Sitting of 9 February 2000

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

    CITY OF LONDON (WARD ELECTIONS) BILL (By Order)
    Order for further consideration, as amended, read.
    To be further considered on Wednesday 16 February.

Oral Answers to Questions
  NORTHERN IRELAND
  The Secretary of State was asked—
  NORTHERN IRELAND

    Security
    Mr. Tony Clarke: What recent progress has been made to create a more normal security environment. [107673]
    Mr. Owen Paterson: If he will make a statement on the security situation in Northern Ireland. [107675]
    The Minister of State, Northern Ireland Office (Mr. Adam Ingram): The security strategy paper that was published by my right hon. Friend the Secretary of State on 22 December 1999 outlines the progress made and the further steps that the Government intend to take towards achieving normality, depending on the threat level. In assessing that threat level, we will act on the professional advice of the Chief Constable of Northern Ireland and our security advisers. I want to make it clear that we will not relax our guard. The safety of the public remains at all times paramount.
    Mr. Clarke: I am grateful to my right hon. Friend for that reply and particularly welcome the publication of the Government's strategy. Following the bomb attack in Irvinestown, will he ensure that, while working towards a more normal security environment, we redouble efforts to ensure that those who are working outside the peace process are swiftly brought to justice?
    Mr. Ingram: Obviously, the attack in Irvinestown should be and was rightly condemned by everyone associated with taking forward normalisation in Northern Ireland. It was condemned across the board by political parties and others. In taking forward the process, we must ensure that we do not drop our guard. Even with all the successes of the Garda Siochana in the Republic of
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    Ireland and of the RUC, there are clearly people who are intent on carrying out such actions. We must ensure that they do not succeed in those acts.
    Mr. Paterson: The Minister says that the safety of the public remains paramount, but yesterday the Northern Ireland Human Rights Bureau told me that, since the agreement, there have been 13 murders, 147 shootings and 422 beatings, as well as nearly 1,000 armed bank robberies in which 3,000 members of the public were held up at gun point. Is it sensible to continue to plan the break-up of the RUC and to release murdering terrorists?
    Mr. Ingram: The hon. Gentleman would do better to rely on official statistics, rather than the source that he quoted. He has got it totally wrong.
    Mr. Paterson: Which one is wrong?
    Mr. Ingram: The hon. Gentleman could easily ask written questions to gain such information, but I personally undertake to ensure that he is provided with the accurate statistics. It is not the case that we intend to break up the RUC, as the hon. Gentleman says. I remind him that the future of policing in Northern Ireland was part of the Good Friday agreement. I assume that the hon. Gentleman supports that agreement. If so, he should give a fair wind to the difficult decisions that we have to take on the future of policing there.
    Mr. David Trimble: May I refer the Minister to the Irvinestown bomb incident? I am aware that, in official circles, it is thought that the Real IRA, based around Dundalk, is more dangerous than Continuity IRA, which is based around the Fermanagh borders. This is the third bombing in Fermanagh by Continuity IRA. Consequently, there needs to be particular vigilance on the Fermanagh borders. Does the Minister agree that nothing could be more foolish than to decide now to demolish the patrol bases on the Fermanagh border? That incident shows the clear need to retain those patrol bases. The suggestion that the bases should be demolished as a political gesture, which has been made from time to time, should now be dropped entirely.
    Mr. Ingram: Any bombing incident or killing by any dissident group has to be condemned whatever happens in Northern Ireland. Of course, we had the tragic circumstances of Omagh and there have been other incidents during the peace since the Good Friday agreement was agreed by the various parties who signed up to it. We have always said that this is not a perfect peace. We have always highlighted the potential dangers contained within it. I take note of what the right hon. Gentleman says, but he will understand that Ministers and the Secretary of State will always act on any matter—either the specific matters that he raised or the wider agenda—on the basis of the best advice from the Chief Constable and our security advisers.
    Mr. Eddie McGrady: Would the Minister agree that the commencement of decommissioning would be a great asset in the pursuance of normal security? Does he also agree that that is the dear and earnest wish of all sections of the community in Northern Ireland and these isles in general? Does he agree

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    that the default to decommissioning precipitated the suspension of the Northern Ireland Assembly? Can he explain whether, in his opinion, that default is a default in respect of the Good Friday agreement, the Mitchell review or the artificial deadline set by the Ulster Unionist party for its council meeting next Saturday?
    Mr. Ingram: We had a very thorough-going debate on that issue yesterday, following last week's statement by the Secretary of State, and my hon. Friend made a significant contribution to that debate. We have a situation that we now have to deal with. Although there is a very real lack of confidence in various aspects of the way forward under the Good Friday agreement, I know that, like me, my hon. Friend believes that decommissioning and normalisation should happen, and that, in many ways, the two will go hand in hand. The more normalised Northern Ireland becomes, the greater will become the pressure on those who want to use the bomb and the bullet not to do so. Their communities will put that pressure on them. I am sure that the issues raised by my hon. Friend will continue to be addressed in the coming days.
    Mr. Lembit öpik: In the context of normalisation, will the Patten recommendations on police be implemented even if the Assembly is suspended?
    Mr. Ingram: We have made it clear that the Patten recommendations, which have now been analysed and proposed by the Secretary of State, are part of the Good Friday agreement. We have said that we want to continue with the Good Friday agreement. Therefore, the simple answer to the hon. Gentleman's question is yes.
    Mr. Andrew MacKay: Does the Minister accept that, after the bombing at Irvinestown on Sunday, there must be one absolutely clear message from both sides of the House to the men of violence—that they will never, ever succeed, and that what they are doing is totally counterproductive to achieving what they want?
    Mr. Ingram: I share that sentiment with the right hon. Gentleman, and I am sure that every hon. Member wants decommissioning. The sentiment was also expressed in the Good Friday agreement. It is also what the people of Northern Ireland and of the Republic of Ireland want. They want a peaceful future and an end to the violence that they have known for the past 30 years.
    Mr. MacKay: Does the Minister accept that, after Irvinestown and other incidents, when there is very clearly still a terrorist threat, it would be quite wrong to implement recommendations in the Patten report that are security sensitive? Will he now give a guarantee to the House that those particular recommendations will not be implemented until there is no longer a terrorist threat in Northern Ireland?
    Mr. Ingram: I am not so sure that the right hon. Gentleman has heard the answers that have been given by Ministers before; if he has, he has not absorbed them. We have made it clear that the threat level always has to be taken into account. The Secretary of State made that clear in announcing the way forward on the recommendations flowing from the Patten report. Clearly, we have to take
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    the threat level into account, and we do so on the best security advice available. We have to take that advice into account. We are also talking about a specific time scale—immediately, medium term or long term—and judgments will be made as we progress on the issue.

    Terrorist and Paramilitary Violence
    Helen Jones: What discussions he has had with the Office of First and Deputy First Minister relating to victims of terrorist and paramilitary violence. [107674]
    The Minister of State, Northern Ireland Office (Mr. Adam Ingram): I had a constructive and positive meeting with the First and Deputy First Ministers on Monday 31 January to discuss how victims' issues can be best addressed. It was agreed that a co-ordinated approach is essential to ensure that victims are treated with the respect that they deserve.
    Helen Jones: I thank my right hon. Friend for that reply. Does he agree that, in the past 30 years, there have been too many victims and too many damaged people, both in Northern Ireland and on this side of the Irish sea? Will he assure those victims and their families that, through this very difficult time, both he and those with whom he is in discussions will redouble their efforts to ensure a lasting peace in Northern Ireland—which is what most of those victims and their families want?
    Mr. Ingram: I do not think that I could add very much to the sentiments expressed by my hon. Friend, who has articulated both past events and the problems associated with victims and survivors of the violence. The best way forward is to achieve a lasting peace, so that we have no more such victims or survivors.
    Mr. Michael Colvin: While I condemn all acts of terrorism in Northern Ireland, may I ask the Minister to acknowledge that much of the money that was collected by the Noraid organisation, in North America, was to help the victims of terrorism in Northern Ireland, but that, more often than not, that aid found its way into the IRA's hands to buy arms, thereby creating victims of terrorism in Northern Ireland? Would there be merit in considering an extra payment to the victims of terrorism in Northern Ireland pro rata for the arms surrendered, thereby giving an incentive to both sides to do so?
    Mr. Ingram: We are always prepared to listen to new and innovative ideas, and that suggestion has not been put to me before. It would be hard to quantify that proposal, but, as the Minister with responsibility for this issue, I would be prepared to look at such ideas to see whether there is a practical way forward. I thank the hon. Gentleman for his suggestion.
    Mr. Jeffrey Donaldson: Does the Minister agree that the best way to ensure real peace in Northern Ireland and to ensure that there are no more victims is to take the arms out of circulation and

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    to have them decommissioned? In the absence of decommissioning, surely it would be wrong to hurl further insult upon the hurt of the victims of terrorist violence by continuing with the early release of terrorist prisoners, when those terrorist organisations are failing to deliver on their obligations under the agreement.
    Mr. Ingram: We have always made it clear that one of the most difficult aspects of the agreement was the early release of prisoners. We always hoped that more progress would be made on a parallel basis on all other aspects of the agreement. It is a vexed and difficult question and, as the Minister who has to deal regularly with victims and survivors of terrible acts, I well understand the sentiments expressed by the hon. Gentleman. I suggest to him that he could serve the interests of those victims and survivors better by working alongside his right hon. Friend the Member for Upper Bann (Mr. Trimble) to bring about a lasting peace in Northern Ireland, and by helping in the efforts that the right hon. Gentleman is making in support of the Good Friday agreement.
    Mr. Harry Barnes: Has the Minister thought beyond decommissioning, as residual punishment beatings, exilings and intimidations will still take place? People will have difficulty in reporting these incidents to the RUC and the state because of fears of intimidation. Would not the setting up of an independent anti-intimidation unit with international support alert us to the problems of continuing gangsterism? Would that be helpful in terms of developing democracy in Northern Ireland?
    Mr. Ingram: When we talk about moving towards a normalised society, we do not mean that it will be a criminal-free society, as that is not the nature of any society now. We must ensure that the RUC and the other agencies of the Government with responsibility for tackling violent crime have all the means at their disposal, so that the victims of violence and those who may wish to give evidence against those carrying out such acts have the full protection and support of all the agencies of the state.
    Mr. Robert McCartney: How can the Government's ethical policy towards Austria in relation to the inclusion of Mr. Haider's party in Government be equated with the policy pressurising democrats of all descriptions to serve in an Executive with representatives of a terrorist organisation that remains armed and has murdered 2,500 British citizens?
    Mr. Ingram: The hon. and learned Gentleman is not easily pressured. Usually, he takes great umbrage when he is pressured, so I would never seek to pressure him into doing anything. The establishment of the Executive was agreed by the parties that supported the Good Friday agreement, which itself was supported by the vast majority of people in Northern Ireland. I should have thought that he, as a democrat, would be prepared to bow to the wish of the majority.

    Thanksgiving Square
    Rev. Martin Smyth: What discussion he has held with the Ministers and officials of the Northern Ireland Assembly concerning Thanksgiving square. [107676]
    The Parliamentary Under-Secretary of State for Northern Ireland (Mr. George Howarth): Neither my right hon. Friend the Secretary of State nor I have had any discussions with Ministers or officials of the Assembly regarding this matter.
    Rev. Martin Smyth: I am sorry that that was not a more positive response, although I understand the reasons. Does the Minister accept that the Secretary of State for Culture, Media and Sport had appointed a lead person to give the funding? That person claimed to be dealing with the Arts Council, and then—having held those involved spinning for a long time—finally said that there was no money. Was that because the Arts Council is more concerned about performing arts than other arts? Does the Minister accept that Thanksgiving square—proposed by Jews, Muslims, Hindus, Christians and others—would be useful in finishing the waterfront?
    Mr. Howarth: While I agree with the hon. Gentleman that the project is undoubtedly very worth while and has the wide support that he describes, matters relating to charities and funding for such projects now fall under the auspices of the devolved Administration. However, I note what he says and I accept entirely that the development would be very desirable.

    Decommissioning
    Mr. David Ruffley: What progress has been made on the decommissioning of arms and explosives. [107677]
    The Secretary of State for Northern Ireland (Mr. Peter Mandelson): The Independent International Commission on Decommissioning made a further report to the British and Irish Governments on Monday 31 January. As I said to the House on 3 February, all the main paramilitary groups on ceasefire are now engaged with the commission, but there has not yet been decommissioning of arms by a major paramilitary group. We and the Irish Government continue to work intensively to secure the further progress on decommissioning that is essential to maintain the confidence required to sustain the devolved institutions.
    Mr. Ruffley: Will the Secretary of State end the early release of terrorist prisoners if there is no decommissioning this week and the Assembly is suspended?
    Mr. Mandelson: No, I will not, because the issue of prisoner releases is governed by other considerations and other legislation. I am obliged to keep under review permanently the issue of ceasefires, because it is by that that I judge the continuation of the prisoner release scheme.

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    I can assure the hon. Gentleman and other right hon. and hon. Members that I will keep those ceasefires under constant scrutiny.
    Dr. Norman A. Godman: Is my right hon. Friend in a position to estimate when he is likely to receive a second report from General de Chastelain? Will my right hon. Friend say from the Dispatch Box that he will resist the demands made in some quarters that the shelving of the Patten report and its recommendations should be part of the discussions?
    Mr. Mandelson: I certainly echo what my right hon. Friend the Minister of State has already said on that subject. The Patten commission's proposals and the decisions that we have taken about them stand on their own merits, and while I will consider the nature and speed of the implementation of Patten's recommendations in accordance with the security threat, as a matter of principle my view is that we should continue with implementation.
    In answer to my hon. Friend's first question, there may well—as General de Chastelain and his colleagues have already indicated—be a further report from the decommissioning body before the end of this week. In that context, I would appeal to the leaders of all the political parties in Northern Ireland not to close their minds to any further developments. They should keep alive the chance of a solution to the difficulties we are in, even at this late stage. Nobody wants any of the political parties to walk away from the peace process, because we want this to work. It is their duty to the public whom they represent in Northern Ireland not to extinguish hope that we may yet find a solution, even at this eleventh hour.
    Mr. William Thompson: The Government keep talking about the voluntary act of giving up weapons, but should they not be talking about the mandatory act of giving up weapons? Surely talking about the process being voluntary weakens the Government's whole case. Furthermore, given the good relations that we are told now exist between the British and Irish Governments, what representations have the Government made to the Irish Government to find out what they know about the location of arms dumps in the Republic of Ireland? Have the British Government asked that question? If they have had any positive answers, what representations have they made to the Irish Government to raid those dumps and take out those arms?
    Mr. Mandelson: In answer to the hon. Gentleman's first question, I do not have any power to force anyone to do anything. Just as devolution and entering the Executive and institutions were voluntary acts by the political parties, so too is decommissioning. I would just say this to all the paramilitaries, and to the IRA in particular. Nobody is asking for surrender by the IRA; nobody is demanding that humiliation be heaped on the IRA. If politics is to work, and if we are to see the decommissioning that is an essential part of the peace process, there must be certainty and there must be
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    definiteness, if confidence in all the institutions is to be rebuilt. I hope that the IRA will understand this need and, even at this eleventh hour, respond in a constructive way.
    Mr. David Winnick: Will my right hon. Friend make a distinction between those of us who are very much in favour of the Good Friday agreement, who want decommissioning to take place and who understand the difficulties that the British and Irish Governments face, and the political dinosaurs who are totally opposed to the Government and use decommissioning only as a way of trying to destroy an agreement that they never wanted in the first place?
    Mr. Mandelson: I have some sympathy with what my hon. Friend says. Everyone realises that if the peace process is to operate properly, if politics in Northern Ireland is to work, that must involve everyone. Everyone has a stake, and everyone's commitment is equally essential. If we are to rebuild the trust and confidence that we need for the institutions to work, they must enjoy the confidence of both traditions in Northern Ireland. We cannot sustain these institutions with the confidence or the support of one tradition alone. That is why I say that it is very important indeed that the Good Friday agreement as a whole must be implemented if confidence in the institutions is to be rebuilt.
    Mr. John M. Taylor: Will the Secretary of State give an absolute guarantee that if there is no actual decommissioning by the end of this week, he will suspend devolution on Friday?
    Mr. Mandelson: I have already made it absolutely clear that if it needs to be done we will, with a very heavy heart, put on hold the operation of the Executive and the institutions. I think that the hon. Gentleman and other Members of the House would agree that most people in Northern Ireland would respond to that with a deep sense of despair. They like their Executive; they like the institutions. I have to say to the hon. Gentleman that if we do not do that, the alternative would be worse. If we simply allow the Executive and the institutions to stagger on without the cross-community support that they need to survive, they are likely to shatter irreversibly. I simply will not stand by and allow that to happen. If it is necessary to do so, we will put these institutions on hold in order to preserve them, not to annul them.

    Police Force
    Mr. Gordon Prentice: When he plans to meet his policy objective of the Northern Ireland police having broad parity in terms of the religious affiliations of its officers. [107678]
    The Minister of State, Northern Ireland Office (Mr. Adam Ingram): The Government's aim is a police service that is representative of the community in Northern Ireland and enjoys widespread support from that community. The Patten report proposes measures designed to quadruple the proportion of Catholic officers

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    in the police over a 10-year period. As my right hon. Friend the Secretary of State announced on 19 January, the Government have accepted these measures.
    Mr. Prentice: The Secretary of State said just a few moments ago that the Patten recommendations stand on their own merit. That is good, because yesterday the right hon. Member for Upper Bann (Mr. Trimble) gave the impression—and here I paraphrase—that, with the suspension of the Assembly, the Patten report would be put into cold storage. Is it not the case that a situation in which 92 per cent. of police officers in Northern Ireland are Protestant and 8 per cent. are Catholic is not sustainable in the long term, and that we need to implement the Patten recommendations?
    Mr. Ingram: I made clear in an earlier answer, and my right hon. Friend has made clear in his answers, the way in which we intend to proceed with the recommendations of the Patten report.
    Mr. William Ross: Is the Minister aware that, as intimidation has declined—[Interruption.]
    Madam Speaker: Order. The House must come to order. The Minister cannot hear the question. Speak up, Mr. Ross.
    Mr. Ross: Is the Minister aware that, as intimidation from terrorist organisations, principally the IRA, has declined, the number of Roman Catholics applying to join the Royal Ulster Constabulary has risen to more than 20 per cent? In the light of that welcome development, and assuming that the quality of applicants is equal, when might broad parity be reached without positive discrimination in favour of Roman Catholic applicants?
    Mr. Ingram: I am sure that even the hon. Gentleman wants a police force that represents the wider community. Reaching parity depends on several circumstances, one of which he alluded to. We want to sustain the important developments that have taken place in recent months and to increase the number of people from the minority community who are applying and successfully becoming police officers. That will help to better Northern Ireland society in future.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Mrs. Linda Gilroy: If he will list his official engagements for Wednesday 9 February.
    The Prime Minister (Mr. Tony Blair): This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.
    Mrs. Gilroy: Does the Prime Minister recollect that many of the hundreds of public servants whom he met in
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    Plymouth last week made it plain that they want more funding for public services? Would a binding policy on tax take for the whole of a Parliament lead to savage cuts in public services? Is that why at least one senior Tory Member has described that policy as mad?
    The Prime Minister: Of course that tax guarantee would mean cuts in basic public services, health and schools—[Interruption.] There is nothing quite so ludicrous as the push-me-pull-you double act between the Leader of the Opposition and the shadow Chancellor over the past few days. This morning, the shadow Chief Secretary told us unequivocally that they would—
    Mr. Stephen Day: It has nothing to do with you.
    The Prime Minister: The shadow Chief Secretary said that the tax guarantee stood. That does have something to do with the person sitting opposite me. When he gets up, will he tell us whether the tax guarantee stands? Yes, or no?
    Mr. William Hague: The tax guarantee stands, and it will continue to stand. As the Prime Minister has had a straight answer from me, can we have some straight answers from him? That would be a novelty.
    When archbishops, cardinals, the Chief Rabbi, the Muslim Council, Conservative Members of Parliament, many Labour Members, the chief inspector of schools, former Labour Cabinet Ministers, a majority of the Prime Minister's reformed House of Lords and the vast majority of mainstream opinion in the United Kingdom believe that the Government are wrong to abolish section 28, will the right hon. Gentleman listen to them and drop the whole idea?
    The Prime Minister: No, I will not, for the reason I shall give in a moment. First, however, let me point out that the previous Government decided in 1994 guidance that section 28 did not apply to schools. The idea that has been put about in parts of the press that repeal is about gay sex lessons in schools and all the rest of it is nonsense.
    Section 28 is being repealed because of the information given to us and the pleas made to us by such organisations as the National Children's Bureau, the National Association of Head Teachers, the British Medical Association and the Royal College of Nurses. It has nothing whatever to do with some of the nonsense that we have heard over the past few days. It is intended to ensure that teachers and others are able properly to give children information that they need. Although the right hon. Gentleman may wish to exploit the issue for the Conservative party's purposes, I believe that our country is more tolerant than he gives it credit for.
    Mr. Hague: We all believe in a tolerant society. Many of those organisations to which the Prime Minister referred have talked about bullying in schools. However, his own chief inspector of schools said:
    "My own experience is that there is no evidence that section 28 has had a negative effect on teachers' ability to deal with bullying. No head teacher has raised it with me in all the school visits I have made."

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    If section 28 does not prevent teachers from acting, will the Prime Minister answer a question that many people want to ask him? What is it that he wants to see taught in classrooms that cannot be taught now?
    The Prime Minister: It is nothing to do with teaching children in classrooms; it is to do with answering their questions. I heard what the chief inspector of schools said, but the evidence presented to us by organisations representing children and representing teachers is that, in some cases, the section did make a difference. We have, therefore, decided to replace it with proper guidance for schools.
    There are two different types of concern over this matter. There are those expressed by churches and others—in the House of Lords and elsewhere. We shall listen to those concerns; indeed, we have already done so. My right hon. Friend the Secretary of State for Education has indicated that he will introduce guidance that will address those sensible, legitimate concerns.
    Another aspect of the opposition has to do with exploiting anti-gay feelings. Let us be quite open about that. Those are the opponents I intend to take on.
    Mr. Hague: In all the nonsense that the right hon. Gentleman has come out with over the past three years, he has never beaten that. If he wants to listen to people, he would drop the idea. The debate has become more than a debate about a clause in a local government Bill; it is about tolerance being a two-way thing in this country. It is about whether millions of parents have the right to determine what their children are taught, and about whether the mainstream majority has the right to have its views and values respected, or whether taxpayers' money can be commandeered by a Government who have no respect for that. Does the right hon. Gentleman not understand that the debate is, indeed, about tolerance? It is about the tolerance demanded by the mainstream majority that its views and values be respected.
    The Prime Minister: The right hon. Gentleman may fool some of those sitting on the Opposition Benches with those remarks, but he will not fool many people. As I have just pointed out, since 1994—when he was a member of the then Conservative Government—section 28 does not apply to schools. In relation to sex education, parents are already perfectly entitled—and will remain entitled—to withdraw their children from any of those lessons. Furthermore, teachers and governors will decide what is taught in their individual schools.
    All that is clear, although one will not read it in some of the press comment. It has been made clear many times over the past few days. What is also clear, however, is that part of the explanation why this matter is being whipped up has nothing to do with tolerance, or with teaching children properly in schools; it is to exploit the issue for the political reasons that I have given. If the right hon. Gentleman will not listen to me, I would have hoped that he would listen to some of the more tolerant voices—even in his own party.
    Mr. Nigel Griffiths: Will my right hon. Friend confirm that the working families tax credit benefits 1.5 million families by an average of £24 a week? Does he agree that, when the
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    Tories have mastered that simple arithmetic, he can tell Archie to tell Michael to tell William, and that we shall see another U-turn?
    The Prime Minister: If anything indicated the extraordinary weakness of the Leader of the Opposition's position, it is that the shadow Chancellor announces their policies on such issues at Question Time. Let us hear some more answers from them. Are they against £100 for the pensioners? Are they against the new deal for the unemployed? Are they against child benefit increases, free eye tests for pensioners or extra money for rural bus services?
    Today, the Opposition have recommitted themselves to the tax guarantee; they will be impaled on it at the next election.
    Mr. Charles Kennedy: Has the Prime Minister had a chance to read the Liberal Democrat early-day motion? [Interruption.]
    Madam Speaker: Order. Mr. Kennedy, please proceed.
    Mr. Kennedy: The spontaneous reaction from those on the Labour Benches confirms that at least 85 Members in the parliamentary Labour party have read the motion—because they signed it. We are very grateful for their support. It describes the 75p uprating for pensioners as inadequate. Will the Prime Minister therefore take this opportunity to tell 85 of his right hon. and hon. Friends why they are wrong and why 75p is adequate?
    The Prime Minister: It is not the case that all that pensioners are getting from the Government is a 73p increase. The £100 is an increase that pensioners are getting; the minimum income guarantee helps many of them; and pensioners over the age of 75 will get free television licences from autumn 2000. There are also, of course, free eye tests, the national concessionary bus fares scheme and the many other things that we have done for pensioners in this country.
    We have already exposed the Conservatives' tax guarantee. I think that it is about time that we heard from the Liberal Democrats what their tax guarantee is, although the only guarantee that they seem to be making in respect of people's taxes is that they will go up.
    Mr. Kennedy: On the issue of guarantees and of pensioners, will the Prime Minister acknowledge, as he did on his visit to the south-west last week, that many pensioners are concerned about the issue that I raised with him last week—the future of the rural post offices? He will recall that he said to me then that subsidy was no way forward for guaranteeing the future of threatened post offices. Yet, 24 hours later, he told the editor of the Western Daily Press:
    "look, you may need a subsidy to allow this rural post office to function".
    It is reasonable to ask what the policy of the Prime Minister is. Is it Wednesday's policy or is it Thursday's policy?
    The Prime Minister: It is the same; I did not say that. I said that it would be wrong to stop the switch-over from paying benefits in cash to paying them into a bank account.

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    It would be absolutely absurd to have the technology to do that, to have invested in it and then to waste that technology. In respect of the rural post offices, I also put forward a number of things that will help them to deal with the new situation. If the Liberal Democrats are really saying that even if we have the technology to pay money direct into people's bank accounts, we should not do so, I disagree with them.
    On pensioners, I am delighted that the authoritative source of my right hon. Friend the Secretary of State for Social Security is sitting to the left of me. He tells me that, in the Liberal Democrats' manifesto—a nod or a shake of the head will do—they committed themselves only to uprating the pension in line with prices, not earnings.
    Maria Eagle: While considering the future direction of Government health policy, has my right hon. Friend had an opportunity to read a recent edition of the magazine Public Finance, in which an adviser to the Conservative's Front-Bench health team says that
    "in the end we may have an NHS only for the poor, a service for the people who earn less than a certain amount."
    Will my right hon. Friend assure the House that his Government will rebuild and modernise the NHS while maintaining it as a universal service free at the point of use whereas the Conservative party would privatise it and force people to pay for private medical insurance?
    The Prime Minister: We will not privatise the health service; we will rebuild it. My hon. Friend is right to draw attention to the remarks of the Conservatives' adviser. It all stems from the tax guarantee; they cannot make it work unless there are big cuts in health service provision. However, it is not just their adviser who has expressed such a view. Their health service spokesman, when describing their policy, said within the past few days:
    "So people would look to the NHS to provide them with service when they had serious life-threatening conditions, and would look to their private insurance to help them with those things where the NHS had to ask them to wait".
    This is their Trojan-horse policy, and it is our job to make sure the country knows it.
    Sir Archie Hamilton: As it was only the strong-arm tactics of the Prime Minister that delivered the job of the First Secretary of the Welsh Assembly, will the Prime Minister now tell him and members of the Welsh Labour party to abide by the decision of the vote of no confidence, whatever the outcome might be?
    The Prime Minister: There is a no confidence motion in the Welsh Assembly, but I believe that the Welsh First Secretary is doing an excellent job and so does the Labour party. Let us be clear what the issue is. What we have in the no confidence motion is the nationalists and the Tories joining together.
    The leader of the Tory party in Wales is saying that he wants an immediate extra £180 million from the Treasury over and above the Barnett formula. That brings me back to the tax guarantee. When will the Conservatives say whether they want the tax guarantee or the £180 million
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    of extra spending? Their man has not resigned. Which is it—the tax guarantee or the spending? We need an answer.
    Mr. Martyn Jones: Is the Prime Minister aware that Carlsberg-Tetley proposes to close the Wrexham Lager Beer Company, which is just outside my constituency? The company was established in 1882 and is the oldest lager brewery in Britain, not much younger than Carlsberg itself. Given that Carlsberg makes great play of its history, does my right hon. Friend agree that if it goes ahead with the closure and does not enter into negotiations with the local council to continue brewing on the site, Carlsberg risks being considered by the people of Wrexham to be probably the worst lager in the world?
    The Prime Minister: Of course I am aware of the distress that those job losses may cause, but I know that my hon. Friend is working with others to try to put together a package for his constituents, and I very much hope that it is successful.
    Mr. Peter Viggers: Is the Prime Minister personally aware of the depth of the crisis in the defence medical services caused by the closure of the only military hospital, at Haslar in my constituency? Is he aware that, following a massive, vigorous local campaign, the hospital is now to be kept open by the national health service? Will he take the advice of almost all those who have specialist knowledge and retain Haslar as a centre for defence medicine?
    The Prime Minister: I would have hoped that the hon. Gentleman would congratulate us on the work that we have done on the matter. We are now considering how to make the appropriate provision of critical care services, and we are spending an extra £140 million over the next five years to help to rebuild the defence medical services. Again, it all comes back to money. People in the hon. Gentleman's constituency have been asking us to spend more money on the health service; we are, but we cannot do that and have a tax guarantee at the same time.
    Dan Norris: Last Friday, somebody whom I was at school with, who is currently a nurse, was savagely attacked at a Bristol hospital. She is currently critical and unconscious. The day before, a Kent GP was stabbed in the back at his surgery. Other professions—particularly social workers, but also teachers and those who drive buses and taxis—also face dangers in working with the public. What role do the Government have to play in promoting information, training, safeguards and guidelines on how people who work with the public can best ensure their own safety, especially if by the very nature of their job they have to work face to face with the public?
    The Prime Minister: That is indeed a serious problem, which is why last October the Government launched a series of initiatives called the NHS zero tolerance zone. We are investing money in accident and emergency departments and modernisation work specifically for improvements to security and safety for hospital staff and patients. We hope that the additional investment will make a difference. We are also establishing a task force

    245
    to take forward a programme of work designed to reduce violence against social care workers. This is a serious problem, and our sympathy and our hearts go out to the individual who was attacked last week.
    Mr. Peter Luff: The Prime Minister was quick to remove the Whip from the hon. Member for Glasgow, Govan (Mr. Sarwar), when he was the subject of a police investigation. Why has he not acted with the same speed and decisiveness in the case of the hon. Member for Coventry, North-West (Mr. Robinson)?
    The Prime Minister: Let us wait and see what the investigation reveals. As with many of the investigations into my right hon. Friend, it was instigated on the basis of allegations made by Conservative Members of Parliament.
    Mr. David Borrow: I am sure that my right hon. Friend saw the Low Pay Commission report this weekend, which demonstrates that there has been no loss of jobs with the introduction of the minimum wage. Will my right hon. Friend welcome the conversion of the Conservative party to support for the minimum wage? Will he also congratulate my constituent, Erica Ledbetter, from Leyland, who won a tribunal case on the minimum wage without being represented by a lawyer or a trade union? Does my right hon. Friend recognise, however, that many of the people who are most vulnerable in respect of the minimum wage need better advice to enable them to take their case to an industrial tribunal?
    The Prime Minister: Of course, the Conservatives detest the minimum wage, but they lack the courage of their conviction to get rid of it. A few months ago, the shadow Chancellor called it "an immoral policy", but now they have had to accept it. It is an important reform which we have introduced, and it symbolises a different approach to people in the workplace. We believe that employers can treat their workers fairly and get the best out of them by doing so. That is Labour's way, which the Conservatives now have to accept.
    Mr. William Hague: Will the Prime Minister comment on the fact that within moments of his expressing full confidence in the First Secretary in Wales five or 10 minutes ago, news came through to the House that the First Secretary had resigned, before the vote of confidence had taken place? [Interruption.] Will the Prime Minister confirm that that has happened, and if it has, will he confirm also that the next big test of devolution will be the choice of a new First Secretary without any interference whatever from the Prime Minister?
    The Prime Minister: The one thing of which we can be sure—[Interruption.]—is that that will not be a Tory.
    Madam Speaker: Order. I have had enough of hon. Members calling out from sedentary positions.
    The Prime Minister: The no confidence motion was not just accepted by the nationalists, but backed by the Conservatives. Perhaps the right hon. Gentleman will
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    explain why his leader in Wales is saying that he has a commitment from the Conservative party to fund £180 million above the Treasury block grant. If that is true, how does he intend funding it?
    Mr. Hague: All I want to know is whether the First Secretary in Wales has resigned and, if so, why he did so before the vote of confidence, and whether the Prime Minister will undertake not to interfere in any way in the choice of a new First Secretary.
    The Prime Minister: The decision is for people in Wales. [Interruption.] What we need to know is why the nationalists and the Tories are in bed with one another—the two wreckers of devolution—one group that wants to separate Wales from the United Kingdom, and the other that supports centralisation. After all the fun and games down at the Assembly are over, the right hon. Gentleman must explain why the Tories are supporting the nationalists' demand for an extra £200 million of public spending.
    Mr. Hague: It is no good the Prime Minister dismissing as fun and games serious proceedings in an Assembly which he created and which he campaigned for, about a First Secretary whom he imposed on the Welsh Labour party in the Welsh Assembly. Not only has the Prime Minister forgotten why he imposed the First Secretary—he does not even know whether the First Secretary is in office at this moment. Is the First Secretary still in office? If he is not, will the Prime Minister undertake not to interfere in the election of a successor?
    The Prime Minister: The decision is for people in Wales. The fun and games to which I refer is the fact that the Tories and the nationalists are in an alliance together. [Interruption.] Yes, they are in alliance together. Once the fun and games have ended, the right hon. Gentleman will have to explain—
    Madam Speaker: Order. Some hon. Members seem to be having apoplexy. The House must come to order. I want to hear what is being said.
    The Prime Minister: The nationalists and the Tories are now joined together in a demand for extra public spending. That is the truth, which Opposition Members want to shout down. The Conservative party demands that we spend an extra £200 million in Wales. Why does not the right hon. Gentleman explain how he can demand £200 million more, while maintaining a tax guarantee?
    Mr. Jim Dobbin: Has my right hon. Friend read early-day motion 336 tabled by Tory Members, who want the Government to extend private health insurance? Given that two thirds of day beds are taken by people who are over 65, and that the cost of a hip operation can be as much as £7,800, does he agree that anyone who believes that private health insurance can fund the national health service in this country is simply not living in the real world?
    The Prime Minister: The Conservative policy, accurately described as a Trojan horse, will mean that people who are over 60 will have to take out private medical

    247
    insurance at a cost to many of them of £60 to £80 a week. [Interruption.] Conservative Members can shout as much as they like, but many people will not be able to afford that sort of private medical insurance. It is wrong to expect them to do so. Furthermore, the Conservative policy of giving tax breaks on private medical insurance will mean a deadweight cost that would wipe out the entire nurses' pay claim for next year just for those who already have private medical insurance. People know that that will happen if they vote Tory at the next election.
    Mr. Richard Page: A year or so ago, I invited the Prime Minister to visit my constituency to explain the soaring waiting lists in hospitals, but he refused. He solved that problem by having a waiting list for a waiting list. I again invite him to my constituency to visit the governors of some successful former grant-maintained schools, whose budgets are being cut. Can he advise them whether they should sack teachers, or put a levy on parents? After all, I remind the Prime Minister of the importance of education, education, education.
    The Prime Minister: That is why we are putting the largest investment ever in education this year and in the next two years. Again, Conservative Members are asking for more money. It is time that they made up their minds about what they want. They ask for more public spending in Wales, on the health service and on schools. In the past week, their defence spokesman asked for more defence money; their agriculture spokesman asked for more agriculture money; and the local government spokesman wants more for local government. The Leader of the Opposition and all Conservative Members will have to decide whether their policy is for a tax guarantee, or a cuts in public services guarantee.
    Mr. Chris Pond: Given the rather childlike behaviour we have witnessed in the Chamber, I ask my right hon. Friend about his commitment to halve child poverty in 10 years and to eliminate it in two decades. Given that 4 million of our children were in poverty when he took over, he has set quite a challenge. Is he confident that the Government can fulfil that commitment?
    The Prime Minister: I believe that we can fulfil it, partly because of the measures on child benefit, the new deal, which puts young people back in work, and the working families tax credit, which will lift approximately 800,000 children out of poverty. We can already be proud of our record in our first term. The country will be reminded time and again that our measures, such as child benefit, the £100 for pensioners, the new deal and the working families tax credit are opposed and would be taken away by the Conservative party.
    Mr. Nigel Evans: I want to ask a simple question. Will the Prime Minister guarantee that neither he nor Millbank will interfere with the selection of the new Labour leader of the National Assembly for Wales?
    The Prime Minister: Given the state of the Conservative party, they can leave my party to me. Whatever happens in Wales, questions about public spending have to be answered. The entire case of the nationalists, supported by the Tories, that they cannot afford objective 1 spending is false. Everybody knows that it is false, and that Conservatives and nationalists cannot possibly afford the extra £200 million that they demand. Whatever happens in the next few days, people in Wales would do better to stick to a Labour party that can deliver extra spending rather than a Tory party that would cut it.
    Mrs. Louise Ellman: How does the Prime Minister intend to increase and publicise the Government's considerable successes in regeneration and employment in inner-city areas such as Liverpool?
    The Prime Minister: Long-term youth unemployment has halved under this Government and some 200,000 young people are back in work. Those young people had no hope and opportunity of a job before. They now have a job. Everyone should remember that these policies are fair, but they also improve the state of the economy. As a result of the changes that have been made, we are cutting the costs of economic and social failure from the level we inherited from the Conservatives by £3 billion a year. That is then money we can spend on schools and hospitals. That is the Labour way, not the Tory way of cuts and social exclusion.

Points of Order
3.31 pm
Mr. Nigel Evans: On a point of order, Madam Speaker. Given the Prime Minister's inadequate responses today—[Interruption.]
Madam Speaker: Order. I decide whether it is a point of order. Let me hear what it has to do with me.
Mr. Evans: The Prime Minister's responses today were inadequate and there may be the implications for the House. It is too soon for you to have received a request from the Secretary of State for Wales to make a statement today on the National Assembly for Wales, but should he make one would you please accede to it as soon as possible so that we may question him about the involvement of the Prime Minister and Millbank in the appointment of a new leader of the Labour party in the Assembly?
Madam Speaker: The hon. Gentleman knows that the Speaker has no authority in respect of whether Secretaries of State want to make statements. They make them when they wish to, without consulting me. They just tell me, and that is how it should be.
Mr. Philip Hammond: On a point of order, Madam Speaker. May I draw your attention to Sessional Order No. 4, which the House passed on Wednesday 17 November 1999? It requires the Commissioner of Police of the Metropolis to keep the roads leading to the House clear and free of obstruction when the House is sitting. You will have noticed the extensive roadworks in Parliament square, which are causing considerable difficulty to Members seeking access to the House. I understand that the Metropolitan police agreed with the contractors that those works should be carried out now without consulting Officers of the House, who were merely informed after the event. Will you instruct the Serjeant at Arms to discuss the matter further with the Metropolitan police to establish whether the Commissioner has carried out the order's requirements?
Madam Speaker: I understand that traffic disruption in and around Parliament square is on account of cabling work. The Serjeant at Arms warned Members of those works and they should be prepared for delays until early March. The Sessional Order to which the hon. Gentleman refers concerns matters such as demonstrations and processions, which come under the responsibility of the Commissioner of Police of the Metropolis. It does not cover roadworks, which are of course the responsibility of Westminster city council. However, I am greatly concerned at the significant disruption in Parliament square and its impact on Members' ability to reach the House expeditiously. I regard it as most important that there is proper liaison, of which the hon. Gentleman spoke, and consultation between the council and our House authorities on such matters. I shall review the current arrangements in that connection so that we have better liaison as to when repairs can be carried out in that area. For example, we could mutually agree that they could be done during a parliamentary recess.
Dr. Phyllis Starkey: On a point of order, Madam Speaker. Is it in order for the
250
hon. Member for Lichfield (Mr. Fabricant) to accuse another hon. Member—in this case, the Prime Minister—of lying in the House?
Madam Speaker: Certainly that is totally unacceptable in the House. I did not hear such a thing, otherwise I would have asked the Member concerned to withdraw it immediately. The hon. Member for Lichfield is here; could he offer me some explanation?
Mr. Michael Fabricant: I made no such statement. If I accused the Prime Minister of lying, of course I withdraw the remark. However, I am not aware of what the hon. Member for Milton Keynes, South-West (Dr. Starkey) is talking about. I can only assume that she is referring to something that occurred during Prime Minister's Question Time. I am sure that the Prime Minister would not have lied, but if he had lied, I would have shouted "Liar".
Madam Speaker: Sometimes tempers in the House are a little more frayed than I would wish them to be. I accept the hon. Gentleman's word.
Mr. William Ross: On a point of order, Madam Speaker. Although you are aware of the content of questions on the Order Paper, you cannot possibly be aware of the supplementary questions during Prime Minister's Question Time. You will recall that questions were asked today about events in the Welsh Assembly. You will also be aware that the Scottish Assembly—
Dr. Norman A. Godman: Scottish Parliament.
Mr. Ross: The Scottish Parliament and the Northern Ireland Assembly have certain devolved functions that are outwith the competence of this House. Madam Speaker, when a question is bounced on you from Back Benchers, how are you to decide whether the issue raised is a matter for this House or for the devolved institutions? Were the questions put today about the Welsh Assembly devolved matters or matters for this House?
Madam Speaker: The questions today were perfectly in order. I always come to the House prepared in my own mind to deal with such supplementary questions. I have good relations with the Presiding Officers of the Welsh Assembly and the Scottish Parliament. We have arrangements whereby we can deal with such matters daily in the event of them coming before us. I assure the hon. Gentleman that nothing that has been said in this House since those areas were devolved has been out of order. I try to watch these matters carefully.

BILL PRESENTED

  REGULATION OF INVESTIGATORY POWERS
  Mr. Secretary Straw, supported by the Prime Minister, Mr. Secretary Prescott, Mr. Secretary Cook, Mr. Secretary Mandelson, Mr. Secretary Hoon and Mr. Charles Clarke, presented a Bill to make provision for and about the interception of communications, the acquisition and disclosure of data relating to communications, the carrying

  251
  out of surveillance, the use of covert human intelligence sources and the acquisition of the means by which electronic data protected by encryption or passwords may be decrypted or accessed; to provide for the establishment of a tribunal with jurisdiction in relation to those matters, to entries on and interferences with property or with wireless telegraphy and to the carrying out of their functions by the Security Service, the Secret Intelligence Service and the Government Communications Headquarters; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. Explanatory notes to be printed [Bill 64].

  Emissions Trading
  3.37 pm
  Mr. Gareth R. Thomas: I beg to move,
  That leave be given to bring in a Bill to establish emissions trading; to create an emissions trading authority; to require the corporate disclosure of emissions; and for related purposes.
  Emissions trading would be good news for the environment, good news for British business, and good news for British workers. It offers a marriage between a crucial environmental imperative—the need to reduce greenhouse emissions—and the business need for efficient, innovative and cost-effective solutions.
  The Kyoto protocol signed in December 1997 demands legally binding targets to reduce the emissions of a basket of six greenhouse gases. Having been included in that historic protocol, emissions trading has arrived on the international stage. It is being considered by countries that have little previous experience of this issue. Indeed, the details of an international emissions trading scheme are already being worked on.
  The purpose of my Bill is to establish a domestic emissions trading system to work alongside and supplement the climate change levy, which is a new drive to stimulate renewable energy, and other action to reduce our greenhouse gas emissions. The Bill would require Ministers and Parliament to fix an overall cap on emissions, and would enable the distribution of emission permits, equal to the value of the overall agreed level, to participating businesses.
  The Bill would allow the trading of permits between businesses, thus ensuring that businesses can trade off the cost of controlling their pollution with the cost of buying other businesses' spare emission permits. It would establish an emissions trading authority, with representatives from business, the City, environmental non-governmental organisations and academic specialists, to oversee the issuing and trading of emissions permits, monitor a robust verification process and impose penalties for non-compliance with the scheme rules.
  The Bill would allow Ministers to require all companies over a certain size to calculate and publish the level of their carbon dioxide emissions. Lord Marshall made it clear in his report to the Treasury in November 1998 that the calculation of emissions from fossil fuel use was relatively straightforward.
  The current company law review being carried out in the Department of Trade and Industry is considering environmental reporting, and the Department of the Environment, Transport and the Regions has already published "Guidelines for company reporting on greenhouse gas emissions", which are being used by Wessex Water and CGU to disclose their level of emissions. Firms with more than 250 employees have been consistently encouraged to disclose voluntarily their environmental performance, and the need for monitored and audited reporting to help deliver Kyoto targets has been highlighted by a range of investment organisations and environmental non-governmental organisations, not least the excellent World Wide Fund for Nature.
  My colleagues in the Department of the Environment, Transport and the Regions have also strongly encouraged environmental reporting. A shift now to require the

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  mandatory disclosure of emissions would undoubtedly stimulate further action by businesses to reduce their emissions of carbon dioxide, improve their cost competitiveness and stimulate participation in emissions trading.
  The Intergovernmental Panel on Climate Change calculated that a global reduction in carbon dioxide of about 60 per cent. was needed by the middle of the century to stabilise our climate, with a 70 to 80 per cent. reduction by 2050 likely to be necessary for developed countries. Such a reduction will require careful but considerable change in technology and behaviour. Emissions trading, supported in principle by much of big business, would be an additional policy weapon and be part of a wider climate change strategy.
  Crucially, emissions trading allows companies to achieve specified reductions in carbon emissions flexibly and cost-effectively Having been allocated a target for reducing emissions, those that can reduce them at least cost can go further than their target and sell the excess to companies that are finding it more difficult or expensive to reach their target. In turn, those that find it difficult to reduce emissions can buy the extra permits from those that have gone further than they needed to, paying someone else in effect to achieve their reduction in emissions. It allows the more environmentally efficient firms to receive a reward in the form of trading profits, and will inevitably stimulate investment in innovative energy-efficient technology. It would also help British companies to develop expertise in emissions trading prior to the launch of an international emissions trading scheme.
  An emissions trading pilot was recommended by Lord Marshall in his report to the Treasury in November 1998. The CBI and the Advisory Committee on Business and the Environment have produced the broad outline of an emissions trading scheme backed by a diverse range of businesses and bodies, from British Steel and the Corporation of London through to Cadbury-Schweppes and the Eastern Group.
  There is already evidence around the world of successful emissions trading schemes. The largest such scheme is in the United States, addressing emissions of sulphur dioxide and their role in acid rain. Since the scheme's establishment in 1995 the overall total of controlled sulphur dioxide emissions has fallen to 23 per cent. below allowable emission levels. The flexibility offered by trading is estimated to have reduced total compliance costs by between a third and a half.
  Similarly, the regional clean air incentives market, or RECLAIM, came into force in January 1994. It is a trading scheme designed to tackle severe air quality problems in southern California. Total stationary source emissions are capped, with the cap declining each year until targets are met, and with participating facilities receiving and trading emission allowances. The cost reductions from using this trading scheme to achieve environmental targets were forecast to be 42 per cent. over the years 1994 to 2000. The indications are that the scheme is already being highly positive.
  Closer to home, BP Amoco established an internal emissions trading system in September 1998, trading emissions between 12 profit centres around the world
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  rather than in one country. The aim is to help the company achieve a voluntary target of a 10 per cent. reduction in greenhouse gas emissions by 2010 compared with 1990 levels. The scheme will be rolled out next year to all the company's business users. The results to date suggest that the environmental benefits can be obtained more cost-effectively than through some other possible measures. Monitoring and tracking are less burdensome than some regulations. Incentives exist within the scheme to achieve more than the minimum, and the scheme has already stimulated more innovation in technology.
  In Europe, too, Germany is already engaged in very limited trading schemes. Belgium, Denmark and the Netherlands have also all used a limited form of trading scheme for existing power stations to implement EU limits of sulphur dioxide emissions. The Confederation of Norwegian Business and Industry has also proposed a sulphur trading scheme, in which permits would be allocated to both sulphur emitters and producers of oil products.
  Emissions trading is inevitably complex. It poses many difficult questions, not least about how emissions permits are best allocated. But it is increasingly being considered around the world as a serious tool in the drive to lower greenhouse gas emissions. Britain needs to build on the momentum achieved by the work of the CBI and ACBE, and introduce our own focused emissions trading scheme soon.
  My Bill would allow businesses to choose whether to join a trading scheme, but, once committed, a business would be committed for a determined length of time, and its participation in the scheme would be on a statutory footing. The scheme would be linked with the climate change levy and the negotiating agreements. A key task of the emissions trading authority would be to ensure that participating companies were delivering sustained reductions in emissions, or paying a price for their eco-inefficiency.
  The authority would be required to monitor delivery on emission reduction targets, to enable all organisations to see that the scheme was achieving its environmental objectives. It would be able to commission research to monitor the flexibility and cross-effectiveness enjoyed by participants. It would be required to ensure rigorous monitoring of the quality of emissions data reported by participating companies to maintain the credibility of the scheme.
  International emissions trading is coming. Our neighbours and competitors are already being forced to consider introducing it. According to a recent briefing from the Parliamentary Office of Science and Technology,
  "If the UK began a domestic scheme prior to the introduction of an international scheme it might be able to lead the design and implementation of international emissions trading and even to be the location of the brokerage system that would conduct trading".
  That would provide a powerful commercial advantage for our business community. In August last year, Ilex, the energy consultancy, suggested that selling carbon emission permits under an international trading scheme could earn the United Kingdom an extra £700 million a year.
  Establishing our own emissions trading scheme would give British business a head start in the coming international emissions market. It would also be a

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  powerful addition to the policy weapons that are available to help us to achieve our necessary reductions in global greenhouse gas emissions.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Gareth R. Thomas, Mr. Andrew Love, Mr. Stephen Hesford, Mr. Stephen Twigg, Mr. James Plaskitt, Ms Karen Buck, Mr. Colin Burgon, Mr. Gareth Thomas, Mr. Phil Hope, Gillian Merron and Mr. Jim Fitzpatrick.

  Emissions Trading

    EMISSIONS TRADING
    Mr. Gareth R. Thomas accordingly presented a Bill to establish emissions trading; to create an emissions trading authority; to require the corporate disclosure of emissions; and for related purposes: And the same was read the First time; and ordered to be read a Second time on Friday 21 July, and to be printed [Bill 65.1.
    Mr. John Bercow: On a point of order, Madam Speaker. May I seek your guidance—not on the subject of lying, on which you have made the position abundantly clear, but on the subject of Ministers who, no doubt entirely inadvertently, give credence to untruths?
    I seek your guidance, Madam Speaker, because of two recent and serious examples. The first occurred this afternoon, when the Prime Minister suggested to the House and the country that 200,000 people were in work today as a result of the new deal, although statistics released by the Department for Education and Employment show otherwise.
    Madam Speaker: Order. I will not enter into a political argument with the hon. Gentleman. What is the point of order for me?
    Mr. Bercow: The point of order, Madam Speaker, is simply this. Given that the information that the Prime Minister inadvertently gave inaccurately was nevertheless inaccurate, and given that the effect of that inaccuracy is unhelpful to millions of people who were watching on television at home, is there any means whereby you can instruct the Prime Minister to come to the House and apologise to the British people?
    Madam Speaker: These are political arguments. I fear that the hon. Gentleman is seeking to prolong Prime Minister's Question Time. If he wishes to pursue the matter, he must do so politically. He must do so through the Order Paper, rather than through the Chair.

    Financial Services and Markets Bill (Programme)
    Ordered,
    That the following provisions shall apply to proceedings on the Financial Services and Markets Bill:—

    Timetable
    1.—(1) Remaining proceedings on Consideration and proceedings on Third Reading shall be completed at today's sitting.
    (2) Proceedings on Consideration shall, if not previously concluded, be brought to a conclusion at Nine o'clock.
    (3) Subject to sub-paragraph (2), each part of proceedings on Consideration shall, if not previously concluded, be brought to a conclusion at the time specified in the second column of the Table.

    TABLE
    Proceedings—Time for conclusion of proceedings
    Remaining New Clauses; amendments to Clauses 1 to 9 and 11 to 18—One hour after commencement of proceedings on this Order.
    Amendments to Clause 19—Two hours after commencement of proceedings on this Order.
    Amendments to Clauses 20 to 51 and 53 to 94—Three hours after commencement of proceedings on this Order.
    Amendments to Clauses 95 to 203—Four hours after commencement of proceedings on this Order.
    Remaining proceedings on consideration—Five hours after commencement of proceedings on this Order.
    (4) Proceedings on Third Reading shall, if not previously concluded, be brought to a conclusion at Ten o'clock.

    Questions to be put
    2.—(1) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph 1 the Speaker shall forthwith put the following Questions (but no others)—

    (a) any Question already proposed from the Chair;

    (b) any Question necessary to bring to a decision a Question so proposed;

    (c) the Question on any amendment moved or Motion made by a Minister of the Crown;

    (d) any other Question necessary for the disposal of the business to be concluded;

    and on a Motion for a new Clause or Schedule, the Speaker shall put only the Question that the Clause or Schedule be added to the Bill.
    (2) If two or more Questions would otherwise fall to be put under sub-paragraph (1)(c) on amendments moved or Motions made by a Minister of the Crown, the Speaker shall instead put a single Question in relation to those amendments or Motions.

    Miscellaneous
    3.—(1) This paragraph applies if—

    (a) a Motion for the Adjournment of the House under Standing Order No. 24 (Adjournment on specific and important matter that should have urgent consideration) has been stood over to Seven o'clock; but

    (b) proceedings to which this Order applies have begun before then.

    (2) Proceedings on that Motion shall stand postponed until the conclusion of those proceedings.
    4.—(1) No Motion shall be made to alter the order in which any proceedings on the Bill are taken.
    (2) No dilatory Motion with respect to, or in the course of, proceedings to which this Order applies shall be made except by a Minister of the Crown; and the Question on any such Motion shall be put forthwith.
    (3) No debate shall be permitted on any Motion to recommit the Bill (whether as a whole or otherwise), and the Speaker shall put forthwith any Question necessary to dispose of the Motion, including the Question on any Amendment.
    5. Standing Order No. 82 (Business Committee) shall not apply to this Order.
    6. Standing Order No. 15(1) (Exempted business) shall apply to the proceedings to which this Order applies.
    7. Proceedings to which this Order applies shall not be interrupted under any Standing Order relating to the sittings of the House.

    Supplemental orders
    8.—(1) If any motion is made by a Minister of the Crown to amend this Order so as to provide a greater amount of time for proceedings on the Bill under paragraph 1 of this Order, the Question thereon shall be put forthwith and may be decided, though opposed, at any hour.
    (2) If any Motion is made by a Minister of the Crown to supplement the provisions of this Order in respect of proceedings on any Lords Amendments or any subsequent message from the Lords relating to the Bill, such Motion may be proceeded with, though opposed, at any hour and the proceedings shall, if not previously concluded, be brought to a conclusion three quarters of an hour after they have been commenced.
    (3) If at any day's sitting the House is adjourned, or if the sitting is suspended, before the time at which any proceedings are to be brought to a conclusion under this Order, no notice shall be required of a Motion made at the next sitting by a Minister of the Crown for varying or supplementing the provisions of this Order.—[Mr. Dowd.]

  Orders of the Day
    Financial Services and Markets Bill
    As amended in the Standing Committee, further considered.
    Financial Services and Markets Bill

      New Clause 2
      Matters to be included in orders under section 20
      "—(1) The Treasury shall specify each of the activities set out in subsection (2) in any order made by it pursuant to section 20.
      (2) The activities referred to in subsection (1) are the following—

      (a) providing advice to a consumer on the choice of a manager;

      (b) providing advice to a consumer on the performance of assets under the management of a manager;

      (c) providing advice to a consumer on asset mix or allocation for a fund;

      (d) advising on the structuring or reorganisation of a fund.

      (3) References in this section to advice and advising do not include the provision of legal advice.
      (4) "Consumer" means a person who uses, or may be contemplating using, the services provided by a manager.
      (5) "Manager" means a person who performs the regulated activity of managing investments in the United Kingdom.
      (6) "Fund" means an occupational pension scheme, or other assets held under trust.
      (7) "Occupational pension scheme" means any scheme or arrangement which is comprised in one or more instruments or agreements and which has, or is capable of having, effect in relation to one or more descriptions or categories of employment so as to provide benefits, in the form of pensions or otherwise, payable on termination of service, or on death or retirement, to or in respect of earners with qualifying service in an employment of any such description or category.".—[Mr. Flight.]
      Brought up, and read the First time.
      3.49 pm
      Mr. Howard Flight: I beg to move, That the clause be read a Second time.
      Madam Speaker: With this it will be convenient to discuss new clause 34—Transfer to Financial Services Ombudsman of functions of Pensions Ombudsman—
      ".—(1) There shall be transferred to the scheme operator all the functions and powers of the Pensions Ombudsman established under Part X of the Pension Schemes Act 1993 (as amended by the Pensions Act 1995).
      (2) The Treasury may by order—

      (a) provide for the transfer of any property, rights or liabilities held, enjoyed or incurred by any person in connection with functions transferred under this section;

      (b) provide for the carrying on and completion by or under the authority of the scheme operator of any proceedings, investigations or other matters commenced, before the order takes effect, by or under the authority of the Pensions Ombudsman;

      (c) make any transitional, incidental or consequential provision which is necessary or expedient as a result of the transfer of functions under this section;

      (d) provide for the substitution of the scheme operator for the Pensions Ombudsman in any instrument, contract or legal proceedings made or begun before the order takes effect.

      (3) The Treasury may make regulations providing for—

      (a) the transfer to the scheme operator of any staff previously employed in the service of the Pensions Ombudsman;

      (b) the terms on which any such transfer shall take place; and

      (c) the terms on which the employment of any person previously employed in the service of the Pensions Ombudsman may be terminated.

      (4) In this section "scheme operator" means the body corporate established under Schedule 14 to operate the disputes resolution procedure referred to in section 200 as "the ombudsman scheme".".
      Mr. Flight: New clause 2 is to a substantial extent a probing amendment. Members will be aware that the roles of different parties in the provision of financial services have changed. Typically, pension fund consultants will advise pension funds on the spread and constitution of their assets among bonds, equities, international assets and domestic assets. They will also advise funds on the appointment of fund managers. Accountants provide similar services to companies and to high net worth individuals. Indeed, lawyers are also providing such advice.
      The issue is that, under clause 20, the Treasury will need to specify what constitutes a regulated investment activity. I ask the Minister to use this occasion to clarify whether it is intended that the type of activities that I have described will indeed fall within the definition of regulated investment activities. If that is not the case—it was not in the whole sorry saga of pensions over recent years—a major territory of regulation will be omitted. That would be undesirable.
      On new clause 34, there is a simple issue: when bringing together all the ombudsmen under one unit under the Financial Services Authority, there is little logic in leaving out just the pensions ombudsman, who is short of resources. Additional actuaries are needed to deal with quite a few complaints. It would be more sensible if all the ombudsmen relating to financial services were brought together under one ombudsman scheme.
      Mrs. Jacqui Lait: Like my hon. Friend the Member for Arundel and South Downs (Mr. Flight), I emphasise that new clause 34 is a probing amendment. It is so probing that I managed to forget to include in it the fact that the Occupational Pensions Regulatory Authority should go with the pensions ombudsman.
      I thought that it was worth having a debate about the role of the pensions ombudsman in the new structure. It arises because of a constituency case that has raised some complex issues, most of which will be pursued in other ways, but the need to look more closely at the role of the pensions ombudsman was one of the results of that case. I will pursue some of the issues in the Committee that is considering the Child Support, Pensions and Social Security Bill. I emphasise that I tabled the new clause and was interested in it long before I was delighted to take on the pensions spokesman portfolio.
      The pensions ombudsman has a good record. Many consumers have been delighted with his decisions, so I emphasise that it is an entirely constitutional legislative issue. It is by no means an attack on his role. There is a debate in the financial world about that role. I do not wish to take part in that debate. He has been so good to so many small consumers that some of the bigger companies have raised issues about him.
      260
      Members of pension funds, however, are unlikely to go to the press because they would feel intimidated in doing so. They are not likely to complain publicly. However, I think that complaints have been raised with a number of hon. Members privately. Lawyers are picking up on some of the issues that are emerging. That is where the debate has been in the past. As he has been so successful at resolving many of the easier cases, it is primarily only the complex, and of course the new, cases that remain.
      The pensions ombudsman is unique in that he has some judicial powers, one of which is almost equivalent to those of Customs and Excise—he can send in the bailiffs. I am sure that some of the other ombudsmen wish that they had similar powers.
      The ombudsman has been criticised over administration and delays. My hon. Friend pointed out that there have been improvements. Last September's annual report showed that fewer cases were waiting at the end of the year. However, we must remember that the poor ombudsman has few staff. He has half a lawyer, one legal adviser, one in-house litigation solicitor and no actuaries. Given that actuaries drive the pensions industry, I should have thought that he needed access to in-house actuarial advice.
      I recognise that the pensions ombudsman only looks after occupational pensions. Historically, such pensions have been the prime provider, but life is changing. We have more money purchase and private pension schemes as well as the Government's stakeholder pension. That is where the problem arises. The Financial Services Authority and OPRA, plus two ombudsmen—two different ombudsmen—will have regulatory authority over stakeholder pensions, which points up the absurdity of the present situation.
      The Investment and Life Assurance Group pointed out to me the confusion among the bodies that regulate stakeholder pensions. Such pensions are designed for people who earn roughly up to £20,000 a year. With the best will in the world, those are the people who have most need of sensible advice and who may need to have recourse to the regulatory authorities.
      The present provision will lead to confused consumers. That is why there is an argument for the pensions ombudsman to come under the umbrella of the FSA in the new set-up. That would make the system simple. Consumers could go to one organisation. That ombudsman would have access to the latest thinking in a structured as opposed to an informal way.
      Under the present proposals, the ombudsman is out on a limb, completely independent and without a structural relationship with the FSA. He may hear about best practice and thinking and new forms of help for consumers through the informal net, but he will not do so through the formal structured net, so he is a fairly lonely character in structural terms—robust, but lonely.
      The Government must consider whether they are happy that the pensions ombudsman sits outside the FSA. The argument for that, as I understand it, is that the pensions ombudsman deals only with occupational pensions, which are not a financial product in the same way as an insurance policy is. These days, that comes close to deciding how many angels are dancing on the head of a pin. Ordinary consumers, among whom I would count most hon. Members, would not recognise the distinction

      261
      between an occupational pension and a financial services product. On those grounds, we have reason to bring the pensions ombudsman within the FSA structure.
      There has never been a move to bring the pensions ombudsman into the FSA fold. As many people are satisfied with the job that he is doing, they have not felt that we need to re-examine his place in the system.
      4 pm
      In a sense, inertia rules. I feel that there could be a role for the ombudsman within the FSA, and that his relationship with the FSA should at least be more clearly defined. As I said, the matter of who holds responsibility for stakeholder pensions, for example, is very confused, and a clear line of responsibility needs to be established. Another option is to give the pensions ombudsman more power over more pensions products.
      Consumers will become confused about pensions, and confused consumers become angry consumers. They will receive little satisfaction from this regulatory system and will be pushed from pillar to post. Moreover, hon. Members will discover that ever more people will visit our advice surgeries or write complex letters to us about pensions. As hon. Members who have dealt with pensions cases will know, constituents often visit us and begin by saying, "It's a long story", before producing several files. We have to help people with pensions complaints to find their way through the pensions maze.
      I should hope that the Government will take new clause 34 away and seriously consider whether there is a role for the pensions ombudsman, with more responsibility, outside the structure, or whether he might be better placed within the FSA structure—so that the lives not only of consumers, but of hon. Members might be simplified.
      The Economic Secretary to the Treasury (Miss Melanie Johnson): As the new clauses deal with rather different topics, I shall deal first with new clause 2, and then with the points made on new clause 34.
      New clause 2 proposes that certain activities must be the subject of a regulated activities order, to be made under clause 20. Currently, however, the Bill does not specify which activities should or should not be subject to such an order, although, in schedule 2, an indicative list is provided of the types of activities that could be covered. The schedule essentially sets the four corners of the scope of financial regulation in the Bill.
      Specifying activities in the Bill would not be appropriate, and it would go against the basic structure that we have tried to establish—which is that the detailed activities to be regulated are to be specified in secondary legislation, so that the scope of regulations may be adapted when necessary to take account of the changing needs of the regulatory climate. When it is proposed to extend the scope of regulation under the Bill, affirmative resolution procedure will apply.
      Much of new clause 2 touches on advice being given on general matters, not on particular investments. The draft regulated activities order that was published in February 1999 proposed that, if advice was not being given on particular investments, it should not be caught. Therefore, generic advice given on investing in shares rather
      262
      than bonds, for example, would not be a regulated activity, whereas advice to buy shares in a given company would be a regulated activity.
      The new clause seems partly to seek to contradict that position, and potentially to bring new matters within the scope of regulation, which is simply not our intention.
      Although I appreciate that the hon. Member for Arundel and South Downs (Mr. Flight) said that the new clause was a probing amendment, I hope that I have explained why we do not think that it is the appropriate way to go.
      Mr. Flight: The point of the probing amendment that was debated in Committee was to establish whether the Treasury were proposing to specify in the Bill the various types of investment advice that have developed. I should be grateful if the Minister could answer that.
      Miss Johnson: If we specified them, we would do so in secondary legislation which will require an affirmative resolution. In schedule 2, we have indicated only the types of activity that we think could be covered, rather than tied ourselves down on the matter in primary legislation.
      New clause 34, proposed by the hon. Member for Beckenham (Mrs. Lait), deals with dispute resolution in connection with operational pensions. It has been our intention where possible and sensible to remove the scope for overlaps and gaps in the arrangements connected with all kinds of financial services, so I cannot deny that there is a certain logic in the proposal.
      However, the pensions ombudsman's current role is different from that envisaged under the Bill. The pensions ombudsman can entertain complaints against any trustees or sponsoring employers. That would not be the case under the Bill, because all potential respondents—such as employers—would not need to be authorised by the FSA, and so could not be brought within the compulsory jurisdiction. There is a fundamental difference in terms of the basis of the jurisdiction of the ombudsmen.
      Moreover, the financial services ombudsman will generally consider relatively minor complaints—primarily from retail and small business customers about financial services they have bought, their home insurance, a problem with the mortgage and so on—where the nature of the complaint is between customer and service provider.
      The pensions ombudsman—as all hon. Members will know—can look at the operation of the pension scheme as a whole, and can even consider complaints by potential respondents such as employers and trustees against each other. The ombudsman needs to be able to deal with the firm, the employees of the firm and the trustees of the firm's pension scheme, and deal with relationships between those people. Accordingly, whereas under the FSA's current proposals the ombudsman will be able to make awards of up to £100,000 per complaint, this would not be a sensible approach for the pensions ombudsman, given the collective nature of occupational pension schemes. There are a number of differences between the two proposals.
      Mrs. Lait: Can the Minister clarify where the balance would lie in terms of people who have stakeholder pensions under a trustee system and the many stakeholder

      263
      pension schemes that will not have trustees? Would a member of a trustee stakeholder scheme go to the pensions ombudsman? Would someone with a money-purchase stakeholder scheme go to the FSA?
      Miss Johnson: That is a matter for the relevant pensions Minister. The hon. Lady said that she will be raising such issues in debates on child support, pensions and social security. That issue should be raised with my colleagues in the Department of Social Security.
      I accept that things will not always be clear cut. Clearly there can be cases where a person has a complaint against both an authorised person and the scheme trustees or employer—for example, in relation to a decision to opt out of an employer's scheme and take a personal pension plan recommended by an independent financial adviser. When problems arise, it is not immediately clear where the fault lies.
      Sadly, I am not sure that that conflict can ever be resolved entirely. However, I hope that the hon. Member for Beckenham will note that paragraph 14(2)(c) of schedule 14 enables the ombudsman scheme rules to make provision allowing the ombudsman, with the consent of the complainant, to refer the case to another body for resolution by that body. Paragraph 19 provides a similar power for the voluntary jurisdiction, and allows the scheme to perform functions on behalf of a similar body, such as the pensions ombudsman. Those provisions were included with the pensions ombudsman in mind to ensure that the consumer could continue to benefit from an apparently seamless service in relation to pensions questions.
      I hope that the hon. Member for Beckenham will agree that although there is no overwhelming single argument against the proposal that she has made, taking the various factors together, there are a number of potential problems that we ought to guard against. I hope that she will find my comments about the relationship between the two schemes reassuring.
      Question put and negatived.

      Clause 2

        THE AUTHORITY'S GENERAL DUTIES
        Amendment made: No. 240, in page 2, line 17, leave out paragraph (f) and insert—
        "(f) the need to minimise the adverse effects on competition that may arise from any exercise of its general functions;
        (g) the desirability of facilitating competition between those who are subject to any form of regulation by the Authority.".—[Miss Melanie Johnson.]
        Dr. Vincent Cable: I beg to move amendment No. 456, in page 2, line 18, at end insert—
        "(g) the need to facilitate access to appropriate financial services for disadvantaged consumers.".
        Much of the attention of the Minister and her officials has been directed to the concerns of the City and the lightness of touch of regulation under the FSA, and we have devoted relatively little attention to the retail consumer interests, of which there are several. I raised in Committee the broad category of vulnerable consumers, which is a group of people who could be defined in terms of age, geography, mobility and income. The Minister gave a sympathetic reply, but said that such concerns
        264
        could be dealt with under the general objective of consumer protection contained in the Bill. I think that she accepted the spirit of the amendment I tabled in Committee, but thought that there was no reason for particular provision to be made.
        I return to the issue for one particular reason. In another capacity, I am increasingly involved in the scrutiny of the Utilities Bill, which came before the House a few weeks ago. It contains a clause that specifically deals with disadvantaged consumers, and that represents an evolution in thinking in Government about how regulation should be handled. Until recently, utility regulators took the view that matters of poverty and age were nothing to do with them. The hon. Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee on Trade and Industry, recounts a tale of the time the gas regulator appeared before the Committee and said that poverty had nothing to do with her. She claimed that it was the business of the Department of Social Security and the Treasury and should not be brought to the regulators.
        The Department of Trade and Industry now understands that poverty is a regulatory issue and that it has, and should have, direct responsibility for focusing on the distinct problems of disadvantaged consumers. There are strong analogies between regulating utility contracts, which are complex and involve switching costs, and the kind of transactions that many consumers have to deal with in the financial services market. I do not know whether the Department has compared notes with the Treasury, but it seems that the regulation of financial services may be lagging behind the regulation of utilities in that respect. Perhaps some cross-fertilisation could take place.
        The issue is important and I wish to press it. We are concerned on behalf of many people who face two sets of problems. The first is the problem of financial exclusion, which is something that the Minister knows about, because the Treasury has led the interdepartmental work on financial exclusion. She will know that some 1.5 million people are effectively shut out of the system of banking and financial intermediation.
        The second problem is the exploitation of vulnerable people by financial institutions. We all know of many cases of 75-year-olds who have sought advice from bank branch staff. The old people do not understand that the advice is not independent and they are persuaded to switch large sums of money into an account that yields high commission income for the bank but is not in the interests of the customers. Some of those cases have been highlighted in the Daily Mail, which has run a campaign on the issue for some years.
        The issue of vulnerable consumers is, therefore, partly a question of access, but also of abuse and consumer protection, which are not sufficiently covered in the Bill. What role can the FSA play, other than in its broad commitment to consumer protection? Well, the FSA could perform various specific functions and there is the possibility of cross-subsidising some of its regulatory activities. Certain kinds of financial institutions, such as credit unions, cater to the financially excluded, and cross-subsidy within the FSA arrangements could permit such work to be given priority, together with the use of information.
        Perhaps most important is encouraging or, in some cases, requiring financial institutions to have proper safeguards and codes of conduct on how to deal with

        265
        disadvantaged consumers. For example, some banks whose branches have brought them bad publicity, such as Lloyds TSB, have adopted codes of good practice. Senior managers must approve investments by customers over the age of 75. Such customers must have an accompanying friend or mentor to advise them; they are encouraged to take away the contract before they sign it, and are not allowed to invest in long-maturing investments. There is a series of provisions that can be, and are, built in by the more forward-looking financial institutions—Nationwide is another one—but which are not common practice. The Financial Services Authority could ensure that such practice is generalised.
        4.15 pm
        This is an important issue that affects many people but has been omitted from the Bill. I understand that such a provision may previously have been felt to be insufficient. However, given the way in which regulatory thinking in government is advancing, particularly when we consider the Utilities Bill, I should need to be persuaded by the Minister that there were very good reasons for not pressing the amendment to a Division.
        Mr. Flight: The issue raises an important subject on which all parties in the House agree—that is, that more than 1.5 million people do not use financial services. However, I think that the thoughts of the hon. Member for Twickenham (Dr. Cable) might have been led up the wrong path by his experience in connection with the Utilities Bill.
        With regard to this Bill's objectives, the Government, the Opposition and the FSA have all stressed that they are the key guidelines that the FSA is to follow. I am sure that the hon. Gentleman is not suggesting that in that category of objectives the FSA should be thinking about making rules that were biased towards one particular section of the community.
        Many things can be done to address and help those who do not use financial services. The hon. Gentleman cited many voluntary procedures. Credit unions are being encouraged to participate, Barclays bank is doing deals with post offices, and so forth. I think that on reflection the hon. Gentleman would agree that it is not appropriate for the issue to be listed as one of the five key objectives of financial regulation. I suggest that it is playing to the gallery, rather, to raise the point in this context.
        We want to hear what other initiatives the Government suggest to help those consumers, and to encourage banks and others to provide services where they do not exist. As has been pointed out, much of that will have to be done on a cross-subsidised basis. Again, it is not really the role of regulation to have an objective telling businesses to cross-subsidise.
        As for the right advice and products being provided for older people in particular, that is covered in the Bill under best practice. Under the Bill, it is a sin for advisers or providers to recommend a product to older people which is not suitable for their circumstances, and they can be punished if they do so. The amendment would not add anything in that area. Furthermore, I am sure that the industry is developing codes of good practice, and the FSA can encourage such development under its objective to provide greater education.
        266
        There is no disagreement with the spirit of the proposal, but the amendment itself is unsuitable.
        Miss Melanie Johnson: As financial exclusion is a matter of concern to the whole House, I share the starting point adopted by the hon. Members for Twickenham (Dr. Cable) and for Arundel and South Downs (Mr. Flight). It is certainly a matter of great concern to the Government. We have focused on the needs of vulnerable consumers in several areas, and I shall touch on them when I come to answer the specific questions put by the hon. Member for Arundel and South Downs about action to help consumers.
        Financial exclusion limits the ability of many of the poorest people in society to have access to or enjoy the benefits of an ever-increasing range of financial services. It is often more expensive for them to carry out transactions than it is for those of us with access to such services.
        The Bill already contains two important provisions that help us towards our objective. First, there is the consumer awareness objective, set out in clause 4, which gives the Financial Services Authority an important role in providing the public with information. In part, of course, that is about helping those who already use financial services, but the objective is not only current users. It also gives the FSA a role in providing information and promoting the benefits—at least in general terms—of using financial services.
        Hon. Members may be aware that the FSA has been working hard on this area. It has issued various consumer-oriented publications, such as its series of mini-guides. It has worked with consumer interest groups and citizens advice bureaux on consumer education initiatives. It has also worked with the Department for Education and Employment on possible topics for inclusion in the national curriculum, which will help young people to participate more actively as customers in the financial services market of the future. I very much welcome those developments, as both hon. Members will.
        The consumer protection objective is also relevant. We have carefully sought to define "consumer" widely in clause 5, so that the people whom the FSA is required to protect include those not currently using financial services, but contemplating doing so. The Treasury has given considerable thought to the idea of imposing on the FSA a duty to have regard to financial exclusion, both in the context of the Bill and as part of its wider agenda on the topic. However, our conclusion was that the kind of provision proposed would not be the right way ahead. Indeed, as the hon. Member for Arundel and South Downs said, that was the drift of our argument in Standing Committee A.
        As regards the points about action already taken, the main thrust of our announcements has been through policy action team report 14, which included proposals for an improved regulatory framework for credit unions, which have an important role to play; a new central services organisation to support and enhance the role of the credit unions; support for more widespread introduction of insurance-with-rent schemes so that people may have access to home contents insurance; exploring the possibility of widening the role of the social fund to help those in low-paid employment; and greater disclosure by the banks of their provision of services to the socially excluded.

        267
        Further steps include deregulation of the industrial insurance business—often known as the home services insurance business—which many insurers see as vital to the provision of door-to-door and locally delivered insurance and savings products. We will also provide greater freedoms for friendly societies. One of our most important initiatives aims at ensuring that people will have access to basic bank accounts, which we are pursuing with the banks and the British Bankers Association. We want to make sure that basic bank accounts are available to everyone who wants one for basic banking purposes. We are also in regular discussion with the industry—both firms and trade associations—about how we can work together.
        The hon. Member for Twickenham talked about banks and codes of good practice. The BBA code of practice covers access and the identification required to open a bank account. Most major banks are party to that code. Our initiatives will lead to advances on the issues that concern the hon. Gentleman.
        I agree with the hon. Member for Arundel and South Downs that the amendment would not be the right way to advance matters. It would not be sensible to add a further principle to the Bill, as the amendment would do. However, we anticipate that the FSA will consider protecting consumers as part of its general work and will seek to educate and inform consumers. We attach great importance to that principle, and I hope that the hon. Member for Twickenham will withdraw his amendment in the light of my remarks.
        Dr. Cable: I thank the Minister for that reply. However, although its tone was helpful, it does not quite answer my concerns. I do not ask for much; we are not trying—as the hon. Member for Arundel and South Downs (Mr. Flight) suggested—to elevate the provision to one of the Bill's key objectives. That is not the point. We realise that consumer protection is the overriding concern.
        We want our modest request to be taken into account, however. I do not know why the Government have a problem with it. If I understand the Minister's reply correctly, she said that the Government had been thinking about how they could insert a phrase so that we could have regard to financial exclusion and the difficulties faced by low-income and older consumers. But the Government have not met that requirement—perhaps it will be dealt with in another place. In the absence of a Government provision, the amendment is the only proactive suggestion for handling the matter.
        I accept much of what the Minister said. A great deal is happening on the financial exclusion front; I do not want to minimise that. Many good initiatives have been taken and I welcome them. However, we have to confront an environment in which the FSA has a broad remit to examine such problems.
        In debates on other clauses, we discussed the problem of what happens under different management. For example, Mr. Howard Davies will move on, and a different cultural environment will develop in which there is no pressure on the FSA management to give those issues the importance that they deserve. That is why it is essential to have some explicit commitment in the measure to oblige the FSA to treat certain issues with some importance—especially education and the prevention of abuse, both of which are serious problems for people on low incomes and for very elderly people.
        I therefore ask the House to accept the amendment.
        Question put, That the amendment be made:—
        The House divided: Ayes 38, Noes 305.

        Division No. 68]

        [4.27 pm

        AYES

        Allan, Richard

        Kirkwood, Archy

        Ashdown, Rt Hon Paddy

        Livsey, Richard

        Baker, Norman

        Maclennan, Rt Hon Robert

        Ballard, Jackie

        Michie, Mrs Ray (Argyll & Bute)

        Beggs, Roy

        Moore, Michael

        Brand, Dr Peter

        Oaten, Mark

        Breed, Colin

        Öpik, Lembit

        Burnett, John

        Rendel, David

        Burstow, Paul

        Ross, William (E Lond'y)

        Cable, Dr Vincent

        Russell, Bob (Colchester)

        Campbell, Rt Hon Menzies (NE Fife)

        Smyth, Rev Martin (Belfast S)

        Stunell, Andrew

        Cotter, Brian

        Taylor, Matthew (Truro)

        Donaldson, Jeffrey

        Thompson, William

        George, Andrew (St Ives)

        Tyler, Paul

        Hancock, Mike

        Webb, Steve

        Harvey, Nick

        Welsh, Andrew

        Heath, David (Somerton & Frome)

        Willis, Phil

        Hughes, Simon (Southwark N)

        Keetch, Paul

        Tellers for the Ayes:

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

        Mr. Adrian Sanders and

        Mr. Tom Brake.

        NOES

        Ainger, Nick

        Caplin, Ivor

        Ainsworth, Robert (Cortry NE)

        Casale, Roger

        Alexander, Douglas

        Caton, Martin

        Allen, Graham

        Cawsey, Ian

        Ashton, Joe

        Chaytor, David

        Atkins, Charlotte

        Chisholm, Malcolm

        Austin, John

        Clapham, Michael

        Banks, Tony

        Clark, Rt Hon Dr David (S Shields)

        Barnes, Harry

        Clark, Paul (Gillingham)

        Barron, Kevin

        Clarke, Charles (Norwich S)

        Battle, John

        Clarke, Eric (Midlothian)

        Bayley, Hugh

        Clarke, Rt Hon Tom (Coatbridge)

        Beard, Nigel

        Clarke, Tony (Northampton S)

        Beckett, Rt Hon Mrs Margaret

        Clwyd, Ann

        Benn, Rt Hon Tony (Chesterfield)

        Coaker, Vernon

        Benton, Joe

        Coffey, Ms Ann

        Bermingham, Gerald

        Coleman, Iain

        Best, Harold

        Colman, Tony

        Betts, Clive

        Connarty, Michael

        Blackman, Liz

        Cooper, Yvette

        Blair, Rt Hon Tony

        Corbett, Robin

        Blears, Ms Hazel

        Corston, Jean

        Blizzard, Bob

        Cox, Tom

        Blunkett, Rt Hon David

        Cranston, Ross

        Boateng, Rt Hon Paul

        Crausby, David

        Borrow, David

        Cryer, Mrs Ann (Keighley)

        Bradley, Keith (Withington)

        Cryer, John (Hornchurch)

        Bradley, Peter (The Wrekin)

        Cummings, John

        Bradshaw, Ben

        Curtis-Thomas, Mrs Claire

        Brinton, Mrs Helen

        Dalyell, Tam

        Brown, Rt Hon Gordon (Dunfermline E)

        Darling, Rt Hon Alistair

        Darvill, Keith

        Brown, Rt Hon Nick (Newcastle E)

        Davey, Valerie (Bristol W)

        Brown, Russell (Dumfries)

        Davidson, Ian

        Browne, Desmond

        Davies, Rt Hon Denzil (Llanelli)

        Buck, Ms Karen

        Davies, Geraint (Croydon C)

        Burden, Richard

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

        Burgon, Colin

        Butler, Mrs Christine

        Dawson, Hilton

        Campbell, Alan (Tynemouth)

        Denham, John

        Campbell, Ronnie (Blyth V)

        Dismore, Andrew

        Campbell-Savours, Dale

        Dobbin, Jim

        Cann, Jamie

        Doran, Frank

        269

        Dowd, Jim

        Lepper, David

        Drew, David

        Leslie, Christopher

        Eagle, Angela (Wallasey)

        Levitt, Tom

        Eagle, Maria (L 'pool Garston)

        Lewis, Terry (Worsley)

        Edwards, Huw

        Liddell, Rt Hon Mrs Helen

        Ellman, Mrs Louise

        Linton, Martin

        Ennis, Jeff

        Livingstone, Ken

        Etherington, Bill

        Lloyd, Tony (Manchester C)

        Reid, Rt Hon Frank

        Lock, David

        Fisher, Mark

        Love, Andrew

        Fitzpatrick, Jim

        McAvoy, Thomas

        Fitzsimons, Lorna

        McCabe, Steve

        Flint, Caroline

        McCafferty, Ms Chris

        Foster, Rt Hon Derek

        McCartney, Rt Hon Ian (Makerfield)

        Foster, Michael Jabez (Hastings)

        Foster, Michael J (Worcester)

        McDonagh, Stobhain

        Fyfe, Maria

        Macdonald, Calum

        Galloway, George

        McDonnell, John

        Gardiner, Barry

        McFall, John

        Gerrard, Neil

        McGuire, Mrs Anne

        Gibson, Dr Ian

        McIsaac, Shona

        Gilroy, Mrs Linda

        McKenna, Mrs Rosemary

        Godman, Dr Norman A

        McNamara, Kevin

        Godsiff, Roger

        McNulty, Tony

        Goggins, Paul

        Mactaggart, Fiona

        Golding, Mrs Llin

        McWalter, Tony

        Gordon, Mrs Eileen

        McWilliam, John

        Griffiths, Jane (Reading E)

        Mahon, Mrs Alice

        Griffiths, Nigel (Edinburgh S)

        Mallaber, Judy

        Griffiths, Win (Bridgend)

        Marsden, Gordon (Blackpool S)

        Grocott, Bruce

        Marsden, Paul (Shrewsbury)

        Gunnell, John

        Marshall, David (Shettleston)

        Hall, Mike (Weaver Vale)

        Marshall, Jim (Leicester S)

        Hall, Patrick(Bedford)

        Marshall-Andrews, Robert

        Hamilton, Fabian (Leeds NE)

        Martlew, Eric

        Hanson, David

        Maxton, John

        Harman, Rt Hon Ms Harriet

        Meacher, Rt Hon Michael

        Heal, Mrs Sylvia

        Meale, Alan

        Healey, John

        Michie, Bill (Shefld Heeley)

        Henderson, Ivan (Harwich)

        Milburn, Rt Hon Alan

        Hesford, Stephen

        Miller, Andrew

        Hill, Keith

        Mitchell, Austin

        Hinchliffe, David

        Moran, Ms Margaret

        Hodge, Ms Margaret

        Morgan, Ms Julie (Cardiff N)

        Hopkins, Kelvin

        Morley, Elliot

        Howarth, George (Knowsley N)

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

        Howells, Dr Kim

        Hughes, Ms Beveriey (Stretford)

        Mountford, Kali

        Humble, Mrs Joan

        Mudie, George

        Hurst, Alan

        Mullin, Chris

        Hutton, John

        Murphy, Denis (Wansbeck)

        Iddon, Dr Brian

        Murphy, Jim (Eastwood)

        Jackson, Helen (Hillsborough)

        Naysmith, Dr Doug

        Jamieson, David

        O'Hara, Eddie

        Jenkins, Brian

        Organ, Mrs Diana

        Johnson, Alan (Hull W & Hessle)

        Pearson, Ian

        Johnson, Miss Melanie (Welwyn Hatfield)

        Pickthall, Colin

        Plaskitt, James

        Jones, Rt Hon Barry (Alyn)

        Pollard, Kerry

        Jones, Helen (Warrington N)

        Pond, Chris

        Jones, Ms Jenny (Wolverh'ton SW)

        Pope, Greg

        Pound, Stephen

        Jones, Jon Owen (Cardiff C)

        Powell, Sir Raymond

        Jones, Dr Lynne (Selly Oak)

        Prentice, Ms Bridget (Lewisham E)

        Jones, Martyn (Clwyd S)

        Prentice, Gordon (Pendle)

        Jowell, Rt Hon Ms Tessa

        Prescott, Rt Hon John

        Kaufman, Rt Hon Gerald

        Prosser, Gwyn

        Keeble, Ms Sally

        Purchase, Ken

        Keen, Alan (Feltham & Heston)

        Quin, Rt Hon Ms Joyce

        Kemp, Fraser

        Quinn, Lawrie

        Khabra, Piara S

        Radice, Rt Hon Giles

        Kidney, David

        Rammell, Bill

        Kilfoyle, Peter

        Rapson, Syd

        King, Andy (Rugby & Kenilworth)

        Raynsford, Nick

        King, Ms Oona (Bethnal Green)

        Reed, Andrew (Loughborough)

        Kumar, Dr Ashok

        Reid, Rt Hon Dr John (Hamilton N)

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        Rogers, Allan

        Taylor, David (NW Leics)

        Ross, Ernie (Dundee W)

        Thomas, Gareth R (Harrow W)

        Ruane, Chris

        Timms, Stephen

        Ruddock, Joan

        Tipping, Paddy

        Russell, Ms Christine (Chester)

        Todd, Mark

        Ryan, Ms Joan

        Touhig, Don

        Salter, Martin

        Trickett, Jon

        Sarwar, Mohammad

        Truswell, Paul

        Savidge, Malcolm

        Turner, Dennis (Wolverh'ton SE)

        Sawford, Phil

        Turner, Dr Desmond (Kemptown)

        Sedgemore, Brian

        Turner, Neil (Wigan)

        Shaw, Jonathan

        Twigg, Derek (Halton)

        Sheerman, Barry

        Twigg. Stephen (Enfield)

        Sheldon, Rt Hon Robert

        Vis, Dr Rudi

        Shipley, Ms Debra

        Walley, Ms Joan

        Short, Rt Hon Clare

        Ward, Ms Claire

        Simpson, Alan (Nottingham S)

        Wareing, Robert N

        Singh, Marsha

        Watts, David

        Skinner, Dennis

        White, Brain

        Smith, Rt Hon Andrew (Oxford E)

        Whitehead, Dr Alan

        Smith, Angela (Basildon)

        Wicks, Malcolm

        Smith, Jacqui (Redditch)

        Williams, Rt Hon Alan (Swabsea W)

        Smith, Llew (Blaenau Gwent)

        Williams, Alan W (E Carmarthen)

        Snape, Peter

        Williams, Mrs Betty (Conwy)

        Soley, Clive

        Wills, Michael

        Speller, John

        Wilson, Brian

        Squire, Ms Rachel

        Winnick, David

        Starkey, Dr Phyllis

        Winterton, Ms Rosie (Doncaster C)

        Steinberg, Gerry

        Wise Audrey

        Stewart, David (Inverness E)

        Wood Mike

        Stinchcombe, Paul

        Woodward, Shaun

        Stoate, Dr Howard

        Woolas, Phil

        Strang, Rt Hon Dr Gavin

        Worthington, Tony

        Stringer, Graham

        Wright, Anthony D (Gt Yarmouth)

        Stuart, Ms Gisela

        Wright, Dr Tony (Cannock)

        Sutcliffe, Gerry

        Taylor, Rt Hon Mrs Ann (Dewsbury)

        Tellers for the Noes:

        Mr. Kevin Hughes and

        Taylor, Ms Dari (Stockton S)

        Mr. David Clelland.

        Question accordingly negatived.
        Miss Melanie Johnson: I beg to move amendment No. 241, in page 2, line 23, leave out "advice and" and insert "general".
        Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss Government amendments Nos. 242 to 244, 90, 117, 418, 419, 448, 125, 126, 128 to 134, 449, 454, 138, 141 to 143, 330 and 443.
        Miss Johnson: The amendments make minor drafting changes designed to achieve accuracy and consistency in the Bill. I do not propose to speak to any of them, unless hon. Members raise specific questions.
        Mr. Flight: Many of the points covered by the amendments were raised by us in Committee. I shall comment on two issues.
        In amendment No. 241, the wording limits the general functions in relation to advice and guidance to only general guidance. This is largely a semantic issue, but in our view that is wrong. It is a general function of the FSA to give ad hoc advice and information on an informal basis, and we would not want the amendment to be interpreted in such a way that that was not a general function of the FSA.
        Amendments Nos. 448 and 454 empower the FSA to call for specified information and impose requirements on the operations of collective investment schemes outside

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        the UK in the designated territories, on the same basis as it is empowered to do in relation to schemes run by UK-authorised persons. That is tantamount to claiming an extraterritorial power, which is not appropriate.
        Machinery already exists to remove designated status approval if the FSA is not satisfied with the way in which a scheme outside the UK is being run. I trust that the Lords will deal with the matter further. It is not appropriate, as the amendments imply, for the FSA to claim regulatory powers over other countries that have their own regulatory regimes.
        Amendment agreed to.
        Amendment made: No. 242, in page 2, line 26, at end insert—
        "( ) 'General guidance' has the meaning given in section 130(5).".—[Miss Melanie Johnson.]
        Mr. David Heathcoat-Amory: I beg to move amendment No. 235, in page 2, line 26, at end insert—
        "(4A) The Authority must ensure that its staff responsible for or involved in—

        (a) monitoring, investigating or disciplining authorised or approved persons or,

        (b) investigating persons suspected of engaging in, or of requiring or encouraging another person to engage in, market abuse or any offence for which it can institute proceedings, and

        (c) drafting, or giving instructions to the draftsman of, rules, statements of principle or codes

        shall be suitably competent and shall have sufficient knowledge of the relevant financial sector to fulfil their functions."
        I am sorry that we have only a few minutes to debate a rather important issue—the qualifications of FSA staff—as it is a matter of considerable concern to the financial services industry. Although many of those in the industry have faith in the competence and ability of the senior members of the authority, they often have to deal with more junior staff, many of whom lack experience, to put it mildly. A number of the previous regulatory bodies, such as the Personal Investment Authority, achieved a reputation for having staff who did not always exhibit the required professionalism and experience.
        The authority will wield substantial discretionary power. Comparatively junior staff will therefore have considerable authority. Even if firms are not frightened of them, they believe that they have a right to expect that staff are properly trained. Many firms and people in the market complain that they spend a great deal of time educating the regulatory staff in basic rules of business. That takes time and is the reason for many of the compliance costs. Will the staff hired and retained by the authority measure up to the standards that they require of others when they become authorised persons?
        4.45 pm
        I asked the Minister that question in Committee and did not receive an answer. The matter is especially important given that, under the compensation scheme, authority staff will run businesses, or at least make business decisions about firms—for example, when and how they can be compensated. In the case of insurance companies, they can take over businesses and make important decisions about them. It is important that the staff measure up to the standards that they require in others. Will FSA staff be required to be authorised persons? If not, why not?
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        My other question deals with the adequacy of current staffing in the FSA. On 4 February,The Times reported that the authority was still attempting to recruit approximately 150 staff. The article stated:
        "An FSA spokesman admitted yesterday that the regulator was still short of the 2,000 staff it needed to carry out its revamped and expanded function, which has been set out in the Bill."
        That is worrying. We want an effective regulator, which has not only the right quality of staff but enough of them to discharge the functions that the House is giving it. I hope that the Minister can answer the questions about the training and competence of the staff and their number.
        Miss Melanie Johnson: The Joint Committee considered the staffing of the FSA. It rightly concluded that it is important for the FSA to attract appropriately qualified staff, that their salaries need to be competitive and that there is merit in seconding practitioners with up-to-date experience of trading in regulated industries. I am sure that the right hon. Member for Wells (Mr. Heathcoat—Amory) agrees with that. However, the Committee also concluded that staffing is not a matter for the Bill. That is crucial, and I agree whole-heartedly with the Committee. It is not appropriate for a Bill to go into staffing details for an organisation such as the FSA.
        The Bill already deals with some of the issues about which the right hon. Gentleman is worried. It makes board members responsible for arrangements for the discharge of its functions, and gives the non-executive members a specific role in reviewing the discharge of the FSA's functions. The board, not members of its staff, will be responsible for discharging its legislative functions.
        The FSA will be required to report on the discharge of its functions in its annual report. Its general policies and practices will be subject to scrutiny by the practitioner and consumer panels, as well as by the Government and, through the Treasury Committee, by Parliament. We do not think it is necessary or appropriate for the Bill to tell the FSA, any more than other bodies that exercise public functions, what staff it should employ to meet its responsibilities.
        If the FSA fails to deliver its objectives, board members are ultimately accountable, so they will have every incentive to employ the right mix of staff and to make the best use of them—
        It being one hour after the commencement of proceedings on consideration of the Bill, MR. DEPUTY SPEAKER,pursuant to Order [this day], put forthwith the Question already proposed from the Chair.
        Amendment negatived.
        MR. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
        Mr. Deputy Speaker (Sir Alan Haselhurst): I understand that the Government need to move Government amendment No. 405.
        Mr. David Kidney: On a point of order, Mr. Deputy Speaker. You refer to Government amendment No. 405. Am I wrong to think that that is an Opposition amendment?
        Mr. Deputy Speaker: It was originally an Opposition amendment, but it was accepted by the Government. The guillotine has fallen so it has to be proposed by them.

      Clause 6

        THE REDUCTION OF FINANCIAL CRIME
        Amendment made: No. 405, in page 3, line 19, leave out "by a regulated person" and insert—

        "(a) by a regulated person, or

        (b) in contravention of the general prohibition,". —[Mr. Allen.]

      Clause 17

        THE GENERAL PROHIBITION
        Amendment made: No. 67, in page 8, line 7, leave out
        "in relation to that activity".—[Mr. Allen.]

      Clause 19

        RESTRICTIONS ON FINANCIAL PROMOTION
        Mr. Heathcoat-Amory: I beg to move amendment No. 4, in page 8, line 21, leave out from "communicate" to "activity" in line 22 and insert—
        "or cause to be communicated—

        (a) an invitation to engage in investment activity; or

        (b) information which is intended or might reasonably be presumed to be intended to lead directly or indirectly to engagement in such".

        Mr. Deputy Speaker: With this it will be convenient to discuss the following: amendment No. 5, in page 8, line 28, leave out
        "capable of having an effect"
        and insert—
        "intended to be acted on by a person".
        Amendment No. 185, in page 8, line 34, leave out
        "The Treasury may by order specify"
        and insert—
        "Subsection (1) does not apply in the case of an oral communication which does not constitute an invitation to engage in investment activity and the Treasury may by order specify other".
        Government amendment No. 68.
        Amendment No. 388, in clause 212, page 108, line 10, after "communicate", insert—
        "to a person in the United Kingdom".
        Amendment No. 403, in page 108, line 10, leave out from "communicate" to end of line 11 and insert—
        ", or cause to be communicated, to a person in the United Kingdom—

        (a) an invitation to participate in a collective investment scheme; or

        (b) information which is intended, or might reasonably be presumed to be intended, to lead directly or indirectly to such participation.".

        Amendment No. 404, in page 108, line 15, leave out
        "capable of having an effect"
        and insert—
        "intended to be acted upon by a person".
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        Amendment No. 389, in clause 214, page 109, line 19, after "communicated", insert—
        "and none of the exemptions prescribed by rules made by the Authority under section 212(5) would have applied".
        Mr. Heathcoat-Amory: The Minister was cut off in full flow, but I hope that that will not prevent her or her colleagues from returning to the unanswered points, perhaps on Third Reading. She began a little unconvincingly, if I may say so, and perhaps the real answers were further on in her brief. Staff training is sufficiently important to warrant the provision of a little more information. However, under the rules of the House we must pass on to restrictions on financial promotion, which relates to an important part of the Bill.
        Clause 19 caused a lot of problems in Committee and we debated it at considerable length. However, I freely concede that the Bill has been greatly improved in this respect. The first stab at restricting financial promotion was absurd, as almost everyone would have been prevented from telling almost anybody about any investment activity whatever. The Government rapidly recognised that as unworkable, if not absurd. I gave an example in Committee that was not contradicted by any Labour Member: if I was not an authorised person, telling my neighbour that he ought to think about taking out a pension would have been a criminal offence. That approach would have completely discredited the law, as it does us no service to have laws that are widely ignored or ridiculed.
        The Government have improved that aspect of the Bill, and advice or an invitation to invest must be offered in the course of business. That is a big improvement, but our amendment would improve things further—the clause is still drawn very widely indeed—by importing an element of intention to the activity, or at least strengthening the intention element. The person communicating information must invite the other person to invest or intend to do so. The clause, certainly in some respects, refers to an invitation but also to an inducement. It is not clear whether that provision operates sufficiently in respect of the intention of the person making the offer or issuing the invitation, and it relies too much on effect. It is important to be more explicit about the motives and state of mind of the person issuing the invitation; otherwise, we shall catch those who provide information—it may be acted on by others who may undertake investment activity as a result of reading it or listening to such people—even though they did not intend to issue any sort of invitation whatever.
        Amendment No. 5 tackles the issue of communications received from outside the UK. At present, the Bill attempts to criminalise communications that are capable of having an effect in the UK unless they are made by an authorised person. Many people issuing electronic invitations or making information available on websites will not have heard of the FSA and will certainly not be authorised persons.
        The provision is far too wide and is liable to catch communications between two people, neither of whom are in the UK, but which nevertheless could be seen and acted on by someone in the UK—for instance, on the internet. An invitation over the internet from someone in Canada to another person in the United States may be freely accessible in this country and could be acted on by someone here, who would be caught by the clause. I think

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        that that provision is largely unenforceable. If I am wrong, perhaps the Financial Secretary could explain how the clause will operate. Amendment No. 5 would remove the phrase
        "capable of having an effect"
        and insert the words
        "intended to be acted on by a person".
        That is an important restriction and a narrowing of the clause, which would give it greater purpose and effect.
        Amendment No. 185 would expressly provide that oral communications are allowed. This is more in the nature of a probing amendment, but I hope that it will lead to a short debate on the issue of solicited as against unsolicited communications. As things stand, even a telephone call that is solicited by a client could be caught by the Bill. To give another example, a firm based abroad may be telephoned by someone from this country who has seen some of its promotional literature and wants to know more about the products or services on offer. If the firm responds, it could be guilty of an offence. I should like to know whether that is reasonable, and how it can be enforced. Our amendment tackles that problem and would exclude such oral communications from the prohibition.
        Amendment No. 388 concerns collective investment schemes. Clause 122 prohibits authorised firms from marketing unregulated investment schemes. We are not quarrelling with that, but our amendment would restrict that to persons in the United Kingdom; otherwise, firms in this country would be unable to market schemes in other countries where the local regulator had no objection, and we could face the bizarre situation in which the only schemes that could not be marketed in such countries would be United Kingdom schemes, which would put our industry at a competitive disadvantage.
        It is wrong in principle that firms in this country should face a double jeopardy. They could be stopped from marketing a certain investment scheme which falls foul of the rules over here, even though the countries to which their marketing effort is directed have no problems. If that happens, the citizens and investors in that country will simply buy from everyone else except the United Kingdom. I do not think that this is compatible with the principle set out in the Bill, which is to try to safeguard the competitiveness of the United Kingdom industry. It is not right that one part of the Bill should conflict with the expressed objectives and principles in another. 1 shall be interested in the Minister's comments.
        5 pm
        The Financial Secretary to the Treasury (Mr. Stephen Timms): The financial promotion regime dealt with in the clause governs the advertising of financial services and investments. It is important for ensuring that members of the public are not ripped off. The regime that we have developed and enshrined here seeks to bring the law more up to date and to recognise new technologies and different media, such as the internet and digital television.
        The guiding principles have been to make the new regime future-proof and technologically neutral. We are committed to doing everything we can to make sure that the UK is in the lead in making the best use of technology in this field, as in all fields. We are also proposing new financial promotion exemptions in secondary legislation to make informal capital-raising by small businesses and start-ups easier.
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        The financial promotion regime set out here applies to unauthorised persons. Authorised persons will be subject to the rules of the Financial Services Authority. So the clause is unlikely to have a direct effect on the businesses of financial services firms. This is an issue where there has been a good deal of misunderstanding, and the House needs to be clear about it.
        Government amendments to the clause and to clause 212 were proposed in Committee in July in response to consultation. As the right hon. Member for Wells (Mr. Heathcoat-Amory) acknowledged, they have gone a long way to meeting the concerns that were expressed at that time.
        The amendments did two main things. First, they introduced a business test into the financial promotion prohibition, so that only promotions made in the course of business are caught, and not the discussion between neighbours that the right hon. Gentleman suggested, which could have been caught by the earlier formulation. Secondly, the amendments changed the language of the basic financial promotion prohibition so that the prohibition and offence apply to communications which are more clearly promotional in nature, not just information which might lead to financial services activity.
        We have put out two consultation papers on financial promotion. The second included a draft order with exemptions from the basic financial promotion prohibition. The consultation period for the second paper closed very recently. We shall listen carefully to comments on the draft order and to other comments made in relation to the clause. It is important that we do not prejudge at this stage the results of that consultation exercise.
        Amendments Nos. 4 and 403 seek to reinstate the previous financial promotion restriction, although they recognise that there should be a business test. It was not clear from what the right hon. Member for Wells said, but it is the case that they propose bringing back the old language, before the July amendments, catching
        "information which is intended or might reasonably be presumed to lead directly or indirectly to engagement in investment activity",
        with the focus on "information". In the July amendments that was changed to make reference to a prohibition on invitations or inducements to engage in investment activity.
        The right hon. Gentleman suggested that the form of words in the amendment enshrined a greater degree of intent than is in the wording of the Bill, but I do not think that that is so. There is clearly in the wording here, "invitation or inducement", greater clarity about what is envisaged than in the old wording, which has appeared again in amendment No. 4.
        The changes were made in response to concern expressed in consultation that factual information that was not promotional could be caught by the prohibition as originally drafted. I am surprised that the Opposition should suggest returning to the earlier wording.
        Mr. Jim Cousins: I am sure that my hon. Friend has followed the exchanges that have taken place between two of our great popular newspapers over the past 10 days. Allegations have been made—it is not necessary to explore the truth of them here—that journalists responsible for giving investment advice themselves had investments in the companies and enterprises that they were tipping. Do the Government intend activities of that kind to be caught by the clause?

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        If this is a difficult question, I am happy for further thought to be given to it, but we need clarification. The investing public are now very aware of the situation, because of the conflict between the two newspapers.
        Mr. Timms: My hon. Friend presents me with an interesting invitation to engage in the crossfire between two august institutions. I shall resist on this occasion, but he has raised a significant point, on which we may be able to comment before the end of the debate.
        Amendment No. 5 deals with the territorial scope of the financial promotion prohibition. We discussed that at length in Committee, and it was also dealt with in the two financial promotion consultation papers. Territorial scope is especially important given the increasing use of the internet, whereby overseas providers can easily target UK investors. We want to encourage use of the internet, which should lower costs to consumers and provide consumer choice. It should also give UK businesses better access to a wider range of consumers. It is, however, important for consumers to have appropriate protection as well.
        The financial promotion prohibition has a twofold territorial scope. It applies to promotions issued from the UK to places or persons overseas, and also to inward promotions—promotions issued to the UK from outside it. Amendment No. 5 relates to inward promotions, and proposes that promotions that originate overseas but are
        "intended to be acted on by a person"—
        a UK person—should be caught. The language in the Bill as it stands catches inward promotions that are
        "capable of having an effect"
        in the UK. I should point out, however, that the draft financial promotion exemptions order, on which we have been consulting, proposes the limitation of that arrangement, so that only communications that are actually directed at the UK will be caught. That may well deal with the concern expressed by the right hon. Member for Wells.
        Amendment No. 5 would have a fairly similar effect to that of inserting the "directed at" test—currently in the order—in the Bill. Both the amendment and the clause as currently drafted reflect, to an extent, the principle of so-called host state regulation: regulation in the country in which a promotion is received. We mention in the consultation paper that we have been considering putting the "directed at" test in the Bill, rather as the right hon. Gentleman proposes. We think, however, that it would be inappropriate to make any change along those lines at this stage, for a number of reasons.
        First, the consultation has only just ended, and we need to consider it properly. Secondly, we need to view the issue in the light of potential European Union and international developments—and, in particular, a possible move to the "home state" or "country of origin" regulatory principle in respect of financial promotions, if that is provided for in future by EU legislation or other multilateral agreements. We want to ensure that the Bill is future-proof in that respect.
        We support the principle of home state regulation that is reflected in the draft European e-commerce directive, although its application is limited in the financial services sector, but we are not currently convinced by the
        278
        argument for applying solely the home state regulatory principle to financial promotions in advance of appropriate European legislation. We need to bear in mind the importance of the UK acting consistently with other jurisdictions. If the UK applied, say, only home state regulation, but other European economic area jurisdictions applied only host state regulation, there could be undesirable results and gaps in the system. However, it is an important issue. We have been consulting on it. We prefer not to prejudge the results of that consultation by amending the Bill at this stage. The possibility remains of doing so later. I hope that Conservative Members will take some comfort from that.
        I move to amendments Nos. 388 and 404. Amendments that would have had a similar effect were debated in Committee, when my hon. Friend the Economic Secretary to the Treasury recognised that there might be a case for applying the territorial scope of the collective investment scheme marketing prohibition differently from that of the clause 19 prohibition. We will continue to reflect on that in the light of consultation responses to the financial promotion consultation paper; again, reflection on that is not yet concluded.
        Amendment No. 185 seeks to provide that oral promotions should not be prohibited, unless they amount to an invitation to engage in investment activity. That is not appropriate. First, it reintroduces the concept of oral and other types of communication to the basic prohibition. We have tried to do away with those concepts in the light of developing technology. For example, why should someone be allowed to promote investments orally, but not over the internet, say, via an internet chat room, which to all intents and purposes has similar features to a conversation, in that a chat room effectively allows informal, immediate on-line "conversations"? The distinction is not as clear cut as it should be to be included.
        Secondly, there are numerous ways in which a person might promote investments which do not amount to an outright "invitation." Conceivably, quite a hard sell would be involved, but it might not be an invitation. Under amendment No. 5, such a hard sell could be exempt, but we are not seeking to regulate all forms of communication. Seeking to control conversations of all types is not sensible. That is why we have proposed that communications that are not made in the course of business should not be caught. Therefore, a conversation between friends in the pub or neighbours should not be caught, unless it is made in the course of business.
        The draft exemptions order proposes various other exemptions that could apply to oral communications: for example, a widespread exemption for calls that are invited by the recipient of the promotion and that are not made as part of a wider selling campaign.
        Amendment No. 389 tracks amendment No. 787, which was tabled by the hon. Member for Arundel and South Downs (Mr. Flight) in Committee. The intention behind the clause is that, if an authorised person cannot issue the promotion, an authorised person cannot approve an unauthorised person issuing it either. Beyond that, it will be for the authority to make rules under clause 118 concerning authorised persons' approval of financial promotions. That is the intention. As the Economic Secretary to the Treasury said, we are still considering how well the drafting achieves that. We will come back

        279
        to the matter, if necessary, in due course. We will, of course, reflect again on what the right hon. Member for Wells has said.
        Government amendment No. 68 is a drafting amendment to improve the clarity of the wording. I commend it to the House.
        Mr. Flight: As the Minister will recollect, there were 43 pages of debate on the clause in Committee. Numerous concerns about the clause have been raised by a raft of lawyers, by the communication industry, by the financial services industry and indeed by bureaucrats. It is somewhat strange that we should be on Report with the Government effectively saying at last that they recognise quite a lot of the concerns that we have expressed and will look to deal with them. We are left with a crucial clause that is nowhere near complete.
        5.15 pm
        We cannot see why the Government have for so long not taken the points, which are clear and straightforward and which our various amendments highlight. Without repeating all the points that were made by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), there are four different territories. One is simple: we are dealing with a criminal offence. People can go to jail for it and there should be some requirement on the prosecution to prove intent; that the communication was to some extent promotional and intended to attract people potentially to invest.
        The issue on the net is the most important. The Government seem to be saying that they will change their mind. The draft exemptions go some way towards that, but as the Government will be aware, there is quite a lot of detail that would lead a lot of businesses to fall foul of the order.
        It has been made fairly clear that it would be possible to open EU infringement proceedings. Indeed, there is a question as to whether the Government should have cleared draft legislation with the Commission under the transparency directive before introducing it.
        It seems that the Government will move in one form or other to the principle that we have suggested. Ridiculously, the wording
        "capable of having an effect in the United Kingdom"
        would ensure that almost any form of communication about the world would be covered by UK regulation. The many communications between a business in Tokyo and one in the United States on the net could have an effect if someone looked them up here. The suggestion that the FSA should regulate cyberspace is impractical and indeed damaging to our reputation.
        Amendment No. 185 deals with the cold-calling and oral issue. The intention is not to exempt oral communications that were self-evidently fraudulent or designed to promote, but unless our amendment is accepted there will be problems with overseas investment firms that do not have branches in the UK and that would be unlikely to know the detailed requirements under the proposed Treasury orders and to remember to send a second document asking for consent to cold calls. Many breaches could arise in relation to the placement of flotations; United States security houses would naturally want to send offerings about the world by not just oral, but
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        other means of communication. More thought will need to be given if our amendment is not to be accepted in that parameter.
        Amendment No. 388 relates to the fact that the Bill prohibits authorised firms from marketing unregulated collective investment schemes. We believe that that prohibition should apply only when the communication is to a person in the UK. Again, there are many instances where schemes may not be regulated. They may be under jurisdictions other than that in the UK; UK firms may be properly promoting in other parts of the world, where there are either no regulations to prohibit them from doing so, or it is normal to do so. As the clause stands, particularly in the venture capital sector, some silliness could result.
        We see amendment No. 389 as a correction. Clause 214 imposed a general prohibition on approving marketing materials for unregulated schemes. Our amendments limit that provision to where none of the exemptions prescribed by the FSA rules apply. As the clause is drafted, that may seem implicit, but it certainly is not,
        This territory is of crucial importance. It is relevant to the development of the United Kingdom as a leading economy in e-commerce and to the international marketing of products and services by European Union financial services businesses. It concerns a criminal offence. The clause is not right yet, as the Government seem to admit. It is well overdue that it should be and we want to press our amendments.
        Mr. Timms: We will certainly reflect on the arguments of the hon. Member for Arundel and South Downs (Mr. Flight) as well as those of the right hon. Member for Wells (Mr. Heathcoat-Amory). The clause has been a good deal improved since it first appeared before the Standing Committee. I am still not clear why Opposition Members are trying to reinstate some of the wording that was removed during the improvement process.
        In response to my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins), on the activities of newspapers and journalists, as I said, I would not want to comment on the individual case to which he referred. Alongside the existing criminal offences of insider dealing and market manipulation, new provisions in the Bill will allow the FSA to impose penalties on anyone who abuses markets. Journalists will be in the same position as everyone else. Penalties could be imposed on them if they abuse the markets. Journalists do not at present need authorisation if they give advice in a newspaper or periodical whose principle purpose is not giving investment advice. In the consultation document on regulated activities under the Bill, which was published last year, we proposed that that position should be maintained.
        Mr. Heathcoat-Amory: I am grateful to the Minister for his courtesy in at least conceding that we are raising legitimate issues. Our worry is that this has all come so late. Although the Bill was first announced nearly three years ago and has been available in draft since July 1998, the Government are still grappling with some of the concepts. In addition, we discussed clause 19 exhaustively in Committee. By now, the Government should have come to a conclusion about some of these matters. The Bill is not simply for the convenience of the Government or the authority. Outsiders and the industry in general want to know where they stand.

        281
        The situation is summed up by the stance on amendment No. 5. The Government are saying that the clause goes too wide, catches too many people and will be unenforceable, but that they will use secondary legislation to restrict its provisions. It is wrong to attempt to outlaw something in primary legislation and then authorise it in secondary legislation. People who want to know how the industry is to be regulated, who will be caught and what offences they risk falling foul of, will go to the Bill—it is the Act, as it will then be, that will be scrutinised. The single volume that is publicly available will be the fountainhead of knowledge about the regulatory system, not all the orders, the regulations and the endless flow of secondary legislation.
        On the basis of the quality of legislation alone, the Government are condemned. Even now, they have not come to a conclusion on some of these matters. As a mark of that fact and to emphasise the importance that we attach to the matter and that we expect some serious amendments to be made in another place, we shall divide the House on amendment No. 5.
        I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.
        Amendment proposed: No. 5, in page 8, line 28, leave out
        "capable of having an effect"
        and insert
        "intended to be acted on by a person"—[Mr.Heathcoat—Amory.]
        Question put, That the amendment be made:—
        The House divided: Ayes 175, Noes 312.

        Division No. 69]

        [5.25 pm

        AYES

        Ainsworth, Peter (E Surrey)

        Chapman, Sir Sydney (Chipping Barnet)

        Allan, Richard

        Amess, David

        Clappison, James

        Ancram, Rt Hon Michael

        Clark, Dr Michael (Rayleigh)

        Arbuthnot, Rt Hon James

        Clifton-Brown, Geoffrey

        Ashdown, Rt Hon Paddy

        Collins, Tim

        Atkinson, David (Bour'mth E)

        Colvin, Michael

        Atkinson, Peter (Hexham)

        Cormack, Sir Patrick

        Baker, Norman

        Cotter, Brian

        Baldry, Tony

        Cran, James

        Ballard, Jackie

        Curry, Rt Hon David

        Beggs, Roy

        Davies, Quentin (Grantham)

        Beith, Rt Hon A J

        Davis, Rt Hon David (Haltemprice)

        Bercow, John

        Day, Stephen

        Beresford, Sir Paul

        Donaldson, Jeffrey

        Blunt, Crispin

        Dorrell, Rt Hon Stephen

        Body, Sir Richard

        Duncan, Alan

        Boswell, Tim

        Duncan Smith, Iain

        Bottomley, Peter (Worthing W)

        Evans, Nigel

        Bottomley, Rt Hon Mrs Virginia

        Faber, David

        Brady, Graham

        Fabricant, Michael

        Brake, Tom

        Fallon, Michael

        Brooke, Rt Hon Peter

        Flight, Howard

        Browning, Mrs Angela

        Forth, Rt Hon Eric

        Bruce, Ian (S Dorset)

        Fowler, Rt Hon Sir Norman

        Bruce, Malcolm (Gordon)

        Fox, Dr Liam

        Burnett, John

        Fraser, Christopher

        Burns, Simon

        Garnier, Edward

        Burstow, Paul

        George, Andrew (St Ives)

        Cable, Dr Vincent

        Gibb, Nick

        Campbell, Rt Hon Menzies (NE Fife)

        Gill, Christopher

        Gillan, Mrs Cheryl

        282

        Gorman, Mrs Teresa

        Öpik, Lembit

        Green, Damian

        Ottaway, Richard

        Greenway, John

        Page, Richard

        Gummer, Rt Hon John

        Paice, James

        Hague, Rt Hon William

        Paterson, Owen

        Hamilton, Rt Hon Sir Archie

        Pickles, Eric

        Hammond, Philip

        Portillo, Rt Hon Michael

        Hancock, Mike

        Prior, David

        Hayes, John

        Redwood, Rt Hon John

        Heald, Oliver

        Rendel, David

        Heath, David (Somerton & Frome)

        Robathan, Andrew

        Heathcoat-Amory, Rt Hon David

        Robertson, Laurence

        Hogg, Rt Hon Douglas

        Roe, Mrs Marion (Broxboume)

        Horam, John

        Ross, William (E Lond'y)

        Howard, Rt Hon Michael

        Rowe, Andrew (Faversham)

        Howarth, Gerald (Aldershot)

        Ruffley, David

        Hughes, Simon (Southwark N)

        Russell, Bob (Colchester)

        Hunter, Andrew

        St Aubyn, Nick

        Jack, Rt Hon Michael

        Sanders, Adrian

        Jackson, Robert (Wantage)

        Sayeed, Jonathan

        Jenkin Bernard

        Shephard, Rt Hon Mrs Gillian

        Johnson Smith, Rt Hon Sir Geoffrey

        Shepherd, Richard

        Smyth, Rev Martin (Belfast S)

        Keetch Paul

        Spelman, Mrs Caroline

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

        Spicer, Sir Michael

        Spring, Richard

        Key, Robert

        Steen, Anthony

        King, Rt Hon Tom (Bridgwater)

        Streeter, Gary

        Kirkbride, Miss Julie

        Stunell, Andrew

        Kirkwood, Archy

        Swayne, Desmond

        Laing, Mrs Eleanor

        Syms, Robert

        Lait, Mrs Jacqui

        Tapsell, Sir Peter

        Taylor, Ian (Esher & Walton)

        Lansley, Andrew

        Tavlor, John M (Solihull)

        Leigh, Edward

        Taylor, Matthew (Truro)

        Letwin, Oliver

        Taylor, Sir Teddy

        Lidington, David

        Townend, John

        Lilley,.Rt Hon Peter

        Trend, Michael

        Livsey, Richard

        Tayler, Paul

        Lloyd, Rt Hon Sir Peter (Fareham)

        Tyrie, Andrew

        Loughton,Tim

        Viggers, Peter

        Luff, Peter

        Walter, Robert

        MacGregor, Rt Hon John

        Wardle, Charles

        McIntosh, Miss Anne

        Webb, Steve

        MacKay, Rt Hon Andrew

        Wells, Bowen

        Maclean, Rt Hon David

        Welsh, Andrew

        Maclennan, Rt Hon Robert

        Whitney, Sir Raymond

        McLoughlin, Patrick

        Whittingdale, John

        Major, Rt Hon John

        Widdecombe, Rt Hon Miss Ann

        Maples, John

        Wilkinson, John

        Maude, Rt Hon Francis

        Willetts, David

        Mawhinney, Rt Hon Sir Brian

        Willis, Phil

        May, Mrs Theresa

        Winterton, Mrs Ann (Congleton)

        Michie, Mrs Ray (Argyll & Bute)

        Winterton, Nicholas (Macclesfield)

        Moore, Michael

        Yeo, Tim

        Moss, Malcolm

        Young, Rt Hon Sir George

        Nicholls, Patrick

        Norman, Archie

        Tellers for the Ayes:

        Oaten, Mark

        Mr. Keith Simpson and

        O'Brien, Stephen (Eddisbury)

        Mr. John Randall.

        NOES

        Ainger, Nick

        Benn, Rt Hon Tony (Chesterfield)

        Ainsworth, Robert (Cov'try NE)

        Benton, Joe

        Alexander, Douglas

        Best, Harold

        Allen, Graham

        Betts, Clive

        Armstrong, Rt Hon Ms Hilary

        Blackman, Liz

        Ashton, Joe

        Blears, Ms Hazel

        Atkins, Charlotte

        Blizzard, Bob

        Austin, John

        Blunkett, Rt Hon David

        Barnes, Harry

        Boateng, Rt Hon Paul

        Barron, Kevin

        Borrow, David

        Battle, John

        Bradley, Keith (Withington)

        Beard, Nigel

        Bradley, Peter (The Wrekin)

        Beckett, Rt Hon Mrs Margaret

        Bradshaw, Ben

        Bell, Stuart (Middlesbrough)

        Brinton, Mrs Helen

        283

        Brown, Rt Hon Nick (Newcastle E)

        Gardiner, Barry

        Brown, Russell (Dumfries)

        Gerrard, Neil

        Browne, Desmond

        Gibson, Dr Ian

        Buck, Ms Karen

        Gilroy, Mrs Linda

        Burden, Richard

        Godman, Dr Norman A

        Burgon, Colin

        Godsiff, Roger

        Butler, Mrs Christine

        Goggins, Paul

        Campbell, Alan (Tynemouth)

        Golding, Mrs Llin

        Campbell, Ronnie (Blyth V)

        Gordon, Mrs Eileen

        Campbel-Savours, Dale

        Griffiths, Jane (Reading E)

        Cann, Jamie

        Griffiths, Nigel (Edinburgh S)

        Caplin, Ivor

        Griffiths, Win (Bridgend)

        Casale, Roger

        Grocott, Bruce

        Caton, Martin

        Grogan, John

        Cawsey, Ian

        Gunnell, John

        Chaytor, David

        Hain, Peter

        Chisholm, Malcolm

        Hall, Mike (Weaver Vale)

        Clapham, Michael

        Hall, Patrick (Bedford)

        Clark, Dr Lynda (Edinburgh Pentlands)

        Hamilton, Fabian (Leeds NE)

        Hanson, David

        Clark, Paul (Gillingham)

        Harman, Rt Hon Ms Harriet

        Clarke, Charles (Norwich S)

        Heal, Mrs Sylvia

        Clarke, Eric (Midlothian)

        Healey, John

        Clarke, Rt Hon Tom (Coatbridge)

        Henderson, Doug (Newcastle N)

        Clarke, Tony (Northampton S)

        Henderson, Ivan (Harwich)

        Clwyd, Ann

        Heppell, John

        Coaker, Vernon

        Hesford, Stephen

        Coffey, Ms Ann

        Hill, Keith

        Coleman, Iain

        Hinchliffe, David

        Colman, Tony

        Hodge, Ms Margaret

        Connarty, Michael

        Hoon, Rt Hon Geoffrey

        Cooper, Yvette

        Hope, Phil

        Corbett, Robin

        Hopkins, Kelvin

        Corston, Jean

        Howarth, George (Knowsley N)

        Cousins, Jim

        Howells, Dr Kim

        Cox, Tom

        Hughes, Ms Beverley (Stretford)

        Cranston, Ross

        Humble, Mrs Joan

        Crausby, David

        Hurst, Alan

        Cryer, Mrs Ann (Keighley)

        Hutton, John

        Cryer, John (Hornchurch)

        Iddon, Dr Brian

        Cummings, John

        Jackson, Helen (Hillsborough)

        Cunningham, Rt Hon Dr Jack (Copeland)

        Jamieson, David

        Jenkins, Brian

        Curtis-Thomas, Mrs Claire

        Johnson, Alan (Hull W & Hessle)

        Dalyell, Tam

        Johnson, Miss Melanie (Welwyn Hatfield)

        Darling, Rt Hon Alistair

        Darvill, Keith

        Jones, Rt Hon Barry (Alyn)

        Davidson, Ian

        Jones, Helen (Warrington N)

        Davies, Rt Hon Denzil (Llanelli)

        Jones, Ms Jenny (Wolverh'ton SW)

        Davies, Geraint (Croydon C)

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

        Jones, Jon Owen (Cardiff C)

        Jones, Dr Lynne (Selly Oak)

        Dawson, Hilton

        Jowell, Rt Hon Ms Tessa

        Denham, John

        Kaufman, Rt Hon Gerald

        Dismore, Andrew

        Keeble, Ms Sally

        Dobbin, Jim

        Keen, Alan (Feltham & Heston)

        Doran, Frank

        Kemp, Fraser

        Dowd, Jim

        Kennedy, Jane (Wavertree)

        Drew, David

        Khabra, Piara S

        Eagle, Angela (Wallasey)

        Kidney, David

        Eagle, Maria (L'pool Garston)

        Kilfoyle, Peter

        Edwards, Huw

        King, Andy (Rugby & Kenilworth)

        Ellman, Mrs Louise

        King, Ms Oona (Bethnal Green)

        Ennis, Jeff

        Kumar, Dr Ashok

        Etherington, Bill

        Lepper, David

        Field, Rt Hon Frank

        Leslie, Christopher

        Fisher, Mark

        Lewis, Ivan (Bury S)

        Fitzpatrick, Jim

        Lewis, Terry (Worsley)

        Fitzsimons, Lorna

        Liddell, Rt Hon Mrs Helen

        Flint, Caroline

        Lloyd, Tony (Manchester C)

        Follett, Barbara

        Love, Andrew

        Foster, Rt Hon Derek

        McAvoy, Thomas

        Foster, Michael Jabez (Hastings)

        McCafferty, Ms Chris

        Foster, Michael J (Worcester)

        McCartney, Rt Hon Ian(Makerfield)

        Fyfe, Maria

        Galloway, George

        McDonagh, Siobhain

        284

        Macdonald, Calum

        Sarwar, Mohammad

        McDonnell, John

        Savidge, Malcolm

        McFall, John

        Sawford, Phil

        McGuire, Mrs Anne

        Sedgemore, Brian

        McIsaac, Shona

        Shaw, Jonathan

        McKenna, Mrs Rosemary

        Sheerman, Barry

        McNamara, Kevin

        Sheldon, Rt Hon Robert

        McNulty, Tony

        Shipley, Ms Debra

        MacShane, Denis

        Short, Rt Hon Clare

        Mactaggart, Fiona

        Simpson, Alan (Nottingham S)

        McWalter, Tony

        Singh, Marsha

        McWilliam, John

        Skinner, Dennis

        Mahon, Mrs Alice

        Smith, Rt Hon Andrew (Oxford E)

        Mallaber, Judy

        Smith, Angela (Basildon)

        Marsden, Gordon (Blackpool S)

        Smith, Jacqui (Redditch)

        Marsden, Paul (Shrewsbury)

        Smith, Llew (Blaenau Gwent)

        Marshall, David (Shettleston)

        Snape, Peter

        Marshall, Jim (Leicester S)

        Soley, Clive

        Marshall-Andrews, Robert

        Spellar, John

        Martlew, Eric

        Squire, Ms Rachel

        Maxton, John

        Starkey, Dr Phyllis

        Meacher, Rt Hon Michael

        Steinberg, Gerry

        Meale, Alan

        Stewart, David (Inverness E)

        Michie, Bill (Shef'ld Heeley)

        Stinchcombe, Paul

        Milburn, Rt Hon Alan

        Stoate, Dr Howard

        Miller, Andrew

        Strang, Rt Hon Dr Gavin

        Mitchell, Austin

        Stringer, Graham

        Moran, Ms Margaret

        Stuart, Ms Gisela

        Morgan, Ms Julie (Cardiff N)

        Sutcliffe, Gerry

        Morley, Elliot

        Taylor, Rt Hon Mrs Ann (Dewsbury)

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

        Taylor, Ms Dari (Stockton S)

        Mountford, Kali

        Taylor, David (NW Leics)

        Mudie, George

        Temple-Morris, Peter

        Mullin, Chris

        Thomas, Gareth (Clwyd W)

        Murphy, Denis (Wansbeck)

        Thomas, Gareth R (Harrow W)

        Murphy, Jim (Eastwood)

        Timms, Stephen

        Naysmith, Dr Doug

        Tipping, Paddy

        O'Brien, Mike (N Warks)

        Todd, Mark

        O'Hara, Eddie

        Touhig, Don

        Organ, Mrs Diana

        Trickett, Jon

        Osborne, Ms Sandra

        Truswell Paul

        Pearson, Ian

        Turner, Dennis (Wolverh'ton SE)

        Pendry, Tom

        Turner, Dr Desmond (Kemptown)

        Pickthall, Colin

        Turner, Neil (Wigan)

        Plaskitt, James

        Twigg, Derek (Halton)

        Pollard, Kerry

        Twigg, Stephen (Enfield)

        Pond, Chris

        Tynan, Bill

        Vis, Dr Rudi

        Pope, Greg

        Walley, Ms Joan

        Pound, Stephen

        Ward, Ms Claire

        Powell, Sir Raymond

        Wareing, Robert N

        Prentice, Ms Bridget (Lewisham E)

        Watts, David

        Prentice, Gordon (Pendle)

        White, Brian

        Prescott, Rt Hon John

        Whitehead, Dr Alan

        Primarolo, Dawn

        Williams, Rt Hon Alan (Swansea W)

        Prosser, Gwyn

        Purchase, Ken

        Williams, Alan W (E Carmarthen)

        Quin, Rt Hon Ms Joyce

        Williams, Mrs Betty (Conwy)

        Quinn, Lawrie

        Wilson, Brian

        Radice, Rt Hon Giles

        Winnick, David

        Rammell, Bill

        Winterton, Ms Rosie (Doncaster C)

        Rapson, Syd

        Wise, Audrey

        Reed, Andrew (Loughborough)

        Wood, Mike

        Reid, Rt Hon Dr John (Hamilton N)

        Woodward, Shaun

        Rogers, Allan

        Woolas, Phil

        Rooker, Rt Hon Jeff

        Worthington, Tony

        Ross, Emie (Dundee W)

        Wright, Anthony D (Gt Yarmouth)

        Ruane, Chris

        Wright, Dr Tony (Cannock)

        Ruddock, Joan

        Russell, Ms Christine (Chester)

        Tellers for the Noes:

        Ryan, Ms Joan

        Mr. David Clelland and

        Salter, Martin

        Mr. Kevin Hughes.

        Question accordingly negatived.
        Amendment made: No. 68, in page 8, line 35, leave out
        "rules made under section 118"
        and insert "financial promotion rules".—[Mr. Robert Ainsworth.]

      Clause 20

        THE CLASSES OF ACTIVITY AND CATEGORIES OF INVESTMENT
        Amendment made: No. 406, in page 9, line 15, after "which" insert
        "is carried on by way of business and".—[Mr. Robert Ainsworth.]

      Clause 24
        AGREEMENTS MADE BY UNAUTHORISED PERSONS
        Amendment made: No. 243, in page 10, line 30, leave out "('the provider')".—[Mr. Robert Ainsworth.]
      Clause 26

        AGREEMENTS MADE UNENFORCEABLE BY SECTION 24 OR 25
        Amendments made: No. 244, in page 11, line 33, leave out "provider" and insert
        "person carrying on the regulated activity concerned".
        No. 245, in page 11, line 36, leave out from "not" to "that", in line 37, and insert "know".—[Mr. Robert Ainsworth.]

      Clause 27

        ENFORCEABILITY OF AGREEMENTS RESULTING FROM UNLAWFUL COMMUNICATIONS
        Amendments made: No. 246, in page 12, line 13, leave out
        "as a direct or indirect result"
        and insert "in consequence"
        No. 247, in page 12, line 20, leave out
        "as a direct or indirect result"
        and insert "in consequence".
        No. 248, in page 12, line 32, leave out from "that" to end of line 4, on page 13, and insert
        "the enforcement conditions are met.
        ( ) The enforcement conditions are that it is just and equitable for the agreement or obligation to be enforced or (as the case may be) for the money or property paid or transferred under the agreement to be retained and—

        (a) if the applicant made the unlawful communication, that he reasonably believed that he was not making such a communication; or

        (b) if the applicant did not make the unlawful communication, that he did not know that the agreement was entered into in consequence of such a communication.

        ( ) 'Applicant' means the person seeking to enforce the agreement or obligation or retain the money or property paid or transferred.
        ( ) Any reference to making a communication includes causing a communication to be made.". —[Mr. Robert Ainsworth.]

      Clause 28

        AUTHORISED PERSONS
        Mr. Flight: I beg to move amendment No. 34, in page 13, line 29, at end insert—
        "(cc) a person qualifying for authorisation under Schedule 5,"
        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 73 to 76, 112 and 121.
        Amendment No. 380, in clause 211, page 107, line 5, leave out "on" and insert "under an express".
        Amendment No. 65, in page 107, line 15, after "which", insert—
        "(otherwise than under other provisions)."
        Amendment No. 381, in page 107, line 17, after "repurchased", insert—
        "in accordance with the scheme".
        Amendment No. 66, in page 107, line 17, leave out
        "(otherwise than under other provisions)".
        Amendment No. 382, in page 107, line 18, leave out "are" and insert "may be".
        Amendment No. 383, in page 107, line 18, after "are", insert—
        "at the request of participants".
        Amendment No. 384, in page 107, line 21, leave out "related to" and insert "not significantly different from".
        Amendment No. 385, in page 107, line 22, at end insert—
        "(2A) In subsection (2)(b)(i) participants are only to be regarded as having an entitlement to have their shares or securities redeemed or repurchased in cases where the entitlement is exercisable by the participants".
        Amendment No. 386, in page 107, line 27, after "State", insert—
        "or such other territory or country outside the United Kingdom as the Treasury may by order specify".
        Amendment No. 387, in page 107, line 40, at end insert—
        "and in relation to any other collective investment scheme means the person, if any, having responsibility under the arrangements constituting the scheme for the day to day management of the property of the scheme.".
        Amendment No. 393, in clause 236, page 118, line 37, after "that", insert—
        "it is desirable in order to protect the interests of participants or potential participants that".
        Government amendments Nos. 450 to 453, 420, 155, 171 to 177 and 442.
        Mr. Flight: Amendment No. 34 deals with the same territory that, apparently, is dealt with by the Government amendments to schedule 5. Before going into the amendments, I would like to ask the Minister whether there are likely to be further Government amendments on this matter when the Bill is in Committee in another place, or whether they believe that they have got this matter into its final form. In Committee, it was clear that many provisions would have unintended effects and needed

        287
        changing—particularly in terms of bringing investment trusts formed outside the UK under the collective investment scheme rules under certain circumstances.
        Secondly, the new regulations for open-ended investment companies had not been promulgated. Since then, there has been considerable progress on that front. However, this is a practical matter concerned with the industry, and it is not a matter of principle.
        Government amendments Nos. 73 to 76, 112 and 121 are not controversial. The main amendments that we stress are Nos. 380 to 387 and 393. Essentially, they repeat issues that we raised in Committee, and cover unit trusts to be constituted under an express trust, open-ended investment companies and the definition of "operator". Clause 236 would be amended for consistency. The most important amendment is No. 383, which requires the participants in an OEIC to request the redemption or repurchase of their interest in the OEIC.
        Amendments Nos. 65 and 66 are new amendments to the OEIC definition which we have made to make sure that investment trusts are not caught by it. The amendments move the exemption for the repurchase of shares pursuant to the relevant provisions of the Companies Act 1985, so that it covers both limbs of clause 211(2)(b)(i), and not just the second limb.
        Government amendments Nos. 450 to 453 are not controversial, while amendments Nos. 20 and 155, 171, 177 and 442 are all essentially technical and relate to schedule 5.
        5.45 pm
        Miss Melanie Johnson: Amendment No. 34 raises a point that was discussed in Committee—namely, adding a further class of person requiring authorisation under the Bill to clause 28:
        "a person qualifying for authorisation under Schedule 5".
        However, we believe that subsection (d) should already include
        "a person qualifying for authorisation under Schedule 5"
        and so the amendment is unnecessary. I would be grateful if the hon. Member for Arundel and South Downs (Mr. Flight) would consider withdrawing the amendment.
        The hon. Gentleman asked whether we thought that there was a need further to amend clause 28. We think that clause 28 is fine as it stands, and we do not expect any further amendments—although one cannot be absolutely certain.
        Amendments Nos. 65, 66 and 381 to 387 concern open-ended investment companies. Hon. Members will know that, on 28 January, we issued a consultation draft on the OEIC regulations under clause 237. This particular group of amendments are all aimed at the definition of an OEIC. We debated this issue in Committee, when a number of substantially similar amendments were tabled by the Opposition.
        I said at that time that we were considering whether the definition might be improved. We are mindful of the need for greater certainty, and we are working on the definition. Features that we are looking at in bringing forward a definition include whether shareholders expect their shares to be redeemed or repurchased, the regularity of repurchases or redemptions and the proportion of capital in relation to which the right or redemption should apply. This is a technically difficult area, and it is important that we get these matters right in the Bill.
        288
        The hon. Gentleman said that he took no exception to a number of the Government amendments, so I shall address amendment No. 393. The amendment was debated in Committee, and I said that we would review the urgent intervention powers in the Bill at a later date, and we will do so. I give a continuing undertaking on that subject. I will not speak to any of the Government amendments unless anyone has any particular queries.
        Mr. Flight: I thank the Minister for her comments and, in the light of them, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 30

        WITHDRAWAL OF AUTHORISATION BY THE AUTHORITY.
        Mr. Timms: I beg to move amendment No. 69, in page 14, line 15, leave out from "person" to end of line 16.
        Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 81, 82, 89 and 98.
        Mr. Timms: These amendments remove the existing provision in clause 30 for retaining the authorisation of persons who no longer have permission for any regulated activity. Amendments Nos. 69, 89 and 98 provide instead that, under clauses 39 and 40, the FSA will be able to keep an empty permission in force, but may need to cancel it once it is satisfied that this is no longer necessary.
        We are not just talking about preventing wrongdoers from escaping the jurisdiction of the FSA. The power could be used, for example, to suspend an authorised person's activities while an aspect of his business is investigated urgently. Following the investigation, his substantive permissions could be restored without forcing him to make a fresh application under clause 36.
        Amendments Nos. 81 and 82 are consequential, and limit clause 36 to fresh applications by persons who are not already authorised under the Bill. The amendments exclude applications from persons who already have a permission under part IV. They can apply instead for a variation of their existing permission under clause 39.
        I hope that the amendments will meet with the approval of the House.
        Mr. Heathcoat-Amory: I thought that I understood the Bill, but I am a little baffled by the amendment. I think that I see the intention behind it, but as the clause stood, the FSA was to be allowed to maintain someone's status as an authorised person even though the person concerned might not have permission to carry on a regulated activity. From what I understand of the amendment, the authority will be able to keep a permission alive even though the authorised person concerned may not any longer be performing any regulated activities. That is a consequence of the fact that his permission may have been varied.
        The amendment would introduce a bizarre concept. Other parts of the Bill might have been drafted by Lewis Carroll, but this seems to break new ground. We were trying, I thought, to make the Bill easy to understand, so perhaps the amendment could have been drafted differently or we could stick with the previous wording,

        289
        which was at least logically possible. If a permission is to be kept alive when the person to whom it was granted no longer has it because it has been withdrawn or varied, that requires some explanation.
        Mr. Timms: The benefit of keeping an empty permission in force is that it will allow the FSA to retain its jurisdiction over the firm involved. For example, it may be investigating a possible disciplinary matter or it may be necessary for the firm to complete a past business review. That is the reason for the need to keep the permission alive.
        The amended provision will make it clear that the FSA has to cancel a firm's permission once the FSA is satisfied that it is no longer necessary. The previous formulation in clause 30 only required the FSA to have good reason for not withdrawing a person's authorisation. The FSA's refusal of an application to cancel a firm's permission will be subject to the usual procedural safeguards. It is necessary to have the mechanism contained in the amendment to allow the FSA to retain its jurisdiction for a time while an investigation or other matter is in hand.
        Amendment agreed to.

      Clause 31

        EEA FIRMS
        Amendments made: No. 70, in page 14, line 17, after "under" insert "Part II of'.
        No. 71, in page 14, line 23, leave out "Schedule 3 authorisation" and insert—
        "authorisation under Part II of Schedule 3".
        No. 72, in page 14, line 25, after "under" insert "Part II of".—[Miss Melanie Johnson.]

      Clause 33

        PART XVI QUALIFIERS
        Amendments made: No. 73, in page 14, line 34, leave out "Part XVI qualifier" and insert—
        "person authorised as a result of paragraph 1(1) of Schedule 5".
        No. 74, in page 14, line 35, leave out "a Part XVI qualifier" and insert "such a person".
        No. 75, in page 14, line 36, leave out "Part XVI qualifier" and insert—
        "person authorised as a result of paragraph 1(1) of Schedule 5".
        No. 76, in page 14, line 37, leave out from "to" to end of line 38 and insert—
        "be a person so authorised".—[Miss Melanie Johnson.]

      Clause 34

        EXEMPTION ORDERS
        Amendments made: No. 77, in page 15, line 5, leave out
        "persons for the purposes of section 17"
        and insert "from the general prohibition".
        No. 78, in page 15, line 6, leave out from second "person" to end of line 7 and insert—
        290
        "as a result of an exemption order if he has a Part IV permission".—[Miss Melanie Johnson.]
        Mr. Flight: I beg to move amendment No. 199, in page 15, line 14, at end insert—
        "(5) No exemption order to which subsection (7) applies may be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.
        (6) An exemption order to which subsection (7) does not apply shall be subject to annulment in pursuance of a resolution of either House of Parliament.
        (7) This subsection applies to an exemption order which:

        (a) is the first order to be made under this section in respect of a particular person; or

        (b) varies an order previously made so as to vary or remove an exemption."

        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 427 and 428.
        Amendment No. 53, in clause 374, page 195, line 3, after "section", insert "110(6A), 111(6),".
        Government amendments Nos. 430 to 436.
        Mr. Flight: This is a ragbag group of amendments. Amendment No. 199 requires that Treasury exemption orders in respect of people requiring to be authorised persons should be laid before both Houses, both for any initial exemption and for any variation. Amendment No.53 would add two territories of orders requiring the positive affirmation of both Houses and relates back to points that we stressed earlier about limiting the FSA's powers to regulate non-regulated activities and the activities of regulated UK businesses overseas. In essence, the amendments would require affirmative resolutions of both Houses for any new rules made that related to restrictions on businesses or marketing outside the UK and to any extension of non-regulated activities.
        Government amendment No. 427 would grant the Lord Chancellor powers to make rules in respect of the tribunal by statutory instrument. As I understand it, the rest are consequential. The remaining Government amendments would require a draft of regulations to be put before both Houses for affirmative order, and we would certainly support those proposals.
        Miss Melanie Johnson: Amendment No. 199 proposes that an exemption order under clause 34 should be made subject to affirmative resolution procedure when it is first made and thereafter when it is replaced and certain exemptions are removed. Clearly, there is a parallel with what is provided for in amendment No. 199 and the provision in the Bill for making the first regulated activities order under clause 20 and subsequently adding to the scope of regulated activities. That is to say that both work together to define the scope of regulation under the Bill. However, the parallel is far from exact.
        The effect of the regulated activities order under clause 20 will define the scope of regulation. The effect, therefore, will be to bring within the FSA's remit a wide range of activities and firms. An exemption order will be different. Our intention is to exempt only narrow categories of person whose activities are not generally such as to give rise to risk to consumers. On the one hand there will be bodies such as the Crown and the Bank of

        291
        England, who because of their nature, have never been serious candidates for regulation under the financial services legislation.
        On the other hand, there will be a series of bodies that do not carry on regulated activities within the normal sense but which do things that just might qualify at the margins as regulated activities. A good example is an organisation such as a trade union or a charitable organisation that raises and invests money for the indirect benefit of its members. The purpose of the exemption in those cases is to make it absolutely clear that they can continue to do those things without fear of committing an offence.
        Even to the extent that the activities of such bodies might qualify as regulated activities for the purposes of the Bill, it would happen in a way where there was no potential for consumer detriment. For example, with trade union funds, members contribute to the organisation for a number of reasons, but they do not contribute to make a return on those contributions. Any such benefits would be seen as a bonus.
        I am sure that no one would wish to object to our proposals for exemptions in such cases. Regulation is really not necessary. Of course, were a trade union or charity to establish a high street bank as a side line, their exemption would need to be reviewed—and most likely would be withdrawn—in order to ensure the protection of potential depositors.
        In my view, the negative resolution procedure provided for in the Bill is the most appropriate for an order of that kind. The Delegated Powers and Deregulation Committee in the other place considered the powers in a draft of the Bill at the same time the Committee chaired by Lord Burns considered the draft more generally. The Delegated Powers and Deregulation Committee did not recommend a different procedure and I therefore propose not to accept this amendment. I hope that the hon. Member for Arundel and South Downs (Mr. Flight) will withdraw his amendment.
        The Government amendments in this group, to clauses 373 and 374 are largely technical. The hon. Gentleman raised a point about one particular Government amendment, but I have forgotten which one. If he wishes me to make a response, I would be grateful if he alerted me to which one it was.
        Mr. Flight: We did not require a specific response to any of the Government amendments. We are happy to withdraw amendment No. 199, although the territory is tricky and could be subject to further discussion in the other place. I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 35

        EXEMPTION OF APPOINTED REPRESENTATIVES
        Amendments made: No. 79, in page 15, line 15, after "person" insert—
        "(other than an authorised person)".
        No. 80, in page 15, line 24, leave out "an exempt person" and insert—
        "exempt from the general prohibition".—[Miss Melanie Johnson.]

      Clause 36

        APPLICATION FOR PERMISSION
        Amendments made: No. 81, in page 16, line 10, after "may" insert "not".
        No. 82, in page 16, line 11, leave out "does not have" and insert "has".
        No. 83, in page 16, line 14, at end insert—
        "(2A) An EEA firm may not apply for permission under this section to carry on a regulated activity which it is, or would be, entitled to carry on in exercise of an EEA right, whether through a United Kingdom branch or by providing services in the United Kingdom.".—[Miss Melanie Johnson.]

      Clause 37

        GIVING PERMISSION
        Amendments made: No. 84, in page 16, line 22, at end insert—
        "( ) If the applicant—

        (a) in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 35(1) or an order made under section 34(1), but

        (b) has applied for permission in relation to another regulated activity,

        the application is to be treated as relating to all the regulated activities which, if permission is given, he will carry on.
        ( ) If the applicant—

        (a) in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 260(2) or (3), but

        (b) has applied for permission in relation to another regulated activity,

        the application is to be treated as relating only to that other regulated activity.".
        No. 85, in page 16, line 23, leave out subsection (3).—[Miss Melanie Johnson.]

      Clause 38

        IMPOSITION OF REQUIREMENTS
        Amendments made: No. 86, in page 16, line 38, leave out from "include" to end of line 40 and insert—
        "such requirements as the Authority considers appropriate.".
        No. 87, in page 16, line 41, leave out subsection (2).—[Miss Melanie Johnson.]

      Clause 39

        VARIATION ETC AT REQUEST OF AUTHORISED PERSON
        Amendment made: No. 88, in page 17, line 20, leave out subsection (2).—[Miss Melanie Johnson.]
        6 pm

      Clause 39

        VARIATION ETC AT REQUEST OF AUTHORISED PERSON
        Mr. Flight: I beg to move amendment No. 206, in page 17, line 27, after "it", insert "after receiving representations".
        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 91, 94, 95, 97 and 99 to 103.
        Mr. Flight: As the Government will be aware, one of the problematic areas with regulation to date has been the

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        approval or turning down of applications to become authorised, and any dispute arising from that. Amendment No. 206 would simply require that the FSA should first receive representations from the relevant applicant before refusing an application. It is designed, in part, to save time and hassle with the complaints investigator which, I repeat, is one of the main areas in which complaints of FSA conduct has arisen.
        The other amendments in the group are Government amendments. They seem to redraft clause 40, focusing the FSA's powers regarding cancelling permissions on protective as opposed to punitive measures, specifically on failing
        "to satisfy the threshold conditions",
        and failing to have carried on a registered activity for 12 months. However, we are not comfortable with those provisions described as generally protecting the interests of consumers or potential consumers in relation to a regulated activity. As we see it, that should be, and is, part of the threshold conditions, and would be better incorporated in the first ground just described. The provisions give the FSA carte blanche to invent a new ground to vary or cancel permission, using its powers under clause 40 in whatever way it sees fit. I cannot think that that is really the Government's intention.
        Mr. Timms: The Government's amendments in this group deal with the FSA's own-initiative power to vary or cancel an authorised person's permission under clause 40. Amendments Nos. 91, 94 and 95 redraft clause 40(1), focusing that power on protective measures, as opposed to the punitive measures provided for under part XIII. I think that that move would be generally welcomed.
        The grounds for the FSA to take action under the clause to vary or cancel a part IV permission are to be limited to failing, or being likely to fail, to satisfy the threshold conditions, as case A in the text provides; failing to carry on a regulated activity during a period of 12 months, as case B provides; and protecting the interests of consumers or potential consumers in relation to regulated activity, as described in case C. The former grounds of contravening or being likely to contravene a requirement and recklessly or knowingly misleading the FSA, which both came under case B, are now omitted.
        Clearly, these matters may inform the FSA's assessment of the extent to which the authorised person meets the threshold conditions or may give grounds for considering that the interest of consumers may be under threat. However, they will not be grounds in their own right for action under this clause. The purpose is to establish a clearer line between the grounds for varying permission and the grounds for taking disciplinary action under part XIII of the Bill. The remaining amendments are consequential or minor drafting amendments.
        I listened to the explanation of amendment No. 206. I did not understand immediately whether the amendment's reference to "representations" meant representations from consumers or the applicant, but the hon. Member for Arundel and South Downs (Mr. Flight) made it clear that it refers to the applicant.
        The Bill already provides for representations from the applicant—first, when he makes his application; secondly, if the authority proposes to refuse an application, clause 49
        294
        ensures that he will have an opportunity to make representations through the warning notice, decision notice mechanism in the usual way. I think that it would be quite a serious constraint if the FSA were not allowed to refuse an application simply because no representations had been forthcoming. I think that we would all agree that that is not right, but it could be implied by the amendment. There is a mechanism through the arrangements under clause 49, and I hope that the hon. Gentleman accepts that that is adequate and feels able, on that basis, to withdraw amendment No. 206.
        Mr. Flight: There is a slight issue as to whether clause 49 needs the amendment to tie the two things together. I think that there is a debate as to whether it would be better if the FSA needed to have received representations before declining an applicant—it could save time and hassle. However, on the grounds that the main part of our intent is covered elsewhere, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.
        Amendments made: No. 89, in page 17, line 31, at end insert—
        "( ) If, as a result of a variation of a Part IV permission under this section, there are no longer any regulated activities for which the authorised person concerned has permission, the Authority must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.".
        No. 90, in page 17, line 32, after "permission" insert "under this section".—[Miss Melanie Johnson.]

      Clause 40

        VARIATION ETC ON THE AUTHORITY"S OWN INITIATIVE
        Amendments made: No. 91, in page 17, line 36, leave out from "vary" to "in" and insert—
        "a Part IV permission in any of the ways mentioned in section 39(1) or cancel it".
        No. 92, in page 17, line 39, leave out from "that" to "in", in line 40, and insert—
        "the authorised person is failing, or is likely to fail, to satisfy the threshold conditions".
        No. 93, in page 17, line 41, leave out "the authorised person concerned" and insert "he".
        No. 94, in page 18, line 3, leave out from beginning to end of line 7.
        No. 95, in page 18, line 14, leave out from beginning to end of line 24.
        No. 96, in page 18, line 25, leave out subsection (2).
        No. 97, in page 18, line 29, leave out subsection (3).
        No. 98, in page 18, line 32, at end insert—
        "( ) If, as a result of a variation of a Part IV permission under this section, there are no longer any regulated activities for which the authorised person concerned has permission, the Authority must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.".
        No. 99, in page 18, line 35, leave out "Part IV".
        No. 100, in page 18, line 37, leave out subsection (5).—[Miss Melanie Johnson.]

      Clause 41

        VARIATION OF PERMISSION ON ACQUISITION OF CONTROL
        Amendments made: No. 101, in page 18, line 42, leave out
        "as mentioned in section 150".
        No. 102, in page 19, line 7, at end insert—
        "( ) Any reference to a person having acquired control is to be read in accordance with Part XI.".—[Miss Melanie Johnson.]

      Clause 42

        EXERCISE OF POWERS IN SUPPORT OF OVERSEAS REGULATOR
        Amendment made: No. 103, in page 19, line 25, leave out from "any" to "may", in line 26, and insert—
        "case in which the Authority does not consider that the exercise of its own-initiative power is necessary in order to comply with a Community obligation, it"—[Miss Melanie Johnson.]

      Clause 43

        PROHIBITIONS AND RESTRICTIONS
        Mr. Timms: I beg to move amendment No. 104, in page 20, line 1, leave out from "Authority" to end of line 12 and insert—

        (a) on giving a person a Part IV permission, imposes an assets requirement on him; or

        (b) varies an authorised person's Part IV permission so as to alter an assets requirement imposed on him or impose such a requirement on him.

        (1A) A person on whom an assets requirement is imposed is referred to in this section as "A".
        (1B) "Assets requirement" means a requirement under section 38—

        (a) prohibiting the disposal of, or other dealing with, any of A's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings; or

        (b) that all or any of A's assets, or all or any assets belonging to consumers but held by A or to his order, must be transferred to and held by a trustee approved by the Authority."

        Mr. Deputy Speaker: With this it will be convenient to discuss the following: amendment No. 208, in page 20, line 8, after "by", insert "A".
        Amendment No. 209, in page 20, line 15, leave out
        "in connection with the imposition"
        and insert "for the purposes.".
        Government amendment No. 106.
        Amendment No. 210, in page 20, line 24, after insert—
        "or any other duty which it may owe A".
        Government amendments Nos. 107 to 109.
        Amendment No. 211, in page 20, line 40, after "liquidator", insert "or administrator".
        Government amendment No. 110.
        Amendment No. 212, in page 20, line 43, after "A", insert "or the Authority".
        Amendment No. 213, in page 20, line 46, after "A", insert "or the Authority".
        Government amendments Nos. 111 and 127.
        Mr. Timms: This group contains a number of drafting amendments to clause 43, which deals with the effect that prohibitions or restrictions imposed as a requirement by the FSA on a firm's dealings or assets may have on third parties, such as the firm's bank.
        The Opposition amendments, which are largely drafting amendments, are interesting. We are particularly interested in the suggestion in amendment No. 208 to insert "A". That amendment would be rendered ineffective by amendment No. 104, but the drafting suggestion has now been incorporated in that amendment. Amendment No. 208 was tabled in time for us to do that, and we are grateful to Conservative Members for bringing that suggestion forward.
        Amendment No. 209 is also the subject of amendments Nos. 104 and 105 and other consequential amendments, which have the effect of removing the distinction between the main requirement and any connected requirement that amendment No. 209 seeks to clarify. I hope that Conservative Members will be satisfied with that arrangement.
        Amendments Nos. 210 to 213 make further interesting drafting suggestions, and we would like to consider them further with the parliamentary draftsman. On that basis, I hope that the amendments will be withdrawn.
        Mr. Heathcoat-Amory: I am grateful to the hon. Gentleman for having accepted one of our amendments, or at least incorporating it in one of his. We realise that amendment No. 208 is not exactly the stuff by which Governments rise and fall. Nevertheless, it was an attempt to tidy up the clause and make it a little clearer by ensuring that in referring to A's assets we also include assets belonging to investors but held by A, or to A's order. I think that that phrase is a little clearer than the one that left out one of the A's. The Minister said that that had been graciously accepted.
        I should mention a few other amendments. The Minister kindly said that he was interested in them, which is code for saying that he may be minded to accept some of them. Amendment No. 211 was intended to make it clear that references to a liquidator should also include administrators. Today, companies frequently go not into liquidation but into administration in an attempt to keep going and recover assets. I think that we have copied that practice from the United States, although I am no expert. Usually, administration is preferable if there is an opportunity to save the firm concerned. The Minister may consider whether references to the liquidator should include the administrator too.
        I am not sure whether the Minister was minded to accept amendment No. 212. If he was, he would be changing the attitude that he and the Economic Secretary adopted in Committee, where they appeared to think the amendment unnecessary. Its purpose is to ensure that assets held by trustees are recoverable for investors; otherwise, someone under investigation could plant assets in the hands of trustees. I assume that that is the reason behind the provision in the Bill, and it is a valid reason.
        However, our point is that if the principal fails to give notice to the trustee, the authority should have powers to give written notice to the trustee. There is no great danger here of excessive bureaucracy, or of one body leaving it to the other to issue the written notice. In all cases, I expect that the authority would issue a written notice to

        297
        the trustee. If the authorised person also wrote, then two pieces of paper would exist—but it is better to be safe than sorry. I urge the Government at least to consider amendment No. 212, possibly with a view to accepting it in the other place.
        Mr. Timms: I am grateful to the right hon. Gentleman for those remarks, and we will reconsider amendment No. 212 in the light of what he has said.
        Amendment agreed to.
        Amendments made: No. 105, in page 20, line 13, leave out subsection (2)
        No. 106, in page 20, line 18, leave out "(1)(a)" and insert "(1B)(a)".
        No. 107, in page 20, line 34, leave out "(1)(b)" and insert "(1B)(b)".
        No. 108, in page 20, line 35, after "released" insert "or dealt with".
        No. 109, in page 20, line 37, leave out "(1)(b)" and insert "(1B)(b)".
        No. 110, in page 20, line 42, leave out "(1)(b)" and insert "(1B)(b)".
        No. 111, in page 21, line 8, leave out "(1)(b)" and insert "(1B)(b)".—[Miss Melanie Johnson.]

      Clause 45

        AUTHORITY'S DUTY TO CONSIDER OTHER PERMISSIONS ETC.
        Amendments made: No. 112, in page 21, line 28, leave out "qualifying for authorisation under" and insert
        "authorised as a result of".
        No. 113, in page 21, line 33, at end insert "and".
        No. 114, in page 21, line 34, leave out from "Treaty" to end of line 35.—[Miss Melanie Johnson.]

      Clause 48
        WHEN PERMISSION IS GIVEN
        Amendment made: No. 407, in page 22, line 32, leave out clause 48.—[Miss Melanie Johnson.]
      Clause 53
        PROHIBITION ORDERS
        Amendment made: No. 116, in page 25, line 1, leave out subsection (7).—[Miss Melanie Johnson.]
      Clause 58
        DETERMINATION OF APPLICATIONS
        Amendment made: No. 117, in page 27, line 11, leave out "rules under section 110" and insert "general rules".—[Miss Melanie Johnson.]
      Clause 61

        CONDUCT: STATEMENTS AND CODES
        Amendments made: No. 249, in page 28, line 24, after "code" insert 'issued'.
        No. 250, in page 28, line 31, at end insert—
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        "( ) The Authority may at any time alter or replace a statement or code issued under this section.
        ( ) If a statement or code is altered or replaced, the altered or replacement statement or code must be issued by the Authority.
        ( ) A statement or code issued under this section must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention to the public.".
        No. 251, in page 28, line 32, leave out "issued under subsection (2)" and insert—
        "published under this section and in force".
        No. 252, in page 28, line 37, at end insert—
        "( ) A person is not to be taken to have failed to comply with a statement of principle if he shows that, at the time of the alleged failure, it or its associated code of practice had not been published.
        ( ) The Authority must, without delay, give the Treasury a copy of any statement or code which it publishes under this section.".
        No. 253, in page 28, line 40, leave out "for different cases" and insert—
        "in relation to persons, cases or circumstances of different descriptions.".
        No. 254, in page 28, line 42, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of a statement or code published under this section.".—[Miss Melanie Johnson]

      Clause 62

        STATEMENTS AND CODES: PROCEDURE
        Amendments made: No. 255, in page 29, line 1, leave out from beginning to "must" and insert—
        "Before issuing a statement or code under section 61, the Authority".
        No. 256, in page 29, line 4, leave out "a statement" and insert—

        "(a) a cost benefit analysis; and

        (b) notice".

        No. 257, in page 29, line 5, leave out
        "before the end of a specified period"
        and insert "within a specified time".
        No. 258, in page 29, line 7, leave out "a" and insert "the proposed".
        No. 259, in page 29, line 8, leave out "(2)" and insert "(2)(b)".
        No. 260, in page 29, line 8, at end insert—
        "(3A) If the Authority issues the proposed statement or code it must publish an account, in general terms, of—

        (a) the representations made to it in accordance with subsection (2)(b); and

        (b) its response to them.

        (3B) If the statement or code differs from the draft published under subsection (1) in a way which is, in the opinion of the Authority, significant—

        (a) the Authority must (in addition to complying with subsection (3A)) publish details of the difference; and

        (b) those details must be accompanied by a cost benefit analysis.

        (3C) Neither subsection (2)(a) nor subsection (3B)(b) applies if the Authority considers—

        (a)that, making the appropriate comparison, there will be no increase in costs; or

        (b) that, making that comparison, there will be an increase in costs but the increase will be of minimal significance.".

        No. 261, in page 29, line 9, leave out "Subsection (1) does" and insert—
        "Subsections (1) to (3C) do".
        No. 262, in page 29, line 10, leave out "it" and insert "them".
        No. 263, in page 29, line 12, leave out paragraph (a).
        No. 264, in page 29, line 13, leave out from "61" to end of line 14.
        No. 265, in page 29, line 15, leave out "the statement or code" and insert—
        "a draft published under subsection (1)".
        No. 266, in page 29, line 16, at end insert—
        "( ) This section also applies to a proposal to alter or replace a statement or code.".
        No. 267, in page 29, line 17, leave out subsections (7) to (12).
        No. 268, in page 29, line 28, at end insert—
        "( ) 'Cost benefit analysis' means an estimate of the costs together with an analysis of the benefits that will arise—

        if the proposed statement or code is issued; or

        if subsection (3B)(b) applies, from the statement or code that has been issued.

        () 'The appropriate comparison' means—

        (a) in relation to subsection (2)(a), a comparison between the overall position if the statement or code is issued and the overall position if it is not issued;

        (b) in relation to subsection (3B)(b), a comparison between the overall position after the issuing of the statement or code and the overall position before it was issued.".—[Miss Melanie Johnson.]

      Clause 63
        DISCIPLINARY POWERS
        Amendment made: No. 269, in page 30, line 11, leave out from "when" to "is" and insert "a warning notice.—[Miss Melanie Johnson.]
      Clause 67

        PRACTICE STATEMENTS AND GUIDANCE
        Amendment made: No. 270, in page 31, line 5, leave out from "and" to end of line 11 and insert—
        "issue a statement of its policy with respect to—

        (a) the imposition of penalties under section 63; and

        (b) the amount of penalties under that section.".—[Miss Melanie Johnson.]

        Mr. Timms: I beg to move amendment No. 271, in page 31, line 11, at end insert—
        "( ) The Authority's policy in determining what the amount of a penalty should be must include having regard to—

        (a) the seriousness of the misconduct in question in relation to the nature of the principle or requirement concerned;

        (b) the extent to which that misconduct was deliberate or reckless; and

        (c) whether the person on whom the penalty is to be imposed is an individual.".

        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendment No. 278.
        Mr. Timms: Amendment No. 271 is a response to the committee chaired by Lord Burns. In the Standing
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        Committee, we introduced amendments to equivalent provisions in clause 67 in order to set out several specific factors that the FSA should take into account when deciding on the level of penalty to be imposed. Amendment No. 271 sets out those factors for clause 67, and they mirror those in clause 185.
        Briefly, those factors are: the seriousness of the misconduct in question; the extent to which the misconduct was deliberate or reckless; and whether the person on whom the penalty is to be imposed is an individual.
        6.15 pm
        Amendment No. 278 introduces consistency with the equivalent provisions for discipline under part VI on official listing, part VII on market abuse and part XIII on disciplinary measures for authorised persons. The amendment imposes an obligation on the FSA to have regard to published policy in force at the time when the misconduct took place. These are points of consistency to standardise clause 67 with equivalent provisions elsewhere in the Bill.
        Amendment agreed to.
        Amendments made: No. 272, in page 31, line 12, leave out "any material published" and insert—
        "or replace a statement issued".
        No. 273, in page 31, line 14, leave out from "If' to end of line and insert—
        "a statement issued under this section is altered or replaced, the Authority must issue the altered or replacement statement.".
        No. 274, in page 31, line 15, leave out subsection (5) and insert—
        "(5) The Authority must, without delay, give the Treasury a copy of any statement which it publishes under this section.".
        No. 275, in page 31, line 17, leave out subsection (6) and insert—
        "(6) A statement issued under this section must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention of the public.".
        No. 276, in page 31, line 19, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of the statement.".
        No. 277, in page 31, line 20, leave out subsection (7).
        No. 278, in page 31, line 25, leave out subsection (8) and insert—
        "(8) In exercising, or deciding whether to exercise, its power under section 63 in the case of any particular misconduct, the Authority must have regard to any statement of policy published under this section and in force at the time when the misconduct in question occurred.".
        No. 279, in page 31, line 28, leave out subsection (9).—[Miss Melanie Johnson.]

      Clause 71

        APPLICATIONS FOR LISTING
        Mr. Timms: I beg to move amendment No. 408, in page 33, line 5, leave out "company" and insert "body".
        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 409 to 417.
        Mr. Timms: As hon. Members will have realised, we are not yet able to introduce amendments to part VI and

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        other parts of the Bill to take account of the decision to transfer the competent authority function from the London stock exchange to the FSA. Changes of that sort at this stage in the Bill's progress raise complicated drafting issues, although the policy itself is relatively straightforward. We shall produce amendments consequential to the proposed transfer in another place.
        The amendments make relatively minor changes to part VI, largely in response to points raised by the Law Society, to which we are grateful. The exceptions are the changes to clauses 80 and 90, which change coverage of criminal offences to ensure equal treatment of all who might breach the prohibitions of those clauses. I hope that the amendments will be widely welcomed.
        Mr. Flight: The Opposition welcome the amendments in the main, but we wonder why the Government felt it right to follow the Law Society's recommendation to make breaches by authorised firms a criminal offence, like breaches by anyone else. That contrasts with the present position, and breaks the general rule that contraventions of regulatory rules by authorised firms are not criminal offences. It would be desirable to have the Government's thinking on that point on the record.
        Mr. Tim Loughton: I, too, should make a couple of points because I am slightly alarmed that we have before us only a few technical amendments when we were promised in Committee that there would be more substantial and detailed amendments, particularly to clause 87 and the listing details. I too would like an answer on why amendment No. 410 provides that authorised firms should face criminal charges if they fail to publish a prospectus.
        In Committee, we raised serious problems concerning the Chinese walls between the FSA' s roles as a competent authority and as a regulator. The balance seems not to be right. If the FSA fails to act on listing particulars in a listing application within six months, the application will be deemed to have failed, regardless of the fact that that may be entirely down to the incompetence of officials acting for the FSA.
        The amendment seems to swing the scales the other way, in that criminal charges can be brought against authorised firms which issue prospectuses, while incompetence from the FSA is subject to full immunity. I refer the House to the questions that we put in Standing Committee A on the listing particulars; they are recorded in my contribution to the Committee's proceedings on 28 October 1999, in Hansard, from column 607 onwards. The Minister promised us further details, and we assumed that we would have received them by this stage.
        We need further information as to how the fine income from listing abuse will be used. Will it be rebated against fees or against the legal aid scheme? In France, for example, that income goes straight to the Treasury rather than to the equivalent of the FSA. How will the Chinese walls work, between the competent authority bringing in more revenue in its role as rule maker and enforcing the rule book? There will be a temptation to relax the rules in order that more companies should be in the listing, thus providing more listing revenue for the FSA in its role as competent authority.
        That raises the issue that, currently, the stock exchange, as the competent authority, is effectively monitored by the regulator—the FSA. Who will monitor the FSA when it acts
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        as the competent authority? Those additional powers are open to abuse. How will those additional roles be resourced? As we shall see when we discuss later clauses, that is a most important question, given the extra functions that the FSA is apparently taking on.
        What happens if the FSA loses its role as the competent authority? There are many questions. It has been many months since the late summer, when it was announced that the role of the stock exchange as competent authority was to be given over to the FSA. It is disappointing that we can consider only a few technical amendments at present, when much more meat should have been provided for us on Report. I very much want an answer to the questions that we have raised on amendment No. 410.
        Mr. Timms: The whole House welcomes the moves towards competition in this matter. We welcome NASDAQ's announcement that it wants to establish its European base in London. We also welcome other initiatives.
        Some far-reaching amendments will be needed to allow us to introduce competition. In Committee, my hon. Friend the Economic Secretary to the Treasury pointed out that we should table such amendments in due course. As I said earlier, we cannot yet do that, but we shall be able to do so in another place.
        The hon. Members for Arundel and South Downs (Mr. Flight) and for East Worthing and Shoreham (Mr. Loughton) asked questions about amendment No. 410 and clause 80. Clause 80 provides that it is unlawful to offer securities to the public in the UK, prior to the publication of a prospectus, in circumstances where clause 79 requires such a prospectus. It sets out the consequences of such an unlawful action, dealing differently with authorised persons and all other people.
        If an authorised person engages in an unlawful offer of that sort, he is treated as having contravened rules, and may be subject to disciplinary action by the FSA. If any other person takes similar action, he will be guilty of a criminal offence and will be liable to a fine or to imprisonment.
        We reviewed the case for that stark difference in treatment and concluded that we should not continue to distinguish between the authorised and the unauthorised in that way. The amendments subject all persons to the same offence and to the same penalties. That outcome could have been achieved by providing that both should be regarded as contravening FSA rules—that too would have been consistent.
        However, it is a fundamental principle that only those persons who want to undertake financial services business should be the subject of FSA rules. It is hard to see how the system could work in any other way. How would the FSA discipline people breaking its rules who were not authorised? It would obviously not be able to withdraw authorisation.
        In answer to the question, "Why introduce a criminal offence?", we are primarily driven by consistency. There is a lack of clarity as to whether the offence, when committed by an authorised person, would be regarded as a criminal matter under the European convention on human rights. As I noted, it is difficult to understand why behaviour committed by unregulated persons should be criminal, but when committed by regulated persons—who should be more expert—it is not. The amendments make matters more consistent.

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        Who will look after the FSA? The FSA will be accountable to Treasury Ministers—as the stock exchange is at present. However, there will be a much fuller consideration of those matters when amendments are tabled in the other place.
        Amendment agreed to.

      Clause 77
        EXEMPTIONS FROM DISCLOSURE.
        Amendment made: No. 409, in page 35, line 42, after "in" insert "listing".—[Miss Melanie Johnson.]
      Clause 80

        PUBLICATION OF PROSPECTUS.
        Amendments made: No. 410, in page 37, line 7, leave out subsection (2).
        No. 411, in page 37, line 9, leave out "Any other" and insert "A".—[Miss Melanie Johnson.]

      Clause 83

        COMPENSATION FOR FALSE OR MISLEADING PARTICULARS.
        Amendments made: No. 412, in page 38, line 18, leave out
        "But this section is subject to the"
        and insert—
        "Subsection (1) is subject to".
        No. 413, in page 38, line 26, at end insert—
        "( ) Subsection (4) is subject to exemptions provided by Schedule 9".
        No. 414, in page 38, line 41, after "particulars'" insert—
        ", in subsection (1) and Schedule 9,".—[Miss Melanie Johnson.]

      Clause 86

        STATEMENT OF POLICY.
        Amendments made: No. 280, in page 39, line 38, leave out "publish" and insert "issue".
        No. 281, in page 39, line 41, leave out from "to" to end of line 42 and insert—
        "any policy statement published under this section and in force at the time when the contravention in question occurred.".
        No. 282, in page 40, line 1, leave out from "publish" to end of line 3 and insert—
        "a statement issued under this section in the way appearing to the competent authority to be best calculated to bring it to the attention of the public.".
        No. 283, in page 40, line 3, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of the statement.".
        No. 284, in page 40, line 4, leave out subsection (6).—[Miss Melanie Johnson.]

      Clause 89

        OBLIGATIONS OF ISSUERS OF LISTED SECURITIES.
        Amendment made: No. 415, in page 40, line 35, leave out "securities were listed" and insert—
        "listed securities were admitted to the official list".—[Miss Melanie Johnson.]

      Clause 90

        ADVERTISEMENTS ETC IN CONNECTION WITH LISTING APPLICATIONS.
        Amendments made: No. 416, in page 41, line 3, leave out subsection (2).
        No. 417, in page 41, line 5, leave out "Any other" and insert "A".—[Miss Melanie Johnson.]

      Clause 95

        MARKET ABUSE.
        Mr. Flight: I beg to move amendment No. 457, in page 43, line 20, leave out
        "in relation to the market".
        Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 458, in page 43, line 23, leave out "based on" and insert "significantly influenced by".
        No. 459, in page 43, line 26, leave out "relevant" and insert "material".
        No. 460, in page 43, line 26, leave out
        "when deciding the terms on which"
        and insert—
        "in deciding whether or not to enter into".
        No. 461, in page 43, line 27, after first "in", insert "qualifying".
        No. 462, in page 43, line 29, leave out
        "supply of, or demand for"
        and insert "market in".
        No. 463, in page 43, line 30, after first "of', insert "qualifying".
        No. 464, in page 43, line 33, after first "in", insert "qualifying".
        No. 465, in page 43, line 34, leave out from beginning to "that" in line 36 and insert—
        "The behaviour of a particular person or persons is not to be taken to amount to market abuse where".
        No. 466, in page 44, line 16, after "analysis", insert
        "(whether or not requiring the exercise of any expertise)".
        No. 467, in page 44, line 17, after first "of', insert—
        "or for the benefit of'.
        No. 468, in page 44, line 17, after "market", insert—
        "or can be obtained by them on payment of a fee".
        No. 469, in page 44, line 19, after "conforms", insert—
        ", or which is deemed to conform,".
        No. 470, in page 44, line 19, after "rules", insert—
        ", or would so conform (or would be deemed to so conform) if the person whose behaviour is in question were an authorised person,".
        No. 471, in clause 97, page 45, line 18, leave out subsection (2).
        No. 474, in clause 99, page 45, line 30, after "98", insert—
        "and the exercise of its powers under section 104".
        No. 475, in page 45, line 31, after "section", insert—

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        "and the extent to which any penalties already imposed by the court under section 104 will be taken into account in determining any subsequent penalty imposed by the Authority in relation to the same market abuse".
        No. 473, in page 45, line 33, after "must", insert—
        "adhere to the principle of proportionality and must".
        No. 472, in page 45, line 37, leave out "or reckless".
        Government amendments Nos. 118 to 120.
        No. 476, in clause 104, page 47, line 30, at end insert—
        "(2A) In exercising its power under subsection (2) the court must have regard to any statement of policy issued under section 99.
        (2B) In imposing any penalty under this section the court must have regard to any penalty already imposed by the Authority, in relation to the same market abuse.".
        No. 9, in clause 344, page 177, line 19, after "effect", insert—
        "and the extent to which the market abuse was deliberate or reckless".
        No. 10, in clause 345, page 178, line 27, at end insert—
        "(d) in a case within paragraph (b) of subsection (2), to the extent to which the market abuse was deliberate or reckless.".
        Mr. Flight: As the House will be aware, provisions on market abuse are one of the most important technical parts of the measure. It is crucial for Britain's international competitiveness as well as for human justice that this aspect be correct, and that there should be clarity and fairness.
        The Minister may be aware that almost all our amendments arise from discussions with the Law Society; I shall address the more important of them. I was pleased that the Minister welcomed the Law Society's proposals on another aspect of the measure, so I trust that the Government will also welcome them in this difficult part of the Bill.
        The Government may be aware that there is considerable controversy over the recent Bertrand Fleurose case, which came before the Securities and Futures Authority. The legal position appeared to be that the tribunal needed to judge the matter according to the rules rather than according to concepts of fairness or human rights; nor could it proceed as though the Human Rights Act 1998 were already in force.
        Although, in some ways, market abuse cases have been protected against claims that they might infringe the concept of human rights, it is still important that any market abuse proceedings are not technically problematic and that they are seen to be absolutely fair.
        I wish to discuss the key amendments in this rather large group. Amendment No. 459 would change the word "relevant" to "material" in relation to the information on market abuse. "Relevant" seems to us and to the Law Society a considerably vague and wide term. "Material" is a more precise concept.
        6.30 pm
        Amendment No. 460 would change the words
        "when deciding on the terms on which"
        to the phrase
        "in deciding whether or not to enter into".
        That would revive the wording that was in the Bill before its Committee stage. The relevant information needs to be causative, as it was in the Bill's original drafting. If the Government's intention was to narrow the offence by changing the wording, they have not achieved their aim.
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        Amendment No. 462 would amend the wording in relation to creating a false market so that it reflects the criminal offence of market manipulation. It is appropriate that the FSA and the criminal codes should reflect each other.
        Amendment No. 465 is particularly important. It is designed to provide a clear safe harbour when an individual believes that he did not commit an offence and had taken care to avoid committing an offence. The current drafting of clause 95 will leave the FSA the discretion to take such matters into account, but it does not make it clear whether it will provide fair safe harbour.
        Amendment No. 469 would add the concept of a firm being deemed to conform to FSA rules. In certain circumstances, the FSA would be empowered to treat a firm as conforming when it has conformed to certain other relevant rules.
        Amendments Nos. 473 and 475 are about penalties. Amendment No. 473 would require the FSA's policy on penalties to adhere to the principle of proportionality; and amendment No 475 would prescribe that, if a penalty had already been imposed by a court, that should be taken into account in any subsequent FSA penalty for market abuse.
        Amendments Nos. 9 and 10 relate to restitution orders by both the court and the FSA. They would prescribe that the court and the FSA should take account of whether the market abuse committed was deliberate or reckless.
        Finally, have the Government completed their amendment of the clauses on market abuse? Given that the Law Society's comments appeared late, do they intend to reflect on them before the Bill goes into Committee in the other place?
        Mr. David Ruffley: I support the amendments because I have spoken to a few people in the City of London with whom I worked in a previous career. They are solicitors and have some concern. I acknowledge, however, the sensible changes that Ministers made in Committee. Anyone who has read those debates in the Official Report cannot fail to have anything but a great deal of affection for them—they did their very best to listen when they tried to recast clause 95 and the related clauses on market abuse.
        As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) made clear, they are exceedingly important clauses. They are important because they send a strong message to those who wish to trade in this country, to operate in the City of London or to consume financial services provided by the square mile. Those who engage in the market want to see fairness and transparency. If the clauses cannot provide that, our international competitiveness will suffer and business will move elsewhere.
        The amendments and the clauses show the clear importance for professional bodies of the definition of "intent" and whether the provisions on the intent to commit abusive behaviour are sufficiently tightly drawn. These powerful amendments would entrench more clearly in the Bill the requirement that intent must be shown before an offence of abusive behaviour is committed. They do not relate just to the intent of market participants but deal also with the question of whether the clauses protect non-market participants. The power of the FSA to impose market abuse penalties other than on participants in the market should be limited to cases in which abusive behaviour was not reckless but intended.

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        I wish to refer to a powerful comment that was made by Lord Hobhouse who, in an evidence-giving session, expressed concern about these clauses and the provisions on market abuse. He said:
        "All those things when one adds them together add up to a scheme for punishing people who may be abroad, who may not be taking any active part in any market in this country, who have not done anything illegal, whose conduct is innocent, who are under no duty to act where they are accused of failing to act, and nevertheless punishing them for such conduct."
        The amendments seek, in a modest way, to address some of those fears.
        With amendment No. 457, we need to flush out how precisely the Economic Secretary believes that clause 95(1)(c) will catch off-market transactions. For example, will she tell us whether a commodity producer who trades not on the UK markets but on his home market could be caught by a provision for a worldwide squeeze on abuse? Could he be caught by the clause? If he could, what legal advice have Ministers received about the enforcement of the clause under private international law and on the conflict of laws?
        The second example of a UK-based person is someone who has never traded on any of the markets specified in the Treasury order, but who indulges in one or more off-exchange transactions. Will he be caught by the clause? I understand from the Minister's remarks in Committee, as recorded in Hansard, that there is an intention that such off-market participants should be caught. I have cited two examples, but there are many others. Will the Minister give an undertaking that the code of market conduct will set out in detail categories of off-market participants who will or will not be caught by clause 95(1)(c)?
        Amendment No. 458 is important because it concerns the definition of abusive behaviour and the link between actions that would constitute abusive behaviour, which seem remarkably weak and woolly. The words "based on" are too wide and introduce too much uncertainty; we therefore suggest replacing them with "significantly influenced by". The chain of causation would then be better defined and the ambit of the clause would not be too wide.
        On amendment No. 460, I can only endorse the remarks of my Front-Bench colleague, my hon. Friend the Member for Arundel and South Downs. The provisions dealing with safe harbours are very important. Ministers think that clause 95(3) provides a safe harbour, and they are apprised of the need for a clear safe harbour defence. Failure to include that defence will, for the reasons that I gave earlier, greatly damage the City and market participants.
        The difficulty in defining abusive behaviour arises with the phrase "regard must be had" because it gives the FSA wide discretion subjectively to decide what constitutes abusive behaviour. The language should be tightened, and amendment No. 465 would make the clause read:
        "The behaviour by a particular person or persons is not to be taken to amount to market abuse where"
        that person or those persons—the clause gives examples—
        "took care to avoid engaging in market abuse; or … believed that the behaviour in question would not amount to market abuse."
        That would clearly give comfort to innocent market participants. My hon. Friend gave the example of a vicar's wife in Somerset.
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        The amendment is important because it would require the FSA to consider the conditions in subsection 3(a) and (b); only those conditions should be considered in defining abusive behaviour. The amendment should not be objectionable to Ministers, because it pins down a precise definition.
        The remaining amendments in the group would tighten the Bill, provide more certainty and ensure that innocent participants were not inadvertently caught. Amendment No. 467 would make the clause refer to information provided "for the benefit of" users of a market. Equally, the reference to payment of a fee in amendment No. 468 would make it clear to whom the clause refers. That is helpful and should not be objectionable to Ministers. If they seek to oppose those amendments, particularly amendment No. 468, I will want to know why, as will players in the City, in a spirit of honest inquiry.
        6.45 pm
        I turn now to amendments No. 472 and 473. Why have Ministers included a reference to "reckless" behaviour in clause 99? Amendment No. 472 seeks to address that point, but I am not entirely clear why the term "reckless" has been introduced in that clause. It jars, and amendment No. 473, which would introduce the idea of proportionality, is particularly important.
        My hon. Friend drew attention to the importance of amendment No. 475, which would ensure that if fines were imposed by a court, they would not be disregarded by the FSA when it was calculating levels of damages in exercising its jurisdiction.
        For those reasons, I wholeheartedly support all the amendments in the names of my colleagues. I do so for only one reason: to ensure more certainty for market participants and the professionals in the City who do so much to make the square mile the top international financial services centre in the world.
        Miss Melanie Johnson: I shall try to run through the amendments in a sensible order and at appropriate points deal with the remarks that hon. Members have made. However, they have jumped around the order of the amendments slightly, so my comments may not exactly reflect the pattern of their speeches.
        I shall deal first with amendment No. 474. Clause 99 requires the FSA to prepare a policy statement with respect to the penalties that it may impose for market abuse. The amendment would require the statement also to cover circumstances in which the FSA might ask the court, under the provisions of clause 104, to impose a penalty for market abuse on a particular individual. The amendment is unnecessary. We expect the FSA to be transparent about its policies and to consult. Indeed, clause 7 requires it to maintain effective arrangements for consulting on the extent to which its general policies and practices are consistent with its general duties.
        There are some areas where, in addition, the Bill expressly requires the FSA to produce a policy statement. One of those areas is the FSA's own powers to impose penalties for market abuse. Legitimate concerns have been expressed about how the FSA will exercise its powers to impose the penalties, and the consultation draft of the Bill required the publication of a policy statement. The clause has subsequently been improved in line with the suggestions of the Burns committee to specify key factors to which the FSA should have regard.

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        Such concerns do not arise on the FSA's policy on what to bring before the courts. Although that will, of course, be informed by its policy on the imposition of penalties under its own powers, clearly we must draw the line on policy statements somewhere. More important will be the court's determination of the penalties imposed which, by definition, will not be a matter of FSA policy.
        Amendment No. 475 would amend clause 99 to provide that the FSA's policy statement must take into account the extent to which penalties already imposed by the court should be considered in determining any subsequent penalty that it might impose in relation to the same market abuse. Clearly, the FSA must take that issue into account when it arises, not least because, as the hon. Member for Bury St. Edmunds (Mr. Ruffley) acknowledged, it would be unjust to impose two penalties relating to the same set of circumstances. However, I do not see how the FSA can set out in advance the "extent" to which it would take account of any penalties previously imposed, as that would always depend on the circumstances of individual cases, including the amount of the penalty imposed.
        It is important to remember that the tribunal would have something to say if the FSA imposed penalties that were disproportionate in themselves or when considered together with penalties imposed by others. I therefore do not see what the amendment adds to the Bill. Although I understand the intention behind the amendment, I ask that it be withdrawn.
        Amendment No. 473 would require the FSA to adhere to the principle of proportionality in its policy on the amount of penalties that it will impose for market abuse. I have no quarrel with the sentiment—indeed, I agree with it—but the amendment is unnecessary.
        The FSA is already required to take account of the principle of proportionality. Clause 2 includes such a principle, and makes it clear that that applies to the discharge of the FSA's general functions. It goes on to provide that those functions include determining the policy and principles by reference to which it performs particular functions, which will of course include its policy in relation to penalties for market abuse. I hope that the hon. Gentleman will agree to withdraw the amendment.
        Clause 99 provides that the FSA's policy in respect of the amount of any penalty that it may impose for market abuse must take account of the extent to which the behaviour being penalised was deliberate or reckless. Amendment No. 472 would omit the requirement to take account of recklessness.
        Hon. Members will recall that clause 95, which defines market abuse, contains no reference to the intention of the person concerned. That was mentioned by the hon. Member for Bury St. Edmunds and others this evening. The reason is straightforward: unintentional abuse can be just as damaging to markets or third parties as abuse that is deliberate or reckless, so the onus is placed on those who choose to participate in markets to make sure that they do not cross the boundary from acceptable behaviour to market abuse.
        It is also right that once the fact of abuse has been proven, the state of mind of the person concerned should be taken into account in imposing any penalty. The fact
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        that a person had deliberately engaged in abuse must be relevant in considering the size of any penalty to be imposed, and the same principle applies if the behaviour was reckless. I hope that I have persuaded hon. Members not to press the amendment.
        Mr. Ruffley: Is it the hon. Lady's understanding that "reckless" will be defined as it is defined by the criminal courts and criminal case law?
        Miss Johnson: Many of the terms in the Bill, as with any law, will be interpreted by the courts.
        Amendment No. 476 would require the court, in imposing any penalty for market abuse under clause 104, to take account, first, of any statement of policy that the FSA has issued under section 99, and, secondly, of any penalty that the FSA has already imposed in respect of the same market abuse.
        On the first part of the amendment, it would be wrong to impose a legal obligation on the courts to take into account a policy statement prepared by and intended to guide another body—the FSA. However, there may well be occasions when the policy statement is relevant to the issue to be decided by the court, and there is nothing to prevent the person concerned from arguing that before the court. The court will decide the extent to which a policy statement is relevant.
        On the second part of the amendment, it should be pointed out that the court can impose a penalty under clause 104 only if the FSA has requested it do so. That is unlikely if the FSA had already imposed a penalty. If that unlikely situation ever materialised, the court could take it into account in deciding whether to impose a penalty, so there is no need for a statutory requirement.
        Many of the remarks of the hon. Member for Bury St. Edmunds related to amendment No. 457. Clause 95(1)(c) provides that behaviour can be market abuse only if a person fails to live up to the standards expected by a regular user of the market from someone in his position in relation to the market. The qualification
        "in relation to the market"
        is important. By removing it, amendment No. 457 would reduce the clarity of the provision and the protections available for market users.
        The new test, which we introduced in Committee, is aimed at filtering out behaviour that may come within the definitions of behaviour in clause 95(2), but which is not abusive because, in the circumstances, it was not a failure to meet standards that the market would reasonably expect of the person in question.
        One of those circumstances is clearly the position of the person in relation to the market—for example, whether he is an experienced investor in that market who can be assumed to know the effect of a particular action, or whether he owes duties to the market, possibly as the director of a listed company. Does he deal regularly on the market and can he be expected to know the market rules in detail? Such considerations will influence the view of the regular user in deciding whether the test is met.
        Perhaps an example would help. Suppose a person in an overseas country does something in accordance with rules or customs in that country which, nevertheless, affects the relevant market in the UK—for example, by

        311
        giving a misleading impression. Has he engaged in market abuse? His position in relation to the market is clearly important in determining whether abuse took place. If he was acting in accordance with customs and rules overseas and had no relationship with the UK market, it seems unlikely that his action would be considered abuse.
        A similar case was raised by the hon. Gentleman. It would be difficult to determine whether the commodity trader whom he mentioned had a relationship to the market. I hope that my examples make it clear why I do not consider his arguments in support of the amendment compelling.
        Amendment No. 458 would increase the hurdle for proving that misuse of information unavailable to the rest of the market was abusive. That would not be a helpful change. The current test is that the behaviour has to be based on information not generally available, but which a regular market user would consider relevant in deciding the terms on which transactions should be effected.
        The phrase "based on" is a high test already. The words "significantly influenced by" would make the test too stringent. If I have privileged information that a company is about to announce far greater than expected profits, is my decision to purchase the shares "significantly influenced" by the privileged information? It would certainly be possible to mount an argument that it was not, and that I thought that the company was a good bet anyway. It would be hard to prove otherwise.
        We discussed similar cases in Committee. The amendment could significantly weaken the market abuse regime. That is not to say that "based on" is a low threshold; it is not. It means that the behaviour has to be based on information.
        7 pm
        Let us consider amendment No. 459. It is sometimes difficult to know when to raise some issues. I shall begin by commenting on the remarks of the hon. Member for Bury St. Edmunds about Lord Hobhouse and the code of conduct. The hon. Gentleman quoted a section of Lord Hobhouse's remarks, which were also quoted by the right hon. Member for Wells (Mr. Heathcoat-Amory) in Committee. I shall not quote them again, because they will already be on the record. As my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard) said in response to the debate in Committee, the Burns committee had two anxieties about the original drafting of clause 95. We are not considering the original clause on Report. The Burns committee believed that the drafting contained a danger. Its first anxiety was about the European convention on human rights. The revised clause tackles that. The hon. Member for Bury St. Edmunds said that we should consider further anxieties about it.
        The hon. Gentleman also referred to market participants. We considered whether it was possible to define market participants in clause 95(1)(c). As I said in Committee, we discussed that not only with the FSA but with the practitioner group, and a group of exchange representatives, which was established to review the code. It became clear that such an approach would not be fruitful. We want to deter many types of abusive behaviour, and it would not make sense to try to limit the provision's scope by including definitions in subsection (1)(c). They would not be meaningful or practical.
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        Amendment No. 460 would reverse a change that we made in Committee. We made the change to focus on the terms of the transaction, not the decision about whether to enter into the transactions. Amendment No. 461 would make consequent drafting changes. I do not want to address them, except in relation to amendment No. 462, which would replace
        "supply of, or demand for"
        with "market in". I am not sure what we would gain from that change. Despite the attempts of the hon. Member for Bury St. Edmunds to explain it, I did not understand how the amendment would help.
        I shall comment on the later amendments. If hon. Members want to revert to the earlier amendments, I shall be happy to deal with their points. Several hon. Members spoke to amendment No. 471. Clause 96 requires the FSA to produce a code of market conduct. Clause 97(1) provides that when the code states that behaviour is not market abuse, a person who engages in that behaviour is not engaging in market abuse. The clauses therefore provides a complete defence and the safe harbour that hon. Members seek.
        Clause 97(2) provides that, in other circumstances, when people do not comply with the code, or their behaviour is not covered by it, the code
        "may be relied on so far as it indicates whether or not that behaviour"
        is abusive. That applies only when the code is in force. It would be wrong to be able to apply it retrospectively.
        In Committee, we discussed the highway code and the offence of driving without due care and attention. Like the highway code, the FSA code will carry evidential weight. That will provide for greater certainty in the regime, which will help the regulator and market users. I am surprised that Conservative Members want to remove it. If it did not exist, the FSA could give less weight to the code. That is not a desirable consequence.
        I come now to the amendments to clauses 344 and 345. Clause 344 grants the court the powers to order, on the FSA' s application, that a person who has engaged in market abuse and made a profit or caused others to make a loss should make a restitution. The amendments would change the clauses so that, in assessing the amount of restitution, the court or the FSA should have regard not only to the level of the profits or losses but
        "the extent to which the market abuse was deliberate or reckless".
        I cannot accept that. In formulating our policy on market abuse, we made it clear that it should cover not only deliberately or recklessly abusive behaviour, but negligent behaviour. There is a good reason for that. The damaging effects of abuse depend not on the state of the perpetrator's mind, but on the impact on markets and consumers.
        As I said earlier, we do not claim that intention or recklessness are irrelevant, but there are degrees of culpability. The fact that someone may have deliberately or recklessly engaged in abuse is relevant. Clause 99 deals with the penalties that can be imposed for abuse, and requires the FSA to take those factors into account in formulating its policy on the amount of the penalty.
        Restitution is different. A restitution order is intended to restore any loss that might have been incurred by others as a result of the abuser's action. The position is the same as that for breaches of FSA rules that lead to a loss for

        313
        consumers. Failure to observe a rule, which results in a loss to consumers, might not be due to the recklessness of an authorised firm. However, it would be wrong if consumers could not get their money back in such circumstances. That is a fundamental principle of restitution.
        The hon. Member for Arundel and South Downs (Mr. Flight) asked a general question about whether the Government had completed their amendments on market abuse, or whether more would be tabled in another place. We have no plans to table further amendments, but I cannot put my hand on my heart and swear that no more will be tabled, because we are considering a highly technical subject.
        Mr. Cousins: I have followed my hon. Friend's arguments as closely as I can, and I have been impressed not only by her clarity and moderation but by her robustness on behalf of consumer interests. She has taken a reasonably clear position with regard to another place. I want to reinforce her determination to ensure that her stand on behalf of consumers will be defended not only in the Chamber but in another place. I strongly endorse her position.
        Miss Johnson: I thank my hon. Friend for his understanding and support for our position and the modifications that we have made. I believe, as does my hon. Friend, that we have moved far enough to ensure that we are proposing a regime that will operate fairly on behalf of those who may fall into a category of committing market abuse. We have defined that properly and rightly. Any further amendments would be made only as a result of technical changes, not changes in the Government's position. We have got the balance right.
        Mr. Heathcoat-Amory: The House will be pleased to know that I shall not grind through the case for our amendments again, as it was ably put by my hon. Friends the Members for Arundel and South Downs (Mr. Flight) and for Bury St. Edmunds (Mr. Ruffley). They set out the arguments for a modest package that is largely in line with the requirements of the Law Society. Those arguments should be taken seriously by the Government as these provisions are most important, if only because they could affect everybody, not only the regulated community. Many of the other disciplinary powers relate to comparatively few professionals who form only a small proportion of the population even though they number many thousands, but market abuse could be committed by anyone who engaged in market activity and these measures could catch unintentionally people who have only an association with a market.
        The Government have tried to limit the provisions and I again concede that the proposal before us is much better than the one they started with, but further certainty is required. It is a basic requirement of justice that people should know in advance what behaviour is likely to be caught by a Bill and whether they would be subject to either the criminal law or civil law sanctions. That was at the root of many of the objections made by witnesses to the Burns committee. My hon. Friend the Member for Bury St. Edmunds quoted Lord Hobhouse and, although
        314
        the Minister came back to describe how the Bill had been altered since, many of the misgivings expressed last year are still valid.
        Our amendment would import greater clarity and certainty to the Bill. As the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) said, the protection of consumers is a perfectly valid objective for the market abuse provisions—indeed, that is one of the Bill's main aims—but the consumer interest will not be well protected if they are unworkable in any respect. If they fall foul of the courts or, worse, are tripped up by an adverse ruling at the European Court of Human Rights, the whole industry will suffer through lack of effective regulation. The consumer interest could also be jeopardised so it is important that the modifications are adequate.
        The Government have introduced provision for subsidised legal assistance when people are accused of such crimes and misdemeanours. It is important to recognise that those matters have aspects of the criminal law about them and that the defence that must be available must therefore measure up to criminal standards. That cannot be regarded as simply a matter for the civil law.
        I was slightly worried by the Minister's comments on the code of conduct. It is an important indicator of what might or might not be market abusive, but no substitute for clarity and certainty in the primary legislation. As I have said before, people will go to the primary legislation to find out where they stand in relation to the authority and the law and referring them to a voluminous code of conduct as a safe or partially safe harbour—if they have time to read it—will not entirely meet requirements.
        7.15 pm
        I was also a little worried by the Minister's comments on the fact that unintended abuse would still be caught. I understand what lies behind them, but it is dangerous to propose that we should rely entirely on the effect of an action and disregard the intention. She explained that the degree of intention in the market abuse would have to be taken into account in settling penalties, but I cannot help drawing the House's attention to the contrast between the treatment of people accused of market abuse and the protection given to the FSA when it engages in wrong behaviour unintentionally.
        The Government have been careful to ensure that the authority is not liable for unintended wrong behaviour when, for example, it acts negligently or even recklessly. They have erected a series of protections for the authority that are not available to the public or those accused of market abuse and that asymmetry—this is not the only example of it—causes some disquiet.
        Mr. Nigel Beard: Proof of intent has been debated several times and is being covered again now. Several cases of market abuse were notable because they were difficult to prove and people got away with it. Would not it be extremely difficult to prove market abuse if intent were introduced as the basis of proof and would not an awful lot of people still get away with it? The Bill eases the process of prosecution so that those who should be prosecuted and found guilty will be found guilty.
        Mr. Heathcoat-Amory: The hon. Gentleman makes the big claim that guilty people have got away with it.

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        I am not sure that I necessarily agree with that, but I agree that we want the regulations to be effective. The villains, crooks and thieves have to be brought to book and rigging a market is a form of fraud or theft, but my point that the proposal could be counter-productive unless the Government get it right remains valid. People could get away with genuine market rigging and market abuse because the Government have not listened to outside legal interests that are genuinely trying to improve the Bill. The Law Society falls into that category. It is certainly not on the side of the crooks; it is a comparatively disinterested trade body, if I may describe it as such, that is trying to make the Bill more effective.
        Liz Blackman: How else can market abuse be evidenced, other than in its effect?
        Mr. Heathcoat-Amory: I shall not go through the case for our amendments again, but I refer the hon. Lady to the arguments of my hon. Friend the Member for Arundel and South Downs, who proposed a modest amendment to tighten the provisions and to place greater emphasis on the concept of intent. If we do not do so, we could violate a fundamental principle of justice. Although I recognise the force of the Minister's arguments, I am nevertheless disturbed at the extent to which they are beginning to rely more on the effect of behaviour rather than intent in defining market abuse. Our amendment, which would not have completely removed the concept of unintended abuse, would have achieved an improvement.
        The Law Society has advanced those concerns, and suggestions for dealing with them. We do not intend to press any of these amendments to a Division at present. In her response, the Economic Secretary left the door very slightly ajar, so there may be an opportunity to return to these matters in the other place to get a regime to conquer market abuse that is effective without doing too much damage to the traditional principles of British justice.
        Mr. Flight: In the light of my right hon. Friend's comments, I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 96

        THE CODE
        Amendments made: No. 285, in page 45, line 1, leave out subsection (5) and insert—
        "(5) If the code is altered or replaced, the altered or replacement code must be issued by the Authority.
        (5A) A code issued under this section must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention to the public.".
        No. 286, in page 45, line 5, leave out subsections (6) to (8).
        No. 287, in page 45, line 13, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of the code.".—[Miss Melanie Johnson.]

      Clause 99

        STATEMENT OF POLICY
        Amendments made: No. 288, in page 45, line 28, leave out "publish" and insert "issue".
        No. 289, in page 45, line 40, leave out
        316
        "any statement of policy for the time being published"
        and insert "a statement issued".
        No. 290, in page 46, line 1, leave out
        "any statement of policy for the time being published"
        and insert "a statement issued".
        No. 291, in page 46, line 2, leave out "publish" and insert "issue".
        No. 292, in page 46, line 6, leave out "of policy".
        No. 293, in page 46, line 6, after "section" insert "and in force".
        No. 294, in page 46, line 8, leave out subsection (6) and insert—
        "( ) A statement issued under this section must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention to the public.".
        No. 295, in page 46, line 11, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of a statement published under this section.".
        No. 296, in page 46, line 12, leave out subsection (7).
        No. 297, in page 46, line 16, leave out "of policy".—[Miss Melanie Johnson.]

      Clause 103

        SUSPENSION OF INVESTIGATIONS
        Amendments made: No. 118, in page 47, line 6, leave out from "of' to "it" in line 7 and insert—
        "a power relating to market abuse".
        No. 119, in page 47, line 19, leave out from "powers" to "are" and insert "relating to market abuse".
        No. 120, in page 47, line 22, leave out "impose penalties" and insert—
        "appoint a person to conduct an investigation".—[Miss Melanie Johnson.]

      Clause 116

        ENDORSEMENT OF CODES ETC. ISSUED BY OTHER BODIES
        Amendments made: No. 298, in page 53, line 14, leave out subsections (6) to (11).
        No. 299, in page 53, line 29, leave out
        "(7), (8)(b), (9) and (11) apply"
        and insert
        "(1), (2)(d), (4), (5), (6)(a) and (10) of section 127 apply (with the necessary modifications)".—[Miss Melanie Johnson.]

      Clause 125

        RULE-MAKING INSTRUMENTS
        Amendment made: No. 300, in page 57, line 14, leave out from beginning to "the" in line 15 and insert—
        "(4) A rule-making instrument must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention or.—[Miss Melanie Johnson.]

      Clause 127

        CONSULTATION
        Amendments made: No. 301, in page 58, line 2, leave out from "analysis" to end of line 3.

        317
        No. 302, in page 58, line 5, leave out "a statement" and insert "an explanation".
        No. 303, in page 58, line 8, leave out "a statement" and insert "notice".
        No. 304, in page 58, line 10, leave out from beginning to second "the" and insert—
        "In the case of a proposal to make rules under a provision mentioned in subsection (8A),".
        No. 305, in page 58, line 12, leave out "those proposals are" and insert "the proposal is".
        No. 306, in page 58, line 15, leave out from first "the" to "to" in line 17 and insert—
        "Authority makes the proposed rules, it must publish an account, in general terms, of—

        (a) the representations made to it in accordance with subsection (2)(d); and

        (b) its response.".

        No. 307, in page 58, line 18, leave out
        "rules made by the Authority"
        and insert "the rules".
        No. 308, in page 58, line 21, leave out "publish a statement" and insert—
        "(in addition to complying with subsection (5)) publish details".
        No. 309, in page 58, line 22, leave out "the statement" and insert "those details".
        No. 310, in page 58, line 22, leave out from "analysis" to end of line 23.
        No. 311, in page 58, line 24, leave out "(3) and".
        No. 312, in page 58, line 27, leave out from beginning to "of in line 33 and insert—
        "( ) Neither subsection (2)(a) nor subsection (6)(b) applies if the Authority considers—

        (a) that, making the appropriate comparison, there will be no increase in costs; or

        (b) that, making that comparison, there will be an increase in costs but the increase will be".

        No. 313, in page 58, line 34, at end insert—
        "(8A) Neither subsection (2)(a) nor subsection (6)(b) requires a cost benefit analysis to be carried out in relation to rules made under—

        (a) section (Funding of the legal assistance scheme)(2);

        (b) subsection (1) of section 187 as a result of subsection (4) of that section;

        c) section 209;

        (d) paragraph 17 of Schedule 1.".

        No. 314, in page 58, line 38, after "rules", insert "that have been made".
        No. 315, in page 58, line 38, at end insert—
        "(11) 'The appropriate comparison' means—

        (a) in relation to subsection (2)(a), a comparison between the overall position if the rules are made and the overall position if they are not made;

        (b) in relation to subsection (6)(b), a comparison between the overall position after the making of the rules and the overall position before they were made.".—[Miss Melanie Johnson.]

      Clause 129
        GUIDANCE
        Amendment made: No. 418, in page 59, line 7, leave out "under this Act".—[Miss Melanie Johnson.]
      Clause 130
        NOTIFICATION OF GUIDANCE TO TREASURY
        Amendment made: No. 419, in page 59, line 34, leave out "Notice of an alteration" and insert "The notice".—[Miss Melanie Johnson.]
      Clause 131

        INTERPRETATION
        Amendment made: No. 316, in page 60, line 21, leave out
        "the Treasury and the Director may assume"
        and insert "it may be assumed".—[Miss Melanie Johnson.]

      Clause 132
        POWERS AND DUTIES OF THE TREASURY
        Amendment made: No. 317, in page 60, line 24, leave out Clause 132.—[Miss Melanie Johnson.]
      Clause 133

        POWER OF THE DIRECTOR TO REQUEST INFORMATION
        Amendment made: No. 447, in page 61, line 13, leave out "132" and insert
        "(Reports by Director General of Fair Trading)".—[Miss Melanie Johnson.]

      Clause 134

        THE COMPETITION ACT 1998
        Amendments made: No. 318, in page 61, line 40, leave out Clause 134.
        No. 319, in page 62, line 27, leave out Clause 135.—[Miss Melanie Johnson.]

      Clause 137

        AUTHORITY'S POWER TO REQUIRE INFORMATION
        Amendment made: No. 448, in page 64, line 15, at end insert—
        "( ) an operator, trustee or depositary of a scheme recognised under section 243 or 245 who is not an authorised person;".—[Miss Melanie Johnson.]

      Clause 150

        OBLIGATION TO NOTIFY THE AUTHORITY
        Amendment made: No. 121, in page 74, line 31, leave out
        "does not qualify for authorisation under"
        and insert
        "is not a person authorised as a result of paragraph 1 of'.—[Miss Melanie Johnson.]

      Clause 157

        CONDITIONS ATTACHED TO APPROVAL
        Amendment made: No. 122, in page 77, line 31, leave out subsection (2) and insert—
        "(2) In imposing any conditions, the Authority must have regard to its duty under section (The threshold conditions).".—[Miss Melanie Johnson.]

      Clause 158

        OBJECTION TO ACQUISITION OF CONTROL
        Amendments made: No. 123, in page 78, line 12, at end insert "and".
        No. 124, in page 78, line 16, leave out from "control" to end of line 24 and insert—
        "( ) In deciding whether the approval requirements are met, the Authority must have regard, in relation to the control that the acquirer—

        (a) has over the authorised person concerned (`A'), or

        (b) will have over A if the proposal to which the notice of control relates is carried into effect,

        to its duty under section (The threshold conditions) in relation to each regulated activity carried on by A.".—[Miss Melanie Johnson.]

      Clause 166

        GENERAL GROUNDS ON WHICH POWERS OF INTERVENTION ARE EXERCISABLE
        Amendments made: No. 125, in page 83, line 22, leave out "authorised person" and insert "firm"
        No. 126, in page 83, line 23, after "such" insert "a"—[Miss Melanie Johnson.]

      Clause 175
        EFFECT OF CERTAIN REQUIREMENTS ON OTHER PERSONS
        Amendment made: No. 127, in page 88, line 3, leave out "(1)" and insert "(1B)".—[Miss Melanie Johnson.]
      Clause 177

        POWER TO PROHIBIT THE CARRYING ON OF CONSUMER CREDIT ACT BUSINESS
        Amendments made: No. 128, in page 88, line 14, at end insert—
        "(1A) If it appears to the Director that a restriction imposed under section 178 on an EEA consumer credit firm has not been complied with, he may by written notice given to the firm impose a consumer credit prohibition.".
        No. 129, in page 88, line 30, at end insert "or (1A)".—[Miss Melanie Johnson.]

      Clause 178
        POWER TO RESTRICT THE CARRYING ON OF CONSUMER CREDIT ACT BUSINESS
        Amendment made: No. 130, in page 89, line 35, leave out subsection (5).—[Miss Melanie Johnson.]
      Clause 185

        STATEMENTS OF POLICY
        Amendments made: No. 320, in page 91, line 13, leave out "publish" and insert "issue".
        No. 321, in page 91, line 24, leave out "any material published" and insert "a statement issued".
        No. 322, in page 91, line 26, leave out "any such material" and insert
        "a statement issued under this section".
        No. 323, in page 91, line 26, leave out "publish it as altered" and insert
        "issue the altered or replacement statement".
        No. 324, in page 91, line 28, leave out subsection (5) and insert—
        "(5) The Authority must, without delay, give the Treasury a copy of any statement which it publishes under this section.".
        No. 325, in page 91, line 30, leave out subsection (6) and insert—
        "(6) A statement issued under this section must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention of the public.".
        No. 326, in page 91, line 33, leave out subsection (7).
        No. 327, in page 91, line 40, leave out "material" and insert "statement".
        No. 328, in page 91, line 40, after "section" insert "and in force".
        No. 329, in page 91, line 41, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of the statement.".—[Miss Melanie Johnson.]

      Clause 189
        RIGHTS OF THE SCHEME IN RELEVANT PERSON' S INSOLVENCY
        Amendment made: No. 131, in page 95, line 16, leave out "65" and insert "55".—[Miss Melanie Johnson.]
      Clause 195

        POWERS OF COURT WHERE INFORMATION REQUIRED
        Amendments made: No. 132, in page 99, line 3, leave out "punish" and insert "deal with".
        No. 133, in page 99, line 4, leave out from "he" to end of line and insert "were in contempt".—[Miss Melanie Johnson.]

      Clause 197
        MANAGEMENT EXPENSES
        Amendment made: No. 134, in page 99, line 30, leave out ", (3)".—[Miss Melanie Johnson.]
      Clause 198
        COMPULSORY JURISDICTION
        Amendment made: No. 135, in page 99, line 31, leave out Clause 198.—[Miss Melanie Johnson.]
      Clause 203

        DETERMINATION UNDER THE COMPULSORY JURISDICTION
        Mr. Flight: I beg to move amendment No. 237, in page 103, line 18, leave out subsections (4) to (7) and insert—
        "(4) The ombudsman's determination shall be binding on the respondent and the complainant and shall be final.
        (5) The ombudsman's statement must:

        (a) give the ombudsman's reasons for his determination; and

        (b) be signed by him.".

        Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss Government amendments Nos. 180 and 181.
        Mr. Flight: The new FSA ombudsman scheme brings together the various existing ombudsman schemes, but has been led by the insurance side. When we dealt with this issue in Committee, it struck Conservative Members as quite wrong that there were different obligations on those appealing to the ombudsman and those whose conduct was being considered by him: either both or neither should be bound by the ombudsman's decision.
        I spoke to the new head of the ombudsman scheme to sound him out about why that was the case. The gist of his response was that, when the ombudsman had been established in the insurance industry—which was his background—it was a way for insurance companies to slough off dealing with complaints and to get some good PR from setting up an independent body. It was rare for individuals to go to court, even if the ombudsman found against them, because they could not afford to do so. It looked good to be able to say that an individual complaint to an ombudsman could go on to court proceedings, even if the ombudsman had found against the complainant.
        That is not a very good argument for the asymmetry that has now been fed into the entire ombudsman scheme. It is possible that the European convention on human rights would give rise to proceedings in the courts if the scheme remained asymmetrical. There is an argument for the two possibilities—either both parties should be bound by the ombudsman's decision, which seems to me the more sensible, or neither side should be bound. By inheriting this anomaly, which arose for the reasons that I have described, the ombudsman scheme is open to attack under the European convention on human rights. It is also wrong in principle.
        I want to raise another, indirectly related issue. Under present arrangements, which I understand will continue, if a case against a financial adviser is brought to the ombudsman and he finds the financial adviser innocent of any wrongdoing, the adviser still has to pay a charge, as he sees it, or an administrative cost, as the ombudsman describes it, of £500. There is an understandable widespread feeling of unfairness.
        Independent financial advisers are often not very large businesses, and £500 for being found innocent is perceived as an unjust method of gaining justice. I understand that there are proposals to waive that charge in future if complaints to the ombudsman are viewed as vexatious, but to my mind the whole basis should be further examined, because it is wrong for people to be fined when they are innocent, which is how the arrangements operate in practice.
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        The key point in our amendment is that there should be symmetry one way or t'other, so that we know whether the complainant and the party complained about are both bound by the ombudsman's decision.
        Mr. Andrew Tyrie: We had a good canter around this issue in Committee, so I shall not rehearse all the arguments again, which will please everyone, including me. The Bill creates a leviathan ombudsman scheme—I should think that it will be the biggest ombudsman scheme that there has ever been anywhere, certainly that I know of—and there is a risk of a growing bureaucracy associated with it.
        It is important to put this in the context of other UK ombudsman schemes. The parliamentary ombudsman scheme has become a bit of a bureaucracy. It is taking, on average, two years to investigate cases and costs are rising. We do not want this ombudsman scheme to go that way, but I am concerned that we may move down that road. At the moment, the existing schemes are relatively flexible. Most of the eight or nine schemes that we are joining together seem to work reasonably well.
        Picking up the point that my hon. Friend the Member for Arundel and South Downs (Mr. Flight) made about the £500 charge, the flip side of that is that the ombudsman scheme is free to consumers at the point of use. Some modest charge should be made to discourage flippant approaches to the ombudsman. The way to do that is to have, like several of the existing schemes, an entry fee of, say, £50.
        A second problem with the scheme that we are setting up is that the ombudsman is not accountable to anyone. Unlike the parliamentary ombudsman, who is accountable to Parliament, this ombudsman will be accountable only to the ombudsman scheme board that is being specially created for the purpose. Some form of parliamentary oversight, perhaps by the Treasury Select Committee, would be better. I regret that nothing is being done about that.
        The most important consideration is the asymmetry of treatment before the law. The principle of the existing ombudsman schemes in the United Kingdom is equality of treatment under the law. The proposed scheme contains a blatant unfairness. The decision of the ombudsman is binding on the firm, but it is not binding on the individual, who may go to law and pursue the issue further. It is that unfairness, in particular, that our amendment seeks to redress.
        It is not only that the scheme is unfair, it is also imprudent, because it will greatly increase the likelihood of the European Court of Human Rights having oversight of this whole area. That in itself will add a layer of bureaucracy, and will slow down the process of dealing with these cases.
        I am supportive of an ombudsman scheme in principle, and I am extremely keen that there should be a mechanism to assist consumers' complaints. I am fairly sure that we have not got it right as the Bill is drafted. That is why I hope that the House will support our amendment.
        7.30 pm
        Mr. Timms: The question whether the ombudsman's decision should be binding on the complainant as well as the respondent was considered in Standing Committee. It was also considered by the Joint Committee.

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        The amendment would improve the position of the firm and worsen the position of the individual. We continue to believe that the balance is right as the Bill stands. First, it is what the vast majority of firms with retail customers want. The firms themselves have said that—that is very clear from responses during our consultation process on the Bill and the provisions of the two main forerunner voluntary ombudsman schemes in this area, which cover banking and insurance. The Personal Investment Authority, which is the main retail self-regulating organisation, has also chosen to adopt this model for its scheme, so the precedents are clear.
        Mr. Tyrie: Those are voluntary schemes; that is the crucial point. The Bill is not a voluntary scheme, it is a compulsory scheme. If we volunteer to go through a process which we think will benefit us, through a scheme which has asymmetry in treatment before the law, that is one thing; if we are "volunteered" into a scheme about which we have no choice and which leaves us without access to the courts, that is quite another thing.
        Mr. Timms: The existing schemes have very wide support in the industry. They provide a good model for how the new scheme should work. It is true that we are proposing a compulsory scheme, but I do not agree that it would be right to tilt the balance in the design of the new scheme against the individual, which is what the Opposition propose.
        Secondly, as the majority of retail firms clearly recognise, it is necessary to give consumers confidence that they can refer their complaints to the scheme without losing any legal right that they may have to take a firm to court. After all, the point of this scheme is to enable consumers to bring complaints outside the expensive arena of the courts. Very few complainants, very few individuals, will have the resources to seek judicial review of an ombudsman's decision, whereas firms very often will. When important principles are at stake, they will have the technical and financial support of their trade bodies as well. So, if we made the ombudsman's determination binding on both sides, we would be recreating exactly the inequality that the ombudsman's scheme is designed to remove.
        It is also important that we are not dealing here with commercial disputes between firms. To be fair, that has been clear from what Opposition Members have said. This is a retail scheme—it will limit those who are eligible to complain and the sums that may be awarded. Consultation paper 33 from the FSA proposes to set an overall limit of £100,000. Beyond that, the ombudsman will only be able to recommend that the firm should pay an additional sum.
        Thirdly, there is no question of a complainant receiving a double award from the ombudsman and from the courts, even when an award goes beyond what a court could award. The provisions that the amendment would remove require the complainant to decide within a specified time whether to accept the ombudsman's award. If he accepts, the ombudsman's determination is binding on both parties. If not, he will be treated as rejecting the award.
        Opposition Members have suggested that that might breach a firm's rights under the European convention or force the ombudsman to adopt an over-legalistic procedure in order to be compatible with the convention. That is not our understanding. I do not think there is a
        324
        contradiction between adopting a quick and informal process which is fair to both sides and ensuring that the parties can, if they choose, receive a fair public hearing from an independent tribunal, as required by article 6(1).
        Mr. Tyrie: One of the concerns is that there could be excessive bureaucracy where the ombudsman knows that there may be an ECHR inquiry; he will therefore be all the more meticulous, which could lengthen the inquiry. Do the Government have a target that they think would be reasonable for the average duration of an ombudsman's investigation?
        Mr. Timms: That would depend very much on the nature of the case and of the complaint. I do not have an anticipated average. It may well be that the ombudsman does, although I imagine that he would have in mind different periods for different kinds of complaint.
        There are many other areas in which Parliament has deemed it necessary to redress the imbalance of resources that would otherwise exist between the parties to a civil dispute. For example, in a very different context, there is a comparable situation in disputes between landlord and tenant, where the requirements on the tenant and the requirements on the landlord are rather different, reflecting the different strengths of their position. Other examples are employers and employees, lenders and borrowers. In all of those cases, it is necessary to provide additional procedures that give confidence to the weaker party that he or she will have the same opportunity to present the case. That is exactly the position here as well.
        The experience of other schemes is that the vast majority of complaints are settled without the need for a formal hearing. There is no evidence that firms have been or will be prejudiced by giving consumers the theoretical option of having their complaint reheard by the courts. Therefore, I hope that the whole House will accept, on reflection, that the clause is the best model both for firms and for consumers.
        I should like to say a few words about the Government's amendments. Amendment No. 180 clarifies the rules governing the budget to be adopted by the ombudsman scheme operator each year. As drafted, the Bill requires only that the budget reflects income from fees. The amendment makes it clear that the budget should set out any income that the operator has from the operation of the scheme—for example, income from publications.
        Amendment No. 181 makes it clear that the operator of the ombudsman scheme may include in its standard terms under the voluntary jurisdiction matters relating to the payment of fees and levies. That is consistent with the arrangements for the compulsory jurisdiction under clause 209.
        Mr. Flight: We remain of the view that it would be wiser for both sides to be bound by the ombudsman. However, this is not a matter of major principle, and therefore I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Clause 237
        OPEN-ENDED INVESTMENT COMPANIES
        Amendment made: No. 449, in page 121, line 2, after "of insert ", or made under,".—[Mr. Timms.]
      Clause 240

        REPRESENTATIONS AND REFERENCES TO THE TRIBUNAL
        Amendment made: No. 450, in page 122, line 36, leave out "A person" and insert—
        "The operator of the scheme".—[Mr. Timms.]

      Clause 242

        POWER OF AUTHORITY TO SUSPEND PROMOTION OF SCHEME
        Amendments made: No. 451, in page 123, line 23, at end insert—
        "( ) If the Authority decides to revoke a direction under this section it must—

        (a) give the operator of the scheme a decision notice; and

        (b) inform the competent authorities in the scheme's home State of its decision.".

        No. 452, in page 123, line 39, at end insert—
        "( ) The Authority may, either on its own initiative or on the application of the operator of the recognised scheme concerned, revoke a direction given under subsection (1A) if it appears to the Authority—

        (a) that the conditions specified in the direction have been complied with; or

        (b) that it is no longer necessary for the direction to take effect or continue in force.".

        No. 453, in page 123, line 40, after "effect" insert "(unless revoked earlier)".—[Mr. Timms.]

      Clause 252
        POWER TO REQUIRE INFORMATION
        Amendment made: No. 454, in page 128, line 17, leave out clause 252.—[Mr. Timms.]
      Clause 260

        EXEMPTION FOR RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES
        Mr. Timms: I beg to move amendment No. 136, in page 132, line 36, leave out from beginning to "in", in line 37 and insert-
        "in relation to which a recognition order is".
        Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendment No. 137.
        Amendment No. 481, in clause 262, page 134, line 9, after "for", insert "access to and".
        Amendment No. 482, in page 134, line 9, after "services", insert—
        "and the capacity of those services".
        Government amendment No. 139.
        Mr. Timms: Amendment No. 139 makes a drafting change to correct the mistaken indirect reference in
        326
        clause 269(6) to directions made in subsection (2). Subsection (2) in fact contains no such power. The amendment makes a further consequential change.
        Amendments Nos. 136 and 137 make minor changes to improve the drafting of clause 260. They do not change the substance of the provisions of this part.
        Amendments Nos. 481 and 482, in the name of my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins), would make drafting changes to the provisions on the required particulars which applicants for recognition as recognised investment exchanges must send with their application. I shall be interested to hear what he has to say about this, but I suggest that the amendments are covered already by provisions in the Bill.
        Clause 288(2)(b), for example, provides that references to rules of an investment exchange, which must be submitted with the application, are to rules made with respect to
        "admission of persons to, or their exclusion from the use of, its facilities".
        That, I think, deals with amendment No. 481 and the important point about access.
        Amendment No. 482 would add a reference to
        "the capacity of those services".
        If there is an issue, I think that it can be dealt with by the FSA asking for additional information under clause 262(3)(e)—or, if need be, in the recognition requirements described in clause 261. I think that the points raised by my hon. Friend in his amendment are dealt with by provisions already in the Bill, but I shall be interested to hear what he has to say.
        Mr. Cousins: I shall not detain the House for long, but we are dealing with an important aspect of developments in the markets that have taken place since the inception of the Bill. It is important because it concerns the capacity of the London market to continue to maintain its strength and significance: it must have the technological capacity to deal with modern market situations.
        The United States has 160 on-line share brokers; 40 per cent. of all share trading there takes place on line rather than directly through the markets. The situation in this country is quite different. On the London stock exchange, although 2,000 shares are listed only 130 can be traded on line, and only a limited number of brokers have on-line trading capacity.
        Since the explosion in asset values last autumn, the number of trades on the market has increased incredibly rapidly. The number of trades, particularly by small traders, is now three or four times greater than it was even six months ago. People are attempting to make the most of those trades by telephone, because of the lack of on-line trading capacity. In many cases, the telephone systems handled by brokers have broken down, causing delays and causing consumers attempting to buy and sell stock to doubt whether they have been fairly treated. I have been told by the FSA that in the early part of January as many as 2 billion shares a day were being traded on the markets, and that those included an increasing number of very small trades. In that respect, the London market compares very unfavourably with the market in Frankfurt, which has a completely electronic platform.

        327
        In November and December of last year, the position of small traders in the market led to a major outcry in the press and other media about the lack of ability to place deals when people wanted to execute them. At that time, the Securities and Futures Authority, which is currently responsible for this aspect of the work of the exchanges, produced some guidance for people in the market. That guidance effectively attempted to protect the position of clients who were already registered with brokers and who had nominee accounts. Plainly, they were to be given priority to the disadvantage of other traders who were not similarly placed. That cannot be satisfactory in consumer terms.
        It is not clear that the FSA regards the capacity of the market to sustain the volume of trade as part of its duty. After I submitted a dossier of correspondence on the topic to Howard Davies of the FSA, he wrote:
        "You can be assured that where a firm does get into difficulties which pose a significant risk to customers—whether with its telephone or internet-based services—our supervision staff can and do get involved. Persistent poor service to customers, causing losses to them, could be grounds for disciplinary action … The longer-run development of dealing services is ultimately a commercial matter for the exchanges and their users."
        7.45 pm
        I confess to being rather dismayed by that last point. I am worried about the fact that the FSA does not consider the maintenance of the capacity to execute deals in the markets to be clearly one of its responsibilities. I accept that, as my hon. Friend the Minister has said, provisions in the Bill allow the FSA perhaps to include that in its remit, but the Bill does not seem to specify a duty, which is one of the purposes of the amendments.
        Issuing the 9 December guidance that established priorities for those with nominee accounts, Lindsay Thomas, head of the Securities and Futures Authority's supervision department, said:
        "It is important that firms put in place systems adequate to handle the new peak levels of business that they should now expect."
        That implies that Lindsay Thomas envisages some duty for the SFA to deliver in that regard. Howard Davies's later correspondence with me appears to water that down.
        I am concerned about that. We are seeing the development of new markets; we are seeing the development of new traders in the market—consumers with small stocks of equities in which they wish to deal. It is, of course, possible that some of that may not be well advised. There is concern about people who are working on the margins, buying options rather than the shares themselves. However, the concern about whether consumers are well advised to engage in such trades provides no excuse for a lack of capacity in the market.
        I urge Ministers to make it clear that the FSA will have a duty and responsibility to ensure that our British share markets can function in a modern, high-tech, e-commerce way, and will no longer be subjected to the delays experienced by small traders in the last months of 1999.
        Mr. Flight: Let me ask the Minister a question about investment exchanges. Under the Bill, they become semi-regulative bodies themselves and gain a legal immunity that, in the main, was not enjoyed before. What arrangements, if any, will be organised to deal with complaints about investment exchanges in relation to those
        328
        using them, and for any potential recompense when exchanges have acted improperly to members or customers?
        Mr. Timms: I listened with interest to what was said by my hon. Friend the Member for Newcastle upon Tyne, Central. I share his concern: it is important for adequate facilities to be available for as many people as wish to participate in trades.
        There has been a remarkable increase in recent months. That is a welcome development. The more people who take part in such trading, the better. Of course they must take adequate advice and precautions, but we want more people to participate, and that is clearly happening.
        My hon. Friend is right to draw attention to the growth of on-line share brokering. He has made the point that things have gone a good deal further in the United States than they have here. That is true, but I have no doubt that there will be rapid developments on that front in the UK as well; it is happening across the board in on-line services. That sector will be no exception.
        It is clear from the letter that my hon. Friend read from Howard Davies that the FSA will take a general and close interest in what is happening to ensure that arrangements are working well and that provision is adequate, but if there is demand for a particular type of service, we will want the market to respond to that demand. I do not think that it is for the Bill or the FSA to require that the market should respond. I am not quite sure what mechanism it could adopt to require that.
        Therefore, the arrangements in the Bill are the right ones. They allow for both my hon. Friend's points to be dealt with through the provisions that are already in place, but I am not sure that it will be possible for the FSA to take the rather more prescriptive role that he outlined, although it will take a close interest in how things develop. In that sector, notwithstanding the difficulties with capacity that have arisen in recent months, we can expect the market to move pretty quickly and ensure that there is adequate capacity for the attractive commercial opportunities that growth is presenting.
        The hon. Member for Arundel and South Downs (Mr. Flight) asked about arrangements for complaints. The Bill requires the FSA to maintain arrangements for dealing with complaints against recognised bodies; it is in clause 275. The draft recognition requirements that were published for consultation last year also require the recognised bodies to maintain complaints arrangements. Those are the provisions that have been made. I hope that that covers his point.
        Amendment agreed to.
        Amendment made: No. 137, in page 132, line 38, leave out from "house" to "in", in line 39 and insert—
        "in relation to which a recognition order is".—[Miss Melanie Johnson.]

      Clause 269

        MODIFICATION OR WAIVER OF RULES
        Amendments made: No. 138, in page 137, line 30, at end insert—
        "( ) Subsections (3) to (5) apply to a direction given under subsection (1)."
        No. 139, in page 137, line 42, leave out subsection (6).—[Miss Melanie Johnson.]

      Clause 274
        DIRECTIONS AND REVOCATION: PROCEDURE
        Amendment made: No. 140, in page 140, line 7, at end insert "or (4)(b)".—[Miss Melanie Johnson.]
      Clause 281
        FURTHER REPORTS BY DIRECTOR GENERAL OF FAIR TRADING
        Amendment made: No. 141, in page 144, line 20, leave out "contained in an annual" and insert "the subject of a".—[Miss Melanie Johnson.]
      Clause 283

        INVESTIGATIONS BY DIRECTOR GENERAL OF FAIR TRADING
        Amendments made: No. 142, in page 145, line 41, leave out "punish" and insert "deal with".
        No. 143, in page 145, line 42, leave out from "he" to end of line and insert "were in contempt".—[Miss Melanie Johnson.]

      Clause 288

        INTERPRETATION OF PART XVII
        Miss Melanie Johnson: I beg to move amendment No. 144, in page 148, line 21, leave out from "and" to end of line 23 and insert—
        "in relation to which a recognition order is in force".
        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 145 and 154.
        Miss Johnson: These are drafting amendments and follow on from the amendments to clause 260. They bring the definitions into line with those for domestic recognised investment exchanges and recognised clearing houses in clause 260.
        Amendment No. 154 defines an exempt person as any person who has been granted exemption under an exemption order made under clause 34, as the appointed representative of an authorised person under clause 35, or who has been recognised as an investment exchange or a clearing house.
        Amendment agreed to.
        Amendment made: No. 145, in page 148, line 26, leave out from "and" to end of line 27 and insert—
        "in relation to which a recognition order is in force".—[Miss Melanie Johnson.]

      Clause 291

        DIRECTION BY AUTHORITY
        Amendments made: No. 330, in page 150, line 37, leave out "("the effective date")".
        330
        No. 331, in page 150, line 38, at end insert—
        "( ) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.
        ( ) The Authority may charge a reasonable fee for providing a person with a copy of the direction.
        ( ) The Authority must, without delay, give the Treasury a copy of any direction which it gives under this section.".—[Miss Melanie Johnson.]

      Clause 293

        EXERCISE OF POWERS THROUGH COUNCIL
        Amendment made: No. 332, in page 151, line 20, at end insert—
        "( ) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.
        ( ) The Authority may charge a reasonable fee for providing a person with a copy of the direction.
        ( ) The Authority must, without delay, give the Treasury a copy of any direction which it gives under this section.".—[Miss Melanie Johnson.]

      Clause 294

        CONSULTATION
        Amendments made: No. 333, in page 151, line 21, leave out
        "If the Authority proposes to give"
        and insert "Before giving".
        No. 334, in page 151, line 22, leave out "it" and insert "the Authority".
        No. 335, in page 151, line 24, leave out from beginning to "and", in line 25, and insert "a cost benefit analysis".
        No. 336, in page 151, line 26, leave out "a statement" and insert "notice".
        No. 337, in page 151, line 27, leave out "reasonable" and insert "specified".
        No. 338, in page 151, line 30, leave out from "publish" to end of line 31 and insert—
        "an account, in general terms, of".
        No. 339, in page 151, line 37, leave out "publish a statement" and insert—
        "(in addition to complying with subsection (4)) publish details".
        No. 340, in page 151, line 38, leave out "the statement" and insert "those details".
        No. 341, in page 151, line 42, leave out from beginning to "of in line 4 on page 152 and insert—
        "( ) Neither subsection (2)(a) nor subsection (5)(b) applies if the Authority considers—

        (a) that, making the appropriate comparison, there will be no increase in costs; or

        (b) that, making that comparison, there will be an increase in costs but the increase will be".

        No. 342, in page 152, line 10, at end insert—
        "( ) "Cost benefit analysis" means an estimate of the costs together with an analysis of the benefits that will arise—

        (a) if the proposed direction is given; or

        (b) if subsection (5)(b) applies, from the direction that has been given.

        331
        ( ) "The appropriate comparison" means—

        (a) in relation to subsection (2)(a), a comparison between the overall position if the direction is given and the overall position if it is not given;

        (b) in relation to subsection (5)(b), a comparison between the overall position after the giving of the direction and the overall position before it was given.".—[Miss Melanie Johnson.]

      Clause 314

        DISCLOSURE OF INFORMATION BY THE INLAND REVENUE
        Miss Melanie Johnson: I beg to move amendment No. 146, in page 162, line 29, leave out from beginning to "may" and insert—
        "Information obtained as a result of subsection (1)".
        Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 147 to 153.
        Miss Johnson: The amendments are drafting changes intended to make it clear that the restrictions on the use of information in the clause apply only to information that has been provided by the Inland Revenue to the Secretary of State, or the FSA under the powers of the clause, and not to any other sort of information. I commend the amendments to the House.
        Amendment agreed to.
        Amendments made: No. 147, in page 162, line 41, leave out from beginning to "may" and insert—
        "Information obtained as a result of subsection (1)".
        No. 148, in page 163, line 3, leave out "Revenue information" and insert—
        "information obtained as a result of subsection (1)".—[Miss Melanie Johnson.]

      Clause 315

        OFFENCES
        Amendments made: No. 149, in page 163, line 9, after "312" insert "or 314(5)".
        No. 150, in page 163, line 16, leave out from "if" to end of line 18, and insert—
        ", in contravention of any provision of regulations made under section 313, he uses information which has been disclosed to him in accordance with the regulations".
        No. 151, in page 163, line 18, at end insert—
        "(3A) A person is guilty of an offence if, in contravention of subsection (4) of section 314, he uses information which has been disclosed to him in accordance with that section.".
        No. 152, in page 163, line 19, after "(3)" insert "or (3A)".
        No. 153, in page 163, line 25, after second "information" insert—
        "or that it had been disclosed in accordance with section 314".—[Miss Melanie Johnson.]

      Clause 351

        THE AUTHORITY'S PROCEDURES
        Amendments made: No. 343, in page 181, line 31, leave out from "in" to "it", in line 32, and insert—
        "the way appearing to the Authority to be best calculated to bring".
        No. 344, in page 181, line 32, at end insert—
        "( ) The Authority may charge a reasonable fee for providing a person with a copy of the statement.
        ( ) The Authority must, without delay, give the Treasury a copy of any statement which it issues under this section.".—[Miss Melanie Johnson.]

      Clause 363

        DEFINITIONS
        Amendments made: No. 420, in page 188, line 19, at end insert—
        " "authorised open-ended investment company" has the meaning given in section 211(5);".
        No. 154, in page 189, line 4, at end insert—
        "exempt person", in relation to a regulated activity, means a person who is exempt from the general prohibition in relation to that activity as a result of an exemption order made under section 34(1) or as a result of section 35(1) or 260(2) or (3);".
        No. 155, in page 189, leave out line 25
        No. 156, in page 189, line 45, at end insert—
        " "rule-making instrument" has the meaning given in section 125;".
        No. 157, in page 190, line 8, at end insert—
        " "threshold conditions", in relation to a regulated activity, has the meaning given in section (The threshold conditions);".—[Miss Melanie Johnson.]

      Clause 364

        CARRYING ON ACTIVITIES IN THE UNITED KINGDOM
        Amendments made: No. 421, in page 190, line 20, leave out "three" and insert "four".
        No. 422, in page 190, line 28, leave out from "Kingdom" to end of line 29 and insert—
        "( ) he is entitled to exercise rights under a single market directive as a UK firm; and
        ( ) he is carrying on in another EEA State a regulated activity to which that directive applies.
        ( ) The second case is where—

        (a) his registered office (or if he does not have a registered office his head office) is in the United Kingdom;

        (b) he is the manager of a scheme which is entitled to enjoy the rights conferred by an instrument which is a relevant Community instrument for the purposes of section 239; and

        (c) persons in another EEA State are invited to become participants in the scheme.".

        No. 423, in page 190, line 30, leave out "second" and insert "third".
        No. 424, in page 190, line 33, leave out paragraph (b).
        No. 425, in page 190, line 35, leave out "that" and insert "the regulated".
        No. 426, in page 190, line 40, leave out "third" and insert "fourth".—[Miss Melanie Johnson.]

      Clause 373

        REGULATIONS AND ORDERS
        Amendments made: No. 427, in page 194, line 41, at end insert—
        "( ) The Lord Chancellor's power to make rules under section 107 is exercisable by statutory instrument.".
        No. 428, in page 194, line 44, leave out "Treasury consider" and insert "person making it considers".—[Miss Melanie Johnson.]

      Clause 374

        PARLIAMENTARY CONTROL OF STATUTORY INSTRUMENTS
        Amendments made: No. 429, in page 195, line 3, leave out "237" and insert—
        "(Carrying on regulated activities by way of business)"
        No. 430, in page 195, line 6, at end insert—
        "( ) No regulations are to be made under section 237 unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.".
        No. 431, in page 195, line 7, leave out from beginning to second "to" and insert—
        "An order to which, if it is made, subsection (4) will apply is not".
        No. 432, in page 195, line 10, leave out subsection (3).
        No. 433, in page 195, line 13, leave out "made".
        No. 434, in page 195, line 17, at end insert—
        "( ) it is the first order to be made, or to contain provision made, under section 19(5);".
        No. 435, in page 195, line 22, leave out subsection (5).
        No. 455, in page 195, line 24, at end insert—
        "(5A) An order containing a provision to which, if the order is made, subsection (5B) will apply is not to be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.
        (5B) This subsection applies to a provision contained in an order if—

        (a) it is the first to be made in the exercise of the power conferred by subsection (1) of section (Designation of professional bodies) or it removes a body from those for the time being designated under that subsection; or

        (b) it is the first to be made in the exercise of the power conferred by subsection (6) of section (Exemption from the general prohibition) or it adds a description of regulated activity or investment to those for the time being specified for the purposes of that subsection.".

        No. 436, in page 195, line 26, after "376(2)" insert—
        "or to which paragraph 26 of Schedule 2 applies".—[Miss Melanie Johnson.]

  New Schedule 1
    TRANSFER SCHEMES: CERTIFICATES
      PART I

        INSURANCE BUSINESS TRANSFER SCHEMES
        1.—(1) For the purposes of section (Sanction of the court for business transfer schemes)(3) the appropriate certificates, in relation to an insurance business transfer scheme, are—

        (a) a certificate under paragraph 2;

        (b) if sub-paragraph (2) applies, a certificate under paragraph 3;

        (c) if sub-paragraph (3) applies, a certificate under paragraph 4;

        334

        (d) if sub-paragraph (4) applies, a certificate under paragraph 5.

        (2) This sub-paragraph applies if—

        (a) the authorised person concerned is a UK authorised person which has received authorisation under Article 6 of the first life insurance directive or of the first non-life insurance directive from the Authority; and

        (b) the establishment from which the business is to be transferred under the proposed insurance business transfer scheme is in an EEA State other than the United Kingdom.

        (3) This sub-paragraph applies if—

        (a) the authorised person concerned has received authorisation under Article 6 of the first life insurance directive from the Authority;

        (b) the proposed transfer relates to long-term insurance business; and

        (c) as regards any policy which is included in the proposed transfer and which evidences a contract of insurance (other than reinsurance), an EEA State other than the United Kingdom is the State of the commitment.

        (4) This sub-paragraph applies if—

        (a) the authorised person concerned has received authorisation under Article 6 of the first non-life insurance directive from the Authority;

        (b) the business to which the proposed insurance business transfer scheme relates is general insurance business; and

        (c) as regards any policy which is included in the proposed transfer and which evidences a contract of insurance (other than reinsurance), the risk is situated, in an EEA State other than the United Kingdom.

        Certificates as to margin of solvency
        2.—(1) A certificate under this paragraph is to be given—

        (a) by the relevant authority; or

        (b) in a case in which there is no relevant authority, given by the Authority.

        (2) A certificate given under sub-paragraph (1)(a) is one certifying that, taking the proposed transfer into account—

        (a) the transferee possesses, or will possess before the scheme takes effect, the necessary margin of solvency; or

        (b) there is no necessary margin of solvency applicable to the transferee.

        (3) A certificate under sub-paragraph (1)(b) is one certifying that the Authority has received from the authority which it considers to be the authority responsible for supervising insurance companies in the place to which the business is to be transferred that, taking the proposed transfer into account—

        (a) the transferee possesses or will possess before the scheme takes effect the margin of solvency required under the law applicable in that place; or

        (b) there is no such margin of solvency applicable to the transferee.

        (4) "Necessary margin of solvency" means the margin of solvency required in relation to the transferee, taking the proposed transfer into account, under the law which it is the responsibility of the relevant authority to apply.
        (5) "Margin of solvency" means the excess of the value of the assets of the transferee over the amount of its liabilities.
        (6) "Relevant authority" means—

        (a) if the transferee is an EEA firm falling within paragraph 5(d) of Schedule 3, its home state regulator;

        (b) if the transferee is a Swiss general insurance company, the authority responsible for supervising insurance companies in Switzerland;

        335

        (c) if the transferee is an authorised person not falling within paragraph (a) or (b), the Authority.

        (7) In sub-paragraph (6), any reference to a transferee of a particular description includes a reference to a transferee who will be of that description if the proposed scheme takes effect.
        (8) "Swiss general insurance company" means a company—

        (a) whose head office is in Switzerland;

        (b) which has permission to carry on regulated activities consisting of the effecting and carrying out of general insurance contracts; and

        (c) whose permission is not restricted to reinsurance business.

        Certificates as to consent
        3. A certificate under this paragraph is one given by the Authority and certifying that the host State regulator has been notified of the proposed scheme and that—

        (a) that regulator has responded to the notification; or

        (b) that it has not responded but the period of three months beginning with the notification has elapsed.

        Certificates as to long-term business
        4. A certificate under this paragraph is one given by the Authority and certifying that the authority responsible for supervising insurance companies in the State of the commitment has been notified of the proposed scheme and that—

        (a) that authority has consented to the proposed scheme; or

        (b) the period of three months beginning with the notification has elapsed and that authority has not refused its consent.

        Certificates as to general business
        5. A certificate under this paragraph is one given by the Authority and certifying that the authority responsible for supervising insurance companies in the EEA State in which the risk is situated has been notified of the proposed scheme and that—

        (a) that authority has consented to the proposed scheme; or

        (b) the period of three months beginning with the notification has elapsed and that authority has not refused its consent.

        Interpretation of Part I
        6.—(1) "State of the commitment", in relation to a commitment entered into at any date, means—

        (a) if the policyholder is an individual, the State in which he had his habitual residence at that date;

        (b) if the policyholder is not an individual, the State in which the establishment of the policyholder to which the commitment relates was situated at that date.

        (2) "Commitment" means a commitment represented by insurance business of a prescribed class.
        (3) References to the EEA State in which a risk is situated are—

        (a) if the insurance relates to a building or to a building and its contents (so far as the contents are covered by the same policy), to the EEA State in which the building is situated;

        (b) if the insurance relates to a vehicle of any type, to the EEA State of registration;

        (c) in the case of policies of a duration of four months or less covering travel or holiday risks (whatever the class concerned), to the EEA State in which the policyholder took out the policy;

        (d) in a case not covered by paragraphs (a) to (c)—

        (i) if the policyholder is an individual, to the EEA State in which he has his habitual residence at the date when the contract is entered into; and

        (ii) otherwise, to the EEA State in which the establishment of the policyholder to which the policy relates is situated at that date.

      PART II

        BANKING BUSINESS TRANSFER SCHEMES
        7.—(1) For the purposes of section (Sanction of the court for business transfer schemes)(3) the appropriate certificates, in relation to a banking business transfer scheme, are—

        (a) a certificate under paragraph 8; and

        (b) if sub-paragraph (2) applies, a certificate under paragraph 9.

        (2) This sub-paragraph applies if the authorised person concerned or the transferee is an EEA firm falling within paragraph 5(b) of Schedule j05036.s.

        Certificates as to ,financial resources
        8.—(1) A certificate under this paragraph is one given by the relevant authority and certifying that, taking the proposed transfer into account, the transferee possesses, or will possess before the scheme takes effect, adequate financial resources.
        (2) "Relevant authority" means—

        (a) if the transferee is a person with a Part IV permission or with permission under Schedule j04188.s, the Authority;

        (b) if the transferee is an EEA firm falling within paragraph 5(b) of Schedule j05036.s, its home state regulator;

        (c) if the transferee does not fall within paragraph (a) or (b), the authority responsible for the supervision of the transferee's business in the place in which the transferee has its head office.

        (3) In sub-paragraph (2), any reference to a transferee of a particular description of person includes a reference to a transferee who will be of that description if the proposed banking business transfer scheme takes effect.

        Certificates as to consent of home state regulator
        9. A certificate under this paragraph is one given by the Authority and certifying that the home State regulator of the authorised person concerned or of the transferee has been notified of the proposed scheme and that—

        (a) the home State regulator has responded to the notification; or

        (b) the period of three months beginning with the notification has elapsed.".—[Miss Melanie Johnson.]

        Brought up, read the First and Second time, and added to the Bill.

    New Schedule 2
      ROLE OF THE COMPETITION COMMISSION

        Provision of information by Treasury
        1.—(1) The Treasury's powers under this paragraph are to be exercised only for the purpose of assisting the Commission in carrying out an investigation under section (Consideration by Competition Commission).
        (2) The Treasury may give to the Commission—

        (a) any information in their possession which relates to matters falling within the scope of the investigation; and

        (b) other assistance in relation to any such matters.

        (3) In carrying out an investigation under section (Consideration by Competition Commission), the Commission must have regard to any information given to it under this paragraph.

        Consideration of matters arising on a report
        2. In considering any matter arising from a report made by the Director under section (Reports by Director General of Fair Trading), the Commission must have regard to—

        (a) any representations made to it in connection with the matter by any person appearing to the Commission to have a substantial interest in the matter; and

        (b) any cost benefit analysis prepared by the Authority (at any time) in connection with the regulatory provision or practice, or any of the regulatory provisions or practices, which are the subject of the report.

        Applied provisions
        3.—(1) The provisions mentioned in sub-paragraph (2) are to apply in relation to the functions of the Commission under section (Consideration by Competition Commission) as they apply in relation to the functions of the Commission in relation to a reference to the Commission under the Fair Trading Act 1973.
        (2) The provisions are—

        (a) section 82(2), (3) and (4) of the Fair Trading Act 1973 (general provisions about reports);

        (b) section 85 of that Act (attendance of witnesses and production of documents);

        (c) section 93B of that Act (false or misleading information);

        (d) section 24 of the Competition Act 1980 (modifications of provisions about the performance of the Commission's functions);

        (d) Part II of Schedule 7 to the Competition Act 1998 (performance by the Commission of its general functions).

        (3) But the reference in paragraph 15(7)(b) in Schedule 7 to the 1998 Act to section 75(5) of that Act is to be read as a reference to the power of the Commission to decide not to make a report in accordance with section (Consideration by Competition Commission)(2).

        Publication of reports
        4.—(1) If the Commission makes a report under section (Consideration by Competition Commission), it must publish it in such a way as appears to it to be best calculated to bring it to the attention of the public.
        (2) Before publishing the report the Commission must, so far as practicable, exclude any matter which relates to the private affairs of a particular individual the publication of which, in the opinion of the Commission, would or might seriously and prejudicially affect his interests.
        (3) Before publishing the report the Commission must, so far as practicable, also exclude any matter which relates to the affairs of a particular body the publication of which, in the opinion of the Commission, would or might seriously and prejudicially affect its interests.
        (4) Sub-paragraphs (2) and (3) do not apply in relation to copies of a report which the Commission is required to send under section (Consideration by Competition Commission)( 10).".—[Miss Melanie Johnson.]
        Brought up, read the First and Second time, and added to the Bill.

    Schedule 1

      THE FINANCIAL SERVICES AUTHORITY
      Amendments made: No. 345, in page 198, line 8, leave out "or varying".
      No. 346, in page 198, line 9, leave out "details of its proposals" and insert—
      338
      "a draft of the proposed scheme in the way appearing to the Authority to be best calculated to bring it to the attention of the public".
      No. 347, in page 198, line 10, leave out "published proposals" and insert "draft".
      No. 348, in page 198, line 10, leave out "a statement" and insert "notice".
      No. 349, in page 198, line 11, leave out from "Authority" to end of line 12 and insert "within a specified time".
      No. 350, in page 198, line 13, leave out "carrying out its proposals" and insert—
      "making the proposed complaints scheme".
      No. 351, in page 198, line 14, at end insert—
      "(6A) If the Authority makes the proposed complaints scheme, it must publish an account, in general terms, of—

      (a) the representations made to it in accordance with sub-paragraph (5); and

      (b) its response to them.

      (6B) If the complaints scheme differs from the draft published under sub-paragraph (4) in a way which is, in the opinion of the Authority, significant the Authority must (in addition to complying with sub-paragraph (6A)) publish details of the difference.".
      No. 352, in page 198, line 17, leave out "arrangements" and insert "provision".
      No. 353, in page 198, line 19, at beginning insert "Those".
      No. 354, in page 198, line 19, leave out "most suitable for bringing" and insert "best calculated to bring".
      No. 355, in page 198, line 20, at end insert—
      "(9) The Authority must, without delay, give the Treasury a copy of any details published by it under this paragraph.
      (10) The Authority may charge a reasonable fee for providing a person with a copy of—

      (a) a draft published under sub-paragraph (4);

      (b) details published under sub-paragraph (7).

      (11) Sub-paragraphs (4) to (6B) and (10)(a) also apply to a proposal to alter or replace the complaints scheme.".
      No. 356, in page 200, line 38, at end insert—
      "( ) Up to date details of the scheme must be set out in a document ("the scheme details").
      ( ) The scheme details must be published by the Authority in the way appearing to it to be best calculated to bring them to the attention of the public.".
      No. 357, in page 200, line 39, leave out "or varying".
      No. 358, in page 200, line 39, leave out "details of its proposals" and insert—
      "a draft of the proposed scheme in the way appearing to the Authority to be best calculated to bring it to the attention of the public".
      No. 359, in page 200, line 41, leave out
      "published proposals must be accompanied by a statement"
      and insert
      "draft must be accompanied by notice".
      No. 360, in page 200, line 42, leave out "them" and insert "the proposals".
      No. 361, in page 200, line 42, leave out from "Authority" to end of line 43 and insert "within a specified time".
      No. 362, in page 201, line 1, leave out "carrying out its proposals" and insert "making the scheme".

      339
      No. 363, in page 20], line 2, at end insert—
      "(7) If the Authority makes the proposed scheme, it must publish an account, in general terms, of—

      (a) the representations made to it in accordance with sub-paragraph (5); and

      (b) its response to them.

      (8) If the scheme differs from the draft published under subparagraph (4) in a way which is, in the opinion of the Authority, significant the Authority must (in addition to complying with subparagraph (7)) publish details of the difference.
      (9) The Authority must, without delay, give the Treasury a copy of any scheme details published by it.
      (10) The Authority may charge a reasonable fee for providing a person with a copy of—

      (a) a draft published under sub—paragraph (4);

      (b) scheme details.

      (11) Sub—paragraphs (4) to (8) and (10)(a) also apply to a proposal to alter or replace the complaints scheme.".—[Miss Melanie Johnson.]
      Mr. David Davis: I beg to move amendment No. 483, in page 202, line 4, at end insert—

      THE FINANCIAL SERVICES AUTHORITY

        Value for money examinations
        22. Section 6 of the National Audit Office Act 1983 (which enables the Comptroller and Auditor General to conduct examinations into the economy, efficiency and effectiveness with which certain departments, authorities and bodies have used their resources) shall apply to the Authority.".
        The amendment's purpose is to secure the accountability of the FSA to Parliament. There are important reasons why Parliament should put in place effective accountability arrangements. First, the authority will have a significant impact on a major sector of the economy and will carry out major public policy functions. It will prescribe and exercise far-reaching controls and regulations over a wide range of businesses and in the interests of society at large, as well as the consumers who use financial services. Therefore, although constituted as a private company, the authority will have a statutory objective and will carry out public policy.
        Some of those functions, such as the regulation of building societies and insurance, are currently undertaken by bodies subject to the scrutiny of Comptroller and Auditor General and hence of the Public Accounts Committee on behalf of Parliament. Without the amendment, that scrutiny will be lost. That would be a move backwards.
        The authority will be funded by fees paid by registered firms, a form of compulsory levy, or directly hypothecated tax, in effect, on the financial services industry. Widespread concerns have been expressed—among others by those firms that will be required to fund the authority—that the Government's original proposals, which are reflected in the Bill, do not provide for full independent scrutiny on behalf of Parliament, for example, the Securities Institute and the London Investment Banking Association have expressed support for the idea of the CAG undertaking such scrutiny.
        The CAG would be well placed to provide such independent scrutiny. He would bring the necessary authority to that role and be in a strong position to assess the authority's performance against its statutory objectives. The National Audit Office already has considerable expertise as the external auditor of the
        340
        other principal regulators—the electricity, gas, rail, telecommunications, water industries and the Office of Fair Trading—and would be able to provide valuable assistance to the authority, to the Treasury and to Parliament.
        On a basis of CAG reports, the PAC has published a number of reports on those regulatory authorities. Their value has been publicly recognised by the Government. In March 1998, the President of the Board of Trade, in a report to Parliament, noted that
        "a recent Public Accounts Committee inquiry into regulatory methodology was instrumental in securing closer collaboration between regulatory offices",
        and concluded that
        "the current Parliamentary arrangement have allowed for effective scrutiny of utility regulation".
        I acknowledge that the Bill provides that the authority will be required to produce an annual report to Parliament, on the basis of which it can be questioned on its activities. Clause 10 provides that the Treasury can commission independent reviews of the authority's performance and will be able to choose who undertakes such reviews.
        8 pm
        In Committee in July, the then Financial Secretary to the Treasury said that it would be open to the Treasury to appoint the NAO to carry out a particular review and that that option would be considered carefully. That is all very well, but there is no substitute for giving the Comptroller and Auditor General, and therefore Parliament, the right to examine the authority as a basis on which it can be satisfactorily scrutinised. In particular, it would be for the Treasury to decide if and when such a review should take place and to prescribe the terms of reference. In my judgment, that takes away rights from individual Members of Parliament, for example to ask for a review as a result of a constituent's problems.
        In tabling the amendment I recognise that the option of the CAG being able to examine the authority has already been considered during the progress of the Bill. The Joint Committee on Financial Services and Markets, which examined the draft Bill, studied the issue but did not support access for the CAG on the ground that the authority will be paid for by the industry and not the taxpayer. That argument is entirely disingenuous. On that basis, we would not have access to Camelot and a series of bodies that carry out a public function. The authority will be performing a public function and, bluntly, its charges can be seen as akin to a directly hypothecated tax. Therefore, such arrangements call for fully independent scrutiny on behalf of Parliament.
        It should also be noted that the CAG already has access to a number of limited companies that undertake public functions, such as the Student Loans Company and Remploy, on which he has usefully reported.
        The Joint Committee also believed that parliamentary scrutiny could best be achieved by asking a parliamentary Committee to review the authority' s annual report and to take regular evidence from a broad section of consumers and practitioners. The Joint Committee did not suggest which Committee should do so, or how the work would be resourced. Were the Public Accounts Committee to do it, it would expect to have evidence from the CAG. It is difficult to see how a Committee could exercise effective

        341
        scrutiny without some form of report based on access to the authority's papers. I say that as the Chairman of the Committee that carries out most of the scrutiny of such matters in the House.
        In Committee, the Government rejected an amendment to clause 10 that would have required the Treasury to appoint the Comptroller and Auditor General as the independent person undertaking reviews. In doing so, the Government argued in addition that the Treasury might wish to use someone else to undertake some types of review and that the CAG ought not to conduct any review that might question policy objectives. I entirely accept the last point.
        This amendment deals with both arguments and leaves the Treasury free to use clause 10 to commission other types of independent review, including those involving policy objectives. It applies the bar on the CAG questioning policy objectives—that is built into the National Audit Office Act 1983.
        The House has considered amendments to clause 10 that would deal with the independence of Treasury review and make periodic reviews mandatory. Although those amendments did not refer to the CAG, my hon. Friend the Member for Chichester (Mr. Tyrie) considered in Committee that the Government had not explained why providing for the Comptroller and Auditor General to conduct the independent reviews was not a reasonable approach. We have not had an answer to that argument. My hon. Friend also referred to the benefits of the CAG reporting to the PAC. In response, the Financial Secretary referred elliptically to the burdens associated with mandatory reviews and to the Joint Committee.
        The amendment has the advantage of providing the independent evidence that effective scrutiny by a parliamentary Committee, as recommended by the Joint Committee, would require. It does not specify how frequently the reviews should be undertaken. That is left to the CAG's discretion. In exercising that discretion, he would of course consult the Treasury and the authority as to the timing and the matters that he would be examining. I have discussed that matter with him.
        If the authority is to get off to a good start, it needs to secure the confidence of the financial services industry. A clear line of accountability to Parliament, accompanied by independent assessment of performance by the CAG would go a long way to achieving that.
        Mr. Cousins: I do not support the amendment, or its terms. None the less, it raises an important and interesting point. I do not see why it is sensible to accept that the National Audit Office will be the agency that will carry out reviews at this stage, nor do I think—as the FSA is to be one of the most closely monitored and scrutinised public statutory bodies—that such an amendment is necessary. I am not happy with the idea that the NAO could undertake policy reviews of the authority. That would in some way usurp the responsibilities that the Government intend to give to Parliament.
        Mr. Davis: That is precisely the opposite of what I said. The use of the National Audit Office Act proscribes any investigation by the Comptroller and Auditor General into the merits of policy. He is not allowed to do that
        342
        under that Act and that is why the extension of the clause is there. That is also why the Treasury can use other investigators to look into policy matters.
        Mr. Cousins: I am grateful for that intervention. I had understood the right hon. Gentleman to be saying that he wanted the NAO to review the objectives of the FSA. If I have misunderstood him—
        Mr. Davis: I think I used the term, "the achievement of objectives". That is what the NAO does—it studies effectiveness in the achievement of pre-set objectives.
        Mr. Cousins: I am grateful for the clarification. However, it points to some of my anxieties and my difficulty in supporting the amendment. The important point is that the Government intend that the FSA will make an annual report to Parliament. They also intend that a parliamentary Committee will be responsible for scrutinising the authority's work. However that is to be done, and whoever is to do it—the Minister may not wish to go into detail about that at this stage—what resources are to be made available to Parliament through the mechanism of whichever Committee is to be responsible for carrying out that duty effectively? That is the important question. We should consider whether the NAO, or some agency that could be commissioned if resources were available, would be accessible to whichever Committee had the task of scrutinising and reviewing the FSA so that Parliament might be better and more fully informed. Committees often do not have the resources that they want to carry out their scrutiny functions effectively. I urge my hon. Friend the Minister to bear at least that point in mind, but I do not support the amendment.
        Miss Melanie Johnson: I understand why the right hon. Member for Haltemprice and Howden (Mr. Davis) tabled the amendment and I know that he has already argued his case on behalf of the Public Accounts Committee in a memorandum to Lord Burns Joint Committee, as well as arguing it fulsomely in connection with another Bill.
        Clause 10 provides that the Treasury may appoint an independent person to conduct a review of the economy, efficiency and effectiveness with which the FSA has used its resources in discharging its functions. However, it does not provide that the NAO must always carry out such reviews. I am not apologetic about that. In some cases, if the Treasury concluded that a review was justified, it might want to ask the NAO to do the job and nothing would prevent it from doing so. However, on other occasions, the Treasury may wish to appoint another body to perform that task. If so, that would not be any reflection on the NAO's expertise or professionalism, but simply of the fact that another body may be more familiar with how the financial markets work, and thus the constraints under which the FSA operates. A different body may be more appropriate to perform the task in a particular case.
        Mr. David Davis: I take the hon. Lady's point entirely. As we heard from the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), preclusion from policy might be another reason for having a body other than the NAO perform the task. However, in answering my points, I hope that the Minister will answer the simple question of how

        343
        direct accountability to Parliament will be achieved. If hon. Members themselves want to raise an issue about the FSA's performance—not about its policy—how will they do so if their only mediator is the Treasury?
        Miss Johnson: I am happy to answer the question, but should first say that, if the amendment were accepted, it would create a dual system in which the Treasury could initiate a review under clause 10, whereas the National Audit Office might begin its own review under the amendment. I am not sure whether the right hon. Gentleman intends his amendment to have that effect, but, as drafted, it certainly has the potential to cause overlap and confusion.
        Therefore, although I certainly agree that the FSA should be susceptible to value-for-money scrutiny, we share the Burns committee's conclusion—to which the right hon. Gentleman referred in his earlier remarks—that
        "The NAO rightly seeks to follow public money wherever it goes, but the FSA will be paid for by the industry, not the taxpayer."
        The right hon. Gentleman advanced some arguments that he felt countered that fact, but many people would say that the FSA is in a different position from other bodies and that his arguments might be stronger in relation to those.
        The right hon. Gentleman asked how the FSA can be held to account. It is important to recognise that much stronger accountability requirements—both to Ministers and to Parliament—are being imposed on the FSA than were imposed on its many predecessor bodies, some of which he also referred to. There is, for example, provision for the Treasury to appoint and remove the board. Additionally, non-executives will have to report annually on the FSA's efficiency and economy, and that report will have to be laid before Parliament. We should also fully expect that report to be debated by Parliament. The Treasury could also commission inquiries into regulatory failures.
        We feel that the best way of ensuring full accountability to Parliament would be to ask—as the Burns committee did—a parliamentary Committee to review the FSA's annual report and to take regular evidence from a broad spectrum of consumers and practitioners.
        Mr. Cousins rose—
        Mr. David Davis: Will the hon. Lady give way?
        Miss Johnson: I shall happily give way.
        Mr. Davis: I thought that there was a great deal of power in the point made by the hon. Member for Newcastle upon Tyne, Central—who may want to intervene on this point himself—on parliamentary Committees' resources and access. I wholly agree with the Minister's comments on the right to dismiss the board and the other powers that she mentioned. However, all of that depends on the information that is available to Parliament. Without the right information, all those decisions are not only irrelevant, but would certainly be ill-founded. The availability of impartial information is a specific concern, and a report produced by the body itself could not conceivably be seen in such terms.
        Miss Johnson: I apologise to my hon. Friend the Member for Newcastle upon Tyne, Central, who I did not realise was trying to intervene. I am grateful to the right hon. Gentleman for drawing it to my attention.
        344
        We are not suggesting that the body should not be subject to value-for-money scrutiny; we believe quite the reverse. Criteria will be established under which the FSA will be subjected to value-for-money scrutiny. The only disagreement that I have with the right hon. Gentleman on that point is whether it must be the National Audit Office that performs that role, and whether the Bill should specify that, in all circumstances, the National Audit Office must perform that role. That is the only issue between us. In every other way, I should expect exactly the type of information and reviews that he mentioned to be submitted to the House and subjected to the full panoply of parliamentary scrutiny.
        8.15 pm
        Mr. Cousins: I am most grateful to the Minister for those comments, and should like to pursue the points made by the right hon. Member for Haltemprice and Howden. Currently, the Treasury Select Committee—of which I, like some other hon. Members in the Chamber, am a member—scrutinises the FSA's work. Although I cannot prejudge what the Committee will do in future, I am reasonably confident that we intend to continue to scrutinise it. However, the issue arises of access to sufficient resources to perform that work of scrutiny of a body such as the Financial Services Authority will be after the Bill is passed.
        The FSA will be a powerful and significant body, and there should be sufficient resources to perform proper scrutiny. Although I realise that my hon. Friend might regard that as a matter for the authorities of the House rather than for Ministers, the issue is so important that—even if it were to be seen as a matter for the authorities of the House—the Government's guidance and intentions on the issue now would be significantly advantageous.
        Miss Johnson: I am grateful to my hon. Friend for those comments. However, I am a little puzzled by his difficulties on the matter. Obviously, the FSA would be audited and subjected not only to value-for-money scrutiny, but to reviews on effectiveness and on fulfilling other criteria. The scrutiny and reviews will be done by those who are appointed to do them, and they will be reported. Therefore, all the information will be available. Moreover, future difficulties in scrutiny will be the same as those that already exist—such as hon. Members' ability to find sufficient time and to put in the effort to review all the information that is produced by those activities, to ensure that the information is subjected to the scrutiny and oversight that it merits.
        I do not think that the difficulties encountered in scrutinising the FSA under the arrangement that we envisage will be any different from, or greater than, those currently confronting the House or Committees in scrutinising the authority.
        Mr. David Davis: The hon. Lady has been very courteous in giving way so many times. The hon. Member for Newcastle upon Tyne, Central made a valid point. Even before that, however, the issue of access was raised. The Select Committee on the Treasury is probably the proper Committee to deal with the matter. However, even if it had sufficient resources, it would not be able to gain

        345
        sufficient access on its own back, but would still have to use the mediation of the Treasury itself. I do not believe that that is acceptable for parliamentary accountability.
        Miss Johnson: The FSA will have to be reviewed and to subject itself to such scrutiny, and will not have the option of deciding whether to undergo those processes. Therefore, that information and those reports will come back to Parliament and be available for hon. Members to debate and consider. Specifically, presentation of the annual report to Parliament will be a major occasion. In the annual report, non-executives are required to report on both efficiency and economy.
        I am quite confident that the arrangements that we have provided in the Bill are entirely satisfactory. In meeting the desires of the right hon. Member for Haltemprice and Howden, the arrangements fail in only one respect—they do not, in totality, specify the National Audit Office. Although I am sorry to disappoint him again, I trust that the House will not support amendment No. 483.
        Mr. David Davis: I beg to ask leave to withdraw the amendment.
        Amendment, by leave, wthdrawn.

    Schedule 2
      REGULATED ACTIVITIES
      Dr. Cable: I beg to move amendment No. 444, in page 205, line 12, at end insert—
      REGULATED ACTIVITIES

        Mortgages for house purchase
        "23A. The provision of loans for the purchase of property for residential use, where the obligation of the borrower to repay the lender is secured on the value of the property in question.".
        I realise that, for the first time in its long passage in the House, the Bill is ahead of the clock. I do not intend to fill the remaining 40 minutes, but should like to return to an issue that I raised in Committee—mortgages, and how they are handled in the Bill and by the FSA. There is a paradox here, in that the aspect of financial services regulation and the work of the FSA that will have the greatest impact on our constituents is almost certainly the one relating to mortgages, yet it has been subject to very little discussion during the passage of the Bill.
        It might be useful to recap briefly how the issue has emerged. It was subject to considerable discussion at the pre-legislative stage by the Select Committee on the Treasury and by the Joint Committee. There was consensus at that point that mortgages should be regulated under the Bill. Last year, there was a strong media offensive by the Chancellor and the Secretary of State for Trade and Industry, who pointed to the many areas of abuse in the market and made it clear that regulation was urgent, overdue and needed to be draconian.
        We then discussed the Bill in Committee, and the Government and the Treasury properly went through a process of public consultation. It was a little discordant, in the sense that there was a difference between Ministers and officials as to whether it should be a statutory or a voluntary process. We were promised that the Government would report eventually, and that a policy would be announced. It emerged in the new year.
        346
        The announcement of mortgage regulation was not made to Parliament. It has not been presented here, and the proposals have never been discussed here. As far as I know, there are no proposals to discuss the proposals here. I hope that, at the very least, this short debate will provide an opportunity for people to react to what the Government have done, although the specific purpose of the amendment is to make the regulation of mortgages explicit in the Bill.
        I do not want to comment at length about what the Government have decided. I have read the newspapers like everyone else, and I have formed a preliminary judgment. I do not understand why it has been decided to split the regulatory control of mortgages. The whole rationale of the Bill was that we would have a one-stop shop for regulation which would be simple and clear. However, mortgages will be split depending on their size.
        Miss Melanie Johnson indicated dissent.
        Dr. Cable: The Minister shakes her head, and this may be a point that she can be clear up quickly. My understanding was that small loans would be covered by consumer credit legislation, rather than through the FSA. I had understood that there was to be dual responsibility for mortgage regulation between two separate Government Departments. I hope that that will be made clear.
        Why have the Government chosen to defer the introduction of mortgage regulation until what would appear to be the latest possible time? There are two perfectly legitimate lines of argument. One is that there are serious problems of the abuse of consumers—I thought that this was the view of Ministers—and that mortgage regulation was urgent and important, in which case it should be brought within the FSA as quickly as possible. The other view, which some Conservative Members have argued—it is a perfectly plausible argument—is that self-regulation was working perfectly well, the mortgage lenders were learning as they were going along, and there was no need to change the system. They thought that the system should be spun out for as long as possible.
        What is the rationale behind the timing that Ministers have chosen, which is to introduce the system over 18 months? Is it because that is the time needed to staff the FSA? There may be perfectly good practical reasons.
        My understanding is that mortgage advice is not to be regulated in the same way as mortgage lending. This appears to imply that an independent financial adviser mis-selling a mortgage package and giving bad advice is exempted from the proposed regulatory provisions. That seems odd. I can understand why the authorities might wish to encourage independent financial advice—which, in itself, is a good thing. Independent financial advice is desirable, rather than tied advice. However, exempting it altogether from the provisions of mortgage regulation seems odd, since we are aware from the private pensions sector that a lot of the malpractices occurred in the IFA sector—not that the IFAs should be the scapegoats. If there are abuses, they apply to the independent advisory bodies as well as to the mortgage lenders. Why regulate one and not the other? The reasoning behind that is unclear.
        I want to understand how some of the matters which most concern people about mortgage lending will be dealt with under the new regime. For example, redemption

        347
        penalties trouble many people who take out a fixed-rate mortgage on attractive terms and then pay a heavy redemption penalty if they repay early. How will the system outlaw, change or manage that?
        If someone goes to a building society or a bank to take out a mortgage, they are under a lot of pressure. They are told that they can have a mortgage, provided they take an endowment or the society's insurance policy. How will that activity be regulated under the proposals? I ask these questions in all innocence, as I do not know how the system will work. I am as much concerned with getting answers as I am with establishing the process by which the House will conduct the debate.
        There are at least three members of the Select Committee on the Treasury here and, in due course, the Committee will be looking at this matter. However, it would seem appropriate, given the importance of the subject to large numbers of people, that we should have a proper opportunity to discuss what mortgage regulation will be about.
        Mr. Flight: I wish to echo much of what the hon. Member for Twickenham (Dr. Cable) has said. When I read the Government's announcement casually, it seemed reasonable. It was only when I looked into it that, regrettably, I saw that the spin papered over some major problems.
        There are various issues to discuss. First, is the FSA capable of providing the regulation that is needed and appropriate? Is the reason for delay that Howard Davies has too much on his hands? The Treasury has signalled that it was cautious, as the large players wanted regulation and we were heading for a form of regulation which would encourage cartels, rather than competition.
        It is important that the regulation of mortgages is the first time we have moved from regulating the asset side to the liability side. If we regulate borrowings against houses, why do we not do so for other borrowings? There are as many potential scams and criticisms when people borrow money for their businesses. Where do we draw the line as regards personal borrowings, other than small consumer borrowing?
        I was amazed to find that, under the Government's proposals, providers would somehow be responsible for advice. When an adviser is giving advice—whether it is on buying financial assets, taking out a mortgage or taking out an insurance policy—it is, broadly, all the same thing. It is a question of whether that adviser is giving the best advice to his client or clients in relation to financial products. We have chaos now, in that an adviser is regulated under the Bill in relation to assets, but has a completely different regime in relation to insurance. There was chaos left from the old regime, before insurance comes under the new regime, while mortgages are not regulated at all.
        Speaking from personal experience when I was given mortgage advice, both times it was unsatisfactory and a waste of money, and I could have done better myself. Mortgage advice needs some form of effective regulation. When we debated the issue in Committee, I recollect making the point—in an echo of the seminar that the Treasury had put on—that we wanted effective regulation. Whether it was to be voluntary or compulsory, it needed to work. Although so far voluntary regulation has been
        348
        ineffective, the Treasury officials seemed to be saying that there was a better chance of getting effective voluntary regulation than compulsory regulation.
        8.30 pm
        I do not pretend to know the answer, but what we have now does not strike me as especially satisfactory. The product is regulated, but not the advice, and the regulation will not start for some time. Life will be more confusing for the consumer buyers of mortgages than it is at present. I agree with the comment that it is an extraordinary way to give birth to the process, because it has not been debated in Parliament or even announced. It has taken place outside the democratic process, and we now have a package of measures that most hon. Members probably do not understand at all.
        Mr. Cousins: I commend the Government on the measures they have taken to bring mortgages under some kind of regulation. That is long overdue and could not have been done under the previous legislation. The Government clearly signalled that they wished to consult widely on the procedure, and that consultation produced a clear and emphatic result. The Council of Mortgage Lenders began by resisting the idea of mortgage regulation, but now accepts and indeed advocates it, following the consultation. That reflects the real progress that the Government's approach to the issue has brought.
        I also have to say that the House is indebted to the hon. Member for Twickenham (Dr. Cable) for tabling the amendment, because it enables us to consider the issue of mortgage advice. Without repeating what was said by the hon. Member for Arundel and South Downs (Mr. Flight), I suggest that it would not be true to say that mortgage advice is one of our best regulated professions. That constitutes a real difficulty. We are not dealing with a function that is already well patrolled and policed by a professional organisation. If advice and, in some respects, packaging advice—linking to mortgages to other products—were not regulated by the FSA, we would end up with a very complicated situation.
        In particular, the mortgage provider, whom the Government intend to regulate, would be in a difficult position. The mortgage provider may have a client who is already committed to a course of action that has been urged by the mortgage adviser and which the mortgage provider may find difficult to resist. None the less, as matters stand, it is the mortgage provider who will carry the responsibility for the failure of the advice, not the adviser.
        I urge my hon. Friend the Minister to consider how the issue might be further clarified. The Government have done so well on the issue and it would be a shame not to have a system that was fully organised and protected, and robustly and adequately regulated. In other respects, the Government have done splendidly in bringing an important area of concern properly under control.
        Miss Melanie Johnson: The comments made by hon. Members this evening about mortgages have ranged widely on the basis of the amendment, but I am happy to answer the points that have been made. The amendment is specific; it covers the same ground as paragraph 23 of schedule 2, which is the provision in the Bill—it was there when we discussed the issue in Committee—that enables

        349
        regulation to take place by means of statutory instrument. Further debate will obviously take place when such an instrument is introduced.
        The original day for debate on this part of the Bill was two weeks ago, which would have been shortly after I had made the announcement. Because of various parliamentary eventualities, a little time has passed and we have been able to discuss the issue now, which has been beneficial.
        Virtually all residential mortgages will be covered by the FSA, and all first charge mortgages will be covered by FSA regulation, regardless of the value of those mortgages. The only provision that is separately covered—in this respect, we are subject to other legislation that we are not here to debate—will be second charge mortgages or mortgages for such things as double glazing.
        Hon. Members have raised the issue of mortgage advice. In considering mortgage regulation, we have tried to address the detriment that consumers were experiencing in dealing with the mortgage market and which was reported to us as a result of the consultation. That detriment was mainly based on bad and misleading information, including hidden charges and surprise small print, which consumers needed a fine-toothed comb to discover. Consumers received many unpleasant surprises from the mortgage deals that they had been sold. We sought to address those issues because consumers are still experiencing those difficulties. It is important, following such a consultation, to address the problems that it found, and that is what we are doing.
        The issue of advice has exercised people somewhat. It is important to realise that because endowment mortgages are investments, advice about them has always been covered by regulation and will continue to be covered. All mortgages that are to be repaid by means of endowments as investment vehicles will be regulated, as has been the case for some time. The FSA has recently taken a number of steps on the selling of endowment mortgages, and many providers have decided to pull out of the endowment market. There have been a number of such announcements.
        Advice is a technical term in this context. It is not like popping into the estate agent's and asking whether it has a number of different mortgages. We are talking about someone who will go through an applicant's entire financial circumstances. It may take an hour or more to do and will require the applicant to produce background information such as bank statements, pay slips and other evidence of his financial circumstances. People divulge such information in considerable detail. Those who are technically giving advice can then match up the applicant's financial circumstances to a range of products available in the market. That is the process of advice giving. We are not talking about the more casual advice that we all receive from different people just by exchanging a few words with somebody under particular circumstances.
        I decided not to regulate mortgage advice because that was not the problem that people were identifying. Nor do I think, in the light of the regulation that we have chosen, that it will be necessary in many cases for people to resort
        350
        to such advice. If they are buying endowment products or going for any investment vehicle, they will have to get advice, and that advice will be subject to regulation.
        The hon. Member for Twickenham (Dr. Cable) mentioned redemption penalties. Details of those will have to be set out very clearly in the information available to consumers. We are regulating the form of information that consumers receive, so that they can compare one lender's offer with another or compare the products that they are being offered. They will be able see very clearly what the terms, conditions and repayments of a mortgage are, and can compare products for themselves using the simple and comprehensive information that they will receive as a result of the regulation.
        The possibility of certain things coming as a surprise will no longer exist. That will be the result of the FSA's regulation of the information. Redemption penalties will be outlawed as part of the CAT standard regime. If someone buys a CAT standard mortgage, they will know that no such penalties will apply.
        Mr. Flight: Does the Minister not agree that quite aside from the issues that she describes, when people take out a mortgage there are some crucial matters on which they need advice, analogous to buying a unit trust? For example, depending on the future course of interest rates, taking out a fixed-rate or floating-rate mortgage will make a huge difference to one's net wealth and position. Many people will not know what is likely to be appropriate to their circumstances or what can be expected of interest rates in the future.
        Secondly, even with very standard mortgages, the difference in charges in the market varies considerably, depending on whether particular lenders want to lend or not. Therefore, people get advice on where they can get the best deal on a seven-year fixed mortgage. There is a growing market for advice, partly because of the complexity of mortgages. The Minister says that she has not had feedback—
        Mr. Deputy Speaker (Mr. Michael Lord): Order. Is the hon. Gentleman making a speech or an intervention? He has probably said about enough.
        Miss Johnson: I was lulled into listening to the hon. Gentleman as if he were making a speech. I was interested in his comments.
        Were people to receive advice in the sense referred to by the hon. Gentleman, the only way in which it could be regulated is if the person giving the advice went through extensive financial examination of their affairs. Otherwise, advice which is not really advice in this technical sense would not be subject to regulation, nor could it be. How could one judge whether advice was good if it was not based on evidence of an individual's financial circumstances? That is why I felt that it was not the right course to take. People wanting a full inquiry can of course take advice in that sense. It will be regulated in the same way that advice on endowments is regulated. If one is simply popping in to ask for information, there cannot sensibly be any regulation.
        We have decided to regulate lenders, who will be responsible for making sure that brokers comply with regulations about information and behave as if they, like the lenders, were regulated by the FSA.
        8.45 pm
        Mr. Cousins: May I urge the Minister to bear in mind the fact that the mortgage market contains a bewildering range of products that are simply mortgages? There are mortgages calculated daily, flexible mortgages, fixed-rate mortgages, mortgages with different redemption penalties and many more. There is an established market for advising and directing people who may be not terribly sophisticated or new to the market. Those different products have quite different effects on people's income, and they take that income at different points in people's lives, which is crucial to many low-income families purchasing a mortgage for the first time. I urge my hon. Friend to reflect on the position, considering whether the heavy bias—
        Mr. Deputy Speaker: Order. Long interventions seem to be becoming contagious.
        Miss Johnson: Hon. Members are much enticed by this, Mr. Deputy Speaker. I have already reflected on the matter at length and found that there is a problem with the information that people receive rather than with advice, except in the case of endowments for which advice is regulated already. That is why we chose the route in the Bill. I accept that many mortgage products are available—between 4,500 and 5,000, in fact—but consumers cannot make comparisons between them because the information available is not standardised. Nor is it clearly set out in terms that people may readily understand. For that reason, we have decided to regulate the form of information provided and the conduct of lenders and, through lenders, brokers. We believe that that will deal with the detrimental effects that consumers experience in today's mortgage market.
        I reiterate that amendment No. 444 covers the same ground as paragraph 23 of schedule 2. The action that we have decided to take will protect consumers, and I look forward to discussing the matter further when we produce a statutory instrument.
        Dr. Cable: I thank hon. Members on both sides of the House for the depth and experience that they have brought to the debate. I agree with the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) that we should not lose sight of the central point, which is that we are on the threshold of mortgage regulation. That is a positive development. We are arguing about the way in which it is being done, but the central point is that it is happening.
        I was glad to hear the Minister accept that the legislative process had not yet thrown up a proper scrutiny process. I look forward to debating the statutory instrument. I hope that that debate will be held soon and will be well signalled so that it may have the promised substance.
        In long and eloquent interventions, it has been made clear that there is continuing concern about advice. I have gained the impression that representative bodies in the field—the Consumers Association and the National Consumer Council—remain concerned, although I do not know what evidence they gave to the public inquiry. In retrospect, they feel that the exclusion of advice considerably weakens the Government's proposals for regulation. I look forward to the continuation of that debate.
        352
        The Minister mentioned CAT standards. Such benchmarking of complex products is useful, but much of the Government's policy hinges on the fact that CAT marking should be an accepted and understood convention, not only for the products we are discussing but for utilities products and for pensions, when they are introduced. However, many products that are not CAT-marked will continue to be sold and will contain serious defects.
        I realise that the amendment does not address the problems about advice that have been thrown up by the debate. The amendment's scope is narrow and I shall not push it to a vote. I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

      Schedule 3

        EEA PASSPORT RIGHTS
        Amendments made: No. 158, in page 208, line 3, leave out
        "of his home state regulator"
        and insert—
        "in which he has his head office"
        No. 159, in page 210, line 2, leave out "13 or 14" and insert "12".
        No. 160, in page 210, line 5, after "branch" insert—
        "(if it satisfies the establishment conditions)"
        No. 161, in page 210, line 6, after "Kingdom" insert—
        "(if it satisfies the service conditions)"
        No. 162, in page 210, line 9, at end insert—
        "( ) Sections 21, 39(1) and 147(1) of the Consumer Credit Act 1974 (business requiring a licence under that Act) do not apply in relation to the carrying on of a permitted activity which is Consumer Credit Act business by a firm which qualifies for authorisation as a result of paragraph 12, unless the Director General of Fair Trading has exercised the power conferred on him by section 177 in relation to the firm.
        ( ) 'Consumer Credit Act business' has the same meaning as in section 177.".
        No. 163, in page 210, line 15, leave out from beginning to "change" and insert—
        "make provision as to any".
        No. 164, in page 210, line 17, after "Kingdom" insert—
        "and as to the procedure to be followed in relation to such cases".
        No. 165, in page 210, line 34, at end insert—
        "( ) The activities identified in a notice of intention may include activities which are not regulated activities.".
        No. 166, in page 211, line 27, leave out "providing services" and insert "conducting business".
        No. 167, in page 211, line 46, at end insert—
        "( ) The activities identified in a notice of intention may include activities which are not regulated activities.".
        No. 168, in page 212, line 28, leave out from beginning to "change" and insert—
        "make provision as to any".
        No. 169, in page 212, line 30, after "on" insert—
        "and as to the procedure to be followed in relation to such cases".

        353
        No. 170, in page 212, line 36, at end insert—
        ".—(1) Sub-paragraph (2) applies if a UK firm—

        (a) has a Part IV permission; and

        (b) is exercising an EEA right to carry on any Consumer Credit Act business in an EEA State other than the United Kingdom.

        (2) The Authority may exercise its power under section 40 in respect of the firm if the Director of Fair Trading has informed the Authority that—

        (a) the firm,

        (b) any of the firm's employees, agents or associates (whether past or present), or

        (c) if the firm is a body corporate, a controller of the firm or an associate of such a controller,

        has done any of the things specified in paragraphs (a) to (d) of section 25(2) of the Consumer Credit Act 1974.
        (3) 'Associate', 'Consumer Credit Act business' and 'controller' have the same meaning as in section 177.
        .—(1) Sub-paragraph (2) applies if a UK firm—

        (a) is not required to have a Part IV permission in relation to the business which it is carrying on; and

        (b) is exercising the right conferred by Article 18.2 of the second banking co-ordination directive to carry on that business in an EEA State other than the United Kingdom.

        (2) If requested to do so by the host state regulator in the EEA State in which the UK firm's business is being carried on, the Authority may impose any requirement in relation to the firm which it could impose if—

        (a) the firm had a Part IV permission in relation to the business which it is carrying on; and

        (b) the Authority was entitled to exercise its power under that Part to vary that permission.".—[Miss Melanie Johnson.]

      Schedule 5

        PERSONS CONCERNED IN COLLECTIVE INVESTMENT SCHEMES
        Amendments made: No. 171, in page 214, line 20, leave out from "scheme" to end of line 21 and insert "is an authorised person".
        No. 172, in page 214, line 23, leave out "operator of an".
        No. 173, in page 214, line 23, leave out "qualifies for authorisation" and insert "is an authorised person".
        No. 174, in page 214, line 25, leave out sub-paragraph (4).
        No. 175, in page 214, line 28, leave out from "person" to "paragraph" and insert—
        "authorised as a result of".
        No. 176, in page 214, line 30, after "activity," insert—
        "appropriate to the capacity in which he acts".
        No. 177, in page 214, line 33, leave out from "person" to "paragraph" and insert—
        "authorised as a result of'.
        No. 442, in page 214, line 38, leave out from beginning to end of line 41.—[Miss Melanie Johnson.]

      Schedule 6

        QUALIFYING CONDITIONS
        Amendments made: No. 178, in page 215, line 5, leave out paragraph 1.
        354
        No. 179, in page 215, line 9, leave out from "If' to "or" in line 11, and insert—
        "the regulated activity concerned is the effecting or carrying out of insurance contracts, the authorised person must be a body corporate, a registered friendly society".—[Miss Melanie Johnson.]

      Schedule 7

        TRANSFER OF FUNCTIONS UNDER PART VI
        Amendment made: No. 443, in page 218, line 23, leave out "enactment" and insert—
        "primary or subordinate legislation (including any provision of, or made under, this Act)".—[Miss Melanie Johnson.]

      Schedule 14

        THE OMBUDSMAN SCHEME
        Amendments made: No. 180, in page 234, line 37, leave out
        "received or anticipated from fees"
        and insert—
        "of the scheme operator arising or expected to arise from the operation of the scheme".
        No. 181, in page 237, line 11, at end insert—
        "( ) The standard terms may, in particular—

        (a) require the making of payments to the scheme operator by participants in the scheme of such amounts, and at such times, as may be determined by the scheme operator;

        (b) make provision as to the award of costs on the determination of a complaint.".—[Miss Melanie Johnson.]

      Schedule 15

        MUTUALS
        Dr. Cable: I beg to move amendment No. 1, in page 239, line 5 at end insert—
        "7A. In section 13 (control of subsidiaries and other bodies corporate),—

        (a) in subsection (2)(a) for 'of the activities specified in Schedule 7 to this Act' substitute 'activities authorised by the Commission'; and

        (b) omit subsection (8).

        7B. In section 52 (applications to court), in subsection (2)(d) for `mentioned in Schedule 7 to' substitute 'authorised by virtue of section 13(2)(a) of'.
        7C. Omit Schedule 7 (activities which may be carried on by a subsidiary of or body jointly controlled by an incorporated friendly society).".
        Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 2, in schedule 17, page 241, line 24, column 3, at beginning insert "Section 13 (8).".
        No. 3, in page 241, line 24, column 3, at end insert "Schedule 7.".
        Dr. Cable: The amendment can be dealt with in seconds rather than minutes. It is a probing amendment, which reflects the interest in the problems of friendly societies expressed at an earlier stage of the Bill's progress by my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir R. Smith). He is on

        355
        paternity leave and cannot speak to the amendment this evening. [Interruption.] I seem to have triggered some interest in that issue.
        Friendly societies are distinctive financial institutions; they are mutually owned and non-profit-making. We must be sensitive to the impact of regulation on such institutions. As my hon. Friend pointed out, many of them are small, thus the regulatory costs would be disproportionately high.
        The purpose of the amendment is to ask the Government whether, while tidying up the schedule and bringing together earlier legislation on friendly societies, they have properly consulted the societies. Does the measure give friendly societies sufficient scope to develop their business and maintain an expanding part of the financial sector? Could the measure be technically improved by the inclusion of these small, technical amendments?
        Mr. Flight: I support the amendment. Friendly societies are governed by the Friendly Societies Act 1992—schedule 7 of which sets out what business they can undertake. To change that, they must submit to the cumbersome mechanism of going to the Friendly Society Commission and the Treasury and then obtaining a statutory instrument. They have found problems in changing their activities according to circumstances. They will now be regulated by the FSA.
        The Minister told us that the Government intend to repeal schedule 7 of the 1992 Act and there has already been movement in relation to the insurance activities of friendly societies. There can be no argument against getting rid of schedule 7, so that the activities of the societies can be governed by their FSA regulator.
        Miss Melanie Johnson: As hon. Members will be aware—especially those who were members of the Standing Committee—the Government tries hard to please all Members. On this occasion, I trust that we shall succeed. Broadly speaking, I agree with the probing amendments tabled by the hon. Member for Twickenham (Dr. Cable).
        I confirm that we intend not only to repeal schedule 7 of the Friendly Societies Act 1992, but to amend section 13 of the Act. Together, those provisions limit the purposes for which subsidiaries and jointly controlled bodies of an incorporated friendly society may exist.
        The supervisory functions of the Friendly Societies Commission under the 1992 Act will be replaced by the functions of the FSA under the Bill. The commission's other functions will, for the most part, be transferred to the FSA. After the proposed repeal of schedule 7 and the necessary amendment of section 13, the FSA will impose any future restrictions to the extent necessary to protect the interests of policyholders of the friendly societies concerned.
        I very much hope that the change to the regulatory regime for incorporated friendly societies will enhance their ability to provide services to the community, and I am sure that everyone hopes for that. We intend appropriate drafting to be inserted into schedules 15 and 17 when we are in a position to make the changes to which I have just referred. I hope that the hon. Member
        356
        for Twickenham will not press his amendment, because I assure him that the Government will introduce changes to meet the point that he has made.
        Dr. Cable: I thank the hon. Member for Arundel and South Downs (Mr. Flight) for his brief but clear support and the Minister for her constructive answer. I hope that it produces a happy outcome. I beg to ask leave to withdraw the amendment.
        Amendment, by leave, withdrawn.

    Schedule 16
      MINOR AND CONSEQUENTIAL AMENDMENTS
      Amendment made: No. 182, in page 240, line 14, at end insert—
      MINOR AND CONSEQUENTIAL AMENDMENTS

        The Income and Corporation Taxes Act 1988 (c. 1)
        .—(1) The Income and Corporation Taxes Act 1988 is amended as follows.
        (2) In section 76 (expenses of management: insurance companies), in subsection (8), omit the definitions of—

        "the 1986 Act";

        "authorised person";

        "investment business";

        "investor";

        "investor protection scheme";

        "prescribed"; and

        "recognised self-regulating organisation".

        (3) In section 468 (authorised unit trusts), in subsections (6) and (8), for "78 of the Financial Services Act 1986" substitute "217 of the Financial Services and Markets Act 2000".
        (4) In section 469(7) (other unit trust schemes), for "Financial Services Act 1986" substitute "Financial Services and Markets Act 2000".
        (5) In subsection (1) of section 632 (establishment of personal pension schemes)—

        (a) in paragraph (a), for the words from "authorised" to "business" substitute "an authorised person for the purposes of the Financial Services and Markets Act 2000 and who has permission under that Act to carry on a regulated activity";

        (b) for paragraph (aa) substitute—

        "(aa) an authorised person for the purposes of the Financial Services and Markets Act 2000 having permission under Schedule 3 to that Act to carry on a regulated activity consisting of long-term insurance business (within the meaning of that Act);"

        (c) in paragraph (c), for "authorised under the Banking Act 1987" substitute "which is an authorised person for the purposes of the Financial Services and Markets Act 2000 having permission under Part IV of that Act to carry on a regulated activity consisting of accepting deposits";

        (d) in paragraph (cc), for "authorised under the Banking Act 1987" substitute "of a kind mentioned in paragraph (c)";

        (e) for paragraph (e), substitute—

        "(e) an EEA firm falling within paragraph 5(b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000 lawfully carrying on in the United Kingdom any activity falling within item 1, 7 or 11 of the annex to the second banking co-ordination directive (as defined by that Schedule);"

        (6) In subsection (2) of that section—

        (a) for "business" substitute "regulated activity"; and

        (b) in paragraph (b), for "78(1) of the Financial Services Act 1986" substitute "217 of the Financial Services and Markets Act 2000".

        (7) Omit subsections (2ZA) and (2B) of that section.
        (8) In section 728 (information in relation to transfers of securities), in subsection (7)(a), for "Financial Services Act 1986" substitute "Financial Services and Markets Act 2000".
        (9) In section 840A (meaning of "bank")—

        (a) in subsection (1), for paragraphs (b) and (c) substitute—

        "(b) an institution which is an authorised person for the purposes of the Financial Services and Markets Act 2000 having permission under Part IV of that Act to carry on a regulated activity consisting of accepting deposits;

        (c) an EEA firm falling within paragraph 5(b) of Schedule 3 to the Financial Services and Markets Act 2000 which satisfies the establishment conditions and qualifies for authorisation under that Schedule;"; and

        (b) omit subsection (2).

        (10) In section 841(3) (power to apply certain provisions of the Tax Acts to recognised investment exchange), for "Financial Services Act 1986" substitute "Financial Services and Markets Act 2000".

        The Finance Act 1991 (c. 31)
        .—(1) The Finance Act 1991 is amended as follows.
        (2) In section 47 (investor protection schemes), omit subsections (1), (2) and (4).
        (3) In section 116 (investment exchanges and clearing houses: stamp duty), in subsection (4)(b), for "Financial Services Act 1986" substitute "Financial Services and Markets Act 2000".".—[Miss Melanie Johnson.]

    Schedule 17

      REPEALS
      Amendment made: No. 183, in page 241, line 23, at end insert—

      "1988 c. 1.

      The Income and Corporaion Taxes Act 1998.

      In section 76, in subsection (8), the definitions of "the 1986 Act", "authorised person", "investment business", "investor", "investor protection scheme", "prescribed" and "recognised self— regulating organisation".

      In section 632, subsections (2ZA) and (2B).

      Section 840A(2).

      1991 c. 31.

      The Finance Act 1991.

      In section 47, subsections (1), (2) and (4).".

      —[Miss Melanie Johnson.]
      Bill, as amended, to be reported.
      Order for Third Reading read.
      8.56 pm
      The Chief Secretary to the Treasury (Mr. Andrew Smith): I beg to move, That the Bill be now read the Third time.
      358
      First, I pay a warm tribute to all those who have contributed to our debates. In particular, I thank all the members of the Standing Committee who worked long and hard through 35 sittings and for 90 hours or so—to say nothing of the three further sittings on the Floor of the House—properly to scrutinise the Bill and to make many improvements. The work of Lord Burns and his committee and of Don Cruickshank has also helped to improve the Bill. I am grateful to them for all their hard work.
      I take this opportunity to thank especially my hon. Friends the Economic Secretary and the Financial Secretary for their enormous contribution. Theirs is real achievement and something of which they can be proud. I know that, even when it might not have seemed like it, it was truly a labour of love. I therefore extend thanks to them and to their predecessors. I am also grateful to our officials, to their colleagues in the FSA and to parliamentary counsel without whose skill and dedication a Bill of this size could simply not have been prepared and carried forward.
      The reason for the extent of those labours is the importance, the scope and the inevitable technical complexity of such a Bill. I do not believe that there are real differences of opinion in the House or outside on the underlying objectives of modernising the regulation of financial services. We therefore very much welcomed the co-operation of the Opposition parties in using the innovative roll-over procedure last autumn and the other ways to progress the Bill. That will allow us, I hope, to get a fully scrutinised Bill on to the statute book in the spring. That is in the interests of everybody concerned.
      As the right hon. Member for Wells (Mr. HeathcoatAmory) said on Second Reading, the importance of the Bill is undoubted. Its purpose is to put into place modern and effective regulation for one of our most important industries. Financial services account for 7 per cent. of gross domestic product and contribute £32 billion net to the balance of payments. The United Kingdom's world-beating financial services industry is vital not only because it employs more than a million people, but because it provides a means to look after the savings of many millions more. Firms in all sectors of the economy rely crucially on it for the provision of finance.
      The Government inherited a regulatory system that could, perhaps, be most tactfully described as complex and interesting—if one likes that kind of thing. We are replacing that with something much better. In place of the outdated multiplicity of regulators, we shall have a single statutory, accountable regulator.
      The FSA will have clear objectives and the right balance of powers and duties to provide, as we have said, a light touch where possible and effective consumer protection where necessary. It will be required and expected to operate in a way that is fair, transparent and accessible.
      Important improvements have been made in the House to many aspects of the Bill; for example, the new market abuse regime, which was discussed earlier this evening, and the competition provisions, helping to protect the integrity and effectiveness of markets. Important clarifications and safeguards have been added in those and other areas. In addition, of course, many more technical improvements have been made with the support of both sides of the House.

      359
      The Bill will go to another place with its general framework in the shape in which I hope and expect it to emerge. Inevitably with a Bill of this nature, further refinements will be needed; for example, in additional technical improvements and transitional provisions. We shall also bring forward, as promised, changes to part VI, as a consequence of the developments in the stock exchange, which occurred after the Bill was introduced.
      Mr. Tyrie: It is absolutely clear that the other place will have to put in transitional arrangements and repeals. The Chief Secretary has made it clear that he wants to get the Bill on the statute book as early as possible in April, so why was it not possible to make those amendments before the Bill goes to the other place?
      Mr. Smith: There is a simple, commonsense reason for that. It makes sense to put in place the architecture and design of the new building before one handles all the arrangements for moving in, and that is the logical reason why many transitional provisions will be made later. As I said, demutualisation of the stock exchange has occurred since the Bill was introduced.
      It is right at this stage to thank all those responsible for the important work of pre-legislative scrutiny carried out by Members of both Houses under the chairmanship of Lord Burns. That is a further aspect of the modernisation of procedures from which the Bill has undoubtedly benefited. The hon. Member for Arundel and South Downs (Mr. Flight) is on the record as saying that the Joint Committee virtually rewrote the Bill. That may be an exaggeration, but there is no doubt that it made a vital contribution in the form of several important recommendations on the draft Bill, the great majority of which we accepted and implemented prior to the Bill's introduction or during its passage through the House.
      The Joint Committee proceedings laid the foundations for the co-operative scrutiny of this far-reaching, technical Bill in the House. The discussions have, at least until tonight, engaged many hon. Members, but we have exhausted the interest even of some of the more assiduous Conservative Members, as is evident from the sparse attendance.
      For the overwhelming majority of the time there has been a constructive approach to the Bill, and I trust that it will continue in another place. It is clearly important that it should since we must all do what we can to get right this important legislation, while avoiding unnecessary delay in its enactment. I am glad that the right hon. Member for Wells acknowledged that point on Second Reading and on several subsequent occasions.
      A couple of weeks ago, I had the pleasure of visiting the FSA with the Chancellor of the Exchequer, and we were both very impressed by what Howard Davies and his colleagues have already achieved. I have no doubt whatever that they are putting in place a world-class regulator for a world-beating industry. The Bill will give them a statutory framework to match, and I commend it to the House.
      9.4 pm
      Mr. David Heathcoat-Amory: The Bill is nearing the end of its long passage through the House. It has been something of a parliamentary epic, and I can claim to be a founder member of the club, together with my
      360
      hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton). He was in at the start, and I am glad that he is in at the finish.
      The origins of the Bill go back to the weeks following the general election, when the Government announced their intention to legislate for a new, unified regulator to oversee financial services and banking. I am not sure that the Government understood what they were taking on in those days.
      There have been many changes, many of them good, but the process has not been helped by the fact that there have been so many ministerial changes. That is no criticism of the industry and commitment of the Economic and Financial Secretaries, but there have been three complete changes of the ministerial team, which has undoubtedly caused a hiccup from time to time.
      For our part, we have been constructive throughout in our criticism. We want a Bill that will be effective in regulating an important industry, while being fair in its procedures and just towards those accused of financial crimes. The problem has been that the more we scrutinise the Bill, the more misgivings we have, despite the fact that the Government have moved on a number of issues. I acknowledged that several times this evening.
      Many of the difficulties are in the wording and the detail of the clauses. Matters are not helped by the fact that much of the Bill remains submerged. It will become apparent in secondary legislation, which we have not seen, even in draft form.
      We have been more or less alone in carrying out our scrutiny task. It is flattering that we now have a Liberal Democrat with us—the hon. Member for Weston-super—Mare (Mr. Cotter), whose constituency is in my county, Somerset, is always welcome, as an observer if nothing else. We would have appreciated a more active role from that party during the long days and evenings last year when we were considering the Bill clause by clause. The silence of the Liberal Democrats, who were entirely absent from most of the Committee stage, will have been noticed by the trade bodies concerned and by the million or so people who are directly employed in that important industry.
      Mr. Brian Cotter: On behalf of my hon. Friend the Member for Twickenham (Dr. Cable), may I say that, as the right hon. Gentleman knows, we targeted our efforts on certain issues? I pay tribute to my hon. Friend's work in that respect.
      Mr. Heathcoat-Amory: The Liberal Democrats were certainly economical with their targeting, and the effort of intervening on Report clearly exhausted the hon. Member for Twickenham (Dr. Cable), who has left the Chamber.
      We should try, even at this stage, to make improvements to the Bill. It still has to go to another place. As we have emphasised repeatedly, the financial services industry is not only extremely important and successful, but highly mobile. The City is under almost ceaseless attack. The competition in world markets is pitiless and continuing. A regulatory system in this country must respect that. While it must be effective, it must avoid imposing excessive costs. Whenever possible, it should promote competition at home and competitiveness in world markets. If it fails to do that, the economy will suffer a great deal of industrial damage, and

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      consumers will also suffer. An industry that is driven to Dublin or Frankfurt may be subjected to a lower regulatory standard. Consequently, jobs could be lost and the general standard of regulation could suffer.
      It has been observed that over-regulation leads to concentration of an industry by driving out small firms. Regulations are big business friendly because they raise the threshold of entry. Small businesses suffer. If a concentration occurs, further regulation is needed, and thus the ratchet effect increases constantly.
      It is important that the authority's procedures are fair and can, if necessary, be challenged in court. There is a huge concentration of power in the authority. It combines rule making, investigating, disciplinary action and fining. Fines can be unlimited, and people can be deprived of their livelihoods. Failure of the procedures would lead to injustice in a domestic context, and the authority could also be torpedoed by the European convention on human rights.
      I retain many doubts about whether the proposed statutory immunity will survive in the long term. If the authority acts negligently or incompetently and severely damages an individual or a firm, its action may breach the European convention on human rights if the person or firm is denied access to the courts to seek restitution. Statutory immunity is therefore vulnerable.
      If the authority is torpedoed, the consequences could be serious. They could jeopardise, at least in the short term, the whole regulatory structure and render ineffective the powers that the FSA needs to ensure fair trading. We responded constructively to that by pressing the Government to accept the recommendation of the Burns committee that the complaints investigator should not only be genuinely independent but able to recommend financial awards against the authority when it acts wrongly. I regret that the Government have rejected that suggestion.
      Instead of accepting our amendment to elevate the importance of competition, the Government followed a highly bureaucratic route of bringing in the Office of Fair Trading, which will report to the Competition Commission, which will report to the Treasury, which will alter the authority's rules. It would have been far better if the FSA's statutory objectives included supporting competition at home and competitiveness abroad.
      The Government accepted some of our suggestions. The Bill is an improvement on the original measure, which was published in July 1998. However, the Government rejected our suggestions on too many subjects, and many matters remain outstanding. Time prevents me from listing them all, but I shall mention some of them.
      We tried to improve the accountability of the FSA' s internal procedures by suggesting the appointment of a chief executive as well as a non-executive chairman. Its accountability would also be improved by enhancing the role of the non-executive members in line with good practice in the private sector. Again, the Government turned that down.
      We also tried to ensure that the FSA is subject to regular independent reviews and that the existing rulebook—not only new rules—is subject to cost-benefit
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      analysis. That would have been some defence against the inevitable tendency of public bodies to expand over time and would at least have ensured that the cost base from which it operates would be subject to cost-benefit analysis. Again, we were turned down.
      Territorial scope, the treatment of electronic trading and how products are offered over the internet—often across national boundaries—are complex issues. The Government seem to have adopted the precautionary approach of catching them all and exempting some by secondary legislation. That is unsatisfactory, particularly given the time that they have had to consider and consult. It would have been better had they set out a strategy—preferably one of home state supervision and regulation, which could be jeopardised if the Bill proceeds in its current form.
      We have a better Bill, which is due largely to the efforts of those on the Benches behind me, but it is flawed in a number of fundamental respects. Let no one be in any doubt about that. We shall continue our efforts to improve it in the other place and the epic is not yet over.
      9.16 pm
      Mr. Barry Sheerman: I am intruding on the debate, although I was deputy chairman of the Burns inquiry. I got off after four months, with good behaviour. The time between spring and the end of summer was invigorating and interesting and it was fascinating to watch Lord Burns, the poacher turned gamekeeper.
      Mr. James Plaskitt: That is why he has gone hunting.
      Mr. Sheerman: Indeed. I wish Lord Burns well in the more difficult task on which he has embarked as a chairman.
      The procedure for handling the Bill is of great constitutional importance. I am very interested in our constitutional processes, the background to which is constant sniping and criticism of the traditionally hasty passage of legislation through both Houses of Parliament. I enjoyed not only the long and interesting consultation that the Government took in hand, but the pre-legislative inquiry, which was totally new and set a precedent as it involved both Houses of Parliament. All who served on the Burns committee found that the peers—even some of the hereditaries, although one should not say that—assisted our deliberations and that their expertise improved the Bill.
      What did we achieve? The pre-legislative inquiry made many sound and serious recommendations and I have been reading the Library report on how many were accepted over the past few days. A large number were agreed to and the Government have to be congratulated on being flexible and open to change. However, I still have one disagreement: the post of chairman and chief executive should be split in half. I say that honestly. It was a recommendation of the committee and I still think that there is something in it. I might have been tempted to vote for it, if the Opposition had had the courage to force a Division.
      The process of consideration was interesting and should not be forgotten as it represents a way of dealing with complex legislation. The Bill is one of the most complex

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      that the House will have to consider and if that process was good for it, it must be good for other Bills. We should extend the method and the Commons and the Lords should work together to improve Bills. The Bill has to go through subsequent stages, and I think that it will be further refined. However, we already have a better Bill and we have discovered a process that works. We should not forget that. We should use it.
      As with all Oppositions, the right hon. Member for Wells (Mr. Heathcoat-Amory) showed why a pre-legislative inquiry is better. We sat round a semi-circular table. We were not scoring points across the divide day after day. We collaborated as a team to improve the Bill, and we did. One problem is that, when we get into a confrontational position in the Chamber, both sides have to find something to fight over. Some of the amendments, and some of his comments, showed that the Opposition have had to find something to criticise in a fundamentally good Bill.
      We must not forget the lessons that we have learned. We should use the process. I say to all my colleagues on both sides who participated in the early part of the Committee's deliberations that, although I escaped to do other duties in other Committees, I learned a great deal from them and enjoyed the process. We did something remarkable that we should be proud of, so let us remember.
      9.21 pm
      Mr. Loughton: I am grateful to my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). Some of us were present at what seems like the birth. Before that, the Bill was conceived in the Labour manifesto, of dodgy parentage. The first contractions were experienced in the draft Bill in July 1998, but there was no sense of urgency at that time. The patient was then rushed to hospital in serious need of help, and given over to the specialist, Lord Burns, in February 1999. On the face of it, the chief gynaecologist dealing with the Bill agreed with Dr. Burns's prognosis, but would not commit herself.
      Despite that, there was a serious need for further opinions from consultation exercises. However, before the consultant's results even arrived on the scene, the patient was taken to the delivery ward and in July 1999 we had a new Bill altogether. No sooner had it arrived in the delivery ward, than the lead gynaecologist and the whole medical team were changed, replaced by rookies who were not privy to the patient's history, condition or entire medical records.
      All that time, the patient was left in limbo, not knowing whether she was going to give birth, or to how many offspring. Contractions gathered pace between July and December of last year, although at times the new medical team seemed to have little understanding of what they were doing, which bits go where, who was responsible for what, and what will be produced, where and when.
      Now, 18 months after the contractions started, the entire method of delivery is to be changed, and a straightforward single birth looks like becoming quadruplets all in the breach position. Members of the Government Front Bench are trying to perform an emergency caesarian, aware of all the time that has been wasted up till now.
      My fear is that at least one of those quadruplets will appear with two large bolts attached either side of its neck. The nature of the beast that we are creating in the
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      FSA will prove to be a Frankenstein monster that will turn on the financial services industry, and the potentially destructive powers of its regulatory zeal will soon run out of control. I thought that was a rather better metaphor than the leviathan that we have mentioned so many times.
      I had lunch today with a senior director of a financial services firm in the City, who echoed many similar comments that have been made in recent weeks. He said that despite everything that we have inserted in the Bill, the balance of the rights of the regulated person against the powers of the regulator to initiate investigation, impose regulations and penalties, and ultimately withdraw authorisation and destroy whole livelihoods, has been completely tilted in favour of the regulator.
      There is a climate of fear in the City. Firms will take excessive investigation on the chin, and the ensuing penalties will be out of all proportion to the misdemeanour or ability of firms to do anything about a rogue trader or a rogue incident. The climate of fear is such that firms are afraid to raise any objections in case they are singled out for intensive scrutiny and never given the benefit of the doubt.
      Despite all our attempted safeguards, that climate of fear, far from being dispelled, is potentially worsened by the unlimited fining ability and enormously increased powers. That is very worrying, coming from so many practitioners of long standing. The cost of this Frankenstein's monster is forecast in the new budget document, just released, to be £162.5 million next year, up from £154 million for this year, an increase of 5.5 per cent.—and that is before taking account of the likely cost of regulating mortgages and whatever else.
      At the end of the day, what so many people from the Labour Benches never realise is that the consumer will pay the cost of extra legislation. The very people that we are here to protect will be paying excessive amounts of money for excessive regulation. That is our fear.
      The problem with the Bill is the unparalleled conferment of regulatory authority on an autonomous body. It covers the whole financial services sector, and now, apparently, mortgages. It covers prudential and conduct-of-business aspects, and has very wide-ranging powers: authorisation, legislation, investigation, intervention and discipline. It must be accountable and inspire confidence, but quite patently, as our deliberations show, it does not.
      The generality of the objectives is such that they are open to interpretation. There is insufficient regard to competition, despite the parallel Cruickshank report that we considered midway through Committee. There are insufficient checks on the FSA's doing its job properly, and it needs to be accountable to Parliament. Too much is governed by rules to be made under delegated legislation and not subject to parliamentary review.
      Far too much in the Bill is left open-ended. The chairman-chief executive split—the hon. Member for Huddersfield (Mr. Sheerman) quite rightly mentioned it; it is a shame he was not here to mention it earlier—is another example of the lack of accountability by the FSA. When Howard Davies leaves in a few years' time, we shall be dealing with entirely different characters.
      There is a lack of commitment in the Bill to regular reviews and a proper look at the cumulative effect of regulation in an international context. The whole Bill is completely lacking in detail. The statutory immunity is

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      not counterbalanced by independent investigation and a compensation scheme. The ultimate recourse of judicial review is impractical and just will not happen.
      The extent of regulation is down to what the Treasury decides to specify at any given time. As my right hon. Friend mentioned, the lack of certainty under the market abuse clauses must surely in time be subject to the ECHR, articles 6 and 7. What is the role of the FSA with regard to systemic risk?
      There is so much detail still to come at this late stage. Even today we have heard that there are no further details about the FSA's role as the competent authority. The mechanics of the excessively bureaucratic legal aid scheme, which is to be published, and the rebating of excess fees and fines we know nothing about. All this is so late in the day after such a long birth.
      The Opposition want an FSA that is effective and streamlined and has clarity and transparency. We do not want a leviathan or a Frankenstein's monster which threatens the competitiveness, pre-eminence and international appeal of the whole financial services community, and for which ultimately the consumer will pay. This is a major lost opportunity in the Bill.
      This is nanny—[HON. MEMBERS: "The hon. Gentleman does not mean that."] I mean it sincerely. This is nanny on an enormous scale. It is nanny with knuckledusters and expensive habits, and I therefore urge my hon. Friends to vote against the Bill.
      9.29 pm
      Mr. Beard: For the four of us on these Benches who have seen the Bill through all its stages from the Burns committee, tonight has something of an end of term feeling. I am sure that all four of us would wish to associate ourselves with the remarks of my hon. Friend the Member for Huddersfield (Mr. Sheerman) on the constructive way in which the committee dealt with the matter and its value through all the subsequent stages.
      The main emphasis of all the evidence in the pre-legislative scrutiny Joint Committee was from financial practitioners, concerned, as the hon. Member for East Worthing and Shoreham (Mr. Loughton) has been, that the Bill would enable the Financial Services Authority to bear down on them too severely. In Committee, virtually all the Opposition amendments were designed to increase accountability, to make it easier to pursue the FSA in the courts, to remove or limit its immunities, or to secure increased consultation and reasoned responses.
      It is vital for the Bill to be fair, and not to provide so draconian a regime that financial services companies in London and the rest of the country would be at a disadvantage in international financial markets. It is also vital, however, for the financial services industry in Britain to have a reputation for integrity. People should be able to trust our financial practitioners, without any suspicion or reservation. That point has never been so strongly represented in debates as has the need to avoid regulatory cost, and the need to prevent the FSA from becoming a behemoth—or the leviathan referred to earlier—trampling innocent financiers underfoot.
      As the Bill moves to another place where there are many distinguished financial service practitioners, there is a danger that the same emphasis is about to be
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      intensified—that there will be too much emphasis on accountability and restraint of the FSA, and that too little will be said about performance and effectiveness in the achievement of its objectives. I also feel some unease about the way in which so many strands of FSA accountability have been added to each other, without much debate about the total impact on the day-to-day effectiveness and flexibility of the organisation.
      Let me briefly summarise the many dimensions of accountability that already exist in the Bill. The Treasury will appoint the board with a majority of non-executive directors, who will form a committee reviewing the economy and efficiency of the FSA. The executive directors will be subject to confirmatory hearings by a parliamentary Committee. An annual report will be published covering a prescribed list of topics, which will be reviewed by a parliamentary Committee. The Treasury may appoint investigators to inquire into whatever aspect of the FSA's work it wishes to be examined.
      Two panels, one representing consumers and the other representing practitioners, must be consulted on various aspects of FSA practices and rule making, and their observations must be given reasoned answers. When guiding principles and codes of practice are to be established or subsequently amended there must be consultation with the relevant public, and responses must be made about why any observation has not been accepted. All FSA decisions are subject to appeal to a tribunal involving quasi-judicial proceedings, hearing cases from scratch, and there is to be an independent investigator of complaints.
      If the other place piled on a few more accountabilities and introduced a few extra impediments to fast reaction in a spirit of giving misbehaving practitioners a sporting chance, the real fear would not be that a powerful unaccountable monster had been created and let loose. The real question would be whether the staff of the FSA would have any time, energy or motivation left to pursue dodgy dealers, financial fiddlers and insider traders.
      It is reasonable that the accountability of such a powerful regulatory authority should be at the forefront of people's minds; but the FSA must have the ability and flexibility to achieve its primary objectives. That is vital to the future of the City and the financial markets, and to their international reputation for integrity and ethical dealing. Accountability and performance must be balanced. I hope that the FSA board, the Treasury and the parliamentary Committee will review that balance regularly as practical experience of the working of the Act is gained.
      9.34 pm
      Mr. Tyrie: I agree with much of what the Chief Secretary said. Of course, we all want regulation: we want regulation that works. We all agree that the ultimate objective should be to protect the consumer, but we do not agree on how to achieve it. Conservative Members do not think that the Government have got it right, despite our best efforts to guide them in Committee.
      The reason why that should be of concern to us is, as several hon. Members have pointed out this evening and on many other occasions, that we are creating a hugely powerful institution. It has the power to act as a legislator; it can make its own rules. It has the power to act as an executive; it implements its own rules. It has the power

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      to act as judge and jury. Within certain limits, it can even adjudicate on whether there have been any transgressions at all. It has at its head a man who has no one looking over his shoulder, a combined chief executive and chairman. That is the first and most important source of concern.
      I thought that the best thing I could do this evening was to set out an agenda of the major issues that the other place needs to look at again—issues on which I feel that we have not had satisfactory answers, or where legislation is clearly still deficient. As I have said, we must split the role of chairman and chief executive. I hope that the other place comes back to that issue.
      I do not think that it can be right that we are left in a position where the FSA can act recklessly and still be immune from a civil action. The FSA must have a duty to act fairly, reasonably and proportionately. It does not, as the Bill is drafted.
      There is the whole issue of the practitioner panels. The industry must have more say as to the composition of the panels. It should not be left to the regulator to appoint the people who will give advice.
      There is also the issue of reviews. It is extraordinary that the Government should have decided that they are not prepared to commit themselves to at least one thorough review of the Bill, in, say, three years. They want to retain the discretion not to have any review at all. That cannot be right.
      There is the question of financial promotion from outside the UK, which is governed at the moment by the phrase:
      "capable of having an effect in the United Kingdom",
      which is clearly far too stiff. We must go back to the principle that that sort of business promotion should be regulated if the intention is to direct the product at the UK. I notice that, after months of stonewalling in Committee, the Government are finally wavering on that. I hope that, in the other place, they will table an intelligent amendment on that point.
      There is the question of market abuse, which we have discussed again tonight. I find it unacceptable that a firm may find itself guilty of market abuse, even if it had no intent and it can show that it had no intent to do so. Clearly, intent should be relevant in assessing the firm's guilt.
      There is the issue of the FSA's powers of investigation. Those must be made subject to judicial review.
      Today, we have discussed again the decisions of the ombudsman. His decisions should be binding on both parties—the firm and complainant—or on neither. They should both be permitted to go to judicial review. The imbalance, the asymmetry between the firm and the individual with respect to the ombudsman, is clearly unfair and may lead to a European Court of Human Rights review.
      Finally in the list of 10 items as suggested prep for the other place to look at, there is the issue of mortgage regulation. It is true that the Liberal Democrats have scarcely been here during the whole of our lengthy scrutiny, but at least at the finish they came in with a couple of points about mortgage regulation, with which I thoroughly agree. I notice that one or two Labour Members also agree. The Government's approach, with
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      the lender heavily regulated and the adviser not regulated at all, is clearly in no one's interests, certainly not the consumer's.
      Those are 10 major items that I want their Lordships to consider. However, the Bill contains one overriding weakness, which we have discussed time and again—competition and competitiveness—and which the Government have still not got right. They have not fully grasped the implications of the fact that the optimal level of regulation is not one that will produce zero misconduct; it must be one that maximises the consumer benefit.
      To its credit, the FSA produced an interesting document—the most interesting of the great bundle that it has generated—entitled, "A new regulator for the new millennium". In it, the FSA appears to recognise exactly what we have been saying all these months. In fact, Howard Davies has gone a long way towards redefining the market confidence objective in a way that embraces consideration of our concerns. Page 6 of the document states that the FSA should aim for
      "as low an incidence of"—
      market—
      "failure … as is consistent with the maintenance of competition and innovation".
      Mr. Davies, of the FSA, says:
      "achieving a 'zero failure' is … undesirable … It would be likely to damage the economy as a whole".
      The FSA acknowledges that eliminating the risk of regulatory failure would be unacceptably costly to the industry, the consumer and the economy.
      The chairman of the FSA is right, but the balance that he is trying to strike in the document should have been in the Bill. With this document, the FSA is merely patching up the failures of this legislation. It is introducing an economic performance test—a competitiveness test—through the back door: through article 127, which is the cost benefit analysis clause. It is worth pausing to think through how the FSA should go about the process. I suggest to the authority and the Government a simple test; it is not perfect but it will be a good rule of thumb to enable a cost benefit analysis approach—which is clearly what Howard Davies is thinking of applying much more stringently than had originally been intended—to be applied so as to enable economic performance to be maximised. That will enable the delivery of the competitiveness objective.
      I want the Government to ask the FSA to consider, before any regulation or rule is made or changed, whether the proposed regulatory change would shrink or enlarge the market. If it would enlarge it legitimately, it would almost certainly benefit the consumer. Of course, there are provisos, which I will not go into as I do not have time, but if that simple test is applied and forms the basis for cost benefit analysis we may be able to secure through the back door what the Government have so determinedly refused to allow through the front: adding a competitiveness or economic performance objective to clause 2.
      What the chairman of the FSA has done is welcome. It fills a major gap in the Bill. However, we should not have had to rely on him to produce that document or to interpret the rules so creatively on such a crucial matter. We should have had in the Bill the trade-off that he is trying to address in the document. The fact that it has now

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      been produced and will have such an impact is a reflection of the enormous power that we are placing in his hands. If someone else were in charge who did not take such an enlightened view, we could be in a difficult situation—there could be a threat to the industry and the consumer, with the risk that economic performance would tail off and be eroded by regulation.
      I have listed 10 major issues with which I want the other place to deal and have discussed an 11th at length. I have not touched on the many other financial and legal issues involved, which are in a thoroughly unsatisfactory state. The one comfort that I do take is that the other place is full of financial and, particularly, legal experts, and I am sure that they will do a very thorough job on the Bill.
      9.44 pm
      Mr. Flight: This is the largest piece of legislation introduced by this Government. As described, it will affect 1 million people, our biggest industry and our biggest exporter. It is not exactly a red-hot sphere of party politics, but I think that the Government could be forced to accept that the Opposition's opposition has endeavoured to be constructive, to scrutinise the Bill in huge detail and to get it right—for the sake of our country, the industry and the people who work in that industry. I offer our thanks particularly to the lawyers who have advised us in our task, and who are sitting under the Gallery.
      Although I am pleased to note that the Government have concurred on many of the issues that we have raised—that is largely why Report has taken so long—there are, as I said when we began our consideration, certain key points of principle that we wanted the Government to acknowledge and to put right. We feel that those principles continue to be fudged, which is undesirable for the legislation's success. My colleagues have dealt with those principles in our debates.
      If a body as powerful as the FSA is to enjoy legal immunity, there will have to be, as Burns recommended, a clearly independent complaints procedure empowered to award recompense. The Government have come close to making such provision, but why will they not fully accept it?
      The FSA's regulatory mandate should be to accept and to promote both domestic competition and international competitiveness. The Government have added their cumbersome machinery—including the Office of Fair Trading, the Competition Commission and the Treasury—but such an addition makes no sense unless the FSA is instructed up front that its regulatory activities are to be essentially pro-competition.
      The FSA is a leviathan. It is the governor of a particularly large industry and is able to go forth without having to hold elections on its actions. It is surely right that its starting mandate should be to be reasonable, fair, open, accountable and proportionate. The Minister said that that is what the Bill says, but it does not—although the Opposition tried on several occasions to get it in there.
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      A body as large as the FSA surely should be subject to periodic independent reviews of its operation, efficiency, cost and cost-effectiveness.
      On the chief executive, we have agreed with the Government that we should let Howard Davies sort out the issues. Thereafter, however, it must be right to follow the private sector's precedent of good practice by having a non-executive chairman and giving the non-executive board responsibilities analogous to those performed in the private sector.
      It must be wrong to have a situation in which United Kingdom firms are damaged in their overseas business by attempted United Kingdom regulation. It must be completely wrong to pass legislation that the Government themselves have essentially accepted will damage our e-commerce.
      The Bill has already been tremendously improved, but it will be further improved in the other place. Today, however, we shall be voting against it, to register the key points of principle that we have banged on about since we started consideration in Committee.
      9.48 pm
      Miss Melanie Johnson: It is my great privilege to bring to a close the House's very extensive consideration of this necessarily very extensive Bill.
      My right hon. Friend the Chief Secretary to the Treasury has already paid generous tribute to the work of the great many people, inside and outside the House, who have contributed to this work. I strongly endorse that tribute, as does my hon. Friend the Financial Secretary to the Treasury. We should like also to endorse the work of our predecessors and of the Burns committee.
      This has been a model process of how to deal with important, but technically very complex, legislation. We have had extensive public consultation, followed by pre-legislative scrutiny of the most important aspects of the Bill, followed by constructive and co-operative line by line consideration. The Government would be the first to acknowledge that the Bill has been significantly improved at each point of the process. There is likely to be further scope for refinement in another place before the Bill returns to us for final consideration.
      I have been much entertained by the speeches during the debate. I was pleased that my hon. Friend the Member for Huddersfield (Mr. Sheerman) felt able to rejoin the debate this evening, and I appreciate the contribution of my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard) and other members of the Select Committee who have contributed positively to the Bill. I was much entertained also by our debates on fine targeting with the Liberal Democrats.
      I was particularly entertained by the comments of the hon. Member for East Worthing and Shoreham (Mr. Loughton) and his heavily laboured analogy concerning the birth of the Bill. I was somewhat bemused, as one of the reasons why the Bill has had so many amendments—the hon. Member for Arundel and South Downs (Mr. Flight) did say this—is that it has been much improved, and some of the amendments have been in

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      response to points made by the Opposition. Some Opposition Members have dug themselves into opposition and kept digging, despite the fact that the Government have responded so positively to the many points that they raised.
      The Bill will give the Financial Services Authority a coherent set of modern regulatory powers, and, as such, it constitutes a thorough and necessary overhaul of a relevant part of the statute book. The result will be to enable the FSA to operate as an effective, fair and accountable regulator. The reforms to be facilitated by the Bill are pro market confidence, pro consumer protection and pro consumer awareness. They are anti financial crime, anti-abuse and anti-malpractice. Scams, malpractice and market abuse will do nothing for a world-class industry, and consumers must be protected. That has been one of our overriding concerns, along with making sure that we have a first-class regulator.
      One wonders why the Opposition are voting against the Bill, and what that will do for a world-class industry. The Bill is a prime example of the Government's aim to reform and modernise Britain. It responds to the changing face of the financial services industries, and it will bring a fair deal to those operating within one of our most successful industries, as well as to those who use and rely on financial services for their well-being and prosperity.
      The industry is well regulated in the UK, and it has been maintained and secured. It is that success, the high standards and the high regard in which financial services in the UK are held around the globe, that the Bill seeks to maintain. The Bill is central to maintaining and enhancing that success. It will increase accountability, and it will have regard to competition. It will make sure that competition is at the heart of the consideration that the FSA gives to its work as a regulator. It will protect consumers.
      Above all, the Bill will strike the right balance. It will provide light-touch regulation, and protection where necessary. It is a new regulator for a new millennium, and I trust that the House will support the Bill tonight.
      Question put, That the Bill be now read the Third time:—
      The House proceeded to a Division—
      Mr. Deputy Speaker: I ask the Serjeant at Arms to investigate the delay in the No Lobby.
      The House having divided: Ayes 340, Noes 128.

      Division No. 70]

      [9.54 pm

      AYES

      Ainger, Nick

      Benton, Joe

      Ainsworth, Robert (Cov'try NE)

      Best, Harold

      Alexander, Douglas

      Betts, Clive

      Allan, Richard

      Blackman, Liz

      Allen, Graham

      Blears, Ms Hazel

      Armstrong, Rt Hon Ms Hilary

      Blizzard, Bob

      Ashton, Joe

      Boateng, Rt Hon Paul

      Atkins, Charlotte

      Borrow, David

      Austin, John

      Bradley, Keith (Withington)

      Ballard, Jackie

      Bradley, Peter (The Wrekin)

      Barnes, Harry

      Bradshaw, Ben

      Barron, Kevin

      Brake, Tom

      Battle, John

      Brinton, Mrs Helen

      Beard, Nigel

      Brown, Rt Hon Nick (Newcastle E)

      Beckett, Rt Hon Mrs Margaret

      Brown, Russell (Dumfries)

      Benn, Rt Hon Tony (Chesterfield)

      Browne, Desmond

      372

      Buck, Ms Karen

      Gapes, Mike

      Burden, Richard

      Gardiner, Barry

      Burgon, Colin

      George, Andrew (St lves)

      Burnett, John

      George, Bruce (Walsall S)

      Burstow, Paul

      Gerrard, Neil

      Butler, Mrs Christine

      Gibson, Dr Ian

      Byers, Rt Hon Stephen

      Gilroy, Mrs Linda

      Caborn, Rt Hon Richard

      Godman, Dr Norman A

      Campbell, Alan (Tynemouth)

      Godsiff, Roger

      Campbell, Ronnie (Blyth V)

      Goggins, Paul

      Campbell-Savours, Dale

      Golding, Mrs Llin

      Cann, Jamie

      Gordon, Mrs Eileen

      Caplin, Ivor

      Griffiths, Jane (Reading E)

      Casale, Roger

      Griffiths, Nigel (Edinburgh S)

      Cawsey, Ian

      Griffiths, Win (Bridgend)

      Chapman, Ben (Wirral S)

      Grogan, John

      Chaytor, David

      Gunnell, John

      Chisholm, Malcolm

      Hain, Peter

      Clark, Rt Hon Dr David (S Shields)

      Hall, Mike (Weaver Vale)

      Clark, Dr Lynda (Edinburgh Pentlands)

      Hall, Patrick (Bedford)

      Hamilton, Fabian (Leeds NE)

      Clark, Paul (Gillingham)

      Hancock, Mike

      Clarke, Charles (Norwich S)

      Hanson, David

      Clarke, Eric (Midlothian)

      Harman, Rt Hon Ms Harriet

      Clarke, Rt Hon Tom (Coatbridge)

      Heal, Mrs Sylvia

      Clarke, Tony (Northampton S)

      Healey, John

      Clelland, David

      Heath, David (Somerton & Frome)

      Clwyd, Ann

      Henderson, Doug (Newcastle N)

      Coaker, Vernon

      Henderson, Ivan (Harwich)

      Coffey, Ms Ann

      Hepburn, Stephen

      Coleman, Iain

      Heppell, John

      Colman, Tony

      Hesford, Stephen

      Connarty, Michael

      Hill, Keith

      Cooper, Yvette

      Hinchliffe, David

      Corbett, Robin

      Hodge, Ms Margaret

      Corbyn, Jeremy

      Hood, Jimmy

      Corston, Jean

      Hoon, Rt Hon Geoffrey

      Cotter, Brian

      Hope, Phil

      Cousins, Jim

      Hopkins, Kelvin

      Cox, Tom

      Howarth, George (Knowsley N)

      Cranston, Ross

      Howells, Dr Kim

      Crausby, David

      Hughes, Ms Beverley (Stretford)

      Cryer, Mrs Ann (Keighley)

      Hughes, Kevin (Doncaster N)

      Cryer, John (Hornchurch)

      Hughes, Simon (Southwark N)

      Cummings, John

      Humble, Mrs Joan

      Darvill, Keith

      Hurst, Alan

      Davidson, Ian

      Hutton, John

      Davies, Rt Hon Denzil (Llanelli)

      Iddon, Dr Brian

      Davies, Geraint (Croydon C)

      Jackson, Helen (Hillsborough)

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

      Jamieson, David

      Jenkins, Brian

      Dawson, Hilton

      Johnson, Alan (Hull W & Hessle)

      Dean, Mrs Janet

      Johnson, Miss Melanie (Welwyn Hatfield)

      Denham, John

      Dobbin, Jim

      Jones, Rt Hon Barry (Alyn)

      Doran, Frank

      Jones, Helen (Warrington N)

      Dowd, Jim

      Jones, Ms Jenny (Wolverh'ton SW)

      Drew, David

      Eagle, Angela (Wallasey)

      Jones, Jon Owen (Cardiff C)

      Eagle, Maria (L'pool Garston)

      Jones, Dr Lynne (Selly Oak)

      Edwards, Huw

      Jones, Martyn (Clwyd S)

      Ellman, Mrs Louise

      Jowell, Rt Hon Ms Tessa

      Ennis, Jeff

      Kaufman, Rt Hon Gerald

      Etherington, Bill

      Keeble, Ms Sally

      Fisher, Mark

      Keen, Alan (Feltham & Heston)

      Fitzpatrick, Jim

      Keen, Ann (Brentford & Isleworth)

      Fitzsimons, Lorna

      Keetch, Paul

      Flint, Caroline

      Kemp, Fraser

      Flynn, Paul

      Kennedy, Jane (Wavertree)

      Follett, Barbara

      Khabra, Piara S

      Foster, Rt Hon Derek

      Kidney, David

      Foster, Michael Jabez (Hastings)

      Kilfoyle, Peter

      Foster, Michael J (Worcester)

      King, Andy (Rugby & Kenilworth)

      Foulkes, George

      Kumar, Dr Ashok

      Fyfe, Maria

      Lepper, David

      Galloway, George

      Leslie, Christopher

      373

      Levitt, Tom

      Radice, Rt Hon Giles

      Lewis, Ivan (Bury S)

      Rammell, Bill

      Lewis, Terry (Worsley)

      Rapson, Syd

      Liddell, Rt Hon Mrs Helen

      Raynsford, Nick

      Linton, Martin

      Reed, Andrew (Loughborough)

      Livsey, Richard

      Reid, Rt Hon Dr John (Hamilton N)

      Lloyd, Tony (Manchester C)

      Rendel, David

      Lock, David

      Roche, Mrs Barbara

      Love, Andrew

      Rooker, Rt Hon Jeff

      McAvoy, Thomas

      Ross, Ernie (Dundee W)

      McCabe, Steve

      Ruane, Chris

      McCafferty, Ms Chris

      Ruddock, Joan

      McCartney, Rt Hon Ian (Makerfield)

      Russell, Bob (Colchester)

      Russell, Ms Christine (Chester)

      McDonagh, Siobhain

      Ryan, Ms Joan

      Macdonald, Calum

      Salter, Martin

      McDonnell, John

      Sanders, Adrian

      McIsaac, Shona

      Sarwar, Mohammad

      McKenna, Mrs Rosemary

      Savidge, Malcolm

      McNamara, Kevin

      Sawford, Phil

      McNulty, Tony

      Sedgemore, Brian

      MacShane, Denis

      Shaw, Jonathan

      Mactaggart, Fiona

      Sheerman, Barry

      McWalter, Tony

      Sheldon, Rt Hon Robert

      McWilliam, John

      Shipley, Ms Debra

      Mahon, Mrs Alice

      Short, Rt Hon Clare

      Mallaber, Judy

      Simpson, Alan (Nottingham S)

      Marsden, Gordon (Blackpool S)

      Singh, Marsha

      Marsden, Paul (Shrewsbury)

      Skinner, Dennis

      Marshall, David (Shettleston)

      Smith, Rt Hon Andrew (Oxford E)

      Marshall, Jim (Leicester S)

      Smith, Angela (Basildon)

      Marshall-Andrews, Robert

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Martlew, Eric

      Maxton, John

      Smith, Jacqui (Redditch)

      Meacher, Rt Hon Michael

      Smith, Llew (Blaenau Gwent)

      Meale, Alan

      Soley, Clive

      Merron, Gillian

      Spellar, John

      Michie, Bill (Shefld Heeley)

      Squire, Ms Rachel

      Milburn, Rt Hon Alan

      Starkey, Dr Phyllis

      Miller, Andrew

      Steinberg, Gerry

      Mitchell, Austin

      Stewart, David (Inverness E)

      Moffatt, Laura

      Stinchcombe, Paul

      Moore, Michael

      Stoate, Dr Howard

      Moran, Ms Margaret

      Strang, Rt Hon Dr Gavin

      Morgan, Ms Julie (Cardiff N)

      Stuart, Ms Gisela

      Morley, Elliot

      Stunell, Andrew

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

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Mountford, Kali

      Taylor, Ms Dari (Stockton S)

      Mudie, George

      Taylor, David (NW Leics)

      Mullin, Chris

      Temple-Morris, Peter

      Murphy, Denis (Wansbeck)

      Thomas, Gareth R (Harrow W)

      Murphy, Jim (Eastwood)

      Thomas, Simon (Ceredigion)

      O'Brien, Mike (N Warks)

      Timms, Stephen

      O'Hara, Eddie

      Tipping, Paddy

      Öpik, Lembit

      Todd, Mark

      Organ, Mrs Diana

      Touhig, Don

      Osborne, Ms Sandra

      Trickett, Jon

      Pearson, Ian

      Truswell, Paul

      Pendry, Tom

      Turner, Dennis (Wolverh'ton SE)

      Pickthall, Colin

      Turner, Dr Desmond (Kemptown)

      Pike, Peter L

      Turner, Neil (Wigan)

      Plaskitt, James

      Twigg, Derek (Halton)

      Pollard, Kerry

      Tyler, Paul

      Pond, Chris

      Tynan, Bill

      Pope, Greg

      Vis, Dr Rudi

      Pound, Stephen

      Walley, Ms Joan

      Powell, Sir Raymond

      Ward, Ms Claire

      Prentice, Ms Bridget (Lewisham E)

      Wareing, Robert N

      Prentice, Gordon (Pendle)

      Watts, David

      Prescott, Rt Hon John

      Welsh, Andrew

      Primarolo, Dawn

      White, Brian

      Prosser, Gwyn

      Whitehead, Dr Alan

      Purchase, Ken

      Williams, Rt Hon Alan (Swansea W)

      Quin, Rt Hon Ms Joyce

      Quinn, Lawrie

      Williams, Alan W (E Carmarthen)

      374

      Williams, Mrs Betty (Conwy)

      Woodward, Shaun

      Willis, Phil

      Woolas, Phil

      Wills Michael

      Worthington, Tony

      Wright, Anthony D (Gt Yarmouth)

      Wilson, Brain

      Wright, Dr Tony (Cannock)

      Winnick, David

      Winterton, Ms Rosie (Doncaster C)

      Tellers for the Ayes:

      Wise, Audrey

      Mrs. Anne McGuire and

      Wood, Mike

      Mr. Gerry Sutcliffe.

      NOES

      Ainsworth, Peter (E Surrey)

      Key, Robert

      Amess, David

      King, Rt Hon Tom (Bridgwater)

      Ancram, Rt Hon Michael

      Kirkbride, Miss Julie

      Arbuthnot, Rt Hon James

      Lait, Mrs Jacqui

      Atkinson, David (Bour'mth E)

      Lansley, Andrew

      Baldry, Tony

      Leigh, Edward

      Bercow, John

      Letwin, Oliver

      Beresford, Sir Paul

      Lewis, Dr Julian (New Forest E)

      Blunt, Crispin

      Lidington, David

      Body, Sir Richard

      Lloyd, Rt Hon Sir Peter (Fareham)

      Boswell, Tim

      Loughton, Tim

      Bottomley, Peter (Worthing W)

      Luff, Peter

      Bottomley, Rt Hon Mrs Virginia

      MacGregor, Rt Hon John

      Brady, Graham

      McIntosh, Miss Anne

      Brazier, Julian

      MacKay, Rt Hon Andrew

      Brooke, Rt Hon Peter

      Maclean, Rt Hon David

      Browning, Mrs Angela

      McLoughlin, Patrick

      Bruce, Ian (S Dorset)

      Mawhinney, Rt Hon Sir Brian

      Burns, Simon

      May, Mrs Theresa

      Chapman, Sir Sydney (Chipping Barnet)

      Moss, Malcolm

      Nicholls, Patrick

      Clark, Dr Michael (Rayleigh)

      Norman, Archie

      Clifton-Brown, Geoffrey

      O'Brien, Stephen (Eddisbury)

      Collins, Tim

      Ottaway, Richard

      Colvin, Michael

      Page, Richard

      Cormack, Sir Patrick

      Paice, James

      Cran, James

      Paterson, Owen

      Curry, Rt Hon David

      Pickles, Eric

      Davies, Quentin (Grantham)

      Portillo, Rt Hon Michael

      Davis, Rt Hon David (Haltemprice)

      Prior, David

      Day, Stephen

      Randall, John

      Dorrell, Rt Hon Stephen

      Redwood, Rt Hon John

      Duncan Smith, Iain

      Robathan, Andrew

      Evans, Nigel

      Robertson, Laurence

      Faber, David

      Roe, Mrs Marion (Broxboume)

      Fabricant, Michael

      Rowe, Andrew (Faversham)

      Fallon, Michael

      Ruffley, David

      Flight, Howard

      St Aubyn, Nick

      Forth, Rt Hon Eric

      Sayeed, Jonathan

      Fowler, Rt Hon Sir Norman

      Shephard, Rt Hon Mrs Gillian

      Garnier, Edward

      Shepherd, Richard

      Gibb, Nick

      Spelman, Mrs Caroline

      Gill, Christopher

      Spteer, Sir Michael

      Gillan, Mrs Cheryl

      Steen, Anthony

      Gorman, Mrs Teresa

      Streeter, Gary

      Green, Damian

      Swayne, Desmond

      Greenway, John

      Syms, Robert

      Grieve, Dominic

      Tapsell, Sir Peter

      Gummer, Rt Hon John

      Taylor, Ian (Esher & Walton)

      Hamilton, Rt Hon Sir Archie

      Taylor, John M (Solihull)

      Hammond, Philip

      Taylor, Sir Teddy

      Hayes, John

      Townend, John

      Heathcoat-Amory, Rt Hon David

      Tredinnick, David

      Hogg, Rt Hon Douglas

      Trend, Michael

      Horam, John

      Tyrie, Andrew

      Howard, Rt Hon Michael

      Viggers, Peter

      Howarth, Gerald (Aldershot)

      Walter, Robert

      Hunter, Andrew

      Wardle, Charles

      Jack, Rt Hon Michael

      Wells, Bowen

      Jackson, Robert (Wantage)

      Whitney, Sir Raymond

      Jenkin, Bemard

      Whittingdale, John

      Johnson Smith, Rt Hon Sir Geoffrey

      Widdecombe, Rt Hon Miss Ann

      Wilkinson, John

      375

      Winterton, Mrs Ann (Congleton)

      Tellers for the Noes:

      Winterton, Nicholas (Macclesfield)

      Yeo, Tim

      Mr. Keith Simpson and

      Young, Rt Hon Sir George

      Mrs. Eleanor Laing.

      Question accordingly agreed to.
      Bill read the Third time, and passed.

  SCOTTISH GRAND COMMITTEE
  Motion made, and Question put forthwith, pursuant to Standing Order No. 100(1) (Scottish Grand Committee (sittings)),
  That the Scottish Grand Committee shall meet—

  (1) on Tuesday 29th February at half-past Ten o'clock at Westminster to consider a substantive Motion for the adjournment of the Committee;

  (2) on Wednesday 5th April at half-past Ten o'clock at Westminster to consider a substantive Motion for the adjournment of the Committee—[Mr. Betts.]

  Question agreed to.

  Mr. Deputy Speaker (Mr. Michael Lord): With permission, I shall put together the motions relating to Committees.
  COMMITTEES

    PUBLIC ADMINISTRATION
    Ordered,
    That Helen Jones be discharged from the Select Committee on Public Administration and Mr. Neil Turner be added to the Committee.

    MODERNISATION OF THE HOUSE OF COMMONS
    Ordered,
    That Mr. Stephen Twigg be discharged from the Select Committee on Modernisation of the House of Commons and Ann Coffey be added to the Committee.

    BROADCASTING
    Ordered,
    That Mr. Andrew Stunell be discharged from the Broadcasting Committee and Norman Baker be added to the Committee.

    ENVIRONMENTAL AUDIT
    Ordered,
    That Norman Baker be discharged from the Environmental Audit Committee and Mr. Paul Keetch be added to the Committee.—[Mr. Betts.]

  PETITION

    Housing (Stroud)
    10.11 pm
    Mr. David Drew: Thank you, Mr. Deputy Speaker. I am delighted—
    Mr. Deputy Speaker (Mr. Michael Lord): Order. Hon. Members should leave the Chamber quickly and quietly so that Mr. Drew can present his petition.
    Mr. Drew: I am delighted to present this petition on behalf of the residents of Hardwicke and Haresfield in my constituency. The petition states:
    To the House of Commons.
    The petition of residents of Hardwicke and Haresfield,
    Declares that we object in the strongest terms to the planned building of over 1500 new houses on agricultural land at Colethrop farm, Haresfield, which is being imposed by the new Gloucestershire Structure Plan, together with the new Stroud District Local Plan. The effect of this concentrated building, alongside a larger development in Quedgeley will be to make existing traffic conditions, on the mainly rural roads, quite impossible to manage.
    The Petitioners therefore request that the House of Commons urge the Secretary of State for the Environment, Transport and the Regions to do all within his power to cause this ill-prepared policy of centralised development to be completely reassessed.
    To lie upon the Table.

  Charities
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]
  10.13 pm
  Helen Jones: I am grateful for the opportunity to raise the problems of Integrate Services, a charity that cares for people in Warrington with learning difficulties.
  The history of the charity is complex, so I do not propose to go through all of it tonight. It has been set out clearly in an extremely helpful report, produced for the local health authority by Mrs. Glenys Marriott. However, it may help the House if I point out that Integrate Services, formerly known as Warrington Integrate, was originally set up to care for people from the old Newchurch hospital. It currently cares for about 23 residents—the number fluctuates—in eight homes in Warrington.
  The charity is not, and never has been, a fund-raising body. It is entirely dependent on public money, mainly a section 64 grant from the health authority, together with social services benefits due to residents and a small amount of other income.
  The difficulties surrounding the charity began to surface last year when a member of staff approached the Warrington Community Health Care trust. It immediately contacted the North Cheshire health authority which believed that the allegations were serious enough to warrant an investigation. It therefore contacted both the trustees of Integrate and the Charity Commission in May last year. The Charity Commission, however, did not begin its section 8 investigation until September and that investigation is still incomplete. I believe that the delays to which it has been subject have formed a major problem and prevented the resolution of many of the problems facing the charity.
  As the number of staff expressing concerns began to increase, arrangements were made for them to make statements to solicitors under the Public Interest Disclosure Act 1998. The allegations were many, including that staffing levels at the charity were tightly controlled on financial grounds and did not change as residents' needs changed and that staffing was, in any case, too low. For example, if a resident had to attend a medical appointment, others in the home had to go with him.
  Allegations were made that the chief executive and his wife, who was also employed by the charity, spent very little time in Warrington and that they claimed payments to which they were not entitled. Further allegations surrounded the use of the charity's money to fund holiday provision and the effect that that had on provision for residents. There were allegations, for example, that residents had to wear old clothes, that they were bought only the cheapest food and that they were forced to take their holidays in Integrate's holiday facilities.
  The important thing is that many of those allegations have never been properly and fully investigated because the response of the trustees at the charity was, I regret to say, rather bizarre. They first commissioned two of their own number to produce a report—they were apparently oblivious of the principle that organisations do not normally investigate themselves.
  378
  The trustees' members produced a report based largely on uncorroborated statements from the chief executive. The charity still refers to that as an independent report, which I can describe only as a terminological inexactitude. It then failed to agree with the health authority on nominating an independent person acceptable to both to carry out a full investigation, and it spent a great deal of money instructing solicitors in order, I believe, to avoid an investigation.
  Under pressure, however, the trustees commissioned two further reports—one from PricewaterhouseCoopers and another from Mr. Frank Watts. Copies of these—the charity's own reports—have been passed to me, and I shall refer to them later. However, the trustees refused, despite repeated requests from the health authority, to suspend the chief executive who was at the centre of many of the allegations. The decision not to suspend him was taken by a meeting of trustees at which the chief executive, his wife and Mr. Colin Fiveash, who was briefly engaged as a consultant to Integrate even though he had been dismissed from his previous post in the health service for gross misconduct, were all present. The fact that Mr. Fiveash was even employed says much about the charity.
  However, before that, the chief executive had been unofficially suspended for one day. On his return, it is alleged that he broke into the charity's office and removed a large quantity of files and papers. The Charity Commission has confirmed to me that the chief executive accepts that he took away files and papers, but he says that it was for safekeeping and that he returned them later except for a few personal items. I have yet to discover why anyone would need to remove things for safekeeping when they were in a locked office or what corroborating evidence there is to show that they were all returned.
  The chief executive's treatment contrasts strongly with the treatment meted out to whistleblowers at the charity. That seems to follow a pattern. Staff who blew the whistle were accused of various offences, including serious ones such as the abuse of residents and theft, despite the fact that no allegations had been made against them before they made statements about the charity. I have checked with social services in Warrington because they are serious allegations that need to be properly investigated, and they tell me that not one allegation of abuse or even improper behaviour has been proven against any of the whistleblowers at the charity. Letters from the charity, however, continue to repeat those allegations as if they were proven.
  I have been passed a copy of a letter from the chief executive to the Charity Commission dated 18 January, in which he refers to allegations against a particular member of staff as being proven. The secretary of the trustees wrote to me on 31 January in similar terms. One must ask why the charity repeats those allegations. It seems to me that there was a pattern of bullying and intimidation at the charity against anyone who spoke out.
  I have been contacted not only by current and recent staff, whistleblowers and non-whistleblowers, but by people who worked at Integrate some time ago, left before the allegations surfaced and now hold responsible positions elsewhere. They have confirmed to me their view that anyone who crossed the chief executive was likely to be subject to a similar campaign. Frankly, they are terrified of that man, Mr. Trevor Upshall. I do not use the word "terrified" lightly, and I did not choose to name

  379
  him in the House without careful thought, but it is the duty of Members of Parliament at least to bring such allegations into the public domain to offer some protection to those who are subject to them.
  The failure to suspend the chief executive means that both reports produced for the charity are necessarily incomplete because many members of staff would not speak to the investigators while the chief executive remained in post or allow the statements made under the Public Interest Disclosure Act to be revealed to him. The investigators were also circumscribed by the brief given to them by the charity, yet their reports highlight issues of major concern.
  The PricewaterhouseCoopers report makes it clear beyond doubt that there was consistent underspending on Integrate's budget year on year to build up reserves. That money had been given for the care of residents—that was its sole purpose. Yet according to the accountants, on 31 March 1999 the charity had cash at bank of £428,364, which far exceeded three months' running costs of approximately £169,000. The accountants who prepared the report questioned the need for having three months' reserves at all, since the health authority paid its grant to the charity in advance. However, that underspending is part of a pattern: in 1998–99, there was £80,923 left; in 1997–98, £214,664 was left.
  The purpose of the reserves was clear. They were used to purchase holiday facilities and associated items. A cottage in Oswestry was purchased, as was a caravan, a barge and a Land Rover. Why a Land Rover? According to the charity's own reports, it was kept in Oswestry, where the charity's handyman was based, although all the charity's homes were in Warrington.
  There were national lottery grants, which may now be subject to scrutiny, to refurbish the cottage and purchase what was described as a "trip boat". Other strange purchases were made, such as a massage couch, which it was alleged was kept at Mr. and Mrs. Upshall's home, and now appears to be at the holiday cottage, but is certainly nowhere near the residents.
  There is clear evidence in the reports that the policy resulted from a decision of the management committee to set up what it described as a "holiday arm", and it changed the charity's objects to facilitate that. The management committee did so without notice to the health authority that funded the charity.
  It has been alleged that residents were forced to take their holidays in those facilities, but it is remarkable how little the residents used them, according to the report. In 1999, the cottage was used by the residents for precisely eight weeks. On other occasions it was let to other bookings. The trip boat was used on two or possibly six occasions by residents. That is difficult to determine, because of the way in which the records were kept.
  It is clear from the report that members of the management committee feared a process of attrition as residents grew older and no more were placed with them, so they deliberately used public money to acquire holiday facilities which their own accountants say were beyond those needed for residents and which Mr. Watts says "far exceed" what is reasonable. The whole purpose of the charity became the perpetuation of its own existence. Since when has that been a charitable object?
  380
  The question arises whether the beneficiaries suffered. It seems that, in some senses, they did. Mr. Watts's report states that Integrate's income suggests the expectation of a substantially greater level of staffing than he found at the charity.
  Advocates now working with the residents to facilitate the changeover to a new provider have come up with some heart-rending stories. For instance, they have heard residents say that they wished they were back in Newchurch, because they were allowed day trips from there. They have heard residents say that they were not allowed certain foods, and that when Integrate's residents went to day centres, they had to take packed lunches, whereas everyone else had a cooked meal.
  However, Mr. Upshall stated in a letter to the health authority in December 1997, and he also told me just after I was elected, that he had had to
  "reduce cover and services to residents"
  because the grants from the health authority had been frozen.
  In a letter to staff dated 4 February this year, Mr. Upshall mentions having dealt with a member of staff who had been on duty for 24 hours. Why should that be, when the charity had built up such reserves? Why should decent staff have had to work in such conditions, when Integrate had consistently underspent its staffing budget?
  While the residents lost out and staff were left to cope, the chief executive and his wife enjoyed unusually favourable terms of employment. They live in Oswestry where, by coincidence, we also find the cottage, the Land Rover, the handyman and, of course, the massage couch. A decision was taken by the trustees to use part of their property as an office base and to allow them to have their work base in Oswestry, meaning that they could claim mileage and on-call payments from Oswestry to Warrington.
  Mr. Watts reports that the alleged savings from that were never quantified, nor it is clear what alternatives were considered. The arrangement was allowed, despite the fact that all letters from the charity are addressed from Lyster close, which is in my constituency, and where I know there is an office as I have been in it.
  Mr. Watts also states that it is unusual for a senior officer of a charity not to be located locally and to receive on-call payments at all. He states in his report that it is difficult to see the justification for Mr. Upshall being on call, as the on-call rota for the homes was covered by the team leaders. He finds it even more difficult to see the justification for Mrs. Upshall being on the on-call rota, and that her job description seems to have been written specifically for her.
  The payments that those two senior officers received were considerable. Payroll details passed to the health authority and to me cover five months from late 1998 to 1999. During that period Mr. Upshall received £13,182 net in salary and £10,398 in additional allowances, including a payment of £1,820 for what are described as "extra hours"—an unusual payment to a chief executive—and £3,203, described as holiday pay.
  In the same period, Mrs. Upshaw, whose pay per hour was almost double that of other team leaders at the charity, received a salary of £11,674 and £6,575 in extra payments, which included an extra-hours payment of

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  £1,612 and more than £300 in holiday pay. I am a simple soul, and I do not know what holiday payments mean in the context that we are considering. It is difficult to understand how someone can receive holiday pay and on-call payments simultaneously. The health authority estimated that to earn his extra-hours payments for one month, Mr. Upshaw would have had to work 212 hours in addition to his usual 150 hours. Clearly, a superman was running the charity.
  The health authority has decided to end its grant to the organisation on 31 March and to transfer to a new provider. However, lessons need to be learned, and I regret that the trustees have not learned them. A copy of the letter that the trustees sent to their solicitors was recently passed to me. In it, they asked for advice on how to exclude the health authority from discussions with the new provider,
  "especially when we will be discussing such points as TUPE and also our assets."
  Is the organisation anxious for a smooth transfer for the benefit of its residents or concerned to preserve its assets? I suggest the latter. That is confirmed by a letter from the new chairman of trustees to the health authority. It states:
  "Our current strategy is to retain the organisation's non-staff assets and, subject to the consent of the Charity Commissioners, to use those assets as the basis for developing leisure-based services for disabled people."
  The charity intends to set up a separate leisure organisation, using the assets that were bought with money given for the care of people in Warrington. The legal position can be debated, but the moral position is clear. The money was given for the care of a specific group of people, who should benefit from the assets. Anything else is a form of legalised asset stripping of some of the most vulnerable people in our society. It is monstrous that any charity would consider behaving in that way.
  I hope that my right hon. Friend the Minister will consult his legal advisers about whether the process that I have described can be stopped before we get into a long round of legal debate, which will use up more money that should be spent on care.
  I also hope that we will learn lessons from what has happened. The Charity Commissioners or social services need powers to intervene in an organisation when its management goes wrong before matters get to the stage that we are considering. There should be clearer powers of investigation when the governance of a charity is at fault. Social services can intervene only when there is danger to residents, not when they know that a problem might arise in future.
  More thought should be given to training management committees. Clearly, many trustees did not understand what a section 64 grant was, their responsibilities to their employees or even the functions of different parts of the health service. We should consider carefully giving advice to trusts on the contracts that they ought to make.
  Many of the schemes that I have mentioned were set up so quickly that we have never fully explored the interaction between section 64 grants and charity law. There should be clear contracts that require agreements on surpluses, properly agreed development plans, and notification of the health authority of any change in a charity's objectives.
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  I hope that we will seriously consider insisting on a form of independent advocacy for residents in schemes such as those operated by Integrate Services. Their residents were the most vulnerable of the vulnerable and there was no independent person to speak to them.
  However, none of that would have stopped some of the trustee's actions, the purchase of holiday homes or the chief executive's remuneration package so they and the charity's management must bear a great part of the blame for what went on. I sincerely hope that the Departments concerned will look very closely at this operation and that, if another organisation is set up by the same people, they will think clearly about their advice to health and social services on whether to use such facilities. It is the duty of Members of the House to make sure that this does not happen again.
  10.35 pm
  The Minister of State, Home Office (Mr. Paul Boateng): The whole House has heard my hon. Friend the Member for Warrington, North (Helen Jones), who advocated most powerfully and trenchantly the interests of one of the most vulnerable groups in our society—those living with learning disabilities—and put a proper constituency interest at the forefront. Her speech and her assiduous investigation of this matter do her great credit and are in the best traditions of the House and Adjournment debates such as this.
  My hon. Friend has raised those issues outside the Chamber with me, with the Minister of State, Department of Health—my hon. Friend the Member for Barrow and Furness (Mr. Hutton)—and with our officials. I am glad that she is meeting the chief Charity Commissioner next week as she will have the opportunity to raise with him some of the detailed points that she has shared with us tonight. I know that he is looking forward to the meeting, which will greatly assist the commission in fulfilling its responsibilities under charity law.
  The whole House will be aware that each of our constituencies contains a number of small and medium-sized voluntary organisations and charities that provide a range of services to the national health service, local authorities and other statutory bodies. They are an enormously important part of the infrastructure of our communities and the Government recognise and value the role of the voluntary sector. In the millennium year in particular—in which we are focusing on the concept of an active community—it is important to pay tribute to its work, but it is also important to emphasise, as my hon. Friend has done, that transparency of operation and accountability are essential. The sector must show good governance at every level. That is a particular responsibility for trustees and their officials, chief executives and staff and they must take it seriously.
  Similarly, those who fund such bodies are responsible for having in place proper mechanisms for holding them to account for public money. I know that my hon. Friend the Minister of State will look carefully into the concerns that my hon. Friend raised about the way in which services were provided by Integrate Services and financed by the health authority. He will have in mind—as we all do in government—the importance of public money being used properly. He will want to be satisfied that that money has been properly accounted for, and that the interests of the patients and those receiving care have held primacy

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  of place at all times. It is the particular responsibility of the health authority in this instance and of funding bodies generally, to ensure that that is so.
  There is a role for social services in assessing the quality of care, and it is important to draw my hon. Friend's remarks to the attention of the health authority and the relevant social services department to ensure that they are fully acquainted with the facts and the concerns that have been raised in the Chamber tonight.
  I should like to say a few words about the particular role of charity law and the way in which the Charity Commission has acted in this case. The Charity Commission was first told of the allegations last year, when these problems were brought to its attention. It was made aware of the serious allegations about the conduct of the chief executive and possible financial irregularities.
  The charity's trustees commissioned a series of reports into those allegations. The commission received those reports in September 1999, and on 23 September opened
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  a formal inquiry under section 8 of the Charities Act 1960. That inquiry obviously cannot cover matters outside the commission's jurisdiction, which is limited to the oversight of charity law. Issues relating to employment and care fall outside its jurisdiction. I assure my hon. Friend that the commission will not hesitate to use all the powers at its disposal to safeguard charitable funds and to ensure that all the papers and evidence that it ought to have sight of are made available to it.
  The commission is looking into the allegations of misappropriation of the charity's assets and financial impropriety. I cannot anticipate the inquiry's conclusions, but I understand that it is almost complete. It is vital that public confidence in the voluntary sector is maintained by ensuring that such inquiries are robust, and that their outcome is properly made known.
  Question put and agreed to.
  Adjourned accordingly at seventeen minutes to Eleven o'clock.

Preamble
[MR. MICHAEL J. MARTIN in the Chair]

Air Services Agreements
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Jamieson.]
9.30 am
Mr. Tony Lloyd: May I begin by saying how pleased I am to see so many people here this morning, from across the party political divide? The issue of air transport is fundamental to consumer choice, which should be at the centre of any such debate, and to economic development. If I may speak slightly parochially, the statistics showing the importance of Manchester airport to the national economy as well as that of the north-west are a testimony to the tremendous importance of air travel. Manchester airport already delivers £500 million to the economy of the north-west and about £1.7 billion to the national economy. It provides 85,000 full-time equivalent jobs. It is important not only to the future of the north-west region, but to the whole of the north of England: indeed, it is not fanciful to say that it is one part of the infrastructure that is vital to the future of the national economy. It is in that context that I make my first point.
For far too long, Governments have shown a strange reluctance to recognise the importance of airports outside the south-east. Airport policy has been fixated on the development of Heathrow and Gatwick. Regional airports were considered as a bolt-on, viewed simply in terms of the way in which they affected the development of air transport into the south-east. Such an approach may have been understandable, but it is unacceptable in terms of regional development and, indeed, runs counter to the national interest.
In the past, air transportation initiatives have been driven by the need to protect the interests of BAA, the airport operator, or British Airways, rather than those of the consumer. That view was fundamentally mistaken. I restate that the central issue is how to develop consumer choice—how we give consumers the freedom to exercise the choice to fly from where they are best served.
In the non-south-east air travel system, BAA and British Airways have been at best uncertain friends. I pay tribute to the importance of British Airways to the development of Manchester airport and other non-London parts of the system. British Airways is, of course, the dominant United Kingdom carrier. Nevertheless, it has too frequently adopted what it believes is a reasonable, commercially sensitive approach, leading to withdrawal of services or the failure to develop services outside Heathrow and Gatwick. Most recently, British Airways withdrew its service from Manchester to Islamabad, justifying its decision on the preposterous ground of consumer choice. It is difficult to explain to people living in Macclesfield, for example, how their choice is increased when their travel to Pakistan involves them taking a detour through a London airport.
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In the past, British Airways has responded to competitive pressure only when forced to by other airlines choosing to use Manchester. British Airways has then put on rival services. My critique of British Airways is not meant to be hostile—rather the opposite. It is a recognition that it is important to the development of regional air transport. However, it will always operate in its own commercial interests, which we understand.
In the same way, nothing that I say should be seen as a criticism of BAA. It is a matter of practicality that, for a long time to come, consumers in my city and region will have to look to the London airport system for many of their long-haul travel requirements. Flights to Africa, the far east and Latin America, for example, will involve routeing from Manchester through either Heathrow or Gatwick. Therefore, it does not serve the interests of Manchester or any other region outside London for air travel in and out of Heathrow or Gatwick to be restricted.
For every passenger who travels through Heathrow or Gatwick, two passengers travel from United Kingdom regions to European airports, such as Charles de Gaulle, Schiphol and Frankfurt and then go further. That is an astonishing statistic; it means that the use of United Kingdom resources is already being eroded as people are forced to make a different choice. This is not efficient for consumers either in terms of economics or in terms of choice. Consumers are best served if they can fly from an airport that can be conveniently reached from the place where their journey begins. That is best enhanced by the development of a strong regional airport framework. I include Manchester, of course—but everything I say about Manchester could equally be applied to Aberdeen, Glasgow, Prestwick, Newcastle, Leeds-Bradford or Birmingham. This is not simply an argument about Manchester; it is about maximising consumer choice across the nation.
Slots in the London airport system are being severely restricted. That is a fact of life. Slot reductions—or slot rationing, to be accurate—impact on what happens regionally. It takes place not just at Heathrow and Gatwick but more widely. I mentioned passengers travelling through European airports. Last spring, KLM began running a service from Sheffield to Amsterdam. Passengers from South Yorkshire could end their journeys there or—which was more likely—travel on from Schiphol to their final destination. However, KLM came across a slot problem at Schiphol and has now ceased operating that service. Only if services are developed directly from the point of departure such as Sheffield can we be certain that consumer choice will be maximised in the long term.
I hope that my hon. Friend the Minister will be able to give us some comfort on my central theme. We want this notion of fifth freedoms—rather an inelegant expression—maximised so that regional airports can benefit. By fifth freedoms, we mean the ability of airlines to fly into our regional airports from their country of origin and go on elsewhere. Where that happens, it is good for airlines and for the travelling public.
In a rare moment of weakness, I will admit that Manchester airport faces a problem that Heathrow and Gatwick do not have. Demand for services from Manchester is clearly not as strong as at the London airports. Any airline that get its hands on a slot at

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Heathrow will take it, so Manchester's argument for fifth freedoms does not necessarily parallel Heathrow's. Heathrow can fill slots simply by offering them. Manchester's position is different, as the airport is still developing and needs to encourage airlines to come in. The ability for an airline to fly from its point of departure, disembark and pick up passengers at Manchester, and fly on elsewhere would give that airline a strong guarantee that it would make more money than it would if the service were restricted to flying from its point of departure to Manchester and back again.
I ask the Minister to think radically about regional airports and fifth freedom rights. There once seemed to be a total ideological blockage on the concept of fifth freedom rights, but we have seen some movement. However, not all the changes have been helpful. For example, FedEx was granted the right to operate fifth freedoms from Prestwick airport for commercial services—freight. As a result, FedEx was able to fly from the United States to Prestwick and on to the far east. Polar Air, which had flown from Manchester, chose to relocate at Prestwick precisely because it could have fifth freedoms from Prestwick but not at Manchester. It is ludicrous that an airline should have to relocate for economically rational reasons because fifth freedoms are available at one airport and not another.
I warmly applaud the decision to grant Olympic Airways the right to fly from Athens to Manchester, and from Manchester to Boston. It is hoped that flights may go on to Toronto, although there are difficulties on the Canadian side. I hope that the Canadians will recognise that it is not in their national interest to restrict flights.
That decision displayed a welcome change of thinking in central Government, but I must temper such free public applause with some criticism by asking Ministers to liberate their thinking. Ideally, we would like unlimited fifth freedom access to regional airports. That idea receives much support from airports, including Manchester, that would welcome the ability to develop their own air services without restriction. The Department of the Environment, Transport and the Regions argues that a bargaining process must be maintained, and that the Government are the custodian of long-term development. It is suggested that short-term consumer satisfaction may not always be best in the long term, and I accept that argument.
However, any restrictions on development of air transportation and the ability of consumers to use air services should be imposed in a way that is consistent with consumer choice, and, therefore, with leisure patterns, family travel and business travel. Too often, agreements on Manchester have been tied to decisions affecting the interests of London airports or British Airways. In the case of Olympic Airways, for example the knock-on deal with Greece—welcome though it was—was that British Airways should have parallel rights in that country. I have no objection to our increasing the capability of a British carrier, but I would be concerned if such trade-offs might jeopardise development at Manchester.
Let me give two examples. First, Biman, the Bangladeshi airline, wanted to travel in and out of Britain. It was offered flights to Manchester, but it wanted flights to London and was not prepared to
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accept Manchester as a second-best option. The irony is that Biman would have accepted a deal if it had been told that it could fly into Manchester and fly on from there. Forced to enter into a bargaining process, Biman was not prepared to accept a deal. Manchester has been frustrated for no clear national gain.
The other example involves Singapore Airlines, which was offered the chance to fly from Singapore through Manchester to New York, but was not prepared to accept that as a second-best option to flying via London.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Muffin): Is my hon. Friend suggesting that we should unilaterally grant fifth freedom rights to countries in which our carriers are subject to restrictions that we would not tolerate?
Mr. Lloyd: No. I want the Minister, in any negotiation on regional airports—Manchester, of course, but also Birmingham, Sheffield and others—to bear in mind the development needs of those airports. It is, of course, necessary to put pressure on others to exercise the same freedoms and develop the same services that we have, but we must get away from thinking that development in Manchester must involve some deal for London airports or for British Airways as the national carrier. We want regional transport to develop for the sake of the regions, but also for the sake of the national airport system.
Air travel is growing enormously, and that will continue. There are also restrictions at Heathrow, Gatwick and other major international airports such as Charles de Gaulle and Schiphol. If British people from outside London are to enjoy maximum choice, we need strong development of regional airports and a strategy that sees them not as an add-on, but as a central part of national air travel.
If that development does not come, Heathrow and Gatwick will suffer. They are already at saturation point, and demand for development at Gatwick will be locally resisted on environmental grounds. There are restrictions on how many people can fly through Heathrow. Granting fifth freedom rights to regional airports is therefore strongly in the national interest.
I know that negotiations are taking place on that, particularly regarding Pakistan's PIA, which may fly into Manchester. The Minister may not be able to comment on the negotiations, which have taken place in recent days and even hours.
My appeal is that we should unblock the thinking that regional development must be conditioned by the view that the true national interest lies in the London airport system; it does not lie there, it never did and it certainly never will. Regional development is a national good. I look forward to a strong indication from the Minister that that old thinking is now a thing of the past, and that in future there will be a strong endorsement of flights into and beyond airports such as Manchester.
I realise that other Members want to speak and I hope that I have said enough to give the flavour of the matter. My hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins) is in rather a difficult position as regards the debate, because he is a Parliamentary Private Secretary. I pay tribute to him because he

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provided the instigation for the debate, as the Member in whose constituency Manchester airport lies. He has played an important role in pushing for the developments to which I referred.
9.50 am
Mr. John M. Taylor: I am grateful for the opportunity to speak in this debate. I do so simply and solely as the Member of Parliament for Solihull.
International access to regional airports is of considerable importance to my local airport, Birmingham international, where only foreign airlines currently provide long-haul services to key business and leisure destinations. Indeed, a previous Conservative Administration first brought that about, by allowing American carriers to start services to regional airports from the United States without reciprocal rights for UK airlines. As a result, Birmingham now has two daily transatlantic scheduled services.
In the absence of UK airlines that are willing to serve regional airports such as Birmingham, the Government should encourage foreign carriers to do so instead, on a third or fourth freedom basis, but also on a fifth-freedom basis. UK airlines should not be able to prevent foreign airlines from doing that through the influence that they can exert over existing bilateral negotiations.
If foreign carriers were allowed to operate such services, the economic benefits to the regions would significantly outweigh any detrimental impact on UK airlines. It would also demonstrate that the Government were looking after the interests of UK consumers, who increasingly want to fly from their local airport, irrespective of the nationality of the airlines that operate there. That last category also includes me.
9.53 am
Mr. Peter L. Pike: I am glad to have the opportunity to say a few words in this important debate. I congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on initiating the debate. Like him, my main purpose in speaking is to draw attention to the effects on services at Manchester airport. However, my remarks also apply to the other regional airports.
Manchester airport is not merely the airport for Manchester; it serves the whole north-west region and beyond—Yorkshire, for example. Without question, it is the most successful regional airport in England. That is because the former Manchester city council was always prepared to invest in it.
In the 1960s, in Manchester, I was a backroom boy, as a Labour party political organiser, when decisions were taken to develop the airport. People said, "It will not pay until 2000." Yet those developments of the 1960s have long since disappeared as air traffic has grown—terminals 2 and 3 and other developments make what was done at that time seem insignificant.
The difficulty is that we still expect people to travel into the country via London, and we should not do so. A few years ago, I was asked—as a representative of the House—to visit NATO in Brussels. I had to travel on a Monday morning and was told by the House authorities that I had to come down to London, because they expected me to travel from here. No one took into
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account the facts that the fare was dearer, that I had to come down to London on the Sunday before, or that a convenient flight from Manchester arrived in Brussels 10 minutes before the flight that I was expected to catch from London. None of that was included in the equation. It was only when I insisted that I would not go if I could not travel from Manchester, that it was conceded that I could do so. Even our own House authorities sometimes do not do all that they can to encourage the development of our regional airports.
My hon. Friend the Member for Manchester, Central referred to fifth freedoms; that is extremely important. We want more freedom to be opened up. However, I understand the difficulty to which my hon. Friend the Under-Secretary referred: such reciprocal arrangements can pose problems. Nevertheless, it is nonsense for a plane to touch down at an airport without being able to pick up passengers—it is not economic.
At times, all Members who have an interest in regional airports have received letters from various companies, such as Singapore Airlines, which want to fly into different airports but have not been given slots to do so. In many cases, they battle for several years before they are finally allowed to run flights into those airports. We want other airlines to be able to do that too.
I regret the decision of British Airways not to use Manchester airport for their flights to Islamabad. That is a retrograde step because many people in the north-west want to travel to Islamabad with BA. It is true that they can use another airline, but they should have been given the choice of using BA.
There is always too much concentration on bringing people to the south-east. How many tourists come into the country through London who would have found that the north-west, or even Scotland or other parts of the UK, have as much to offer? They could fly into those places and visit them, rather than having to travel into London and fight their way out of it to get to other parts of the nation. Instead of visiting Stratford-on-Avon and other parts of the country for a couple of days, they could base their holiday in those places and visit London from them.
I look forward to the Minister's response on these important issues, although I accept that they are difficult ones. We want our airports to be given more freedom to develop their traffic potential, so that airlines can use all the regional airports. We also want our airlines to have the same freedoms to pick up passengers in other countries. The point is to give passengers—the consumers—what they want. We do not want them to experience the difficulty of having to come to London and to travel from Heathrow or Gatwick when it is not necessary. That is a major problem.
My hon. Friend the Member for Manchester, Central has focused attention on these issues. As a Member representing a Lancashire constituency, I support his case, because the bounds of Manchester airport go well beyond Lancashire. We want Manchester airport—and others, such as Birmingham—to grow and flourish, and to give passengers freedom of choice.
10 am
Mr. Nicholas Winterton: I support fully the excellent case advanced by the hon. Member for Manchester, Central (Mr. Lloyd). Like the hon. Gentleman, I pay tribute to the hon. Member for Wythenshawe and Sale, East (Mr. Goggins), who I hope will catch your eye, Dr. Clark, in the debate. He plays an important role as the chairman of the all-party group that seeks to promote and represent the interests of Manchester international airport.
I speak as the Member for Macclesfield, an important constituency in the north-west. That area contributes substantially to the economy and to the viability of the region. The benefits that flow to my constituency from the locality and the existence of Manchester international airport are very great.
I hope that the Minister will understand from the number of Members present in Westminster Hall today the strong feelings that exist about the importance of regional airports. From my point of view, Manchester is important, but, as my hon. Friend the Member for Solihull (Mr. Taylor) pointed out, Birmingham international airport is, too. Regional airports play an important role not only in transport, but in the overall economy of the United Kingdom.
We hear that there are problems with overcrowded skies in the south-east. Why do the Government not direct their attention to those parts of the country, such as the north-west, that could take the pressure off the south-east? There is room in the sky and runway capacity in the north-west. Many of us will be more than aware that the second runway at Manchester airport will come on stream in the not-too-distant future. As the hon. Member for Manchester, Central said, Manchester is only too willing to accept additional flights and they will bring great benefits to the economy of the region.
The north-west economic strategy identifies the development of Manchester international airport and other airports in the area as very important to the future prosperity and development of the region. In particular, it identifies the system of international route licences operated by successive Governments as a continuing constraint on the growth of international scheduled flights
"which are the key to attracting new investment and supporting economic growth".
The Government rightly state—successive Governments have done so—that they want continuing economic growth in the United Kingdom. A more realistic approach to regional airports could make a major contribution to support the growth that we all want to see.
The hon. Gentleman cited statistics on Manchester airport. He said that, in 1998, it had been estimated that the United Kingdom income impact of Manchester airport was £1.7 billion, of which £585 million was in the north-west. As I am sure we all agree, that is a dramatic statistic. The hon. Gentleman also referred to the impact on total United Kingdom employment, which was estimated to be 85,000 full-time equivalents with more than 15,400 jobs on the airport site itself. He did not add that the 1999 census on working population shows that 17,900 people are employed on the site at the airport, an increase of about 2,500 in 12 months, which is the
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equivalent to the creation of seven new jobs every day. Is that not something that we want to encourage and to continue?
Forecasts of traffic at Manchester suggest that the airport could be handling—this is an amazing figure—40.7 million passengers in 2015, with a UK income impact of £4 billion to £5 billion and an employment impact of between 137,000 and 177,000 full-time equivalents. The catalytic effects, such as those on tourism, are not included in those estimates. However, the passenger forecasts are underpinned by the assumption an increased range of destinations will be served, and frequencies offered in international scheduled services. The hon. Gentleman ably made that case. I emphasis to the Minister that regional economic impacts will not be achieved if further liberalisation of air services does not take place.
I stress that several Members from across the political divide are here today to highlight the importance of regional airports. My hon. Friend the Member for Solihull made an excellent case for Birmingham international airport. Before I represented Macclesfield, I lived close to what was then Elmdon airport in Birmingham. I know just how important the international airport is to that major industrial centre. Obviously, I claim that Manchester is the second capital of the United Kingdom and its industrial contribution to the country is substantial. In 2002, Manchester will host the Commonwealth games and, if many colleagues visit Manchester, they will see a city and a region that has been transformed in recent years.
As a Conservative, I am happy to pay tribute to the contribution that the Labour-controlled council has made over the years to the economic success of Manchester. Members from the north-west appreciate the role of Manchester and there is often cross-party support for many of the actions that are necessary to ensure that the city can continue to play a major role in the economy not only of the north-west, but of the United Kingdom as a whole.
There is full liberalisation of air services in the European Union and the Government have accepted that. It has resulted in many new services to regional airports throughout the United Kingdom. There is unilateral access to UK regional airports for United States carriers on what is known as the third and fourth freedom basis. That is a complicated term, but those who understand the subject know what it means. The Government have also accepted that, and it has resulted in additional services to Manchester and to Birmingham.
The transport White Paper identified a role for regional airports to maximise the contribution that they make to local and regional economies. In addition, as I have already said, they should reduce the pressure on congested south-east airports. I refer particularly to Heathrow and Gatwick, but I might also include in that equation Luton and Stansted because they contribute to the overcrowded skies in that part of the United Kingdom.
We need also further to minimise unnecessary surface journeys. Expanded scheduled services to Manchester, Birmingham and elsewhere in the regions can make a major contribution to that. The hon. Member for Manchester, Central has drawn attention to FedEx and

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the problems resulting from its development, which has contributed directly to an increase in lorry movements on our roads, which the Government say they want to reduce.
I say to the Minister that regional airports cannot fulfil the role that the Government and others want them to fulfil while they are subject to bilateral constraints that prevent services from operating where there is demand.
Airports are major economic engines in the areas that they serve. They create local jobs, on and off airport sites, offering the widest range of skills. As the hon. Member for Macclesfield, I know that they stimulate the local economy, and that is a prerequisite for social inclusion. The regional liberalisation deal has had only limited take-up, and further action is necessary. It is not the correct mechanism; it is flawed and misunderstood, and it has not maximised the potential contribution that regional airports can make.
I hope that the Minister will respond positively to the debate. The subject raised and initiated by the hon. Member for Manchester, Central has strong cross-party support. I hope that the Minister will try to get his Department and the Government to make changes that will bring immense benefits not only to Manchester international airport, which is so important to my constituency, but to other regional airports that can contribute to the improvement in the UK economy.
10.12 am
Mr. Paul Goggins: I, too, congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on securing this important debate, and thank him for his warm remarks about my role. I thank also the hon. Member for Macclesfield (Mr. Winterton) for his warm remarks, and I pay tribute to his role in articulating strong arguments in favour of Manchester airport in particular, and regional airports in general. It is important that different parties and regions are represented in the debate.
My starting point is as the Member of Parliament for Wythenshawe and Sale, East, which is home to Manchester airport. As we all know, there have been many debates about the development and growth of the airport, not least about the construction of the second runway. Opinion in my constituency and throughout the region is strongly in favour of the airport's development because 18,000 people have a job there and the possibility of future growth is a great cause for optimism in the local economy.
The regional development agency, local businesses and the local authorities that own the airport all agree that it is a major driver in the regional economy. It connects the people of the north-west with destinations throughout the world. Crucially, it is a gateway through which global companies come and invest in the north-west of England.
Clearly, there is no dispute that the Government acknowledge the role of regional airports in transport policy and economic development, and they said as much in the 1998 transport White Paper. In that White Paper the Government promised greater liberalisation and they have already delivered the open-skies policy for
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airports other than Heathrow and Gatwick, provided that there are reciprocal arrangements with other countries and carriers.
At about the same time as the White Paper was published, we had a report on regional air services from the Environment, Transport and Regional Affairs Committee. The report went further than the White Paper and made a strong recommendation for
"unilateral liberalisation of international access to regional airports, including fifth freedom rights, in addition to the limited liberalisation that has been announced."
Clearly the Government have not so far heeded that advice, and no doubt the Minister will go to some lengths to explain why that is so. The debate gives us a good opportunity to take stock and assess the current position.
I want to suggest, as colleagues have done, ways in which the system of air agreements could be improved, but we have to set those recommendations against the success that has already been achieved in the UK's aviation industry. As a whole, it contributes some £10 billion to gross domestic product. UK airports are now handling around 160 million passengers a year, and it is predicted that by 2015 that number will almost have doubled.
Some 180,000 people are employed directly at airports, and a further 200,000 are employed in service industries that support the aviation industry. A figure that bears repeating is that for every extra 1 million passengers who are attracted to airports in this country, 1,000 jobs are created. The industry is therefore important and already very successful.
As we look to the future, we have to tackle a number of constraints. My hon. Friend the Member for Manchester, Central spoke eloquently about the first, which concerns not only a physical but a psychological and cultural barrier: the belief that one can only run an international airport from London—that regional airports are only there to offer holiday charter and low-cost flights and are served by low-cost carriers, and serious international flights must go to Heathrow or Gatwick.
Mr. Pike: On that point, should we not stop calling Manchester a regional airport? Is it not a national airport that happens to be in the north-west?
Mr. Goggins: Indeed, I generally refer to it as Manchester international airport, because that is not only the reality but reflects the airport's aspiration. Just over half the flights out of Manchester are chartered, and just under half are scheduled, and the majority of the scheduled flights are international. The aspiration is to increase not only the number of passengers travelling through Manchester airport, but the number of scheduled flights and the proportion of such flights with international destinations. Manchester airport is becoming more international, and that should be the aspiration of other regional airports.
If it is possible for Denmark, which has a GDP smaller than that of Manchester airport's catchment area, to have an airport such as Copenhagen, there is no reason why a regional airport such as Manchester should not also be an international hub. If Milan and Frankfurt, as regional capitals, have major

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international airports, why cannot some of our regional airports also be major international airports? The London-centred mindset must be fought on a number of fronts, but it is particularly important to overcome it in aviation.
The second constraint is economic development. Time will not stand still, and if we do not succeed in turning some of our regional airports into major hubs, business will simply pass us by and passengers and carriers will go to other European international airports. My hon. Friend quoted a figure that demonstrated that far too many people from the north-west have to travel internationally via London, but twice as many go to international airports in Europe, such as Paris and Amsterdam. If we do not act now, when Gatwick and Heathrow are full to bursting, passengers and carriers will go to other European hub airports, and we will miss the opportunity fully to develop our regional capacity.
The third issue is fifth freedoms—an inelegant phrase, as my hon. Friend the Member for Manchester, Central said, but essential to the development of long-haul services to our regional airports. Fifth freedoms have been essential to the development of Manchester airport's long-haul routes. Qantas Airways first developed its route from Melbourne to Manchester via Amsterdam, and other airlines did similarly—Emirates Airlines from Dubai via Zurich, and flights from Hong Kong via Amsterdam and Paris, and Pakistani International Airlines from Islamabad via Copenhagen.
The end result of the development of a fifth freedom may eventually be a direct route, but fifth freedoms are essential for carriers if they are to minimise risk, to develop passenger numbers, and to develop the market. As my hon. Friend said, the present negotiations on fifth freedoms are far too London-centred, and far too focused on the interests of Heathrow and Gatwick and the demand of international carriers for slots there. As a result, we are missing the opportunity to develop travel through our regional airports.
The fourth point to be confronted is a current issue. It seems that many of the partial liberalisations and mini deals are not working or are beginning to unravel. We all hoped that mini deals would lead to progress, but I fear that they are taking us in the wrong direction. Only last week, the possible mini deal between the UK and the United States appeared to have stalled. That has massive implications for Manchester and the north-west region.
Mr. Winterton: Has the hon. Gentleman received the letter that I have from British Midland, commenting on the failure of the talks between the UK Government and the United States, which could put under threat the 2,000 jobs that British Midland had hoped to create, many of them in the region? Does that not show how important it is that we get it right?
Mr. Goggins: I entirely agree. As I understand it, Mr. Deputy Speaker, some 600 jobs have been lost from Manchester as a result of the difficulties in negotiating that mini deal.
We heard earlier about the fifth freedoms granted to FedEx and Polar Air for daily flights to Prestwick, but we also heard the recent announcement from FedEx
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that it is suspending those flights. FedEx also wanted fifth freedoms to Stansted, and regards it as unprofitable to have fifth freedoms into Prestwick only.
Although the intention behind the partial liberalisations and mini deals is entirely honourable, they do not always work out as we hope. There is a strong argument for removing uncertainty by taking the politics out of the matter. We should leave it to the airports and carriers to work out the routes and services, making those decisions on the basis of their commercial assessments. I recognise, as the my hon. Friend the Minister pointed out in his intervention, that the protectionist attitude that exists in some other countries and among some carriers must be confronted, but if we do not move ahead, we will miss a huge opportunity to develop our regional airports.
Manchester airport will soon have a second runway. It is under construction as this debate takes place. The airport has the aspiration, and by 2015 will have the capacity, for 40 million passengers a year to travel through it. Gatwick and Heathrow are already approaching capacity, with little or no likelihood of further expansion in the near future.
We have a choice, Mr. Deputy Speaker. Either we create a level playing field which gives regional airports in this country a real opportunity to grow, or passengers will simply move elsewhere. They will travel via Paris, Frankfurt, Amsterdam or Copenhagen. The implications for jobs, growth and prosperity in our regions are immense.
Dr. Michael Clark (in the Chair): Order. For the convenience of hon. Members, may I point out that there are four Deputy Speakers allocated to this Chamber. I am not one of them. I am a member of the Chairmen's Panel, standing in for a Deputy Speaker. Therefore it would be appropriate to address me by my name.
I call Mr. Harold Best, confident of the fact that he will accommodate me by bearing in mind that I have three Front-Bench speakers to call, starting at 10.30 am.
10.24 am
Mr. Harold Best: Thank you, Dr. Clark. I echo the observations made by previous speakers about the importance of international airports in various corners of the United Kingdom. It is difficult to overstate their importance to industry, commerce and people.
The idea of regional international airports is not new. We have heard references to cross-party support, and there is also trans-Pennine support for Manchester's airport. When I was a member of West Yorkshire county council, we joined others in trying to impress upon the Government of the day that such an international airport should be developed in the north of England.
Caroline Flint: Is my hon. Friend aware that in my constituency there will, we hope, be Doncaster Finningley international airport, which will be the only airport in Yorkshire able to provide the long-haul services that our region desperately needs and the finance that Manchester currently enjoys?
Mr. Best: I am aware of those proposals, but my hon. Friend is not entirely right. The airport in my

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constituency, Leeds-Bradford, has that capacity now and for some years has been able to handle flights to anywhere in the world. Concorde is a regular visitor to the Yeadon site in my constituency—not always welcome, however, because of the noise that it makes and the pollution that it leaves behind.
The freedom to get goods, services and people in and out of a region is essential for the future of the northern part of the United Kingdom. That is why I find that intriguing phrase, "the fifth freedom", so attractive. However, there are problems, which it would be remiss not to mention.
There is resistance in my constituency to the further development of an intercontinental airport, because of the huge increase in the associated road traffic and the pollution that that might bring. With considerable foresight, the planners and developers of the international airport in Manchester supported the idea of a permanent rail link between that airport and Leeds city centre. It is now possible to travel freely in both directions, making use of a good service.
An important factor in the control of pollution and damage to the local environment is the simple, almost accidental fact that the railway track that serves Harrogate through Leeds passes within three quarters of a mile of the end of the airport runway at Yeadon. A study is under way to examine the feasibility of extending and developing a terminal for the railway service at Yeadon airport. That will not detract from other facilities, but will expand in an intelligent and environmentally friendly way the services essential to such an airport.
I am mindful of your injunctions, Dr. Clark.
In my constituency, we welcome the expansion of air transport. It is important that it should be seen to be fair and evenly distributed throughout the United Kingdom—"fair" not just in the sense that one should play the game fairly, like cricket, but fair in the sense of industrial, commercial and travel opportunity for the people of the United Kingdom.
Only those who have to face the certain knowledge of the nightmare journey from the north of England to Gatwick or Heathrow to catch a plane to other parts of the world understand the pain of travelling and the massive inconvenience that it causes to the commercial and industrial interests of the north.
It is difficult to resist the arguments that have been advanced for an expansion of the fifth freedom. I believe that we should have open skies, as far as that is possible and practicable, but we should do what is necessary in planning terms to protect the immediate environment and provide the transportation facilities to ease the burden on our existing road network.
10.30 am
Mr. Michael Moore: We have had a useful and timely debate on an important subject. I congratulate the hon. Member for Manchester, Central (Mr. Lloyd) on choosing the subject and securing the debate.
Having listened to the debate for the past hour, it is incumbent on me to provide not only an element of political balance—hon. Members have stressed the consensus that exists—but a small amount of regional
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balance. The speakers have been predominantly from the north-west, especially Manchester. I pay tribute to Manchester airport, which has received a great deal of political support. It is a successful airport, which will develop this year through the second runway. However, to someone from north of the border, Manchester is to the rest of the regional network what the London airports, especially Heathrow and Gatwick, are to Manchester and other places. We are lured to Manchester to go on our holidays.
Caroline Flint: It took me more than two hours to get to Manchester airport by public transport last year. It also takes me two hours to get to London. A long-haul airport in the south of Yorkshire is important for my constituents and the other 4 million people who travel south to go abroad.
Mr. Moore: I welcome that intervention and I wish the hon. Lady every success in securing a regional airport for her area. It is important to strike a balance, not only between London and the rest of Britain, but within the regions.
The basic proposition that we have discussed is well understood. We all agree that strong regional airports are good for regional economies. Many hon. Members have referred to both Birmingham and Manchester international airports, as well as using the old names by which those airports were known 20 or 30 years ago. We know Edinburgh international airport as Turnhouse airport as much as by its modern, wholly appropriate name. That airport is being vastly expanded so that it can cope with the huge growth in demand that it, like many other airports throughout the United Kingdom, is experiencing.
Dealing with air service agreements and providing for the fairest and most open system possible are crucial to ensuring the development of the success that has been achieved so far, and making the most of it. There is a chicken-and-egg aspect to our considerations. Does a successful regional airport drive the local economy, or does a successful local economy drive the need for a regional airport? Many hon. Members in the Chamber are frequent fliers. I applied to become a member of two frequent-flier schemes, as I travel from Edinburgh to London. We are often stacked over Watford, and have to wait for a long time to land in London airports.
Our areas provide evidence of the development of regional airports and the importance of giving them the strength—through the extension of the fifth freedom deal, or other measures—to improve their contribution to their local economies. Airports contribute to the local economy directly through jobs and indirectly through the service suppliers to the industry. Several hon. Members have highlighted the direct leverage effect of increasing the number of passengers in specific airports. The growth in leisure travel and cargo is crucial to complementing the lucrative business markets with which many of us may be most familiar.
When we are considering the development of our regions, many of us focus on the importance of inward investment. Good regional airports, be they in Yorkshire, the north-west or Scotland, are important in attracting that inward investment. Until recently, I served on the Select Committee on Scottish Affairs. Last

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year, we carried out an important investigation into inward and outward investment. Time and again, we were told by officials, agencies such as Locate in Scotland, or companies, which described their motivations, that the infrastructure links, especially air links, were crucial to the decision to locate in an area. Tourism, which is vital to our regional economies, can be developed only if there are worthwhile and useful air links to promote it.
Airports are not much use if the business, leisure or cargo services are not available at them. I want to focus briefly on two issues that have been mentioned in passing this morning: the impact of disputes over transatlantic scheduled services, and cargo. Regional airports' efforts to develop transatlantic services will be stymied if we cannot make progress on the issues affecting Heathrow. The hon. Member for Macclesfield (Mr. Winterton) referred to the letter from British Midland. I also received a copy. As a keen supporter of that airline's role in increasing competition and providing consumer choice—another theme of this morning's discussions—it is important the such airlines can develop their services and participate in transatlantic flights. Clearly, the immediate focus is on Heathrow, but British Midland has suggested that it is keen to work with Manchester airport.
Many participants in the debate will have followed the recent transatlantic talks and watched as public expectation increased that a break-through would occur. The break-down of those talks is worrying and I hope that the Minister will be able to shed some light on it. It is widely suspected that the commercial interests of British Airways and Virgin may have been as influential as the American Government in curtailing the talks and causing them to fail.
Let us consider cargo. Many references have been made to Prestwick. The relaxation of fifth freedom rights for Prestwick was widely welcomed in Scotland. However, that welcome has been turned on its head by the disappointing news that FedEx will cease its service. Again, commercial negotiations, and the desire to fly in and out of Stansted, are clearly important. I agree with the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) that piecemeal developments in fifth freedom rights are not the answer. However, they can be important in such areas as Prestwick, where airports have developed their businesses largely through their cargo facilities.
I echo the comments of the hon. Member for Leeds, North-West (Mr. Best). If we are to develop regional airports, which are key drivers of local economies, and if we are to gain the necessary freedoms to increase the flights and respond to consumer demand, we must consider the integrated nature of the available transport. It is a source of constant amazement that there is no rail link from Edinburgh airport, which is 200 yd above the main east-coast rail line to the north of Scotland, to the city. That story is repeated in many places around the country. Perhaps the Minister will comment on that in his reply.
There is cross-party consensus that liberalisation and responding to customer demand are important. The Government must knock heads together to ensure that we do not stymie important local developments.
10.39 am
Mr. Damian Green: The number of hon. Members who have spoken or who wished to speak, and the passionate advocacy of the various airports that we have discussed from Members representing all political viewpoints will have convinced the Minister that the negotiations in which the Government engage in pursuit of liberalisation of air services are vital not only to the industry, but to many people in the areas surrounding those airports. I take the point made by the hon. Member for Burnley (Mr. Pike) that we should perhaps not refer to them as regional; they are international airports that happen to be in the regions.
Conservative Members are entirely in favour of liberalisation. As the Minister and others will be aware, the previous, Conservative Government consistently negotiated hard and did an enormous amount to achieve a degree of liberalisation—although not enough—in Europe and elsewhere. The Minister will also be aware that that liberalisation must be balanced with the interests of airlines and airports and their right to maintain their business as best they can with the travelling public. We have discussed the development of various airports. Manchester has a number of advocates, but Birmingham international and Leeds-Bradford are equally important, as are other prospective international airports that hon. Members clearly desire for their regions. They have all done a lot to encourage economic growth in the areas surrounding them and to achieve regional development. That has been possible under the existing terms of air service agreements and much has been achieved through flights between United Kingdom regional airports and the United States.
Negotiations with the US are often at the heart of the problems that we face. The Bermuda 2 agreement is clearly not perfect, but it represents a step forward. We must be realistic and recognise that we have to build on what is in place. Despite the restrictions and imperfections of Bermuda 2, the UK aviation industry is a success story and has done much to encourage regional development. The link between successful airlines and successful airports is clear, as is the link between successful airports and regional development. The debate is about how we can best maximise the growth and continued success of the aviation industry and the associated benefits that that brings to the regions.
We must consider the negotiations and refer in particular to the FedEx and Prestwick case. I hope that the Minister can explain where he sees that going. I understand that FedEx was given fifth freedom rights at Prestwick with no reciprocity, which disadvantaged other airports around the regions. Also, there was no benefit for British carriers to the US, which was a double whammy on the downside. As we have all heard in the past few days, after that rather dubious agreement was reached, FedEx pulled out anyway, leaving Prestwick with no benefit and the disadvantage of hoped-for jobs not being created. That is a catalogue of disasters by any standard.
Mr. Moore: The hon. Gentleman should bear in mind the fact that FedEx represents 10 per cent. of cargo handling at Prestwick. He may be giving the impression that it represents cargo handling in its entirety.
Mr. Green: No, no. The hon. Gentleman is exactly right, but I am sure that he agrees that an enormous head of optimism built up on the back of the FedEx deal. Obviously, that has been deflated and I hope that the Minister will explain where he sees things going.
The problems over the FedEx deal bring home the importance of cargo issues. Most of the debate dealt with passenger services, but, as the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) said, cargo is equally important. Indeed, cargo is a key industry for some airports. For example, DHL has done much to bring investment to East Midlands airport and independent cargo airlines such as Channel Express have invested heavily in Bournemouth airport.
Caroline Flint: Is the hon. Gentleman aware that cargo and maintenance needs in Yorkshire are not being met by any of the Yorkshire airports? That niche could be filled by Finningley, especially if air services were liberalised.
Mr. Green: The hon. Lady is persistent in getting her message across, but I have no intention of engaging in what appears to be an intra-Yorkshire debate. I have learned in life and in the House that it is wise to steer clear of them.
The British Cargo Airlines Alliance estimates that access to the US market could create 4,000 UK jobs by 2005. Everyone would welcome that, but it depends on the Government achieving the best possible deal for UK carriers in the open skies negotiations with the US. I hope that the Minister reaffirms that they will continue to push for a slice of the American market for UK airlines. The direct impact on regional airports would be not only economic growth, but the environmental benefits of which he will be aware. For example, the more we spread the freight load being carried to different international destinations, the shorter lorry journeys will be. With the right infrastructure around airports and if more freight could be carried from different airports around the UK, heavy-lorry traffic would be minimised.
Several hon. Members mentioned the British Midland letter and expressed disappointment about the failure of the negotiations, but I was struck by how positive it is about using Manchester airport. The letter says that
"Manchester Airport has been supportive of our efforts to establish a new hub … this remains a key element of our … strategy."
That will be welcomed by those who advocated the case of Manchester international so eloquently. Many such problems inevitably hit the logjam of the question whether the Government can negotiate successfully, with the Americans in particular, and there will be no progress without successful negotiations.
The underlying figures are slightly disturbing in respect of not only the individual competitiveness of our regions, but our national competitiveness. British business travellers can travel direct to only 10 US cities, but there are 18 direct services from Frankfurt for German business travellers. Greater diversity of services from this country is clearly necessary. For example, Manchester provides only 48 direct services a week—operated by the four UK-US airlines—to only five cities
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and no services to the US west coast, which is a vital and growing market. We would all like those services to be increased. Birmingham, which is at the heart of many of our industries, has only two airlines operating 14 services direct to only two US cities. Glasgow has only one direct service. Not only is that inadequate for the individual airports and cities concerned, but it puts the whole country at an economic disadvantage compared with some of our European partners and economic competitors.
The Minister will be aware that he and the Government have an important job to do in negotiating those various new services. We are all aware that Ministers face a difficult task and he will have heard this morning that, effectively, he is being urged to give unlimited fifth freedom access to many of our airports, even though that may not be in the interests of some of our carriers. I am also aware that "open skies" means something different in America from what it means here. The American definition seems to exclude cabotage, ownership and control, wet leasing, the fly-American policy and other arcana of the debate.
Perhaps the Minister could spend a few minutes explaining what the future negotiating stance will be after the recent failure of the talks. That stance will be important not just to airlines and to the various airports, but to the possibility of successful regeneration in many cities. I hope that the Minister will give us some information and comfort on that point.
10.50 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): I thank my hon. Friend the Member for Manchester, Central (Mr. Lloyd) for initiating what proved to be an interesting debate in which, possibly with one exception, Members of all three main parties have spoken with one voice.
My hon. Friend made the central charge, which others echoed, that for too long airports policy has been fixated on London. I assure him that we recognise the importance of the regions. Indeed, I represent a seat in the north-east of England which has an expanding airport at Newcastle. I am sure that it would make the same arguments as my hon. Friend has made on behalf of Manchester airport.
We also recognise that, given the demand for air travel is increasing exponentially, it is inevitable—even if we did not want it to be the case, and we do—that there will have to be an expansion of air travel and services from regional airports. One of the great challenges facing this and any Government in the next 20 or 30 years is to reduce the 70 per cent. of air journeys that originate from the three London airports, and to spread the load more equally around the country—for environmental reasons as much as for any other. It is inevitable and desirable that greater development takes place in regional airports.
I concede that the policy may have centred too much on London and on carriers' interests. However, I think that that policy was beginning to change even before we were elected—the hon. Member for Ashford (Mr. Green) asked me to acknowledge that—and we intend to continue in that vein.

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My hon. Friend the Member for Manchester, Central made a balanced speech. He was generous enough to concede that it was the Government's job to balance other interests, and the hon. Member for Ashford made the same point. We face the dilemma that I put to him in an intervention: do we concede freedom to countries that resolutely exclude or limit our carriers, or do we try to get something in return?
I should add that some foreign carriers are also fixated on London, and it does not follow that, were we unilaterally to grant the freedoms that some have called for, those carriers would necessarily all take advantage of services from regional airports. A number of airlines—my hon. Friend mentioned Biman, the Bangladeshi airline—have been offered freedoms from Manchester but have rather contemptuously declined them. I hope that, on reflection, they will realise that great value is to be gained from those freedoms.
Those are some of the problems that we must take into account. Several hon. Members have referred to environmental considerations. We should not have such a debate without recognising that neither regional nor national airports are entirely popular with some of our constituents, especially if they happen to live next door to them. One way of mitigating the great expansion of regional airports that will inevitably and desirably take place is to ensure that there are proper public transport links. My hon. Friend the Member for Leeds, North-West (Mr. Best) referred to the rail link at Leeds, which is very welcome, and the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) talked of the lack of such a facility at Edinburgh. The Government are trying to encourage all regional airports to develop proper access by public transport, and thereby reduce pollution and disruption.
In the short time allotted to me, I shall do my best to address some of the other points made by hon. Members. In 1998, the Government decided to make an offer to all states with which we have bilateral aviation relations and where services to the UK regions were not already liberalised. The offer was to open up all UK airports, other than Heathrow and Gatwick, to services by foreign airlines, without restrictions on capacity or frequency. The only condition was that UK airlines should have the same rights to fly from those UK airports to whichever airports in the relevant foreign state were available—often just the national capital, rather than regional airports.
Of the 74 states that we contacted with that offer, 17 have so far agreed to it and 25 have responded negatively. We continue to remind the others of our offer, and take every opportunity to raise the matter when we have air services discussions with them. So far, by our calculations, two new long-haul services to Manchester, two to Stansted and one to Birmingham have commenced as a direct result of that regional policy.
Many states realise that demand for services from their territory to UK regional airports does not exist. They are therefore simply not interested in the offer. Others are instinctively hostile to liberalisation and are not ready to follow the lead that we have taken. Because of those factors, the take-up rate of our regional access offer has been relatively low.
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Some, including the Select Committee on the Environment, Transport and Regional Affairs, have urged us to make our offer on a unilateral basis. That point was made in the debate. They want us to offer to accept foreign airlines at UK regional airports without restriction, while UK airlines remain prevented from flying the same routes, or restricted to a certain frequency. The Government have been reluctant to do that. The granting of monopoly rights for a foreign carrier to serve a UK regional airport may, in itself, be an attraction to start services, but we do not believe that it is in the long-term interests of consumers to put foreign Governments in a position to keep UK carriers off specific routes and to leave development of a route entirely in the hands of a foreign carrier.
The Select Committee, Manchester airport and others have also argued that we should unilaterally concede fifth freedom rights from regional airports in the UK on the ground that such rights can help to swing a decision by a foreign airline in favour of commencing operations to a regional airport. Again, the Government have not been convinced that the merits of such a policy outweigh the drawbacks. Capacity increases, fifth freedom rights or more flexible tariff frameworks are frequently sought by UK carriers from foreign states, and it would weaken our ability to negotiate such rights for our own airlines if we unilaterally granted fifth freedom rights to others.
However, we have been prepared, on a case-by-case basis, to examine requests by foreign carriers for fifth freedom rights from UK regional airports. In each case, we ask the Civil Aviation Authority to conduct an evaluation of the benefits and disbenefits of such services for UK airports, for the regions in which they are situated and for UK carriers.
Following such an analysis, we have recently approved an application by Olympic Airways for fifth freedom rights from Manchester to Boston and Toronto. Those services are due to start in April. Singapore Airlines operates fifth freedom services from Manchester to Bombay. In addition, Emirates Airlines has in the past made use of the fifth freedom rights that it enjoys from Manchester to a number of European points, but no longer does so. We have also indicated to Emirates that we would be willing to consider fifth freedom rights from Manchester to New York, but it has preferred to concentrate its efforts on obtaining such rights from London. Similarly, Singapore Airlines has been offered transatlantic fifth freedom rights from all UK regional airports but rejected the offer because fifth freedoms from Heathrow were not available. My hon. Friend asked about Pakistan. We are having further talks with Pakistan regarding its service, and I am told that those talks are going well.
Several others points have been raised. I would have liked to say something about the difficulties that we are experiencing in talks with the United States, but time does not permit. I shall be happy to follow that up with my hon. Friend in correspondence if he so desires.
I reiterate the point that I made at the outset. We accept that past policy may have been tilted too far in the direction of London, but that will not be the case in the future. We recognise the desirability of expanding regional air services.

Fishing Industry
11 am
Mr. Tim Loughton: I am very pleased to have secured this debate on the fishing industry after several months of putting in for it. It might not have been necessary if the House had had a full day's debate on the whole subject of the fishing industry on 13 December. In the few hours allotted to us at that stage, it was noticeable that no Conservative or Labour Back Bencher representing a coastal constituency was given the opportunity to express his or her views.
I want to examine at the fishing industry today on two levels: first, the complete failure of the common fisheries policy, its devastating impact on the British fishing industry and its total failure as a conservation measure; and secondly, and more important for me, the trickle-down effect of that failure on small fishermen, particularly those in my constituency of East Worthing and Shoreham, and its impact on non-pressure stocks such as sea bass, which is causing problems off the Sussex coast. Again, it might not have been necessary for me to raise these issues if the Minister, who I am glad is here today, had agreed to meet a delegation of fishermen from my constituency, but he has declined to do so on two occasions.
The common fisheries policy has failed, first, to treat British fishermen equitably. There is no level playing field, or whatever the marine equivalent of a level playing field is, in Europe. However, the industry is still important for the United Kingdom. According to the latest figures, it still has 7,800 vessels, catching 980,000-odd tonnes of fish, with a value of £620 million. It employs 18,600 people directly, and gives work to 3,000 fishmongers and a great many more people in supporting industries.
Recent common fisheries policy developments have been singularly unfair to the United Kingdom. The total allowable catch cuts proposed by the European Commission at the end of last year are substantial. The cost to the UK fishing industry is likely to be £88 million, out of a total industry of £622 million. That is about 14 per cent. of the catch in value terms. Inevitably, that will lead to more decommissioning of boats and job losses. Yet there never seems to be the same impact on other EU fishing fleets. Cuts by other member states have equalled those in the UK numerically, but not as a percentage of national fleets. Thus, some other member states, mainly Spain and Portugal, have cut their industries by a smaller proportion, yet received support grants for having been judged to have complied.
The UK gets a particularly poor deal from grants. The United Kingdom was the fifth largest recipient of FIFG grants between 1994 and 1997, receiving 173 million ecus, compared with Portugal receiving 248 million ecus, France 267 million ecus and Spain a massive 1,163 million ecus. It seems that still we have that problem, and the Minister is still proving unsuccessful in standing up to the Treasury. One of the reasons for the disparity is that the Treasury is unwilling to allow MAFF to apply for the multi-annual guidance programme grants awarded for decommissioning, because of the Fontainebleau agreement, which requires 71 per cent. of moneys granted to be removed from the
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national rebate. That has implications for the modernisation of the UK fleet, which is now much older than the equivalents in Spain and Portugal, for example, and becoming less efficient. Effectively, the United Kingdom has paid £100 million towards the upgrading of the Spanish fleet, while our own is being increasingly decommissioned.
In recent quota cuts, the Minister failed to stand up for Britain by invoking the Hague preference for North sea cod. That would have given the UK an additional 4,350 tonnes to catch. The Hague preference exists to give sensitive regions extra quota when TACs fall, but the Minister failed to play that card for Britain. The United Kingdom continues to get a poor deal from quota hopping, which always hits the headlines. Despite plenty of hot air from the Government, foreign-owned vessels fishing UK quotas still account for around 25 per cent. of the tonnage of the UK fleet. We increasingly see other ways being found around the restrictions, such as foreign vessels unloading their catches at UK ports straight on to freezer lorries destined for home port markets on the continent.
England also faces added competition because the Scottish Parliament now has its own Scottish Fisheries Minister, with powers to discriminate against English, Welsh and Northern Irish vessels operating in the Scottish zone. The Scottish fishermen have a Minister arguing solely for their interests, while England loses out. We have nobody to speak out against the excesses of Scottish vessels, which now come as far south as the south coast of England.
Another problem facing the UK industry is that of safety grants, another disgraceful example of the way in which the UK fishing industry is operating with one hand tied behind its back. MAFF's decision to axe safety grants was a disgrace. The interminable delay in reinstating them does no credit to the Government and speaks volumes about the place of fishermen's safety in the Minister's priorities.
The industry is now faced with the working time directive regulations, ignored by most European fishermen, under which the courts can decide whether or not the directive should be applied, despite the Minister's assurances. As with so many things, regulation weighs particularly heavily on the smaller operators, as the larger commercial operators can afford to take advantage of the increased regulatory burden to force uncompetitive practices on the smaller competition.
It is little wonder, therefore, that the National Federation of Fishermen's Organisations recently called for the Minister's resignation. Its chief executive went on record recently as saying:
On practically every major front, the industry is being forced onto the back foot. It is intolerable that the Minister has asserted that the fishing industry is doing well under the present Government. Nothing could be further from the truth. The catalogue of failure, fudge and callous indifference clearly shows that the interests of the industry in England, Wales and Northern Ireland have taken a back seat."
The second failure of the common fisheries policy is on conservation, where it has failed dismally. Last November's announcement about cuts in the TAC, understandably described as massive, was surely an admission that the CFP is not working as a conservation measure. The cuts recommended were indeed massive:

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for cod 47 per cent. in the North sea and 69 per cent. in the Irish sea; for haddock 26 per cent. in the North sea and 40 per cent. in the Irish sea. Those were pretty desperate measures, as the cuts are usually capped at 40 per cent. for any one year. We are told that cod and haddock levels are at their lowest for 30 years, which is hardly a vindication of the CFP or a mark of its success.
The truth is that the CFP has no role as a conservation or environmental measure, because British fish stocks were particularly healthy prior to our joining the EEC. The whole approach to conservation in the CFP is completely wrong. Quotas do not reduce the amount of fish caught. Instead, boats trawl again and again to find the catch for which they have a quota to fill. They are more likely to catch non-quota stocks and then throw them back into the sea dead, including many juvenile specimens. It has been estimated that possibly 30 per cent. of fish stocks have been thrown back. A MAFF study conducted a few years ago near my constituency, off Brighton, showed that the survival rates of fish thrown back into the sea can be as low as 40 per cent. The coley example is a good one, because there is a small quota available for coley, which breed prolifically in the North sea. However, apparently annually some 80,000 tonnes have been dumped back into the sea to die and pollute the oceans.
Throwing dead fish back into the sea totally undermines any attempts at conservation of our fishing stocks. It is ironic, therefore, that, as from 1 January this year, the minimum landing sizes for 11 species of sea fish—including brill, turbot, dab, and black and red sea bream—were abolished, allowing the legal landing of postage stamp sized fish, which are particularly popular in foreign markets.
Fishing News, not surprisingly, says:
"Reducing or scrapping MLS sizes is an act of stupidity and no British fishermen wanted to see any reduction in MLS sizes. We have been calling for increased MLS sizes for so many years that we now see MAFF paying lip service to the EU."
The upshot of all this is the creation of a climate of environmental failure and a dog eat dog mentality among United Kingdom and European fishermen—or, perhaps, dogfish eat dogfish—between Scottish and English fishermen and, now, between larger commercial fishermen and smaller operators, often fishing off-beach, as is the case in Worthing. Alas, it is my fishermen in Worthing and Shoreham who are, as it were, the last dogfish on the menu and whose very existence is at stake. Already, only the last vestiges of a fishing fleet remain there.
Let me say something about the local situation. Sea bass in particular have caused great problems among my fishermen, who brought the matter to my attention last summer. At that time, for the second season running, the livelihoods of Worthing fishermen have been threatened by larger fishing boats which come along the coast—particularly from Newhaven, in East Sussex—and scoop up large quantities of fish using nets slung between a pair of trawlers.
Pair trawling is a real problem. Two trawlers operate typically 200 yds apart. Up to six pairs have been operating in the area during the season, and they have started the season early. They drag heavy steel wire lines
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in water as shallow as 20 ft. Heavy weights are attached to hold down the gear, which are in contact with the sea bed. Heavy wire sweeps herd fish into the nets with a funnel effect, and heavy chains and rubber bobbins scrape along the sea bed, overturning boulders, smashing rocks and uprooting kelp beds, which provide feeding grounds for bass and other fish and where small species such as crabs hide in the dark.
Often, after the pair of trawlers have been along, there are no fish for other fishermen. The fragile kelp beds, which have been deteriorating off Worthing for the last 15 years, are now virtually gone. It is said that they were deteriorating in any event, but dragging heavy gear along the sea bed cannot help the position.
Mr. Peter Bottomley: I pay tribute to my hon. Friend for going out with the fishermen of Worthing and Shoreham, and maintaining contact with them. When I was the Minister in the Northern Ireland Office responsible for agriculture, we did a fair amount of research in Strangford lough on the effects of dredging. I suspect that the results we obtained were the same as those found in the near coastal waters of the south coast and elsewhere. The practice is very damaging, and I will support any recommendation that my hon. Friend makes to the Minister that it should happen way offshore, if it happens at all.
Mr. Loughton: My hon. Friend knows the position in Worthing as well as I do. I have seen photographs taken 10 or 15 years ago, and compared them with those taken by divers over the past few years. There is very little left—which is especially galling for Worthing, given that, arguably, its name is derived from the Saxon word for seaweed. Worthing has had problems with seaweed for many years: it has made a mess on the beach, and in summer it stinks. However, although the stink has gone, the fish will go as well because of the lack of seaweed.
Another problem with pair trawlers is that they have been coming closer and closer to shore. Some have come as close as 50 yds from the end of the pier, causing a danger to swimmers. As local fishermen will testify, after pair trawlers have hauled in their gear, vast amounts of small bream and whiting can often be seen floating dead or dying on the surface, feeding the seagulls. That does no good to anyone, apart from the seagulls.
I acknowledge that, as it stands, the practice is entirely legal, as long as it is restricted to boats of less than 14 m in length using a net mesh of 90 mm or more, and provided that the boats do not come within a quarter of a mile of the shoreline. Pair trawling is perfectly legitimate, and is not restricted under European Union legislation. I do not suggest that the fishermen operating out of Newhaven—whom I have also met—are flouting the regulations. I believe, however, that the practice is damaging the fish for everyone, and is weighing unduly on small fishermen who are restricted in terms of the distances that they can travel.
Pair trawling is an increasingly effective way of fishing. The amount of sea bass caught in that way has increased by 500 per cent. over the past two years. In 1997–98, 43.3 tonnes were landed; in 1998–99, the amount had increased to 216.2 tonnes. Because of that enormous increase, a number of full-time commercial boats are now fishing for bass. The number has increased substantially over the past five or six years.

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My fishermen in Worthing and Shoreham are very aggrieved that some of the best bass fishing grounds of Sussex are being systematically denuded. Since working with them, I have received letters of support from all over the country—from as far afield as Glamorgan, Somerset, Cornwall and Nottinghamshire. I have been out to see the pair trawlers, and I have been out with the conventional fishermen as well.
The response from the pair trawlermen is understandable, and in many respects I sympathise with them. They are caught by the common fisheries policy like everyone else. Because of the lack of pressure stocks and the decreasing quotas for cod, sole and plaice, they are having to look for alternative catches, and the position is worsening. They are having to look further afield for new species that are not covered by the quotas and the TACs. I was recently told that a colony of scallops had appeared in an area that the men do not usually fish; they scooped them up and moved on, leaving no scallops behind.
The problem in Worthing is that shoals of bass come close to the shore and are easy prey for the pair trawlers. Bass is rather a lucrative catch. The trawlers plough up and down all day long and then fill their nets. The Sussex fishery is typical of the eastern channel. A variety of species arrive season by season—for instance, Dover sole, turbot, brill, cod and mackerel. Now, as I have said, trawlers are coming down from as far away as Scotland to take advantage of the position, because of pressures in the North sea. The sea bass stocks, which are not covered by quotas, are inevitably coming under pressure, as evidenced by the catch limits per week being imposed on boats.
A fisherman from Somerset wrote to me about the problem of pair trawling. According to him:
"Pair trawling is not a sustainable method of fishing a relatively small sea or arguably any sea area, particularly for one of the less numerous species of fish albeit one with a culinary price on its head which has the unfortunate habit of forming very dense shoals when spawning and is therefore easy prey for these high tech vessels. Sea anglers and artisan fishermen as well as the knock on effect on the local tourist trade pay for the consequences of this overfishing."
The letter also mentions the MAFF report on offshore bass fishing, which was issued last year. It is the result of a pilot study, and is entitled "MO802". According to another letter:
"The Report which was conducted during the winter of 1998–99, clearly shows that this fishery has become a recruitment fishery which is relying on each new year class of fish as soon as they enter the adult stocks. The catches consist predominantly of small adults in their lst/2nd year of spawning. Very few fish were present in the widely sampled catches that exceeded ten years of age in a species that normally lives in excess of twenty five plus years and does not successfully spawn until aged six/seven years."
One of the most serious problems affecting the state of world fish stocks is the level of spawning stock biomass for each species. I am sure that you, as a scientist, appreciate that, Dr. Clark. Only mature fish can spawn, and thus contribute to the replenishment of stocks. World fisheries, however, are now increasingly targeting fish that are immature or only recently mature. Those fish have had little or no opportunity to spawn, and cannot contribute to the long-term health and survival of the stock. The plight of the sea bass is a prime example of the problem.
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We have to look only at MAFF's consultation document on the subject, which was produced last October, to highlight the problems. Again, I quote:
"When the adult bass return inshore in spring, following spawning, they supplement the summer fishery, but these fish are now perceived to be returning in much reduced numbers. As a consequence, effort on juvenile bass may be intensifying, thus undermining the current conservation package aimed at protecting these fish."
It goes on:
"the trends in the Fishery are worrying. They may indicate that the offshore stock is depleted and that the depletion is already affecting the Inshore Fishery."
That is serious. Pair trawlers are doing, and have the potential to do further, large-scale, long-term damage to the future of sea bass around our shores. In Ireland and the United States, pair fishing has been banned as not sustainable and harmful to quotations. The influence on south coast and south-west fisheries needs to be properly looked at before it is too late here as well.
What is the Minister doing about it? He has twice refused to meet a delegation of fishermen from my constituency, who are suffering from the problem, but who will not give up because their livelihoods are at stake. His actions are just encouraging pair fishermen. I went to see them last summer and tried to broker a gentleman's agreement, whereby they would respect certain lines of demarcation. Initially, they were keen to do that, but when word got round that the Minister was not taking the case seriously and refused to meet my fishermen, they got back to me and said, "If the Minister does not think that it is a problem, we will carry on and take as many fish out as we can." An unhelpful state of affairs has resulted.
The Minister keeps deferring to the Sussex sea fisheries committee, which operates out of Newhaven—from where those very boats come. It constantly denies that there is any such problem, which flies in the face of the evidence. It claims that pair fishermen are using gear that is designed to skip over the ground, rather than carve through it. That is patently not the case, as anyone who has seen photographs of the gear that they use will know.
The complacency on the boats coming too close to shore is worrying because swimmers were endangered last year. The chief fisheries officer of the Sussex sea fisheries committee is quoted in the paper as issuing the advice:
"anyone who swims near a trawler should know to avoid it."
That is hardly helpful advice in the circumstances. We still have a tourist trade and sandy beaches in Worthing and we do not want to discourage tourists in that way.
Worthing fishermen have few options. Some boats target cod in the summer, but they have now moved a long way offshore, on to wrecks in deep water, and are accessible only to a few larger boats. If the quota for cod is exhausted and a blanket ban put on in summer, what can those few boats do for the season? There is a problem. The common fisheries policy and fish stocks covered by quotas are one thing, but the effect on non-pressure stocks should not he overlooked. The livelihoods of many small and part-time fishermen in and around my constituency are seriously threatened. The whole tradition of fishing long associated with places such as Shoreham and Worthing could

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disappear. Clearly, we have a problem in Worthing and in the UK as a whole; it is no good pretending that everything is rosy.
It is not for me to say what the UK Government's policy should be, but, clearly, the CFP has failed and is failing large vessels, and its trickle-down effect means life or death for my fishermen. Carrying on the way we are will end in the wide-scale demise of the Europe-wide fishing industry, particularly the British fishing industry, which poses a serious threat to the long-term sustainability of fish stocks and the health of marine varieties that depend on them.
We need to regain greater control over our national fishing waters. The 2002 review of the CFP and the potential expiry of derogation is an opportunity to thrash out a proper long-term sustainable policy once and for all. I, for one, would favour the permanent extension of national and local management to 12 miles, empowering EU member states actively to manage the fisheries themselves, sensitive to local needs and circumstances and with sustainable social and environmental safeguards. That is the view that the Royal Society for the Protection of Birds took. We can learn much from Norway—it manages its fishing industry without the necessity to dump dead fish and it uses complex and technological monitoring mechanisms and zonal management.
The CFP is a perfect example of everything that is wrong with the EU. It is rigid, centrally applied and has no flexibility. When dealing with a natural resource such as fish stocks, a large degree of flexibility is needed both over time and between areas. The Commission has imposed the quota system from Scandinavia to Gibraltar with no diversity; hence it is failing in all areas. Instead of promoting flexibility, the Commission has introduced a permit system that will take effect from the end of 2002, whereby all vessels that fish outside the six or 12-mile limit will be part of an EU fleet under the Commission's control. That does not bode well for UK fishermen.
The last vestiges of the fishing industry in Worthing are in crisis. It is a microcosm of the desperate state of the UK fishing industry as a whole and it is getting worse. In the interests of the UK fishing industry and the sustainability of European fishing stocks as a whole, that decline must be urgently reversed. That cannot be achieved by a Government who constantly try to con people into believing that they have never had it so good.
We need a Minister to stand up for British fishermen and to take a lead in Europe with radical reform of the CFP, starting with the extension of the derogation to national Governments of control of the 12-mile limit, rather than taking the soft option of caving in every time. We need to hear his proposals for 2002 very quickly. We need a Minister who will stand up to the hoarding mentality of the Treasury, while grants to UK boats that desperately need modernisation and extra safety measures are effectively closed off.
We need a Minister who will have the good sense to acknowledge the plight of smaller fishermen such as those in my constituency, who will be prepared to listen to their views and their experiences at first hand and
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include them in the whole equation when discussing the fishing industry. I urge the Minister again to receive a delegation of Worthing fishermen, or to come down to Worthing to meet them.
11.27 am
Mrs. Joan Humble: I congratulate the hon. Member for East Worthing and Shoreham (Mr. Loughton) on securing the debate. I was one of the many Members who were not fortunate enough to be called when we had our annual fisheries debate last year, so I welcome the opportunity to take part in today's debate. However, I shall not repeat the speech that I had prepared for that occasion because it concentrated on the proposals on quota cuts for this year and things have moved on. Instead, I would like to concentrate on the proposals that were recently agreed in Brussels to close part of the Irish sea fishery, which will have a serious effect on the fishing industry in Fleetwood.
As the Minister is aware, Fleetwood lost its distant water trawler fleet in the cod wars with Iceland in the 1970s, but successfully built a flourishing inshore fleet. Unfortunately, that fleet has gone down from about 70 vessels to 20, so there are serious concerns about its viability. We need not only measures to ensure that it continues in the short term, but measures to secure its long-term future.
The cuts in quota that have been agreed for this year because of the parlous state of fish stocks will make it difficult for Fleetwood fishermen to sustain their industry. Therefore, they were especially concerned when they learned of proposals to close part of the Irish sea fishing ground.
My local fish producers organisation well understands the need for conservation of fish stocks and spawning grounds. It also recognises that the Irish sea as a whole is suffering from over-capacity. Fleetwood has been trying very hard to ensure that it does have a sustainable fishing industry.
Fishermen are remarkably resourceful people and the fishermen of Fleetwood are certainly among their number. They have invested locally and they work closely with the local authority. The catchers have been working with the producers and auctioneers in the market, with everyone pulling together to ensure that the fishing industry remains. Fleetwood owes its birth to fishing. Even though not so many people are now employed in that industry, it is still part of their heritage and they want to keep it going. They are working hard to ensure that it does.
The producer organisation has proposed various conservation measures and is looking forward to the opportunities presented by the review of the common fisheries policy in the run-up to 2002 to ensure that this country, and indeed Europe, has a viable fishing industry. The fishermen would support a total ban on fishing in the Irish sea to protect spawning stock of cod and juveniles, but they are bewildered why beamers from Ireland, Holland and Belgium are to be allowed in to fish. Beam trawlers are large vessels and they are moving ever closer to the 12-mile limit. Fishermen from the Fleetwood inshore fleet tell me that beamers regularly come inside that limit and that they have reported the sightings to the Ministry of Agriculture,

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Fisheries and Food. I urge them to continue to report such incidents because, clearly, policing the 12-mile limit is at issue.
As the Minister is aware, trawlers in the beamer fleet take by-catches of cod. Boxes of codling are offered for sale to merchants in Fleetwood, so fishermen from those trawlers are coming ashore. My local fishermen tell me that some of the by-catch from those larger vessels is more than the total catch of the small inshore fleet—what is seen as a by-catch for larger vessels is their livelihood, which adds to their concern.
I read with interest an article in Fishing News on 4 February in which the Minister explained the background to some of the recent measures taken by the Council of Ministers. It is an excellent article and outlines the issues in detail. I noted, in particular, that the background to the debate was:
"to protect the immature cod which will spawn this year during February, March and April;
to maintain those fisheries that would not conflict with the spawning cod;
to impress on the Commission and the UK industry that the industry's involvement in the process was essential if a realistic plan was to be developed."
I agree entirely with what my hon. Friend said in the article. I want all that to happen. My fishermen and I agree that immature cod have to be protected and want their fishery to be maintained during the time that the cod are to be protected. They also want to work closely with the Commission and the Government to produce a realistic plan.
I hope that my hon. Friend will respond positively to this debate and let me know how these fishermen can become actively involved in the Irish sea cod recovery plan. Without fish, there will be no fishermen. That is why Fleetwood fishermen are realistic about the problem.
Representatives of the local producer organisation and Fish Forum are to attend a meeting in Belfast next Wednesday, when the matter will be discussed further. My hon. Friend the Minister is aware that interesting moves are afoot to study a regionally based plan for the Irish sea. That fishery concerns not merely men from Fleetwood but people from Northern Ireland and Eire, as well as other European countries. At last, they are talking to each other constructively and I want that constructive dialogue to be maintained.
In the meantime, Fleetwood fishermen would certainly welcome an opportunity for MAFF scientists to accompany them on one or two of their inshore vessels on short trips to those grounds to monitor fishing activity and take samples of the fish caught. They also want the opportunity to accompany MAFF survey vessels on their observations. I often find myself in the difficult position of, on the one hand, listening to and reading accounts from scientists of what is going on, and on the other, listening to fishermen who have fished those waters for 20 or 30 years, and I find that their accounts do not always marry up.
It is important that scientists and fishermen study carefully the data that scientists are collecting, as well as taking into account fishermen's knowledge based on their own enterprise. We need to ensure that quotas are properly allocated, based on the availability of the stock. If scientists and fishermen disagree, the industry will not work together as we would all welcome.
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My hon. Friend the Minister has agreed to meet with some of my fishermen. He has visited Fleetwood on two occasions, I think, and he impressed local fishermen with his profound knowledge of fish, the fishing industry and his commitment to their long-term sustainable future. Having met them, he knows that they are people who express their opinions forcefully. They will express their concerns to him at the meeting that we hope to have next week. They very much welcome the opportunity to meet him to discuss the issue. The Irish sea is the only fishing ground for Fleetwood's small inshore fleet. If it is closed, they will have nowhere else to go. They need to consider carefully how conservation will give them a long-term future, but also what measures can be taken now to ensure that they will be in a position to take advantage of that future when that is being discussed as part of the wider debate on the CAP.
Fishermen understand the need for conservation and for quotas. They understand that scientists have a role to play in advising on the state of the fish stocks. They want to take an active part in the process. My local producer organisation recently appointed new officers to lead it and it is determined that the voice of Fleetwood will be heard when the fishing industry is discussing its future, and that it will be a positive voice because they want the industry to succeed in Fleetwood and elsewhere.
11.38 am
Mr. Christopher Gill: I congratulate my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) on obtaining this important debate and compliment him on the cogency and fluency with which he put his case.
I am pleased to see the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food and my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss), the shadow fisheries Minister in their places. I have always found the Parliamentary Secretary to be unfailingly courteous in dealing with these matters. Within the constraints imposed upon him by his stewardship of a pernicious and unworkable regime, he has always been unfailingly helpful.
I have never understood how a person with the hon. Gentleman's strong views on animal welfare has been able to reconcile those views with support for the common fisheries policy, which positively encourages wanton destruction of precious marine life. Nevertheless, the fact remains that the hon. Gentleman and the Labour party condone the CAP, which, as we all know, results in more than half of all the fish that are caught being dumped back dead into the sea. That is all done, as we know, in the name of conservation.
What is even more extraordinary is that there has not been a squeak out of the animal welfare lobbyists on the subject. They are very busy opposing fox hunting and fur farming, but, when it comes to the utterly unnecessary and totally immoral destruction of millions of fish, there is not a peep. Every day of every week, thousands upon thousands of perfectly saleable fish are needlessly discarded, but the animal welfarists remain strangely—and suspiciously—silent. Here is an open-and-shut case of wanton destruction of animal life, but they have absolutely nothing to say. Hon. Members

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might like to ponder why that is. They might even conclude, as I do, that the motivation of those self-styled champions of animal rights is purely political.
As I am on the subject of political motivation, I should return to the Minister himself. The hon. Gentleman might resent being called a communist—
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): It is not very new Labour.
Mr. Gill: There is, however, no escaping the fact that the Minister and his Government colleagues are supporting a collectivist policy. How else would one describe a regime that, from the centre, tells fishermen what they may catch, in which sea areas, in which quantities, and even—from last year—at which ports they may land them, and, in some cases, between which hours that landing may be made?
The Minister and the Labour party are totally committed to that policy. They are the ones who condone the evil regime. They are the ones who are responsible for what can only be described as an environmental outrage. They are the ones who have acquiesced in the scrapping of the minimum landing size on the 11 species that were mentioned, quite accurately, by my hon. Friend the Member for East Worthing and Shoreham. They are the ones who, far from reducing the sand eel total allowable catch, are party to its being increased.
Mr. Morley indicated dissent.
Mr. Gill: Before the Minister intervenes, I should say that I recognise that there is now a closed area for sand eels. However, as he will know, that area has been created for the sake of the birds. In the modern idiom, the whole of the policy is for the birds. The policy is certainly not for the sake of fish or for the good of fishermen.
Mr. Morley: Will the hon. Gentleman give way?
Mr. Gill: If the Minister will let me finish on this subject, I shall gladly give way.
I should like the Minister to listen to what a Scottish fisherman has to say on the subject. In a letter to Fishing News, published on 17 December, Mr. George Stephen, of St. Combs, in Scotland, had this to say:
"From midnight on 31 December I will be subject to constant satellite surveillance …
Why? What have I done to warrant this electronic tagging? I am not a paedophile, drug dealer, murderer, gun runner or released IRA terrorist, neither do I cruise Clapham Common, trade in porn or smuggle booze. Nor am I a burglar, mortgage swindler or an illegal immigrant.
My crime? I am a fisherman, a so-called 'enemy of the environment'! In 30 years at sea I have never caught a whale, destroyed a dolphin, killed a seal or dumped nuclear waste, but I have been forced by the EU to dump hundreds of tonnes of edible fish in the name of 'euro-conservation' CFP style."
Mr. Morley: The hon. Gentleman is making a speech in his usual robust style. However, I should like to
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clarify a couple of issues. First—and we have been through this before—the vast majority of fish that are dumped are dumped because of the nature of fishing itself and the fact that they are immature or non-target species. Nevertheless, that is not an excuse for the extent of dumping. It is a technical conservation issue that must be tackled, and we are doing that.
As for closed areas for sand eels, science on the impact of sand eel catches on birds was used to justify the closure. However, there is no doubt that the closure has had benefits for migrating salmon and other commercial food stock species. Moreover, it was the United Kingdom that argued for a limit on sand eel catches. Although I concede that that limit was far too high and that I should like to revisit the issue to obtain such reductions, we shall have to have science to back our arguments.
The impact on the sea beds is part of the science—
Dr. Michael Clark (in the Chair): Order. You are making an intervention, Mr. Morley, and I should be very grateful if you could keep it intervention length. You will have a chance to sum up later.
Mr. Morley: Thank you, Dr. Clark.
Mr. Gill: I shall be only too happy to respond to that intervention, Dr. Clark. One of my complaints about the common fisheries policy is that, for 25 years, we have known that there is a problem, and that, for 25 years, Ministers—people who have gone before the current Minister—have been saying that something needs to be done. The Minister and I have crossed swords on many occasions when I have explained to him that the prospect of reforming the common fisheries policy in any radical or meaningful way is impossible. He and I know that it requires unanimity; otherwise, or that, if the changes are proposed and are passed under qualified majority voting, at least one nation—I suspect the Spaniards—will take the European Union to court on the ground that there has been discrimination.
The Minister also did not tell the Chamber that the outcome of the Government's representations on sand eels to the Council of Ministers was that the sand eel total allowable catch was increased from 1 million tonnes to 1,020,000 tonnes. However, anyone with the least knowledge of fishing and fish stocks realises the importance of sand eels as a feedstock for fisheries.
The fact that the European Union has increased the sand eel TAC is mind-boggling. Currently, the sand eel catch is less than half of the approved catch limit. The estimate is that, in 1999, 430,000 tonnes of sand eels were caught. Moreover, the catch has been decreasing by about 100,000 tonnes for each of the past three years. Why on earth Ministers decided that they needed to increase the sand eel TAC is a matter that the Minister will perhaps deal with in his slightly longer intervention at the end of the debate.
I do not think that you were in the Chair, Mr. Jones, when I read extracts from a letter by Mr. George Stephen, of Aberdeenshire, but I do not think that I need to say more about that letter—the gentleman said it all. The common fisheries policy is devoid of any semblance of common sense and is entirely hostile to the environment that it purports to sustain. Indeed, the

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policy is hostile to that most precious of infinitely renewable resources—the fish themselves—that it purports to conserve. The policy is entirely bereft of any sense of morality.
The greatest scandal, however, is that the CFP continues to be supported by politicians—people such as hon. Members in the Chamber now. There can be no excuse for that situation. Thanks to the tireless efforts of Save Britain's Fish, there is no longer ignorance about the facts of the common fisheries policy—how it originated, how it works, and what it will inevitably lead to. We carry on down that path at our own peril. Furthermore, the guilt of destroying one of nature's most priceless assets will be on our shoulders.
I should like the Chamber to know exactly where the Conservative party now stands on these issues—[Interruption.] I shall make it abundantly clear, without a shadow of a doubt, and hope that I shall not embarrass my hon. Friend the Member for North-East Cambridgeshire. On 15 December 1998, the previous shadow fisheries Minister, my hon. Friend the Member for Teignbridge (Mr. Nicholls), said:
"We have to bring fisheries policy back under national control"—[Official Report, 15 December 1998; Vol. 322, c. 845.].
He echoed the words of my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), who stated as long ago as 1997:
"There are several areas where the EU is exercising powers which could be devolved to the member states. Another candidate for repatriation is fisheries policy … Fishing grounds out to 200 miles or the median line could be brought back under national control, with sensible bilateral agreements and recognition of the historic rights of other countries."
The last word must go the Leader of the Opposition, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), who, in a letter to Mr. George Wiseman of Fraserburgh, dated 9 March 1999, stated:
"I do not believe the current CFP arrangements are working … Our aim has therefore been set out unequivocally … our approach will succeed in regaining national control of our own fishing waters."
That is unequivocal. That is where we stand, and where we shall fight. We shall stand up for a vital British interest. We shall fight to retain what remains of a once-proud industry, and we shall take back control of our own waters out to 200 miles or the median line.
I applaud that outbreak of common sense. I rejoice in the fact that my party now has a policy which is distinct from that of the Labour party and the other Opposition parties. I further rejoice that the Conservative party is now on the right side of the argument. I welcome this renunciation of collectivism.
I challenge the European integrationists and the proponents of the common fisheries policy—some of whom are present in the Chamber this morning—to explain what distinguishes this collectivist policy from communism. [Laughter.] The hon. Member for St. Ives (Mr. George) laughs, but he will have an opportunity to answer the question. I have posed it to many others, and they have all failed to answer. I shall be delighted to hear what the hon. Gentleman has to say.
One of the consequences of collectivisation is that what everybody owns, nobody owns. A regime that denies individual fishermen any sense of ownership is the absolute enemy of conservation. The Chamber will
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be grateful to my hon. Friend the Member for East Worthing and Shoreham for his graphic description of how the common fisheries policy is failing the fishing industry, failing the nation and prejudicing the very existence of the fish themselves.
11.53 am
Mr. Andrew George: I congratulate the hon. Member for East Worthing and Shoreham (Mr. Loughton) on an eloquent and thoughtful speech, and on securing the debate. He rightly pointed out that the annual fishing debate—the pre-eminent opportunity for us to review the state of the industry—was so severely curtailed that we had little debate at all. I ask the Government's business managers to ensure that next year's debate provides an adequate opportunity.
The substance of the hon. Member for East Worthing and Shoreham's speech was local, but it has resonance around the coast of the British Isles in relation to local, coastal and low-impact fisheries and their impact on other economies in the area, including tourism. The hon. Gentleman referred to the failure of the common fisheries policy, as did the hon. Member for Ludlow (Mr. Gill). I do not think that any Member here would condone or support, as the hon. Member for Ludlow put it, the common fisheries policy in its present form. I and members of my party—and other hon. Members—have criticised the common fisheries policy for being an almost complete failure on almost every count. When I came into the House in May 1997, that was the situation I found, and we must deal with that situation.
The hon. Member for Ludlow claims that it is a collectivist policy, and that the Minister therefore must be a communist. If so, the previous Tory Government were, for 18 years, communists also.
Mr. Gill: I do not think that the hon. Gentleman should be allowed to get away with that. I said that the Minister would probably resent it if I called him a communist
Mr. George: I am sure that the hon. Member for Ludlow would resent that, too, but that is the inevitable conclusion that one must draw from the hon. Gentleman calling anyone responsible for trying to manage the common fisheries policy in government a communist or a collectivist. As the hon. Member for East Worthing and Shoreham pointed out, there are serious issues to address, such as conservation and quota management.
I wish to refer to safety and to minimum landing sizes, and I agree with the hon. Member for East Worthing and Shoreham about the working time directive. He will find that the Liberal Democrats strongly opposed the introduction of the working time directive into the industry in its present form, but we failed to secure the support of Conservative Members when we tabled a motion in the House just over a year ago.
Mr. Loughton: I was a member of the European Standing Committee which debated the working time directive, and the Conservative members did vote against it.
Mr. George: I accept that, but the motion tabled in the annual debate in 1998 emphasised that the directive

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should not be imposed on the fishing industry in the proposed form. The fact is that we failed to secure the support of Conservative Members at that stage.
The hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) referred to the impact of the annual cut in quotas, and how substantial the cuts have been. All hon. Members have been struck by how severe the cuts have had to be this year. We have called on the Minister to say whether the Government have had further opportunity to consider the possibility of introducing multi-annual quotas. We cannot simply go on limping from one year to the next with the 11th-hour brinkmanship over the setting of quotas. We do not know two weeks before the commencement of the next fishing year what the quotas will be. There is some indication of quotas, but clearly that is not good enough.
I have enormous sympathy with the substantive point that the hon. Member for East Worthing and Shoreham raised about the damage done to the inshore fishery in the Worthing area, and I was interested in his comments about Worthing and seaweed. In my part of the country, seaweed was seen in the past as a great resource and the kelp industry was an important part of the local economy. Perhaps if there is a lot of seaweed, especially kelp, in the area, the hon. Gentleman should encourage some of his constituents to consider that as a potential economic development opportunity.
On the Cornish coast around my constituency, we have similar problems, although the problems created by pair trawlers beyond the 12-mile limit are a matter of great concern. The Minister knows my criticisms of the way in which the Government introduced the 15 tonnes per month rule at a very late stage, when we were previously looking at five tonnes per week. As far as the bass longliners in Cornwall are concerned, that has meant unwelcome continued fishing opportunities for pair trawlers, whereas the five tonne per week limit would have curtailed some of those fishing opportunities. Line-caught bass around the Cornish coast is an economically viable industry. Low-impact fisheries are economically viable and they should be encouraged, not damaged by pair trawlers, which, by the ratio of catch per person employed, do not have the same beneficial impact on the local economy. Therefore, I encourage the Minister to monitor the impact of the 15 tonnes per month limit and to consider withdrawing it to protect the bass stocks and encourage low-impact fishing around our coast.
The hon. Gentleman may also be interested to learn that I have disagreed with the hon. Member for Totnes (Mr. Steen) about the damage done by certain types of fishing methods, such as scallop dredgers, in inshore areas. I have argued that they have damaged important fishing grounds, especially crab and lobster grounds, but the hon. Gentleman has strongly argued in favour of continued freedom for scallop dredgers. Attitudes to the issue depend on local circumstances and the concerns of the local fishing fleet.
I shall be interested in the Minister's response to the points raised by the hon. Member for Blackpool, North and Fleetwood on the closing down of part of the Irish sea. The industry has agreed with the broad thrust of local management agreements, and it will be interesting
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to see whether the way in which the closure will be achieved will be altered under the devolved regional management plan proposed for the area. The industry in Cornwall has long argued for seasonally closed areas and satellite surveillance, because responsible fishermen recognise that if they are to follow the rules, other fishermen must also, and they need effective policing to ensure that. Therefore, I can tell the hon. Member for Ludlow that many fishermen welcome the introduction of satellite surveillance to ensure that their conformity to the rules does not put them at a disadvantage.
I was also interested in the hon. Gentleman's clarification of Tory party policy on the common fisheries policy. It will be interesting to hear in a moment whether the hon. Member for North-East Cambridgeshire (Mr. Moss) concurs.
Mr. Gill: Our policy is better than yours.
Mr. George: The hon. Gentleman's policy is for the birds, because policies have to be achievable in the real world. The Liberal Democrats have long argued for a radical reform of the CFP, which involves decentralisation, along the lines proposed for the Irish sea, to regional management boards, which would include scientists and fishermen. That would give fishermen some say over fishing policy in their areas. With power comes responsibility, and the fishermen recognise that. If we could achieve that through reform of the CFP in future, it would be very welcome.
The Minister has reassured me that we are reasonably confident of maintaining the six and 12-mile limits and relative stability beyond 2002, but we need further reassurance that the Minister is fighting hard to achieve, as far as possible, a regional fishing policy along the lines proposed by the industry. I know that the Minister has shown some sympathy for the proposal.
I share the concerns of other hon. Members who have raised the issue of minimum landing sizes today. I appreciate that criticisms of discards made by the hon. Member for Ludlow and others have also been made vociferously by the industry, but it is now saying that discards are better than scrapping the minimum landing sizes altogether. I believe that the fishing industry in this country is responsible, and there is little or no market for juvenile and undersized fish in this country. Therefore the scrapping of minimum landing sizes will probably have little impact in the UK. However, the danger is that it will give a green light to irresponsible fishermen who may target juvenile fish because there is a market for them in other parts of Europe.
I look to the Minister for some reassurance that action will he taken, because a reformed CFP should contain more robust mechanisms to ensure that the rules are enforced evenly across Europe. The Minister will know that many British fishermen have little faith that their conformity with the rules is matched in other countries.
Fishing safety is an issue of great concern. I know that the Minister is not directly responsible for that, but the Deputy Prime Minister held out the prospect of reinstating the fishing safety grants for six months. Only a couple of weeks ago, after he had let the fishing industry down, he criticised fishermen for their irresponsible and cavalier attitude to fishing safety. That

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is not good enough, and it has not gone down well with the fishing industry that the Minister who claimed that he would be responsible for reintroducing fishing safety grants has taken that attitude. We have recently seen tragic loss of life in the fishing industry, and in my own constituency in 18 months we have lost 11 men to the sea. That is an issue of grave concern, because no other industry has such a record of tragedy and loss of life. I look to the Minister for some reassurance that the issue will be a top priority for the Ministry.
12.10 pm
Mr. Malcolm Moss: May I congratulate my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) on his success in securing this debate? May I also compliment him on making a competent and cogently argued case? It contained many points to which I will, I hope, give the Minister enough time to respond. We never seem to have enough time for our fishing debates. It has already been alluded to several times that our annual debate was very short and very few Back Benchers managed to contribute to it. One would encourage Back-Bench colleagues to put in for more fishing debates in this environment.
I support my hon. Friend's plea for action on the sea bass problem. I have had several letters from around our coast, but particularly the approaches in the channel, showing that this is now a very serious problem. My hon. Friend referred to last year's offshore bass fishery report, which confirmed that the bass targeted by the pair trawlers were shoaling bass which were about to spawn. Given that evidence, one wonders why little if no action has been taken since that report came out. It is also in direct conflict with Labour's charter for anglers. Under the heading of sea angling, Labour said that it would introduce a coastal planning policy that would recognise important areas of sports fishing and closed areas for spawning and preserving breeding stocks. We have not seen much of that policy; perhaps the Minister will tell us why the Government have been a bit dilatory in coming forward with it.
I want to give the Minister plenty of time to respond to the very important points that have been made this morning. However, I also want to give him the opportunity to answer the six-point indictment from the National Federation of Fishermen's Organisations which recently called for the hon. Gentleman's resignation. This must be the first time that such a body has called for a Minister's resignation. [Interruption.] The Minister has had plenty of time to answer the main points that were put in Fishing News and in the federation's press release. Perhaps this morning he will begin to answer some of the key criticisms that have been made. First of those was his failure at the European Commission meeting to invoke the Hague preference for cod in the North sea. It is a critical aspect of fishing in that area. As my hon. Friend pointed out, it could have meant an additional 4,350 tonnes which, in pounds and pence, represents £6 million to the industry. That cod was clearly traded off for some other priority. It would be helpful to know why the Minister did not invoke the Hague preference and what other deals were done as a result.
The federation believes that the Commission's plan for Irish sea cod will fail to build on the industry's proposals to protect the spawning cod. It will also fail to
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secure vital haddock fishing during the main season. The federation points out that British vessels will have to be tied up or undertake expensive conversion to remain in business.
On fleet modernisation, the usual point is made that there is a continuing decline in the British fishing industry, and that nothing has come from the Government in the way of grant aid for decommissioning or scrap and build.
Safety has been debated both in the Chamber and on the Floor of the House, and promises were made. On 11 June 1999, the Deputy Prime Minister wrote to Barrie Deas of the National Federation of Fishermen's Organisations regarding the decision of the Ministry of Agriculture, Fisheries and Food to close the national fishing vessel equipment scheme. The right hon. Gentleman said:
"We share that concern, which is why, speaking for Government as a whole, I have made clear that the fishing vessel safety equipment grants would continue."
He has not repeated that position, speaking for the Government as a whole, but he wrote on 2 November saying that the problem was that since he wrote on 11 June, there had been devolution. He continued:
"MAFF's previous regulations which covered this scheme are no longer valid. Nor can they simply be restored, either for the UK or England alone, because of what the regulations' text actually provides … In light of this, it makes sense to draw a line under the previous scheme, and to consider whether to introduce a grant scheme for this purpose in the future."
The key word in that is "whether", whereas in his earlier letter, the right hon. Gentleman had more or less confirmed that the scheme would be reintroduced.
Finally, the federation believes that the Government's enthusiasm for the working time directive has led to the interests and concerns of the fishing industry being brushed aside. If applied to the industry, the working time rules will mean that most vessels will be unable to operate in a viable way. I add to that list the fact that the Minister, who supports minimum landing sizes—or used to—failed totally to hold his corner at the meeting. As a result, the issue of minimum landing sizes—which the federation and most people looking at the industry believe to be a key ingredient of all conservation measures—has been swept aside for certain species.
I rest my case there. I have not spoken for very long, but the Minister has many questions to answer and I hope that, in the time available, he will do just that.
12.16 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Elliot Morley): There have been some very good contributions in this debate, and I add my congratulations to the hon. Member for East Worthing and Shoreham (Mr. Loughton) for the way in which he made his case. I do not agree with all the points that he made, as I will explain in a moment, and I shall deal head on with the local issues that he raised.
It is true that the National Federation of Fishermen's Organisations has called for my resignation. Calls for fisheries Ministers to resign are not unusual; it is an occupational hazard. I have been around the industry for a very long time, and if the hon. Gentleman would like to talk to those of his right hon. and hon. Friends

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who have held this post, he will find that a call for one's resignation, in the context of the history of the relationship between fisheries Ministers and the industry is pretty small beer, frankly. I recognise that there are genuine frustrations and concerns in the fishing industry. If it makes fishermen feel better to call for my resignation, I am not one to complain.
I have never said that the industry has never had it so good. Although some parts are clearly having a very difficult time, it would be wrong to think that all sectors are on their knees. However, I do not want to gloss over the problems that the industry faces, and I will deal with them.
As this debate was secured by the hon. Member for East Worthing and Shoreham, I should like to deal with his points before dealing with the general issues. I accept the points that have been made about the time available for fisheries debates. That is a fair comment, although I think that it was helpful to have a three-hour debate on the Select Committee report on fisheries. That extra debate gave many hon. Members the chance to speak.
I accept the need to look after the inshore sector. I am very keen on the inshore sector—I have introduced a consultation document for inshore fishermen which deals with how they can protect their interests. I have increased the underpinning of certain stocks for the inshore sector. As for quota hoppers, one benefit of the new economic link regulations was that some of those vessels actually gave back all their quota—50 tonnes of sole—directly to the inshore sector to assist it. So I understand the sector's needs; I am keen to support it and want to do more.
I did not accept the hon. Gentleman's request to bring a delegation of local fishermen to see me, and I should like to explain why. Generally speaking, I am only too pleased to meet hon. Members and fishermen to discuss their problems. The hon. Gentleman would have been only too welcome if he had stopped me in the Lobby to discuss the matter in more detail. Indeed, some of his hon. Friends have no qualms about discussing fish with me whether I want to hear them or not. I offer him that courtesy; we are all constituency Members and I want to help all hon. Members to deal with constituency issues.
However, I did not feel it appropriate to meet the hon. Gentleman's delegation on the particular issue on which he requested the meeting. The matter is dealt with by the sea fish committees. I appreciate that the hon. Gentleman's fishermen are concerned about pair trawling, which may damage kelp beds and disturb the inshore fleet and even sea angling. As soon as the hon. Gentleman wrote to me, I raised this serious matter with the Ministry's sea fisheries inspectorate and the Sussex sea fish committee. Both bodies assured me that pair teams working off Worthing respect the committee byelaw that puts a maximum length of 14m on vessels within the SFC district. The teams also used larger meshes than local single trawls did, which is also regulated by the byelaw. I am keen to see people using larger meshes than required because it is good for conservation.
I was further informed that there was no evidence that the pair trawlers were damaging what remained of the kelp beds. The hon. Gentleman referred to problems
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with the gear being used. The SFC is dealing with that and I would be reluctant to trespass on areas that are the responsibility of local sea fish committees. I favour devolution and regional management, and the sea fish committees are an important part of that. My responsibility as a Minister is simply to confirm that byelaws made by SFCs are made after due consultation. Operation of the byelaws is a matter for the committees, which represent a range of interests in their regions.
If I met a delegation that wanted to raise the type of complaint identified—quite legitimately —by the hon. Gentleman, I can guarantee that the hon. Member who represents the interests of the pair trawlers would also demand to see me. The pair trawlers have a very different tale to tell on this matter, and I should have to try to arbitrate in a local dispute that is the responsibility of the sea fish committee.
I was concerned to hear the hon. Gentleman say that pair trawlers are using the fact that this is a matter for the SFC as an excuse to do nothing. I appreciate that the hon. Gentleman is trying to reach an agreement, but that role lies with the SFC. In at least one part of the country, there has been an example of what happens when an SFC cannot achieve agreement locally. In that event, the Ministry of Agriculture, Fisheries and Food has to take over by introducing temporary byelaws and taking a role in local regional management. I do not believe that we should do so. Inshore management should be a matter for the committees, involving local fishermen and other people.
That is why I felt it inappropriate to become involved in the dispute on which the hon. Gentleman wrote to me.
Mr. Moss: Will the Minister explain why agreement was given for a massive increase—500 per cent.—in the sea bass catch?
Mr. Morley: I am not sure that the hon. Gentleman is right in referring to an increase in the sea bass catch as there is no quota on sea bass, which is a non-pressure stock. We have, in fact, introduced measures to restrict the catch of sea bass.
I shall try quickly to cover the points made by my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) and the hon. Members for North-East Cambridgeshire (Mr. Moss) and for Ludlow (Mr. Gill). Funds have been made available for decommissioning, and funds remain available for a small decommissioning scheme, which we may have to introduce as part of our multi-annual guidance programme. By and large, we have achieved our MAGP target for the bulk of our fleet, so we do not have to decommission. I am glad about that. Although we have sometimes had to decommission, that does not resolve the problem, and unbalanced decommissioning can cause particular problems in ports around the country.
We had a detailed debate on fleet modernisation, and I do not think that it would do any good for the inshore fishermen represented by the hon. Member for East Worthing and Shoreham if the Government used public funds to modernise vessels so that they were more efficient and could increase their catches. In some cases, we would be giving people money to build vessels that they could not sustain on their normal catches. That does no one good, including fishermen.
Mr. Loughton: I entirely agree that that would do no one any good. Why, in that case, are we giving

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£100 million of United Kingdom taxpayers' money to Spanish fishermen to do exactly that? May I remind the Minister that the problem is generally one of pair trawling, and, as the hon. Member for St. Ives (Mr. George) said, that also affects other parts of the country. Will the Minister meet my fishermen on the subject of the damage that pair trawling is doing, even if he meets those represented by other hon. Members at the same time? That is the point I should like him to consider. Expansion in the industry is making it exceedingly efficient and effective, and that is having a detrimental knock-on effect on people such as my fishermen.
Mr. Morley: I want to help the hon. Gentleman. That was not the point that he put in his original letter. If he and his inshore fishermen wish to see me about an issue for which I have policy responsibility—pair trawling may be such an issue—I shall of course consider his request sympathetically, as I would for any hon. Member. He may wish to ponder on what request he wants to make.
Time is short, but I shall try to deal quickly with points made about the Hague preference. In the Fisheries Council of the European Union, I must negotiate in the best interests of our country. Our national interest relates not only to the North sea, but to the English channel, the waters off the south-west and the Irish sea. The future of the Hague preference is also an issue for consideration. We do not have an automatic right to impose the Hague preference, but can do so only with the Commission's support once it has gone through the Council of Ministers. Four member states objected in the most recent negotiation.
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We must focus on the benefits. We have managed to negotiate a quota of 34,360 tonnes of North sea cod for this year. As the actual catch in 1999 was 33,357 tonnes, we have managed to negotiate a quota larger than the amount caught last year. Yet all science suggests that cod stocks are in poorer shape this year than they were last year. I should tell the hon. Member for Ludlow that that has nothing to do with the common fisheries policy, but has more to do with cod breeding cycles and rising sea temperatures.
All countries that are not in the CFP also apply quotas. The CFP can of course be criticised—it is not perfect, and the Government have never said that it is. However, there must be an alternative to quota management. Every other country uses quota management, and Norway employs a discard policy that involves ships landing their discards, although the authorities in Norway have told me how difficult it is to enforce that policy.
I do not have time to go through all the points raised this morning. If hon. Members feel that I have not touched on particular burning issues, I ask them to write to me. My hon. Friend the Member for Blackpool, North and Fleetwood raised several important points, and I shall take them seriously. She is bringing a delegation to see me, and I hope to discuss those points in more detail then.
In conclusion, important issues have been raised, and we must tackle them properly. I was not convinced by what the hon. Member for Ludlow said about Conservative policy. Recognising historical rights is tricky—
Mr. Barry Jones (in the Chair): Order. We must now move to the next debate.

Objective 2 Funding (Southend)
12.30 pm
Mr. David Amess: The hopes and aspirations of thousands of my constituents depend on the outcome of this debate—such is the responsibility that has been placed on the shoulders of the Minister for Competition and Consumer Affairs, the hon. Member for Pontypridd (Dr. Howells).
I shall state what I am trying to achieve at the outset of my remarks, because there is a chance that, as I continue, the purpose may be lost. On behalf of my constituents, I want to obtain a plain answer as to why their Member of Parliament was not given the courtesy of being told by the Government, at any stage, that Leigh and Chalkwell would be removed from objective 2 status. Later on, I shall give more details of the circumstances of my inquiry. However, my constituents need to know why their MP was treated so discourteously.
I hope that the Minister will be able to explain who—precisely which body or individuals—decided to take Chalkwell and Leigh out of that bid. Only six wards were removed; hey presto, that included the only two that were in my constituency. Someone must have been responsible for that decision. Was it the Government, the council or Members of the European Parliament?
Finally, I hope that the Minister will tell me whether anything can be done to change that original decision. If that is impossible, can something be done to help my constituents in Leigh and Chalkwell?
This is my maiden speech in Westminster Hall—this dreadful poor relation to the Chamber. I thoroughly disapprove of this arena, but I have been trying to secure a debate on the Floor of the House for such a long time that I decided to accept its being held in Westminster Hall. However, I do not aspire to some consensual, European style of diluted government.
I want to share with the Minister the background to the bid. It was never my idea to get involved in any bid for objective 2 status. The local authority is controlled by 12 Liberal and 8 Labour councillors, against 19 Conservative councillors. Through its officers, the council asked me to support its bid for objective 2 status. I did so enthusiastically.
Given that the UK is such a huge contributor to the EU budget, although I voted "no" in the referendum on Europe in the 1970s, I was only too delighted to try to secure some of that money to help my constituents. My goodness, they need help.
In the larger world, there is an impression that Southend, West is a well-heeled community. When the Guinness family represented the area—as they did for 100 years—that may have been so, but it certainly is no longer true. I live in the heart of the community and I know only too well the challenges faced by my constituents. That is why I secured an Adjournment debate in the Chamber on 30 April last year. The then Under-Secretary of State for Trade and Industry, now the Under-Secretary of State for Education and Employment, the hon. Member for North Swindon (Mr. Wills), replied to the debate and we had a useful exchange of views.
After the debate, he suggested that I arranged for a group to meet him to set out in greater details the reasons why Southend was entitled to objective 2 status.
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That meeting took place on 28 June at the Department of Trade and Industry and was most agreeable. At the end, I looked the then Under-Secretary straight in the eye and said, "If we are successful, I will thank you; if we are unsuccessful, I will blame your boss."
There was some delay before an announcement was made. I have had a great deal of correspondence on the matter. The deadline kept being pushed back; I do not know whether that was because our officials could not agree with European officials. There was some difficulty in drawing up the map for objective 2 funding.
The subject is complicated and technical. I have yet to meet anyone who has a real grasp of all the details—we are only human beings. However, I deduce from the map that there was much double-speak before it was finalised—I shall explain that in due course. After much correspondence, we heard the wonderful announcement that Southend was to be promoted. I have the document in front of me; it was published in October 1999. It gives the names of the successful areas, with the joyous news that Southend was to be proposed as qualifying for objective 2 status—two of the wards were in my constituency, and we were delighted that Leigh and Chalkwell were to qualify for that status.
I am sure that the Minister for Competition and Consumer Affairs understands that the local community worked extremely hard to draw up various proposals as to how to spend £15 million over 10 years. I pay tribute to Daryl Godbald, who leads the local fishermen, and to Steven Dell, who leads the local cocklers. They drew up a wish list of different proposals.
For instance, we have been hoping for some time that Leigh creek would be dredged—for various reasons. It would enable fishermen and yachtsmen to keep their craft afloat, with access to a lock. It would attract considerable income and employment to the town from permanent moorings and visiting UK and continental craft. It would be an ideal stopping-off point for continental yachtsmen visiting London.
Other large schemes were proposed; for example, cockle sheds at Leigh straight wharf, with improved road access. We planned to extend Bell wharf by 100 m—the list went on and on. The bottom line is that those proposals would have transformed our area.
Sometimes a false impression is given of Southend. Anyone who knows Southend knows that the fishing and cockling community is extremely important. Many families in the town have been involved with that industry for many years. The community gave magnificent support to this country at Dunkirk.
It is sad to see what has happened to that community over several years. I have had several discussions with the former Under-Secretary for Trade and Industry, who has done his best to help. The proposals to which I referred would have transformed the area; there can be no doubt of that.
There are arguments to be made about the facts and figures that were considered during the bidding process—the amounts may seem small to some people, but they are important to my constituents. However, to underpin our qualification under the fisheries strand, it should be borne in mind that 10 years ago there were seven boats in Leigh; at present, only three work full time. There were five boats in Chalkwell; currently only one works full time. By and large, the area is supported

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only by the cockling industry. For instance, the firm of Gilson's used to employ 23 people, but that number is now down to eight. I therefore found it extraordinary when I received a letter from a Minister telling me that we did not qualify under the fisheries strand because there had not been a reduction in jobs.
So seriously did I take the local authority's call to support the bid that I not only had meetings with Ministers but went to Brussels. I met two of our European Members of Parliament, Mr. Robert Sturdy and Mr. Geoffrey Van Orden, and the lady responsible for working up the east of England bid. We made sure that Europe was made well aware of the position.
I now come to what has incensed me most. On 26 November last year, I was at the switch-on of the Leigh lights with the chairman of Leigh town council. He asked me whether I had seen the local newspapers and I said that I had not. A huge group of people attended that day, but the chairman of the council told me that, if I read the local newspapers, I would see that Leigh and Chalkwell were no longer going to obtain objective 2 status. I could not believe it. Such is the style of politics these days that elected representatives count for nothing. The media are much more important and they get news three weeks before elected representatives. It is an absolute disgrace that a democratically elected Member of Parliament should find out from local newspapers what is going to happen to a project that would have meant a great deal for his constituents.
I can do no better than to quote the letter written to me by the clerk of the council:
"The Town Council was very seriously concerned to hear last Friday (26th November) that Leigh and Chalkwell Wards may be excluded from support through Objective Two, and replaced by two other Wards. This means that the two Wards originally planned for this support which are in the Town Council's area"
will not receive any support whatever. He adds:
"Leigh is the registered Port for the area, and the centre of the fishing and cockling industry … These two activities have been severely hit over recent years by a variety of problems and directives, which limit the times at which they can operate and also the levels of catches they can make … There are also problems in relation to Leigh Creek".
The letter describes the consequences of that and continues:
"In addition to these industries, the whole of the foreshore needs attention … Attention to a part of this area only would lead to a marginalisation of the West of the town; unemployment in Chalkwell is currently 6.4 per cent., against an average for Southend of 5.8 per cent. and for Essex of 3.7 per cent."
I blew a gasket when I learned the news. I was elected to the House on the same day as the Prime Minister. In the years I have been a Member of the House, I have not thought that party allegiances determined whether letters were replied to. Ever since we have had a Labour Prime Minister I have never received a single letter back when I have written to him personally. Someone in his office has presumably told his staff, "If you get anything from a Conservative Member of Parliament, bung it on to the Minister." That is a disgrace. Unless we are called in the House—and that is a lottery—how can we make our points? How on earth can we speak on behalf of our constituents? What is the point of being a Member of Parliament any more? Let us not bother with elections; let the media and the civil servants run the show.
Since I received the news on 26 November 1999, I have done everything to raise the matter in the House, so here I am in the new Westminster Hall to do just that.
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I shall not make personal remarks against the Minister, but it seems that I have not even got the right Minister to answer the debate. He and I have had no contact on this issue. All the letters are from different people. What does that say to my constituents? Does it say, "You've got a Conservative Member of Parliament and they are a lot of old rubbish. They are down to 164 and we have are not going to have an Opposition. It is only Labour Members and Labour areas that count"? If that is the game, I am not putting up with it. The sooner the general public become wise to it, the better. Such an attitude would be a disgrace. However, I am sure that the Minister will be able to reassure me that that is not what happens.
The town council wrote directly to the Minister for Trade to raise several points. It wanted to know why the decision had been made, on what basis it had been taken and what he was going to do about it. I have seen the exchange of correspondence and the Minister for Trade has written most courteously to the town council. However, I do not agree with the contents of his reply. We seem to be at an impasse. We are told that when the UK case was put to Europe, it did not quite fit and that changes had to be made. Throughout the United Kingdom, six wards were taken off the list and it was my bad luck that two of them happened to be in my constituency. It would be interesting to know whether any other Member's constituency lost help as a result of the ward changes. I bet my bottom dollar that I am the only Member of Parliament in that position.
We were then told that we qualified under the urban strand. I have examined the criteria for that, and what has gone on is barking mad. I am delighted that the other constituency has qualified for the money; I do not want to take money from it. However, it is extraordinary that one of the wards included in the urban strand is regarded as the most affluent in the whole of Southend.
I have not even mentioned Westborough ward in my constituency. It is the most challenging area, with the highest crime rate in the whole of Essex. It faces huge pressures from asylum seekers; it has the largest primary school in Essex; and it has high unemployment. However, Westborough ward does not even get a look-in. I am expected to accept that we do not qualify under the fisheries strand, but that we qualify under the urban strand. However, when I consider one element that has been included in the urban strand, there is no way that at least one of the wards in Southend, West should not have been included. That is an absolute disgrace.
I pay tribute to the councillors who have continued to make the case for Leigh and Chalkwell. They are Councillor Mike Dolby, the chairman of Leigh-on-Sea town council, Councillor John Lamb, a Leigh councillor, and Mr. Richard Brown, Mr. Charles Latham and Mrs. Leslie Salter, who are all in the Chalkwell ward and continue to raise this matter with me. However, it is desperately disappointing that, despite the fact that we have tried diligently to engage the Government in dialogue, we have not got anywhere. I know that officials talk to each other, so how was it that UK and European officials did not talk on the telephone or exchange letters to agree things in the first place? It is extraordinary that they did not.

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Why were we told that we would have objective 2 status when I read in the local newspapers that we could not? The whole thing stinks. It is an absolute disgrace that my constituents have lost out.
I am delighted that the Government have secured objective 2 status for Southend and supported the local authority's bid for that status. I pay tribute to the Southend council officials who spent about two years drawing up those proposals. However, it is a shabby outcome for my constituents. Southend, West is a tiny constituency of seven wards, and if two of them had benefited from the decision, that would have been marvellous.
I know that when the Minister responds he can do only as he has been advised, and he will say that Southend is getting the money, so my constituency will benefit. I invite anyone to come to Southend. They will find that people in Leigh and Chalkwell do not feel an affinity with people in other parts of the town. They seem to live in individual communities, and the fishing community will not feel any benefit from what is going on in another part of town.
I represent a tight-knit community who were overjoyed that they were to get help via objective 2 status. I know that the Minister will not have time to respond in detail to the points that I have made, but will he and his officials reflect carefully on my remarks? The Parliamentary Secretary, Privy Council Office, was able, in the Christmas Adjournment debate, to give me some hope, although I think that the facts were not as he had understood them. If the Under-Secretary is unable to say anything positive today, I hope that he will at least reflect on the matter, whether to see there is any way in which he could possibly help us in future. I ask only for fair treatment for Southend, West, and we have not received it so far.
12.52 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Dr. Kim Howells): I thank the hon. Member for Southend, West (Mr. Amess) for raising this important issue. There is a great misconception throughout the islands that if a town is situated in the south-east of England, it must be wealthy. I know that Southend is not wealthy and that it shares many of the problems of coastal towns, especially those in Kent.
To put forward a forceful case, the hon. Gentleman should have been much better informed than he was about the ways in which structural fund decisions are made. I shall not try to defend those methods. An MP should be consulted about any changes that are to be made. During the negotiations for reallocations, some Members made representations and were part of the process, but I know that it is very easy to miss those stages, and the hon. Gentleman has told us how he fell into that trap. There is nothing worse than finding out about an important decision affecting one's constituency by reading it in the press.
I want to concentrate on the basis of the change. I am sure that the hon. Gentleman knows that there are several criteria, or strands, that determine whether a particular part of a city or region can qualify for structural funding under the objective 2 changes. Those
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strands are industrial, urban, rural and fisheries. If the hon. Gentleman does not have the information on what each of those four criteria comprises, I will gladly send it to him.
When the wards were first considered, they were included in the fisheries strand because, as the hon. Gentleman pointed out, there have been big changes to the pattern of the supply of sea products along the Thames estuary and elsewhere. The fisheries strand areas have been identified as ports showing a decline in fisheries jobs between 1992 and 1997, or between 1995 and 1997, whichever is available. However, the Commission also required a minimum programming area of 50,000 population for urban and fisheries areas and 100,000 population for industrial and rural areas, so we have had to build up programming areas.
If the hon. Gentleman will set aside for a moment the problems that he has had in communicating with Ministers—he made a fair point when he said that we have never before communicated about this subject—I will try to explain the criteria by which structural funding decisions are made. The programming area criteria meant that we had to include some non-qualifying wards and exclude some isolated qualifying wards, which is an unavoidable consequence of the rules.
While the hon. Gentleman was speaking, I asked my officials about the loss of jobs in his area. EU regulation 1260/1999, which governs the structural fund, says in article 4, paragraph 8:
"The areas dependent on fisheries … shall mean coastal areas in which the number of jobs in the fisheries industry as a percentage of total employment is significant and which are facing structural socio-economic problems relating to the restructuring of the fisheries sector which result in a significant reduction in the number of jobs in that sector."
The hon. Gentleman has admitted that the number of boats involved is very small. My hon. Friend the Member for Newport, West (Mr. Flynn), who is also present, has witnessed a decline in his constituency in the numbers of people who earning their living, not necessarily from deep sea fishing, but from working the waters of the Severn estuary. There is no question but that there have been great changes in fishing. The European Commission did not accept that the loss of fisheries jobs between 1992 and 1997 or between 1995 and 1997 in the wards mentioned by the hon. Member for Southend, West was sufficiently significant, and that is indisputable.
As the hon. Gentleman said, there was then an effort to include those two isolated wards in the urban strand, and link them with the most problematic wards with the greatest unemployment and social deprivation. The Commission would not accept the inclusion of those "islands", even though they are very deprived. As the hon. Gentleman and others know, there are many such cases throughout the country; for example, a troubled council estate may lie on the edge of a town that has a population of fewer than 50,000 but has severe problems.
It must be exceptionally irksome for the hon. Gentleman to see his constituency deprived of a couple of wards and that money shifted to other wards not far away. I imagine that that would generate a great deal of anger and debate.

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For the first time, Southend will benefit from objective 2 funding. It is the only place in Essex that will receive that extra money. I trust that, despite his disappointment about his own wards, the hon. Gentleman will devote his remarkable energy and forthrightness to ensuring that the jobs that are created in Southend, East will benefit his own constituents in the deprived wards of Southend, West.
I can offer no other explanation. It is always problematic when someone else sets criteria about how money can be distributed. The hon. Gentleman has clearly expressed his disappointment with that process. If we are to ensure that the fine-tuning of objective status allocations is not to happen in future, I hope that the Government and the European Union and the Commission will look carefully—
Mr. Barry Jones (in the Chair): Order.

Pensioners (Minimum Income Guarantee)
1 pm
Mr. Paul Flynn: Today is an auspicious day, because it is the day when I am fully qualified to join the Southwark pensioners action group. I already qualified as a resident of Southwark, but from today onwards, I qualify as a pensioner. It will be a great boost to me to belong to an organisation of which I will be, at least briefly, the youngest member.
The story that we have to tell is a grim one. In spite of all our hopes through the long years of opposition, pensioners as a group have not had a fair deal from the Government. While we were in opposition, we said many times that when Labour came to office, we would concentrate on the poorest pensioners. The credibility of our policies rests on that.
Let me quote what the then Secretary of State for Social Security said after we had been in office for just over a year. She stated in July 1998:
"There are some pensioners who are even poorer than those on income support. They are some of the very poorest people in Britain. They are the pensioners who are entitled to income support, but are not getting it; those who are slipping through the safety net altogether—the forgotten pensioners. This is not a marginal issue involving just a few slipping through the net. We estimate there are as many as I million of these forgotten pensioners. They are mostly very elderly, and nearly all women."
The Secretary of State went on to say:
"Now we are taking action to bring the guaranteed minimum income to them, too."
She promised that, starting from the following April—April 1999—
"we will be introducing, for the first time, a new national programme of personal advisers for pensioners… Through new technology, we will for the first time use the information that pensioners have already given us throughout their lives…
The pensioner will then be contacted by the personal adviser, who, over the telephone or through a visit, will assess their entitlement, and then fill in the forms for them. All that pensioners will have to do is sign, and their extra money will come through the following week."—[Official Report, 17 July 1998; Vol. 316, c. 704.]
A sophisticated system was supposed to be in place to provide that, but, almost two years later, nothing has happened. The minimum income guarantee is crucial, because it is the Government's alibi for not restoring the link—about which we spoke for many years in opposition—between basic pensions and earnings. With that link, the basic pension would not be £67 from April this year, but £95.
The Government show no inclination to restore the link. Indeed, they have argued that the poorest pensioners would lose by it, but the reverse is true. Pensioners who are not getting income support would have benefited pound for pound from the restoration of that link.
What has happened since 1998? The minimum income guarantee has been introduced, but it amounts to very little. It may just be window-dressing—a change of name. We see that throughout the history of social security since the war. The minimum income guarantee is the old basic state pension, plus income support. That has existed for a long time.
It is disgraceful that those who contributed to their pensions throughout their lives are getting pensions below the level that the Government say is the minimum on which they should live.

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We are told that the number involved is now about 700,000. That is the new figure given this week—700,000 who, according to the Government's figures, are losing £18 a week. That is a huge sum. We have pursued the issue through many avenues, to ensure that it is taken up. The next general election is rapidly approaching and we have failed to honour our promises.
Is there money available? Yes, there is ample money in the national insurance fund. There are surpluses described by the Government Actuary as "unneeded surpluses", and that is over and above the £6 billion that is regarded as a working surplus.
Until about a fortnight ago, the surplus was described as £5.9 billion, but, according to the most recent calculations, it is £9 billion over that level and will be increased further if, contrary to what the Minister said in the House on Monday, the Government go ahead and introduce the cut in SERPS that they promised. There is no doubt that the money is available for the changes. Even if the link to earnings were restored for a period of five years, the money is there.
On Monday, the Minister said, referring to take-up:
"There is an issue about who is being missed out—hence the research. We cannot be certain about the figures. There is a broad spread of figures; they come from the general household survey."
A new figure was given by the Minister. He said:
"Following the Benefits Agency work, we estimate that the figure is a little over 2 million."
He continued:
"Those people will be targeted in three tranches anyway. There will be television and press advertising. We will make an early announcement about the way in which we intend to go forward; we certainly will make the announcement before the end of this month. There will then be a large Government-sponsored take-up campaign, with a telephone national line and television advertising.
The work has been done, in the sense that we have seen the scripts and literature, with 'minimum guarantee' on leaflets and drafts. At present there are no posters or leaflets with minimum income guarantee on them. There are no documents, but there will be: we have seen the proofs. To that extent, we are on the verge of being able to launch that campaign. It is important that we get the money to the people who deserve it."—[Official Report, 7 February 2000; Vol. 344, c. 77–78.]
That statement is disappointing, and there are points in it that we must take up. After two and a half years in office, the Government are planning an advertising campaign, of the same type, presumably, as Governments have run several times over the past 50 years. None has had a lasting effect, for various reasons.
There is no mention of the data-matching or the personal advisers that we were promised two years ago. Unless advisers are available, the scheme will create a little flurry of publicity and then be forgotten. It will not reach the persistent cases who are not claiming the income support to which they are entitled.
Will my hon. Friend tell me in his reply whether the data-matching and the personal advisers have been dropped? With regard to the number of pensioners involved, what on earth does
"a little over 2 million"
mean? We previously heard the figure of 700,000. Has it suddenly risen to 2 million? That is alarming, if it is the case. How did it happen? If the Minister was referring to
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all the people who are currently getting income support, the figure should be higher than that. We need clarification.
The fact that there are no posters or leaflets with "minimum guarantee" on them means that nothing has been done so far to encourage claims, two and a half years into a Labour Government. The number of non-claimants is almost certainly the same now as it was a year ago, despite the introduction of the so-called guarantee.
If the missing pensioners are to be targeted in three tranches, it will take many months before the final tranche is reached. In the meantime, the pensioners who should have been getting extra money from July 1998 have missed out on £1,000, on average. On the basis of all previous law on social security, according to which payment is made on the date of entitlement, attempts will be made to persuade the Government that all the pensioners who miss out—not through their fault, but because of the Government's inaction—should receive the back-pay to which they are entitled. Otherwise that money will go straight back into Treasury funds. That is elementary.
One of the most disappointing aspects of our Government is that they talk about giving money to the people who "deserve" it. That gives the game away. The winter fuel allowance was announced as if it was a gift from the Government. There was even a stunt in which a large cheque was offered, to show that this generous Government were giving money to pensioners. Pensioners do not get money because they are deserving; the Government need to be reminded that pensioners have paid out money throughout their working lives of 40 or 50 years. Their contributions are made in accordance with the rate of inflation. The money is not a gift or a handout, but an entitlement. When the Government speak as though it were a gift, they incur pensioners' anger—and rightly so.
We appreciate that many pensioners do not take pensions because they are disabled or intimidated by the forms. However, the main reason for not taking them up is that some people never lost a day's work and never claimed supplementary benefits, national assistance or income support, and it is a matter of pride to them that they never accepted a state handout; they do not intend to begin now. That is profoundly important. If the money is added to the basic pension, it becomes an entitlement. If it is left as a so-called minimum income guarantee, it becomes a handout, and many people of my generation find claiming it a demeaning experience.
London Labour party members received an extraordinary document from the Prime Minister's office, which states:
"For pensioners … we have introduced a £100 winter fuel allowance"—
that is fine—
"free TV licences for the over 75s and restored free eye tests for the over 60s. Together with the Guaranteed Minimum Pension"—
whatever that is—
"these measures mean that the poorest pensioners will soon get almost £20 a week more than when we came to office."
A letter from the Minister comes to a different conclusion. He cites those changes, but concludes that, as a result of Government measures, pensioner

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households will be better off by £300 a year, and those over 75, who tend to be the poorest, will be better off by up to £500.
Why has the Prime Minister written to hundreds of people in London and multiplied the figure by two? The Minister's figure is fairly optimistic, but perhaps he can contact the Prime Minister and ensure that he sends a correction to all the people who received the letter to London Labour party members. What is a guaranteed minimum pension? It is another example of the new language. It is neither a pension nor guaranteed; it is the basic pension that pensioners have earned through their contributions, plus a little income support.
I want to give the Minister plenty of time to reply to the debate, but the Prime Minister's letter referred to other Government measures. For example, it states:
"the poorest pensioners will get almost £20 a week more than when we came to office."
If the arithmetic is wrong, perhaps we should be told.
Like other Labour Members, you and I, Mr. Jones, fought the election on a promise in our manifesto to ensure that all pensioners would share fairly in the nation's growing prosperity. Early-day motion 1 and early-day motion 2 have been tabled on the minimum income guarantee. They are regularly signed by 100 Members of Parliament. We have achieved good things for many pensioners, and we have been fairer—I shall not say more generous—than previous Governments. However, the confidence trick continues to be played on pensioners. Many Labour Members feel unhappy and have bravely spoken against the leadership and the policy line. Their views are based on genuine unhappiness in the pensioner community.
It is a shame that pensioners do not take a leaf out of the book of the often well-heeled, rich groups, which persistently and enthusiastically lobby Parliament. The pensioners' lobby is much too polite; pensioners do not often block streets or take action. They do not get the Government's attention.
A deep and continuing injustice is perpetrated against those who built this country; many of them built the party to which you and I belong, Mr. Jones. They are being cheated by a Government who promised them a great deal. The Government should examine events in Britain in the past 12 months, which hold a terrible, unacknowledged lesson for us. A man who was told that he was not fit to be a Labour party candidate not only won an election, but got the biggest majority of any candidate in Scotland. In Wales, people in Llanelli, Islwyn and, of all places, the Rhondda, deserted the party. The same may happen in London. Many of them are elderly. They feel, "We won the election, but we lost our party." The Labour party is losing people who voted Labour before new Labour was invented.
The Government must restore pensioners' confidence and faith. They are our core supporters; they created our Labour party many years ago. We currently put up attractive sums of money—£100—which appears to be a great deal more than £2 a week. That is reminiscent of the tricks played by rotten employers who cheat their workers in their pay packets every week but give them a turkey at Christmas. The Government present skilful propaganda, half-truths and figures that are exaggerated or misrepresented, but, as a Government
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and as a party, we do not deliver for the mass of pensioners. As for the poorest pensioners, on whom we promised to concentrate, we are cheating them.
1.18 am
The Minister of State, Department of Social Security (Mr. Jeff Rooker): I congratulate my hon. Friend the Member for Newport, West (Mr. Flynn) on his 65th birthday today. He is a model Member of Parliament. However, I seriously question some of the language that he used. The Government are not playing any tricks on pensioners. We must be careful not only about the language but about the figures we use.
My hon. Friend has questioned one or two figures. Before I reach the thrust of my remarks, I shall answer his questions about figures. There is no contradiction between the letters that he has received from me and the letter from the Prime Minister. I am happy to provide detailed figures, although I cannot give them at length because there is not time to do so.
I cited the figure of £500, which relates to single pensioners over 80 between April 1998 and April 2000. This includes the winter fuel payment of £ 100 a year, for which my hon. Friend almost said thank you, and the reduction in VAT on fuel, from 8 to 5 per cent. That is only £16 a year, but that money still counts. The minimum income guarantee increase over the Rossi price index represents £293, and the free television licence, which comes into effect later this year, takes the figure to £510. The figure that he gave—I do not have the letter from the Prime Minister in front of me, but I understand that he was quoting—refers to 1997–2000 and older pensioner couples aged over 80. I have taken advice, and I know that the figure must come from there. The comparable figure for 1998–2000 is almost £13. We are not playing around. We consider couples and singles and use different years, whether 1998–2000 or 1997–2000, so figures are bound to change.
Mr. Flynn: Do I understand correctly? Is the Minister saying that £13 a week is almost £20 a week?
Mr. Rooker: No. I am saying that £13 a week applies to 1998–2000 and £20 a week must apply to 1997–2000. One figure applies to two years and the other to three. There is a difference, so the figures are bound to be different. The Government came to power in 1997 and the Prime Minister's figure refers to when we took office. I was referring to 1998–2000, in respect of which the figures are £672 for a couple—almost £13 a week—and £500 for a single person. We are considering couples and singles over two years or three; one has to look at a common figure. All the quoted figures are correct, but they apply to different groups over a different time scale.
My hon. Friend quoted at length what I said on Monday evening In respect of the forthcoming take-up campaign, I want to make it absolutely clear to him on the record that I did not say that 2 million people are missing out. I repeated our broad estimate of between 530,000 and 870,000—the average figure is 700,000—but we do not know their addresses. If we did, we would contact them. The figures come from a statistical extrapolation from the general household survey. To make the take-up campaign meaningful and to reach those people—on the assumption that they exist—we

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have looked at the information that the Government have within the Benefits Agency and used data matching and data sharing. From this, we have identified about 2.1 million pensioners who look most likely not to take up their entitlement. We plan to contact them personally in three tranches—by post, at specific addresses—so that we can cope with the feedback and the telephone line can cope with the inquiries that we shall receive. We have estimated the use to which the line will be put.
We will not send out a 40-page leaflet—lengthy forms are a big put-off in respect of MIG or income support—but will use a filter system to identify the most likely to be eligible and put them into the system to see whether they are eligible and whether they have been missed out because they have not claimed. Some may wilfully refuse to claim, but it is many years since I met a constituent who knew that they were eligible but wilfully refused to claim. Since I became a Social Security Minister, and following MIG's introduction, I have not dealt with a constituent without savings who survives on the basic state pension of £66.75, and neither have the two Age Concern branches in my constituency, which are very active. I am not saying that such people do not exist, but they may not fit the stereotype—a single pensioner living alone in a damp flat with a two-bar electric fire who refuses to claim because of pride or because he has been told that the minimum income guarantee is a state handout—language I did not use. The people whom we will find through the take-up campaign will not fit that stereotype. However, that is not the issue.
The money is there to be claimed, but we will never be able to backdate it simply because it is means-tested. Money is paid only from the day on which people make a claim, and my hon. Friend has to take that on board, but we must overcome the barriers to making a claim. I know from experience that people do not want to go to the social or the DSS. They do not want to be equated with the kind of people whom they perceive as using the social unfairly and affecting the unemployed, the disabled, people of working age on income support, and lone parents. Pensioners do not want to be associated with the DSS. I do not agree with that attitude, but I understand it. However, it is not necessary to go to a DSS or Benefits Agency office to claim the minimum income guarantee. That can be done through a home visit, by post or, in many parts of the country, over the phone. The information can be taken and the application completed at the other end and sent to pensioners to sign—that is all they would have to do.
The take-up campaign will not be in full swing on the day it is announced, which, as I said on Monday, will be before the end of the month; but it will be stepped up over the spring. We will then be able to use an electronic claim form, which will do wonders as people will not have to see all the questions that they do not have to answer. I freely admit that lengthy forms are a big put-off, although I am told that form design is reviewed every six months. For heaven's sake, there has not been much improvement in the past few years, let alone the past few months. There has been no literature or posters
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carrying the words "minimum income guarantee" in post offices or anywhere else visited by pensioners. That has been a big mistake. It does not matter whether anybody argues that MIG is income support dressed up as something else because it is different. MIG has been related to earnings in the way that my right hon. Friend the Chancellor said it would be and we have to market it as MIG. That is what we will do.
As I said on Monday, we have seen the leaflet proofs. They refer to MIG and are simple, clear and easy to understand. They will be used as a filter to see whether people might be eligible before we get them into the main system. Obviously we have to check their means and know about their assets. There is no doubt about that. I say to my hon. Friend, with due humility, that this will not be like other Government take-up campaigns, which he so easily dismissed and which I accept have not always been successful: this one will be carried out on a different scale.
Much to my annoyance and distress, when I arrived at the DSS last summer, I discovered that we could not launch the campaign before Christmas. We could have made a start or introduced it this month, but it would not have worked. The planning has taken a considerable time; the cost will not be zero; and we have had to organise the resources to run it properly, which is what we intend to do. The Government have a moral obligation to see that everyone who is entitled to the benefits that Parliament has said are available—based on need and as of right—receives those benefits. They must not miss out because of ignorance.
People may choose not to claim, even if we remove all the hurdles that are present and perceived to be present one by one as we assess them. But let us be realistic: millions of pensioners claim means-tested council tax benefit; millions of pensioners claim means-tested housing benefit; and 1.5 million pensioners claim means-tested income support—MIG now. Forget the research, forget the statistics; because of my constituency experience, I do not accept that there is a massive stigma in claiming. Millions of people consider those benefits—which are based on their needs—to be a right, not a handout. We are getting that money to them, either from central Government or, if it is represented by housing benefit, via the local authorities.
Mr. Flynn: Will the Minister give way?
Mr. Rooker: No, I do not have time; there is only a minute left.
My hon. Friend said in his first sentence that pensioners have not had a fair deal from the Government. Even though it is his birthday, I say to him that that is simply not true—I rebut it. The party to which he and I belong will lose seats if its own Members peddle an untruth, wherever it is peddled. It is not fair to say that there has been trickery in the Government's dealing. There has been no trickery and our record on providing for pensioners, based on their income and their needs, stands comparison with that of any previous Government.

Second Home Ownership
1.29 pm
Mr. Andrew George: I am pleased to initiate this important debate. Since the House resumed in October, I have been requesting a debate on second homes. The Minister for the Environment made a statement on this matter to a fringe meeting at the Labour party conference. No doubt, when he replies to the debate, the Under-Secretary will address himself to that statement and the Prime Minister's response to it.
I welcome the new hon. Member for Ceredigion (Mr. Thomas). "Agas dynargh", as we say in Cornwall. Perhaps there is a translation of that into Welsh—we may find that out later.
It is my experience that it is impossible to raise the issue of second homes without the debate becoming deeply emotional. I want to emphasise that, in calling for this short debate, I am not, unlike some others, engaging in the politics of envy, seeking to wreak revenge or fanning the flames of an absurd class war across rural Britain. That is not my purpose. I simply want to probe Government thinking on this important aspect of policy and to make it clear that we are talking about second residences that are entitled to a 50 per cent. discount in council tax, not about holiday homes on which business rates are payable.
I emphasise that my reasons for raising this issue are not personal. There are many second homes in Cornwall and on the Isles of Scilly, and we are pleased for their owners to come to our communities. Many of them are close friends of mine, so I do not intend my remarks to be personal. Those people are a bonus for the community. Although they cannot be there supporting local services all year round, they make a limited contribution and take pleasure in investing in the local economy. Of course, for some people personal wealth and privilege go hand in hand with arrogance, pomposity and a patronising attitude, but such people constitute a small minority and do much to undermine the good name of the majority, whom I have found to be pleasant and sensitive to local people and to have a genuine interest in the local community.
I seek the Minister's recognition of the social and economic costs of high second home ownership in areas of high unmet local housing need where local services—shops, schools and businesses—become unviable. I am not suggesting that second home owners should be inappropriately penalised, merely that they should not be subsidised as they are at present.
Before concentrating on policy points in detail, it is worth dealing with some of the myths that still surround the often highly charged debates on this subject. Those who defend the purchasers of second homes often maintain that local people, by selling their properties at extortionate prices, have cruelly and cynically exploited unwary and innocent second home purchasers, whose sole interest was to protect vernacular architecture and the fabric of rural areas. That has been the serious contention of people defending such sales, but it ignores the reality of how the housing market works. If a local person sells his house, he must buy another, equivalent house, so he must sell at the market rate. Local people have not sold their birthright. Where will they live? That contention is clearly not valid.
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The other contention is that it is not possible to apply policy in this area because it is impossible to define a second home. Those who follow this debate found it remarkable that, when it became possible to obtain a 50 per cent. discount on council tax on second homes, amazingly and miraculously thousands of people were, overnight, suddenly able to define their properties as second homes. We all noted that with great interest.
I accept that in some areas—the north and the islands of Scotland and other places—there is little or no unmet housing need, and second home ownership protects properties from falling down. Such injection of capital in those rural areas may be valuable.
Mr. David Drew: The hon. Gentleman is making a good case. The problem with second home owners taking on a run-down property is that they often knock two cottages into one. They take those properties out of the housing market for ever and a day for people who may, with some support, be able to buy back into the market. Does he agree with that?
Mr. George: I welcome that intervention. The hon. Gentleman is assiduous in this regard. Yes, any property loss—whether it be two properties knocked into one or any property in a rural community where there is a high unmet local housing need for affordable housing—adds to and fuels the house prices in that area, so that they are above that which the local community can afford. That is the issue that we are dealing with.
Cornwall, with a population of 500,000, has about 200,000 properties. A survey in which I have been involved professionally in the past and information from other sources suggest that there are about 20,000 people with an unmet housing need, half of whom—the figure varies from time to time—are on local authority waiting lists. Therefore, the figure is about 10,000, sometimes more and sometimes less. There are about 20,000 second and holiday homes, including those in the business sector, half of which are second residences for the purpose of recreation. It is interesting to relate that housing need to the number of properties that are taken out of local availability in Cornwall.
Such homes are concentrated in some areas more than others. They are in largely coastal areas, estuaries and other areas where there is a lot of sailing, such as Roseland and St. Minver. I am pleased to see that my hon. Friend the Member for North Cornwall (Mr. Tyler) is present. Certain identifiable locations contain higher numbers of second homes and are concomitant with higher house prices. In many communities—some in my constituency—30 or 40 per cent. of the housing stock is under second home ownership.
The new earnings survey produced annually by the Government shows that Cornwall has been pretty well on the bottom since records began. It has the lowest earnings and the lowest gross domestic product of any comparable area. We have one of the biggest mismatches of house prices and earnings anywhere in the country, and that is of great concern.
Mr. Paul Tyler: Does my hon. Friend agree that the most significant aspect of this matter is that it is an accumulation of many local

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problems. The last thing we want is for someone from Whitehall to lay down a strategy for dealing with this situation. We want local communities to have the freedom to say when enough is enough—whether in the Lake district, the west of Wales or our own end of Cornwall. Those who know best about saturation and the economic and social problems are the local people.
Mr. George: I am grateful to my hon. Friend for that intervention. It helps me to make a point that I shall refer to later. There is no doubt that the implementation of new policy in this area would have to be applied variably across the country. Local authorities should be able to interpret the policy as it applies to their own areas, and use their power flexibly in one area as opposed to another.
Mr. Elfyn Llwyd: I first congratulate the hon. Gentleman on securing time for this very important debate and thank him for allowing me to intervene very briefly. He may know that two years ago I introduced a ten-minute Bill to deal with this problem. My suggestion then was that local authorities could use the classes order: if a property was a part-time property, it would have to have planning permission, in which case there would be the flexibility in each local area to deal with the problem.
Mr. George: Once again, I am grateful for a very helpful and positive intervention. What the hon. Gentleman says falls entirely within Liberal Democrat party policy. It has been our policy for a very long time. I entirely support and endorse the purpose of the hon. Gentleman's ten-minute Bill.
In addition to covering mainland west Cornwall, my constituency includes the Isles of Scilly where the problems are much more highly focused. The Isles of Scilly consists of five inhabited islands and many uninhabited islands, with about 2,000 people and 1,200 properties. About 30 per cent. of those properties are second homes. As in Cornwall, there are very low wages on the Isles of Scilly, but it also has even higher house prices. The smallest house on the islands costs £200,000, and it costs £160,000 to buy a council house there. On the off islands, one might obtain an assignable lease for a small property starting at about £300,000. Clearly, anyone on local wages cannot even look at that kind of property. They have to go to the rented sector, where they can find it. Low-earning islanders do not have the option of commuting to work from a low house price area somewhere on the mainland. That is physically not possible.
There are four areas of policy concern. I shall deal with the first two briefly, because they do not form part of the Minister's brief. The first is capital gains tax, under which cohabiting couples can avoid paying the tax if they register their two homes under different names. Secondly, a matter that concerns many hon. Members is the fact that during national elections second home owners can choose where they can most effectively vote. If one home is in a safe seat and another in a marginal, where, if they are politically aware, will they most effectively place their vote? They can have a
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disproportionate influence on the way in which elections are decided, and, as there are thousands of second home owners, it is a matter of concern.
I hope that the Minister will respond on the third matter, which concerns the 50 per cent. rebate on council tax referred to earlier. Even the much hated and socially divisive poll tax did not dare do that; people simply paid the poll tax twice. Then, in the haste to introduce the council tax, the clause giving the 50 per cent. discount was introduced. It was justified by the previous Government on the basis that second home owners did not use the more expensive personal services, such as education and social services. But the council tax is a tax on property, at a rate which varies according to the value of the house. It does not depend on which services the council tax payer uses. Many local people who do not use the most expensive service, which is education, are not entitled to a discount or a rebate.
The Government response so far has been disappointing. I have been pushing Ministers. The Under-Secretary wrote to me on 15 November saying:
"council tax is generally working well as a local tax and … there are no fundamental problems which require our urgent attention."
Similarly, the Economic Secretary to the Treasury wrote to the secretary of the south-west branch of the Local Government Association on 29 September 1999, saying that the Government's review
"concluded that the council tax had no fundamental problems"
and was widely accepted as working well.
With regard to proposed amendments, the Economic Secretary to the Treasury said in the same letter, in reply to proposals that the discount should be removed:
"As far as the effect on local revenue is concerned, you will know that the proportion of local authority second homes attracting the 50% relief is reflected in the calculation of Revenue Support Grant."
In other words, there are no financial benefits for local authorities if they wish to vary the contribution that they are seeking from second home owners. However, even if that were true in all circumstances—this assumes that all local authorities stick to their standard spending assessments—what about the interests of the taxpayer at the end of the day? If a local council taxpayer does not subsidise the second home owner, the effect, to judge by that reply from the Economic Secretary to the Treasury, is that the national taxpayer does. Therefore, the Government should take a second look at this matter.
There have been proposals from my Liberal Democrat colleagues, from Liberal Democrat councils and others that local authorities should, as my hon. Friend the Member for North Cornwall suggested, be given the powers to vary the rate of council tax in the affected areas. Perhaps that additional income should be ring-fenced to be directed towards affordable homes for local people, or to contribute towards local services that would otherwise not receive the same kind of support because of the existence of second homes in those areas.
The Government need to review that matter again. The rather complacent response that I have received from Ministers so far with regard to their review, saying that the council tax system is working very well in this area of second home ownership, is not accepted on the ground by local authorities that have to work the system.

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The fourth matter is one of planning control. Proposals for change in the use class order have been made. On 1 October, the Secretary of State for the Environment, Transport and the Regions proposed the banning of second homes in certain areas. Either way, there would need to be a definition and some kind of use class order—some kind of regulation—to implement such a proposal.
I draw attention to something that the Minister will see in his own records, as I told him before the debate. The Isles of Scilly has pointed out that section 319 of the Town and Country Planning Act 1990 allows the Secretary of State to make orders modifying the Act's application to the Isles of Scilly. The Town and Country Planning (Isles of Scilly) Order 1992 is an example of that—it relates to local authority housing.
Without introducing primary legislation, the Minister could introduce an order giving the Isles of Scilly the power to have a use class order for second homes, use that as an initial experiment and then relate it to other areas. I hope that the Minister will take that on board. The councillors from the Isles of Scilly who have requested a response have not so far received a satisfactory answer.
I shall conclude now because I want the Minister to have ample time to respond to the points raised. I am interested primarily in equity and social inclusion, not in penalising second home owners. I am interested in probing the Government's thinking on this matter. I hope that the Minister will accept that my questions and comments are intended to be constructive. Judging from other comments made by the Government, I believe that this is a matter of concern for some members of the Government. I am asking for simple recognition of the fact that one person's apparent freedom may have both social and economic costs which are worthy of consideration, and that these costs should be reflected in policy, and not overlooked. I look forward to the Minister's reply.
1.49 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): The hon. Member for St. Ives (Mr. George) has raised an important issue and has presented his case very reasonably and forcefully. I shall do my best in the 11 minutes he has left to me to address the points that he raised, although we may have to follow one or two of them up by correspondence.
Although the quality of life is in many respects higher in the countryside than in the city, shortages of affordable housing in some areas are a matter of real concern. I lived in the west country 30 years ago, and even then the issue of second homes was a serious problem in some of the more scenic areas. In many rural areas, particularly those like the south-west, demand for housing is high, both from local people and from those who want to retire to pleasant surroundings or buy a second home. As the hon. Gentleman says, people on low incomes are easily squeezed out.
On a national level, the number of rural second homes is relatively small, amounting to less than 1 per cent. of housing stock. According to the hon. Gentleman, the proportion in popular tourist areas is as high as 30 or 40 per cent. I was informed that it was 20 per cent., but the hon. Gentleman probably has more detailed knowledge of the position.
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As we are heard today, such concentrations of second homes are of real concern to communities that are rightly keen to ensure that there is enough affordable housing locally. The Government recognise the important contribution that housing makes to balanced, sustainable rural communities and the need for affordable housing, especially for those on low wages and for young people.
The area represented by the hon. Gentleman is very beautiful, but it is also an area of contrasts. The available employment is predominantly seasonal and low paid, and unemployment, especially in winter, is well above the United Kingdom average. When I was a reporter on the Sunday Independent in the west country, I was sent to St. Ives to write a feature on high unemployment outside the summer season, and I know that such unemployment makes it difficult for many local people to afford housing.
Local authorities, however, can and already do act to alleviate the problem. Penwith district council is currently advising owners of empty properties on how to return them to use. The council is now a member of the West Cornwall partnership with Carrick and Kerrier authorities, which are commissioning housing association projects jointly with the Housing Corporation. That should create some more affordable housing. Penwith has received a 50 per cent. increase in its total allocation from the housing investment programme for the current financial year, and I understand that it proposes to increase its financial support for registered social landlords during the year.
Cornwall and the Isles of Scilly will receive up to £314 million from European structural funds over the next seven years to increase economic prosperity. Although the funds are not targeted directly at housing, they have the potential to support housing initiatives indirectly. I acknowledge that the Government also have a part to play. We have introduced a number of initiatives to help people to buy their own homes through low-cost home ownership schemes; we have also taken steps to improve the quality and increase the supply of affordable rented housing.
The Government have a good record on social housing. We have increased investment significantly: local authorities will receive an additional £4.4 billion for housing during the life of the current Parliament, which will enable many of them to begin to tackle the backlog of renovation. They can use some of the money to provide new social housing in order to meet local priorities. Of the extra resources, roughly £20 million will go to Cornwall, representing an increase of about two thirds.
Local authority housing expenditure programmes will be based on the priorities identified in their housing strategies, which should be based on robust assessments of local need and must take proper account of the needs of rural communities. It is vital for authorities to consult local interests such as parish councils in developing rural housing strategies. The Housing Corporation and the Countryside Agency are jointly funding a project to develop a good practice guide for local authority rural strategies.
The Housing Corporation continues to have a significant role in the delivery of new housing. It will deliver about 40,000 new social lettings in England

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during the present year, some in Cornwall. To ensure that sufficient priority is given to the needs of small communities, we have set a rural housing target each year. The current target is that 3.4 per cent. of new homes provided by the Housing Corporation should be in villages with populations of fewer than 3,000. Since 1989, when the programme began, it has provided an additional 16,000 homes in rural areas. The Housing Corporation has also established a rural housing advisory group, which is examining current approaches to establish whether they can be improved.
The planning system also has a part to play. Where there is evidence of a need for affordable housing, both low-cost market and subsidised, local planning authorities can require an element of such housing to be included as part of a wider residential development on suitable sites. The rural exceptions policy enables local planning authorities in rural areas to grant planning permission for land that would not otherwise be released for housing. A condition is that "exceptions housing" must be occupied only by people on low incomes.
Both the hon. Gentleman and the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) suggested that the spread of second homes could be controlled by the creation of a separate category of land use in the use classes order. I have been given a lengthy explanation of why that might not be possible for legal reasons, but time does not permit me to read it all out. I shall merely say that I should be glad to follow up the point in correspondence.
The hon. Member for St. Ives said that my Department had received a formal request from the Isles of Scilly for the Secretary of State to introduce secondary legislation requiring planning permission for housing that is to be used other than as a main residence. The wider issue of second homes has been raised by many people during consultation on the rural White Paper, and the concerns of the Isles of Scilly are likely to be considered in that context.
The hon. Gentleman made a forceful case for changes in council tax. He pointed out that second home owners had no difficulty in defining themselves once it was known that doing so would bring some financial advantage. There may well be a case for doing away with the discount for second home owners, but that might
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not solve the problem that the hon. Gentleman seeks to solve. Given that second home owners are by definition more prosperous than others, most can easily afford to pay the difference. I accept that that does not deal with the question of whether it should be done, but it is relevant to the problem that the hon. Gentleman has raised.
The hon. Gentleman said that he had received a rather complacent response from the Government, and, indeed, I have here a rather complacent response, which I will not read out. I merely say that the issue was reviewed about a year ago, and at the time there were no sufficiently cogent reasons for a change. I am, however, willing to follow up the point in my Department. Perhaps we can discuss it later.
I entirely accept the point raised by the hon. Gentleman. I am well aware that it is a serious issue in communities such as his. I regret to say that there are probably no easy answers: some problems can be solved, but others are more complicated. I hope that I have at least demonstrated, and that the hon. Gentleman will acknowledge, that action is being taken to address the problem of low-cost housing in his constituency and others, but I recognise that more needs to be done.
Mr. Andrew George: Will the Minister give way?
Mr. Mullin: I think that you are about to stop me, Mr. Jones, but the hon. Gentleman can try his luck.
Mr. George: May I return to this issue of the Isles of Scilly? The Minister says that the Government are reviewing the possibility of introducing secondary legislation. Are they considering a planning rather than a council tax regulation, and will they write to the council shortly?
Mr. Mullin: We shall be responding to the council, and, as I have said, the issue is likely to be reviewed in relation to the rural White Paper, which will have to address the whole issue. We have no plans to do what the Isles of Scilly wants in the immediate future, but I realise that the problem there is serious—perhaps more serious than the problem in any other part of the country.
It being Two o'clock, the motion for the adjournment of the sitting lapsed, without Question put.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Energy Conservation
  Mr. Hilary Benn
  To ask the Secretary of State for the Environment, Transport and the Regions what average saving in energy consumption he estimates would be made if new houses were constructed using best available techniques for energy conservation in place of the requirements of current building regulations. [108019]

  Ms Beverley Hughes
  New dwellings might have an annual energy consumption for space heating and hot water around half that of dwellings built in compliance with current building regulations if built using best available techniques that take account of factors such as capital and running costs, buildability and environmental costs.

  A36(T) Wiltshire
  Mr. Key
  To ask the Secretary of State for the Environment, Transport and the Regions (1) what representations he received(a) from Wiltshire County Council and (b) from named councillors in support of the provision of a pedestrian crossing on the A36(T) at South Newton, Wiltshire; [107640]

  (2) for what reason he decided to construct a pedestrian crossing on the A36(T) at South Newton, Wiltshire; what type of crossing will be built; when it will be operating; and how much it will cost. [107641]

  Mr. Hill
  [holding answer 1 February 2000]: I have asked the Chief Executive of the Highways Agency, Mr. Peter Nutt, to write to the hon. Member.

  Letter from Peter Nutt to Mr. Robert Key, dated 9 February 2000:
  I have been asked by the Secretary of State for the Environment, Transport and the Regions to reply to your recent Parliamentary Questions about the provision of a pedestrian crossing on the A36 trunk road at South Newton as these are operational matters for the Highways Agency.
  A written representation was received from Wiltshire County Council last December asking the Agency seriously to consider a pedestrian crossing at South Newton. In addition, Mr. West, a County Councillor for the area, has also asked orally for a pedestrian crossing to be provided there.
  The reason for providing a crossing is that a large part of the village is cut of from the village shop by a heavy traffic flow, and there have been personal injury accidents involving pedestrians crossing the A36 at this point. When taken together, these factors support the case for the provision of a crossing.
  A signal controlled crossing is to be provided and detail design work is programmed to commence in Spring of this year. We expect the crossing to be operational by Winter 2000. The estimated cost of this scheme is £30,000.
  152W
  If you require any further information, the Route Manager, Mr. Nigel Dovell, telephone 0117 987554, who is based in the Highways Agency's Bristol office, will be pleased to help you.

  Airline Accidents
  Dr. Cable
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 24 January 2000,Official Report, columns 131–32W, on airline accidents, if new boundaries for public safety zones at airports were defined following the receipt of the advice from NATS Ltd. [108215]

  Mr. Mullin
  We have accepted NATS' advice that it is feasible to base public safety zone boundaries on risk contours around airports, and NATS are well advanced with the detailed work to redefine the boundaries for us on this basis. We hope to bring the new boundaries into effect, together with guidance to local planning authorities, in the spring.

  Open Skies
  Mr. Fearn
  To ask the Secretary of State for the Environment, Transport and the Regions what discussions he has had concerning the Open Skies policy in relation to regional airports in England and Wales during(a) this parliamentary session and (b) the last parliamentary session. [108634]

  Mr. Mullin
  In June 1998 we offered to bilateral partners with whom we did not already have liberal agreements unrestricted third/fourth freedom access to all UK regional airports, as long as UK airlines were also allowed to operate on the same routes. Some 17 countries have accepted the offer and it has been discussed in virtually all air services negotiations held since June 1998.

  Whaling
  Mr. Lepper
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the proposals to be put forward by(a) Japan, (b) Norway and (c) other states on whales and whaling to the forthcoming meeting of the parties to the Convention on International Trade in Endangered Species, indicating the position of Her Majesty's Government in relation to these proposals. [108492]

  Mr. Meacher
  Japan and Norway have put forward four proposals to downlist whale populations to Appendix II of the Convention on International Trade in Endangered Species (CITES). These are the North-east Atlantic and North Atlantic Central, the West Pacific and Southern Hemisphere stocks of Minke whale (Balaenoptera acutorostrata) and the Eastern North Pacific stocks of Grey whales (Eshrichtuis robustus.) We have already made clear to both countries our opposition to these proposals on the grounds that they would undermine the moratorium on commercial whaling under the International Convention for the Regulation of Whaling (ICRW). This position was endorsed by the majority of EU member states at a recent informal meeting of EU experts.

  The meeting of experts, which acts as a precursor to the formation of a common EU position through the Council of Ministers, also considered three resolutions concerning the relationship between CITES and the International Whaling Commission (IWC). There are two

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  competing resolutions: one from Japan, that seeks to weaken the primacy of the IWC in the field of managing and conserving whale stocks; and one from the United States, which underscores existing arrangements. In addition there is a simple consolidation of all extant CITES resolutions on whaling proposed by the CITES Secretariat. The majority of member states agreed that the EU should seek the withdrawal of the US and Japanese proposals in favour of the simple consolidation of resolutions which will preserve the existing arrangements between the two Conventions.

  School Crossing Patrols
  Mr. Edward Davey
  To ask the Secretary of State for the Environment, Transport and the Regions what the latest available figures are for the number of designated school crossing patrols in(a) England and Wales in total and (b) each London borough; and how many of these designated school crossing patrols have vacant positions in (i) England and Wales and (ii) each London borough. [108676]

  Mr. Hill
  The figures requested are not collected.

  Major Road Schemes
  Mrs. Brinton
  To ask the Secretary of State for the Environment, Transport and the Regions how many major road schemes were(a) accepted, (b) provisionally accepted, (c) deferred and (d) rejected in each English region in the local transport settlement 2000–01. [108721]

  Mr. Hill
  The information is given in the following table:

  (a)

  (b)

  (c)

  (d)

  Region

  Accepted

  Provisionally accepted

  Deferred

  Rejected

  Total

  South East

  0

  1

  5

  3

  9

  South West

  1

  0

  2

  2

  5

  West Midlands

  2

  0

  6

  3

  11

  North West

  0

  1

  4

  0

  5

  North East

  1

  0

  2

  0

  3

  Yorks and Humber

  0

  2

  6

  1

  9

  East Midlands

  2

  1

  4

  1

  8

  East of England

  2

  5

  1

  1

  9

  The table refers to the 59 bids which are either being funded as major road schemes or were identified as being wholly roads-based. A further 14 major schemes put forward contain significant road schemes as part of an integrated strategy including public transport and related works.

  Housing (Domestic Violence)
  Mr. Cox
  To ask the Secretary of State for the Environment, Transport and the Regions if he will issue guidance to local authorities on allowing housing in cases where a woman has left the area in which she was living as a result of domestic violence and has moved to a different authority area; and if he will make a statement. [108727]

  Mr. Mullin
  People who are fleeing domestic violence are regarded as homeless by virtue of sections 175 and 177 of the Housing Act 1996. Authorities should consider whether applicants are vulnerable as a result of having suffered violence or abuse from a person with whom they 154W
  are associated. If so, they will have a priority need for accommodation. When discharging their duties under the homelessness provisions of the Housing Act 1996, authorities must have regard to how suitable the location of that accommodation is. Threats of violence would clearly be a factor in their decision making.

  The Department of the Environment, Transport and the Regions revised draft Code of Guidance on the Allocation of Accommodation and Homelessness, due to be published in the Spring, gives clear messages to local authorities about the approach they might take where women need to leave their home because of domestic violence. It also encourages authorities to refer to the voluntary Inter-Borough Agreement on out-of-area-placements of homeless households in the private rented sector, which has been agreed between member authorities of the Association of London Government. This sets out a framework for co-operation and consultation between member authorities. Although this addresses the particular context of London, the principle and policies advocated apply equally across all areas where there is a need for out-of-area placement.

  Health and Safety Laboratory
  Mr. Levitt
  To ask the Secretary of State for the Environment, Transport and the Regions when he will decide the future location of the Health and Safety Laboratory. [108789]

  Mr. Meacher
  The Health and Safety Laboratory is currently in negotiations with a preferred bidder under PFI to rationalise its estate. This involves locating the Laboratory on a single site at Buxton. If Ministers are satisfied that the final proposals represent value for money, approval will be given. A decision on the project is due in Summer 2000.

  Reprocessing (Road Surfaces)
  Mr. Gordon Prentice
  To ask the Secretary of State for the Environment, Transport and the Regions for the latest 12 months for which figures are available how many miles of resurfaced highway contained reprocessed waste tyres; and if he will make a statement. [108983]

  Mr. Hill
  Road surfacing products containing waste tyres are currently undergoing trials as part of their development process. No central records are kept concerning the use of these materials. A trial just under one mile long was laid on the A244 Hersham bypass in June 1999 for Surrey County Council, and is being monitored jointly with the Highways Agency.

  Rent Acts Judgment
  Mr. Stinchcombe
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the need for primary legislation following the judgment of the Court of Appeal in R vs Secretary of State for the Environment, Transport and the Regions ex parte Spath Holme Limited that the Rent Acts (Maximum Fair Rent) Order 1999 (SI 1999 No. 6) was ultra vires. [108787]

  Mr. Mullin
  We will consider whether any further action is appropriate once the outcome of the petition to another place is known.
  155W
  Mr. Stinchcombe
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the impact on the stock of affordable homes of the judgment of the Court of Appeal in R v. Secretary of State for the Environment, Transport and the Regions ex parte Spath Holme Limited that the Rent Acts (Maximum Fair Rent) Order 1999 (SI 1999 No. 6) was ultra vires. [108783]

  Mr. Mullin
  The Court of Appeal's judgment does not affect the supply of affordable homes. However, it is likely to affect the ability of some tenants to afford rent increases which would have been capped under the Order.

  Mr. Stinchcombe
  To ask the Secretary of State for the Environment, Transport and the Regions what action he plans to take following the judgment of the Court of Appeal in Rv. Secretary of State for the Environment, Transport and the Regions ex parte Spath Holme Limited that the Rent Acts (Maximum Fair Rent) Order 1999 (SI 1999 No. 6) was ultra vires. [108785]

  Mr. Mullin
  We intend to petition another place seeking permission to appeal the Court's decision.

  Mr. Stinchcombe
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the impact on rents of the judgment of the Court of Appeal in Rv. Secretary of State for the Environment, Transport and the Regions ex parte Spath Holme Limited that the Rent Acts (Maximum Fair Rent) Order 1999 (SI 1999 No. 6) was ultra vires. [108784]

  Mr. Mullin
  The judgment is likely to lead to significant increases in fair rents that would have been capped under the Order. The impact will vary between regions. However, provisional analysis of rents registered by rent officers in England and Wales shows an average difference between the amount capped under the Order and the uncapped amount of £5.61 per week.

  Mr. Stinchcombe
  To ask the Secretary of State for the Environment, Transport and the Regions by what means he will prevent disproportionate increases in rent following the judgment of the Court of Appeal in Rvs Secretary of State for the Environment, Transport and the Regions ex parte Spath Holme Limited that the Rent Acts (Maximum Fair Rent) Order 1999 (SI 1999 No. 6) was ultra vires. [108786]

  Mr. Mullin
  The Secretary of State has no powers to intervene to prevent disproportionate increases in rent. It is for rent officers and rent assessment committees to decide whether and by how much to increase the rent for tenancies registered under Part IV and Part VI of the Rent Act 1977. They must follow the rules set out in Section 70 of the Act and have regard to leading court judgments on the assessment of a fair rent.

  Minicabs
  Mr. Cox
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to introduce legislation to control the use of minicabs in the Greater London area. [108731]

  Mr. Hill
  I refer my hon. Friend to my reply to the hon. Member for Richmond Park (Dr. Tonge) on 21 December 1999,Official Report, column 537W.

  Deregulation
  Mrs. Curtis-Thomas
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the potential impact on business associated with each of the following planned deregulation proposals(a) the disposal of houses by local authorities in England, (b) amending section 7 of the Building Act 1984 and (c) eligibility to drive a private hire vehicle outside London. [108776]

  Ms Beverley Hughes
  [holding answer 7 February 2000]: A consultation exercise was carried out last year on the proposal concerning the disposal of houses by local authorities in England. Following this, an assessment of the potential impact on business has been produced, and is currently under consideration.

  The proposals to amend Section 7 of the Building Act 1984 arose from proposals made by the Better Regulation Task Force. A forthcoming consultation will seek to identify the impact of amending Section 7, and this will be fully assessed by means of a Regulatory Impact Assessment prior to making a deregulation order.

  The issues surrounding the eligibility to drive a private hire vehicle outside London are being considered in the light of consultation responses from business and other interested parties. If these result in a deregulation order, Cabinet Office guidance on making such an order will be followed. This guidance requires that a Regulatory Impact Assessment be produced.

  Mrs. Curtis-Thomas
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the economic impact associated with each of the following deregulation orders and contracting out orders on business(a) the Deregulation (Parking Equipment) Order 1996, (b) the Deregulation (Motor Vehicles Tests) Order 1996, (c) the Deregulation (Building) (Initial Notices and Final Certificates) Order 1996, (d) the Deregulation (Exchangeable Driving Licences) Order 1998 and (e) the Deregulation (Taxis and Private Hire Vehicles) Order 1998. [108775]

  Ms Beverley Hughes
  [holding answer 7 February 2000]: The five listed orders were laid prior to the requirement, introduced in August 1998, to produce Regulatory Impact Assessments looking at all economic impacts of proposals. At that time, Compliance Cost Assessments were required, but only for proposals expected to impose costs. Since, under the Deregulation and Contracting Out Act 1994, deregulation orders are not allowed to impose burdens, no such assessments were prepared in these cases.

  Raptor Working Group
  Mr. Grogan
  To ask the Secretary of State for the Environment, Transport and the Regions when he will publish the main report of the Raptor Working Group. [109089]

  Mr. Mullin
  The report of the UK Raptor Working Group was launched at the Raptor Forum meeting hosted by my Department on 3 February. The full report is published as a priced publication entitled "Report of the
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  UK Raptor Working Group" available from Scottish Natural Heritage at the address below. Copies are also available in the House Libraries.

  Fiona MacTaggart

  Scottish Natural Heritage

  Barrington Bond

  1,2 Anderson Place

  Edinburgh EH6 5NP

  Tel: 0131 4462453

  E-mail: Fiona.MacTaggart@snh.gov.uk

  Thameslink
  Mr. Pollard
  To ask the Secretary of State for the Environment, Transport and the Regions what options for additional capacity on the Thameslink rail route have been proposed since June 1999; and what is the timetable for such options. [109108]

  Mr. Hill
  The loan of four class 317 units from WAGN and two class 319 units from Connex has resulted in longer trains on Thameslink services, providing 3,900 extra seats per week, and an extra train path from 26 September 1999. The SSRA are currently evaluating proposals for new rolling stock and further additional train paths on the Bedford to London section of the route. They are also investigating other options for additional capacity on this section. The earliest any further additional capacity could be provided by the acquisition of new rolling stock is September 2001.

  Public Transport (Accessibility)
  Mrs. Brinton
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to increase accessibility to bus and rail services for the (a) elderly and (b) disabled elderly. [109248]

  Mr. Hill
  The regulations we are introducing under the Disability Discrimination Act 1995 will ensure that in future all land-based public transport vehicles are fully accessible.

  Rail Vehicle Accessibility Regulations have been introduced which apply to all new types of passenger rail rolling stock first introduced into service from 1 January 1999. Similar regulations dealing with new buses and coaches used on local and scheduled services will be introduced this year. The regulations cover a wide range of features which will improve access for older people as well as for disabled people: for example, improved handrails which will benefit those with poor dexterity and the use of colour and tonal contrasts to assist those with low vision.

  PPG3
  Mr. Cousins
  To ask the Secretary of State for the Environment, Transport and the Regions whether the target in draft PPG3 of 60 per cent. of homes on brownfield sites is a target for (a) each planning authority, (b) each planning region and (c) the country as a whole; and how he intends to ensure that authority and regional targets will achieve the national target. [109013]

  Ms Beverley Hughes
  [holding answer 8 February 2000]: The Government's target is that by 2008, 60 per cent. of additional housing in England should be provided on previously developed land or by re-using existing buildings.
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  Forthcoming guidance on Planning for Housing (PPG3) will advise Regional Planning Bodies to set appropriate regional and sub-regional targets taking account of the national target, the amount of land available for recycling and their assessment of the capacity of their areas to accommodate additional dwellings. Local planning authorities will wish to set targets consistent with the regional targets as confirmed by the Secretary of State in Regional Planning Guidance.

  Departmental Secondees
  Mr. Willis
  To ask the Secretary of State for the Environment, Transport and the Regions how many staff were seconded from the private sector to his Department from (a) May 1997 to April 1998, (b) May 1998 to April 1999 and (c) May 1999 to the latest date for which figures are available, stating in each case the companies from which staff have been seconded. [109071]

  Ms Beverley Hughes
  [holding answer 8 February 2000]: Secondments and attachments are part of the Interchange Initiative, which promotes the exchange of people and good practice between the Civil Service and other organisations. All sectors of the economy are involved: Voluntary, Education, Health, Public and Private. Interchange is a key component of the reform agenda. The Modernising Government White Paper committed us to increasing interchange, in particular by bringing in more people on secondment and seconding more of our people out.

  From May 1997 to April 1998, there were 19 secondees to the Department. Four of these secondees were from the private sector, and came from the following companies:

  CRE Group Ltd.

  Bank of Scotland

  Unilever

  District Audit.

  Between May 1998 to April 1999, there were 40 secondees to the Department. 21 of these secondees were from the private sector, and came from the following organisations:

  Kvaerner Construction

  OVE Arup

  Crown House Engineering

  British Gas

  Bovis Construction

  Kvaener Cementation Foundations

  Geoffrey Reid Associates

  Marks and Spencer

  Bellway Urban Renewal

  KPMG

  Buildings Research Establishment

  IPPR

  ABROS

  Boots the Chemist Ltd.

  College of North East London

  D. A. Dawson and Associates

  National Grid

  Hider

  Waters Ltd.

  OPM

  Institute for Fiscal Studies.

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  From May 1999 to December 1999, there were 20 secondees to the Department. Five of these secondees were from the private sector, and came from the following companies:

  Buro—Happold

  Christiani and Nielsen

  Development Trust Association

  Building Research Establishment

  Homeless Network.

  Biosafety Protocol
  Mr. Chaytor
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the outcome of the Montreal conference on the Biosafety Protocol. [109081]

  Mr. Meacher
  The Montreal conference, at which I represented the United Kingdom Government, was a success. Countries throughout the world agreed by consensus on 29 January to adopt the Biosafety Protocol to the United Nations Convention on Biological Diversity. We achieved our goal of securing a Protocol that is robust in protecting biodiversity, and effective and workable for those who have obligations under it.

  The Protocol will ensure that developing and developed countries alike will be able to take informed decisions, on the basis of scientific information including a risk assessment, about whether to import certain living (genetically) modified organisms (LMOs) that may have adverse effects on the conservation and sustainable use of biodiversity. In the absence of scientific certainty, due to insufficient scientific information and knowledge, and consistent with Principle 15 of the Rio Declaration, countries will be able to take such decisions on import on a precautionary basis in order to avoid or minimise any potential adverse effects, and to take into account the impact of LMOs on the value of biodiversity to indigenous and local communities.

  Where importing countries lack a domestic regulatory framework for taking decisions on the import of LMOs, they will be able to do so under the Protocol. In the case of LMOs intended for intentional introduction into the environment, this will be on the basis of information provided in advance by the exporter. In the case of LMOs intended for direct use as food or feed, or for processing, importing countries without domestic legislation will be able to take decisions on the basis of information provided through a clearing-house mechanism established under the Protocol.

  Further provisions in the Protocol lay down minimum documentation requirements for LMOs moving between countries. These requirements are categorised according to whether the LMO is intended for intentional introduction into the environment, for contained use, for direct use as food or feed, or for processing, or for other purposes. The Protocol also requires work to be undertaken on the options for a regime for liability and redress to be completed within four years of its entry into force.

  The effectiveness of the Protocol in achieving its objective of contributing to biosafety is strengthened by specific recognition that trade and environment agreements should be mutually supportive with a view to achieving sustainable development.
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  The Protocol is a significant step forward in ensuring proper evaluation of any risk to biodiversity from the transboundary movement of LMOs that may have adverse effects on the conservation and sustainable use of biological diversity, taking also into account risks to human health. It will complement national and regional law in many parts of the world and enable other countries to benefit from experience elsewhere, including the United Kingdom and Europe, and to protect their biological diversity.

  Suburban Housing Estates
  Mr. Cousins
  To ask the Secretary of State for the Environment, Transport and the Regions if draft PPG3 contains a presumption against approval of large suburban housing estates, predominantly of high-priced housing. [109297]

  Ms Beverley Hughes
  The consultation draft of PPG3 states that any substantial new development should be planned as a community with mixed land uses, including adequate shops and services. It also advises that local planning authorities should adopt policies to secure an appropriate mix of dwelling size, type and affordability in new developments to meet the changing composition of households in their areas. The final version of PPG3 will be issued shortly.

  School Grants
  Mr. Bob Russell
  To ask the Secretary of State for the Environment, Transport and the Regions under what circumstances schools may receive grants for environmental projects from the proceeds of the landfill tax; and if he will make a statement. [108781]

  Mr. Timms
  I have been asked to reply.

  Operators of landfill sites who are registered for landfill tax may claim for tax credits for contributions that they make to support environmental projects. These may include research and education for the purpose of encouraging the use of more sustainable waste management and the provision and maintenance of public amenities in the vicinity of landfill sites. Landfill site operators may choose to support schools as part of such projects.

  Further information regarding the scheme can be obtained from the regulatory body, ENTRUST Ltd., at the following address:

  ENTRUST

  Acre House

  2 Town Square

  Sale

  Cheshire

  M33 7WZ.

DEFENCE

  Digitisation Systems
  Mr. Hancock
  To ask the Secretary of State for Defence what is the cost of fitting the British Army units in Kosovo with platform level digitisation systems; and how many units will be refitted. [99414]

  Mr. Spellar
  We have no immediate plans to fit British Army platforms in Kosovo with digitised systems.

  Cluster Bombs
  Mr. Cohen
  To ask the Secretary of State for Defence what research his Department has carried out into the failure rate of cluster bomb sub-munitions used by Her Majesty's armed forces. [107427]

  Mr. Spellar
  Information on the failure rate of cluster bomb sub-munitions used by UK armed forces is collected during regular in-service trials and from field data. Recent statistics show a failure rate of approximately 5 per cent. in line with expectations.

  Service Men (Telephone Calls)
  Mr. Hepburn
  To ask the Secretary of State for Defence what are the costs per minute of telephone calls to the United Kingdom by service men based in(a) Belize, (b) the Falklands and (c) Cyprus; and what assessment he has made of the impact of such costs on recruitment and retention in the armed forces. [107862]

  Mr. Spellar
  We recognise the importance to personnel serving overseas of keeping in touch with family and friends by being able to telephone home. The standard cost of telephone calls per minute to the United Kingdom is:

  Belize: £2

  Cyprus: Peak 33p Off-peak 28p

  Falkland Islands: Peak 99p Off-peak 80p.

  Falkland Islands costs can be reduced by 15 per cent. by purchasing telephone cards from Service sources on the island.

  The call-back services provided by a number of telecommunications companies can reduce these charges substantially. Typical rates are 41p per minute for Belize, 17p for Cyprus and 59p for Falklands (although the latter is a limited service). The availability of these reduced cost services is widely publicised at each location and personnel are encouraged to use them.

  Personnel in these overseas locations are in receipt of Local Overseas Allowance (LOA), which contains an element for telephone calls.

  UK/VSC 501 System
  Mr. Hancock
  To ask the Secretary of State for Defence what is the cost of installing the UK/VSC 501 system on the 18 Land Rovers and the Hagglunds BV206 vehicles currently being delivered to the Royal Marines. [108591]

  Dr. Moonie
  This is a matter for the Chief Executive of the Defence Procurement Agency. I have asked the Chief Executive to write to the hon. Member.

  Letter front Sir Robert Walmsley to Mr. Mike Hancock, dated 9 February 2000.
  I am replying to your question to the Secretary of State for Defence about the cost to the Ministry of Defence of installing the UK/VSC 501 satellite system on the 18 Land Rovers and the Hagglunds BV206 vehicles being delivered to the Royal Marines. This matter falls to me for answer within my area of responsibility as Chief of Defence Procurement and Chief Executive of the Defence Procurement Agency.
  This procurement provided for the upgrade of 18 MOD-owned Land Rover-mounted VSC 501 terminals together with the development and production of two new terminals on MOD-owned
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  Hagglunds BV206 vehicles. The total cost of the work was £11M and the vehicles were delivered between March and September 1999.
  This cost includes the procurement of spares, training, equipment documentation and supporting infrastructure to provide the users with full terminal functionality and connectivity.

  Racism (Armed Forces)
  Mr. Hancock
  To ask the Secretary of State for Defence what steps his Department has taken to improve racial equality in the armed forces in the last 12 months; and if he will make a statement. [108744]

  Mr. Spellar
  The Armed Forces continue to work hard to develop an organisational culture that welcomes racial diversity and places the highest priority on tackling racism within the Services. Within the framework of the Partnership Agreement with the Commission for Racial Equality, the cornerstone for Service racial equality policies, the Armed Forces are committed to reflecting more closely the rich ethnic balance of our society, and to be a beacon for others in the promotion of racial equality.

  During the last 12 months the Armed Forces Equal Opportunities goal was published on 22 March 1999, Official Report, column 10W, and seeks to achieve universal acceptance and application of a working environment free from harassment, intimidation and unlawful discrimination, in which all have equal opportunity, consistent with our legal obligations, to realise their full potential in contributing to the maintenance and enhancement of operational effectiveness. The Armed Forces respect and value every individual's unique contribution, irrespective of their race, ethnic origin, religion or gender and without reference to social background or sexual orientation.

  The Service Heads of Chaplaincy are currently working with the Buddhist, Hindu, Jewish, Muslim and Sikh Religious Advisers to the Armed Forces to establish a network of "Chaplains" from minority faiths in order to ensure that the spiritual and moral needs of Service personnel from minority faiths are provided for. Additionally, as part of the Armed Forces' aim to cater for all special religious dietary requirements, Vegetarian, Halal and Kosher Operational Ration Packs have been introduced.

  Education and awareness of equality issues is central in the drive to eradicate unacceptable behaviour in the Armed Forces. Comprehensive equal opportunity training is undertaken widely across the Services in addition to the specialist training provided by the Tri-Service Equal Opportunities Training Centre at Shrivenham.

  The Armed Forces continue to stress their policy of zero tolerance towards all forms of racial discrimination and harassment.

  Shorts Missile Systems Contract
  Mr. Hancock
  To ask the Secretary of State for Defence (1) what is the value of that part of the contract between his Department and Shorts Missile Systems that will be spent in the United Kingdom; [108749]

  (2) how many high-velocity missiles are to be supplied by Shorts Missile Systems under their contract with his Department. [108748]
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  Dr. Moonie
  This is a matter for the Chief Executive of the Defence Procurement Agency. I have asked the Chief Executive to write to the hon. Member.

  Letter from Sir Robert Walmsley to Mr. Mike Hancock, dated 9 February 2000:
  I am replying to your question to the Secretary of State for Defence about the value of that part of the contract between the Ministry of Defence and Shorts Missile Systems that will be spent in the United Kingdom. You also asked how many high velocity missiles are to be supplied by Shorts Missile Systems under their contract with the Department. These matters falls within my area of responsibility as Chief of Defence Procurement and Chief Executive of the Defence Procurement Agency.
  I presume both questions refer to the High Velocity Missile contract placed on 6 December 1999. The value of that part of this contract that will be spent in the United Kingdom is 98% of the overall contract cost which as stated in the press release is around £200M. I am afraid that I am unable to let you know how many missiles have been ordered as it is considered that the release of this information would be harmful to our national security interests and would also be in breach of a third party's commercial confidences. I am therefore withholding this information under Exemption 1 (Defence, security and international relations) and Exemption 13 (Third party's commercial confidences) of the Code of Practice on Access to Government Information.

  Sarin
  Mr. Dalyell
  To ask the Secretary of State for Defence what study he is making of the long-term effects of Sarin. [108464]

  Mr. Spellar
  [holding answer 7 February 2000]: The Department is at present undertaking no specific study into any possible long-term effects of exposure to the nerve agent Sarin. There is, however, both on-going and completed MOD funded research which will inform, in general terms, our understanding of the effects of nerve agents. The results from two earlier studies on the effects of low levels of exposure to Sarin have been published: the first appeared in the "Journal of Human and Experimental Toxicology" in 1996 (Vol 15, pages 369–375); and the second in the "Journal of Psychopharmacology" in 1999 (Vol 13, pages 128–135).

  Fylingdales
  Mr. Key
  To ask the Secretary of State for Defence what discussions he and his officials have held with the United States Government about the future of Fylingdales in Yorkshire; and if he will make a statement. [108664]

  Mr. Hoon
  [holding answer 7 February 2000]: I have discussed with the US Defense Secretary, William Cohen, the possible US requirement for facilities in the UK to support the US National Missile Defence (NMD) programme. We have received no formal request from the US Administration regarding Fylingdales, nor would we expect any until after a US decision on whether or not to proceed towards deployment of the NMD system.

  Chinook Accident (Mull of Kintyre)
  Mr. Letwin
  To ask the Secretary of State for Defence what evidence was used by his investigators to determine the weather conditions affecting the coastline on the Mull of Kintyre in the last 40 seconds before impact of RAF Chinook ZD 576. [109119]
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  Mr. Spellar
  [holding answer 8 February 2000]: The RAF Board of Inquiry obtained evidence relating to weather conditions from the Meteorological Office, as well as from several witnesses who were in the area at the time of the accident.

  Mr. Letwin
  To ask the Secretary of State for Defence what reports he has received about whether the Mull of Kintyre was covered or only partly covered in cloud as RAF Chinook ZD 576 made its final approach on 2 June 1994. [109121]

  Mr. Spellar
  [holding answer 8 February 2000]: The RAF Board of Inquiry found that the weather was very poor, with cloud and hill fog extending from below the lighthouse level (300 ft) to at least the summit of Beinn na Lice (1,400 ft), the highest point on the southern tip of the Mull.

  Thiepval Barracks
  Mr. McGrady
  To ask the Secretary of State for Defence what feasibility study was undertaken in respect of the land at Thiepval barracks; if he will make a statement on the options contained in the report; which option was chosen; and if he will place a copy of the report in the Library. [109082]

  Dr. Moonie
  The land at Thiepval barracks was last subject to a major review in 1997. The resulting report contained classified information regarding the layout of the barracks and proposed development. I am therefore withholding information on the content of that report under Exemption la of the Code of Practice on Access to Government Information.

  Balkans (Army Communications)
  Mr. Jim Cunningham
  To ask the Secretary of State for Defence if he will make a statement concerning army communications in the Balkans. [109582]

  Mr. Spellar
  As part of my Department's on-going efforts to reduce overstretch in the Army, I am pleased to announce that a contract has been let to provide for less manpower-intensive and more modern communications equipment in the Balkans. The contract, with BAe Systems, will provide for wide area communications in support of the UK' s contribution to the NATO Multi National Divisions in Bosnia and Kosovo. While maintaining the UK's responsibility to NATO's peacekeeping forces, it will enable us to bring home some 150 Royal Signals personnel by the end of the year. It is also an excellent example of the SMART Procurement Initiative by demonstrating the advantages of working closely together with industry to deliver the equipment our front-line troops need. The contract is specific to the Balkans theatre of operations and does not affect the Army's wider communications requirements. The cost of this equipment will be met from the Contingency Reserve.

HOME DEPARTMENT

  Departmental Research Projects
  Dr. Harris
  To ask the Secretary of State for the Home Department, pursuant to his answer of 20 December 1999,Official Report, column 373W, what restrictions were

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  placed on contractors carrying out research projects funded by his Department in 1999 in respect of them discussing their findings with journalists (a) before and (b) after publication. [108197]

  Mr. Straw
  The terms and conditions with regard to publicity about research projects undertaken by contractors on behalf of the Home Office vary depending upon the detailed circumstances of the contract. As a rule, research contracts with the Home Office require contractors not to make public statements concerning the work without the prior consent of the Department. In practice, this usually means that contractors do not discuss findings of research before publication but are free to do so afterwards. I am committed to ensuring that any research commissioned by my Department is published once it has been properly validated (save in subject areas where the protection of national security or the prevention of serious crime require that the research can only be used for internal purposes). I have agreed a protocol with my Director of Research governing the publication of the Home Office research reports. I have placed a copy in the Library.

  Body Armour (Female Officers)
  Mr. Cohen
  To ask the Secretary of State for the Home Department what guidance is given by his Department to police forces on the provision of suitably designed body armour for female officers. [109000]

  Mr. Charles Clarke
  Suitable body armour for female officers, designed and approved to standards set by the Home Office Police Scientific Development Branch

  Table showing the number of asylum seekers being supported by London boroughs1 at 7 January 2000

  Borough

  Total number of asylum seekers

  Unaccompanied minors2

  Single adults

  Number of families3

  Number of people in families

  Barking and Dagenham

  2,440

  140

  800

  530

  1,500

  Barnet

  1,420

  40

  270

  330

  1,100

  Bexley

  400

  80

  100

  60

  220

  Brent

  1,890

  50

  570

  430

  1,270

  Bromley

  530

  40

  170

  90

  310

  Camden

  1,820

  80

  510

  370

  1,230

  Corporation of London

  170

  —

  90

  20

  70

  Croydon

  940

  150

  180

  180

  610

  Ealing4

  1,280

  —

  390

  260

  900

  Enfield4

  1,970

  60

  420

  550

  1,490

  Greenwich

  1,850

  70

  820

  330

  960

  Hackney

  2,440

  —

  920

  490

  1,520

  Hammersmith and Fulham4

  2,400

  180

  670

  470

  1,550

  Haringey4

  4,680

  320

  1,330

  910

  3,040

  Harrow

  750

  40

  170

  150

  540

  Havering4

  310

  —

  220

  30

  90

  Hillingdon

  1,880

  400

  760

  230

  710

  Hounslow4

  920

  30

  210

  270

  690

  Islington4

  2,360

  220

  1,280

  460

  860

  Kensington and Chelsea

  1,790

  130

  810

  260

  850

  Kingston-upon-Thames4

  330

  10

  90

  70

  230

  Lambeth

  2,900

  150

  1,050

  580

  1,710

  Lewisham4

  2,390

  90

  1,000

  410

  1,300

  Merton4

  910

  —

  260

  190

  660

  Newham

  6,120

  70

  1,240

  1,420

  4,810

  Redbridge

  1,860

  200

  540

  340

  1,120

  Richmond-upon-Thames

  1,650

  210

  710

  2107

  30

  Southwark

  2,850

  190

  1,010

  550

  1,660

  Sutton

  550

  50

  250

  90

  260

  Tower Hamlets

  660

  10

  230

  130

  420

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  (PSDB) and the Association of Chief Police Officers (ACPO), has been available since May 1999. The new PSDB Stab Resistance Standard for Body Armour 1999 also includes provision for testing female armour.

  The results of all body armour tested to PSDB standards are published in the "Manual of Ballistic and Stab Resistant Body Armour", a joint PSDB/ACPO publication. The manual is available to all police forces and contains information on how to select appropriate body armour from among almost 200 commercially available armours. PSDB also gives presentations on female body armour to individual forces.

  Asylum Seekers
  Mr. Coleman
  To ask the Secretary of State for the Home Department how many asylum seekers who are(a) single adults, (b) families with children and (c) unaccompanied children in each London borough were being supplied through (i) the Social Services departments and (ii) other housing departments on 31 January. [108797]

  Mrs. Roche
  Central Government do not collect information in the form requested. I understand that the Association of London Government collates data on the numbers of single adults, families and unaccompanied minors being supported by London boroughs each week. A breakdown between those persons supported by social services departments or other housing departments is not available.

  The latest figures available from the Association of London Government, for the week ending 7 January 2000, are set out in the table.
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  Table showing the number of asylum seekers being supported by London boroughs1 at 7 January 2000

  Borough

  Total number of asylum seekers

  Unaccompanied minors2

  Single adults

  Number of families3

  Number of people in families

  Waltham Forest

  2,250

  —

  1,150

  490

  1,100

  Wandsworth

  970

  10

  210

  220

  750

  Westminster

  2,260

  160

  740

  410

  1,360

  Total

  57,940

  3,170

  19,170

  11,520

  36,600

  1 A significant proportion of the single adults live in other areas of the country but the accommodation is organised by London local authorities.

  2 Unaccompanied children under 17.

  3 Families include cases with only dependant adults.

  4 Updated figures not yet reported, figures taken from previous report.

  Mr. Gerrard
  To ask the Secretary of State for the Home Department what plans he has taken to ensure that current overstayers will not lose the right to a suspensive appeal against a decision to remove them taken after 1 October. [109544]

  Mrs. Roche
  Section 9 of the Immigration and Asylum Act 1999 provides for a minimum three month period during which overstayers can apply to regularise their immigration status. If they do so, and the application is refused after the new removal procedures are implemented, the old procedures will apply to their case after 1 October and a suspensive right of appeal will be retained.

  The Immigration (Regularisation Period for Overstayers) Regulations 2000 came into force on Tuesday 8 February. The period runs from now until 1 October 2000, which is the day before the Human Rights Act 1998 is expected to come into force, and thus lasts for a minimum of almost eight months.

  I shall shortly write to all Members, giving details of the scheme and how an application should be made under it. I shall place copies of the information leaflet we have produced in the Library. We shall be discussing further publicity with relevant interest groups, but as a first step the leaflets are being distributed to local community groups through the Citizens Advice Bureaux and the Joint Council for the Welfare of Immigrants.

  The scheme is solely intended to retain a suspensive right of appeal to the Immigration Appellate Authority for those overstayers who make a specific application to us during the period. It is by no means an amnesty: the same considerations apply whether an application under the scheme is made or not. All overstayers should be aware that a decision to remove them from the United Kingdom is, and will, remain the normal response to their unlawful behaviour. Only when the compassionate circumstances outweigh the public interest in maintaining an effective immigration control will we allow them to remain.

  Women's Refuges (London)
  Mr. Cox
  To ask the Secretary of State for the Home Department how many women's refuges there are in each Greater London borough. [108729]

  Mr. Boateng
  Refuges operate independently of Government, and such data are not collected centrally. The most comprehensive and up-to-date information available is contained in "The Gold Book: the Women's Aid Directory of Domestic Violence Research and Helpline 168W
  Services 1999", published last year by the Women's Aid Federation (England). Information is also available on the Women's Aid website, http://www.womensaid.org.uk.

  Mr. Cox
  To ask the Secretary of State for the Home Department what funding has been made available to(a) open and (b) support women's refuge projects in the Greater London area in each of the last three years. [108723]

  Mr. Boateng
  Refuges are funded by a range of sources, rather than directly by central Government. In some cases, the Department of the Environment, Transport and the Regions, through the Housing Corporation, provides capital and revenue funding. Other income comes from the rents paid by users (who may be relying on Housing Benefit support), local authorities, charities, trusts, private donations and their own fund-raising activities. Some refuge projects work in partnership with Housing Associations. Because of this the information requested is not available.

  The paper "Supporting People" outlined plans to introduce a new policy and funding framework for the provision of supported accommodation for all who need it, including the survivors of domestic violence, from April 2003.

  Firearms
  Mr. Martyn Jones
  To ask the Secretary of State for the Home Department how many days it takes to process the grant and renewal of a shotgun and firearm certificate in each police constabulary area. [108823]

  Mr. Charles Clarke
  This information is not collected centrally.

  Mr. Martyn Jones
  To ask the Secretary of State for the Home Department what monitoring and evaluation of the firearms licensing regime has been carried out in respect of the level set for firearm fees. [108822]

  Mr. Charles Clarke
  As with other aspects of police administration, firearms licensing is subject to monitoring by Her Majesty's Inspectorate of Constabulary (HMIC) as part of their inspection process.

  Mr. Martyn Jones
  To ask the Secretary of State for the Home Department what representatives of shooting user groups have been invited to participate in Home Office discussions on firearms fees. [108821]

  Mr. Charles Clarke
  The Firearms Consultative Committee (FCC), the independent statutory authority that advises the Government on firearms matters, considered initial proposals for reviewing firearms
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  licensing fees last year. The Home Office has since received detailed information from the Association of Chief Police Officers as to the basis on which the fees might be set. Ultimately, it is for the Home Secretary to lay an Order before Parliament setting out any changes, but before doing so we shall wish to consult the British Shooting Sports Council for their views.

  Mr. Martyn Jones
  To ask the Secretary of State for the Home Department what steps he has taken to improve the efficiency of police firearms licensing departments in respect of the criticisms made in Her Majesty's Inspectorate of Constabulary report in 1993. [108820]

  Mr. Charles Clarke
  In the years immediately following the publication of their 1993 Report on Firearms Licensing, Her Majesty's Inspectorate of Constabulary (HMIC) paid particular attention to firearms licensing departments during their inspection of individual forces, having regard to the shortcomings identified in the report. In general, HMIC was satisfied that most forces had taken those steps identified by the Inspectorate to improve their efficiency and effectiveness in this area.

  Since the publication of the 1993 Inspection Report, there has been considerable change in the field of firearms licensing following the tragic events at Dunblane and the subsequent legislation. There have also been wider changes, for example in the role and effectiveness of computer systems. Her Majesty's Inspectorate of Constabulary is, therefore, drawing up new inspection protocols for firearms licensing departments.

  British Summer Time
  Mr. Kidney
  To ask the Secretary of State for the Home Department, pursuant to his answer of 24 November 1999,Official Report, column 124W, what are the respective responsibilities of his Department and the Scottish Executive in relation to British summer time in Scotland. [108818]

  Mr. Mike O'Brien
  The Scotland Act 1998 reserves powers relating to summer time to Westminster and responsibility, therefore, remains with the Home Office.

  Mr. Kidney
  To ask the Secretary of State for the Home Department if he will consult road safety groups and others on abandoning British summer time in England and Wales. [108819]

  Mr. Mike O'Brien
  We have no plans to promote changes to the present summer time arrangements, but we will continue to listen to all sides of the argument.

  Human Rights Act 1998
  Mr. Gordon Prentice
  To ask the Secretary of State for the Home Department how much he has spent on counsel's opinion in respect of securing statements of compatibility of public bills with the requirements of the Human Rights Act 1998. [108757]

  Mr. Straw
  Statements under section 19 express the Minister's view as to whether the provisions of a Bill are compatible with the Convention. Each Department is responsible for seeking its own advice before making a170W
  section 19 statement. No money has been spent by the Home Office on counsel's fees for the immediate purpose of making such statements. But in forming a view as to a Bill's compatibility, the Minister will take into account all the legal advice available to the Department, including any advice from outside Counsel, where appropriate. Such advice may be obtained in relation to a specific issue or have been given, for example, in the context of relevant litigation.

  Mr. Gordon Prentice
  To ask the Secretary of State for the Home Department if he will place in the Library copies of the paper setting out the basis for statements of compatibility of Public Bills with the Human Rights Act 1998. [108756]

  Mr. Mike O'Brien
  Copies of the revised guidance to Departments have been placed in the Library.

  Lawrence Inquiry
  Mr. Alan Simpson
  To ask the Secretary of State for the Home Department if he will place in the Library the document relating to the Lawrence Inquiry, entitled, "Summary of Progress on Key Action Points". [108718]

  Mr. Charles Clarke
  Yes; but I shall shortly be publishing a much fuller account of the progress made in implementing the action plan published in March 1999 in response to the report of the Stephen Lawrence Inquiry.

  Crown Court Appeals
  Mr. Lidington
  To ask the Secretary of State for the Home Department, pursuant to his answer to my right hon. Friend the Member for Maidstone and The Weald (Miss Widdecombe) of 2 February 2000,Official Report, column 599W, on his proposals to restrict the right to elect trial by jury, (a) if it is his intention to allow (i) either the prosecution or defence, or both, to petition the Crown court for an oral hearing of an appeal against the determination of mode of trial by magistrates, where an oral hearing is not requested by the judge and (ii) only circuit judges to hear appeals in the Crown court against the determination of mode of trial by magistrates, and (b) if the prosecution and defence will be able to adduce additional evidence, over and above that presented to the magistrates, during the course of an appeal to the Crown court against the determination of mode of trial by magistrates, and if they will be able to call witnesses and expert witnesses to give oral testimony. [109208]

  Mr. Charles Clarke
  [holding answer 8 February 2000]: The appeal would be a re-hearing by a circuit judge of the magistrates decision. It would be open to either of the parties to seek an oral hearing in the notice of appeal, and it would be for the discretion of the judge whether to allow an oral hearing to take place. It would also be for his discretion whether to allow the parties to adduce further evidence (including, in the unlikely event that it would be necessary, evidence from expert or other witnesses) in support of their representations.
  171W
  Mr. Lidington
  To ask the Secretary of State for the Home Department, pursuant to his answer of 2 February 2000,Official Report, column 599W, what parts of criminal proceedings in the Crown Court may at present be heard in chambers by a single judge; what estimate he has made of the number of Crown Court sitting days that would be taken up by the hearing of appeals against the determination of mode of trial by magistrates, what items are included in the cost of (i) a written and (ii) an oral appeals; and on what basis he reached his estimate of the number of defendants who would appeal against magistrates' decisions on mode of trial. [109209]

  Mr. Charles Clarke
  [holding answer 8 February 2000]: Business which may be heard in chambers by a single judge (pursuant to Crown Court Rule 27) includes applications for bail and for the extension of time-limits, and appeals against the decision of magistrates on those issues. In estimating the cost of appeals against mode of trial, the generous assumptions have been made that in 25 per cent. of cases the defendant might appeal, and that 17.5 per cent. of cases will require an oral hearing. In total, less than 650 judicial hours would be spent on these appeals per year. The costs have been based on court time, prosecution costs and legal aid standard fee rates. The reply I gave to the right hon. Member for Maidstone and The Weald (Miss Widdecombe), on 2 February 2000, Official Report, column 599W, contained a typographical error: it is estimated the number of defendants who would appeal is 3,000, and not 3,900 as stated.

  Organised Crime (Hungary)
  Mr. Fabian Hamilton
  To ask the Secretary of State for the Home Department what steps he is taking to encourage a further strengthening of co-operation with Hungary to combat organised crime. [109668]

  Mr. Straw
  I have today signed with the Minister of the Interior of Hungary, Dr. Sandor Pinter, a Memorandum of Understanding on Co-operation in Combating Illicit Drug Trafficking, Organised Crime, International Terrorism and Illegal Immigration. The agreement provides a framework within which law enforcement agencies and prosecuting authorities in our two countries can develop their close working relations in preventing, detecting and investigating all forms of serious and organised national and international crime. It is an important step forward in combating the common threat from criminal activity both within and beyond Europe.

  Immigration
  Mr. Burgon
  To ask the Secretary of State for the Home Department what arrangements he has made to ensure that immigration officers exercising the new powers of search, entry and seizure in Part VII of the Immigration and Asylum Act 1999 will have regard to the codes of practice issued under the Police and Criminal Evidence Act 1984. [109669]

  Mrs. Roche
  The new powers of entry, search and seizure will come into force on 14 February 2000. In accordance with section 145 of the Immigration and Asylum Act 1999, a Direction has been made which will ensure that immigration officers exercising these powers, and their existing powers of arrest under Schedule 2 of the Immigration Act 1971, must have regard to the relevant 172W
  provisions of the Police and Criminal Evidence Act 1984 Codes of Practice. A copy of the Direction is being placed in the Library. It is also being sent to members of the Immigration and Nationality Directorate (IND) User Panel and will be made available more widely via the IND website.

  The use of the new powers will be restricted initially to a team of immigration officers involved in a joint pilot scheme with the Metropolitan police. This pilot scheme will enable the powers to be tested in the operational arena before more widespread use of the powers is considered.

  Immigration and Nationality Directorate
  Ms Ward
  To ask the Secretary of State for the Home Department if he will make a statement on changes in the membership of the Immigration and Nationality Directorate Complaints Audit Committee. [109671]

  Mrs. Roche
  Ms Ros Gardner has been appointed as a new Member of the Complaints Audit Committee to replace Janet Whitaker, who resigned on being made a Life Peer. Ms Gardner runs a consultancy specialising in customer care and complaint handling. She was formerly Manager of the Customer Services Department of Marks and Spencer and was a member of the Cabinet Office's Citizens Charter Complaints Task Force.

  Police Officer Recruitment
  Mr. Burgon
  To ask the Secretary of State for the Home Department if he will make a statement on the results of police forces' bids for funding from the Crime Fighting Fund to recruit police officers. [109672]

  Mr. Straw
  All 43 police forces in England and Wales bid for a share of the Crime Fighting Fund to recruit 5,000 police officers over and above the number they had otherwise planned to recruit over the next three years commencing April 2000.

  The total number of officers which forces bid for came to 8,220. As all forces meet the gateway criteria set out in the Bidding Guidelines, I have, in allocating funding for the 5,000 officers between forces, taken into account the information which they provided in support of their bids.

  The table shows the number of police recruits each force has bid for, the number they have been allocated in each year of the scheme and in total, and the funding each will receive in year one of the scheme.

  The numbers of officers in years two and three are provisional at this stage. They are dependent on forces meeting the continuation criteria for benefiting from the Fund in those years.

  Forces tell us that, without the additional resources from the fund, they are planning to recruit a total of 12,478 police officers (new recruits to the service) in the three years commencing in April 2000. Their estimates reflect the decisions they and their police authorities have made about the way in which they will use the resources available to them next year, and the assumptions they have made about funding and budget levels in the two following years which have yet to be settled. The money from the Crime Fighting Fund will be used to recruit 5,000 officers over and above the number forces plan to recruit over the three-year period.

  173W

  Crime Fighting Fund: Recruits

  Allocation

  Year 1 costs (£)

  Forces

  3 Year total bid

  2000–01 Year 1

  2001–02 Year 2

  2002–03 Year 3

  Total

  Total to force

  Training1

  Total Year 1

  Avon and Somerset

  165

  20

  40

  41

  101

  510,000

  140,000

  650,000

  Bedfordshire

  102

  11

  22

  22

  55

  280,500

  77,000

  357,500

  Cambridgeshire

  69

  16

  14

  12

  42

  408,000

  112,000

  520,000

  Cheshire

  115

  17

  34

  35

  86

  433,500

  119,000

  552,500

  City of London

  16

  8

  0

  0

  8

  225,040

  56,000

  281,040

  Cleveland

  57

  5

  23

  0

  28

  127,500

  35,000

  162,500

  Cumbria

  60

  8

  16

  16

  40

  204,000

  56,000

  260,000

  Derbyshire

  250

  20

  40

  41

  101

  510,000

  140,000

  650,000

  Devon and Cornwall

  200

  28

  55

  55

  138

  714,000

  196,000

  910,000

  Dorset

  90

  9

  18

  19

  46

  229,500

  63,000

  292,500

  Durham

  60

  13

  18

  20

  51

  331,500

  91,000

  422,500

  Dyfed Powys

  100

  10

  20

  20

  50

  255,000

  70,000

  325,000

  Essex

  124

  23

  40

  40

  103

  586,500

  161,000

  747,500

  Gloucestershire

  70

  12

  20

  20

  52

  306,000

  84,000

  390,000

  Greater Manchester

  1,000

  78

  145

  155

  378

  1,989,000

  546,000

  2,535,000

  Gwent

  65

  12

  20

  11

  43

  306,000

  84,000

  390,000

  Hampshire

  150

  27

  53

  53

  133

  688,500

  189,000

  877,500

  Hertfordshire

  48

  13

  16

  16

  45

  331,500

  91,000

  422,500

  Humberside

  251

  15

  29

  30

  74

  382,500

  105,000

  487,500

  Kent

  180

  30

  58

  58

  146

  765,000

  210,000

  975,000

  Lancashire

  152

  25

  51

  50

  126

  637,500

  175,000

  812,500

  Leicestershire

  150

  17

  26

  40

  83

  433,500

  119,000

  552,500

  Lincolnshire

  50

  11

  20

  10

  41

  280,500

  77,000

  357,500

  Merseyside

  360

  40

  80

  81

  201

  1,020,000

  280,000

  1,300,000

  Metropolitan Police

  1,800

  242

  424

  447

  1,113

  6,807,460

  1,694,000

  8,501,460

  Norfolk

  90

  11

  30

  25

  66

  280,500

  77,000

  357,500

  North Wales

  75

  12

  25

  25

  62

  306,000

  84,000

  390,000

  North Yorkshire

  39

  5

  20

  0

  25

  127,500

  35,000

  162,500

  Northamptonshire

  105

  14

  25

  14

  53

  357,000

  98,000

  455,000

  Northumbria

  172

  27

  57

  52

  136

  688,500

  189,000

  877,500

  Nottinghamshire

  120

  17

  35

  35

  87

  433,500

  119,000

  552,500

  South Wales

  90

  14

  27

  27

  68

  357,000

  98,000

  455,000

  South Yorkshire

  150

  20

  40

  41

  101

  510,000

  140,000

  650,000

  Staffordshire

  102

  17

  33

  33

  83

  433,500

  119,000

  552,500

  Suffolk

  73

  11

  24

  10

  45

  280,500

  77,000

  357,500

  Surrey

  120

  18

  30

  30

  78

  459,000

  126,000

  585,000

  Sussex

  135

  22

  45

  45

  112

  561,000

  154,000

  715,000

  Thames Valley

  379

  40

  80

  80

  200

  1,020,000

  280,000

  1,300,000

  Warwickshire

  68

  6

  24

  0

  30

  153,000

  42,000

  195,000

  West Mercia

  108

  18

  35

  36

  89

  459,000

  126,000

  585,000

  West Midlands

  480

  64

  120

  126

  310

  1,632,000

  448,000

  2,080,000

  West Yorkshire

  180

  26

  52

  53

  131

  663,000

  182,000

  845,000

  Wiltshire

  50

  8

  16

  16

  40

  204,000

  56,000

  260,000

  Total

  8,220

  1,060

  2,000

  1,940

  5,000

  27,687,500

  7,420,000

  35,107,500

  1 The £7,000 per recruit to forces other than the Metropolitan Police Service for training will be paid to National Police Training

  Police Statistics
  Mr. Ivan Henderson
  To ask the Secretary of State for the Home Department if he will make a statement on the number of police officers in each police force area in England and Wales, and in total, for the latest available date; and, if he will list the total number of(a) police officers and (b) civilian support staff in England and Wales for each year from 1990. [109673]

  Mr. Straw
  The information is set out in the tables. At the end of September 1999, the total number of police officers in England and Wales was 125,464. The number of officers in the 43 forces (excluding officers seconded to the National Crime Squad, the National Criminal Intelligence Service and central service) was 123,050. At the end of September 1999 there were 53,254 civilian support staff in the police service.

  I have also accepted the recommendations of a Working Group chaired by Her Majesty's Inspector of
  174W
  Constabulary and including representatives of the Association of Chief Police Officers and the Association of Police Authorities on the re-classification of police service personnel. The Working Group recommended that greater recognition should be given to the important contribution that civilian support staff make to operational policing. Civilian staff now account for 30 per cent. of total police service personnel.

  From March 2000, police service staff will be categorised within three bands as (a) operational, (b) operational support, or (c) organisational support. The new information, to be collected annually by Her Majesty's Inspectorate of Constabulary, will provide a more accurate reflection of the deployment of all police service personnel.

  We shall continue to publish information on police officer numbers in the usual way.

  175W

  Police numbers—change between March 1999 and September 1999

  Force

  Strength as at 30 September 1999

  Change since 31 March 1999

  Avon and Somerset

  2,988.7

  -11

  Bedfordshire

  1,048.4

  +7

  Cambridgeshire

  1,272.2

  -2

  Cheshire

  2,043.6

  -27

  City of London

  744.6

  -33

  Cleveland

  1,372.6

  -43

  Cumbria

  1,092.9

  -33

  Derbyshire

  1,763.6

  +5

  Devon and Cornwall

  2,861.1

  -26

  Dorset

  1,276.1

  -3

  Durham

  1,554.6

  -13

  Dyfed-Powys

  1,048.6

  +22

  Essex

  2,834.7

  -56

  Gloucestershire

  1,098

  -6

  Greater Manchester

  6,810.3

  No change

  Gwent

  1,261.3

  +14

  Hampshire

  3,410.8

  -63

  Hertfordshire

  1,760

  +36

  Humberside

  1,926.2

  -48

  Kent

  3,256.7

  +56

  Lancashire

  3,221.4

  -23

  Leicestershire

  1,997.5

  +4

  Lincolnshire

  1,110.8

  -29

  Merseyside

  4,070.8

  -140

  Metropolitan police

  25,884.5

  -188

  Norfolk

  1,381.5

  No change

  Northamptonshire

  1,130

  -7

  Northumbria

  3,800.1

  -40

  North Wales

  1,399

  +8

  North Yorkshire

  1,293.7

  -43

  Nottinghamshire

  2,227

  +2

  South Wales

  2,983

  +2

  South Yorkshire

  3,165

  -3

  Staffordshire

  2,206

  -32

  Suffolk

  1,160

  -30

  Surrey

  1,721.1

  +59

  Sussex

  2,909.3

  +63

  Thames Valley

  3,749.5

  +1

  Warwickshire

  915.7

  +8

  West Mercia

  1,979.4

  -45

  West Midlands

  7,296.4

  -24

  West Yorkshire

  4,873

  -109

  Wiltshire

  1,150.2

  -1

  Force total strength

  123,050

  -791

  Seconded police officers

  2,414

  +159

  Total police service strength

  125,464

  -632

  1 Includes officers seconded to NCS, NCIS and central service such as National Police Training.

  Total police service personnel—1990–99

  Year

  Total police officers

  Total civilian support staff

  31 March 1990

  126,777

  44,525

  31 March 1991

  127,495

  46,373

  31 March 1992

  127,627

  47,320

  31 March 1993

  128,290

  49,503

  31 March 1994

  127,897

  50,229

  31 March 1995

  127,222

  51,096

  31 March 1996

  126,901

  52,933

  31 March 1997

  127,158

  53,011

  31 March 1998

  126,814

  52,974

  31 March 1999

  126,096

  53,031

  30 September 1999

  125,464

  53,254

  Nuclear Bunker (Soar)
  Mr. Steen
  To ask the Secretary of State for the Home Department if he will order the sale of the former nuclear bunker at Soar, Devon; and if he will make a statement on outstanding issues in relation to the National Trust. [108994]

  Mr. Mike O'Brien
  The outstanding issues in relation to the National Trust are on the point of being resolved. The first stage in the process of offering this property for sale will begin on 24 February, with the first of a number of open days, when prospective purchasers will have an opportunity to view the property prior to submitting sealed bids.

  Crime (Banbury and Abingdon)
  Mr. Woodward
  To ask the Secretary of State for the Home Department if he will provide statistics on incidents of crime in Banbury and Abingdon(a) in the 12 month period before and (b) after the installation of closed circuit television surveillance. [109123]

  Mr. Charles Clarke
  This information is not available centrally. The British Crime Survey and other centrally collated crime statistics are not sufficiently detailed to provide the comparative before and after information requested.

PRESIDENT OF THE COUNCIL

  European Charter on Human Rights
  Mr. Mitchell
  To ask the President of the Council, pursuant to her answer to the hon. Member for South Ribble (Mr. Borrow), of 8 December 1999,Official Report, column 532W, on the EU Charter of Fundamental Rights, what parliamentary procedures preceded the appointment of my hon. Friend the Member for Bridgend (Mr. Griffiths) as the delegate of the House to the Charter drafting body; and what documents set out his instructions as a delegate. [108736]

  Mrs. Beckett
  I refer my hon. Friend to the reply I gave on 7 February 2000,Official Report, column 24W.

FOREIGN AND COMMONWEALTH AFFAIRS

  Departmental Fees
  Mr. Matthew Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs which fees his Department, its agencies and associated public bodies collect; how much has been raised and will be raised from each of these fees from 1989–90 to 2004–05; and which of these fees count as negative expenditure. [107977]

  Mr. Hain
  I refer the hon. Gentleman to the answer I gave to the previous question on 8 February 2000,Official Report, column 134W.

  Helsinki Council
  Mr. Mitchell
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to the answer of the Secretary of State for Defence of 20 January 2000,Official Report, columns 536–37W, on the three new

  177W
  military committees to be established in the European Council, what Parliamentary proceedings will be initiated by a Minister of the Crown prior to negotiations and decision-making concerning their respective terms of reference. [108735]

  Mr. Vaz
  Draft Council Decisions establishing the three interim structures (the Interim Political and Security Committee, the Interim Body of Military Representatives, the secondment of Military Experts to the General Secretariat of the Council) are being submitted for Parliamentary Scrutiny. Future Decisions and other instruments concerning these bodies will be similarly submitted for Parliamentary Scrutiny, in line with the Government's 1998 White Paper on the Parliamentary Scrutiny of EU business.

  Diplomatic Staff
  Mr. Robathan
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 2 February 2000,Official Report, column 622W, on diplomatic staff what instructions he has given UK diplomatic staff not to meet particular UK nationals. [108958]

  Mr. Hain
  No instructions have been issued to members of the Diplomatic Service not to meet particular UK nationals.

  Gibraltar
  Mr. Colvin
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the appointment of the next Governor of Gibraltar and the timing of the appointment. [109183]

  Mr. Vaz
  The present Governor, Sir Richard Luce, is due to leave Gibraltar towards the end of March. An announcement on his successor will be made in the near future.

  Sharia Law
  Mrs. Fyfe
  To ask the Secretary of State for Foreign and Commonwealth Affairs if Sharia law continues to be imposed in parts of(a) Chechnya and (b) Dagestan; and what representations he has made concerning this. [109092]

  Mr. Vaz
  Sharia law, as imposed in parts of Chechnya and Dagestan, has included, among other punishments, public executions. These are in contravention of the European Convention on Human Rights and the human rights standards of the OSCE. The Government have made repeated representations to the Russian Government to urge them to seek a political solution to the situation in Chechnya, with the aim of restoring normal European standards throughout the territory of the Russian Federation. We have urged Russia to use the good offices of the OSCE and the Council of Europe in this task.

  Burma
  Mrs. Fyfe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what reports he has received of ethnic cleansing by the SPDC of minority groups in areas of Burma closed to monitors for security reasons. [109095]
  178W
  Mr. Battle
  We continue to receive disturbing reports of human rights violations against ethnic minorities from many parts of Burma. These violations include arbitrary killings, rape, torture, mass arrests, forced labour and forced relocations. We take every opportunity to condemn these violations: for example, the UK co-sponsored the UN General Assembly resolution adopted last November which contains strong condemnation of the appalling catalogue of human rights violations in Burma, including against ethnic minorities. We continue to make regular representations to the regime on this issue.

  Mrs. Fyfe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he will take to promote the long-term safety of the(a) Karen, (b) Chin, (c) Kavenni and (d) other minority tribes in their homelands in Burma. [109096]

  Mr. Battle
  We take every opportunity to raise with the Burmese authorities our concerns about the violations of human rights of ethnic minorities, including the Karen people. We support the work of the UN agencies. such as the UN High Commissioner for Refugees' work on Burma's Western border and UN Development Programme's projects in ethnic minority areas all over Burma. We also support the international non-governmental organisations working under difficult conditions in many of the ethnic minority areas. In Thailand, we provide humanitarian assistance through the Burma Border Consortium (£270,000 this calendar year). We continue to encourage political dialogue between the Burmese regime and democratic leaders, including ethnic minorities.

  Mrs. Fyfe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has made to the SPDC calling for it to open up all areas of Burma to human rights monitors and humanitarian aid workers. [109097]

  Mr. Battle
  The SPDC have persistently refused any visit to Burma by Judge Lallah, the present UN Special Rapporteur on Human Rights. We have co-sponsored resolutions both at the UN Commission on Human Rights and at the UN General Assembly expressing concern at this lack of co-operation. Several UN agencies and international non-governmental organisations, such as the International Committee of the Red Cross, are in Burma doing excellent work, but some parts of Burma are not accessible to them, largely because of civil unrest due to the regime's continued oppression of ethnic minorities. We deplore this oppression and call on the regime to enter into a dialogue with democratic groups, including ethnic minorities, to resolve Burma's political impasse.

  Mrs. Fyfe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what action he is taking to ensure that the minority tribes in Burma are not subjected to forced labour. [109098]

  Mr. Battle
  Forced labour is one of the key areas of concern in Burma. We condemn it wherever it occurs. A report by the International Labour Organisation in 1998 highlighted the use of forced labour in Burma and made three recommendations for the regime to implement: to stop forced labour; to penalise those who exact it; and to amend Burmese legislation. So far, these
  179W
  recommendations have not been adopted. Until they are, we will continue to maintain pressure in the ILO, and will raise this subject again at the March Governing Body.

  Indonesia
  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what measures the Government have taken(a) alone and (b) in collaboration with the United Nations, to ensure that instability within the borders of Indonesia does not spread throughout the region; and if he will make a statement. [109110]

  Mr. Battle
  We believe that President Wahid's democratic government is committed to finding a fair and lasting solution to the regional troubles in Indonesia. We and the international community stand ready to offer practical help to President Wahid and shall continue to support him in his efforts to create a democratic and united Indonesia, which will be a force for stability in South East Asia.

  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assurances he has received from the newly elected President of Indonesia that his Government will stop the persecution of Christians within its borders; and if he will make a statement. [109111]

  Mr. Battle
  My right hon. Friend the Prime Minister, my right hon. Friend the Foreign Secretary and I all discussed the situation in Maluku with President Wahid when he as in London last week. President Wahid reaffirmed his commitment to secure lasting peace between the conflicting Muslim and Christian communities in the province.

  Moldova
  Mr. Hancock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent support the Government have given to Moldova; and if he will make a statement. [109038]

  Mr. Vaz
  We fully support the work of the OSCE Mission to Moldova in their efforts to reach a political settlement in the Moldova/Transdniestria conflict. We will continue to press for complete withdrawal of Russian forces from Moldovan territory by the end of 2002, as agreed at the OSCE Istanbul Summit in November 1999. We have provided funding for several projects in support of reaching a settlement including, for example, part-funding a constitutional workshop, attended by members of the Moldovan and Transdniestrian experts groups, in December 1999; and funding a seminar "Living with Conflict—the Role of Local Authorities" in September 1999. We are also funding training of six Moldovan journalists at the BBC, to enhance their reporting skills and to promote balanced media coverage.

  The Department for International Development's programme of assistance to Moldova stands at £1 million for 1999–2000. The main focus of the programme is the rural livelihoods sector, to which DFID have recently extended work. To complement this, DFID have also recently started work to facilitate further the effective development of savings and credit associations.

  Guatemala
  Mr. Martyn Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps Her Majesty's Government have taken to persuade the Government of Guatemala(a) to prosecute the murderers of street youths, with particular reference to murders in which the police are believed to have been involved, and (b) to give better general care and protection to Guatemala's street children. [109039]

  Mr. Battle
  We regularly raise human rights concerns generally, and those of street children specifically, with the Government of Guatemala. For example, we have lobbied the Guatemalan Government to enact its Child Code legislation, which would offer greater legal protection to children.

  Our Embassy in Guatemala has made a number of inquiries about the state of investigations into the murders or abuse of street children. NGOs working in this area suggest that abuse of street children by state agencies has decreased in the past few years. Street children are more frequently incidental victims of the prevalent violent street crime in Guatemala. There is also an increasing incidence of serious violence between the street children themselves, mostly as a result of an increase in drug trafficking and addiction by and among these children.

  The European Union is providing 200 million euros in 1997–2000 towards projects supporting the Peace Programme in Guatemala. The UK's contribution amounts to about £24 million. About a third of the EU funding is dedicated to establishing a National Civil Police Force and strengthening the administration of justice. We expect one consequence of the reform of the police and judiciary to be better treatment of street children. We also indirectly promote human rights and challenge impunity through our support for the UN Verification Mission in Guatemala (MINUGUA).

  In addition to working with the Guatemalan Government to protect and care for street children, we also provide support directly. In 1999 we gave £13,500 to an NGO, Toybox (known locally as El Castillo), to finance building a hostel for rehabilitating street children outside Guatemala City. In 1998 we gave £75,000 to Toybox for a similar project.

  We shall continue to convey to the Guatemalan authorities our concern for the well-being of street children in Guatemala.

  Departmental Staff
  Ms Christine Russell
  To ask the Secretary of State for Foreign and Commonwealth Affairs what child care provision was made available in the financial year 1998–99 for use by (i) his departmental staff and (ii) employees of executive agencies under the control of his Department; what was the cost to parents of this child care; and how many parents used the facilities. [109189]

  Mr. Hain
  The Department's site at Hanslope Park has an on-site nursery and creche facility used by 22 parents in 1998–99. The Department also had access to 16 places at a central London nursery, all of which are subsidised. It participated in the Whitehall holiday playscheme to a total of 240 days. The cost to parents of child care provision varied according to the site, the age of the child
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  and the particular scheme. Allowances for UK-based staff overseas include provision of 390 hours of child care a year for staff with children accompanying them. The value of the provision varies according to the Post. Representational allowances cover the cost of child care overseas incurred as a result of official representational duties. The Wilton Park Executive Agency has no child care facilities.

  Ms Christine Russell
  To ask the Secretary of State for Foreign and Commonwealth Affairs what provisions are made available to (i) departmental staff and (ii) employees of executive agencies under the control of his Department, for(a) maternity leave, (b) maternity pay, (c) paternity leave, (d) parental leave, (e) flexible working hours, (f) part-time work, (g) job sharing, (h) leave to care for sick children, (i) home-working, (j) term-time contracts, (k) annual hours contracts, (l) child care allowances, (m) careers leave and (n) career break schemes; and what criteria are used to judge eligibility in each case. [109190]

  Mr. Hain
  I shall write to my hon. Friend shortly with the details she has requested

  British Council
  Mr. Streeter
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to increase his Department's contribution to the British Council budget. [109230]

  Mr. Hain
  In the current CSR period, starting in 1999–2000, this Government have already provided the British Council with an uplift of some 2 per cent. in real terms over 1998–99, in line with the settlement for the FCO as a whole. We shall seek to ensure that the Council continues to share whatever gain we obtain as a result of the current spending round, covering 2001–02 to 2003–04.

EDUCATION AND EMPLOYMENT

  Teachers' Pay
  Mr. Hurst
  To ask the Secretary of State for Education and Employment what assessment he has made of the responses of teachers to the consultation on those aspects of the Green Paper, "Teachers: meeting the challenge", dealing with performance-related pay; and if he will make a statement. [107262]

  Ms Estelle Morris
  The consultation on the Teacher's Green Paper ran from December 1998 until March 1999. The results of the consultation exercise on the Green Paper were published on 8 July 1999. A leaflet, "Teachers: taking forward the challenge of change", was delivered to all schools, summarising the outcomes and explaining how the proposal would be taken forward. Copies of more detailed analysis of the consultation responses were placed in the Libraries of the Houses of Parliament.

  Although the formal consultation period on the Green Paper has closed, discussions have been on-going with key stakeholders. The proposals to reform teachers' pay were outlined in further detail in the written evidence which the DFEE submitted to the School Teachers' Review Body (STRB) last autumn. The STRB's report,
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  published 1 February 2000, backed the Government's proposals. The Secretary of State will consult on its recommendations and announce arrangements for the new pay structure during spring 2000, for introduction in September 2000.

  Sex and Relationships Education
  Mr. Waterson
  To ask the Secretary of State for Education and Employment what guidance his Department has issued to schools and education authorities about the use of the video, "Beyond a Phase". [108216]

  Jacqui Smith
  The Department is in the process of consulting on the shape and content of revised sex and relationships education guidance. This will make it clear that it is for the governing body, in consultation with parents, to develop a policy on sex and relationships education, and to determine whether material used in schools is appropriate to the age of the pupils and in accordance with the PSHE framework, and the law which states that materials produced by health authorities often have a specific purpose of treating or preventing the spread of disease and schools need specifically to address the appropriateness of such material within a school context, again consulting with parents on its use.

  School Sports
  Mr. Reed
  To ask the Secretary of State for Education and Employment (1) what research his Department has undertaken into the number of hours per week spent on physical education in schools since 1 May 1997; [108294]

  (2) what assessment he has made of the amount of competitive sport played in schools; and if he will make a statement; [108295]

  (3) what figures he requires from local education authorities on the amount of sport and PE taking place in schools. [108296]

  Jacqui Smith
  OFSTED collects information about the percentage of taught time for each subject when inspecting schools. The number of school hours spent on physical education varies from school to school. Evidence from OFSTED inspections during 1998 of the average number of hours per week primary and secondary schools currently spend teaching National Curriculum PE is given below.

  Average hours of PE per week (approximately)

  Key Stage 1 (ages 5–7)

  1 hour 20 minutes

  Key Stage 2 (ages 7–11)

  1 hour 35 minutes

  Key Stage 3 (ages 11–14)

  2 hours

  Key Stage 4 (ages 14–16)

  1 hour 15 minutes

  We have set an aspiration that all schools should provide two hours of curricular or extra curricular activities a week, and my officials are meeting regularly with DCMS and representatives of PE and sports organisations to discuss ways of promoting this aspiration in schools.

  External Examiners
  Dr. Gibson
  To ask the Secretary of State for Education and Employment what guidance is given to(a) universities and (b) university departments on choosing external examiners. [109025]

  Mr. Wicks
  The Quality Assurance Agency published a section of its Code of Practice that deals with External Examining in January 2000. This contains advice on the appointment of external examiners.

  Dr. Gibson
  To ask the Secretary of State for Education and Employment what instructions his Department gives to universities in respect of payment of fees to external examiners. [109026]

  Mr. Wicks
  Payment of fees to external examiners is a matter for individual institutions.

  Dr. Gibson
  To ask the Secretary of State for Education and Employment what issues are included in the reviews undertaken by the Quality Assurance Agency for Higher Education relating to external examiners. [109024]

  Mr. Wicks
  The Quality Assurance Agency considers, in relation to assessment and quality management, the use made by an institution of its external examiners and of their reports. It also considers, in relation to the way an institution discharges its responsibilities for the academic standards of all its awards, the selection, appointment and briefing procedures used and the approaches adopted to the follow-up of external examiners' comments.

  Departmental Responsibility
  Mr. Shaw
  To ask the Secretary of State for Education and Employment on what date his Department assumed responsibility for educating children with learning disabilities from the Department of Health and Social Security. [109172]

  Jacqui Smith
  The Education (Handicapped Children) Act 1970 removed the power of health authorities to provide training for children with learning disabilities and transferred responsibility for the education of these children to Local Education Authorities.

  The Government's education policy includes a clear strategy for children with special educational needs. A cornerstone of that strategy is to develop and promote the inclusion of children with special educational needs in mainstream schools, where parents want this and appropriate support is available.

  Mr. Shaw
  To ask the Secretary of State for Education and Employment when his Department assumed responsibility for pensions of nurses and ancillary staff working in education establishments who had previously been the responsibility of the Department of Health and Social Security. [109173]

  Mr. Wicks
  Academic staff in the former Colleges of Health, which have transferred to the higher education sector, have been eligible for membership of the Teachers' Pension Scheme since 1992.

INTERNATIONAL DEVELOPMENT

  Montserrat
  Dr. Tonge
  To ask the Secretary of State for International Development what discussions she has had with the Government of Montserrat regarding conditions on the Island of Montserrat and the need for some residents to relocate to the United Kingdom. [108758]

  Clare Short
  The Parliamentary Under-Secretary of State last met with the Montserrat Chief Minister during the October 1999 Consultative Council meetings in London. Senior officials visit the island regularly.

  In October 1997, my Department approved £1.6 million for the Assisted Passage Scheme, which met the cost of flights and onward travel costs of those people who chose to relocate to the UK. DFID also finances an Evacuee Return Air Fare Scheme for those wishing to return to Montserrat.

  Globalisation
  Mr. McNamara
  To ask the Secretary of State for International Development what procedures she is establishing to consult(a) NGOs and (b) other interested parties before she publishes her proposed White Paper on globalisation. [108979]

  Clare Short
  We will invite widespread consultations as part of the preparation of the White Paper. This will include establishing a White Paper website on which we will place a brief outline of the paper, and inviting submissions from the public, non-governmental organisations and other interested parties. The consultation process will in particular include developing countries, and international organisations.

  Aid Misappropriation
  Mr. Streeter
  To ask the Secretary of State for International Development what assessment she has made of the percentage of United Kingdom Government aid and development funding which is misappropriated by the recipient country. [109103]

  Clare Short
  No instances have been identified where UK Development assistance has been misappropriated by the recipient country.

PRIME MINISTER

  Arms Exports (Zimbabwe)
  Dr. Tonge
  To ask the Prime Minister what is the Government's policy on the export of spare parts for British Hawk Jets to Zimbabwe. [107090]

  The Prime Minister
  [holding answer 27 January 2000]: Following an interdepartmental review, the Government's policy on export licences for countries intervening in the conflict in the Democratic Republic of the Congo (DRC) has been tightened.

  We will not grant export licences for new military or dual-use equipment where there is a clear risk that it would be used in the DRC.
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  We will remove intervening countries from the coverage of open licences for any equipment that might be deployed in the DRC and will not issue new Open Individual Export Licences (OIELs) for such equipment to any of these countries.

  We will continue to implement rigorously our national criteria and the EU Code of Conduct for all applications for Standard Individual Export Licences (SIELs), examining each on a case-by-case basis.

  This will include applications to provide spares for UK equipment already supplied under pre-existing contracts. In reaching decisions on such individual applications, we will take into account the wider implications of forcing UK companies to break existing obligations.

  This policy applies to those countries who have signed the Lusaka peace agreement, ie Angola, Namibia, Zimbabwe, Rwanda, Uganda and the DRC itself, plus Burundi which has acknowledged that it has troops in the DRC. Details will be included in the "Summary of Additional UK Restrictions on the Export of Strategic Goods", an annexe to the "List of Sanctions Regimes implemented by the UK", which are available on the FCO website at www.fco.gov.uk/news/newstext.asp?2163. Copies are also in the Libraries of the House.

  Correspondence
  Mr. Lansley
  To ask the Prime Minister how many replies to letters he sent to members of the public in 1999; and how many letters were answered on his behalf by his office rather than by Ministers in other Government Departments. [109031]

  The Prime Minister
  My office received 465,432 letters and cards from members of the public—an increase of 84 per cent. over the previous year. How this correspondence can best be replied to is considered on an individual basis. It is not possible for me to deal personally with all of the letters I receive and I must refer a large majority of letters from members of the public to the Minister and the Department that has responsibility for policy or the matter in question.

  Bulgaria
  Mr. Dalyell
  To ask the Prime Minister what representations he has received from the Bulgarian Government concerning(a) the consequences for Bulgaria of sanctions against Yugoslavia and (b) the situation in Kosovo, with particular reference to its multi-ethnic composition. [108231]

  The Prime Minister
  [holding answer 7 February 2000]: The Bulgarian Government have been consistent in their support for NATO policy towards Yugoslavia ever since the breakdown of the Rambouillet talks in March last year. The Bulgarian Government has expressed understandable concern about the impact to their economy of the Kosovo crisis, including sanctions against Yugoslavia and the closure of the Danube—in particular on their transport links through Serbia to Western European markets. The latest World bank figures indicate that the cost to the Bulgarian economy of the crisis since last March has been some US$100 million. HM Government are seeking to address these concerns through the Stability Pact and other multilateral and
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  bilateral assistance projects, including the Know How Fund. Bulgaria supports a multi-ethnic Kosovo with wide-ranging autonomy within Yugoslavia.

  Robert Schuman Project
  Mr. Bercow
  To ask the Prime Minister if he will make a statement on Government policy towards the Robert Schuman Project to improve awareness of community law within the legal profession; and which EU budget line funds the project. [108333]

  The Prime Minister
  An appropriate level of knowledge of Community law among judges and lawyers is vital for the proper functioning of the single market; that in turn is in the clear interests of the United Kingdom. However, a survey carried out in 1995 suggested that there could be substantial benefits in training in and use of Community law among lawyers and judges throughout the European Union. The Government therefore support the aims of this project, to offer financial assistance to national training schemes in Community law.

  The Schuman project is financed from budget line B5–3001, entitled "Implementation and development of the internal market". Additional expenditure to finance administrative costs may come from budget line BA5–3001, entitled "Implementation and development of the internal market—administrative-management expenditure". The project falls within the ministerial responsibility of my noble and learned Friend the Lord Chancellor.

  Performance and Innovation Unit
  Mr. Matthew Taylor
  To ask the Prime Minister (1) what consultations the Performance and Innovation Unit has undertaken as part of the study on accountability and incentives for joined-up Government; [108370]

  (2) what consultations the Performance and Innovation Unit has undertaken as part of the study on the use of analysis and modelling in central Government. [108372]

  The Prime Minister
  The Performance and Innovation Unit carried out extensive consultation for both reports. Those consulted include representatives from Government Departments, international institutions, overseas governments and the National Audit Office. In the case of the report on accountability and incentives, local authorities and the Audit Commission were also consulted.

  Paragraphs 2.9 and 2.10 of the report on Whitehall's management of cross-cutting policies and services, "Wiring It Up", summarises the consultations carried out for the project. Annexe 5 of the report on the use of analysis and modelling in central government, "Adding It Up", lists those consulted by the project team.

NORTHERN IRELAND

  Human Rights
  Mr. Bradshaw
  To ask the Secretary of State for Northern Ireland what progress has been made in the training of RUC officers in human rights issues. [107679]
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  Mr. Rammell
  To ask the Secretary of State for Northern Ireland what recent progress has been made in the training of RUC officers in human rights issues. [107680]

  Mr. Ingram
  The RUC has embarked upon a new, comprehensive programme of training for all officers and support staff with human rights training being an important element in that programme.

  The Chief Constable has set up a committee of senior officers to organise and develop this programme and this committee is in contact with the Northern Ireland Human Rights Commission and with other police training colleges in the development of that programme.

  Violent Crime
  Mr. Connarty
  To ask the Secretary of State for Northern Ireland what progress he is making on tackling crimes of violence in Northern Ireland. [107683]

  Mr. Ingram
  Provisional figures on violent crime for the period April to October 1999 and the final comparable figures for the same period in 1998 show some positive trends. Although the number of offences recorded has increased by 10.18 per cent., the clearance rate is even higher than that proportion with a 13.9 per cent. improvement. As a result, clearance rates for violent crime compare favourably at 53.4 per cent. with the previous year's figure of 46.9 per cent.

  Patten Report
  Jean Corston
  To ask the Secretary of State for Northern Ireland what discussions he has had with the Chief Constable of the RUC on the implementation of the Patten commission recommendations on policing in Northern Ireland. [107684]

  Mr. Ingram
  My right hon. Friend the Secretary of State and the Chief Constable have frequent meetings during which they discuss a range of issues—including the implementation of the recommendations in the Patten report. The last such meeting was on 17 January 2000.

  Anti-drugs Strategy
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Northern Ireland what recent discussions he has had with the Northern Ireland Assembly Ministers responsible for the delivery of anti-drugs strategies. [107685]

  Mr. Ingram
  I have not had any specific discussions with Northern Ireland assembly Ministers about drug misuse policy since devolution on 2 December 1999, although I am keen to do so. In the meantime, my officials have had regular contact with colleagues in Assembly Departments.

  Domestic Violence
  Mrs. Irene Adams
  To ask the Secretary of State for Northern Ireland what action he is taking to reduce crimes of domestic violence in Northern Ireland. [107686]

  Ms Moran
  To ask the Secretary of State for Northern Ireland what action is being taken to reduce crimes of domestic violence in Northern Ireland. [107701]
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  Mr. Ingram
  Domestic violence is an abuse of human rights and cannot be tolerated in a civilised society. Our policy in this area aspires to the eradication of domestic violence in all its forms. The Northern Ireland Regional Forum on Domestic Violence was established in 1995 to bring together Government Departments, other public bodies and voluntary organisations to promote cooperation and liaison in this area. The forum has four main policy aims: to heighten awareness of domestic violence, highlighting domestic assault as a crime, to improve services to victims to challenge perpetrators' attitudes and behaviour and to improve the information base.

  Decommissioning
  Mr. Simon Hughes
  To ask the Secretary of State for Northern Ireland what progress has been made in decommissioning illegally held weapons. [107687]

  Shona McIsaac
  To ask the Secretary of State for Northern Ireland if he will make a statement on the decommissioning of illegally held terrorist weapons. [107689]

  Mr. Donaldson
  To ask the Secretary of State for Northern Ireland what progress there has been on the decommissioning of illegal terrorist weapons. [107697]

  Mr. Bercow
  To ask the Secretary of State for Northern Ireland if he will make a statement on the latest report he has received from the Independent International Commission on Decommissioning. [107699]

  Mr. Mandelson
  I refer the hon. Members and my hon. Friend to the oral answer I gave earlier to the hon. Member for Bury St. Edmunds (Mr. Ruffley), at column 236.

  Northern Ireland Executive (Redundancy Payments)
  Mr. Ian Bruce
  To ask the Secretary of State for Northern Ireland what arrangements exist in respect of redundancy payments for members of the Northern Ireland Executive who resign or are removed from office. [107691]

  Mr. Mandelson
  Responsibility for this matter currently rests with the devolved Administration.

  Terrorist and Paramilitary Violence
  Mr. Colman
  To ask the Secretary of State for Northern Ireland what recent discussions he has had with the Office of First and Deputy First Minister relating to victims of terrorist and paramilitary violence. [107692]

  Mr. Ingram
  I refer my hon. Friend to the oral answer I gave earlier to my hon. Friend the Member for Warrington, North (Helen Jones), at column 234.

  Victim Support
  Mr. White
  To ask the Secretary of State for Northern Ireland what recent support his Department has provided for victims of the troubles. [107693]

  Mr. Ingram
  Building on previous initiatives in this field I recently announced a £3 million core funding scheme to sustain the work of groups providing quality
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  services to those most directly affected by the Troubles. In addition, an extra £1 million has been given to the Northern Ireland Memorial Fund.

  Part-time Working
  Mr. Savidge
  To ask the Secretary of State for Northern Ireland when he last met the Irish Congress of Trade Unions to discuss Government policy on part-time working. [107694]

  Mr. Mandelson
  Responsibility for this matter currently rests with the devolved Administration.

  Belfast Agreement
  Mr. Hunter
  To ask the Secretary of State for Northern Ireland what representations he has recently made to and received from Sinn Fein on the implementation of the Belfast agreement. [107700]

  Mr. Mandelson
  I have met Sinn Fein representatives on a number of occasions in recent weeks. Those discussions have focused on the need to ensure that the Good Friday agreement is fully implemented including the complete decommissioning of all paramilitary arms by May 2000.

  Mr. Stephen O'Brien
  To ask the Secretary of State for Northern Ireland if he will make a statement on the implementation of the Belfast agreement. [107702]

  Mr. Mandelson
  Both Governments are working intensively to try to secure further progress on decommissioning as an essential part of the peace process. An enabling power to put the various institutions on hold is being considered in another place. I hope this legislation will not be required but the process of decommissioning intentions must be clear if further confidence in the present arrangements is to be sustained.

  Departmental Secondees
  Mr. Willis
  To ask the Secretary of State for Northern Ireland how many staff were seconded from the private sector to his Department in(a) May 1997 to April 1998, (b) May 1998 to April 1999 and (c) May 1999 to the latest date for which figures are available, stating in each case the companies from which staff have been seconded. [109295]

  Mr. Mandelson
  None.

HEALTH

  Pigmeat
  Dr. Kumar
  To ask the Secretary of State for Health what checks are carried out by local authority environmental health officers on pigmeat which is processed and sold in pre-packed form. [107108]

  Ms Quin
  I have been asked to reply.
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  The processing of pigmeat for human consumption is covered by the Meat Products (Hygiene) Regulations 1994, as amended, which implements Council Directives 77/99/EC and 95/68EC. The Regulations lay down the supervisory checks that local authority environmental health departments are required to carry out. Guidance to enforcement authorities on the approach to inspection is given in the Food Safety Act 1990 Code of Practice No. 17: Enforcement of the Meat Products (Hygiene) Regulations 1994, and on the frequency and nature of these supervisory checks in Code of Practice No. 9: Food Hygiene Inspections.

  Intensive Care Beds
  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many(a) intensive and (b) critical care beds there are planned to be for the three years of the Comprehensive Spending Review. [108168]

  Mr. Denham
  This year there are 1,591 adult intensive care beds within a total of 2,362 critical care beds, according to fast track management information collected on 17 January 2000. As the Parliamentary Under-Secretary of State for Health, my hon. Friend the Member for Birmingham Edgbaston (Ms Stuart) announced on 1 February 2000,Official Report, column 903; this represents an increase of 122 on the number at 31 March 1999. Numbers for 2000–01 and 2001–02 will be determined following the outcome of the thoroughgoing review of critical care services and in the light of local planning.

  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many(a) critical care and (b) intensive care beds there were in NHS hospitals in each of the last 10 years. [108224]

  Mr. Denham
  Information on the average daily number of beds by ward type for each National Health Service trust is published annually in "Bed Availability and Occupancy, England" and is available in the Library. As wards classified as "intensive care" can also contain other types of beds we have introduced a new census focusing specifically on adult intensive care and high-dependency care beds. National and regional information from the first census taken in March 1999 is in the Library. The full results will be published in due course.

  Nurses
  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many of each category of nurse were employed by the NHS in each of the last 10 years. [108223]

  Mr. Denham
  The information requested is shown in the tables. Over the past 10 years there have been three methods for collecting this data. Therefore, data for 1989, 1990 to 1994 and 1995 onwards are shown in separate tables and are not directly comparable.
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  NHS Hospital and Community Health Service (HCHS): Nursing, midwifery and health visiting staff, by category, in England, as at 30 September each year

  Whole time equivalents

  1995

  1996

  1997

  1998

  Total nursing, midwifery and health visiting staff

  330,440

  332,660

  330,620

  332,200

  Acute elderly and general

  171,560

  171,020

  170,850

  172,110

  Paediatric nursing

  13,730

  14,980

  15,060

  15,740

  Maternity services

  26,410

  26,530

  25,960

  26,310

  Community psychiatry

  9,540

  10,530

  10,720

  11,330

  Other psychiatry

  42,120

  42,050

  41,980

  40,240

  Community learning difficulties

  4,790

  5,550

  6,350

  7,010

  Other learning difficulties

  20,900

  19,830

  18,030

  17,010

  Community services

  38,920

  40,480

  40,480

  41,430

  Education staff

  1,760

  750

  600

  580

  Other

  710

  940

  590

  440

  Notes:

  1. "Other" are other staff not allocated to a specific occupation code and includes staff employed by SHAs, OSAs and other centrally based services.

  2. Figures are rounded to the nearest 10.

  3. Due to rounding, totals may not equal the sum of component parts.

  4. Figures exclude learners and agency staff.

  5. A new classification of the non-medical workforce was introduced in 1995. Information based on this classification is not directly comparable with earlier years.

  Source:

  Department of Health Non-Medical Workforce Census.

  NHS Hospital and Community Health Service (HCHS): Nursing, midwifery and health visiting staff, by category, in England, as at 30 September each year

  Whole time equivalent

  1990

  1991

  1992

  1993

  1994

  All nursing, midwifery and health visiting staff

  395,360

  392,200

  378,780

  361,460

  348,690

  General nursing

  199,150

  192,640

  186,380

  176,660

  169,100

  Paediatrics

  10,660

  11,070

  11,770

  11,950

  12,300

  Mental health (hospital)

  55,560

  54,730

  52,850

  48,790

  47,320

  Community psychiatric nursing (CPNs)

  3,610

  3,760

  4,230

  4,340

  4,780

  Learning disabilities (hospital)

  31,360

  29,720

  28,290

  26,970

  26,110

  Community learning disabilities (CLDNs)

  1,600

  1,880

  1,930

  1,870

  2,030

  Midwifery-seniors

  140

  120

  90

  100

  80

  Midwifery-qualified (hospital)

  15,640

  15,540

  16,090

  15,520

  15,200

  Midwifery-qualified (community)

  4,200

  4,100

  4,160

  4,010

  4,050

  Midwifery-learners

  3,810

  3,220

  2,560

  2,020

  1,500

  Maternity

  8,470

  8,540

  8,540

  9,000

  8,670

  District nurses

  10,390

  9,900

  9,650

  9,460

  8,680

  District nurses trainees

  610

  520

  400

  340

  290

  Health visitors

  10,580

  10,380

  10,250

  10,190

  9,670

  Health visitor students

  810

  720

  600

  490

  400

  School nurses

  2,540

  2,460

  2,440

  2,470

  2,350

  Other community

  14,010

  14,110

  14,530

  15,000

  15,160

  Others

  22,230

  28,790

  24,030

  22,290

  20,970

  Notes:

  1. Figures from 1990 to 1994 include learners and bank staff.

  2. "Other" are other staff not allocated to a specific occupation code and includes staff employed by SHAs, OSAs and other centrally based services.

  3. Figures are rounded to the nearest 10.

  4. Due to rounding, totals may not equal the sum of component parts.

  5. Figures exclude agency staff.

  6. 1989 figures collected using different categories of nurses therefore not directly comparable with 1990–1995.

  Source:

  Department of Health Non-Medical Workforce Census.
  192W 193W

  NHS Hospital and Community Health Service (HCHS): Nursing, midwifery and health visiting staff, by category, in England, as at 30 September 1989

  Whole time equivalents

  Number

  All nursing, midwifery and health visiting staff

  398,660

  General administration

  1,190

  General nursing

  110,700

  Younger chronic disabled

  1,160

  Geriatrics

  23,090

  Y.C.D/Geriatrics

  15,740

  Paediatrics

  9,670

  Gen/Geri/Paed Bank

  4,580

  Mental illness

  51,340

  Mental handicap

  29,780

  Midwifery

  23,170

  Maternity

  8,100

  Community health

  34,670

  School health

  2,790

  Centrally based

  3,180

  Education

  64,090

  Other

  15,400

  NHS funded pre-registration nursing and midwifery training commissions

  Nursing diploma

  Degree1

  Total pre-reg.

  Midwifery degree2

  Diploma

  Total pre-reg.

  Other3

  Total pre-reg. N&M

  Adjusted pre-reg. total 4

  1992–93

  14,883

  190

  15,073

  42

  206

  248

  1,292

  15,321

  16,338

  1993–94

  12,439

  199

  12,638

  92

  450

  542

  1,215

  13,180

  14,197

  1994–95

  10,594

  255

  10,849

  92

  522

  614

  1,044

  11,463

  12,480

  1995–96

  11,495

  256

  11,751

  128

  485

  613

  1,030

  12,364

  13,381

  1996–97

  13,011

  297

  13,308

  161

  498

  659

  993

  13,967

  14,984

  1997–98

  14,429

  297

  14,726

  224

  572

  796

  908

  15,522

  16,539

  1998–995

  15,155

  1,201

  16,356

  254

  611

  865

  892

  17,221

  17,221

  1 The step change in degree commissions in 1998–99 is a result of the transfer of funding from DfEE to DH following Dearing.

  2 Midwifery data for 1992–93 are incomplete. Some degree data missing (possibly 60 places) for 1993–94, 1994–95—possibly 24 places in 1995–96, 1996–97 onwards is complete.

  3 Post-registration students, who are already qualified nurses, undertaking a full-time shortened diploma or degree course or part-time equivalent leading to a second registration as a midwife.

  4 Adjusted to take account of the Dearing report transfer 1,017 places 1992–93 to 1997–98 inclusive.

  5 Unvalidated 1998–99 outturn.

  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many nurses are planned to be in training for each year of the Comprehensive Spending Review. [108162]

  Mr. Denham
  We recognise that we need to train more nurses, which is why we committed ourselves to delivering 6,000 new nurse training places during the Comprehensive Spending Review period.

  Precise data on the number of places each year are not available. However, the target was based upon delivering 1,000 of the new places in each year, and we are now planning to deliver around 1,600 in the current year.

  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many nurses who joined the NHS in each of the last 10 years were at some stage previously employed as nurses in the NHS. [108166]
  194W
  Notes:

  1. "Other" includes staff employed by SHAs, OSAs and other centrally based services.

  2. Figures include qualified and unqualified nurses, learners and bank staff.

  3. Figures are rounded to the nearest 10.

  4. Due to rounding, totals may not equal the sum of component parts.

  5. Figures exclude agency staff.

  6. A new classification of the non-medical workforce was introduced in 1995. This was based on occupation code rather than payscale. Information using the new classification is therefore not directly comparable with earlier years.

  Source:

  Department of Health Non-Medical Workforce Census for 1989.

  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many nurses were in training in each of the last 10 years. [108167]

  Mr. Denham
  Information about numbers of nurses in training is not available for 1989–90, 1990–91 and 1991–92. Data for 1998–99 are unvalidated. Available information for nurses in training is shown in the table:

  Mr. Denham
  Information is available which shows that, as a result of the 1999 recruitment campaign, by 31 December 1999 almost 2,600 former nurses and midwives had already returned to work in the NHS and a further 2,400 are preparing to join them.

  Information on previous years is not held centrally.

  Patient Transfers
  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many patient transfers there were from(a) the private sector to the NHS and (b) the NHS to the private sector in each year for the last 20 years. [108164]

  Ms Stuart
  The information in the table covers the period 1989–90 until 1997–98. Figures were not collected for earlier years.
  195W

  Admission from non-NHS institution1

  Discharge destination to non-NHS institution

  Admission from non-NHS run hospital2

  Discharge destination to non-NHS run hospital

  1989–90

  37,873

  42,048

  —

  —

  1990–91

  38,102

  56,466

  —

  —

  1991–92

  35,375

  63,439

  —

  —

  1992–93

  31,207

  64,785

  —

  —

  1993–94

  29,141

  61,851

  —

  —

  1994–95

  24,575

  59,703

  —

  —

  1995–96

  21,160

  42,229

  —

  —

  1996–97

  —

  —

  5,153

  6,978

  1997–983

  —

  —

  20,096

  24,867

  1 Up to 1995–96 the code for "non-NHS institution" included non-NHS hospitals, nursing homes, health care and residential institutions. In 1996–97 the category was sub-divided so that admissions from non-NHS hospitals formed a single classification.

  2 The definition of "non-NHS run hospital" includes hospices. We cannot disaggregate these data, but it seems probable that a high proportion of the discharges are to hospices.

  3 Figures for 1997–98 are provisional and no adjustments have been made for shortfalls in data.

  Waiting Lists
  Mr. Matthew Taylor
  To ask the Secretary of State for Health if he will list the Government's commitments on changes in out-patient and in-patient waiting list numbers and waiting times. [108160]

  Mr. Denham
  We are determined to reduce in-patient and out-patient waiting lists and times. The waiting list is now 87,000 below the level inherited. We remain on track to achieve our manifesto commitment to reduce waiting lists by 100,000 from the level inherited. As waiting lists have fallen, so have waiting times. The average waiting time of those on the list was 12 weeks at the end of November 1999—three weeks less than at June 1998.

  We are taking action to reduce out-patient waiting times. Patients referred urgently with suspected breast cancer can now be reassured they will not wait longer than two weeks for an out-patient appointment. We are also determined to cut the number of patients waiting over 13 weeks for a first out-patient appointment.

  Steroids
  Dr. Iddon
  To ask the Secretary of State for Health if the National Institute for Clinical Excellence is investigating the inappropriate prescribing on a long-term basis of steroidal drugs. [108609]

  Mr. Denham
  This topic is not included in the current work programme for the National Institute for Clinical Excellence.

  Birmingham Heath Authority area

  West midlands

  England

  Patients waiting for cardiothoracic surgery at September 1999.

  468

  1,948

  14,889

  Total finished consultant episodes where an operation was recorded and main specialty was cardiothoracic surgery in 1997–98.

  3,730

  6,497

  52,358

  Average waiting time of patients admitted for cardiothoracic surgery in the quarter July to September 1999 (days)

  81.5

  89.6

  118.1

  There has been major investment to provide additional cardiac surgery capacity in Birmingham and the West Midlands.

  Shipman Inquiry
  Dr. Iddon
  To ask the Secretary of State for Health (1) if he will ask the public inquiry into the Shipman case to look at the practicalities of tracking controlled drugs, from all points of purchase to all points of use, including use(a) in hospitals and hospices and (b) in the community; [108615]

  (2) if he will investigate ways of recovering unused controlled drugs from a patient's home when it is known that the patient is no longer in need of them. [108613]

  Mr. Denham
  The terms of reference for the inquiry into the issues raised by the case of Dr. Shipman are broad. The inquiry is invited to examine the role and conduct of the statutory bodies and authorities concerned, and to consider the appropriateness of the response of these organisations to the information available about Harold Shipman's clinical practice. They are further invited to make recommendations for safeguarding patients and on any related matter which the public interest may require.

  Copies of the terms of reference of the inquiry are available in the Library.

  Cardiothoracic Surgery
  Dr. Lynne Jones
  To ask the Secretary of State for Health how many patients are waiting for cardiothoracic surgery in(a) Birmingham, (b) the West Midlands, (c) England and Wales and (d) the United Kingdom; what are the average numbers of operations carried out; what are the average waiting times for such surgery in each of these areas; and if he will make a statement on action being taken to increase capacity in each area. [108863]

  Mr. Denham
  The information requested is given in the table.

  On 18 October 1999, the Secretary of State announced that £50 million will be made available nationally to increase heart operations by 10 per cent. over the next

  197W
  two years. The extra money will pay for additional bypass graft procedures and angioplasties by March 2002. This investment will enable more patients with heart disease to get easier and faster access to treatment.

  The National Service Framework on Coronary Heart Disease is due to be published shortly. This will be the first comprehensive plan to deal with all aspects of CHD and will set out an ambitious 10-year strategy to provide a modern service with fair and fast access to high quality services.

  Matters for Wales, Scotland and Northern Ireland are for their respective administrations.

  Primary Care Groups
  Mr. Amess
  To ask the Secretary of State for Health if he will make a statement on the circumstances surrounding the establishment by Southend Primary Care Group of a Primary Care Trust with special reference to the recent ballot of general practitioners in the area. [108871]

  Mr. Denham
  [holding answer 7 February 2000]: As indicated in national guidance, the application to establish a Primary Care Trust (PCT) in Southend was considered against national criteria. Local consultation was carried out by South Essex Health Authority in accordance with the requirements set out in the Primary Care Trusts (Consultation on Establishment, Dissolution and Transfer of Staff) Regulations 1999 (SI 1999–2337). The resulting consultation report indicated that broad local support was evident for the Southend PCT application.

  A recent letter, which approves the establishment of Southend PCT, clearly sets out an expectation that the PCT will be able to demonstrate an increased level of support and commitment from local general practitioners before becoming operational this April. In addition, all PCTs are expected to ensure that GPs, nurses and other front-line staff are fully engaged and committed to delivering the service improvements that PCT status will attain for their communities.

  Royal Marsden and Christie Hospitals
  Mr. Brady
  To ask the Secretary of State for Health, pursuant to his answer of 2 February 2000,Official Report, column 629W, concerning funding of the Christie Hospital and the Royal Marsden Hospital, if he will provide a breakdown of the other sources mentioned in his answer. [109219]

  Mr. Denham
  [holding answer 8 February 2000]: The breakdown of the "other sources" is as follows:

  Christie Hospital

  Private patients—£3.711 million

  North West Medical Physics Services to Non NHS bodies—£367,000

  Commercially Sponsored clinical Trials—£1.434 million

  Residential Accommodation—£98,000

  Catering Income—£399,000

  Car Parking—£84,000

  Day Nursery—£226,000

  Gift Shop—£155,000

  Bank Interest—£108,000

  Other Various—£14,000

  Total—£6.596 million

  198W
  Royal Marsden Hospital

  Private patients—£15.542 million

  Hire of Conference Centre and course fees—£300,000

  Provision of occupational Health Service to other NHS Trusts and associated institutes—£360,000

  Accommodation (staff)—£500,000

  Accommodation (patients relatives)—£100,000

  Catering (staff and visitors)—£550,000

  Car parking (staff and visitors)—£130,000

  Staff Day Nursery—£210,000

  Photography and Printing Services—£130,000

  Pharmacy Income—£150,000

  Distinction Awards Funding—£860,000

  Diagnostic Services for other NHS Trusts—£400,000

  Funding for flexible trainees and NMET—£200,000

  Collections of Private Income Fees—£110,000

  Tx from donation reserve (depreciation on donated assets)—£1.063 million

  Other Various—£247,000

  Total—£20.852 million.

  NHS Staff
  Mr. Matthew Taylor
  To ask the Secretary of State for Health what has been the average pay rise for NHS nurses in each of the years 1985–86 to 1999–2000; and what has been the average pay rise for the same years for NHS ancillary staff, including(a) hospital porters, (b) catering staff, (c) cleaning staff, (d) finance staff and (e) other ancillary staff; and if he will make a statement. [108900]

  Mr. Denham
  [holding answer 8 February 2000]: It is not possible to identify separately hospital porters, catering and cleaning staff and finance staff. The table sets out across the board increases for nurses and ancillary workers for the years requested. Information is not yet available for ancillary staff for 1999–2000 as the staff side is still consulting its membership on the pay offer.

  Percentage

  Nurses

  Ancillary staff

  1985–86

  12.1

  4.7

  1986–87

  8.2

  6

  1987–88

  9.1

  5

  1988–89

  8.8

  5.4

  1989–90

  7.7

  6.5

  1990–91

  10.1

  7.8

  1991–92

  10.8

  10.4

  1992–93

  6.3

  4.93

  1993–94

  1.5

  1.5

  1994–95

  3

  2.39

  1995–96

  3

  —

  1996–97

  2.8

  2.8

  1997–98

  3.3

  3.3

  1998–99

  3.8

  3.8

  1999–2000

  4.7

  —

  Mr. Matthew Taylor
  To ask the Secretary of State for Health how many people work for the NHS, broken down by (a) doctors, (b) nurses, (c) managers, (d) porters, (e) catering staff, (f) finance staff, (g) cleaning staff, (h) maintenance staff and (i) others. [108902]
  199W
  Mr. Denham
  [holding answer 8 February 2000]: The information requested is shown in the table.

  NHS Hospital and community health services (HCHS): All staff within the NHS broken down by specific groups in England, as at 30 September 1998

  Numbers (headcount)

  Whole time equivalents

  Non-medical staff Total

  878,750

  707,200

  Administration and estates staff total

  198,540

  167,700

  of which:

  Managers

  22,690

  21,850

  Clerical and Administrative1

  162,520

  —

  Maintenance and works

  13,100

  12,720

  Nursing, midwifery and health visiting staff total

  421,750

  332,200

  of which:

  Managers

  4,960

  4,720

  Support staff2 Total

  91,160

  65,300

  All Other non medical staff total

  167,300

  142,000

  of which:

  Managers

  2,210

  2,090

  Doctors total3,4

  91,840

  —

  Total practice staff5,6

  —

  101,000

  of which:

  Practice Nurse

  —

  10,360

  Direct Patient Care

  —

  1,740

  Administrative and Clerical

  —

  48,880

  Other

  —

  340

  1 Clerical and administrative staff include all finance staff.

  2 Support staff include all porters, catering and cleaning staff.

  3 Hospital, Public Health Medicine and Community Health Service Staff, excludes medical staff working as Hospital Practitioners or Clinical Assistants most of whom also work in General Practice.

  4 All practitioners includes Unrestricted Principles, PMS Contacted GPs, PMS Salaried GPs, Restricted Principles, Assistants, GP Registrars, Salaried Doctors (para 52 SFA) and PMS Other.

  5 Total Practice Staff (numbers) is rounded to the nearest hundred.

  6 WTE Practice Staff total does not include 62 WTE Community Nurses who are seconded.

  Notes:

  1. PMS Pilots. These are however included in Total Practice Staff (number).

  2. "Other" includes staff employed by SHAs, OSAs and other centrally based services.

  3. Figures are rounded to the nearest ten.

  4. Due to rounding totals may not equal the sum of component parts.

  Sources:

  1. Department of Health Non-Medical Workforce Census.

  2. Department of Health Medical and Dental Workforce Census.

  3. Department of Health General and Personal Medical Services Statistics.

  Insulin Pens
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Health if he will announce his decision on whether insulin pen needles and reusable insulin injection pens can be prescribed on the NHS. [109667]

  Mr. Denham
  We have agreed that, with effect from 1 March, insulin pen needles and certain reusable insulin pens should be prescribable by general practitioners on the National Health Service.

AGRICULTURE, FISHERIES AND FOOD

  Chicken Imports
  Mr. Andrew George
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the control of chicken imports into the UK from outside the European Union in relation to(a) animal welfare and (b) human health. [103291]

  Ms Quin
  In relation to public health, all consignments of fresh meat and poultry meat imported into the UK, whether from other EU member states or third countries, must have been produced in accordance with harmonised Community rules. These rules include the licensing, structural and veterinary supervision requirements to be applied in abattoirs, cutting plants and cold stores. Slaughterhouses in third countries have to comply with hygiene standards at least equivalent to those which apply in the EU before imports can be permitted.

  Ensuring that third countries supplying the EU market comply with Community requirements is the responsibility of the European Commission. The Commission's Food and Veterinary Office is responsible for arranging and carrying out inspections in those countries, but national officials can and do report to the Commission on investigations they may have carried out. All consignments of fresh meat and poultry meat imported from third countries are subject to veterinary checks, including checks on accompanying veterinary health certification, on entering the EU to ensure that conditions of import have been complied with and that they have remained in a satisfactory condition during transport.

  It would not be compatible with World Trade Organisation rules to ban imports of meat because of the animal welfare standards under which it had been produced. The Government are considering how to promote wider international consensus on farm animal welfare. The EU, with UK support, is seeking greater recognition of farm animal welfare considerations in WTO rules.

  Beef on the Bone Ban
  Mr. Yeo
  To ask the Minister of Agriculture, Fisheries and Food what assessment he has made of the cost of the ban on beef on the bone to(a) the beef industry, (b) local government and (c) central Government from the date the ban came in to force until the date the Minister announced the lifting of the ban. [101736]

  Mr. Nick Brown
  [holding answer 7 December 1999]: No estimate has been made of the actual costs incurred by the beef industry. This would involve a multifactorial analysis which would depend on many untestable assumptions. It is doubtful if authoritative estimates could be made.

  Nor is it possible to identify reliably the costs of the controls to local or central government.

  Memorandum of Understanding
  Mr. Paice
  To ask the Minister of Agriculture, Fisheries and Food if he will make a statement on the surveillance project in the Memorandum of Understanding with the French Government, indicating(a) how the identification of animals related to those born

  201W
  after 1 January 1996 will be achieved, (b) if the animals so identified are removed from the food chain on what basis the owner will be compensated and (c) in the case of animals so identified which are still in useful production if they will be prematurely slaughtered as part of the project. [101073]

  Ms Quin
  [holding answer 2 December 1999]: Under the surveillance proposed, State Veterinary Service (SVS) officials will identify the farms on which BSE cases born after 1 January 1996 were born. They will then investigate on those farms both the potential source of the infection and which other animals born around the same time might have been exposed to it.

  Animals over 30 months are not eligible for entry into the food chain but can be slaughtered with compensation under the over thirty months scheme. The occasions when animals born around the same time as a BSE case are themselves under 30 months are expected to be very rare, but they will be restricted and monitored.

  In these respects, the Memorandum of Understanding records action which HMG was in any case proposing to undertake.

  Beef (School Menus)
  Miss McIntosh
  To ask the Minister of Agriculture, Fisheries and Food which local authorities in England are serving British beef on their school menus. [106038]

  Ms Quin
  This information is not available centrally. However, the Minister wrote to all local authorities on 27 October 1999 encouraging them to serve British beef.

  Mr. Breed
  To ask the Minister of Agriculture, Fisheries and Food how many local authorities(a) have and (b) have not lifted the ban on beef in school meals. [106864]

  Ms Quin
  This information is not available centrally. However, the Minister wrote to all local authorities on 27 October 1999 encouraging them to serve British beef. According to Meat and Livestock Commission figures:(a) 108 out of 150 local authorities in England do not have a ban on beef;

  Table 2: Subsidy paymets to UK Farmers 1992–1997

  £ million

  1992

  1993

  1994

  1995

  1996

  1997

  Arable Area Payments Scheme

  0

  653

  816

  1,087

  1,116

  1,114

  Other crop subsidies (incl. set aside)

  184

  423

  240

  224

  182

  109

  Beef Special Premium

  45

  159

  193

  232

  295

  271

  Suckler Cow Premium

  99

  144

  178

  228

  286

  374

  Sheep Annual Premium

  437

  433

  391

  481

  329

  300

  Other Livestock subsidies

  6

  11

  7

  7

  626

  432

  Hill Livestock Compensatory Allowances

  154

  130

  111

  108

  166

  109

  Environmentally Sensitive Areas

  13

  21

  22

  33

  38

  46

  Other agri-environmental schemes

  10

  16

  34

  46

  49

  59

  Other subsidies1

  10

  8

  8

  8

  9

  9

  Total2

  957

  1,998

  2,002

  2,456

  3,095

  2,820

  1 Includes CAP, non-CAP and national payments.

  2 Excludes levies.

  Notes:

  1. Numbers may not add up due to rounding.

  2. Agriculture in the United Kingdom.
  202W
  (b) 42 out of 150 local authorities in England are continuing with some form of beef ban on school meals. Of these 22 have a total ban and 20 have primary school bans only.

  Agenda 2000
  Mr. Cox
  To ask the Minister of Agriculture, Fisheries and Food how many responses he has received to the consultation document, Agenda 2000: A New Direction for Agriculture; and if he will make a statement. [108015]

  Ms Quin
  We received 169 written responses. We also held 14 well-attended regional consultation meetings when attendees were able to make their points in person. Copies of the consultation responses have been placed in the main Ministry of Agriculture Library.

  These responses were taken into consideration in the final choices we made for the implementation of the discretionary areas of Agenda 2000.

  Farm Subsidies
  Mr. Paul Marsden
  To ask the Minister of Agriculture, Fisheries and Food, pursuant to his answer of 25 January 2000,Official Report, column 192W, if he will publish a breakdown of subsidy payments to farmers in (a) Shropshire and (b) the United Kingdom for each year from 1992 to 1997; and if he will make a statement. [107917]

  Ms Quin
  The breakdown of subsidy payments in Shropshire in the years 1994 to 1997, and the United Kingdom in the years 1992 to 1997, is set out in the tables as follows.

  Table 1: Subsidy payments to farmers in Shropshire 1994–1997

  £ million

  1994

  1995

  1996

  1997

  Arable Area Payments Scheme

  18.6

  16.7

  28.7

  23.2

  Beef Special Premium

  3.6

  4.7

  5.0

  5.7

  Suckler Cow Premium

  3.1

  2.5

  4.8

  4.0

  Sheep Annual Premium

  8.2

  8.8

  9.3

  5.1

  Hill Livestock Compensatory Allowances

  1.3

  1.3

  1.2

  2.2

  Environmentally Sensitive Areas

  0.8

  1.1

  1.3

  1.6

  Other agri-environmental schemes

  0.7

  0.3

  0.3

  1—

  Other subsidies2

  —

  0.2

  2.8

  1.4

  Total

  36.3

  35.5

  53.4

  43.2

  1 Less than 0.1

  2 Includes CAP, non-CAP and national payments.

  203W
  Mr. Sawford
  To ask the Minister of Agriculture, Fisheries and Food what was the average subsidy paid to each British fanner in the last year for which figures are available. [105991]

  Ms Quin
  The total amount of subsidies (less levies) paid to UK farmers in 1998 (the last year for which figures are available) was estimated to be £2,673 million. The total number of farm holdings (excluding minor holdings) in 1998 was 237,900. The average subsidy per farm holding was therefore just over £11,200. Information is held on a holding by holding basis, rather than farmer by farmer.

  This average includes those holdings upon which no subsidies were received.

  Farming (Berkshire)
  Mrs. May
  To ask the Minister of Agriculture, Fisheries and Food how many people in total were employed in agriculture in Berkshire for the years(a) 1996–97, (b) 1997–98 and (c) 1998–99. [108420]

  Ms Quin
  [holding answer 3 February 2000]: The information requested is provided in the table.

  Labour force on main agricultural holdings: Berkshire

  Year

  Total labour force

  1996

  2,229

  1997

  2,162

  1998

  2,254

  1999

  2,107

  Source:

  Agricultural and Horticultural Census

  In 1998 fundamental changes were introduced to the labour questions of the census. It appears that this change may have led to the recording of additional labour that were not previously included in the returns. Caution is therefore advised when comparing the 1998 and 1999 results with previous years.

  Research and Development
  Joan Ruddock
  To ask the Minister of Agriculture, Fisheries and Food what was Government spending on research and development relating to(a) organic farming, (b) agricultural genetic engineering and (c) agricultural biotechnology, at 1999 prices, from 1 April 1999 to the latest available date. [108638]

  Ms Quin
  [holding answer 4 February 2000]: Planned MAFF spending in 1999–2000 in these areas is as follows:

  £ million

  (a) Organic farming

  2.017

  (b) Agricultural genetic engineering (including risk
  assessment and relevant veterinary research)

  3.572

  (c) Agricultural biotechnology

  ca 24.0

  Notes:

  1. Organic farming benefits also from much of the research the Ministry undertakes on aspects of conventional farming. In 1999–2000, MAFF plans to spend some £8 million on biological control techniques, plant health, animal welfare and wildlife conservation on farms.

  2. Funding is also provided by the research councils and other Government Departments for these topics.
  204W
  In the time available, it is not possible to provide figures for actual in-year spending to date from 1 April 1999. These would, in any event, reflect the particular phasing of payments for individual projects, and the invoicing arrangements across a substantial number of contractors, and thus be potentially misleading.

  Media Releases
  Mr. Baker
  To ask the Minister of Agriculture, Fisheries and Food what was the average cost of issuing a media release from his Department in the last 12 months. [108890]

  Mr. Morley
  [holding answer 8 February 2000]: The average cost of issuing a media release, using latest figures available, is £244. Of which, £76 is the cost of production and £168 the cost of distribution.

  Ministerial Meetings
  Mr. Yeo
  To ask the Minister of Agriculture, Fisheries and Food (1) if he will list the dates since 1 August 1999 on which he (i) met and (ii) spoke by telephone with the (a) Spanish Minister for Agriculture, Fisheries and Food, (b) the Irish Minister for Agriculture and Food, (c) the Italian Minister for Agricultural Policies, (d) the Luxembourg Minister for Agriculture, Viticulture and Rural Development and (e) the Dutch Minister for Agriculture, Nature Management and Fisheries; [108425]

  (2) if he will list the dates since 1 August 1999 on which he (i) met and (ii) spoke by telephone with the (a) Austrian Federal Minister for Agriculture and Forestry, (b) the Portuguese Minister for Agriculture, Rural Development and Fisheries, (c) the Finnish Minister for Agriculture, (d) the Swedish Minister for Agriculture, (e) the Agriculture Commissioner of the European Union and (0 the American Secretary of Agriculture; [108428]

  (3) if he will list the dates since 1 August 1999 on which he (i) met and (ii) spoke by telephone with (a) the Belgian Minister for Agriculture and Small and Medium Sized Businesses, (b) the Danish Minister for Food, Agriculture and Fisheries, (c) the German Minister for Food, Agriculture and Fisheries and (d) the Greek Minister for Agriculture. [108427]

  Mr. Nick Brown
  [holding answer 3 February 2000]: There are regular contacts between EU agriculture Ministers and the agriculture Commissioner within the margins of agriculture councils and at other times by telephone. In addition, there are regular contacts between officials acting on behalf of Ministers and the Commissioner.

  I plan to meet the American Secretary of Agriculture later this month.

  West Devon Meats
  Mr. Breed
  To ask the Minister of Agriculture, Fisheries and Food what were the reasons behind the decision to withdraw from West Devon Meats the contract to slaughter cattle under the over-thirty-months scheme. [101913]

  Ms Quin
  [holding answer 13 December 1999]: Contracts have been awarded to abattoir to slaughter over-thirty-months scheme (OTMS) animals, effective

  205W
  from 4 January 2000. Decisions were reached following a competitive tender under which bids were evaluated against objective criteria, including quality of service, price, ability to offer a dedicated service, ease of supervision, throughput and locations.

  While West Devon Meats scored reasonably well on most criteria, the abattoirs awarded contracts for the throughput and area for which West Devon Meats were considered will provide the service at significantly lower price than that tendered by West Devon Meats.

  Food Safety
  Mr. Kidney
  To ask the Minister of Agriculture, Fisheries and Food what responsibility his Department has for enforcement of food safety pending the establishment of the Food Standards Agency. [106066]

  Ms Quin
  Most food law enforcement is carried out by local authorities, and will continue to be after the Food Standards Agency is established. MAFF is responsible for the enforcement in England and Wales of fresh meat legislation. This is carried out in licensed premises by the Meat Hygiene Service, an executive agency of MAFF that will transfer to the Food Standards Agency. MAFF also enforces dairy hygiene controls at production holdings in England and Wales, and responsibility for this will also transfer to the Agency. MAFF's ongoing responsibilities after the establishment of the Food Standards Agency will continue to include the enforcement of some functions relevant to food safety, in particular on residues of pesticides and veterinary medicines and on animal health, in addition to some enforced by local authorities.

  Abattoirs
  Mr. Cox
  To ask the Minister of Agriculture, Fisheries and Food when he last placed an item on the agenda of the European Union Agricultural Minister's meetings relating to study of the hygiene and operating conditions of abattoirs in each of the member states. [107120]

  Ms Quin
  We supported the request by the Danish and Dutch delegations, at the June 1999 Agriculture Council, that the Commission review the operation of the meat inspection system established by the EU Fresh Meat Directive with the aim of basing inspection methods more on risk assessment principles. In response, the Commission undertook to carry out a wide-ranging review of the current meat inspection system. Encouragingly, discussions between my officials and Commission representatives on the ongoing exercise to consolidate and simplify existing EU food and veterinary legislation, including the meat hygiene Directives, have also indicated that the Commission sees risk-based inspection systems as the way forward.

  We have also drawn to the Commission's attention the concerns of the farming and meat sectors about over-regulation of the meat slaughtering and processing industries and about the apparent lack of uniformity in individual member states' application of Community rules on charging for meat inspections. We will continue to take every opportunity to press the Commission to modernise meat hygiene controls and to ensure that trade in the EU is carried out on a level playing field.

TRADE AND INDUSTRY

  Export Licences
  Mr. Chope
  To ask the Secretary of State for Trade and Industry on how many occasions export licence application 6078 was put before the Interdepartmental Committee; and what were the dates of the first and last such occasions. [108477]

  Dr. Howells
  Export licence application 6078 was put before the interdepartmental committee on one occasion, the meeting of 18 October 1999.

  HIPC Debt
  Ms Oona King
  To ask the Secretary of State for Trade and Industry how much(a) by value and (b) by percentage of the debt owed to the UK by HIPC countries is for defence-related business. [108708]

  Mr. Caborn
  Debt owed by Heavily Indebted Poor Countries to ECGD under Paris Club rescheduling arrangements amounts to £1.6 billion. In addition, non-rescheduled debt in arrears and current exposure is some £300 million. Much of the rescheduled debt relates to contracts entered into the 1970s and 1980s, when ECGD did not record exposure by the nature of the goods exported. However, recent researches indicate that the amount of debt, all rescheduled, currently owed by HIPCs and which resulted from military sales is only £12.7 million or 0.67 per cent. of the total.

  Ilisu Dam
  Mr. Brake
  To ask the Secretary of State for Trade and Industry when Balfour Beatty applied for export credit support in respect of the Ilisu Dam in Turkey; under what statutory provision the application(a) was made and (b) is being considered; and if he will place a copy of the application, together with all supporting documents, in the Library. [109004]

  Mr. Caborn
  Balfour Beatty's application was made under, and is being considered under, Section 1 of the Export and Investment Guarantees Act 1991.

  Under Exemption 13 of the Code of Practice on Access to Government Information, the application and its supporting documents are classified as "Third Party's Commercial Confidence" and therefore cannot be placed in the Library of the House.

  Deregulation
  Mrs. Curtis-Thomas
  To ask the Secretary of State for Trade and Industry, pursuant to his answer of 25 January 2000,Official Report, column 196W, on deregulation, what assessment he has made of the economic impact on business associated with the deregulation and contracting out orders listed. [108809]

  Mr. Byers
  [holding answer 7 February 2000]: It is not possible to give an assessment of the cumulative impact of all the deregulation orders as prior to August 1998 there was no requirement to carry out a full regulatory impact assessment on regulations expected to reduce costs to business.
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  As far as the orders made since that date are concerned, the Deregulation (Weights and Measures) Order 1999 is expected to save businesses involved in the manufacture, installation and repair of weighing and measuring equipment up to £5 million a year. The Deregulation (Pipelines) Order 1999 is expected to save oil and gas companies involved in laying pipelines up to £10,000 for each application for planning permission in respect of short pipes.

  ECGD
  Dr. Cable
  To ask the Secretary of State for Trade and Industry what assessment he has made of the impact on the ECGD of the recent decision to extend the number of countries which will be given ECGD cover only for productive expenditure; what contracts have been cancelled as a result of this decision; what plans he has to seek to extend this restriction to all low income countries; and what assessment he has made of the impact on the ECGD of such an extension. [108770]

  Mr. Caborn
  [holding answer 7 February 2000]: In view of the volume and nature of business previously supported by ECGD in the affected countries, the recent decision to extend the range of countries for which ECGD cover is available only for productive expenditure is likely to have only a limited impact on ECGD and its customers. No contracts have been cancelled and, as there are no plans at present to extend this restriction to other countries, no assessment of the impact on ECGD of such an extension has been made.

  Enterprise Grants
  Mr. Beith
  To ask the Secretary of State for Trade and Industry if guidelines have been issued for Enterprise grants and the revised form of regional selective assistance which came into operation on 1 January. [108505]

  Mr. Caborn
  [holding answer 7 February 2000]: The Government Offices and Business Links are currently distributing copies of the Enterprise Grant brochure (with application form) which provides applicants with details of the scheme's qualifying criteria, levels of grant and areas in which grant is available. Copies of the brochure have also been placed in the Libraries of the Houses. Regarding Regional Selective Assistance (RSA), new criteria will be issued when the Assisted Areas map is approved. Where interim arrangements for RSA applications are concerned, I refer the right hon. Member to the reply I gave to the right hon. Member for Caernarfon (Mr. Wigley) on 27 January 2000, Official Report, column 290W.

  Link Network
  Mr. Chidgey
  To ask the Secretary of State for Trade and Industry what assessment he has made of the effect on competition in the banking service sector of the break-up of the Link network. [108780]

  Dr. Howells
  [holding answer 8 February 2000]: In the first instance, it is a matter for the Director General of Fair Trading (DGFT) to consider the competition effects of changes to the LINK agreement. After 1 March, any changes can be considered by the DGFT under the prohibitions of the Competition Act 1998.
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  In addition, the Cruickshank Review is looking into competition in the banking sector.

  TransTec
  Mrs. Browning
  To ask the Secretary of State for Trade and Industry if he will list the serious issues mentioned in his press release of 20 January regarding the collapse of TransTec which the public interest requires to be investigated by independent inspectors. [109218]

  Mr. Byers
  [holding answer 8 February 2000]: The criteria for appointing inspectors are listed under Section 432(2) of the Companies Act 1985.

  Civil Servants (Courses)
  Mrs. Browning
  To ask the Secretary of State for Trade and Industry if he will place in the Library the criteria by which civil servants are financed by his Department for courses and related expenses that are not connected with their departmental employment. [109216]

  Mr. Byers
  [holding answer 8 February 2000]: The Department's present policy is to delegate the majority of its budget for training and development to local management units which are accountable for the use to which their resources are put.

  I have recently instigated a review of the guidance to managers to ensure value for money and that the training budget meets Departmental needs.

  Media Releases
  Mr. Baker
  To ask the Secretary of State for Trade and Industry what was the average cost of issuing a media release from his Department in the last 12 months. [108891]

  Mr. Byers
  [holding answer 8 February 2000]: The average cost of issuing media release in 1999 was £194.

  Minimum Wage (Northern Ireland)
  Mrs. Ellman
  To ask the Secretary of State for Trade and Industry if he will make a statement on the application of the minimum wage in Northern Ireland. [107696]

  Mr. Michael J. Foster
  To ask the Secretary of State for Trade and Industry if he will make a statement on the impact of the minimum wage in Northern Ireland. [107681]

  Mr. Alan Johnson
  The national minimum wage helps eradicate in-work poverty, in Northern Ireland as in the rest of the United Kingdom. Latest Office for National Statistics figures indicate that some 20,000 low-paid workers in Northern Ireland had already benefited from the introduction of the national minimum wage at the time of implementation (March-May 1999). We asked the independent Low Pay Commission to report on the impact of the introduction of the minimum wage and the Commission's report, with the Government's response, will be published shortly.

  EU Structural Funds (Northern Ireland)
  Judy Mallaber
  To ask the Secretary of State for Trade and Industry what consultation he has held relating to the future of EU structural funds allocated to Northern Ireland. [107682]
  209W
  Dr. Howells
  Throughout the negotiations on the new European Structural Funds Regulation my Department consulted with Ministers and officials of the Department of Finance and Personnel, Northern Ireland.

  Following the special deal agreed for Northern Ireland at the Berlin European Council, the Department of Finance and Personnel consulted my officials on their Structural Funds Plan, which was lodged with the Commission on 15 November 1999. Negotiations with the Commission on a new Community Support Framework are expected to begin soon.

  A public consultation was held to determine the United Kingdom's new eligible areas for Objective 2 European Funding. The consultation document was issued jointly on behalf of several Government Departments, one of which was the Department of Finance and Personnel, Northern Ireland.

  Low Pay (Northern Ireland)
  Mr. Pound
  To ask the Secretary of State for Trade and Industry if he will make a statement on low pay in Northern Ireland. [107698]

  Mr. Alan Johnson
  We introduced the national minimum wage and the Working Families Tax Credit to help eradicate low pay and lift workers out of in-work poverty, in Northern Ireland as in the rest of the United Kingdom. Latest Office for National Statistics figures indicate that some 20,000 low-paid workers in Northern Ireland had already benefited from the introduction of the national minimum wage at the time of implementation (March-May 1999). We estimate that some 50,000 working families in Northern Ireland have benefited from the Working Families Tax Credit. Latest Office for National Statistics figures indicate that some 20,000 low-paid workers in Northern Ireland had already benefited from the introduction of the national minimum wage at the time of implementation (March-May 1999).

SOCIAL SECURITY

  Income Support
  Mr. Willetts
  To ask the Secretary of State for Social Security what estimate he has made of the number of people moving from income support to(a) family credit and (b) working families tax credit who face combined marginal rates of taxation and benefit withdrawal of more than 100 per cent. as a result of the loss of income support for mortgage costs. [108762]

  Mr. Bayley
  The information is not available and could be obtained only at disproportionate cost.

  SERPS
  Mr. Willetts
  To ask the Secretary of State for Social Security how many people have paid both Class 1 and Class 2 National Insurance contributions towards SERPS in the last full year for which figures are available. [108004]

  Mr. Rooker
  Around 275,000 people accrued entitlement to additional pension under SERPS as a result of paying a combination of Class 1 and Class 2 contributions in 1996–97, the latest year for which figures are available.1
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  Assuming a similar number for the current year, we estimate that some 68,000 of these individuals may be affected by our proposals to base entitlement to the State Second Pension solely on Class 1 contributions. While we have no information about the level of their earnings from self-employment, we estimate that 18,000 of these will have Class 1 earnings in excess of £18,000.

  Source:

  1 Lifetime Labour Market Database

  Departmental Research Contracts
  Dr. Harris
  To ask the Secretary of State for Social Security, pursuant to his answer of 21 December 1999,Official Report, columns 541–42W, what restrictions were placed on contractors carrying out research projects funded by his Department in 1999 in respect of them discussing their findings with journalists (a) before and (b) after publication. [108202]

  Mr. Rooker
  Dissemination of social research findings commissioned as part of the Department's research programme is governed by the standard conditions for research grants. These state:"Any publication of research material … is subject to the prior consent of the Secretary of State which consent shall not be unreasonably withheld" (para 12.2).

  Publication refers not only to reports but also includes any oral presentation (para 1—Interpretation). Once published, the Department actively promotes the dissemination of its research.

  The Department's Communications Directorate contracts its research work through the Central Office of Information (COI). The COI contract specifically states that
  "the Contractor shall not reproduce, publish or supply any such material to any party other than COI without the prior written approval of COT".

  COI would not give that permission without first consulting us. We would not normally give that permission before the results had been published. After publication, in most cases we would ask researchers if they are contacted by journalists to refer them to the Department's Press Office.

  Housing Benefit
  Mr. Willetts
  To ask the Secretary of State for Social Security (1) what changes to Housing Benefit have been proposed by the Housing Benefit Simplification and Improvement Project; and what plans he has to implement them; [108614]

  (2) on what date he will publish the report of the Housing Benefit Simplification and Improvement Project. [108605]

  Angela Eagle
  The Housing Benefit Simplification and Improvement Project was set up with local authority representatives to look at ways of simplifying and improving the delivery of Housing Benefit. The work of the project is being carried forward in a number of ways, including initiatives in this year's spending review. The planned Housing Green Paper will also address issues highlighted by the project work. There are no plans to publish a report of the project.
  211W
  Mr. Colman
  To ask the Secretary of State for Social Security (1) what comparative research his Department has undertaken into the performance standards of local authority housing benefit administration and that provided by private sector contractors; [108987]

  (2) what advice is offered by his Department to local authorities on dealing with private sector providers of housing benefit administration services which fail to achieve agreed performance standards. [108986]

  Angela Eagle
  The Department has not undertaken comparative studies of the performance standards of local authorities' administration of Housing Benefit and that provided by private sector contractors.

  The Benefit Fraud Inspectorate will collect information on standards of administration across all authorities in the course of its inspection cycle. No advice has been offered to authorities specifically on how to deal with private providers who fail to achieve agreed performance standards as these are matters for local decision in the light of available evidence. However, in August 1998, the Department issued to all local authorities good practice guidance on the preparation of Housing Benefit administration for competitive tendering.

  Mr. Colman
  To ask the Secretary of State for Social Security if he will assess the benefits of removing scrutiny of the effectiveness of housing benefit administration from the remit of the Benefit Fraud Inspectorate and setting up a separate agency to focus on aspects other than fraud. [108985]

  Angela Eagle
  We attach great importance to there being a comprehensive end-to-end review of local authorities' Housing Benefit operations in which the effectiveness of both benefit administration and counter-fraud work are complementary factors in the assessment of overall performance.

  The responsibility of the Benefit Fraud Inspectorate is to report on the administration of Social Security across both central government agencies and local authorities, with a particular emphasis on standards of counter-fraud and security performance. The Inspectorate's reports on Housing Benefit will continue to reflect the fact that both security and accuracy are at the heart of effective benefit administration.

  CSA and Benefits Agency Staff
  Dr. Lynne Jones
  To ask the Secretary of State for Social Security how many employees in(a) the CSA and (b) the Benefits Agency in each of the past five years have received (i) sick pay at pension rate and (ii) early retirement on ill health grounds; and what proportion of staff these figures represent. [108862]

  Angela Eagle
  The information requested is not available. Such information as is available is in the tables.

  Total number of staff in the Child Support Agency and Benefits Agency receiving sick pay at nil rate

  Number of staff

  Year

  Child Support Agency

  Benefits Agency

  1998

  277

  7,670

  1999

  236

  9,083

  212W

  Total number of staff retiring from the Child Support Agency and Benefits Agency on medical grounds and the percentage of workforce

  Child Support Agency

  Benefits Agency

  Year

  Number of staff

  Percentage of the workforce

  Number of staff

  Percentage of the workforce

  1996

  52

  0.59

  450

  0.55

  1997

  31

  0.33

  347

  0.45

  1998

  29

  0.32

  311

  0.41

  1999

  22

  0.23

  228

  0.29

  Notes:

  1. The system is unable to specifically identify staff who are in receipt of sick pay at pension rate. It is, however, able to give the number of staff who are on sick leave at nil pay rate which includes those getting sick pay at pension rate.

  2. All information about the components of salary from before 1996 has now been archived.

  Source:

  Financial and Management Information System (FAMIS)

  Rents
  Miss Geraldine Smith
  To ask the Secretary of State for Social Security if he will list the 10 local authority areas with the lowest single room rent payable authorised by rent officers. [109186]

  Angela Eagle
  The information is not available. However, the Department of the Environment, Transport and the Regions publication "Rent Officers Statistics" provides figures of the average weekly Single Room Rent for each London Borough, and for the counties of England and Wales. Summary statistics are also available at Government Office Region and national level. The publication of these statistics is quarterly, and a copy is placed in the Library. The latest publication covers the first quarter of 1999.

  Benefits
  Mr. Levitt
  To ask the Secretary of State for Social Security (1) what benefits are available to persons in full-time employment but on term-time only contracts for the periods between terms; [109180]

  (2) if Jobseeker's allowance is available to people on full-time but term-time only employment contracts for periods between terms. [109179]

  Angela Eagle
  Both Jobseeker's Allowance and Income Support are available during school holiday periods to people whose employment contracts are formally terminated at the end of the school term.

  Neither Jobseeker's Allowance nor Income Support are normally paid to those who have ongoing employment contracts which only require them to work during term-time if they work for 16 hours or more a week on average. The Court of Appeal has recently confirmed that school ancillary workers who are not entitled to Jobseeker' s Allowance (or Income Support) during term-time because of the hours they work are also not entitled to those benefits during school holiday periods.

  Housing Benefit and Council Tax Benefit, which are intended to help people with their rent and council tax, can be paid to people on full-time, ongoing, term-time-only employment contracts during term-time as

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  well as during the school holiday periods. Working Families Tax Credit, payable through the tax system for working people with children, is also available.

  Pensioners Income
  Mr. Cousins
  To ask the Secretary of State for Social Security when he will complete his review of savings limits, and the savings tariff income schedule, that govern entitlement to the minimum pensioners income guarantee. [109014]

  Mr. Rooker
  We made a commitment in the pensions Green Paper, "Partnership in Pensions", to give "greater rewards" to those individuals who have made provision for their retirement. We will bring forward our proposals during this Parliament.

  Family Credit
  Mr. Cousins
  To ask the Secretary of State for Social Security if he will estimate the number of claims of family credit that were agreed to in the two months prior to the introduction of the Working Families Tax Credit. [109015]

  Angela Eagle
  In the two months prior to the introduction of Working Families Tax Credit in October 1999, there were 248,000 awards of Family Credit.

  Notes:

  1. Based on claims with a start date between I August 1999 and 30 September 1999.

  2. Figure has been rounded to the nearest thousand.

  3. 5 per cent. sample, therefore subject to sampling error.

  Source:

  Family Credit 5 per cent. sample.

  Departmental Secondees
  Mr. Willis
  To ask the Secretary of State for Social Security how many staff were seconded from the private sector to his Department in(a) May 1997 to April 1998, (b) May 1998 to April 1999 and (c) May 1999 to the latest date for which figures are available, stating in each case the companies from which staff have been seconded. [109293]

  Mr. Rooker
  Secondments and attachments are part of the Interchange Initiative, which promotes the exchange of people and good practice between the Civil Service and other organisations. All sectors of the economy are involved: Voluntary, Education, Health, Public and Private. Interchange is a key component of the reform agenda. The Modernising Government White Paper committed us to increasing interchange, in particular by bringing in more people on secondment and sending more of our people out.

  For the periods in question, three private sector staff are recorded as having been seconded to the Department. One was from the Guardian Media Group plc between September 1997 and December 1997, one from Sacker and Partners between October 1997 and February 1998, and the third from CSL Managed Services between August 1999 and February 2000. Other inward secondments of three months or more recorded centrally in the above periods were mainly from local government and other parts of the public sector outside the civil service.

  State Second Pension
  Mr. Cousins
  To ask the Secretary of State for Social Security if the state second pension will allow for credits of qualifying contributions for periods of(a) contributory jobseeker's allowance, (b) income-related jobseeker's allowance and (c) low income, including non-state pension income, in the five years before the statutory retirement age. [109016]

  Mr. Rooker
  The State Second Pension is designed for those who are employed, particularly low earners, and those who are unable to work regularly due to caring responsibilities or long-term disability. Individuals will not be able to accrue entitlement to the State Second Pension by virtue of receiving contributory or income-related Jobseeker's Allowance. As with people in other age groups, those in the five years before the statutory retirement age will be able to build up entitlement to the State Second Pension if they have a low income from employed earnings at or above the Lower Earnings Limit, through qualifying caring responsibilities or long-term disability.

TREASURY

  Working Families Tax Credit
  Ms Kelly
  To ask the Chancellor of the Exchequer what estimate he has made of the additional cost to the Exchequer of providing the working families tax credit to couples with children if couples split their total earnings in half and the credit is calculated on each half. [104867]

  Dawn Primarolo
  The estimated expenditure on the Working Families Tax Credit for 2000–01, the first full year of the credit, is £4.7 billion. If each partner in a couple received the full amount of credits, and each had an award based on half the couple's earnings, the expenditure would increase to over three times this figure. Lone parents would be unaffected.

  Mr. Kidney
  To ask the Chancellor of the Exchequer what estimate he has made of the numbers of families who will be(a) eligible to receive, (b) in receipt of and (c) receiving working families tax credit via their pay packet by October 2000. [107260]

  Dawn Primarolo
  Estimates for 2000–01, the first full year of the Working Families Tax Credit (WFTC), consistent with the Pre-Budget Report, are given:Number of families in receipt of the Working Families Tax Credit—1.4 million
  Number of families receiving the Working Families Tax Credit through the wage packet—840,000

  No estimate has been made of the total number of families eligible to receive WFTC through the wage packet.

  Dr. Cable
  To ask the Chancellor of the Exchequer if he will estimate the impact on the total payments of Working Families Tax Credit of a national minimum wage of(a) £3.80 and (b) £4.00. [108371]

  Dawn Primarolo
  The estimated reductions in expenditure on the Working Families Tax Credit in 2000–01, the first full year of the credit, are given in the table.
  215W

  National minimum wage

  Reduction in expenditure (£ million)

  £3.80 per hour

  15

  £4 per hour

  30

  These estimates do not take account of any consequential labour market behavioural effects and are on the basis of current national minimum wage rates.

  Mr. Levitt
  To ask the Chancellor of the Exchequer under what circumstances working families tax credit is available to people on full-time but term-time only employment contracts for the periods between terms. [109178]

  Dawn Primarolo
  Working Families Tax Credit (WFTC) may be available to people during the periods between terms either if they apply during term time and the 26-week period of the award spans the period between terms, or if they apply for the tax credit during the holiday period and they have on-going, "term-time only" contracts. WFTC is not available to people who apply for the tax credit during the period between terms, but whose contracts formally terminated at the end of the previous term.

  Mr. Burgon
  To ask the Chancellor of the Exchequer what steps the Government are taking to publicise the working families tax credit in Northern Ireland. [107690]

  Dawn Primarolo
  The WFTC TV and press publicity campaign was launched in early September throughout England, Scotland, Wales and Northern Ireland and ran until the end of November. In Northern Ireland, television advertisements ran on Ulster TV, Channel 4, Channel 5 and a number of 'satellite' channels. Press advertisements ran in the Northern Irish press, the national newspapers and women's magazines.

  In addition, I led a conference in Belfast for information providers to explain WFTC and DPTC, and provided a forum for questions and answers.

  Local publicity included mailshots to relevant advisory bodies, followed up by presentations to voluntary and community groups.

  National Insurance Contributions (Benefits in Kind)
  Mr. Pickles
  To ask the Chancellor of the Exchequer what plans he has under Part IV of the Child Support, Pension and Social Security Bill to extend national insurance contribution to benefits in kind which include (a) vaccination against influenza, (b) educational scholarships, to children of employees, (c) taxis provided for the security of late working employees, (d) worker children's nurseries, (e) personal safety alarms, (f) private medical insurance, (g) staff Christmas parties where the amount exceeds £75 per head, (h) membership of a sporting facility and (i) membership of the employer's sporting facilities, where these are open to the general public paid for by the employer. [107114]

  Dawn Primarolo
  A preliminary guidance leaflet, "Class 1A National Insurance Contributions on Benefits in Kind" CWG5, containing a table setting out the tax and proposed national insurance treatment of the majority of 216W
  benefits in kind has been sent to all employers in the new annual pack. A copy is available in the Library of the House.

  Departmental Research Contracts
  Dr. Harris
  To ask the Chancellor of the Exchequer, pursuant to his answer of 16 December 1999, Official Report, column 300W, what restrictions were placed on contractors carrying out research projects funded by his Department in 1999 in respect of them discussing their findings with journalists (a) before and (b) after publication. [108194]

  Miss Melanie Johnson
  I refer the hon. Member to the reply I gave him on 16 December 1999,Official Report, column 300W.

  Heavily Indebted Poor Countries Initiative
  Ms Oona King
  To ask the Chancellor of the Exchequer how the Export Credits Guarantee Department's share of the future debt write-offs, announced by him, will be financed; and where the money will come from. [108717]

  Miss Melanie Johnson
  The costs of providing the extra bilateral relief over and above the amounts due to the UK's participation in the HIPC initiative will be met by the Department for International Development from resources additional to the existing aid budget.

  Arms Exports
  Dr. Cable
  To ask the Chancellor of the Exchequer how much of the debt owed to the United Kingdom by highly indebted poor countries relates to defence-related business expressed in (a) cash terms and (b) as a proportion of total debt. [108767]

  Mr. Caborn
  I have been asked to reply.

  Debt owed by Heavily Indebted Poor Countries (HIPCs) to ECGD under Paris Club rescheduling arrangements amounts to £1.6 billion. In addition non-rescheduled debt in arrears and current exposure is some £300 million. Much of the rescheduled debt relates to contracts entered into during the 1970s and 1980s, when ECGD did not record exposure by the nature of the goods exported. However recent researches indicate that the amount of debt, all rescheduled, currently owed by HIPCs in respect of defence-related business is £12.7 million or 0.67 per cent. of the total owed.

  Mr. Streeter
  To ask the Chancellor of the Exchequer what criteria were used for selecting the countries that will no longer be supplied with military equipment under the guarantee of the Export Credits Guarantee Department. [109201]

  Mr. Caborn
  I have been asked to reply.

  My right hon. Friend the Chancellor of the Exchequer announced on 11 January 2000 an extension to the UK's unilateral ban on export credits in respect of "unproductive expenditure" to include a further 22 countries. The additional countries are those which are allowed to borrow on highly concessional terms from the World Bank—the so called "IDA only" countries. These

  217W
  countries, while they do not have an historically large debut burden, can ill afford to take on new burdens of commercial loans for unproductive expenditure.

  This built on the earlier initiative announced at the 1997 Commonwealth Finance Ministers' meeting in Mauritius, which applied to the so called Heavily Indebted Poor Countries. The ban now applies to 63 countries: a full list is below.

  Applications for ECGD cover of projects in these countries will be measured against whether they meet the following indicative criteria:

  assist social and economic development; or

  be of maximum benefit to areas most affected by poverty; or

  tackle problem areas where private investment is not available; or

  wherever possible, earn foreign exchange; or encourage viable self-financing projects.

  These principles need not necessarily preclude ECGD support for the sale of defence or dual use equipment, provided that such equipment is, for example, deemed essential for national security, or required to combat the drugs trade, piracy, smuggling etc. Support for projects must be cleared with the Department for International Development, who must be satisfied that the expenditure is consistent with the above.

  1. Afghanistan

  2. Albania

  3. Angola

  4. Bangladesh

  5. Benin

  6. Bhutan

  7. Bolivia

  8. Burkina Faso

  9. Burundi

  10. Cambodia

  11. Cameroon

  12. Cape Verde

  13. Central African Republic

  14. Chad

  15. Comoros

  16. Cote d'Ivoire

  17. Democratic Republic of Congo

  18. Djibouti

  19. Equatorial Guinea

  20. Eritrea

  21. Ethiopia

  22. Ghana

  23. Guinea

  24. Guinea-Bissau

  25. Guyana

  26. Haiti

  27. Honduras

  28. Kenya

  29. Kiribati

  30. Lao People's Democratic Republic

  31. Lesotho

  32. Liberia

  33. Madagascar

  34. Malawi

  35. Maldives

  218W

  36. Mali

  37. Mauritania

  38. Mongolia

  39. Mozambique

  40. Myanmar

  41. Nepal

  42. Nicaragua

  43. Niger

  44. Republic of Congo

  45. Republic of Yemen

  46. Rwanda

  47. Samoa

  48. Sao Tome and Principe

  49. Senegal

  50. Sierra Leone

  51. Solomon Islands

  52. Somalia

  53. Sri Lanka

  54. Sudan

  55. Tajikistan

  56. Tanzania

  57. The Gambia

  58. Togo

  59. Tonga

  60. Uganda

  61. Vanuatu

  62. Vietnam

  63. Zambia

  EU Appropriation Orders
  Mr. Mitchell
  To ask the Chancellor of the Exchequer, pursuant to his answer of 6 December 1999, Official Report, column 448W, concerning Transfer of Appropriation Orders approved by or awaiting approval by the Council of Ministers, if he will list for each application from 1 July (a) the reference and original purpose and amount, (b) the reasons for non-implementation of the 1999 Budget line, (c) the purpose for which the application was made and (d) the total sum likely to be transferred by this means for the financial year 1999. [108738]

  Miss Melanie Johnson
  Details of all transfers of appropriations dated up to 30 September 1999, plus the "Notenboom" ("omnibus") transfer of 11 October 1999, have been deposited and are available in the House of Commons Library. Transfers since that date will be deposited shortly in compliance with the usual procedures, when all the relevant documents have been received.

  Gardening Leave
  Mr. Maude
  To ask the Chancellor of the Exchequer how many officials in (a) Her Majesty's Treasury, (b) Her Majesty's Customs and Excise and (c) the Inland Revenue are currently on gardening leave. [108737]

  Miss Melanie Johnson
  None.

  Cigarettes (Taxation)
  Mr. Barron
  To ask the Chancellor of the Exchequer what was the proportion of the average retail price taken
  219W
  in tax for each of the last 10 years for a pack of 20 cigarettes in (a) the United Kingdom, (b) Belgium and
  (c) Luxembourg. [109099]

  Dawn Primarolo
  The table shows the proportion of the price taken in tax (excise duty and VAT) for a pack of 20 cigarettes in United Kingdom, Belgium and Luxembourg in the most popular price category. The figures relate to January each year. It is not possible to provide the figures for earlier than January 1993.

  Percentage

  Year

  United Kingdom

  Belgium

  Luxembourg

  1993

  75

  73

  67

  1994

  76

  75

  69

  1995

  78

  75

  69

  1996

  78

  75

  69

  1997

  79

  74

  69

  1998

  79

  74

  69

  1999

  79

  75

  69

  Source:

  European Commission excise duty tables for data on Belgium and Luxembourg.

  Minimum Wage
  Judy Mallaber
  To ask the Chancellor of the Exchequer how many (a) women and (b) men in Amber Valley are in receipt of the national minimum wage. [109040]

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

  Letter from Tim Holt to Judy Mallaber, dated 9 February 2000:
  As the Director of the Office for National Statistics (ONS), I have been asked to reply to your recent parliamentary question regarding the number of males and females who are in receipt of the national minimum wage in Amber Valley.
  Definitive estimates on the number of people that have benefited from the national minimum wage are not yet available. Currently available estimates for assessing the effect take data from both the New Earnings Survey and the Labour Force Survey and adjust them for known limitations in each. However, the latest adjusted estimates are based on data for the spring (March - May) 1999 Labour Force Survey and this period spans the introduction date for the national minimum wage legislation. As a result, the adjusted estimates may be giving a misleading picture of the effect of the minimum wage legislation since employees might legitimately have been earning below the minimum wage rates in March 1999.
  The currently available estimates were published in an ONS First Release on 14 October and show that the number of people earning below the minimum wage rates fell significantly between 1998 and 1999. A copy of this first release is available in the House of Commons Library.

  Deregulation
  Mrs. Curtis-Thomas
  To ask the Chancellor of the Exchequer what assessment he has made of the economic impact associated with each of the following deregulation orders and contracting out orders on business (a) the Deregulation (Building Societies) Order 1995 (S.I., 1995, No. 3233), (b) the Deregulation (Friendly Societies Act 1992) Order 1996 (S.I., 1996, No. 1188), (c) the Deregulation (Credit Unions) Order 1996 (S.I.,1996, No. 1189) and (d) the Deregulation (Industrial and Provident Societies) Order 1996 (S.I., 1996, No. 1738). [108779]
  220W
  Miss Melanie Johnson
  [holding answer 7 February 2000]: None.

  Government Spending
  Mr. Matthew Taylor
  To ask the Chancellor of the Exchequer if it is his policy to adhere to the existing planning total for overall Government spending in 2001–02; and if he will make a statement. [108976]

  Mr. Andrew Smith
  [holding answer 8 February 2000]: I refer the hon. Member to the answer I gave him on 11 November 1999, Official Report, column 781W.

  Earnings Statistics
  Mr. Matthew Taylor
  To ask the Chancellor of the Exchequer what is his estimate of the number of people earning (a) over £100,000 per annum, (b) over £500,000 per annum and (c) over £1 million per annum, for each year from 1979–80 to 1999–2000; and if he will make a statement. [108978]

  Miss Melanie Johnson
  [holding answer 8 February 2000]: The information requested falls within the responsibility of the Director of the Office for National Statistics. I have asked him to reply.

  Letter from Tim Holt to Mr. Matthew Taylor, dated 9 February 2000:
  As Director of the Office for National Statistics (ONS), I have been asked to reply to your recent parliamentary question regarding the number of people earning over £100,000 per annum, over £500,000 per annum and over £1 million per annum, for each year from 1979–80 to 1999–2000.
  The new Earnings Survey (NES), carried out in April of each year, is a 1 per cent. sample of all employees who are members of pay-as-you-earn (PAYE) schemes. It does not capture information relating to the self-employed. However, I am only able to provide estimates of the percentage of employees whose earnings lie within specified ranges, rather than numbers, because appropriate factors to gross the survey results to accommodate this sample frame are not currently available. Additionally, I am unable to provide data for financial years prior to 1997–98 since estimates of annual earnings are not available. Data for the 1999–2000 financial year will be available when the NES 2000 is published in November of this year.
  The available information, from the 1998 and 1999 New Earnings Survey, is presented in the attached table.

  Employees on adult rates, who have been in the same job for at least 12 months

  Percentage with annual earnings in excess of

  £100,000

  £500,000

  £1 million

  1997–98

  Full-time employees

  0.4

  0.0

  0.0

  Part-time employees

  0.0

  0.0

  0.0

  All employees

  0.3

  0.0

  0.0

  1998–99

  Full-time employees

  0.6

  0.0

  0.0

  Part-time employees

  0.0

  0.0

  0.0

  All employees

  0.4

  0.0

  0.0

  Source:

  New Earnings Survey (GB)

  Climate Change Levy
  Mr. Jack
  To ask the Chancellor of the Exchequer if he will publish details of the calculations which determined the present indicated rates for the Climate Change Levy. [108468]

  Mr. Timms
  [holding answer 8 February 2000]: The rates of the climate change levy that were published in the 1999 Pre-Budget Report are consistent with a levy raising around £1 billion in 2001–02. They are based on energy use data consistent with the DTI's Digest of United Kingdom Energy Statistics.

  All the revenues raised from the levy will be recycled to business through a 0.3 percentage point cut in employer's National Insurance Contributions and increased support for energy efficiency measures.

  Correspondence
  Mr. Kaufman
  To ask the Chancellor of the Exchequer when he intends to reply to the letters to him dated 16 September, 4 November and 9 December 1999 from the right hon. Member for Manchester, Gorton, with regard to Mr. D Sammons. [109250]

  Mr. Andrew Smith
  I wrote to the right hon. Member on 20 December 1999.

CULTURE, MEDIA AND SPORT

  Football Task Force
  Ms Walley
  To ask the Secretary of State for Culture, Media and Sport if he will publish the Football Task Force report as a Command Paper. [106942]

  Kate Hoey
  The Football Task Force's final report was published on 22 December. I have sent a copy to every Member and copies are also available on the Department's website or direct from the Football Trust. I have no plans to commit public funds to publish the report as a Command Paper.

  Motspur Park (Fulham Football Club)
  Mr. MacShane
  To ask the Secretary of State for Culture, Media and Sport what representations he has received concerning the availability of Fulham Football Club's Motspur Park training ground to local amateur and school football teams. [108285]

  Kate Hoey
  My right hon. Friend the Secretary of State and I have received no representations on this subject.

  EU Structural Funds
  Mr. Sanders
  To ask the Secretary of State for Culture, Media and Sport, pursuant to his answer of 31 January 2000,Official Report, column 478W, if he will list those seaside resort wards on the Objective 2 European funding map that would not have qualified for inclusion had they not been in seaside resorts. [108635]

  Mr. Caborn
  I have been asked to reply.
  222W
  All areas including seaside resorts proposed for new Objective 2 area status met the criteria set out in Article 4 of the Council Regulation (EC) No. 1260–1999 for European Structural Funds. Eligible areas qualified under the industrial, rural, urban or fisheries strand.

  Being a seaside resort was not a criterion for selection. The criteria were linked to unemployment, urban deprivation, and structural problems in industry, agriculture or fishing.

  The criteria were applied on an objective and consistent basis nationally. We made every effort to include regional priority wards where we could do so within the constraints of the legislation and the population ceiling.

  Sports Strategy
  Mr. Spring
  To ask the Secretary of State for Culture, Media and Sport what consultations he has had directly with the professional players' associations in respect of the Government's sports strategy. [107970]

  Kate Hoey
  [holding answer 3 February 2000]: I have not consulted formally with professional players associations in respect of the sports strategy. I have, however, met a wide range of sporting organisations to discuss the issues which surround the development of sport. These discussions have informed the development of the strategy.

  Cultural Property
  Mr. Faber
  To ask the Secretary of State for Culture, Media and Sport if Her Majesty's Government will now ratify(a) the UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property 1970 and (b) the UNIDROIT Convention on Stolen and Illegally Exported Cultural Objects 1995. [108999]

  Mr. Chris Smith
  Her Majesty's Government has decided not to sign the 1970 UNESCO Convention because significant practical difficulties remain in implementing its provisions into UK law. I would refer the hon. Member to the reply I gave on 7 February 2000,Official Report, columns 8–9W, regarding the Government's decision about the 1995 UNIDROIT Convention.

  Gardening Leave
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport how many officials in his Department are currently on gardening leave. [108959]

  Mr. Chris Smith
  There are no officials in the Department for Culture, Media and Sport currently on gardening leave.

  St. Anne's Further Education College
  Mr. Jack
  To ask the Secretary of State for Culture, Media and Sport when the Lytham St. Anne's Civic Society will receive an answer to their request that part of the St. Anne's Further Education College be declared a grade II listed building. [109241]

  Mr. Alan Howarth
  English Heritage, our statutory adviser on the historic environment, inspected this building on 8 February, and will submit its advice within
  223W
  the next few days. My right hon. Friend the secretary of State will then make his decision on whether to add the College to the Statutory List. I will write to the right hon. Member about the decision as soon as possible.

LORD CHANCELLOR'S DEPARTMENT

  Court Service (Fee Income)
  Mr. Burnett
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on the method employed by the Court Service to calculate the estimated reduction of litigation and consequential short-fall of fee income in the financial year 2000–01. [108826]

  Jane Kennedy
  To calculate the estimated reduction in litigation, the number of claims issued over two period of six months were compared. These were May to October 1998 and May to October 1999. This comparison showed that the total of originating proceedings (excluding family and insolvency) commenced in total declined by 23 per cent. The calculation of the estimated shortfall in fee income was based on a combination of actual income from April to December 1999 and three months of forecast income to March 2000. Income for 2000–01 is expected to be £308 million. The calculated level of new income from the changed fees in a full year has been downgraded by 9 per cent. for 2000–01 to allow for the fact that the higher fees will not apply for the whole of the financial year and a small decline in workload.

  Court Closures
  Mr. Burnett
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on the number of court closures in England and Wales in the past three years. [108860]

  Jane Kennedy
  Magistrates courts are locally managed by magistrates courts committees under the provisions of the Justices of the Peace Act 1997. Decisions concerning the future of magistrates courts are for the relevant magistrates courts committee to determine.

  My Department surveys the number of courthouses and courtrooms in April each year. The number of closures as reported by MCC's is as follows:

  1997

  1998

  1999

  Courtroom closures

  48

  46

  14

  Courthouse closures

  22

  22

  8

  Legal Aid
  Mr. Burnett
  To ask the Parliamentary Secretary, Lord Chancellor's Department what was the expenditure on legal aid for personal injury cases in (a) 1993–94, (b) 1994–95, (c) 1995–96, (d) 1996–97, (e) 1997–98 and (f) 1998–99 and for the same years in relation to legal aid for personal injury cases; (i) what amount of contributions to the Legal Aid Fund was paid or repaid by legally aided litigants, (ii) how much of this expenditure on legal aid for personal injury cases in the 224W
  above years was value added tax and (iii) what is his Department's estimate of the benefits, recovery and savings by virtue of cases won by litigants in personal injury cases who had the benefit of legal aid for the years requested. [108791]

  Mr. Lock
  Excluding advice and assistance expenditure on cases completed in each year was as follows:

  £ million

  Net

  Gross

  Contributions from legally aided litigants

  (a) 1993–94

  38.0

  155.3

  1.3

  (b) 1994–95

  44.4

  190.1

  1.5

  (c) 1995–96

  55.2

  239.6

  1.7

  (d) 1996–97

  61.8

  274.2

  1.9

  (e) 1997–98

  65.6

  1307.7

  12.3

  (f) 1998–99

  2—

  335.2

  1 CIS was installed during 1997–98 in the Board's Nottingham and Chester offices. Because of this the figures for 1997–98 are incomplete and do not include data for five months (Nottingham) and six weeks (Chester)

  2 I am unable, at present, to provide net figures for 1998–99 due to the differences in data collection between the Legal Aid Board's former computer system and its current Corporate Information System (CIS)

  I am also unable to provide details of VAT because not all the Board's payment systems record it as a separate item. Some disbursements are registered for VAT and others are unregistered.

  It is not possible to estimate the benefits, recovery and savings to litigants by virtue of cases won in personal injury cases. Neither is it possible to estimate the benefit to public funds. Although the Compensation Recovery Unit of the Department of Social Security (CRU) will seek to recover any state benefit from the amount of damages paid, the CRU does not record whether monies recovered were in relation to a case supported by legal aid throughout, partially supported by legal aid or financed in another manner, eg with the support of a trade union.

  Public Trust Office
  Ms Oona King
  To ask the Parliamentary Secretary, Lord Chancellor's Department what representations he has received on the proposed reform of the Public Trust Office; and if he will consider extending the period for consultation. [108828]

  Jane Kennedy
  I refer my hon. Friend to the written answer I gave her on 8 February 2000, Official Report, column 132W on the consultation period. Representations from a number of organisations and groups have been received on the Quinquennial Review of the Public Trust Office including Members of Parliament, the judiciary, the Law Society and other professional bodies, voluntary organisations and groups representing the interests of PTO clients and staff.

  Court Cases (Press Activity)
  Ms Oona King
  To ask the Parliamentary Secretary, Lord Chancellor's Department what steps he proposes to take to implement the recommendations made by the
  225W
  National Heritage Committee in its report on press activity affecting court cases (HC 292, Session 1996–97). [109573]

  Mr. Lock
  The Government announced on 27 February 1998 that it accepted in principle the recommendations of the National Heritage Committee. As my noble Friend the Lord Chancellor said in another place on 22 November 1999,Official Report, House of Lords, column 169, legislation will be brought forward when Parliamentary time allows. The Lord Chancellor is setting up an interdepartmental working group of officials to review the law relating to the payments to witnesses in criminal proceedings and the publication of information in advance of criminal trials. The review will inform the Government's decisions about the form of legislation required to implement the National Heritage Committee's recommendations. The review will consider how the requirements of the European Convention of Human Rights affect the law of contempt.

CABINET OFFICE

  Departmental Contracts
  Mr. Don Foster
  To ask the Minister for the Cabinet Office if she will list for the financial year 1998–99(a) the number and (b) the total value of contracts let by her Department with external consultants and advisers that (i) were put out to competitive tender, (ii) were not put out to competitive tender and (iii) were let on a non-commercial basis, stating in each case the names of the individuals or organisations that have carried out the work. [109269]

  Mr. Stringer
  The information requested is not held centrally and is available only at disproportionate cost. It is departmental policy to purchase all goods, services and works by means of competition unless there are convincing reasons to the contrary.

  Performance-related Pay
  Mr. Gill
  To ask the Minister for the Cabinet Office what recent assessment she has made of the effect of performance-related payments in Government Departments. [107470]

  Mr. Stringer
  The Cabinet Office began a review of pay and grading delegation within the Civil Service in September 1998. The interim report was published in April 1999 and the findings contributed to the Report on Performance Management, published on 15 December, in support of Sir Richard Wilson's Report to the Prime Minister on Civil Service Reform. The Civil Service will now implement the reform programme and, in particular, the modernisation of its performance management and pay systems.

  Copies of all these reports have been placed in the House of Commons Library.

  Civil Servants (Counselling)
  Mr. Maclean
  To ask the Minister for the Cabinet Office what is her policy with regard to granting civil servants time off work for counselling. [107575]
  226W
  Mr. Stringer
  Individual Departments and agencies have delegated authority to determine the circumstances when staff may have time off work. Within this framework, Departments and agencies have been consistently encouraged to be sympathetic towards requests for special leave in appropriate circumstances. Last year the Cabinet Office published a resource pack "Managing Attendance in the Public Sector: Putting Best Practice to Work" to help public sector bodies manage attendance in a fair, consistent and supportive way. One of the recommendations was that the public sector organisations should provide or arrange access to welfare and counselling services, and that staff should be encouraged to make full and effective use of those services.

  Quangos
  Mr. Llew Smith
  To ask the Minister for the Cabinet Office when she will respond to the Sixth report of the Select Committee on Public Administration on Quangos (Session 1998–99, HC 209). [106729]

  Mr. Stringer
  The Government will respond shortly to the Sixth Report of the Select Committee on Public Administration on Quangos.

  Departmental Staff
  Mr. Stephen Twigg
  To ask the Minister for the Cabinet Office what percentage of her Department's staff were(a) registered disabled, (b) women, (c) from ethnic minorities and (d) from (i) independent, (ii) grammar and (iii) other schools in (1) 1970, (2) 1979, (3) 1989 and (4) 1999. [106759]

  Mr. Stringer
  The first year for which there are records containing statistical information about ethnic minorities and staff with disabilities is 1989. Prior to this date surveys of the ethnic origin of staff or those with disabilities were not carried out in a comprehensive way. Information about the educational background of staff could be obtained only by searching individual records of staff.

  Table for 1970, 1979, 1989 and 1999 are as follows:

  Percentage

  Disabled

  Women1

  Ethnic minorities

  1970

  2—

  25

  2—

  1979

  2—

  40

  2—

  19893

  0.82

  55

  6.2

  19994

  1.26

  48.39

  9.02

  1 Figures for 1979 are full-time equivalent, other figures are based on head count

  2 Not available

  3 Includes Office of Minister of the Civil Service

  4 Voluntary self-classification based on the definition contained in the Disability Discrimination Act 1995

  Recycling
  Mr. Dobbin
  To ask the Minister for the Cabinet Office what policy she has on the recycling of materials produced by her Department. [108472]
  227W
  Mr. Stringer
  My Department's policy on recycling materials reflects our overall approach for waste management to reduce, reuse, recycle and recover.

  We are currently preparing a sustainable development strategy for greening the Cabinet Office's and its Agencies' operations taking account of Government policies and best practice. This strategy will include waste reduction targets taking account of the Government target
  228W
  for all Departments to recover a minimum of 40 per cent. of total office waste, with at least 25 per cent. of that recovery coming from recycling or composting in 2000–01. We are undertaking a waste audit and will use the results of the audit to establish baselines, against which the targets can be set and performance measured. The Cabinet Office agencies are similarly working towards the Green Ministers target. We currently recycle paper, cardboard, bottles and cans.

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

Roadworks: Delays and Disruption
Lord Blakerasked Her Majesty's Government:
What steps they are taking to reduce the delays, expense and inconvenience caused to the public and businesses by roadworks.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, the New Roads and Street Works Act 1991 and in Northern Ireland the Street Works (Northern Ireland) Order 1995 balance utilities' needs against those of road users and the public. In October, shortly before the Question from the Earl of Kinnoull on a similar issue, my department consulted on incentives to minimise disruption and improve street works co-ordination in England. It ended on 31st January, and we are now considering the options in the light of the responses and further discussion with the highways authorities and utilities. Any solution will need to be workable and minimise bureaucracy.
Lord Blaker: My Lords, is the Minister aware that road works problems are getting worse by the month and are a major cause of frustration and rage on the part of drivers and their passengers, including at the present time Members of both Houses of Parliament? Am I right in understanding that the consultation to which the Minister refers, which provides for the introduction of lane rental and penalties for the late completion of works, excludes works done by the highways agencies and by the local authorities, including the London boroughs? If that is right, is that not a mistake? When do the Government expect to announce their decision?
Lord Whitty: My Lords, yes, the noble Lord is correct. However, he has put it in a strange conceptual fashion because the highways agencies own the roads and they must maintain and repair them. That is their statutory responsibility. The consultation was mainly with utility and cable companies, which dig up the roads, about their responsibility to the local authorities and highways agencies, the sanctions they might bring to speed up the traffic, and more optimised methods of reducing disturbance to traffic when digging up the road. They are not simple repair and maintenance jobs.
Viscount Tenby: My Lords, will the Minister agree that part of the problem is that contractors bidding for the possession of roads build in a generous time
654
allowance which permits them to engage in other work during the course of the contract—perhaps on something a little more glamorous or profitable for them? What does he propose to do about that?
Lord Whitty: My Lords, in traffic sensitive areas, there are tight regulations as regards the notice that utilities must give to the transport authority and the time that they take. The problem is that there are a number of different demands, not all of which are co-ordinated, and the sanction on extending the period is not sufficient. Two broad ways of how we might deal with that were suggested in the consultation paper to which I referred.
Lord Stoddart of Swindon: My Lords, I am sure that my noble friend will agree that many roadworks are carried out during the day, not overnight or at weekends when traffic is much lighter. I hope that consultation is taking place on that. However, is it not true that one of the reasons why local authorities cannot undertake work at weekends and at night is the huge extra cost? Are the Government prepared to help meet those costs so that local authorities as well as private contractors can work at weekends and overnight?
Lord Whitty: My Lords, as regards the Highways Agency, we have developed a more structured approach to maintenance and there is now a greater use of night working by the agency on inter-urban roads. There are different problems in urban areas, where one must take account of the noise made during the night in residential districts. That applies even more so to the trenches which utilities are required to dig, given the heavy machinery which they frequently use. Therefore, most local authorities take the view that utilities' trenches in urban areas should not be worked on at night.
Lord Renton: My Lords, the most important factor is that the lives of men working on the road should be protected. However, is the Minister aware that highway contractors often seal off long stretches of road days before work begins, which seriously and unnecessarily slows down the traffic? Could not something be done about that without incurring risks to the road workers?
Lord Whitty: My Lords, the noble Lord, Lord Renton, is right to say that the safety of workers on the road is paramount and that they need to be protected. That is particularly important when they are working at night and visibility is limited. I believe that the noble Lord will find that stretches of motorways and trunk roads that need to be coned off in preparation for roadworks are nowadays much shorter. Furthermore, the speed with which roadworks are completed using the newest techniques on the inter-urban network is now far greater. The Highways Agency is determined to improve on that even more. However, the situation is much more complicated in urban areas.
Lord Jacobs: My Lords, does the Minister agree that a certain lack of common sense is shown when road

655
repairs are carried out? For example, in the extremely important thoroughfare between Wigmore Street and Oxford Street, which usually provides five lanes in one direction, three lanes are blocked off by roadworks, one lane remains open for legal parking and a single lane is left for traffic.
Lord Whitty: My Lords, traffic management for such areas is for the most part a matter for the local borough council, which acts on advice from the police. Clearly, better and worse examples exist of how matters are managed. Nevertheless, I believe that the techniques of roadworking are improving, given the amount of traffic that has to be dealt with. As regards better co-ordination among contractors, noble Lords may not believe this, but one of the best examples of co-ordination is taking place in Parliament Square where no less than five groups are using the trench at the same time. That is a good example of how this sort of activity should be organised.
Lord Elton: My Lords, will the noble Lord encourage those involved in digging holes in the road to declare, on a readable notice, who has dug the hole, why it has been dug and when it will be filled up again?
Lord Whitty: My Lords, as regards the immediate local area, that is a matter for Westminster City Council. Furthermore, requirements differ across the boroughs. However, the point I wish to make is that if there were better co-operation between the utilities and the cable companies, the number of times that a road needs to be dug up would be reduced.
Lady Saltoun of Abernethy: My Lords, can the Minister tell the House why the roadworks in Parliament Square could not have been carried out during the summer holidays?
Lord Whitty: My Lords, a sequence of cabling is being carried out in Westminster involving the cable companies and the electricity provider. Westminster City Council has the responsibility of scheduling the work. As regards access to Parliament, on Monday last my noble friend the Chief Whip indicated the period of notice that was given of those works.

Specialist Schools
2.45 p.m.
Lord Dormand of Easingtonasked Her Majesty's Government:
What are the criteria on which specialist schools are established.
Lord Bach: My Lords, the criteria against which specialist schools are designated are published in four guidance documents, each dealing with one category of specialism: technology; languages; sport and the arts. These set out the considerations taken into account when deciding to designate a school as a
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specialist school. The criteria address, first, sponsorship; secondly, school and community development plans; and thirdly, location.
Lord Dormand of Easington: My Lords, I thank my noble friend for that helpful Answer. First, does he accept that the success of specialist schools depends on having available high quality specialist teachers? For the foreseeable future, there will be a shortage of such teachers in some areas. Secondly, does my noble friend agree that frequently parents submit more applications than there are places in such schools? How will children be selected or chosen from that list?
Lord Bach: My Lords, one of the ways in which specialist schools can contribute is by giving a clear message that the country values teachers in those specialisms. Of course, we should and do put those teachers high on our agenda and make it clear that their jobs are very important indeed. I can tell my noble friend that specialist schools do not have as much trouble recruiting teachers as they might have. The crucial point is that specialist schools will take on the responsibility for training other teachers. That is how we shall raise standards and, in turn, entice more able people into the profession.
In response to my noble friend's question about parents, as he indicated, it is a fact that specialist schools are popular. By September of this year, 86 per cent of local authorities will have a specialist school. At the moment, there does not appear to be any great difficulty for parents who wish to secure places for their children.
Lord Quirk: My Lords, taking as a measure the number of pupils who get five or more GCSE passes at grades A to C, is it not the case that specialist schools are doing twice as well as the rest of the secondary school system? If that is the case, is it not an indication that the present criteria are working pretty well and that we should in fact be vastly increasing the number of specialist schools?
Lord Bach: My Lords, I agree with the noble Lord. On average last year, the 330 specialist schools improved their A to C examination performance by 2.5 percentage points over 1998 compared with an average of 1.5 percentage points for all other schools. Some 16 specialist schools are in this year's list of top improving schools, which is 15 per cent of the list. As regards increasing the number of specialist schools, that is certainly something that the Government intend to encourage. We have already doubled the number of specialist schools from 222 when we came into office to 403 today. I hope that the noble Lord will be pleased to hear that we expect to double that number to 800 by 2003.
Baroness Blatch: My Lords, can the noble Lord tell the House the difference between selection for specialist schools and selection on the basis of ability?
Lord Bach: My Lords, I thought that I would be asked that old chestnut. I am only the last in a long line

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of Members of this House—even of those standing where I am now—to be questioned on the definition of ability and aptitude.
Baroness Blatch: My Lords, I did not ask that question.
Lord Bach: My Lords, there is no doubt at all that the noble Baroness implied that question. The noble Baroness ought to understand that all schools with specialisms—including specialist schools—can, if they so wish, select up to 10 per cent of their intake on aptitude; not on ability, but on aptitude. The fact is that, among specialist schools, it is thought that fewer than 5 per cent take part in any selection whatsoever. Furthermore, I should like to add that the record of the party opposite in government was appalling in this field and the country gave its verdict on that educational policy in May 1997. Things have moved on since then and it is about time that the party opposite—and in particular the noble Baroness—moved on.
Lord Mackay of Ardbrecknish: My Lords, taking mathematics as an example, perhaps the noble Lord can explain to me the difference between aptitude and ability in mathematics.
Lord Bach: My Lords, I certainly would not dream of taking on the noble Lord in the field of mathematics. However, I believe that the best definition of "aptitude" is that given by my noble friend Lady Blackstone in this House on 11th March 1999. Perhaps the noble Lord heard it himself. My noble friend said:
"Aptitude has nothing to do with prior or current educational attainment. The code '—
about which she was talking—
"makes it clear that children who will be able to benefit from teaching in a specific subject or who have demonstrated a particular capacity to succeed in a subject can be regarded as having an aptitude for that subject.—[Official Report, 11/3/99; col. 441.]
In other words, ability relates to attainment already reached; aptitude is as I have described.
Lord Tope: My Lords, did the Minister say in one of the quieter moments just now that only 5 per cent of specialist schools had applied the selection test? If that is right, on reflection will he agree that these Benches were right to argue that facilities in specialist schools should be available to all pupils, regardless of aptitude or ability?
Lord Bach: My Lords, in the real world, the ability to go to a school of this kind is practically universal. So far, the number of people who have been tested in this way is very small. That does not prove the noble Lord or his party right, but these matters are progressing.

Channel Tunnel Rail Link
2.52 p.m.
Lord Bradshawasked Her Majesty's Government:
Whether the developers of the Channel Tunnel Rail Link are required to design and build it so that it can accommodate conventional freight trains and whether freight facilities will be operational at the time that any part of the new railway is available for passenger trains.
The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, the principal objective of the Channel Tunnel Rail Link is to provide a two-track, high-speed passenger line and any freight provision will need to be designed to ensure that that objective is not compromised. Union Railways has given specific undertakings to Parliament to provide certain facilities for freight from the outset. However, the main benefit to freight services will be through releasing capacity on existing lines in the south-east.
Lord Bradshaw: My Lords, I thank the Minister for that reply. However, the existing lines through the south-east require freight to take a circuitous route along lines which are already congested. I ask, the Minister in particular whether he is in a position to confirm reports in the technical press that the freight facilities which were to be provided under the Channel Tunnel Rail Link Act will, indeed, be provided on the Channel Tunnel Rail Link.
Lord Macdonald of Tradeston: My Lords, Union Railways gave undertakings to Parliament in 1996, and the new Kent line, when it is built, will be able to carry high-speed freight running at approximately 125 miles per hour. It has been built to the larger continental standards. Therefore, it should have the capacity for faster freight trains and, indeed, for medium-speed freight trains. A problem would arise with slower trains, which could compromise its operating and safety requirements if they run at around 50 miles per hour because a slow freight train takes up the pathways of perhaps three passenger trains. However, be assured that there will be no concessions unless we are utterly convinced that Union Railways is unable to meet its operational objectives.
Lord Faulkner of Worcester: My Lords, does my noble friend share my disappointment that the proportion of freight nationally which is carried by rail is not high? Is not one of the problems that at the time of rail privatisation no single organisation was placed in charge of the strategic development of freight? Is he satisfied that the take-up of track access grants and freight facility grants made available by the Government is adequate to make a difference?
Lord Macdonald of Tradeston: My Lords, I am pleased to say that since privatisation the growth of

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freight has been 34 per cent. It now stands at approximately 5 per cent of the freight carried. That is obviously quite a small proportion in comparison with road freight. However, there was 12 per cent growth in the year 1997–98. That has gone down slightly in the past year, but growth is continuing.
On the question of freight grants, it is true that we have had a record number of grants—34 last year. We look to improve on that figure this year. In the three years since 1997 we have spent approximately £80 million on grants. That has resulted in taking about 30 million tonnes of freight off the roads and on to rail. And, for a Minister, I am in the highly unusual situation of saying that there is more money there to spend if anyone wants it.
Lord Harrison: My Lords, will my noble friend confirm that the shippers of freight give as their main reason for not using the Channel Tunnel the very poor quality of freight services in and across France?
Lord Macdonald of Tradeston: Yes, my Lords. I share my noble friend's disappointment about the difficulty of growing freight through the Channel Tunnel. It amounted to just over 3 million tonnes in 1998. Unfortunately, a combination of the impact of the World Cup and a rash of strikes meant that SNCF gave priority, as it always does, to passenger services, and that figure is now below the 1997 level. However, EWS, the freight company, is co-operating with SNCF to try to improve the situation. We have been working hard by talking to the French in bilateral discussions and working with the European Transport Council of Ministers to try to encourage greater competition in Europe to tackle the bottlenecks and to obtain greater technical compatibility there. I hope that that will make a significant impact when it comes into force.

Farming: Long-term Strategy
2.57 p.m.
Lord Glentoranasked Her Majesty's Government:
What is their long-term strategy for British farming following the Prime Minister's visit to south-west England.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, our long-term strategy remains as announced by my right honourable friend the Minister of Agriculture in another place on 7th December last year; that is, to secure a more competitive and sustainable industry with a strong market orientation; to reduce agriculture's reliance on subsidies based on production; instead, to reflect in public support the public benefits that agriculture provides; and to encourage restructuring for long-term economic and environmental sustainability.
Lord Glentoran: My Lords, I thank the Minister for that rather uninspiring Answer. Michael Meacher
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described the Prime Minister's visit to the West Country as being "very courageous". Does she agree with that? Furthermore, does she agree that the Prime Minister's visit was not only courageous but a well orchestrated, unrealistic, sanitised public relations study which kept him from seeing the worst crisis in agriculture this century?
Baroness Hayman: My Lords, I am less upset by being accused of giving an uninspired Answer when I hear the misrepresentation of the visit by my right honourable friend the Prime Minister to the South West. Far from being sanitised, he took the trouble to surprise some of the people who were with him, to meet, speak to, invite in and talk to some of the people who protested, those who were concerned and wanted to make their concerns felt about the crisis in agriculture. I believe that those who read his speech to the National Farmers Union last week would recognise that in that speech he was looking, as I believed the noble Lord was in his Question, to the long-term strategy and future of the farming industry in this country. That means change; it means painful change for many people, and no one would underestimate the amount of pain which exists at the moment. Equally, if we are to have an industry that is sustainable for the future, it is no good pretending that we can simply go on as we have done in the past or even at present.
Earl Ferrers: My Lords, I declare an interest in asking this question in so far as I am involved in agriculture.
Lord Stoddart of Swindon: My Lords—
Earl Ferrers: My Lords, when the noble Lord, Lord Stoddart, is kind enough to resume his seat, perhaps I may continue with my question. I am half way through my question and I think I did get to my feet first.
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, the Clock says 23 minutes. I am sure that even if the noble Earl and my noble friend Lord Stoddart were speak at some length, the Minister would have time to reply to both of them. As the noble Earl was on his feet first, perhaps we should hear from him first.
Earl Ferrers: My Lords, I am grateful to the noble Baroness. I shall try not to speak at length because my question is a simple one. Is the noble Baroness aware that the price of milk in places like Denmark and Holland is 26 pence per litre; in England it is 15 to 16 pence per litre? How does the noble Baroness intend to rectify that in what is supposed to be a common market?
Baroness Hayman: My Lords, the rectification of pricing which is the result of market forces is not something that a single market does. A single market does not imply that exactly the same price applies in every part of the market with which we are dealing. Of

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course there have been difficulties and I recognise that UK prices are at the bottom of a European price league. It is regret table but it is not new. The noble Earl should reflect on the history of the regulation of the milk market within this country over a period longer than the term of office of this Government.
Lord Stoddart of Swindon: My Lords, does my noble friend agree that the Government's agricultural policy cannot be anything other than uninspiring because it is controlled by Brussels through the common agricultural policy? Under those circumstances, would it not be far better for our agricultural policy to be repatriated to the nation states in order that they can assist agriculture in a way which suits their own farmers and economies?
Baroness Hayman: My Lords, I do not believe that my noble friend offers a realistic alternative for farmers in this country. I accept that the common agricultural policy has proved an impediment to agriculture developing in ways which are sustainable and market oriented for the future. That is why we have supported strongly both the reform of the CAP and the establishment of the rural development regulation, the second pillar of the CAP, as a basis for a sustainable EU agriculture policy.
Noble Lords who say that this is all so uninspiring should look at the £1.6 billion to be spent on rural development measures over the next seven years and the reaction there has been from the farming community and environmentalists to the opportunities which that provides. There is the possibility of redirecting expenditure towards environmental benefit. Therefore, it is not so uninspiring as they suggest.
Baroness Miller of Chilthorne Domer: My Lords, the Minister referred to a painful future. I presume that she meant in terms of restructuring the number of family farms which will disappear. Will she ensure that a family-farm support structure is put in place nationally in order to encourage young people into farming?
Secondly, some young people are unable to continue and diversification is the only option. Therefore, how will the continued procrastination of the Government in relation to Objective 1 funding for our most needy rural areas give any encouragement to young people who are looking to move into forms of employment other than agriculture?
Baroness Hayman: My Lords, the point which the noble Baroness made that we must see agriculture and employment in agriculture in terms of the wider rural economies and support for those rural economies is well made and important. That is why the rural White Paper later this year will be valuable in that respect.
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As regards the reference to "pain", I was talking about pain in the present rather than in the future. That pain exists for individual farmers, and tenant farmers in particular, who are having great difficulty. We are not seeing the possibility of only large non-family farms in the future. There are other possibilities under the rural development regulation—energy crops, marketing schemes, countryside stewardship, and the vast amount of extra money which is to be put into that, and skills training—which will benefit new entrants to farming and young farmers and will support a diversity of size in the agricultural industry.
Baroness Byford: My Lords, first, does the Minister believe that the United Kingdom should continue as a food-producing country? That is a very basic question which needs to be answered.
Secondly, will she confirm the Prime Minister's assurance, which I understand he gave during his visit to the south-west, that pig farmers may be compensated for the BSE regulations imposed upon them? If that is not done there will be no future for the pig industry either in the short or long term.
Baroness Hayman: My Lords, as regards food production, I can do no better than quote from the final passage of the Prime Minister's speech which was about the challenge facing agriculture. He said it was,
"a challenge to get away from the cycle of short-term crises and become again what British farming should be—a world-class industry in a world-class setting-.
Of course, food production is part of the agricultural industry. We must look at that within the context of a worldwide market. We cannot simply look back to the same policies and constraints which framed support either through the CAP, when it was first introduced, or for post-war agriculture in this country. If we do that, we ignore the present.
The Prime Minister made it quite clear that we have not ruled out further measures to help the pig industry. We are willing to continue the discussions which have been taking place for a long time. But there are difficulties on the question of state aid, and anyone who pretends that there are not is deluding either himself or the farming community. Any help which is forthcoming must be linked to a strategy that provides a long-term framework for that sector.
Lord Henley: My Lords, perhaps I may raise a matter with the Government Chief Whip which arose yesterday. At Question Time yesterday my noble friend Lord Rotherwick asked a supplementary question about asylum applications. He quoted various statistics in support of his question. In response he was told by the Minister, the noble Lord, Lord Bassam of Brighton, that those statistics were "fictional statistics".
I have since checked in what is described as Home Office Statistical Bulletin 20/99, the control of immigration statistics, and discovered that my noble friend's statistics were correct. Therefore, I ask the Government Chief Whip to ensure that the noble Lord, Lord Bassam, comes to the Dispatch Box at the

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earliest possible opportunity to offer his apologies to my noble friend and a correction to the House for his description of my noble friend's statistics as "fictional statistics".
Lord Carter: My Lords, the Opposition Chief Whip was kind enough to tell me just before Starred Questions that he was going to raise this matter. Clearly, I am not briefed to reply on the specific exchange to which he refers. I shall draw the attention of my noble friend Lord Bassam to the question which the noble Lord has asked.

Business of the House: Northern Ireland Bill
3.8 p.m.
Baroness Jay of Paddington: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That Standing Order 40 (Arrangement of the Order Paper) be dispensed today to allow the Second Reading of the Northern Ireland Bill to be taken before the Motion on employment standing in the name of Lord Lea of Crondall; and that Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with tomorrow to allow the Northern Ireland Bill to be taken through its remaining stages that day.—(Baroness Jay of Paddington.)
On Question, Motion agreed to.

Business of the House: Debate this Day
Baroness Jay of Paddington: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of Lord Lea of Crondall set down for today shall be limited to three-and-a-half hours.—(Baroness Jay of Paddington.)
On Question, Motion agreed to.

European Union Committee
3.9 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Baroness Stern be appointed a member of the Select Committee.—(The Chairman of Committees.)
On Question, Motion agreed to.

Northern Ireland Bill
3.10 p.m.
Lord Carter: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Northern Ireland Bill, has consented to place her prerogative and interests, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
I also inform your Lordships that a revised speakers' list for the Bill is now available. The noble Lord, Lord Molyneaux of Killead, will speak after the noble Lord, Lord Eames.
The Minister of State, Cabinet Office (Lord Falconer of Thoroton): My Lords, I beg to move that this Bill be now read a second time.
This is a Bill that the Government had hoped not to have to introduce. Even at this stage we hope that it will prove unnecessary to implement it.
Last Thursday, my right honourable friend Mr Mandelson made a Statement in another place in response to the latest report of the Independent International Commission on Decommissioning. He said then that, if further information came to light which rendered his Statement out of date, he would inform the House. Intensive discussions continue and there remains the possibility of a further report by General de Chastelain and his colleagues.
At the moment there has been no further substantive progress to report. Therefore, it is necessary to put this legislation in place so that, if it remains necessary because cross-community confidence is collapsing, we can create a pause in the operation of Northern Ireland's devolved political institutions from the end of this week.
There is no doubt that the necessary cross-community consensus has been severely dented by the absence of credible progress on decommissioning; indeed, the absence even of an unequivocal commitment to decommission or a specific timeframe in which it will occur.
On every other front the Good Friday agreement has brought a better way of life for the population as a whole than Northern Ireland has ever had before. It has brought an inclusive Executive, responsible to a locally elected Assembly. There are no longer any outsiders—no more second-class citizens—in Northern Ireland's administration. It places the principle of consent at the very heart of the Northern Ireland constitution and the Irish constitution has been amended to reflect that. It has enabled serious and practical North-South co-operation to proceed to the benefit of all parts of the island. It has strengthened ties within the United Kingdom and has built a new and vigorous relationship with the rest of the island of Ireland.
The devolved institutions are functioning effectively, proving that local minds are best applied to local problems. The new Ministers are working

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together in good faith, in the interests of all the people of Northern Ireland. They are working co-operatively with their counter parts in Dublin, London, Edinburgh and Cardiff. The vigour that they have applied to their new responsibilities proves conclusively that self-rule is far and away the best form of government for Northern Ireland alongside all the new institutions, and we must spare no effort to ensure their long-term survival.
But the Good Friday agreement is a finely-judged deal. Every detail, every word is there for a reason and contributes to its overall balance. That is why every part of the agreement has either been implemented, is in the process of being implemented, or a plan exists to implement it in the near future. Along with the new Executive, North-South ministerial and implementation bodies have been set up. Human Rights and Equality Commissions have been established. Reform of policing and criminal justice is moving forward. Prisoner releases are continuing, causing understandable anguish among victims' families. The normalisation of security arrangements grows as the threat subsides.
All those things are happening, and much else besides. They are all necessary to build confidence in the peace process. But confidence-building is not a one-way street. Members of both traditions need to feel that their commitment is being reciprocated and right now that confidence has slumped. Actual, verifiable decommissioning is vital if we are to retain the faith of all parties in the agreement, not just by the IRA but by all the paramilitary organisations.
In December last year, George Mitchell celebrated the success of his review of the agreement. He said:
"I believe that the basis now exists for devolution to occur, for the institutions to be established, and for decommissioning to take place as soon as possible".
He concluded:
"there is no other way forward".
He was right.
Against that background, Ulster Unionists always made it clear that, if there were no progress on decommissioning by the end of January, it would be very difficult for them to remain in the Executive. No commitments or guarantees were made on the other side. Indeed, Sinn Fein made it clear that premature public deadlines made its task harder. But it does not help to accuse others of acting in bad faith. Nobody has a monopoly of good intentions in this situation. None the less, it was made clear to all those involved in the Mitchell review that substantive, tangible progress in decommissioning would be needed to sustain Unionist commitment to the Executive beyond the end of January.
It is not simply the continued absence of actual decommissioning that is causing the current difficulty. It is the uncertainty about whether decommissioning will ever happen and, if so, when, and on what terms—not British terms, or Unionist terms, but any terms. All that remains unclear despite the availability of the de Chastelain commission to take matters forward.
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Of course, the Government welcome the fact that the Provisional IRA's guns are silent. Their ceasefire during the past two and a half years has been an indispensable condition for politics to work. The Government welcome their expressed desire far a "permanent peace". The absence of the word "permanent" was once an insuperable obstacle. Now it has been surmounted. If the war is over, why do arms need to be retained? If violence is a thing of the past, why cannot weapons of violence be put permanently beyond use? I know of no section of Nationalist opinion, anywhere, that disagrees with that sentiment.
Of course, anything that smacks of surrender is unjustified, but any cause that unites the Irish Government, the American Government, editorial writers in Dublin, Cork, Boston, Washington and New York, the leadership and rank and file of the SDLP together with public opinion in the North and South of Ireland cannot, surely, be wrong. Yet, as things stand at present, a way forward eludes us.
As my right honourable friend Mr Mandelson said last week in his Statement in another place, because of these circumstances the cross-community support necessary for the institutions to operate is fast ebbing away. We hope that the circumstances will yet change, but that requires clarity over whether decommissioning will happen, how and when. Without such clarity, we believe that the current loss of cross-community confidence is so serious that the Executive would simply fall apart. Where that is clearly foreseeable, we must ensure that good government for all the people of Northern Ireland continues.
We are not faced with a choice between suspension and imperfect continuation of the Executive. It is pause or bust. It is in no one's interest for these fragile institutions to be allowed to shatter irreversibly, simply because it is too hard or too painful to take the necessary action to forestall this now. Delay will not buy us time. It will only make the landing harder, unless between now and the end of the week a substantial turn-around of events occurs and we have answers to the essential decommissioning questions: whether and when?
A pause will preserve the institutions. It will allow all our efforts to focus on finding a way forward, through a review; a way—we hope quickly—to restore the institutions and make progress on decommissioning and all other aspects of the agreement. This Bill, therefore, enables what I hope, if it proves necessary, will be the temporary return of direct rule.
Under Clause 1, while the institutions, including the Executive, are on hold neither the Assembly nor its committees will meet. All Northern Ireland Ministers and the chairmen and deputy chairmen of statutory committees will cease to hold office. But under Clause 3 all Ministers, and other office holders who lost office, who are still eligible are automatically re-appointed to their previous office when the institutions are restored.

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Clause 2 allows the Secretary of State for Northern Ireland to make a restoration order to end the suspension, taking into account the outcome of the review.
The schedule sets out that executive responsibility will return to the Secretary of State and the Northern Ireland departments acting under the direction of the Secretary of State. Legislation that would normally be made by the Assembly will be made by Order in Council approved by Parliament. A restoration order—and its revocation—under Clause 7 must be approved by both Houses of Parliament.
Clause 5 requires the Secretary of State to return the functions of the implementation bodies to the relevant Northern Ireland departments, in line with arrangements agreed with the Irish Government. This reflects the underlying principle of the agreement that all those institutions are interlocking and interdependent.
These are serious steps, but steps which, in the absence of any progress, will preserve the institutions from collapse and enable us to revive them at the earliest possible date.
The bomb attack in Fermanagh on Sunday reminds us that there are still people who prefer violence and chaos to peace and stability. My sympathy goes out to all those in Irvinestown whose property has been destroyed and whose peace has been shattered.
These futile, cowardly assaults on the overwhelming will of the people are what the Good Friday agreement sought to end. It is the duty of the British and Irish Governments and of the political parties to deliver their will and put this process back on track. There will never be a better agreement than this one. With this Bill, the Government are moving to guard its integrity and the confidence of all sides in it. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Falconer of Thoroton.)
3.21 p.m.
Lord Glentoran: My Lords, I begin by associating this side of the House, and my party in particular, with the remarks of the Minister in relation to the bomb in Irvinestown. Sadly, executive or no executive, we shall still have to live with those maverick actions for some years to come. Those who live in Northern Ireland are well aware of that.
Dealing with this Bill and making decisions on it is rather more difficult than one might have thought. The whole basis of decommissioning depends on General de Chastelain. He reported to the Secretary of State, Mr Mandelson, and also to the Irish Government. But we in this Parliament have not had sight of that report; we do not know what it says. We were given a great deal of sound and objective information by the Secretary of State. But the fact that it has not been presented to Parliament leads to speculation as to what it may contain that is so negative that we are not allowed to see it. That tactic is perhaps not the right one.
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Perhaps the Minister will comment on that when he sums up, but tell us also a little more in relation to the attitude of the Irish Government to this Bill and its consequences. Apart from that, it is clear, as my right honourable friend made clear in the other place, that this party associates itself with the Government in bringing this Bill forward.
It is a sad day for the people of Northern Ireland because, after around 30 years, they had democracy back. They were being governed by their locally elected representatives. If we believe all that we are told I read most of the local press on most days—that was working in a sound and robust way. That stands to end. They were also living normal lives. People were crossing peace lines, even to work. Children and others were running about their normal business without the fear of a bomb round the corner or a sniper hitting their parents or somebody else. In other words, peace appeared to be reigning in most parts of the Province. Life was much more difficult in certain corners of Belfast and certain parts of Armagh. However, as has been made clear by the Minister, life was better than it had been for a long time in the Province. The need to end the executive is extremely sad.
Why are we here? For one reason and one reason only. The Good Friday agreement has been going very well. As the Secretary of State said in the other place, it has been fulfilled and followed in every way except one; that is, in relation to decommissioning. The people of Northern Ireland, this Government, this Parliament and the Dail have been badly let down by the provisional IRA and Sinn Fein.
The First Minister, Mr David Trimble, was courageous enough with his colleagues to jump first. Regrettably, the IRA has so far failed to follow. The Unionist Party made clear at the time that it could not sustain the position of power sharing with Sinn Fein fully armed. How could it? How can there be a democratic government with one party holding weapons under the table? Zero hour is now nigh and the Government's options are few. They have played most of their trump cards, though I hope not all. They stand to lose everything by standing by while David Trimble and the whole executive fall apart because he is forced to resign by his colleagues, or play for time and another breathing space by suspending the executive, thereby freezing the situation in a timeframe while others can think and negotiations continue.
We on this side of the House have said for some time that we support suspension if there is not a satisfactory report from General de Chastelain by the end of the week—I am nervous about Clause 9 of the Bill in that regard. We support the Government's efforts to bring the peace process on track again, and we support the Bill, though we regret the need for it.
If the Government decide to suspend the executive or are forced temporarily to do so—I hope only temporarily because perhaps decommissioning is coming forward—it may be time for a rethink; perhaps a look back in history. What is Sinn Fein's long-term objective? It is, of course, a united Ireland. Why has it changed?

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The IRA was founded around 1867 in support of the Irish Republican Brotherhood with the objective of putting the Brits out of Ireland. Its first insurrection failed. It was reconstituted for the 1916 Easter uprising. In 1919 it was officially recognised by Dail Eireann as the army of the Irish Republic. Between 1919 and now the IRA has been alternately linked to and divorced from both Fianna Fail and Sinn Fein and it has been both inside and outside of constitutional politics. It negotiated alliances on the back of prisoner releases as long ago as 1926. Nothing in its history is new. However, it never disarmed; never gave up its objective of a united Ireland under Republicans. Why should it now disarm and accept ministerial posts in one of Her Majesty's Governments on a permanent, constitutional basis?
We have to find an alternative to Sinn Fein/IRA as representatives of the nationalist people. Perhaps the time has come—I hope this will be taken in the positive spirit in which it is meant—for Sinn Fein to find a way to disassociate itself from the IRA violence and guns and fully join in the democratic process. A new way must be found. The people of Northern Ireland, nationalists and Unionists, have a right to democratic government; to be governed by their own elected representatives. They want it and are enjoying it. While we sincerely hope that it will not be necessary to use the powers in this Bill, we support the Government in introducing it and look forward, if it has to be actioned, to the day that democracy can be returned to Ireland.
3.29 p.m.
Lord Smith of Clifton: My Lords, we on these Benches wish to be associated with the Minister's sentiments regarding the people of Irvinestown and the atrocity that they suffered a couple of weeks ago.
It will generally be agreed that this is yet another very disappointing and sad moment for Northern Ireland and for the vast majority of its people. It is, alas, not unique. Over the years they have been forced to experience many such moments when setbacks have triumphed over progress that had been made towards an enduring, peaceful settlement. Having come so far in achieving that goal, the suspension of the Executive and the Assembly, as proposed in the Bill—after all, they have only been fully operational for eight weeks or so—is a terrible blow to those whose hopes had been raised that a more normal, democratic and inclusive system of devolved government was well on the way to becoming established.
The present impasse is all the more dismaying in view of the Herculean efforts made at all levels. The unstinting energies applied by the Prime Minister, the Taioseach and the President of the United States are unprecedented. Successive Secretaries of State have been equally assiduous in persuading all sides to collaborate. Individual political leaders in Northern Ireland, I think it is fair to say, have strained every muscle to keep the show on the road and to maintain the necessary momentum. In the event, the point has been reached, alas, where all those efforts risk being in vain.
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The suspension of the Executive and the Assembly and the consequential reimposition of direct rule are a massive step backwards and one fraught with dangers. The recent history of Northern Ireland cruelly reveals that progressive initiatives, once they falter, are never resuscitated. That is the real challenge for the immediate future. By one means or another—and it will not be easy—dialogue and contacts must be maintained by the main political actors so that history is not allowed monotonously to repeat itself. We must all hope that the suspension is of short duration.
It is vital, above all, if the proposed suspension is to have any chance of being speedily revoked, that Northern Ireland does not lapse back into the habit of intransigent, zero-sum posturings that masqueraded as politics for far too long. They must not be restored to their full futility.
Having lived in Northern Ireland for most of the 1990s, I can readily appreciate the exasperation felt by the unionist community on the one hand and, on the other, the fear among the nationalist community that many of their aims, such as the cross-border institutions, are now at risk. Above all, I recognise and share the dismay of most ordinary people in Northern Ireland that further progress at this stage does not seem possible.
However, we are where we are. Unionist opinion has reached breaking point. Almost everyone of good will and a fair mind, including the three most closely involved heads of government, agree that the time has come for the IRA to make a positive and substantive move towards decommissioning its weaponry if the Belfast agreement is to be implemented. The initiative now rests squarely with the IRA and its protagonists.
Accordingly, we on these Benches will support, albeit with a heavy heart, the proposals outlined by the Government in this Bill. In the current circumstances, as has often been remarked, suspension is the least worst option available. However, we hope that the reimposition of direct rule will be done with a light touch and that it will not be of the somewhat heavy-handed character that previously obtained. That will require all the imagination, ingenuity and dexterity with which the present Secretary of State is credited. In the Bill he has left himself with a good deal of flexibility and room for manoeuvre. We wish him well in his endeavours.
3.33 p.m.
Lord Tebbit: My Lords, it is indeed a sad day for us today as we face the enactment of this legislation. In his speech, the noble and learned Lord, Lord Falconer, referred to the damage that is being done by the uncertainty about the intentions of the IRA on decommissioning. Would that there was any uncertainty! I suspect that it is because there is no uncertainty about those intentions that this Government, who were once committed to a freedom of information Act and to open government, are refusing to let us see the most important piece of information—intelligence—which would help us to judge these matters today; namely, the de Chastelain report.

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It seems quite extraordinary to me that we should be asked to make judgments on this legislation and on the intentions of Her Majesty's Government while we are denied that information. Is it that the report is too optimistic and that we might get carried away and say, "Oh, the Government do not need this Bill; it's all going to come right"? Alternatively, is it so darkly pessimistic that the Government feel that it would cast a pall over our discussions and possibly tend to make us be more extreme than we hope is necessary in our reactions?
I suppose the shortest and, in some ways, the most effective speech that I could make on this subject today would be merely to say, "I told you so", because I did; and so did many others. But, sadly, the Government would not listen. For a start, had they listened to what some of us were telling them when the original Northern Ireland legislation setting up these institutions was enacted, they would have put into it the provisions that we are now being asked to make today. This Bill would then have been unnecessary. But at that time we were told that there had been "seismic shifts" in the attitude of the IRA. It is rare indeed to find a seismic shift that has done nothing whatever to alter the landscape all these months afterwards.
It is commonly held, and often said, that it is the IRA which has now precipitated this crisis by breaking its undertakings on decommissioning. Although it is absolutely certain that the crisis has been brought about by the refusal of terrorists in general—most notably the IRA—to give up their arms, it has to be said, as we must recollect, that the IRA has broken no promises whatever. It never promised to disarm; it never has; and, indeed, in the very recent past, it has made it plain that it will not do so. Perhaps that is why we are not to see the report. Nor is it customary for victorious armies to give up their guns. It was not the IRA but the Prime Minister who made the promise to the people of Northern Ireland that there would be disarmament if they voted for the Belfast agreement. It is his promise that has been broken, not the promises of the IRA.
The tragedy is that during the past two years the Government have deliberately and remorselessly thrown away every high card in their negotiating pack. Prisoners have been released; Sinn Fein is in government; and the RUC is to be dismembered. So let us not just blame the IRA for doing what comes naturally to it—what, in its own words, it "does best". We should blame those who have let the IRA get away with it.
Snatching back devolved government is surely more likely to be damaging than if devolved government had never been granted at all until there was clear evidence that the IRA was willing to disarm. There is one party that is, happily, not represented in this House and that is Sinn Fein. What we should perhaps be discussing today is: what are the intentions of Sinn Fein? Do members of Sinn Fein intend to divorce themselves from their army and behave as though they were democratic politicians? Alternatively, do they intend
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to sweat this one out reckoning that, on past form, it is the Government who will blink first and it is they who will profit once again by their association with a murderous, terrorist army?
3.39 p.m.
Lord Fitt: My Lords, this is the second time I have sat through a debate to bring about suspension of a power-sharing executive in Northern Ireland. In 1974 I was part of that executive and my noble friend Lord Merlyn-Rees was the Secretary of State who signed the suspension order. That executive was brought to an end because of a campaign of violence by both loyalist and IRA elements. They brought that courageous experiment in devolution to an end after a short period of five months. The noble Lord, Lord Glentoran, delved a little into Irish history. I want to take some time drawing parallels between what happened at the time I have mentioned and what is happening now.
During the five months of the existence of the executive, the SDLP—the party of which I was leader—insisted on what it called the Council of Ireland, the Irish dimension. It was that element in the Sunningdale Agreement which brought the bitterness of the unionist population onto the streets. I am quite certain that the unionist population would have accepted the power-sharing element, but under no circumstances would they accept the Council of Ireland proposals which they saw as an element on the road to an Irish republic and the beginning of joint authority.
Incidentally, just before the downfall of that executive, we in the SDLP realised that we would not get everything we had demanded by way of the Anglo-Irish Agreement, and we attempted to take it in stages. However, by that time, it was too late; the unionist population were totally opposed to the continuation of the executive. Today there are similar elements. The IRA believes that it can insist on its demands—namely, no decommissioning—and that at the end of the day it will get its way.
I have sat here over the past few years watching—sometimes with great anxiety—the concessions made to the IRA. Time and again I have viewed with awe the number of concessions that have been made, notably the release of prisoners. There are now 300 people roaming the streets of Northern Ireland who were sentenced to terms of imprisonment for murder. They have now been released. The Patten commission was established at the behest of the IRA and nationalism. The IRA has given absolutely nothing in return. The Unionist population view this as a step-by-step process until the IRA achieves all its demands.
The noble Lord, Lord Glentoran, mentioned the beginning of the IRA. I shall develop that further. The IRA claims that its authority stems from the Easter rebellion of 1916 and the subsequent massive vote it received—from which it obtained 72 seats—as a consequence of the tide of emotion which swept Ireland after the First World War. The IRA claims that the mandate it received then still exists and that it is the sole spokesman for the people of the Irish nation.

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However, everyone realises that the mandate given then to the IRA exists no longer. The only mandate which the IRA—and everyone else—has now is the Good Friday agreement. That agreement constituted a departure from previously held tribal loyalties. It was overwhelmingly voted for by means of a referendum throughout the island of Ireland. As the Liberal Democrat spokesman said, throughout the world it is recognised as the only element which can bring about peace in Ireland.
I wish to quote from two newspapers. The Irish News states:
"According to the IRA, the decommissioning crisis can be resolved but not on British or unionist terms".
There is no mention of the aspirations of the Irish people. The Irish people have demanded decommissioning as an attempt to bring about some form of normality in Northern Ireland. The IRA cannot claim to speak on behalf of the Irish people.
An even more pungent comment—I quote it bearing in mind the remarks of the noble Lord, Lord Tebbit—from the Irish Times states:
"The leader of the Ulster Unionists, Mr David Trimble, has issued an appeal to Sinn Féin to join in eleventh-hour talks. Mr Mitchel McLaughlin declares that his party will camp out all night if necessary to try to find a way forward. It is, perhaps, remotely possible that some formula will be found in the next 48 hours. … There must be no doubt as to where responsibility for delay—it is premature to speak of failure—is to be placed. The Provisional IRA has not only refused to begin the process of decommissioning its weapons. It has not only refused to discuss a timetable for decommissioning".
That editorial was not written last week but on 8th March of last year, Nothing has changed. The IRA is determined that it will not decommission. One has only to recall the words of Mr Gerry Adams on "Newsnight" yesterday evening when he made it quite clear that the IRA would not decommission.
We are now into the "blame game". Who is to blame for the present position? In my mind there is absolutely no doubt that the blame for the present situation lies with the IRA. The British Independent newspaper states:
"Mr Adams will persuade no reasonable person that the Ulster Unionist Party is responsible for the suspension which now seems inevitable".
Sinn Fein gave to understand in negotiating the Good Friday agreement that the IRA would begin to disarm. Unionist opinion, quite reasonably, cannot tolerate dealing with it any longer in the absence of decommissioning. Sinn Fein says that it wanted to take a part in the government of Northern Ireland. That was one of its demands. It said that if it obtained that, it would stop the campaign of violence.
As one from a different political background I must say that David Trimble has shown tremendous courage in what he has tried to do with the Unionist population in Northern Ireland. Reluctantly, but realising everything that was at stake, he decided last November to enter a power-sharing administration with Sinn Fein. Sinn Fein almost certainly had given an undertaking to General de Chastelain that if the power-sharing functions were established it would
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begin the process of decommissioning. David Trimble's party rightly viewed his attitude with deep suspicion. He wrote a letter stating that if IRA/Sinn Fein did not decommission he would resign. That was a courageous thing for him to do at that time. It led to the formation of the power-sharing Executive. I believe that the power-sharing Executive worked well and that its Sinn Fein members worked well within it. I have no doubt that given time, and with decommissioning out of the way, there would be effective, cross-party government in Northern Ireland, which would include Sinn Fein.
However, as I say, the IRA has not given anything in return. It has clearly stated that there will be no decommissioning. In that situation David Trimble cannot continue to be First Minister. Yesterday I listened to the debate in the other place. Members said that they were opposed to the suspension, but that if there was no suspension there was no chance of decommissioning. If David Trimble is forced to resign, the whole Executive will collapse and in the next quarter of a century there will be no hope—this occurred with the previous suspension—of resurrecting political institutions in Northern Ireland which have the support of the majority.
So one has to take a chance. Those who are opposed to suspension must be asked these questions: "Do you want David Trimble to resign? Do you want that resignation to bring about the downfall and the total collapse of the present institution? Or is it better to have a temporary suspension in order that, with the help of God, the Executive may return in far less time than it took to resurrect the previous one?"
We are at a time of crisis in Northern Ireland. As much as I do not want to be seen supporting the suspension of the power-sharing Executive, I believe that that is the only course left open to us Very reluctantly, the Government and the overwhelming majority of the Irish people want to see the Assembly, after a short period of suspension, return again in its present entity, with cross-party support, including Sinn Fein. From my knowledge of Northern Ireland, I would plead with Sinn Fein to do something within the next 48 hours which will possibly keep that Executive in existence.
3.51 p.m.
Lord Prys-Davies: My Lords, it is common ground that it is enormously disappointing that the very difficult circumstances in Northern Ireland have made it necessary for the Government to present this Bill to Parliament. But I am bound to accept—I do so with gratitude—that every effort has been made by the Government—indeed, by the two Governments and by the pro-agreement parties in Northern Ireland—to try to avert the position in which we are now.
Sadly, the decommissioning of weapons remains an unresolved issue. Given that fact, given Mr Trimble's post-dated letter of resignation from his office of Chief Minister, and given the absence of decommissioning, the Government were faced with a heavy responsibility—indeed, an appalling responsibility.

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Although I am nervous about the full consequences of this very important Bill—it has been rushed through Parliament and there may be consequences that we cannot foresee—none the less, there is common ground that this is the best way forward, and possibly the only way forward.
I join with others, again in gratitude, in noting that Mr Trimble, in good faith, made a brave decision and took a courageous step when in November or December last he entered into a power-sharing Executive with Sinn Fein representatives without prior decommissioning by the IRA. But there is also the other side. I, for my part, think that Mr Gerry Adams and the Sinn Fein leadership believe, in good faith, that they too have fulfilled their promises to the extent that it is within their power to do so.
I share the widespread concern that the IRA has not started the process of decommissioning. I welcome its recent statement, to which the Minister referred, expressing its desire for a permanent peace. It is more encouraging than its earlier statements, but the statement lacks precision and clarity about whether the IRA will decommission, when it will decommission and upon whose terms it will decommission.
However, one question still worries me. Given the history of the IRA, and given the history of the anti-colonial struggle in Ireland over centuries, is it possible that the demand that the IRA should yield up its arms—and that is what decommissioning means—has brought it to a threshold which it finds extremely difficult, if not impossible, to cross, at least today? If that is so—and only time will tell—that is an important issue that will not go away.
The Minister has explained very clearly that the effect of this Bill is to empower the Secretary of State to suspend devolved government. It does not abolish devolved government; the Good Friday agreement is not falling apart; suspension is not irreversible. That is why we are heartened by Clause 2 of the Bill. Under that clause the Secretary of State is to institute,
"As soon as is reasonably practicable"
after suspension begins, a review under the review section of the Belfast agreement. After taking account of the results of the review, he may restore devolved government, subject, of course, to parliamentary approval.
When my noble friend comes to reply to the debate, can he explain precisely what will be reviewed? Can he also give the slightest hint of the maximum period over which the review is to be conducted and who will conduct it?
Even if suspension comes into force during the course of the next few days, the search for a solution to the difficulties will, and must, go on. One must hope that suspension will not erode confidence in the democratic process but, rather, that it will provide a powerful incentive for all concerned to get on with the task of creating the conditions for restoring devolved government to Northern Ireland as quickly as possible.
3.57 p.m.
Lord Rogan: My Lords, it gives me no pleasure as an Ulster Unionist to rise in support of this Bill today.
I know that many noble Lords will not have had an opportunity to visit the Northern Ireland Assembly. While differences between Members of that Assembly are so great as to make the differences in your Lordships' House pale into insignificance, one could be forgiven for thinking over there that one was in any other parliamentary assembly in these islands. There is robust debate—yes, of course there is—but there is also a commitment, evident on all sides, to encouraging the kind of economic redevelopment, regeneration and social inclusion that Northern Ireland so desperately needs.
Perhaps I may give your Lordships one example. Last week, the Ulster Farmers Union—traditionally seen as the voice predominantly, but not exclusively, of Protestant farmers—held a rally at Stormont to draw attention to the crisis in agriculture—a crisis, I might add, which is having more severe repercussions in Northern Ireland than in any other region of this Kingdom. There were cheers for the Unionist speakers, of course. But there were cheers also for Mr Gerry McHugh, the Sinn Fein agriculture spokesman. Things have certainly changed in the Province—and changed for the better.
Going about my business, I detect no willingness whatever in any section of the community to return to the position that we were in two years ago, let alone in the darkest days of the troubles. Northern Ireland's new Executive and democratic institutions have begun to show signs of working despite those who would gladly see them collapse. But Stormont is not like any other parliament. One of the parties in the Executive has a standing army. Two Ministers in the Northern Ireland Executive are inextricably linked with the Provisional IRA. While I support the Bill, it would be folly to pretend that the prospect of the new institutions in Northern Ireland going into suspension for an indeterminate period does not concern Unionists, just as it also concerns nationalists.
While suspension is without doubt not the outcome we would have wanted, it is not the end of the world. I welcome the kind words that noble Lords have said about my party and my party leader. I especially welcome the kind words that the noble Lord, Lord Fitt, said about my party and the risk that we undoubtedly took to make the agreement work. Of course, it would have been far preferable for Sinn Fein/IRA to have followed the lead my friend, the right honourable Member for Upper Bann, gave and for them also to have taken with us a risk for peace. Even in the past 20 short weeks, significant progress has been made. The basic framework of a settlement—power-sharing devolution within the United Kingdom with a North-South dimension—has been vindicated. No convincing alternatives have been presented.
There is a new optimism on the streets of Belfast and in the countryside of Northern Ireland. Above all, lives have been saved. I even detect some progress from that

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most intractable of organisations, the IRA. Certainly its oratory has changed. Back in 1996, just after the Canary Wharf tragedy, its position was that,
"There will be no decommissioning either through the front or the back doors. This is an unrealistic and unrealisable demand which simply won't be met.
As I stand here today, that has been replaced at least by a softer-sounding commitment that the peace process is under no threat from the IRA.
However, the option of a return to war remains very real. Even the test set by Northern Ireland's nationalist Deputy First Minister—a commitment to decommissioning and a start date—still shows no signs of being satisfied. Even that would still be some way away from the understandings given last November to a start to actual dismantling of the structures of terrorism.
If the peace process is to succeed, it requires all of us to set aside traditional assumptions and ways of thinking. Even those who have committed the vilest acts must be given a chance to show that they have changed their ways. They have been given that chance. Almost as soon as the review of the Belfast agreement conducted by Senator George Mitchell was completed, two Sinn Fein spokesmen, Mr Pat Doherty and Mr Martin Ferris, were convincing their supporters in America that no commitment to decommissioning had been given. One assumes that they believed that even if the Unionists raised decommissioning again, Her Majesty's Government and the Government of the Irish Republic would cave in to the implicit threat of renewed violence.
It pleases me to see, therefore, that there is a determination on both sides of the Irish Sea that this issue be resolved once and for all. I trust that that pleasure will not turn into pain if that determination weakens in any way. The prospect of the only decommissioning occurring being that of the Northern Ireland Executive and the North-South and east-west institutions appals every section of opinion, including, I believe, many Sinn Fein supporters.
The pretence that the agreement did not require the weapons of war to be put aside has been shown to be just that—a mere pretence. While Northern Ireland and the Republic of Ireland both face confidently into a new future based on mutually beneficial co-operation and partnership, the people of the island of Ireland are being held to ransom by a small nucleus of militants who cannot accept the loss of status that decommissioning involves. I am glad that the decision to suspend the institutions if there was a default by the IRA was endorsed by the Taoiseach, Mr Ahern, on 23rd November 1999 in Dail Eireann. If the institutions are suspended, no one can predict with confidence when they will be revived. If trust it will not be for long.
However, for once, the paths of expediency and morality have converged. Once suspended, the chances of Mr Adams persuading his militants that the Sinn Fein Ministers can be reinstated without decommissioning occurring are nil. At the same time, weakness from Her Majesty's Government and the
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Irish Government at this stage would have convinced the militants that London and Dublin are open to bullying and threats. Mr Adams's job would be made all the harder, given that the process cannot succeed without unionist involvement. Support for the Belfast agreement has already fallen within the Unionist community. Be assured that any attempt to proceed again on the basis of vague statements will not carry majority support.
Even as this legislation comes to its final stages, we must not give up hope that the republicans will rescue the situation. Mr Adams must know that decommissioning is a necessary and inevitable part of the process of making peace. By supporting the Bill today, we can send a powerful message to the republican movement that all the people of Northern Ireland cannot be expected to endure what the Taoiseach called an "armed peace". I trust it will receive support from all sides of the House.
4.7 p.m.
Viscount Brookeborough: My Lords, I too strongly support the Bill as a necessity and the only way of preserving the progress so far of the implementation of the Good Friday agreement. I endorse the comments made with reference to the fact that we do not have the de Chastelain report to read. I join others in asking the Minister why that is so.
The vast majority—that is to say, everyone except those inextricably linked with terrorism—will be deeply saddened and devastated when our devolved administration is suspended. The sole reason for that is, of course, the lack of decommissioning at this stage. The reasons we are given are incomprehensible even to those of us who live in Northern Ireland. The danger, threat and ability to blackmail as a result of the retention of illegal weapons and explosives has been brought into reality too many times, including the tragedy of the Omagh bomb and, to prove that that was not the end of it, the bomb in Irvinestown a few miles from my home on Sunday evening. It was incredibly lucky that no one was hurt in that attack.
The requirement for decommissioning, which is at the base of the matter, is incumbent on all groups, whether they be so-called loyalist or Republican, within the Good Friday agreement. I should like to remind your Lordships why it is primarily the intransigence of Sinn Fein/IRA that has brought us to this sad day.
Sinn Fein is the only party which is inextricably linked with a terrorist group and which has a place on the Northern Ireland Executive. Therefore, it is Sinn Fein/IRA alone who can enable the immense effort, compromise and courage of others to bear fruit at this time. It is only they who seem determined to destroy the progress and hopes of so many, despite their protestations otherwise. Sinn Fein says that it did not

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agree in the Good Friday agreement to decommission any weapons. However, it did agree to paragraph 3 on decommissioning on page 20 of the agreement. It says:
"They also confirm their intention"—
as did everyone else—
"to continue to work constructively and in good faith with the Independent Commission, and to use any influence they may have, to achieve the decommissioning of all paramilitary arms within two years following endorsement in referendums North and South of the agreement and in the context of the implementation of the overall settlement".
That is what brings us to the date of 22nd May of this year. The key words in the agreement are "to work constructively" and "to use any influence". It is for everyone, including the two governments, to investigate and question rigorously whether or not Sinn Fein has carried out its commitment.
Let us look at the practicalities. Sinn Fein includes many members of the IRA and a few who have been members of the IRA Army Council. They know where many of the arms dumps are, or at least where they were until they were conveniently moved. I believe that, due to the sophistication of these hides, many of the weapons are still where they were when these Sinn Fein personalities were active members. However, can the Minister confirm whether or not any member of Sinn Fein has discussed these locations with the independent commission? Would that not constitute the very minimum of commitment required under the Good Friday agreement? Can the Minister tell us whether the commission has been shown the location of a single bunker or long-term store, albeit empty? I believe that the answer to that is "No", and that Sinn Fein has failed in every respect on decommissioning.
Although it has condemned in public the perpetrators of the Irvinestown bomb, it does not help in any way in discovering the recent origins of the explosives that were used. The perpetrators, we are told, are a splinter group—originally members of the IRA known to the Army Council. The explosives would have been held by the IRA until recently. Is this total lack of co-operation from these people acceptable when they say that they have embraced the democratic process and sit on the Executive? They will have to do better than that.
The Government have paid a high price and the people of Northern Ireland a higher one: immunity, prisoner releases, reduced military activity, and so on; and devolution and seats on the Executive. Sinn Fein has brought nothing with it. That is why this very sad day has come about. Incidentally, can the Minister tell us what the status of the prisoners released on licence will be if the entire Good Friday agreement falls apart?
With reference to decommissioning, my Lords, you may think that I oversimplify it all. I beg you to understand that I do not. Having been a member of the security forces for many years and having studied the modus operandi of the terrorists in depth, I know how quickly they can produce weapons should a target present itself. It is measured in hours, not weeks, months and years. If Sinn Fein lived up to its signed-up commitment, it could start decommissioning before
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the Bill completes its passage. It is to be hoped that the efforts being made by the Taoiseach and by the Prime Minister might enable that to happen. But I can assure your Lordships that it is feasible in the time-scale—before tomorrow evening.
I should like to ask the Minister two short questions. First, on the Good Friday agreement, in paragraph 3 on decommissioning, which I have already read out, the date given for completion is two years after the referendum, which gives us the date of 22nd May. If that fails to occur, can the review change that date? Is it empowered to do so?
Secondly, Clause 2 of the Bill states that if suspension takes place prior to a restoration order, the Secretary of State must take into account the results of the review. If decommissioning starts, how long will the review take and will all the parties have to sign up to it? Discussions may be used by many to hinder the progress and delay it. What is the possible time-scale and how will the Government get round this? Should decommissioning start—that is the last hurdle—between the suspension and 22nd May, can a review be avoided?
I support this Bill most strongly, but hope that even at this late stage its enactment might be avoided by some movement from the intransigent parties.
4.15 p.m.
Baroness Park of Monmouth: My Lords, I believe Sinn Fein/IRA have claimed that the Government's proposal to suspend the Northern Ireland Assembly and the Executive is unlawful. That this was, however, implicit in the agreement is evident in the validation and review provision in paragraph 7, which states:
"If difficulties arise which require remedial action across the range of institutions, or otherwise require amendment of the British-Irish Agreement or relevant legislation, the process of review will fall to the two Governments in consultation with the parties in the Assembly. Each Government will be responsible for action in its own jurisdiction".
The two governments, in their July 1999 statement, "The Way Forward", drew on this in what they described as a fail-safe clause, under which they undertook that, in accordance with the review provisions of the agreement, if commitments under that agreement were not met, either in relation to decommissioning or devolution, they would automatically and with immediate effect suspend the operation of the institutions set up by the agreement. The statement went on to say, in relation to decommissioning, that this action must be taken on receipt of a report at any time where the commitments now being entered into, or steps which are automatically laid down by the de Chastelain commission, are not fulfilled in accordance with the Good Friday agreement. The British Government would legislate to that effect.
For the first time, Sinn Fein/IRA were presented with a clear warning that it was time for them to act or to lose the major political advantages they had gained—and they were many. On 17th November the IRA said that it would appoint a representative to talk to General de Chastelain and his commission. By 5th December both

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the IRA and, incidentally, the Ulster Freedom Fighters had appointed representatives. On 10th December General de Chastelain reported that,
"initial contacts provide the basis for an assessment that decommissioning will occur".
So far, so good. Meanwhile, on 22nd November, the Secretary of State, noting the IRA's statement that it was committed unequivocally to the "search for freedom, justice and peace in Ireland", noting also both Sinn Fein/IRA's acceptance that decommissioning is an essential part of the peace process, to be brought about under the aegis of the commission, and the IRA's acknowledgement of the Sinn Fein leadership, had accepted Senator Mitchell's belief that a basis did exist for devolution to occur, for the institutions to be established and for decommissioning to take place as soon as possible. That was the build-up. Not least, the Unionists had courageously decided to jump first and enabled devolution to occur on the clear understanding that that would open the way for voluntary decommissioning by the IRA. But the IRA has become accustomed to getting away with statements—with words and not actions—and, moreover, statements which mean one thing to them and another to the ordinary man. It has not been accustomed to having its bluff called.
It must be said, however, that it has never at any time said that it would decommission. It even reinforced that in recent statements in the United States. The fault has lain with those who wished to believe that it had. Incidentally, the infamous bargain struck for it in the location of victims' remains Act, which produced only three bodies in return for total amnesty for murderers of many more, is an example. On this occasion, as so often before, it thought that they could get away with doing no serious business whatever with the de Chastelain commission. I am only amazed that anyone thought that it would.
The report has not been published, and I deplore that. It was, however, possibly because, according to the IRA's own statement of 2nd February, it has,
"never entered into any agreement or undertaking or understanding at any time whatsoever on any aspect of decommissioning".
That could hardly be clearer. It seems to have thought that it was having those discussions,
"to help move the political situation out of a vacuum"
very generous! Its representative passed his time, according to its own statement,
"stressing that we are totally committed to the peace process, that the IRA wants a permanent peace, that the IRA guns are silent, and that there is no threat to the peace process from the IRA".
That is what the unfortunate general seems to have been listening to for quite a long time, one assumes. Clearly, it has not, according to its own statement, discussed in the three meetings that have taken place the modalities, the timing or anything else practical at all.
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It is significant that another IRA statement says,
"The issue of arms needs to be dealt with m an acceptable way, and this is a necessary objective of a genuine peace process. For that reason we support it to secure the resolution of the arms issue".
The issue of arms is IRA-speak for demilitarisation of our forces, the removal of the legitimate Armed Forces and the disarming and disbandment of the RUC. That is what it means to them. Gerry Adams knows that, and knew it when the review was taking place.
The terms of decommissioning are so far absolutely non-threatening: those handing in arms benefit by an amnesty which has been extended year by year since the 1997 Act. Indeed, an order of 1999 extended the current amnesty until 24th February 2000—a fact of which I imagine the IRA will not be unaware. They will know, too, that as the decommissioning commission report of July 1999 states, in an annex, the 1997 decommissioning Acts in both the UK and Ireland specified,
"that methods and manners (schemes) to be used for decommissioning require the destruction of the arms being decommissioned".
I have gone into such detail because two significant things have now happened. The first is that Mr Seamus Mallon, leader of the SDLP and therefore a respected voice for the large Catholic and not necessarily republican community, has put the two questions that the IRA has never yet been asked to answer: "Will you decommission?" and, "If so, when?".
Some have argued that the IRA can go right up to the wire and make no decision until 22nd May, two years after the conclusion of the agreement. Sinn Fein/IRA are already arguing that the deadline should be two years after the institutions are in place and working. But the crucial questions which all those people in Northern Ireland and the Republic who voted for peace in 1998 (71 per cent of the 81 per cent turn-out in the North, 94 per cent of the 56 per cent turn-out in the South) are asking those two questions. What is stopping Sinn Fein/IRA from answering? And how, incidentally, do the IRA reconcile its claim in their latest statement that,
"the peace process is under no threat from the IRA",
and that its guns have been silent, with the importation from the US last year, and no doubt before, of significant quantities of machine- and hand-guns, not by the Continuity IRA or the Real IRA but, according to the Gardai, by the Provisional IRA (PIRA), whose local leaders have been telling the rank and file that these were new weapons to replace the old. I say nothing of the separate issue of continuing violence towards their its communities.
It is in any case fairly irrelevant whether it is the PIRA, the Continuity IRA or the Real IRA, since there can be no doubt that the army council would never have tolerated the existence and operations of those groups if they were not serving the interests of the Provisional IRA. They are very useful and will be deployed to threaten us; and they can then be disowned.

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I spoke of two significant events. The second was the fact that the Government, and this Secretary of State in particular, are now confronting Sinn Fein/IRA and calling their bluff. They are not sheltering behind the Unionists, and they are at long last representing the large majority who do not want to live in a most fragile peace courtesy of Sinn Fein/IRA. Of course it is a risky policy, and Sinn Fein/IRA will make, and no doubt carry out, many dire threats, such as Gerry Adams's latest threat that this will make the IRA break off talks with the commission. So what? It has not discussed anything but its own agenda, which is not to give an inch.
There will be dangerous times ahead, and the maverick element in Unionism could still, alas, present problems, as could the loyalist paramilitaries. The Irish Government will want very badly to appease Sinn Fein/IRA for internal political reasons—and I fear that we may be trying to do so to some extent through the disqualification Bill and in possible legislation to allow Sinn Fein to raise funds abroad. The Bloody Sunday inquiry opens in Londonderry next month, to add to the possible flashpoints.
I strongly urge the Secretary of State—who has understood so well that the IRA, like any other negotiator, knows when it has met someone prepared to call its bluff—not to forget even now the need for confidence building in the wider community. It is not only Protestant Unionists who feel that this is not the time to make changes in the RUC, whose courage and professionalism we shall need more than ever, nor to consider tacit deals which might be proposed to equate paramilitary arms with those of the regular forces and lower our defences. Any move towards trying to find ways to please the IRA will only confuse the issue and weaken the Government's case. I beg them not to appease.
I believe that the Executive is strong enough to resume its work in due course, without loss of effectiveness, when the conditions are right and that, meanwhile, much can be done at local level. I hope that Northern Ireland Ministers will associate appropriate members of the Executive with the practical work, if that is possible.
After the commitments made, we have no choice but to suspend the process now. The Secretary of State has shown both courage and resolution, and I have confidence that the two governments will now find ways to enable the IRA to enter the real world, without, however, confusing that with further appeasement. I think we all recognise that there will be a dangerous period of uncertainty—and of course we may not solve the problem—but any other course than the one taken would have been far more dangerous. Meanwhile, it is not yet time for so-called normalisation. The IRA has not gone away.
4.27 p.m.
Lord Eames: My Lords, like many who have lived and worked in Northern Ireland for most of their lifetime, I find a mixture of emotions as I address the
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Bill. First, I find sadness that, after so much suffering in the Province, a period that appeared to offer the promise of hope appears to have been eroded. I find disappointment because the efforts of two governments and politicians, many of whom have shown exemplary courage, appear to have produced stalemate. I find frustration because the political process has been unable to produce fresh stability and hope for a long-suffering community. Above all, I find a sense of sorrow—for Unionists and Protestants, nationalists and Roman Catholics, who in overwhelming numbers trusted. Today they question whether that trust has been returned.
As a churchman of no party political allegiance who has ministered through 30 years of violence, death and destruction and who has seen the depths of loss suffered by so many families because of terrorism, I see the necessity of the Bill as a sharp reminder of reality. That reality is that the long, long journey to political stability in Northern Ireland has reached a point of sober reflection. Far from being the end of a journey in which so much has been invested, we have reached the point where a basic question has to be faced—but faced not through language of condemnation, victory or surrender, but with a realism born of experience. To me, that basic question is: how can we remove the negative, destructive and life-threatening forces from society and make political progress without losing all that has been gained in the past few years?
As the noble Lord, Lord Rogan, reminded us, much has been achieved, but beyond that progress, and even the Bill we are now considering, the one element that we have failed to achieve in Northern Ireland is the total removal of the instruments of destruction. They hang over us like a sword and appear from time to time in varying intensity. But they have a definite link with the two elements that must be stressed in the sense of reality: fear and trust. Even now, fear and trust go hand in hand in the Province. Until we build trust between and within communities and among individuals there is a continuing danger that these weapons—the subject of the decommissioning debate—will be used. Above all else, that is what brings us to this moment.
Beyond the established political realities for Unionists and republicans, we must remember the important moral issues as we address the Bill. If we are to see its implementation by the Secretary of State in the next few days I urge the Minister and, through him, the Government and all parties here and in Northern Ireland to do all they can to keep open the doors of dialogue. From my point of view, and I believe many others, the real risk is that if the Bill is implemented in the next 48 hours or so there will be a sense of déjà) vu and, with the lifting of pressure, the negative issues on all sides of our community, which have been so detrimental to party political progress, will come into full play. I beg both the Government and this House to recognise that that is the biggest single danger to be faced, not only during the further review, but when this Bill, with its consequences, is implemented.

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It would be very easy to close the door and walk away from discussion in the weeks ahead. Such action would be disastrous for us all. The door must stay open. If we are to have any real hope for the future, neither a return to direct rule nor real or imaginary excuses by any politician or party in Northern Ireland to withdraw into the perceived comfort of political closets will achieve anything. If we are to find democracy, shared responsibility, leadership and communal decency, all instruments of destruction and death must be removed from the scene once and for all. Too many lives have been lost for us to have any doubt in our minds that the removal of such instruments, whether in republican or—let us not forget—loyalist hands, would be a major step in building up the confidence and trust to which I have referred.
I recognise the difficulties that so-called decommissioning presents to both communities. I also recognise that there are times when we dwell in a fairytale world in which decommissioning appears to be the last obstacle to he removed. Let us be honest about: there are many elements of the armaments in Northern Ireland which could be replaced in less than 24 hours. Let us be honest about the existence of Semtex and the use made of agricultural fertilisers. That is not the point. As I travel between here and Northern Ireland and listen to debates in this House, I sense an unreality about decommissioning. We seek the decommissioning of a mindset, attitude and feeling on the part of some that as long as they possess these weapons they can get their way. That is immoral, undemocratic and, as the noble Lord, Lord Fitt, reminds us constantly in this House, one of the greatest underlying causes of mistrust and fear.
At the moment, within the Unionist as well as the republican community there is great confusion of thought. We are told that those in the republican community do not trust their Unionist neighbours. I make no apology for saying that within the Unionist community there is a deep and palpable desire for lasting peace and stability, but also a feeling that the pace and cost to them of the political peace process has resulted it a hardening of attitude to decommissioning. Whether we like it or not, that reaction is summed up in the perception that it has had to give, give and give again without achieving what it wants most: the removal of weapons.
Those are just a few of the realities that underlie the debate on the Bill. But those realities cannot be divorced from this debate or any review that follows in the days ahead. I refer to Clause 2 which bears the description "Ending suspension". As we debate this Bill, let none of us forget that if there is not a continuation of dialogue and a recognition of the cost of political failure in lives and destruction, Northern Ireland will face years of continuing danger and erosion. I genuinely believe that there is a will to progress in both communities, and the people of Northern Ireland of all shades of opinion deserve it. The Churches are ready and willing to play their part in practical ways. I pray God that we shall all find new courage and trust to see a way forward together.
4.37 p.m.
Lord Molyneux of Killead: My Lords, I am greatly relieved to follow my noble friend Lord Eames the most reverend Primate of All Ireland. In that role he is responsible for my spiritual well-being but cannot be held accountable for my words and actions in the temporal sphere, and for that he must be very thankful.
I intend to be brief because much has already been said. In any case, I have tabled amendments for the remaining stages of the Bill tomorrow which I hope will also be constructive and brief. I support the Bill for two reasons. First, if the Bill is speedily implemented, it will protect the United Kingdom from censure, and possibly expulsion, from the European Union. The EU is now threatening Austria because 27 per cent of its electorate voted for the Freedom Party which does not contain convicted terrorists or rely on a terrorist wing. That is the situation as I understand it. In comparison, Her Majesty's Government have placed in government—we all share in this responsibility—those whose record is plain to see. For some reason, the Foreign Secretary has ignored the highly dangerous position in which Britain finds itself. None the less, the Bill will remove that fault, provided it is implemented speedily.
My second reason for supporting the Bill is that it protects David Trimble from a very great peril. It has already been said—I join in the tribute to Mr David Trimble—that in the Mitchell review last autumn it was clearly agreed, without any fanfare of trumpets, that someone should blink first. By that, it meant the two main protagonists, David Trimble and Mr Adams. That was refined subtly to a further demand that some one should jump first. That David Trimble did—not in the recent few weeks but as far back as the end of November—by simply putting in a sealed letter the date by which he felt that he could sustain his position no longer if his jumping first had not been followed by that which Mr Adams implicitly agreed to do: to jump as well.
So noble Lords can be forgiven for resenting the treatment meted out by the Northern Ireland Office. I exonerate all the Ministers because they are not entirely masters in their own house. That department makes a practice of prematurely producing legislation in advance of what one might term reasonable proof that its exotic schemes are likely to survive the test of constitutional realism. It has become standard practice to dash ahead of mature consideration and hope that wishing will make the matter come true. That procedure worked originally two years ago when the Belfast agreement was endorsed by a population stampeded and bewildered by a propaganda campaign which would have reduced Dr Goebbels to the role of tea boy.
It is not surprising that the thousands of "Yes" voters now feel embittered by false promises made at the highest level and never delivered. It is inevitable that all the spin doctoring and brainwashing should produce a swings-and-roundabouts attitude even at collective party leadership level. Hence the demeaning

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impact upon the Parliament of the United Kingdom, this House and another place. Your Lordships will remember the year 1998 when we in this House were stopped in our tracks from considering a major Northern Ireland Bill because the Secretary of State had acted in contradiction of the department's decision 24 hours earlier. It has to be accepted that such behaviour is bound to damage the standing of governments and of Parliament itself.
Having made mention of those examples of the unworkability of schemes in general, it is surely now in the national interest to examine the problems which were apparently unforeseen. In all three regions—Scotland, Wales and Northern Ireland—there was much rejoicing over the phrase "power back to our own hands". Two years on, local leaders are judged not on their ability to exercise the power delivered back into their hands, but (to use an ominous phrase used in all three regions of the United Kingdom), "to stand up to London". That means to stand up to the policies of the supreme sovereign Parliament of the United Kingdom, and in particular to the Treasury.
As regards Northern Ireland, there will be much bleating about the vacuum. But with 30 years' experience behind me I propose with great respect and in all humility an effective remedy. I support the remarks of the noble Lord, Lord Eames: that dialogue must be kept going. But dialogue is very different from a form of scaled-down or upgraded Mitchell review. We need an upgrading of local government. That was promised over 20 years ago and rejected or sabotaged in the early 1980s on the ground that "it was not enough", although it had been endorsed a few weeks earlier by 14.5 million of the United Kingdom electorate. Yet still "it was not enough".
I know that the proposal was not enough for the ambitions of the Northern Ireland Office and its big brothers in the Foreign Office. For them there is no scope for international summits in doing something modest and workable. It is dreary stuff; it is not of interest to the press, television, and so on. We have been restricted to high-wire acts without even a safety net. But a remarkable scene has developed in Northern Ireland. The noble Lords, Lord Eames and Lord Fitt, touched on this issue. Local councils have made great progress despite the fact that they were deprived of much of their power—I have to admit by my own party, no doubt with my support in the early 1970s. But they have clawed back power which they were never meant to have. They are exercising that power in the best interests of the entire community.
I give noble Lords one example of a neighbouring council with an Ulster Unionist majority. It can outvote all the other parties put together. It has chosen as its mayor a Catholic from the SDLP Party. Not only did it give him a term for the sake of it; it re-elected him for the current year because it admired the way he was guiding the council with the full support of all but one tiny party, the identity of which noble Lords can guess.
However, perhaps most significant is the Belfast City Council which is only one step down from the Assembly. There, one has representatives of all the
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parties, including Sinn Fein, and others, so-called loyalist paramilitaries, sitting round the council table. Because they respect the wishes of the electorate who sent them there, they co-operate in the best interest of the entire community. My noble friend Lord Rogan is under their jurisdiction in the sense that he is a resident and a ratepayer. But that is a burden we all have to bear!
Let us give Belfast City Council—the largest one—and its fellow councillors in every other area a further range of responsibilities. I shall be rash and guarantee that within one year we shall see a transformed Northern Ireland. But we shall not achieve that if we go for yet another Mitchell review, the high-wire act, television cameras on the lawn, with journalists buttonholing all the participants as they enter and leave the council locality, and setting one side against the other. We need quiet, calm deliberation; trusting each other. Let there be private talk but, whatever else we do, let us make certain that we give real substance to that new spirit to which every speaker has subscribed. It does not owe everything to the Good Friday agreement. It was taking place long before that. Let us make certain that that is now underpinned and made to stick.
4.48 p.m.
Lord Hylton: My Lords, I share the sadness that has been expressed at the perceived need for the Bill before us today. That sadness is a little mitigated by one small item of good news: that the Springfield Road campus for university and further education is now, at last after many years, to go ahead. I know that local people on either side of the peace line have been widely and deeply consulted about that project. It has generated a great deal of worthwhile cross-community collaborative work.
I welcome the fact that this Bill provides for a restoration order. Like the two previous speakers from these Benches, I plead as strongly as I can for the maintenance in Northern Ireland of all possible channels for political dialogue. I should like to mention a few of them. First, the Executive is still in existence today, as I understand it. Could it not continue in shadow form during whatever interim period we may be facing? Secondly, the Assembly has been elected and set up at considerable public expense. Could it not continue in a consultative, if not a legislative, mode? It may be that the Assembly will have to be called something else. Perhaps it might be renamed the "Convention"; I know not.
There is so much that it could usefully discuss. For example, there is the reform of the criminal justice in Northern Ireland; the prevention of crime; and the development of restorative justice at local level. Those are issues in which I have a personal interest. Could it not also discuss the future of policing, which is another urgent and serious question? Could it not take much further than hitherto the accountability of the many quangos?
The cross-border bodies have been mentioned already. I hope and pray that the essence of their work will be continued by whatever means. They are

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important, possibly vital, bodies. It is most desirable that there should be no break in the continuity of that kind of work. The Belfast agreement provided for something called the Civic Forum, drawn partly from voluntary organisations and other bodies. As far as I know, it has not yet started work. I believe that it could have a role in developing and strengthening civil society.
As the noble Lord, Lord Molyneaux of Killead, mentioned, there are the district and city councils, particularly those, as he indicated, which have developed varying degrees of power-sharing among their political parties and membership. Surely ways could be found to enable them to undertake greater responsibilities.
What is the alternative if ways of continuing political dialogue are not found? In that case I believe that those outside politics, the splinter groups who have always rejected agreement, and the political parties who have not signed up to the Belfast agreement or who wish to see major changes and revisions, are the kind of people who will benefit. That would be most unsatisfactory.
I make two other points. I hope that ways and means will be found for having available conflict resolution processes to deal with the most contentious issues that exist in Northern Ireland. I mention one; namely, the routing of those marches on which agreement cannot be easily or readily found. By conflict resolution processes, I mean independent processes professionally assisted by qualified people. Methods of these kinds can lead to shared analysis and to problem-solving approaches.
Finally, I strongly support all that my noble friend Lord Eames said about the importance of building trust, the role of the Churches in helping to achieve that, and about building peace at every level of society. I am sure that he is only too willing to give a strong lead with a view to having all the Churches working in the same direction. I trust that this can happen.
4.55 p.m.
Lord Desai: My Lords, this is a sad, but not unforeseen, event. On the last occasion we spoke on this subject my noble friend Lord Dubs did himself out of a job while moving an order. I remember saying that if the IRA decommissioned there would be other IRAs. It is the nature of the IRA to have different incarnations. Last Sunday we saw that another splinter group has become active.
There has always been a difficulty to which I have alluded before. The central difficulty is that we have both a post-colonial situation and one within the jurisdiction of a sovereign country. History hangs on that question, as the noble Lord, Lord Glentoran, said. My noble friend Lord Prys-Davies spoke about the anti-colonial struggle and the noble Lord, Lord Tebbit, spoke about a victorious army. I do not believe that the IRA is a victorious army; it is an undefeated one. That is one difference.
On the one hand we have a settlement within the jurisdiction of the United Kingdom Parliament and on the other we have a kind of hangover from an old
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colonial struggle. That makes it very difficult to grasp the IRA situation properly. As already stated, the IRA was not part of the Good Friday agreement. I do not condone what it does. As also stated, it never promised to decommission. A number of leading people, responsible politicians on all sides, thought they understood there was a promise to decommission. As recently as last November David Trimble thought he had an understanding of some sort. It defies all the knowledge of history which these leading figures must have. An army which decommissions ceases to exist. The IRA would have to wind up if it decommissioned. I hoped that it would. But because that was never explicit we have now reached a situation where the present period of devolution has lasted for a shorter period than that of 25 years ago. I never thought that that would be the case.
We have to do what we have to do. There is no escape from that. There have been various hopeful suggestions which I wish to emphasise. The noble Lord, Lord Molyneaux, says that across Northern Ireland there are examples of co-operative power-sharing between the various factions. The noble Baroness, Lady Denton, is unfortunately not in her place. I remember her saying in a previous discussion that we have practical experience. It is a very healthy sign that that has not been marred by the high theatricals at top-level negotiations.
I endorse what the noble Lord, Lord Hylton, said. I was going to say it myself, but he took my point. I hope that, either officially under Clause 2 of the Bill or unofficially, my right honourable friend the Secretary of State for Northern Ireland will keep some form of Assembly and Executive going, perhaps in a shadow form or as a review body. It should not be dismantled, although it could be stripped of its powers.
However, there is a difficulty because Clause 1(3) states:
"Neither the Assembly nor any committee of the Assembly is to hold a meeting or conduct any business".
That is unnecessary and I wish it was not in the Bill. I can see that under subsection (2)—
"No Act is to be passed by the Assembly"—
it can meet every day to discuss issues, but it just will not have any legislative powers. I wonder whether it is a little too strong.
Lord Tebbit: My Lords, I am grateful to the noble Lord, Lord Desai, for giving way. He might have gone on to say that a further difficulty is that if the legislation is used, when the Assembly and Executive are restored, the procedure for re-electing the First and Deputy First Ministers will be precisely the same; and the odds are that they will be precisely the same Ministers, which means that it will be impossible to restore the Assembly and the Executive unless in the mean time there has been a real change over the decommissioning of arms.
Lord Desai: My Lords, I am grateful to the noble Lord for that intervention. I agree with him and I want to deal with that issue.

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I want to raise the problem of the constitutionality of the Bill. The noble Baroness, Lady Park of Monmouth, addressed the problem, but I want my noble friend to confirm that it is the case. In last Saturday's Irish Times, my colleague, Professor Brendan O'Leary, wrote an article in which he raised doubts on this score. I am not a constitutional expert, but he is. Therefore, I quote from what he wrote:
"In effect the Good Friday agreement made Northern Ireland into a 'federacy'—a self-governing unit whose constitution could not be unilaterally altered by the Westminster Parliament without the consent of the devolved Assembly. For the UK Parliament to assume that right of suspension would be consistent with the agreement only if it were to be supported by the Assembly through cross-community consent procedures".
I have quoted that passage because I should like my noble and learned friend to say that my colleague is wrong.
The relevant point is that when we passed the Act in 1998 we also repealed Section 75 of the Government of Ireland Act 1920. I have heard that that is what gave north and south Ireland a right to self-determination. No one else has raised the issue and it would be good to have clarification of it.
There is another issue in relation to the election of the First and Deputy First Ministers. I am told that it is contained in the Good Friday agreement. My colleague states in his article:
"However, within the letter and procedures of the 1998 Act, agreed by the parties as the UK enactment of the Good Friday agreement, the Assembly can propose, by weighted majority, any intro vires amendment to the procedure for electing the First and Deputy First Minister, which could then be sent to Westminster for ratification".
That refers to the point made by the noble Lord, Lord Tebbit. Politically, it would be impossible to get two different First and Deputy First Ministers, but there is a great deal of ambiguity about what is and is not possible under the agreement. After all, the Good Friday agreement is an international treaty; it is not a piece of UK legislation. Therefore, if we do not fulfil the obligations perhaps we can be taken to some European court or other. It would be bad luck indeed if that happened at this stage.
5.4 p.m.
Lord Armstrong of Ilminster: My Lords, I share the disappointment expressed by other noble Lords at the developments that have made it necessary for the Government to introduce the Bill. I wish that I could say that I was as surprised as I am disappointed. An hour or so ago, a noble Lord with whom I have in the past worked on Irish matters said to me, "We have been here before". Well, not quite here perhaps, but brought up short by similar set-backs.
We are told by the IRA that the problem of decommissioning can be resolved, but not on British or Unionist terms. I suppose that that means on IRA terms. But we are not told what the terms would be. Any agreement must involve give and take on all sides. It may be literally true, as the noble Lord, Lord Tebbit, said, that there has never been a clear and formal
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commitment on the part of the PIRA to decommission arms or explosives. But we have been allowed—I might almost say "encouraged"—to hope and believe that as part of the peace process there might at least be a measure of decommissioning in the time-scale of the Belfast agreement and what developed from it. As that is not to be the case, the course which the Government now propose is, as one noble Lord said, the least worse course open to them.
I am attracted by the notion that, even if it is necessary to suspend the new institutions, we should keep discussion going and keep the doors open, as the noble Lord, Lord Eames, said. Whether that can be done by keeping on the move in shadow form the institutions that have been suspended, I do not know. I rather doubt it.
However, on that score, I want to add one comment. The past 15 years, since the signing of the Anglo-Irish Agreement at Hillsborough, have seen a great and growing improvement in the trust and confidence that persists between the British and Irish Governments. We have had much less megaphone diplomacy and much more serious and business-like discussion, if need be in private. I hope that I may be forgiven for believing that that improvement was one of the results of the Anglo-Irish Agreement of 1985; both of the agreement itself and of the process of discussion and negotiation that led up to it.
If the new institutions in Northern Ireland, and between the two parts of Ireland and within the British Isles as a whole, now have to be suspended, it will be of the first importance that that growth of confidence, trust and co-operation between Her Majesty's Government and the Government of the Republic of Ireland should not be imperilled or impaired. That it should be maintained and improved is, and will continue to be, an indispensable element not only in resolving the present impasse but also in developing longer-term solutions to the problems of Northern Ireland.
Therefore, I hope that the Minister will be able to assure us that it will continue to be the care and object of Her Majesty's Government to make sure that their relationship with the Irish Government is not allowed to deteriorate as a result of suspension, but will be confirmed and strengthened.
5.9 p.m.
Lord Dubs: My Lords, I share in the sadness that this legislation is necessary, the more so as it contrasts with the hopes and excitement that some of us felt last December when devolution took place. That sense of hope and excitement was clearly marked in Northern Ireland, where most people felt that a new era had begun. For the two months of devolution, we have been able to watch the new Assembly at work and the new Executive has, by and large, functioned reasonably well. Furthermore, we have seen politics in Northern Ireland move forward to discussing the kind of issues that are the stuff of real day-to-day democratic politics. Whether that is the crisis in Northern Ireland agriculture or the location of a

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maternity hospital in Belfast, these are real and proper political issues. They represent a move towards democracy.
That is why the disappointment today is much more palpable because we have been able to see that the new institutions can work. We have seen the north/south bodies work, and yet, here we are, faced with the bitter pill that, overall, all parts of the Good Friday agreement have not come about. Nevertheless, I share the hope expressed by my noble friend Lord Fitt that, even at this late stage, with only a couple of days to go, might it not be possible for the IRA to decommission some of their store of weapons and explosives? If they were to do so, the whole situation in Northern Ireland would yet again be transformed.
Life today for the people of Northern Ireland is immeasurably better than it was several years ago. There is peace; it may not be total security, but there is a measure of peace. We can see more prosperity. As the noble Lord, Lord Molyneaux, pointed out, all over Ireland we can see better co-operation across the political divide at the local authority level. Positive works of co-operation are taking place in local partnerships. The noble Lord, Lord Molyneaux, mentioned Belfast City Council as an example of one local authority, but of course there have been many others.
The noble Lord also touched on local government reform. I agree with him that that reform is necessary. However, I am not sure that now is the right time to embark upon it. I had always hoped that the new Assembly and Executive would seize this issue and make progress en it. Certainly it is a matter that, sooner or later, must be addressed.
Over the years I have tried to understand the position of at least some of the main parties in Northern Ireland. One conclusion I have come to is that most of them have very little margin for manoeuvre, when one takes into account the constraints under which they operate. Certainly I am convinced that David Trimble, who has shown enormous courage in the moves that he has made, does not have much more margin for manoeuvre over and above what he has already done. I do not believe that he would have been able to set up the Executive through the support of his Ulster Unionist Council without agreeing that there would a further meeting of the EUC—the one that is to take place on Saturday—nor indeed without the draft letter of resignation that he has penned.
Over my time in Northern Ireland I often heard members of Sinn Fein saying that David Trimble must face down the Unionists; that was the phrase they used. On the few occasions that I entered into discussions on this, I would say that David Trimble had moved as far as he could—although that is not a phrase that I particularly like to use. Last November he then moved even a little further. He did so publicly. We know what is going on in the Ulster Unionist Party. It is public and out in the open, as it should be with a proper democratic party. For that reason, we can make our own judgment about how little room for manoeuvre is available to David Trimble.
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Last November David Trimble stated that he would be prepared to jump first, provided that the IRA jumped afterwards. As I understand it, he made it clear that he would not have long, after jumping first, before the IRA would need to jump, otherwise he would not be able to hold his position. Indeed, sadly, that has proved to be the case. The question that we should now ask is: why did the IRA not jump when it knew the position he was in and knew the basis upon which the Assembly set up the Executive?
Personally, I believe that the leadership of Sinn Fein does want decommissioning; or at least I think that I believe that. I am not certain because we do not know. Such discussions are not held in public, unlike those of the other parties in Northern Ireland. But I think that there is at least a chance that Gerry Adams and Martin McGuinness would like to see decommissioning come about. However, they have not managed to secure support for that within the Sinn Fein/IRA organisation.
I have heard senior members of Sinn Fein state in public meetings that they personally believe that decommissioning must take place. Indeed, perhaps I may refer to the IRA statement published a few days ago. Some parts of that statement are unhappy and uncompromising, but I should like to quote a few lines from the end:
"We recognise that the issue of arms needs to be dealt with in an acceptable way and this is a necessary objective of a genuine peace process.
For that reason, we support efforts to secure the resolution of the arms issue. The peace process is under no threat from the IRA"
If that means anything, I believe that it means that the IRA has moved on the position it held some time ago. How much it might mean, I cannot say, because there are certain enigmatic phrases in the statement. However, I believe there to be an element of movement, or otherwise what do the words,
"the issue of arms needs to be dealt with",
mean? That must mean something different from the present position.
Lord Tebbit: My Lords, I think that the noble Lord, Lord Dubs, is clutching at straws, and I can understand why. The statement of the IRA is not incompatible with the position that it will give up its arms when the British Army—the army of the United Kingdom—is disarmed in Northern Ireland and has left. That is what the IRA is saying in that statement; nothing more except to provide—shall I say?—hope to people like the noble Lord, Lord Dubs, in order that it may continue to take us down the road of granting concessions while it gives nothing back.
Lord Dubs: My Lords, I am not trying to take anyone down a road; I am only trying to make a speech giving my own views based on some experience of Northern Ireland. I did not say that I was certain that the statement meant anything, only that it was possible. We need to look at what is going on. In his speech, the noble Lord, Lord Tebbit, did state that perhaps we should spend our time today considering

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the views of the various parties in Northern Ireland. For that reason, I took him at his word and have done what he urged us to do.
This is my tentative conclusion. By no means am I certain that I am right, but there is some supporting evidence here. I believe that the leadership of Sinn Fein feels that there are more political dividends to be gained if it pursues the political option of seeking to increase its political support in Northern Ireland in the nationalist community and in winning a few TDs in the Republic. In this House I do not need to develop the benefits that would accrue to republicanism if it were able to do that. However, provided that it is done using peaceful democratic means—we may not share the objectives—we could agree on the methods used. I believe that there is some indication that that is a part of Sinn Fein's agenda.
I listened to parts of yesterday's debate in the other place. I know that Seamus Mallon does not want suspension to take place, although I would argue that, if the Executive collapsed, that would be a worse outcome for the future of the peace process than if we implement this legislation, because at least we shall keep the First Minister and Deputy First Minister in place. By doing that we shall be in a much better position to resume the review and the negotiations to get the mechanisms re-established as soon as possible.
I should like to say for the sake of those in Sinn Fein who attack this Government's record by suggesting that we have not played our part by the Good Friday agreement, that I believe that we have. We have introduced human rights legislation, the Equality Commission and we have tackled the difficult question of the RUC—perhaps not to everyone's liking, but we have certainly grasped that problem. The review of criminal justice will shortly be completed. We have reduced the military presence on the streets and there are now fewer troops in Northern Ireland. Furthermore, we helped to put the Executive in place, along with the north/south bodies, the Council of the Isles and the implementation bodies.
Above all, there is the question of prisoner releases, to which the noble Lord referred. That has been a painful and difficult issue for many people here, and, goodness me, so much more difficult for the people of Northern Ireland. They may be related to or friends of victims of the people who have been released. We received much opposition in this House, but we had to argue—certainly, I argued when I had some responsibility for these matters—that we should to do that because, difficult as it was, it was the price of achieving a peaceful settlement.
However, I say to the republicans in Northern Ireland that under the Good Friday agreement there was no starting date for prisoner releases, no starting date for dealing with the question of the RUC, no starting date for reducing the number of troops in Northern Ireland and no starting date for the criminal justice review. We, the Government, started all that. Therefore, when they say that in the Good Friday agreement there was no starting date for
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decommissioning, certainly, there was not. However, in terms of good faith and building up trust, it was clear that that was a proper expectation, and we achieved many difficult things. Therefore, it is reasonable for the Government to say, "Why can't you do your difficult things as well?" That, after all, is what we urged should happen. It has not happened yet, but perhaps it is still possible in the last few hours.
I talked to a person from the nationalist area of Belfast only the other day. He said to me, "People there are saying that decommissioning will happen sooner or later. Why not now?" Whether or not that is typical of the views of the community, I do not know. However, that was a view which was put to me.
Perhaps I may spend a moment or two discussing the way forward. I believe that it is important—and other Members of this House have said so, too—that we ensure that the process of trying to achieve the full implementation of the Good Friday agreement continues. We must encourage all the parties to meet the challenge of getting the Executive and the Assembly up and running again and the Good Friday agreement implemented in totality as soon as possible. I appeal to all the parties in Northern Ireland to enter into that review process as soon as possible because we must protect the many gains of the Good Friday agreement on behalf of the people of Northern Ireland. There are gains; we must protect those and move forward.
Therefore, I urge that the talks should begin as soon as possible and that the close co-operation between the British and Irish Governments, to which the noble Lord, Lord Armstrong, referred, should continue and form the basis of the move forward. I believe that the Good Friday agreement is the best—indeed, the only—assurance of permanent peace in Northern Ireland. We need the Good Friday agreement, devolution and decommissioning to happen. That must be the main aim of the Government in Northern Ireland over the coming period because the people of Northern Ireland deserve no less from us.
5.22 p.m.
Lord Cooke of Islandreagh: My Lords, we have heard some important and powerful contributions this afternoon which, I am sure, will be listened to and read with great interest. They have been most helpful in this difficult position in which we find ourselves.
I believe that we have no alternative to this Bill, for reasons that have been explained. However, unfortunately the suspension on Friday must take place so that the structure of the Executive can remain intact and, it is hoped, be reinvigorated after a short delay. It has been remarkable and pleasing to us all to see how well the Executive has got up and running, even for a short time, and how Ministers have shown the value of local control of Northern Ireland departments. For 30 years, we have existed in a democratic vacuum in Northern Ireland. As the years have gone by, the absence of local input has become increasingly obvious. Two months of devolved

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government have made clear how much there is to be done and how important it is that the Assembly and Executive are re-formed as soon as possible.
Even in a short time, devolution has shown that Unionists can work well with SDLP colleagues, and vice versa. However, I am not so sure about the members of Sinn Fein. They have had a political agenda of their own; for example, it is not helpful to order that the Union flag is not to be flown on the buildings of the Sinn Fein Minister's department.
I believe that devolution, in itself, was remarkable because we appeared to have reached an impasse in the late autumn. However, thanks to Senator Mitchell's intervention, the possibility—"opportunity" is perhaps too strong a word—which David Trimble grabbed showed that he had very great courage in jumping first and testing just how valid was the IRA's intention to decommission.
However, the problem which we now face goes back to the Good Friday agreement. That agreement does not require Sinn Fein/IRA to decommission. The noble Viscount, Lord Brookeborough, spelled that out in detail. Immediately the agreement was published, that vital flaw was seen and recognised, and various promises were made that the difficulties would be overcome. I need not go into the detail of that, but this basic fudge has had serious effects on people's feelings in Northern Ireland. There are now few people who trust the Government, and our new Secretary of State, Mr Mandelson, has a mountain to climb before people begin to believe what Ministers say. He has started very well; he has spoken very clearly in the other place, and I wish him well.
That lack of confidence is compounded by something else. For five or six years, governments have largely disregarded the majority in Northern Ireland who are proud to be citizens of the United Kingdom. Governments have offered Sinn Fein/IRA—clearly, a terrorist organisation—one inducement after another in the hope that that would persuade it to give up bombing and murdering and to destroy its weapons. Sinn Fein/IRA has pocketed each gift without a "thank-you" and has demanded more. When will government realise that that policy does not work?
The declared intention of changing the name of the Royal Ulster Constabulary is an insult which, to many people, is unbearable. It will not make any difference as to how Sinn Fein behaves towards our police service, whose duty it is to uphold law and order. Sinn Fein will not accept any police service, no matter what it is called. The intention has been to find a title which will be acceptable to the people of Northern Ireland, but it will not be acceptable to them. It is ironic that the only title which is acceptable to the majority in Northern Ireland is "the Royal Ulster Constabulary".
As a consequence of that and similar issues, the thoughts and feelings of peace-loving citizens of every type and creed are in turmoil—a mixture of anguish and confusion. My noble friend Lord Eames referred to that and I can only confirm that I believe that to be one of the problems. It is important that efforts be made to allow people to think clearly, and I hope that
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we now have an opportunity to do that. I beg government to realise that all the presents and inducements in the world will not persuade Sinn Fein to decommission. There are said to be only 200 or 300 hardcore republican terrorists in the island of Ireland. To suggest that there is not another way to deal with them is, I believe, absurd.
In recent months it has been suggested that we are now at peace in Northern Ireland. Yes, we have been spared widespread bombing and indiscriminate shooting, but there are many areas in our cities, and towns which are controlled either by Sinn Fein or by so-called "Protestant paramilitaries". In Sinn Fein-controlled areas, there is clearly a plan to retain control of the areas in order to prove that Northern Ireland is ungovernable. We must remember that Sinn Fein/IRA's declared objection is unchanged, and they have said that themselves: to get the Brits out and to have the whole of Ireland governed by Sinn Fein. Recently, Mr Adams projected that that would he achieved by 2016.
In those areas, intimidation, beatings, torture and expulsions continue on a daily basis. Witnesses dare not go to the police because they know what will happen to them if they do. To bring law and order to those areas will be a difficult job which will take years. But until it is achieved, we shall not have real peace in Northern Ireland.
For some people to suggest, as they have, that this suspension will lead to a break-down and that it will take a generation to recover the situation is, I believe, quite untrue. We now have capable, courageous politicians in Northern Ireland. In addition, there are many wonderful men and women who work night and day for peace and to bring people together. Things need not slip back and, with a little clear thinking, could move forward quickly.
I have noticed that there is still a thought that the IRA will decommission. I have lived a lifetime in Northern Ireland and have had all too frequent experiences of and acquaintanceships with the IRA. I believe firmly that it will never decommission on its own. We must face up to that. There are, perhaps, only 100 or so people but the belief is in their bones that they are the rightful army of the Republic of Ireland. That is their belief and they do not recognise that they are in any way defeated. That is a real problem. I do not believe that the IRA will decommission of its own will. It will make all sorts of statements, as it has done, but it has never said that it will decommission. We must take account of that.
5.31 p.m.
Lord Cope of Berkeley: My Lords, I suppose that by now, we should be used to the good days and the bad days of Ulster politics but, somehow, one never does quite get used to it.
I agree with all other noble Lords who have spoken that this is a sad day and we have had a sombre debate. But like everybody else, we support this Bill in the circumstances which face us. Nobody explained the sadness of the day more movingly than the noble Lord, Lord Eames.

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However, there is a wise political saying that things are never quite as bad and never quite as good as they seem at the time. Of all the areas of politics, that has proved particularly true of Ulster and I hope that it proves to be so again.
As has also been said, in any negotiation one must try to understand all the parties to the negotiation in order to see how progress can be made. Several speakers have attempted to unravel that. There has been a particular concentration on the Provisional IRA. That is not because we do not all recognise, as we do, the importance of the so-called loyalist paramilitaries as well as the Provisional IRA but because the loyalist paramilitaries have apparently said that they will decommission provided that the Provisional IRA does so. That is a long-standing position. It has not just arisen in recent months. So, naturally, attention has been on the Provisional IRA.
It seems that there are many in Sinn Fein/IRA who now believe, quite accurately in my view, that violence has not worked and will not work. The people of Northern Ireland and Great Britain have amply demonstrated their robustness in the face of terror over a very long time.
My noble friend Lord Tebbit asked about the intentions of Sinn Fein. Sinn Fein tells us that it is separate from the IRA. That is an important element of its argument. But if that is so, why can Sinn Fein not tell us what it thinks about whether the Provisional IRA should decommission?
The noble Viscount, Lord Brookeborough, read a passage from the Belfast agreement and I wish to read two other sentences from the same page of the decommissioning section. In paragraph 1 it states:
"Participants recall their agreement …on 24 September 1997 'that the resolution of the decommissioning issue is an indispensable part of the process of negotiation'".
Paragraph 3 begins by stating:
"All participants accordingly reaffirm their commitment to the total disarmament of all paramilitary organisations".
Sinn Fein agreed to that. It agreed to the whole agreement even if it is said that the IRA did not. I should add that I do not believe that any of us saw that as a total solution to the violence. I remember remarking to your Lordships' House that, among other things, fertiliser cannot be decommissioned, quite apart from the fact that other arms can always be procured. We all know, as Irish history tells us, that breakaway groups are extremely likely to emerge—I put it no stronger—in the situation that we face.
Of course, the importance of decommissioning lies not only in the contribution it can make to security problems but also in the signal that it sends that democracy has been accepted as the way in which this matter should be taken further forward.
But this Bill shows that concessions made by democracy in the course of the implementation of the agreement can be suspended. It provides for the suspension of a large part of what was agreed at that time. I hope that the Minister will not mind me remarking that a large part of his speech was word for
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word the same as that of the Secretary of State. Of course, we should have been critical had it been too different. But the noble and learned Lord said that all parts of the Belfast agreement have been moving forward except for decommissioning. It seems to me to follow that all parts of the agreement should be at least subject to the possibility of the same pause that is provided for the Executive and the Assembly by this Bill.
If one side of the agreement is not to work out—notably, decommissioning—then the other parts of the deal will certainly need rethinking very soon. After all, we were assured repeatedly at the time we discussed the measure to release the prisoners that released prisoners could be recalled to prison. We did not think that that would be easy, but we were assured that that could happen if the rest of the agreement did not go forward, as it apparently is not doing.
Sinn Fein says that the guns are silent and also that the IRA has not yet failed to decommission because we have not yet reached 22nd May. But, as has been said by a number of noble Lords in the course of the debate, apparently, it has not even started to make clear commitments about the process.
It is not entirely true that the guns have been silent. For example, we know that the IRA is held responsible for five murders since the Good Friday agreement. That is slightly fewer than the loyalists, who are held responsible for five murders and in addition the murders of the three Quinn children who were tragically killed. For shootings and mutilations, the score is slightly higher on the loyalist side but it is much the same. There have been beatings and mutilations and 749 people have been exiled by the IRA since the Good Friday agreement; a similar number have been exiled by the loyalists. Two thousand and seventeen families have been rehoused due to intimidation either by the IRA or the so-called loyalist terrorists since the Good Friday agreement.
As the noble Lord, Lord Cooke, said, all this is about control of certain areas within Ulster. I believe that it is also about the preservation of the financial rackets which I have long believed are part of the momentum of the Troubles, and they need to be tackled accordingly.
A few moments ago I said that the decommissioning has not started at all, even in the form of commitments, but we cannot be sure about that because most of us have not seen the de Chastelain report. It is a pity that we have not seen it, not least because that inevitably leads to speculation as to what is in the report and why it is that we cannot be told what is in it. I do not want anything to be published that may be security sensitive—I would never call for that—but I believe that that causes a difficulty for the House. We have also had hints of another report by the general. It may help if the Minister can tell the House something about that this evening.
The really sad point is that in other respects there has been great progress. In local government and elsewhere people are working together. Several noble Lords have made that point so I do not need to dwell on it.

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Meanwhile the Bill provides for the possible reintroduction of direct rule. I have had some experience of direct rule, as your Lordships know, and I believe that direct rule is benevolent dictatorship. I like to think that we managed to provide—I do not make a party point as I believe this is a view held across the board—good government, but it was dictatorship and again it will be, if only temporarily, a form of dictatorship. It certainly damaged the political life of Northern Ireland no end.
If direct rule returns, I hope that it will be for as short a time as possible. We want to see a return to devolution as soon as possible. We also hope that the pause will be used positively for the redevelopment of devolution and democracy. As the noble Lord, Lord Eames, said, the doors remain open. I am sure that they will.
Meanwhile with this Bill we are almost signing a blank cheque on the basis of a report that we have not seen. We are trusting the Government and I believe that we are right to do so in this difficult situation. I hope that there is sufficient momentum in the massive desire for peace of practically everybody in Northern Ireland and in the rest of the United Kingdom that this is a pause and not a full stop. In Northern Irish matters hope is always essential.
5.43 p.m.
Lord Falconer of Thoroton: My Lords, I thank all noble Lords who have contributed to a thorough and well-informed debate. Listening to the debate it is obvious that many of your Lordships have a great deal of experience from a whole series of angles of Northern Ireland politics. Over many years noble Lords have lived through the highs and lows of the political process in Northern Ireland and understand the bitter disappointment of the people of Northern Ireland when set-backs occur.
It is patently clear that I am not alone in saying that I wish this Bill did not need to be brought before the House today. We all want to see a peaceful and lasting solution to the problems that have beset the people of Northern Ireland for so long. None of us wants the political process, which has advanced further than many thought possible in recent years, to lose momentum.
We believe that the Good Friday agreement provides the only viable basis for progress and we are saddened by the prospect that a lack of cross-community confidence in the institutions may require their temporary suspension. The vast majority of people in Northern Ireland want the agreement to work. They want local politicians to take responsibility for local decisions. Many noble Lords referred to the quality of local decision making. They have been encouraged by the professionalism, energy and commitment shown by the new Northern Ireland Ministers. They want this to continue, and so do I.
There can be no doubt that the agreement remains the best option for the creation of a new society based on consensus and the peaceful, democratic expression of political aims. I believe that this piece of legislation
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before the House today, regrettable though it may be, will provide a means to keep that goal in our sights. It has not been drafted in response to pressure from one party and it will not be triggered because of a potential resignation or a back-room deal. It has been introduced because we recognise that the institutions cannot survive if they fail to command cross-party and cross-community support and confidence. If that confidence does not exist, the Assembly and all the other institutions will collapse in disarray. We would be left with chaos in the short term and little hope in the long term. That would be a tragedy for all the people of Ireland.
Instead, suspension, if that is necessary, will afford a breathing space by providing for a pause in the operation of the institutions. It will enable us to carry out a review and to provide a context in which it is possible for all parties to focus their energies on moving forward together. It will also serve to protect the integrity of the agreement. It will make it clear that the agreement is a complete package. All of its various parts must be implemented in order for it to retain the support and confidence of the people and parties across Northern Ireland.
Because that has not yet been the case, because there is still a crucial component of the agreement where little substantive progress has yet been made, that confidence is fast ebbing away. If clear and credible progress is not made within the next few days, there can be little doubt that we must act and the institutions must be suspended. Neither I, nor my right honourable friend Mr Mandelson in another place could have been much clearer on that point.
I turn to deal with specific points raised in the course of the debate. First, a number of noble Lords, in particular the noble Lord. Lord Glentoran, mentioned the position of the Irish Government. The Government are in daily, if not hourly, contact with the Irish Government. We want to see the closest co-operation continue whatever setbacks we face.
Our first and shared aim is to see whether a basis can yet be found, even at this eleventh hour, on which the institutions can continue to operate with cross-community support. The only basis for continuation of the institutions is cross-community confidence. Without some significant and substantive change in current circumstances that will ebb away fast. Clearly, if there is no such improvement made quickly, both governments face very tough decisions.
I cannot answer for the Irish Government. I do not want to say anything that may prejudice their and our efforts to find a satisfactory way forward. However, the position of the British Government is clear. We have a duty to act, to preserve good government for all the people of Northern Ireland. If, because cross-community confidence has gone, the new institutions are on the point of collapse, we shall act to make alternative arrangements for good government in Northern Ireland and to preserve the institutions so that as quickly as possible their operation can be restored.

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Inevitably that will have implications for the north-south institutions, as is recognised in the agreement, which states that the functioning of the assembly and the north-south council are so closely inter-related that the success of each depends on that of the other. We shall need to make provision, in consultation with the Irish Government, for the practicalities as far as the north-south bodies are concerned. The clear principle underlying the agreement on which we shall act is that all those institutions are interlocking and interdependent.
Secondly, many noble Lords referred to the non-publication of the de Chastelain report, dated 31st January. Last Thursday, in a Statement made in another place, my right honourable friend Mr Mandelson gave a full account of the contents of the report. He said yesterday in another place,
"no further useful purpose is served by publishing the report because it does not contain additional information, other than that which I have already given the House, that would inform the House".—[Official Report, Commons, 8/2/00; col. 128.]
He added,
"in the event of a further report being delivered to the two Governments by General de Chastelain, we shall publish both so that they can be seen alongside each other".—[Col. 129.]
In relation to the contents of the report he said,
"In summary, General de Chastelain and his colleagues reported that, as far as the IRA is concerned, to date they had received no information from the IRA as to when decommissioning will start".—[Col. 128.]
Bearing in mind that the report is to the two governments, they are agreed that its usefulness to the House will arise in the event of a further report being issued by the decommissioning commission. In those circumstances my right honourable friend said he would judge it appropriate and necessary to publish both the original and further report but only at that stage. In those circumstances, I ask the House to accept the judgment of my right honourable friend.
Lord Tebbit: My Lords, I am grateful to the Minister for giving way, but what he said leaves me even more puzzled. If the Secretary of State told us everything that is in the report fully, frankly and openly, what is there that prevents him from publishing it? What is the damage in publishing the report if there is nothing in it beyond what we have already been told?
Lord Falconer of Thoroton: My Lords, the judgment is that at this stage publishing the report would not materially assist the peace process, and I ask noble Lords to accept that judgment.
I was asked a number of questions in relation to the review referred to in the legislation. First, it will be a review under the validation implementation part of the Good Friday agreement. The timescale of the review will ultimately be a matter for the parties. It is they who must work together to find an agreed way forward. Our hope is that a solution will be found quickly enabling institutions to be restored as soon as possible. The Bill before the House requires steps to be taken as
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soon as is reasonably practicable after a suspension to initiate a review. I am obviously not in a position today to say who the chairman of any such review may be.
The noble Lord, Lord Tebbit, said that the promise in relation to decommissioning was given not by Sinn Fein, not by the IRA, but by the Prime Minister. It was not the Prime Minister who said that decommissioning should and would happen; it was the Good Friday agreement. The agreement says,
"All participants [including Sinn Fein] reaffirm their commitment to the total disarmament of all paramilitary organisations".
That is what the agreement required. That is what the people of Ireland, north and south, voted for. That is why clear and credible progress of decommissioning is essential to restore confidence in the devolved institutions.
The question was asked as to whether it was possible to move this Bill without the consent of the Assembly. I can assure my noble friend Lord Desai that it is perfectly constitutionally proper to do that.
A number of noble Lords, in particular my noble friend Lord Desai and the noble Lords, Lord Hylton and Lord Armstrong of Ilminster, asked why the Assembly cannot continue meeting in shadow form but still talking. As most noble Lords recognise, the effect of Clause 1 of the Bill prevents the Assembly from meeting or conducting any business during a suspension. That means that it will not be able to function in a shadow or consultative mode. The Bill is not about providing an alternative role for the Assembly; it is about providing a complete breathing space in order for people to focus their energies on resolving the current difficulties. Of course Assembly members will continue to hold their position and still be able to make representations on behalf of their constituencies. Similarly, it will be open to the Government to consult with any individuals or parties on any matter, but not meet in the formal setting of the Assembly.
I hope that I have dealt with all of the main points raised in the course of this debate. I express my gratitude on behalf of the Government for the broad measure of support for the promotion of this Bill in another place and here today. Once again, I commend the Bill to your Lordships.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Employment
5.55 p.m.
Lord Lea of Crondallrose to call attention to changes in employment patterns in the United Kingdom; and to move for Papers.
The noble Lord said: My Lords, on 23rd and 24th March in Lisbon there will be a special summit of the European Union to be called the Special Council on Employment, Economic Reform and Social Cohesion, for a Europe of Innovation and Knowledge—not exactly a snappy title—which is

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strange, because the conference was largely inspired by the British Government. But it is nice to know that the art of compositing is alive and well in Downing Street.
When Harold Wilson made his famous speech about "the white heat of the technological revolution" at the Labour Party conference in Scarborough in 1963, the first Labour Party conference I attended, all the lobby correspondents there thought it was brilliant. They knew about as much about the white heat of technology as I did. But it was a great leap forward for the Labour Party and I certainly approved of it, even though for the citizens of Scarborough he might as well have been talking Greek.
Nowadays he would certainly add a couple of references to "e-commerce" and the Internet, calling the whole package "the new economy", and the story would be complete. Let me make it clear; it is a valid agenda and I support it. The analysis is correct. But how do jobs fit into it and the lives that the next generation will lead?
When we talk of employment patterns we think of farmers in mid-Wales, steel workers in Scunthorpe through to call centres in Glasgow and musicians in the Barbican. It is important that we do not generalise too much from any one industrial sector. Britain has created an extra 700,000 jobs in the past three years, many of them in distribution and business services, hotels and personal services. The public sector has stabilised but there should be no presumption that the big growth needed in social, health, transport and environmental services should not be through public agencies, albeit no doubt with some degree of hypothecation.
My thesis this afternoon will be that, both for economic and social reasons, we now need to put as much emphasis on the quality of employment as we do on the quantity of employment. How can we set out the vision which accommodates that? Some noble Lords may be surprised to learn that there are now as many managerial and professional workers—38 per cent of the workforce—as there are manual workers, also now exactly 38 per cent. We should not regret that in any way in so as that in itself is a trend in society towards improving the quality of employment. There was never much quality of life down a coal mine, but the redundant miners to this day do not have the quality of life of most people living in Wokingham. That is another issue concerning structural change. It was Walter Reuther, the leader of the Auto Worker of America who told Henry Ford, when the latter said he would not need so many workers, that he sure as hell needed some workers, some place, to buy his cars. So let us agree that we are talking about structural change, not the collapse of work.
There are unsatisfied demands in society. Over the past four decades civilian employment in the UK has increased by around 4 million, raising the size of the total workforce to 27 million. Most of us will have to get used to hearing the buzz words, "the new economy". I commend an excellent pamphlet entitled, Behind the Buzzword—The New Economy, written by John Philpott, 'Director of the Employment Policy
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Institute being published next week, from which I derived great benefit and on which I shall draw from time to time in my remarks.
The underlying theme is that developed economies are increasingly knowledge dependent, founded on information and communications technology, and ever more geared to the production of weightless services rather than primary and heavy manufactured goods. The idea of "weightlessness" is, apparently, attributed to Alan Greenspan, who noted that in 1996 the physical weight of US output was then little different from the 1940s, but the real value of output was three times higher. You do not need to be Einstein, or even Alan Greenspan, to work that out.
The story of economic growth is one of technological change and continuity. As one so-called "industrial revolution" succeeds the previous one, we should remember that change will be our ally as long as everyone affected can see how it can improve his or her quality of life.
Standard national statistics record that manufacturing employment is now well under 20 per cent of the total. A great deal more of the value added is now incorporated at an earlier stage in production and the computer hardware and software is itself an excellent example. But business and financial services—often serving manufacturing—now constitute a larger sector than manufacturing itself in the national statistics of employment. The jury is still out on how far the Internet is likely to lead to any step change in productivity. One is reminded of the remark of the American economist Robert Solow:
"I see computers everywhere, apart from in the productivity statistics."
The question of how we measure the value added of Internet services was at the heart of the issue of the price agreed between Time Warner and America On-Line. There are massive industrial policy issues involved here, many of which have to be addressed in the context of Europe. I am very glad that this is one of the areas on which I understand my noble friend Lord Puttnam will focus his remarks.
In some industries Europe is more successful than America. I need only mention Nokia or Vodafone to make that point. On the question of e-commerce, through Sub-Committee B of the European Communities Committee the House has an important study under way. We look forward to hearing the contribution from that committee's chairman, my noble friend Lord Brooke of Alverthorpe.
We must engender confidence in change, while recognising that disruption in people's lives is not a good thing in itself. It was one of my responsibilities at the TUC to convene representatives of managerial and professional representatives. In recent years there has been a massive groundswell of concern among them about almost every aspect of the contract of employment—whether working time, holidays, health issues and, in some cases, new technology. It is actually a big growth area of trade unionism. According to one survey, two-thirds of managers are subject to restructuring in any one year. Performance-related pay may be here to stay, but not

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everyone thinks that he is on this earth to vie with Sir Alex Ferguson as far as concerns his contract of employment. However, people do want a benchmark of quality for their contract. I have been a member of a so-called "high level" EU group on benchmarking. It is clear that adopting best practice between the countries of Europe on such questions as contracts of employment and contracts for service provision is a very useful way forward.
Women's share of employment has perhaps been the most significant structural change in recent years: 46 per cent of the labour force are now women; and about 70 per cent of all women are now gainfully employed. In the presence of my noble friend the Leader of the House (and Minister for Women), I need hardly add that women's issues have been given unprecedented prominence by this Government. They have, for example, implemented EU directives on such issues as part-time workers, fixed-term contracts and parental leave, all of which are clearly of central importance in improving the quality of women's contracts of employment and are also part of what is now called, as a new buzz word, "work/life".
Incidentally, those directives were all agreed in Brussels during the past three or four years at the instigation of the trade unions and then negotiated with employers under the Social Chapter of the Maastrict Treaty—though you would probably never know that if you relied on the press releases of the CBI or, for that matter, those from the DTI. Moreover, they are one of the most popular aspects of Europe in Scarborough and Scunthorpe, and also perhaps—I would not be surprised—among readers of the Daily Telegraph.
If we want Europe to become more popular, then any idea that these are the kind of policies we should keep out of sight is eccentric to say the least. But we must not exaggerate the number of people who are on short-term contracts at this stage. In 1999, temporary employment—that is to say, fixed-term contracts—represented 6 per cent of the labour force, if anything falling slightly. More traditional contracts continued to dominate the labour market. In 1999, they accounted for over 80 per cent of all work. Part-time work has shown a slow rise, increasing from 19 per cent in 1984 to 22 per cent in 1999.
People often talk about the seven-day 24-hour society. It may have escaped the attention of some people that three shift systems have been the norm for some industries for the past 200 years. They are now less common rather than more, even if call centres now employ two or three hundred thousand people on that basis. About 25 per cent of people say that they usually work on Saturdays; 13 per cent work on Sundays and 17 per cent work evenings. The figure for people working nights is 6 per cent and, as we established in connection with the Working Time Directive, they are basically the same people who have always worked nights; for example, those who work in emergency services, hospitals and hotels, as well as those who work as security guards and cab drivers. There is anecdotal evidence of more unpaid overtime by
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managerial and professional workers, and, of course, by teachers. But working from home via teleworking represents less than 1 per cent of all work.
I turn now to the question of job tenure. Whereas occupational change is quite rapid, this should not be confused—as I am afraid it often is—with the length of job tenure. Currently, 11 per cent work for the same employer for over 20 years, 20 per cent do so between 10 and 20 years and 19 per cent do so between five and 10 years. If you add up all those numbers you end up with exactly 50 per cent, which means that exactly half of working people stay in the same job for over five years. There was no change in that figure between 1985 and 1999.
There are more problems for older men. I would flag that up as part of the debate that has never really got off the ground in a satisfactory way; namely, the relationship between retirement age, pensions and flexible work. I know that my noble friend Lady Turner of Camden, who will speak later, has often addressed those issues. It is, of course, older workers who fear most being left behind in the development of information technology, but a recent poll found that around half of all the UK workforce shares that fear.
We face a range of separate issues in relation to young people. The Government have shown considerable courage in their policies for young people and the socially excluded. The New Deal is now about to meet its target of 250,000 in the year 2000. The dramatic increase in the demand for skills is best illustrated by the remarkable statistic that only 5 per cent of jobs offered are now for the unskilled. The national learning and skills council will have a very impressive budget of £6 billion and must set a target to close the gap in intermediate level qualifications as compared with France and Germany.
We are just beginning to counter the worrying increase in inequality in earnings from work. The minimum wage will start to help, as long as it is regularly uprated. The working families' tax credit is also a big step forward. America is more unequal than Britain or the rest of Europe, but does create more low productivity jobs. Our education reforms will ensure that we do not need to head any further in the American direction, with all that goes with that—hire and fire and winner takes all. Whatever else it is, it is not the "third way". There must be a limit to how far "downsizing" is the one knee-jerk test by the Stock Exchange for shareholder value.
The other major dimension is the regions. Public resources are, of course, crucial in dealing with the gap between winners and losers within the regions, as well as between the regions, as demonstrated by the opportune study by the Cabinet Office on regional and inter-regional disparities. The fact is that we have to run faster to stand still on regional as well as sub-regional disparities.

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Europe is starting to get its act together on active labour market policy, with guidelines on employment policy drawn up between national governments under the four headings of,
"Promoting entrepreneurship, addressing issues of employability, of equal opportunity and of adaptability".
Feedback from the TUC and the CBI has been positive both at the level of Whitehall and in the regions.
Northern Ireland has started to give a lead on this. I very much look forward to hearing the maiden speech of the noble Baroness, Lady Blood, who is from Belfast. I had some involvement with Jacques Delors leading up to the £200 million fund—300 million ecus—for Northern Ireland which, by all accounts, has led to a number of successful cross-community projects.
Regional disparities in prosperity are also at the heart of our macro-economic dilemma with what can be argued are inappropriate interest rates and exchange rates for one part of the country or another. Inward investment has made a huge contribution to keeping that problem under control and we must not put it at risk. Some 1,000 Japanese companies and 6,000 American companies already in Britain will soon run out of time for an answer concerning our future in Europe. Let us be clear, we are talking here about the British national economic interest.
We must find a stable, competitive and sustainable exchange rate. Many of us, of course, conclude that the zone of stability is the euro zone, after we have negotiated a soft landing. However, that is another debate for another occasion. I hope that I have raised enough issues for a useful debate. I beg to move for Papers.
6.11 p.m.
Baroness Blood: My Lords, it is with a good deal of nervousness that I rise to speak to this House for the first time, but also with a sense of wonderment that someone from my background should be afforded this privilege.
This House represents a world away from the one I normally work in, and I must confess that the thought of being part of your Lordships' House gave me some sleepless nights, but I need not have had such worries as the kindness and friendly welcome which I have received from your Lordships and from the attendants and other staff of this House since I arrived has made my task of entering this House painless and, indeed, a pleasant experience.
In Northern Ireland, as in other parts of the United Kingdom, employment has undergone profound change. In the past three decades, there have been changes in people's values and attitudes towards work—changes brought about by the speed of technological change and information technology, but change has also been brought about by the wider integration of global economies which has reduced the difference in time and distance.
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Within this House, and indeed within this debate today, many will speak from a wealth of experience and expertise on the subject of changing patterns of work, and will be able to quote statistics et cetera. I do not pretend to have this expert knowledge. Therefore, I beg your Lordships' indulgence; I should like to speak, for the main part, from personal experience.
When I first started work many years ago, it was commonplace for most people to stay within one company or trade for most or all of their working lives, but with the onset of new skills, new ideas and new management practice, that idea today would be the exception to the rule. Most people now work to fixed-term contracts, which afford flexibility to the company within the global market but make for a good deal of uncertainty for the workforce. If the employee is not multi-skilled and does not have the opportunity to move between companies or jobs, he or she faces unemployment over and over again.
For the past 10 years, I have worked within the social economy, working on the peaceline in north and west Belfast. It was interesting to note that the preceding debate concerned Northern Ireland. I was told that I should be witty in my maiden speech, but I do not feel witty this week. As I say, I have worked on the peaceline in north and west Belfast, seeking to influence companies to provide employment in an area of high unemployment and poverty, and working closely with government training schemes to train local people in the skills needed to secure employment opportunities when they arise. We have also looked at other ways of generating employment and bringing in funds to help to set up local employment. The noble Lord, Lord Lea, has referred to one of those. But as I have already said, many of these opportunities are short-lived. Because of the effect of change in working practices many people who take advantage of government training schemes and are lucky to secure a job find that, at best, the job lasts only one to two years and they then find themselves unemployed again.
I give an example; I know the young man concerned quite well. A young man (who has a wife and baby to support) is pleased to secure employment in a local supermarket. He comes off benefit and looks forward to supporting his family. The pay and conditions are not the best, but he views this as an opportunity to stop being an unemployment statistic. Twelve weeks later he is told that this will be his last pay packet. This has happened to this young man three times in two years. Can we imagine the loss of confidence to the whole family when once again the young man has to "sign on" the unemployment register?
That example could be repeated over and over again, but such are the daily happenings within the changing patterns of work in today's inner-city communities within the United Kingdom. We often read and hear about the breakdown of family life and social values, but can we wonder at that when so many of the values that we took for granted as we grew up would seem today to be built on shifting sand?

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It has often been suggested that Northern Ireland is particularly well placed to take advantage of the opportunity created by an extended European market, by its demographic factors and the excellent reputation of its workforce. It is also suggested that these positive factors must be matched by a perceived ability to adapt to the requirements of foreign-based companies in terms of their structures, organisation and industrial relations practices. However, we in Northern Ireland believe that this should not be an exclusive approach. There must be a continuing pressing need to develop Northern Ireland's indigenous sector as a fundamental part of our community.
Finally, the decline in traditional clerical functions within companies will impact more on women to a greater extent than on their male counterparts. In the recent past, it was women who tended to be part time or be involved in job-sharing schemes. They also tended to be mainly employed in what were regarded as non-core activities. The contracting out of these peripheral functions means that female jobs are more likely to be placed in jeopardy. As the noble Lord, Lord Lea, has already said, of course women have made progress and have established a foothold in managerial, supervisory and technical positions and within the political movement. While these gains are important as role models for other women at lower levels in organisations, unfortunately these are the kinds of jobs that are most at risk from de-layering and the present drive towards flatter organisations.
I am grateful for the opportunity to speak in your Lordships' House for the first time and I look forward to becoming a voice for the community of Northern Ireland in this House.
6.17 p.m.
Lord Howell of Guildford: My Lords, it is my great pleasure to congratulate the noble Baroness, Lady Blood, on an excellent maiden speech. She speaks with tremendously detailed knowledge, prescience and authority about a part of the United Kingdom which I know from the past. In the odd whirl of events that affect Northern Ireland, I was at one stage a Minister of commerce and of employment in Northern Ireland. Although that occurred many years ago I remember the positive qualities that the people of Northern Ireland showed, and continue to show, in adjusting to new labour market conditions. Over all the years and through all the bloodshed and difficulties I have never lost faith in the colossal ability of the people of Northern Ireland to be almost ahead of the game in adjusting to the new network age and to the new demands of global competition and of the global economy. They have done that in the past; they are doing it now; and they will do it in the future. The noble Baroness gives voice to the hopes and the immense weight of common sense which will see them through.
I turn to the broader themes of the debate. This is nothing very new. Some 25 years ago pioneer thinkers such as Charles Handy and James Robertson told a
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disinterested world that the whole pattern of the labour market was about to be transformed: that large blocks of employment were going to dissolve and whole categories melt away; that we were moving towards an era of portfolio jobs, of flexitime and of part-time and self-employment; and that there would be a huge rise in the participation of women in the labour market, but not in the traditional job patterns. They were telling us 25 years ago that the division in analysing the economy between manufacturing and services was already out of date. Manufacturing was shot through with services; services were intermingled with manufacturing; and the whole was permeated by the then embryonic information technology, which belonged to no category at all.
These matters were being set out in great detail by those seers, those prophets. They were telling us that the old familiar landscape of a job for 47 hours a week, 47 weeks a year and 47 years of one's life—which was the normal pattern, the one which all analysts, statisticians and policy makers tended to think about when they spoke about the labour market, employment and unemployment—was already dissolving.
Those ideas were highly uncongenial at the time, largely neglected and resisted. And they have continued to be resisted even to this day. I was reminded, reading today's newspapers, that one of the great citadels of resistance all along to the fact that the labour market has changed has been that noble institution, the Inland Revenue. Today what was supposed to be an avant-garde forecast has become the orthodoxy. Less than half the working population is employed in full-time, single jobs. That is confirmed by the Office for National Statistics and by the newspapers this morning.
But the Inland Revenue does not recognise that. It remains totally hostile to the self-employment patterns, to the portfolio working patterns, and to the new world which involves more than half of the working population. I spent 30 years of my life in another place as a Member of Parliament, year after year, on behalf of numerous constituents, trying to persuade Treasury Ministers to persuade the Inland Revenue that it should adjust the patterns of taxation and the schedules to take account of this totally new kind of labour market—broadly without success. Indeed, even now, according to today's Financial Times, the Inland Revenue is about to introduce a new series of rules in April which will make it much more difficult for this half of the working population to develop their skills and talents and to work properly. That is regrettable—I suppose it is understandable—and it should be noted by the policymakers, particularly those who are long on the rhetoric of the new flexible economy but a little short when it comes to making policy adaptations.
As Handy observed at the time—a quarter of a century ago—his ideas were met with "a complete conspiracy of silence" on the part of policymakers, politicians, sociologists and economists for the reason that they did not seem to fit any of the traditional preconceptions. They were not at all popular either.

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For most people, except the most independent-minded, energetic and entrepreneurial, the prospect of working outside the safe and predictable area of full-time, regular, heavily unionised employment—with a hierarchy of management from whom to take guidance and orders, and with the proper protection of labour laws and so on—seemed thoroughly frightening; they did not want to know about it.
Unfortunately, that was not the choice. Even while people were saying, "This cannot happen; it must not happen", it was happening. Policymakers found that these unwelcome events were confronting them with entirely new dilemmas. They might not wish it to be so, but huge new forces were coming together in the economy, dissolving the old patterns completely. Out of the window went the kind of image in the Lowry paintings of people crowding in their thousands through the factory gates in the morning in response to the siren. All that old world was vanishing. Encouraged by dawning new technology, as the noble Lord, Lord Lea, reminded us—I am still talking about the past—livelier firms were moving heaven and earth to contract out, to miniaturise their work units and to bring in more flexible work times and arrangements. Thousands, indeed millions, more women were working and home life and business life were being transformed. A huge expansion was under way of the informal economy—and, incidentally, of the black economy, hence the worries no doubt of the Inland Revenue—with new occupations and knowledge-based services developing of which the policymakers had not dreamed and of which no mention whatever was to be found in economic textbooks, nor yet in the works of best-selling authors like J K Galbraith and others.
A quarter of a century ago, no one had heard of the Internet or globalisation, and privatisation was in its infancy. Looking back, we can now see that a completely new network pattern was developing—held together by work and social relationships and other sensitivities—and that this was emerging with amazing rapidity and pushing aside the familiar hierarchical structures of business, politics, labour organisations and everyday life.
It was not doing that completely; I must not overstate what has happened. Indeed, the noble Lord, Lord Lea, warned against doing that. People such as Francis Fukuyama have reminded us that despite all this global networking and the rise and empowerment of the individual and so on, people prefer to work in hierarchies. Fukuyama presents us not with "Homo Economicus", who never existed except in hermetic and abstract economic theory, but with "Homo Hierarchicus", who by nature likes the world of status and place and is far more comfortable in that kind of situation than in the milieu of risk and ill-defined networks.
So motives for wanting to stay with the hierarchy concepts obviously differ, as do people. Some people want status, want to be the boss, want to be recognised as leaders and as exerting various authorities and so on, and there are those who want the familiarity and
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freedom from responsibility which a proper and safe place in the hierarchy brings. "Each in their place and a place for all", to quote the Duke of Wellington.
Businesses which are trying to drive through unsettling new arrangements or change direction sharply need leaders, strategists and generals; they do not need networks or flattened management structures. Those things which are all the fashion have to come later. So that is the counterpoint to the feeling that the entire world of labour is being atomised and unravelled.
Having said that, despite all those trends, Handy's predictions have now become commonplace. All around us this is now the new pattern. The only trouble is that the intellectual framework of debate has remained almost frozen. The thinking fraternity, sociologists, economists—especially economists—and academic analysts, with their supporting army of statisticians, have been unbelievably slow in appreciating and understanding, let alone explaining, what has occurred.
This is especially so among the social scientists and groups such as the progenitors of the so-called "Third Way", of which I have made a very close study. They seem to have alighted with surprise on trends such as the evaporation of traditional work patterns, the growth of voluntarism and the merging of manufacturing and services. These are trends, obvious to the people I have mentioned and to other people for 20 years, to which the Third Way enthusiasts seem to have arrived, breathless, very recently, as though they were new insights. In fact they have been long understood, debated and resolved outside the little world of the Third Way clique.
In the current debate the picture of what information technology is supposed to do to the labour market is deeply embodied in the public mind. It is fostered by much public comment—and it is almost entirely wrong. The conventional thinking insists that new technology is bound to eliminate jobs, replace people with incomprehensibly fast and powerful machines, replace unskilled and semi-skilled workers with fewer skilled technicians and create the foundations of a jobless society. In so far as a mass of workers has a future in such a scene, it is argued, it will be in low-skilled, low-paid service jobs, creating new divisions and social polarisation.
In the real world, the pattern now evolving before our eyes is going in a diametrically opposite direction. Jobs are disappearing and appearing, as we know. There is a pattern of gains and losses and winners and losers. But the much more significant pattern overlaying it is one of a vast new variety and complexity in which the old job classifications are meaningless and in which the labour market becomes a fragmented mosaic of new skills, flexible work times and spread out locations. I would not for a moment question the issue debated in your Lordships' House yesterday; that the totally unskilled need to be vastly upgraded to acquire skills and that all efforts must be thrown into that task. But one must keep the matter in perspective. Those prepared to perform jobs which

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require a mixture of hard physical work, as in construction, but also a good technical knowledge, will be increasingly valued. I was fascinated that the great manual of the network society, Manuel Castells' volume, The Rise of the Network Society, points out that work in agriculture—farm work and land related work—is actually rising in the advanced societies. All the textbooks stated that it would fall, but more and more people are being drawn into that sector.
The overall message is clear. Information technology and its widespread application to all walks of life has little net impact on levels of employment. It creates a world in which ponderous giant trade unions, locked into dying categories of skills and industry, have a dwindling part to play. That explains entirely the huge decline in trade union numbers in several countries, including the United Kingdom. It creates conditions in which the building blocks of class warfare and social division have crumbled. Bosses and capitalists are no longer the identifiable enemy, ever available for demonising. With the help of wider ownership, those distinctions have begun to blur. The information age has created massive popular ownership on a huge scale far more quickly than many of us dreamt of 10 years ago. That too has created totally new conditions.
Not only academics but also policymakers, political parties and leaders have been slow to the point of paralysis in responding to the new trends. Political speeches and vocabulary continue to be couched in terms appropriate to a vanished employment age. Pretensions of economic control over events remain undiminished. Officials and departments continue to serve up categories and concepts for parliamentary and public discussion which bear no relation whatever to the real world or to the everyday events and influences shaping work, business and society. I am glad that your Lordships' House—your Lordships' transitional House—has shown that it can address those issues in today's terms instead of the terms of yesterday's pretences.
6.33 p.m.
Baroness Turner of Camden: My Lords, I welcome the opportunity to participate in the debate. I am grateful to my noble friend Lord Lea of Crondall for introducing it and for the stimulating way in which he did so. I am extremely pleased that the noble Baroness, Lady Blood, chose this debate in which to make her maiden speech, which I found interesting and, indeed, extremely moving. I hope that we shall hear a great deal more from her in the future.
There is no doubt at all that there have been changes in the pattern of employment in the past 20 years or so. Those seem largely to have been brought about by changes in technology, by the information revolution and increasing globalisation—although of course political policies have played a part. We have seen the decline in Britain of heavy industry and the growth of technology-based industries. That has meant that some former centres of manufacturing industry have become impoverished, with high levels of
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unemployment—particularly male unemployment. It has led also to a growth in areas devoted to newer industries—notably, but not only, in the south-east.
There is a general perception that such factors have wrought a major change in the way in which working lives are spent. A belief exists that years ago, in some golden age, the majority of the workforce were employed by a single employer for all their working lives, but now this has been replaced by a new flexible pattern of constant mobility and movement from job to job. That view is overstated. I have a copy of an interesting report prepared for the National Association of Pension Funds, The flexible labour market: implications for pension provision, which also points out that that view is overstated. Such a lack of security was almost always the fate of lower earners and of manual workers, except those in communities such as that of mining, where people tended to remain rooted in their working environment.
In recent years, some areas of white-collar employment, hitherto regarded as safe and secure, have ceased to be so. That is particularly true of financial services, where the impact of technology and ever increasing competition has resulted in mergers, which themselves have caused job losses. Unions have often protested at the way in which such mergers have been carried out, with little advance warning for the staff involved. Sometimes the first that staff have heard of a merger has been in a radio announcement, together with a statement that there would be a loss of some 5,000 jobs. Unions believe it is wrong that the interests of staff should be entirely disregarded in pursuit of greater profitability. I share that view.
Those changes have for the first time had a major impact on white-collar male staff. Many such employees, made redundant in their mid-50s, do not join the labour market again. That often represents a loss of skill and experience that could be ultimately disadvantageous. We are often told that we are all living longer. Usually, we are told that in the context of discussions about how much the NHS is likely to cost later in this century. But one of the ways of keeping healthy is to have an active involvement in the world around one, in addition to being economically productive. So there are benefits all round in keeping older people in some sort of employment. I believe that there should be legislation against age discrimination, although I understand that the Government's preference is for a code of practice. Perhaps the Minister will enlighten the House on that point.
Another major change has been the involvement of women in the workforce in a way not envisaged 40 years ago. My noble friend Lord Lea mentioned that point. There has been an increase in part-time employment. In 1998, 25 per cent of employees worked part time—the majority of them women.
It is clear from recent research that most part-time employees work part time because they prefer it. Only 11.5 per cent said they would prefer to work full time. It is mainly women with young children who find such a work pattern acceptable. However, there is a need to improve the status and conditions of some part-time

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work and I therefore welcome the consultation exercise which I understand is currently being undertaken by the Department of Trade and Industry.
The Government have been particularly keen to get lone mothers into employment, believing, with some justification, that work is the way out of poverty. Recent research published in the November issue of Labour Market Trends indicates that while the employment of what are called "couple" mothers—that is, mothers who are married or in some sort of relationship—has increased to 68 per cent from 61 per cent a few years earlier, that of lone mothers has remained stable at around 44 per cent, having risen more slowly.
The survey points to a widening gap between the employment of "couple" mothers and lone mothers. A number of factors have been indicated for that difference: lone mothers' relatively low involvement in the labour market before parenthood; their lesser access to childcare; their concentration in areas with poor local job opportunities; and features of the tax and benefit system that limit their financial gains from employment. There have been several pilot schemes and it is notable that the lone parents who have most profited from them and secured employment are those who already possess educational qualifications which gave them access to reasonably well paid jobs.
On the other hand, it is my view—I have said this in social security debates from time to time—that pressure should not be exerted on lone mothers of young children to work outside the home unless they really want to do so. There seems little point in paying for expensive childcare if the mother would prefer to look after her children herself while they are young and perhaps take advantage of educational opportunities available, through home study, so that she can take advantage of job opportunities when her children are older. We should have in place social policies that make such choices genuinely voluntary.
Despite the increasing involvement of women in the labour market, there are still problems, as the recent survey of the Equal Opportunities Commission indicates. Women's earnings are still substantially lower than those of men, and most of the low paid are women. The Government have made a good start on this problem through the introduction of the minimum wage and the working families' tax credit. Although I think the minimum wage has been set too low, it has still benefited about 2 million workers—most of them women. Moreover, the predicted job losses did not take place. We must all welcome the Opposition's conversion to the cause of the minimum wage. It is largely due to its introduction that the EOC can report that women's earnings are now 80 per cent of men's rather than 77 per cent, as formerly.
Nevertheless, low pay still remains a major problem. A substantial minority of the British workforce spend their entire working lives in a cycle of disadvantage, moving between tow-paid jobs, often with spells of unemployment or inactivity in between. Those who are low paid tend to be older men, some women or people with few educational qualifications, and they
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are likely to experience persistent low pay. Young people may be among the low paid at the beginning of their working lives, but many tend, as they change jobs or make progress within an organisation, to become established on a stable upward trajectory which peaks in their late 40s.
It will be seen, therefore, that the emphasis on education and training, which has been such a basic feature of government policies, is correct. Incidentally, partnership with the trade unions is important. Unions are keen to ensure that their members take advantage of whatever employment training opportunities are available. I commend the Government on the improvements that have been introduced as far as concerns trade union recognition and trade union legislation. Those changes have not led to unemployment, as was predicted at the time.
We are currently in an economic boom. Unfortunately, not everyone is benefiting from it. Those who are not are likely to be from disadvantaged backgrounds, with poor educational attainment. Quite obviously, economic upturns should, as far as possible, offer benefits to all. So far, they have not done so. I believe that the Government have in place policies which help and which can be built on. Yes, the employment scene is changing. The changes will favour the skilled, the educated and the entrepreneurial. But disability, age, and social disadvantage should not lead to social exclusion. The changes in employment patterns—the subject: of today's debate—should not involve the creation of an underprivileged underclass.
6.43 p.m.
Lord Dahrendorf: My Lords, this is one of our Wednesday debates. I am delighted that we can continue to have them, and continue to have them in the middle of the week. It gives me an opportunity to take up the challenge offered to us by the noble Lord, Lord Lea of Crondall, and to discuss, at least briefly, a problem without actually offering a solution, which I suppose is what we usually do on Mondays, Tuesdays and Thursdays. The earlier debate today strikes me as having also been one which presented us with a problem without having a solution. But that is another matter. In the process, perhaps I can do a little to redeem the thinking fraternity, which attracted the gentle irony of the noble Lord, Lord Howell of Guildford.
Like the noble Lord, I believe it is a mistake to use traditional language and concepts as if the world to which they apply had not fundamentally changed. That is true for work; it is also true for a concept like unemployment; and it is certainly true for a concept like full employment. The major changes that have taken place have been mentioned, so I can be brief on this point. But perhaps I may remind the House of two processes which strike me as particularly important. The first has been mentioned by almost everyone who has spoken. It is the massive growth in non-standard employment. By that I do not merely mean part-time or fixed contract employment but also a new form of self-employment. It is not strictly self-employment as

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the term used to be used. It ties individuals to particular employment contexts but at the same time turns them into self-employed people, whether self-employed porters at a television station or self-employed drivers for a company.
I know that this is one of the cases where the glass is both half empty and half full. I shall use figures in my comments which come largely from what I regard as the most informative empirical study on the whole area of work and life. I refer to the British Household Panel Study, conducted at the University of Essex on behalf of the Economic and Social Research Council, and in particular to the publication by Jonathan Scales entitled The Future of Work and Lifestyles, which was produced for the Debate of the Age organised by Age Concern.
In 1970, 20 per cent of people were in non-standard employment. In the early 1980s, the figure had risen to 30 per cent. By the late 1990s, the figure had reached 40 per cent. I am not suggesting—and no one would suggest—that that can be extrapolated to 100 per cent. But it is an almost undeniable fact that we now have two types of employment. We have standard employment, with some of the certainties and uncertainties which it has always had, and we have a massive incidence of non-standard employment.
The other important trend—little has been said about it so far—is the strange reduction in the proportion of the economically active population. That is true both at the young end—at any rate for men, who find it difficult to enter the labour market—and at the older end; again, primarily for men but not only for men. Here we have some of the elements of two of the major social problems facing us.
In the case of young men who find it hard to enter employment, we are quite close to some of the problems of crime which worry us. At the older end, we have very considerable problems for our benefit system. The fact is that, of 61 to 65 year-olds, only 40 per cent are still in employment. Incidentally, compared with other European countries, that is a high figure. In most European countries, the percentage is even lower. The fact that only 40 per cent are in employment tells us a story about the role of work in the lives of our fellow citizens, especially at a time when, fortunately, life expectancy has gone up.
If there were more time, I would outline a third trend which was mentioned by the noble Baroness, Lady Turner, and other speakers. I refer to the strange new inequality which has emerged from changing work patterns. There are some, perhaps a growing number, who seem to have all the disadvantages while others have all the advantages. There are people with a low level of education and income; who are subject to greater health risks; who live in worse housing; and who participate less, generally.
Let me concentrate on the other two trends. The problem that I draw from their existence is that, nowadays, even paid work fails to solve some of the problems that work solved in the past, notably paid work. I do not suggest that that is necessarily a bad
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thing. I do suggest, however, that it forces us to rethink a whole range of issues. I merely mention two, which are of major, and in some cases immediate, significance. The first is entitlement to benefit—in a sense, the Inland Revenue problem, the non-acceptance of changes which have consequences for the way in which redistribution is organised.
Linking benefits to jobs is all very well but, given the new working patterns, it is not good enough. We must try to achieve a greater separation of people's entitlements from their employment. That means that the entitlements must be more closely associated with the individuals, and less directly associated with the jobs that they do.
We see the beginnings of that change in the Learning and Skills Bill that is before the House. I refer to the introduction of individual learning accounts. That is precisely what I have in mind when I argue that changing patterns of work require that benefits become transportable in a more effective way than was the case when they were totally linked to jobs. That is true also in the field of pensions, although I am hesitant to enter into a serious discussion of pensions in the presence of the noble Baroness, Lady Turner, who knows so much more about the matter. It seems to me that the separation of the redistributive elements of the welfare state from jobs is an almost necessary consequence of changing work patterns.
There is another equally serious, if less tangible, point. I speak about it with some hesitation. It is the fact that work no longer provides the degree of satisfaction, meaning or content in life for many that it may have done in the past. To take up the impressive language of the noble Baroness, Lady Blood, work no longer provides the kind of content in life to which many of us have been used.
The survey to which I referred includes an interesting table relating to life satisfaction. One set of figures may be interesting in this connection; namely, a category of people who were employed one year ago and are now unemployed. According to the survey, a third say that they are more satisfied with life; a third say that they are less satisfied; and a third say that life is much the same. I do not want to over-interpret the figures, but it is probably true to say that the relationship between the work that people do and the general satisfaction that they feel in life has become more tenuous. Indeed, work no longer structures people's lives as effectively as it may have done in earlier times.
By the same token—this point is relevant to those who make the provision of work one of the main planks of social policy—work also no longer provides the degree of social control that was implied in the past. I disagree with the noble Lord, Lord Howell, in his praise for hierarchy. Where there is hierarchy, there may be social control. However, one of the changing patterns is that there is simply not the same degree of hierarchy, and social control cannot be exercised through the employment system alone. That is where a very big problem arises in terms of social cohesion.

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Changes in work patterns make it extremely hard to see how societies are knit together and how they are supposed to hold together.
Many proposals might be discussed in the practical field. There is the question of basic incomes and their effect on cohesion, as well as on the transportability of benefits. I am one of those who regard the working families' tax credit as a step in the right direction. It does not get us there, but it is a step in the right direction, and that is better than staying put or going back.
There is the great issue of voluntary activity. I am pleased that, in a speech today to the National Council for Voluntary Organisations, the Chancellor of the Exchequer made an effective plea far strengthening voluntary activity and supporting it, in part, through the instrument of a modernised Inland Revenue and through other means at his disposal. There may be other things that can be done. However, my problem is that work does not do the trick. Given changes in expectation and working patterns, the view that jobs can still be used to the same end as they were often used in the past is misguided.
At present, many trends work against social cohesion. The new inequality certainly does not help. Unless we take the matter as seriously as it needs to be taken, we run the risk of creating societies that call for authoritarian leaders rather than relying on civil methods. Against that background, tackling the consequences of changes in the world of work is essential.
I conclude with, an abject apology. Owing to shifts in the timetable for this debate, for the first time since joining this House I may not be able to be present for the entire debate. However, I promise that, for me, this occasion will remain the singular exception.
6.59 p.m.
Lord Puttnam: My Lords, I, too, am grateful to the noble Lord, Lord Lea, for introducing this timely debate. It has far-reaching implications for the future of all of us. I should like to congratulate the noble Baroness, Lady Blood, on her maiden speech. It was wonderful to hear an authentic voice of experience in this House. I am delighted that the noble Baroness has joined us and look forward to hearing from her on many future occasions.
I think I detected a sense of frustration in the remarks of the noble Lord, Lord Howell. I share that frustration. It is odd that in the year 2000 we have to reiterate and anticipate facts which have been relatively common knowledge for 20 years. We all share some blame for the fact that as a nation we are not better prepared for the changes in the workplace that overtake us.
The world of work is undergoing some fundamental changes, and I believe that they will affect every aspect of our lives. "The Internet economy", "the wired world" and "the learning society" are no longer just buzz words; they increasingly define the world that we inhabit. The days when any nation such as ours could remain competitive based on large manufacturing
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industries, or a largely agrarian economy, are rapidly drawing to a close. There will still be a place for those industries; we still need refrigerators and food to put in them, and cars and the fuel to power them, but these industries can no longer serve as the locomotives of our particular economy if we are to have the remotest chance of remaining competitive on a global stage.
I suspect—in fact I know—that some noble Lords remain sceptical about the new e-economy. They imagine that it is simply a blip along the timeline of the ordinary working world and that somehow things will eventually settle down and return to the world lamented by John Mortimer in last Sunday's Observer where life revolves around the village post office, grocer and local craftsman. If one looks at the ordinary lives of many in the country it is true that things seem to be going on much as before. People quietly go about the same or similar jobs that they have had for the past 30 years. Every time there is a dip in the share price of Yahoo or Amazon.com it is reassuringly possible, somehow, to dismiss the Internet revolution as yet another "over-hyped, over-here" phenomenon created in the fevered imagination of some American futurologist.
I no more wish to be viewed as an alarmist than to stand here 20 years from now shaking my Zimmer frame and saying, "I told you so!", but in our anxiety about the future we are in danger of becoming almost a nation in denial. We must acknowledge and adjust to future realities, or we shall be left floundering in their wake. Growth in the western economies is now being driven by the astonishing rate of the development of the world-wide web and e-commerce generally. When President Clinton came to office there were just 50 websites in the entire world; now pages are being added at the rate of over 100,000 per hour. Another 100 million users will come online this year. But in the end it is not the technology itself but the way that it is used and regulated which will define the scale and nature of these changes.
In some respects it is reminiscent of the development of the railways in the 19th century, only much more rapid and, to some extent, profound in its implications. It is well worth remembering that, in the end, what changed rail travel into a genuinely mass form of transport was not any particular technological development but a simple piece of parliamentary legislation which required every public railway to run trains on a daily basis, and at appropriate times, to enable working men and women to travel to and from their places of work at a flat fare of a penny a mile. It was perhaps the first recognition of the benefits that can flow from what we have come to call "universal access".
The value of the railways in both social and commercial terms lay precisely in the notion of universal access. In the space of a very few years cheap travel swept away those factors which had, since time immemorial, kept the vast majority of the population at home or close to the place in which they were born. The railways made it possible for one to travel further afield for work; to read the same morning newspaper, even in rural areas; to send a letter to the other end of

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the country overnight; and to visit a friend or have a day out. It even made possible the development of today's Football League. The greater the access to rail travel, the more varied became its impact on society and culture; and the more varied that impact the more it became an indispensable part of the life of the whole nation.
The stock prices of the railway companies soared and tumbled just like the Internet start-ups of today, but the railways themselves were here to stay. They changed our economy and the social fabric of the nation for ever. I believe that the impact of digital communication on the information age will in many ways parallel this, albeit in a very different form, perhaps on an even more dramatic scale.
I shall try to illustrate the scale of change in another way by using the London Stock Exchange as an example. In a recent article in Science and Public Affairs, David Potter, chief executive of Psion, observed that in 1984 the 10 largest firms by value quoted on the London Stock Exchange were: BP, Shell, GEC, ICI, BAT, Glaxo, Marks & Spencer, Grand Metropolitan, BTR and Beecham. Their combined market value at that time was £40 billion and their net assets were also £40 billion. Between them they employed a little over 1 million people. Today, the 10 largest firms are: BP-Amoco, Shell, BT, Glaxo-Wellcome, HSBC, Lloyds-TSB, Smithkline-Beecham, Vodafone, Diageo and AstraZeneca. Their combined value is £340 billion and their net worth is £90 billion. They employ about 750,000 people. Six of those companies deal in intellectual property rights (IPRs) and are not valued for their capital stock; nor is any of them an "industrial" in the accepted or traditional sense of the word.
I give another more topical illustration: Vodafone's 113 billion dollar acquisition of Mannesmann last week. As Lex observed in Saturday's Financial Times, this new company will be worth 16 per cent of the entire Footsie 100. If one adds together the food, drink and tobacco sectors, throws in electricity, gas and water and then aerospace, defence, steel, engineering and construction, all of those sectors together just about equal the value of the newly-enlarged Vodafone—which was a company that did not even exist a few years ago.
One of the implications of all this is that the new economy is already with us. Regardless of the share price of Yahoo today, tomorrow or even a year from now, like the railways this is an economy that is here to stay. It is a global economy which tears down trade and cultural barriers alike. Just watch the impact that Vodafone's bid for Mannesmann will have on other long-sheltered titans of German industry. Suddenly, they are as vulnerable to predators from across the world as anyone else.
In this new "knowledge economy" value resides overwhelmingly in intellectual property rights—human knowledge—which are now termed intangible or weightless goods. The noble Lord, Lord Lea,
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explained exactly what that term meant and from where it came. In the new economy competitive advantage increasingly means knowledge advantage.
As I said in this Chamber only two weeks ago, all of this has an enormous impact on patterns of employment. The job for life, the nine to five working day and the single male breadwinner are very much things of the past. Whole industries are being restructured; payroll, procurement and pensions are all moving online. Gone are the days of the set, but comforting, pattern of education, work and then retirement. Increasingly, individuals must adapt to the rapidly changing demands of the job market.
I offer a couple of small but quite telling examples. Between 1979 and 1998 the number of self-employed people among the managerial and professional classes in the UK grew by 300 per cent. I was told only last week that today one person in six in Britain works for a business that did not exist five years ago.
All of this throws up enormous challenges for policy makers. How can we provide for such a varied pattern of work? What will these changes mean for the non-work aspects of our lives, including our families and leisure? How can we ensure that people have the opportunities to act flexibly to meet the new demands of the future workplace?
I listened with real interest to the noble Lords, Lord Dahrendorf and Lord Howell, and my noble friend Lady Turner, who spoke about the commercial and social impact on society. Above all, it poses a massive challenge for our educational system. We need to tie our learning institutions ever more firmly to the world of business. Many of our universities remain relatively dislocated from industry; and that is certainly not so in the United States, where business and higher education work hand in glove with industry and government. The result is an economy that plays fully to its strengths, where the academic world meshes with business and government to create a seamless web of support for America's strategic and commercial interests. I do not pretend that it is an immaculately conceived fact of life, but it is the net effect of industry, government and business working together with the academic world to ensure that they move forward as a coherent modern economy.
President Kennedy once said of his country,
"Our progress as a nation can be no swifter than our progress in education".
At the beginning of the 21st century that statement carries a ring of truth that he and his advisers could scarcely have imagined possible.
It is a cruel fantasy to believe that the UK can maintain a competitive economy without embracing the fact that our entire economic infrastructure is being transformed by the digital technologies. Increasingly, we as a nation will be judged by the quality of our skills and the depth and versatility of our knowledge-based workforce. That is why the quality of our education system, and of our educators, is of absolutely fundamental importance to any future prosperity of this country. Change, not just in

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employment patterns, but in the economy more generally is all around us. We diminish it or, worse still, ignore it at our peril.
7.11 p.m.
Lord Haskel: My Lords, I, too, congratulate my noble friend Lord Lea on introducing the debate. Employment patterns are changing. I welcome this opportunity to debate these changes which affect the working lives of us all.
It seems to me that the elements causing these changes are a commitment to enable all to work in the face of the harsh realities of the global market; and the realisation that a healthy economy and a fair society are not opposites but the same side of the coin. So how will those factors affect employment patterns in Britain? What changes will they bring about?
Some of the pieces of the jigsaw are already apparent. My noble friend Lord Lea told us about the new economy. He is right and I thank him for explaining it to us. It is crossing the Atlantic from the United States—and why not? Look what it has done for the United States over the past 10 years. Ten years ago the American economy was in decline. Today it has outpaced us all in productivity and job creation. The key to the new economy is information technology and the Internet.
I agree with my noble friend Lord Puttnam about the importance of e-commerce. That is important in the real world. However, I differ from the conclusions he draws about the stock market world. The stock market world is distorted by crazy share prices, the current fashion for high technology, and by opportunistic financial short-termism. That is why Amazon.com is 40 per cent off its peak and Yahoo is 35 per cent off its peak while, in the rest of the world, life goes on as normal. These are huge changes.
Information technology and e-commerce is only just starting here. However, its impact on employment patterns will be enormous and inevitable. Last week British Airways announced that 50 per cent of its ticket price sales will be via the Internet by 2003. The Prime Minister has undertaken that 25 per cent of government business will be transacted over the Internet by 2008. He obviously means it because he has appointed an information technology czar to ensure that the skills and technology to carry that out are firmly in place.
We no longer need computers. Our family-friendly television sets are beginning to serve just as well; so are our mobile phones. As British firms try to compete with low labour costs overseas, the pattern of jobs is changing in the manufacturing sector. The noble Lord, Lord Howell, reminded us that that has been happening for 25 years. But today the situation is different. British firms have turned to information technology and mass customisation. Indeed, the division between manufacturing and services is becoming more and more blurred. Mass customisation is itself becoming a service, while in the world of the new economy, services become experiences which have to be available seven days a week, 24 hours a day.
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Therefore, I think that we can discern a more ruthless economy based on attacking the status quo and the entrenched players with new technologies and working methods that improve or replace earlier ones. That ruthlessness will certainly change the pattern of jobs, particularly in retail. It will mean many lay-offs as the old skills become obsolete and new ones are needed. The noble Baroness, Lady Blood, told us that in her excellent maiden speech. More change, more insecurity and more stress will be the pattern; perhaps all with the same employer, not because of job protection which has no place in the new economy, but because employment nowadays is continued at the same firm by continuous learning and training. Quite rightly, the Government are making that a cornerstone of their policy.
But if the new economy is to be successful, it requires not only new skills, but also a higher degree of commitment and responsibility from both employers and employees; for example, trusting people with sensitive information which has been kept previously confidential. The new economy demands new attitudes towards team working and loyalty. The new 24-hour service economy does not require the long hours that seem prevalent in this country. My noble friend Lord Lea reminded us about shift working. It requires flexibility, but not the flexibility of easy hire and fire. It requires employers to be flexible and helpful over hours, and employees to be reliable.
I expect the future pattern of work to be one of flexible hours with job-sharing instead of a long working week, especially as more women work. Social trends tell us that a quarter of women working full time work flexible hours.
I do not believe that we shall all be working at home on computers. The case for teleworking has been overstated. It may mean that some highly talented people may work at home perhaps for more than one company, but in general people need to react with people. Creativity and innovation rarely happen in isolation. Human contact cannot be replaced by information technology. Indeed, according to recent figures, the percentage of the workforce who telework has been pretty static for the past couple of years.
Neither do I see any great increases in leisure time. Ten years ago we were told that the biggest social problem today would be filling our leisure time. Instead, we are working the longest hours in Europe. What I think is inevitable is rising employment in personal services, as we all become better off—that half of the economy which is not affected by information technology. The noble Lord, Lord Dahrendorf, referred to it as the non-standard employment.
Information technology is more likely to replace financial trading before it replaces gardening, childminding or recreation. That will mean working all hours, but not necessarily for low pay.
That is how I think that the new economy will change our patterns of work. But there will he other effects. It will increase the inequality of earnings. My noble friend Lord Lea told us that 5 per cent of jobs

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offered are for the unskilled. Looking at social trends, it appears that self-employment is becoming the pattern for the unskilled. Sixteen per cent of men in work in the spring of 1999 were self-employed. One-quarter of these worked in construction and were mainly white. Of the remainder, by far the most were from the Indian sub-continent and worked in distribution, hotels and catering. They are victims of the ruthless economy—the socially excluded—referred to by my noble friend Lady Turner. The stress of the ruthless economy will increase pressure on personal and family life. To make it all worth while people will want a government who deliver a sound economy with low inflation, low interest rates and tough regulations from competition.
But social justice and fairness are also part of this sound economy. That too will affect the patterns of work. Indeed, the effect has already begun. My noble friend Lady Turner told us about the minimum wage, the Working Time Directive and the working families' tax credit.
All that points to an enormous amount of power in the hands of the leaders of business and industry. Perhaps these are the authoritarian leaders to whom the noble Lord, Lord Dahrendorf, referred. How can this be balanced so that employment patterns are not just a matter of their whim? Regulating employment is fine and necessary, but it is only part of the answer because after a while diminishing returns set in. Regulation has to go hand in hand with the creation of quality jobs and quality work in maintaining a healthy economy so that Britain is a good place for business. That is a far greater incentive than any kind of protection.
Employers then have every encouragement to provide training and opportunities for lifelong learning and to provide work because they need the staff and have a loyalty towards them.
But power is increasingly held in the global private sector. Decisions taken outside our borders affect employment patterns here in Britain. What can we do about that? In addition to a sound economy, perhaps the Government could look at the United Nations report on business and human rights, which was released at the end of last month. It outlines nine core principles on standards of labour, human rights and the environment. It seems to me that the economically powerful would be happy to accept these principles in return for the sound economic conditions provided by the Government. That seems sensible to me because, after all, the business of business is to serve society.
7.22 p.m.
Lord Eatwell: My Lords, I must confess that at first I was a little puzzled as to how to approach the topic of this debate, for changes in employment patterns are essentially the outcomes of the interaction of a complex range of processes. It is those processes which are the determinants. It is the patterns of employment which are simply determined.
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So it seems to me that the real issues at stake in this debate are those determinants of the patterns of employment, predominantly demographic, economic, technological, and political, and the relationship between those determinants and the economic well-being of the British people. It is therefore no accident that many noble Lords who have spoken already have focused on technical, economic, political and demographic changes in describing the changes in the patterns of employment in the UK.
I do not intend to deal at length with the demographic issues, important though many of them are. The increased labour market of participation of women, the ageing of population and the high mobility and economic flexibility of the immigrant population have all had, and are having, a significant impact on the performance of the economy and on the pattern of employment. They are, if one likes, the supply side of the employment equation as, to a certain extent, is the important issue of the quality of education and training the major determinant of the flexibility of the labour force as a whole.
Instead, I wish to concentrate on what is really the fundamental economic factor which determines the pattern of employment and indeed its overall level. That fundamental factor is the demand side of the labour market. Later on, I shall turn to some of the political and policy issues.
The size and composition of the demand for labour depends, so far as the private sector is concerned, on the growth and decline of industries. But even here there is no one-to-one link between the growth of a particular industry and employment in it or indeed between the competitiveness of an industry and the pattern of employment in the economy as a whole.
For example, a vital component of the UK economy today, as indeed for many years past, is our manufacturing industry. That is because it produces a very large proportion of our tradeables—that is, the goods we sell abroad and/or the goods which compete against imports from abroad. It is also because the performance of manufacturing industry is one of the prime determinants of the overall growth of productivity and hence of the competitiveness of the economy.
The peculiar importance of tradeables is that, at high levels of domestic demand which are enough to secure something like full employment, the balance of what Britain buys and sells must be sustainable. That means that we must be able to compete. If we cannot compete, then high levels of demand will simply suck in more and more imports and we shall run up larger and larger foreign debts to pay for them. So a competitive industry producing competitive tradeables is one of the basic components of any sound employment policy.
But, while a competitive industry is the indispensable foundation of a sound employment policy, it does not matter at all how many people are actually employed in our competitive manufacturing and other industries. All that matters is that they should be competitive. For example, let us suppose

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that only one person were employed in all manufacturing industry perhaps to switch on in the morning and switch off in the evening. That would not matter so long as that one person were backed by sufficient capital to ensure that he or she produced the requisite exports to pay for the goods and services that we import at full employment levels of demand. Only one person would be employed in manufacturing, but the competitiveness of that individual would be the key factor that permitted the full employment of the labour force in other sectors of the economy, including the public sector with perhaps more nurses and policemen or perhaps more university teachers.
So the fundamental issue in the modern highly competitive world in which we live today is whether our economy is competitive. If it is not, then it will be increasingly difficult to sustain full employment and such employment as can be sustained will tend to be increasingly low skilled and low paid. If the economy is competitive, then not only will it be possible to sustain full employment but also the pattern of employment will tend to consist of more highly skilled, more fulfilling and more varied jobs.
It is important to notice that attaining competitiveness is not just about ensuring that existing industries invest in the people the capacity and the innovation that will place them at the forefront of international markets. It also demands that there is a framework of ownership, of corporate government and, where appropriate, of regulation within which the industries of the future can flourish. That is why our approach to the development of the electronic media is so important today. That is why the speech of my noble friend Lord Puttnam was so important.
The growth of information systems, of electronic commerce and telephony and the link between all these and the traditional media of radio, television and film, is transforming today's economy as radically as the introduction of the steam engine did in the 19th century or indeed widespread electrification in the 20th century. Those great technological innovations created entirely new industries and revolutionised the old ones.
That is what is happening again today—with one added ingredient. Today, innovation in information technology, in telephony and in broadcasting is happening in the context of a highly competitive international economy. In that international economy, location—where you physically happen to be—is becoming far less important than it has ever been in the past. If we here in Britain are to compete in the future—if, that is, we are to maintain full employment and generate a fulfilling pattern of employment opportunities for the British people—we must ensure that there is a framework of industrial policy in place that will secure for Britain a position at the forefront of innovation in industries, new and old, fashionable and unfashionable, on an international scale.
That leads me on to the issue of policy. The rapid changes to which noble Lords have referred create major difficulties for policy makers. To illustrate those
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difficulties, I shall concentrate my remarks on a distinctly unfashionable—indeed, old-fashioned—industry: radio. In doing so, I declare an interest as chairman of the Commercial Radio Companies' Association, but what I have to say will apply as much to commercial radio as to the BBC. I also declare an interest as a director of Anglia Television, a component of the United News and Media group, because I shall have something to say about television later.
Radio plays a large role in the lives of the people of this country. Nine in every 10 people listen to radio for an average of 24 hours a week. Compare that with the average television viewership of 27 hours a week. So, in terms of consumption, radio is roughly as important as television. Yet radio is neglected in government and by the upper echelons of broadcasting policy makers. For example, last year there was a DCMS survey of household attitudes to BBC services. There was no question at all on radio. Why not? Perhaps the Minister will explain when he sums up. In the Davis Report on the future of digital broadcasting, there was again no mention of radio. Finally, last year at the Prix Italia broadcasting awards, a world showcase for all that is best in broadcasting, the Chairman of the B BC devoted all his remarks to television at what was supposed to be a television and radio event.
Those examples are rather limited and represent a regrettable neglect. But they also represent a folly. Radio is part of the electronics revolution. Indeed, as noble Lords are probably aware, mobile telephony is referred to in the United States as "wireless".
Perhaps most important of all, like all electronic media, radio is facing the digital revolution; a revolution which embodies the potential not only of very high quality sound, transmission and reception, but also could, if there were a total switch to digital broadcasting, permit a far more intensive use of that most scarce of all commodities in both broadcasting and telephony: the radio spectrum.
Digital radio will also produce a huge increase in choice for listeners and, by making more effective use of the spectrum, a huge increase in access for broadcasters of all kinds; that is national broadcasters, community and ethnic groups and all kinds of social interests.
Digital radio will also simplify broadcasting by Internet. In a few years' time, as many people will receive their radio programmes via the Internet as via a conventional radio set. The origins of those radio broadcasts could be anywhere in the world. In just a few years, competition between British commercial radio and the BBC will be a minor side show in a world-wide competition for audiences.
In this country, we have the opportunity to succeed in that global competition. Crucially, we have the product in quality radio broadcasts across the range of music and speech produced by the BBC and by our commercial broadcasters. We have the industry skills to make this a very British success story. Only outdated legislation stands in the way.

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First, successive Secretaries of State, acting under the Broadcasting Act 1990, have allocated only sufficient spectrum to digital radio for it to reach 75 per cent of the population. Do the Government simply not care about the other 25 per cent of listeners? Perhaps the Minister will tell us. Is it not clear that lack of access to digital radio will stifle investment in the industry?
Let us take another example. In order to encourage investment in digital radio, the 1996 amendments to the Broadcasting Act permits foreign—that is, non-EU—investment in the digital sector. But at the same time, highly restrictive ownership rules severely handicap domestic commercial companies from achieving the size which would generate the revenues to fund the investment that is necessary. While welcoming foreign investors with open arms, current legislation leaves the British radio industry fighting competitive battles with its hands firmly tied behind its back.
Thirdly, the sensitive and complex issue of a switch-over date from analogue to digital services is being neglected by the Government. Without consideration of a switch-over date, there is little incentive to invest, particularly in the production of reasonably priced receivers.
The radio industry is working hard to achieve digitisation. The BBC and commercial radio are working together in a public-private partnership to persuade the equipment manufacturers to commit to the scale of receiver production that will bring prices down. We are all grateful that the Secretary of State for Culture, Media and Sport has agreed to support this campaign at an event in May. But it is not just support that is needed.
The dilemmas facing the industry and the straitjacket of outdated legislation that is inhibiting its growth demand that government policy be modernised now. Throughout broadcasting, radio and television, many of today's regulatory structures have been rendered irrelevant by the new information age. We must modernise. An example of the urgency of the situation we face may be found in yesterday's referral of the planned television merger of United and Carlton to the Competition Commission. The Competition Commission will inevitably assess the merger through the lens of competition alone without referring to wider broadcasting issues. Its conclusions, however wise, can be only a partial solution.
Before the election, the Government promised a new regulatory structure to envelope all the electronic media—radio, television and telephony. That new, modern structure of regulation is required to support investment. It is needed to secure competitive success for all our media industries in the new international media environment. And it is needed now. The year 2002 will be too late: too late for industry; too late for jobs; and too late for the future of employment in the industries of the future.
7.37 p.m.
Lord Brooke of Alverthorpe: My Lords, I am grateful to the noble Lord, Lord Lea of Crondall, for introducing the debate and I extend my congratulations to the noble Baroness, Lady Blood, on a marvellous maiden speech.
I make my contribution as a simple general secretary of a couple of Civil Service trade unions. My contribution comes from great experience of dealing with the many changes which came at us from many different angles. I also speak as someone with an interest in the future of work. I was involved in the review of the future of work, sponsored by the Churches in 1997. It was chaired by our colleague, the noble Lord, Lord Sheppard, who was then Bishop of Liverpool. I refer to that this week when we in this Chamber have heard a great deal about morality, principles and religion. I regret that more noble Lords are not expressing an interest in today's topic because I believe that work, or service, is at the heart of things, leading to the physical and spiritual well-being of individuals, families and the nation as a whole. It is that which motivated the Church review when it was set up in 1996–97. It took place against a background of a good deal of trouble within the labour market. People were experiencing difficulties which had arisen as a result of following, over the preceding 15 years, the policies of our colleagues on the opposite side of the Chamber.
I shall take a political stance for a short period. It is worth remembering, when considering major changes in the pattern of employment, that the major change we are now experiencing is a shift from having great numbers of people unemployed to having much higher levels of employment. During the period of the previous government, the number of full-time jobs fell by over 1.18 million. When they left office, unemployment still stood at over 2 million. For the first time in decades, we saw over 3.25 million people living in households where no one had any employment whatever. In terms of remuneration, 50 per cent of the vacancies advertised in job centres throughout the United Kingdom were offering hourly rates of £3.50 or less. Indeed, in many cases people working from home were being offered as little as £1 an hour, in particular women employed in piecework.
In the period from 1979 when the Conservatives came to power, incomes of the bottom 10 per cent fell by 30 per cent in real terms. Against that, at the other end of the scale, we saw a phenomenal growth in the salaries, incomes, dividends, share options and so forth of people who were able to progress using the freedoms given to them under that administration. We watched that big divide develop and we are now tackling it. It is now a fact of life: people in the bottom 10 per cent of income levels are worse off in relative terms. Perhaps I may remind my colleague, the noble Lord, Lord Howell of Guildford, that during the 1980s a line was taken that stated that nothing could be done about the growth of unemployment. A phrase parroted by everyone stated that high unemployment was inevitable and that we should adjust to it accordingly. However, I am glad to say that right

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around the Chamber, that fatalism has been rejected. Now a good deal more optimism about what the future holds for us is evident.
Lord Howell of Guildford: My Lords, perhaps the noble Lord will allow me to defend myself. What we were saying was that, in a period of transition and restructuring that was necessary for all modern economies, there would indeed be areas in which large numbers of jobs would be lost and the entire job pattern redistributed. We went through that. It was very painful, but the net effect is that the British economy is now one of the most agile and flexible in Europe with the lowest levels of unemployment. It is not a question of rejecting or accepting levels of unemployment; it is a question of having the courage to go through a period of great difficulties and emerging in an advantageous position. Does the noble Lord dispute that Britain is now in an advantageous position? How does he think we got to this point?
Lord Brooke of Alverthorpe: My Lords, Britain is now in a more advantageous position than it was before. However, I wished to make the point that a view was held in many parts of the country—particularly on the side of the Opposition—that a high level of unemployment was inevitable. Even the Labour Party, when it came to power, was cautious about the extent to which it would make the commitment to seek the reintroduction of full employment.
Lord Haskel My Lords, I thank my noble friend for giving way. To enlarge upon what he was saying, the philosophy that prevailed at the time was that the price of a sound economy was high unemployment.
Lord Brooke of Alverthorpe: My Lords, I shall move on. While global competition and markets, along with technological change, are bringing even faster challenges, we should continue to reject the scaremongering that went on for a good many years. I believe that the future of work is a matter of choice and priorities for the Government. Unemployment is not something that is inevitable, nor do we have to endure it if we choose not to do so. I also advance the view that it is not inevitable that the current deep divisions in society should continue.
In this difficult week for the Government, I should like to congratulate them on their efforts and for the considerable progress they have made in the short time since they came to power. I repeat that the major change we have seen in working patterns has been the shift in the numbers moving from the unemployment register into work. This has been achieved through skilful economic management—and with a little legacy left by the previous government; I am happy to acknowledge that.
High employment has also been achieved through the New Deal, which, I believe, my colleagues opposite are not prepared to embrace. It has also been achieved by encouraging people to move from benefits and into work by making work pay better than benefits. This
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has been aided by the introduction of the minimum wage, the working families' tax credit, a gradual approach to welfare reform, and reductions in income tax and national insurance contributions for those at the bottom end of the wage scale. These should all be set against the background of the priority and attention being given to education, which has been discussed by my noble friend Lord Puttnam and others. It is likely that the benefits that will accrue from changes in education and training will not be immediately apparent. However, we can trust that if we have got it right and appropriate education and training is being provided, those benefits will flow in the longer term.
Perhaps some critical friends from within the Labour Party cannot yet see quite how all this adds up for our supporters and for the electorate. But I believe the picture is now becoming clearer and I hope that increasingly we shall have the opportunity of putting the message across to the country. At the very least, it is good to see that the forces of conservatism within the Opposition are now beginning to recognise what is happening. We all welcome the recent U-turns in the Opposition's approach to economic and employment issues. We look forward with interest to see what further changes they may make in order to move closer to what we have been advocating.
To return to changing work patterns and the supply of labour, I recall that only 20 years ago—I am speaking primarily of the public service—we still had an overwhelming majority of males in the workforce. There was little part-time or flexible work available and most employees still, in the main, stayed with one employer for most of their careers. The view was held that people had jobs for life. Self-employment was still a small-scale activity.
Many of those factors have changed over the past 20 years, as several speakers have pointed out. Self-employment has increased from around 1 million to the current 4 million, with projections that the figure will rise to over 5 million in the not-too-distant future. The distinction between gender roles and work has been and continues to be eroded. There is now an increasing number of women in paid work—either full-time, part-time or on a flexible basis. Regrettably, many of them still seek to fulfil two roles: looking after the home and being in employment. Those are issues which need to be addressed.
On the other hand, on the male front, there are more young men who are no longer entering the labour market. That point has been mentioned by other noble Lords. An increasing number of men are withdrawing from the labour market in middle age. The problem of the young unemployed and of the middle aged needs to be addressed. The noble Lord, Lord Lea, mentioned the need to examine the inter-relationship between middle-aged men being made redundant and factors linked to pensions.
In addition, a significant proportion of the population are now working longer and harder. Other noble Lords have mentioned that, and it is a topic to which we should turn our attention. I believe that

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latterly there has been a change in attitude to the issue of job security. Although change is occurring, people now feel more relaxed than perhaps was the case some time ago.
Of course, we are faced with big changes arising from e-commerce. I believe that that will present a big challenge for the workforce and for employers. Inadequate research has been carried out into the consequences of e-commerce on the labour market, and work needs to be done there in the near future. Those are the big drivers which we must address. Overall, I believe that we are now in a much more confident position with regard to the labour market than we were some years ago and that we can look forward with a great deal more confidence than has been the case for a number of years.
7.52 p.m.
Lord Avebury: My Lords, perhaps the noble Lord may look forward to a day when Mr Portillo endorses the New Deal. Having, as he said, made a couple of U-turns already, that would be a small step for him to take. While he is about it, perhaps he can help those of us who believe that the national minimum wage is rather too low and should be increased, at least to take into account the effects of rises in wage levels. Thus, the people who receive the national minimum wage may receive the benefits of the growth in the economy which apply to others in earnings.
I begin by saying how much I have learnt from listening to this debate, which falls outside my usual political horizons. I join with those who have already congratulated the noble Lord who initiated the debate and who, I believe, got it off to a tremendous start.
I was particularly impressed by what he said about the work of the trade unions in Brussels in trying to improve the working time directives there and in having labour practices examined more thoroughly than they would otherwise be. Like the noble Lord, I believe that that is an unsung story and perhaps it should receive a wider audience than it receives in this House. I should like to join the noble Lord in thinking of a way in which we can arrange for the achievements of the trade unions in Europe to be more widely known. I believe that noble Lords would like to hear about that, and that, not only those on the Tory Benches, but some of the residual anti-Europeans in his own party, such as the noble Lord, Lord Bruce, should pay attention to what can be done by those who represent the workers in the corridors of power in Brussels.
I also add my few words to those already expressed in admiration of the maiden speech of the noble Baroness, Lady Blood, to which I enormously enjoyed listening. I believe that we have something to learn from Northern Ireland in relation to both work and social exclusion. Last summer I was in Northern Ireland at the invitation of the noble Lord, Lord Dubs, to look at the activities of the Government there in relation to the travelling population. I saw several
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things which impressed me and which I believed were done much better in Northern Ireland than in this country.
In particular, in Northern Ireland travellers are regarded as being the most socially deprived of all the minority communities in the Province. However, in this country not only has the Social Exclusion Unit made no recommendations on how to tackle the social exclusion of gypsies, including their exclusion from the world of work, it has not even begun to consider making such recommendations for the future. Therefore, I hope that we shall hear a great deal more from the noble Baroness about Northern Ireland and about aspects of life in the world of work there from which we may learn something to our advantage.
I refer to the comments made by the noble Lord, Lord Howell, concerning the fallacies of information technologies. He said that a great many people still believed that those technologies would replace unskilled and semi-skilled workers, and that, generally, they would have a harmful effect on the labour market. I remember my friend Bruce Page talking about the effect of information technology on the publishing industry. His point was that in every advance in technology in publishing, more people have been employed, from the days of Caxton onwards. If one thinks of the latest developments as being, in a way, an advance in publishing, I believe that the same thing is true now.
The noble Lord, Lord Puttnam, talked about the expansion of services that can be provided by the Internet. Of course, he is absolutely right. More products will be offered on the Internet. There will be more entertainment, more goods and more information in terms of the uses that are made of it by other businesses—I include the Government in that. It is absolutely right to say that the Government are one of the chief beneficiaries of the IT revolution.
I believe that the only person who touched on that point was the last speaker, the noble Lord, Lord Brooke of Alverthorpe. As he said, the Prime Minister has undertaken that in the next four years 25 per cent of government transactions will be carried out over the Internet. That represents an enormous revolution for the people who will provide that work.
We have already seen that information technology creates upheavals. I refer, for example, to some of the unfortunate glitches in the delivery of computer systems to government departments. Almost every week, there is a Question or a comment in your Lordships' House or another place about the tragedy of the Immigration and Nationality Directorate's computer, which is way behind schedule and still has not been delivered. However, that does not diminish the importance of people who work in the Immigration and Nationality Directorate. They still have to make judgments on who is entitled to enter this country and to whom they must issue a notice of refusal. If it is ever delivered, the computer system will provide the civil servants—the immigration officers—with the equipment and information at their elbow to

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be able to say whether a certain person comes within the rules which have been laid down by Parliament to decide who can enter this country.
In addition, I believe that we see the beginning of a period in which the boundaries between government departments will melt away. It is common façon de parler to speak about "joined-up government". That becomes possible with information technology because there are no boundaries between the information provided for tax services, social security services or for any other purpose, except those which Parliament chooses to impose. Provided that we can overcome people's natural anxieties about the security of personal data, there is no reason whatever in future why we should not have a joined-up system of taxes and national insurance. When that time comes, it will also mean that the individual consumer will be able to access his information very easily via any office of the DSS or any tax office. It will be immaterial where he goes because all those terminals will have equal access to the same information which, of course, will have adequate protection in terms of passwords and so on. The benefits here are enormous for the consumer and I think that they are enormous for the workers in those industries as well.
If anything, the noble Lord, Lord Puttnam, underestimated the extent of this revolution when he compared it with the railways because, after all, the railways are concerned only with getting from one place to another. But this technology will enter into every single nook and cranny of a person's life. It is not just a question of being able to shop more easily; being able to get information off the Web more easily; and being able to send e-mails; because devices which can be embedded in ordinary household articles are now on the threshold of development, technology can be extended into virtually anything. Already noble Lords have spoken about the joining up of television with the Internet. That is going to be one of the major developments of the next few years.
The other development which, I think, is really going to take off is the use of a larger band width by consumers. At the moment, the chief inhibiting factor is the time you wait to get a download or even sometimes to get on the Internet. If that process becomes instantaneous, not only will you be able to log on, send an e-mail, write an order to Tesco's, or download your SETI all in five minutes, but it will be possible to do all that without any skill. When I speak of SETI, perhaps I may just put in a plug for it because I think it is so wonderful. Last May Berkeley launched a system for allowing people with personal computers to process small quantities of data from the radiotelescope at Arecibo. Now, 1.6 million people are signed up to that world-wide. You just download a piece of software on to your personal computer and you are sent chunks of data, 330Kbytes at a time. Your computer processes it and sends it back to the University of Berkeley where it is analysed. If you have found the little green men, you will be told about that six weeks later.
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The wonderful thing is that instead of having to have one enormous computer centralised in Arecibo, it has managed to harness the power of all these millions of computers in people's private houses all over the world. I think—
Lord Haskel: My Lords, I thank the noble Lord for giving way. Perhaps I may comment in view of the noble Lord, Lord Eatwell, saying that most people logged on to the University of California at Berkeley on that system because they heard about it on the "Today" programme.
Lord Avebury: My Lords, that may well be so, but it has now received very wide currency in all the computer magazines. I doubt whether there is a single owner of a PC who has not heard of it by now.
I conclude by making this serious point. In Britain we have a great interest in this changing structure of employment, which has been one of the themes of today's debate, because of the shifting patterns of employment. From the jobs-for-life of the past, which have been spoken of by several of your Lordships, to the routine job changes and rise of short-term contract work, it is something which I think we have experienced more drastically than most other European countries. Many industries are shifting towards lean employment structures in which they rely on others for everything but their core operations.
One businessman to whom I was talking the other day had gone the whole way. He was engaged in providing airline catering. Initially, he brought in the food, cooked the meals, put them into the plastic packs and sent them off himself to the airlines who were his customers. Gradually, he contracted out all those operations until the only thing he had at the middle was a computer. He was writing out schedules which said that X meals had to be delivered to airline Y at such and such a time on Monday morning and other people were doing all the work. He has one individual sitting at the middle, masterminding the whole programme. We could reach a situation where we have a core of people who are very well educated and very well trained but, outside that, there will be a penumbra of people who are on short-term contracts, brought in from agencies on temporary hire, or are self-employed and contracting their services to the larger companies. That is Will Hutton's 30:30:40 world in which he says that 30 per cent of the population of working age will be in core jobs and will be highly skilled, highly trained; 30 per cent will be in contract jobs; and 40 per cent will not participate in the workforce at all for some reason, such as early retirement, motherhood or being a student.
It is the small and medium-sized firms that on the whole bear the brunt of the economic cycle, the ups and downs of the switchback. So it is going to be the 30 per cent of short-termers who bear the employment up and downs and what used to be referred to as "the lump" in the construction industry where self-employed workers have long been the norm. It is now common in the more starchy areas of banking and

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finance. It is, of course, rife in the information technology industry itself, as a glance at the ads pages of the computer press discloses.
I should like to make a plea to the Government not to boast too much about the flexibility we have achieved. There have been genuine gains in employment, and from these Benches we welcome and endorse the Government's emphasis on helping the long-term unemployed back into work, even if the New Deal has not been quite as successful as they have claimed (because of the strength of the pound and the endemic mismatch between the overheated south-east and other parts of the country, which are still relatively in the doldrums). That flexibility in the labour force has come largely from the shifting patterns of employment which I have described and the large numbers now working on short-term contracts. That has transferred the risk in the economy away from capital and on to the workers; indeed, often on to those workers least able to bear the effects of any downturn.
That carries potential long-term dangers. It is quite common in the UK to hear the Germans being criticised for their lack of flexibility and to point out their falling productivity. Those critics overlook two matters: first, that German productivity statistics since 1992 have incorporated the East German Länder whose productivity was always below western standards. Secondly, West German productivity in terms of added value per worker per hour has been, and remains, about 30 per cent higher than its British counterpart. One of the main reasons is that German workers are trained better and for longer than British workers. German employers invest in training because generally German workers stay longer in their jobs and, if not for life, at least long enough to pay back the cost of training.
I suggest that the changing structures of employment which we have witnessed over the past 25 years are part of a long-term and dynamic situation. We as a nation have very little control over it and we have chosen for one reason or another not to use the few controls that we have. Whether that is a wise decision, time will tell. It has resulted for the present in an imbalance in regional terms (which I have mentioned, but which has been dealt with at length by others) between the core and the periphery of the workforce—that core workforce and the penumbra of part-timers and contract workers. In both senses, flexibility has its upside and its downside. I urge the Government to recognise the downside and perhaps to be a little more humble when they preach the British solution to our partners in the rest of Europe.
8.9 p.m.
Baroness Miller of Hendon: My Lords, this has been a most interesting, stimulating and informative debate. Perhaps I should apologise to noble Lords for my grating voice. It is certainly grating inside my head.
I congratulate the noble Lord, Lord Lea of Crondall, on introducing such a good debate and one which has provoked so many interesting and
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informative speeches from all sides of the House. I also congratulate the noble Baroness, Lady Blood, on her fine maiden speech. I was most impressed by the fact that she said that she wanted to speak from personal experience. Noble Lords know that when they speak from experience they always speak better because they know what they are talking about. I do not suggest that in this Chamber any noble Lords do not know what they are talking about, but in other places that is perhaps the case.
Changes in employment patterns have been taking place not just in the past couple of decades as many have said, but for thousands of years. Nine thousand years ago man stopped being a hunter nomad and became a farmer. Later he developed into an artisan, working in wood and metal, devising alphabets and discovering mathematics and all forms of science, so creating the world of ideas. Everything accelerated at the time of the Industrial Revolution, which changed the whole balance of employment from agriculture and small craft work into the gigantic industrial conglomerates and the major industries that existed around the world at the beginning of World War II.
In 1901, 12 per cent of the population of the United Kingdom lived in the countryside and were engaged in agriculture. By 1991 the number of agricultural workers had fallen to 2 per cent. In contrast, the number of people working in office jobs rose from 18 per cent to 40 per cent in the same period more than double. Currently the number of couples with dependent children where both partners are in employment is three-fifths, compared with around half in 1979–80. A relevant fact is that between the spring of 1971 and the spring of 1999 the proportion of economically active women rose from 56 per cent to 72 per cent. One reason for that is that since 1901 there have been more office jobs than manufacturing jobs and the gap widened from 10 per cent to 20 per cent in the years between 1971 and 1991.
In other words, the nature of the work available has changed. More women are prepared or are physically capable of carrying out the jobs that are on offer, so more and more have paid employment. Their ambitions for themselves and their families, quite apart from their economic needs, are putting more women into the labour market. Several noble Lords, particularly the noble Lord, Lord Lea of Crondall, and the noble Baroness, Lady Turner, have mentioned that that is one of the greatest changes in employment patterns that we have seen over the past quarter of a century.
Without industries on the scale that existed in the first half of the 20th century, the unsurpassed savagery of the two global wars would simply not have been possible. After the Industrial Revolution the greatest accelerator to invention was the two world wars, which demanded new processes like mass production and incredible new inventions that today we take for granted, like radar, jet planes and Henry Kaiser's Liberty Ships, which transformed shipbuilding from rivets to welding. The list is almost endless and I shall not take up the time of the House by reciting a catalogue of them. After the war, the development of

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new inventions, new materials and new techniques arrived at a speed that even then was bewildering. The noble Lord, Lord Puttnam, told us about the present rate of change in relation to the digital economy and so on. Look at the difference between our old 7-inch black and white television sets and the new digital, all-singing, all-dancing interactive ones that we use today, not merely to watch a favourite soap opera, but to instruct our bank, for example, to pay the gas bill. Anyone who has bought a new computer in the past few years knows that it is virtually obsolete the minute it is taken out of its box.
What about telephones? The other day I was watching a not so old film when I was struck by the character laboriously turning the dial of the telephone and I compared that to the push button machines that we all use now. Those will soon be replaced by voice-operated telephones, which are already on the market. In 20 years' time—possibly less—I suppose the telephone kiosk will have disappeared completely in exactly the same way as the street gas lamp.
That leads to another example of changing employment patterns. When the gas lamps went, so did the jobs of the men who used to light them every night, along with the many jobs lost in the gas industry. Inventions have brought about changes in employment patterns, destroying old jobs, but at the same time creating new ones. One of my sons is a software engineer. When he was born there was no such thing as a software engineer.
Social considerations and international politics have also played a major part in the changing patterns of employment. The entire former British Empire has been decolonised and practically each new emerging country wanted to add industry to its predominantly agricultural economy. So we helped them to establish textile factories and in no time "King Cotton" was killed off by cheap imports from the developing world. In some cases, steelworks were developed and our steel industry suffered as a result.
Our steel industry was also decimaled as a result of fierce competition in the developed world and changes in manufacturing techniques in other industries. Reduction in demand caused by changing car engines from steel to aluminium and introducing plastic into car bodies is one such example.
In economics there is a new buzzword, "globalisation". International trading companies have been with us for long time. Those companies now have the opportunity to manufacture or to buy components in one country, assemble them in another and sell them in a third country.
Inability to compete with overseas industries working with cheap labour and less restrictive environmental regulations have all long played their part in virtually destroying old, traditional industries in which we were once the leaders. In four great centres we were the world leaders in shipbuilding. That industry has virtually disappeared. Overseas competition and domestic restrictive trade union practices played a major part in that I am not being judgmental because I believe that under-investment and had management were also to blame.
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The fact is that the industry has gone and it has gone for ever, which brings me to geography. Why was it so hard to introduce new industries to the North East to replace shipbuilding, despite there being a ready-made skilled, versatile workforce on the spot? Another reason for this situation is the transport costs. A business that has to move its goods from Newcastle to Dover is inevitably at a disadvantage in relation to one that is based somewhere on the M2.
Even that factor is beginning to change. We have just entered a new world—indeed a new planet—"Planet.com". The other day I ordered something by mail order and found myself talking to a lady in Cornwall. I can buy books, compact discs and all sorts of things from America without speaking to anybody, and far more cheaply than I can buy them here. There is even a website operating out of Cyprus that sells cars at thousands of pounds less than in the United Kingdom.
What I call electronic work can be done anywhere. Call Directory Enquiries from London and you are likely to be answered by someone in Northern Ireland or Scotland. Data can be processed just as easily and speedily in some provincial town.
Lord Avebury: My Lords, perhaps the noble Baroness will allow me to intervene. UK Info, which costs about £25, contains every name and address in the United Kingdom and all the telephone numbers, so one never needs to ring Directory Enquiries. It is cheaper to buy UK Info.
Baroness Miller of Hendon: My Lords, I thank the noble Lord for his advice. Data can be processed just as easily and speedily in some provincial town or even in India or South America, as in one of the big cities, at less cost in wages and rent.
That is yet another change in employment patterns. How many ordinary, day-to-day financial transactions are now done long distance rather than face to face? Utility companies encourage us to pay by direct debit, giving advantage to those who can afford to compared with poorer people who do not have a bank account. Pensions are now paid directly into accounts.
It used to be regarded as a secure job for life to work in a bank. But not any more. The noble Baroness, Lady Turner of Camden, spoke of the change in businesses that were once regarded as being there for a long time. Counter clerks who aspire to become bank managers grow fewer in number. Money comes out of a hole in the wall. And a vast proportion of what people used to pay in the form of dozens of cheques each month, or by cash, is settled by one cheque to the credit card company. That is how things work these days.
The subject of the debate today is so vast that it is impossible, even with all the contributions made tonight, to cover every topic and ramification: they are endless. However, one of the great things about today's debate has been hearing of the experiences of different people who have spoken about different industries from different knowledge bases. I confess,

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as did the noble Lord, Lord Avebury, that I learnt an enormous amount from the noble Lord, Lord Puttnam. Apparently, my granddaughter knows far more about these matters than I do, but that is one aspect of the modern age. I have tried to show that it is clear that there has always been change. It is important therefore to have flexibility in the labour market to allow people to move from one job to another as circumstances require.
I should like to talk a little about what the future might hold—but only a little because with the enormous changes taking place one would need to be extremely brave to predict what will happen, and I certainly cannot.
The noble Lord, Lord McIntosh, would be surprised if I said that I had written a speech containing no political content; he would not expect that of me. But when I listened to the speeches around me I crossed out the political parts. I felt it was an extremely informative debate and did not want to move into the realm of politics. However, the noble Lord, Lord Brooke of Alverthorpe, tempted me to go back and read a couple of paragraphs which I had crossed out.
Despite the way that new Labour likes to turn facts on their head, this Government inherited a thriving economy, and one which continues to thrive because of the momentum which was already in place. I will not have the noble Lord, Lord Brooke, say, unanswered from this side, that it is down to what has taken place within the past two or three years. Far from it. The economy had not come to a shuddering halt by 1997.
Lord Brooke of Alverthorpe: My Lords, I know I have not been on the best of form today, but when the noble Baroness reads Hansard tomorrow she will see that there was a qualification in my remarks concerning inheritance.
Baroness Miller of Hendon: My Lords, yes, and the noble Lord made other remarks which I shall also read carefully. I felt it was a pity. Can I say more? This is not a political debate. The patterns of employment change throughout history and the problem for us all, whether we are in government or in opposition, is to do our best to try to create markets and work hard. It is essential and right that citizens of this country should be able to move from one area to another to find work. I felt that particularly when the noble Lord, Lord Puttnam, mentioned the number of people working in the Vodafone management organisation. I believe he said it was a business involving 400 million people but with 750,000 employees, as compared to the 10 at the top of the Stock Exchange which he mentioned earlier.
Lord Puttnam: My Lords, what the noble Baroness is trying to say is absolutely not accurate and I shall write to her with the precise figures.
Baroness Miller of Hendon: My Lords, that is the worry—not that the noble Lord is going to write to me; I shall be waiting for his letter with bated breath. But
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the problem is that the larger the organisation, the bigger the changes, the fewer people appear to be required. That will be a challenge for us all in the future.
With that little diversion I have passed over pages of my notes. But I shall let them go. I made my point with the noble Lord, Lord Brooke of Alverthorpe, and say no more in that regard. But I conclude by mentioning something that Adair Turner wrote in an article last September. He said that he felt that our labour markets were doing well, which was reflected in the impact of the profound labour market liberalisation which was introduced by the previous government—I emphasise "previous government"—in the 1980s and 90s. He said it is a liberalisation that the new Labour Government have left in place. There we have it. On both sides of the debate I have tried to be extremely fair.
8.25 p.m.
Lord McIntosh of Haringey: My Lords, this has not been a debate at all; it has been a seminar, and much better for that. We have all learnt things, thanks to the excellent choice of timing and subject of my noble friend Lord Lea and all the contributions that he attracted to his debate. I am a little disappointed that my noble friend intends to write to the noble Baroness, Lady Miller. He should send an e-mail and copy it, if he does not mind, to mcintoshar@parliament.uk.
We benefited greatly from the contributions today. In the limited time available to me, I want to say something about patterns of employment which is the subject matter of this "seminar", and something about the way the Government see them. Whether or not I go back the full 9,000 years that the noble Baroness, Lady Miller, did is doubtful. Then I want to talk about the economic aspects, particularly the macro-economic aspects, then the micro-economic and social aspects. A theme running through the debate has been, quite rightly, the quality of work as well as the quantity.
The pattern of employment in this country was described by the noble Lord, Lord Howell, as a "demented mosaic".
Lord Howell of Guildford: My Lords, "fragmented mosaic".
Lord McIntosh of Haringey: My Lords, my hearing is going. But the noble Lord is right in the sense that the employment market in this country is much more diverse, much more fragmented—to use his much improved word—than in other European countries and other parts of the world. For example, if we take the standard 40-hour week, only 10 per cent of people in this country work that 40-hour week compared with over 50 per cent in Germany and 40 per cent in France and Italy. As has been said, we have more Saturday and Sunday working, more shift working and more part-time work than anyone else in Europe.
Diversity is a good thing in the sense that it enables people to find a pattern of work that suits them. That is relevant to what the noble Baroness, Lady Blood,

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said in her excellent maiden speech; that is, that we have one of the highest rates of female participation in the world because the range of jobs, particularly part-time work, allows many women to combine paid work with domestic responsibilities. Whether we go from that into the more rarefied zones of treating our careers, as Charles Handy would say, as portfolios rather than as jobs is another matter.
Of course there have been changes, but we are still in the position where 87.5 per cent of those in employment are employees and only 11.5 per cent are self-employed. We have seen dramatic changes in the nature of jobs but, as the noble Baroness, Lady Miller, said, that has been true for a long time; indeed, for the past 20 years 7 million people have been changing jobs every year. It has always been the case that what appears at any particular moment in time as dramatic can be found to have been so at many points in our history.
So we do have a rather healthy pattern of employment in terms of its suitability for the wide range of uses that people want to make of employment, whether as a source of income, a source of meeting people or for what other purpose may be appropriate. We also have a very dynamic employment pattern. Again, these things have been going on for a very long time. The one clear measure of dynamism is the amount of change that is taking place within the UK labour market. In numerical terms, over 2.5 million vacancies are notified to the job centres of the Employment Service every year and perhaps twice as many more arise through newspaper advertisements, private employment agencies and the Internet. The Employment Service alone fills 1 million jobs every year.
There is a role for government in this process. It is valuable that we can contribute to oiling the wheels of the employment market. At the same time, the "flexibility"—which is a very fashionable word—in the labour market has many different meanings. Yes, flexibility is essential when you have a dynamic and diverse labour market, but it does not necessarily mean—and in most cases it should not mean—a hire and fire policy. It should mean jobs that are smart, in the smart card sense, efficient and well resourced with adequate capital behind them.
I shall not go into the history of what kind of economy the Labour Government inherited in 1997. However, this Government have a different idea not only about the quality of work and its social effects but also about what our objectives and our choices should be. It should be noted that Gordon Brown, as Chancellor of the Exchequer, is the first Chancellor not only to have talked about full employment for many years but also to mean it; and, indeed, clearly to have plans in place for achieving full employment.
There was a certain amount of party political discourse between my noble friend Lord Brooke and the noble Lord, Lord Howell. However, I am sure that the noble Lord would not deny that it was his noble friend Lord Lamont who said that a high level of unemployment was a price worth paying for the
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changes that were taking place in labour markets. Indeed, I think he was largely justifying that in his speech. But whatever may have been the case in the past, the point we want to make is that a high level of employment and a low level of wasted lives and talents is a proper objective of government. Governments are free to make that choice and it is one which this Government have deliberately made. I give way.
Lord Howell of Guildford: My Lords, I thank the Minister for giving way and I am sorry to delay noble Lords further. The Minister speaks so persuasively, but he still has not grasped the point. The capitalist system is evolving. We now have a brand new system of capitalism globally. This country has been through a revolution and will go through further revolutions. These things take time. During the time in question there had to be a rise in unemployment, with great regret, before the level could come down and settle in the new job pattern. It was not a question of accepting high unemployment as a permanent feature and later welcoming some new and different model: we had to go through that period to get where we are now. It was inevitable; as other countries are now finding out, it cannot be done any other way.
Lord McIntosh of Haringey: My Lords, I hoped that I had chosen not to go backwards and I trust that the noble Lord will listen to the rest of the argument, because it is about an evolving economy. As reflected in the instructions of the Chancellor of the Exchequer to the Bank of England in setting interest rates, what is important is a high and stable level of employment—indeed, to be quite precise, high and stable levels of growth and employment. This means employment opportunities for all, and that is the definition of "full employment" for which we should be looking; in other words, work for those who can work.
There has been a change in emphasis from previous definitions of full employment from levels or rates of unemployment, which is the way that the previous government always chose to look at the figures, towards rates of employment, supplemented by a fair and inclusive distribution of employment. We have done that quite deliberately to enable us not only to help the unemployed but also those who are currently economically inactive, including some of the most disadvantaged people in society, so that they can reap the benefits of work.
If we look at the figures of the breakdown of the labour market, we can see that of the working age population of 36 million something like 27 million people are in work; something like 1.7 million are unemployed (under the ILO definition which is what we use in this Government); and something like 21 per cent are economically inactive, of whom 30 per cent say they do not want a job but very many would want a job if it were possible for them to do it. The whole thrust of government policy on employment has been to make it possible, desirable and attractive for those who are not economically active to get back to work and make that work pay. That moves me from my macro-economic objectives to the social objectives.

747
However, before I continue on that track, I should like to say a few words about the knowledge economy, which has been a theme of so many well-informed and fascinating speeches this evening. The noble Lord, Lord Howell, was right in much of his analysis of the knowledge economy. I believe he described a pattern where many rotten jobs—boring and unskilled jobs—have disappeared, will disappear and will not come back. But the question is: how can we ensure that they are replaced by interesting, worthwhile and well-paid jobs, which will contribute to the quality of life of everyone? Before I finish agreeing with the noble Lord, I have to say how much I disagree with his "Homo Hierarchicus" model. It sounds very much to me like the rich man in his castle with the poor man at his gate. I do not think that the noble Lord would like to think of himself in that way.
I am not in any way trying to go back—certainly not 9,000 years. Indeed, I am not even going back to what my noble friend described as "John Mortimer's village" of 70 years ago, with the lonely barrister plodding homeward on his weary way. I hope that we are looking forward and that we are taking seriously the technological changes that are taking place.
My noble friend Lord Puttnam made a very good analogy with railways. The point about railways is not that the employment there in the last century was enormous but the fact that it made possible the movement of goods to and from markets; it expanded markets; and made possible the movement of people to and from work by train. The analogy ought also to be thought of as being valid for e-commerce. It is not that e-commerce itself will be a huge employer, nor should we be misled by the stock market valuations of high-tech companies. Surely the effect of e-commerce will be as a tool for all other businesses. Unless those other businesses make use of the technologies available, they will go to the wall. There will not be such a dramatic change in the pattern of employment, but simply—we hope—in the quality of the jobs that will be made available.
I found my noble friend's analogy of Vodafone to be less valid. If we take stock market valuations as a significant factor, we could be misled. But he got back on track, as always—
Lord Puttnam: My Lords, I thank my noble friend for giving way. The point I want to make—I think that it is a terribly important point—is that I am no fan of the ups and downs of the stock market. However, as the noble Lord, Lord Howell, pointed out, we live in a capitalist economy whereby the value on paper allows a company of no intrinsic value, but with a lot of future, to purchase assets on the open market. I believe that we have not fully come to terms with the fact that the new economy is able to purchase the assets of the old economy and move forward. That is not fully appreciated in this country.
Lord McIntosh of Haringey: My Lords, I do not deny the facts. I am not at all certain what the political and economic implications are. Perhaps I am just confessing a failure of analysis. I do not think that the Government take a view on these matters. As I said, I think that my noble friend was back on track when he talked about education and our educational policy. That is what we debated this week when we discussed the Learning and Skills Bill.
I ought to say a few words about the employment policies of the Government. I shall do so briefly as there was not much comment on it except from the noble Baroness, Lady Blood, who described a young man with a wife and baby who was offered work in a supermarket that turned out not to be permanent. The point which ought to reassure the noble Baroness is that, according to the statistics, those who find such work—even if their first job does not work out—often eventually obtain full-time jobs. The difficulty is to get the first job. Often people who are successful in obtaining their first job find that their subsequent work prospects improve.
As regards the comments of my noble friend Lady Turner, I point out that we have set out a legal framework of decent minimum standards through the Employment Relations Act, the national minimum wage, the Working Time Directive, the social chapter measures and provisions to protect part-time workers through giving them comparable rights to those of full-time workers. Those provisions appear to be working. People are more confident about seeking work. Those whom I have described as being inactive but who want to work are being encouraged to seek it.
That leads me to the other labour market measures that have been almost an obsession with this Government during the past three years. We have heard about the New Deal for the young unemployed. That has been extended to those aged 25 and over and, from April this year, will be extended nationally to those aged 50 and over.
My noble friend Lady Turner mentioned lone mothers. I shall not mention any further statistics but take up that point. The programme for lone mothers is voluntary. Some 90,000 people, nearly all of whom are women, have taken up the offer of an interview. Some 23,000 have found jobs and an additional 5,000 have entered education and training. If one extends those statistics to the other parts of the New Deal, one can see that the increase in employment in this country of over 700,000 in the past three years is not a matter of chance but has occurred because deliberate and effective government policies have been introduced to make that possible.
Before I leave the issue of older people, my noble friend will know that following consultation we issued a code of practice in July of last year on ageism in employment policies. We shall see how that works before we take any decisions as to whether anything further needs to be done. These considerations apply to all aspects of the labour market, particularly as regards women, which I do not have time to refer to, even in the 40 minutes that remain in which I may speak!

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All of these measures are not job creation measures or measures to provide an alternative to work. They help people to help themselves to get a job and avoid the problem of being stuck out of work. The measures ensure that when people go back into work that is beneficial to them in social and economic terms and is beneficial also to society. I do not have time to discuss working families' tax credits, the national minimum wage or all the other aspects of government policy which are relevant to the subject matter of this debate. I conclude by saying that it is our objective to achieve full employment in this country, not only for moral and social reasons but because that is the way for this country to thrive. We believe that we have made a good start.
8.45 p.m.
Lord Lea of Crondall: My Lords. I am glad that noble Lords have found this a rewarding debate. I understand that one does not respond at this stage to points that have been made in the debate. However, I wish to make a couple of points.
I share the view of the noble Baroness, Lady Miller, that forecasting the future is rather difficult. Some of us have heard a good number of forecasts. I refer to the forecast of my noble friend Lord Eatwell. He said that he envisaged a scenario whereby the whole of manufacturing industry was run by one man. I add that the man has a dog. I know about this as I went on a VIP visit to the place where the man is employed. At the end of the visit we were asked whether we had any questions. We asked, what the man did. We were told that the man was present to feed the dog. That was fair enough. We then asked what the dog did. We were told that the dog made sure that the man d id not touch any of the equipment.
This debate has not been political. I was particularly glad to hear the range of contributions. I was interested in the speech of the noble Lord, Lord Howell. I point out that membership of the trades unions increased by 100,000 last year. Therefore I believe that the trades unions will be around for a long while yet. I say to the noble Lord, Lord Avebury, that a request from him for information on how social partners arrange negotiations in Brussels arising from the Maastricht Treaty would be well received. They have involved the TUC and the CBI in those matters. That is an important development which few people seem to appreciate.
Finally, I echo the comments of everyone who has said that the noble Baroness, Lady Blood, made a notable maiden speech. I thank the noble Baroness for choosing this debate in which to make her maiden speech and for mentioning her personal experience and her reflections on some aspects of her work in Northern Ireland. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Industrial Training Levy (Construction Board) Order 2000

  Industrial Training Levy (Engineering Construction Board) Order 2000
  8.48 p.m.
  Lord Bachrose to move, That the draft orders laid before the House on 16th December 1999 be approved [6th Report from the Joint Committee].
  The noble Lord said: My Lords, it may he for the convenience of the House if I speak to these orders together.
  The proposals before your Lordships seek authority for the Construction Industry Training Board (CITB) and the Engineering Construction Industry Training Board (ECITB) to impose a levy on the employers in their industries to finance their training activities, including grants schemes, and to fund the operating costs of the boards. Provision for this is contained in the Industrial Training Act 1982 and the orders give effect to proposals submitted by the two boards.
  In each case, the proposals are based on employers' payrolls and their use of subcontract labour. Each board has included the provision to raise a levy in excess of 1 per cent of an employer's payroll. The Industrial Training Act 1982 requires that in such cases the proposals must be approved by affirmative resolution of both Houses. The other place has approved the proposals.
  As required by the Industrial Training Act, both boards have provided for the exemption of small firms from the levy. The level at which this exemption takes effect aims to strike the right balance between helping small firms to grow and giving them unfair commercial advantage. However, the boards are committed to supporting the training efforts of small firms, whether or not they pay the levy. All companies need a skilled, competent workforce if they are to be competitive, and small firms in these sectors are encouraged to take advantage of the services offered by the boards and to provide opportunities for trainees and apprentices.
  In the case of the Engineering Construction Industry Training Board, which assesses off-site establishments—that is, head offices—and construction sites separately, the proposed levy rates are 0.18 per cent of the total of payroll and net expenditure on labour-only subcontracting for off-site employers, those employers with combined payroll and net labour-only payments of £1 million or less not being liable to pay the levy; and 1.5 per cent of the total of payroll and net expenditure on labour-only subcontracting for site employers, those employers with combined payroll and net labour-only payments of £75,000 or less not being liable to pay the levy.
  The proposals are different to those approved by your Lordships' House last year in that the small firms exemption levy for off-site employers is based on

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  payroll rather than on numbers of employees. This ensures a more reliable and accurate measure of a company's levy liability and brings the arrangements in line with those for site employers. The change has been introduced in such a way that there will be no drop in levy income for the board. Nor will any additional employers be brought into the levy net.
  Turning to the Construction Industry Training Board, the proposed rates are 0.5 per cent of payroll for direct employees and 2.28 per cent of net expenditure by employers on labour-only subcontracting. Employers with combined payroll and labour-only payments of less than £61,000 will not be liable to pay the levy. This represents an increase for directly employed labour on last year's rate of 0.38 per cent. The board has explained that the increase is necessary because of important changes that are taking place within the industry.
  New rules have been introduced by the Inland Revenue and the Contributions Agency which are causing major changes in patterns of employment. There has been a large swing from using labour-only subcontractors back to direct employment. Because the levy on labour-only subcontracting is charged at a higher rate, this swing has led to a reduction in the board's income. The industry has agreed to increase the PAYE levy to 0.5 per cent to maintain the necessary levels of income. This is part of moving to a single rate of levy for all employees over a five-year period to 2003.
  At the same time, the industry is significantly increasing its investment in training. The CITB will be making additional grants and other resources available to support employers' efforts. This will be wholly financed by cost reductions, an increase in non-levy income and increased levy income from growth in the industry.
  For both boards, the proposals involve levy rates in excess of 0.2 per cent, with no provision for exempting employers who make their own training arrangements. In such cases the Industrial Training Act 1982 requires boards to demonstrate that the proposals have the support of the employers in their industry. I am satisfied that each board has obtained that support. All of the key employer federations have been consulted about the levy rates and have agreed that these rates are necessary to fund the boards' training plans.
  The proposals I have outlined are expected to raise between £75 million to £80 million for the Construction Industry Training Board and around £10 million for the Engineering Construction Industry Training Board. Both boards will use the money to fund a range of training activities, including grant and initiative schemes, new entrant training and operating costs.
  Your Lordships will know from previous debates that these are the only two statutory industry training boards. They exist because of wide support from employers and employer interest groups in these sectors who believe that without them there would be a serious deterioration of training.
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  Both boards are committed to ensuring that employers in their industries receive a quality service and each places great importance on a forward-looking strategic planning process based, importantly, on regular analysis of the labour market. This is crucial if they are to ensure that the education, training, skills and qualification needs of their sectors—both now and for the future—are met.
  Each board is also the government-recognised national training organisation for its sector and is fully involved with the national network of sector-level training organisations. They are making a significant contribution to workforce development. For example, the nationally recognised labour market assessment systems developed by the boards inform the important work of the National Skills Task Force, the regional development agencies and, from April 2001, subject of course to the will of Parliament, the new national and local learning and skills councils. That Bill, of course, is making its way, perhaps somewhat slowly, through your Lordships' House.
  The draft orders before the House will enable the two boards to carry out their training responsibilities in 2000. I believe it is right that the House should agree to approve them. I commend them to the House. I beg to move.
  Moved, That the draft orders laid before the House on 16th December 1999 be approved [6th Report from the Joint Committee].—(Lord Bach.)
  Baroness Blatch: My Lords, I am grateful to the Minister for his careful explanation of the two orders and for moving them together.
  We all know that the engineering and construction industries are crucial to this country's economic regeneration and employment policies. We know that regulations which affect the industries can be a force either for progress or for inhibiting progress. As I understand it, these are the only two training boards in the whole of the country. Just as the previous government moved away from industrial training boards, the present Government are now moving away from the levy subsidy scheme and forward training.
  The exemption for small firms is welcome, although I know that the levy still causes some grief to many small employers. I note from the debates in another place that there are still some small companies wending their way through the tribunal system in order to seek exemption.
  I wish to emphasise a point raised in another place by my honourable friend Mr Tim Boswell, when he pleaded for more user-friendly language in these documents. I am sure that the Minister will agree with that. I have been reading regulations for many years and I have found them almost impossible to understand. Along with my honourable friend in another place, I do not plead for my own purposes but for small businessmen, particularly for those in the construction industry and sometimes for those in the engineering industry. Such people do not have access to expensive legal advice and to interpreters of legalese. Efforts were made by the previous

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  government, and will continue to be made by this Government, but it is important that we persuade the counsel who draft legislation to remember that, at the end of the day, it has to be read, understood and—a point often missed—that such legislation has a very practical impact on the workforce of many companies.
  The increase proposed in the orders will be seen as considerable by some employers. Can the Minister say how many employers do not meet their levy payments? What loss to the training boards does this represent? I am fascinated also to know to what extent the increase is in place to compensate for such losses.
  There are considerable new burdens on business as a result of much new legislation, which results in extra workloads that are costly for many companies; small ones in particular. I refer to the administration of the national minimum wage, the working time directive, the parental leave directive and many other pieces of legislation.
  An important point was made in another place by Mr Richard Allan, the MP for Sheffield, Hallam, and endorsed by my honourable friend Tim Boswell, about the cost of engineering courses. I know that the issue will feature in the debates on the Learning and Skills Bill, but those courses are important. For obvious reasons they are relatively more expensive than many others for further education colleges and training providers to mount. During the Second Reading debate on the Learning and Skills Bill, I asked—and I shall certainly refer to the matter during the course of amendments to the Bill—on behalf of the Engineering and Marine Training Authority whether the Government will include proper differential funding for such courses under the new post-16 proposals. That is a vexed issue.
  My final point was made in another place. None of us seems to be able to put his hand on the regulatory impact assessment. Alongside the regulatory orders it is important to have some understanding of what the impact would be on those subject to the order. I understand that it is not readily available in the Library or in the Printed Paper Office It will be helpful if it is made more available so that we may access it when we come to discuss these matters. I conclude by thanking the Minister again for the way he explained the two orders.
  Lord Avebury: My Lords, I welcome the two orders. I am grateful for the explanation the Minister has given for them. Perhaps I may pick up one of the points made by the noble Baroness: the question of the exemptions for small businesses. If one looks, for instance, at the Engineering Construction Board Order, the exemption applies to businesses where the sum of the emoluments in respect of labour-only payments for all off-site employees does not exceed £1 million.
  Has the Minister had any representations about that figure? Do small businesses believe that it is a correct figure as a cut-off point or would they prefer it to be somewhat higher? What exactly is the argument by which the cut-off point is determined, in relation
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  both to that order and to any other? I am not arguing that the figures are wrong; I simply point out that the Minister in his explanation did not specify how the Government had calculated that a "small" business was one which came below that limit and was therefore entitled to the exemption, whereas a business with payments of £1,000,001 could be labelled in the other category and would be subject to the full force of the levy.
  I do not want to make suggestions that make life for businesses even more complicated than it is already, but I wonder whether it is right to have an absolute cut-off point as a result of which a business £1 below the cut-off point does not pay anything at all whereas a business £1 above it is subject to the full force of the levy. That seems rather anomalous. In the real world it might have been better to have a graduated system of payments phasing up to the full amount, just as, for example, happens in the income tax system. One does not pay the full rate immediately one comes within the income tax band; one pays a reduced rate on the first tranche of one's earnings.
  If one looks logically at the philosophy of dealing with small businesses, a business does not suddenly graduate from being a small to being a large business once it passes a particular point in its operations. It moves slowly from being small to large over a wide range of activity. Therefore, one would have thought that the levies should take account of that fact of life.
  Lord Bach: My Lords, I am grateful to the noble Baroness and to the noble Lord for their support for the orders and for their helpful remarks. It is good that the orders, which are important, are uncontroversial to the extent that they are.
  I agree with the noble Baroness that these two industries are important. She is absolutely right about that. She is right also about the issue of using more friendly language. I am delighted to be able to tell her that the statutory instruments are being reviewed this year. It may be that those reviewing them had some prior notice that the noble Baroness was going to mention that point this evening. Both boards also issue plain English leaflets and guides at the same time, which is useful.
  The noble Baroness asked, fairly, for figures with regard to the increases. I shall write to her in due course and place a copy of the letter in the Library. In relation to any shortfall that may occur if someone does not pay up or pay up in time, I understand that both training boards keep reserves in order that such an eventuality may be taken care of.
  With regard to courses and their cost—both matters that we are debating this week in our proceedings on the Learning and Skills Bill—the last FEFC report found good quality facilities. The LSC, when it comes into being, will set tariffs to reflect different course costs.
  The noble Baroness asked about the regulatory impact assessment. It was an omission, but it was placed in the Library immediately after the debate in the other place. I am again grateful to the noble Baroness for her comments.

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  I turn to the points raised by the noble Lord, Lord Avebury. He mentioned the £1 million figure in relation to the Engineering Construction Board Order. That is for off-site establishments; the head offices. The exemption is as high as it is because it concerns some extremely large firms and their offices. The people on the payroll in the offices of large firms are often fairly well paid. So the 0.18 per cent of their salaries, as it were, is a larger amount than perhaps it would be of the salaries of those who are not so well paid. As I understand it, there has been little complaint about—indeed there has been support for—the £1 million limit.
  The noble Lord made one other important point. He asked why there is a cut-off point. The cut-off point simplifies matters. The noble Lord will know that when a firm moves gradually into having to pay the levy it will pay a percentage. As it gradually grows, the total amount that it has to pay will become larger and larger as its payroll increases. There is a gradualism about this, even though there is a specific cut-off point. I hope that my answer makes some kind of sense to him.
  I once again thank the noble Baroness and the noble Lord for taking part in this short debate. I commend the orders to the House.
  On Question, Motion agreed to.

  Contracting Out (Functions in Relation to Petroleum Royalty Payments) Order 2000
  9.8 p.m.
  The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I beg to move the Motion standing in my name on the Order Paper.
  We are here today to debate an order, under the Deregulation and Contracting Out Act 1994, which will permit the transfer of royalty collection functions from the DTI's Oil and Gas Royalties Office to the Inland Revenue's Oil Taxation Office. As your Lordships may know, the administration of direct government revenues from UK Continental Shelf production is currently split between the Inland Revenue and the DTI. The Oil Taxation Office administers petroleum revenue tax and corporation tax while the Oil and Gas Royalties Office, which has 14 staff in Aberdeen, administers the 12.5 per cent royalty paid on oil and gas produced from older—pre-April 1982—fields.
  The effect of a transfer will be to consolidate all these functions in one unit—albeit with two sites, in Aberdeen and in London. The proposed rationalisation should bring significant benefits to producer companies. The intention is that the administration of petroleum revenue tax and oil and gas royalties will, with industry input, be gradually conformed, to bring a more streamlined service,
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  building on the substantial similarities in royalty and PRT. The Government believe this proposal to be both worth while and uncontroversial.
  It may help noble Lords if I give a little of the background history. The current division of responsibilities between the DTI and the Revenue has its origins in the earlier years of the UK's oil and gas production industry. Before 1975, oil and gas producers were liable only for production royalties and for conventional corporation tax on any production profits. Oil and gas royalty first began to generate substantial sums at the time that commercial production of gas began, in the 1960s, and, at that time, royalty administration sat naturally with the licensing authority itself—initially the Department of Energy, and latterly the DTI.
  The special taxes on North Sea production profits came somewhat later with the introduction in the 1970s of petroleum revenue tax, ring-fenced corporation tax, and the extra-territorial charge on the profits earned by offshore contractors operating in the UK sector. These taxes have been administered since 1975 by the Inland Revenue's Oil Taxation Office.
  The royalties office and the Oil Taxation Office have worked more or less closely together ever since 1975, but their respective sizes and responsibilities have changed substantially over that time, reflecting the development of the province and successive changes to the North Sea fiscal regime. Thus, the role of the Oil Taxation Office has steadily grown and now includes overall responsibility for the oil and gas industry, upstream and downstream, valuation of product for both tax and royalty, relations with overseas fiscal authorities, and the provision of technical support to the Know-How Fund and to the Falkland Islands Government.
  For present purposes, perhaps the most significant of these changes was the effective abolition of royalty for post-March 1982 fields. Although the royalties office's workload is stable at present, the medium and longer-term future of the royalties office and its staff is, as matters currently stand, an uncertain one. Furthermore, the collection of royalty does not sit particularly well within the DTI's general area of responsibility.
  While there are no guarantees for the long-term future of either office, the Government have concluded that worthwhile benefits are to be had from a merger of the two offices. First, a merged operation will facilitate a conformed approach to the administration of royalty and PRT. Both are forms of resource rent, levied on very similar licensee populations. For historical reasons, the approach of the respective offices has been different. That difference has been a source of concern to licensees, and a key objective of the merger will be to secure as much commonality in the future as is practical.
  Secondly, the new merged operation will have sufficient critical mass to manage the inevitable eventual run-down of royalty and the other duties with confidence. Thus we are looking as much to secure good, effective administration in the medium and longer-term as for the present.

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  In sum, there are substantial similarities in royalty and PRT on which the transfer will build, leading to simpler administration of royalty. Furthermore, the royalties office and the Oil Taxation Office currently have different skill bases and the expectation is that both will gain from further integration. The producer companies, which have been aware of the proposal for some time, stand to gain from closer integration of royalty and PRT administration, and have given their support to the idea.
  Responsibility for royalty policy will remain with the DTI. An order under the Deregulation and Contracting Act 1994, rather than a Transfer of Functions Order under the Ministers of the Crown Act, is being used in this case because the Inland Revenue is not a ministerial department. I commend the order to the House.
  Moved, That the draft order laid before the House on 16th December 1999 be approved [6th Report from the Joint Committee].—(Lord Sainsbury of Turville.)
  Lord Avebury: My Lords, perhaps I may ask the Minister one question. Are there any implications for the pension rights of employees in the two halves that are coming together? Are their pension rights at present identical; or will there be a scheme to assimilate the rights of both sets of employees? If that is so, will there be there a "no detriment" clause?
  Lord Sainsbury of Turville: My Lords, I believe the situation is that employees will retain the pension rights that they currently have and that there will not be a change. There is no significant difference between the DTI and the inland Revenue on that point.
  The Government believe that the transfer will be warmly welcomed by the oil companies which pay royalty on their production from North Sea oilfields. The established success of the province owes a great deal to the pragmatic partnership that government has formed with producers. This modest proposal is very much in that spirit of practicality and pragmatism. The order will permit an important rationalisation of royalty collection functions. I commend it to the House.
  On Question, Motion agreed to.

Competition Act 1998 (Determination of Turnover for Penalties) Order 2000

  Competition Act 1998 (Land and Vertical Agreements Exclusion) Order 2000
  9.15 p.m.
  Lord Sainsbury of Turvillerose to move, That the draft orders laid before the House on 19th January be approved [7th Report from the Joint Committee].
  The noble Lord said: We are here to debate two orders which will complete the overhaul of our competition regime that we promised in our manifesto. We said that we would adopt a tough "prohibitive"
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  approach to deter anti-competitive practices and abuses of market power. The Competition Act, when it comes into force on 1st March 2000, will deliver that.
  The two orders before us are concerned with helping to build an efficient, focused and effective regulatory system to enforce the prohibition. One obstacle to that is the risk that the competition authorities, the Director-General of Fair Trading and the utility regulators with concurrent powers under the Act, will be faced with the notification of a large number of benign agreements and will inevitably spend their time processing those rather than, as we would wish them to do, tracking down cartels. It is, of course, in the nature of cartels that they themselves will not be notified!
  There is practical evidence of the existence of such a risk of excessive precautionary notifications. When what are now Articles 81 and 82 of the treaty came into force, the European Commission received thousands of notifications. And when the Irish Government introduced a domestic prohibition modelled on Article 81, their Competition Authority was inundated with notifications of leases for shops.
  I know that your Lordships recognised that risk during the passage of the Bill, and Section 50 was incorporated to give express power to define and exclude land and vertical agreements from the Chapter I prohibitions.
  The Land and Vertical Agreements Exclusion Order does that. Its purpose is to remove any need to notify such agreements to the OFT or regulators on a precautionary basis, while putting in place mechanisms to deal with any agreements within the categories that do raise competition concerns. The regulatory system will be more efficient if the competition authorities are able to focus on and deal with those agreements that do affect competition significantly and adversely.
  So far as land agreements are concerned, the order will disapply the prohibition in respect of agreements which create, alter, transfer or terminate an interest in land for—example, a lease—together with certain obligations or restrictions which are part o f the agreement and which are accepted in the party's capacity as holder of an interest in land, or benefit him in that capacity. Examples of these are the usual covenants in commercial property agreements relating to the payment of rent, service charges, obligations to insure the property and clauses on the use to which the property is to be put. Our purpose is to exclude the normal restrictions and obligations to be found, for example, in shopping centre leases which we do not think are likely to affect competition appreciably but which may well be notified to the OFT on a precautionary basis.
  There is, similarly, a good case to exclude vertical agreements. Broadly, these are agreements between a supplier and business customer or dealer concerning the use or marketing of the goods or services supplied. They are less likely to raise competition concerns than horizontal agreements between businesses at the same level of trade, for example, two manufacturers of a

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  product. The prevailing view among economists is that vertical agreements will have only beneficial effects, such as stimulating inter-brand competition, except in some cases where one or more of the parties has market power or, sometimes, there is a network of similar agreements. Even in such cases careful examination of the market and the other circumstances is needed to establish whether the vertical agreement has a harmful effect. We need to exclude the mass of vertical agreements from scrutiny while providing powers to investigate and deal with those which may cause competition concern.
  The text of our definition of vertical agreements is closely modelled on the new Commission block exemption for vertical agreements which will apply from 1st June. In particular, I draw your Lordships' attention to the definition of price-fixing, which we have largely drawn from the Commission, in Article 4 of the order. It is the possibility that vertical agreements may facilitate price-fixing, such as resale price maintenance, which has led some to look at them suspiciously. We and the Commission have adopted wide definitions to ensure that not only the most overt forms of price-fixing but also the more subtle forms of pressure or incentives cause an agreement to fall outside the exclusion and hence within the prohibition.
  We have, however, thought it right to go wider than the Commission in excluding vertical agreements. We have not adopted all of the qualifications that the Commission has in its block exemption, such as market share tests, and that approach was supported when we consulted on a draft order. We can be more relaxed than the Commission because its concern that vertical agreements do not divide the single market on national grounds is not relevant to the Chapter I prohibition. In almost every case in which the Commission has taken action against vertical agreements single market considerations have been the predominant or only concern.
  We also believe that we have more effective safeguards than those available to the Commission to deal with any vertical agreements that cause competition concerns domestically. In particular, we have provided a more effective withdrawal power in Article 7 which will enable the director-general to "clawback" from the exclusion and deal with individual agreements that raise competition concerns. We also have the complex monopoly power in the Fair Trading Act, to which there is no real equivalent at Community level, which will enable networks of vertical agreements, which may in combination have an effect on a market, to be investigated and remedies imposed.
  With these powerful safeguards in place, we conclude that to exclude land and vertical agreements will enable the new competition regime to be more effective and efficient in dealing with matters of real competition concern, including any vertical and land agreements which fall into this category, than it would be if the OFT and the regulators became bogged down in the detailed scrutiny of what will usually prove to be benign agreements.
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  I turn now to the turnover for penalties order. Section 36 of the Act enables the director-general to require an undertaking to pay him a penalty in respect of an infringement of either of the Act's prohibitions. Subsection (8) provides that no penalty fixed by him may exceed 10 per cent of the turnover of the undertaking as determined in accordance with such provisions as may be specified by the Secretary of State. This order specifies how the turnover is to be determined.
  I should emphasise that the actual penalty in any particular case will be determined by the circumstances and in the light of the DGFT's guidance on the appropriate amount of any penalty. This sets out the steps which the director will follow when calculating the amount of penalty in any case. The steps encompass, among other factors, consideration of such matters as the undertaking's turnover in the relevant product and geographic market, the nature and duration of the infringement, and the size of any gain made. One step involves adjustment for any aggravating factors such as the involvement of directors and senior managers and repeated infringement, and any mitigating factors such as acting under duress, genuine uncertainty as to whether an agreement constituted an infringement, and negligent, as opposed to intentional, infringement. Any penalty may then need to be adjusted to take into account the ceiling of 10 per cent. The order is concerned with determining that ceiling.
  Under the corresponding EC regime, the maximum fine is 10 per cent of the undertaking's world-wide turnover in the preceding business year. We have departed from that approach in two significant respects, just as elsewhere in the Act we made changes where we thought the EC regime could be improved.
  First, we have decided that, since this is a piece of domestic legislation concerning trade within the UK, the turnover should be confined to turnover arising in the UK. Secondly, subject to a minimum of one year's and a maximum of three years' turnover, turnover is to be that arising for the entire period of the infringement.
  We know from the cartels that the OFT has uncovered under its existing powers that they can be long lived, often enduring for years. We believe that the punishment should fit the crime. Those who have engaged in a long-running cartel should face a higher potential penalty than a business which commits a one-off infringement.
  I said at the start that these orders were about creating an efficient, focused and effective regulatory system. The provisions in the Act and this order will provide a regulatory system with real teeth. Taken with the other order and the Act, we shall have established a modern competition system, one which is efficient and effective in dealing with matters of significant competition concern and one which is able to punish those who transgress and to deter those minded to follow in their path. I commend the orders to the House.

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  Moved, That the draft orders laid before the House on 19th January be approved [7th Report from the Joint Committee].—(Lord Sainsbury of Turville.)
  The Earl of Courtown: My Lords, I thank the Minister for his description of the orders. Usually when I debate such orders I am in full agreement with the Government. On this occasion, I am not.
  The Minister must be aware that there is concern in the industry about the effect of the orders on the part of no less a body than the CBI. As noble Lords are aware, these orders originated from the Competition Act 1998, which states that the penalty for contravention of Chapter I, which covers cartels and price fixing, and Chapter II—abusing a dominant position—will result in fines of 10 per cent of the UK turnover for up to a maximum of three years. Perhaps the Minister will confirm that. That will no doubt force industry to think very carefully about how its actions will affect its competitors. It will be able, of course, to apply to the Director-General of Fair Trading for guidance on its actions. That could result in any number of applications. Can the Minister tell the House whether it is planned for a fee to be paid on such applications? If so, how much will that be?
  As regards any fine, will the Minister confirm that the figure is 10 per cent of UK turnover over the maximum period of three years; or is it 10 per cent per year? I do not argue that there should not be a penalty. However, do the Government realise the knock-on effect of imposing such onerous burdens on industry?
  I understand that part of the reason for the orders is to bring us into line with the European Union. However, its imposition of fines is limited to one year and, if imposed, is subject to extensive consultation throughout the Commission, and final approval by the entire Commission. Has there been any indication from the Commission that the one-year period is not enough? Even though the fines imposed by the Commission will be worldwide, UK companies with a large turnover could be disproportionately affected. A fine of 10 per cent of turnover could easily turn a profit into a loss and could even force substantial companies into liquidation.
  As regards the Competition Act 1988 (Land and Vertical Agreements Exclusion) Order 2000, that is once again a very significant measure. It would emasculate the Competition Act in relation to distribution agreements and agreements relating to land, including tenancies of tied outlets such as pubs and petrol stations. That could be contrary to the public interest.
  The proposed order would exclude exclusive and other restrictive agreements between suppliers and retailers from the Act's prohibition on anti-competitive agreements. It would thus permit a wide range of anti-competitive agreements restricting competition between both distributors and suppliers,
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  to the detriment of consumers and the economy. I have made a number of points and I look forward to hearing the Minister's response.
  Lord Avebury: My Lords, perhaps I may ask one question before the Minister replies. As I understand it the figure of 10 per cent is the maximum and that it is not an automatic fine. The Minister said that the punishment would be made to fit the crime. Presumably, therefore, where it is imposed, if the fine was of such a nature that it put a company into a serious financial position then presumably there would be some leeway and mitigation of the 10 per cent maximum.
  I am ashamed to have to ask the next question because I was not here when we dealt with the Bill itself. Can the Minister say whether there is an appeal against the fine? If a company believes that the amount imposed is unreasonable, can it go anywhere else to get a judicial or any other kind of review?
  Lord Sainsbury of Turville: My Lords, if the infringement has continued for three years the 10 per cent maximum level of fine applies to that period. As has been pointed out, the fine is placed only on UK trade as opposed to the situation in the EC, where it is placed on worldwide turnover. We have made adjustments both ways. Our view is that in these circumstances, if there is a long period of infringement, that should be taken into account when deciding the penalty. That suggests that the punishment should be proportionate to the crime. The point must also he made that there is a 10 per cent maximum fine. Whether it reaches that maximum depends on the nature of the infringement. I gave some of the reasons why it may vary.
  The fees are £5,000 for guidance or £13,000 for a decision. Clearly, where companies believe that they may be trespassing, they will take very careful account of the matter. There is also a right of appeal to the Commission.
  The final point that I should make is that as regards EC law, and in America also, very substantial fines are being imposed by the Justice Department and the Commission in order to make it very clear that infringements will be taken very seriously. I believe that everyone agrees that American law has probably been the most effective. In the case of the company Hoffman La-Roche, there was a fine of 500 million dollars.
  We believe that firms as well as consumers will benefit from a strong Competition Act. Competition is the life-blood of a competitive economy. We cannot afford weak, uncompetitive domestic markets. We allow cartels, abuses of dominance and other anti-competitive behaviour to hold back business at our peril.
  That is why the Government embarked on a radical strengthening of our competition laws. A key part of that strengthening is provision for penalties. Under the competition regime we inherited, when a cartel is uncovered, all that happens is that the businesses concerned are asked to stop.

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  By contrast, our proposals, of which the Determination of Turnover for Penalties Order provides an important part, will give the new regime real teeth. As I have said, the penalties in any case will depend on the particular circumstances, but they are intended to act as a deterrent. They should encourage firms to think twice before entering into anti-competitive agreements or abusing a dominant market position. By taking into account the period of the infringement, the Determination of Turnover for Penalties Order will discourage a cynical cost-benefit analysis that the potential profits might outweigh the penalties provided that the anti-competitive behaviour can remain secret long enough.
  I do not accept the proposition that such an approach will be bad for business. On the contrary, strong competition in our domestic markets makes for strong businesses. It provides a spur for firms to innovate, increase productivity, and provide real choice for consumers. It equips them to compete in the global market place. Conversely, anti-competitive behaviour is a burden on the economy and on businesses which want to grow by offering better
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  value. It is certainly a burden on new small businesses and on ordinary consumers who have to pay more for less.
  The US economy shows that strong competition laws vigorously enforced can contribute to growth, innovation and investment. Is it suggested that American businesses have been made less competitive by their authorities' long-standing, tough approach to anti-trust enforcement? I believe that we all know the answer. It is the rigour of the competition authorities in pursuing anti-competitive practices which has contributed to the success of US businesses. Furthermore, fines there are seen as an essential component of anti-trust enforcement. Certainly, that is the lesson drawn by the US Department of Justice, which has been increasing the level of the fines it imposes.
  I hope that the House will support these important proposals. They will help to make the new competition regime efficient and effective; and that regime is a key part of our strategy for modernising the British economy and helping it to become more competitive. I commend the orders to the House.
  On Question, Motion agreed to.
  House adjourned at twenty-two minutes before ten o'clock.

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