. on account of tax and Class 4 National Insurance. Under the old scheme, only those who wished to receive payment gross needed to apply to the Inland Revenue for a card. The registration card has been successful in ensuring that 50,000 subcontractors, who were previously unknown to the Inland Revenue, have now registered with a tax office.

  In order to register for the scheme an individual must take a completed application form, together with a recent passport size photograph and two proofs of identify, one of which must carry a photograph and one must show their current address, to a tax office.

  An individual who also has proof of their National Insurance number, which can be validated by the Inland Revenue through the NIRS system, will be issued with a permanent registration card—CIS4(P). An individual who is unable to provide proof of their National Insurance number, or whose number cannot be validated, is issued with a temporary registration card—CIS4(T) which is only valid for up to three months. The temporary registration card is replaced once the Inland Revenue has validated the individual's National Insurance number.

  To date the Inland Revenue have issued approximately 61,000 temporary registration cards, of which over 54,000 have now expired.

  Working Families Tax Credit
  Mr. Stevenson
  To ask the Chancellor of the Exchequer how many people will receive the Working
  371W
  Families Tax Credit from 18 April (a) in the Stoke-on-Trent, South constituency and (b) in Stoke-on-Trent as a whole. [118591]

  Dawn Primarolo
  For the Stoke-on-Trent, South constituency, I refer my hon. Friend to my answer today,Official Report, column 370W, to my hon. Friend the Member for Shrewsbury and Atcham (Mr. Marsden). It is estimated that 6,200 families in Stoke-on-Trent have been awarded the Working Families Tax Credit by the end of March 2000.

  Mrs. Curtis-Thomas
  To ask the Chancellor of the Exchequer how many families are in receipt of the working families tax credit in the Crosby constituency; and what percentage they constitute of the total number of families in the constituency. [118685]

  Dawn Primarolo
  [holding answer 11 April 2000]: I refer my hon. Friend to my answer today, Official Report, column 370W, to my hon. Friend the Member for Shrewsbury and Atcham (Mr. Marsden) for the number of Working Families Tax Credit awards in Crosby. Estimates of the number of families at constituency level are not available.

  Dr. Stoate
  To ask the Chancellor of the Exchequer how many families in Dartford will benefit from the increase in the under-16 child credit in the working families tax credit. [118823]

  Dawn Primarolo
  I refer my hon. Friend to my answer today,Official Report, column 370W, to my hon. Friend the Member for Shrewsbury and Atcham (Mr. Marsden). Almost all families having new awards, or renewing awards, from June 2000 will benefit from the increase in the under 16 child credit.

  Helen Jones
  To ask the Chancellor of the Exchequer how many families are in receipt of the working families tax credit in(a) Warrington and (b) Warrington North constituency. [118856]

  Dawn Primarolo
  The information is contained in the table relating to the answer I have today given my hon. Friend the Member for Shrewsbury and Atcham (Mr. Marsden),Official Report, column 370W.

  Energy Efficiency
  Mr. Brake
  To ask the Chancellor of the Exchequer what is his Department's energy efficiency performance target expressed as a percentage change in comparison to 1990–91 for each of the next five years; and if he will make a statement. [118993]

  Mr. Timms
  I refer the hon. Member to the reply given by my right hon. Friend the Minister for the Environment on 22 March 2000,Official Report, columns 548-49W. It was explained then that a new target had been set across the Government estate to apply from 2000–01, of a 1 per cent. per annum reduction in greenhouse gas emissions. My Department will aim to meet this target. It represents a change against the previous cross Government target to 31 March 2000 which was expressed in terms of reductions in energy expenditure. Measurement in greenhouse gas emissions provides a much better fit with the current climate change programme and the UK's Kyoto targets. The base year will be 1999–2000 as it was the final year to which the previous target applied. Figures
  372W
  will be released when they are available on performance in 1999–2000 against the target to 31 March 2000 with 1990–91 as the base year.

  Mr. Brake
  To ask the Chancellor of the Exchequer what has been the percentage change compared to 1990–91 in his Department's energy efficiency in each year since 1990–91; and if he will make a statement. [118992]

  Mr. Timms
  I refer the hon. Member to the reply given by the then Parliamentary Under-Secretary of State, my hon. Friend the Member for Mansfield (Mr. Meale), on 22 July 1999,Official Report, column 582W which reports progress for all central government departments by 31 March 1998. I hope to publish shortly results for the period up to March 1999.

  Exports
  Mr. Matthew Taylor
  To ask the Chancellor of the Exchequer, pursuant to his answer of 15 March 2000,Official Report, columns 187-88W, what assessment he has made of the recent trends in export volumes; and if he will make a statement. [118849]

  Mr. Timms
  [holding answer 14 April 2000]: I refer the hon. Member to Chapter B (The Economy) of the Financial Statement and Budget Report published on 21 March 2000.

  Tobacco Duties
  Mr. Heathcoat-Amory
  To ask the Chancellor of the Exchequer what is the hypothecated expenditure in the current financial year for the NHS resulting from the increase in tobacco duties announced in the Budget. [119214]

  Mr. Andrew Smith
  [holding answer 14 April 2000]: The extra £2 billion in 2000–01 allocated for the National Health Service by the Chancellor in the Budget is inclusive of £235 million, which is the anticipated yield for the 5 per cent. real terms increase in tobacco duty in that year.

  Anti-depressants
  Mr. Flynn
  To ask the Chancellor of the Exchequer if he will make a statement on death caused by(a) Dothiepin and (b) other anti-depressant drugs. [118889]

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

  Letter from John Kidgell to Mr. Paul Flynn, dated 17 April 2000:
  The Director of the Office for National Statistics (ONS), has been asked to reply to your recent question on the causes of death from Dothiepin and other anti-depressant drugs. I am replying in the Director's absence.
  Information on the underlying causes of drug-related deaths where Dothiepin or other antidepressants are mentioned is given in the attached table. The data has been extracted from the ONS drug-related deaths database.
  373W

  Number of drug-related deaths with a mention of Dothiepin or other anti-depressants by underlying cause, England and Wales usual residents, 1993–97

  Underlying cause of death1

  1993

  1994

  1995

  1996

  1997

  Dothiepin2

  Drug dependence/abuse

  3

  1

  4

  5

  2

  Accident

  40

  38

  34

  44

  37

  Suicide and Undetermined

  155

  207

  190

  218

  261

  Drug Psychoses/assault

  0

  0

  0

  0

  0

  Total

  198

  246

  228

  267

  255

  Other Anti-depressants3

  Drug Dependence/abuse

  3

  5

  5

  5

  6

  Accident

  59

  37

  47

  68

  52

  Suicide and Undetermined

  194

  183

  206

  197

  221

  Drug Psychoses/assault

  0

  0

  0

  0

  0

  Total

  256

  225

  258

  270

  279

  1 The underlying cause of death are categorised as follows:

  Deaths with the underlying cause codes 304, 305.2-9, using ICD9 where the named substance was mentioned on the death certificate Deaths with the underlying cause codes E850-E858, using ICD9 where the named substance was mentioned on the death certificate Deaths with the underlying cause codes E950.0-5, E980.0-5, using ICD9 where the named substance was mentioned on the death certificate

  Deaths with the underlying cause codes 292, E962.0. using ICD9 where the named substance was mentioned on the death certificate

  2 These figures for Dothiepin include all deaths where drugs containing Dothiepin Hydrochloride were mentioned (including any mention of the brand name Prothiaden)

  3 Death with a mention of antidepressants but with no mention of drugs containing dothiepin hydrochloride

  Office for National Statistics
  Mr. Flynn
  To ask the Chancellor of the Exchequer if he will set out the reasons for the time taken to outsource Office for National Statistics projects as recommended by the Treasury Taskforce; and if he will make a statement on the current policy in respect of outsourcing work at the Office for National Statistics. [118885]

  Mr. Timms
  In February 1999, the then Economic Secretary announced a programme of efficiencies for the Office for National Statistics (ONS) which was expected to release £20 million through a combination of internal efficiency and outsourcing. These savings would be reinvested in the ONS to improve the range and quality of the statistical information it produces.

  The programme of internal efficiency has proceeded and is releasing savings. The outsourcing of the facilities management services is also nearing completion, according to the original timetable, and should offer the ONS considerable savings.

  However, before any outsourcing of other activities, we have asked the ONS to review their business strategies and to consider to what extent the private sector can contribute to their achievement. Government policy remains to draw on the best of the public and private sector to deliver modern, high quality, public services.

  Mr. Flynn
  To ask the Chancellor of the Exchequer what plans he has to improve the efficiency of the Office for National Statistics, with particular reference to the in-sourcing of work that can be undertaken cost-effectively there. [118886]
  374W
  Mr. Timms
  The Office for National Statistics is currently undertaking an Efficiency Programme which aims, through a combination of internal efficiencies and outsourcing of central services, to release £20 million to improve the quality and range of its statistics.

  The internal efficiencies achieved, since the beginning of the Programme in February 1999 are summarised as follows:

  Amount in 2000–01

  IS development

  205,000

  IS consolidation

  750,000

  Accounts processing

  100,000

  Merge Marketing/Press

  100.000

  Merge Personnel/HRD

  100,000

  Reduce property holdings

  300,000

  Total

  1,555,000

  The ONS is also reviewing a range of other areas to achieve more internal efficiency savings. Examples of the activities involved include finance and planning, general administration and document output. In addition, business areas such as Business and Prices and the Registration service are undergoing major efficiency reviews which will consider the most cost effective approach to these areas of work. All of these internal efficiencies, together with the rest of the ONS Efficiency Programme, will help ensure that resources are focused towards the delivery of a high quality statistical service.

  Environmental Taxes
  Mr. Flynn
  To ask the Chancellor of the Exchequer what estimate he has made of the losses to the National Insurance Fund from the reductions of employers' contributions resulting from the introduction of the landfill tax, the climate change levy and the aggregates levy(a) separately and (b) in total, for each year from their introduction to 2010–11; and what proposals he has to compensate the Fund for that loss. [118934]

  Dawn Primarolo
  Budget 2000 confirmed that the climate change levy will be introduced from April 2001 and the aggregates levy from April 2002. The revenues from these levies will be recycled to business through cuts in employer NICS of 0.3 and 0.1 percentage points respectively. This is consistent with the Government's approach to shifting the burden of taxation from "goods" such as labour to "bads" such as environmental pollution.

  The estimated costs of the reduction in employer NICS for each year until 2010–11 are shown in the table. This represents the costs of a 0.3 percentage point reduction in employer NICS from April 2001 and a 0.4 percentage point reduction from April 2002.

  £ billion

  Year

  Exchequer cost of reduction in employer NICS

  2001–02

  1.0

  2002–03

  1.4

  2003–04

  1.5

  2004–05

  1.6

  2005–06

  1.7

  2006–07

  1.7

  375W

  £ billion

  Year

  Exchequer cost of reduction in employer NICS

  2007–08

  1.8

  2008–09

  1.9

  2009–10

  2.0

  2010–11

  2.1

  The Treasury Grant provides a mechanism for the balances on the fund to be maintained at the level recommended by the Government Actuary as the appropriate minimum balance.

  Betting Duty
  Mr. Heathcoat-Amory
  To ask the Chancellor of the Exchequer if he will list the actual and estimated yield from betting duty for the years 1996 to 2001. [119452]

  Mr. Timms
  Information on the actual yield from betting duty can be found in "HM Customs and Excise Annual Report", Table L2 "Betting, Gaming and Lottery: Receipts". The estimated yield from betting and gaming duties in 1999–2000 and in 2000–01 can be found in the "Financial Statement and Budget Report March 2000", Table C9 "Public Sector Current Receipts".

  National Insurance Records
  Mr. Swayne
  To ask the Chancellor of the Exchequer what action he is taking to deal with delays in processing national insurance records in the Newcastle centre; and if he will make a statement. [117967]

  Dawn Primarolo
  Inland Revenue National Insurance Contributions Office process information onto National Insurance accounts, and although it is recognised that there have been delays in finalising this work in the Newcastle centre, they are implementing a programme of recovery to clear the work items on hand caused by earlier difficulties.

  Constant monitoring ensures delays are kept to a minimum.

HOME DEPARTMENT

  Electronic Tagging
  Miss Widdecombe
  To ask the Secretary of State for the Home Department, pursuant to his oral statements of 29 November 1999,Official Report, columns 26-27 and 28 March 2000, Official Report, column 234, and to his answer to the right hon. Member for Maidstone and the Weald of 29 March 2000, Official Report, column 145W, what types of offender serving sentences of four or more years he estimates will be released earlier than at present as the result of the availability of electronic monitoring as a condition of release on licence, under the provisions of the Criminal Justice and Court Services Bill, with particular reference to offenders convicted of (a) homicide, (b) drugs offences, (c) robbery, (d) assaults, (e) firearms offences, (f) burglary and (g) terrorist offences; if he will define the term serious offenders, used in his oral statement of 29 November; if it is his policy that the timing of the release of (i) serious, (ii) high-risk
  376W
  and (iii) sex offenders should not be influenced by the electronic monitoring provisions of the Bill; and if he will make a statement. [118307]

  Mr. Straw
  [holding answer 7 April 2000]: The electronic monitoring measures in the Criminal Justice and Court Services Bill will not change the timing of any prisoner's eligibility for release. The basis of any discretionary release decision will continue to be careful risk assessment. The use of the new licence conditions will be subject to piloting before full implementation. Evaluation of the pilots will include consideration of the impact of the new licence conditions on discretionary release decisions taken by the Parole Board and by the Prison Service, on behalf of the Secretary of State.

  In the vast majority of cases, we anticipate that the availability of electronic monitoring as a licence condition will have no impact on release decisions.

  Prison Service Orders will make clear there are no circumstances in which the availability of the new electronic monitoring provisions in the Bill should influence decisions on release made by the Prison Service, on behalf of the Secretary of State.

  In addition, using the powers available to him under section 32(6) of the Criminal Justice Act 1991, the Home Secretary will direct the Parole Board that in considering certain types of case, decisions on release should not be influenced by the availability of the new powers of electronic monitoring in the Bill. The Home Secretary's Directions to the Parole Board will cover any sex offender required to register under the Sex Offenders Act 1997, and any sexual or violent offender who is serving an "extended sentence" as provided for in the Crime and Disorder Act 1998. The Directions will also apply to all prisoners serving a licence sentence, to other prisoners serving a determinate sentence for homicide or attempted homicide, terrorism, arson, robbery or assault and to any other prisoner whose offending or other behaviour suggests that he poses a clear risk of violence to the public. This definition could include prisoners convicted of drugs offences, firearms offences or burglary, depending on the circumstances of the cases.

  The types of case where the use of electronic monitoring may provide sufficient extra reassurance to influence a decision in favour of release are expected to be those where the Parole Board is considering prisoners who are at the lower end of the offending scale (within the category of prisoners eligible for parole), and who pose no obvious risk of violence to the public.

  It is, therefore clear that the Home Secretary's policy is that the timing of the release of serious, high risk and sex offenders, as defined above, should not be influenced by the electronic monitoring provisions of the Bill.

  The term "serious offenders" has different legal definitions in different contexts. In the context of my oral statement of 29 November, the term "serious offenders" was a reference to those prisoners serving sentences of four years or more who will be covered by the planned Directions to the Parole Board.

  Immigration Checks (Young People)
  Mr. Cox
  To ask the Secretary of State for the Home Department what immigration checks are made on
  377W
  (a) young children and (b) young people allowed into the UK; how such checks are followed up; and if he will make a statement. [118390]

  Mrs. Roche
  The normal requirements of the Immigration Rules apply to persons under the age of 18. For a British Citizen or other European Economic Area national the immigration officer establishes nationality and identity to confirm exemption from the immigration control. For other nationalities, the immigration officer must be satisfied that the individual is eligible for entry for the purpose requested.

  Every effort is made to try to ensure that inquiries or an interview are conducted in the presence of a responsible adult either accompanying or meeting a child.

  Once granted entry, the normal requirements apply in respect of those seeking an extension of stay, or with failure to observe the time limit which render the child's or young person's stay unlawful.

  Metropolitan Police (Ethnic Minorities)
  Mr. Cox
  To ask the Secretary of State for the Home Department how many(a) men and (b) women from ethnic minority backgrounds are officers of the Metropolitan Police Force; and what ranks are held by these officers. [118502]

  Mr. Straw
  The information requested is given in the table, provided by the Commissioner of Police of the Metropolis, and represents the position as at 31 March 2000.

  Total

  Rank

  Male

  Female

  Commander and above

  2

  0

  Chief Superintendent

  2

  0

  Detective Chief Superintendent

  0

  0

  Superintendent

  3

  0

  Detective Superintendent

  0

  0

  Chief Inspector

  4

  0

  Detective Chief Inspector

  3

  1

  Inspector

  16

  1

  Detective Inspector

  5

  0

  Sergeant

  70

  6.69

  Detective Sergeant

  18

  1

  Constable

  615.6

  180.16

  Detective Constable

  75

  12

  Vulnerable Adults
  Mr. Martyn Jones
  To ask the Secretary of State for the Home Department what plans he has to introduce legislation to make police checks on people working with vulnerable adults compulsory; and if he will make a statement. [118738]

  Mr. Charles Clarke
  The Criminal Records Bureau, which is being established under Part V of the Police Act 1997, will provide information from police and criminal records to employers, voluntary organisations and others in positions of responsibility for vulnerable adults. The 1997 Act does not make such checks compulsory. It is for those organisations and others, including departments and authorities with responsibility for employing people in positions of trust, to lay down their particular vetting 378W
  requirements and procedures. This might include legislating for particular sectors where this is considered appropriate.

  Asylum Seekers
  Mr. Hilary Benn
  To ask the Secretary of State for the Home Department what steps he is taking to ensure that asylum seekers in receipt of food vouchers are able to purchase food required for dietary or religious reasons, including halal meat. [118869]

  Mrs. Roche
  Our voucher provider, Sodexho Pass, is required to ensure that vouchers can be exchanged in a wide variety of retail outlets. A number of major retail stores accept the vouchers. In addition, Sodexho Pass have contracted with a large number of independent retailers, including stores supplying specialist dietary or religious needs.

  Mr. Mitchell
  To ask the Secretary of State for the Home Department, pursuant to his answer of 3 April 2000,Official Report, columns 366-68W, concerning applications for asylum, what grounds are required for admission of persons seeking asylum from each applicant state; what grounds have been regarded as acceptable in respect of those granted asylum; when he expects to publish complete figures for 1999; and what representations the Government have made to applicant Governments about such claims. [118865]

  Mrs. Roche
  All asylum applications, regardless of the applicant's nationality, are considered in accordance with the criteria set out in the 1951 United Nations Convention relating to the Status of Refugees. To qualify for asylum a person must be outside his/her country of nationality and have a well-founded fear of persecution for reasons of race, religion, nationality, membership of a particular social group or political opinion. Those who meet these criteria are granted asylum; those who do not meet the requirements of the 1951 Convention may nevertheless be granted exceptional leave to remain in the United Kingdom if there are exceptional compelling humanitarian reasons why they should not be required to leave. Asylum statistics for 1999 are expected to be published in June 2000.

  Ministers and officials regularly take the opportunity to discuss the question of migration to the United Kingdom with the Governments of applicant nations. These discussions include measures which may be taken to prevent the possible abuse of the United Kingdom's immigration legislation and asylum process.

  Mr. Borrow
  To ask the Secretary of State for the Home Department which cities have been judged appropriate for the housing of asylum seekers with HIV infection under the new dispersal arrangements. [118948]

  Mrs. Roche
  We have not selected particular areas for those with HIV infection. Instead, when asylum seekers make an application for asylum they are invited to indicate whether they have any special needs. Consideration is given on a case-by-case basis to those needs both in terms of the accommodation and support package and the proximity to any medical treatment which may be required.
  379W
  Mr. Coleman
  To ask the Secretary of State for the Home Department what the cost is to his Department as of the week commencing 9 April of placing(a) unaccompanied minors, (b) single asylum seekers and (c) asylum seekers' families with children in the cities of (i) Glasgow, (ii) Edinburgh, (iii) Liverpool, (iv) Sheffield and (v) Newcastle; and if he will make a statement. [118967]

  Mrs. Roche
  The information is not available.

  The National Asylum Support Service has contracts with a number of private sector contractors. The information on contract price is commercially confidential. In any event, this information is not disaggregated by area of location.

  The Home Office is not responsible for the costs of unaccompanied minors.

  Animal Experiments
  Mr. Baker
  To ask the Secretary of State for the Home Department how much the Government spent on research and development in relation to methods of conducting(a) animal experiments and (b) non-animal alternatives to vivisection in 1999; and if he will make a statement. [118826]

  Mr.Mike O'Brien
  Most work done on alternatives is neither done by the Government nor with Government money. Nonetheless, each year, the Home Office makes available to the Animal Procedures Committee (APC) a budget for the research into the development and promotion of alternatives which replace animal use, reduce the number of animals used or refine the procedures involved to minimise suffering. Work aimed at improving the environmental conditions in which laboratory animals are kept and transported has also been sponsored. Through national advertising, the APC Research and Alternatives Sub-Committee invites applications for funding of suitable projects. It then selects the most appropriate and monitors progress. Details of completed research for 1998 is published in the Report of the Animal Procedures Committee for 1998.

  The budget available to the Committee in 1998–99 for this purpose was £259,000 (an increase of 42 per cent. from £182,000 the previous year). However, this is not the only money spent by the Government on alternatives: other Departments also fund such work; estimates of spending reach approximately £2 million each year. Industry, too, spends millions of pounds each year on the search for and development of alternatives.

  On an international level, the United Kingdom Government will continue to support the European Centre for the Validation of Alternative Methods (now known as the Unit for the Validation of Biological Testing Methods) through contributions to the European Union. It is the unit's task to monitor and co-ordinate research into alternatives and to develop the processes of validation—that is, the assessment of alternative methods to see whether they are reliable and whether they produce a level of information similar to the animal based tests they are to replace. The lack of progress in some areas is more often due to the limitations of science than to inadequate funding.
  380W
  Mr. Hancock
  To ask the Secretary of State for the Home Department (1) what representations have been made to him on the LD50 tests in the last six months; and if he will make a statement; [118900]

  (2) what representations have been made to him this year on licences for the LD50 tests; if his Department examines alternative methods before granting such licences; and if he will make a statement. [118902]

  Mr. Mike O'Brien
  I refer to the reply I gave my hon. Friend the Member for Halton (Mr. Twigg) on 21 October 1999,Official Report, column 624W and to the replies I gave the hon. Gentleman on 4 april 2000, Official Report, column 437W and on 10 April 2000, Official Report, column 72W.

  No new licences authorising the LD50 test (Organisation for Economic Co-Operation and Development Guide 401) have been issued since 21 October 1999. Representations made on two licences under section 12 of the Animals (Scientific Procedures) Act 1986 were both withdrawn recently and the licence holders have agreed to submit the licences for removal of authority for the LD50 test.

  Mr. Hancock
  To ask the Secretary of State for the Home Department what representations have been made to him on reducing the number of dogs used in regulatory toxicology; and if he will make a statement. [118901]

  Mr. Mike O'Brien
  The Government recognise the particular concern about the use of dogs in scientific procedures. Under the terms of the Animals (Scientific Procedures) Act 1986, animals may only be used where there are no alternatives and where the benefits of the programme outweigh any suffering caused to the animals concerned. In addition, certain species (such as dogs, cats and primates) can only be used where animals of no other species are suitable. Special conditions, tailored to each project, control and minimise any pain or suffering caused.

  I receive correspondence from members of the public who find it particularly difficult to accept that species that are kept as domestic pets or companion animals are also used in procedures. Such animals must be purpose-bred and supplied only by designated establishments. Dogs are only used in about 0.25 per cent. of all procedures. (The results of this work have produced medicines which have cured illness, saved human lives and indeed added to veterinary science which have assisted animal care.)

  I have not received representations direct, but I am aware of recent campaign material on the subject from the British Union for the Abolition of Vivisection.

  Animal Procedures Committee
  Dr. Ladyman
  To ask the Secretary of State for the Home Department (1) what advice(a) he and (b) his officials gave to the Chairman of the Animal Procedures Committee about the resignation of Dr. David Christopher from the Animal Procedures Committee in 1997; and what advice he has given to the Chairman about Gill Langley's membership of the Committee; [118907]

  (2) when he was informed that Gill Langley was the author of the British Union for the Abolition of Vivisection report on Harlan UK; [118905]
  381W
  (3) following the report from Home Office officials on the credibility of the BUAV report on Harlan UK, what assessment he has made of the extent to which Gill Langley met the requirement for members of the Animal Procedures Committee to act in good faith and to the highest standards of impartiality, integrity and objectivity. [118906]

  Mr. Mike O'Brien
  The authorship of the report of the findings of the British Union for the Abolition of Vivisection investigation at Harlan UK Hillcrest (published in June 1999) was not formally notified to the Secretary of State until 29 March 2000. I understand that a member of the Animal Procedures Committee declared an interest when the subject was raised at the Committee's meeting on 9 February. I have no assessment to offer on her role as Committee member: nor has advice about her membership (which is an appointment made by the Secretary of State) been given to the Chairman.

  Dr. Christopher resigned from the Animal Procedures Committee in 1997, after the establishment with which he was associated was investigated by the Home Office. Again, no direction was given by the Secretary of State nor officials to the then Chairman or to that member. As was proper, the Secretariat to the Committee advised the Chairman only on how to handle discussion of the investigation at the relevant meetings of the Committee.

  Immigration Appeals
  Mr. Hinchliffe
  To ask the Secretary of State for the Home Department what the reasons are for the delay in the forwarding of appeals papers by the Immigration and Nationality Directorate to the Appellate Authority, relating to the case of Immigration Reference No. GAN75908, Home Office Reference Number IMP01009547/2(S), P023042/99, in accordance with assurances given to the hon. Member for Wakefield on 23 December 1999; and if he will make a statement. [118839]

  Mrs. Roche
  The Immigration Service sent the appropriate appeals papers for this case to the Appellate Authorities on 22 January 2000. Unfortunately there is no record of receipt. To avoid further delay, duplicate papers were then sent by facsimile on 10 March but, in this form, they were not acceptable to the Appellant Authority. The Immigration and Nationality Directorate will now forward a full bundle to the Authority as a matter of urgency.

  Lord Archer
  Mr. Gordon Prentice
  To ask the Secretary of State for the Home Department how many person-hours the Metropolitan police have committed to date to investigating the allegations that Lord Archer of Weston-Super-Mare had sought to persuade a potential witness to commit perjury in the Daily Star libel case. [118928]

  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis has informed me that up to 12 April, members of the Organised Crime Group have spent approximately 720 hours on the investigation of allegations of perjury made against Lord Archer.

  Crime Fighting Fund (Dartford)
  Dr. Stoate
  To ask the Secretary of State for the Home Department how many of the 5,000 additional police officers which funding from the Crime Fighting Fund will create will be allocated to the Dartford area. [118825]

  Mr. Straw
  I refer my hon. Friend to the statement I made on 9 February 2000,Official Report, columns 172-74W, which set out details of the share of the 5,000 recruits under the Crime Fighting Fund for all forces in England and Wales. My reply to my hon. Friend the Member for Coventry, South (Mr. Cunningham) on 27 March 2000, Official Report, columns 1-3W gave details of additional money for fighting crime and that the three year Crime Fighting Fund would be brought forward with the aim of delivering the recruitment scheme over two years.

  It is for the Chief Constable of Kent to decide how to deploy the additional officers he has been allocated under the Crime Fighting Fund. Power to set establishment levels for each force was removed by the previous Government in 1994, under the Police and Magistrates' Courts Act 1994. It is for chief officers to determine staffing requirements within the overall resources available.

  Police Vehicle Accidents
  Ms Osborne
  To ask the Secretary of State for the Home Department how many people were(a) killed and (b) injured in each of the last five years in accidents involving police vehicles while answering emergency calls. [119206]

  Mr. Charles Clarke
  Figures dealing with responses to emergency calls are not available centrally as statistics collate them together with accidents arising from pursuits. Information has been provided by Her Majesty's Inspectorate of Constabulary, to whom forces submit statistical returns.

  Police vehicle accidents arising from responses to emergency calls and pursuits: England and Wales

  Year

  Injuries

  Fatalities

  1994–95

  1,8301

  211

  1995–96

  2,1691

  211

  1996–97

  1,9302

  152

  1997–98

  2,123

  15

  1998–99

  1,8632

  112

  1 Figures from three forces missing from the total

  2 Figures from one force missing from the total

  Crime (Alcohol and Drugs)
  Mr. Flynn
  To ask the Secretary of State for the Home Department what estimate he has made of the number of crimes committed by those under the influence of(a) alcohol and (b) heroin in each of the last three years. [118890]

  Mr. Charles Clarke
  Statistical data are collected on offences involving alcohol or illegal drugs only, not on offences which may have been committed under the influence of alcohol or illegal drugs. A report published in 1998 on research carried out during 1996 and 1997 on behalf of the Home Office by the University of
  383W
  Cambridge sheds light on the links between alcohol, drugs and crime, Further data collected during 1998 and 1999 are currently being analysed as part of the NEW-ADAM programme for interviewing and drug testing arrestees. It is hoped to publish the next set of full results in the first half of this year.

  The research undertaken so far on drug testing of arrestees, based in five locations, indicates that three-quarters (74 per cent.) of arrestees had recently taken at least one illegal drug and/or alcohol prior to arrest. The proportion of arrestees testing positive for alcohol average 25 per cent., while that for heroin/opiates was 18 per cent. These findings confirm the supposition that offenders tend to be heavy consumers of drugs.

  While this study considerably advances knowledge of drugs-crime links, it will always be difficult to calculate a single percentage figure reflecting precisely what proportion of all crime is alcohol- or drug-related.

  Figures on drug offences in 1998 were published in February 2000 in Home Office Statistical Bulletin Number 3/00 "Drug seizure and offender statistics, United Kingdom, 1998". Some alcohol-related statistics are also published. Figures on breath tests were published in Statistical Bulletin 16/99 "Breath Test Statistics, England and Wales, 1998", motoring offences in Statistical Bulletin 12/99 "Motoring Offences, England and Wales, 1997"; other offences involving alcohol are included in "Criminal Statistics England and Wales 1998" published in March 2000. Copies of all these publications are in the Library.

  Mr. Flynn
  To ask the Secretary of State for the Home Department how much was spent in the past three years in prisons to deal with misuse of(a) illegal drugs and (b) alcohol. [118887]

  Mr. Boateng
  Information is readily available only about spending on elements of the drug strategy which are co-ordinated centrally. The figures are:

  1997–98: £9 million

  1998–99: £9 million and, following the Comprehensive Spending Review,

  1999–2000: £31.5 million.

  In addition, establishments will have funded locally driven drugs and alcohol initiatives, details of which are not collected centrally.

  Probation Service
  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department if his Department will continue with the second phase of the Probation Information Technology programme called Copernicus; and if he will make a statement [119333]

  Mr. Boateng
  Yes. Phase 2 of the Copernicus project is under way.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department (1) how many probation properties have clear legal titles in England and Wales; [119330]

  (2) what is the current value of the Probation Estate in England and Wales. [119328]
  384W
  Mr. Boateng
  The current value of the probation non-hostel estate in England and Wales is estimated to be in the region of £52 million. Further work will be undertaken to verify the legal titles of all premises used by probation services in England and Wales, and until then it is not possible to quantify property holdings that do not have clear titles.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department (1) who he commissioned to develop a Probation Estate Transitional Strategy; what were the principal conclusions of that strategy; and if he will make a statement; [119327]

  (2) what consultations he has had with probation organisations prior to the decision to accept the recommendations in the Probation Estate Transitional Strategy; and if he will make a statement; [119297]

  (3) what representations he has received concerning the Probation Estate Transitional Strategy; and if he will make a statement; [119296]

  (4) if he will publish the cost/benefit analysis for the options contained in the Probation Estate Transitional Strategy; and if he will make a statement; [119295]

  (5) if he will publish the business case for the Probation Estate Transitional Strategy; and if he will make a statement; [119294]

  (6) if he will make a statement on the implications of the Audit Commission studies of the management of the police estate and local authority estate for the Probation Estate Transitional Strategy; and if he will make a statement. [119298]

  Mr. Boateng
  The Probation Estate Transitional Strategy was an internal document produced by officials in the Home Office. It drew on the advice provided by a consultants' report, but was not dependent upon that report. Prior to and during the formulation of the Probation Estate Transitional Strategy, Home Office officials consulted with the principal probation management organisations, Central Probation Council (CPC) and Association of Chief Officers of Probation (ACOP), who are represented through the Probation Estate Advisory Committee. Some 10 representations concerning the Probation Estate Transitional Strategy have been received, from probation committees/boards and from the probation organisations, CPC and ACOP. Forty six probation services also responded to a request for comments on the consultants' area survey reports.

  A business case and cost/benefit analysis are contained in the consultant's report which will be published in due course and a copy placed in the Library.

  In 1999, the Audit Commission published "Action Stations—a management handbook on improving the management of the police estate". Management of the much smaller national probation estate presents a very different set of issues, but as much of the good practice guidance has generic application to all property management, it provides a useful reference source/guide.
  385W
  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department what claims he expects for compensation from companies who are unsuccessful in bidding for the Case Recording and Management System for Probation Service in England and Wales; and if he will make a statement. [119301]

  Mr. Boateng
  Any procurement for Information Technology for a new case recording and management system for probation services in England and Wales will be conducted in accordance with regulations and, therefore, there would be no grounds for compensation.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department if he will authorise a further version of the Case Recording and Management System for the Probation Service in England and Wales to take into account the changes contained in the Criminal Justice and Court Services Bill; and if he will make a statement. [119300]

  Mr. Boateng
  Work is currently under way to consider the implications of the Criminal Justice and Court Services Bill for Probation Service Information Technology systems.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department if he will place in the Library the assessment conducted by Amey Vecta Ltd. on the effectiveness of probation information technology in Merseyside; and if he will make a statement. [119299]

  Mr. Boateng
  This is an independent report commissioned by and prepared for Merseyside Probation Service. Publication is a matter for that Service.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department if existing contracts to install and maintain probation information technology will be renewed; and if he will make a statement. [119430]

  Mr. Boateng
  The existing contracts for supply and maintenance run until the end of 2001. A new procurement will be undertaken for contracts thereafter.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department what plans he has to use the Private Finance Initiative in relation to the probation estate; and if he will make a statement. [119331]

  Mr. Boateng
  No decisions have been taken about the future financing of the probation estate in England and Wales as a whole and a range of options, including Private Finance Initiative (PET), will be considered in due course. Local PFI initiatives are already being considered for probation services in Mid Glamorgan and Avon and Somerset.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department what implications the Probation Estate Transitional Strategy has for staff levels; and if he will make a statement. [119332]

  Mr. Boateng
  The matter is under consideration at present. It will, however, be a matter for the new probation boards to determine their staffing needs.

  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department if the management of the Probation Estate will be the subject of external tenders in line with existing procurement rules; and if he will make a statement. [119329]
  386W
  Mr. Boateng
  It is proposed that management of the probation estate be carried out by a dedicated central team. However, should any external specialised property management services be procured by this management team, then these will of course follow the procurement rules then in force.

LORD CHANCELLOR'S DEPARTMENT

  Libel Awards
  Mr. Gordon Prentice
  To ask the Parliamentary Secretary, Lord Chancellor's Department on how many occasions since 1986 the(a) damages and (b) costs awarded to a successful litigant in a libel action against a national newspaper have exceeded £499,000 in the case of (a) and £699,000 in the case of (b). [118909]

  Jane Kennedy
  This information is not held centrally and could be provided only at a disproportionate cost.

  Community Legal Service (Dartford)
  Dr. Stoate
  To ask the Parliamentary Secretary, Lord Chancellor's Department when a community legal service partnership is due to be created to cover the Dartford area. [118842]

  Mr. Lock
  The South Eastern Legal Services Committee will shortly be consulting on their plan for developing CLS Partnerships in the region. The plan proposes that CLS Partnerships should be rolled out in four phases. Dartford has been listed as one of the areas in the fourth phase. We hope that Dartford will form a CLS Partnership by spring 2001. If it proves possible to form a CLS Partnership in this area earlier, the Lord Chancellor will give serious consideration to supporting any such proposal.

CABINET OFFICE

  Mr. Peter Wyman
  Mr. Jack
  To ask the Minister for the Cabinet Office in what(a) paid and (b) unpaid capacity Mr. Peter Wyman of PricewaterhouseCoopers has assisted Her Majesty's Government during the period 1987 to 2000. [117039]

  Mr. Stringer
  The names of the contract firms who carry out work for the Government would appear in official records, but the names of the officials from that firm would not necessarily be recorded. Mr. Wyman may, therefore, have carried out work for the Government on behalf of PricewaterhouseCoopers. There is no way of identifying the details without incurring disproportionate cost.

  Correspondence
  Mr. Watts
  To ask the Minister for the Cabinet Office if she will publish the latest figures showing the volume of correspondence received by Ministers and agency chief executives from hon. Members in 1999, the targets set for the replies and the replies sent within target times. [119663]
  387W
  Marjorie Mowlam
  The 1999 correspondence figures are set out in the table. The table also sets out comparative figures for 1998, first published on 11 June 1999,Official Report, columns 403-05W. Members' attention is drawn

  Correspondence from MPs to Ministers and Agency Chief Executives

  1998

  1999

  Department or Agency

  Target set for reply (working days)

  Number of letters received

  Percentage of replies within target

  Target set for reply (working days)

  Number of letters received

  Percentage of replies within target

  Ministry of Agriculture, Fisheries and Food

  15

  8,058

  57

  15

  17,021

  60

  Cabinet Office

  15

  292

  96

  15

  552

  2685

  Crown Prosecution Service

  15

  66

  88

  15

  230

  93

  Department for Culture, Media and Sport

  18

  3,387

  86

  18

  5,502

  90

  HM Customs and Excise

  18

  4,439

  16

  18

  33,009

  38

  Ministry of Defence

  15

  5,619

  53

  15

  45,488

  66

  Armed Forces Personnel Administration Agency

  —

  —

  —

  15

  17

  59

  Army Personnel Centre

  15

  43

  96

  15

  42

  84

  Army Training and Recruiting Agency

  —

  —

  —

  15

  11

  82

  Defence Clothing and Textiles Agency

  —

  —

  —

  15

  15

  100

  DERA and Defence Diversification Agency

  15

  42

  79

  15

  35

  89

  Meteorological Office

  —

  —

  —

  15

  12

  83

  RAF Personnel Management Agency

  —

  —

  —

  15

  13

  100

  Department for International Development

  15

  2,613

  91

  15

  2,750

  93

  Department for Education and Employment

  15

  19,766

  70

  15

  21,196

  75

  Employment Service

  15

  630

  92

  15

  635

  98

  Department of the Environment, Transport and the Regions

  15

  38,059

  51

  15

  515,768

  45

  Driving Standards Agency

  15

  108

  85

  15

  124

  68

  DVLA

  7

  453

  99

  7

  855

  98

  Highways Agency

  15

  480

  83

  15

  357

  79

  Marine and Coastguard Agency

  15

  21

  100

  15

  22

  91

  Planning Inspectorate

  8

  286

  87

  8

  6204

  92

  Vehicle Inspectorate

  15

  20

  100

  15

  18

  94

  Foreign and Commonwealth Office

  7

  10,040

  85

  5

  711,921

  74

  15

  9,453

  47

  15

  89,482

  37

  Department of Health

  20

  10,648

  61

  20

  18,346

  47

  NHS Pensions Agency

  15

  42

  74

  15

  51

  84

  Medicines Control Agency

  10

  37

  73

  10

  70

  68

  Home Office

  15

  17,875

  32

  15

  916,826

  1145

  20

  875

  52

  20

  10877

  79

  Fire Service College

  —

  —

  —

  7

  10

  100

  HM Prison Service

  20

  2,400

  69

  20

  2,514

  73

  UK Passport Agency

  10

  181

  96

  10

  703

  35

  Inland Revenue

  18

  6,305

  20

  18

  3,125,872

  49

  23

  193

  100

  23

  13368

  60

  Valuation Office

  23

  47

  36

  23

  24

  81

  Legal Secretariat to the Law Officers

  15

  291

  80

  15

  14223

  95

  Lord Chancellor's Department

  20

  2,672

  78

  20

  152,038

  82

  Court Service

  20

  1,230

  99

  20

  16898

  79

  HM Land Registry

  20

  36

  100

  20

  1653

  91

  Public Trust Office

  15

  63

  98

  15

  1642

  95

  Northern Ireland Office and Northern Ireland Departments17

  10

  2,001

  70

  10

  171,897

  78

  Child Support Agency

  10

  104

  87

  10

  1887

  49

  Compensation Agency

  7

  25

  100

  7

  23

  100

  Environment and Heritage Service

  —

  —

  —

  10

  14

  100

  Northern Ireland Prison Service

  10

  35

  66

  10

  37

  92

  Planning Service

  10

  62

  74

  10

  64

  75

  Rate Collection Agency

  5

  10

  90

  10

  20

  90

  Rivers Agency

  15

  32

  97

  15

  31

  84

  Road Service

  10

  35

  97

  10

  26

  69

  Social Security Agency

  10

  70

  93

  10

  116

  97

  388W
  to the footnotes which accompany the table and which provide general background information on how the figures are compiled.
  389W

  Correspondence from MPs to Ministers and Agency Chief Executives

  1998

  1999

  Department or Agency

  Target set for reply (working days)

  Number of letters received

  Percentage of replies within target

  Target set for reply (working days)

  Number of letters received

  Percentage of replies within target

  Water Service

  10

  48

  85

  10

  36

  97

  Office for National Statistics

  10

  679

  88

  10

  19275

  98

  President of the Council's Office

  15

  230

  88

  15

  151

  81

  The Scotland Office20

  —

  —

  —

  15

  20105

  72

  Department of Social Security

  20

  19,330

  31

  20

  16,555

  66

  Benefits Agency

  20

  2,797

  56

  20

  2,033

  70

  Child Support Agency

  20

  8,365

  100

  18

  5,661

  98

  War Pensions Agency

  20

  529

  98

  20

  477

  100

  Department of Trade and Industry

  10

  22,193

  50

  10

  320,889

  50

  Companies House

  10

  38

  100

  10

  19

  100

  Insolvency Service

  10

  19

  100

  10

  22

  86

  Patent Office

  —

  —

  —

  10

  21308

  88

  Radio Communications Agency

  10

  15

  100

  15

  2239

  97

  HM Treasury

  15

  7,086

  37

  15

  35,322

  44

  Treasury Solicitor's Department

  15

  44

  98

  2310

  2440

  100

  Wales Office25

  —

  —

  —

  15

  2561

  64

  Notes on 1999 figures27

  1 Includes correspondence on the Intervention Board.

  2 Letters addressed to the Law Officers but subsequently replied to by the Director of Public Prosecutions (DPP). In addition, the DPP received 228 letters direct from MPs in 1999 of which 94 per cent. were replied to within 15 working days.

  3 Includes all Ministerial replies, not only replied to letters from MPs.

  4 Includes letters from Peers and MEPs. Also includes 387 letters where Agency Chief Executives replied on Ministers' behalf.

  5 This figure includes only correspondence received between 1 April 1999 and 31 December 1999. 1998 and 1999 figures are not directly comparable, as a new data system now provides figures relating to letters received from MPs only.

  6 Includes 49 cases relating to Wales.

  7 General correspondence (excluding correspondence on migration and visa matters).

  8 Correspondence on migration and visa matters only.

  9 15 working days is the target for all correspondence other than correspondence on Prison Service issues.

  10 20 working days is the target for correspondence on Prison Service issues and takes account of particular geographical circumstances. The target is the same whether replies are sent by Ministers or the Director General.

  11 The Home Office's overall performance was badly affected by the Immigration and Nationality Directorate's operational difficulties. Encouragingly, the rest of the Home Office achieved 72 per cent. of replies within target.

  12 Head Office figures.

  13 Local Office and "delegated" figures (where local officials have replied direct to MPs).

  14 This figure excludes letters which were subsequently replied to by the Director of Public Prosecutions (DPP).

  15 Excludes letters from MPs to Ministers where Agency Chief Executives have replied on Ministers' behalf.

  16 Includes letters from MPs to Ministers where the Agency Chief Executive has replied on Ministers' behalf.

  17 Figures for Northern Ireland Departments relate to the period 1 January 1999 to 2 December 1999, the date of devolution.

  18 In addition, the Child Support Agency received 308 letters on GB cases direct from MPs in 1999 of which 49 per cent. were replied to within the 20 working day target.

  19 Includes 214 letters where the Chief Executive replied on Ministers' behalf.

  20 The Scotland Office came into existence on 1 July 1999. Figures relate to the period 1 July 1999–31 December 1999. Figures do not include interim replies.

  21 Includes 301 letters where the Chief Executive replied on Ministers' behalf.

  22 Includes 16 letters where the Chief Executive replied on Ministers' behalf.

  23 The Treasury Solicitor's Department reduced its target in May 1999 from 15 working days to 10 working days.

  24 Includes 20 letters where the Chief Executive replied on Ministers' behalf.

  25 The Wales Office came into existence on 1 July 1999. Figures relate only to the period 1 October 1999–31 December 1999.

  26 The Cabinet Office performance was badly affected by the need for wide consultation on correspondence concerning "external" issues. On issues relating to Cabinet Office domestic issues, the Cabinet Office replied to 97 per cent. of letters within target.

  27 The 1998 figures are taken from the 11 June 1999, Official Report, columns 403-05W. Please also refer to the notes given with that reply. Departments and Agencies which received a total of between one and ten letters from MPs during 1999 are not shown in this table.

  Public Sector Regulation
  Mr. Watts
  To ask the Minister for the Cabinet Office what steps she has taken to improve public sector regulation. [119662]

  Marjorie Mowlam
  The Government are concerned about the amount of red tape and bureaucratic procedures that are affecting the delivery of public services to the
  390W
  citizen. I recently established a team within the Regulatory Impact Unit in the Cabinet Office to examine and review the red tape and bureaucracy that exists within the Public Sector and to recommend ways of reducing them. I asked the Public Sector Team to produce an initial report on police paperwork, in conjunction with the Government Departments with responsibility for the criminal justice system.
  391W
  I am delighted to publish today their report called "Making a difference: Reducing Police Paperwork", copies of which I have placed in the Libraries of the House. The report recommends a number of deregulation measures on police paperwork, which my ministerial colleagues and I hope will free up police time, enabling them to deliver their front line services more effectively.

  The Public Sector Team will continue to work towards making regulation in the criminal justice system more efficient and effective, and will, in due course, also turn their attention to regulation affecting health, schools and local authority issues.

WALES

  National Lottery
  Mr. Wigley
  To ask the Secretary of State for Wales how much money was spent in Wales by the National Lottery on each of the sectors of activity which it supported during 1999. [118341]

  Kate Hoey
  I have been asked to reply.

  According to the distributing bodies the amount of National Lottery money awarded to grant recipients based in Wales during 1999 was:

  £

  Good cause

  Amount

  The Arts

  14,260,264

  Charities

  26,611,341

  Heritage

  17,767,408

  Millennium projects

  97,712

  Sport

  7,329,822

  Education, Health and the Environment

  632,158

  Total

  66,698,705

FOREIGN AND COMMONWEALTH AFFAIRS

  European Defence
  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) what recent discussions he has had with his European Union counterparts regarding(a) the missile threat to Europe, (b) the US Government preparations to pursue National Missile Defence, (c) US-Russian discussions on ABM treaty modifications and (d) continuing NATO discussions on theatre missile defence; [119169]

  (2) what recent representations he has made to his European Union counterparts regarding the threat to Europe from weapons of mass destruction. [119172]

  Mr. Vaz
  These issues are the subject of regular discussions in NATO. European Union partners which are also members of the Alliance take part in the discussions. These issues also arise frequently in our bilateral contacts with EU partners. Proliferation issues are regularly discussed in the appropriate European Union Common Foreign and Security Policy forum.
  392W
  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the progress made in setting up modalities for full consultation, co-operation and transparency between the EU and NATO. [119174]

  Mr. Vaz
  The United Kingdom is fully involved in the continuing discussions to ensure the best means of ensuring full mutual consultation, co-operation and transparency between the EU and NATO.

  The Presidency will report on progress to the European Council at Feira on 19-20 June.

  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) what recent representations he has made to the US administration on further development of the European Union's Common Security and Defence Policy; [119175]

  (2) what recent representations he has received from the US administration on the development of the European Union's Common Security and Defence Policy. [119177]

  Mr. Vaz
  The Secretary of State visited Washington in February, and discussed European Defence with Mrs. Albright. The Defence Secretary discussed European Defence with his US opposite number in January. There are other frequent Ministerial and official contacts.

  The US Administration remains supportive of the initiative: in recent Senate testimony, Assistant Secretary of State Marc Grossman commented that:
  ESDI will be good for the Alliance, good for US interests and good for the US-European relationship.

  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) if he will make a statement on the progress made by the EU in setting up consultation and co-operation links between the EU and(a) NATO's non-EU members, (b) other countries who are candidates for accession to the EU and (c) other prospective partners in EU-led crisis management; [119178]

  (2) what recent discussions the EU has had with (a) non-EU European NATO members and (b) other countries who are candidates to the EU on establishing appropriate structures for dialogue and information on issues related to security and defence policy and crisis management. [119173]

  Mr. Vaz
  The UK, other EU members and the Presidency have regular bilateral and multilateral discussions with the non-EU European NATO members and EU candidates on this subject.

  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with other Government Departments on(a) the missile threat to Europe and (b) the US Government preparations to pursue National Missile Defence. [119171]

  Mr. Vaz
  We are in continuous contact with all other Government Departments with an interest in these issues.

  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received from(a) the Czech Republic, (b) Hungary and (c) Poland on the development of the European Union's Common Security and Defence Policy. [119176]
  393W
  Mr. Vaz
  The Secretary of State met the Foreign Minister6/21/2006s of Poland, Hungary and the Czech Republic on 29 February. I met their deputies on 31 March-1 April. The future role of the non-EU Allies in EU crisis management operations was discussed in detail on both occasions.

  Gibraltar
  Mr. John D. Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs on what date the European Court of Human Rights issued its decision on the right of the people of Gibraltar to vote in European Parliament elections; how he plans to comply with the decision of the court; and if he will make a statement. [119018]

  Mr. Vaz
  The judgment was given on 18 February 1999. Within a month the Government tabled an amendment to the 1976 EC Act on Direct Elections in order to extend the European franchise to Gibraltar. We have continued to press for that, and will spare no effort to secure Gibraltar's enfranchisement.

  US National Missile Defence System
  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received from the US Administration on the US Government's preparations to pursue National Missile Defence. [119170]

  Mr. Vaz
  I refer the right hon. Gentleman to the answer I gave to my hon. Friend the Member for Milton Keynes South-West (Dr. Starkey) and the hon. Member for Truro and St. Austell (Mr. Taylor) on 4 April 2000,Official Report, columns 408-09W. We remain in regular dialogue with the United States Administration.

  EU Charter of Fundamental Rights
  Mr. Spring
  To ask the Secretary of State for Foreign and Commonwealth Affairs what the Government's policy is on incorporating the Charter of Fundamental Rights into the Treaty. [119306]

  Mr. Vaz
  I refer the hon. Member to the reply I gave the right hon. Member for Wokingham (Mr. Redwood) on 10 April 2000,Official Report, column 78W.

  Bosnia
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many suspected war criminals have been apprehended by British forces in Bosnia. [117902]

  Mr. Hain
  British SFOR troops have successfully detained nine war crimes suspects indicted by the International Criminal Tribunal for the former Yugoslavia. They have also been involved in the arrest of a further two suspects with other SFOR forces. An indictee was also shot dead by British SFOR personnel acting in self-defence during a detention operation.

  International Criminal Court
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to place 394W
  the ratification of the International Criminal Court on the agenda at the Copenhagen Plus Five Conference in June. [118970]

  Mr. Hain
  The UK regularly encourages support for the International Criminal Court (ICC) at appropriate multilateral fora. The Copenhagen Plus Five Conference will review implementation of the Copenhagen Declaration and Programme of Action which resulted from the World Summit for Social Development in 1995, and consider further initiatives. As ratification of the ICC falls outside the issues covered at Copenhagen, it is not expected to feature on the Conference agenda.

  Colombia
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with his US counterparts concerning financial assistance for Plan Colombia. [118973]

  Mr. Battle
  UK officials keep in close contact with their US counterparts on all aspects of foreign affairs, including the peace process in Colombia. During President Pastrana's visit to the UK on 13 April, we discussed ways in which the international community might assist. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs suggested the UK could take the lead in hosting an international gathering of officials and technical experts, including those from North America and Europe, to discuss the details of Plan Colombia in the next two months.

  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the Colombian Government concerning UK assistance for(a) social and economic aspects of Plan Colombia and (b) military assistance for Plan Colombia. [118972]

  Mr. Battle
  We had a friendly and productive discussion with President Pastrana on 13 April about all aspects of Plan Colombia. We discussed the ways in which the international community could be of assistance, and focused in particular on the need for alternative development, the fight against drugs, and institution building.

  Joint Environmental Markets Unit
  Mr. Colman
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to the answer of 6 December 1999,Official Report, column 539W, on the Joint Environmental Markets Unit, when he will implement his commitment to second staff from his Department to work for the Unit. [116069]

  Mr. Hain
  The joint FCO/DTI British Trade International has identified the environment sector as a priority area of its trade promotion work, and has close links with the DTI/DETR Joint Environmental Markets Unit (JEMU).

  In addition, the FCO is in the process of enhancing its interchange programme with other Government departments. As part of this, we hope to institute regular secondments to JEMU in due course.

  Abdullah Ocalan
  Mr. Cox
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the Turkish Government regarding the death sentence imposed on Abdullah Ocalan. [118831]

  Mr. Vaz
  I met the Turkish Foreign Minister during his visit to the UK in September 1999 and expressed our opposition to capital punishment under any circumstances. The Minister of State, my hon. Friend the Member for Neath (Mr. Hain), repeated this message to the Turkish Ambassador in December 1999. In the regular meetings between British and Turkish officials, we consistently make clear to the Turkish authorities our opposition to the death penalty as a matter of principle.

  The UK also supported the statements by the EU Presidency on 29 June and 25 November 1999, which confirmed our opposition to the death penalty imposed upon Mr. Ocalan. Our general position on capital punishment was most recently restated at the EU-Turkey Association Council on 11 April by the EU Presidency.

  We welcome the Turkish Government's decision in January to await the outcome of Mr. Ocalan's appeal to the ECHR before taking further action and have urged them to maintain the moratorium on capital punishment which has been in place for 15 years.

  Visa Applicants (Islamabad)
  Mr. Nigel Griffiths
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps his Department is taking to provide shade and water for visa applicants queuing at the British High Commission in Islamabad; and if he will extend the system used in respect of visa applicants at the Deputy High Commission in Karachi to Islamabad. [118915]

  Mr. Vaz
  Covered accommodation for some 400 visa applicants, with drinking water and toilet facilities, is already provided inside the British High Commission at Islamabad. Similar accommodation and facilities are provided in Karachi, in a more modern building.

  The land outside the compound at Islamabad belongs to the Pakistani authorities. The High Commission has repeatedly asked their permission to construct facilities which would provide shade for visa applicants. No response has been received.

  Zimbabwe
  Mr. Gordon Prentice
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many British passport holders are resident in Zimbabwe; and how many other residents of Zimbabwe could claim a right of abode in the UK. [118895]

  Mr. Hain
  We cannot provide exact figures of the number of British passport holders resident in Zimbabwe because British nationals are not obliged to register with our High Commission in Harare. As of 12 April there are 9,000 British nationals and some 5,500 dual British/Zimbabwe nationals registered with the High Commission. Actual numbers will be higher.
  396W
  Any Commonwealth citizen with a UK born parent or married to a British citizen may qualify for right of abode in the UK. For the reasons given above it is not possible to put a figure on how many residents of Zimbabwe may be eligible to claim.

  Algeria
  Dr. Starkey
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he was first informed of the MI5 report about the involvement of the Algerian Government, or part of it, in serious human rights violations committed in Algeria. [118926]

  Mr. Hain
  It has been the policy of successive Governments not to comment on the operations of the security and intelligence agencies. In line with this policy the Government do not reveal what information is held by the Security Service.

  Dr. Starkey
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the Algerian Government, and when, concerning their obligations under international law to undertake full and open investigations of human rights abuses. [118927]

  Mr. Hain
  I raised this issue personally with the Algerian Prime Minister during my visit to Algiers on 12 April.

  Dr. Starkey
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will ask the Algerian Government to invite the UN Working Group on Enforced and Involuntary Disappearance to visit Algeria, with particular reference to the treatment of women relatives of the disappeared in Algeria during recent demonstrations. [118937]

  Mr. Hain
  I welcome the recent announcement by the Algerian authorities that international NGOs, including Amnesty International, have been given dates to visit. We continue to press the Algerian government to allow access to UN experts. I raised this issue personally with the Algerian Prime Minister during my visit to Algiers on 12 April.

  Iran
  Mr. Clappison
  To ask the Secretary of State for Foreign and Commonwealth Affairs further to the oral answer to the hon. Member for Hendon (Mr. Dismore) of 11 April 2000,Official Report, column 178, what steps the Government plan to take to monitor the trial and other legal proceedings in respect of the 13 members of the Jewish community from Shiraz; and if he will make a statement. [118986]

  Mr. Hain
  Since my answer to the House on 11 April we are concerned at reports that trial Judge has decided to hold the trial in camera, and have made our concerns known to the Iranian authorities. The pattern of developments is not entirely clear, but our Embassy is following events closely. We note that defendants have now had the opportunity to appoint their own counsel, and that all those detained have done so.

  The first session of the trial took place on 13 April. We understand that the trial has been adjourned until 1 May at the request of the defence lawyers to allow them to prepare their defence. We and our EU partners will

  397W
  continue to monitor events carefully. We will be paying especially close attention to defence counsel's view of proceedings.

  Iraq
  Ann Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has received from Iraqi opposition groups concerning sanctions against Iraq. [118944]

  Mr. Hain
  During my regular meetings with representatives of the Iraqi opposition, I receive strong support for the Government's policy on Iraq and sanctions. The Iraqi National Congress, perhaps the most significant opposition grouping outside Iraq, has made quite clear that, like us, it holds the Iraqi regime responsible for the suffering of the people, and wishes to ensure that Saddam Hussein can never again attack his own people or his neighbours with weapons of mass destruction.

  Peru
  Ann Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will raise the issue of alleged electoral fraud in Peru with the Peruvian Government. [118945]

  Mr. Battle
  The UK has played a leading role in calling for higher standards in the electoral process in Peru. We have financed two reports this year which have highlighted the deficiencies, and copies of these reports have been sent to the Peruvian Government as well as being circulated widely internationally. We were instrumental in organising a critical EU statement on 7 April in advance of the vote. On 12 April, after the vote, I issued a statement which was delivered through our Embassy in Lima to the Peruvian President, Prime Minister and Foreign Minister. In it I suggested a second round was both desirable and sensible in the light of widespread concerns, including that of the two British observers, my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) and the hon. Member for East Londonderry (Mr. Ross).

  Since the declaration of a second round, I have issued a further statement (on 13 April) expressing the hope that the next round will be held in conditions that are free, fair and transparent. We shall be working with our EU colleagues to impress on the Peruvian authorities the need for them to conform to international standards.

  Mr. Tony Lloyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of reports of alleged malpractice during the first-round ballot of the Peruvian Presidential election; and if he will make a statement. [119428]

  Mr. Battle
  Further to the answer I gave above to my hon. Friend the Member for Cynon Valley (Ann Clwyd) (UIN 118945), I remain concerned at allegations of irregularities during the Peruvian election campaign and on polling day itself on 9 April. I issued a statement on 13 April calling for the second round of voting to be held under conditions that were democratic, transparent and free from the irregularities of the first round. We shall be working with our EU colleagues to impress on the Peruvian authorities the need for them to conform to international standards in their electoral process.

SOCIAL SECURITY

  Minimum Income Guarantee
  Mr. Webb
  To ask the Secretary of State for Social Security what is his latest estimate of the number of pensioners with incomes below the minimum income guarantee who are not entitled to the minimum income guarantee because of savings in excess of the upper capital limit. [108451]

  Mr. Bayley
  [holding answer 4 February 2000]: The last take-up estimates, covering 1997–98, were published in September 1999. Estimates of numbers of pensioners with incomes below the minimum income guarantee who are excluded for reasons of excess capital are not yet available.

  Mr. Flynn
  To ask the Secretary of State for Social Security how much higher the income of(a) a single pensioner and (b) a pensioner couple not receiving income support would be in the year 2000–01 if the basic retirement pension had been uprated in (i) 1998, (ii) 1999 and (iii) 2000 in line with average earnings. [117589]

  Mr. Rooker
  The information is in the table.

  While our priority is to target help to those pensioners in greatest need through the Minimum Income Guarantee (MIG), we have provided significant help to all pensioners. During this Parliament, we will have spent nearly £1.9 billion more on Winter Fuel Payments and the MIG than on earnings uprating the basic State Pension. Clearly, given constraints on resources, if we had uprated the basic pension in line with earnings, we would not have been able to provide the level of help we have, particularly to the poorest pensioners. Also earnings uprating the basic State Pension does not help them as the increase would be offset by a pound-for-pound reduction in the MIG they received. All these aspects need to be taken into account when using figures in the table.

  £.p.

  (a)

  (b)

  ((a)-(b))

  Pensioner status

  Year

  Actual rate payable

  Rate payable if uprated in line with average earnings

  Weekly difference

  Single Pensioner

  1998

  64.70

  65.00

  0.30

  1999

  66.75

  68.20

  1.45

  2000

  67.50

  71.25

  3.75

  Pensioner Couple

  1998

  103.40

  103.90

  0.50

  1999

  106.70

  109.00

  2.30

  2000

  107.90

  113.90

  6.00

  Notes:

  1. Average Earnings Index Whole Economy (Non-seasonally adjusted), as published by the Office for National Statistics.

  2. Figures have been rounded to the nearest 5 pence at each uprating.

  Dr. Stoate
  To ask the Secretary of State for Social Security how many pensioners in Dartford will benefit from the recent increase in the minimum income guarantee. [118824]

  Mr. Bayley
  Around 2,000 pensioners in the parliamentary constituency of Dartford are receiving their minimum income guarantee paid through Income Support, and have benefited from the recent increase in benefit rates.

  SERPS
  Mr. Field
  To ask the Secretary of State for Social Security if he will estimate the cost of(a) 5 to 10 per cent., (b) 10 to 15 per cent., (c) 15 to 20 per cent., (d) 20 to 25 per cent., (e) 25 to 30 per cent., (f) 30 to 35 per cent., (g) 35 to 40 per cent., (h) 40 to 45 per cent., (i) 45 to 50 per cent., (j) 50 to 55 per cent., (k) 55 to 60 per cent. and (l) 60 to 65 per cent. of those currently in SERPS producing satisfactory evidence that they have been misled over surviving spouses' entitlement. [117538]

  Mr. Rooker
  The cost of any given percentage of people currently in SERPS producing satisfactory evidence that they have been misled over surviving spouses entitlement will depend on which individuals are included and how much SERPS they have accrued.

  Fraud (Brentwood)
  Mr. Pickles
  To ask the Secretary of State for Social Security what assessment he has made of the effectiveness of the procedures of the Borough of Brentwood District Council in preventing and detecting fraud. [118601]

  Angela Eagle
  We are aware that Brentwood Borough Council is operating the Royal Mail "do not redirect" scheme, is using the Housing Benefit Matching Service and has a Remote Access Terminal installed. It has also applied to this Department for Electronic Transfer of Data which will be installed during the summer.

  The authority exceeded its weekly benefit savings threshold by 82 per cent. in 1998–99 resulting in additional subsidy of around £16,000.

  However, the Borough has expressed no interest in implementing the Verification Framework and we have no record that they prosecuted or referred any cases of fraud for prosecution between April 1996 and April 1999.

  Housing Benefit (Brentwood)
  Mr. Pickles
  To ask the Secretary of State for Social Security (1) if he will make a statement on the level of co-operation between the Borough of Brentwood District Council and the Benefits Agency in relation to housing benefit; [118600]

  (2) how many complaints in the last 12 months the Benefits Agency has made to the Borough of Brentwood District Council about lack of co-operation on housing benefit. [118602]

  Angela Eagle
  This is a matter for Peter Mathison, the Chief Executive of the Benefits Agency. He will write to the hon. Member.

  Letter from Peter Mathison to Mr. Eric Pickles, dated 14 April 2000:
  The Secretary of State has asked me to reply to your recent Parliamentary Questions asking, if he will make a statement on the level of co-operation between the Borough of Brentwood District Council and the Benefits Agency (BA), in relation to housing benefit, and how many complaints in the last 12 months the BA has made to the Borough of Brentwood District Council about lack of co-operation on housing benefit.
  The BA and Brentwood Borough Council have a joint Service Level Agreement which covers the service and performance requirements expected of both parties in connection with Housing Benefit and Council Tax Benefit. Standards are measured and reviewed as necessary.
  400W
  We have quarterly benefit liaison meetings to discuss any initiatives and issues that arise. Both the Local Authority and BA are satisfied with the level of co-operation.
  In the last 12 months there have not been any direct complaints from the BA to Brentwood Council with regard to lack of co-operation on housing benefit.
  I hope this is helpful.

  Benefits (Crosby)
  Mrs. Curtis-Thomas
  To ask the Secretary of State for Social Security how many people under the age of 65 received an Attendance Allowance in Crosby constituency in each of the years from 1994 to 1999. [118680]

  Angela Eagle
  [holding answer 11 April 2000]: The administration of Attendance Allowance is a matter for Peter Mathison, the Chief Executive of the Benefits Agency. He will write to my hon. Friend.

  Letter from Peter Mathison to Mrs. Claire Curtis-Thomas, dated 14 April 2000:
  The Secretary of State for Social Security has asked me to reply to your recent Parliamentary Question asking, how many people under the age of 65 received an Attendance Allowance (AA) in Crosby constituency in each of the years from 1994 to 1999.
  Since the introduction of Disability Living Allowance (DLA) on 1st April 1992, persons under the age of 65 have not been able to claim AA. Customers who were under the age of 65 and in receipt of AA had their benefit converted to DLA.
  Details of DLA for 1998 and 1999 are set out in the table below. Prior to 1998 figures were based on a 5% sample and the numbers for Crosby constituency are too small to be statistically reliable. Since 1998 the figures are based on a 100% sample.

  Year

  DLA recipients

  1998

  2,172

  1999

  2,158

  I hope this is helpful.

  Asbestos-related Diseases
  Mr. Worthington
  To ask the Secretary of State for Social Security, pursuant to his answer of 28 February 2000,Official Report, column 173W, how many CT scans Medical Services has commissioned in the case of asbestos-related diseases in the past three years. [119005]

  Mr. Bayley
  Medical Services have commissioned no CT scans in the past three years in the case of claims for an Industrial Injuries Scheme Benefit for an asbestos-related disease.

  Benefit Review Interviews
  Mr. Field
  To ask the Secretary of State for Social Security if the Department or its Agencies record whether claimants refuse to be interviewed for area benefit review interviews. [119211]

  Mr. Rooker
  There are no formal records for the information requested. However, the records that are available show that only a very small number of people refuse to be interviewed.

  Benefit Payments
  Dr. Lynne Jones
  To ask the Secretary of State for Social Security what arrangements he will put in place to allow benefit recipients without bank accounts to be paid in cash over the counter at post offices once automated credit transfer is introduced. [119707]

  Mr. Rooker
  The vast majority of benefit recipients, over 80 per cent., already have access to a bank account.

  The Post Office is working with banks and the Department to make a range of bank and other simple accounts available to everyone, and to make sure that getting cash from these accounts will he available to customers from local post offices.

  However, we recognise that there will be some people who we will be unable to pay by automated credit transfer, and some urgent payments that cannot be made this way. For these, we are considering what alternative simple electronic money transmission system, which could also be accessed at post offices, may be commercially available.

  Mr. Lilley
  To ask the Secretary of State for Social Security if he will estimate the cost of paying all relevant pensions, currently paid via automated credit transfer four weeks in arrears, on a weekly basis in the year the transition was made. [119422]

  Mr. Rooker
  There would be no overall increase in benefit expenditure in moving to weekly payments.

  However, there could be a one-off cash flow effect, with expenditure up to the value of £555 million1 being brought forward to an earlier tax year because of more frequent payments.

  The Department would also incur some small additional banking costs as a result of more frequent payments.
  1 This figure assumes that all pensioners and widows, whose pensions are currently paid into a UK bank account, take up the option and that the transition was made in a single year, neither of which may necessarily be the case.

  Pensioners
  Mr. Jack
  To ask the Secretary of State for Social Security how much of his Department's expenditure was on people of retirement age and above; and what proportion of GDP this represented, in each year from 1992 to 2000. [118920]

  Mr. Rooker
  [holding answer 14 April 2000]: The information is in the table.

  Expenditure on people over 60 as a percentage of all Social Security benefit expenditure and as a percentage of GDP

  Expenditure as a percentage of:

  Year

  Expenditure (cash £ million)

  All expenditure

  GDP

  1991–92

  31,772

  47.85

  5.39

  1992–93

  34,145

  45.34

  5.57

  1993–94

  36.443

  44.21

  5.63

  1994–95

  37,269

  43.92

  5.43

  1995–96

  38,681

  43.61

  5.36

  1996–97

  40,808

  44.25

  5.33

  402W

  Expenditure on people over 60 as a percentage of all Social Security benefit expenditure and as a percentage of GDP

  Expenditure as a percentage of:

  Year

  Expenditure (cash £ million)

  All expenditure

  GDP

  1997–98

  42,577

  45.61

  5.23

  1998–99

  44,502

  46.56

  5.19

  1999–2000

  47,640

  47.97

  5.29

  2000–01

  49,962

  49.27

  5.28

  Notes:

  1. Expenditure figures are consistent with Table 3 of the 2000 Departmental Report (Cm4614) and earlier equivalents.

  2. Social Security benefit expenditure includes non-DSS funded expenditure on Housing Benefit and Council Tax Benefit.

  Mr. Flynn
  To ask the Secretary of State for Social Security what was the cost of the recent research and pilot projects carried out to ascertain the reasons for pensioners not claiming Income Support and the most effective ways of promoting take-up. [118884]

  Mr. Bayley
  The Department carried out an extensive programme of research including surveys and qualitative work.

  The cost of the research to ascertain the reasons for pensioners not claiming Income Support, and to identify possible ways to increase take-up was £325,000.

  The costs of running the pilots both at District Office level and centrally were absorbed within existing work loads and no separate costs for this activity have been identified. The evaluation of the pilots, which included analysis of administrative data and a follow-up survey cost £278,063.

  Asylum Seekers
  Mr. Evans
  To ask the Secretary of State for Social Security how much his Department spent (i) directly and (ii) indirectly on asylum seekers in(a) 1995, (b) 1996, (c) 1997, (d) 1998 and (e) 1999; and what estimate has been made of expenditure in the year 2000. [119489]

  Mr. Bayley
  The Home Office will be responding to this question on behalf of Government as a whole.

  Disability Living Allowance
  Mr. Willetts
  To ask the Secretary of State for Social Security if he will estimate the cost of extending the entitlement for new claims to Disability Living Allowance to all those aged below 70 years. [119246]

  Mr. Bayley
  The estimated programme cost would be £300 million in 2001–02, rising to £350 million in 2002–03 and £400 million in 2003–04.

  Invalid Care Allowance
  Mr. Burstow
  To ask the Secretary of State for Social Security when he expects to conclude his review of Invalid Care Allowance. [119480]
  403W
  Mr. Bayley
  We are committed to keeping financial support for carers under review and we are continuing to do this. This issue is being considered in the context of the follow-up work to the National Carers' Strategy, and our response to The Royal Commission on Long Term Care, and the nature and timing of any conclusions will depend on progress on these wider activities.

  Inter-Ministerial Group for Older People
  Mrs. Curtis-Thomas
  To ask the Secretary of State for Social Security if he will list the members of the Inter-Ministerial Group for Older People; when it was established; how often it has met and when; what its terms of reference are; what subjects have been considered by it; what reports it has produced; what third parties it has consulted; and what the outcome was of those discussions. [119533]

  Mr. Rooker
  The Inter-Ministerial Group for Older People, established in June 1998, has met eight times on the following dates:

  2 July 1998

  24 March 1999

  14 July 1999

  27 October 1999

  7 December 1999

  26 January 2000

  8 March 2000

  11 April 2000.

  The Group's terms of reference are:
  to ensure that Government strategy and policy affecting older people is effectively co-ordinated, avoids duplication, and takes account of the needs of older people;
  to develop a better understanding of the lives and aspirations of older people and how they are affected by Government policy; and
  to co-ordinate the presentation and promotion of Government policy affecting older people.

  The Group has considered a wide range of subjects including active aging, care issues, consultation and involvement, transport, volunteering and improving services for older people. A consultation document, "Building a Better Britain for Older People", was published in November 1998. The Group has also sponsored research into attitudes and aspirations of older people which was published last year1.

  The Group has consulted widely with organisations representing older people and has undertaken a significant programme of consultation with older people themselves. Members of the Group attended a series of listening to older people events across the UK during 1999, which provided older people with a further opportunity to discuss issues that are important to them. The programme will conclude with a National Listening Event on 17 May in London. This will build on and respond to the consultation that has taken place over the past year.
  404W
  This extensive programme of consultation has proved valuable in helping the Inter Ministerial Group plan its work programme.

  The current membership of the Group is as follows:
  The Inter-Ministerial Group for Older People
  Right hon. Jeff Rooker MP (Chair): Minister of State, Department of Social Security
  Right hon. Paul Boateng MP: Minister of State, Home Office
  David Hanson MP: Parliamentary Under-Secretary of State, Welsh Office
  Keith Hill MP: Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions
  Margaret Hodge MP: Parliamentary Under-Secretary of State, Department for Education and Employment
  Alan Howarth MP: Parliamentary Under-Secretary of State, Department for Culture, Media and Sport
  George Howarth MP: Parliamentary Under-Secretary of State, Northern Ireland Office
  Dr. Kim Howells MP: Parliamentary Under-Secretary of State, Department of Trade and Industry
  John Hutton MP: Minister of State, Department of Health
  Right hon. Baroness Jay of Paddington: Minister for Women
  Melanie Johnson MP: Economic Secretary, Her Majesty's Treasury
  Jane Kennedy MP: Parliamentary Secretary, Lord Chancellor's Department
  Lewis Moonie MP: Parliamentary Under-Secretary of State, Ministry of Defence
  Right hon. Ian McCartney MP: Minister of State, Cabinet Office
  Nick Raynsford MP: Minister of State, Department of the Environment, Transport and the Regions
  Brian Wilson MP: Minister of State, Scotland Office

  The Welsh Assembly and the Scottish Executive also have responsibilities for policies that affect older people. The Inter-Ministerial group is therefore working closely with Jane Hutt and Iain Gray, both of whom have attended meetings.

  Note:

  1. Attitudes and Aspirations of Older People—a review of the literature by Annette Boaz, Carol Hayden and Miriam Bernard, was published on 18 October 1999 in the Department of Social Security's Research Report Series (Report No. 101, ISBN 1 84123 144 4).

  Attitudes and Aspirations of Older People—a qualitative study by Carol Hayden, Annette Boaz and Francesca Taylor was published on 18 October 1999 in the Department of Social Security's Research Report Series (Report No. 102, ISBN 1 84123 158 4).

  ONE Pilot Areas
  Mr. David Stewart
  To ask the Secretary of State for Social Security (1) what period of time has been devoted to training start-up officers and personal advisers in the ONE pilot areas to enable them to identify entitlement to income support, housing benefit, disability living allowance and incapacity benefit; and what period of time has been devoted to training to enable them to identify entitlement to working families tax credit and disabled persons' tax credit; [119338]

  (2) what training advisers in the ONE pilot areas have received in understanding and applying the principle of good cause. [119343]

  Angela Eagle
  ONE training for all advisers is individually tailored through the use of the learning assessment framework which matches training provision to training need. A copy of this framework can be found in the Library.
  405W
  There is extensive benefits training available to advisers on the entitlement to ONE benefits. Advisers receive a three-week benefit entitlement training course, which includes Income Support, Housing Benefit, Disability Living Allowance, Incapacity Benefit, Working Families Tax Credit and Disabled Persons Tax Credit.
  406W
  Advisers also receive training in relation to good cause. However, it should be noted that most already understand and know how to apply the principles of good cause. Good cause provisions exist elsewhere in the benefit system and were, for example, included in the training for the New Decision Making and Appeals procedures which were implemented in the Autumn of 1999.

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

Lord Acton of Bridgnorth
Richard Gerald Lord Acton, having been created Baron Acton of Bridgnorth, of Aldenham in the County of Shropshire, for life, took the oath.
2.39 p.m.

Delveloping Countries: Debt Relief
Baroness Whitakerasked Her Majesty's Government:
Whether the improvements to the heavily indebted poor countries initiative for developing countries have produced the faster, wider and deeper debt relief which was intended.
Baroness Amos: My Lords, five countries have qualified for relief under the enhanced heavily indebted poor countries initiative. That is disappointing because the target was for 11 countries to have qualified by the spring meetings of the World Bank and the IMF, which are taking place now in Washington. We are pressing the bank and fund to speed up the process.
Baroness Whitaker: My Lords, I thank my noble friend for that Answer, which is rather discouraging. In view of the crucial importance of the initiative, will she say whether all 25 of the countries targeted to have met the goal by the end of the year will have done so?
Baroness Amos: My Lords, I agree with my noble friend that the situation is somewhat disappointing. However, we must remember that the improvements to the HIPC process were agreed only in September last year. We set ourselves a number of ambitious targets. We remain committed to those targets. In particular, we welcome the IMF committee's agreement yesterday in Washington to establish a joint World Bank/IMF implementation committee to oversee implementation of the HIPC initiative. We hope that we shall achieve our target by the end of the year.
Baroness Rawlings: My Lords, I accept the importance of debt relief and that those funds were granted by well-informed, trained people, but will the Minister tell the House what Her Majesty's Government are doing to persuade the governments concerned not to spend the debt savings on defence and private whims, but instead to ensure more
452
responsibility and more transparency in government to minimise corruption? Are the Government supporting the IMF's decision regarding Uganda?
Baroness Amos: My Lords, the IMF has not yet made a decision in relation to Uganda. As I understand it, concerns were expressed about an element of spending by Uganda, which has been entirely transparent. It is an element that was predicted by Uganda. The IMF is considering it.
With respect to the noble Baroness's other questions, the HIPC 2 initiative is linked clearly to developing countries producing poverty reduction strategies which will ensure that debt relief is then spent on matters such as education and heals h. As part of that process, those countries are expected to consult with civil society organisations, with the international financial institutions themselves and with donor countries. There is transparency and there is clearly a commitment to cutting down on corruption.
Viscount Waverley: My Lords, once resolved, what measures will be put into place to protect against such forms of indebtedness arising again, including tiding due recognition of disaster periods?
Baroness Amos: My Lords, of course we want to ensure that countries do not get into debt in the first place. That is why the kind of review currently taking place, such as the export credit guarantee scheme, for example, is important. I have already mentioned in my reply to the noble Baroness, Lady Rawlings, that the international financial institutions are tying debt relief to poverty reduction strategies. The IMF will tie poverty reduction and growth facility lending to poverty reduction strategies. We must, of course, try to ensure that developing countries achieve economically so that they can come out of debt in the first place.
Lord Rea: My Lords, can my noble friend say whether it is too early to see any increase in social spending in the countries affected by the HIPC initiative, which she has said that the initiative ensures? If that is not visible already, can she speculate as 1.0 when we are likely to see such an increase?
Baroness Amos: My Lords, the rationale of debt relief is to allow countries to make progress on poverty. It is too soon to see any impact on poverty in the countries that have taken part so far. However, the effect on poverty spending so far has been encouraging. Uganda, for example, put the debt relief into a poverty action fund, which has given the debt/ poverty link a local political importance. So far that fund has allocated money to primary education. Before the floods, Mozambique had made important progress on health spending and Guyana, which has had some social unrest, has increased its social spending above the target. While it is too soon to see the detail of the change, we can see some evidence of it already.
Lord Skelmersdale: My Lords, many of these countries suffer from a lack of water. One of the most

453
important things that can be done by the international community is to ensure that water retention schemes are carried out and that wells are dug in those countries. Does that matter fall within the category of the Question?
Baroness Amos: My Lords, it is important to remember that debt relief is not the only mechanism that we are using to assist developing countries in respect of their long-term sustainable development. It is one part of the process. In terms of our own development assistance to countries, we have now taken what is called a sector-wide approach by which we shall agree with the government of each country the areas in which we shall work. In a number of countries water and sanitation are key priorities and we lead in those sectors. I agree with the noble Lord that that is important in terms of the long-term, sustainable development of a number of developing countries.
The Earl of Sandwich: My Lords, can the Minister say whether the Government, in the form of the Chancellor, could lodge a complaint with the IMF about the case of Uganda? No developing country has done more to put poverty alleviation strategies in place. If Uganda cannot make it work, none of the other countries will follow.
Baroness Amos: My Lords, we believe that Uganda has produced an excellent poverty reduction strategy. It has been entirely transparent about its proposed spending. I understand that the discussion with the IMF relates to the purchase of a jet and we shall have the result of that discussion as soon as possible. We shall continue to press the IMF to make a decision as quickly as possible.

HM Prison Rochester
2.45 p.m.
Lord Aveburyasked Her Majesty's Government:
What action they propose to take on the report of the Chief Inspector of Prisons on HM Prison Rochester.
Lord Bach: My Lords, we welcome this report which highlighted a number of weaknesses in conditions for prisoners and detainees at Rochester.
An action plan addressing the 132 recommendations made in the report was produced within 30 working days of publication. Sixty-five of the recommendations have already been implemented, 55 are in the course of implementation and the rest are still being considered. We expect the Prison Service to respond to the report formally in three to four weeks.
Lord Avebury: My Lords, I thank the Minister for that reply. First, can he explain why the Prison Service has repeatedly ignored the recommendation of the chief inspector not to leave prisons without governing
454
governors for months on end? In this case it was six months. As the chief inspector points out, such a situation almost invariably leads to problems.
Secondly, can the Minister say what has been done about the recommendation—again repeatedly made by the chief inspector—to have a senior official at Prison Service headquarters responsible for the treatment and management of foreign prisoners, whether they be in detention centres or prisons? If the Government do not accept that recommendation, what other means do they plan to adopt to ensure that the special needs of foreign prisoners are met?
Lord Bach: My Lords, the difficulties caused by leaving an establishment without a governing governor are recognised. The Prison Service must make the best possible use of the skilled managers in the service. The movement of senior governors is directed by the deputy director-general in discussion with the relevant area managers, based on their expert judgment of the greatest need.
As has been stated recently in the House, the director-general has said that at diverse and complex prisons there will be no gap at governor one level. Efforts are being made to keep any other gaps at other prisons to a minimum, but it is not possible to eliminate those entirely. Therefore, for as short a time as possible, it will be necessary to fall back on the deputy governor who will cover a role that he normally undertakes and that he is qualified to carry out. Rochester falls into that category, but I and the Prison Service recognise and accept that it was unsatisfactory for Rochester to be left without a governing governor for as long as six months.
The answer to the noble Lord's second question is "no". It would be impractical. We believe that it is best to manage the service on a geographical basis, aligned to government regions.
Lord Quirk: My Lords, is it not a matter for dismay and alarm that the report finds the education provision at Rochester to be in so desperate a state? Fewer than half of those enrolled in classes attend them; evening courses have been suspended; there are no functioning workshops; there are bad relations between the Prison Service and the education service; and poor management of the education service. As regards education in prisons, will the Government take urgent action not only in Rochester but throughout the service?
Lord Bach: My Lords, at the time of the inspection, there were weaknesses. However, I am happy to be able to tell the House that there have been significant improvements since then; for example, in November last year 98.5 per cent of the contracted hours were delivered. Improvements to the regime at Rochester were already in hand prior to the visit of the chief inspector, with the allocation of —465,000 of funding

455
over the three-year period specifically to develop the provision of education and offending behaviour programmes.
The Lord Bishop of Rochester: My Lords, in view of the chief inspector's recommendation that there should be an urgent review of the conditions in the prison at Rochester and his call for a clear and coherent set of guidelines for the treatment of detainees, together with the need to take the variety of cultures seriously—for example, in the training of prison staff and in terms of staff from the Immigration Service—will the Minister acknowledge the excellent work being carried out by the ecumenical chaplaincy, which, incidentally, was not mentioned in the report, and pledge all the necessary resources for the continuance and strengthening of this important work?
Lord Bach: My Lords, I am happy to do so. I am very grateful to the right reverend Prelate, who represents with such distinction the area within which the prison is located, for asking me a question this afternoon. The answer to his question is, unreservedly, "yes".
Lord Allen of Abbey-dale: My Lords, can the Minister say whether there is any truth in the press report that the Government are proposing to abolish the post of Chief Inspector of Prisons?
Lord Bach: My Lords, there is no truth in that report. However, if the noble Lord will be patient with me, I shall have more to say in that respect on Thursday when I believe that I shall be answering a Question for one of my noble friends on this very subject.
Lord Ackner: My Lords, is the noble Lord aware that one of the chief concerns mentioned in this report was the poor treatment and conditions experienced by numbers of asylum seekers, immigration detainees and other foreign nationals? Does the Minister propose to do anything about the recommendation that someone should be identified by the Prison Service within its headquarters and given specific responsibility for the treatment and conditions of foreign nationals?
Lord Bach: My Lords, as I hope I indicated in my earlier reply to the noble Lord, Lord Avebury, given the small numbers held in various establishments, which also have other functions, it would be impractical for someone at the head office of the Prison Service to have overall responsibility for the treatment and conditions of foreign nationals.
'The most recent consultation exercise on the management structure of the service produced widespread support for continuing to manage the service on a geographical basis. Only the high security and female estates are managed functionally. The move to dedicated centres for immigration detainees,
456
which is the Government's policy, will reduce the number of prisons which hold small numbers of them alongside other prisoners.
Lord Pearson of Rannoch: My Lords, can the noble Lord tell the House of any progress that the Government are making to ensure that fewer people who are mentally ill, mentally handicapped and mentally disturbed are kept in prison when they could perhaps be more happily accommodated elsewhere?
Lord Bach: My Lords, a task force is at present looking into exactly that difficult and important issue. I look forward to being able to report back to the House in due course.
Lord Carlisle of Bucklow: My Lords can the Minister say whether it is still the view of the Government that prison works?
Lord Bach: My Lords, of course prison works; but it works better for some than for others.

West Coast Main Line
2.53 p.m.
Baroness Thomas of Walliswoodasked Her Majesty's Government:
Whether, in the light of reported delays in the modernisation of the West Coast Main Line, they will call together the parties involved to agree a programme for timely completion of the project.
The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, a group consisting of officials from the shadow Strategic Rail Authority (sSRA), the Office of the Rail Regulator, Railtrack and the train operators involved ill the West Coast Main Line, both passenger and freight, has been established and meets regularly. The sSRA reports to Ministers as necessary. Railtrack has said that it is on course to meet its contractual commitment to Virgin in 2002 and 2005. The Rail Regulator has published a draft final order that he proposes to make. This would require Railtrack to produce robust plans which demonstrate that it can meet those commitments and that it can meet the reasonable requirements of other train operators and funders, including the shadow Strategic Rail Authority.
Baroness Thomas of Walliswood: My Lords, I thank the Minister for that reply. I am glad to hear that this co-operative group, albeit at a fairly low level, is in operation. However, is not the Minister concerned that this project is running so dangerously near to being very late that the Rail Regulator has already issued threats of possible action for default? Is not the noble Lord also concerned that there is still doubt as to whether or not sufficient capacity will be provided for freight and for the slow passenger lines that must continue to use the West Coast Main Line? Further,

457
should this work ever start, does the noble Lord know—indeed, does anyone know—Railtrack's plans for coping with the work and minimising the disruption to the rest of the rail network during the process?
Lord Macdonald of Tradeston: My Lords, the regulator has sought and obtained enforceable undertakings from Railtrack to provide additional capacity for train operators, other than West Coast Trains Limited, on completion of the next stage—namely, to carry out strategic reviews of the scope for further capacity on the route. In November 1999, using his powers under the Railways Act, the regulator initiated enforcement action against Railtrack to require it to produce credible plans that demonstrate that it can complete the project successfully.
At present, Railtrack has refused to consent to the enforcement action. Without the consent of Railtrack to the changes, the regulator is required to go through a statutory consultation period. When that period closes on 25th April—this month—the regulator will decide whether to confirm, modify or withdraw the order in the light of representations received. However, the Rail Regulator and the sSRA have been in regular discussion about the enforcement action. The sSRA supports the approach that the regulator is taking. Railtrack's undertakings made to the regulator in April 1998 provided that it would carry out the necessary actions to ensure that the line is completed. We are assured that it will be completed on time in its first stage in 2002, and in its later stage in 2005.
Lord Faulkner of Worcester: My Lords, I have a question for my noble friend the Minister about the recent report of the National Audit Office on the Rail Regulator. Does not my noble friend agree that that report reveals how wholly unsatisfactory and inadequate the process of regulation of the railway was until the appointment of the present incumbent, Mr Torn Winsor? Further, can my noble friend also confirm that it is right that the regulator should insist that Railtrack honours its licence commitment to put the public interest ahead of that of its shareholders, and that there must be no slippage on the West Coast Main Line upgrade?
Lord Macdonald of Tradeston: My Lords, I agree with my noble friend. The present regulator, Tom Winsor, took up his post in July 1999. He is currently engaged in a review which will make the final decisions later this year about the level of access charges to be paid during the period from April 2001 to 2006.
My noble friend referred to the report of the National Audit Office which said that the regulator found it difficult to establish whether Railtrack has carried out enough maintenance and renewal and that was partly because the regulator did not agree clearly enough at the outset in 1993 what standards Railtrack was supposed to meet. Therefore, the Rail Regulator has not been able to monitor the condition of Railtrack's assets, and information given to the
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regulator has not been independently verified. The Government echo the Comptroller and Auditor General of the NAO, who said that he welcomed the action by Mr Winsor. The Government also welcome the rigour that Mr Winsor is bringing to the role of regulator.
Lord Tomlinson: My Lords, if the West Coast Main Line is a top priority—I believe it is the unanimous view of industry and commerce in the West Midlands that it should be and that it should, therefore, be completed and completed on time—does my noble friend the Minister agree that it is imperative that the Government do not become a victim of their own success in attracting passengers on to the railways? What kind of assurance can my noble friend give me that the industry will have the capacity to cope with rising demand that will come from the completion of this modernisation; for example, are enough vehicles being built and old ones scrapped?
Lord Macdonald of Tradeston: My Lords, there has been an increase of 15 per cent in rail passenger journeys since May 1997. Train operators, however, are running 1,100 more trains a day to meet that increased demand. There has been a 15 per cent increase in freight moved by rail since May 1997. However, I am delighted to say that private sector rail investment has increased by 34 per cent in the past two years and now stands at £1.7 billion. Much of that sum has been invested by Railtrack. The main vehicle for promoting increased rail investment will be the franchise replacement programme currently being undertaken by the shadow Strategic Rail Authority.
At this stage we cannot agree any particular figures for future investment. I believe that the precise amounts needed will be illuminated by the sSRA's and the rail regulator's views on the Railtrack 2000 Network Management Statement, which was published at the end of last month. I agree with my noble friend that we must ensure that modernisation is accelerated to cope with the increased demand and growth. I am delighted to say that in the next couple of months over 200 new vehicles will be "rolling- on our railways.
Lord Roberts of Conwy: My Lords, the Minister has given us the completion dates, but is there a firm starting date for the modernisation programme?
Lord Macdonald of Tradeston: My Lords, the modernisation programme is already under way. We are considering upgrades due for completion by the year 2002 on line speeds south of Crewe, which will be taken up to 125 miles per hour. The second stage, which is to be completed in the year 2005, will take speeds up to 140 miles per hour. Some concern has been expressed about the viability of the project because of the huge sums involved. The original figure of £2.4 billion has been increased to an estimate of £5.8 billion by Railtrack. That higher figure is being scrutinised by the regulator at the moment but we are confident—Railtrack has assured us that that is the

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case—that work is under way and that we can look forward to quicker journey times on the West Coast Main Line in future.

British Coal Pension Fund: Surpluses
3.2 p.m.
Lord Dormand of Easingtonasked Her Majesty's Government:
Whether they will reduce their annual claim on the British Coal pension fund in order to increase the payments made to claimants who are former miners.
Lord McIntosh of Haringey: My Lords, since 1994 the Government have acted as guarantor to the former British Coal pension schemes. In return the Government receive 50 per cent of any actuarial scheme surpluses; the remaining 50 per cent being available to the scheme trustees for distribution among their membership. While the Government do not mean to re-open the guarantee arrangements, they are discussing with the trustees whether there are opportunities to build upon them to the mutual benefit of scheme members and government.
Lord Dormand of Easington: My Lords, does my noble friend recall that when a Starred Question was asked on this subject on 14th February this year, the noble Lord, Lord Sainsbury, said that, since 1994, £519 million has been received since the 50 per cent scheme came into operation? Is the noble Lord aware that the trustees have said recently that they expect to receive a minimum of £250 million per annum for a number of years ahead? They have also said that there is a reserve fund of £4 billion from which these payments will be made. Given those facts, does not my noble friend agree that for the foreseeable future there is no possibility of a deficit arising in the fund, and that the time is now opportune for the Government to reduce their 50 per cent take? I remind my noble friend that most retired miners now receive only £38 a week pension.
Lord McIntosh of Haringey: My Lords, I confirm the figures that my noble friend Lord Sainsbury gave in February of this year. However, my noble friend Lord Dormand will recall that. Her Majesty's Government have paid £400 million to the trustees since 1995 for what is allowed to be used as related expenditure; that is, the surpluses have been allowed to be ring fenced and used to offset expenditure on liabilities inherited from British Coal, such as coal health liabilities, respiratory conditions, vibration, white finger and so on. My noble friend will also be aware of the £354 million which has been committed to coalfield areas over a period of three years since 1998.
Lord Ezra: My Lords, is the noble Lord aware that I tabled the Starred Question on 14th February to which the noble Lord, Lord Sainsbury, replied and to which the noble Lord, Lord Dormand, referred, and
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that I thought that I obtained a fairly sympathetic response to the fact that the Government—as the noble Lord, Lord Dormand, has pointed out—have obtained out of their share of the coal pension fund a vastly greater amount than was previously expected? In view of that, will the noble Lord, together with his noble friend, try to do something which has never been done before in history; namely, attempt to locate the heart of the Treasury, appeal to that organ, if they can find it, and make sure, as the noble Lord, Lord Dormand, also urged, that more of this money should be dedicated to benefit ex-mine workers in poor circumstances?
Lord McIntosh of Haringey: My Lords, I am as sympathetic to this matter as my noble friend Lord Sainsbury. I said in my first Answer that we are discussing with the trustees whether there are opportunities to build upon the guarantee arrangements to the mutual benefit of scheme members and government. The reduction in risk of the scheme, which I acknowledge and which was mentioned by the noble Lord, Lord Dormand, may make it possible, for example, for the trustees to adopt a more aggressive investment policy which would produce higher returns to the benefit of everyone.
Lord Marsh: My Lords, are provisions such as the Minister has outlined available to the other former nationalised industries' pension funds, and, if not, why not? I declare an interest.
Lord McIntosh of Haringey: My Lords, I believe that that is a general rather than a specific interest. I know that the noble Lord is a pensioner! The scheme which we are discussing today was set up under the Coal Industry Act 1994. Different arrangements arise from different privatisation legislation of the previous government.
Lord Eden of Winton: My Lords, has the Minister made any assessment of the numbers of former miners who might be claimants, which would give some indication to the House of the scale of the provision that might arise?
Lord McIntosh of Haringey: My Lords. I do not have an assessment of the number of miners, but certainly the trustees have made assessments of the cost of various options which might be open to them —for example, the cost which might arise if former miners were to be given pensions at the age of 50, or if coal board staff were to be given pensions at the age of 50. The former case would involve costs of the order of £1.4 billion. I understand that at the present time the trustees are not able to meet that cost. However, different ways of improving the pension provision would involve significant and varying costs.

Child Support, Pensions and Socialv Security Bill
3.7 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, I beg to move that this Bill be now read a second time.
The Bill introduces reform in three key areas. First, it supports the Government's commitment to eradicating child poverty in a generation by radically reforming child support. Secondly, it introduces the second stage of our pensions reforms. Thirdly, it strengthens the link between the benefits people get and their responsibilities to society, with new action to encourage compliance with community sentences. These reforms build on those we have made since the election—reforms that promote opportunity, reduce people's need to rely on benefits and produce greater security in old age.
Part I of the Bill sets out our reforms of the child support system. There is, I believe, widespread agreement in this House that the primary responsibility for the support of children lies with parents—and that means both parents, whether they live together or apart. The challenge for government is to ensure that where the parents do live apart, there is an effective system of child support in place.
The failings of the current system are well documented. Parents are left angry and confused by a formula of Byzantine complexity. It can take months before a decision is made, and the agency spends 90 per cent of its time chasing information and only 10 per cent chasing up missing payments. The result, not surprisingly, is a system that fails children. Of the 1½million children on the agency's books, only 300,000 gain from maintenance paid, and only 100,000 of that ½ million see all the money that is due to them.
Currently, the CSA faces an impossible task. It is required to administer a hugely complex formula that parents do not understand; parents with care go for months without seeing any maintenance; and because of the delays, non-resident parents—usually fathers—start with huge unanticipated debts and, faced with a cliff to climb, understandably some of them choose not to start. The income support of parents with care is reduced pound for pound, so parents see the purpose of the CSA as reducing benefit expenditure—Treasury support—rather than providing meaningful support for their children. To the mothers, the CSA represents all hassle and no cash—hardly a system that encourages co-operation and involvement from parents.
Going back to the courts is not the answer. The failure of the courts to deliver a fair system led to the introduction of the child support scheme in the first place. That is why we, as the then opposition, backed the previous government's introduction of an agency. But, in their efforts to make the agency acceptable, they made the system too complex to understand and too difficult to administer. We are determined to
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remove the obstacles in the current scheme and to give the CSA the extra powers it needs to deal with parents who continue to seek to avoid their responsibilities.
Our first objective is to address the complexity inherent in the current scheme. The Bill introduces a much simpler system that is easy for parents to understand and for the CSA to administer. Nonresident parents will pay a flat-rate percentage of their net income (after tax, national insurance and pensions contributions) of 15 per cent for one child, 20 per cent for two, and 25 per cent if they have three or more children. There will be ready-reckoner booklets containing that information—the income at the top; the number of children at the side—available in post offices and libraries. So, even for a couple who have broken up, he will know—it is usually "he"—what maintenance he may be expected to pay, and he can make arrangements for it. This approach will mean that decisions can be made in days rather than in months, getting the money flowing faster.
Our second objective is to ensure that children see the benefit of the maintenance paid. Currently, families on income support get no benefit from the payment of maintenance. Under the Bill, in future, if he is on benefit and she is on benefit, the £5 that he currently sends over to the Treasury, of which she sees not a penny, will in future go to her and her child for support. If he is in work and she is on benefit, the first £10 of maintenance will stay with her. If the mother goes into work and receives working families' tax credit, she will keep every penny of the maintenance paid—another £30 or £40 a week extra money available for child support.
We believe that this will provide a major incentive for parents to co-operate in the assessment and collection of maintenance. It will ensure that extra help goes to the poorest families and to the poorest children.
Our third objective in reforming the CSA is to provide it with the teeth that it needs to ensure that parents cannot avoid their responsibilities. Currently, 30 per cent of parents pay nothing towards the upkeep of their children. Reform of the formula and the benefit system provides incentives for parents to cooperate. The simpler system will mean that the CSA has more time to spend on ensuring that effective payment arrangements are in place.
We are also taking new powers to tackle those who continue to try to avoid their responsibilities. Parents who misrepresent or withhold information from the CSA will face fines of up to £1,000. The agency will also have new powers to appoint new specialist inspectors, allowing it to gather information more quickly and effectively than now. Parents who deliberately delay paying money for their children will face a new penalty of up to 25 per cent of the money due. Persistent non-payers could, as now, still face gaol but, in addition, the courts will be given the power to take away their driving licence.
Parents will have every reason to co-operate in the assessment and collection of maintenance for their children under the new and simple system, with the

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direct benefit going to the children. But if they do not, the CSA will have new powers to hold them to account. We want compliance—that benefits children—but if we do not get it, enforcement will kick in.
We are also closing a loophole that allows some fathers to delay an assessment of their liability by denying paternity. We intend to extend nationally the existing arrangements for Scotland. In future, if a child was born while the father was married to the mother, if he is named on the birth certificate or if he refuses to take a DNA test, the burden will be on him to prove that he is not the father.
These reforms pave the way for a radically improved service from the CSA, but we must avoid the failures of the current system which may be caused by introducing the reforms too quickly. The new scheme requires significant changes in the way that the agency works, including new IT systems. It is crucially important that we get the reforms right from day one if we are to build parents' confidence.
To ensure that the new system beds in properly, we shall introduce the new measures for new cases first so that we can get it up and running with a manageable take-on of cases. We expect this stage of the reform to be introduced by April 2002. Existing cases will be transferred at a later date, once we are sure that the new system is working well.
So, to complete my remarks in regard to this part of the Bill, we all agree, I hope, that the current system has failed parents and children alike. This Bill will put that right. The new system will be simple; it will cut out the complexity, bureaucracy and delay that have undermined the existing arrangements. This will allow parents to understand what they can expect; it will get maintenance flowing quickly; and it will allow the agency to spend more time on ensuring that maintenance is paid and less time on chasing paper.
The new system will be fair. It will be fair for parents with care, who will get regular and reliable maintenance for their children more quickly. Obviously, reliability is as important as even the sum of money collected. It will be fair, too, for non-resident parents, who will know quickly what they should pay; they will understand how it has been calculated—they will be able to do the calculations themselves effectively—and they will see the maintenance that they pay directly benefit their children. But, most importantly—at the end of the day, this is what rnatters—it will be fair to children, who will have access to the support that they need. By helping parents who want to support their children and by cracking down on those who do not and will not, a total of more than 1 million children will see the benefit of maintenance for the first time—600,000 of those in the poorest families in our land.
Part II of the Bill deals with our reform of pensions.
Lord Stoddart of Swindon: My Lords, before the Minister goes on to Part II, can she explain why the Government are introducing the penalty of withdrawal of a driving licence from absent parents
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who do not pay maintenance? The object of a driving licence is to ensure that people who drive have passed a relevant test. In my view—in many people's view, I should have thought—the withdrawal of a licence should not be used as a penalty for non-payment of this kind of maintenance or any other. Can the Minister explain? Will this carry on and be applied to all kinds of other crimes or misdemeanours?
Baroness Hollis of Heigham: My Lords. I cannot predict whether it will or will not apply to other kinds of crimes and misdemeanours, to quote my:noble friend. We are seeking to introduce this provision at the moment because fathers who can and should pay maintenance are not doing so. For many of them, a gaol sentence is perhaps too heavy; and some of the other penalties—for example, restraint of goods or garnishee orders on their estates—take a very long time to kick in.
We have looked at the experience of other countries. The latest statistics that I have seen show that in 1996 in the state of Texas some 17 or so licences were impounded—those figures may now have increased—but something like 26 million dollars extra flowed to children. In other words, it was not the taking away of licences that got the money flowing to children; it was the threat of taking away the driving licences that got the money flowing to children. That is what we want to ensure. If we have had real difficulty in some cases in getting a father who can pay to face up to his responsibilities, at the end of the day if the threat of removal of a driving licence ensures that he addresses his responsibilities for the first time, I am confident that I shall have the support of my noble friend.
I move to Part II of the Bill which deals with our reform of pensions. If we do nothing, one in three persons will be dependent on means-tested benefit in retirement by 2050. Our pension strategy will put pensions on a sound, sustainable and affordable footing for the future. Everyone who can save for retirement should do so, but not all have that opportunity. Last summer we legislated for stakeholder pension schemes to provide 5 million moderate earners without access to an occupational scheme with a suitable savings vehicle, through a funded pension scheme.
The reforms in this Bill go further. The measures in the Bill will help 4.5 million low-paid earners, 2 million carers and 2 million long-term disabled people with broken work records. These groups have the least opportunity to save for retirement. Generally speaking, they do not have sufficient earnings to make saving via a personal pension worth while. The state earnings-related pension scheme does not do much for them either because it is earnings related. So, if one does not earn very much, one does not get very much when one retires. Too many people now are headed for a life on low income in old age because they are unable to build up a decent second pension. Women are especially disadvantaged.
We are providing the extra help that these groups need by reforming SERPS through the introduction of the state second pension. For some people, this will

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quadruple the amount of additional pension to which they will be entitled. For example, under SERPS, someone earning the equivalent of £6,000 a year over a working life will get £14 a week on top of their basic state pension. Under the state second pension, it will be £54 a week—four times as much. That is a major shift in resources to those earning less than £9,500, to those with interrupted careers, those who have disabilities or who have been carers.
This extra help will be provided by changing the way in which the additional pension is calculated. First, everyone earning above the lower earnings limit but less than £9,500 in any year will be treated as if they had earned £9,500 for the purposes of calculating their additional pension. If they were earning £4,000 or £6,000 or £8,000, their state second pension would be calculated as though they were earning £9,500. That is why this reform is so redistributive towards those who are less well off. Secondly, the rate at which the additional pension accrues on this £9,500 will double to 40 per cent. This higher accrual rate will apply to earnings up to £9,500 for all earners. To ensure that the extra help is targeted on lower earnings, the extra benefits of the state second pension will taper away on earnings between £9,500 and £21,000, with someone earning in excess of £21,600 receiving exactly what they do now under SERPS.
Low earners—those earning under £9,500—gain the most: someone earning £6,000 will see their additional pension go up 400 per cent. Moderate earners gain on a sliding scale. The position of high earners is unchanged. Low and moderate earners on contracted-out pension schemes will also benefit from this extra help through a combination of national insurance rebates and state second pension top-up payments.
For the first time, carers and long-term disabled people with broken work records will receive help to build an additional pension. The state second pension will treat them as if they had earned £9,500 in each relevant year. That adds up to about £1 a week in extra pension for each qualifying year. For a couple retiring in 25 years' time, one of whom spent a lifetime working for low earnings while the other spent years caring, the state second pension will give them nearly £30 a week more on their pension. They will stay clear of the minimum income guarantee for 15 years after that.
The second stage of the state second pension will be a flat-rate scheme. It will be introduced when stakeholder pensions have become established and will apply only to those who have a significant part of their working life remaining. In stage two, everyone will be treated as if they had earnings of £9,500. This will provide a strong incentive for moderate and higher earners to contract out as rebates will remain earnings related. This reflects our policy of encouraging those who can to provide for their own retirement.
To conclude on this section, the state second pension is the next stage of the Government's strategy for pensions. The stakeholder pensions introduced in last year's Bill will ensure that all those able to save for their retirement have access to a suitable, funded, safe, secure, portable and transparent pension. Under this
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Bill, the state second pension will ensure that those least able to survive can also build a decent income in retirement. The minimum income guarantee, winter fuel payments and free TV licences are among a range of measures designed to provide the extra support that today's pensioners need now. These reforms will achieve our goal of shifting the balance from 60 per cent state pension provision/40 per cent funded provision to the reverse: 60 per cent funded/40 per cent state pension provision.
Part III of the Bill includes our proposals relating to community punishments. Every year about one in four offenders who are given community sentences—of the 130,000 or so in all—are brought before the courts for failing to comply. Failure to comply with the terms of a community sentence demonstrates an offender's unwillingness to make reparation for the offences committed; yet many of these offenders continue to claim benefits from society as a right. They are prepared to meet the conditions of entitlement to benefit when there is something they want from the state; they are not prepared to meet the conditions of their community sentence when the state requires something from them.
We intend to extend the conditions for receiving benefits to link benefit payment to compliance with a community sentence. We shall pilot this in a small number of areas to evaluate the effects on offenders' behaviour and to test operational arrangements before extending the proposals across the country. In the pilot schemes, we propose to withdraw or reduce jobseeker's allowance, income support and training allowances for four weeks for offenders who are referred back to court by the Probation Service for breaching their community sentence. The courts and the Probation Service will warn offenders at the outset that they will lose benefit if they do not comply; offenders will be warned again after one unacceptable failure to attend. This will send a clear message to offenders that rights have to be matched by responsibilities. There will be no sanction imposed if those responsibilities are taken seriously and offenders comply with the terms of their sentence.
Finally, the Bill contains further measures, including reform of the system of appeals for war pensions covering provision about appointments to pensions appeal tribunals. Those appointments, and appointments to other tribunals referred to in this Bill—unified appeal tribunals for housing benefit and council tax benefit, other social security matters and child support, the Pensions Ombudsman and OPRA—are included in the arrangements regarding tenure of office which my noble and learned friend the Lord Chancellor announced last Wednesday.
The Bill also reforms the rules governing occupational and personal pensions to support the Government's aim of encouraging employers to provide pension schemes and employees to join them, so it strengthens the role of trustees.
We promised to reform the welfare state. This Bill contains a radical package of measures that provide the next step in building a welfare state fit for the

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21st century, founded on fairness and opportunity. It is fair to children who miss out under the current system of child support and are therefore, as the children of lone parents, among the poorest in our land. More than 1 million children will get a fair deal from the child support measures in the Bill. It is the children who matter. The Bill is fair to the low paid, carers and long-term disabled people with broken work records, who now miss out on a decent second pension. The state second pension will provide a decent income in retirement for more than 18 million people. The Bill is also fair to those who are prepared to meet their responsibilities to society, by demanding better conduct from those who do not. With pleasure, I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Hollis of Heigham.)
3.30 p.m.
Lord Higgins: My Lords, as is often the case on social security Bills, I must immediately declare an interest as a chairman and trustee of an occupational pension scheme.
Last year the social security Bill which came before us was effectively five Bills in one. The Bill now before us is really at least three Bills in one. One might regard that as progress but I do not think that that is the case. It is quite wrong for Bills to be produced covering a variety of subjects where there is little if any relationship between one part and another. For example, the link between the child support provisions and the pensions provisions, apart from the fact that they are dealt with by the same department, is virtually non-existent. Therefore, we shall have a heavy load of work ahead of us if we are to give the Bill the scrutiny which it deserves.
As the noble Baroness pointed out, the first part of the Bill is concerned with the Child Support Agency and its reform. Anyone who, like me, served in the previous Parliament cannot do other than believe that there is need for reform. I spent an unbelievable amount of time on individual cases and frequently dealt with people who showed a degree of bitterness which I found surprising. I refer in particular to the wives in the second family who were determined not to have any money pass from the second family back to the children of the first marriage. That degree of bitterness created difficult situations. Just when one thought that the whole matter was on an even keel, that the case would be solved and progress would be made, the agency made a mistake which put back the whole matter to square one. Therefore I view with great sympathy what the Government are now proposing. Having said that, we have considerable reservations about a number of aspects of those proposals.
On one point the Minister and noble Lords on this side of the House are certainly agreed: we do not think that the right answer is to take the matter back to the courts. The reason the problem arose in the first place was the tendency of the courts to award the matrimonial home to the mother and assume that the
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state system would support the children thereafter. That is one of the reasons why it was felt necessary to introduce the original Child Support Agency. Progress has been made since then. In the previous Parliament the Select Committee of the other place, under the chairmanship of Frank Field, came forward with proposals which resulted in some improvement. At all events, we are now to have a system which runs two formulae side by side—the old system and the new system. That will create a considerable problem in the transitional period. We can agree with the Minister that it is a good idea—indeed, it is essential —to have more emphasis on enforcement and less on gathering information. There are also a number of aspects in the final part of the Bill which deserve attention.
On the very first page of the Bill there is a declaration by the Minister on the European Convention on Human Rights. It states:
"In my view the provisions of the Child Support, Pensions and Social Security Bill are compatible with Convention rights".
There is widespread concern as to whether Clause 61, which deals with the loss of benefit for breach of a community order, conforms with the Human Rights Act or indeed conforms with our international obligations regarding human rights. My noble friend Lord Windlesham is concerned on this point and a number of noble Lords on the other side of the House may wish to express their concerns. I shall not say more on that subject at this stage, but my noble friend Lord Astor of Hever may also wish to comment on it when he comes to speak.
Part II of the Bill deals with pensions and the introduction of the state second pension. Last year we had trouble because we were discussing the stakeholder pension when we did not know what was going to happen about the second pension. Now we are a little more in the dark about the stakeholder pension—
Noble Lords: Oh!
Lord Higgins: A little more in the light! Either way, because the stakeholder pension is far from clear at this stage. We have to deal with the second state pension separately from the legislation regarding the stakeholder pension.
Perhaps I may say a few words about the Child Support Agency. The fundamental problem will be running the two systems side by side. There is also the question of a transitional period. The former system was clearly more rigorous than the new system will be and therefore people who are already in the system will say, "Why should we be treated more harshly than those who are now coming within the scope of the Child Support Agency?" Perhaps the Minister might like to say a little more about that aspect of the Bill.
We are concerned about other matters. The system is of course simpler. But the problem with simplifying matters is that there is less scope for adjustment in individual cases. In the debates in the other place there seemed to be a degree of inflexibiliy in the Government's attitude regarding certain matters. In

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particular, we are unclear why the Government have been so determined to ensure that the income of the parents with care is to be disregarded. In certain situations the parent with care may actually be a great deal better off than the absent parent. We believe that there is a case for taking both into account.
Another aspect which causes us concern is that there is no upper limit on the amount which, under the new simplified formula, will be taken from the absent parent. There are important issues here which we can do doubt pursue in Committee—for example, where someone is immensely rich but an absent parent, the extent to which that income should be transferred back to the children of the original marriage. It can be even more complicated. I remember having a number of constituency cases where there had been three or four marriages in succession. These matters can be immensely complicated. At all events, we believe that there is a case for the upper limit. Perhaps the Minister can clarify for us exactly how long she sees the transitional period lasting. I believe that 2002 for new cases and 2003 for existing cases have been suggested, with a further five years of transitional arrangements.
We also have some concern, as has the noble Lord, Lord Stoddart, about the penalties to be imposed on those who do not comply with the Child Support Agency's decisions. I find the driving licence penalty a very strange one. When it was first announced we thought that it would be in addition to other penalties. Perhaps the noble Baroness will confirm that it is not in addition to, but is instead of, other penalties. At all events, to quote the American experience seems quite wrong. In America, the removal of a driving licence, which carries a photograph and so on, is a very considerable sanction. Without it, one would be lucky to get anything at all on a credit card. So there is not a reasonable comparison. Noble Lords may like to consider when they were last asked to produce their driving licence in this country and whether, if they had had it removed prior to that, it would have been a severe or effective penalty or even whether the threat of removal, as the noble Baroness suggested, would have been a severe penalty.
There are other penalties in the Bill, in particular, the reduced benefit penalty. I understand that the Public Accounts Committee in another place took evidence on the matter on 3rd April. Unfortunately, the evidence has not yet been printed so I have been unable to check exactly what the committee has in mind. Apparently it has suggested that this penalty should be suspended during the transitional period. Perhaps the noble Baroness could clarify the point.
Complicated issues arise with regard to the relationship between cases that will be decided in court with regard to matrimonial settlements and whether, 14 months later, if one or other party disagrees with the original decision he or she can then take the matter to the Child Support Agency. These issues will need to be examined.
Perhaps I may say a word about other aspects of the Bill before turning to the question of the state second pension. Clause 38 introduces the Government's
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proposals regarding the vexed question of inherited SERPS, which we discussed when the Minister repeated a Statement on 15th March (cols. 1608–1619). Both I and the noble Lord, Lord Goodhart, expressed some concern. The Statement was made on the basis of the ombudsman's report, and the Government said that they had accepted the report's recommendations. Both the noble Lord, Lord Goodhart, and I had difficulty in knowing what the recommendations were. I asked the Minister for clarification, and she suggested that I should take the matter up with the ombudsman. I have done so. I wrote only recently and have not yet received a reply.
The report's recommendations—the ombudsman took more than a year to examine four sample cases— are by reference to a letter written by the ombudsman to the Permanent Secretary. I find that a strange way to express recommendations. At no point in the report are the recommendations stated in specific terms. What is clear if one looks at the paragraphs referring to the letter to the Permanent Secretary is that the important issue arises of burden of proof—whether people knew that the arrangements regarding inherited SERPS had been changed. The ombudsman goes on to state that redress should be,
"on a global rather than an individual basis".
But that is not what the Government propose. They do not propose a global settlement for everyone who may have been misled by the lack of publicity in regard to widows' SERPS, but have introduced a system—apart from delaying implementation of the arrangement—of individual protected rights. It is not satisfactory for the ombudsman to say, "Let's see what the Government come up with, and then I'll say whether it's all right or not". By this stage he ought to have said what should happen; then we could judge the Government accordingly. Therefore, I very much hope that the ombudsman will make the position clear before our debates at later stages of the Bill. It is a matter which the noble Lord, Lord Rix, and other noble Lords regard as extremely important.
Perhaps I may make a passing reference to Clause 54, dealing with the prohibition on different rules for overseas residents so far as occupational schemes are concerned. I thought for one wonderful moment that this provision would be with regard to the state pension and the question of overseas residence. Unfortunately, that appears not to be the case. Perhaps that matter can be debated at a later stage.
Another matter that has recently preoccupied this House is the question of the way in which pensions are drawn. A Question was asked on 12th April about whether benefits would continue to be paid through the Post Office. It applies to all the benefits that we shall consider in relation to the Bill. I asked the noble Baroness the simple question:
"are we to understand that the Government have not yet decided how the option to continue to receive cash through the post office will work? Will she state clearly by what method people will continue to be able to do so?"—[Official Report, 12/4/00; col. 185.]
The noble Baroness gave a lengthy reply—for which I was grateful—but did not answer the question. Perhaps I may put the point to her again. By what

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method will people now be able to draw their cash from the Post Office? It is a matter on which the House has understandably expressed concern. It not only affects pensioners; it affects the position of sub-post offices and has wider implications with regard to the social environment.
I am conscious of the fact that a large number of noble Lords have put their names down to speak in the debate, but before turning to the question of second pensions I must add one other point regarding the imposition of national insurance contributions on benefits in kind, and in particular contributions to private health schemes. As I understand it, the provision will raise some £225 million a year—yet another example of a stealth tax.
I turn finally to the question of the arrangements that are made for the second state pension. We are effectively creating a three-tier system. There is the second state pension for those earning over the minimum but less than £21,600; we then have the stakeholder pension; and on top of that we have occupational pensions.
Baroness Hollis of Heigham: My Lords, I think the noble Lord may have misquoted the figures.
Lord Higgins: My Lords, the matter is slightly complicated. In the early stages, as I understand it, the second state pension will be income related and at the later stages it will become a flat-rate pension. So I may have slightly misquoted the figures.
Baroness Hollis of Heigham: My Lords, perhaps I may help the noble Lord. He said that the state second pension was for those earning up to £21,600. That is not so. It is intended primarily for those earning up to about £9,500. From £9,500 to about £21,000 the pension would be a stakeholder pension—
people could use the state second pension but it would he less advantageous to them financially than for those earning less than £9,500. It was simply a matter of the income cut-off points.
Lord Higgins: My Lords, the noble Baroness is absolutely right and I understand her point. None the less, there will be a three-tier system: a second state pension, a stakeholder pension, and occupational pensions.
We welcome the fact that the Bill will help many low-paid people—for example, carers, those with a broken contribution record, those with long-term disablement and so on. That is understandable and will be appreciated. However, there is a problem as to whether the combination of the various levels will effectively divide people into different classes and whether it will be difficult to move from one class of pension to another.
A further point was expressed in a letter from Age Concern, which is of course very much involved in these issues. Age Concern continues to express concern about the relationship between the pension and the minimum income guarantee at the later stages.
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Many of these schemes will not become operative for many years, and by that time the minimum income guarantee, which we understand is to be uprated in relation to earnings, will "overtake" the state pension—which is apparently to be uprated only in relation to prices—and any other proposals on that basis. Age Concern believes that,
"for many people heavily dependent on the basic pension and State Second Pension for their income in retirement, the levels will be inadequate to meet the Government's aim of people not liming to rely on means-tested support in retirement".
It points out that in a situation such as I have described more older people will become newly entitled to means-tested benefit year on year. The relationship between benefits which are based only on prices and the minimum income guarantee which is based on earnings is likely to create a difficult situation in which an individual's contributions, or even those of the state, are inadequate to take him off means-tested benefit, and in the long term he will not gain from the Government's proposals.
The Bill now before us is clearly in conflict with the manifesto of the Labour Party at the time of the last election. The Labour Party said in the clearest possible terms that it would retain SERPS as an option for those who wished to remain within it. That is not what the Government now propose. I am not surprised to see the noble Baroness, Lady Castle, nodding her assent.
The Government put forward a series of proposals. On the one hand, they create a situation in which there is likely to be more means-testing. On the other hand, a number of benefits (so-called) are to be introduced; for example, winter fuel payments and free television licences, which go to everyone regardless of need. There appears to be a fundamental contradiction in many aspects of government policy. On the one hand, it is said that benefits must be focused by way of means-testing and, on the other hand, there are to be handouts—I believe that to be an adequate description of the free television licences, and perhaps also of the winter fuel payments—to those who have no need for them. The Government do not appear to have adopted a consistent policy, and it is important that in Committee and at later stages of the Bill noble Lords examine very carefully the whole basis on which the system of pensions is to he constructed.
3.51 p.m.
Earl Russell: My Lords, speaking at three minutes to one in the morning tends to lead both to brevity and bluntness. It was at that hour of the morning that my honourable friend Mr Webb, speaking on Third Reading of this Bill in another place, said:
"The Bill does not take social policy forward. We regret that it has come before the House".—[Official Report. Commons, 3/4/00; col. 781]
If we wrap that up in a little more cotton wool it is because we are able to enjoy the courtesies of tea time; it is not that we disagree with that judgment in any way. This Bill has not found favour on our Benches. As usual, my noble friend Lord Goodhart will deal with

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pensions and national insurance matters, and I shall deal with issues involving the Child Support Act and other miscellaneous matters arising out of the Bill.
I have been concerned with the Child Support Act for 10 years. I wish I could say that the first 10 years are the worst. One is told that one must be consistent and avoid repetition. Having spent over 10 years on one subject, it is quite difficult to achieve both objectives at the same time. We all believe that we are consistent. I decided this morning to check that out by looking at what I said on 29th October 1990 when the first proposals for the CSA were put before us in the form of a Statement. First, I said that fathers should be responsible for the financial support of their offspring. Secondly, I agreed that the taxpayer had an interest in the matter. Thirdly, I said that the Government would be mistaken to hope for too much from the Bill. Today I could repeat all of those remarks which show absolutely no sign of dating.
It appears that we are following the line of debate which we had, for example, on the poll tax. Following in a seamless robe of continuity from her predecessor, the noble Lord, Lord Mackay of Ardbrecknish, the noble Baroness has sought to transform this matter into a debate on the willingness or otherwise of fathers to pay. The Minister referred throughout her speech to those who would not pay. I was reminded of the observations of the noble Lord, Lord Waddington, on poll tax defaulters in the debates in this House in 1991. We on these Benches have always sought to argue that the issue is not just about those who will not pay but about those who, because of the nature of the formula, either cannot pay or feel a profound sense of injustice about the terms on which they are asked to pay.
We agree that there is a hard core of fathers who feel considerable reluctance to support their children after separation or divorce. If, however, one is dealing with those fathers, or any hard core resistance to a government measure, sensible politics demand that one sets out to isolate that resistance, not provide it with a large body of gratuitous extra support. One does not provide those who will not pay with the support of a large number of allies who either cannot pay or feel a profound sense of injustice about the terms on which they are asked to pay. That is the mistake which has been made in all three of the CSA Bills and innumerable CSA regulations with which I have been concerned. Every now and then a fashion sweeps through the Palace of Westminster while leaving the rest of the world almost totally immune. The CSA has been one of them. The CSA has very little support in the country at large, the media or the general body of informed opinion. It appears to enjoy support only within the walls of this Palace.
The argument here is entirely about the nature of justice. I have said to the Minister before—I am sure that I shall have occasion to repeat it—that it illustrates as clearly as anything could why, although we agree on a great many things, we shall nevertheless always be in different parties. I believe that I am correct in saying that the Bill's notion of justice is fundamentally derived from Plato. That notion of
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justice is essentially mathematical and invokes consistency. Its claim to consistency relies on what is taken to be a single material point. It is the justice of Procrustes. We on these Benches believe that our notion of justice owes a great deal more to the English common law and, with it, Shakespeare. It begins with the belief that both parties must be heard.
Nothing has caused more grievance in the whole of the CSA than the fact that those who feel aggrieved by its operations are simply not entitled to a hearing. They write to me in their hundreds—I suspect that they write in their thousands—setting out reasons why the assessments appear to them unjust. Some of those reasons are bad, some are good and some very good indeed, but in all cases they believe that they are entitled to a hearing. One after another I must write back to say that, by the decision of Parliament, the CSA is not allowed to give them a hearing. That is the basis of a great deal of resentment.
For us, justice is a bottom-up matter. It does not come down from the top simply as a Mikado-like decree. It comes up from hearing the facts of the case. When one has heard the facts of the case, one is allowed a certain element of discretion and, above all, the quality of mercy. Justice without mercy seems to me impossible. Nowhere in the formula of the CSA is there any room whatever for mercy, and we do not believe that that can be right. The Minister shakes her head. I know she does not think it, but I beg her to accept that we do. We cannot start from anywhere other than where we are. We think that the formula is unjust because it is a formula.
I shall not dwell at length on the obvious points about housing, travel to work, or support of aged parents who need nursing care. I am sure the Minister will say that you do not claim those factors against taxes. Fair enough; but just because you cannot claim them against taxes, you cannot apply the same rule to child support. It is the nature of the case that you can make only one thing top priority.
Let me cite an actual case to the Minister. It dates from before the CSA but the principle to which it gives rise affects it. A woman was bankrupted by being left £1 million in shipping shares. In case that perplexes your Lordships, she was left the shares in April 1929 when they were assessed for duty which was payable in October 1929. On a day when the morning headlines envisage losses of £100 billion on the Stock Exchange, we are not entitled to say that that cannot happen here. Anyone asked to meet an assessment which was based on the financial situation and took no account of the debt which had made him bankrupt would be in a fairly sticky position.
I do not think that the Government have ever understood quite how multifarious the situations of matrimonial break-ups are. A man settled a large capital sum on his ex-wife which should have set her up for life. She remarried, and her second husband, who put all the money into property on top of the boom in 1988, went bankrupt and left her. The CSA then assessed the first husband a second time for the same child on whom he had already made a fully adequate

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settlement. He thought that unfair. The CSA was unable even to give him a hearing. That causes resentment.
Not enough account is taken at any time of the need of people who wish to remain employed, especially in rural areas, to retain their cars. I agree with what the noble Lord, Lord Stoddart of Swindon, and the noble Lord, Lord Higgins, said about driving licences. It is no good saying, as the Bill does, that the courts are to take account of whether the person needs to drive to remain employed. They can only assess the need to drive to be employed at the time. But in the flexible labour market in which we now people may lose their jobs through no fault of their own and in many parts of this country they cannot look for work unless they can drive.
I shall table an amendment to delete the clause and, as a fall-back which makes my point, I shall table a further amendment that those so deprived shall be exempt from the actively-seeking-work rules until they get back their driving licence. Depriving fathers of their right to earn their living is killing the goose that lays the golden egg.
I regret deeply that there is no room for negotiation between the parents. After all, in those cases where they are co-operative with each other—and such cases occur—they know their situation better than anyone else. I have the report by Ann Corden and others by the Family Policy Studies Centre on child maintenance regimes in other European countries. It states:
"A key finding is that across Europe, at least in the case of divorce and separation, large numbers of maintenance determinations incorporate or build on agreements worked out by the parents themselves. In countries where parents are required to behave in this way, there are arrangements for advice, help or mediation, and much of this is free of charge…developments in the UK…appear to be heading in the opposite direction compared with these other European countries".
The Minister will of course invoke the interests of the taxpayer. That is fair enough. The noble Baroness heard the full passage that I quoted. She knows the report already. There is machinery within the system for the Treasury to be able to put its case before the negotiation is concluded. The present exclusion of any negotiation reminds me of the proverbial professor of the ancien régime in the University of London who once commented of a syllabus reform proposal, "This proposal originates with the teachers of the subject which I regard as a most improper manner".
We on these Benches agree strongly with the criticisms which have been made on the loss of benefit for breach of community service orders. My right honourable friend Mr Kennedy committed us to this in the Queen's Speech debate and I cheered him to the echo. When we are dealing with people who already have a criminal record, and we deprive them of any legitimate means of making a livelihood, does it take much imagination to ask, "What are these people likely to do next?"
The Minister knows well that we on these Benches have a profound concern about the effect of disentitlement on those who suffer it. I thank her for drawing my attention to DfEE Report No. 68 to which
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we shall return. It has some interesting information on whether people who were disentitled felt that they had suffered hardship, and whether they felt angry about it. It is not a particularly startling discovery that on the whole they did. What one does not gain from the report is an answer to what we on these Benches have been asking from the beginning. What income is available to people who are disentitled? By what means, legal or illegal, do they gain that income? What hardships do they suffer? What do they have to forgo to live on it? What behavioural effects does the disentitlement have on them? The Minster said generously that the system will be introduced by pilot schemes. We on these Benches hope that the pilot schemes will answer those questions. We are ready to negotiate about how that should be clone. The skills of my honourable friend Mr Webb in matters of social security research are considerable. But if it is not done, we shall not answer for the behaviour of these Benches when the regulations are ultimately put before the House. I hope that the Minister is listening.
Lord Williams of Elvel: My Lords, the noble Earl makes an important point. Is he speaking from the Front Bench of the Liberal Democrat Party, or is he speaking for the Liberal Democrat Party in general?
Earl Russell: My Lords, I am speaking from the Front Bench in words which I agreed this morning with my Chief Whip. They are guarded words but they are intended seriously, and I hope that that point is clear to the House.
The Minister will say a great deal against the courts. She might take account of some of the points made on the other side of the argument. The Government have poured money into the CSA. By contrast they did nothing to improve the funding of the courts. They did nothing to improve the staffing of the courts. They did nothing to improve their enforcement powers. They did nothing to co-operate with them to make sure that their warrants received priority. The Government accuse the courts of inconsistency. In many cases what the Minister calls "inconsistency" I call "consistency" because it takes account of the facts of the case.
If there is a problem with other cases, the Government have the power to issue guidelines. I had a stab at that during Report stage of the Bill in 1995. However, when the Government come to giving figures for the cost of going back to the courts, I cannot help suspecting that those figures come from the same stable as the figures which we heard regarding the cost of the freepost in the London mayoral elections. I have much more to say, but I shall not take up more of the House's time now; we shall hear it later.
4.10 p.m.
Lord Rix: My Lords, as the noble Lord, Lord Higgins, noted, this Bill is rather like the excellent finger buffet one is served at a reception in the Cholmondeley Room: rich in variety but with at least one canapé or cheese dip which one does not much like. I have my favourite in this strangely assorted mixed salad of a Bill which, beginning with "Child

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Support" in the title, rapidly goes through the ageing process and reaches the "Preservation of rights in respect of additional pensions"—that is, SERPS—in Clause 38. Perhaps the parliamentary draftsman had Wordsworth in mind, predicting our joy when we reach our sere and yellow, and those rights are well and truly preserved:
"My heart leaps up when I behold
A rainbow in the sky:
So was it when my life began:
So is it now I am a man;
So be it when I shall grow old".
But does my heart leap up when I behold Clause 38? Not quite. I fear that there is still a tiny flutter of atrial fibrillation for, although the clause is rather pompously explained in the Explanatory Notes as ensuring that,
"people who were denied the opportunity of considering taking relevant steps to protect their spouse's position because they received incorrect or incomplete information, can seek redress",
nowhere in the clause is a clear indication given as to how the regulations will provide that remedy.
Noble Lords with good memories will recall our welfare reform debates on SERPS last year. In those debates, we sought to do justice to widows and widowers who were threatened with a 50 per cent cut in their inherited earnings-related pensions rights as a result of a 1986 change which remained one of the Department of Social Security's best kept secrets for most of the next 13 years.
I am most happy to give credit to the Government for seeking an honourable way out of this mess (not of their own making) and acknowledge that the other place accepted the spirit, if not quite the structure, of my multiple choice amendment on SERPS. As a result, as we have already heard, on 15th March Ministers announced how they proposed to use the powers accorded to them by the Welfare Reform and Pensions Act and to offer compensation to those who could show that their spouse had lost out through their following duff advice when accurate advice would have enabled them to make wiser pension choices. Those who received no advice at all—the vast majority—appeared to be excluded.
So now we have Clause 38—one of those beautifully crafted texts which takes a complicated message and makes it totally incomprehensible. As far as I can see, it still ties recompense to tangible evidence of loss. And there's the rub. I should like to see greater certainties written into the Bill for the benefit of those whose age makes it clear that they have lost out or whose disability prevents them arguing their case without requiring them to prove chapter and verse what they knew and what they could and would have done had they known differently. It seems to me unreasonable to insist that the victim of a robbery should provide evidence as to what he could and would have done had he known he was going to be robbed.
Therefore, I shall take it upon myself—together, I hope, with other noble Lords—to table in Committee an amendment which addresses those ambiguities in clear and unequivocal terms. I hope that the
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Government will take that amendment away, study it and accept it, or come back with their own satisfactory, sanitised version. The issues that I shall seek to address concern those people, now retired, who contributed to SERPS in the years between 1978 and 1986 when it automatically provided a 100 per cent legacy for the surviving spouse; those who have reached state retirement age and never had a chance or the notion that they had to opt out into more lucrative second-life pensions; those who are nearing state retirement age and are also unable to make up the deficit; those who have been conned only for a short time and have years ahead in which to provide for a better life in old age; and those who, sadly, through the ageing process, are no longer able to recall or even understand what SERPS is all about.
My amendment will be reasonably short, to the point and, it is hoped, clear even to the Benefits Agency. However, I gather that we are soon to have our own—our very own!—pensions branch which can start life without a single blot on its escutcheon if the SERPS scandal is but a thing of the past. The Government, too, deserve much credit for having started to muck out the Augean stable. Let us hope that straightforward guidance on the face of the Bill will enable them to complete their Herculean task with speed, efficiency and, dare I say it, generosity.
4.15 p.m.
Baroness Pitkeathley: My Lords, I welcome the Bill for its attempt to tackle poverty for both young and old. I endorse its redistributive principles in helping the poorest citizens and its aim to put into place systems which actually work. Anyone who has had dealings with the CSA over past years knows about its complexities and its tendency to get sums wrong more often than it gets them right. Not only will the new proposals in the Bill simplify matters, but they will enable more than a million children to benefit, many of them for the first time.
So far as concerns pensions, the aim of the Bill is to ensure that everyone who has put in a full working life will receive a decent pension above benefit levels. It is especially important for me that a full-time working life now includes a full caring life. It is on that aspect of the Bill that I want to concentrate.
I warmly welcome the development of the state second pension as an important step forward for carers. For the first time, carers who are in receipt of invalid care allowance will be given more than just protection of their basic state pension; they will also he given a credit into the second-tier pension. Arguably, that is the most positive and significant change to carers' income since the invalid care allowance was introduced in 1976. The last positive change introduced to ICA was in 1993, when the earnings limit on the benefit was raised to £50 a week.
Therefore, why is the state second pension so important to carers? It is because many of them give up paid work in order to care. In 1996, the Carers National Association found in a survey that 50 per cent of carers had given up paid work in order to take

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up a caring role. As a result, carers who provide a substantial amount of care store up poverty for themselves for the future. The state second pension will seek to change that by recognising the value of the support given by carers.
The new provisions could start as early as 2002. Carers who receive ICA, have an underlying entitlement to ICA or receive home responsibilities protection will be credited into the scheme as if they were earning £9,500 a year. There are several reasons why that represents a great step forward for carers. First, a carer who receives ICA at £40.40—it is the lowest of all the benefits—for 52 weeks receives the sum of approximately £2,070 for a minimum of 1,820 hours' care per annum. I ask noble Lords to think about that sum. Crediting carers as though they earned £9,500 per year values that care at over three-and-ahalf times the level of the invalid care allowance. The lower earnings threshold of £9,500 of the state second pension compares very favourably with the earnings that carers forgo. A survey by Caring Costs in 1996 found that the average wage given up by carers in order to care was £9,000 per annum. Unlike ICA, which rises in line with prices, the state second pension will rise in line with earnings year on year.
In order to receive one year's credit, a carer must be receiving ICA throughout the year. That is defined neither in the legislation nor in the Explanatory Notes, but discussion in Committee and on Report in the other place suggested that it meant 52 weeks in a year, although that has never been stated. Low earners who earn above the lower earnings limit would be credited in at the same level. That means that as long as carers earn over the lower earnings limit or receive ICA throughout the year, they will receive credits for the state second pension.
But there are a couple of potential problems in relation to that entitlement to which I want to draw the Minister's attention. The contribution condition requiring ICA throughout the year may result in two particular groups of carers being excluded from receipt of that important new pension. They would be carers who have lost ICA because the person they care for has had one or more periods in hospital or respite care which in total amount to more than 28 days in six months.
I give your Lordships an example. A mother cares for her son who has severe learning difficulties and physical disabilities. He goes into residential care every few weeks. Because of the linking rules, she becomes disentitled to ICA after her son has had a total of 28 days in respite care. She cannot work because she is exhausted and because the residential care is not a regular feature but only occasional and her son needs 24-hour care when he comes home. She does not have a full year's contribution and loses out on another year's pension. The mother cannot see the situation changing unless the son goes permanently into residential care and she does not want that to happen. So for the years for which she is caring for her son she will have no additional pension.
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The second group of people who may miss out are those who have lost ICA because they have earned over the £50 per week earnings limit in one or more weeks but whose earnings over a year do not reach the lower earnings limit for national insurance contributions. For example, Tom has a part-time job in a small workshop near his home in between caring for his mother. It has been a very good year and the boss wants to reward him with a Christmas bonus. The Benefits Agency takes into account Tom's bonus over the following month. His bonus, which is only £20, takes him over the earnings limit for the ICA so he loses a full month of ICA. He does not earn enough to pay national insurance and because he does not have a full year of ICA he loses out on another year's pension contributions.
Those problems seem to me to be out of step with two of the Government's key strategies in relation to carers: first, their stated aim of ensuring that carers have greater access to breaks under the carers grant. That was a new grant of £50 million introduced under the National Carers Strategy to local authorities to provide additional breaks for carers. It has been welcomed by carers and is very well used. The other part of the Government's strategy is to ensure that carers maximise work opportunities, recognising that paid work for carers is not only important financially but also socially and emotionally.
A solution to those problems could be found by relaxing the entitlement condition of receipt of ICA to, for example, 26 weeks or more in a year—I imagine that that could be done through a regulation-making power—or by making other measures more generous; namely, home responsibilities protection. I understand that the Government are considering that and I hope that the Minister will be able to confirm the relationship between HRP and the new scheme in her reply.
I cannot miss the opportunity to bring two further issues to your Lordships' attention if the financial disadvantage of carers is to be addressed. These really need to be looked at. The first is the issue of backdating and the second is helping carers over retiring age.
Carers will begin to build up credits towards the state second pension only from 2002, leaving many carers—hundreds of thousands perhaps—who have been caring since 1978 without credits towards an additional pension. That may leave many current and former carers facing poverty in retirement. I know that the issue of back-dating was discussed at length in another place but the Minister could give no guarantees about back-dating. In fact, he said that the administrative barriers prevented it.
It is vital that carers over the age 65 are given more financial support to meet the costs of caring and that those who have been left in poverty in retirement because of a lifetime of caring should also he given additional financial support. Ideally, I should like to see the state second pension back-dated to 1978. If that is not possible, it may be possible to introduce short-term measures; for example, allowing carers over

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retirement age to claim ICA for the first time. I know that it is an income replacement benefit, but the fact is that the overlapping benefits rule would mean that most carers could not claim that anyway but they might be able to access the carer premium, which would help with meeting the additional costs of care; for example, transport, laundry, convenience foods and so on.
Finally, I remind the Minister of one of our earlier debates on welfare reform when she stated that the Government would be undertaking a review of the invalid care allowance. She said that it was not possible to give a timetable at that stage but that carers' organisations would certainly be consulted. I should welcome any further information about a timetable for the review and would like to know whether the issue of financial support for older carers will be considered in the review.
4.25 p.m.
Lord Windlesham: My Lords, every so often in a Bill unconnected with the penal system a proposal is slipped in without any real consideration as to whether or not it conforms with the principles of justice. That is because the context is different.
Buried in the 148 pages of the omnibus Bill which we are considering today is a prime example. It is to be found in the proposals contained in Part III, giving powers to the Secretary of State to withdraw or reduce benefit when a person subject to a community sentence fails to comply with its terms.
The fundamental objection to that proposal is that it is nothing whatever to do with the Secretary of State for Social Security or, indeed, any other Minister. Probation is the result of a judicial process. Probation orders and community service orders are orders of the court. Some of your Lordships—I see the noble Lord, Lord Shepherd, in his place opposite—will remember Baroness Wootton of Abinger. Community service orders owe more to her than to any other single person. What she would be saying today were she here to take part in this debate defies imagination.
Both orders were introduced by statute after long and thorough consideration. Their purpose and operation was quite clear. It is simply wrong that they should now be hijacked by any Minister to make his own unrelated policies more effective. There may be a case for making those policies more effective, but not by this means.
The prospect that these clauses, should they be enacted, may be an early casualty under the obligations assumed by the Government and by Parliament in incorporating the European Convention on Human Rights into domestic law does not warrant their acceptance now.
That the effect will be discriminatory cannot be denied. Let us assume that two offenders subject to probation or community service orders are returned to court as a result of failure to comply with the conditions of the orders. Typically, the reasons will be missing an appointment with a probation officer or
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failing to attend a session of community service. One of those offenders has earnings; the other is on benefit. Both are found to have breached the terms of their respective orders. Yet whatever the court decides by way of penalty, which may be a custodial sentence or some other penalty, the Bill intends that the offender in receipt of benefit should be subjected to an additional mandatory sanction in the form of loss or reduction of benefit. It is hard to see how double punishment of that sort will withstand the challenge it will inevitably attract once the Human Rights Act is implemented.
As if that were not enough, having invaded territory that more properly belongs to the Home Office, the Secretary of State for Social Security and his advisers have devised a remarkable administrative procedure by which the penalty actually precedes the trial. As soon as a benefit office is notified by the Probation Service that an offender has been referred to the court for breaching the conditions of a community sentence, the specified social security benefits will be withdrawn or reduced. It must be wholly wrong for benefit to be withdrawn or reduced before the court has found that the alleged breach of the order is proven. The fact that arrears will be repaid later, if the court finds that no breach has taken place, must be scant consolation.
We have to keep in mind the characteristics of the constituency at which these new provisions are aimed. Many will be persistent offenders who have been before the courts previously, often many times before. Some will be in work, but most will not be, whether because of lack of job opportunities or their own motivation. A high proportion will be male. As black males typically have a higher unemployment rate than white males, they are likely to be over-represented in the group of offenders most liable to incur withdrawal of benefit. There will often be dependants who will suffer from loss of benefit, leading to greater family impoverishment, possibly providing an incentive for still further offending pending a court appearance.
Something that is hard to get into the minds of those with little knowledge of the working of the penal system is that a large bulk of offending is opportunistic; it is not planned in advance. So the idea of sending "a clear message", as the Secretary of State described it at Second Reading in the House of Commons, to such a disparate an audience is farfetched in the extreme.
It is also worth noting the Secretary of State's response to an intervention from a Back-Bencher in the same debate. When asked whether removing benefits would encourage rehabilitation or would lead to further offending as circumstances became more difficult, Mr Darling's reply hardly corresponded with his Parliamentary Under-Secretary of State's later denial in Standing Committee that the forfeiture of benefit was not a punishment. She argued, using a phrase that is surely worthy of "Yes Minister", that it was not a punishment; it was "an additional benefit conditionality". If conditionality is to be the lifebelt to which the Government now intend to cling, there was certainly no hint of it in the Secretary of State's Second Reading speech.

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When asked the question to which I have just referred, what was his answer? Speaking impromptu and not scripted, he said,
"There are provisions for hardship, but the remedy in cases such as the hon. Gentleman described lies in the hands of the person who breaks a probation order. People are not required to live in poverty or to lose their benefit. They are required only to do what the court tells them to do. If they are not willing to do that, they can have no cause for complaint".—[Official Report, Commons, 11/1/00: col. 160.]
In that comment the unmistakable tones of new Labour authoritarianism can be heard.
Should this misguided measure become law, I suggest that the outcome may be the opposite of what the Government intend. On this side of the House there will be little disagreement that community sentences should be rigorously enforced and that probation officers should be resolute in returning offenders to court for persistent non-compliance. However, if probation officers know there is a possibility of unjust results, there must be a temptation, to put it no higher—and certainly not to approve of giving way to such a temptation—not to record failure to comply so as to avoid these consequences. That observation is not mine. It comes as a warning from the National Association of Probation Officers. Whether we like it or not, we would be unwise to disregard the forecast that,
"the regulations may make staff reluctant to breach. Benefits are set at subsistence level. Many staff would not find it morally acceptable to push offenders and their families into further debt and possible destitution".
I repeat, this is a misguided measure. For the reasons explained at the start of my speech, it is wrong in principle. I t is certain to have harmful consequences, and is unlikely to produce the results the Government intend.
4.37 p.m.
Baroness Turner of Camden: My Lords, we have another complex Bill on these matters, which my noble friend the Minister introduced this afternoon with a skill and clarity we have come to expect from her. She will not be surprised to hear from me that there are aspects of it, particularly relating to pensions, which cause me some anxiety.
Other parts of the Bill seem to offer some improvement on what we have had before, particularly those sections relating to child support with the emphasis on more money going to the support of children. If my reading of that part of the Bill is correct, no pressure can in future be applied to women to make them divulge the father of a child, particularly if there is concern about violence. That is very much to be welcomed.
Another section would appear to indicate that imprisonment is ultimately envisaged for parents who fail to pay up. Then there is the driving licence disqualification, also to be used as a form of punishment. Reference has already been made to that by my noble friend Lord Stoddart and the noble Lord, Lord Higgins.
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I too wonder about the effect of I hose measures as possible deterrents, particularly in cases where a second family is involved and the parent concerned may be experiencing genuine difficulty in meeting his commitments. These are complicated matters, and the degree to which legislation can deal with them is doubtful. Perhaps my noble friend will explain government thinking in that regard.
My main concern is with the section dealing with pensions. It is not possible to consider this section of the Bill without referring back to the Welfare and Pensions Bill, now an Act, considered in this House last year. Indeed, both pieces of legislation are envisaged in the Government's comprehensive paper, (CM 4179) Partnership in Pensions.
My noble friend will be aware of my commitment to the basic pensions structure known as the "Castle Plan", for ever associated with the name of my noble friend Lady Castle. Partnership in Pensions significantly departs from the concept on which that plan was based. I am fully aware of the Government's criticisms of SERPS; that it did little for the low paid, although the original concept certainly would have done. If the basic pension had been increased in line with the wages index, a single pensioner would now be receiving around £94 per week and on top of that some SERPS entitlement. That would have lifted many people entirely out of poverty.
However, we have moved on from there; the previous government destroyed that package. What we are now presented with in the Bill is the second-tier state pension. We are told that it will be much more generous than the present SERPS. The low paid will receive pensions as though they had been earning £9,500 a year, even had they not been doing so. The Government have decided to target provision towards the low paid in an attempt to alleviate poverty among pensioners.
However, it is clear from the government publication to which I referred that the second-tier state pension is regarded as a transitional provision only. Ultimately, there will be a flat-rate pension for the very poor. Everyone else will be encouraged on to stakeholder pensions; in other words, on to the private sector. We are seeing here a withdrawal of the state from pension provision for all except the very poorest—and that is where I have a fundamental disagreement with the Government. I am a supporter of the principle of social insurance. What the Government are proposing departs from that principle. A system which is targeted at the poorest, ultimately, is poor law provision. Targeting means means-testing. That is never likely to be popular; certainly not with the present generation of pensioners.
I know that the Government have introduced the minimum income guarantee to be paid through income support. I am glad that they intend to take steps to ensure that there is a take-up by all those entitled to claim it. It is now to be worth £78 for a single pensioner and £121 for a couple. Moreover, the MIG will rise in line with the wages index instead of the retail

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prices index. Incidentally, I believe that that is a further indication of the Government's intention eventually to run down the value of the basic state pension. There have been moves to assist pensioners through the increased fuel allowance and free TV licences for the over-75s. They are welcome, but they do not deal with the basic need of pensioners for a reasonable income. They are hand-outs rather than income; and, of course, the MIG is subject to savings limits—I understand that the Government are reviewing those limits—and that over time entitlement is lost altogether. I believe that the upper savings limit was £8,000, but that it is now being reviewed.
No doubt my noble friend will again tell me that many pensioners are now rich. Indeed, that was repeated in the statement issued by the DSS regarding its campaign on the MIG take-up. We are told that during the past 40 years pensioner incomes have risen faster than earnings. I have yet to meet a rich pensioner. Last week, I went to talk to the pensioner section of my union. Like many unions, we now allow pensioner members to retain membership at a reduced rate. They have their own organisation within it, and I met the London group last week. The meeting was well attended, but they were unanimous in their plea that the earnings link be reapplied to the basic pension. They were not really poor; most had occupational pensions, but not pensions which could be described as "generous". The basic state pension was a significant part of their income.
Indeed, most occupational pension schemes are devised on the assumption that they are second tier; in other words, they top up the basic state pension. For two-thirds of today's pensioners, the state benefits comprise the majority of their income, yet the DSS statement says that a "minority" of pensioners have missed out in all this wonderful pensioner prosperity. The myth of the well-off pensioner is very much exaggerated. Indeed, I believe that it is very odd and I want to challenge my noble friend on that.
We are told that pensioner incomes have risen faster than the wages index. That cannot, of course, refer to the basic state pension because we know that it has not risen beyond the RPI. I have a great deal of experience of negotiating occupational pension schemes. In general, they do not move beyond the RPI. Indeed, there is a kind of formula that we often utilised in the early 1970s, when they were being negotiated: that the total occupational pension would rise in line with the RPI to a maximum of 5 per cent per annum; if the RPI was less than that, the pensioner would receive the lower figure. Taking those two figures together, it cannot be true that the income of the average pensioner with an occupational pension outstripped the wages index in that period. There was no structure available for that to occur; the argument cannot be justified.
In any event, why should not well-off pensioners receive the same basic state pension? They will have paid more heavily for it and will be taxed on it, which poorer pensioners will not. Allowing the basic pension to decline and increasing means-testing erodes the
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contributory principle and threatens the survival of the basic pension long term. But perhaps that is what the Government are really after. Perhaps the ultimate objective is the complete withdrawal of the state from pension provision and then everyone will be steered towards stakeholder pensions. There will be no compulsion, and employers, while providing access to stakeholder providers, will not have to make a contribution. The schemes will be money purchase —in other words, risk based with employees bearing the risk. The outlook for future generations of pensioners is not good unless there is a growth in good occupational pension provision.
A section of the Bill deals with occupational pensions and contains reference to employee trustees. The sections of the Bill, including schedules, seem extremely complex, but there is one aspect that we must explore further in Committee. I do not see why provision could not have been made for 50 per cent of the trustees of a pension scheme to come from the workforce or pensioners. I also believe that since the duties of trustees have become more onerous as a result of successive pieces of legislation, it is vital that they should be suitably trained. Everything possible should be done to encourage the provision of occupational pensions as there is a general view, which I share, that they have been a success in the past 20 years.
The NAPF has expressed some concern lest stakeholder pensions, unless the employer has to contribute, may be used by some employers gradually to withdraw from occupational pension provision on the basis that stakeholder pensions, for which they have to provide access, render occupational provision no longer necessary. Of course, it is cheaper for the employers because they do not have to contribute. I should welcome my noble friend's comments on that point.
In the mean time, I again thank my noble friend for the way in which she has presented the Bill. We shall have a great deal more to say about this (and other issues to which I have not had time to refer) when we are in Committee.
4.47 p.m.
Baroness Strange: My Lords, as Easter is approaching, I shall try to be like an Easter hare, galloping through my speech at great speed so as not unnecessarily to burden your Lordships. As the Minister might guess, I am only following through the amendment moved in another place and putting in a small plea to the Government—or to that part of them currently engaged in the MoD review—not to forget the plight of the 2,650 war widows currently in receipt of the Armed Forces family attributable pension, which they would lose in the event of remarriage.
As your Lordships must be aware by now, both the Goode and the Bett reports recommended that this pension should be for life, regardless of future marital circumstances. This pension, unlike the ordinary war widow's pension, has been contributed to by the husband. If he had retired in the normal course of

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events, he would have received this pension for life. It hardly seems just that if he is killed in the service of his country his widow should not receive this pension for life.
The issue was discussed and also voted on in another place on 3rd April and several of the relevant short and pithy speeches mentioned that it had been a cause close to the heart of the late Mr Michael Colvin. We in this House who also knew and loved him and his wife are still shocked and saddened by their deaths. In looking at all my former speeches on this subject and those of my noble friends from all parts of this House, my desk has been even more littered than usual with papers—well over six inches high. I hope your Lordships will not be alarmed. I am not going to reiterate any of them. I had also forgotten that Mr Michael Colvin had written to me on this subject. So, on the last two weekends when I returned home, I have been startled to find a different letter to me from him on the top of the pile. When I am away, letters are tidied into heaps on my desk, but no-one files or arranges them. I cannot help feeling that the emergence of those two letters on this subject, like stones out of a clay soil, has some significance.
I am aware that the question of retention for life of the Armed Forces family attributable pension is even now in the MoD being discussed with the Defence Review. I have not forgotten this issue; nor indeed have your Lordships; nor have the .2,650 war widows concerned, for some of whom it is a pressing personal issue; nor have all the other war widows, nor have our Armed Forces. I hope that the right honourable Secretary of State for Defence and his team will also remember.
4.51 p.m.
Baroness Castle of Blackburn: It was very kind of Lord Bruce to try to encourage me to my feet. I hope he is not injured by the stumble. It will surprise no one to know that I intend to concentrate my remarks on the state second pension section of this complicated measure. I will make a confession: I have not even read the rest of it. If I live long enough I might get around to it, but the amount of time taken to work one's way through Clauses 30 to 39 showed me that I really would have to devote a large amount of effort and time to reading the whole Bill.
One of the first things that struck me about it is its wording. Incidentally, I wonder whether anybody in this House, has read the whole Bill. If you look at the wording, it reminds me of what Lady Turner was saying about the money purchase schemes putting the risk on the pensioners, because this Bill puts all the risk on the reader: there is not one line that does not refer one back to six other Acts. To do that, I would have to get a library full of books and sit there asking, "What's it mean?" My devoted secretary was reading Clause 30 to me the other day and I said to her, "I don't understand a word of it: read the Explanatory Memorandum". She said, "Oh, that was the Explanatory Memorandum!"
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It is a kind of disease of this Government. It reminds me of the philosophy of the woman they admired so much, Lady Thatcher. I once described that philosophy as "Confuse and rule". This process is going on today in all our discussions and all our attempts to get together an integrated and coherent pension scheme. Instead, we have had the "salami solution"—give us one slice one year and another in another year and so on, until we have lost all sense of the interrelationship of one bit to another.
I will give the Minister one particular illustration. It is fashionable to say that we are discussing a second state pension scheme; that they are not abolishing SERPS: they are merely replacing it with something that would be more generous. That is a very important claim, and if it were true we would have to consider it very seriously. But it is by taking the Bill in sections that they are able to disguise what is actually happening.
Lord Higgins, quite rightly, quoted the reference to SERPS in the Government's manifesto. They were not going to abolish it, they said, but retain it for those who wished to take part in it. Now we are told, "We haven't broken a pledge; we have reformed SER PS." l am sorry, but anybody who says that cannot have read the very clear Act I introduced and the even clearer White Paper, describing it in its entirety, which 'was called rightly Better Pensions.
What we stressed in our Bill was that we were talking not about a basic pension or a second pension but about the components of one income that the pensioner would get on retirement. The Bill said that the income received on retirement consisted of two components: one was the basic state pension and the other was the earnings related one. They were merged into just one income.
Now the Minister, skilfully—I entirely agree with Lady Turner on the skill of the Minister and I sometimes wonder what her conscience is like at night—has been plugging away, taking just one of those components in isolation and saying, "Oh, but look how much more generous we are being". She has repeated again today—I shall have to look at. her exact words in Hansard—that so many pensioners will get a second state pension, worth so much, et cetera; but she carefully did not tell us what was happening to the second and basic component: the basic state pension scheme—and that is an integral part of a retired person's income.
What is the good of giving people a little bit more and calling it a "state second pension" while at the same time ignoring the fact that the other component is deliberately being left to wither on the vine? I entirely agree with Lady Turner when she said, first, that she is a great believer in state insurance—if am, too—and, secondly, that she was worried that this Bill was deliberately designed to destroy the state insurance scheme. That is what the Government's persistent refusal to restore the earnings link for the uprating of the basic pension component means.
By the way, as I understand it. and I am willing to be corrected by my noble friend the Minister, you do not get all this second state pension from the word

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"go": you have to work for 41 years for it now. If I am wrong about that, no doubt she will correct me with enthusiasm. One hears the description that this is all rather like a ripe apple waiting to fall into the eager pensioner's hands so that the pensioner will not worry that the basic state pension component of their income is shrinking year by year in relation to the national prosperity.
That is why the major battle remains, and must remain, the demand for the restoration of the earnings link for this important component of the retired person's income. Incidentally, I was waiting eagerly to hear what Earl Russell had to say on the matter. I was very disappointed that he said that he was not going to deal with it but leave it to Lord Goodhart. I was interested, because he refused to back an amendment to restore the earnings link which I and a number of my colleagues, including Lady Turner, pressed on the Welfare Reform and Pensions Bill. He said that he was waiting to see what the state second pension provides. I wanted to know whether he had been satisfied. I am particularly interested because the Liberal Democrats are a little divided on this issue.
In another place a few days ago, rebel Labour MPs moved an amendment to the Bill to restore the earnings link for the basic state pension—that other essential component in a retired person's income. I am glad to say—I do not know whether this House realises it—that no fewer than 31 Liberal Democrat MPs voted with the Labour rebels. I hope that I live to see the day when there are a few real Liberal rebels left in this House; 31 Liberal Democrat MPs! It is true that I heard the Liberal Democrat leader Charles Kennedy tell Jonathan Dimbleby on a TV programme on a recent Sunday that he did not support the restoration of the earnings link because it would cost too much. So what has happened to the Liberal Party? It is not the tail wagging the dog, but the body wagging the head. So I await Lord Goodhart's speech—
Lord Goodhart: My Lords, I am most grateful to the noble Baroness. Perhaps she would be well advised to wait to hear what I am going to say in winding up on the debate.
Baroness Castle of Blackburn: Yes, but I was having a little têteàtête with Earl Russell. I spend a great deal of time in this Chamber listening to what he says, so I thought that he would want to explain whether what the Bill proposes on the state second pension had converted him. I still wait—
Earl Russell: My Lords, perhaps I could make it clear that in this Chamber my noble friend Lord Goodhart speaks for these Benches on pensions.
Baroness Castle of Blackburn: I am surprised to hear that. I have heard a great many words from Earl Russell about pensions. Never mind; if the Liberal Democrats have two spokesmen on pensions, the more the merrier, as long as they end up with one policy.
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The restoration of the earnings link is not just a rather pretty idea, as some of us have said. It basically affects the whole structure of pensions if you look at it as a whole. Take, for instance, the crediting-in proposals in the Government's provisions. I, of course, welcome the announcement regarding people earning between the lower earnings limit and —9,500 per year, which is—I believe that I am right—only half average national earnings. Half national earnings has been defined on more than one occasion as the dividing line between rich and poor. Of course I welcome it. But what people do not realise is that when we drew up our pensions scheme, the lower earnings limit was fixed to tally with the basic state pension. If the earnings link, which was an integral part of that policy, had not been abolished by Lady Thatcher's government in 1980, that basic state pension and, therefore, the lower earnings limit, would today be £97 per week for a single pensioner; above any of the figures about which the Government have been boasting that they are to lift people's income to through means testing.
People wanted more. People would retain their dignity. I am appalled at the lack of understanding in this House about the importance to poor people of their dignity. It is all the more important if you do not have much of anything else. Means testing, as anyone's postbag shows, shocks most pensioners—or a large number of them—because it humiliates them. I received a letter—I meant to bring it with me, but there you are; you are spared it. One chappie wrote to me with the details of what he had to claim to, or admit to. He said, "My advice to anyone thinking of claiming income support is: don't". It was only a few days ago that I received that letter. I do not say that I endorse that advice; I want people to get as much money as they can to meet their needs.
But look at the picture; look at the mess that we are getting ourselves into. The Government have spent two years on nine pilot schemes trying to find out why people are not claiming. They tell us—the Minister said so to me in debates on the last Bill—"We discovered that large numbers of them are too well off, yet they are people who claim to be entitled to it". But that has not stopped the Government from announcing that they are to spend £15 million, starting next month, to make sure that everyone who is entitled to the minimum income guarantee claims it. They are going to have television shows, television call-ins and heaven knows what, with advertisements, costing —15 million, almost—that is nothing, is it?—to try to persuade people to take a minimum income guarantee. I wonder whether we will be told at the end of that exercise that, "Oh, the trouble is that most of them are earning too much".
We are not being honest with ourselves. We are not being intellectually worthy of our responsibilities. When I set out with my colleagues and a wonderful band of special advisers to work out an improvement to the pensions scheme, way back in 1974, we were not airy-fairy scheme drawers-up—pie-in-the-sky; never mind who pays. I have not been a member of eight Cabinets and eight public expenditure exercise agonies

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not to know that you must balance your books and that you cannot ask people to pay taxes or contributions that are unreasonable. But we did try to be honest and open.
I was shocked when I read in Commons Hansard the other day on, I believe, 6th April the Answer given by the Chancellor of the Exchequer to a Question about the restoration of the earnings link. He said, "But pensioners will be getting £800 million more by the end of this Parliament than they would have done even if we had recreated the earnings link".
I wanted to get those figures analysed. I succeeded to a certain extent, with the help of our excellent Library. What did I find? I found that a large amount of that £800 million consists of the increased fuel allowances that were welcomed by all of us. No doubt, when the new free TV licences come in for the over-75s in the autumn, they will count as well.
But the Government have claimed that those fuel payments are to go to every elderly person irrespective of income in recognition of the fact that they are old and need to keep warm. You do not start niggling about whether they are entitled to that or say that if they had saved a bit more they would not be entitled to it. That is what we are doing: we are penalising the thrifty by this extension of means testing.
What struck me was that the Chancellor of the Exchequer said that this payment, which is due to everybody, is, in fact, to be financed from the denial of the restoration of the earnings link. So all these people who rely on their basic pension, including some of the million-odd people who the Government say are not claiming means-tested support, are the people who are denied the earnings link and, therefore, are paying, in effect, for the fuel concession to all pensioners.
Why should it be wrong to give the earnings link to pensioners because they will get a fuel allowance, when it is not wrong, in the Government's estimation, to pay that same fuel allowance to everyone irrespective of income? They have not thought it through. They have not seen it as an integrated whole.
I must not keep the House any longer, but as Lady Turner has said, there will be opportunities at the Committee stage to probe these figures to their very depths in order to try to persuade the Government at least to be logical.
There is a whole area of SERPS provision that this Government have never understood. Take the carers; you would think that they had just thought up the problems of the carers. It was my government who introduced the invalid care allowance, but more importantly—they never mention this—an integral part of the SERPS pension was the 20 best earning years. The maturity rate was 20 years. You paid all the time you were earning, but the pension could mature in 20 years. In assessing entitlement to pension you could claim to base that pension on your 20 best earning years. Think how civilised that is.
I remember talking to a leading member of the Carers National Association just before the Government's Bill was introduced and I told her about this. She said, "That would be fine; that would meet
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most of our needs". Carers are not born in the cradle; they take up caring at a certain point in their lives. The same is true for disabled people.
I end with this: in the discussions in the Commons, our good friends the Liberals, and Labour Members, made some very good points. One sentence stands out: Angela Eagle, whom I believe is a junior Minister in the DSS, said, "The worst thing that happened for women in the labour market was the abolition of the 20 best earning years". So let us be really civilised, really honest and really logical, as we shall try to persuade the House to be when we come to the Committee stage.
5.15 p.m.
The Lord Bishop of Lincoln: My Lords, I wish to comment on Clauses 61 to 66 of the Bill. They concern the loss of benefit for breach of a community order. I join with the noble Lord, Lord Windlesham, in objecting to them in principle and also in the belief that the measures will be counter-productive in practice.
The proposals unfairly penalise the poorest and in many cases, the most socially-excluded people in our society. Many studies have shown a strong correlation between poverty and crime. Pushing poor people into even greater poverty must increase their temptation to steal, burgle, solicit or sell drugs. A reduction in non-housing benefit income will directly affect some offenders' ability to maintain their accommodation, which in itself increases the likelihood of re-offending.
Coupled with the proposals in Clause 46 of the Criminal Justice and Court Services Bill, to gaol offenders who are in breach of a community sentence, the clauses will, if agreed, inevitably lead to a rise in the prison population and threaten further the ability of the Prison Service to improve the education and the possibility of rehabilitation of prisoners. All that seems to conflict directly with the Government's stated intention of bringing down crime rates.
In addition to those practical concerns, I believe that there are also moral objections to the proposals. As employment statistics show, people from ethnic minorities are more likely than white people to he unemployed. These proposals could therefore constitute indirect discrimination against black people, as defined in the Macpherson report.
An even more serious objection, as mentioned by the noble Lord, Lord Windlesham, is that the measures amount to double punishment. The courts will retain all their current powers to impose penalties for breaches of orders, ranging from fines to imprisonment, and the withdrawal of benefits will be additional to whatever penalty the court imposes. Moreover, that double punishment will apply only to the poorest offenders because it will not affect offenders who are in work. Inevitably, it will also affect other innocent family members, including young children, through its impact on the total family income. As such, surely it raises a moral question of how society deals with offenders and their families.
It is wholly wrong that benefit will be reduced before a court has found that the alleged breach of the order is proven. It is like fining everyone who is

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accused of a criminal offence before they go to court, saying, "Do not worry, we shall pay you back if we find you not guilty".
I know that the Under-Secretary of State in another place argued in Committee that that measure is an extension of so-called benefit conditionality and not a punishment. However, the requirement that benefit claimants should be willing to co-operate with attempts to find employment is directly related to their need for benefit. If they were in employment, they would either not need benefit or would need benefits at a lower level. There is no direct relationship between breach of a community sentence and the need for benefits to be paid to an individual who has no income. For this reason, whatever is said, the reduction or withdrawal of benefit has a gratuitous element that gives it all the hallmarks of an additional punishment.
Benefits are, understandably, set at subsistence level. Many probation officers working with offenders would not find it acceptable morally to push them and their families into further debt and destitution. In making the probation officer responsible for sending the appropriate certificate to the benefits office, the legislation undermines and destroys any trust that has been built up between the probation officer and the offender. I should like to remind the House that trust is all-important if effective care and rehabilitation is to take place. I hope that the Government will think again about these clauses. I hope also that I shall be in a position to oppose them in Committee.
5.21 p.m.
Baroness Crawley: My Lords, I welcome this Bill as a further stage in the Government's responsibility to ensure that our welfare system reflects the contemporary needs of our most vulnerable citizens and delivers for them. Despite this being a three-in-one Bill with added extras, amusingly described as a "finger buffet" by the noble Lord, Lord Rix, there is a theme running through it. It is that the welfare system should impact far more fairly and effectively on those with whom it is engaged so that the benefits that they have a right to, or the outcomes of the responsibilities they undertake, as with community service, are fairer, more transparent and more immediate.
The Bill's measure of success will be if, following the proposed reform of child support, children actually receive the money and practical support to which they are entitled and receive it more speedily with far less bureaucratic obstacles than is currently the case. The Bill will also succeed if the second state pension actually does what it proposes and transfers greater resources to low earners, many of whom, as several speakers have said, are women, and to the long-term disabled—all with broken work records.
The third major part of the Bill, in the words of the gracious Speech last November, will,
"reinforce people's obligations to society by linking benefit entitlement to compliance with community sentences".—[Official Report, 17/11/99; col. 3.]
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This proper aspiration will also only succeed if its reinforcement of community sentences is carried out in a way that targets the offender without spreading the consequences of that sanction to those close to the offender who may be innocent of any wrongdoing.
Several noble Lords who are speaking today made extremely valuable contributions a few weeks ago in the debate I had the opportunity to initiate on child poverty. The whole purpose of the child support section of this Bill is to use the reform of the CSA as a vehicle towards ending the scandal of child poverty. It is not just a case of me, a Labour Back-Bencher, saying that: a number of organisations have written to noble Lords. The Children's Society says that, as a national organisation serving the needs of children and young people, it welcomes the proposed reforms and the child-centred spirit in which they are made.
As we know, the CSA was established to reinforce the financial responsibility of both parents to their children, whether they live together or apart. However, in many cases that has not happened. Honourable Members in another place have bursting postbags and acrimonious surgeries as evidence of the need for CSA reform. The noble Lord, Lord Higgins, made reference to the acrimony that arises under the current system.
Under the present system, CSA staff spend 90 per cent of their time doing the assessment calculations and only 10 per cent of their time chasing payments. Only 40 per cent of assessments made are paid in full; and only 66 per cent of maintenance due is actually paid. That is an awful lot of children in need, given that the CSA is currently handling more than 998,000 families. As my noble friend the Minister said, it is expected that more than 1 million children will benefit from the Bill's proposals, many of them receiving maintenance for the first time. That has to be a major step forward in combating child poverty.
This long overdue reform of the CSA will provide a far simpler system of rates. Levels of liability will reflect a simple percentage of the non-resident parent's net income; families on income support or income-based jobseeker's allowance will be able to keep up to £10 a week of maintenance paid to their children; there will be a tougher sanctions regime so that non-resident parents cannot escape their responsibilities and will be fined for non-co-operation with the CSA; and the new CSA will be far more focused on delivering a service to clients, thereby building up a far better culture of assistance and accessibility.
The second major section of the Bill upon which I should like to spend a few moments is that relating to the state second pension. As chair of the Women's National Commission, I particularly welcome the fact that those who will gain from the state second pension—the 14.5 million low and moderate earners—will include millions of women. These are women with broken work records, as my noble friend Lady Turner pointed out, and women carers. The Bill should help approximately 2 million carers, as my noble friend Lady Pitkeathley, so graphically outlined, the vast majority of whom are women.

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If women are earning between the national insurance lower earnings limit of £3,432 and the new low earnings threshold of £9,500, we understand that, under the Bill, they will get pension credits as if they were earning £9,500. That will surely go a long way towards pulling down the hard architecture of poverty in old age, which, as we know, is built up over a lifetime by so many women's low and erratic pay patterns.
If things had been left as they were in 1997, more than two-thirds of women workers earning less than £10,000 a year would have no second pension provision whatever. If nothing were done, very many women would end up as part of the one-third of people in this country who could be left to retire on means-tested benefits alone in the year 2050.
I believe that this Bill will make a substantial difference in improving the lives of vulnerable children in its reform of the CSA and in opening up far better pension prospects for low and moderate earners, especially women. I therefore welcome it as another route out of poverty.
5.28 p.m.
Baroness Fookes: My Lords, as the noble Baroness, Lady Crawley, reminded us, the noble Lord, Lord Rix, described the Bill as a "finger buffet". I do not look at it as a "finger buffet" at all. To me, it is very much more of a rather vulgar club sandwich, with several disparate layers and far too thick to enable one to take a civilised bite out of it. But, seriously, it shows a disturbing trend that we have seen not only with this Bill but also with others that the Government have brought forward—no doubt they will continue to do so—namely, putting several Bills into one so that we are forced to consider in the time for one Bill what should have been spread out for consideration in three. In other words, we are getting far more legislation even than one might have supposed from one's calculations. I do not believe that this is the right trend; we want less and better legislation rather than the quantity that we are now getting.
Having made that protest, I now make several points on the Bill. Like the noble Baroness, Lady Castle, I confess that I have not read all the clauses and schedules. However, I have read sufficient to give me concern over certain aspects. I am delighted to note that the Child Support Agency system of payments will be simplified. As a former MP, I saw all too often in my surgeries unhappy women trying to cope with a court system which appeared to be far too difficult for them to manage and which resulted only in court orders that were broken. They then faced the miserable prospect of returning to court, of endless delays and of no satisfaction.
I believed—and still do—that the principle of the Child Support Agency was a fine one. However, the system was far too elaborate and far too complicated. It caused endless resentment among the fathers who defaulted on their payments. It also caused endless problems for the employees of the Child Support Agency. A regional office of the Child Support Agency was located close to my former constituency in
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Plymouth. Some of the young women employees at that office were targeted by angry fathers who took photographs of them and recorded their car registration numbers. That was a frightening experience for people who were trying to operate a system that was far too complicated and to carry out a task that was not of their making. I hope that the new system will make their lives easier. No one has mentioned them in the debate today. It is important that we place on record our recognition of the contribution that they have made and of the difficulties that they have experienced. We thank them for what they have achieved and we hope that their lives will be easier in the future.
I turn now to pensions. I am glad to note that the noble Baroness, Lady Strange, is present as she referred to war widows. I fully share her views on that matter and I look forward to working in partnership with her at later stages of the Bill, when we hope to bring forward a suitable amendment on that issue. I believe that it is important to place that on the record now.
I was not, of course, surprised, but disappointed, as always, to discover that one matter had been left out of the Bill altogether. The noble Baroness will not be surprised to hear that I refer to the frozen pensions of expatriates who live abroad. Their pensions are frozen when they leave the country. I know what the noble Baroness's reply will comprise as she gave me a frank reply recently; namely, that the cost of meeting the provision I seek would be too high and that there are better ways of spending that money. However, that remark has caused great offence to the pensioner associations with which I am in contact. The House will understand that those bodies see this provision in terms of an obligation which has not been fulfilled and not in terms of some kind of optional decision on the best way to spend money. I hope to return to that also on another occasion.
I turn to the matter of reducing the benefit of those who breach community service or probation orders. I shall not discuss this in great detail as no one could have given a more masterly exposition of it than my noble friend Lord Windlesham. I agreed with him when he said that this issue was objectionable in principle and probably unworkable in practice. No one has mentioned the people in bail or probation hostels who have to make some payment for their accommodation. Presumably, if they breach an order and their benefit is reduced, they will then be unable to pay for their accommodation. I believe that that is wholly impracticable.
I urge the Government to reconsider the difficulties that arose when the Child Support Agency was set up with far too detailed a system. I fear that the Government will go down the same road with the measure I have just mentioned. If nothing else, I believe that such a measure could involve clear breaches of the Convention on Human Rights. I have received one or two submissions from lawyers who have suggested that the measure could be in clear breach of certain articles, notably that concerning fair trial.

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Noble Lords have already said that it is unusual, to say the least, to impose a fine or punishment without having first secured a conviction in court. I believe that it would be possible to challenge the measure on that basis alone, although I do not speak as a trained lawyer. I also believe that the measure could be regarded as discriminatory in so far as those in work who breach an order would not be subject to such a penalty as they do not receive benefits but those who are in receipt of benefits would face that additional hazard. I believe that the measure will lead to problems in that regard. I urge Her Majesty's Government to think again about that measure and seriously to consider withdrawing it altogether, or at least to make it available to the courts as a sanction if they see fit to impose it, rather than to introduce it as a compulsory, non-discretionary element.
Noble Lords will understand my muted feelings on the Bill. I am disappointed by certain aspects of it. However, I hope that in Committee and at subsequent stages we shall make some improvements to it.
5.37 p.m.
Lord Davies of Coity: My Lords, as we all know, and have been reminded in the debate, this is a lengthy and comprehensive Bill. It embraces child support, pensions and social security—all matters of fundamental importance to nearly everyone. It is a Bill which reflects the enormous changes that have taken place in our society. It addresses not only the problems that face us now but also anticipates the problems of the future if nothing is done now. It is a Bill which I am sure we can all generally support in principle, even if there are differences as regards the means by which the fundamental objectives of the Bill are achieved.
The eradication of child poverty and the building of the foundation for security in retirement are undoubtedly aims with which no one can quarrel. These aims are precisely what this Bill seeks to achieve. The Bill will help to ensure that pensioners have a life to look forward to. It is also designed to provide more support and greater opportunities for children. The Bill sets out clear responsibilities for working adults, as well as promoting rights for them.
In addition to reforming the system of child support, introducing the state second pension and introducing disciplines in respect of community sentences and benefit entitlement, the Bill also addresses occupational and personal pensions; the powers of fraud inspectors; housing benefit overpayments; national insurance contributions on benefits in kind; and war pensions—all issues which need legislative attention.
Times have changed and circumstances have changed. If our welfare state is to mean anything in the 21st century, it must also change. I compliment the Government on their vision and courage on embarking upon this programme of change which is not only desirable but also necessary.
However, I intend to concentrate on the child support aspect of the Bill. Children are the ones least able to speak for themselves, but they are the ones who
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will inherit the future and they are the ones who will determine what that future will be like. Therefore, apart from our moral obligation to do all that we can to support and to protect our children, we must also do so if we want the future to get better and not worse.
We know of all the problems that have arisen for children born outside marriage—particularly those from teenage pregnancies—and of the enormous increase in one-parent families. In the main, this has meant a considerable struggle for the sole parent bringing up the child or the children, the overwhelming and vast majority of whom we know are women.
In an effort to get the absent parent to accept responsibility for the child or children he has fathered, the previous Government introduced the Child Support Agency. We do not quarrel with that concept, but we must recognise that it has not been working. The current system is complex and complicated. Some 90 per cent of the time of staff is spent on doing sums and 10 per cent on chasing payments; only 40 per cent of assessments made are paid in full; and only 66 per cent of maintenance due is paid. This cannot be right.
That is why the Government are proposing to simplify the system under which the Child Support Agency works. Through this Bill, an absent parent—described as a "non-resident" parent—will pay a percentage of his net income to support the child or children he has fathered. The Bill also provides for reduced rates for those on low incomes and more help for the poorest of parents. Through these provisions it is expected that more than 1 million children will benefit from the new system, with many of them getting maintenance for the very first time. These must be measures that we can all support. Children have a right to care and parents have a responsibility to provide it. If a father does not voluntarily fulfil that responsibility, then in the interests of the child the state must impose it.
When I was a young man—I am sure that most of your Lordships' House will remember this—if a lad got a young girl "into trouble" or "in the family way", as I recall the circumstances were described, fulfilling his responsibility by getting married was done without a second thought. Although that may no longer be the case, a father must accept responsibility for the child he has fathered; hence the reason for the establishment of the Child Support Agency. Whatever sympathy we may have for parents, absent or otherwise—as indeed expressed by the noble Earl, Lord Russell—let us not forget that our duty is to the child and to the children; the child must come first. Child poverty must be removed; bureaucracy dramatically reduced; and maintenance paid and provided more quickly.
This is what this Bill is about—and the quicker it becomes law the better. My only regret is that it appears that, because of legislative and operational timetables, the introduction of these provisions will not take place until the end of 2001. So the quicker we deal with the Bill the sooner children will benefit.
In conclusion, I should like to share with the House a recent experience that I am so pleased to have had. Last Friday afternoon my wife and I were invited to

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the primary school in our village which four of our grandchildren attend. We were invited as grandparents. Two classes of six year-olds, one of which our granddaughter attends, were putting on a performance for their grandparents, singing and individually expressing their feelings and love for their grandparents. We were provided with tea and cakes. It was a wonderful afternoon. In these two classes—this is the point—there were fewer than 60 children, but what was so wonderful is that there were nearly 200 grandparents there. I am sure that the House can imagine the amount of emotion generated.
I know that these children are having a wonderful start in life—in their school, in their homes and in the community in which we all live. I wish that every child could have such opportunities. I believe that this Bill, along with other programmes and measures being brought forward by this Government, will do a great deal more and provide greater opportunities for all the nation's children in the future.
5.44 p.m.
Baroness Howells of St Davids: My Lords, in speaking to this Bill, I confess to a certain crisis of identity. I share most of the views of the noble Earl, Lord Russell, on the CSA as an organisation; however, I welcome the proposed reforms envisaged in the Bill, especially the child-centred spirit in which they have been suggested.
The introduction of the child premium, not in the Bill itself but in the White Paper on children's rights and parents' responsibilities, must be seen as both a vital and a tangible expression of the Government's commitment to putting children at the centre of all child support reforms and to abolishing child poverty. The Government's introduction of a simple formula for calculating child maintenance is certainly to be welcomed.
However, the Government's claim that they are giving more help to the poorest parent falls short when they speak of tougher sanctions against those who do not comply—for example, by making withholding information a criminal offence, with fines of up to £1,000 and a late payment penalty. In itself, it seems only right and proper that those who do not comply should be penalised. But I should like the Minister to pause for a moment to consider what the reasons may be for those who may fail to comply—for example, those who have been raped; those who have had accidents which have resulted not from a stable relationship but from other forms of unsociable behaviour; those children who have children themselves; those 13 to 15 year-olds who have been raped by fathers, stepfathers or older relatives who may themselves be drug addicts. No one would suggest that such persons should be protected, but, life being what it is, these young mothers have to bear a cross in silence, often to protect those whom they love, who are their nearest and dearest and who could be hurt beyond repair. To penalise them in this way may impose greater poverty.
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I believe that the Government are truly trying to eradicate poverty, but we have only to read the papers to see what can happen in some cases when vulnerable children with children are forced to mime the father of their child. I have known of cases where the stepfather has been gaoled for six months—rightly so, I am sure your Lordships will agree—but the young mother is made to feel so guilty that her life and that of her child become untenable. I shall not bore your Lordships by speaking of cases where these young mothers have been forced either to give up their children or to flee with their children to places of safety—not from the man responsible for the pregnancy but often from their own mothers, aunts or cousins, whose loved ones, in their eyes, have been put in gaol because of this unsociable behaviour. I urge the Government to put in train a safety net for those unfortunate children before seeking sanctions as the only way forward.
Several surveys have shown that many lone parents are surviving at the edge of a basic existence. Family and community support systems are fragile. Despite these difficulties, lone parents have the desire to change and return to work.
We must, as a Government and people 'with responsibility, provide conducive circumstances and, more importantly, affordable childcare which has the flexibility to enable those lone parents to return to work, to know that their children are looked after and not to be dependent on state aid.
The penalty proposed will not only delay the return to work but may lead to child neglect among the most vulnerable in our society. Sometimes when we make laws we forget that there are centigrade people and fahrenheit people, the same, but having very 'very different circumstances. I shall not take time to explain to your Lordships what. I mean by centigrade and fahrenheit people because I think you will know yourselves if you think about it.
Finally, in Clause 10, on the subject of appeals, in the interests of a fair and just process I would suggest that tribunals set up for any such appeals should be headed by at least three persons, of whom one should be of the same sex and one should certainly be of the same ethnic group as the qualifying person, to make such judgments. Our different ethnic groups have very different positions in this society.
Baroness Byford: My Lords, in my maiden speech nearly four years ago I spoke about the role of voluntary organisations and the work they do in today's society. I mentioned the WRVS and their work in running centres for families and as a place for visiting parents, usually the fathers, where I hey could come together to meet their children on neutral territory.
In an ideal world parents would work through their difficulties and remain together. However, this is often apparently not possible and instead means have to be found to ensure that the absent parents remain in touch with the children and help to support them. Equally, the parent with custody rights has to be

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encouraged to ensure that the children are able to meet the absent parent regularly. As other noble Lords have said, that is often the father.
I can imagine little worse in an already fraught situation than to have to grit my teeth and wave the children a brave goodbye as they trot off to meet an absent parent who pays little or nothing towards their support or who regularly fails to pay on the due date.
The Child Support Agency was intended to make the lot of those with the responsibility of care easier to manage. As it stands, and as others have said, the accumulation of the information necessary to decide the level of payment takes, I believe, 90 per cent of the time available, leaving only 10 per cent for enforcing the ruling. This is clearly not enough, especially as about one-third of absent parents—usually the fathers—refuse to co-operate with the agency.
I am sure we are all agreed that reform is necessary. Biological parents must take responsibility for the children they beget. The formula to be used in deciding the form and level of that support should be simple but, I believe, flexible. The administration system should be direct and effective. The time taken from the receipt of request for help to settlement should be comparable with the targets set in other areas of professional life—for example, in the treatment of major illness in hospital.
The recent employment of the private sector in the provision of advice on debt management and in the collection of overdue moneys is to be welcomed. However, the Government's proposal to establish new specialist inspectors to obtain information from employers and the self-employed needs very careful consideration. It suggests that they have in mind a formula which will be based on the assessment of ability to pay rather than on the assessment of the child's need followed by the hearing of an appeal that may be brought by the absent parent.
In his thoughtful contribution to the Second Reading debate in another place, Frank Field highlighted the formula as an area of concern. He also said that the proposed rates are set too high and that the moneys due should be collected by the Inland Revenue and not by the social security agencies. In the same debate Anne McIntosh raised the question of whether overtime payments should be taken into account in calculating the sum due. Jeff Rooker, in response, was of the opinion that it should be where it was a regular part of the income. Perhaps when the Minister comes to respond, she might enlarge upon the Government's thinking in that area.
I should like to suggest that that argument should be left to an appeal panel to decide. I was interested to hear what the noble Baroness, Lady Howells, has just said. Many absent parents are only too willing to help support their children. They want to be assured that the level of support is fair and is comparable with what others in the same position are paying. If they have to work overtime to meet the required sum they will do so. Why spend time and effort trying to meet trouble where there is none?
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While I support the need for reform, I am seriously concerned at the volume of detail which has already entered the debate. It may well be that we shall need to look at it again more closely when this issue comes up before us at committee stage. It has been suggested that were the formula simpler it would be seen as fair by the vast majority or parents. Were this linked with a simple appeal system, along the lines perhaps of a small claims court, only a relatively small proportion of parents would feel constrained to use it. The net result would be a considerable reduction in the amount of dissension generated by the system and the children would obtain the benefit earlier.
I would also like to suggest that—just as having a named nurse when in hospital—it would be sensible to have a named official in charge of each of the CSA claims. This might speed the agreement between the warring parents. My suggestion is that it should be the same person who would deal with both sides, the male and the female concerned. Surely, this would be aided if that named individual were clearly responsible for listening to both sides of the argument within the family debate. Perhaps a simple formula, an easy-access appeal system and a named official would reduce the need for sanctions against non-co-operative parents. Where the argument is about money and what can and cannot be afforded, it seems self-defeating to talk about fines of up to £1,000 and the removal of driving licences when so many people cannot work without a car. Indeed, that point has been echoed by many speakers in the debate. Surely, if there is to be an ultimate sanction, it would make much more sense to consider removing someone's passport than their driving licence.
This Bill deals with a multitude of subjects, including the number of benefits, national insurance contributions and that well known catch-all "miscellaneous". However, I shall confine my remaining remarks to a few words on pensions. At Second Reading in another place, the Secretary of State said:
"We are helping some 4.5 million low-paid people, 6 million moderate earners, 2 million carers and 2 million disabled people with broken work records".—[Official Report, Commons, 11/1/ 2000; col. 161.]
I have added that up and it totals 19.5 million people who are to be helped by this Bill. Will the Minister assure me that my mathematics are correct, because that is one-third of our population who will be helped if this Bill is passed?
I refer to something my noble friend Lord Higgins mentioned about the actual payment of benefits to people, whether they are in the form of pensions or of welfare payments. I have looked carefully in Hansard at the responses of the noble Baroness, Lady Hollis, to the various questions. While I accept that the Government are looking at different ways, I did not see any final decision as to what method will be used to pay these benefits—will it be by Giro or by a card?—if they are to continue to be paid through the Post Office.

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Finally, am I the only person wondering whether it would not have been simpler to require everyone, earning or not, to contribute to the state pension; and whether it would not have been simpler to carry out a radical review of the rules for crediting contributions? Would it not be possible to use the mobile phone licence bid money—I understand that that is likely to amount to several billion pounds—to convert the state pension scheme to being partially funded? At the same time, I feel that the Government should look very carefully at the system of annuities. At Second Reading in another place, the point was made that low inflation, low interest rates, an increase in private pension money in the market and a lack of gilts on offer will drive annuity rates even lower.
This Bill comes at a time when, in the pecuniary sense, the Government can afford to think laterally. I hope that during the passage of the Bill we shall be able to persuade them to do so.
6 p.m.
Lord Christopher: My Lords, I fully support the principles of the Bill. There are some loose ends which I hope can be tidied up, but I do not wish to deal with them. I seek to address the question of pensions and, in particular, the national state pension, to which a number of noble Lords have referred.
The noble Earl, Lord Russell, said that we can only start from where we are. I cannot quarrel with him over that. But it is sometimes interesting to find out the route we took to get there. I was particularly impressed by what the noble Baroness, Lady Castle, who is not in her place at the moment, had to say. I would wish to take the noble Baroness back to the early 1970s, when it was at last beginning to dawn on people that the post-1945 situation of social security and benefits was in grave danger of running slightly out of steam. At that time, Anthony Barber, as he then was—the noble Lord, Lord Barber, as he became—produced a Green Paper on the concept of a negative income tax. The union of which I was then an assistant general secretary—the Inland Revenue Staff Federation—supported that proposal in principle. The proposal certainly had two serious faults. The first was its huge cost and the second—perhaps because of the first—was that the numbers gave the shifts of income not from the middle ranking paid people to the lower paid but the other way round.
The strongest opponent of that paper was probably the noble Baroness, Lady Castle. With the help of Lord Kaldor—Nicky Kaldor as he then was—a highly respected economist, she was successful and the Green Paper disappeared into limbo. It has taken almost 30 years for anyone to go back to that thinking and try to see whether there did not lie in it some assistance towards the serious problems which we currently face.
Lord Higgins: My Lords, by way of an historical footnote, the proposal had gone rather further than a Green Paper. We did in fact have a draft Bill prepared. It was only because we lost the election that it did not come forward. As the noble Lord rightly implied, it would have involved spreading the cost over a
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considerable number of years before ]t could have been fully implemented. It was a committee in the new government, including the noble Baroness, Lady Castle, which killed the idea. It took a very long time to get it there. But we had every intention of legislating had we not been so unfortunate as to lose the election.
Lord Christopher: My Lords, I am not at all sorry that I allowed the noble Lord to intervene. That was a fascinating piece of history, although I do not share the noble Lord's feelings about who won the election.
The cost of the state pension today is £30 billion, which is 10 per cent of GDP. We are all aware of the range of expensive demands being made from all round this House, from the other place and in the press for a great deal more expenditure elsewhere. The proposals in the Bill will add £5 billion to that cost in current terms by 2050. The noble Baroness, Lady Crawley, gave us a somewhat bleak picture of what would have arisen in about 30 years' time had the Government not taken this problem by the scruff of the neck and attempted to do something about it. Alistair Darling has produced a formula which is of considerable assistance. As I said in the House some time ago that no one since Lloyd George has ever got pensions right, I am certainly not going to give Alistair the benefit of actually conquering all, because I suspect that he has not. We are on something of a learning curve.
Some people feel that the only solution to the problem is to increase the state pension. I cheerfully acknowledge that it is unlikely that it is going to many really wealthy people but it is certainly going to a great many people who, strictly speaking, are not in that need. I declare an interest. I am one. No one has offered a solution beyond that—not even from the Opposition Front Bench. I suspect that the noble Lord, Lord Higgins, did not offer a solution because the integrity which he has displayed over so many years and which I have respected would scarcely allow him to do so given Mr Portillo's proposals for reducing taxation.
Even though the minimum income guarantee is to be linked to earnings, my advice to colleagues is to tackle that. There is nothing I have seen in the papers that we have received over recent months to suggest that an earnings-related link is the sole link or that something special could not be done. Reference was made to the winter payments and to the television licence assistance being given globally to those who qualify by age. I suspect the answer is that there is no other way of doing it. No one has yet come up with a refined system which will permit that degree of discretion.
I hope that we can proceed to support the Bill and deal with some rough edges. But, certainly on the central theme, I hope that we can hold to it.
6.7 p.m.
Lord Brookman: My Lords, nearly every speaker has agreed about the importance of the Bill, albeit some noble Lords have said that it is difficult to follow

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its every detail. From my perspective, the Bill deals with the Government's broad welfare reform agenda and its general thrust is to be welcomed. However, an area of concern to many—this point has not been raised in the debate—is the issue of pension schemes and the proposed arrangements in Clauses 42 to 45 to change the way in which member trustees are nominated to the trustee boards of those pension schemes. This point may not raise as much emotion as some of the key areas of the Bill that have been discussed today but it is very important.
Pension schemes are now high on the agenda of working people. That was not the case in my younger days when starting employment but it is so now, and it is right that it should be. Trade unions ensure that pension schemes are high on the negotiating agenda with employers. Trade unions and their members regard pensions and pensions contributions as deferred pay.
I should like to share with the House the concerns of pensioners and their representatives relative to company pension schemes and Clauses 42 to 45. The Pensions Act 1995 introduced a requirement for member-nominated trustees in occupational pension schemes. The good intentions underpinning the Act in that area were soon undermined by the numerous opt-out opportunities that were provided for employers to avoid the scrutiny that a member trustee can provide to a pension scheme. I am very pleased that the Government intend to change the position.
I now turn to the concerns that I want to express. Early indications suggest that the new structures may have limited value for one section of members in company pension schemes; namely, the pensioners themselves. From my own experience, pensioners nominated as trustees can, and do, provide a welcome knowledge and a high level of independence which are invaluable. Under the Bill, amendments to Section 16 of the 1995 Act would provide a framework that would allow trustees flexibility over certain aspects of nomination and selection. It is feared by many pensioners that the prospect for pensioner representatives could be few and far between if trustees are themselves allowed to allocate the majority of member-nominated seats. In other words, would it not be the case that active members would nominate other active members, and that other classes of members would be excluded? That is the genuine concern of pensioners receiving payment from company pension schemes and of pensioner organisations. What pensioners want is proper representation as trustees, not under some grace and favour arrangement but in their own right. I share their view, as I hope does my noble friend the Minister.
Perhaps my noble friend will be good enough to reply to the following questions and concerns. Does she agree that pensioner trustees would add value to the deliberations of trustees and that they would add a voice of independence? Will my noble friend ensure that pensioners are given equal treatment in the nomination and selection process? Finally, does she share my view and that of many others that the
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requirement for 10 per cent—which could mean 10,000 objections—to register opposition to employers' proposals is excessive, particularly in regard to large schemes?
I am sure the House very much wishes to hear my noble friend's comments on those points. In replying, I hope that she will satisfy the current concerns of pensioners and others regarding pension schemes.
6.11 p.m.
Baroness Greengross: My Lords, I am pleased to have an opportunity to speak in this debate. I shall concentrate mainly on issues relating to state pensions.
The Bill introduces the state second pension. I very much welcome the principle of crediting in those with low earnings or who are unable to work due to caring responsibilities or disability. However, I am concerned that the level of the state second pension, when added to the basic pension, will not be enough to provide a decent income in retirement for everyone.
The DSS report, Opportunity for all, gives an example of a woman who spends her life on low earnings or caring for young children who, in 2051, would have a total pension of £84 a week from both the basic pension and the state second pension in relation to today's earnings. Recent research by the Family Budget Unit commissioned by Age Concern suggests that that is not enough to avoid living in poverty and that it is a long way off the £150 a week, the minimum amount in total that is needed for a modest but adequate standard of living in retirement. To address that problem, both the level of the basic pension and the level of the state second pension will need to be higher.
While the state second pension will help people in the future, there is also a need to address the urgent problem of today's pensioners. The Government have already made some welcome improvements; for example, increasing the minimum income guarantee and other means-tested benefits for people of 60 or over and proposing to increase the capital limits quite generously from April 2001.
However, many older people who have struggled to build up savings or additional private pensions feel penalised for having done so, while others who would like to work part time are deterred from doing so because they would lose benefit. The Government have said that they will consult on a pensioners credit to reward work and saving, and I look forward to hearing further about this.
One major problem is that there is no official assessment of the actual needs and living costs of older people on which to assess the adequacy of current benefits and pensions. In order to address that, I should like to see the Government developing budget standards. The Family Budget Unit's report, Low cost but acceptable incomes for older people shows how these can be developed and indicates that current pension and benefit levels are not high enough to enable all older people to avoid living in poverty.

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I have already referred to the importance of looking at the assessment of savings and income to ensure that people do not feel penalised for having saved. However, above all the Government must recognise the importance that older people place on having a basic non-means-tested pension and the anger there has been at this year's 75p increase. The level of the basic pension needs to be improved to act as a true foundation on which to build up additional income in retirement.
I now turn to Clause 38 dealing with inherited SERPS. As is now well known, the 1986 legislation would have halved SERPS for people widowed on or after 6th April. Most people were unaware of the change and some received wrong or incomplete information. On 15th March, the Government announced that they would delay the change to October 2002 and introduce a protected rights scheme to provide redress for people who have been misinformed.
Speaking in this House, I welcomed the Government's recognition that they must take responsibility for addressing this difficult situation, which is not of their making. However, I expressed some concerns about how a protected rights scheme would work in practice and whether everyone affected would find their spouse's financial position secure. On considering the matter further and hearing the comments of many people who have contacted Age Concern, I am afraid that my concerns are increasing rather than decreasing. The change has been delayed for two and a half years—that is welcome—but in the mean time it leaves people worried and uncertain about their position. One man wrote to Age Concern stating,
"continuing the uncertainty is a constant source of distress and erosion of our lives".
The onus of proof will be on the DSS. Yet it will still be up to individuals to make a claim; to show that they were given incorrect or incomplete information; to show that they relied on that information; and to show that otherwise they might have acted differently. Many still do not understand the situation. Others may well find it difficult to fit the rules of the scheme because they did not seek out specific information and assumed that the rules had not changed.
I am concerned that those most likely to benefit are those who are well educated, well informed or who have access to good advice and support. Most worryingly of all, however, there is a danger that the scheme will benefit those people who are prepared to be dishonest. Others less able to cope with applying or who, for example, honestly state that they cannot quite remember exactly when they contacted the Benefits Agency and everything that was said, may lose out. For those reasons, a delay of two and half years and a protected rights scheme are an inadequate response to a very difficult problem. I shall return to that matter at a later stage.
I fully endorse the observations of the noble Lord, Lord Brookman, and others about ensuring that pensioner members are represented on trustee boards. In view of the default procedures, although the Bill
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improves the situation it does not necessarily go far enough. I hope that the Minister can reassure the House that the strengthening of the Pensions Act 1995 will go far enough to ensure the involvement of the correct proportion of pensioner representatives.
6.20 p.m.
Baroness Kennedy of The Shaws: My Lords, I speak to Clauses 61 to 66 in Part III of the Bill which provide for a reduction in welfare benefits, or their withdrawal, when an offender breaches a community sentence such as a probation or community service order. I believe that these provisions are in breach of human rights law and our commitments under a number of other international conventions. The measures are retrograde and counter-productive and are bound to increase crime. To push poor people into even greater poverty must increase the temptation to steal, burgle, shoplift, solicit for prostitution or sell drugs.
The noble Lord, Lord Windlesham, spoke of a fundamental objection to the Bill. I agree. These changes create an unacceptable cross-over between the welfare system, which is based on need and entitlement and the duty of the state in any civilised society to keep people above subsistence level, and the criminal justice system. I understand that the measure is to be piloted in a number of areas, but that provides little consolation when the change in law means such a departure from principle and creates a double penalty for the poorest in our society.
The clauses provide that the penalty of reduced benefits will begin when the benefit office receives a notification from the probation service which confirms that an offender may be in breach and is being brought back to court. It is, surely, wholly wrong that the benefit is to be reduced before a court has found that the alleged breach of the order is proven. Reductions will begin as soon as the offender is referred back to court, but we are supposed to be consoled that there will be a repayment of arrears if the court finds that no breach has occurred. As the noble Lord, Lord Windlesham, said, this is the novel idea that punishment precedes trial. I hope that that does not creep into other parts of the system. It is a bit like fining everyone accused of a criminal offence before they go to court and telling them not to worry because they will be paid back if they are found not guilty. Probation officers should comply rigorously with the regulations in bringing people back to court for breaches, but a dreadful moral pressure will be placed on officers if they know that to report, an accused for a second failure to attend will add to that person's social problems and poverty and possibly increase crime.
A matter of serious concern is the differential impact of these proposals. They will apply only to offenders who receive benefits and there is no equivalent sanction for those in work. Withdrawal of benefits will be additional to another penalty imposed by the court. This will be a double punishment applied selectively to the poorest offenders. The extra punishment will seriously affect other innocent family members. The unemployment rate for black males is higher than for

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white males. Thus, black males will be over-represented in the group of offenders liable to a withdrawal of benefit. That will feed into perceptions about the unfairness of the criminal justice system.
These clauses will also impact disproportionately on women. Many courts already face problems in finding suitable sanctions for women, particularly poor ones who cannot pay fines. Often the tariff for women increases. Women may find themselves on probation when such an order would not normally be imposed for the particular offence. These women often have children and therefore have problems in attending. Undoubtedly, the loss of benefit will place enormous pressure on them. Even if a woman is able to persuade the court that there was a good reason for her failure to attend, imagine her problems in the weeks in between in having to manage on significantly less money and go through the process again of obtaining the right entitlement so that the money is put back into her purse.
In opening, the Minister spoke of her serious intent to meet the challenge of child poverty in our privileged society. These measures will add to the problems of children. Loss of benefit impacts on whole families. Research shows that, even where the offenders are adult males, very often they will meet their own needs from the available income and women and children will be left to manage on what is left. If these clauses come into effect, they are likely to visit serious problems upon women and children.
I am glad that the noble Lord, Lord Windlesham, spoke about the Jesuitical claim that this is not a double punishment but another instance of "benefit conditionality". It sounds like another example of economy with réalité. It is becoming unfashionable to speak of matters of principle, but I am an old-fashioned girl. When some of us speak out on matters of principle we are derided for expressing such concerns. It is cynically suggested that we must be looking after a vested interest. When lawyers in this House expressed concern about reducing the right to trial by jury it was suggested that they sought to look after their own interests. When the trade union leader, Bill Morris, suggested that there was a risk of inflaming racism because of changes in the laws on asylum it was said that he sought to look after his trade union members who were truck drivers. I do not expect such cynicism from the Minister. This is a matter of principle. I hope that the Government will think again about proposals which do not conform to the principles of justice and which diminish the honourable intentions of many parts of the Bill.
6.27 p.m.
Lord Haskel: My Lords, I am sure noble Lords agree that, looking back over the past three years, one pattern that stands out is the Government's consistent attack on poverty, to which my noble friend Lady Pitkeathley referred. There has been an attack on poverty in the developing world by the cancellation of debt. Closer to home, there has been an attack on poverty at work by the introduction of the minimum
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wage and the working families' tax credit. There has also been an attack on child poverty by increases in child benefit and child support in this Bill, as my noble friend Lord Davies reminds us. Further, there has been an attack on the poverty of those not in work with the New Deal and the dismantling of the poverty trap. Pensioner poverty has been attacked by the introduction of a minimum income guarantee.
In this Bill, we now have an attack on future pensioner poverty with the introduction of the second pension. I welcome that consistent and determined attack to break the cycle of poverty which diminishes so many lives. It is that part of the Bill which deals with pensions and pensioner poverty that I should like to explore.
It is obvious that the poorest pensioners are those on low pensions who have to rely on benefits. We are all aware of the unfairness and indignity of working hard all our lives and, on reaching retirement, having to exist on benefit, means-tested or otherwise. I do not want to get into that argument. As the Minister said, if no action is taken, the present system means that one-third of working people are destined to retire on benefit. Clearly those people are destined to be the pensioner poor. I therefore join other noble Lords who welcome the state second pension. It will mean that everyone earning £9,500 in a year, and who pays into the National Insurance Fund, will be treated as though they had earned £9,500—a kind of minimum wage for pensioners.
I approve of the idea because most of those earning a low wage are not doing so deliberately to exploit the system. Circumstances force it on them—caring for children or elderly relatives; disability or illness; or changes in the economy affecting their work. This broken pattern of work can take up many years and, indeed, can affect the 20-year rule for SERPS.
The state second pension will, therefore, give these people the pensions that they would not otherwise receive, and they will not have to rely on benefit, which is clearly unpopular and difficult, judging from the nearly 1 million pensioners who do not claim the benefit to which they are entitled.
What about uprating the state benefit instead? In a way, the state pension has already been uprated with the minimum income guarantee. But as is clear from the figures given by my noble friend Lord Christopher, the truth is that there may be some encouragement to move to the private sector for pensions. I do not object to that; it is a sign of the times. Apart from the National Health Service, many aspects of service provision have been transferred to the private sector— I refer to utilities and to transport—all with a regulator to protect the public interest; such is the age in which we live.
Some have argued that the scheme is unnecessarily complex. Perhaps the reason for its complexity is to make the scheme flexible enough to allow people to move into occupational or personal pension schemes and to take the benefits of the second pension with them. This, too, is of particular interest to women whose earnings and circumstances fluctuate more than

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those of men. The scheme must be flexible enough to accommodate that. Who knows what will happen in the future?
Some noble Lords have said that it will take a long time for the scheme to have an effect. Some have spoken of backdating. Such an observation is more about pensions in general than this scheme in particular. The very nature of pensions is that any new scheme can be introduced only for people whose major part of their working lives is still before them. Of course, an occupational scheme would be far better but that is out of the reach of many people. This scheme ensures that those who have worked hard all their lives but whose earnings, for various reasons, have been low or intermittent will receive sufficient pension to retire at above the minimum benefit level. They will not be part of the pensioner poor. It is a good deal for those on low pay; and I welcome it.
The Bill deals also with other aspects of occupational and personal pensions on which I should like to comment. I declare an interest as trustee of a pension fund. Like my noble friend Lord Brookman and the noble Baroness, Lady Greengross, I welcome Clauses 42 to 45 which require that at least one-third of the trustees of pension funds must be nominated by the members. My noble friend Lord Brookman reminded us that under the Pensions Act 1995 employers could make alternative arrangements which meant that no members of a pension scheme were trustees. Quite rightly, that provision has now been removed.
One reason for the absence of member-nominated trustees was that no members were qualified; they lacked the knowledge and skills to understand pension schemes. I agree with my noble friend Lady Turner that the new arrangement emphasises the importance of training schemes for pension trustees—not least to learn the jargon. Such schemes are essential in order that members may be independent and effective trustees. That is the lesson of the Maxwell episode. I hope that the Government will draw attention to the work of the pension education working group and to the responsibility of the Financial Services Authority to promote financial literacy. Of course, the Financial Services Authority is not obliged to advise on different pension products, but it is obliged to promote understanding. I hope that the Minister will ensure that it does so by studying that section of the authority's annual report.
I also welcome Clause 51 about the annual benefit statements sent to members of occupational and personal pension schemes. Most statements about these schemes detail the amount of contributions paid and the current value of the fund. But what people really want is a clear statement of the likely value of their pension at retirement age.
I welcome the requirement that each statement should be accompanied by a calculation forecasting the value of the pension at current prices. It will be combined with a statement giving the state pension rights. People will then have a full picture of their financial situation at retirement. The purpose is to flag
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up problems in advance. If the amount is too little, the time to do something about it is while people are working, not when they retire. These are two measures in the Bill which I think will help to clarify some of the mystery surrounding pensions.
My final point concerns Clause 40. This clause deals with the "Hollis split". The "Hollis split" is not some exotic ice cream dessert; it is the sharing of pensions on divorce. I call it the "Hollis split" because this little bit of social justice is largely due to my noble friend the Minister. In 1995 I supported my noble friend when from the Opposition Front Bench she moved amendments about pension splitting on divorce and was told categorically that it was actuarially and administratively impossible. When she moved to the Front Bench on this side of the House she introduced a draft Bill in 1998, and legislation on pension sharing was included in the Welfare Reform and Pensions Act 1999.
Clause 40 of this Bill tidies up some of the detail and consolidates the principle of the "Hollis split". This achievement is a tribute to my noble friend's grit, vision and determination over the past five years. I hope that noble Lords will join me in congratulating her.
6.37 p.m.
Lord Goodhart: My Lords, I start by agreeing with the noble Lord, Lord Higgins, and the noble Baroness, Lady Fookes, that this is not one Bill but three, as was last year's Welfare Reform and Pensions Bill. That is true to such an extent that my noble friend Lord Russell and I have had to enter into a job-sharing agreement. As he explained, he will deal with the child support and social security aspects of the Bill; I shall deal with pensions and national insurance contributions contained in Parts II and IV.
However, before turning to those parts of the Bill, I should like to state our entire agreement with what has been said today by the noble Lord, Lord Windlesham, the right reverend Prelate the Bishop of Lincoln and the noble Baronesses, Lady Fookes and Lady Kennedy of The Shaws, on the withdrawal of benefits from those in breach, or, even worse, alleged breach, of community orders. The principle is the same as the withdrawal of driving licences from those who are in breach of their child support obligations, although to a more serious level. I am sure we all remember a song from the "Mikado" about the punishment fitting the crime. These punishments emphatically do not fit the crime. They are gimmicks; but they are dangerous and I believe illegal gimmicks.
The main function of Part II of the Bill is to introduce the rules governing the state second pension which we were promised last year. Last year we dealt with the first part of government reforms: the stakeholder pension. No doubt during the course of further stages of this Bill there will be further discussion on some aspects of stakeholder pensions. This year, we shall get the state second pension.
I summarise how, as I see it, the pension will work. It will be implemented in two very different stages. At stage 1 the state second pension is a modified version

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of SERPS, the main modification being that those who earn less than £9,500, which is described as the lower earnings threshold, are treated as having earned £9,500. We are told that all people with earnings under £21,600 will do better under the state second pension than under SERPS, and those with the lowest earnings will, in percentage terms, do best. Those who have, throughout the year, received the care allowance, have had home responsibility for a child under the age of six or have been in receipt of IB will be treated as though they have been earners with earnings at the lower earnings threshold. All those provisions are, indeed, to be welcomed.
At stage 2 the state second pension changes its nature, like a butterfly emerging from a chrysalis. It will become a flat-rate pension, with a pension based on whatever the lower earnings threshold is at the time of the changeover. Stage 2 will be introduced at some uncertain future date when, we are told, the stakeholder pension is up and running. However, at both stages 1 and 2 an earner can opt out of the state second pension and can obtain a rebate of his or her national insurance contributions which can be put into a stakeholder pension or an occupational or personal pension. That will be particularly important at stage 2, when anyone who earns much above whatever the lower earnings threshold then may be will be significantly better off by contracting out.
As I understand it, the lower earnings threshold will be earnings-linked and the earnings factors derived from past years of contributions will be uprated in line with earnings. That means that the starting point of the state second pension for new pensioners will be uprated annually in line with earnings. However, once the state second pension becomes payable to a pensioner, the pension will increase only in line with prices. That means that if the minimum income guarantee increases in line with earnings, as is proposed, the state second pension for any given pensioner could start above the MIG level but could fall below it over a period of years.
The new pension system is, indeed, ingenious. It has many good features. When fully operational, the state second pension should lift everyone with a full contributions record above the minimum income guarantee, at least at the beginning of their retirement. It contains a considerable amount of redistribution and particularly benefits those who are on low earnings or who are unable to earn because of caring responsibilities or incapacity. However, it is fiendishly complicated, and that is a serious problem.
I believe that it will be a particular problem when employees have to take the decision whether to contract out or to stay in the state second pension. That will be very important at stage 2 when the failure by people who earn significantly more than the lower earnings threshold to contract out will have a seriously damaging effect on their pension rights. I should like to ask the noble Baroness how the Government intend to ensure that people who need to take that decision will be properly informed about the advantages and
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disadvantages of contracting out. If there is no proper information, we risk the third great pensions mis-selling scandal.
I believe that there is scope for simplification at stage 2. At that point, the basic state pension and the state second pension, or what is left of them, will both be flat-rate pensions. It would simplify pension arrangements greatly if at that stage the basic state pension, or what is left of it, and the state second pension could be merged into a single state pension with the right for employees to opt out of part of the pension and receive a partial rebate of contributions to pay into stakeholder or other private pensions. I wonder whether the Government have given any thought to that as a longer-term possibility.
I hope that we shall be able to move on to stage 2 fairly soon. I believe that the main problem with the state second pension is its slowness of implementation. On present form, it will take approximately 45 years to reach maturity; that is, to reach the point where everyone who is retiring will be entitled to a full state second pension if they have a full contributions record. Until then, they will have to rely on a mixture of SERPS and the state second pension.
As my honourable friend Professor Steve Webb pointed out in another place, no pension system yet invented in this country has survived for more than about 20 years. Therefore, it may well be that the state second pension will never reach maturity. However, until the state second pension reaches maturity, the pension improvement is inadequate; indeed, as I understand it, under the present proposals the poorest pensioners will be approximately only £1.30 per week better off in real terms by the year 2025 as a result of the introduction of the state second pension.
I can see no objection in principle to faster implementation. This is not a funded scheme, where the full benefits cannot be paid until the fund needed to pay for them has built up. This is a pay-as-you-go scheme. If the Government wanted to do so, they could, for example, treat all SERPS rights as rights to a state second pension. I do not suggest that the Government should do that all at once, but I believe that they could and should accelerate the right to the state second pension.
My honourable friend Professor Webb proposed to speed up implementation by allowing anyone who had proved an entitlement to the state second pension by contributions or credits in any year to receive, by reason of those contributions, two years' entitlement to the state second pension, provided one of those years was exchanged for the right to SERPS accrued in an earlier year. That would mean that earners who have existing SERPS rights could obtain more benefit from the state second pension by substituting it for the less beneficial SERPS rights year by year. That would, of course, accelerate increased government spending on the state second pension, but still over a fairly long time-scale.
There are a number of other issues relating to pension questions, apart from the question of the state second pension. The Liberal Democrats support an

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increase in the basic pension at the ages of 75 and 80. We believe that those pensioners are in greatest need. In addition, the provision of increases at those ages would help to reduce the number of cases in which the amount of the state second pension would, over time, fall below the minimum income guarantee level. That is an issue that we shall bring up in Committee. However, I should like to give a warning to the Government. As we know and as, indeed, we have been told, at Report stage in the other place a number of Labour rebels moved the amendment to restore the earnings link for the basic pension. The noble Baroness, Lady Castle, in a passionate speech made clear her intention to do that in your Lordships' House.
As we made clear in the debates last year, restoration of the earnings link is not our policy. That is not because we believe that the pensions will be adequate as they will stand after the Bill comes into force but because we believe that there are more cost-effective ways to help poor pensioners without forcing them to rely on the minimum income guarantee, which is, of course, income support under another name. As I have already indicated, they include the acceleration of the state second pension and increases in the basic pension for the oldest pensioners. However, if the Government are not prepared to give way on those issues, it is very likely that on this occasion we shall support the noble Baroness, Lady Castle, and the other Labour rebels in your Lordships' House in any Division on a proposal to restore the earnings link, as, indeed, we did in the other place.
Of course, we welcome the extension of the state second pension to carers, to those with home responsibilities and to those on incapacity benefit. However, we are concerned about the requirement in Clause 30 that credits for the state second pension will be available only if someone is entitled to the invalid care allowance, has homecare responsibility or is entitled to incapacity benefit throughout the whole of a year. As the noble Baroness, Lady Pitkeathley, pointed out, for example, carers may lose their invalid care allowance because the person they care for has had periods in hospital lasting more than 28 days in any period of six months. That seems to us extremely unreasonable. We should wish to look at ways of allowing credits to be claimed on the basis of something less than a full year's qualification.
I move to the other pension matters in the Bill. Clause 38 deals with the very difficult question of inherited SERPS. The noble Lord, Lord Rix, spoke eloquently on that. We support him warmly in principle. We shall need to wait to see the words of his amendments before we can commit ourselves to support in detail but we shall certainly look on them with a very favourable eye.
I agree also with the criticisms of Clause 38 by the noble Baroness, Lady Greengross, especially the point that for those who are applying under the government scheme, dishonesty will be the best policy as the proposals now stand.
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In the other place, we moved an amendment to give full SERPS to widows or widowers of pensioners who will be living in 2002 but have already retired, or will by then have retired, and therefore are not in a position to do anything to improve the financial position of widows or widowers. We shall no doubt move a similar amendment in your Lordships' House.
Chapter II deals with a number of matters relating to occupational and personal pension schemes, especially the selection of trustees, the winding up of schemes and the extension of the jurisdiction of the ombudsman. We give those a general welcome, although there are some issues of concern on the selection of trustees and in particular the position of pensioner representatives.
There is a need for representation on the hoard of trustees of pension schemes of both employee and pensioner members whose interests are by no means always in alignment with each other. That issue was raised in particular by the noble Lord, Lord Brookman, and we shall need to look further at those issues in Committee.
Chapter III of Part II contains provisions relating to war pensions. We do not object to anything that is in Chapter III. However, in another place the question was raised of the termination of the right to attributable pensions of war widows who remarry. That is completely intolerable. That issue was debated on last year's Bill in your Lordships' House. The noble Baroness, Lady Strange, moved an amendment then. She will no doubt do so again and, if she does, we shall support her.
We shall also support the noble Baroness, Lady Fookes, on the issue of overseas state pensioners. The only reason that they have a low priority is that most of them do not have votes. Certainly, morally and logically, they have every right to have their pensions increased, along with those of other pensioners.
Finally, Part IV deals with national insurance contributions. The purpose is to make Class 1 contributions payable on all benefits in kind which are taxable in the hands of employees. The alignment of the tax base for national insurance contributions in PAYE makes obvious sense and in principle we support it. Treating some forms of "perk" as NIC-free distorts the system of wages and salaries. That was, for example, particularly true in the case of the company car, which led to an unnecessary and undesirable increase in the number of cars on the road. There is no reason, of course, why employers should not provide employees with health insurance, but that is part of the salary package and should be taxed as such. There may be a case, however, for giving special treatment to the provision of childcare by employers or by third parties at the expense of employers.
The general principles of Part II and Part IV are acceptable, although there are a number of issues which do not appear in those parts which cause us concern. But there are still worrying problems in relation to the state second pension, especially as regards the slowness of implementation. I believe that we shall need to do a lot of work on this Bill at its later stages.
6.54 p.m.
Lord Astor of Hever: My Lords, the Minister put the best possible gloss on what my noble friend Lady Fookes described as a "vulgar club sandwich" of a Bill. As we have heard today, not all noble Lords agree with the Minister's optimism and she will not be surprised that we and numerous outside bodies which have been in contact with us have many concerns which we shall want to examine critically and constructively in Committee.
The noble Earl, Lord Russell, said that the Bill did not find favour on his Benches. We look forward to working with his party to improve the Bill.
First, I turn to the Government's proposed reforms of the Child Support Agency. My noble friend Lord Higgins made it clear that we accept that the CSA needs reform in order to ensure that it functions effectively and with equity. But we have reservations about the way in which the agency is to be reformed, although we agree with the Minister that going back to the courts is not the answer.
We are concerned about the timescale in which the new, allegedly simpler, formula for assessing claims will take place. According to the Minister in the other place, the new system will not come into force until late 2001 and then only for new CSA claims. The transition may therefore be both long and complicated, which may exacerbate concerns over the system's efficiency and cause real resentment among those caught between the two arrangements. That concern was highlighted by the Social Security Select Committee last year when it said that,
"the Government should distinguish between the resources allocated to the Agency to deal with cases under the present child support scheme, and the resources to develop the systems, technology and training for the proposed new scheme".
We are concerned also that there may be pressure for existing cases to move onto the new system before it is clear that it delivers a better service. I should be grateful if the Minister will tell the House what criteria and timescale will be used by the Government to evaluate whether the new system is both more efficient and fairer than its predecessor.
All the evidence is that the new operation of two systems in conjunction may prove highly problematic, particularly if one is seen to be preferable to the other. Added to that is the potential for the IT systems not to be sufficient to cope. I hope that the Government have fully prepared for the operational implications of such proposals. Will the Minister assure the House that the new computer system mentioned in the Explanatory Notes really will enhance efficiency?
We are concerned, as is the Law Society, that under the Bill, the CSA can intervene in maintenance agreements, even when they have been drawn up fairly, agreed by the parents and approved by the courts. That reform really would be a triumph of bureaucracy over fairness.
We have further concerns over the proposals to make criminals out of absentee parents. The decision to incarcerate may very well make it far more difficult for parents to find suitable employment in order to pay
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maintenance, given both the time spent in prison and the subsequent stigma attached to it by prospective employers and society at large.
The alternative to prison, which is to surrender a driving licence, is absurd and objectionable in principle. Several noble Lords today have said that they believe that there is a clear distinction between the withdrawal of a driving licence for a motoring offence and withdrawal for failure to comply with maintenance obligations. The Opposition believe that this is a major flaw in the Bill as the Government in effect are saying, "If you don't fancy going to gaol, you can always hand in your driving licence instead." Why driving licences? Why not passports, as my noble friend Lady Byford suggested, or curfew orders, or electronic tagging, as my honourable friend Eric Pickles suggested in the other place?
Underlying much of the proposed CSA reform is the concept of so-called "rough justice". We on this side need far more convincing of the nature of how "rough" such justice will be and what will be the practical impact of this change in policy. We are also concerned with the impact of the reforms on second families. The Opposition fully accept that it is essential parents realise their responsibilities to all their children. However, the Government have much more to do to ensure that their proposals do not treat second families as second class.
In particular, the proposals ignore the possibility of the parent with care re-marrying and, as a result, enjoying enhanced circumstances that are greater than those of the former spouse. It would be contrary to natural justice if such changes were not taken into account in an appropriate recalculation of contributions. We believe that the incomes of both the non-resident parent and the parent with care should be taken into account in maintenance payments. It would be quite wrong for affluent parents with care to receive maintenance from absent parents with far lower incomes. That is also the view of the Child Poverty Action Group which called for the proposed protection for second families to be strengthened through a phasing in of the assessments to decrease, help for second families on income support and a broadening of the appeals mechanism. We hope that the Government will treat those concerns with due respect.
I move on to the Government's proposals for the state second pension. There can be no doubt that the Government are making pension arrangements ludicrously complicated and confusing for the vast majority of lay people. Indeed, many people in the pensions industry to whom I have spoken in the past few days worry at the complexity of the scheme. The new proposals only add to such complexity and increase the number of available options to the bewildered: the basic state pension, SERPS, personal pensions, occupational and company pensions, stakeholder pensions and now yet another state second pension. The complexity will especially manifest itself in the rebate and top-up structure. It will make an already complicated structure even more so.

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Planning for retirement is one of the most critical decisions an individual makes, either privately or as an employee. We feel strongly that the Government should act to make those decisions more accessible for the individual. The two-tier introduction will make it even more complex for lower earners to plan for the future.
A serious question must be asked about the effects of the introduction of the new arrangements. There is a clear danger that the Government will create two classes of pensioner for the future; those who earn less than £9,500 per annum, and those who earn more. Those in the former category will be effectively trapped in the state system and excluded from private provision. That rigidity is out of line with the increasingly flexible labour market mentioned by the noble Earl, Lord Russell. The proposals are not well suited to those with fluctuating earnings.
The NAPF said that the danger of pension mis-selling is immense. Individuals will be pushed into one arrangement or another at an early stage of their employment. It also criticised the proposals initially for the evident lack of thought by the Government in relation to the interaction of different types of provision within one overall framework. The sheer complexity, to which the Government have added, would only really be addressed by competent expert advice from pension professionals, which is exactly what people will not obtain within the 1 per cent stakeholder cap. It is highly unlikely that those who suffer from the Government's proposals will have the same access as those who can afford private pension provision. The pensions system needs to reflect and understand the growing career flexibility in this country. These proposals fall far short of that requirement.
The complexity and potential mis-selling relates not only to the state second pension, but also to the Government's wider approach to pensions, including stakeholder pensions. We believe that measures are required to address those problems, including concurrency between stakeholder pensions and all occupational schemes. The complexity of the Government's pension proposals was pointed out by the noble Baroness, Lady Castle. It was for me a privilege and a pleasure to hear her speak tonight. I am not so sure that it was such a pleasure for the Minister, although I am sure she cheered up when she heard the nice words from the noble Lord, Lord Haskel.
Lord Haskel: My Lords, I thank the noble Lord for giving way. Does he not agree that the reason for the complexity is because people's lives are now much more complicated? This complexity is really the way in which people can move from one pension scheme to another as their circumstances change in their working life.
Lord Astor of Hever: My Lords, I am sure we shall debate that point endlessly in Committee.
During the Conservative Party's time in office, pensioner income rose. Since coming to power, this Government have attacked pensioners' savings. This
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April's measly 75p increase in the basic state pension has been combined with such measures as time abolition of ACT dividend tax credit, and the abolition of PEPS and TESSAs. The proportion of national wealth spent on pensioners is less under this Government than under the last.
The minimum income guarantee will be a massive disincentive for lower earners to save, which hardly equates to a government that preaches the virtues of self-reliance and employment. They admit that an individual will have to work (or care) for 49 years and earn above the national insurance lower earnings limit in order to have an income above the MIG level. That is a blatant disincentive to employees.
I turn briefly to Part al of the Bill and specifically Clause 61. I make clear that we strongly oppose this clause, as do many other noble Lords who emphatically condemned it. We heard a powerful speech from my noble friend Lord Windlesham, who speaks with all his knowledge on the penal system, his authority as a former chairman of the Parole Board and his experience as a Minister in the Home Office. My noble friend made some important points which I shall not repeat. However, I feel that we must have a full response from the Minister tonight and some assurance that the Government will think again.
The noble Baroness, Lady Kennedy of The Shaws, also spoke on this subject, mentioning a possible breach of the Human Rights Act. Furthermore, I understand that the National Association of Probation Officers believes that the proposals for the removal or reduction of benefits from offenders who breach community court orders breach the Act she mentioned, and the United Nations Convention on Human Rights. I should be grateful if the Minister could clarify the position in that regard, particularly in view of what my noble friend Lord Higgins said in relation to the Explanatory Notes.
With regard to Part IV and NICs, we are concerned that the Government are imposing yet another stealth tax on business by extending national insurance liability to benefits in kind. The Government's approach seems to be, "If it is taxable, it is NICab1e"; and they are nicking another £225 million through that provision.
Social security and welfare reform generally have been hailed as an area in which the Government will think the unthinkable in order to put the national interests first. But the gap between rhetoric and reality has been considerable. We on this side accept the need for a range of reforms to ensure that we meet the challenges of the 21st century both socially and financially. These measures from the Government will go no way to meet such challenges and it will be for their successors to deliver, which we shall.
7.10 p.m.
Baroness Hollis of Heigham: My Lords, I want to begin by quoting my noble friend Lord Haskel, and not for the reasons your Lordships might think. He was right to describe the Bill as an attack on poverty. It is an attack on the poverty of children and

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pensioners. It is an attack on poverty among children because we know that those who are poor in our society are the children of mothers who are not in work and where the child is not receiving maintenance. It is an attack on poverty among pensioners because we know that poor pensioners are primarily older, often widows who have no occupational pension on which to draw. For the longer term, we hope that the moves we are making on state second pensions and stakeholder pensions will resolve that problem. However, we have issues which must be addressed now. Therefore, my noble friend was right in saying that the Bill is about poverty.
I shall begin, as did your Lordships, by reflecting on the structure of the Bill and dealing with the comments on the Child Support Agency. I was pleased that the principles of our actions were welcomed by my noble friend Lady Crawley, the noble Baroness, Lady Fookes, and the noble Lords, Lord Higgins and Lord Astor. I was particularly pleased by the tribute that the noble Baroness, Lady Fookes, felt able to pay to the staff. They have had a most difficult time. Unlike any other government officials who have a one-to-one relationship with a client wanting a benefit, a passport or whatever, the CSA staff have been the lightning-rod in all kinds of marital disputes between warring partners. If he gains, she loses and if she gains, he loses. I know of stories of staff who have received razor blades, excrement and so on in the post. They have had to do a difficult job with heroism and grace, and I was delighted that the noble Baroness paid tribute to them. From everything I have seen of their work, I can endorse that.
The Conservative Front Bench in both opening and winding-up speeches made points, which I take, about the difficulties in running two schemes side by side and about the issue of phasing. I agree; we thought long and hard about the matter. It was a question of trying to assess the risk of a "big bang" approach on a new IT system or of trying to phase in implementation by taking new cases first—those which come in during the first year—and taking existing cases as and when we are confident that the IT system is robust and that we are achieving the speed and accuracy of assessment that we believe the new system will allow us to generate. We had to choose between those two aspects, but everything we have learnt about government over the past 10 or 20 years has suggested how unwise it is to go for a "big bang" if an alternative is available. We believe that there is.
The noble Lord, Lord Astor, suggested that the problem was compounded by the fact that we are phasing in the system over a number of years. Someone currently receiving £30 which must rise to £60, or someone receiving £60 which must fall to £30, will not see the change overnight; it will be phased. If the mother is in receipt of WFTC, he would like to phase if he is a loser but would like immediately to move to the new assessment if he is a winner. The reverse is true for his former partner.
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We believe that, on balance, it is right to phase. At the core of our concern is the possibility that if he were asked to pay more on the same level of income overnight, his finances would be thrown into real hardship. We believed that it was therefore right to phase. We are talking about a period of five years and we can discuss that, but we believe that it strikes the right balance between the conflicting and sometimes warring interests of the two partners and the need not to throw his finances into disarray by imposing possibly a substantially different assessment overnight when he has only the same level of income and pre-existing commitments.
I was asked why we are not taking into account the income of the parent with care. First, we believe that the parent with care—it is usually the mother—is meeting her responsibility for the care of the child because the child, by living with her, enjoys her standard of income. Her contribution is coming, so to speak, in kind because the child is living in her household. His contribution is coming in cash because he does not. If it were an intact family, both would be contributing in much the same way.
The first point is philosophical: she is already contributing. The second point is practical and administrative: 96 per cent of parents with care have incomes of less than £100 a week. Only 500 on our casebook of 1.2 million have incomes over £500 a week. At that point, they might be expected to be making a realistic financial contribution. So for the sake of 500 or 1,000, we should have to assess the income of every parent with care and, as was suggested by the noble Lord, the income of her new partner, which means that we must also assess the partner of the non-resident father. Instead of assessing only the father, we should have to make four assessments: the parent with care, her new partner, the non-resident father and his new partner. If that were to be done, instead of seeking three pieces of information, we should have to seek 30 or 40 in order to get an accurate assessment. In that case, noble Lords would be reimporting back into our simple formula some of the complexity that has made the existing agency impossible successfully to administer. Therefore, philosophically, it is not right; administratively, it would be a nightmare; and it is not worth it.
It was said that we are not treating second families fairly. On the contrary, most second families will see a lower assessment and a more generous treatment of children in second families, including the non-biological children who are treated in exactly the same way as the biological children of the non-resident parent. There will be no first and second-class children in our system either between first and second families or within a second family. Therefore, I hope that on reflection the noble Lord will think his remarks in that respect not justified.
The noble Lords, Lord Higgins and Lord Astor, and the noble Earl, Lord Russell, spoke of the courts. The noble Earl and I have a philosophical difference about them. I believe that the previous court system failed children. I believe that that was accepted by the noble Lord, Lord Higgins, and the noble Baroness, Lady

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Fookes. It was unfair in its incidence; it was ineffective in collection and it was adversarial in style. What do you say to a child when he sees his father going to a court to try to reduce the amount of maintenance he should pay? What kind of message are you sending to a child when he sees his father taking on that role?
The system was unfair in its incidence. We know that in 1988, on average earnings of £140 a week with three children, 25 per cent of all fathers were paying less than £15 a week in maintenance and that 25 per cent were paying more than £40 a week. That was on identical finances and with an identical number of children. The system was a lottery; it was unfair; it was not effective and it was adversarial. We believe that it would be wrong to return to it.
I do not mean to be unfair to the noble Earl, Lord R ussell—if I am, I apologise—but I listened carefully to his speech and noted that he made much of his concerns about the unfairness to fathers. I do not believe that at any point he mentioned the well-being of children in our reforms of the CSA. That was significant.
Earl Russell: My Lords, that omission will be made up for many times before the Bill is through.
Baroness Hollis of Heigham: My Lords, I am sure that it will be now that I have reminded the noble Earl! However, noble Lords, particularly on the Conservative Benches, were concerned about the implications for the CSA and the court settlement. Perhaps I may remind your Lordships that the original proposals for the agency were that the courts would have no discretion on child support. The CSA settlement would run over all court settlements which would have to import the CSA figures.
That was rightly not pursued because it would have been further retrospective activity, particularly for existing court cases. We are trying to do something perhaps more subtle, but I hope more supportive. We are saying that where parents agree and go to court or where they reach a private arrangement and the mother is not on benefit, that is fine. They can make whatever arrangement they want because they are perfectly entitled to do so. The taxpayers do not have a financial interest in the level of benefit and therefore the level of maintenance. However, we are also saying that there should be a right to return to the CSA. Therefore, it is for the CSA to collect its own level of enforcement where after 12 months that arrangement is pulling apart and where there is some sense of unfairness and grievance.
Why have we done this? It is quite simply because we want lawyers, rather than having to impose on them acceptance of the CSA settlement, to have the mindset that. if either party is dissatisfied with the arrangement on child support, either party has the right to go back to the CSA. The father may decide to pay more because, for example, he is paying for a disabled child. He may choose to pay less because he may be helping to pay school fees. If both parties are satisfied, that is fine, unlike the original arrangement, which would not have been fine. We want lawyers to be very aware that
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if there are disputes, the benchmark is the CSA figure. If courts want to tailor a settlement more appropriately to individuals by whatever means, we think that is right and proper; but basically the CSA settlement is the fallback of last resort, where couples end up disagreeing.
I was asked by my noble friend Lady Howells about naming fathers. Where there is the possibility of fear of distress or violence, I think that we have a decent system of good cause. Indeed, many European countries do not have any good cause arrangements whatsoever, on the grounds that they do not want the woman to have any choice and therefore do not want to offer the man any ability to put pressure on her to exercise that choice to keep him anonymous. However, there have been instances in the past where, for example, fathers have been advised on a website to break a window in order to show that they were violent and therefore would not have to pay maintenance. If we were to follow the line about allowing maintenance to be voluntary, we would effectively be rewarding bad behaviour. We believe that that is wrong.
My noble friend asked about three-person tribunals. We introduced the new system in June 1999 and I am not aware that there have been any problems. However, I shall check and see whether my noble friend's worries are validated by the research.
The noble Baroness, Lady Byford, asked about named officials in order to help to resolve problems. She is right. We want to get consensus and compliance as far as possible, and not enforcement. Since last month, we have had in place 600 face-to-face officials, who will offer an interview within 10 days to either party in their own home, in the workplace or anywhere else, to try to resolve their child maintenance problems. So far, the scheme is working successfully. That deals with most of the questions dealing with child support. Of course, I shall write to noble Lords if there are any questions that have been left unanswered.
A second cause for concern over the Bill was the state second pension. The noble Lord, Lord Higgins, accurately described the three tiers of pension and my noble friend Lord Haskel rightly described how it was designed so that people could move easily and seamlessly between the three systems. I was asked by the noble Lords, Lord Higgins and Lord Goodhart, about the interconnection between the state second pension and the fallback on MIG. The facts were rehearsed in the other place, and your Lordships may know them by now. Essentially, for an average earner contracted into the state second pension, the MIG would not overtake the basic pension and the state second pension until some 15 years after retirement age. That in any case is due primarily to the additional payments made at 75 and 80 to MIG rather than to any deficiency in the state second pension.
My noble friend Lady Pitkeathley asked several questions about carers, and I am delighted that she felt able to welcome this aspect of the Bill. On the point about somebody who is being cared for moving frequently but erratically into residential care, it is the

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case that under our proposals a carer could have a possible total of 12 weeks' break in any of 26 weeks, and not more than four weeks of that might be holidays; and they would not lose their entitlement.
As for earnings, any carer who earned above the LEL would retain an underlying entitlement for that part of the year. Anyone who earned below the LEL would be in exactly the same position as anyone else earning below the LEL, which would not be an entitlement to the state second pension. I regret that we cannot make it retrospective because if it were retrospective it would be retrospective for all possible client groups within the strategy for disabled people and those who are caring for children. My noble friend asked about the timetable for the review: that is in the context of following up work for the national carers' strategy and the Government's response to the Royal Commission. We are awaiting final determinations on that.
The third major issue raised today on the state second pension brought linking remarks from my noble friends Lady Turner and Lady Castle. First, they pressed me about the destruction of the earnings link to retirement pensions rather than going down the road of MIG and the like. I should like to say, first, that for only four years has there been an earnings link and that wages were exceeded by prices for at least two of those years. However, there is a bigger issue: the question of choice. We could, if financial priorities allowed, restore an earnings link and we could give a little to everyone, or alternatively we could choose to concentrate, as we are doing, on the poorest.
Why are we doing that rather than giving a little to everyone? It is a difficult choice, but the reason why we are concentrating on the poorest is that since 1979 inequality in pensioner incomes has grown substantially. Most pensioners are not poor, although some are. Fifty per cent more pensioners have been enjoying occupational pensions since 1979. For most of us the average growth in earnings since 1979 has been 38 per cent. The growth in pensioners' income has been 64 per cent—almost double—but the bottom 20 per cent of pensioners have seen an increase below the average increase in national incomes; the increase of the top 20 per cent has been well above it.
That is our dilemma. Do we seek to add to the income of better-off pensioners, who have seen their income grow by 64 per cent since 1979 or do we target the poorest? We have chosen to target the poorest. As a result, a pensioner couple of over 75 who could have had an earnings-related hoist of £6 per week, will get an entitlement to a MIG hoist of an extra £18 per week on income of £125. That is the choice: £6 for couples over 75 or £18 for the poorest couple. We have chosen to concentrate on the latter. My noble friends may disagree with me, but it is an honourable choice, and it is not a cheap choice. Far from £800 million being
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spent on pensioners, something like £1.8 billion extra will have been spent on pensions by the end of this Parliament. I agree—
Lord Higgins: My Lords, of course all this is totally inconsistent with the television licence and the winter fuel payments going to all pensioners.
Baroness Hollis of Heigham: My Lords, I take the point about TV licences. Of course, it is for the over-75s and I would go back to the point made by the noble Lord, Lord Goodhart, that it is those over 75 who are proportionately the poorest pensioners because they are for the most part elderly women. In that sense, I think it is reasonably targeted.
My noble friend Lady Castle was absolutely right when she said that if we are going to target, which I believe is the decent, honourable and right thing to do given what has happened to pensioner incomes since my noble friend was Secretary of State, we must make sure that such targeting is accompanied by allowing the dignity to which every pensioner is entitled. That is our problem: how to target people without bringing about the ignominy of people refusing to seek that pension increase because they dislike the means testing involved. That is precisely why we have promoted telephone help. Pensioners will be entitled to apply for the increase in their own home through electronic transmission. I can give the telephone number to my noble friend: it is the number which pensioners should call in order to get the money to which they are entitled. The number is 0800 028 1111. I hope that that number is engraved on your Lordships' hearts, because money that people should have is going unclaimed and we are trying to make sure that they get it in a way that is entirely consonant with the dignity they are entitled to have.
Perhaps I may now turn to questions about widows which were raised by the noble Lords, Lord Higgins and Lord Rix, and by the noble Baroness, Lady Greengross. We have made it clear that recompense should be tied to tangible evidence of loss. Clearly it is not the Government's responsibility to compensate people because there has been a change in the law. What the Government are seeking to do is to target what might be called the mis-selling problem; to compensate people in cases where they have been misled and as a result have acted to their own detriment or failed to take action that would have corrected any detriment they might have suffered. It is not unreasonable to ask people for evidence that they were being misled and that they would have acted differently, but a lack of documentary evidence does not necessarily mean that the claim would fail. That claim will be decided on the basis of information which the claimant gives on the claim form. People will be contacted by post for further details and, of course, claimants will be asked to sign a statement that it is a true account.
The noble Lord, Lord Higgins, asked me whether that was consistent with the ombudsman's recommendation for a "global" response. Yes, it is a global solution. The scheme applies a common form of

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redress to all successful applicants; in other words, compensation is not related to individual circumstances but is available to all those who were misled or who would have acted differently and therefore relieved themselves of some possible financial detriment. At a recent hearing, the Parliamentary Ombudsman stated that the inherited SERPS scheme meets the definition of a global solution. I hope that that addresses the noble Lord's point.
Lord Higgins: My Lords, no doubt we shall return to that point later, but are we right in understanding the Minister to say, in line with what the ombudsman was apparently saying, that what would be required would be evidence of loss rather than of being misled?
Baroness Hollis of Heigham: No, my Lords. What I was saying is that we are seeking to establish that someone was misled and that as a result he acted to his detriment, or could have acted in a way that would have avoided that detriment, but that if he does not have documentary evidence to that effect, the case will not necessarily fail. It will be investigated and discussed in the usual way.
I turn to a shopping list of smaller items. The noble Baroness, Lady Strange, gave notice that she was going to raise the question of war widows. I see my noble friend Lady Symons on these Benches. I am sure that she was pleased to hear that news. The noble Baroness, Lady Fookes, and the noble Lord, Lord Goodhart, said that they were going to raise the question of overseas pensions again. We know our positions on that matter. I can say only that my position is the same as the previous government's position: that that was not a priority. I did not challenge the noble Lord, Lord Mackay, at any time when he was also resisting claims to that effect.
The question of ACT was raised. The noble Lord, Lord Higgins, pressed me about how it was to be paid. I believed that I had answered that point, but I am sorry if he felt that I did not. Basically, the expectation is that from 2003—the noble Lord will understand that, being three years off, not all the fine print has as yet been worked out; that is the whole point of having consultation and discussions with POCL and the subpostmasters—to 2005, schemes will come in so that either the Post Office will be acting as a bank for other banks, such as Lloyds TSB, which will effectively be treating the Post Office as an outpost, given the new electronic transmission claims—arid, incidentally, paying them more than we would pay them—or, alternatively, the Post Office will be acting as a credit account or holding a credit account for someone in their own right as a form of universal bank.
We shall be receiving the PIU report in early summer, but I do not see why there should be any difficulty in getting one's head around the concept that the Post Office will hold that account. The advantages for people who currently do not have a bank account will he huge. They will be able to write cheques; they will not need to go to cheque changing agencies; they will be able to pay in their money; they will be able to
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draw part of their benefit; there will be greater security against fraud; and they will be brought in from those grey areas of dependence on pawnbrokers, money changers and credit catalogues, which have been so costly to so many of our people.
There are points about annuity rates but, given the time, I shall pass those by for a moment if I may and return to them in writing. My noble friend Lord Brookman asked several questions about mandatory pensioner trustees and whether I agree that pensioner trustees added value. Yes, of course I do, but we believe it unwise to suggest that pensioner members should be there in a representative capacity any more than anyone else. That was one of our concerns. We are conscious that pensioner members feel in some cases that they have been unfairly excluded from involvement in some schemes. That is why the revised provisions go further to ensure that pensioner members cannot be unfairly treated; unlike the current prescribed appropriate rules, pensioner members will be involved at all stages of the trustee route.
It will still be possible for the employer to propose arrangements that do not involve pensioner members in the nominational selection of member-nominated trustees. However, those proposals are subject to member approval and all pensioner members would have to agree to them. If approval is not gained, the alternative is the trustee route which guarantees that pensioners can make nominations and stand for selection. My noble friend asked questions about the 10 per cent being excessive. It is in the existing legislation; we have no evidence of any particular problems with it. But if my noble friend has and he cares to write to me, I shall do my best to answer him.
Finally, I return to a question which, perhaps more than any, was of concern to your Lordships this evening; that of community punishment. I assure the noble Earl, Lord Russell, that there will be pilots and that they will be carefully evaluated by independent external researchers funded by the DSS, the Home Office and the DfEE, particularly on behavioural points. I am expecting that external independent research to be as scrupulously handled as any research which comes through the department. I should certainly expect nothing less.
On the more substantial point raised by the noble Lord, Lord Windlesham, the right reverend Prelate the Bishop of Lincoln, and my noble friend Lady Kennedy, we have taken legal advice and I am assured that our proposals are compatible with the ECHR. I have checked and checked again and I am told that that is the case on legal advice. If that advice is inaccurate or those cases are tested and it is found to be incorrect, so be it, but I have checked on many occasions and that is the assurance I have been given and the legal advice I have obtained.
A number of your Lordships said that we were offering double punishment. If I may say so, anyone familiar with social security legislation would know that that is not an acceptable description of what we are doing. Benefit entitlement in this country has always been conditional. Even David Rendel, an

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honourable Member in another House, has said that no one believes that people should receive benefit for doing absolutely nothing. It has always been conditional; for example, we have benefits sanctions if someone is on JSA, is supposed to be actively seeking work and fails to do so. We have benefits sanctions if someone is supposed to come to a ONE interview and has no good reason for not doing so. We have benefits sanctions if women who should co-operate with the CSA have no good cause for not doing so and still fail to do so. In the whole array of DSS benefits it is accepted that there are grounds for benefits sanctions, which may or may not be challenged in your Lordships' House in any particular case, and that benefits are not unconditional.
We are attaching another condition to benefit, not offering a second punishment. That is the Government's position. The situation will be clearly explained to anyone concerned. A sanction would occur only after a second offence. Essentially, the provision would be about entitlement to benefit, not a second punishment. My noble friends said that that would be harsh, particularly on women and on black members of our society and so on—
Earl Russell: My Lords, I should be grateful if the Minister could explain why that condition is relevant to the receipt of benefit.
Baroness Hollis of Heigham: My Lords, I do not understand the noble Earl's question.
Earl Russell: My Lords, why is the question whether or not people breach community service orders relevant to their entitlement to social security benefits? I can understand, if not always accept, social security conditions; these I do not understand.
Baroness Hollis of Heigham: My Lords, the Government believe that if a person seeks benefit from society, as taxpayers we have a right to attach conditions to that seeking of benefit. I refer obviously to the day-to-day conditions of benefit entitlement; for example, one cannot claim for children if one does not have any; but it is also the case that if someone is required by the courts to observe a community sentence and he fails to do so and, if after the first offence where he is warned, he still persists in failing to accept that community sentence and to observe by its rules, we believe that it is reasonable that society should say that the other part of its contract with him to support benefit is not upheld; that he has broken it and therefore, as a result, the sanctions on benefit have come into play.
Earl Russell: My Lords, does the same principle allow withdrawal of benefits for those found speeding?
Baroness Hollis of Heigham: My Lords, it is interesting that the noble Earl is pushing me on that point. At the moment, I understand that something like 130,000 community sentences per year are passed.
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Something like 30,000 per year are breached. Some of those sentences are for quite serious offences, but they are being breached. As a result, we want to ensure that such young offenders—they are often young and mainly men—observe community sentences. If society as a whole and taxpayers offer benefit to people who in turn renege on their obligation to society—that is what they are doing if they fail to observe a community sentence—we have a right to consider entitlement to benefit. That is the approach of the Government.
It is not the case that women, in particular, will be affected. Of those on community sentences, 89 per cent are men. Nor will it affect, in particular, the ethnic minority community, although they have a slightly higher representation than in the population as a whole. We do not believe that the incidence of this will be unfair either on women or on black and ethnic minority communities.
I realise that your Lordships have dissatisfaction with different aspects of the Bill. I can appreciate where noble Lords are coming from. However, I return to what my noble friend Lord Haskel said. At the core of the Bill are two proposals: first, to tackle the poverty of children who do not receive maintenance, and, secondly, to tackle the poverty of pensioners who do not receive the minimum income guarantee and who in future will remain reliant on means-tested benefits unless we can lift them off that by the state second pension that we propose in the Bill.
This Bill is a good Bill. It tackles the poverty of two or more sections of our society. I hope your Lordships will support it.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Defence Evaluation and Research Agency
7.40 p.m.
Lord Hogg of Cumbernauldrose to ask Her Majesty's Government what their long term objectives are for the Defence Evaluation and Research Agency as part of the development of the United Kingdom's knowledge-based economy.
The noble Lord said: My Lords, I am most grateful to the House for affording me the opportunity to raise what I believe to be an important matter. I am reinforced in that belief having read the business section in yesterday's Sunday Times.
I begin by commending the Government's recent publication of the consultation document on science and innovation. Within it there are several key principles in which, as a government, we have strongly believed for many years.
The Government look at the UK's science base as a key driver for economic growth and international influence. They are actively promoting greater technology transfer and unlocking the scientific resource residing both within government and through our universities to the benefit of the economy and the country's quality of life.

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However, we must be careful not to allow the forces of conservatism—if I can use that phrase—to thwart our vision of an active knowledge economy. I refer in particular to the proposed public-private partnership restriction on the Defence Evaluation and Research Agency, the MoD's science and research agency.
I shall give some facts that demonstrate the significant scientific and technological achievements of some of our country's unsung scientists and technicians. I shall mention just three to make my point. DERA were behind the original technology for liquid crystal display; the original and new generation of carbon fibre; and the next generation of voice recognition software. Without DERA, many technologies that we take for granted today would not have been developed.
The proposed PPP for DERA aims to offer the organisation the opportunity to work more effectively within the civilian market; to exploit its knowledge into real and tangible businesses and to enter into new joint ventures establishing a vibrant centre for technological development and wealth creation. Put simply, it would be a world class resource.
The purpose and intention are sound, but I am concerned about the proposed method. In my view, the proposed method for releasing DERA runs counter to the Government's overall intentions. The organisation is proposed to be divided into two separately run bodies: the sensitive research functions would be in an organisation still run by the MoD and the technology side would be split to form a company attracting private finance. While that deals with the security elements of the work of DERA that is retained by the MoD, potentially it offers the worst of all worlds.
One of our great scientific jewels would be dismembered. By separating the sensitive from the technological, we would lose one of the most important elements of DERA, which is its ability to translate the sensitive into the commercial. We would destroy the bridge between the two that is unique and valuable. The value is in the relationship between the two. We should resist that divorce.
There is also the employment issue. I understand that the model proposed could result in over 3,000 job losses in the sectors where we are working hard to encourage more employment. I hope that the Minister will say something about that. I further understand that the United States is concerned about any joint collaboration falling within the private sector. I appreciate that concern. However, we must not construct the whole model on that basis. Under the existing structure DERA manages the divide between areas of United States security collaboration and the more commercial elements of its work effectively. That raises the question: could that continue as effectively into the future?
The challenge for those addressing this issue is to marry the following concerns: to maintain the justifiably sensitive research within the Government's domain—I emphasise the word "domain"—to ensure that the overall objective of liberating a core
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international centre of research and technological development is achieved with significant benefits to the UK economy, and to maintain the integrity of the organisation and its staff at the highest level possible.
At the moment a good model is already being debated in Parliament: the publicly owned plc proposed for the Post Office. I believe that that offers the best solution. It would provide the ability to reassure the United States that the sensitive elements of DERA are still government owned and managed. It would give DERA the ability to enter into long-term ventures, to attract finance for longer-term investment and to develop subsidiary companies in non-sensitive areas; and it would maintain the integrity of the organisation, ensuring that this unique centre of excellence was not dismembered into two rather average organisations, if I may put it that way. We should retain the employees within the public sector and ensure that the long-term assets of DERA are exploited for the greater benefit of the United Kingdom.
I commend to my noble friend the liberation of DERA from the confines of MoD into a free-standing, publicly owned plc without destroying the long-term potential or existing integrity of an organisation of which we can all be proud.
7.47 p.m.
Lord Faulkner of Worcester: My Lords, I congratulate my noble friend Lord Hogg of Cumbernauld on securing a debate on the future or the Defence Evaluation and Research Agency. The outcome of the Government's review has been awaited anxiously by the 12,000 people who ate directly employed by DERA and by many thousands more who live and work in the towns where the agency is based, and who, to a greater or lesser extent, are dependent on DERA for their own business livelihood.
I intend to speak mainly about the DERA establishment that I know best as it is situated close to my home in Worcestershire. Although I have lived in the Malvern area for most of my adult life and have been aware of how important DERA is to the economy of the town and its surrounding area, it was not until some weeks ago when my noble friend first sought this debate that I arranged to spend the better part of a day at DERA Malvern to find out more about what they do there. I am pleased to put on the record my thanks to Dr Norman Apsley and his team for giving me such a comprehensive and impressive view of DERA Malvern's work.
It is hard to over-estimate the importance of DERA to the area. DERA Malvern's turnover is over £150 million and the financial impact on the local economy is worth a further £50 million annually, taking into account the spending of salaries and commercial arrangements with local suppliers.
DERA Malvern provides much of the MoD's advice on Command and Control and on sensors, which, in cost value terms, probably represents at least half of the £9 billion equipment spend each year. In

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addition, the technology itself is made available to the defence industry. This has resulted in 13 Queen's Awards and other prizes.
DERA is by far the largest single employer in the town—including the two associate outstations at Defford and Pershore, there are 2,250 staff working for it. Of these, no fewer than 1,800 are first-degree graduates and 900 have PhDs. Their fields cover physical electronics, communications and computing. John Jay, writing in the Sunday Times on 20th February this year, described DERA as,
"one of the world's finest collections of research talent".
There can be no other non-university town in the land with such an academic population as Malvern. The link with education is intensified because many spouses and partners of DERA employees are themselves teachers at local schools. Members of staff have always participated fully in the life of the community, serving on local political bodies and charitable bodies and working with schools and other organisations.
DERA supports education in the town through sponsorship of the local high school's technical college status and in many other ways, such as science weeks, the "Bring our Children to Work" scheme, scientific and other professional work experience. It also acts as a local focal point for national institutions, such as the Institute of Physics and the institute for electrical engineers, and it hosts or sponsors local lectures and seminars. It offers a local venue for the annual DTI sponsored Innovation Lecture.
In the autumn DERA is also one of the main supporters of the Malvern Festival, which was created by DERA scientists four years ago. It is an integral part of the district, the county and the West Midland economic strategies. The director, Dr Apsley, is a member of the Regional Innovation Strategy Steering Group and a CBI regional councillor.
The Malvern Hills Science Park is a joint endeavour between DERA, the district council, the county council, the chamber of commerce and the Regional Government Office. It opened last September on land leased from DERA. The Defence Diversification Agency has one of its seven offices on the park and, with DERA, is working well with local businesses.
I turn now to the wider West Midlands. DERA wants to create a regional market for its science and technology advice. It is just beginning a project funded from the EU and the Government Office, called DERA Malvern Science Laboratory, which aims to use their collective science and technology to support and create new business in the West Midlands Objective Two sub-regions. DERA Malvern also succeeds in selling its wares to West Midlands businesses such as Jaguar, Rover, IMI and Dowty Wolverhampton.
There is more that I could say about how crucial the future well-being of DERA is to the well-being of the town, the county and the region, but I hope that your Lordships will have gained enough of a picture to understand how anxiously the outcome of the
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Government's review has been awaited. There is general acceptance that retaining the status quo is not an option. The end of the Cold War and reductions in defence spending meant that the flow of work from the Ministry of Defence would, inevitably, slow down. However, the scope for high level work with the private sector is enormous and I have already given noble Lords some examples this evening.
I am aware that DERA's trade unions were opposed to any solution that involved a break-up of the agency, or put it into the private sector. But my own view is that the public private partnership that the Government put forward as their preferred option in May 1999 could have worked and was worth a try. The consultation document of the Ministry of Defence at that time spoke of creating,
"a special purpose corporate vehicle containing most of DERA's existing staff and facilities. DERA would operate in the private sector with mechanisms to preserve its essential character and to protect MoD's interests".
MoD said that,
"a principal driving force in arriving at the proposed option was the desire to keep DERA, as far as possible, an integrated organisation and thereby retain its broadly based capability".
This became known as the "Reliance" option.
It would not be true to say that these proposals were universally welcomed; indeed, far from it. The trade unions combined to produce a "privatisation campaign newsletter" and urged a mass letter writing campaign to Members of Parliament in another place. Private sector defence companies did not much like the idea of a new highly-experienced competitor advising the MoD and competing with them for research funds. The Defence Select Committee did not like it and called the proposals "fatally flawed".
Had the opposition come just from political and trade union sources in this country, I suspect that the Government might have pressed on with the "Reliance" option. But I believe that the Financial Times got it right on 31st January when it reported that the United States Pentagon had vetoed this approach because,
"US military chiefs reacted with alarm to a proposal that could have involved British defence companies getting their hands on US secrets during collaborative projects. The government's first plan, to keep most of DERA together and sell a stake to investors, was blocked by the Pentagon, who feared the potential leak of its secrets to the detriment of US national security and American companies".
So that went off the agenda and, until today, we were still waiting to hear what the Government's decision would be.
One possibility might have been a minority sale of the whole company, in the way described by my noble friend Lord Hogg of Cumbernauld, which would have made DERA a Government-owned company with some of the shares going to the private sector. But, frankly, I cannot see how the Americans could have gone along with that idea, given their opposition to the "Reliance" option, because, in their eyes, the private sector would still have been involved to an unacceptably large extent.

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Therefore, it is not surprising that "Core Competence" now seems to be the preferred option, with perhaps 3,000 of DERA's employees becoming MoD civil servants, providing the core of knowledge to the Government and enabling them to work on secret projects with the United States, as well as offering impartial advice on weapons procurement.
It is interesting to note how much of this debate has been conducted in the media. Indeed, Flight International magazine suggested in an article in its 25th January issue that,
"the core competences would include the Centre for Defence Analysis, the chemical and biological warfare capability at Porton Down, its library service and areas believed to include access to US surveillance satellite data".
The remainder of DERA would then be offered to the private sector through a PPP. That, because of the nature of the work carried out at Malvern, would obviously include a very large part of the DERA operation in that town.
I am clear that DERA represents a unique national resource which must be given every encouragement to grow and prosper. Already at Malvern they are looking to expand their outside commercial work from 6 per cent of turnover in 1999 to 33 per cent in 2005. They envisage no reduction in staff during that time.
I am sure the Government appreciate the paramount importance of ensuring that they do nothing to destroy the conditions that will allow DERA in Malvern, and elsewhere, to continue to play such a vital part in the life of the towns, the counties and the regions in which they are situated, as well as in the nation's defence industry. I very much look forward to hearing from my noble friend the Minister what route the Government have finally decided to adopt.
7.57 p.m.
Lord Brett: My Lords, I congratulate my noble friend Lord Hogg of Cumbernauld on initiating this very timely debate. I echo his support for the public sector option. I echo too the appreciation of my noble friend Lord Faulkner of Worcester of the quality and value of Malvern. I, too, read the Sunday Times. I have to say that I read the headline,
"MoD Research Sale Puts 3,000 Jobs at Risk",
with more than a little anger.
There are those who would say that Parliament has the first right and responsibility to hear of major government decisions. Although that is important, I actually take a slightly different view. Do not the staff concerned have the right to hear such news from their employer first rather than reading about it in a national newspaper, which, inevitably, will not always be correct? In this situation, they had a choice. They could either ignore completely the fear of a 3,000 job loss; or they could read the business section story in the Sunday Times—which, incidentally, was quite credible as regards the now-known facts—and then realise that there was an option before them which was not the one they would wish to see and which could be quite damaging to their interests.
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It is disgraceful that such a leakage took place in this way. I ask my noble friend the Minister to give an assurance that the MoD was not responsible in any way for it. Since then, like other noble Lords, I have had the opportunity to obtain a copy of the consultation document, which was made available at 3.30 p.m. today. It provides for 30 working days—a very short period— of consultation on the Government's preferred option, which is not the option that my noble friend Lord Hogg and I would have preferred.
However, rather than continue that debate, I make the obvious statement that the consultation document begs many questions. I have a number of questions for the Minister. I recognise that as I have had the document for only some three hours, my questions will not be as comprehensive as I would wish. I do not seek comprehensive answers from the Minister to all my questions. I shall be happy with a written reply if the Minister feels that at this point insufficient detailed information is available to enable her to respond.
It is interesting to note that the consultation document recognises the stakeholder interests. Here I should declare an interest. Before I entered the House a year ago I retired as general secretary of the Institution of Professionals, Managers and Specialists, the membership of which includes the vast majority of the scientific and technological staff of the Ministry of Defence, including those employed in DERA. Therefore I have had an intimate knowledge of the events we are discussing. Since I entered the House I have maintained an interest in those events although the views I express tonight are my own.
However, in terms of the stakeholders, what can he offered to the private sector? It is not a case of offering a production line or a series of items of high technology, but rather the intellectual property rights that derive from the skills and experience of scientists and technologists. The work of the scientists and technologists has given DERA its high reputation for innovation and technology. The stakeholders comprise an important clement of DERA. Unhappy stakeholders never result in a company being successful. I hope that we shall do much more than we have done so far to reassure the staff about their future.
The noble Lord, Lord Faulkner of Worcester, mentioned the views of the Select Committee in another place on the matter we are discussing. I believe that most of us recognised that the Smart procurement initiative was a worthwhile way forward. However, that begs the question as to whether our defence research industry would be prepared to collaborate with the public private partnership, which would involve a substantial privatised element. It has indicated its unhappiness on that issue over the past 12 months. That is a major issue. We know that the staff—one stakeholder—are unhappy at the moment, but we may be able to assuage their worries over time. In the next 30 days we shall discover whether the defence industry—another major stakeholder—is equally unhappy, or whether it has been placated by the contents of the paper that is before us.

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A number of questions need to be answered. Are intellectual property rights to be transferred from DERA to the new PPP? Clearly, the intellectual property rights will have a major impact on any evaluation of such a body. Do we have an estimate of the costs of separation? Throughout a dynamic leadership of DERA in the past decade, Sir John Chisholm has spent much time and effort and has been successful in bringing about a much more integrated agency. Ironically, some degree of separation now appears to be proposed which must involve associated costs. I refer to the creation of Chinese walls and the re-creation of duplication in some areas that we have removed. Again, the Minister may not be able to respond to that question tonight, but I hope that the answer will be forthcoming.
A number of concerns arise as regards staffing issues. The Principal Civil Service Pension Scheme is valued for its ability to provide pensions that respond to periods of higher inflation than we suffer from at the moment. Staff will wish to ensure that that valuable part of the remuneration package is not undermined. Many staff have many years of accumulated rights under the scheme in terms of redundancy provision. There have been fears at the time of previous privatisations—I refer to the dockyards and others— that subsequent private sector employers might alter such benefits on the ground of cost. That, again, is an area where staff need to be given assurances.
I am more curious than outraged by the suggestion that military personnel will work under the new arrangements with their status unchanged. I am fascinated to know how the command structure will operate if military staff work for a privately owned company. However, I am sure that an answer to that question will be forthcoming. I particularly seek an assurance that at the end of the consultation period, which is only some six weeks away, the Minister will meet with the trade unions nationally, whatever the outcome of the consultation.
As regards method of sale, I note that the consultation document states in paragraph 26 that the,
"MoD is likely to retain initially a significant financial stake in NewDERA, as a means to ensure that taxpayers receive full value for their investment in past government funded research".
That seems to me eminently sensible. The document continues:
"Retention of such a stake would not be a long term position".
If this is a jewel in the crown, a national asset, and if it is to be highly successful in the private sector, as it may well be, why do not the Government retain a minority stake in it? I believe that Sir John Chisholm referred to a golden share in a communication to the staff, although I believe that it is referred to in the document as a special share. I am sure that that provision will be debated further.
This is the second consultation paper that has been produced on the proposal that we are discussing. I leave the Minister with the questions that I have posed, although many more will be forthcoming. I look forward to hearing the Minister say that the
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primary stakeholders, apart from the Government—I am sure that the Minister is capable of looking after the Government' interests—namely, the shareholders of the defence industries and the staff will be given the assurances that I seek either tonight or in the course of the next 30 days.
8.7 p.m.
Baroness Sharp of Guildford: My Lords, I echo the thanks of other speakers to the noble Lord, Lord Hogg of Cumbernauld, for initiating this timely debate on this important topic.
In the mid-1980s I was a joint author with colleagues at the Science Policy Research Unit of a brief article which appeared in a Lloyds Bank review and which suggested that Britain devoted too many resources to defence research and that defence research pre-empted scarce scientific resources which might otherwise go to the civilian sector. At that time defence research accounted for more than 50 per cent—that total was rising—of the total amount that the then government spent on research and development. Civilian R&D funded by the government of that time had fallen to 48 per cent of the total amount and that percentage was falling. There was considerable concern that Britain was not pulling its weight in the new technologies such as electronics and telecommunications, where it ought to pull its weight.
I believe that the criticism that I and some of my colleagues made at that time had an impact on the debate that occurred. Of course today things have changed considerably. MoD's funding of research has halved in real terms and is now down to 38 per cent of the amount that the Government spend on supporting research and development. In areas such as mobile telephony and the Internet, civilian research has more than caught up with military research and indeed has overtaken it in many respects.
But, as we recognised in the mid-1980s, these are also areas where civilian technology was rooted in military technology. If it had not been for the long years of public investment in these areas—not, by any means, entirely in the UK but around the world, particularly in the United States—there are many benefits which we would not be securing today.
In the meantime, defence establishments have been totally reorganised under the able leadership of Sir John Chisholm and are now integrated into the next-steps agency, DERA, which is the subject of today's debate. DERA, which was established in 1995, has proved itself to be both an effective and a significant player, not only in terms of the purchaser/provider split in the provision of military R&D, but also increasingly in the commercial area, where it is beginning to pull its weight. The question we are debating today is: where next with DERA? Is privatisation or part-privatisation the best way forward?
The case for privatisation is quite strong: it puts R&D at arm's length from the Ministry of Defence; it enables DERA to get the full benefits of being a commercially-based organisation; it gives it full

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flexibility in relation to recruitment of staff and payment of salaries out of the Civil Service net, which many regard as being a difficult net in which to work; it enables the organisation to go outside the public sector to raise the resources necessary to back up its vital investment potential; and, above all, it enables Her Majesty's Government to cash in on their equity, as it is estimated that privatisation would raise between £1 billion and £1.5 billion for the Exchequer—although I, like others, wonder why the Exchequer needs this extra money at a time when it is already sitting on a good £17 billion.
The downside of privatisation, about which we have heard a fair amount already, is that the Ministry of Defence needs expert and impartial advice. It needs it even more so with the Smart Procurement initiative. Wholesale privatisation of DERA will separate the customer from the contractor very nicely, but the danger is that it could leave the Ministry of Defence devoid of the expert advice on purchasing that it needs. As we all know, a poor purchaser gets poor value for money—arguably, a lack of knowledge in purchasing has already plagued the Ministry of Defence—and it is vitally important that DERA's resources are available to help in such purchasing.
Secondly, there are areas in which security issues demand in-house expertise rather than out-of-house expertise, and where control over knowledge is important—for example, in the biological warfare and germ warfare areas. There are also other important areas, such as intelligence gathering. It is vital that such knowledge should be in-house rather than out-of-house. The great danger with privatising DERA and pushing it down that route is that the knowledge is not there when the Ministry needs it in-house.
Thirdly—again, this has been raised already by other speakers—there is the whole question of collaboration with the United States. Collaboration is vitally important. We know now that technology transfer takes place through people talking together—not through passing bits of paper, not through blueprints, not through publications but through people being able to talk together. Collaboration is vital to the effective passing of knowledge.
As far as I can see, the Americans have made it quite clear that they are not prepared to collaborate fully with the United Kingdom if it is a matter of collaborating with a largely private sector organisation. They are worried that there will be leakage, not only in a military strategic sense but also in a commercial strategic sense—and, after all, DERA does have close links with BAe systems.
So what have we come up with? It seems to me that we have come up with a typical British compromise. We have basically split the organisation down the middle. The high security parts associated with biological warfare and Porton Down remain in the public sector; the key information gatherer, the Defence Research Information Centre, is to remain within the public sector; the strategic analysts—the key people in strategic analysis in the Centre for Defence Analysis—who are the backbone of this US
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collaboration system, are also to remain within the public sector. Approximately 3,000 DERA staff are to remain within the public sector and the remaining 9,000 are to go the route of the public partnership privatisation.
Perhaps the Minister can answer this question today: is this a viable option? Can we cut off what is, in many senses, the head of the organisation? Can we cut off the defence information and the big databases, the analysis of which is absolutely essential to the strategic function of the organisation? Can we cut off the strategic analysts, who are a key part of this organisation? Will it leave the organisation viable if we cut off its head—or will it go on running around like a chicken?
We are rather sceptical on these Benches. Our view is that the exercise is driven not by defence needs or defence priorities but, once again, by the Treasury and its desire to cut defence expenditure. By hiving off to the private sector the capital costs of providing defence R&D, the Treasury is saving money in the short term as well as bringing into the Exchequer kitty the nest-egg of privatisation.
But there are real questions to be asked about whether the private sector is prepared to fund the kind of long-term research and development that DERA undertakes. The British private sector is not well known for funding research and development even when it has a three-year pay-off, let alone a 15 or 20-year pay-off, which is the case with defence R&D. Is it really likely to support such R&D? I know we have had the dot.com revolution, but that seems to have got a bit pricked these days. Will the private sector be anxious to buy out DERA? Can we be confident that it will go on investing in DERA as we need to?
DERA is a very significant resource for Britain in terms of research and development. We do not have many research and development resources; are we really wise to sell DERA off to the private sector when the private sector's record is so appalling?
Secondly, will the Ministry be able to keep in-house the expertise it needs to be a Smart purchaser? Is there not a danger that scientists who are no longer working on day-to-day experimentation on the bench will rapidly get out of date and out of touch with leading edge developments? Again, all experience shows that keeping in touch through day-to-day experimentation enables scientists to keep their edge. The last thing we want is a whole lot of deadwood scientists sitting in the Ministry advising—perhaps badly—on purchasing. We question whether they will be able to keep their hand in.
Thirdly, do not the same arguments apply to those parts of DERA which are set aside for collaboration? If such people are not doing active research on the bench, will they be able to keep their knowledge at a leading edge? And, vice versa, will those parts which remain in the new organisation—which I believe is to be called the "New DERA"—be viable without the leadership that the strategic analysts have given them and without access to the data resources which have been an important source of DERA's research?

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On these Benches, we have come to the decision that this hybrid, this part privatisation, poses many dangers and many risks. In moving along this route, we believe that there is a real danger of the Government killing the goose that has been laying some golden eggs for them. We believe that it risks leaving the Ministry devoid of top quality, honest and independent advice; that it risks killing the Smart Procurement initiative in its tracks; and that it is driven not by any rational argument for optimising the defence research function but by the Government's obsession with public expenditure headline figures.
DERA has moved a very long way towards opening up its research resources for the benefit of the nation. Dual-use technologies—commercial off-the-shelf technology systems—have brought many changes to DERA's working methods over the last decade. We believe that there is a strong case for leaving the organisation as it is within the public sector and investing in it as a public sector resource. However, this would require investment by the Government for the longer term. It is that investment, whatever the likely benefits, that this Government, like their predecessor, seem incapable of providing. Sadly, we believe that this decision yields yet another example of Britain's endemic short-termism.
8.20 p.m.
Lord Burnham: My Lords, the timing of the noble Lord, Lord Hogg of Cumbernauld, is immaculate in that having originally asked this Unstarred Question a month ago, he has now asked it again on the day when the Government have made an announcement on their plans for the future of DERA. I am sure that all noble Lords have read the consultation paper. As a result, the noble Lord's Question has taken on a rather different aspect. The Government have produced marvellous timing. They made the announcement on a day when technology stocks have taken a hammering. On this day, of all days, it may be considered that possibly selling DERA into the private sector is not a good thing.
The postponement of the debate on the noble Lord's Question was made for entirely understandable and acceptable reasons. It is not acceptable that the Government should choose this occasion and this debate to make a statement of such importance. In another place it has been done by means of a Question for Written Answer which is even worse. My honourable friend the shadow Secretary of State in another place is understandably less than happy about the way in which that House has been treated. Your Lordships have the advantage of the noble Lord's debate. But it is not good enough, and it must be considered that the strong suspicion is that the Government are trying to sweep this sale under the carpet. The announcement has been downgraded from a proposal that has been talked about in many areas to a consultation document. There is strong reason to believe that this has been done at the instigation of the Government of the United States. Thank goodness that they have done so.
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In proposing a public/private partnership, Her Majesty's Government have resuscitated the remark of the late Lord Stockton that has been universally misquoted as selling the family silver. It is interesting that that speech should have been made about nationalisation. To quote this remark is better than to suggest a similarity with the other man who received 30 pieces of silver this week many years ago. At least he received all of it and did not have to hand 70 per cent of it back to the Treasury.
It is shameful that the defence budget should be in such a state that major considerations of security should be affected by the need to balance the books with the £250 million which the Minister will receive as a result of the sale of DERA. That £250 million is 1.5 per cent of the defence budget. Sadly, it is true that the need to satisfy the Treasury is seen by the Ministry of Defence and the Armed Forces as a whole as more important and urgent than hanging on to get DERA right.
There seems to be a serious and fundamental difference of opinion between the MoD, including the Secretary of State on the one hand, and two groups of Treasury officials on the other about the defence budget. One group is against defence expenditure per se, in support of so-called "socially valuable" expenditure. The other believes that the MoD is uncontrollably wasteful and that only constraints on budgets will do anything to remedy this.
When DERA was founded it was recognised that national security was of paramount importance and that to put DERA in the private sector would risk government to government security relations, particularly with the US. Since its prime function lies in the realm of independent evaluation and testing, the possibility of privatisation brought a suspicion that its impartiality would be compromised.
This Government have never clarified their position. What is the answer on the planned issue for intellectual property rights, or the financial structure and the legality under European legislation of the special purpose corporate vehicle? What does the proposed sale involve? Some DERA establishments, such as Porton Down and Malvern, are highly sensitive. The Government have only said in their proposals that they may be kept in the public sector, a point admittedly covered in paragraph 6 of the consultation document.
Can the noble Baroness the Minister give an assurance that the delay in the decision on Heavy Lift and on BVRAAM is not being affected by the proposed sale of DERA?
At present the MoD is both the owner and the main customer of DERA. As the main source of independent advice and evaluation to the MoD, it is essential that it continues to be regarded as wholly impartial both by the industries with which it deals and by foreign governments. There is a close relationship with the American defence industry. It is unlikely that the Government of the United States would be as willing to share their secrets with a commercial organisation. This is not new. In the past, difficulties

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have been experienced with US industry where the US Government do not own the IPR rights. The French Government, too, will not deal with private foreign organisations.
It seems that it is US pressure that has forced the downgrading of the PPP proposal to a consultation document. Undoubtedly, the US will pull some of the work if DERA is privatised. I ask the Minister if she will be going to America next month to discuss this particular problem?
It is hard to overstate the deterioration in the relationship between DERA and British industry that will follow privatisation. Already the limited amount of commercial work being undertaken has damaged the relationship between DERA and industry. The National Audit Office report states:
"Our unique position of trust and impartiality has been damaged".
It goes on to state that industry now realises that DERA is to be trusted and not regarded as a competitor. But would it continue to do so if DERA were privatised?
Why have things been going wrong and why, in some areas of the MoD, are there pressures for a degree of privatisation?
First, there is a management problem. Too many senior managers now regard themselves as superior consultants—very profitable, too—and have left their departments largely unmanaged. Without doubt, senior staff will benefit substantially from flotation on the market. What role will Sir John Chisholm play in the new organisation? Will he be in any way constrained from relationships with other commercial organisations.
Secondly, there is understandable frustration in the MoD about delays in getting solutions out of DERA. There are too many cases where DERA has endlessly sought perfection where the needs of defence would have been much more quickly and almost equally efficiently satisfied by buying equipment off the shelf. It would not have been perfect but it would have been in service. Ministry officials have said that now is the moment to stop; they need the kit. But in so doing they have entirely destroyed the basis on which research and evaluation are carried out. It may seem strange for the Conservative Party to attack privatisation but in this case privatisation will destroy the relationship between the Ministry of Defence and the defence industry. The Labour chairman of the Commons Select Committee summed it up best in his reported comments:
"Only the British would be stupid enough to sell their sensitive military research, possibly to a foreign company".
The timing of the decision, not only in terms of what has been going on today on the Stock Exchange, is also extraordinary. Sir Keith O'Nions is newly in post as chief' scientist. When he was interviewed by the Select Committee he made it clear that he needed time to decide how defence science should be conducted. As a loyal servant of the Government, he will no doubt accept today's announcement, but it cannot make him happy. Can the noble Baroness give an assurance that
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he will be fully involved in all the details of the change of ownership, management and the conduct of affairs? The same applies to Sir Jeremy Blackham's board which would seem to be undermined by current events. The work of the board was clearly set out in the SDR. Now the Government are going across what they said then.
Even this Government have realised that some parts of DERA are too sensitive to be included in the sale, such as Porton Down and Malvern. What about Boscombe Down? Do the Americans control that? The Government must think again if there is not to be the most disastrous debacle in the history of defence procurement. I have not even touched, and will not touch, on the loss of jobs.
With no disrespect to noble Lords who have taken part in the debate, the Benches are empty where, had the nature of the debate been known earlier, other noble and noble and gallant Lords might well have played a part. I hope that the Minister can give an assurance that both in your Lordships' House and in another place we may have the opportunity of debating the matter more fully.
8.31 p.m.
The Minister of State, Ministry of Defence (Baroness Symons of Vernham Dean): My Lords, I am grateful for the opportunity offered by the Question of my noble friend Lord Hogg of Cumbernauld to debate the future of the Defence Evaluation and Research Agency and to hear, for the most part, the valuable contributions made by those present today. I should like to thank my noble friend for initiating the debate and everyone who has participated in it. I am also pleased that so many noble Lords who have spoken recognise what a valuable asset we have in DERA and what an important part it can play in the new economy, provided we can give it the right opportunities.
Like the noble Lord, Lord Brett, I was interested and not entirely pleased to see the coverage of the issue in the weekend press. I understand that there were no official briefings to the press on this issue over the weekend, but of course staff were told on Friday to expect briefings today. It is entirely right and proper, as the noble Lord pointed out, that staff are given as much notice as possible, and we wanted to be as open as possible. It is one of the elements of such openness that journalists draw their own conclusions. After all, a great deal has been put into the public arena on this issue, so it is not entirely surprising that some of the journalists' conclusions have been accurate about what the Government's conclusions were likely to be. That is not particularly remarkable.
To answer some of the points raised by the noble Lord, Lord Burnham, the Question of my noble friend Lord Hogg was postponed because I asked him to postpone it as I was away. This is an issue with which I have dealt and which falls particularly within my ministerial remit. My noble friend was kind enough to postpone his Question. There has been no sweeping of anything under any carpets. The Question was

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answered today by Written Answer in another place. It was referred to during defence Questions which took place today in another place. A consultation document is before your Lordships and everyone else. I assure noble Lords that all contributions will be welcome.
Perhaps I may say to the noble Lord that I also deal with the issue of Heavy Lift and BVRAAM. The two decisions—those decisions and this one—are entirely free-standing. They are in no way connected. I give the noble Lord that assurance as the Minister who deals with both. Perhaps I may say to him with regard to another point he raised that Sir Keith O'Nions and Sir Jeremy Blackham both sit on the working group which I convened to consider the future of DERA. The recommendations of that working group were unanimous. They were unanimous not because one went round the table and some people disagreed and then I asked for a unanimous recommendation. They were genuinely unanimous.
We have been working on a way forward for DERA for the past two-and-a-half years. One of the reasons it has taken this long is the complexity of the subject and the number of interested parties. Often the stakeholders we have consulted have had very specific and quite different views and interests. In the face of such complexity it was important that we fully explored the key issues. We were determined to get this as right as we could in order to ensure a successful future for DERA.
I shall try to explain to my noble friend Lord Hogg of Cumbernauld, and perhaps as importantly, given some of the things he said, to the noble Lord, Lord Burnham, why we believe that DERA needs to move on from the structure that has underpinned the successes of the past five years. DERA's core business from the Ministry of Defence, about half of which is research, has declined significantly over the past 10 years, a point made by my noble friend Lord Faulkner of Worcester. That is not because we do not rate the value of the science and technology that DERA produces; far from it. It is largely because our procurement process has moved away from buying individual commercial components and integrating them with home-grown equipment developed in DERA laboratories. Instead, we require our prime contractors in industry to be responsible for providing us with fully-integrated systems. This reduces the risk of delay and ever-increasing costs by placing the burden of risk on industry to get it right first time. That lies at the very heart of our Smart Procurement Initiative.
In addition, as the noble Baroness, Lady Sharp of Guildford, told us, the balance of research for defence is changing. The civil sector now leads in many areas of technology which are also relevant to defence needs. For example, the work the civil sector is doing in biotechnology, communications and computing has a significant impact on military requirements and doctrine. If we do not find ways for defence to take advantage of this work as early as possible in the development cycle, our Armed Forces are bound to be the losers. The way to address the impact of this
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decline in DERA funding is not to call for its reversal. If I may say so, the point made by the noble Lord, Lord Burnham, was very short sighted because it ignores the changing environment in which we operate. The answer is to find a way of allowing DERA to become fully involved in the wider science and technology base. That is not only good for DERA; it is good for the MoD because it ensures that DERA can bring a wider expertise to meeting the requirements of the Armed Forces. It is also good for the UK as a whole as it allows DERA to exploit the treasure trove of knowledge and ideas that it possesses to the benefit of a wider market than its traditional defence customers. In this way DERA will be able to make a growing contribution to the country's economy. I assure the noble Baroness, Lady Sharp, that those are the genuine reasons why we announced in the Strategic Defence Review that we would take advantage of the opportunities offered by a public/private partnership approach for the future of DERA.
Initially, as my noble friend Lord Faulkner said, we believed that it would be possible to place the bulk of DERA in the private sector, operating as a plc but constrained to ensure that the UK and our international partners' security interests were properly protected. Following extensive and entirely genuine consultation on this proposal last summer, it became apparent that this was not the best approach. Strong concerns were expressed by a number of stakeholders, not least the UK's own industry and our international allies. These concerns focused on the need to retain in the public sector specific activities concerned with the integration of world-wide science and technology knowledge, the provision of an in-house source of impartial advice and responsibility for the integration and management of the research programme and international research collaboration.
Following last year's consultation, we looked at two possible ways of dealing with the problems identified during our initial consultation process. The first involved setting up virtually the whole of DERA as a plc but selling only a minority share in the organisation. The second involved an approach which would see about three-quarters of DERA's staff forming a company which would transfer to the private sector, with a core group of staff retained within the MoD for strategic reasons.
We concluded that the first approach simply would not work because it failed to address adequately concerns over sensitive and high-level policy and competition-sensitive work being carried out in the private sector. We have, therefore, concentrated on finding a solution that would allow us to retain the most sensitive areas of activity within government so that the remainder of DERA could be placed in the private sector in a way that enabled it to provide to the MoD all research relevant to defence needs and ensured it a future as a prosperous, growing force for the national economic good.
That does not mean that we have not been very conscious of the concerns that have been raised by our decision to pursue this option. Indeed, many of those concerns have been voiced by your Lordships during

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the debate. I also understand why DERA's own staff were worried that, if we split the organisation in two, we might destroy something that has become a real success—as most noble Lords have been kind enough to acknowledge—over the past 10 years, and indeed a genuine asset of which the Government are justifiably proud.
What we have done, therefore, is to devise a way of preserving within government the resources necessary to carry out the most sensitive functions and to provide the MoD with impartial high-level advice, while at the same time leaving within DERA the capability to maintain the full range of current activities—from laboratory-based research and testing through to providing carefully packaged advice to customers in the MoD and elsewhere. That important point was raised by the noble Baroness, Lady Sharp of Guildford.
I now turn to the points raised by my noble friend Lord Hogg of Cumbernauld and the noble Lord, Lord Burnham, about reaction from the United States. A great deal has been said about the reaction of our United States allies, much of it not particularly accurate. Some people believe that we are taking too much notice of the views of the United States; others believe that we are not taking enough notice. I was a little concerned as to which the noble Lord was most worried about: whether I was taking too much notice of the United States or whether I was not taking enough notice.
Lord Burnham: My Lords, I thank the noble Baroness for giving way. I do not see how she could have thought I was suggesting that we were taking too much notice.
Baroness Symons of Vernham Dean: My Lords, I thought that the noble Lord indicated towards the end of his address that possibly we had bowed too much to what the United States was saying. I assure the noble Lord, if he is worried—as his honourable friend in another place expressed himself to be worried in a Radio 4 interview this morning—I have talked face to face with United States politicians and officials on this issue. The noble Lord, Lord Burnham, asked me when I should be going to the United States to do so. I have already been to the United States specifically for that purpose. I have also discussed the issue with our friends and colleagues in Australia, who also had some concerns about the original reliance option.
The United States faces much the same challenges as we do. It is certainly not standing in the way of a PPP for DERA. We have listened to the comments of the United States on this issue, just as we have listened to the comments of our other allies. We have listened to the comments of UK industry, and of DERA, and of MoD staff. Not only have we listened; we have taken them into account in putting forward these revised proposals—a genuine revision of proposals in the light of consultation. I am confident that the "core competence" approach will be welcomed by the majority as the best way forward.
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Let me now say something about the core competence model in detail. It is our preferred model. We detailed it today in a consultation document under the title, Core Competence. It would lead to a clear separation of the two parts of DERA. The element to be retained in the MoD would include the chemical and biological defence sector at Porton Down and a majority of the Centre for Defence Analysis, as well as a number of teams and individuals involved in either sensitive projects or top-level systems research. Final decisions have not been made yet, but we would expect the number of staff within the retained elements to be fewer than 3,000.
The elements retained in the MoD would, therefore, provide a high-level overview across the whole spectrum of science and technology currently addressed by DERA. That would ensure that the MoD has an impartial source of advice and system research capability to provide high-level assessment, integration and management of its research programme and international research collaboration. This capability would be focused on those activities that must be carried out within government.
The remainder of DERA, which noble Lords will see referred to as "New DERA" in the consultation document, would consist of about 9,000 staff. It would continue to be a major supplier of science and technology to the MoD but essentially with the freedom to develop its business for a wider range of customers in the defence and civil areas.
This approach would create two vibrant, sustainable organisations. The new company would have the freedom to flourish, to grow its business and to diversify the wealth of knowledge it has built up over the years, to the benefit of the wider UK economy, while still providing the MoD with the essential services that we shall continue to need long into the future. Indeed, we should expect this organisation to become a globally branded technology company. I do not share the pessimism of the noble Baroness, Lady Sharp, on that issue. We already have an indicator of just how successful it might become in the success of the recent joint venture between DERA and NXT to exploit speech recognition technology. The retained organisation will be a small but also, importantly—I stress this—a world-class organisation offering rewarding careers within the MoD and the wider Civil Service.
The delivery of this vision is dependent to some extent on how DERA is placed in the private sector. The most sensitive activities are to be retained in the MoD. That will allow us to minimise the constraints under which DERA can operate. That will, in turn, create an environment that permits full exploitation of its potential.
We envisage the process beginning with DERA's incorporation as a plc. This could be followed fairly swiftly by a flotation, as soon as DERA has reached a suitable stage of development. This could be as soon as 2001. All of this would take place under the leadership of its current chief executive, Sir John Chisholm. I should like to take this opportunity to pay tribute to

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Sir John—the man who formed the DERA that we know today against all the advice of those who thought it was impossible. Sir John has constructed an agency that has produced real efficiencies and benefits. I am very pleased that he is to lead the new DERA.
It is likely that the MoD would retain initially a significant financial stake in DERA. This would ensure that the taxpayer received a share of what we believe will be the increasing value of the new company as it builds upon and exploits its impressive legacy of government-funded research. In answer to the question raised by my noble friend Lord Brett, the decision as to when the MoD will dispose of its stake in the business will depend on market conditions and the speed with which the company establishes itself as a commercial organisation. It is a little early for us to anticipate that yet.
Obviously, detailed work would be needed to refine the implementation of the core competence model and to decide how the MoD-retained elements in DERA will operate. We are now embarking on a six-week period of consultation to determine the views of our stakeholders. We shall not take any final decisions until we have heard those views. My noble friend Lord Brett raised a number of points which I shall endeavour to deal with. I assure my noble friend that this is a genuine consultation exercise. It will come as no surprise to many noble Lords who know our histories that my noble friend and I share something of a common past in our trade union affiliations. I am clear that such a period of genuine consultation is enormously important.
A number of noble Lords, including my noble friend Lord Brett and the noble Lord, Lord Hogg of Cumbernauld, were concerned about job losses. Over the next few years there must be adjustments in both the retained element and the new company as they adapt to changing demands, and that will probably have employment implications. However, that is not new. My noble friend Lord Brett is aware that this has occurred, and is occurring now, in DERA as the balance shifts from the more traditional defence technologies to the new information technologies. Therefore, the issue is before us in any event.
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My noble friend also asked about pensions. In this process it is important to safeguard the terms and conditions of employment of those who transfer from the public to the private sector. That will be achieved by structuring the PPP to ensure the transfer of undertakings. In that context my noble friend and I are familiar with TUPE, which will apply in this case.
My noble friend also asked about the position of military officers. I remind him that we already have arrangements under which military staff work within private sector companies such as BAe Systems. We are confident that similar secondment arrangements can be put in place as far as concerns DERA.
My noble friend Lord Faulkner went into a good deal of detail. I was pleased to hear of his highly successful visit to Malvern. A number of DERA's sectors have staff based on the site at Malvern. As we have not yet completed the detailed breakdown of staff between the retained DERA and the new company, it is not possible to be definitive about the splitting of the Malvern staff between the two organisations. We expect that division to be refined during consultations. As I have indicated to my noble friend Lord Brett, that will be genuine consultation. My noble friend Lord Brett and the noble Lord, Lord Burnham, were concerned about intellectual property rights. Those rights are owned by the MoD and we foresee that they will pass to the new company, with reserved rights for defence use.
I hope your Lordships agree that what I have set out tonight are the results of genuine consultation on an imaginative and potentially highly successful way forward for DERA. We have listened carefully to all commentators and stakeholders, and the proof of that is in the revised documents that are before your Lordships. We believe that what we now propose meets the concerns of those who felt that some of DERA's activities were simply too sensitive for the private sector and, at the same time, offer the opportunity for us to create a world-class company that is able to exploit technology in partnership with civil industry and, consequently, to invest not only in people but in facilities and science to the wider benefit of wealth creation in the United Kingdom.
House adjourned at eight minutes before nine o'clock.

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