Sitting of 19 July 2000

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

  CITY OF LONDON (WARD ELECTIONS) BILL (By ORDER)
  Order for further consideration, as amended, read.
  To be further considered on Wednesday 26 July.

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

    Peace Process
    Mr. David Winnick: If he will make a statement on developments in the peace process. [129859]
    Mr. Jeremy Corbyn: If he will make a statement on the peace process in Northern Ireland. [129864]
    Mrs. Ann Winterton: If he will make a statement on the current state of the peace process. [129866]
    The Secretary of State for Northern Ireland (Mr. Peter Mandelson): Considerable progress has been made in recent weeks. Devolution has been restored, the IRA confidence-building measure is in place, and good progress is being made to implement the Good Friday agreement in full.
    I am not complacent: dissident republicans still pose a threat, and decommissioning remains a high priority. Nevertheless, the vision contained in the agreement is now becoming the reality—a better future for Northern Ireland, based on democratic ideals and guided by the principles of non-violence, parity of esteem and consent.
    Mr. Winnick: If today's security alert in central London turns out to have been caused by breakaway IRA groups, should not they learn that we did not give in during 25 years of sustained terror and that we are hardly likely to do so now? Does not my right hon. Friend agree that dissident IRA elements and the loyalist factions that have caused so much trouble with hooliganism and violence recently have something in common? They
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    loathe each other and want to commit murder, but is not what they have in common a desire to destroy the Good Friday agreement?
    Mr. Mandelson: I strongly echo my hon. Friend's sentiments, and I deeply regret the inconvenience to rail and underground travellers today. The main paramilitary groups are maintaining their ceasefires. However, a threat remains from dissident paramilitaries opposed to the Good Friday agreement. I utterly condemn that threat, and the disruption caused by the incidents today.
    The Government's policy of resolute action against terrorism, combined with the search for a just and enduring settlement has led to a marked reduction in terrorist activity in the past few years. The threat remains, however, and as long as it does the police will continue to combat it with whatever resources they need to do their job effectively.
    Mr. Corbyn: In the context of the process of peace and reconciliation, will my right hon. Friend comment on the death of Robert Hamill in Portadown? Is he prepared to authorise or instruct a judicial inquiry, under section 44 of the Police (Northern Ireland) Act 1998, into the circumstances surrounding his murder?
    Mr. Mandelson: I do not rule out such an inquiry, or one of a similar kind. However, while investigations into that tragic and brutal killing are continuing, I shall maintain the option without giving any further commitment to undertaking such an inquiry.
    Mrs. Winterton: The Secretary of State is a master of the oleaginous reply. Will he break the habit of a lifetime and answer this question directly: what is the estimate of the percentage of IRA weapons that have been inspected by Mr. Ahtisaari and Mr. Ramaphosa? Will he give an indication when decommissioning, the key feature of the Belfast agreement, will be complete?
    Mr. Mandelson: A substantial quantity of armaments in a number of dumps was inspected by the two international inspectors. That included weapons, explosives and detonators. I am sure that the hon. Lady will join me in welcoming the fulfilment of that commitment by the Provisional IRA—assuming that further inspections by the two international inspectors can take place in due course.
    Mr. David Trimble: The Secretary of State will know that today's incidents in London are being attributed to dissident republicans. Does the right hon. Gentleman recall that dissident republicans were responsible for the Omagh atrocity, and that the House was recalled to enact emergency legislation that we were told would be used against those elements? In the two years since, that legislation has not been used at all. Will it be used? Will the Secretary of State press the Irish Government to use the equivalent legislation on their side of the border?

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    Over the past two years, the Irish Prime Minister has given assurance after assurance that the law in the Republic will be used against dissident republicans. When will that happen? Has the right hon. Gentleman pressed the Irish Government to fulfil those promises?
    Mr. Mandelson: The legislation to which the right hon. Gentleman refers remains on the statute book. Where the police and the prosecuting authorities believe that it is possible and desirable to invoke it, they will do so without hesitation.
    The right hon. Gentleman is right that combating dissident republicans depends on close co-operation between the Government and the Irish Government. That co-operation is proceeding, and I can tell the House that I will be holding a telephone conversation with the Irish Minister of Justice at 5 pm, in order to discuss with him what further action both Governments can take.
    Mr. Stephen Pound: Following the point raised by the right hon. Member for Upper Bann (Mr. Trimble), I can tell my right hon. Friend that normal life came to a halt in my part of west London this morning because of what we are now told was a "viable" explosive device in Ealing. A coded warning was given from what we assume to be a dissident republican group. Will my right hon. Friend join me in paying public tribute to the emergency services, and to the operators of the overground trains and of the London underground, who kept disruption and misery to a minimum?
    Will my right hon. Friend also accept assurances from me, my constituents and all decent people in the kingdom that his work becomes ever more vital? We are talking not about some faraway country, but about life and death for us, on our own doorsteps.
    Mr. Mandelson: I am sure that the whole House will want to join my hon. Friend in expressing gratitude to the emergency services, who reacted so promptly and efficiently today in response to the coded warnings that were received, and in coping with the disruption that ensued. The device that has been exploded at Ealing was an improvised explosive device. Further details are awaited, but the code word used in connection with the incident was the same as that used for the attack on the railway line at Newry and in other incidents and hoaxes on the mainland. The device at Ealing may have been of a size similar to that of the Hammersmith bomb. It certainly appears that this attack was carried out by dissidents, but we shall pursue the matter and pin down exactly who was responsible.
    Mr. Lembit Öpik: I want to return to matters in the Province. Will the Secretary of State say what we must do to prevent a recurrence, in the run-up to 12 July 2001, of the recent civil unrest, which involved illegal roadblocks?
    Mr. Mandelson: It is slightly pessimistic to assume already that there will be continued deadlock at Drumcree next year. The determination by the Parades Commission has set out a clear, thoughtful and considered route map to enable all sides in the dispute to reach a local agreement. That will ensure that what took place in the past couple of weeks will not happen again next year.
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    The Parades Commission's proposals deserve careful consideration. I urge Portadown Orangemen to engage in the process. If that happens, I hope that local residents will make a reciprocal gesture and commitment.
    Mr. Eddie McGrady: I am sure that the Secretary of State is aware that, as we in Northern Ireland move painfully and slowly towards peace and normality, there has been an enormous increase in drugs trafficking, which has penetrated our communities and led to beatings, petrol bombings and shootings. Will he urgently examine that new cancer in our society, which is often promoted by erstwhile or so-called erstwhile paramilitaries, review the resources that he and the police have at their disposal, enhance those resources, and start an all-out war on those parasites on our society, who are destroying our young people?
    Mr. Mandelson: It is true that the spread of drugs, their supply, their use and their sale, behind which stand many members of paramilitary organisations, is now at the heart of the programme of activities undertaken by the RUC. Wherever I go in Northern Ireland, the story is the same: the cancer is spreading into every community. I assure the House that the RUC will utilise every resource it has at its disposal to combat that illegal and unacceptable activity, and that the RUC will have the Government's full support in doing so.
    Mr. Andrew MacKay: Will the Secretary of State confirm that on or before 28 July, he will release all the remaining terrorist prisoners who committed crimes before the signing of the Belfast agreement? Will he confirm that one of the most notorious terrorists, Michael Stone, will be released this Friday? Will he also confirm that there has, as yet, been no decommissioning of illegally held arms and explosives—not one gun, nor one ounce of Semtex?
    Mr. Mandelson: The right hon. Gentleman is right about the forthcoming prisoner releases, but I should emphasise that they depend on the maintenance by the organisations to which the prisoners belong of the ceasefires to which they are committed. Evidence of the involvement or engagement of any paramilitary group now on ceasefire in violent or terrorist activity would, of course, have a direct impact on my assessment of their ceasefire and potentially on further prisoner releases. I should point out that all the prisoners due to be released will be released on licence, which provides a mechanism to return them to prison, if necessary—an important point that both the House and the prisoners should bear in mind.
    Mr. MacKay: The Secretary of State will recall that the Prime Minister, rightly, referred to a parallel process when he was persuading the people of Northern Ireland to vote yes in the referendum. However, the process is not parallel when terrorist prisoners are given early release but no decommissioning takes place. At this late hour, I plead with the right hon. Gentleman, on behalf of the great majority of people in Northern Ireland and on the mainland, not to release the remaining terrorist prisoners until, at the very least, all the paramilitary groups that signed up to the Belfast agreement have opened their arms dumps to international inspection and decommissioning starts to proceed.
    Mr. Mandelson: I shall not introduce that fresh condition at this stage, as I do not think that it would be a constructive step in the peace process. However, I remind the right hon. -Gentleman that the Provisional IRA has undertaken its confidence-building measure, which is the first step in a process that the IRA itself says will end in the complete and verifiable putting beyond use of its weapons; in addition, contact has been resumed between the IRA and the decommissioning body. Those are welcome and important confidence-building moves. I should like to see other measures undertaken on the same basis by loyalist paramilitary organisations, and I take this opportunity to urge them to do so.
    Mr. Kevin McNamara: My right hon. Friend will recall that among the confidence-building measures was the Patten report and the new Police (Northern Ireland) Bill. In his speech at Coleraine yesterday, he said that he had introduced 66 changes into the Bill at the behest of the nationalists. At best, those changes only partially restore the Patten provisions, and in only one or two instances do they fulfil the provisions of Patten. Will he give an undertaking that, when the Lords consider the Bill, Patten will be restored to the Bill in full, and that there will be no more withdrawing or alteration of Government amendments at the behest of the Unionists?
    Mr. Mandelson: I strongly contend that the original Bill reflected entirely and faithfully the Patten commission recommendations. In addition, the improvements and changes that have since been made to the Bill have strengthened it. I did not make a speech in Coleraine yesterday— [Interruption.] I did not leak a memo either; however, I did make the point that we need to make a distinction between those parts of the Bill that can and have been, quite legitimately, improved and those claims made by a minority who deliberately misrepresent the Bill's contents. I shall continue to refute those false claims about the Bill, just as I shall continue to consider constructively amendments proposed to improve the Bill's contents.

    Weapons
    Mr. William Ross: How many weapons believed to be held by terrorist organisations have been recovered by the RUC and the Army in Northern Ireland this year. [129860]
    The Secretary of State for Northern Ireland (Mr. Peter Mandelson): During the period 1 January to 30 June this year, the RUC and the Army recovered 64 firearms, 6,085 rounds of ammunition, 247.1 kg of explosives, 34 detonators and four launchers. It is not possible to attribute those finds to individual terrorist groupings.
    Mr. Ross: Does the right hon. Gentleman appreciate that we on these Benches— [Interruption.]
    Madam Speaker: Order. I cannot hear Mr. Ross and I have the impression that the Secretary of State cannot either, because conversations in the Chamber are very noisy.
    Mr. Ross: Does the Secretary of State appreciate that we on these Benches agree entirely with the remarks by the right hon. Member for Bracknell (Mr. MacKay)?
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    Does he also appreciate that not a single round of ammunition or weapon that he has just detailed was given up voluntarily, but that they all had to be recovered from the terrorists, who were unwilling to give them up? Has the Secretary of State yet been able to determine whether the recent murders of Mr. Cairns and Mr. McCoy and the bomb set off in Stewartstown were carried out by dissident or mainstream terrorist organisations? If mainstream, would that not constitute a breaking of the ceasefire, or does that apply only to murders of members of the security forces?
    Mr. Mandelson: If that is the case, the hon. Gentleman is right. Let me take the opportunity to make it absolutely clear that if I receive any assessment based on evidence collected by the RUC that any individual has been involved in perpetrating such offences, I shall expect swift action to be taken against that individual. If that has implications, through that individual's membership of a paramilitary organisation, for the maintenance of that organisation's ceasefire, I shall take them into account when considering further prisoner releases.
    Mr. John McFall: My right hon. Friend will be aware of yesterday's hugely successful reception held in the Palace by the RUC, which was attended by Sir Ronnie Flanagan himself. In the light of the passage of the Police (Northern Ireland) Bill, will he ensure that Catholic recruits are taken into the RUC and that we have representation at all senior levels in future? Will he state what discussions he is holding and what measures he is implementing to ensure that that becomes a reality?
    Mr. Mandelson: The whole House will join my hon. Friend in applauding the performance of the RUC in the past couple of weeks. More generally, I believe that the police response to events surrounding Drumcree was measured and proportionate, but no less firm for all that, and that they acted entirely professionally. If we were not serious about creating a fresh start for policing, we would not be introducing a 50:50 selection procedure to achieve an intake to the new police service that is balanced between Protestants and Catholics. We shall operate that system not only for three years or 10 years, but for however long it takes to achieve the properly representative police service that Northern Ireland needs if its police service is to be even more effective in future.
    Mr. Robert McCartney: With reference to the important issue raised by the hon. Member for South Down (Mr. McGrady) on the extension of mafia-like activities in drugs, extortion and other criminal acts, the Secretary of State has confirmed the widespread involvement of paramilitaries on both sides. Can he confirm that the paramilitaries involved are largely the good terrorists who support the peace process, not the wicked, dissident terrorists who are allegedly disrupting London?
    Mr. Mandelson: Unlike the hon. and learned Gentleman, I do not distinguish between good terrorists and bad terrorists. To me, all terrorists are bad and equally unacceptable. If there is any evidence that will bring them, individually or collectively, to book, it will be acted on decisively.
    Mr. John M. Taylor: In that spirit, while it is true that the IRA has opened some arms dumps to the

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    international inspectors, is it not regrettable that other paramilitaries have made no such progress? What pressure is the Secretary of State exerting on that point?
    Mr. Mandelson: It is highly regrettable that the loyalist paramilitaries, who, in a sense, got off to a good start—better than that of the Provisional IRA—have now fallen behind on the efforts required to bring about a complete decommissioning of all weapons held by all paramilitary organisations in Northern Ireland. Their own side of the community—the people for whom they purport to speak and represent—stand to gain just as much as anyone else from a peaceful, demilitarised society in which violence and terrorism have been put behind then once and for all. I hope that those organisations will begin to make their contribution to the complete decommissioning that the people of Northern Ireland expect and demand.

    Crime Statistics
    Mrs. Eleanor Laing: If he will make a statement on the current levels of recorded crime in Northern Ireland. [129862]
    The Secretary of State for Northern Ireland (Mr. Peter Mandelson): I apologise for the absence of my junior Minister, who is caught on a train somewhere in south London.
    The number of recorded crimes for the period April 1999 to March 2000 has increased by 9.2 per cent. against the same period in 1998–99. More than 60 per cent. of the overall rise was accounted for by increases in two crime classes—offences against the person, which went up 16.2 per cent., and criminal damage offences, which rose 12.8 per cent. The number of offences cleared by the police in 1999–2000 was 13.8 per cent. higher than in 1998–99. There was also a rise in the overall clearance rate from 29 per cent. to 30.2 per cent.
    Mrs. Laing: While those figures are in some ways worrying, they are also relatively good in comparison with those for some other parts of the United Kingdom. That is a great credit to the RUC, and the Secretary of State was right to praise the force a few moments ago. Does he agree, however, that a worrying fact is concealed behind the statistics in that a great many punishment beatings and mutilations are not recorded crimes because their victims are too afraid to report them?
    Mr. Mandelson: The hon. Lady makes a good point. While comparisons are not straightforward, it is clear that the overall crime rate in Northern Ireland is lower than that in other parts of the UK with comparable population sizes. Paramilitary attacks are entirely the opposite of what the Good Friday agreement was all about. I call on all those who have information to co-operate with the police in order to stop those attacks in future. I call on those with influence over paramilitary groups to call a complete and immediate cessation to those barbaric acts.
    Dr. Nick Palmer: As a member of the Select Committee on Northern Ireland Affairs, I visited Drumcree and spoke with the police who held the line. Will my right hon. Friend join me in congratulating the police on keeping the situation within acceptable boundaries this year and on their record in combating
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    disorder and crime in Northern Ireland? Does he agree that once the Police (Northern Ireland) Bill has been enacted, the time will have come to stop looking backwards and quibbling over every detail so that we can work together to ensure that the police have a chance to beat terrorism and crime in Northern Ireland?
    Mr. Mandelson: The whole House will agree with my hon. Friend's sentiments. Everyone should look to the future and towards creating the fresh start in policing for which a consensus exists. The events in Drumcree showed that bullies do not get their way in Northern Ireland and that physical force confrontation—by loyalism or republicanism—does not succeed any more in mobilising the mass of people in Northern Ireland. That is a tribute to the peace process and to the strength and durability of the Good Friday agreement.
    Rev. Martin Smyth: I join those who have congratulated the RUC on its work. Is the Secretary of State aware that the force is under tremendous pressure, not only in dealing with terrorist activity but because of the shortage of funds that leaves many stations not properly manned? Is failure to report republican parades a recorded crime? That is happening, and people are concerned that the law is not being applied impartially.
    Mr. Mandelson: The RUC is fairly and even-handedly applying the law to all groups in both traditions in Northern Ireland. It has the resources and manning to do so, and, under the present Government, I can assure the hon. Gentleman that it will continue to have all the resources, skills and training that it needs to do its job effectively in Northern Ireland in whatever circumstance and in the face of whatever challenge to law and order from whatever source it comes.
    Madam Speaker: Order. Time is up, and I appeal to the House to settle down. There is a lot of noise and loud conversation. Ministers are finding it difficult to make themselves heard.

  The Prime Minister was asked—
  PRIME MINISTER

    Engagements
    Mr. Simon Hughes: If he will list his official engagements for Wednesday 19 July.
    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 be having further meetings later today.
    Mr. Hughes: Is it not now completely true that the Labour Government are out of touch with gut British instincts? They were elected on a promise to make sure that pensioners
    share fairly in the increasing prosperity of the nation

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    but they have announced a public expenditure package of £43 billion in which pensioners do not receive a single penny.
    The Prime Minister: Let me remind the hon. Gentleman that the Liberal Democrats' commitment was to raise pensions in line with prices, not earnings. Secondly, they asked us to help the poorest pensioners first, and the minimum income guarantee has raised the pension for the poorest—
    Mr. Hughes indicated assent.
    The Prime Minister: The hon. Gentleman says that that is right, but he has just been telling me it was all wrong. We have raised the pension for the poorest people by between £15 and £20 a week, and £6.5 billion has been spent in total. The extra money that we are putting into schools and hospitals is vastly in excess of anything that the Liberal Democrats ever asked for.
    Mr. Ian Cawsey: Last Friday's announcement that Corus would make 600 steelworkers redundant at its Scunthorpe works will bring the number of workers there below 4,000. In 1979, there were more than 20,000 steelworkers there. Will my right hon. Friend assure us that his Government will give every aid and assistance to the local taskforce that has been formed to ensure that there are new jobs and opportunities for the area? Is he aware that last night my local newspaper, the Scunthorpe Evening Telegraph—[Interruption.] Wait for it. Last night, the paper stated that the biggest hypocrite on job losses was the Leader of the Opposition, for trying to make political capital out of job losses in an industry largely destroyed by the Tories.
    The Prime Minister: We will of course work closely with my hon. Friend's constituents to do all we can to protect them following that announcement. We will work hard to see that there are additional jobs, but people should know not only that the Conservative party decimated the industry but that it is now pledged to public spending cuts of £16 billion, which would devastate my hon. Friend's constituency and those of hon. Members throughout the House.
    Mr. William Hague: Two years ago, the Government announced spending of £21 billion, which they said would transform the national health service. Since then, the waiting list for the waiting list has grown by 150,000 and we have learned that there were fewer heart bypass operations last year than for 25 years. Is it not a disgrace that the Prime Minister is commissioning memos ludicrously entitled "Getting the Right Place In History"—even Napoleon did not commission a memo on that subject—when many people are struggling to get the right place in hospital, thanks to the incompetence of his Administration? Was not the adviser who wrote
    TB has not delivered. He said he would improve the NHS…but instead things have got worse
    absolutely spot on?
    The Prime Minister: I thought that the right hon. Gentleman might want to talk about the memo rather than yesterday's spending review. Let me tell him what the
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    first comprehensive spending review delivered for the health service—38 new hospital developments are under way, more than 6,000 more qualified nurses, 5,000 more doctors and every accident and emergency department modernised. Now let him tell us what £16 billion of spending cuts would deliver.
    Mr. Hague: Does the Prime Minister not understand that he has talked about tens of billions of pounds for years, but things have got worse? As the same adviser told him:
    We have not proved strong enough…to get enough done.
    [Interruption.] There is no point in people not wanting to listen to that advice, as the Prime Minister paid out thousands of pounds of the Labour party's money to get it. Some of us read it for 30p in The Sun.
    We shall set out our own plans on public spending, which will include— [Interruption.] They do not want to hear.
    Madam Speaker: Order. There are a lot of noisy people.
    Mr. Hague: We shall set out our own plans on public spending—to spend what the nation can afford. They will include the reform of the welfare state, from which the Prime Minister ran away so pitifully. If he thinks that he is going to spend £16 billion more than a Conservative Government would, he had better work out which £16 billion of additional tax rises he will levy on the people of this country.
    The Prime Minister said that he would be tough on crime, and promised 5,000 additional police officers. Police numbers have now fallen, thousands of criminals have been released early, and violent crime is up 16 per cent. Was it not the Prime Minister's trusted adviser who said— [Interruption.] We can read more of it. Was not the trusted adviser who said that "TB" and his Government were "soft on crime" absolutely spot on?
    The Prime Minister: The right hon. Gentleman said that he would publish his plan for spending cuts, but I can tell him that the Conservative research department has already published it this morning. The document says that the revenue gap will be £16 billion, and helpfully sets out where the cuts will fall, region by region. For the north-west, there will be cuts of £1.7 billion; for Yorkshire and Humberside, £1.2 billion; for the midlands, £2 billion; for London, £1.8 billion. We know where the right hon. Gentleman's spending cuts will fall, and every Conservative Member of Parliament will have to answer for that.
    The right hon. Gentleman said that surely the Government's spending plans would mean that taxes would have to go up. Conservative Members are all nodding, so I shall read out what the shadow Chancellor said the day after the Budget:
    the Red Book which is the document that accompanies the Budget…shows that the Government expects the tax burden to fall during the next parliament, which is exactly what we expect.

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    Because we have run the economy well, and have got debt and unemployment down, we can afford that spending. Let us have some more details of that £16 billion of cuts.
    Mr. Hague: The Prime Minister is the man who said that he had no plans to increase tax at all. Since he said that, people have paid more tax on their petrol, pensions, marriages and mortgages. When the Prime Minister came into office, the poorest fifth of households paid 37 per cent. of their income in tax. Will he give the latest figure from the Office for National Statistics for the poorest fifth of households?
    The Prime Minister: I can tell the right hon. Gentleman about the tax burden, as it is set out very clearly. The tax burden is actually falling this year, and is due to fall next year. However, it is correct to say that for the first two years, we took the measures necessary to get rid of the deficit. As a result, we have the lowest inflation in Europe, and interest rates at 6 per cent, not 10 per cent. as they were under the right hon. Gentleman's Government.
    As for petrol, it is no use the right hon. Gentleman going round promising that he will cut people's petrol duty. Let me quote his shadow Chancellor again, from Frost on Sunday:
    Frost: Would you reduce the tax on petrol definitely, would you give a guarantee on that?
    Portillo: Well…I…I'm not getting into the business of guarantees.
    Hon. Members: More, more.
    Mr. Hague: There is a lot more. They are welcome to a lot more. I was asking the Prime Minister about the poorest fifth of households in this country and how much they pay in tax. The answer is that their tax has gone up from 37 per cent. of their income to 40 per cent., because under this Prime Minister, tax rises are for the many and not the few. He is the Prime Minister who said that there would be no tax increases at all. Does he accept the truth when the adviser who wrote to him—who has written to him a lot in recent weeks—tells him that he has been
    undermined by a combination of spin, lack of conviction and…lack of integrity?
    When it comes to tax, is that not absolutely spot on?
    The Prime Minister: I wonder what the right hon. Gentleman's adviser is saying to him about his tax guarantee. To return to what he was saying about spending and tax—as a result of the commitments that we have given, the tax burden is falling, as I have said. I accept that we have made a choice to put investment into schools, transport, the police and the health service because we believe that that is the right priority for the country. The dividing line at the election is now clear: it is between a party willing to invest in our public services, and £16 billion of cuts under the right hon. Gentleman.
    Mr. Hague: Madam Speaker, The level of public spending is no longer the best measure of the effectiveness of government
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    Those are the words of the Labour party manifesto, and this Government have now produced higher crime, larger class sizes and longer waiting lists in the national health service. Is not the truth that they have no plans to deliver, only new initiatives to spin?
    Can anyone think of anything more pathetic than a Prime Minister so short of ideas after three failed years in office that he sends a memo round Whitehall asking for "eye-catching initiatives"? He begs for "something tough" that
    I, personally, should be associated with.
    People who got their place in history did not send round memos asking for eye-catching initiatives. Winston Churchill did not ask for blood, sweat and eye-catching initiatives. Was not the person who wrote
    all these things add up to a sense that the Government…are…out of touch with…British instincts
    absolutely spot on?
    The Prime Minister: Apart from the points that the right hon. Gentleman made on the health service, education and crime, he says that he wants waiting lists to go down even further. Well of course, but that requires investment. He said that he wanted police numbers to start rising again. I agree, and that is exactly what we will bring about, but it needs investment. He said that there should he a reduction not only in class sizes for five, six and seven-year-olds, which we have reduced, but in other class sizes. We agree, but that requires investment. The right hon. Gentleman does not seem to realise that we are putting in the investment, and he has pledged to cut it.
    The right hon. Gentleman talks about how he will run a more prudent economic policy, but I point out to him—this is another item of policy, so he will not be aware of it—that his shadow Chancellor has not merely given a commitment to £16 billion of cuts; he has made spending commitments. Here they are: £1 billion on private medical insurance—[HON. MEMBERS: "Ah!"]—the reintroduction of the assisted places scheme—[HON. MEMBERS: "Ah!"]—more money for the Territorial Army—[HON. MEMBERS: "Ah!]—detaining all asylum seekers; giving them back their benefits; more money for farmers; more money for tobacco tax; more money on prisons; and Finance Bill amendments that total—[HON. MEMBERS: "They are all saying yes."]—Well, it is such a large sum of money. Their amendments to the Finance Bill total £4.5 billion. Not only can the Leader of the Opposition not tell us where his spending cuts will fall, he cannot even finance the spending commitments he has made.
    Mr. Hague: No one any longer believes the Prime Minister's fiction about the Government's figures, let alone his fiction about the Opposition's figures. He need not be concerned about whether he is personally associated with eye-catching initiatives. As crime rises, he is personally associated with it. As the national health service deteriorates, he is personally associated with it. As taxes have risen, he is personally associated with that. As the Government drift, he is personally associated with that. Does he not realise that he does not need to write memos about getting his place in history, because we, and the British people, will make him part of our history far sooner than he ever expected?
    The Prime Minister: The right hon. Gentleman said that we were making up the figures about his spending

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    cuts pledge. He said that those figures were made up, but they are not. The Conservative research department has shown spending cuts of £16 billion.
    The right hon. Gentleman is right. Of course I am personally associated with all the spending in the review: the extra money on schools, the extra money on hospitals, the extra money on transport, the extra money on defence, the extra money on all those services we need to provide a stable, prosperous future for our country. What is the right hon. Gentleman personally associated with? [HoN. MEMBERS: "Cuts."] The Leader of the Opposition is personally associated with what his shadow Chancellor has done—it is the nearest to political hara-kiri that I have ever seen in an Opposition leader. His shadow Chancellor has committed the right hon. Gentleman and his party to £16 billion of cuts. From now until election day they will pay the price, and then they will pay it finally.
    Mr. John Home Robertson: Following the Chancellor's announcement yesterday, and in view of the fact that unemployment in Scottish constituencies such as mine has been almost halved since the general election—in accordance with our promises—does my right hon. Friend agree that the hon. Member for Banff and Buchan (Mr. Salmond) was wise to decide to throw in the towel as the leader of the Scottish National party?
    The Prime Minister: I do not think that I should comment on the decision of the hon. Member for Banff and Buchan to stand down. My hon. Friend will be aware, however, that the Conservative party wants cuts of £1.4 billion for Scotland. I am sure that will be of enormous assistance to my hon. Friend and his colleagues when they fight the next election.
    Mr. Charles Kennedy: Will the Prime Minister confirm that yesterday's statement by the Chancellor finally brings to an end 21 years of Conservative spending? As the Labour Government stuck to the Tory spending limits during the first three years of this Parliament, will he give us the official figures for the number of operations cancelled, the number of police positions lost, and the number of pensioners who dipped into comparative poverty, during that period?
    The Prime Minister: It is correct that we had two tough years on public spending. Let me explain why. We faced a situation in which national debt had doubled; there was a borrowing requirement of £28 billion, and we were paying out more in interest payments on the debt than we were spending on the school system. The right hon. Gentleman will remember that 18 months ago, many people were predicting recession.
    It was important for us to stabilise the economy first. We have done that; we have cleared the deficit and got public finances under control. Secondly, we had to make sure that we got people off benefit and into work—there are almost a million fewer benefit claimants now. Thirdly, we have to make that investment. We made it only when we had got the public finances sorted out, because, in all honesty to people, that is the only way that is sustainable.
    Mr. Kennedy: Would it not be fair of the Prime Minister—these are the official House figures—to confirm that the price paid over that period has been
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    179,000 operations cancelled, 1,700 fewer police officers and 400,000 pensioners who have dipped into poverty? When he puts those figures in that context, will the Prime Minister tell the House and the people who voted for him last time that this has been, to coin a phrase, a price well worth paying?
    The Prime Minister: No. May I correct the right hon. Gentleman on the subject of pensioners, which I think that he or one of his colleagues raised last week? Those figures refer to the period before the minimum income guarantee, which will make a big difference to pensioner poverty, came into effect. Even in the straitened economic circumstances of the first two years, we put more money into schools and hospitals than the Liberal Democrats promised in their election manifesto.
    We had to decide what the key priorities of the country were. It was no use spending money unless we had sorted out the public finances and the economy on a sustainable basis. As a result we have a healthy economy, we have strong public finances and we have large numbers of people off benefit and into work—something that the new deal has helped enormously, incidentally, and the Liberal Democrats opposed the windfall levy that paid for it.
    Now what is important is to make the investment in education, skills, technology, science and transport that will increase the productive capacity of the economy, and then increase investment in law and order and health care, which increase people's security. Those are the right priorities for the country.
    Ms Bridget Prentice: Which does my right hon. Friend think will be of more interest to my constituents—a two-month-old leaked memo, or the £60,000 for each of the secondary schools in my constituency?
    The Prime Minister: Of course we know why the Conservatives want to talk about that. However, what we should talk about is the clear strategic decisions that have been taken by both political parties over the past two weeks—for us, to put investment in our future first; for the Conservatives, to put boom and bust, and spending cuts guaranteed, before our essential services.
    Sir Archie Hamilton: The television documentary on Saturday night showed that Alastair Campbell is at the heart of the spin machine for the Labour party. Can it be right that he goes on getting a £96,000 salary, paid for by the taxpayer? When I last asked the Prime Minister about Mr. Alastair Campbell's salary, he answered a totally different question about spin doctors. Will he this time answer the question that he has been asked, not one that he has not been asked?
    The Prime Minister: I am entirely satisfied with the job that my chief press spokesman is doing—[Interruption.] Once again, the Conservatives are delighted to ask about anything other than the comprehensive spending review. Let me remind the right hon. Gentleman of what he said before the election, in April 1997. He said that by

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    embracing the minimum wage and the social chapter, the Labour party would increase unemployment and cut child benefit. [Interruption.]
    Madam Speaker: Order. Mr. Townend, you are bursting a blood vessel.
    The Prime Minister: We will see how many of the Conservative questions are about the spending review. What the right hon. Gentleman will have to explain at the next election is where he will find £24 million of spending cuts.
    Mr. Jim Cunningham: Does my right hon. Friend agree that now that the new deal has been made permanent, it will benefit the unemployed and, more importantly, it will benefit young people? Will he congratulate the 434 young people in my constituency who have benefited from the new deal? Does he also agree that if Conservative Members ever got back into power, they would wreck the new deal?
    The Prime Minister: Of course Conservative Members are committed to scrapping the new deal. The new deal has been of fundamental importance, not just in getting people off benefit and into work, but because it has resulted in some of the £3.5 billion savings on benefits. My hon. Friend is absolutely right—the Conservative party would scrap the new deal, and many of the cuts that it would then impose on the schools, transport and health budgets as a result of its spending cuts guarantee would also have a deeply adverse effect on my hon. Friend's constituents.
    Mr. Laurence Robertson: I shall ask a question about the comprehensive spending review. Will the Prime Minister tell my constituents not how much extra money will go into health and education, but how it will address the postcode lottery and bring about a fairer funding formula for education—both areas in which my constituents in Tewkesbury are disadvantaged?
    The Prime Minister: I am delighted to tell the hon. Gentleman that as a result of the extra money going into the health service, and in accordance with the advice tendered to us by the National Institute for Clinical Excellence, we are able to fund drugs better in the health service. It is our desire to use that money to get rid of the postcode lottery.
    I shall of course tell the hon. Gentleman exactly what the rest of the spending will do in his constituency: it will help to get more doctors and nurses, and it will help to do other things, such as rebuild the accident and emergency departments if they need refurbishing. It will help to bring new information technology into the national health service. It will also help to get waiting lists and waiting times down, but I am afraid that at the next general election, he will have to explain to his constituents why there should be £24 million of cuts. I understand that he wants more money for his constituency, but the tragedy for him is that we shall provide it, whereas his party would cut it.
    Mr. Andrew Dismore: In Barnet the police are very overstretched because of the sheer size of the geographical area that they have to cover—33 square miles, with 20 shopping centres. That
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    is not unusual for outer London. Will my right hon. Friend confirm that as the result of the very welcome announcement yesterday, the resources will be devoted to the police service in outer London to enable it to tackle the real problems of violent crime and vandalism, which cause such fear in our communities?
    The Prime Minister: As a result of the announcement that was made yesterday, of course there will be more money for front-line policing, and my right hon. Friend the Home Secretary will make an announcement about that shortly. That is very important. I understand that there are two prospective Conservative candidates in my hon. Friend's constituency, because one was too extreme to be allowed to stand by Conservative central office, so my hon. Friend will be in the happy position of being able to ask one or both of them where they will find the £24 million of cuts.
    Miss Anne McIntosh: Is the Prime Minister aware that in Vale of York the price of unleaded petrol has reached 96.9 pence a litre, which is more than £4 a gallon? Is he proud of the fact that he has increased petrol prices by 3.3 per cent. in line with inflation, but pensions by only 1.1 per cent.? Does he want pensioners to receive the message that petrol prices will go up, and they will have less money to pay for it?
    The Prime Minister: In answer to the Leader of the Opposition, I have said that in fact, the system that we use to calculate pensioners' increases is precisely the one that has been used for many years. In respect of petrol prices, as I have said at the Dispatch Box in the last year, the bulk of the increase has been due to the rise in the oil price—but I accept that in the first two years, we took the necessary action through the fuel duty escalator, which was introduced by the previous Government, to cut the deficit. A moment ago I read out what the shadow Chancellor said. The hon. Lady can sympathise with her constituents, but the fact is that she is not pledged to cut a single penny of the duty on petrol. It is important to recognise that there are choices, and we believe that it is sensible to have a stable economy and to invest in public services.
    Mr. Russell Brown: In April I raised the issue of the long-term care of the elderly with my right hon. Friend. According to the Chancellor, we are likely to hear good news next week about additional finances for that. Can my right hon. Friend assure me that those additional finances will be sustained over a good number of years, thereby alleviating the hardship that many elderly people feel when receiving care in their own homes, or in residential or nursing care?
    The Prime Minister: We will, of course, ensure that that is sustainable, if we have the authority to do so as the elected Government over the next few years. I do not want to prejudge the announcement that will be made next week, but it is important that we ensure that the issues of long-term care that were raised by the royal commission, which we set up, are properly dealt with. Again, we know that the Conservative party would cut the very money that we shall put into that.
    Mr. John Hayes: Will the Prime Minister give a straightforward, concise

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    and reasonably cogent answer—[Laughter.] Yes, I know that that last requirement will not be easy—to the question posed by my right hon. Friend the Member for Epsom and Ewell (Sir A. Hamilton)? Let me repeat that question, because clearly he did not hear it the first time: as Mr. Alastair Campbell will clearly play a central part in Labour's election strategy—[Interruption.]
    Madam Speaker: Order. Government Members should listen to the question. [Interruption.] Order. Listen to the question, and listen to the answer.
    Mr. Hayes: As a recent television documentary revealed that Mr. Alastair Campbell is to play a central
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    role in the Labour party's election strategy, should he receive a salary of almost £100,000 funded by the taxpayer?
    The Prime Minister: As I have just said to the right hon. Member for Epsom and Ewell (Sir A. Hamilton), I am entirely satisfied with the work that Alastair Campbell is doing and with the fact that it is entirely proper, and entirely within the rules that are set out, that he does that work. Again, although the hon. Gentleman may think that the big issue in his constituency at the next election will be Alastair Campbell, I can tell him that it will be £24 million of cuts.

SPEAKER'S STATEMENT
Madam Speaker: I have to tell the House that yesterday, together with other right hon. Members, I attended upon Her Majesty Queen Elizabeth the Queen Mother to deliver the House's message of congratulation on her 100th birthday. Her Majesty made the following reply:
I was deeply touched by your message of congratulation and by the sentiments you expressed on the occasion of my 100th birthday.
I feel fortunate that during the last century I have been given the opportunity to serve our country in times of war and peace, and I have always been helped and uplifted by the love of my family, by the fortitude and courage of our people, and by my faith in almighty God.
I pray that future generations will live in peace and prosperity, and I send to you all my heartfelt thanks for your kind message on my birthday.

Police and Criminal Justice Spending Review
3.32 pm
The Secretary of State for the Home Department (Mr. Jack Straw): With permission, Madam Speaker, I should like to make a statement about increased spending for the police and the criminal justice system for 2001–04, following the statement by my right hon. Friend the Chancellor of the Exchequer yesterday.
The Government's strategy for fighting crime is comprehensive and long term. The current programme for that was spelt out in a document laid before the House last November. Our strategy seeks to prevent criminal behaviour, as well as to raise the performance of the criminal justice system, better to detect, to catch and to punish those responsible for crime and disorder. The spending review will reinforce that strategy.
First, the police. The police are at the sharp end of the fight against crime and disorder, but, like others in public service, they have operated under tight financial constraints in the first years of this Government. For the first two years in office, we kept to the spending plans set for the police by the previous Administration. Following the comprehensive spending review published two years ago, I announced in December 1998 a small real-terms increase for 1999–2002 of about 2 per cent. in total. None the less, pressures on police budgets have continued, not least from the cost of pensions, which is now estimated to take 14.5 per cent. of total budgets compared with just half that—7.2 per cent.—10 years ago.
Despite those pressures, I am glad to tell the House that the police service has embraced reform over the past three years, with a commitment to a clear performance culture. Major strides have been made in cutting unnecessary bureaucracy to meet 2 per cent. efficiency targets; in reducing unacceptably high sickness and early retirement rates; in setting challenging performance targets; and in publishing detailed information about crime trends at basic command unit and crime and disorder partnership level so that the service and the public can better compare police performance in their areas.
As we know from the experience of the 1980s, without reforms of that kind, increased police funding is no guarantee of improved performance. However, increased resources properly targeted and managed can unquestionably help to secure significant improvements in the fight against crime. I am therefore pleased to announce today major investment in policing in England and Wales.
for the police, spending in cash terms will rise by more than 20 per cent. between this year and 2003–04. The settlement will see an increase of over 10 per cent. in cash for next year alone against the current provision for 2000–01, which itself has been raised by £90 million over the original 1998 comprehensive spending review plan. The allocation will therefore rise from £7.7 billion for this year to £8.5 billion next year; £9 billion in 2002–03; and £9.3 billion in the final year of the settlement.
Much of that increase will be allocated direct to police forces through the police grant and SSA for them to spend as best fits their local needs. I am, however, targeting investment on two key areas to boost front-line policing, by raising police numbers and by enhancing police equipment and new technology.

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As the House knows, the downward trend in police officer numbers, which began in 1992–93, has regrettably continued under the present Administration. I have today answered a parliamentary question from the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) showing that officer numbers in the last year have fallen by 1,678, to a total of 124,418 for the 43 forces in England and Wales. Civilian numbers in the last year have shown a small rise to 53,227.
To reverse that trend of falling police numbers from 1992–93, I announced last September that there would be new money for this financial year from the crimefighting fund to provide 5,000 additional recruits over and above forces' existing plans. The Chancellor of the Exchequer's Budget in March ensured that that recruitment could be accelerated from three years to two, starting this April. Today, I am able to announce funding for a further 4,000 recruits over and above those already planned, taking the total to an additional 9,000 recruits by 2003–04.
Following changes made in the law by the previous Administration in 1994, the Home Office since then has had no direct legal control over police numbers, so predicting future numbers is very difficult, but the investment that I have announced today, alongside the investment announced earlier in this and the last financial year by the Chancellor, provides the funding to enable chief constables to raise officer numbers to record levels by the end of the settlement period. That significant boost for police recruitment will also help the service to achieve the targets that I have set the police forces to improve the recruitment and retention of more black and Asian officers.
As I have already told the House, in the Metropolitan and City police areas, which have both suffered particular recruitment problems, a £3,329 increase in the London allowance for new recruits and for those who joined after 1994 was brought into force on 1 July this year. However, if we are to get the best from our police officers, as well as funding more police officers, we must ensure that they are properly equipped with the most up-to-date technology.
A key part of that drive is to provide the police with more reliable, better-quality radio and data communications. The new public safety radio communications system—PSRCS—given the go-ahead by me in December, will give officers in rural and urban areas alike fast secure digital communications and access to local and national databases, saving them time and improving their safety. As a national system, it will also provide effective communications between individual forces.
Funding for the new system for this financial year from the capital modernisation fund was announced last September, but I accept that the service needs reassurance about the medium-term funding for that system as well. I am therefore glad to tell the House that the Government are making provision to meet the costs of the new PSRCS. That will amount to around £500 million over the three years of the settlement.
In addition to meeting the core costs of the system, which will be paid centrally by the Home Office, this funding will provide for expenditure by police forces on local service requirements, known as menu costs, and installation and equipment costs. I know that the service will accept that, as a result of this investment in the police, the public will expect improved outputs.
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Research evidence and our own common sense tell us that increasing the likelihood of bringing criminals to justice is key to reducing offending and reoffending. However, in the 1980s and early 1990s the number of offenders convicted fell by a third, while crime doubled.
We are determined to improve detection, especially of serious and of persistent offenders. An important new target for the whole of the criminal justice system, set out in yesterday's White Paper, is therefore to increase the number and proportion of recorded crimes for which an offender is brought to justice. To help achieve this, we are making additional investment in the DNA database, in the number of scenes of crime officers, and in information technology systems, better to link up parts of the criminal justice system.
Our plans also include a substantial investment allowing the Crown Prosecution Service to integrate with its criminal justice system partners and play its full part in improving the performance of the criminal justice system as a whole. Cross-criminal justice system working will be helped by the 2.5 per cent. annual real-terms increases for the courts.
The settlement will also enable us to do more to help victims. It introduces for the first time a joint criminal justice system reserve of £100 million for 2001–02; £200 million for 2002–03; and £225 million for 2003–04. The Lord Chancellor, the Attorney-General and I will together manage this fund. The reserve will provide us with much greater flexibility and will mean that we will be able to respond effectively to new pressures on the system as they arise.
Let me come on to wider issues. A key part of the Crime and Disorder Act 1998 was to establish crime reduction partnerships in every district of England and Wales, to ensure that local authorities and other local agencies worked better to support the police in the fight against crime and disorder. A total of 376 partnerships are now established.
To reinforce the partnerships' work we have, since the 1998 comprehensive spending review, invested significant resources under the Government's crime reduction programme. This includes £150 million on the biggest-ever expansion in closed circuit television; £60 million on securing two million homes in 400 high crime areas to prevent domestic burglary; and £35 million on targeted policing initiatives, including the Cardiff scheme to reduce alcohol-related violence.
This targeted approach has already paid dividends, with domestic burglary across England and Wales down by 24 per cent. since April 1997 to its lowest level for a decade, and a 17 per cent. reduction in vehicle crime over the same period.
Over the coming three years, we will be investing £300 million a year on dedicated programmes to reduce crime, targeting, among other things, vehicle crime, domestic burglary, robbery, and violent crime more generally. This £300 million will also be used to tackle drug abuse and drug-related offending, and to improve the way in which we deal with young offenders.
The youth justice system in place when we took office in May 1997 scarcely deserved that name. It was a shambles, and we are significantly reforming it. We are also delivering on our pledge to halve the time that it takes to deal with persistent young offenders, from the wholly unacceptable 142 days—20 weeks—that we inherited.

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The latest figures show that by March this year, the average time was already down more than seven weeks to 94 days.
As the House is well aware, the approach of other public services has an important influence on levels of crime and disorder. Truancy from schools, substance abuse and poor housing design all affect the environment in which crime breeds. Violent crime imposes great costs on the national health service. All relevant Departments therefore now have crime reduction targets. Extra resources are being provided to support crime reduction initiatives in the main programmes of other Government Departments, especially Health, Education and Employment, and the Environment, Transport and the Regions. However, behind much local crime and disorder is more organised crime—highly sophisticated or high-volume crime being run by a relatively small number of criminals.
In June, I announced the Government's plans to confiscate the assets of such criminals. My right hon. Friend the Chancellor's settlement yesterday provides for the funding of a dedicated national confiscation agency, and £15 million, £18 million and £21 million over the settlement period to pay for that agency.
I turn to prisons and probation. The effective punishment of offenders is a key part of our strategy to reduce crime. We have already implemented minimum sentences for drug dealers, burglars and serious sexual and violent offenders; we have brought in other tough provisions against sex offenders; and, with the Bill currently before Parliament, we are strengthening community punishments.
The settlement of my right hon. Friend the Chancellor yesterday provides for an additional £240 million, £380 million and £470 million for prisons and probation. This will increase capacity, boost the "what works" programme to reduce offending, and support the modernisation of the probation service. A new building programme for the Prison Service and other arrangements will provide 2,660 additional places on top of the 1,400 new prison places that will be brought into place next year.
As the House is aware, the statistics for the latest recorded crime levels for England and Wales showed a 3.8 per cent. increase in the period March last year to March this year. I am the first to accept that more needs to be done to tackle the problems which can undermine our communities and wreck people's lives.
We have put in place a comprehensive strategy to bring sustained, long-term benefits in crime reduction, and to buck the long-term trend in
crime.
Overall recorded crime is still 6 per cent. lower today than it was when we came to office. Where the police and others have targeted those crimes which affect people most, we have seen important successes. Our programme announced today lays out arrangements to build on that success.
The major investment that I have outlined will ensure that the police are better funded and better equipped than they have ever been before, and that all sections of the community and all other public services give the police proper support in the fight against crime. I commend the plans to the House.
Miss Ann Widdecombe: I think that the reaction of most people listening to that
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announcement will be that they have heard it all before. Last year, announcing rises in police spending, the Home Secretary said:
This is a fair settlement which will ensure that the police have the resources they need to fight crime and disorder across England and Wales.
Result? A 4 per cent. increase in crime.
At the Labour party conference, the right hon. Gentleman, amidst a fanfare of trumpets, announced an additional 5,000 police recruits and boasted how he had secured the funding. Result? A drop of 1,600 police over the last year.
The right hon. Gentleman has announced money to help local councils to fund the asylum system. Result? An Audit Commission report painting the picture of an asylum system that is out of control. He has announced money for more immigration officers. Result? Double the backlog. Here we are again today with major announcements. I shall press the right hon. Gentleman for the story behind the latest figures.
The increases for the police, which the right hon. Gentleman has presented rather selectively, are in cash terms. In real terms, will he confirm that they represent 3.8 per cent. over three years? Will he confirm also that that is exactly what the Conservative Government spent on average year on year between 1987 and 1996? Is he not just announcing a return to normal?
How much of the rise that the Home Secretary has announced will be taken up by pensions? He passed over that subject by acknowledging the problem, but he did not say how much of the money will be dedicated to pensions. How much of the money will he spend on salary rises? When he has taken from the money the half a billion that he has just announced for the public safety radio communications project, the extra money needed for pensions and the extra money needed for salary rises, how much will be left over the three years as extra money dedicated to fighting crime?
How much of the planned increased expenditure on asylum is earmarked for planned detention centres in Kent, Bedfordshire, Doncaster and possibly elsewhere? What level of asylum applications is the Home Secretary assuming in his figures? Is he assuming more asylum seekers, the same number of asylum seekers or fewer asylum seekers?
We are well used in this Government to the Chancellor of the Exchequer disagreeing with the Prime Minister and to the Prime Minister disagreeing with the Foreign Secretary, but let me ask the Home Secretary whether he agrees with himself when he said:
The amount of money you put into the police doesn't necessarily change outputs.
How right he was.
Has the Home Secretary not brought about the present position through a series of measures that have been designed to encourage the criminal rather than the crimefighter? [Interruption.] When Labour Members start bellowing, we know that they do not want to hear what is being said.
Is it not the case that the Home Secretary inherited a situation in which the number of constables on the beat was rising, and that he has let their number decline? Has he not decided and put into law a provision to let criminals, including violent criminals and criminals

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convicted of homicides, out even before the halfway point of their sentences? Is not the message that he has sent the criminal, "There are fewer people out looking for you. But, even if you're caught, don't worry. You will never have got out so early in your lives"? Is that not the sort of message that militates against every penny that the right hon. Gentleman puts into policing? Is it not true that money is not a substitute for a common-sense approach?
As the Home Secretary announces a real increase that does not differ from the spending that took place for a vast amount of the time that we were in office, is he not embarrassed by the fact that, in his memorandum, the Prime Minister homed in on the failures of the Home Office as a reason for the public holding the Government in contempt? There has been a 26 per cent. rise in robberies, but the Home Secretary told us in his spending announcement last year that the police have enough money to fight crime effectively. There has been a 16 per cent. rise in violent crime, but he told us last year that his new recruits would make a difference. There has been a 4.5 per cent rise in sex crimes, but he lets criminals out early before the end of their sentences.
There are one or two measures in the announcement that we can welcome—if they happen. If it happens, we welcome the investment in the DNA database.
May I press the Home Secretary on his announcement of money for prisons in which he said that some of it—he was not explicit how much—would be devoted towards "what works", that is to say towards constructive prison regimes and the treatment of offenders? Will he accept that much of that money will have to make up for the huge decline that there has been in the purposeful activity that has taken place in prisons under his stewardship? It has fallen from a peak of 26 hours in our last Parliament to 22 hours now, under his stewardship. Overcrowding is rising, suicides are increasing and conditions in our prisons are such that if they had prevailed under us, the Home Secretary would never have stopped talking about them. We have not heard much talk since he came to office.
Will the Home Secretary admit that he is now taking the people's money to clear up the mess created by Labour politicians? Once again, he stands up, announces money and tells us that everything will be all right tomorrow. His promises on crime have as much credibility as Billy Bunter's postal order.
Mr. Straw: First, the shadow Home Secretary tries to trade statistics and compare our record on crime with that of the Conservative Administration of whom she was a member. Frankly, that is one of many unwise escapades on which she is embarked. The simple and indelible truth is that crime under the Conservatives doubled while the number of people convicted fell by a third.
if the right hon. Lady wants to consider the different Administrations under Mrs. Thatcher and the right hon. Member for Huntingdon (Mr. Major), the contrast is even more acute. In the first three years of the Thatcher Administration, crime rose by 21 per cent; in the first three years of the Major Administration, it increased by 42 per cent; in the first three years of this Labour Administration, it has fallen by 6 per cent. [HON. MEMBERS: "Read the memo!"] Hon. Members say that I should read the memo; what I should like to see are the memos that pass between the shadow Home Secretary and
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the right hon. Member for Kensington and Chelsea (Mr. Portillo), the shadow Chancellor, who has now fled the Chamber.
What the right hon. Member for Maidstone and The Weald (Miss Widdecombe) was forced to say today is completely the reverse of what she said only six weeks ago, when, in answer to a question from Mr. John Humphrys on "On the Record", she said that Conservatives were promising more money on health and education and, we are promising more money on law and order.
What is she promising now?
Miss Widdecombe: Finish the quote.
Mr. Straw: If the right hon. Lady wants me to finish the quote, I shall. She said:
we are promising more money on law and order, but our promises on health and on education and the other things are to honour existing promises on spending, so it's not that much extra.
Is she promising more or not? Earlier in the same interview, the right hon. Lady simply said:
We will spend more money on law and order.
She then moved on to the next question. Today, she says that money is no substitute for a common-sense approach. Is she now saying that thin air, waffle and what she describes as Conservative common sense are expected to pay for the 9,000 additional officers, the £500 million on the police radio and everything else that we are investing in a 21 per cent. increase in spending on the police in the next three years?
Miss Widdecombe: Where are the recruits?
Mr. Straw: We have always made it absolutely clear that the money that I announced last September would be available to spend this financial year. We expected police numbers to fall in the previous year. That is why we have provided additional funds, and not only allocated but increased the money for the next three years.
The right hon. Lady said that she welcomed some of our spending. She mentioned only two items: the spending on the DNA database and some of the spending on prisons.
We did not hear whether she welcomed the significant 20 per cent. cash increase in spending on the police and whether she and her right hon. Friend the shadow Chancellor intend to match that spending in the very unlikely event of their gaining office. Will they match that spending?
The simple truth—as we learned yesterday from the shadow Chancellor—is that given the Conservatives' commitment to cut £16 billion from my right hon. Friend the Chancellor's promises and given that the shadow Home Secretary has already pledged to increase spending on asylum by £3 billion on detention places and £500 million on the restoration of cash benefits for asylum seekers, there is no way in the world that she could match that spending.
I hope that this will be the last we shall ever hear of the right hon. Lady, or any Opposition Member, complaining about a reduction in police numbers and a lack of investment in the police. What the British public know now—and will remember at the next election—is the appalling record of the Conservatives on crime and

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disorder. During their time in office, crime doubled, while the numbers convicted fell by a third. Our programmes, announced today, will significantly increase spending so as to secure long-term reductions in crime and disorder.
Mr. Alun Michael: May I welcome the resources announced by my right hon. Friend and his emphasis on the need to target those resources on the real problems? He referred to the Cardiff scheme, which has brought about a cut in violent crime. Does he recognise that that initiative started with a surgeon in an accident and emergency unit and that the key to it was the enthusiasm with which the police, local authorities, people involved in victim support and nurses and doctors worked together to target the problems of violent crime in the area? Will my right hon. Friend encourage others to follow that example? Does he recognise that almost all the increased crime revealed by the figures yesterday is accounted for by three police areas—West Midlands, Thames Valley and the Metropolitan police? Will he work with the heads of those forces to see that the crimes that are responsible for those increases are targeted, particularly in view of the fine record of the current Commissioner of the Metropolitan police on crime reduction?
Mr. Straw: I greatly commend the initiative in Cardiff under the leadership of Professor John Shephard. I am happy to say that, under the crime reduction programme that my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) introduced, we are helping to fund that important new initiative to get violent crime in the Cardiff area down. It is an important example to the rest of the country.
My right hon. Friend referred to the significant variations in performance of otherwise similar police force areas. He is right to say that the increase in crime in the Metropolitan police area, Thames Valley, West Midlands and one other area is more than equivalent to the total increase in recorded crimes during 1999–2000. If one looks at the overall figures, it is striking to notice that, in some of the 18 police force areas—including the police force area of Kent, represented by the shadow Home Secretary—there have been small reductions in crime in the last few years. In Kent, there has been a 24 per cent. reduction in crime, despite that force having a similar level of resources to others.
I recognise the importance of increasing spending, provided it is spent properly. However, I wish to underline to the House the great importance of ensuring that every police district achieves the best and follows the example of the best. I draw the attention of the House to the comparisons that we included at the back of the crime statistics, which assemble the police districts into what are called statistical families so that each hon. Member, and members of the public, can compare police districts. The striking differences between police performance, given similar resources, makes interesting reading.
Mr. Simon Hughes: Of course the additional resources will be welcomed by the Liberal Democrats, as they will be by people outside the House. Given the Home Secretary has
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said that we have lost 1, 700 police officers over the past year, and 2, 700 since the election, and given that that is 400 below his estimate of the current numbers that we should have had, can he give us the missing figures between now and 2004, when he expects numbers to be at a record level? What are the Government's estimates for the numbers in March 2001, 2002 and 2003?
Secondly, why will the real-terms increase in the police budget over three years be 3.8 per cent., while the average increase in the Home Office budget as a whole is 6.4 per cent? Why will the police receive less than the rest of the Home Office, in relative terms?
Thirdly, let me return to a question that has already been asked. If we take out the cost of the pensions budget and other administration and salary costs, what is the net increase in provision for front-line policing? That is the phrase that the Home Secretary used, and he said that it was a priority.
Fourthly, let me ask a question about prisons. If we take out the additional cost of places and the security required to keep people in them, what additional money will be spent on constructive work programmes or on helping to prevent reoffending by prisoners, either when they are inside or when they have been released?
Fifthly—if the right hon. Gentleman cannot give a full list now, perhaps he will do so later—what changes have been made in targets? The target that he mentioned—to
increase the number and proportion of recorded crimes
for which offenders are brought to justice—is laudable, but no figure has been set. As the right hon. Gentleman will know, the current figure is only 3 per cent., which is extraordinarily low.
Finally, let me ask about victims, whom the right hon. Gentleman rightly mentioned. He has allocated a sum to the Lord Chancellor. Can he tell us how that money will be spent, and whether it will include more resources for legal aid? Would it be reasonable to conclude that from now on the right hon. Gentleman and his Department will spend less time on soundbites and suggestive gimmicks in dealing with the Government's requirement to be tough on crime, and more time dealing with the underlying causes of crime and developing the long-term strategies which, as the right hon. Gentleman knows, are what the country really needs?
Mr. Straw: The hon. Gentleman has spoilt a series of intelligent questions—more intelligent than what was said from across the Gangway.
Miss Widdecombe: I asked exactly the same questions.
Mr. Straw: The right hon. Lady is twittering that she asked the same questions, but she did not. The one thing she did do was avoid saying whether the Conservatives would match our spending.
There is no point in the hon. Member for Surrey Heath (Mr. Hawkins) shaking his head. The key question between now and 10 pm on election day is "Will the Tories match our spending on the police—and, if so, what other spending will be cut?" [Interruption.]
Let me return to the hon. Member for Southwark, North and Bermondsey (Mr. Hughes), and answer his questions while I have the necessary information to hand. He asked

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me about accredited educational and vocational qualifications. The plan is to provide for 23,400 in 2001–02, rising to 36,200 in 2003–04. That will include an increase in the number of level 2 basic skills awards from 18,000 to 21,000.
The hon. Gentleman asked what the additional funds were likely to provide for victims. They will allow the victim support magistrates courts witness service to be completed in all 430 magistrates courts, and an improvement in specialised support services for both victims and, for example, vulnerable or intimidated witnesses. They will also enable work to take place with victims participating in restorative justice measures, and will provide for recording of pre-trial cross-examination of child witnesses on video and the use of intermediaries to assist children to give evidence in court.
That last point is very important if we are to secure more convictions of sex offenders and paedophiles. One of our main difficulties at present is that of providing a safe and secure environment in which children can give evidence, and ensuring that it is proper evidence for the use of the court.
The hon. Gentleman asked a number of other questions. He asked about police targets, and wanted to know what my announcement today about the number of police in March 2000—it is about 400 below the original projection, which was published late last year—meant for the other projections under the crimefighting fund. It means, broadly, that there will be 400 fewer officers at each point in time. I shall provide additional information on that as soon as we have it.
We have reasonably reliable information for this financial year and for next financial year. However, the hon. Gentleman will understand that, for future years, we are dealing very much with projections, particularly because the police service does not know funding levels for 2003–04. Soon, we shall be consulting with the police service on the method of allocating the crimefighting fund recruits for that year. I shall ensure that the House is made aware of how that money is made available.
The highest previous recorded level of police officers—which was reached, I think, in 1993—was about 128,200. As I explained, we anticipate that, in 2003–04, as a result of the announced substantial additional funding, police officer numbers will increase above that level to the highest ever levels.
The hon. Member for Southwark, North and Bermondsey talked about the real-terms increase in funding—which, as was made clear yesterday, represents an average annual increase of about 3.8 per cent. over the next three years. That is supplemented by the significant increases in the crime reduction programme—which is not directly part of the police budget—and by money that we are allocating to deal with drugs, which is also very important. The 3.8 per cent. increase also has to be seen against a baseline that we have already increased by £19 million, or more than 1 per cent, in the current financial year.
The hon. Gentleman asked about pensions. As for his general point, I am satisfied that the increases of 20 per cent. in cash, with a very substantial boost of 10 per cent. for next year alone, are sufficient to take account of what I call prior charges on police budgets—typically, pensions, pay rises and the police radio system. Those
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increases will also pay for additional police numbers. The great restraint on those numbers is simply the capacity of the training estate.
Mr. Robin Corbett: May I tell my right hon. Friend that people in communities in my constituency are deeply unimpressed by slanging matches on crime between those on the respective Front Benches? They are much more confident about what the Government have done in the Kingstanding area of my constituency, for example, to reduce domestic burglary by about one quarter in the past three years—although none of us takes any satisfaction from the contribution to the overall increase in crime made by villains in the west midlands.
Given that the Home Secretary said that crime rates have fallen in 18 of 43 police areas, what work is being done by either the Home Office or the police service itself to learn lessons from those areas and to identify best practice that can be applied elsewhere? Although it is a little early, can he also say what conclusions he draws from the first year of operation of the community safety partnerships and the good work that they are doing in their areas to respond to community demands on how local police should behave?
Mr. Straw: As to how we use best practice of one force area to raise performance in other areas, huge work is being done—partly in the context of best value, and partly, in the wider context, led by the inspectorate of constabulary—to draw forces' attention to best practice and to get them to apply it.
We shall shortly be publishing the very important report of the inspectorate of constabulary on the performance of basic command units. That report shows that similar basic command units, in similar areas and with similar resources, perform very differently. It is at that level—just as it is at the school or hospital level, where the health and education services are improving performance—that real improvements can be made.
The community safety partnerships, which have been operating for just over one year now, are working well. In those areas where they are working particularly well, district councils, police and other agencies, including the health and education services, are making a major contribution to the reduction in levels of crime and disorder. That is shown, for example, in the increasing use of anti-social behaviour orders. Major reforms in the youth justice system are also helping to drive down offending and re-offending by young offenders.
Mr. Michael Howard: Will the Home Secretary acknowledge that in the last four years of the previous Government crime fell by nearly 20 per cent. and the number of police constables increased in every single year? Two months ago, the chairman of the Police Federation told the Home Secretary,
I have never known greater uncertainty, greater dissatisfaction and a greater sense of despair than exists here and now.
Does the Home Secretary absolve himself from responsibility for that sense of despair?
Mr. Straw: If the right hon. and learned Gentleman looks back at what representatives of the Police Federation say each year, he will see that they said much worse things of his stewardship.
Mr. Howard indicated dissent.
Mr. Straw: Oh yes, they did, especially around the time that he implemented the ill-advised Sheehy report, which has been the main cause of the recruitment and retention crisis, especially in the metropolitan areas, and which it has taken me to readjust. If the right hon. and learned Gentleman wants to trade police numbers, the simple truth is that when he came into office as Home Secretary in spring 1993 police numbers stood at 128,300. By the time he left office, under the budget that he established—which, he should remember, he promised would lead to an increase of 5,000 extra officers—the number of officers had fallen by 1,400. The current settlement represents the best increase in the funding of the police service to achieve record numbers of police officers that this country has ever seen.
Mr. Gerald Kaufman: When my right hon. Friend comes to my constituency to discuss law and order, as he has kindly promised to do, will he explain to my constituents why the Liberal Democrats ask him to be tough on the causes of crime but voted against the financing of the new deal, which has reduced youth unemployment in my constituency by 61 per cent.? While my constituents welcome the projected increase in police numbers in Greater Manchester, and also the reduction in burglary in the C division by 34 per cent., will my right hon. Friend accept that they are still deeply worried by disruptive behaviour and would like to see the greater invocation of anti-social behaviour orders and curfews and an increase in the age of curfew applications to teenagers? Will my right hon. Friend consider how he can augment the triggering of those welcome actions that were included in the Crime and Disorder Act 1998?
Mr. Straw: When I come to my right hon. Friend's constituency on Saturday, I will discuss with him and, as importantly, his constituents what has been done in the area to bring burglary down and what still needs to be done to get on top of the long-term trend in crime. He is right to tease the Liberal Democrats who, as always, want things both ways. They want us to be tough on the causes of crime, but they do not want to be tough in the methods by which we bear down on those causes. I remember my right hon. Friend the Chancellor of the Exchequer saying that the welfare-to-work programme was as much an anti-crime programme as it was an economic policy. Putting 1 million people back into work and bearing down on the scourge of long-term unemployment, especially among the young, is profoundly important in securing a decent civic society and binding people into a common set of values. It is without that common set of values, including a sense of responsibility, that an environment develops in which crime breeds.
I can tell my right hon. Friend that we want to see local districts and the police service making better use of the powers that we gave to local authorities and the police, as they requested—although we did not direct them to use the powers—where they feel appropriate. There is not the least doubt that in those areas where the authorities are
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using those powers, especially anti-social behaviour orders, big differences have been recorded in levels of crime and disorder. I hope that a good debate will develop in Greater Manchester that compares levels of performance in the local districts with comparable districts elsewhere, so that where burglary, vehicle and other crime rates appear to be significantly higher, the police and local authority can discuss and determine what actions they will take to reduce those levels.
Several hon. Members: rose—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. May I appeal to hon. Members to up the tempo? Short questions and short answers enable me to call more hon. Members than would otherwise be the case.
Mr. Douglas Hogg: Is the Home Secretary aware that on 1 May 1997 the Lincolnshire police force had 1,221 officers, and only 1,145 on 1 May this year? That reduction, of 76 officers or just over 6 per cent., is the second largest in England and Wales. When can the Lincolnshire force reasonably expect to have the same number of officers that it had when the right hon. Gentleman came to office? Will the Home Secretary guarantee that the next settlement will incorporate the sparsity factor recommended by his own external consultants?
Mr. Straw: On the right hon. and learned Gentleman's final point, we are announcing tomorrow the allocation of the £15 million for rural police force areas that is additional to the current standard spending assessment. That will help rural areas. Longer-term reform of the SSA will be announced in due course, but the Government fully accept that rural areas have special needs. We have taken them into account in the settlement.
The figures in the crimefighting fund provide for increases for Lincolnshire this year, next year and the year after. However, between 1998–99 and 1999–2000, the Lincolnshire force has enjoyed budget increases that are among the largest—of 4.5 per cent., compared with an average across the country of 3.1 per cent. Ultimately, the allocation of cash to officers, equipment and other expenditure is, by law, a matter for the chief constable and not the Home Office.
Mr. Gerry Steinberg: I also welcome my right hon. Friend announcements, but the biggest complaint at my surgeries in the villages around my constituency has to do with youngsters' disorderly and unruly behaviour. At a recent meeting, the divisional commander for my area put that problem down to a lack of policemen and to the huge amount of paperwork needed to bring those responsible to court. He was very complimentary about the fast-track system that the Government have introduced for young criminals, and said that youths were now being brought to court very quickly. However, he said that the big problem was that there was nowhere to send the ones who were found guilty, with the result that they were soon back on the streets.
Do my right hon. Friend's announcements today mean that the problems that I have described will be solved, in my constituency and elsewhere?
Mr. Straw: I must advise my hon. Friend not to take at face value suggestions by the officers of any public

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authority that the only reason for their failure to perform at a certain level is the lack of resources. He ought to compare the relative performance of his police district with that of other, similar, forces. The detailed statistics show that otherwise similar areas perform very differently. I do not think that Durham's police problems are worse than those in my own constituency of Blackburn. However, excellent policing in my constituency—where resources are lower than in most areas—and good partnership work with the Blackburn and Darwen district council has meant that virtually every category of crime has fallen. The force in my area makes full use of the powers available.
On youth justice, the Government are now giving the Youth Justice Board an annual budget of £230 million, including £190 million for the juvenile secure estate. The previous Administration did not properly organise the juvenile secure estate and did not implement powers to allow magistrates to remand into secure custody the so-called bail bandits—people who are arrested one day, charged the next, taken into court the next and then let out on bail. This Government have given the courts clear powers to remand young criminals directly into secure custody. Since June, the Youth Justice Board has had the power, duty and money to ensure that those places are available—in Durham as elsewhere.
Mr. Gerald Howarth: The Home Secretary has made much-vaunted claims about increased expenditure leading to improved performance, but he has completely failed to deliver. We have fewer police and rising crime, and less purposeful activity among prisoners. Why should we believe that the latest increase will make any difference?
Will the right hon. Gentleman share with the House further thoughts on recruitment? He claims that he will have the funds for 9,000 extra recruits; we presume that that has been cleared with the Economic Secretary to the Treasury, unlike the announcement last September. Why should we believe his claims about extra recruits when the numbers for Hendon are plummeting, and there is a real problem with retention in my county of Hampshire because the allowance provided for London officers is not provided for Hampshire officers, and Hampshire officers cannot afford to make their contributions to their pensions?
Mr. Straw: I understand the funding problems that the police have faced and I made it clear in the settlement that I laid before the House in December 1998 that the spending increase for the three years from 1999–2000 was, at 2 per cent., small—that was the word I used. However, the last people in the world able to complain about police funding are Conservative Members of Parliament. It is no good the hon. Gentleman waving his hands. The straightforward truth is that his right hon. Friends promised to increase the number of police—constables and every other rank—when they were in government. On 27 January 1997, the right hon. Member for Maidstone and The Weald promised 5,000 extra officers over three years. However, no money was provided to meet that target. The difference between us and the Conservatives who preceded us is that we have spent more than they pledged to do. The hon. Gentleman faces the problem faced by every Conservative Member of Parliament: how, on the one hand, to call for more spending than I propose and infinitely more than the right
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hon. Lady recommends and how, on the other, to support the shadow Chancellor, who does not want spending to be increased in any of those areas, but instead wants to cut it by £16 billion.
Dr. George Turner: My right hon. Friend will be aware of my interest in rural policing and that, as well as general issues, the case of my constituent, Tony Martin, raised specific issues relating to the difficulty of policing in the fenland, where three police authorities have to co-ordinate their activities. I raised that matter in an Adjournment debate some months ago, when the Minister of State, Home Office, my hon. Friend the Member for Norwich, South (Mr. Clarke), assured me, as he has done every week since, that active consideration is being given to the Norfolk police bid for extra help to address that specific problem. The community safety partnership meets tomorrow; can I give them any good news after the Chancellor's announcement of extra finance for the police?
Mr. Straw: My hon. Friend can take his community two pieces of good news. First, my announcement today will have a direct impact on the Norfolk constabulary by ensuring that it can put in place a good police radio system, that it is better able to detect and prevent serious crime, and that officers numbers increase. In addition, I am pleased to tell him that, today, we have agreed to allocate £600,000 to a targeted policing bid jointly submitted by the Cambridgeshire, Lincolnshire and Norfolk constabularies. That programme, which is not part of the spending review, focuses on problems of crime in rural fenlands and is an excellent example of collaborative work between the three police forces in the area. I hope that my hon. Friend finds that news welcome.
Sir Peter Lloyd: Would not the money that the Home Secretary has earmarked for new prison places be better spent on providing suitable accommodation for the large number of mentally disordered offenders who are currently in prison but ought not to be held there?
Mr. Straw: I accept that there are people in prison who ought to be in the mental health system. We transfer a significant number of such people every year into the hospital system and I work closely with my right hon. Friend the Secretary of State for Health to ensure that prisoners who are inappropriately held in prison are transferred to where they should be. However, if we are to bear down on criminal activity—not only by serious criminals, but by persistent criminals for whom probation and other community punishments plainly have not worked to prevent their reoffending—there has to be an increase in the number of prison places. That is why we have put in place funding for the 2,600 places that I have announced today, in addition to the 1,400 places that are currently being built and will be open next year.
Mr. Geraint Davies: Is my right hon. Friend aware of partnership initiatives in Croydon, and will he consider the initiative to use domestic camcorders, issued by the council or the police, so that members of the public may survey areas that have

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habitual graffiti problems? That would allow citizens to gather evidence and deter criminals and help to bring them to justice.
Mr. Straw: Yes, I welcome the initiative taken by the police and the partnership in Croydon to use domestic camcorders and involve willing members of the public in detecting terrible crimes and lower level disorder.
Mr. Simon Thomas: I welcome in general today's announcement, particularly the reiteration of the need to take account of the sparsity factor affecting rural police forces in Wales. Does the prison programme that the Home Secretary mentioned include the proposed new prison for north Wales, and will that prison be built under the private finance initiative?
Mr. Straw: No, the programme does not specifically include that prison, but I shall be happy for my right hon. Friend the prisons Minister to discuss that matter with the hon. Gentleman.
Mr. Dale Campbell-Savours: I have a short question. Now that my right hon. Friend has the money to do it, may we have a project to evaluate the benefits that would arise from the introduction of national identity cards?
Mr. Straw: I do not have the money for that.

Points of Order
4.32 pm
Miss Ann Widdecombe: On a point of order, Mr. Deputy Speaker. I am aware that you are not responsible for the nature of ministerial replies, or for their veracity or accuracy. May I ask, however, whether it is not a contempt of the processes of Parliament for a Minister's reply—as in the answers to detailed questions put by me and by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard)—to be not even remotely relevant to the question?
Mr. Deputy Speaker (Sir Alan Haselhurst): The right hon. Lady knows that the Chair has absolutely no responsibility for questions or answers.
Mr. Douglas Hogg: On a point of order, Mr. Deputy Speaker. I know from what you said during the statement that the slow process of business concerns you. It took 42 minutes to complete the initial statement and the responses to two questions today. That is appallingly slow. What can the Chair do to ensure more expeditious process of business? Perhaps, if need be, you could call participants to order.
Mr. Deputy Speaker: Madam Speaker has asked Ministers to try to limit the length of statements so that everything that follows can be dovetailed with the length of the statement. Clearly, if a statement is long and complex, the first response from the Opposition Front Bench will also take some time. Over the years, it seems that statements have become longer, and questions have certainly become longer. Members have fallen into the habit of asking multi-part questions that require multi-part answers. The whole process could be speeded up with good will on both sides of the House, and the Chair is dedicated to that end.
Dr. Evan Harris: On a point of order, Mr. Deputy Speaker. On 6 July, I drew your attention to the fact that the Government appeared to have announced £1 billion-worth of public spending in science without making a statement to the House or supplying a written answer. You reminded us that Madam Speaker had deprecated such practice. Have you had any reply from the Government on that point, and how do you view the Government's boast in a press release yesterday that they were proud to have made their announcement at the United Kingdom-United States conference on 5 July?
In addition, is it not significant that there have been other occasions on which the Government have boasted about public spending announcements made to the media rather than the House? It is usual for press releases on Government spending to include significant detail in the paperwork attached to them so that hon. Members may receive it at the same time as the media. However, the Department for Education and Employment press release on the spending review's £100 million for higher education was not made available to Members yesterday although it was available to the media.
Mr. Deputy Speaker: I am sure that those on the Government front Bench will have heard the point about

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the availability of detailed information which comes out in the form of press releases. No doubt I am merely echoing what Madam Speaker has said on more than one occasion, but it is important that that information should be available to hon. Members at the same time as the press releases come out. There is nothing particularly unusual in a head announcement being made about a general direction of policy in a Budget or expenditure review, and for the detail to be followed up within hours by another Secretary of State or by a later announcement in the House.
Mr. John Bercow: On a point of order, Mr. Deputy Speaker. In the light of detailed newspaper reports at the weekend, have you received any requests from the Secretary of State for Education and Employment asking to come to the House to make a statement about his curious failure to declare in the Register of Members' Interests his receipt of rental income?
Mr. Deputy Speaker: No. There is a proper procedure for dealing with complaints of that kind.

Fire Safety (Houses in multiple Occupation)
4.36 pm
Ms Karen Buck: I beg to move, That leave be given to bring in a Bill to require the installation of smoke detectors in houses in multiple occupation.
On Friday evening, I attended the 30th anniversary celebrations of the North Kensington law centre to congratulate it on three decades of effective campaigning in the interests of some of the most deprived people in Britain. At that event, there was a screening of a Granada television documentary about the needs that gave rise to the establishment of the law centre. In watching it, I could not help but be struck by similarities and differences between the events of 1970 and those of today.
One striking feature was the fact that, in 1970, everybody in the video appeared to be dressed as an extra from "Hair". More significantly, the documentary revealed the drama of prevailing housing conditions in our cities at that time, and showed that we were dealing with the legacy of slum landlords such as Rachman and Hoogstraten, who made Notting Hill and Paddington notorious. That sector has now shrivelled away and social landlords have largely filled the gap.
In 1970, people dealt with the drama of appalling fires that ripped through multi-storey rooming houses. They were rabbit warrens of rooms in interconnecting houses, through which fires moved with terrifying speed and ferocity. Fire brigades were handicapped in their dealings with the situation by knowing nothing of the floor plans. Clanricade gardens in north Kensington and Clifton villas in Paddington are dreadful examples of what could happen to under-regulated properties of that kind.
Thirty years later, the position is less visibly dramatic, but the underlying situation is just as bad and, in some cases, worse. Too many dwellings in multiple occupation are still appalling and are high risk for too many people. The number of people dying in, or injured by, domestic fires remains unacceptably high across the board, but fires in houses in multiple occupation occur out of all proportion to the size of the sector. In 1998, the last year for which figures are available, there were 10,463 fires which involved casualties, up from 9,008 five years previously. In 1998, 506 people lost their lives in domestic fires, up from 488 five years before.
Especially worrying is the fact that the proportion of fires involving HMOs rose from an already alarming 43 per cent. to 45 per cent. in 1998. Almost half of all domestic fires occur in HMOs. It is estimated that there are 550,000 houses in multiple occupation in this country, out of an estimated total of 20 million domestic buildings. The disproportionate occurrence of fires in HMOs should, therefore, be a matter of deep concern.
According to the research of the Department of the Environment, Transport and the Regions, the risk of death by fire in a house converted to bedsits is six times higher than in a single-occupancy property. For homes of three or more storeys converted to bedsits, the risk is a staggering 16 times higher. If we allow for the fact that the Department estimates that only about one in six domestic fires is reported to the fire brigade, we get a very disturbing picture.

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Safety should be a major consideration whoever occupies the household, yet as a society we accept a particular responsibility for the vulnerable. HMOs are likely to be occupied by students, young people trying out their first home independent of their parents, and people with mental or physical disabilities seeking life outside a residential situation. In my street, until only a year or two ago, there were three-storey houses converted into 12 or more rooms, occupied by Irish pensioners who had come to this country 40 years ago to work in the construction industry, and who had never had a bathroom or kitchen in their own home. Even now, in cities and seaside towns it is not uncommon to find houses with 12 or more names taped next to the doorbell.
Those properties are more likely than average to represent a fire risk, as the casualty figures show, because of a combination of the built environment and the behaviour of tenants—not because HMO residents are intrinsically more likely to indulge in risky behaviour, but because of the impact of numbers. A two-storey HMO occupied by two people in converted flats is less risky than the same property occupied by eight people. Buildings of four or five storeys, buildings converted into bedsits and those occupied by vulnerable tenants are most at risk.
My Bill would require a comprehensive licensing scheme for HMOs, wherein one of the conditions for licensing is the fitting of smoke or heat detectors, mains powered and, where necessary, linked to each other and including the common parts. Local authorities already have a number of powers available to them by virtue of building control and other environmental regulations, but the casualty figures show that they are not sufficiently effective. In addition, the relatively fluid nature of the HMO sector makes it unnecessarily hard for tenants and councils to enforce standards.
Local authorities have been running local registration schemes in the past few years to achieve the same end as licensing, but so far only 81 areas covering 10,000 HMOs are included. The process is hard going for local authorities. Officers whom I spoke to in one council told me of the problems that they faced. Of the HMOs that they had surveyed, only one in three was fully compliant with all the safety requirements, and only half of the registrable properties were fully fire safe. Penalties were too low to be an effective deterrent to bad landlords.
A recent survey conducted by the Brent private tenants group found that only two thirds of the group surveyed had smoke alarms fitted in their properties and less than half had such alarms in the common parts. Most tenants did not know whether the alarms were working or whether they were regularly tested.
We now know what needs to be done to reduce risk, especially in relation to fire hazards, and we have a good idea of the scale of the problem. I commend to the House Shelter's superb fire safety guide, which spells out the current requirements, best practice and options for improvement. Shelter's campaign for bedsit rights has been at the forefront of action on this matter for decades and has already brought about many changes. Now we need a clear, comprehensive, national scheme with sufficient resources for enforcement and tough penalties for breaches.
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The introduction of a licensing scheme for HMOs was a manifesto commitment for the Government, and the Department has already consulted on principles that could underpin such a scheme. I welcome that, and I hope that we will succeed in getting a housing Bill in the Queen's Speech so that we can proceed with those plans. However, I am concerned that the Government's thinking may be too restrictive to meet the challenge. I believe that they envisage only about one fifth of HMOs being subject to mandatory licensing, which would certainly include many high-risk properties, but would exclude others, such as the two-storey HMOs that the Department's own research indicates account for 48 per cent. of all HMO fire deaths.
Two single tenants who rented a second-floor converted flat in north-west London had a narrow escape from fire recently only thanks to a smoke alarm fitted with great reluctance by their landlord, after months of letters and phone calls. Ten days after the alarm had been fitted, it activated at 3 am. One of the upstairs tenants said:
We couldn't find the fire, but we could smell burning and discovered that our bathroom floor was hot, so we guessed it must be coming from the flat below.
The tenants were able to wake the people in the burning flat who had no alarm system, so fortunately everyone escaped injury. The fire service said that if the tenants below had slept for another 15 minutes, they would have been dead. That property would not be mandatorily licensed as the proposal now stands.
My Bill would require all HMOs to be subject to a new national, mandatory licensing scheme with fire detection and safety at its heart. The licensing requirement would also help to cut accidents and injuries from other causes related to unfit property. I am mindful of the need to keep regulation to a reasonable minimum and to maximise effectiveness by targeting. However, I am ultimately persuaded of the need for a simple, clear and comprehensive scheme; the 4,274 casualties in HMO fires are worth it.
Question put and agreed to.
Bill ordered to be brought in by Ms Karen Buck, Mr. Iain Coleman, Mr. Hilary Benn, Mr. Adrian Sanders, Ms Margaret Moran, Mr. Jim Fitzpatrick, Mr. Andrew Love, Mr. Andrew Dismore, Angela Smith and Mr. Gordon Marsden.

Fire Safety (Houses in multiple Occupation)
  FIRE SAFETY (HOUSES IN MULTIPLE OCCUPATION)
  Ms Karen Buck accordingly presented a Bill to require the installation of smoke detectors in houses in multiple occupation: 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 165].

  DELEGATED LEGISLATION
  Mr. Deputy Speaker (Sir Alan Haselhurst): With permission, I shall put together the motions relating to delegated legislation.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

  DELEGATED LEGISLATION
    EXPORT AND INVESTMENT GUARANTEES
    That the draft Export and Investment Guarantees (Limit on Foreign Currency Commitments) Order 2000, which was laid before this House on 27th June, be approved.

    PUBLIC HEALTH
    That the draft Vaccine Damage Payments Act 1979 Statutory Sum Order 2000, which was laid before this House on 5th July, be approved.—[Mr. McNulty.]
    Question agreed to.

  ADJOURNMENT (SUMMER)
  Motion made, and Question put forthwith, pursuant to Standing Order No. 25 (Periodic adjournments),
  That this House, at its rising on Friday 28th July, do adjourn till Monday 23rd October.—[Mr. McNulty.]
  Question agreed to.

  FINANCE BILL
  Ordered,
  That, notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions, more than one stage of the Finance Bill may be taken at any sitting of the House.— [Mr. McNulty.]

Orders of the Day
  Finance Bill
  Not amended in the Committee and as amended in the Standing Committee, further considered.
  Finance Bill
    Schedule 8

      EMPLOYEE SHARE OWNERSHIP PLANS
      4.47 pm
      The Financial Secretary to the Treasury (Mr. Stephen Timms): I beg to move amendment No. 57, in page 240, line 12, leave out from "must" to end of line 13 and insert—
      'form part of the ordinary share capital of—'.
      Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: Government amendments Nos. 10 and 11.
      Amendment No. 135, in page 248, line 28, at end insert—
      'Where an employer pays on behalf of an employee any Class 1 national insurance contributions which would have been due from the employee but for the deduction of partnership share money not be an emolument or benefit chargeable to tax under Schedule E.'.
      Government amendments Nos. 12 and 13.
      Mr. Timms: The amendments deal with the new employee share ownership plan whose rules are set out in schedule 8. Paragraph 60 provides a rule for the type of share that must be used in the plan. As it stands, the paragraph restricts that to the share capital of a single company.
      The legislation for the new plan inadvertently changes the position for consortium companies. Currently, it would not be possible for shares in more than one consortium company to be used at the same time for the purposes of the new plan. It was not our intention to change the position for such companies; we want the new plan to be open to as many companies and employees as possible. Amendment No. 57 ensures that, in the new plan, shares in consortium companies can be used in exactly the same way as under the existing Inland Revenue-approved schemes. I hope the House will welcome that change.
      I deal now with amendments Nos. 10 to 13. The new plan is designed to give employees a genuine stake in the company for which they work. Under Inland Revenue-approved share schemes, redeemable shares do not normally count as qualifying shares because they do not entail a full-blown stake in the company—employees can get their money back whenever they want to do so.
      Members of retail co-operatives hold redeemable shares, as do those in workers' co-ops. Shares in retail co-ops are bought at their face value. They carry a small amount of interest, providing a dividend based on the company's profit that varies according to the amount of purchases made by the member—often known as a divvy. The shares are also normally redeemable by the company at the same value.
      Retail co-ops want to improve their employees' participation in their business. They want to use the redeemable shares that they issue to other members in an

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      all-employee share plan. Without an amendment to the legislation, such shares would not qualify for the new plan. The amendments extend the current exception whereby workers' co-ops may use redeemable share capital in a new plan to all co-ops that are registered industrial and provident societies.
      The Co-operative Union estimates that at present very few employees are members in this way—perhaps as few as 2 per cent. of the 40,000 employees in the 37 United Kingdom consumer co-ops. These changes will enable retail co-ops to encourage their employees to take a stake in the business, using the same redeemable share capital available to other members. Many more employees working in co-ops will be able to benefit from the tax reliefs in the plan. That will help us to achieve our goal of doubling the number of companies that offer shares to all their employees, and it will extend to co-operatives the substantial advantages that the new scheme offers.
      Several right hon. and hon. Members have advocated an amendment along these lines. It has been welcomed as a real boost by the chair of the Co-operative Union, and I am delighted to commend it to the House. If I may, Mr. Deputy Speaker, I will seek in a few moments to catch your eye to respond to what is said by Conservative Members on their amendment.
      Mr. Howard Flight: We agree with the amendments as outlined by the Minister. I do not know whether this is the right time to mention this, but the issue of consortiums and different shareholdings of companies that are not owned by one single company owning more than 51 per cent. also came up in Committee in relation to investment management incentives. We had a letter of undertaking that the Government would be tabling a relevant amendment. I am not clear whether amendment No. 57 is intended to relate to enterprise management incentives as well as to the employee share ownership plans. However, perhaps we can deal with that point later.
      Amendment No. 135 raises, in a slightly different way, a point that we sought to have addressed in Committee. It would cure an anomaly. Under the employee share ownership plan, lower-paid employees could, by having partnership share money paid before tax, have lower earnings in terms of their national insurance contribution liabilities, and thus pay lower personal NIC contributions, in turn receiving lower reduced earnings-related state benefits. That cannot be the Government's intention, given that the employee share ownership scheme is designed to benefit relatively lower-paid employees in particular. This amendment to cure the anomaly is slightly different from our previous proposal.
      Mr. Andrew Love: I welcome the amendments to extend the all-employee share plan to co-operative organisations. Before I say a little about that, I should make a declaration. I am a Labour and Co-operative Member of the House, with a long-term interest in and involvement with the co-operative movement.
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      In the foreword to the Government's initial consultation document on employee share ownership plans, the Chancellor of the Exchequer stated:
      Share ownership offers employees a real stake in their company with shareholders, managers and employees working towards common goals.
      I agree with that statement. Research shows that employee share ownership plans, when linked with other means of employee participation, can do a number of things. They have a positive effect on productivity; they link the owners with the workers in the objectives of the successful company; and they make employees more aware of the overall performance of the company.
      Today's co-operative movement is interested in reform of its structures which are, in effect, stakeholder models of co-operation. The amendment will assist in achieving that reform by achieving real partnerships between the members who are the owners and their employees. It will enable the employees to participate in the activities of the co-operative by voting at meetings, becoming members of the boards of directors and sharing in the profits of the organisation.
      I welcome the Government's move in this respect. It will create a level playing field in the industries in which co-operatives are involved. Why should it be that other retailers can have such plans, but the co-operative movement cannot? These amendments will extend such plans to the co-operative movement and give the work force a more inclusive role. The press release issued by the co-operative movement states:
      The Government's recognition that our workers deserve to be included is a real boost to those leading exciting reforms in the co-op movement.
      I certainly welcome these amendments; they will help to achieve those reforms in the co-operative movement, and I commend them to the House.
      Mr. Timms: I welcome what my hon. Friend the Member for Edmonton (Mr. Love) has said, and I commend his work in the House on behalf of the co-operative movement to promote the interests of co-ops.
      The hon. Member for Arundel and South Downs (Mr. Flight) asked about amendment No. 57 and the impact on enterprise management incentives. There is no read-across from that amendment to such incentives. I am not sure to which amendment in Committee he was referring, although a later group of amendments deals with enterprise management incentives.
      On amendment No. 135, I understand that the intention of Opposition Members is to ensure that, where the employer pays the employee's national insurance on the amount used to buy partnership shares, that amount would not be chargeable to income tax on the employee, but the underlying assumption is that the employer would be able voluntarily to pay the primary national insurance contributions on the employee's behalf. That is not the case.
      Current legislation does not permit the employer to pay class 1 contributions that he is not liable to pay, so the employer would not be able to pay those contributions as is implied in amendment No. 135. Without changing the underlying law, which would be a task of significant

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      technical complexity, that amendment would have no effect so I hope that Opposition Members will not press it to a Division.
      Amendment agreed to.
      Amendments made: No. 10, in page 240, line 34, leave out "workers'".
      No. 11, in page 240, line 35, at end insert—
      '( ) In sub-paragraph (4) "co-operative" means a registered industrial and provident society which is a co-operative society.
      For this purpose
      "registered industrial and provident society" means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies Act (Northern Ireland) 1969; and
      "co-operative society" has the same meaning as in section I of the 1965 Act or, as the case may be, the 1969 Act.'.
      No. 12, in page 264, line 36, leave out paragraph 128.
      No. 13, in page 267, leave out line 23.— [Mr. Timms.]

    Clause 49
      PHASING OUT OF APPROVED PROFIT SHARING SCHEMES
      Amendment made: No. 58, in page 34, line 42, leave out "6th April 2002" and insert "1st January 2003".—[Mr. Timms.]
    Clause 50

      PHASING OUT OF RELIEF FOR PAYMENTS TO TRUSTEES OF PROFIT SHARING SCHEMES
      Amendments made: No. 59, in page 35, line 12, leave out "6th April 2002" and insert "1st January 2003".
      No. 60, in page 35, line 20, leave out "6th April 2002" and insert "1st January 2003".—[Mr. Timms.]

    Clause 56

      FURTHER PROVISIONS ABOUT SHARE OPTIONS
      Mr. Richard Ottaway: I beg to move amendment No. 131, in page 40, line 19, after "be", insert "multiplied by 2.5 and".
      I make no apology for the fact that the amendment would largely negate the impact of imposing national insurance contributions on share option schemes.
      I want to talk about entrepreneurial activity. We are well aware of what this Government measure will do. The problem has been rightly identified by all involved. A start-up company that has little capital or that makes little profit, and whose shares may be quoted or are at least tradable, may employ many staff on a contractual basis that includes large share options. On the exercise of those options, the national insurance contributions are levied not only on the employee, but on the employer. That imposes a large capital liability on the employer, which he may not have the funds to meet. The Government recognise the problem and have made a gesture, but in our eyes the proposal merely takes things from very bad to bad.
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      I want to talk about entrepreneurial activity largely because that is what the measure will hit. After the election, the Government produced a competition White
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      Paper that built on the efforts of my right hon. Friend the Member for Henley (Mr. Heseltine) when he was Deputy Prime Minister, and a document on the knowledge-driven economy, of which my right hon. Friend was the driving force until 1997. The Institute for Public Policy and Research produced a report entitled "The Entrepreneurial Society", the launch of which the Prime Minister attended. He supported the teaching of entrepreneurship in schools, which was one of the report's main themes, and I shall return to that point. The Government may talk the talk, but do they walk the walk? [Interruption.] Well, that is important and we want to know.
      At first blush, the Government do not do too badly for entrepreneurs. There have been changes to capital gains tax, capital allowances for small and medium-sized enterprises are now 40 per cent. and, for the next three years, allowances for certain information technology equipment will be 100 per cent. for small companies, which will go a long way to help the sort of company that the measure will hit. However, medium-sized companies seem to have dropped out of that relief. Research and development reliefs were discussed upstairs in Committee, and a couple of weeks ago the Government announced a 55 per cent. increase in public expenditure on science.
      Although I am prepared to give the Government the credit for that, I do not want to go too far or be too kind and generous. The point is that these measures are finely tuned and focused. They address a particular sector, but what of the colossal burden of corporate taxation and regulation that has been dumped on business overall? It will completely swamp everything that these measures will introduce.
      Since 1997, business has had to absorb the cost of union recognition and the additional costs of maternity leave and paternity leave, which have been much publicised. It has also had to absorb the cost of rights to time off, rights for part-time workers, the national minimum wage and the working time directive, so it comes as no surprise that the Institute of Directors has said that the additional regulatory burden is costing business £5 billion a year. However, the Labour party election manifesto said:
      We will provide stable economic growth with low inflation—
      so far, so good—
      and promote dynamic and competitive business and industry at home and abroad.
      The Economic Secretary to the Treasury (Miss Melanie Johnson): And we have.
      Mr. Ottaway: I disagree. for the reasons that I am setting out, the effort to promote dynamic and competitive business is being stifled by measures such as those we are debating. If the hon. Lady talks to industry and business, she will find that they agree.
      There is extra taxation on business—the pension fund liabilities, for example. It is dawning on millions of people around the country that there has been a raid on their pensions that will cost them and their employers substantial sums. The Government have introduced the windfall tax on the utilities, corporation tax changes and the climate change levy, which we have discussed. The infamous IR35, which is having a colossal impact on the IT sector and the way it behaves, is not stimulating

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      business in the way that the Government claimed in their manifesto. Stamp duty, which was debated in the House yesterday and upstairs in Committee, hits business particularly hard. It took heavy pressure from the Opposition for the Government to amend their double taxation relief proposals. The proposals that they originally came up with were outrageous. Thanks to the Conservative party, which is business's friend, the Government have largely climbed down on the measure, but why they should dream of introducing it in the first place is beyond me.
      We have had the additional fuel duty, which is having a big impact on industry that relies heavily on transport. We have the aggregates tax and also the national insurance contributions on share options. It comes as no surprise that Sir Clive Thompson, chairman of the Confederation of British Industry, drew attention to Labour's stealth taxes just before the March 2000 Budget. He said:
      The Government has introduced a series of well-camouflaged taxes which has put the tax burden firmly onto business. Changes by the Chancellor since 1997 will push up business taxation by almost £5 billion a year for the first five years of the Labour Government.
      Given that sort of reaction, and if that volume of taxation is going on business, why on earth do the Government bring in such a measure, which will stifle entrepreneurial actively, not help it?
      Ministers must get out there and talk to the people who are at the coal face, who have a wage bill to meet every week and who are up against the heavy burden of corporate taxation and regulation, and listen to them. They would then think twice about putting such a burden on Britain's entrepreneurs.
      What sort of message does the proposal send to entrepreneurs in this country? There is no doubt that entrepreneurial activity has an impact on the economy. If we have more entrepreneurs, it tends to generate more economic activity and the economy grows. Whatever side of the political debate we are on, we all want the economy to grow.
      In the United Kingdom, we are not doing badly with entrepreneurial activity—at least until we compare ourselves with other countries. Just 3.3 per cent. of the people of this country are trying to start a business, but in the United States it is twice that number—more than 6.5 per cent. of people are engaged in entrepreneurial activity. Only 16 per cent. of entrepreneurs in this country think that there are good opportunities that are worth having, whereas in the United States it is 57 per cent., so why do we have those big gaps? What is going on? What lessons can be learned about entrepreneurial activity?
      Mr. John Bercow: Before we accept clause 56, which my hon. Friend wisely seeks to amend, would it not have been helpful if members of the Treasury Bench had spoken to the director general of the British Chambers of Commerce, Mr. Chris Humphries, who said as recently as 20 January this year that, despite their rhetoric, the reality is that the Government have dramatically increased the regulatory burdens that threaten small business competitiveness?
      Mr. Ottaway: My hon. Friend makes his point very well. That is the thrust of the argument. That theme was
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      taken up by the Institute of Directors, whose assessment was that regulatory burdens on business amounted to about £5 billion per annum.
      I was talking about entrepreneurial activity in this country. When the Prime Minister attended the launch of the report published last year by the IPPR, he said that entrepreneurship should be taught in schools—no doubt the message went out to the relevant Ministers. It is worth looking at a written answer from the Secretary of State for Education and Employment. It spoke about the introduction of consumer and education entrepreneurial skills in the national curriculum and went on:

      At Key Stage I, children will be taught that money comes from different sources and can be used for different purposes.

      At Key Stage 2, they will be taught to look after their money and realise that future wants and needs may be met through saving.

      At Key Stage 3, they will be taught what influences how we spend or save money, and how to become competent at managing personal money.—[Official Report, 24 January 2000; Vol. 343, c. 25W.]

      At key stage 4, there will be more lessons in managing personal money.
      That shows that the Government's vision of entrepreneurial lessons and teaching entrepreneurial activity in schools involves telling children how to handle their own money. That is off-beat, and it is not the answer. It will not promote entrepreneurial activity or change the culture. The Prime Minister and the Ministers concerned should revisit the report entitled "The Entrepreneurial Society" and address far more seriously the points that are raised.
      To return to national insurance contributions on the exercise of share options, I am grateful for a memo from Mr. Stephen Allott of Micromuse, a software and hardware company in this country, with considerable experience in the United States. In his briefing paper this month he states:
      The vast majority of technology start-ups are done in the US rather than Europe for many reasons including customer proximity, supplier and labour base, the tax regime and culture.
      He goes on:
      New Economy businesses are built on good people not assets. Building a new business from the UK or persuading a multinational to locate a major business unit in the UK means that top talent will have to be happy to locate in the UK.
      Mr. Allott continues:
      For the UK to be an attractive base for a global technology business (such as Micromuse or the next Cisco) it has to offer something substantial to redress the balance over the United States. The go forward effective personal tax rate of 47 per cent. in the UK compares unfavourably with 26 per cent. in the US for ISO stock options and 46 per cent. for other stock options.
      There we have an experienced business man contrasting the United States with the United Kingdom, and demonstrating how unattractive such a comparison is.
      Mr. Timms: I am grateful to the hon. Gentleman. Will he confirm the last figure that he gave to the House? Did he say that there was an effective rate of taxation of 47 per cent. in the UK on unauthorised options and that in the United States it is 46 per cent?
      Mr. Ottaway: I said that in the United States for ISO stock options, which are considered important, the rate is 26 per cent., and that for other stock options, it is 46 per cent.
      Mr. Timms: We are, of course, speaking about unauthorised share options, so let us compare like with

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      like. The comparison is, as the hon. Gentleman rightly said, 47 per cent. in the UK and 46 per cent. in the US. The arrangements for authorised options are different in both countries.
      Mr. Ottaway: The Minister is more familiar with the matter than I am. However, ISO stock options are considered important by companies such as the one that I mentioned, and they attract a tax rate of 26 per cent. That must be taken into account.
      Mr. Edward Davey: I am grateful to the hon. Gentleman for giving way. Although the Financial Secretary is right with respect to the measure under discussion, is the hon. Gentleman aware that the Financial Secretary admitted in the Standing Committee on 29 June:
      There is an alternative regime for approved options in the US, as there is in the UK
      and that
      the terms of the approved scheme are more generous in the US than in the UK—[Official Report, Standing Committee H, 29 June 2000; c. 1033.]?
      Mr. Ottaway: The hon. Gentleman makes a good point, and the Minister must take account of the weight of opinion. He may receive advice about ISOs before the debate is wound up, just as I may pin down the specific facts.
      I quoted a business man who finds it far more attractive to build up his company in the United States than in the UK. A message must be sent from the Government to entrepreneurs.
      5.15 pm
      I shall conclude by referring to a report from the "Global Entrepreneurship Monitor" produced by the London business school, with which I suspect the Minister is familiar. It is sponsored by Apex Partners and Co., which I suspect has given advice to the Government on entrepreneurial activity. The report was produced in 1999, and includes a clear and specific recommendation in terms of assessing Government policies. It states:
      Rules on share option schemes need to be improved to give incentives to people to join young entrepreneurial businesses and go on to build large, world-class enterprises.
      If someone is prepared to take a risk with his career and a risk in establishing a business, what message are the Government sending out? It is one that is hostile to entrepreneurs. The Prime Minister has made it clear that entrepreneurship should be encouraged. The Government's advisers have recommended change yet I suspect that the Government will persist in pressing on with activity that is hostile to entrepreneurship instead of encouragement.
      Mr. Edward Davey: When, two years ago, the Government introduced measures to apply employers' national insurance contributions to share options and gains on those options, I do not think that they realised the mess into which they were getting themselves. In the Child Support, Pensions and Social Security Bill and in the Finance Bill in clause 56, they have tried to alleviate the problems that they have created. However, they have not
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      gone far enough. The amendment would help to improve the relief but it would go significantly against the Government's intentions.
      When we debated these matters in Committee, the Minister admitted that a real problem had been caused by the Government's previous legislation. He admitted that the problems would lead to some high-tech companies having to assess the unpredictable future liability of employees' national insurance contributions.
      Mr. Michael Fabricant: Is the hon. Gentleman aware that many high-tech companies—some of the dot.com companies—are offering profit-share schemes that are related to profits rather than dividends? They are not providing shares for some of their employees even though they are offering bona fide profit options. Is the hon. Gentleman aware also that that is excluded in clause 56, which the amendment is designed to amend?
      Mr. Davey: I was aware of that, but I am not sure whether it is germane to my argument or to the issues on which we should focus during the debate. I shall develop my argument, which I hope is germane to the issues.
      A problem is created for high-tech companies when it comes to predicting liability and having to account for that. The Minister was up front and honest with the Committee in explaining that problem. High-tech companies often have to go to capital markets to secure extra funds to compete in a highly competitive and dynamic industry, and they have to convince investors that their balance sheets are at least moving in the right direction even when profit and loss does not look too good in the near future. Unpredictable liabilities on balance sheets create great problems in winning the confidence of investors. The Government admitted that that was the problem and they are seeking to deal with it in clause 56.
      Have the Government dealt with the problem? In the Child Support, Pensions and Social Security Bill, they introduced an unusual technique in British tax law, which was that there could be an election and an agreement between the employer and employee to switch the liability for employers' national insurance contributions to the employee, thus getting round the accounting proposal. However that creates another difficulty, which is that of attracting labour.
      The skilled employees in the industry are internationally mobile. If a UK or US company tried to attract them, they would consider the various stock options and salaries on offer and the tax regimes that applied to salaries and stock options.
      In Committee, we focused on whether the provision made the tax regime for stock options for employees of high-tech companies in the United Kingdom worse than the regime in the United States. There was a huge debate about that, and it has been reflected in our proceedings today. I do not think that the Government have gone far enough to make sure that the UK remains attractive enough to internationally mobile labour. The provision will deter skilled employees from joining UK companies instead of those in the United States. That will inevitably encourage high-tech companies to set up in the United States and not in the UK
      The Financial Secretary might say that the tax differential—between 46 and 47.3 per cent. for approved share option schemes—is rather small. It might seem a

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      small differential, but the key point is the change. Many companies have set up in the UK or are considering setting up in the UK because they previously viewed the tax regime here as beneficial. They could encourage skilled internationally mobile employees to work for them in the UK, because the tax regime was favourable for share options. However, in a stroke—by applying class 1 national insurance contributions to stock options—the Government have removed that advantage.
      One could argue that there was a tax loophole that needed closing, but was it necessary to remove it altogether? Was it not necessary to give some competitive tax advantage to the UK's information technology industry to attract companies and internationally mobile labour here? By not recognising that important fact, the Government are doing down that sector and doing this country a disservice.
      Mr. Bercow:I agree with the hon. Gentleman's observation that the fact of the change is significant. However, does he agree that the other significant fact is that a substantial proportion of the companies that will be affected are small companies? Given that 99.6 per cent. of Britain's firms employ fewer than 100 people and that they account for about 50 per cent. of the private sector work force and generate 40 per cent. of national output, that point is of the most dramatic significance.
      Mr. Davey: As always, the hon. Gentleman comes to the House with a barrage of statistics, the veracity of which I cannot confirm at this time. However, I am more than happy to agree with the thrust of his point. Small firms are active in this sector.
      When we debated this issue in Committee, I put some of these points to the Financial Secretary. He said that the Government had chosen to get the marginal rate of the relief in clause 56 down to 47.3 per cent. because they wanted to get it below 50 per cent. He said that it appeared from the negotiations that had been held with the companies affected that the figure of 50 per cent. was "psychologically significant". I am sure that it is "psychologically significant", but is that the test that we should apply? We want to ensure that this country is the most competitive—even vis-a-vis the United States—in the world. One could argue that we are talking about percentage points, but they are important in such decisions.
      Mr. Timms: Can the hon. Gentleman confirm that, in addition to the liability for the employee, employers in the United States also have to pay a 1.5 per cent. Medicare charge? That works in exactly the same way as national insurance liability works in this country, but it is not an issue for companies here. In that respect—indeed, in many others—the UK is in a better competitive position than the United States.
      Mr. Davey: I happily admit that. The Financial Secretary made that clear in Committee. However, he should consider the change. The United Kingdom was in a tax-competitive position, which may have approached becoming a loophole and a matter of concern to the Treasury. I accept that it needed to ensure that its finances were not undermined; I imagine that hon. Members from
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      all parties would accept that. However, admitting that a tax loophole requires tackling is different from deciding to throw away all tax competitiveness and to pick a rate that happens to be the equivalent of a United States rate plus Medicare and so on.
      We must ensure that this country is internationally competitive, especially in the IT sector, and that it can attract mobile capital and labour. We are debating a Bill that contains many provisions that will hit the UK economy through mobile labour and capital, for example, IR35, which the hon. Member for Croydon, South (Mr. Ottaway) mentioned in his speech. One or two other provisions have the same effect. The Minister must address the change. Why did not the Government keep some advantage in tax competition for the UK?
      The Financial Secretary developed his thinking in Committee when he compared the US and the UK from the point of view of a French company, the director of which he had met at a recent conference. The Financial Secretary said that the French director had considered and rejected the rest of Europe because the UK was the best place in Europe to set up an IT company. The French entrepreneur then compared the UK with the US. According to the Financial Secretary, the overriding factor for the French director was that the US skilled labour market in IT was rather tight and that he believed that there was a greater supply of such people in the UK. The Financial Secretary was trying to say that there were other considerations about location.
      That was an interesting argument, which I do not believe that anyone would dispute. However, people locate in one place rather than another for many reasons. We want to make sure that Britain is best for all those reasons, yet the Government have chosen to throw away our tax competition advantage. Perhaps the relief needs to be only slightly greater than that for which clause 56 provides, and perhaps amendment No. 131 would be too generous. However, if the Financial Secretary had granted only a slightly higher level of relief, he would have received plaudits from the industry and been able to defend his proposal more effectively today.
      I hold the Financial Secretary in high regard, and I hope that he will take account of the points that I have made. Many people have been pleased with the way in which he has taken seriously the issue that we are considering, listened to the industry and tried to devise an elegant solution. I am not sure whether it is that elegant, and I hope that he will, in all humility, reconsider that solution to ascertain whether it could be rather more generous next year to ensure that this country remains the world centre for doing business.
      Mr. Fabricant: The hon. Member for Kingston and Surbiton (Mr. Davey) rightly points out that businesses need to be competitive in the world market and that there should also be some certainty about investment for future expansion. My hon. Friend the Member for Croydon, South (Mr. Ottaway) has already pointed out that the Government have not helped the position of new companies—or, indeed, mature companies—that operate in the UK market. The Institute of Directors has acknowledged that union recognition, maternity and paternity leave and the working time directive have added an extra £5 billion in regulatory burdens on such companies. Furthermore, fuel duty has not helped.

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      I should like briefly to explore another area, which the Government have neglected, despite promises made before the last general election by the Secretary of State for Health when he was in the shadow Treasury team.
      5.30 pm
      Amendment No.131 has been designated by Madam Speaker, as is shown on the selection list, as dealing with "Employee share options: tax relief to employees". Employees benefit not just from share options but from profit-related pay to which the Government have not sought to restore tax relief. Dividend is not the only way by which the employee—
      Mr. Deputy Speaker: Order. The matter that we are discussing relates to share options only; nothing else.
      Mr. Fabricant: I am aware of that, and I know that the Clerk is aware of it, too. Clause 56 deals with tax relief to employees, as designated by Madam Speaker.
      Both main Opposition parties have referred to new sunrise businesses; such as dot.com, high-tech companies. For all sorts of reasons, many of those companies are unable to offer share options at an early stage of their existence. Instead, they offer profit-related pay. Similarly, such companies as the John Lewis partnership—which employs 45,000 people—have a bona fide profit-related pay scheme. Before the election, the Prime Minister, having visited the John Lewis store in Oxford street, described John Lewis as an example of a stakeholding company. I simply want to ask the Minister this—
      Mr. Deputy Speaker: Order. I am sure that the hon. Gentleman will accept some guidance. It is not a question of the selection of amendments; we are talking about clause 56, to which the amendment relates. The clause clearly deals with provisions for share options.
      Mr. Fabricant: Thank you, Mr. Deputy Speaker.
      I conclude by saying that I hope that, in future Finance Bills, the Government will decide to honour their promise, made before the election, to extend the provisions of clause 56 not only to share options, but to bona fide profit-related schemes, such as that operated by the John Lewis partnership and many sunrise companies.
      Mr. Edward Davey: Is the hon. Gentleman aware that the previous Conservative Government did not propose tax advantages for share options that might apply to people working for John Lewis and, indeed, took away tax relief on profit-related pay?
      Mr. Fabricant: I am aware of that. I am aware also that the present Secretary of State for Health said that this would be restored within the first year of a Labour Government. That was yet another Labour lie made before the last general election.
      Mr. Timms: The hon. Member for Croydon, South (Mr. Ottaway) was misinformed about a number of his points. He asked whether we had fixed the technical problem. The answer is yes; we have entirely resolved the technical difficulty.
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      The hon. Gentleman was mistaken about other matters as well. There is a new spirit of enterprise abroad across the UK, fostered precisely by the measures that the Government are taking. Helpfully, he listed a number of them, to which I would add a number of other changes that we have made, such as the cut in capital gains tax. The hon. Member for Kingston and Surbiton (Mr. Davey), who is well informed on this matter, will know that the 10 per cent. rate of capital gains tax after four years is significantly less than the comparable rate in the US. On that front, we have made good progress—which the hon. Gentleman will welcome—in terms of competition in attracting investment relative to the United States.
      Mr. John Burnett: Does the Minister regret that the Finance Act 1998 took away the complete exemption for the first £250,000 chargeable gains on retirement?
      Mr. Timms: On retirement! We are now on rather different territory. The answer is no.
      Let me draw attention to our reductions in corporation tax rates. We have cut both the main and the small business rates, and have introduced a 10p rate. We now have the lowest-ever small business corporation tax rates, and the lowest in the industrialised world. Since 1997, small companies have received an average corporation tax cut of nearly 25 per cent. That is why there are now 100,000 more small companies than there were at the time of the general election.
      Those developments were created by the new spirit of enterprise fostered by all the Government's measures. That is why we are making such excellent progress, and that is why there are 1 million more new jobs than there were at the time of the election.
      Mr. Fabricant: The Minister has told us how many new companies had been founded since the election, and the figure was impressive. Will he now tell us how many small companies have gone into receivership since the election?
      Mr. Timms: There has been a net increase of 100,000 in the number of small enterprises. That is my point: there are significantly more, in total, than there were at the time of the election.
      As we have heard, clause 56 gives relief to the employee in respect of the cost of bearing the secondary national insurance liability, either through an agreement allowing the employer to recover the contributions or by means of an election whereby the liability is transferred. The clause allows a deduction from the amount of the share-option gain that will be chargeable to income tax. In effect, it moves to the employee the corporation tax relief that would have been due to the company if it had borne the cost.
      As the hon. Member for Kingston and Surbiton pointed out, that means that the total tax and national insurance charge will be, at the most, 47.32 per cent. As the hon. Member for Croydon, South said, 47.32 per cent. is very similar to the rate that would be paid by a United States employee exercising an option when the uncapped US Medicare contributions and state income taxes are included. It is also a lower top rate of tax than that

      411
      applying in many other European countries. France, Germany, the Netherlands, Spain and Sweden all have higher top income tax rates.
      Mr. Ottaway: I can clarify what was said by the chief executive of Micromuse. He said that companies in the United States with ISO stock options attracted a 26 per cent. tax rate.
      The Minister must recognise that there is a difference between the ways of approving schemes here and in the United States. Here, the Government decide whether a scheme can be approved; in the United States, the company decides. The schemes that we are discussing would attract a 20 per cent. rate in the United States.
      Mr. Timms: Schemes approved in the United Kingdom will benefit from the lower rate of capital gains tax—10 per cent. after four years. That is significantly lower than the rate in the US.
      The rules for approval of schemes in the US are well defined. They specify a limit of $100,000 worth of options that can be provided for under an approved scheme. The ISOs that the hon. Gentleman mentioned are not popular with many US companies, because they do not carry a company tax deduction. The figure in the UK is £30,000 over three years. As I said in Committee—the hon. Member for Kingston and Surbiton mentioned this—that is indeed less generous than the US limit, but it was the previous Government who reduced the UK limit from £100,000 to £30,000 in order to solve some of their "fat cat" problems. I do not think that we should take lessons from the Conservative party on that.
      Mr. Flight: I think that the Minister is unintentionally slightly misleading the House in comparing United States and United Kingdom schemes and applying the word "unapproved" to both types of scheme, because the two are not entirely similar. As he rightly said, the United Kingdom-approved scheme has a £30,000 limit and, therefore, can be used only modestly. Many United States businesses use the ISO scheme. The meaning of "approved" and "unapproved" in United States schemes is different from that in United Kingdom schemes.
      As the Minister will discover, the bottom line is that the great majority of options issued to management in the United States end up being taxed at 26 per cent., not 46 per cent. In the United Kingdom, the great majority of options will now be taxed at 47.3 per cent., which is 20 per cent. higher than the rate applicable on most options in the United States.
      Mr. Timms: The principles are not that dissimilar between the United States and the United Kingdom. Approved schemes in the United States have to comply with USA tax law and USA regulations, just as United Kingdom schemes have to comply with our tax law and regulations. Many of the most successful dot.com start-up companies in the USA use not ISOs, but unapproved arrangements that have various advantages. That is how—depending on the state tax rate—the overall rate of 46 per cent. is arrived at. If the hon. Gentleman is suggesting that the arrangements being provided for in the Bill are significantly less competitive than those applying to many fast-growing United States firms, he is wrong.
      412
      We are proposing a package that is already helping to attract business and jobs to the United Kingdom and to help United Kingdom firms compete in the global market. It recognises the importance of share options for employers and employees, particularly in the new economy. It removes barriers to their use in recruiting and retaining employees, and it meets our aims of a fairer tax and national insurance system by ensuring that tax relief is given for the national insurance contributions on share options to whoever bears that cost.
      Although I do not want to make too much of it, amendment No. 131 is deficient in various ways. Even if the defects could be resolved, the changes suggested in the amendment would considerably distort the use of share options compared with other forms of remuneration—such as cash bonuses—which would remain fully subject to national insurance, and they would provide an unwelcome opportunity for the re-emergence of widespread national insurance avoidance. It is estimated that, all together, the proposed provision could cost at least £1 billion annually in lost revenue. Therefore, bearing in mind that substantial cost, I urge Opposition Members to think long and hard before pressing the amendment to a vote.
      Abolition of the upper earnings cap on employers' national insurance contributions was another step taken by the previous Government. That action led to companies seeking inventive ways of avoiding national insurance on big cash bonuses, particularly in the City. Share options were being used in that way. As I said in Committee, that is one of the reasons why the rules were changed for share options granted after 5 April 1999, to make national insurance payable on the gain made on the option when it was exercised. The change brought the tax and national insurance treatment into alignment and removed scope for such avoidance, which was an important and worthwhile step forward.
      The net effect of the proposed change would be to leave the employee paying combined income tax and secondary national insurance at the employee's marginal tax rate on the share option gain. However, although it would do that for higher-rate taxpayers, as it results in a total tax and national insurance contribution charge of 40 per cent, it would not have the same effect on basic-rate taxpayers—who would be left paying income tax at 27.49 per cent, not the 22 per cent. that would apply to their ordinary salary. Therefore, the amendment also discriminates against the low paid.
      5.45 pm
      The clause is simple and fair. Employing companies will get a corporation tax deduction from their profits if they pay the secondary national insurance contributions as part of the cost of employment and, if the liability is transferred to the employee or if the money is recovered from the employee, there will be no corporation tax deduction. Instead, the employee who bears the cost will get the benefit of an income tax relief for that cost on the same basis as a deduction for the amount paid in calculating the profit chargeable to tax. I urge the House to reject this costly amendment.
      Mr. Ottaway: If amendment No. 131 is extremely costly, and I do not believe that it is, the burden of taxation that the Government are taking out of Britain's

      413
      entrepreneurs' pockets is a darn sight more than we thought that it was. We will divide the House on the issue and the reasons for that are clear. The Government have to send a message to Britain's entrepreneurs. It is no good whacking on the taxes and just expecting those entrepreneurs to pay up, but at the same time hoping that more people will engage in entrepreneurial activity. All the research that the Government have shows that an entrepreneurial culture is lacking in this country. That comes as no surprise if the Government are intent on penalising Britain's entrepreneurs.
      The Financial Secretary says that he has resolved the technical problems, but that means—as I said—that the solution has gone from very bad to bad. That is not a resolution of the problems. He says that he has cut taxes on business. Why then does the CBI talk of an extra £5 billion stealth tax on business? Why does the Institute of Directors say that there is an extra £5 billion a year in regulatory burden? Those are real issues that are hitting Britain's industry today.
      The Financial Secretary said that he has now fostered a new spirit of entrepreneurial activity. If he has, it is despite these measures and not because of them. For those reasons, I urge the House to support our amendment.
      Question put, That the amendment be made:—
      The House divided: Ayes 164, Noes 315.

      Division No. 278]

      [5.47 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Donaldson, Jeffrey

      Allan, Richard

      Dorrell, Rt on Stephen

      Ancram, Rt Hon Michael

      Duncan Smith, Iain

      Arbuthnot, Rt Hon James

      Evans, Nigel

      Baker, Norman

      Ewing, Mrs Margaret

      Baldry, Tony

      Faber, David

      Ballard, Jackie

      Fabricant, Michael

      Beggs, Roy

      Fearn, Ronnie

      Beith, Rt Hon A J

      Flight, Howard

      Bell, Martin (Tatton)

      Forth Rt Hon Eric

      Bercow, John

      Foster, Don (Bath)

      Body, Sir Richard

      Fowler, Rt Hon Sir Norman

      Bottomley, Peter (Worthing W)

      Fox, Dr Liam

      Bottomley, Rt Hon Mrs Virginia

      Garnier, Edward

      Brand, Dr Peter

      George, Andrew (St Ives)

      Brazier, Julian

      Gibb, Nick

      Breed, Colin

      Gidley, Sandra

      Brooke, Rt Hon Peter

      Gill, Christopher

      Browning, Mrs Angela

      Gillan, Mrs Cheryl

      Bruce, Malcolm (Gordon)

      Gorman, Mrs Teresa

      Burnett, John

      Gorrie, Donald

      Burns, Simon

      Green, Damian

      Butterfill, John

      Greenway, John

      Cable, Dr Vincent

      Grieve, Dominic

      Campbell, Rt Hon Menzies (NE Fife)

      Hague, Rt Hon William

      Hamilton, Rt Hon Sir Archie

      Cash, William

      Hammond, Philip

      Chapman, Sir Sydney (Chipping Barnet)

      Hancock, Mike

      Harris, Dr Evan

      Chope, Christopher

      Harvey, Nick

      Clappison, James

      Hawkins, Nick

      Clarke, Rt Hon Kenneth (Rushcliffe)

      Heathcoat-Amory, Rt Hon David

      Hogg, Rt Hon Douglas

      Clifton-Brown, Geoffrey

      Horam, John

      Collins, Tim

      Howarth, Gerald (Aldershot)

      Cotter, Brian

      Hughes, Simon (Southwark N)

      Cran, James

      Jackson, Robert (Wantage)

      Davey, Edward (Kingston)

      Jenkin, Bernard

      Davies, Quentin (Grantham)

      Johnson Smith,

      Davis, Rt Hon David (Haltemprice)

      Rt Hon Sir Geoffrey

      Day, Stephen

      Keetch, Paul

      414

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

      Ross, William (E Lond'y)

      Rowe, Andrew (Faversham)

      Key, Robert

      Russell, Bob (Colchester)

      King, Rt Hon Tom (Bridgwater)

      St Aubyn, Nick

      Kirkwood, Archy

      Salmond, Alex

      Lait, Mrs Jacqui

      Sanders, Adrian

      Lansley, Andrew

      Sayeed, Jonathan

      Leigh, Edward

      Shepherd, Richard

      Letwin, Oliver

      Simpson, Keith (Mid-Norfolk)

      Lewis, Dr Julian (New Forest E)

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

      Lidington, David

      Spring, Richard

      Lilley, Rt Hon Peter

      Stanley, Rt Hon Sir John

      Livsey, Richard

      Steen, Anthony

      LIoyd, Rt Hon Sir Peter (Fareham)

      Streeter, Gary

      Loughton, Tim

      Swayne, Desmond

      Luff, Peter

      Syms, Robert

      MacGregor, Rt Hon John

      Tapsell, Sir Peter

      McIntosh, Miss Anne

      Taylor, Ian (Esher & Walton)

      MacKay, Rt Hon Andrew

      Taylor, John M (Solihull)

      Maclean, Rt Hon David

      Taylor, Matthew (Truro)

      Maclennan, Rt Hon Robert

      Taylor, Sir Teddy

      McLoughlin, Patrick

      Thomas, Simon (Ceredigion)

      Madel, Sir David

      Tonge, Dr Jenny

      Malins, Humfrey

      Townend, John

      Maples, John

      Trend, Michael

      Maude, Rt Hon Francis

      Trimble, Rt Hon David

      Mawhinney, Rt Hon Sir Brian

      Tyler, Paul

      May Mrs Theresa

      Tyrie, Andrew

      Michie, Mrs Ray (Argyll & Bute)

      Viggers, Peter

      Moore, Michael

      Waterson, Nigel

      Morgan, Alasdair (Galloway)

      Webb, Steve

      Moss, Malcolm

      Welsh, Andrew

      Norman, Archie

      Whitney, Sir Raymond

      Oaten, Mark

      Whittingdale, John

      O'Brien, Stephen (Eddisbury)

      Wilkinson, John

      Öpik, Lembit

      Willetts, David

      Ottaway, Richard

      Wilshire, David

      Paice, James

      Winterton, Mrs Ann (Congleton)

      Portillo, Rt Hon Michael

      Winterton, Nicholas (Macclesfield)

      Prior, David

      Yeo, Tim

      Randall, John

      Young, Rt Hon Sir George

      Rendel, David

      Robathan, Andrew

      Tellers for the Ayes:

      Robertson, Laurence

      Mr. Peter Atkinson and

      Roe, Mrs Marion (Broxbourne)

      Mrs. Eleanor Laing.

      NOES

      Abbott, Ms Diane

      Brown, Russell (Dumfries)

      Adams, Mrs Irene (Paisley N)

      Browne, Desmond

      Ainger, Nick

      Buck, Ms Karen

      Ainsworth, Robert (Cov'try NE)

      Burgon, Colin

      Alexander, Douglas

      Butler, Mrs Christine

      Allen, Graham

      Byers, Rt Hon Stephen

      Anderson, Donald (Swansea E)

      Campbell, Mrs Anne (C'bridge)

      Anderson, Janet (Rossendale)

      Campbell, Ronnie (Blyth V)

      Armstrong, Rt Hon Ms Hilary

      Campbell-Savours, Dale

      Atkins, Charlotte

      Cann, Jamie

      Austin, John

      Caplin, Ivor

      Banks, Tony

      Casale, Roger

      Barnes, Harry

      Caton, Martin

      Barron, Kevin

      Cawsey, Ian

      Bayley, Hugh

      Chapman, Ben (Wirral S)

      Beckett, Rt Hon Mrs Margaret

      Chaytor, David

      Begg, Miss Anne

      Chisholm, Malcolm

      Bell, Stuart (Middlesbrough)

      Clapham, Michael

      Benn, Hilary (Leeds C)

      Clark, Rt Hon Dr David (S Shields)

      Benn, Rt Hon Tony (Chesterfield)

      Clark, Paul (Gillingham)

      Benton, Joe

      Clarke, Charles (Norwich S)

      Berry, Roger

      Clarke, Eric (Midlothian)

      Best, Harold

      Clarke, Rt Hon Tom (Coatbridge)

      Blears, Ms Hazel

      Clelland, David

      Blizzard, Bob

      Clwyd, Ann

      Bradley, Keith (Withington)

      Coaker, Vernon

      Bradshaw, Ben

      Coffey, Ms Ann

      Brinton, Mrs Helen

      Cohen, Harry

      415

      Coleman, Iain

      Howarth, Alan (Newport E)

      Colman, Tony

      Howarth, George (Knowsley N)

      Connarty, Michael

      Howells, Dr Kim

      Cooper, Yvette

      Hoyle, Lindsay

      Corston, Jean

      Hughes, Ms Beverley (Stretford)

      Cox, Tom

      Hughes, Kevin (Doncaster N)

      Cranston, Ross

      Humble, Mrs Joan

      Crausby, David

      Hurst, Alan

      Cryer, Mrs Ann (Keighley)

      Hutton, John

      Cryer, John (Hornchurch)

      Iddon, Dr Brian

      Cummings, John

      Illsley, Eric

      Cunningham, Rt Hon Dr Jack (Copeland)

      Jackson, Ms Glenda (Hampstead)

      Jackson, Helen (Hillsborough)

      Cunningham, Jim (Cov'try S)

      Jamieson, David

      Curtis-Thomas, Mrs Claire

      Jenkins, Brian

      Darling, Rt Hon Alistair

      Johnson, Miss Melanie (Welwyn Hatfield)

      Darvill, Keith

      Davey, Valerie (Bristol W)

      Jones, Rt Hon Barry (Alyn)

      Davies, Rt Hon Denzil (Llanelli)

      Jones, Helen (Warrington N)

      Davies, Geraint (Croydon C)

      Jones, Ms Jenny (Wolverh'ton SW)

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

      Jones, Jon Owen (Cardiff C)

      Dawson, Hilton

      Jones, Dr Lynne (Selly Oak)

      Dean, Mrs Janet

      Jones, Martyn (Clwyd S)

      Denham, John

      Jowell, Rt Hon Ms Tessa

      Dismore, Andrew

      Keeble, Ms Sally

      Dobbin, Jim

      Keen, Alan (Feltham & Heston)

      Dobson, Rt Hon Frank

      Keen, Ann (Brentford & Isleworth)

      Doran, Frank

      Kemp, Fraser

      Dowd, Jim

      Kennedy, Jane (Wavertree)

      Dunwoody, Mrs Gwyneth

      Khabra, Piara S

      Eagle, Angela (Wallasey)

      Kilfoyle, Peter

      Eagle, Maria (L'pool Garston)

      King, Andy (Rugby & Kenilworth)

      Edwards, Huw

      Ladyman, Dr Stephen

      Efford, Clive

      Lammy, David

      Ellman, Mrs Louise

      Lawrence, Mrs Jackie

      Ennis, Jeff

      Laxton, Bob

      Field, Rt Hon Frank

      Lepper, David

      Fisher, Mark

      Leslie, Christopher

      Fitzsimons, Mrs Lorna

      Levitt, Tom

      Flint, Caroline

      Lewis, Ivan (Bury S)

      Flynn, Paul

      Lewis, Terry (Worsley)

      Follett, Barbara

      Liddell, Rt Hon Mrs Helen

      Foster, Michael Jabez (Hastings)

      Linton, Martin

      Foster, Michael J (Worcester)

      Lloyd, Tony (Manchester C)

      Fyfe, Maria

      Love, Andrew

      Galloway, George

      McAllion, John

      Gardiner, Barry

      McAvoy, Thomas

      George, Bruce (Walsall S)

      McCabe, Steve

      Gerrard, Neil

      McCartney, Rt Hon Ian (Makerfield)

      Gibson, Dr Ian

      Gilroy, Mrs Linda

      McDonagh, Siobhain

      Godsiff, Roger

      Macdonald, Calum

      Goggins, Paul

      McDonnell, John

      Golding, Mrs Llin

      McFall, John

      Griffiths, Jane (Reading E)

      McGuire, Mrs Anne

      Griffiths, Nigel (Edinburgh S)

      McIsaac, Shona

      Griffiths, Win (Bridgend)

      McKenna, Mrs Rosemary

      Grocott, Bruce

      Mackinlay, Andrew

      Grogan, John

      McNamara, Kevin

      Gunnell, John

      McNulty, Tony

      Hamilton, Fabian (Leeds NE)

      MacShane, Denis

      Hanson, David

      Mactaggart, Fiona

      Healey, John

      McWalter, Tony

      Henderson, Doug (Newcastle N)

      McWilliam, John

      Henderson, Ivan (Harwich)

      Mahon, Mrs Alice

      Hepburn, Stephen

      Marsden, Gordon (Blackpool S)

      Heppell, John

      Marshall, David (Shettleston)

      Hesford, Stephen

      Marshall, Jim (Leicester S)

      Hewitt, Ms Patricia

      Marshall-Andrews, Robert

      Hinchliffe, David

      Martlew, Eric

      Hodge, Ms Margaret

      Meale, Alan

      Home Robertson, John

      Merron, Gillian

      Hood, Jimmy

      Michael, Rt Hon Alun

      Hope, Phil

      Michie, Bill (Shef'ld Heeley)

      Hopkins, Kelvin

      Miller, Andrew

      416

      Mitchell, Austin

      Smith, Llew (Blaenau Gwent)

      Moffatt, Laura

      Snape, Peter

      Morgan, Ms Julie (Cardiff N)

      Soley, Clive

      Morley, Elliot

      Southworth, Ms Helen

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

      Spellar, John

      Squire, Ms Rachel

      Morris, Rt Hon Sir John (Aberavon)

      Starkey, Dr Phyllis

      Steinberg, Gerry

      Mountford, Kali

      Stevenson, George

      Mudie, George

      Stewart, David (Inverness E)

      Mullin, Chris

      Stewart, Ian (Eccles)

      Murphy, Jim (Eastwood)

      Stinchcombe, Paul

      Naysmith, Dr Doug

      Stoate, Dr Howard

      Norris, Dan

      Strang, Rt Hon Dr Gavin

      O'Brien, Bill (Normanton)

      Straw, Rt Hon Jack

      O'Hara, Eddie

      Stringer, Graham

      Olner, Bill

      Stuart, Ms Gisela

      Organ, Mrs Diana

      Sutcliffe, Gerry

      Osborne, Ms Sandra

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Pearson, Ian

      Pendry, Tom

      Taylor, Ms Dari (Stockton S)

      Pickthall, Colin

      Taylor, David (NW Leics)

      Pollard, Kerry

      Temple-Morris, Peter

      Pond, Chris

      Thomas, Gareth R (Harrow W)

      Pope, Greg

      Timms, Stephen

      Pound, Stephen

      Tipping, Paddy

      Powell, Sir Raymond

      Todd, Mark

      Prentice, Ms Bridget (Lewisham E)

      Touhig, Don.

      Prentice, Gordon (Pendle)

      Trickett, Jon

      Prescott, Rt Hon John

      Truswell, Paul

      Primarolo, Dawn

      Turner, Dennis (Wolverh'ton SE)

      Prosser, Gwyn

      Turner, Dr George (NW Norfolk)

      Purchase, Ken

      Turner, Neil (Wigan)

      Quin, Rt Hon Ms Joyce

      Twigg, Derek (Halton)

      Quinn, Lawrie

      Tynan, Bill

      Radice, Rt Hon Giles

      Vis, Dr Rudi

      Rammell, Bill

      Walley, Ms Joan

      Ward, Ms Claire

      Rapson, Syd Reed, Andrew (Loughborough)

      Wareing, Robert N Watts, David

      Rogers, Allan

      White, Brian

      Rooker, Rt Hon Jeff

      Whitehead, Dr Alan

      Rooney, Terry

      Wicks, Malcolm

      Ross, Ernie (Dundee W)

      Williams, Rt Hon Alan (Swansea W)

      Ruane, Chris

      Ruddock, Joan

      Williams, Alan W (E Carmarthen)

      Russell, Ms Christine (Chester)

      Williams, Mrs Betty (Conwy)

      Ryan, Ms Joan

      Wilson, Brian

      Salter, Martin

      Winnick, David

      Sarwar, Mohammad

      Winterton, Ms Rosie (Doncaster C)

      Savidge, Malcolm

      Woodward, Shaun

      Sedgemore, Brian

      Woolas, Phil

      Sheerman, Barry

      Worthington, Tony

      Shipley, Ms Debra

      Wray, James

      Simpson, Alan (Nottingham S)

      Wright, Anthony D (Gt Yarmouth)

      Skinner, Dennis

      Wright, Tony (Cannock)

      Smith, Angela (Basildon)

      Wyatt, Derek

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Tellers for the Noes:

      Smith, Jacqui (Redditch)

      Mr. Mike Hall and

      Smith, John (Glamorgan)

      Mr. Clive Betts.

      Question accordingly negatives.

    Clause 58

      EDUCATION AND TRAINING
      Amendments made: No. 1, in page 42, line 14, leave out "an account-holding" and insert "a fundable".
      No. 2, in page 42, line 44, leave out "97" and insert "108" to "109".
      No. 3, in page 42, line 46, leave out from beginning to end of line 2 on page 43 and insert—
      '(b) regulations under section 1 of the Education and Training (Scotland) Act 2000.'.
      No. 4, in page 43, line 3, leave out "an account-holding" and insert "a fundable".
      No. 5, in page 43, line 7, leave out "96" and insert "104".
      No. 6, in page 43, line 8, at end insert—
      'or he is a party to qualifying arrangements.
      (6) In subsection (5) above "qualifying arrangements" means arrangements which qualify under—

      (a) section 105 or 106 of the Learning and Skills Act 2000, or

      (b) section 2 of the Education and Training (Scotland) Act 2000.'.—[Mr. Timms.]

    Schedule 13

      OCCUPATIONAL AND PERSONAL PENSION SCHEMES
      Amendments made: No. 83, in page 293, line 28, after "section",insert—
      ', and the provisions of section 632B below,'.
      No. 84, in page 294, line 10, at end insert—
      'Eligibility to make contributions: concurrent membership
      632B.—(1) A member who would not, apart from this section, be eligible to make contributions during a year of assessment shall be eligible to make contributions at any time during that year if—

      (a) throughout the year he holds an office or employment to which section 645 applies;

      (b) the condition in any of subsections (6) to (9) of section 632A is satisfied in his case as respects the year;

      (c) he is not, and has not been, a controlling director of a company at any time in the year or in any of the five years of assessment preceding it;

      (d) for at least one of the five years of assessment preceding the year, the aggregate of his grossed-up remuneration from each office and each employment held on 5th April in that preceding year does not exceed the remuneration limit for the relevant year; and

      (e) the total relevant contributions made in the year do not exceed the earnings threshold for the year.

      (2) For the purposes of paragraphs (c) and (d) of subsection (1) above, no account shall be taken of any year of assessment earlier than the year 2000–1.
      (3) For the purposes of paragraph (c) of subsection (1) above, a person is a controlling director of a company at any time if at that time—

      (a) he is a director, as defined by section 612(1); and

      (b) he is within paragraph (b) of section 417(5) in relation to the company.

      (4) For the purposes of paragraph (d) of subsection (1) above—

      (a) "grossed up", in relation to a person's remuneration from an office or employment, means increased by being multiplied by a figure determined in accordance with an order made by the Treasury (or left unchanged, if that figure is unity);

      (b) "remuneration" shall be construed in accordance with an order made by the Treasury;

      (c) "the remuneration limit" for any year of assessment is £30,000;

      (d) "the relevant year" means the year of assessment first mentioned in subsection (1) above.
      418
      The Treasury may by order amend the definition of "the remuneration limit" in paragraph (c) above for any year of assessment by varying the amount there specified.

      (5) For the purposes of paragraph (e) of subsection (1) above and the following provisions of this section, "the total relevant contributions", in the case of a year of assessment, means the aggregate amount of the contributions made in the yea—

      (a) by the member in question, and

      (b) by any employer of his, under arrangements made by the member under the scheme in question, together with the aggregate amounts of such contributions under other approved personal pension arrangements made by that member.

      (6) if—

      (a) in the case of a member, the total relevant contributions in a year of assessment, apart from this subsection, exceed the earnings threshold for the year, and

      (b) but for that, the member would be eligible to make contributions by virtue of subsection (1) above at any time in that year,
      the repayment required by subsection (2) of section 632A is repayment of the relevant excess contributions only (so that the condition in subsection (1)(e) above becomes satisfied).

      (7) In subsection (6) above "the relevant excess contributions" mean—

      (a) to the extent that a contribution is the first which caused the total relevant contributions in the year to exceed the earnings threshold for the year, that contribution; and

      (b) all subsequent contributions in the year.

      (8) The Treasury may by order make provision requiring any person who claims to be eligible to make contributions by virtue of this section to provide to—

      (a) the Board,

      (b) an officer of the Board, or

      (c) the scheme administrator of the personal pension scheme concerned,
      such declarations, certificates or other evidence in support of the claim as may be specified or described, or determined in accordance with, the order.

      (9) A person shall only be eligible to make contributions by virtue of this section in a year of assessment if he complies with any requirements imposed by order under subsection (8) above.".'.
      No. 85, in page 310, line 24, at end insert—
      'except that, in a case falling within subsection (6) of section 632B of the Taxes Act 1988, the contributions required to be repaid shall be determined in accordance with that subsection (and their repayment shall have the like consequence).'.
      No. 86, in page 310, line 47, leave out "section 632A" and insert "sections 632A and 632B".—[Mr. Timms.]

    Schedule 14

      ENTERPRISE MANAGEMENT INCENTIVES
      Mr. Flight:I beg to move amendment No. 144, in page 313, line 34, at end add
      'Where an option does not qualify by reason of an error in the scheme pursuant to which it has been granted, but would otherwise have been capable of being a qualifying option pursuant to paragraphs 9 to 17 inclusive of this Schedule, then that error may be corrected and be deemed to have been always corrected from the date of grant of the option.'.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 143, in page 314, line 24, at end add—
      '(4) In the event of the requirements of this Schedule being found not to be met in relation to an option, whether upon enquiry by the Inland Revenue or following an appeal, there shall be no right of action in tort or contract either in favour of or against the relevant company or any employer company.'.
      Amendment No. 142, in page 316, line 2, leave out from beginning to end of line 3 and insert—
      'At any one time there may not be qualifying options in respect of shares in the relevant company over shares with a total value of more than £1,500,000. For the purposes of this paragraph shares shall be valued according to their market value at the time that the option granted over them is granted.'.
      Government amendment No. 61.
      Amendment No. 141, in page 328, line 21, at end insert—
      '(4) Where pursuant to any provision of this Schedule an individual becomes liable to income tax then notwithstanding any other provision of the Taxes Act 1988, the tax due shall be paid in five equal instalments as follow—

      (a) the first shall be due and payable when, but for the operation of this sub-paragraph and ignoring the operation of Chapter V of Part V of the Taxes Act 1988 (PAYE), that tax would otherwise have been due and payable ("the first payment date");

      (b) the second shall be due and payable on the first anniversary of the first payment date;

      (c) the third shall be due and payable on the second anniversary of the first payment date;

      (d) the fourth shall be due and payable on the third anniversary of the first payment date; and

      (e) the fifth shall be due and payable on the fourth anniversary of the first payment date.'.

      Government amendments Nos. 62 and 63.
      6 pm
      Mr. Flight: At first glance, the enterprise management incentives appear to be extremely generous and attractive schemes to encourage entrepreneurs and key leaders of business. Regrettably, however, as we pointed out in Committee, there are several problems, one of which is that a large number of business areas have been excluded, based on views founded in the past. A larger problem has been raised by several accounting and law firms specialising in the matter: that if the business in which people are granted EMI options succeeds—and therefore the options become worth something—it will almost certainly have disqualified itself by that stage; so, although individuals might enjoy EMI tax advantages for a year or two, they will quickly cease to do so.
      Our amendments relate to the issues thus raised, which reveal the proposal as being more spin than reality—perhaps I should call it underspin. What is the estimated tax cost of the scheme? That would provide a reasonable measure of the extent to which the Government expect it to be effective. According to Government calculations, are EMI schemes a major means of fiscal incentivisation, or am I right to fear that they are merely a case of nice presentation with limited practical application? Before addressing our amendments, I should say, in passing, that the Opposition support the Government amendments, which, as the House will agree, are practical measures.
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      Our amendments are further practical measures that relate to the themes that I have identified. The first issue is the self-certification system, to which amendment No. 144 relates. Business wanted self-certification, which is a good idea, but it might engender some unnecessarily wrong outcomes. Currently, both employee and employer have to take a chance that the option scheme might not qualify; they have to wait to see whether the Revenue agrees with the employer's view that it does qualify. Therefore, the amendment embodies a reasonable suggestion whereby the correction of technical errors should be allowed where it is clear that the company and its arrangements should have been capable of qualifying. There is a difference between a scheme that is clearly outside the key parameters and rules, and one that contains, say, a drafting error that has resulted in the Revenue not granting its approval. Past comparable arrangements provide precedents whereby the Revenue is permitted retrospectively to correct what are described as remediable errors, as opposed to major errors of principle.
      Amendment No. 143 relates to similar territory. Because it is not known at the time of grant whether a scheme will qualify, there is clear scope for legal action if an employee has been led to believe that it will qualify and then finds that it does not. The employer is asked to bear the risk, so we suggest that it should be permissible to give an indemnity against such actions, to avoid the process being impeded by legalese and caveats, which might discourage genuine cases of schemes that should have qualified.
      I am referring to our amendments in reverse numerical order, as they appear on the selection list, which means that amendment No. 142 is next. It represents our attempt to create somewhat greater flexibility within the basic parameters whereby no more than £1.5 million can be awarded under EMI options. The amendment would introduce the principle whereby, instead of there being an inflexible maximum of 15 employees, there should be an aggregate limit constituting the total sum of all qualifying options. As Ministers will note, our amendment is worded so that one person will be prevented from awarding himself the whole lot. The current provisions might produce unnecessary anomalies, given the contrasting nature of different businesses. If a company needed to recruit 16 key people and a perfectly adequate market allocation was £50,000, it could not do so under the present rules; similarly, if the key number of people required was seven, but in the very competitive, new economy area, where £100,000 as an allocation was on the low side, it would not be permitted. Our amendment would provide a little flexibility within a limit of £1.5 million and would cater for the different needs of businesses.
      Amendment No. 141 proposes arrangements that have been used quite successfully in this country in the past, which, in essence, stagger the payment of tax. It relates to the situation in which after an individual has enjoyed EMI terms for the first two years, the company grows and the individual ceases to enjoy the terms. When he or she exercises the options, there will be substantial income tax liability. The amendment would introduce the principle of instalment payments for the income tax that would fall due on the exercise of the EMI option, and it follows the provisions on payment of income tax on share options that prevailed before 6 April 1984, updated to reflect the introduction of self-assessment, which was not then in operation.

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      The amendment also removes the gain from the operation of pay-as-you-earn, providing for payment in five instalments. The first would be on the normal self-assessment date and the others on successive anniversaries of it. It is necessary to take account of the special nature of EMI companies. If the tax were collected via PAYE, the employer would have 30 days to raise it to avoid an additional tax charge under section 144A of the Taxes Act 1988, which states that if an employer receives benefits that are non-cash but PAYE-able, such is the gain made on the exercise of share options that a second tax charge on the amount of the PAYE due would be levied if the employee had not paid to his employer the amount of tax due within 30 days.
      In practice, the amendment will force the employee to sell shares to raise the PAYE. PAYE applies where shares are readily convertible assets, which the Revenue defines and interprets widely, and which catches any listed company, and even unlisted companies in which it is considered likely that the employee might be able to realise cash from the shares, such as businesses that are about to be sold or in which flotation is pending.
      Our proposal is designed to stop what would effectively be mandatory sales arising in situations in which a company has been successful and the EMI qualification has ceased. The Government will be advised by the professions that several problems arise in what is in principle an attractive scheme. Companies offering membership of a scheme to key staff will suffer uncertainty as to how long qualification will last, as to approval by the Revenue after the company's self-certification and as to the potential tax liability. Our amendments are designed to address those uncertainties and make the scheme more workable as regards its basic intent, which we support.
      Miss Melanie Johnson: I do not intend to speak to the Government amendments as they are technical, correcting unintended double negatives and so forth.
      The hon. Member for Arundel and South Downs (Mr. Flight) got a number of things quite wrong in his speech, and I hope to reassure him. He mentioned costs. The anticipated cost is given at page 154 of the Red Book—£45 million for a full year—and we anticipate that 2, 500 companies will take up the incentive in the first three years, which involves about 18,000 employees. That is the basis on which our figures were constructed.
      Amendment No. 144 demonstrates a misunderstanding of how enterprise management incentives work. An EMI option is granted as part of a share option scheme, but it is possible that a company may wish to grant EMI options to key employees under the rules of such a scheme. Nothing in the schedule requires that, however, and the schedule does not refer to a scheme as such. In addition to the reference to a scheme in the amendment, the hon. Gentleman spoke about schemes a few moments ago, but the schedule does not require the establishment of a share option scheme with rules to govern the granting and exercise of options.
      6.15 pm
      One requirement is that a company is carrying on a qualifying trade, but if it was not, it would not be possible to go back in time to suggest that it had been carrying on a qualifying trade at the date when the option was granted.
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      That being so, we would not want to deem the option as having been a qualifying option from the outset, if the company decided that not carrying on a qualifying trade was an error and changed its trade to correct it. That would set an extreme and unwelcome precedent, and I cannot think that Conservative Members would think that sensible or desirable.
      if, however, amendment No. 144 indicates concern that the company will be unfairly penalised if it has accidentally provided incorrect information when notifying the option to the Inland Revenue, I can allay that concern. The schedule already makes provision, at paragraph 3, for errors to be corrected in the notice to the Revenue. The provisions are equivalent to those provided under self-assessment for companies or individuals to correct any mistakes in their return.
      The schedule also makes provision for the grant of an option over shares with a market value exceeding the individual limit of £100,000. Paragraph 10 allows any excess to fall outside the EMI provisions without disqualifying the whole of the option. Any error in the option agreement itself would be a matter between the grantor of the option and the employee. If they agreed to change the terms of the option, and the change related to something not required by the schedule, that would not in itself be a reason to disqualify the option, unless the effect were to increase the value of the shares under option. Amendment No. 144, with its reference to correcting errors in a scheme, in fact addresses an issue not relevant to the schedule. For those reasons, it is unwelcome and unnecessary.
      Amendment No. 143 would have far-reaching consequences that the hon. Gentleman may not appreciate. It seeks to prohibit claims in tort or contract from being brought by or against any relevant company in the event that an option fails to meet the requirements of schedule 14. It is not clear why anyone would wish to protect companies against civil actions taken against them, or prevent them from bringing such actions, simply because the action was in connection with an option that failed to meet the criteria for EMI. I can see no reason why the employee—or employer—should lose his or her rights under civil law because he or she has become involved in the grant of an option intended to qualify under EMI.
      If, for example, a company had deliberately misrepresented an option to an employee as qualifying for EMI, that employee might well feel that he or she had a legitimate right to challenge the actions of the company in court. That could lead to an anomalous situation. An employer may grant two identical options to two employees—one notified to the Revenue under EMI and the other not. It might be that neither would meet the EMI conditions, but once it was discovered that the first option did not meet the EMI criteria, the employee would have no redress against his employer for any failure to meet his contractual obligations, or any negligence or deceit involved in granting the option. The other employee—with exactly the same right to acquire shares—would retain his rights under civil law. The amendment would give too many powers away as well as raising questions under the European convention on human rights.
      Amendment No. 142—it was dealt with as amendment No. 194 in Committee—would allow a company to grant options under the EMI provisions to as many employees as it wished, up to a limit of £1.5 million. The amendment goes against the whole aim of EMI, and against all the

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      recommendations made to us by business experts. As I have already explained in Committee, EMIs are a targeted measure for key employees—those who really make a difference to smaller, high-risk companies.
      In Committee, I provided details of the reports backing EMI which appear at column 515 of Committee proceedings on 6 June. I could list them again, but I did list them all then. A report by the Bank of England on financing technology-based firms, a report by the Confederation of British Industry on technology stars, and the Government's own study group, chaired by Sir Peter Williams, chairman of Oxford Instruments plc, all found that the main barrier to growth experienced by smaller high-risk start-up businesses was a lack of highly qualified and motivated key employees. Those studies recommended targeted tax relief to help solve that specific problem, not general relief for employees to pay less tax.
      EMI is the response to that and provides targeted tax relief. If companies want to, they can grant options to all their employees under not one, but two tax-advantaged share schemes: the company share option plan and the save-as-you-earn savings-related share scheme. A third such scheme is not necessary, as the matter is not about companies being to able to grant those options to all employees.
      Amendment No. 142 would produce another unsatisfactory result. EMIs are simple and quick to operate, and do not require an approvals process. They have been designed that way because smaller companies have told us they want an incentive that is simple to operate and flexible, so that it can be designed to suit the individual needs of a particular business situation. If EMIs could be extended to all employees, having a company limit of £1.5 million rather than a limit of £100,000 per individual would require much more administration or red tape. I am sorry that the hon. Member for Buckingham (Mr. Bercow) is no longer in his place, as he was complaining earlier about red tape. The amendment would increase the amount of red tape and would involve keeping track of all option grants and exercises to ensure that the limit was not breached and all the employees' tax relief lost as a result.
      The hon. Member for Arundel and South Downs asked about disqualification. He claimed that the options will almost certainly have disqualified themselves by the time that the company is successful. There is no disqualification if the company grows above the initial limit of £1.5 million of gross assets. The test applies only at the time that the options are being granted, so the issue foreseen by the hon. Gentleman does not arise. During our extensive consultation, everybody, including an advisory group of experts that helped the Inland Revenue to draw up the legislation, commented that smaller companies have only a limited number of key employees and welcomed the increases that we made to the number, initially from six to 10, and then from 10 to 15. There has also been a welcome for the great flexibility of this incentive.
      Amendment No. 141 addresses issues which, again, are based on a misunderstanding. For the most part, no one will pay any tax as the result of being granted EMI options. Under normal circumstances, people will not pay tax when they exercise the option, if they were granted the option at market value. EMI is a very flexible
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      instrument and allows companies to structure option agreements that could provide a gain to employees for reasons other than the intrinsic growth of the company. For example, companies can offer employees an option at a discount or at no cost at all, or can offer them an option that is immediately exercisable. Normally, there is no charge to tax under EMI on the exercise of a market value option. But when the option is granted at a discount, the normal taxing provisions apply to the part of the gain that relates to the discount. Only the discounted element will then be taxed. The charge arises under the normal charging provisions on share option gains, including section 135 of the Taxes Act 1988. EMI option holders are treated in exactly the same way as any other taxpayer in relation to the chargeable amount.
      EMI has been deliberately designed to target the relief on gains arising from genuine growth in the value of the company. That rewards the employee's contribution to making the company grow, rather than any gains that he may make because he has been granted options at a discount on the market price. If a discountable amount is taxed, we would defend that as being not part of the incentivisation, as it has been granted as part of the arrangement, as opposed to growth. In all other regards, under normal conditions, people are unlikely to pay tax. Therefore the proposal envisaged in the amendment is not necessary.
      I cannot see a case for providing for EMI option holders a special rule for paying tax over five years on taxable gains which do not fall within the schedule's targeted tax reliefs. In fact, we agree that the revived rules seem to fall in with the rules that the previous Conservative Administration looked at and which they acted against in the Finance Act 1984, when they restricted any payment in instalments to options granted before 6 April of that year. We agree with the previous Government's conclusions that the advantages available to companies under the approved schemes mean that there is no need for special rules for paying tax on other gains. Any taxable gains arising from EMI options are in exactly the same position as gains from other unapproved options, and should be taxed after allowing for EMI relief under the same rules.
      The problems envisaged by the hon. Member for Arundel and South Downs will not normally arise and, when they do, that does not present a difficulty, but an arrangement that fits in with other arrangements that we would defend. I hope that I have reassured the hon. Gentleman on a number of counts. On those counts on which I am not reassuring, but arguing that his proposals are unnecessary, unhelpful or complex, I ask him not to press his amendments.
      Mr. Flight: I thank the Minister for her full response to the matters that I have raised. I make the point upfront that the issues that I raised have been raised with me by Cisco, which is now called the Quoted Company Association, as well as several leading lawyers in the matter. For better or worse, they communicated to me that their key worry on EMI legislation as it stands is the lack of certainty. They will find what the Minister said helpful in addressing that worry.
      Without misdescribing the matter as a scheme, however, when an individual gets his EMI qualifying options, there is an issue arising from self-certification. It is possible that the company may have made a minor

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      mistake, which the Revenue will pick up when it looks at it a year later and say, "Terribly sorry, there is something wrong." Consequently, the individual will not qualify. There is clearly an issue of materiality versus non-materiality. The Minister may be able to give me further comfort, as it is not entirely clear whether a relatively minor issue can be put right retrospectively.
      Miss Johnson: I have already covered that point. As with self-assessment returns, there will be a period when the Inland Revenue or those on the other side can correct any matters. It is perfectly possible for genuine minor mistakes to be sorted out in that period.
      Mr. Flight: I thank the Minister for her clear and extremely helpful explanation. I agree that, if that is the case, the risk of EMI agreements getting cluttered with all sorts of legalese to protect businesses against the risk of being sued is probably not a major one. Therefore, amendment No. 143, which sought to address that risk in a rather heavy-handed fashion, is not necessary.
      As the Minister said, the tight rules about 16 people and a limit of £1.5 million were discussed in Committee. Our amendment certainly is not intended to undermine the scheme's objective. The simple point is that how many key executives one needs in a business varies enormously, depending on the nature of the business. If the business is very much a selling business, there will be more key people, especially in the flat structure of companies, who will be the makers of success in that business. If the business is a concentrated high-tech producer and the selling is subcontracted, there will be infinitely fewer key employees.
      The tariff of key people in different areas and different businesses varies considerably. As we said in Committee, we think that it is sensible to permit flexibility. We are glad that the Government have raised the number to 15, but in some areas there may be eight key people and the tariff may be £200,000, and in other areas there may be 20 key people and the tariff will be much less. I understand why the Government want to stick with the simplicity of the rule—that has its logic—but in consultation with companies, as opposed to venture capital professionals, they would find that there is unhappiness about this issue.
      6.30 pm
      I shall repeat our point about instalment payments to get it on the record. When an individual gets his grant of EMI options and the company qualifies, can he be sure that he will retain EMI tax status as long as he holds those options, even though the company may subsequently cease to qualify because of significant growth or for another reason? If the EMI status can change relatively easily beyond the date of grant, and the individual who has EMI options is not certain of retaining his EMI tax advantages, my basic concerns stand.
      Miss Johnson: I repeat my earlier point, which answered the hon. Gentleman's question. There is no disqualification if a company grows above the initial limit of £15 million of gross assets. The tax-exempt status applies only at the date on which the option is granted. Obviously, it has to apply at that point so that the options can be granted under the EMI incentive. Subsequent growth by the company will not invalidate the fact that the options were granted at that point.
      Mr. Flight: I thank the Minister for that reply. The key issue is growth and success, but one could think of other factors that could invalidate the status. On the other hand, there is a question of principle: if there is qualification at the time of grant, does that make the EMI status valid for so long as the individual holds the options? If so, we do not take issue with the proposal. I shall give an example: the Minister, later in her career, will get her EMI options, but she cannot know whether anything will happen to her business or the way in which it conducts itself that will render her options non-EMI, and that will affect her perspective of their value when she receives them.
      My understanding, and that of the lawyers to whom I have spoken, is that one's EMI tax status is not safe on all counts simply because the status applies at the time of grant. There are factors that could subsequently negate that status. The Minister kindly responded to my question about growth, but what about other issues?
      Miss Johnson: I understand that change would not normally alter that status, but I am happy to write to the hon. Gentleman to cover any other eventualities. I cannot, at the moment, foresee any, but there may be some. Under normal circumstances, the individual who receives the tax advantage will continue to receive it through the EMI incentive. In the case of a disqualifying event other than company growth, the employee has 40 days to exercise and keep the relief; otherwise, the answer is yes: the individual will continue to receive the tax advantage through the EMI incentive.
      Mr. Flight: We do not intend to press the amendment to a vote. There has been a useful airing of the issues. I look forward to further modest correspondence on the subject. It is clearly in the country's interests that the measures succeed in their objective. I merely say to the Minister that companies have expressed concerns to me and if the scheme is to work, they must be laid to rest. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendments made: No. 61, in page 321, line 8, leave out—
      'at some time in the qualification period relating to the relevant shares'.
      No. 62, in page 332, line 10, leave out "not".
      No. 63, in page 332, line 36, at end insert—
      'This is subject to sub-paragraph (3).
      (3) Paragraphs 44 to 46 and sub-paragraph (2) of this paragraph do not apply if the amount chargeable under section 135 of the Taxes Act 1988 on the exercise of the option would, in the absence of those provisions, be less than the amount so chargeable by virtue of those provisions.'.—[Miss Melanie Johnson.]

    Clause 66

      TAPER RELIEF: TAPER FOR BUSINESS ASSETS
      Mr. Flight: I beg to move amendment No. 136, in page 47, line 10, at end insert—
      '(2A) Following subsection (7) add—
      "(7A) Where any individual retires or dies or ceases employment due to ill health, injury or disability, and as a result an asset ceases

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      to be a business asset, then on a subsequent disposal of that asset taper relief shall be applied as if—

      (a) there had been a disposal of a non-business asset which had been acquired for a consideration equal to the market value of the asset at the time it ceased to be a business asset, and which had been acquired two years prior to that time; and

      (b) there had been a disposal of a business asset for a consideration equal to the market value of the asset on the date it ceased to be a business asset.".'.

      Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss the following: Government amendment No. 97.
      Amendment No. 137, in clause 67, page 49, line 10, leave out "2000" and insert "1998".
      Amendment No. 138, in page 49, line 12, leave out—
      'at a time before that date'
      and insert—
      'in respect of a disposal prior to 6th April 2000'.
      Mr. Flight: Government amendment No. 97 concerns the issue to which I referred when we were discussing Government amendment No. 57, but I could not find my notes on Government amendment No. 97. We support the amendment, which addresses what we described as the GKN point. Older, larger companies, in particular, have joint ventures and shareholdings below 51 per cent., which would have disqualified many from the taper relief. The amendment resolves that, and I am sure that the Government will have had discussions with those who raised the issue. We are pleased to support the amendment.
      The combination of taper relief, business asset definition and the need to find some method of apportionment will easily result in potential injustice. The unfortunate complications created by those three issues give rise to problems that may be insoluble, and we discussed them at length in Committee. We have considered many formulae, and we may settle on one formula, only to find that we create another injustice.
      Amendment No. 136 is designed to deal with one injustice and to produce a slightly fairer result than that produced by the Bill. It tackles the anomaly in the new business taper relief for employees. As soon as they cease to be employees, their assets, which are principally shares, will cease to be business assets and will receive the less favourable taper based on time apportionment. If the employee retires or resigns of his own free will, that is fair enough, but if he is wrongfully dismissed, he should be able to recover damages from the company. That would be fair, although he would have to go through the legal hassle of doing that. I am well aware that the principle on which the Government rest is that in either case the employee has departed and is not contributing to the business.
      There is, however, a middle set of no-fault departures, or what in business are now called "good leavers", and it would be unfair to cause those employees to be in a less favourable capital gains tax position because there is no voluntary departure or justifiable ground for divorcing them from the business. For those individuals, our amendment proposes an apportionment of gains on the basis of market value at the relevant time, with an acceleration of the non-business clock post-departure.
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      If that produces a worse position than time apportionment, we would accept that it is fair because it means that value has increased more significantly after their departure than when they were present, but they were not contributing to that value. We accept that the negative aspect of the amendment is that it adds further complications, but the rough justice of the present arrangements is the worse of the two options.
      Our amendments Nos. 137 and 138 address the larger problem. As the House is aware, there are new rules relating to assets acquired in the period between April 1998—when the taper started—and April 2000 when, under the present Finance Act, there was a change to business assets. As the new definition of business assets applies only from 6 April 2000, assets acquired prior to that date, and thus held longer than assets held after that date, are eligible for lower taper relief, if they did not qualify as business assets under the old rules.
      We discussed that matter at some length in Committee. As the whole period of ownership is considered for the 10 years prior to disposal, and then divided into periods of business and non-business asset holding, each portion is taxed on different tapers. That seems to be contrary to the Chancellor's policy of encouraging long-term asset holding. As we illustrated in Committee, it produces extremely unfair anomalies in tax bills and would favour people who had acquired their business assets later.
      We concluded that the only solution was to backdate the new rules to April 1998 when the taper started, but that confining them to disposals after April 2000—the intention of the measure—would achieve a fairer result. The Government's main opposition to that proposal was its cost. However, I am not sure whether the figures that Ministers quoted would have been confined—as we propose—to disposals made after 2000. I cannot help but comment that, given the splurge announced yesterday, the amount referred to by the Government as the cost was not hugely significant. Our proposal would sort out the extremely unfair and anomalous situations that could arise.
      Mr. Burnett: As the hon. Member for Arundel and South Downs (Mr. Flight) has pointed out, we probed this matter extensively in Committee. However, it is worth revisiting.
      I speak to amendments Nos. 137 and 138, because they are designed to correct a glaring anomaly that directly contradicts both the Government's principles and the philosophy that underlies their capital gains tax changes—that an individual should be rewarded according to the length of time that he has held an asset. The longer he holds the asset, the less tax he pays.
      A simple example of the mischief to which the Bill would give rise is that if an individual, a Mr. Smith, had acquired shares before 6 April this year—now converted by the Bill into business assets, and we welcome that—he would have to wait until about 2010 to receive full CGT relief. However, if a Mrs. Brown acquires the same class of shares in the same company, she will receive full relief in 2004. The continuance of that anomaly is preposterous.
      In Committee, I suggested that the problem could be remedied by a simple election by the taxpayer, who could then be deemed to have sold and reacquired the value for no gain, no loss as at 6 April 2000, thus allowing that

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      individual, on those shares converted into business assets, to have the time running from 6 April this year. That would have given that taxpayer no advantage whatever.
      I am sure that the Economic Secretary understands that the intention is not to advantage the person who acquired his asset before 6 April 2000, but to put that person in exactly the same shoes as a person who acquired an asset after 6 April 2000. I do not have exact costs for the amendment, but I do not think that they would be significant. Does the hon. Lady have any information about the costs of those proposals to the Treasury?
      The Economic Secretary was good enough to give the matter a fair airing in Committee. I hope that she will have had a chance to think again, and that she can avoid that dramatic anomaly and put all such shareholders in the same position, at little or no cost to the Treasury.
      6.45 pm
      Mr. Edward Davey: Notwithstanding the comments of my hon. Friend the Member for Torridge and West Devon (Mr. Burnett), I thank the Government for tabling amendment No. 97—especially on behalf of my right hon. Friend the Member for Yeovil (Paddy Ashdown).
      We raised the matter in Committee—as did Conservative Members. It hits GKN and Westland especially because of the nature of the defence industry and the need for companies to enter joint ventures. I understand that the Government—through their officials—have held detailed discussions with GKN and Westland that, partly, resulted in the amendment. We are grateful to the Government for listening on that point.
      Will the Minister confirm that it is the Government's understanding that, in such joint ventures, employees of GKN and of Westland will benefit from taper relief under the amendment? Clearly, that is the Government's intention; that is why they have worked so hard on the provisions. It would be helpful—especially if a Pepper v. Hart challenge were mounted—for the Government to make it clear that it is their intention that employees of GKN and Westland, and similar companies involved in joint ventures, should benefit from taper relief. I am advised that amendment No. 97 would provide for that, but—adopting a belt and braces approach—will the Economic Secretary confirm the point?
      Mr. Geraint Davies: I speak briefly on amendments Nos. 136 and 137. There seems to be no indication of the cost impacts of the provisions. Furthermore, they might offer a slightly perverse tax incentive for premature retirement.
      Mr. Burnett: That would not be the case. The provisions would operate on a straight line basis. The period during which a person has held an asset is the period for which he receives relief. If the asset was held for four years, full relief would be obtained if the person had acquired it after 6 April and it was a business asset.
      Mr. Davies: I am not completely convinced by that point.
      Under amendment No. 137, it would not be very beneficial to backdate the more generous taper for business assets, if the idea behind such a taper is that it would produce a positive effect on behaviour. By retrospectively backdating it, the asset holder would
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      receive a windfall profit without any special benefit in respect of behaviour—because the event would already have taken place. There would thus be a windfall tax loss with no investment benefit.
      Mr. Flight: Whether there was a windfall would obviously depend on what happened to the asset. The problem lies in another direction. Let us consider the case of two individuals who work for a company in which they hold shares: one is a loyal employee who first acquired his shares two years ago and the other has only just joined and obtained his shares. During the next eight years, the performance of the shares will be the same, but under the apportionment rules, the longer-serving employee, who bought his shares first, will end up paying more tax than the person who held them for a lesser period.
      If the hon. Gentleman reads the debate we held in Committee, where that point was illustrated, he will appreciate the problem. We considered how to address it, and the only way is to backdate business asset relief to April 1998, when the taper started. We can argue whether there may be a windfall gain, but we must work from the point when taper relief started.
      Mr. Davies: I accept that there is an issue about fairness in the way in which the provision applies. The difficulty arises once one starts going into retrospective benefits. As we cannot change previous behaviour, there is no benefit in terms of future investment and its duration and depth. It simply means a tax loss. Again, I do not know whether any costings have been done.
      Mr. Burnett: In relation to amendments Nos. 137 and 138, if an individual acquired a class of shares in one company before 6 April this year and subsequently acquired shares in the same company of the same class, the recently acquired shares would get full relief in four years, whereas the previously acquired shares would get full relief in 2010. Does the hon. Gentleman not agree that that is glaring anomaly and that it should be corrected?
      Mr. Davies: No, I do not agree. Over time, the tax system will change, and different tax regimes may apply. I do not think that the hon. Gentleman makes a compelling argument for the proposals. What is more, as soon as one opens the Pandora's box of retrospective taxation as a precedent, difficulties will arise. It would mean that if a portfolio of assets had been sold under a previous regime, the people affected would immediately want a tax reassessment. That would be a tax man or woman's nightmare and an accountant's dream.
      I do not think that the benefits proposed are compelling. The costs have not been thought out and the administrative overheads would be ridiculous. I urge right hon. and hon. Members to resist the amendment.
      Miss Melanie Johnson: I thank Conservative Members for their welcome for the change outlined in amendment No. 97. We said that we would bring forward such a measure when we discussed the matter in Committee. Officials have consulted GKN and the Chartered Institute of Taxation in drafting the amendment, and have consulted more widely among other companies.
      My understanding is that everyone is content with the amendment. It would be rash for me to say definitely that GKN employees will benefit, but the company is well

      431
      aware of the amendment. There has been much communication, both formal and informal. I wrote some days ago to various notable members of the Standing Committee—including, I think, the hon. Member for Kingston and Surbiton (Mr. Davey)—and to right hon. and hon. Members with a local interest who had raised the matter with me. We believe that GKN is content with the amendment. That is as far as I can go in giving the hon. Member for Arundel and South Downs (Mr. Flight) an assurance, but I am sure that he will find it as satisfactory as is possible at this stage.
      Of the three Opposition amendments, amendment No. 136 stands on its own, while amendments Nos. 137 and 138 stand together. Amendment No. 136 is unnecessary and unfair, because it would add unwelcome cost and complexity. It would make some people worse off, and is technically defective. I think that the hon. Member for Arundel and South Downs accepted that it would make some people worse off.
      With regard to the amendment being unnecessary, where the employee's shares are in an unlisted trading company, or in a listed company in which the employee owns at least 5 per cent. of the voting rights, the assets will continue to be business assets after retirement. Where the assets change their status, as long as the retired employee disposes of them within 10 years of retirement, he or she will obtain some credit for the period for which those assets were business assets under the normal apportionment rules. So the amendment addresses only a small sub-set of cases.
      The amendment would add complexity. If it was accepted, there would be two different systems of apportionment. They might apply to the same asset. Right hon. and hon. Members have indicated that one system of apportionment is already too complex. I cannot accept that, but I am nervous about expecting taxpayers to apply two different systems. Adding a bonus two years to the period in which the asset has been a non-business asset seems to be wrong in principle and to add further complexity. The bonus year added in 1998 for assets held at 17 March 1998 was added for quite different reasons.
      The amendment would increase taxpayers' resource costs. Taxpayers would need to value the asset at the time of retirement. For listed shares, that is a hassle rather than a cost, but the amendment could also apply to some unlisted shares and securities, and to assets other than shares. Valuations would be needed, and taxpayers would have to bear the cost.
      The amendment would make some people worse off. I quite understand that some would be made better off—broadly, those who keep their assets for a long time after retirement and those whose gains are unevenly distributed and arose predominantly when they were employed. However, there would be losers too—people whose gains arise mainly after retirement, people who acquire their shares shortly before they retire and people who sell their shares soon after they retire, for whatever reason.
      Let us consider an employee who acquires shares 11 months before retirement and disposes of them one month after retiring. Under the amendment, that employee would receive no taper relief at all. Under the normal rules, he would pay tax on only 88 per cent. of the gain.
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      Let us consider—I will exaggerate to make the point—an employee whose shares do not increase in value at all in the four years that he or she is an employee, and then double in value in the four years after retirement. It is possible. Under the normal rules, he or she would pay tax on 47.5 per cent. of the gain; under the amendment, he or she would pay tax on 80 per cent. of the gain.
      My point is not that the normal method of time apportionment always leads to winners. There are winners and losers under both systems of apportionment. However, it is fairer to have a single system that applies to all apportionment cases across the whole taper system.
      The amendment is technically defective. What if the asset later becomes a business asset again? Perhaps the employee returns to work for the company or a listed company becomes unlisted. It is not clear that the amendment would allow a further period of business assets status to accrue.
      The amendment does not define its terms. What are "ill health", "injury" and "disability", and who will decide? Is the amendment meant to cover all retirement or just retirement due to ill health, injury of disability?
      The interaction of the amendment with the normal market value uplift on someone's death is less than clear. No capital gains tax is payable on that uplift at death. The personal representatives of the deceased pay tax only on gains after the death. Under the amendment, however, they might have to pay tax on gains pre-death as well.
      The amendment is similar to one put forward in Committee. It is a better and more worthwhile version, but I still give it only seven out of 10 and do not feel moved to support it.
      The purpose of amendments Nos. 137 and 138 is backdating, so that the period between 6 April 1998 and 5 April 2000 is counted as a period of business use. That would produce no increase in productivity or benefit to the economy, as my hon. Friend the Member for Croydon, Central (Mr. Davies) remarked a few moments ago. It would be expensive, which I shall come on to shortly. I will therefore ask the House to reject the amendments if they are pressed.
      In clause 67 we are providing a real and positive encouragement to entrepreneurial investment and greater employee share ownership in the future. The amendments seek to reward past activity, where there is no scope for incentivisation.
      7 pm
      It has been suggested that there is something unfair about apportioning gains between the part that is attributable to a time when the conditions for the business asset treatment are satisfied and the part that is not. However, it is perfectly fair and reasonable that an asset that has not been a business asset throughout the relevant period of ownership should be treated less generously than one that has. That is the whole point of the more generous business asset taper. To compare the case of a person who acquired the asset when it was not a business asset, but was later converted to one, with a person who has held the asset throughout as a business asset is to compare apples and pears. We discussed that in Committee at considerable length.
      Mr. Burnett: Does the Economic Secretary agree that the Government amendments that convert non-business

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      assets to business assets are thoroughly worth while and that, if that is so, they would have been worth while two or three years ago?
      Miss Johnson: Of course I agree that those changes are worth while, but we cannot incentivise past activities by backdating the measure. That is the crux of the matter, and it is the reason why hon. Members are comparing apples and pears. The apportionment is right in principle because it treats both cases alike by enabling them to receive business asset taper for the time they held the shares as a qualifying business asset. Therefore, I do not agree that the clause is in any way unfair. It is perfectly fair to give business asset taper relief to those who qualify for such relief for the time that they so qualify and not for times that they do not. That is a benefit to all those who hold, and continue to hold, business assets.
      It has been argued that the amendment would simplify assessments by ending the need for apportionment. That is true up to a point, but apportionment would still be necessary if assets changed their status for another reason. The complexity of apportionment has been much exaggerated. The Inland Revenue will set out clearly the series of simple steps that taxpayers should follow.
      Moreover, such a backdating amendment would be very expensive. There would be a cost of more than £300 million in the next three years. That cost would be all deadweight; it would not act as an incentive and would have no impact on future behaviour. The amendments would direct money away from the new enterprise economy, rather than provide further incentives for growth. Therefore, if the amendment is not withdrawn, I shall urge hon. Members to vote against it.
      Mr. Flight: It is not our intention to press the amendment to a Division. The Economic Secretary is aware of the fact that the arrangements contain unfair anomalies and that citizens who are treated unfairly will not be happy. The problem is extremely complicated and the alternative solutions would create other difficulties. We have given the issue an airing, and the Government would be well advised to consider it further, but I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 67

      TAPER RELIEF: ASSETS QUALIFYING AS BUSINESS ASSETS
      Amendment made: No. 97, in page 49, line 8, at end insert—
      '( ) After paragraph 22 insert—
      "Qualifying shareholdings in joint venture companies
      23.—(1) This Schedule has effect subject to the following provisions where a company ('the investing company') has a qualifying shareholding in a joint venture company.
      (2) For the purposes of this paragraph a company is a 'joint venture company' if, and only if—

      (a) it is a trading company or the holding company of a trading group, and

      (b) 75% or more of its ordinary share capital (in aggregate) is held by not more than five companies.

      For the purposes of paragraph (b) above the shareholdings of members of a group of companies shall be treated as held by a single company.
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      (3) For the purposes of this paragraph a company has a 'qualifying shareholding' in a joint venture company if—

      (a) it holds more than 30% of the ordinary share capital of the joint venture company, or

      (b) it is a member of a group of companies, it holds ordinary share capital of the joint venture company and the members of the group between them hold more than 30% of that share capital.

      (4) For the purpose of determining whether the investing company is a trading company—

      (a) any holding by it of shares in the joint venture company shall be disregarded, and

      (b) it shall be treated as carrying on an appropriate proportion—

      (i) of the activities of the joint venture company, or

      (ii) where the joint venture company is the holding company of a trading group, of the activities of that group.

      This sub-paragraph does not apply if the investing company is a holding company.
      (5) For the purpose of determining whether the investing company is a holding company—

      (a) any holding by it of shares in the joint venture company shall be disregarded, and

      (b) it shall be treated as carrying on an appropriate proportion of the activities—

      (i) of the joint venture company, or

      (ii) where the joint venture company is the holding company is the holding company of a trading group, of that group.

      This sub—paragraph does not apply if the joint venture company is a 51 per cent subsidiary of the investing company.
      (6) For the purpose of determining whether a group of companies is a trading group—

      (a) every holding of shares in the joint venture company by a member of the group having a qualifying shareholding in that company shall be disregarded, and

      (b) each member of the group having such a qualifying shareholding shall be treated as carrying on an appropriate proportion of the activities—

      (i) of the joint venture company, or

      (ii) where the joint venture company is the holding company of a trading group, of that group.

      This sub-paragraph does not apply if the joint venture company is a member of the group.
      (7) In sub-paragraphs (4)(b), (5)(b) and (6)(b) above 'an appropriate proportion' means a proportion corresponding to the percentage of the ordinary share capital of the joint venture company held by the investing company or, as the case may be, by the group member concerned.
      (8) The following shall be treated as having a relevant connection with each other—

      (a) the investing company;

      (b) the joint venture company;

      (c) any company having a relevant connection with the investing company;

      (d) any company having a relevant connection with the joint venture company by virtue of being—

      (i) a 51 per cent subsidiary of that company, or

      (ii) a member of the same commercial association of companies.

      (9) The acquisition by the investing company of the qualifying shareholding shall not be treated as a relevant change of activity for the purposes of paragraph 11 above.
      (10) For the purposes of this paragraph 'ordinary share capital' has the meaning given by section 832(1) of the Taxes Act.".'.— [Miss Melanie Johnson.]

    Schedule 22

      TONNAGE TAX
      Amendment made: No. 99, in page 432, line 32, at end insert—
      '; and
      (f) the profits of the overseas company out of which the distribution is paid are subject to a tax on profits (in the country of residence of the company or elsewhere, or partly in that country and partly elsewhere).'.—[Dawn Primarolo.]

    Clause 92

      TRANSFERS OF VALUE BY TRUSTEES LINKED WITH TRUSTEE BORROWING
      Mr. Flight: I beg to move amendment No. 147, in page 66, line 21, leave out "that are" and insert—
      'who are not trustees of a settlement for the benefit of the persons named in paragraphs (a) and (b) of section 86 of the Inheritance Tax Act 1984 but who are'.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 148, in clause 93, page 67, line 26, after "(a)", insert—
      '"settlement" means any settlement other than for the benefit of the persons named in paragraphs (a) and (b) of section 86 of the Inheritance Tax Act 1984 and'.
      No. 149, in clause 94, page 67, line 45, after "13", insert—
      'and "settlement"means any settlement not being for the benefit of the persons named in paragraphs (a) and (b) of section 86 of the Inheritance Tax Act 1984.'.
      No. 150, in page 68, line 34, leave out "that" and insert—
      'which is not engaged in a trade or which does not have a 51 per cent. subsidiary (as that term is defined in section 838 of the Taxes Act 1988) which is engaged in a trade, and which'.
      No. 151, in page 68, line 34, at end insert—
      '(3) This section shall not apply if the trustees show in writing or otherwise to the satisfaction of the Board of Inland Revenue either

      (a) that the purpose of avoiding liability to capital gains tax was not the purpose or one of the purposes for which the trustees became a participator in the close company to which the chargeable gain accrued; or

      (b) that the acquisition and the disposal by the close company of the asset on which the chargeable gains accrued were bona fide commercial transactions and were not designed for the purpose of avoiding liability to capital gains tax.

      (4) The jurisdiction of the Special Commissioners on any appeal shall include jurisdiction to review any relevant decision taken by the Board in exercise of their functions under subsection (3) above.'.
      Mr. Flight: There was a fairly full discussion in Committee of the territory that these amendments cover. A matter of principle is ultimately involved: whether the Government's objective is fundamentally to prevent tax avoidance or to change a principle of British law. It is understood that the purpose of clauses 92 and 93 is to try to stop tax avoidance, but they are widely drafted and apply to all trusts, irrespective of their purpose and operation.
      436
      Employee trusts frequently take out a series of loans from employing companies within a group as part of their disposal of shares to employees. The loose wording of schedule 25 could be applied, more or less, to anything to which the Inland Revenue wanted it to apply. Under amendments Nos. 147 and 148, we suggest that employee trusts should be excluded from the scope of the measure, putting beyond doubt that wider employee share ownership should not be hindered inadvertently by such ambiguously worded legislation.
      The same point arises in relation to amendment No. 148. Employee trusts could make both gains and losses as they pass to employees shares that have been warehoused for a period. It is possible for them to receive shares from, for example, a retiring controlling director. They could be exposed to higher than necessary capital gains while engaged in perfectly legitimate activity, which the Government wish to encourage.
      Similarly, amendment No. 149 is drafted to exclude employee trusts. Why should employee trusts be penalised because they happen to be established for United Kingdom employees where the parent company is located overseas? The Government may say that that is highly unlikely, but business is increasingly global and an employee trust could hold 5 per cent. or more of a company—the minimum threshold to receive a tax bill under clause 94. However, an employee trust would be unlikely to hold more than 5 per cent. of such a company as part of a tax avoidance scheme.
      Amendment No. 150 focuses on different territory. The Paymaster General has helpfully confirmed in correspondence that the provisions under clause 94 will apply only to investment gains; it is not intended to apply to gains on tangible assets used in a trade. That relates to section 13 of the Taxation of Chargeable Gains Act 1992, but the defences in that section are not sufficient. Therefore, why have only tangible assets been included? What about software? The principle set out in the Paymaster General's letter could be best safeguarded by making it clear that those provisions will apply only to non-trading groups.
      Amendment No. 151 is somewhat larger in scope, so I hope the House will excuse me if I deal with the arguments in total. Those subsidiaries of United Kingdom companies that make gains on the disposals of their assets pay tax in the appropriate location. If the proceeds are used to invest overseas, it is right that no UK capital gains tax arises. UK tax is payable when the proceeds are brought back to the UK or distributed to UK shareholders. Those general rules are overridden only where necessary to prevent avoidance.
      The Government say that clause 94 is focused on avoidance, but their definition of avoidance includes any cases in which trustees are shareholders in a close company. Unless, as I have said, the intention is to change an underlying principle of tax law, that definition is too sweeping and unfair. It could significantly reduce the ability of UK-based groups to reinvest overseas and to create continuing flows of income, which would be taxable when brought back to the UK.
      We have received a number of representations from taxpayers who are clearly not involved in avoidance and who will be damaged by the new rules. For example, a pension fund may want to invest in property overseas and find that it can take a stake in a non-UK company,

      437
      the rest of which is owned by a UK private group. Under clause 94, if such overseas property were sold—that would be outside the control of the pension fund—the pension fund would be deemed to be a tax avoider and a notional gain would be charged even if the proceeds were invested overseas and thus not available.
      Another example is a charity with significant assets represented by a gift of shares in a private company. If the status of the private company changed to close—which, by definition, would be outside the charity's control—the charity would have deemed gains visited on it. Thus, it would have a tax liability even when it had no taxable proceeds. A more glaring anomaly is represented by the example of a close company at present controlled by individuals who will be outside the scope of the new rules introduced by clause 94. If those individuals believe unreservedly in the values of employee share ownership, they might create a trust for the permanent benefit of their staff and transfer to it the majority of the shares in the company. Under clause 94, the situation would change totally so that the trustees would be deemed guilty of tax avoidance. Overseas gains would be attributed to them even if they had no money with which to meet the tax. The Baxi Partnership, to which we referred extensively in Committee, is an example of that.
      A company that has had investments abroad for 20 or 30 years might decide that the time has come to realise those investments and reinvest the proceeds in either a different asset or another overseas country. Again, there would clearly be no UK tax avoidance motive, but if the company committed the heinous crime of having trustee shareholders, deemed gains would be attributable through to those shareholders if the company was close and the funds available for reinvestment would be reduced.
      In Committee, we urged the Government to accept that they had to identify commercial cases, including such examples as I have described, to meet what we understood to be their intention to focus on avoidance situations. Our amendment, which draws on long-standing precedents, offers an acceptable way to achieve that. One of the oldest anti-avoidance provisions in our tax code was originally section 18 of the Finance Act 1936, which became well known through the Vestey case in the 1980s. Even that provision, the severity and breadth of which has been commented on by a number of distinguished judges, provides an exemption when the taxpayer has invested overseas for bona fide commercial reasons or not to avoid UK tax. In the narrow area on which the Government are focusing, we ask that they afford the same protection that extends to that wide income tax avoidance provision.
      To sum up, a recent Revenue technical note said:
      Certain aspects of the current tax code for capital gains can hinder businesses' international competitive position and distort their commercial decisions, forcing them to adopt structures that they would not have needed otherwise. It may also act as a disincentive to companies that are investing to innovate and to modernise.
      We ask the Government to see that justice is done.
      The Paymaster General (Dawn Primarolo): I shall respond briefly as we had a similar debate in Committee, and I must admit to a feeling of déjà vu as the hon. Member for Arundel and South Downs (Mr. Right) has
      438
      made exactly the same arguments. I remind the House that the proposals represent an important package of measures that we have introduced to counter a large number of tax avoidance schemes involving the use of trusts, which have been devised to enable individuals to sell valuable assets without paying any tax on their gains. Our proposals, which are specific and tightly drawn, deal with avoidance.
      7.15 pm
      Although this may disappoint the hon. Gentleman, I am no more convinced by his amendment than I was in Committee, even though we have had extensive discussions. Towards the end of his remarks, he referred to three aspects on which there was a meeting of minds in Committee: charities, pension funds and whether the operation of section 13 of the Taxation of Chargeable Gains Act 1992 is harsh. Particular discussion centred on the Baxi company.
      Before I respond on those points, which are the ones on which the hon. Gentleman seeks the comfort of a reassurance given on the Floor of the House, I say to him that the proposals deal with avoidance. In Committee, he agreed that he would not want himself or his party to be associated with activities deliberately designed to allow someone not to pay tax. I accept his point about the amendment, but in the knowledge that there is much to agree on with respect to the broad sweep of the proposals. However, I recognise that the Opposition feel strongly as they have returned to these issues yet again.
      Mr. Oliver Letwin: For only the third time.
      Dawn Primarolo: Third time lucky, perhaps.
      As I said in Committee, I have asked the Inland Revenue to review without prejudice the operation of section 13 of the 1992 Act in respect of charities. I have also asked it to consider pension funds, which the hon. Member for Arundel and South Downs also mentioned. I have some sympathy—I would not like to overstate the point—with the view that section 13 may operate harshly in some circumstances, so I have asked the Inland Revenue to extend the remit of the review, again without prejudice, to see whether there is a case for widening the categories of gain not caught by section 13.
      May I put out a general statement? People concerned about those matters, including the hon. Gentleman, will have the opportunity to make their points to the Revenue. I take a great deal of pleasure in my correspondence with him, and I am sure that the Revenue will do likewise. I shall consider carefully the points arising from the review and there is no reason why there should not be further correspondence at that time. I trust that my remarks have helped to allay the fears expressed by Conservative Members and that they will withdraw the amendment and await the outcome of the Inland Revenue's considerations.
      Mr. Flight: I thank the Minister for a most constructive response. Both of us seek justice and fairness and, with pleasure, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Schedule 26

      TRANSFER OF VALUE: ATTRIBUTION OF GAINS TO BENEFICIARIES
      Amendment made: No. 90, in page 482, line 5, leave out—
      ', in subsections (1), (3)(a), (4), (5), (7) and (8), after "sections 86A to 96
      and insert "—

      (a) in subsections (1), (3)(a), (4) and (7), after "sections 86A to 96", and

      (b) in subsections (5) and (8), after "sections 86A to 90 [Dawn Primarolo.]

    Schedule 30

      DOUBLE TAXATION RELIEF
      Dawn Primarolo: I beg to move amendment No. 103, in page 513, line 11, at end insert—
      'Restriction of relief for underlying tax
      7A.—(1) Amend section 799 of the Taxes Act 1988 (computation of underlying tax) as follows.
      (2) In subsection (1) (underlying tax to be taken into account to be so much of the foreign tax on the relevant profits as is attributable to the proportion represented by the dividend) after "as" insert "(a)" and at the end of the subsection add ", and
      (b) does not exceed the amount calculated by applying the formula set out in subsection (1A) below."
      (3) After subsection (1) insert"—
      "(1A) The formula is—
      D x M/(100 - M)
      where—

      D is the amount of the dividend; and

      M is the maximum relievable rate;

      and for the purposes of this subsection the maximum relievable rate is the rate of corporation tax in force when the dividend was paid."
      (4) In subsection (3) (profits by reference to which underlying tax to be taken into account is calculated)—

      (a) at the end of paragraph (a) insert "and";

      (b) omit paragraph (b); and

      (c) in paragraph (c), for "paid neither for a specified period nor out of specified profits" substitute "not paid for a specified period".

      (5) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom unless the dividend was paid before that date.
      (6) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
      Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 104 to 107.
      Dawn Primarolo: I have not moved the amendment formally because it is necessary to comment on the double taxation relief issues before the House. I recognise that the hon. Member for West Dorset (Mr. Letwin) is not
      440
      feeling as well as he might. I therefore hope to be succinct in my comments and, at this point, perhaps he will agree with our proposition.
      The amendments will change the system of double taxation relief for companies in order to reinforce the Government's policy of removing the tax advantages that the biggest multinationals get from using offshore companies to route dividends into the United Kingdom. At the moment, that enables them to avoid UK tax on profits on which little or no tax has been paid elsewhere, and to avoid the impact of the legislation on controlled foreign companies—a matter that we will come to subsequently.
      Most of the provisions introduced by the amendments are new. Some, however, are a reordering of amendments that were agreed in Standing Committee; they need to be repeated because of the other changes that we are making. I turn specifically to the new proposition in the Government amendments, which basically deals with onshore mixing. That brings me to new sections 806A to 806K. I shall mention briefly what they do.
      The Inland Revenue has produced a very detailed explanatory note with dozens of worked examples. To make this aspect of very complex legislation as clear as we possibly could, the Government thought that it would be helpful to have a full explanatory note for business and, indeed, hon. Members to refer to. The Inland Revenue will publish further detailed guidance about the legislation later this year, well in advance of when the legislation starts to apply at the end of March next year.
      New sections 806A to 806G allow underlying tax that is excluded by the 30 per cent. mixer cap, or that cannot otherwise be allowed in the UK, nevertheless to qualify for credit relief, subject to an upper maximum limit of 45 per cent. That will effectively prevent low-taxed profits from being mixed with high-taxed profits, while still allowing relief for foreign tax paid at rates of up to half as much again as the UK rate.
      A rate of 45 per cent. is generally above the main corporate tax rates in, for example, virtually all the European Union, the United States and a very large number of other countries, which I am more than happy to read into the record if hon. Members wish. However, I do not think that they would wish me to do that, so I will use just those examples.
      The proposals would remove the tax advantages of holding overseas subsidiaries through offshore holding companies. They prevent avoidance of UK tax on low-taxed profits from controlled foreign companies by the current practice of mixing them with high-taxed profits earned by different companies in different countries. They stop the UK giving unlimited relief for foreign tax paid at rates well in excess of the UK rate, while nevertheless giving companies scope for obtaining relief for foreign tax paid at rates that are up to half as much again as the UK corporate tax rate. They introduce more flexible forms of relief than UK companies have enjoyed before.
      The old system of mixing offshore was extremely complex. Dividends had to be timed perfectly. One had to have the right dividend in the right place at the right time in the right year in the right amount. The mixer system was very complicated and entirely artificial. We are putting in place a system whereby new companies investing overseas will in future have a new system that

      441
      is simpler and more flexible, although taxation in this area is never simple; however, it will be simpler. It will influence behaviour.
      Some companies already investing overseas have complicated structures. If they want the maximum benefit from the arrangements, they will need to restructure. In the Financial Times today, the Chartered Institute of Taxation said that the compromise was "generous and flexible". Hallelujah! Peter Cussons, partner of PricewaterhouseCoopers, said of the proposals, "90 per cent. there, " although he would have liked to have seen the cap set a little higher, but he would say that, wouldn't he?
      I think the House will agree that the arrangements that will be in place following all the changes in the Finance Bill on double taxation relief, on capping and to prevent offshore mixing, and the arrangements for onshore mixing give a sound basis to move forward in this policy area. I commend the amendments to the House.
      Mr. Letwin: It seems as long as I have been alive since we started making representations about the matter. Hon. Members present will remember that the initial proposals by the Government followed a consultation paper in which two options were put forward, one of which was onshore pooling. From that moment to this, we have argued that onshore pooling was an appropriate response. I can only say with heartfelt thanks that the Paymaster General and her colleagues have now given us a system of onshore pooling. We could all have been spared a lot of time and bother had that been done in the first instance.
      This is very good news for British industry, for parliamentary democracy and for those who are contemplating establishing headquarters of multinational companies in the UK. Indeed, I will go so far as to say that I think the system of onshore pooling is superior in principle to the system of mixer companies, which has informally and quasi-formally operated to date. It is very good news. Indeed, it overwhelms the points that I am about to make, although they are also important. I hope that the Paymaster General will take them in the spirit in which they are intended—not as party politics, but as a recommendation for serious action over the next year.
      if I can be forgiven a Dickensian allusion, the drafting of these particular amendments, which I recognise has been done in an almighty rush given the complexity of the subject matter, is worthy of the Circumlocution Office and may on reflection engender a certain amount of Jarndyce v. Jarndyce legal action. I hope that the Paymaster General will allow the next few months to be taken up in part by a review of those provisions to see whether a certain element of the spirit of the tax rewrite might not enter some of them, and whether they might not be brought back, not substantively altered necessarily—except in relation to a point that I shall come to—but altered in the drafting, so that there is some hope of people who have to operate the system in future years roughly understanding them.
      Many hours spent going through the provisions in the past few days with expert help have convinced me that it is almost impossible to understand quite large sections. One or two of the most distinguished accountants in Britain are unable to determine the precise meaning of some of the paragraphs. Perhaps the parliamentary counsel who wrote them is unable to determine their meaning. In any case, I am sure that they could be improved upon with the lapse of time.
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      We are grateful for the offer that the Paymaster General makes to produce a kind of guide for the uninformed in due course. I hope that that guide, which will have the benefit again of a much greater amount of time than the notes on clauses have had, will benefit from a little application of Fowler's plain English—not just plain English, but conceptual clarity.
      I do not mean to be abrasive about the people who had the laborious task of drafting the notes on clauses, at what must have been astonishingly high speed. The notes are voluminous, but I must say that they are an extraordinary example of the art form. They make issues that were already complex obscure, and in some cases, issues that were already obscure incomprehensible. In some cases, it was only by returning to the clauses themselves that I could make out what was going on. The problem is remediable. There are plenty of people in the Treasury and at the Paymaster General's disposal who know how to do such things, given a few more weeks. I hope that time will be taken and that when the guide is produced, it will be comprehensible. So far, we are probably ad idem on the matter on both sides of the House.
      7.30 pm
      I shall deal with one grave matter of substance, but, before that with one comparatively minor matter. First, I must declare an interest. I have never been able to work out what it was, but I am sure that I do have an interest in some way, and it would be remiss of me not to declare it.
      The Paymaster General said—and she was right—that the preponderance of the relevant other jurisdictions have tax rates that fall within the 45 per cent. limit. However, the current drafting of the amendments will, rightly, also capture withholding tax. The hon. Lady will discover, or she may already know, that in relation to, for example, subsidiaries held in Tokyo or in the state of New York, the composite effect of underlying tax and withholding tax rates will exceed 45 per cent.—not by very much, but by a little. That is why, I think, Mr. Cussons was arguing for a slightly higher rate. I believe that 48 per cent., for example, would capture almost all the effects to which I am referring, and certainly 50 per cent. would.
      I do not want to stress that point unduly. Throughout the debate, I have never sought to use hyperbole where there are serious arguments and serious issues at stake. The old system that was introduced by the previous version of the Bill would have destroyed Britain as a location for multinational headquarters. The difference between 48 and 45 per cent. as a cap on onshore pooling will not destroy—I repeat, will not destroy—Britain as a headquarters for multinationals. It is, however, a minor irritant and I hope that the Paymaster General will reflect on that. There is time enough between now and next March or April to revise the limit to 48 per cent. That would be helpful, without much cost to the Treasury.
      My major point relates to a matter which the Paymaster General acknowledged, to a degree, but I am not sure whether she has yet, or even that we have yet, fully grasped the scale of the problem. I refer not to new companies that are considering locating their headquarters in the UK, but to multinational companies that are already headquartered in the UK.
      Those multinationals are largely shackled by the provisions that ensure that there will be a significant crystallisation of capital gains, should they seek to leave

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      the UK. It has never been our argument that any change of double tax relief will send packing companies that are already headquartered in the UK, for that very reason—they are shackled by the provisions of capital gains realisation.
      I am not saying that the effects that I am about to describe will send companies packing, but those effects may cost companies currently headquartered in the UK very large sums of money. That is the worry. Currently headquartered in the UK are multinational companies which, for tax-mixing purposes or for other purposes, or both, have been structured around intermediate holding companies, very often Dutch BVs, but in some cases other kinds of mixer companies. They have indirect subsidiaries—subsidiaries of subsidiaries—often in countries such as Japan and the United States.
      The great bulk of the most important subsidiaries of multinationals headquartered in the UK, both originally UK-based and immigrants to the UK, have holdings through intermediates and sub-subsidiaries in the US and Canada. For various cultural and business reasons, our major area of outward investment has been north America. Under the provisions for onshore pooling, in order to benefit fully from the mixing or pooling—in order to get the unrelieved portion dealt with and to be able to use it—those companies will have to restructure their activities in such a way as to bring the current sub-subsidiaries and sub-sub-subsidiaries under the direct ownership of a UK-based company. That is the point of onshore pooling. We have no objection to that. There are restructuring costs associated with that. but I do not dwell on them—I suspect that, in the context of those companies, those costs will not be major.
      However, the UK is not alone in having rules that crystallise capital gains upon restructuring. Other countries do, too. Some of the jurisdictions in the US have very great penalties on restructuring under certain circumstances. The Paymaster General is helpfully nodding, so the subject has evidently been aired inside the Treasury. I have had the opportunity in the past few days to discuss the matter with some distinguished auditors and also with some of the most important company treasurers in multinationals headquartered in the UK, which have not just substantial but enormous sub-subsidiaries and sub-sub-subsidiaries in north America.
      I can assure the Paymaster General that a proper investigation of the matter will in due course reveal that the possible losses to multinationals headquartered in the UK associated with the transitional restructuring, so to speak, required to get the benefit of the onshore pooling may be enormous.
      Bizarrely, that takes us back to a slightly sterile debate that we had right at the beginning, long before I at least, and perhaps even Ministers, properly understood what we were debating. That was the sterile debate about how much the Treasury would or would not raise by moving from mixing to no mixing. It was a sterile debate then as, in fact, the Treasury would not raise anything because sooner or later companies would not come to the UK. The long-term effect of the old proposals would have been that no revenue was raised and no multinationals were headquartered in this country.
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      Now there is the question not of new companies coming, but of existing companies that are shackled in the UK. There is the possibility not of the Treasury doing too well, as it will not gain by the restructuring, but of the US Treasury gaining from the provisions. I know that throughout the proceedings in Committee and on Report, the Paymaster General has been generous and I do not doubt her generous instincts, but I suspect that they do not stretch to trying to make the US Treasury richer at the expense of UK-headquartered multinationals.
      A brief inspection of The Economist this week will show that the US Treasury is rich beyond the wildest dreams of man. It is getting to the point where presidential candidates vie with one another to explain to US taxpayers how much tax relief they will undertake. We do not need to shed tears about the US Treasury, and we do not need to make it any richer at the expense of multinationals headquartered in the UK.
      The practical question arises: how serious is the problem? The honest answer is that I do not know, and there is no one else who knows, as we have had only a few days to study the amendments. It will take time for accountants and treasurers in those large companies to get to grips with what will be required and to work out in detail what the costs will be.
      What are the practical steps that can be taken if it transpires that the problem is serious, as I suspect it may be? I think that I can suggest a course of action that may be acceptable to the Paymaster General and which she would have an opportunity to put on the record today. We could then rest easy, broadly, and, in the spirit of amity, claim joint victory over the forces of evil. I do not suggest in any way that that would be a victory over the Government—no, no, far be it from me.
      I suggest that over the next few months, companies be given the opportunity to calculate the tax costs arising in other jurisdictions; that some consultative process be established so that they can bring to the attention of the UK Treasury on a confidential basis the broad effects; and that the Paymaster General and her colleagues should consider those and judge whether the effects are serious. If they are, the Paymaster General or her successor should bring forward in next year's Finance Bill—that will be just in time—transitional amending provisions to provide more time or to make such other changes as are necessary to allow multinational companies currently headquartered here not to suffer the effects that we are discussing, or not to suffer them too dramatically.
      I say "just in time" because, as the Paymaster General rightly said, the provisions will come into force next March. Unless my colleagues or successors are peculiarly inadvertent, next year's Finance Bill will not have been taken through the House and passed into law by March.
      If the hon. Lady were now to announce that she is at least willing to go through some such process, and to agree that if it transpires that there is modification required she will bring forward in next year's Finance Bill retrospective legislation to allow for that, companies could proceed in the next few months in the knowledge that if they can show that there is a real problem, action will be taken retrospectively to allow them to engage in restructuring at a pace and in a way which minimises that problem.
      Mr. Edward Davey: The hon. Gentleman is making an important point. One way to assist companies as they plan

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      for the next financial year would be if the Government were, in a pre-Budget report, to pre-announce at that early stage their intention to allow retrospective taxation and the possible shape of it.
      Mr. Letwin: Yes. I think the hon. Gentleman's suggestion is an improvement on mine. I agree that it would be helpful if these matters were made clear in a pre-Budget report. I am sure that there will be time enough to do that. If there really is a problem, the scale of it will then have become clear.
      I do not ask the Paymaster General to make a firm commitment on Report to a particular series of steps. However, if she will agree to reflect on these matters and to work out a scheme of action that will ensure that there are not unnecessary, significant and crippling costs—crippling is perhaps an exaggeration—for multinational companies currently headquartered in the UK, we shall have achieved a reasonable solution. This is a textbook case of why it is worth while going through the rather ghastly and laborious process of Second Reading, Committee and Report—it has given the industry and the professionals time to bring out the real problem.
      I give due credit to the Paymaster General because she has shown considerable forbearance and understanding as we have gone through the parliamentary process. In the end, she has produced a sensible and workmanlike solution. She will not go down in history as the sort of Agrippa that we feared. On the contrary, she will be recognised as the kindly aunt of British industry.
      Mr. Barry Gardiner: We have come a long way over the past few months, and the amendments reflect that. I pay a sincere tribute to the work of the hon. Member for West Dorset (Mr. Letwin), who, in a powerful speech at the beginning of our consideration of these matters on the Floor of the House, drew attention to the problems that stemmed from the original drafting. He did his cause nothing but good by the way in which he argued rationally and reasonably throughout consideration in Committee, not taking the line of party political advantage. I have been impressed by that, and I pay him tribute for adopting that approach.
      I pay tribute also to my hon. Friend the Paymaster General for the way in which she has consistently responded to, and taken on board, the points that have been made. With the amendments, we shall end up with much improved legislation. As the hon. Member for West Dorset said, that is a tribute to the parliamentary process of Second Reading, Committee and Report.
      7.45 pm
      In Committee, I recall the Paymaster General making some fine points about the way in which changes to double taxation must be considered, together with all the other elements of the tax system. We must take account of that. I say in response to the comments of the hon. Member for West Dorset about US Treasury gain that business has repeatedly pointed out that there is extreme reluctance to take on board aspects of the US taxation system in this country. Relief for interest is restricted, capital gains are taxable and double taxation relief is extremely complicated in the US. On that basis, I do not think that the amendments will he the windfall for the US Treasury that the hon. Gentleman might have led us to believe.
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      We have ended up with 16 pages of highly complex legislation, and, at short notice, we have had to come to terms with how that will impact on industry. There is still the opportunity for pause for further reflection. When we consider the revised figure of 45 per cent., it seems that companies using overseas holding companies to hold trading companies in higher tax countries are penalised. An example would be if a German subsidiary were held below a holding company. A capped rate of 30 per cent. would apply to double taxation relief. That is the UK corporation tax rate. If the subsidiary company were held directly, the cap is 45 per cent., and can therefore be pooled against more lowly taxed profits. There are areas that need further consideration. There can be commercial reasons for holding companies other than simply tax reasons. These will restrict the ability to mix and pool dividends when shares are held under a holding company.
      A UK company using an EU holding company is now worse off than if foreign trading companies were held directly in some situations. I question whether that is in line with the free movement of capital that is demanded within the EU. However, the movement that we have seen over the past few months has been enormous. We have ended up with much better legislation than would have been the result had we proceeded on the basis on which we started. I pay tribute to my hon. Friend the Paymaster General for the work of her team and for her willingness to listen to all the arguments that have been presented to her.
      Mr. Letwin: What the hon. Gentleman says is true. However, I hope that I shall not be accused of disloyalty to my right hon. and hon. Friends if I defend the Paymaster General against the hon. Gentleman's accusation. It is an inherent part of the logic of onshore pooling that the holding should be direct for the unrelieved portion to be mixable. It is almost necessary that there should be strict compulsion that all the mixing should be done onshore for the regime to be clear. I accept the hon. Gentleman's point that that will mean that the subsidiaries of trading subsidiaries, rather than controlled foreign companies, will also be caught. I accept also his point about the effects in Germany, for example. However, that is an inherent part of the logic and we must accept that consequence, whereas the restructuring that I was talking about is transient.
      Mr. Gardiner: I accept those points. Where we have ended up may have certain consequences that are disadvantageous but, on balance, we have a package that is a huge improvement on the original drafting, and one that should be welcomed by the House.
      Mr. Edward Davey: If only, on the odd occasion, Prime Minister's Question Time could be as consensual as this debate. It has been quite amazing. There has been a great deal of agreement between both sides, and that is welcome. I associate myself and the Liberal Democrats with the comments of the hon. Members for West Dorset (Mr. Letwin) and for Brent, North (Mr. Gardiner). The way in which this debate has been conducted has shown how Parliament, when it is at its best, can help to defend British industry and the interests of our country.
      It is not often that I say that about the way in which the House scrutinises financial matters. On many other occasions, I have criticised the way in which it has dealt

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      with expenditure, and the way in which it deals with tax matters is not often to be praised. We often consider new clauses and amendments late in the day and do not have sufficient time to debate them. One could apply that criticism to some measures in the Bill, but the Government have consulted recently and that has assisted us in our work. I add my support to the call of the hon. Member for West Dorset that the Government continue with that consultative process as we wait to see how these complex measures work in practice. If the Paymaster General can assure us that they will deal with the issue in the pre-Budget report and that they will at least consider the need for possible retrospective legislative change, that will be incredibly helpful.
      One could, at this point, make several party political points about the whole process and say that lessons need to be learned. However, those lessons probably have been learned—I certainly hope so. It would be a wise idea for Ministers to listen to their officials and not just to their political advisers. If officials had been in charge of drawing up the Bill, we would not have faced the problems of the past few months. We would have had better legislation if the proposal that we are now examining had been introduced in a more considered fashion. The hon. Gentleman is probably right to say that onshore pooling is probably superior to the old offshore regime, but it would have been better if such a move had been made after substantial consultation and had not been rushed through in a short time.
      I wish to reflect on one or two details that give rise to slight cause for concern. The first appears in Government amendment No. 106 and in the proposed new section 806H to the Taxes Act 1988 which is headed "Surrender of relievable tax by one company in a group". The arrangements for group provisions for other areas of taxation are often made by primary legislation, but the proposed new section 806H suggests that that should be done by regulation in this case. That is unusual. Perhaps when the parliamentary draftsmen were trying to put such detailed legislation together, they felt that they had no other alternative. One can have sympathy for that view. However, it is not necessarily a good precedent and it is not how group relief is dealt with for other taxation purposes.
      I associate myself with a point made about how the cap relates to subsidiaries in Tokyo. That issue is a cause for concern. The current proposal relates to both the cap and to the underlying withholding tax. Perhaps it should be reconsidered at a later stage.
      A separate point on the relief of capital gains on the sale of shareholdings has been brought to my attention. It may relate to the point that the hon. Gentleman made about the United States tax regime, but my point applies to Dutch mixer companies. It is my understanding that, when a subsidiary held via a Dutch mixer is sold, there is no UK tax on that gain. Is the Paymaster General concerned that, when a UK onshore mixer company sells a subsidiary, it will face a capital gains tax liability that would not exist if a Dutch mixer company is closed and moves onshore as the result of restructuring? I am not sure whether that is so, but I would be grateful if the Government could reassure me on that point.
      Mr. Letwin: I am sorry to return the hon. Gentleman to his point about the proposed new section 806H.
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      On re-examining it, I do not understand his argument. It seems appropriate that the surrender by one group to another of the relievable tax should be organised by regulation. Is he suggesting that there should be a statutory provision describing exactly how that should be done?
      Mr. Davey: My point was that group relief in other areas of the tax system and tax legislation tends to be provided for by primary legislation. Therefore, there is no parallel with this provision. I wanted the Government to explain their thinking. Because this proposal was made in a hurry, I can understand why it will be made through regulation, but I hope that it does not set a precedent. One normally wants group taxation to be provided for by primary legislation.
      Mr. Letwin: In that case, I agree with the hon. Gentleman. In due course, the proposal should be put into statute. However, can he and I not agree that it would be better to assess experience and to understand what the rules should be before we enact the measure? It is right that there should be some rules, but they need to be in regulations at the outset. However, we hope—next year or the year after—to put them into statute.
      Mr. Davey: I am more than happy to concede that point.
      Dawn Primarolo: I intend to follow in the spirit of agreement that has broken out. If the hon. Gentleman reads the provisions of the proposed new section 806H(3), he will see that the regulations made under 806H(1)
      may make different provision for different cases … may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.
      Given the complexity of the issue, it is appropriate to put such measures into regulations that we will have an opportunity to discuss. That does not set precedent. The House has used regulations in that way for some time. Given the complexity of the points made by all the contributors to the debate, and what the hon. Gentleman has said in the past about consultation, that is the most sensible way to proceed.
      Mr. Davey: I did not wish to make this a major issue. I was merely trying to make sure that the Government realise that they have approached group relief arrangements differently from the way in which they have dealt with other tax legislation. I understand that there are special circumstances and I am sure that the Government are right to wish to consult on the detail. That is why I shall certainly not vote against the amendment.
      I return to the point that I may not have been making terribly well. I mentioned Dutch mixer companies and capital gains tax liabilities on the sale of subsidiaries. If such companies move onshore into UK mixer companies, will the Government introduce measures for CGT relief on the sales of the overseas subsidiaries of the UK-based onshore mixer companies? It is possible that I have not understood the point properly, but I would be grateful if the Minister could try to explain it to me.
      Dawn Primarolo: The hon. Gentleman may be struggling with the concept of a mixer company. It is simply a vehicle and its location is determined by where its board

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      meets and by the nationality of those on the board. Its sole function is to funnel profits to the UK having mixed them offshore. He is making a point about mixer companies that does not apply because the provisions relate to payments that come directly to the UK.
      8 pm
      Mr. Davey: The Paymaster General may be right, but I have been led to believe that some mixer companies have subsidiaries; Dutch mixer companies have had subsidiaries. The way in which those companies are constructed is often complicated. The complexity is not necessarily driven by tax reasons. I should be grateful if the Paymaster General reflected on that when she replied to the debate.
      Does the Paymaster General have a forecast or estimate of the expected yield of the proposals? We heard a range of forecasts for the expected yield of the original proposals. The Government have spent much time on the matter, and I wonder whether the Paymaster General could tell the House the expected revenue yield, or whether no Exchequer gain is expected from the proposals.
      When the Government propose major changes to the tax system in future Finance Bills, I hope that they will have learned lessons from this year and that they will abide by their code on consultation. If they do that, we will not again get into the current mess over double taxation relief.
      Dawn Primarolo: I shall reply briefly to the points that were made by the hon. Member for West Dorset (Mr. Letwin), my hon. Friend the Member for Brent, North (Mr. Gardiner) and the hon. Member for Kingston and Surbiton (Mr. Davey). I am sure that hon. Members who have spoken will agree that it is especially important that none of my comments add uncertainty to an extremely complex aspect of taxation. They will therefore forgive me if I do not respond as fully as they would like to some of their points.
      We are considering large companies making decisions about their structure and about their best interests in maximising the benefits that are available in, for example, the new arrangements for onshore pooling. I shall therefore be careful about what I say on that.
      The hon. Member for West Dorset mentioned drafting. I hope that it will be possible to clear up several points in the guidance so that, for now, at least the guidance will be clearly understood by the Revenue and the relevant companies. The hon. Gentleman also mentioned withholding tax. I have considered the point that he made and I examined the January 2000 KPMG corporate tax survey. It considers corporate tax rates and withholding, if it exists. I am not surprised that the hon. Gentleman picked the one place where the combination of withholding and corporate tax might create a higher level than the 45 per cent.
      Mr. Letwin: I mentioned two places: Tokyo and New York. I feel more confident that I am right about New York than about Tokyo. However, will the Paymaster General admit that New York is not any old place? It is where the largest number of major subsidiaries of UK-based multinationals are located. The point that I made is therefore of some importance.
      Dawn Primarolo: I would not want to insinuate that Tokyo or New York were "any old place"—heaven
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      forbid! The 45 per cent. rate is extremely generous. While the difference that may arise is not insignificant to companies, it is only just above the cap. In fairness to the hon. Gentleman, and to provide certainty about the matter, the answer to his direct question about whether I would review the 45 per cent. rate is no.
      The hon. Member for West Dorset also mentioned company structures. He concentrated on the United States preferred company structure as opposed to that in the United Kingdom; the flat structure that the US operates rather than what could be described as a chain structure. The hon. Gentleman mentioned costs in the US. A company may consider it necessary to move the US company so that it has a completely flat structure, which would relate to the UK, to maximise the benefits. That would entail costs. The relevant company would have to consider the benefits of restructuring its operations. That would be a commercial decision for the company, which would have to balance the costs of restructuring with the benefits that might accrue from it. Companies are already doing that in terms of the acquisitions of US-UK groups. We are considering vast companies. The decisions are always complex and involve vast amounts of money and much consideration.
      The hon. Member for West Dorset kept saying, "if there is a real problem". I do not deny that restructuring will involve costs for some companies. I do not believe that that is a real problem in the way in which the hon. Gentleman suggests, although, as with any legislation, the Government have to be watchful about its operation. We have an annual opportunity to consider whether the measure is operating correctly and to remedy it if not. We are considering complex matters, which we will supervise closely.
      I am not currently attracted to helping with transitional costs. The benefits to the companies of being linked directly to the UK are enormous. Apart from the 45 per cent., there is the carry-back of three years to offset a liability, indefinite carry-forward and the ability to surrender to another company in the group for use against uncapped lower dividends. Holding those assets directly is greatly beneficial to the company and the UK economy.
      Mr. Letwin: I accept that the carry-back and carry-forward provisions, and the relief provisions in general, may be attractive. Will the Paymaster General at least give us an assurance that, if representatives of major multinationals with their headquarters in the UK wish, they will have the opportunity to see her or her senior officials to explain the tax consequences, as the year progresses, in the US, or north America generally, of restructuring so that sub-subsidiaries of current Dutch BVs—limited companies—and other vehicles are brought under the direct ownership of the UK headquarter company? Will she assure us that she will consider those representations seriously and take them into account when drafting next year's Finance Bill?
      Mr. Flight rose—
      Dawn Primarolo: I shall deal with the point raised by the hon. Member for West Dorset before giving way to the hon. Member for Arundel and South Downs (Mr. Flight). One at a time, please.
      The Government have clearly demonstrated in the development of their policy that they are prepared to hold discussions and listen to the points that companies and

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      many other people want to make about our proposals. There is no reason why that practice should not continue. Indeed, we have met a huge number of representative groups and large companies. The hon. Gentleman asks whether the Treasury and the Inland Revenue will engage in discussions with companies; of course we will, but we should do so anyway.
      Mr. Flight: It is perfectly reasonable that British-based multinationals should not have everything all ways round. However, much as I support our alliance with the United States, I would not wish to stimulate a massive gratuitous payment of tax to the United States authorities. It would be better if that tax came to the UK authorities.
      Dawn Primarolo: Indeed. As strong as our cultural, historical and business ties with the United States might be, our friendship would not extend to providing income for them. The hon. Gentleman knows a great deal about how complex the matter is, and he will have appreciated my points on providing certainty.
      I agree with my hon. Friend the Member for Brent, North about the way in which the debate has been handled. It has been fraught at times for me at the Dispatch Box, but I feel that I have accounted for myself and the Government's policy clearly. We have developed a good policy. My hon. Friend is right to pay tribute to the officials who have supported Ministers in that exercise at the Inland Revenue and the Treasury.
      I know that the hon. Member for Kingston and Surbiton does not believe everything he reads in the newspapers, so I can tell him that the scurrilous remarks about a division between political advisers and officials inside the Treasury and the Inland Revenue were not correct. The Treasury, the Inland Revenue, Ministers and special advisers work as a superb team to develop good policy—as we have done in this respect—with assistance from some others en route. I have dealt with the point about regulation and why section 806H of the Taxes Act 1988 deals with that.
      The hon. Member for Kingston and Surbiton asked about capital gains tax on mixer companies. There may be a slight misunderstanding about that. The Inland Revenue is currently consulting on the roll-over relief for capital gains on sales of substantial shareholdings. He will have heard me refer to that in Committee. That will include shareholdings in trading companies that would have avoided capital gains in the mixer companies. That is subject to current consultation by the Government, and would cover the point raised by the hon. Gentleman.
      Finally, the hon. Gentleman asked about yield. I direct him to the Inland Revenue's press release of 16 June. There have been huge estimates, with great variations, of how much would be raised or lost. I have explained how the Government systematically tried to measure the cost by looking at previous years. The Inland Revenue made it clear that given the scale of avoidance that has come to light since the Budget, the impact of the overall package represented by the changes—including onshore provisions—would be broadly similar to the estimates provided in the "Financial Statement and Budget Report". The hon. Gentleman wondered whether the Government were going to raise tax, but the figures are approximately the same.
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      I hope, therefore, that I have dealt with all the issues that have been raised. I hope that this closes the chapter on double taxation relief for this Finance Bill.
      Amendment agreed to.
      Amendments made: No. 104, in page 513, line 35, leave out from beginning to end of line 26 on page 514 and insert—
      'Restriction of relief for underlying tax: dividends paid between related companies
      10.—(1) Amend section 801 of the Taxes Act 1988 as follows.
      (2) After subsection (2) (cases where the overseas company receives a dividend from a related third company) insert—
      "(2A) Section 799(1)(6) applies for the purposes of subsection (2) above only—

      (a) if the overseas company and the third company are not resident in the same territory; or

      (b) in such other cases as may be prescribed by regulations made by the Treasury."

      (3) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom. unless the dividend was paid before that date.
      (4) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
      No. 105, in page 515, line 9, at end insert—
      'Separate streaming of dividend so far as representing an ADP dividend of a CFC
      11A.—(1) After section 801B of the Taxes Act 1988 insert—
      "Separate streaming of dividend so far as representing an ADP dividend of a CFC
      801C.—(1) This section applies in any case where—

      (a) by virtue only of section 748(1)(a), no apportionment under section 747(3) falls to be made as regards an accounting period of a controlled foreign company; and

      (b) one or more of the dividends paid by the controlled foreign company by virtue of which the condition in paragraph (a) above is satisfied are dividends falling within subsection (2) below.

      (2) A dividend falls within this subsection if, for the purposes of Part I of Schedule 25, the whole or any part of it falls to be treated by virtue of paragraph 4 of that Schedule as paid by the controlled foreign company to a United Kingdom resident.
      (3) If, in a case where this section applies,—

      (a) an initial dividend is paid to a company resident outside the United Kingdom, and

      (b) that company, or any other company which is related to it, pays an intermediate dividend which for the purposes of paragraph 4 of Schedule 25 to any extent represents that initial dividend,

      subsection (4) below shall have effect in relation to the UK recipient concerned.
      (4) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to that UK recipient—

      (a) that, instead of the intermediate dividend, the dividends described in subsection (5) below had been paid and the circumstances had been as described in subsection (6) or (7) below, as the case may be; and

      453

      (b) that any tax paid under the law of any territory in respect of the intermediate dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).

      (5) The dividends mentioned in subsection (4)(a) above are—

      (a) as respects each of the initial dividends which are, for the purposes of paragraph 4 of Schedule 25, to any extent represented by the intermediate dividend, a separate dividend (an "ADP dividend") representing, and of an amount equal to, so much of that initial dividend as is for those purposes represented by the intermediate dividend; and

      (b) a further separate dividend (a "residual dividend") representing, and of an amount equal to, the remainder (if any) of the intermediate dividend.

      (6) As respects each of the ADP dividends, the intermediate company is to be treated as if it were a separate company whose distributable profits are of a constitution corresponding to, and an amount equal to, that of the ADP dividend.
      (7) As respects the residual dividend (if any), the relevant profits out of which it is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding accordingly so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid.
      (8) If, in a case where this section applies, an intermediate company also pays a dividend which is not an intermediate dividend (an "independent dividend") and either—

      (a) that dividend is paid to a United Kingdom resident, or

      (b) if it is not so paid, a dividend which to any extent represents it is paid by a company which is related to that company and resident outside the United Kingdom to a United Kingdom resident,

      subsection (9) below shall have effect in relation to the United Kingdom resident.
      (9) Where this subsection has effect, it shall be assumed for the purposes of allowing credit relief under this Part to the United Kingdom resident—

      (a) that the relevant profits out of which the independent dividend is to be regarded for the purposes of section 799(1) as paid by the intermediate company are, in consequence of subsection (6) above, to be treated as being of such constitution and amount as remains after excluding so much of those relevant profits as constitute the whole or any part of the distributable profits out of which the ADP dividends are paid; and

      (b) that any tax paid under the law of any territory in respect of the independent dividend, or which is underlying tax in relation to that dividend, had instead fallen to be borne accordingly (taking account of any reduction falling to be made under section 799(2)).

      (10) For the purposes of this section—

      (a) a controlled foreign company is an "ADP controlled foreign company" as respects any of its accounting periods if the condition in paragraph (a) of subsection (1) above is satisfied as respects that accounting period;

      (b) an "initial dividend" (subject to subsection (14) below) is any of the dividends mentioned in paragraph (b) of subsection (1) above paid by an ADP controlled foreign company; and

      (c) a "subsequent dividend" is any dividend which, in relation to one or more initial dividends, is the subsequent dividend for the purposes of paragraph 4 of Schedule 25.

      454
      (11) In this section—
      "distributable profits" means a company's profits available for distribution, determined in accordance with section 799(6);
      "intermediate company" means any company resident outside the United Kingdom which pays an intermediate dividend:
      "intermediate dividend" means any dividend which is paid by a company resident outside the United Kingdom and which—

      (a) for the purposes of paragraph 4 of Schedule 25. to any extent represents one or more initial dividends paid by other companies; and

      (b) either is the subsequent dividend in the case of those initial dividends or is itself to any extent represented for those purposes by a subsequent dividend;

      "the UK recipient" means the United Kingdom resident to whom a subsequent dividend is paid.
      (12) Where—

      (a) one company pays a dividend ("dividend A") to another company, and

      (b) that other company, or a company which is related to it, pays a dividend ("dividend B") to another company,

      then, for the purposes of this section, dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
      (13) Sub-paragraph (2) of paragraph 4 of Schedule 25 (related companies) shall apply for the purposes of this section as it applies for the purposes of that paragraph.
      (14) Where an intermediate company which is an ADP controlled foreign company pays a dividend—

      (a) by virtue of which (whether taken alone or with other dividends) the condition in subsection (1)(a) above is satisfied as regards an accounting period of the company, but

      (b) which also for the purposes of paragraph 4 of Schedule 25 to any extent represents one or more initial dividends paid by other ADP controlled foreign companies,

      the dividend shall not be regarded for the purposes of this section as an initial dividend paid by the company, to the extent that it so represents initial dividends paid by other ADP controlled foreign companies."
      (2) This paragraph has effect in relation to any claim for an allowance by way of credit made on or after 31st March 2001 in respect of a dividend paid by a company resident outside the United Kingdom to a company resident in the United Kingdom, unless the dividend was paid before that date.
      (3) In determining, for the purpose of any such claim made on or after that date, the underlying tax of any such third, fourth or successive company as is mentioned in section 801(2) or (3) of the Taxes Act 1988, this paragraph shall be deemed to have had effect at the time the dividend paid by that company was paid.'.
      No. 106, in page 522, line 24, leave out from beginning to end of line 6 on page 527 and insert—
      'Foreign dividends: onshore pooling and utilisation of certain unrelieved foreign tax
      19.—(1) After section 806 of the Taxes Act 1988 insert—
      "Foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax
      Eligible unrelieved foreign tax on dividends: introductory
      806A.—(1) This section applies where, in any accounting period of a company resident in the United Kingdom, an

      455
      amount of eligible unrelieved foreign tax arises in respect of a dividend falling within subsection (2) below paid to the company.
      (2) The dividends that fall within this subsection are any dividends chargeable under Case V of Schedule D, other than—

      (a) any dividend which is trading income for the purposes of section 393;

      (b) any dividend which, in the circumstances described in paragraphs (a) and (b) of subsection (8) of section 393, would by virtue of that subsection fall to be treated as trading income for the purposes of subsection (1) of that section;

      (c) in a case where section 801A applies, the dividend mentioned in subsection (1)(b) of that section;

      (d) in a case where section 803 applies, the dividend mentioned in subsection (1)(b) of that section;

      (e) any dividend the amount of which is, under section 811, treated as reduced.

      (3) For the purposes of this section—

      (a) the cases where an amount of eligible unrelieved foreign tax arises in respect of a dividend falling within subsection (2) above are the cases set out in subsections (4) and (5) below; and

      (b) the amounts of eligible unrelieved foreign tax which arise in any such case are those determined in accordance with section 806B.

      (4) Case A is where—

      (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of the dividend, exceeds

      (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of the dividend.

      (5) Case B is where the amount of tax which, by virtue of any provision of any arrangements, falls to be taken into account as mentioned in section 799(1) in the case of the dividend (whether or not by virtue of section 801(2) or (3)) is less than it would be apart from the mixer cap.
      (6) In determining whether the circumstances are as set out in subsection (4) or (5) above, sections 806C and 806D shall be disregarded.
      The amounts that are eligible unrelieved foreign tax
      806B.—(1) This section has effect for determining the amounts of eligible unrelieved foreign tax which arise in the cases set out in section 806A(4) and (5).
      (2) In Case A, the difference between—

      (a) the amount of the credit allowed as mentioned in section 806A(4)(b), and

      (b) the greater amount of the credit that would have been so allowed if, for the purposes of subsection (2) of section 797, the rate of corporation tax payable as mentioned in that subsection were the upper percentage,

      shall be an amount of eligible unrelieved foreign tax.
      (3) In Case B, where the mixer cap restricts the amount of tax to be taken into account as mentioned in section 799(1) in the case of the Case V dividend, the difference, in the case of that dividend, between—

      (a) the amount of tax to be taken into account as there mentioned, and

      (b) the greater amount of tax that would have been taken into account as there mentioned, had M in the formula in section 799(1A) in its application in the case of that dividend (but not any lower level dividend) been the upper percentage,

      shall be an amount of eligible unrelieved foreign tax.
      (4) In Case B, where the mixer cap—

      (a) restricts the amount of underlying tax that is treated as mentioned in subsection (2) or (3) of section 801 in the case of any dividend received as mentioned in that subsection, but

      (b) does not restrict the relevant tax in the case of any higher level dividend,

      subsection (5) below shall apply.
      (5) Where this subsection applies, an amount equal to the appropriate portion of the difference, in the case of the dividend mentioned in subsection (4)(a) above, between—

      (a) the amount of underlying tax treated as mentioned in section 801(2) or (3), as the case may be, and

      (b) the greater amount of underlying tax that would have been so treated, had M in the formula in section 799(1A) in its application in the case of that dividend (but not any higher or lower level dividend) been the upper percentage,

      shall be an amount of eligible unrelieved foreign tax.
      (6) For the purposes of subsection (5) above, the "appropriate portion" of the difference there mentioned in the case of any dividend is found by multiplying the amount of that difference by the product of the reducing fractions for each of the higher level dividends.
      (7) For the purposes of subsection (6) above, the "reducing fraction" for any dividend is the fraction—

      (a) whose numerator is the amount of the dividend; and

      (b) whose denominator is the amount of the relevant profits (within the meaning of section 799(1)) out of which the dividend is paid.

      (8) Any reference in this section to any tax being restricted by the mixer cap in the case of any dividend is a reference to that tax being so restricted otherwise than by virtue only of the application of the mixer cap in the case of one or more lower level dividends.
      (9) For the purpose of determining the amount described in subsection (2)(b), (3)(b) or (5)(b) above, sections 806C and 806D shall be disregarded.
      (10) In this section—

      "the Case V dividend" means the dividend mentioned in section 806A(1);

      "higher level dividend", in relation to another dividend, means any dividend—

      (a) by which that other dividend is to any extent represented; and

      (b) which either is the Case V dividend or is to any extent represented by the Case V dividend;

      "lower level dividend", in relation to another dividend, means any dividend which—

      (a) is received as mentioned in section 801(2) or (3); and

      (b) is to any extent represented by that other dividend;

      "the relevant tax" means—

      (a) in the case of the Case V dividend, the foreign tax to be taken into account as mentioned in section 799(1); and

      (b) in the case of any other dividend, the amount of underlying tax to be treated as mentioned in section 801(2) or (3) in the case of the dividend.

      Onshore pooling
      806C.—(1) In this section "qualifying foreign dividend" means any dividend which falls within section 806A(2), other than—

      (a) an ADP dividend paid by a controlled foreign company;

      (b) so much of any dividend paid by any company as represents an ADP dividend paid by another company which is a controlled foreign company;

      457

      (c) a dividend in respect of which an amount of eligible unrelieved foreign tax arises.

      (2) For the purposes of this section—

      (a) a "related qualifying foreign dividend" is any qualifying foreign dividend paid to a company resident in the United Kingdom by a company which, at the time of payment of the dividend, is related to that company;

      (b) an "unrelated qualifying foreign dividend" is any qualifying foreign dividend which is not a related qualifying foreign dividend.

      (3) For the purposes of giving credit relief under this Part to a company resident in the United Kingdom—

      (a) the related qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;

      (b) the unrelated qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;

      (c) the underlying tax in relation to the related qualifying foreign dividends that arise to the company in an accounting period shall be aggregated;

      (d) so much of the foreign tax paid in respect of the qualifying foreign dividends that arise to the company in an accounting period as is not underlying tax shall be aggregated.

      (4) Credit relief under this Part shall be given as if—

      (a) the related qualifying foreign dividends aggregated under paragraph (a) of subsection (3) above in the case of any accounting period instead together constituted a single related qualifying foreign dividend arising in that accounting period ("the single related dividend" arising in that accounting period);

      (b) the unrelated qualifying foreign dividends aggregated under paragraph (b) of that subsection in the case of any accounting period instead together constituted a single unrelated qualifying foreign dividend arising in that accounting period ("the single unrelated dividend" arising in that accounting period);

      (c) the underlying tax aggregated under paragraph (c) of that subsection for any accounting period were instead underlying tax in relation to the single related dividend arising in that accounting period (the "aggregated underlying tax" in respect of the single related dividend);

      (d) the tax aggregated under paragraph (d) of that subsection for any accounting period were instead foreign tax (other than underlying tax) paid in respect of, and computed by reference to,—

      (i) the single related dividend arising in that accounting period,

      (ii) the single unrelated dividend so arising, or

      (iii) partly the one dividend and partly the other,

      (that aggregated tax being referred to as the "aggregated withholding tax").

      (5) For the purposes of this section. a dividend paid by a controlled foreign company is an "ADP dividend" if it is a dividend by virtue of which (whether in whole or in part and whether taken alone or with one or more other dividends) no apportionment under section 747(3) falls to be made as regards an accounting period of the controlled foreign company in a case where such an apportionment would fall to be made apart from section 748(1)(a).
      Utilisation of eligible unrelieved foreign tax
      806D.—(1) For the purposes of this section, where—

      (a) any eligible unrelieved foreign tax arises in an accounting period of a company, and

      (b) the dividend in relation to which it arises is paid by a company which, at the time of payment of the dividend, is related to that company,

      458
      that tax is "eligible underlying tax" to the extent that it consists of or represents underlying tax.
      (2) To the extent that any eligible unrelieved foreign tax is not eligible underlying tax it is for the purposes of this section "eligible withholding tax".
      (3) For the purposes of giving credit relief under this Part to a company resident in the United Kingdom—

      (a) the amounts of eligible underlying tax that arise in an accounting period of the company shall be aggregated (that aggregate being referred to as the "relievable underlying tax" arising in that accounting period); and

      (b) the amounts of eligible withholding tax that arise in an accounting period of the company shall be aggregated (that aggregate being referred to as the "relievable withholding tax" arising in that accounting period).

      (4) The relievable underlying tax arising in an accounting period of the company shall be treated for the purposes of allowing credit relief under this Part as if it were—

      (a) underlying tax in relation to the single related dividend that arises in the same accounting period,

      (b) relievable underlying tax arising in the next accounting period (whether or not any related qualifying foreign dividend in fact arises to the company in that accounting period), or

      (c) underlying tax in relation to the single related dividend that arises in such one or more preceding accounting periods as result from applying the rules in section 806E,

      or partly in one of those ways and partly in each or either of the others.
      (5) The relievable withholding tax arising in an accounting period of the company shall be treated for the purposes of allowing credit relief under this Part as if it were—

      (a) foreign tax (other than underlying tax) paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend that arises in the same accounting period,

      (b) relievable withholding tax arising in the next accounting period (whether or not any qualifying foreign dividend in fact arises to the company in that accounting period), or

      (c) foreign tax (other than underlying tax) paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend that arises in such one or more preceding accounting periods as result from applying the rules in section 806E,

      or partly in one of those ways and partly in any one or more of the others.
      (6) The amount of relievable underlying tax or relievable withholding tax arising in an accounting period that is treated—

      (a) under subsection (4)(a) or (c) above as underlying tax in relation to the single related dividend arising in the same or any earlier accounting period, or

      (b) under subsection (5)(a) or (c) above as foreign tax paid in respect of, and computed by reference to, the single related dividend or the single unrelated dividend arising in the same or any earlier accounting period,

      must not be such as would cause an amount of eligible unrelieved foreign tax to arise in respect of that dividend.
      Rules for carry back of relievable tax under section 806D
      806E.—(1) Where any relievable tax is to be treated as mentioned in section 806D(4)(c) or (5)(c), the rules for determining the accounting periods in question (and the amount of the relievable tax to be so treated in relation to each of them) are those set out in the following provisions of this section.
      (2) Rule 1 is that the accounting periods in question must be accounting periods beginning not more than three years before the accounting period in which the relievable tax arises.
      (3) Rule 2 is that the relievable tax must be so treated that—

      (a) credit for, or for any remaining balance of, the relievable tax is allowed against corporation tax in respect of the single dividend arising in a later one of the accounting periods beginning as mentioned in rule 1 above,

      (b) credit for any of the relievable tax is allowed against corporation tax in respect of the single dividend arising in any earlier such accounting period.

      (4) Rule 3 is that the relievable tax must be so treated that. before allowing credit for any of the relievable tax against corporation tax in respect of the single dividend arising in any accounting period, credit for foreign tax is allowed—

      (a) first for the aggregated foreign tax in respect of the single dividend arising in that accounting period, so far as not consisting of relievable tax arising in another accounting period; and

      (b) then for relievable tax arising in any accounting period before that in which the relievable tax in question arises.

      (5) The above rules are subject to sections 806D(6) and 806F.
      (6) In this section—
      "aggregated foreign tax" means aggregated underlying tax or aggregated withholding tax;
      "relievable tax" means relievable underlying tax or relievable withholding tax;
      "the single dividend" means—

      (a) in relation to relievable underlying tax, the single related dividend; and

      (b) in relation to relievable withholding tax, the single related dividend or the single unrelated dividend.

      Credit to be given for underlying tax before other foreign tax etc
      806F.—(1) For the purposes of this Part, credit in accordance with any arangements shall, in the case of any dividend, be given so far as possible—

      (a) for underlying tax (where allowable) before foreign tax other than underlying tax;

      (b) for foreign tax other than underlying tax before amounts treated as underlying tax; and

      (c) for amounts treated as underlying tax (where allowable) before amounts treated as foreign tax other than underlying tax.

      (2) Accordingly, where the amount of foreign tax to be brought into account for the purposes of allowing credit relief under this Part is subject to any limitation or restriction, the limitation or restriction shall be taken to have the effect of excluding foreign tax other than underlying tax before excluding underlying tax.
      Claims for the purposes of section 806D(4) or (5)
      806G.—(l) The relievable underlying tax or relievable withholding tax arising in any accounting period shall only be treated as mentioned in subsection (4) or (5) of section 806D on a claim.
      (2) Any such claim must specify the amount (if any) of that tax—

      (a) which is to be treated as mentioned in paragraph (a) of the subsection in question;

      (b) which is to be treated as mentioned in paragraph (b) of that subsection; and

      (c) which is to be treated as mentioned in paragraph (c) of that subsection.

      (3) A claim under subsection (1) above may only be made before the expiration of the period of—

      (a) six years after the end of the accounting period mentioned in that subsection; or

      460

      (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid.

      Surrender of relievable tax by one company in a group to another
      806H.—(1) The Board may by regulations make provision for, or in connection with, allowing a company which is a member of a group to surrender all or any part of the amount of the relievable tax arising to it in an accounting period to another company which is a member of that group at the time, or throughout the period, prescribed by the regulations.
      (2) The provision that may be made under subsection (1) above includes provision—

      (a) prescribing the conditions which must be satisfied if a surrender is to be made;

      (b) determining the amount of relievable tax which may be surrendered in any accounting period;

      (c) prescribing the conditions which must be satisfied if a claim to surrender is to be made;

      (d) prescribing the consequences for tax purposes of a surrender having been made;

      (e) allowing a claim to be withdrawn and prescribing the effect of such a withdrawal.

      (3) Regulations under subsection (1) above—

      (a) may make different provision for different cases; and

      (b) may contain such supplementary, incidental, consequential or transitional provision as the Board may think fit.

      (4) For the purposes of subsection (1) above a company is a member of a group if the conditions prescribed for that purpose in the regulations are satisfied.
      interpretation of foreign dividend provisions of this Chapter
      806J.—(1) This section has effect for the interpretation of the foreign dividend provisions of this Chapter.
      (2) In this section, "the foreign dividend provisions of this Chapter" means sections 806A to 806Hon. and this section.
      (3) For the purposes of the foreign dividend provisions of this Chapter, where—

      (a) one company pays a dividend ("dividend A") to another company, and

      (b) that other company, or a company which is related to it, pays a dividend ("dividend B") to another company,

      dividend B represents dividend A, and dividend A is represented by dividend B, to the extent that dividend B is paid out of profits which are derived, directly or indirectly, from the whole or part of dividend A.
      (4) Where—

      (a) one company is related to another, and

      (b) that other is related to a third company,

      the first company shall be taken for the purposes of paragraph (b) of subsection (3) above to be related to the third, and so on where there is a chain of companies, each of which is related to the next.
      (5) In any case where—

      (a) a company resident outside the United Kingdom pays a dividend to a company resident in the United Kingdom, and

      (b) the circumstances are such that subsection (6)(b) of section 790 has effect in relation to that dividend.

      the foreign dividend provisions of this Chapter shall have effect as if the company resident outside the United Kingdom were related to the company resident in the United Kingdom (and subsection (10) of that section shall have effect accordingly).
      (6) Subsection (5) of section 801 (related companies) shall apply for the purposes of the foreign dividend provisions of this Chapter as it applies for the purposes of that section.
      (7) In the foreign dividend provisions of this Chapter—

      "aggregated underlying tax" shall be construed in accordance with section 806C(4)(c);

      "aggregated withholding tax" shall be construed in accordance with section 806C(4)(d);

      "controlled foreign company" has the same meaning as in Chapter IV of Part XVII;

      "eligible unrelieved foreign tax" shall be construed in accordance with sections 806A and 806B;

      "the mixer cap" means section 799(1)(b);

      "qualifying foreign dividend" has the meaning given by section 806C(1);

      "related qualifying foreign dividend" has the meaning given by section 806C(2)(a);

      "relievable tax" has the meaning given by section 806E(6);

      "relievable underlying tax" shall be construed in accordance with 806D(3)(a);

      "relievable withholding tax" shall be construed in accordance with 806D(3)(b);

      "single related dividend" shall be construed in accordance with section 806C(4)(a);

      "single unrelated dividend" shall be construed in accordance with section 806C(4)(b);

      "the upper percentage" is 45 per cent."

      (2) The amendments made by sub—paragraph (1) have effect in relation to—

      (a) dividends arising on or after 31st March 2001, and

      (b) foreign tax in respect of such dividends,

      (and accordingly the single related dividend or the single unrelated dividend which falls to be treated under those amendments as arising in any accounting period of a company shall not include any dividend arising on or before 30th March 2001).
      Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
      20.—(1) After section 806J of the Taxes Act 1988 insert—
      "Application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere
      806K.—(1) Sections 806A to 806J shall apply in relation to an amount of eligible unrelieved foreign tax arising in a chargeable period in respect of any of the income of a branch or agency in the United Kingdom of a person resident outside the United Kingdom as they apply in relation to eligible unrelieved foreign tax arising in an accounting period of a company resident in the United Kingdom in respect of any of the company's income, but with the modifications specified in subsection (2) below.
      (2) Those modifications are—

      (a) take any reference to an accounting period as a reference to a chargeable period;

      (b) take any reference to corporation tax as including a reference to income tax;

      (c) take the reference in section 806A(4)(a) to section 797 as a reference to sections 796 and 797;

      (d) in relation to income tax, for subsection (2) of section 806B substitute the subsection (2) set out in subsection (3) below.

      (3) That subsection is—
      "(2) In Case A, the difference between—

      (a) the amount of the credit allowed as mentioned in section 806A(4)(b), and

      462

      (b) the greater amount of credit that would have been so allowed if, for the purposes of section 796, the amount of income tax borne on the dividend as computed under that section were charged at a rate equal to the upper percentage,

      shall be an amount of eligible unrelieved foreign tax."."
      (2) The amendment made by sub—paragraph (1) has effect in relation to—

      (a) dividends arising on or after 31st March 2001, and

      (b) foreign tax in respect of such dividends,

      (and accordingly the single related dividend or single unrelated dividend which by virtue of that amendment falls to be treated as arising in any chargeable period shall not include any dividend arising on or before 30th March 2001).
      Unrelieved foreign tax: profits of overseas branch or agency
      20A.—(1) After section 806K of the Taxes Act 1988 insert—
      "Unrelieved foreign tax: profits of overseas branch or agency Carry forward or carry back of unrelieved foreign tax
      806L.—(1) This section applies where, in any accounting period of a company resident in the United Kingdom, an amount of unrelieved foreign tax arises in respect of any of the company's qualifying income from an overseas branch or agency of the company.
      (2) The amount of the unrelieved foreign tax so arising shall be treated for the purposes of allowing credit relief under this Part as if it were foreign tax paid in respect of, and computed by reference to, the company's qualifying income from the same overseas branch or agency—

      (a) in the next accounting period (whether or not the company in fact has any such income from that source in that accounting period), or

      (b) in such one or more preceding accounting periods, beginning not more than three years before the accounting period in which the unrelieved foreign tax arises, as result from applying the rules in subsection (3) below,

      or partly in the one way and partly in the other.
      (3) Where any unrelieved foreign tax is to be treated as mentioned in paragraph (b) of subsection (2) above, the rules for determining the accounting periods in question (and the amount of the unrelieved foreign tax to be so treated in relation to each of them) are that the unrelieved foreign tax must be so treated under that paragraph—
      1. that—

      (a) credit for, or for any remaining balance of, the unrelieved foreign tax is allowed against corporation tax in respect of income of a later one of the accounting periods beginning as mentioned in that paragraph, before

      (b) credit for any of the unrelieved foreign tax is allowed against corporation tax in respect of income of any earlier such period;

      2. that, before allowing credit for any of the unrelieved foreign tax against corporation tax in respect of income of any accounting period, credit for foreign tax is allowed—

      (a) first for foreign tax in respect of the income of that accounting period, other than unrelieved foreign tax arising in another accounting period; and

      (b) then for unrelieved foreign tax arising in any accounting period before that in which the unrelieved foreign tax in question arises.

      (4) For the purposes of this section, the cases where an amount of unrelieved foreign tax arises in respect of any of a company's qualifying income from an overseas branch or agency in an accounting period are those cases where—

      463

      (a) the amount of the credit for foreign tax which under any arrangements would, apart from section 797, be allowable against corporation tax in respect of that income, exceeds

      (b) the amount of the credit for foreign tax which under the arrangements is allowed against corporation tax in respect of that income;

      and in any such case that excess is the amount of the unrelieved foreign tax in respect of that income.
      (5) For the purposes of this section, a company's qualifying income from an overseas branch or agency is the profits of the overseas branch or agency which are—

      (a) chargeable under Case I of Schedule D; or

      (b) included in the profits of life reinsurance business or overseas life assurance business chargeable under Case VI of Schedule D by virtue of section 439B or 441.

      (6) Where (whether by virtue of this subsection or otherwise) an amount of unrelieved foreign tax arising in an accounting period falls to be treated under subsection (2) above for the purposes of allowing credit relief under this Part as foreign tax paid in respect of, and computed by reference to, qualifying income of an earlier accounting period, it shall not be so treated for the purpose of any further application of this section.
      (7) In this section "overseas branch or agency", in relation to a company, means a branch or agency through which the company carries on a trade in a territory outside the United Kingdom.
      Provisions supplemental to section 806L
      806M.—(1) This section has effect for the purposes of section 806L and shall be construed as one with that section.
      (2) If, in any accounting period, a company ceases to have a particular overseas branch or agency, the amount of any unrelieved foreign tax which arises in that accounting period in respect of the company's income from that overseas branch or agency shall, to the extent that it is not treated as mentioned in section 806L(2)(b), be reduced to nil (so that no amount arises which falls to be treated as mentioned in section 806L(2)(a)).
      (3) If a company—

      (a) at any time ceases to have a particular overseas branch or agency in a particular territory ("the old branch or agency"), but

      (b) subsequently again has an overseas branch or agency in that territory ("the new branch or agency"),

      the old branch or agency and the new branch or agency shall be regarded as different overseas branches or agencies.
      (4) If, under the law of a territory outside the United Kingdom, tax is charged in the case of a company resident in the United Kingdom in respect of the profits of two or more of its overseas branches or agencies in that territory, taken together, then, for the purposes of—

      (a) section 806L, and

      (b) subsection (3) above.

      those overseas branches or agencies shall be treated as if they together constituted a single overseas branch or agency of the company.
      (5) Unrelieved foreign tax arising in respect of qualifying income from a particular overseas branch or agency in any accounting period shall only be treated as mentioned in subsection (2) of section 806L on a claim.
      (6) Any such claim must specify the amount (if any) of the unrelieved foreign tax—

      (a) which is to be treated as mentioned in paragraph (a) of that subsection; and

      (b) which is to be treated as mentioned in paragraph (b) of that subsection.

      (7) A claim under subsection (5) above may only be made before the expiration of the period of—

      (a) six years after the end of the accounting period mentioned in that subsection, or

      (b) if later, one year after the end of the accounting period in which the foreign tax in question is paid."

      (2) The amendment made by sub-paragraph (1) has effect in relation to unrelieved foreign tax arising in any accounting period ending on or after 1st April 2000.
      (3) No such tax shall be treated by virtue of that amendment as foreign tax in respect of income arising in any accounting period ended on or before 31st March 2000.'.
      No. 107, in page 531, line 8, at end insert—
      'Restriction of interest on repayment of tax resulting from carry back of relievable tax
      25A.—(1) Amend section 826 of the Taxes Act 1988 as follows.
      (2) After subsection (7B) insert—
      "(7BB) Subject to subsection (7BC) below, in any case where—

      (a) within the meaning of section 806D, any relievable underlying tax or relievable withholding tax arises in an accounting period of a company ("the later period"),

      (b) pursuant to a claim under section 806G, the whole or any part of that tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an earlier accounting period ("the earlier period"), and

      (c) a repayment falls to be made of corporation tax paid for the earlier period or of income tax in respect of a payment received by the company in that period,

      then, in determining the amount of interest (if any) payable under this section on the repayment referred to in paragraph (c) above, no account shall be taken of so much of the amount of the repayment as falls to be made as a result of the claim under section 806G, except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (7D) below).
      (7BC) Where, in a case falling within subsection (7A)(a) and (b) above—

      (a) as a result of the claim under section 393A(1), an amount or increased amount of eligible unrelieved foreign tax arises for the purposes of section 806A(1), and

      (b) pursuant to a claim under section 806G, the whole or any part of an amount of relievable underlying tax or relievable withholding tax is treated as mentioned in section 806D(4)(c) or (5)(c) in relation to the single related dividend or the single unrelated dividend arising in an accounting period before the earlier period,

      then subsection (7BB) above shall have effect in relation to the claim under section 806G as if the reference in the words after paragraph (c) to the later period within the meaning of that subsection were a reference to the period which, in relation to the claim under section 393A(1), would be the later period for the purposes of subsection (7A) above."
      (3) In subsection (7D) (date on which corporation tax is due and payable for the purposes of certain provisions) after "(7B)" insert (7BB)".
      (4) In subsection (7E) (which, for the purposes of certain provisions, restricts the power in section 59A of the Taxes Management Act 1970 to alter the date on which corporation tax is due and payable) after "(7B), ", in both places where it occurs, insert "(7BB),".'.— [Mr. Dowd.]

    Clause 104

      CONTROLLED FOREIGN COMPANIES.
      8.15 pm
      Mr. Flight: I beg to move amendment No. 14, in page 72, line 23, leave out clause 104.
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 15, in schedule 31, page 532, line 3, leave out schedule 31.
      Government amendment No. 91.
      Mr. Flight: We believe that there are some major deficiencies in the schedule, which we did not address in Committee.
      Mr. Letwin: The charade that we have just witnessed is necessitated by the fact that I must declare an interest. Again, I am not quite clear which, but I am sure that there will be one. Therefore, I am prohibited by the rules of advocacy from moving the amendment. I do not know what relationship my interests have to schedule 31. However, the rules of the House do not let one speculate, so we will, as always, play by the rules.
      We did not discuss schedule 31 in Committee and the sole responsibility for that lamentable fact lies with me. I was so concerned with schedule 30 that I did not notice that schedule 31 was on the agenda and failed to leap up in time. However, nothing much has been lost, because the right answer on Report is the same as the right answer would have been in Committee, which is that schedule 31 needs to be no part of this Bill. It is radically misconceived and the Government have just as good an opportunity to remedy it now by accepting the amendment to delete it as they would have had in Committee.
      I want to put on the record two critical points. The first is that the Conservative party has no truck whatever with the idea of people being able to construct arrangements for avoiding tax out of controlled foreign companies as a way of going about something quite other than trading business. That is the reason why we introduced controlled foreign companies provisions 16 years ago. There is nothing between us and the Government on the general principle that where a UK company seeks to engage in Bermuda cashbox activities or the like with a straightforward controlled foreign company, that needs to be stopped. The whole purpose of CFC legislation is to stop it. So far, so good.
      The second point is that, unfortunately, this is an area of great delicacy and complexity, involving a huge range of different transactions. As a consequence, it is extraordinarily difficult to disentangle entirely legitimate business manoeuvres from tax avoidance manoeuvres. I do not hold it against Ministers or officials that they have made a muck-up of schedule 31 because it is difficult to separate the two matters. However, the fact is that they have made a muck-up of it and, as a consequence, it needs to be withdrawn. That is not to say that some better constructed analogue of it could not come forward next year and do some good in the service of the British taxpayer. This, however, is not that analogue. It is a schedule that does some very wrong things—albeit, I think, unintentionally.
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      I think that the Paymaster General is aware of some of those things, but she may not be aware of all of them. If she is aware of all of them, I apologise for going through them rather laboriously; but as, if she is aware of them, she should have done something about them, I think I can be forgiven for assuming that she is not. That is the only charitable explanation for the existence of schedule 31.
      I wish to draw attention to two problems in particular. The first is caused by a combination of paragraphs 4 and 8 of the schedule, and relates to the 50:50 joint venture. Let us suppose that there are two corporations, one UK-based and the other US-based, each of which holds an interest of more than 40 per cent. and less than 50.1 per cent. of a joint venture vehicle. If each corporation holds an interest of 50 per cent., both will fall into the category of companies holding an interest of more than 40 per cent. and less than 50.1 per cent., and will therefore be caught in the nexus of paragraphs 4 and 8.
      I am sure that the 40 per cent. rule is intended to capture certain nefarious tax-avoidance practices—practices unknown to me but, doubtless, known to the Minister and her officials. I do not doubt that such practices exist; nor do I doubt that we should find ways of dealing with them. The problem is that the Minister, I think unintentionally, will also catch an entirely legitimate set of business practices which I consider particularly important.
      Let us imagine that the UK and US companies that I mentioned earlier are involved in internet communications, or telecommunications generally. Let us suppose that they operate on the basis of a joint endeavour to provide major multinational customers with voice telephony or data transfer between the US and the UK, and that—not unnaturally—the UK partner seeks to service the UK-based elements while the US partner seeks to service the US-based elements.
      A standard voice telephony call along a straightforward transatlantic cable with indefensible rights of user attached has three components. There is the local and long-distance domestic access within the UK; there is the local and long-distance domestic access within the US, which involves two people, or sets of people, picking up their telephones; and there is the transatlantic component.
      A perfectly rational business structure to be used in such circumstances—a structure that may emerge from detailed negotiations in the setting up of a joint venture—may be the holding of three "pick and mix" sets of accounts. One may relate to the part of the pool charge that originates from the UK caller, and represents the resource cost of providing the UK domestic section of the call facilities. Another may relate to the US termination. The third may relate to the transatlantic element—and the transatlantic element may be accounted for through a 50:50 joint venture.
      It would be perfectly reasonable for that joint venture to be registered in, for instance, the media. We are not talking about a cash box: there is no intention to stuff the system with earnings from the UK in order to collect tax-free interest. The intention is simply to identify a low-tax jurisdiction, for legitimate taxpaying purposes and as part of a legitimate business structure, in which a 50:50 joint venture can be sensibly located—a venture in which the shared part of the call revenue can be placed, and in which the cost of that shared part will be recognised. In this instance, we are talking about the cost of the IRUs on the transatlantic cable and, perhaps, associated transmission equipment.

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      I have described an entirely legitimate business practice and an entirely legitimate business structure. I do not know whether such things currently exist, although I speculate that they do, and if they do not they soon will. There are many other such cases, some of which I know exist, from personal experience. All those cases will be captured by the intersection of paragraphs 4 and 8. The joint venture that I have described will be regarded as a controlled foreign company, and that is wrong. The Financial Secretary will smile at this, inwardly or outwardly, but the effect of the provision is irrational. Moreover, it is unintentional. At least, I assume that it is; the Bill cannot have been intended to clobber such legitimate business practices.
      That is the first defect of schedule 31. I thought long and hard—and, more importantly, tried to persuade experts to do the same, as my capacities in this respect are distinctly limited—about the possibility of tabling specific amendments to deal with that defect, but I am afraid that it defeated us. I think that the structure of the schedule militates against a solution, and that is my first reason for believing that the schedule should be rewritten.
      I am mindful of the fact that, as the hon. Member for Kingston and Surbiton (Mr. Davey) said repeatedly in Committee, we do not want to complicate the situation by tabling "right" amendments on top of "wrong" schedules, ending up with a provision that no one understands. I fear that that would be the very result of trying to weave a solution into schedule 31 as it stands. Surely it would be far better to scrap the schedule, and bring it back next year. The amount that the Government will lose as a result of loopholes they have discovered will not be hugely significant in one year. Over time it may prove important, but I am sure that over time a solution can be found to whatever problems the Paymaster General considers to be real—and arise from tax avoidance manoeuvres—without the need to clobber the joint ventures to which I have referred.
      I do not know whether the Paymaster General already knows about the problem that I have identified. As I have said, if she does, she should have killed it already. I shall charitably assume that she does not.
      Dawn Primarolo: If the hon. Gentleman looks at the Bill, he will see that the motive test would apply. He has described a situation that revolves around not an intent to avoid tax, but the structure of the joint venture. The motive test, and other exceptions, would exempt a case of non-avoidance.
      I do not understand the hon. Gentleman's point. He says that he is against avoidance, but that there are some structures that do not fit the 50:50, 40:40 arrangement. Ours is the only country with the motive test and the other exemptions. If the purpose was not to avoid tax, presumably such structures would be all right.
      Mr. Letwin: I hardly dare suggest it, but we may be making progress. If I tell the Paymaster General what I find worrying, perhaps she can lay my fears to rest for Pepper v. Hart purposes.
      I freely admit that I only dimly understand how the motive test will be applied by the courts. Indeed, I am not convinced that the great lawyers understand that yet. As I
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      dimly understand it, however, the test does not distinguish clearly between two things. We need such a distinction here, and if the Minister can make the right statement we may be able to achieve it.
      The test does not distinguish clearly between manoeuvres designed purely to avoid tax—I agree that they should be clobbered—and arrangements of the kind I have described. While such arrangements are perfectly legitimate business manoeuvres, an element of them will have been the hope that—through onshore pooling and other legitimate means; by causing the subsidiary to be chosen to be in a low-tax jurisdiction—the net effect would be beneficial. That constitutes tax planning of a legitimate kind, not tax avoidance.
      if the Paymaster General is saying that the motive test—not only as she plans it but, much more importantly, as she intends it to apply to this case—would mean that, in the type of circumstances I was describing, that would be regarded not as an avoidance mechanism but as legitimate tax planning, as part of legitimate business activity, I think that we probably do have a solution to this particular problem.
      8.30 pm
      Dawn Primarolo: The motive test has been in place since 1984, when the previous Government introduced it, and has consistently worked perfectly well without the problems that the hon. Gentleman is describing. I assure him that the type of structures that he is identifying are not new ones. He has advanced two arguments, the first of which deals with what would happen if the activity was not avoidance under the 40:40 test. As I told him, the motive test is the key to determining how to deal with the matter.
      Secondly, the hon. Gentleman questioned whether the motive test was adequate. As I said, it has been working perfectly well since 1984 and has withstood the test of time. I think that I am right in saying that we use it also in transfer pricing. However, I shall double check on that to ensure that I am correct.
      I apologise for making a rather long intervention. Nevertheless, both the hon. Gentleman's points are answered in the legislation.
      Mr. Letwin: There is no need to apologise for the length of the intervention. I think—as long as I am thinking straight through the haze of my indisposition—that the Paymaster General is probably saying what needs to be said. We shall later entirely discover. However, I think that she may have succeeded in removing my anxiety on that score.
      Dawn Primarolo: I think that we can certainly clear up these points, and it is important that the explanation is on the record. The motive test exempts controlled foreign companies that do not have United Kingdom tax avoidance as one of the main—I emphasis, the main—reasons for their existence or the transaction. I think that we can see a clear audit trail—involving motive, motive test, exemptions and current and past interpretation—that deals with the point that the hon. Gentleman is making. Clearly, CFC legislation takes account of legitimate activity, but—putting it very directly—nails those who are avoiding tax and for whom the CFC exists purely to help them to do that.
      Mr. Letwin: If the hon. Lady is putting the emphasis that I think she is putting on the word "mainly", I think

      469
      that it probably will capture the case that I was describing and similar cases, and that we probably will have a solution. Therefore, I think that we can probably rest easy on that—although, as I said, time will tell, as we go through the courts and hear how these matters are interpreted. Nevertheless, the hon. Lady's comments were very helpful.
      Mr. Edward Davey: I believe that the Paymaster General is right on this point. My only concern with the motive test in the legislation is whether, in the Inland Revenue's examination of a company's motive, there should be an appeal procedure. There is an appeal procedure in other spheres in which the motive test operates. Does the hon. Gentleman think that the absence of such a procedure is a deficiency in the Bill?
      Mr. Letwin: I agree with the hon. Gentleman that if the motive test is to have placed on it the weight that the Paymaster General has most helpfully placed on it, it would also be helpful if there were an appeal procedure within the Inland Revenue—as the courts already have one. I certainly agree on that point.
      Let us turn to the second problem with schedule 31, which I think that the Paymaster General became aware of at a considerably earlier stage in our deliberations on the Bill. I think that she became aware of it through the representations of one particular company. In Committee, at a certain moment in the discussion of something quite else, the Paymaster General sounded as if she was saying that there was only one company in the whole of the United Kingdom that really was affected in the way that I am about to describe. I think that that was incautious and, in fact, false. Certainly, however, one company has brought to her attention the problem that I am about to bring to her attention. I can only assume that she thinks that the problem is not serious enough to worry about. It is serious enough to worry about.
      What is this particular problem? It is the problem of the Swiss-Lux Finance Company being used as part of a structure whose basic intention is not to avoid United Kingdom tax, but to benefit from the tax shield on interest costs of a higher-tax jurisdiction where the subject of an acquisition resides in the higher-tax jurisdiction. Let me try to disentangle that absolutely ghastly sentence.
      Dawn Primarolo: I think that I may be able to help the hon. Gentleman to untangle that ghastly sentence. Is he describing the transfer of losses into a country where the losses were not generated, to get the benefit of that country's relief?
      Mr. Letwin: In a word, no. I am describing a situation in which a United Kingdom company, as a perfectly ordinary part of its business, acquires a company in another jurisdiction that has a higher corporate tax rate—it is a standard merger and acquisition by one trading company of another trading company; there is no question of any type of sheer financing manoeuvre—and in which it funds that acquisition, as many acquisitions are funded, partially or wholly through debt. Because company A, the United Kingdom company, is the acquirer, it will naturally fund the acquisition through debt raised by itself from its bankers. Therefore, stage 1 of the transaction is that the United Kingdom company—which was previously, for example, debt free—has acquired a huge
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      lump of debt as a result of raising the money to buy company B in, shall we say, Germany, which has a high corporate tax rate.
      So far, there would be nothing between the Paymaster General and the Opposition. Everyone would agree that that is a completely legitimate acquisition activity. It may even lead to the creation of a great United Kingdom company. In fact, there is one instance in recent British history when it has led precisely, as I have described, to the creation of a great United Kingdom trading company.
      The next stage of the transaction is that the United Kingdom company in question—having acquired, first, the German subsidiary, and, secondly, the lump of debt in the United Kingdom—wants to find a way of refinancing that debt in the German subsidiary, so that—
      Dawn Primarolo: It can transfer losses.
      Mr. Letwin: No. We are talking about transferring not losses, but acquisition debt. There is no reason on earth why the United Kingdom tax authorities should object to the transfer of acquisition debt from a United Kingdom acquirer to a subsidiary in a higher-tax jurisdiction. I cannot see any reason at all why that should be something to which the United Kingdom Treasury objects.
      I should point out that, if it really is something to which the United Kingdom Treasury and the Paymaster General object, they are signalling to all such potential acquirers in the United Kingdom that they should do reverse takeovers and end up with their headquarters in the higher-tax jurisdiction. I know that the Paymaster General is the chairman of an important—to my mind rather misguided, but, nevertheless, important—committee of the European Union that looks into these things, and I understand that she may have other interests and motives in the matter—which certainly are not illegitimate in any personal sense, but are part of an agenda that the Opposition do not share.
      None the less, just dwelling on this particular type of case, I cannot see any United Kingdom interest in trying so to arrange things that, in the circumstance that I have described, the United Kingdom acquirer prefers to have headquarters located in the high-tax jurisdiction by doing a reverse takeover. Such an arrangement would be a great disadvantage to the United Kingdom, its financial institutions, its accountants, its lawyers, its office cleaners and all the rest. It is all part of the same syndrome that we thought we had got over when the Government reversed the double tax relief provisions. What we are all trying to achieve, I hope, is attracting—not repelling—companies from locating their headquarters here.
      It is clear to me that I do not need to explain to the Paymaster General—I shall therefore only very briefly explain to the House—that, currently, the manoeuvre of locating acquisition debt in the high-tax jurisdiction subsidiary proceeds by means of having a Swiss-Lux Finance arrangement, whereby the Luxembourg company effectively lends money to the subsidiary in the high-tax jurisdiction and receives interest from it.
      That money is then used by the subsidiary to purchase shares in the acquirer so that the acquirer can pay off its UK debt. By those means, the debt is effectively relocated to the high-tax jurisdiction. That manoeuvre will be prevented by schedule 31(7). However, it is not in the interests of the UK to arrange matters so that such a

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      manoeuvre is illegitimate, because the effect will be to persuade companies to locate their headquarters in the high-tax jurisdictions, which are likely to be other European countries. That cannot be to our national advantage.
      Having said all that, I am most preoccupied by the unfairness involved. Although the disadvantages are considerable, they are not as great as in the case of the double tax relief. Schedule 31(7) is an important, but not a catastrophic, mistake. What makes it necessary for us to oppose the provision is the fact that companies have already performed the manoeuvre in the legitimate expectation that it would not be clobbered retrospectively. The least that the Government should do—which would reduce the schedule from being appalling to merely very bad—is to agree that the provisions will not apply retrospectively. People will know in future that they need to plan around the provisions, but to apply them retrospectively is unfair and the Opposition cannot concur to that.
      I expect that the Paymaster General has received intensive briefing and clear explanations from at least one company. I happen to know that it is not the only one that will be affected, but it is the only one that has stuck its head above the parapet. The Paymaster General will probably admit—while displaying the same delicacy as I am in not naming the company—that the company is a reputable company. It is not a fly-by-night tax avoidance mechanism, but one of Britain's great trading companies. I disagree with the Paymaster General on many things, but I know that we share the patriotism that means we wish to encourage business to locate here. I cannot think that she wants to send out the message that if companies based in the UK behave in certain ways based on legitimate expectations, they will be retrospectively clobbered by Acts of Parliament. That has not been part of the tradition of our tax legislation and the Paymaster General cannot wish to see it happen now.
      if the Paymaster General can tell us, in the same tremendous spirit of co-operation and sympathy that she displayed in relation to earlier problems, that the legislation will not apply retrospectively, for some reason that I have missed, it will at least not be catastrophic, although it will militate against future acquirers locating in the UK. A much better solution would be to redo schedule 31(7) so that it would not have that effect. That is the solution that we seek and the reason why we shall push the amendment to a vote.
      8.45 pm
      Dawn Primarolo: I shall clear up a couple of points before I turn to the issue of acquisition. It was, I believe, the hon. Member for Kingston and Surbiton (Mr. Davey), as well as the hon. Member for West Dorset (Mr. Letwin), who raised the issue of whether the motive test was appealable. The answer is yes. Under self-assessment, it is for companies to assess whether their controlled foreign companies pass the motive test. They have been capable of doing that since 1984, as I explained. If the Inland Revenue disagrees with the self-assessment, it can amend it. As in any other case in which the Inland Revenue
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      makes such an amendment, the company can appeal against it. The case goes to the commissioners and can then go to the courts.
      Mr. Letwin: That is helpful.
      Dawn Primarolo: Thus far, but no further. I have a feeling that we will have to agree to disagree on the rest, because we do not accept the amendment. To remove in their entirety the anti-avoidance measures on controlled foreign companies would be crazy. I am a little surprised that the hon. Gentleman suggests doing so because he is otherwise clear on the issues of avoidance. The amendment is reckless and the beneficiaries would be those multinationals which wish to avoid paying their fair share of UK tax. The losers would be the hard-working families of this country and other companies which would face increased taxation or poorer services because of lower tax receipts. I am sure that the hon. Gentleman does not wish to be seen to support the corporate tax scams and wheezes that the amendment would allow.
      The hon. Gentleman will be familiar with the opinion in the International Tax Review, which in September 1998 specifically highlighted the fact that the use of the controlled foreign company and exempt international holding companies was
      a method of avoiding tax.
      Indeed, the article expressed surprise that the arrangements were not being blocked and it was written by none other than the leading accountant at the then Price Waterhouse, which the Opposition have been keen to quote during these debates.
      On the issue of acquisition, I shall make a few preliminary points and then deal specifically with debt transfer.
      There are four sets of changes in the arrangements for controlled foreign companies, and the point about acquisition is pertinent to the fourth. That change stops the automatic exemption for holding companies from being abused to avoid UK tax on intra-group interests and royalties. As we have discussed, holding companies are generally outside the controlled foreign company rules if at least 90 per cent. of their income comes from companies that meet one or more of the controlled foreign company exemptions.
      Generally speaking, that makes sense when the income is a dividend paid out of post-tax profits. There is a logic in saying that, from the point of view of the UK Exchequer, it is largely immaterial whether the post-tax profits of a non-resident subsidiary are held in the subsidiary or in the non-resident holding company. However, the current rules are not restricted to holding companies that receive their income from post-tax profits. They apply equally where the income consists of interest and royalties paid from pre-tax profits. In those circumstances, pre-tax profits are shifted from the subsidiary to the holding company. There is a tax deduction in the subsidiary, and a new source of income in the holding company.
      The current exemption distorts the way in which some investments are structured, and is leading to a loss of tax for the UK. Multinational companies use offshore holding companies to extract tax-free profit from overseas subsidiaries. They then keep those profits outside the UK tax net. That is part of the problem that the Government

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      are dealing with, but I hope that the hon. Member for West Dorset will accept that several relationships are involved.
      The Bill will ensure that the automatic exemption for holding companies is passed only when more than 90 per cent. of the holding company's income is received in the form of a dividend that is not tax deductible. The change does not introduce any new principle to the controlled foreign company rules. Other ways of diverting the pre-tax profits of overseas subsidiaries into tax havens and preferential regimes are already covered. The Bill will introduce a logical and coherent set of rules by applying to the holding company exemption the same principles that apply to the rest of the controlled foreign company legislation introduced by the Conservatives in 1984.
      It has been suggested that some multinationals—I shall not name them for reasons of taxpayer confidentiality—are using loans from holding companies to reduce foreign tax, rather than UK tax. That is the point that the hon. Member for West Dorset is focusing on, and I hope that he will be happy with what I have to say next. If a company is not seeking to avoid UK tax it will, of course, get through the motive test—end of story. However, holding companies typically use debt finance to reduce both foreign tax and UK tax. It is in those circumstances that the controlled foreign company legislation would bite.
      I hope that the hon. Gentleman appreciates the distinction. He said that he does not agree with avoidance of UK tax, and that he was talking about the transfer of debt into foreign jurisdictions. As long as that transfer does not lead to a reduction in UK tax liability, the CFC legislation will not bite.
      Mr. Letwin: That is helpful, but although the main purpose of the manoeuvre that we are talking about was to reduce costs through reducing tax in a foreign jurisdiction, the by-product was that tax in the UK was also reduced. Does not the Paymaster General think that it would be wrong retrospectively to clobber people who had made plans based on legitimate expectations regarding the law as it previously existed?
      Dawn Primarolo: With respect, I do not understand how the hon. Gentleman can say that the Bill will clobber such people retrospectively. The rules have made it clear that companies could not use controlled foreign companies to reduce their UK tax liability, or to avoid it completely. The Bill proposes amendments to our controlled foreign company legislation because some have sought to circumvent the clear intent of that legislation.
      The hon. Member for West Dorset will know that controlled foreign company legislation is used throughout Europe and north America. The UK is the only country in the world that has a motive test, and we recognise that it can be commercially legitimate to use such companies. However, a company that is avoiding its UK tax liability will be caught by the controlled foreign company legislation. I make no apology for that, as such a company should pay to the Government the tax for which it is liable.
      Mr. Letwin: I persist in believing that the Paymaster General is missing a point. The fundamental purpose of the manoeuvre that we have been discussing is to obtain
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      a reduction in the foreign jurisdiction tax by displacing the debt to the subsidiary; in that case, the CFC is being used not to avoid UK tax, but to reduce tax in the other jurisdiction. However, it may be that a by-product is to reduce UK tax liability, and in that case it seems quite unfair retrospectively to deal a blow.
      Dawn Primarolo: I do not agree. As we discussed in our previous debate, there has been much comment and many representations on the double taxation relief set out in schedule 30. We have received far fewer observations on the controlled foreign company provisions in schedule 31. Indeed, without breaking any confidences about which companies were involved, it is accurate to say that the majority of companies that made representations on the double taxation relief entirely supported our measures in respect of legislation on CFCs—in fact, some thought that we should go further than we have done. A small number of companies were attempting to use CFC legislation to avoid UK tax, and they have, of course, been quite vocal, but their comments are not representative of the far larger number of companies and professional advisers who have discussed these matters with us. The hon. Gentleman should not expect us to make legislation for the exceptions that attempt to reduce their tax liability in the UK when every other multinational is paying that liability. Therefore, should the hon. Gentleman push his amendment to a vote, I shall ask my hon. Friends to reject it.
      Mr. Letwin: Although I appreciate that the Paymaster General is attempting to block off a species of tax avoidance that we agree should be blocked off, she is also blocking off manoeuvres that are perfectly legitimate, and I am bound to say that I persist in believing that she is doing so retrospectively and unfairly. In the circumstances, we shall press the amendment to a vote and I urge my right hon. and hon. Friends to vote against the schedule and in favour of our amendment. I hope that the Paymaster General will reconsider the measure, as she has on double taxation relief, because its long-term effects will be severely deleterious to our industry.
      Dawn Primarolo: I shall urge my hon. Friends to support the Government amendments, including Government amendment No. 91, because I am not persuaded by the hon. Gentleman's arguments. We shall not be able to reach agreement on the matter.
      Question put, That the amendment be made:—
      The House divided: Ayes 120, Noes 344.

      Division No. 279]

      [8.58 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Chapman, Sir Sydney (Chipping Barnet)

      Amess, David

      Arbuthnot, Rt Hon James

      Chope, Christopher

      Baldry, Tony

      Clappison, James

      Beggs, Roy

      Collins, Tim

      Bercow, John

      Cormack, Sir Patrick

      Body, Sir Richard

      Cran, James

      Bottomley, Peter (Worthing W)

      Davies, Quentin (Grantham)

      Bottomley, Rt Hon Mrs Virginia

      Davis, Rt Hon David (Haltemprice)

      Brazier, Julian

      Day, Stephen

      Brooke, Rt Hon Peter

      Donaldson, Jeffrey

      Bruce, Ian (S Dorset)

      Evans, Nigel

      Burns, Simon

      Faber, David

      Butterfill, John

      Fabricant, Michael

      475

      Flight, Howard

      May, Mrs Theresa

      Forth, Rt Hon Eric

      Moss, Malcolm

      Fox, Dr Liam

      Norman, Archie

      Garnier, Edward

      O'Brien, Stephen (Eddisbury)

      Gibb, Nick

      Ottaway, Richard

      Gill, Christopher

      Paice, James

      Gillan, Mrs Cheryl

      Paterson, Owen

      Gorman, Mrs Teresa

      Portillo, Rt Hon Michael

      Greenway, John

      Prior, David

      Grieve, Dominic

      Randall, John

      Gummer, Rt Hon John

      Robathan, Andrew

      Hague, Rt Hon William

      Robertson, Laurence

      Hamilton, Rt Hon Sir Archie

      Roe, Mrs Marion (Broxbourne)

      Hammond, Philip

      Rowe, Andrew (Faversham)

      Hawkins, Nick

      St Aubyn, Nick

      Heald, Oliver

      Sayeed, Jonathan

      Heathcoat-Amory, Rt Hon David

      Shephard, Rt Hon Mrs Gillian

      Hogg, Rt Hon Douglas

      Shepherd, Richard

      Horam, John

      Simpson, Keith (Mid-Norfolk)

      Howarth, Gerald (Aldershot)

      Soames, Nicholas

      Hunter, Andrew

      Spelman, Mrs Caroline

      Jack, Rt Hon Michael

      Spring, Richard

      Jackson, Robert (Wantage)

      Stanley, Rt Hon Sir John

      Jenkin, Bernard

      Steen, Anthony

      Johnson Smith,

      Streeter, Gary

      Rt Hon Sir Geoffrey

      Swayne, Desmond

      Key, Robert

      Syms, Robert

      Kirkbride, Miss Julie

      Tapsell, Sir Peter

      Lait, Mrs Jacqui

      Taylor, Ian (Esher& Walton)

      Lansley, Andrew

      Taylor, John M (Solihull)

      Leigh, Edward

      Taylor, Sir Teddy

      Letwin, Oliver

      Townend, John

      Lewis, Dr Julian (New Forest E)

      Tredinnick, David

      Lidington, David

      Trend, Michael

      Lilley, Rt Hon Peter

      Tyrie, Andrew

      LIoyd, Rt Hon Sir Peter (Fareham)

      Waterson, Nigel

      Loughton, Tim

      Whitney, Sir Raymond

      Luff, Peter

      Whittingdale, John

      Lyell, Rt Hon Sir Nicholas

      Widdecombe, Rt Hon Miss Ann

      MacGregor, Rt Hon John

      Willetts, David

      McIntosh, Miss Anne

      Wilshire, David

      MacKay, Rt Hon Andrew

      Winterton, Mrs Ann (Congleton)

      Maclean, Rt Hon David

      Winterton, Nicholas (Macclesfield)

      McLoughlin, Patrick

      Yeo, Tim

      Madel, Sir David

      Young, Rt Hon Sir George

      Malins, Humfrey

      Maples, John

      Tellers for the Ayes:

      Maude, Rt Hon Francis

      Mr. Peter Atkinson and

      Mawhinney, Rt Hon Sir Brian

      Mr. Geoffrey Clifton-Brown

      NOES

      Abbott, Ms Diane

      Blears, Ms Hazel

      Adams, Mrs Irene (Paisley N)

      Blizzard, Bob

      Ainger, Nick

      Blunkett, Rt Hon David

      Alexander, Douglas

      Borrow, David

      Allen, Graham

      Bradley, Keith (Withington)

      Anderson, Donald (Swansea E)

      Bradley, Peter (The Wrekin)

      Anderson, Janet (Rossendale)

      Bradshaw, Ben

      Armstrong, Rt Hon Ms Hilary

      Brand, Dr Peter

      Ashton, Joe

      Breed, Colin

      Atkins, Charlotte

      Brinton, Mrs Helen

      Austin, John

      Brown, Rt Hon Gordon (Dunfermline E)

      Ballard, Jackie

      Banks, Tony

      Brown, Russell (Dumfries)

      Barnes, Harry

      Browne, Desmond

      Bayley, Hugh

      Bruce, Malcolm (Gordon)

      Begg, Miss Anne

      Buck, Ms Karen

      Beith, Rt Hon A J

      Burgon, Colin

      Bell, Martin (Tatton)

      Burnett, John

      Bell, Stuart (Middlesbrough)

      Burstow, Paul

      Benn, Hilary (Leeds C)

      Butler, Mrs Christine

      Benton, Joe

      Caborn, Rt Hon Richard

      Bermingham, Gerald

      Campbell, Mrs Anne (C'bridge)

      Berry, Roger

      Campbell, Ronnie (Blyth V)

      Best, Harold

      Campbell-Savours, Dale

      Betts, Clive

      Cann, Jamie

      476

      Caplin, Ivor

      Griffiths, Nigel (Edinburgh S)

      Casale, Roger

      Griffiths, Win (Bridgend)

      Caton, Martin

      Grocott, Bruce

      Cawsey, Ian

      Grogan, John

      Chapman, Ben (Wirral S)

      Gunnell, John

      Chidgey, David

      Hall, Mike (Weaver Vale)

      Chisholm, Malcolm

      Hamilton, Fabian (Leeds NE)

      Clapham, Michael

      Hancock, Mike

      Clark, Rt Hon Dr David (S Shields)

      Hanson, David

      Clarke, Charles (Norwich S)

      Harman, Rt Hon Ms Harriet

      Clarke, Eric (Midlothian)

      Harvey, Nick

      Clarke, Rt Hon Tom (Coatbridge)

      Healey, John

      Clelland, David

      Henderson, Doug (Newcastle N)

      Clwyd, Ann

      Henderson, Ivan (Harwich)

      Coaker, Vernon

      Hepburn, Stephen

      Coffey, Ms Ann

      Hepburn, Stephen

      Cohen, Harry

      Heppell, John

      Coleman, Iain

      Hesford, Stephen

      Colman, Tony

      Hewitt, Ms Patricia

      Connarty, Michael

      Hill, Keith

      Cooper, Yvette

      Hinchliffe, David

      Corbett, Robin

      Hodge, Ms Margaret

      Corston, Jean

      Hoey, Kate

      Cotter, Brian

      Home Robertson, John

      Cranston, Ross

      Hood, Jimmy

      Crausby, David

      Hoon, Rt Hon Geoffrey

      Cryer, Mrs Ann (Keighley)

      Hope, Phil

      Cryer, John (Hornchurch)

      Hopkins, Kelvin

      Cummings, John

      Howarth, Alan (Newport E)

      Cunningham, Jim (Cov'try S)

      Howells, Dr Kim

      Curtis-Thomas, Mrs Claire

      Hoyle, Lindsay

      Dalyell, Tam

      Hughes, Kevin (Doncaster N)

      Darling, Rt Hon Alistair

      Hughes, Simon (Southward N)

      Darvill, Keith

      Humble, Mrs Joan

      Davey, Edward (Kingston)

      Hurst, Alan

      Davey, Valerie (Bristol W)

      Hutton, John

      Davies, Rt Hon Denzil (Llanelli)

      Iddon, Dr Brian

      Davies, Geraint (Croydon C)

      Illsley, Eric

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

      Jackson, Ms Glenda (Hampstead)

      Jackson, Helen (Hillsborough)

      Dawson, Hilton

      Jamieson, David

      Dean, Mrs Janet

      Jenkins, Brian

      Denham, John

      Johnson, Miss Melanie (Welwyn Hatfield)

      Dismore, Andrew

      Dobbin, Jim

      Jones, Rt Hon Barry (Alyn)

      Dobson, Rt Hon Frank

      Jones, Helen (Warrington N)

      Doran, Frank

      Jones, Ms Jenny (Wolverh'ton SW)

      Dunwoody, Mrs Gwyneth

      Eagle, Angela (Wallasey)

      Jones, Dr Lynne (Selly Oak)

      Eagle, Maria (L'pool Garston)

      Jones, Martyn (Clwyd S)

      Edwards, Huw

      Keeble, Ms Sally

      Efford, Clive

      Keen, Alan (Feltham & Heston)

      Ellman, Mrs Louise

      Keen, Ann (Brentford & Isleworth)

      Ennis, Jeff

      Keetch, Paul

      Ewing, Mrs Margaret

      Kemp, Fraser

      Fearn, Ronnie

      Khabra, Piara S

      Fisher, Mark

      Kilfoyle, Peter

      Fitzpatrick, Jim

      King, Andy (Rugby & Kenilworth)

      Fitzsimons, Mrs Lorna

      Kirkwood, Archy

      Flint, Caroline

      Kumar Dr Ashok

      Flynn, Paul

      Ladyman, Dr Stephen

      Follett, Barbara

      Foster, Don (Bath)

      Lammy, David

      Fyfe, Maria

      Lawrence, Mrs Jackie

      Galloway, George

      Laxton, Bob

      Gardiner, Barry

      Lepper, David

      George, Andrew (St Ives)

      Leslie, Christopher

      George, Bruce (Walsall S)

      Levitt, Tom

      Gibson, Dr Ian

      Lewis, Ivan (Bury S)

      Gilroy, Mrs Linda

      Lewis, Terry (Worsley)

      Godsiff, Roger

      Liddell, Rt Hon Mrs Helen

      Goggins, Paul

      Linton, Martin

      Golding, Mrs Llin

      Lloyd, Tony (Manchester C)

      Gordon, Mrs Eileen

      Love, Andrew

      Gorrie, Donald

      McAllion, John

      Griffiths, Jane (Reading E)

      McAvoy, Thomas

      477

      McCabe, Steve

      Ruddock, Joan

      McCartney, Rt Hon Ian (Makerfield)

      Russell, Bob (Colchester)

      Russell, Ms Christine (Chester)

      McDonagh, Siobhain

      Ryan, Ms Joan

      Macdonald, Calum

      Salmond, Alex

      McDonnell, John

      Salter, Martin

      McFall, John

      Sanders, Adrian

      McGuire, Mrs Anne

      Sarwar, Mohammad

      McIsaac, Shona

      Savidge, Malcolm

      McKenna, Mrs Rosemary

      Sedgemore, Brian

      Mackinlay, Andrew

      Shipley, Ms Debra

      McNamara, Kevin

      Simpson, Alan (Nottingham S)

      McNulty, Tony

      Skinner, Dennis

      MacShane, Denis

      Smith, Rt Hon Andrew (Oxford E)

      Mactaggart, Fiona

      Smith, Angela (Basildon)

      McWalter, Tony

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      McWilliam, John

      Mahon, Mrs Alice

      Smith, Jacqui (Redditch)

      Marsden, Gordon (Blackpool S)

      Smith, John (Glamorgan)

      Smith, Llew (Blaenau Gwent)

      Marshall, David (Shettleston)

      Smith Sir Robert (W Ab'd'ns)

      Marshall, Jim (Leicester S)

      Snape, Peter

      Marshall-Andrews, Robert

      Soley, Clive

      Martlew, Eric

      Southworth, Ms Helen

      Meacher, Rt Hon Michael

      Squire, Ms Rachel

      Meale, Alan

      Starkey, Dr Phyllis

      Merron, Gillian

      Steinberg, Gerry

      Michie, Bill (Shef'ld Heeley)

      Stevenson, George

      Michie, Mrs Ray (Argyll & Bute)

      Stewart, David (Inverness E)

      Miller, Andrew

      Stewart, Ian (Eccles)

      Mitchell, Austin

      Stinchcombe, Paul

      Moffatt, Laura

      Stoate, Dr Howard

      Moore, Michael

      Strang, Rt Hon Dr Gavin

      Morgan, Alasdair (Galloway)

      Stringer, Graham

      Morgan, Ms Julie (Cardiff N)

      Stuart, Ms Gisela

      Morley, Elliot

      Stunell, Andrew

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

      Sutcliffe, Gerry

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Morris, Rt Hon Sir John (Aberavon)

      Taylor, Ms Dari (Stockton S)

      Mountford, Kali

      Taylor, David (NW Leics)

      Mullin, Chris

      Thomas, Gareth R (Harrow W)

      Murphy, Jim (Eastwood)

      Thomas, Simon (Ceredigion)

      Naysmith, Dr Doug

      Timms, Stephen

      Oaten, Mark

      Tipping, Paddy

      O'Brien, Bill (Normanton)

      Todd, Mark

      O'Hara, Eddie

      Tonge, Dr Jenny

      Olner, Bill

      Touhig, Don

      O'Neill, Martin

      Trickett, Jon

      Öpik, Lembit

      Truswell, Paul

      Organ, Mrs Diana

      Turner, Dennis (Wolverh'ton SE)

      Osborne, Ms Sandra

      Turner, Dr George (NW Norfolk)

      Pearson, Ian

      Turner, Neil (Wigan)

      Pendry, Tom

      Twigg, Derek (Halton)

      Pickthall, Colin

      Tyler, Paul

      Pond, Chris

      Tynan, Bill

      Pound, Stephen

      Vaz, Keith

      Powell, Sir Raymond

      Vis, Dr Rudi

      Prentice, Gordon (Pendle)

      Walley, Ms Joan

      Prescott, Rt Hon John

      Wareing, Robert N

      Primarolo, Dawn

      Watts, David

      Prosser, Gwyn

      Webb, Steve

      Purchase, Ken

      Welsh, Andrew

      Quin, Rt Hon Ms Joyce

      White, Brian

      Quinn, Lawrie

      Whitehead, Dr Alan

      Rammell, Bill

      Wicks, Malcolm

      Rapson, Syd

      Williams, Rt Hon Alan(Swansea W)

      Reid, Rt Hon Dr John (Hamilton N)

      Rendel, David

      Williams, Alan W (E Carmarthen)

      Rogers, Allan

      Willis, Phil

      Rooker, Rt Hon Jeff

      Winnick, David

      Rooney, Terry

      Winterton, Ms Rosie (Doncaster C)

      Ross, Ernie (Dundee W)

      Woodward, Shaun

      Roy, Frank

      Woolas, Phil

      Ruane, Chris

      Worthington, Tony

      478

      Wray, James

      Wright, Anthony D (Gt Yarmouth)

      Tellers for the Noes:

      Wright, Tony (Cannock)

      Mr. Robert Ainsworth and

      Wyatt, Derek

      Mr. Jim Dowd.

      Question accordingly negatived.
      Amendment made: No. 91, in page 533, line 43, leave out "(3)" and insert "(4)".—[Mr. Jamieson.]

    Clause 106

      FOREIGN EXCHANGE GAINS AND LOSSES: USE OF LOCAL CURRENCY
      Mr. Flight: I beg to move amendment No. 155, in page 77, line 11, leave out clause 106.
      This is a probing amendment. We have been approached by the Chartered Institute of Taxation and the Law Society, which are still concerned about the wide scope of the wording of proposed new section 135A of the Finance Act 1993. In their opinion, the new provision is still capable of catching many companies that prepare their accounts in foreign currency for perfectly normal, commercial reasons rather than because of tax factors.
      Both organisations expressed the concern that the test remains an expected main benefit test as opposed to a purpose test. The question posed is what is the main benefit that might be expected to accrue from exchange gains having to be computed for tax purposes by reference to a particular currency, rather than the relevant question as to what is the main benefit that might be expected to accrue from drawing up commercial accounts in a particular currency. The expected benefits of a transaction is the expected result, whereas a purpose test is a motive test.
      A company's motive in choosing to use a particular reporting currency might have been to avoid exchange fluctuations where the majority of its assets or liabilities are denominated in that currency, but, applying the proposed new section 135A, it may be possible to conclude that the expected main benefit of using the currency was that the company would avoid realising an exchange gain under the foreign exchange legislation.
      9.15 pm
      The key concerns about this anti-avoidance provision are whether wider commercial factors can be taken into account and at which time the expected main benefit test is to be applied. Those issues exercised the institute and the Law Society; both expressed concern that the new test could catch a large number of the investment companies that the reforms in clauses 106 and 107 are introduced to assist.
      Will the Minister offer assurances that commercial factors can be taken into account, and that the expected benefit is to be judged at the time when a company first prepares its accounts in foreign currency? Will she also confirm that the provisions of the section will not apply when a company is preparing its accounts in foreign currency, in accordance with normal accounting practice, in order to avoid its results being distorted by exchange rate fluctuations? The current provisions are widely drawn, and it would be most welcome and helpful if the Minister would give us a clear statement on the cases to which the anti-avoidance provision might be applied.
      Dawn Primarolo: The amendment would remove clause 106. That clause contains several provisions to

      479
      support changes introduced by clause 105 to improve the tax system for international companies. Those changes have been widely welcomed because they will make the United Kingdom a more attractive base for international companies.
      As those supporting measures are necessary to enable the new system to fit in with the existing law, I realise that the Opposition's attempt to drop the whole clause is not serious. Indeed, the hon. Member for Arundel and South Downs (Mr. Flight) admitted that the amendment is a probing one, and that the real concern is about the part of clause 106 that deals with the new anti-avoidance measures in the clause: the new section 135A of the Finance Act 1993, designed to stop the new rules established under clause 105 being exploited to avoid tax.
      As the hon. Gentleman knows, the effect of section 135A is to undo the application of the new rules where the main benefit that might be expected to accrue to a company from using a particular currency in its accounts is that a taxable currency gain would not be recognised. In Committee, the Government made it clear that the rule will apply only where net exchange gains would be cancelled out. That demonstrates that we are interested in the overall position of the company and not in the effect of individual transactions considered in isolation.
      The hon. Gentleman continues to express concerns about the scope of the rule, however, so I shall try to reassure him with some comments that I prepared earlier—as they say on "Blue Peter". These comments will also cover points of interest to others who read our proceedings.
      Let me emphasise first that the new rule is intended to catch avoidance. It is not aimed at any particular type of company or business, but seeks to ensure that the new system of calculating tax, based on a company's accounts, cannot be abused to avoid tax. So trading companies and investment companies conducting their business in a normal, commercial way will not be affected. The point of the test is to establish whether the main benefit that might be expected to accrue to a company from the structuring and accounting of assets and liabilities in a particular currency is that a net exchange gain would be avoided.
      The wording of the test allows for commercial considerations to be taken into account. For example, even if the currency adopted in the company's accounts was particularly weak or strong, if it made commercial sense to use that particular currency and the company's assets and liabilities in that currency were broadly matched, no net exchange gains would have been expected to have been avoided, and the section would not apply.
      Where a net gain has been avoided, the test would still be whether the main benefit from using the currency was the furtherance of the commercial purposes of the company or the avoidance of that exchange gain. The Government believe that a company will normally be able to judge whether it would pass or fail this test. In particular, a company will know whether the decision to account in a particular currency makes commercial sense or whether the structuring and accounting of the company's affairs has been skewed to avoid generating taxable exchange gains.
      480
      To conclude, let me reiterate that the new rule is intended to tackle avoidance. It will not affect legitimate business undertaken by any company, whether that company is a trading company or an investment company. However, it will affect companies that aim to exploit the new rules for a tax benefit.
      I hope that those remarks clarify the scope of the provision and give the hon. Gentleman some of the reassurances that he and others seek on the implementation of the clause. The Inland Revenue will also be providing some written guidance on how the provision will be applied. Given this clarification, perhaps the hon. Gentleman will now feel able to withdraw his amendment. It is only regrettable that we did not have an opportunity to cover these points more fully in Committee.
      Mr. Flight: I thank the Paymaster General for her helpful comments. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.

    Clause 107

      OVERSEAS LIFE ASSURANCE BUSINESS
      Miss Melanie Johnson: I beg to move amendment No. 64, in page 79, line 29, leave out from beginning to "an" in line 30 and insert "Where".
      Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 65 to 67.
      Amendment No. 152, in page 80, line 4, leave out—
      'such descriptions of general insurer as may be prescribed:'
      and insert ";

      (i) such descriptions of general insurer as may be prescribed: or

      (ii) a general insurer who elects to be subject to an arrangement prescribed in regulations which appear to the Board to be appropriate;'.

      Government amendments Nos. 68 to 70.
      Amendment No. 153, in page 80, line 10, leave out "prescribed" and insert "commercial".
      Amendment No. 154, in page 80, line 10, after "rate", insert "or rates".
      Government amendments Nos. 71 to 77.
      Miss Johnson: Clause 107 deals with tax deductions for general insurance reserves and introduces the principle of discounting. It consists mainly of regulation-making powers, and this use of regulations has allowed for consultation with the insurance industry, which has been undertaken, and which good continues—to good effect. The amendments will allow regulations made under the clause to incorporate a change to the original proposals which was suggested in the course of consultation.
      In order to explain the amendments, I will briefly explain the effect of the clause. Regulations made under the clause will introduce a process of recalculation of the tax deduction for a year. If it turns out that the tax deduction exceeded a discounted value of actual costs, additions will be made to taxable profits. The additions

      481
      will be calculated like interest charges, so the effect will be to charge interest on tax that has been delayed because tax deductions have been too large.
      This leads to the question of what should happen if it turns out that a deduction was too low. It is right that this situation should be recognised, alongside the case where a deduction is too high. If a deduction was too low, an amount of interest will also be calculated and it will be given as a tax relief for the insurer.
      The consultation paper for the secondary legislation proposed allowing this relief only against interest additions made under the clause, and only in the same year or a later year. In Committee, I agreed that this relief should be made more widely available than was originally proposed, and suggested two options—that relief be available against all trading profits, or that it should be available to carry back to an earlier year.
      Industry representatives have suggested that the two options should be combined, with a general right of set-off in the same year, combined with a limited right of set-off in an earlier year. Of the two options, their preference was for an unlimited set-off in the same year. The amendments to the clause will make this change, by providing that interest on overpaid tax will take the form of additional trade expenses. The expenses will be available in the normal way against all taxable profits arising in the same year. If they create a loss, there will be the usual one-year loss relief carry-back.
      The amended clause also leaves open the possibility of a limited form of carry-back of relief to an earlier year. This is, however, a matter for secondary legislation, and will be decided following further consultation, along with other matters of detail.
      The amendments create an even-handed approach in the way the clause deals with overpayments and underpayments of tax. In this way, the clause will ensure that the tax outcomes are fair to the Exchequer and fair to insurance companies.
      Mr. Michael Jack: When we discussed this in Committee, concern was expressed that the clause as originally drafted would disadvantage UK insurance companies in comparison with world competitors because of the global nature of the insurance market. In the discussions that were subsequently held with the industry, did the Economic Secretary receive positive assurances from the industry that the amendments addressed the competition issue to its satisfaction?
      Miss Johnson: Many countries, including the United States, Canada, Australia and Germany, already require discounting for tax purposes. France has rules very similar to our proposals to counter over-reserving. The UK has the lowest rates of corporation tax of any major industrialised nation. The long-term costs of the clause to the industry will be far less than the cost of typical European corporate tax rates, which are about 10 per cent. higher than in the UK. The cost is also much less than the industry would pay if insurance premium tax were increased to typical European rates. Our rates are well under European rates.
      Companies can choose to base their tax deductions on discounted liabilities. That will cost them more in the short term, but it will reduce or eliminate their long-term costs. They can choose to do that all at once, or to spread
      482
      the costs over several years. Therefore, the clause will not produce a competitive disadvantage for UK insurers. I hope that that answers the right hon. Gentleman's question.
      Mr. John Greenway: I beg the Paymaster General to revisit what she has said because companies do not pay insurance premium tax; consumers do. If I am lucky enough to catch your eye, Mr. Deputy Speaker, I shall acknowledge that the current provision represents a significant improvement on the original proposal. However, such issues are still not entirely resolved to the satisfaction of those of us who are concerned about the continuing competitiveness of the UK insurance industry.
      Miss Johnson: The point that the hon. Gentleman makes about insurance premium tax is correct. Nevertheless, if we were to raise the rate of insurance premium tax, he would say that that would, in effect, cost the companies money, or that the cost would be passed on to the consumer. The cost is not lost depending on the point at which it enters or leaves the system; it affects the entire system. That point would always be made in such circumstances.
      On the general principle of such discounting, there is an increasing acceptance that the proposal represents the right way to proceed. In Committee, I put on record the joint response to the proposal of the International Accounting Standards Committee. Perhaps it is worth while briefly reminding hon. Members of that comment on discounting.
      The IASC's steering committee concluded that the use of the present value in measuring general insurance claim liabilities is consistent with the emphasis on information that is relevant and decision-useful. A claim that is payable within one month imposes a higher economic burden than a claim for a similar amount that is paid two years in the future. The use of present value allows financial statements to provide information that differentiates those claims from each other. The steering committee found no basis to exempt general insurance claim liabilities from the present value measurement. That was not a lone voice, as was suggested in Committee.
      The IASC's view has been widely endorsed by UK accountants, actuaries and companies. There has been a joint response to the proposals on insurance accounting from the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants in Scotland, the Faculty of Actuaries in Scotland, the Institute of Actuaries and the Association of British Insurers. Their joint comment on discounting was simple. They agree that the use of present value in measuring general insurance claims is appropriate. That is the key issue.
      Our large insurance companies agreed with that view. CGNU expressed support for the joint response, and Royal and Sun Alliance commented:
      We do not think there is any argument for not discounting general business under a fair value basis of measurement of liabilities.
      There is overwhelming support for the principle of discounting. That is at issue here, and the matter is being dealt with even-handedly in response to those representations.

      483
      9.30 pm
      I appreciate that the hon. Member for Arundel and South Downs (Mr. Flight) has not yet spoken to his amendments, but perhaps I might comment briefly. Amendment No. 152 would allow companies to elect to reduce their tax deductions to a discounted best estimate of liabilities, creating what has been called a safe harbour. In return, a company that so elected would be given immunity from later interest charges. However, that change would not sit well with the other provisions in clause 107, which sets out a wholly automatic approach to determining tax liabilities. The clause would not require matters of judgment to be decided on or argued about between the insurance company and the Inland Revenue. I could go into much more detail in response to whatever points the hon. Gentleman makes, but the amendment would add an element that could be disputed. I suggest that it might be subject to considerable legal activity, which would probably not benefit anyone except the lawyers.
      Under amendment No. 153, the discount rate would not be prescribed by secondary legislation. Indeed, it suggests that the legislation should merely specify that the discount rate should be the "commercial" rate. That seems to be a recipe for disagreement. Requiring that the rate be commercial is not good enough properly to describe what is needed and companies, tax inspectors and the courts would have insufficient guidance. To avoid ambiguity, the rate must be prescribed in secondary legislation. Perhaps a commitment is being sought that the discount rate will include an allowance for risk. I await clarification. I gave such a commitment in Committee, but, if that is the issue, I am pleased to do so again and reassure Conservative Members that it holds just as true.
      Mr. Jack: The Minister said that an allowance for risk would be made, which is an important point. Will she be kind enough to develop that by saying how the amount is to be calculated?
      Miss Johnson: The allowance for risk in the discounting calculation could be made either by including a margin for error in the undiscounted value and then discounting the result, or by including an allowance for risk in the discounted rate. There may be some combination of the two. If the legislation did no more than specify that the discount rate should include commercial allowance for risk, that would be ambiguous. It would not specify the commercial purpose, as is suggested by a commercial allowance for risk, nor would it deal with the related question of the margin for error. The proper allowance for risk will be prescribed in secondary legislation, along with the determination of a proper margin for error and other matters of detail. Draft regulations will be made available for comment at the appropriate time.
      Mr. Jack: The Minister says that the question of risk will be the subject of secondary legislation. Will she give an assurance that the insurance industry will be consulted on the legislation's detailed points so that it may have an input?
      Miss Johnson: I have no difficulty in giving the right hon. Gentleman that assurance as we want to achieve
      484
      legislation that is workable and right. I have given a commitment on the discount rate and the way in which it will be considered.
      Amendment No. 154 would insert "or rates" alongside the reference to a discount rate. The amendment is not necessary, but perhaps clarification is being sought and I hope to provide it. I can confirm that clause 107 would allow secondary legislation to specify different rates for different types of business. For example, it would allow discounting to proceed according to a non-sterling rate when the liabilities were denominated in another currency. In view of those assurances, I trust that the amendment will be withdrawn.
      Mr. Flight: I begin by welcoming the Government amendments and the concessions. Despite those, the industry still feels that clause 107 is damaging to UK competitiveness and, ultimately, not worth the candle of the revenue that it will generate.
      The amendments are to permit insurers to treat the negative adjustments arising from under-reserving as expenses of the trade. Those are welcome. The Revenue has also indicated that, if the negative adjustment remains unrelieved, it should be allowed to be carried back against previous positives. It has suggested that subsection (5)(c)(i) and (ii) as amended permits that. It would be helpful if the Minister confirmed that understanding in responding.
      What is particularly welcome is that the recognition of risk in the discounting calculation will be on a commercial basis. As well as the references made by the Minister, I mention her letter to my hon. Friend the Member for Ryedale (Mr. Greenway). It states:
      I agree that the discounting calculation should proceed on a commercial basis, which is why I gave a commitment during the debate that the discount would include a risk margin.
      I take a few minutes to put on the record a summary of why the industry is still not happy with clause 107 and remains opposed to it in principle. As we know, the clause introduces both discounting and a retrospective recalculation regime for tax purposes for insurers. The proposals create a harsher regime than those applicable to other UK companies, even after the concessions and amendments that have been announced.
      Unlike other UK companies, insurers are required to compute claim provisions on the basis of 100 per cent. accuracy, with interest charges where that is not achieved. The Revenue's initial proposals were to allow a small—some 5 per cent.—margin of tolerance. The Revenue has indicated that that margin may not be necessary on the basis of the discount rate taking account of risk, but the industry continues to believe that the discount rate and the margin achieve different, although connected, objectives and that the margin should remain.
      The insurance industry, unlike other businesses, will be taxed on its liabilities, which is different from being taxed on its accounts, and required to discount in all circumstances. In our view, the proposals remain harsher than the rules on discounting applying to other insurance markets. Indeed, many other businesses—banking in particular—make reserves, but have no requirement to discount. However, the proposals are harsher in the sense that the ability to write insurance cross-border in European insurance markets and the developments in telephone and e-commerce mean that insurers in other

      485
      European Union member states must be seen as domestic competitors not subject to these measures, which will apply to UK-based insurers.
      While the Government have argued correctly that UK corporation tax rates are among the lowest in Europe, there is a general move to lower company taxation in Europe. As the Government know, Ireland is the main threat to the UK industry; it is rapidly expanding its financial services and the insurance sector, which has not introduced discounting, and it is reducing its corporation tax to 12.5 per cent. as of January 2003.
      As was pointed out in Committee, comparisons with insurers in other countries such as the United States are difficult because of the different regulatory rules and more protected domestic markets. The international business, meanwhile, is highly mobile, and the proposals are negative for the continued success of the UK as the centre for both national insurance and reinsurance.
      The compliance, regulatory and administrative aspects of the proposals are complex and can lead to uncertainty. They are burdensome and make operating in the UK difficult. The Government have calculated the cost of the proposals to insurers at £250 million, but that does not include the effect on insurers' balance sheets, and therefore the cost of capital.
      Under the regime, insurers have two choices: to pay more tax later and recognise a future liability both in their accounts and for regulatory purposes now, or to pay more tax now and set up a deferred tax asset not normally recognised for solvency purposes. With regard to the weakening of the capital base of companies, one leading group estimates that the effect on it will be some £140 million, in line with estimates by other groups.
      In summary, despite the Government's welcome attempts to make their proposals more realistic to operate, the proposals are harsh on short-tail business compared with other sectors, and particularly harsh on long-tail, largely international and increasingly mobile lines of insurance, where competitiveness is of the utmost importance.
      As the Minister pointed out, our amendment No. 152 is designed to create a safe harbour. Contrary to the hon. Lady's comments, we remain of the view that that is appropriate within the regime that the Government seek to put in place. The amendment would allow insurers to elect for an alternative to the hindsight test in the Government's proposals. The proposed freedom to pay more tax liability will not relieve insurers from the requirement to make retrospective recalculations. Any insurer electing to pay tax earlier can therefore still be subject to prolonged uncertainty about the eventual tax position.
      The amendment would allow the industry to explore with the Revenue whether an alternative arrangement might be available as an option. It has been described as a "make your bed and lie on it" approach, and could be based on previous years' experience. The industry's aim is, indeed, to agree a safe harbour arrangement, which would satisfy the Revenue's concerns and protect insurers and pension funds investing in insurance companies from the uncertainty and significant additional compliance costs involved in the retrospective recalculations. Without the amendment, clause 107 would not permit an election for a safe harbour. The amendment permits such an option
      486
      to be available if subsequent consultation between the Revenue and the industry shows that arrangement to be feasible.
      In amendment No. 153, the intent of the word "commercial" is not, as the Minister suggested, to create a confusing situation, but that the rates prescribed should be commercial which, as the Minister kindly confirmed, is the Government's aim. Amendment No. 154 is designed to seek confirmation that more than one rate of discount could be applied, as different rates are likely to be appropriate to different classes of business. The two amendments aim at the same objective.
      In short, although there appear to be those in the Treasury or Revenue who are determined to achieve their long-term objective of shifting to a discounting regime, we do not see that in terms of revenue—the Minister made it clear that the £250 million was the total over time, not a per annum figure—that is worth the candle, compared with the damage, albeit not huge, to the international competitiveness of the industry. If, as seems likely, the Government intend to pursue their objective, we look to them to co-operate with the industry, as they have done, to make their proposed new regime as workable as possible and to minimise the damage to the industry's competitiveness.
      9.45 pm
      Mr. Greenway: It is some time since I spoke on Report on a Finance Bill. As a Front-Bench spokesman with other responsibilities, I felt it convenient and right to leave my right hon. and hon. Friends on the Opposition Front Bench, who have done an admirable job with the Bill, to deal with the issues of the day that arise from the measures that the Government have brought forward in the Finance Bill. However, as the chairman of the all-party group on insurance and financial services, I have been on the receiving end of probably more concerned lobbying on the issue raised by the amendment than any that I can remember for quite some time.
      I am happy to remind the House of my interests in the insurance industry.
      Mr. Graham Allen (Vice-Chamberlain of Her Majesty's Household): Ah!
      Mr. Greenway: None of my interests affects the issue that is before us. The insurance broking and intermediary profession, unlike insurance companies, have no interest. The insurance company interest is the interest of us all because most of our constituents are policy holders with those companies.
      I shall make a brief contribution. I do not wish to take up the admirable speech of my hon. Friend the Member for Arundel and South Downs (Mr. Flight), who has handled the issue with his typical expertise. Nor do I wish to deny the Minister gratitude that the Government have been listening to the concerns of the industry. I wish merely to ask, now that we have narrowed the Government's proposals down to the small point that they intend to pursue, whether it is worth while to continue with what is proposed.
      If, as the Minister and my hon. Friend the Member for Arundel and South Downs say, the amount of revenue that is to be raised is small, what is the point of potentially

      487
      disadvantaging our general insurance industry, which is one of the great earners on our balance of trade? I am talking of invisibles, but they are important.
      I hope that I shall make three telling points. First, the regime that is being imposed is both retrospective and harsher in its nature than comparable regimes in other countries within the European Union. The Minister shakes her head, but that is what I am advised. That must mean that there is a competitive disadvantage. The hon. Lady talked about fair value, but the issue is fair competition. No one denies that there are other mechanisms in place in other member states which we do not have. It is understandable that the Treasury wants in some way to balance things up. Revenue has to be raised, and there has to be fairness in so doing. However, I urge the hon. Lady to view these matters on the basis of fairness and competition.
      The second and crucial point is that insurance companies will now be taxed, even on what has been agreed so far, on a basis that is different from their accounts. I do not see the logic of that. I again ask the Minister to consider the mischief that the Government are) to deal with.
      The third and most important point of all, given that this is not the final stage of the process, is to ask the Minister to continue to be receptive to contributions and consultations from and with the industry on the final outcome of secondary legislation. I understand that some of the features with which the industry remains concerned can be ironed out. We accept that the Government intend to go ahead, and before the night is over the Bill will receive its Third Reading. The Bill will set out the law with which the industry will have to work. I simply plead with the Economic Secretary not to hamper the competitive advantage that our general insurance industry—one of this country's success stories—enjoys because that would inevitably lead to more business moving offshore.
      My hon. Friend referred to e-commerce and internet business, and that is a matter for the future. We are dealing with this issue from an historic perspective and not considering how business will be done in the future. The House should ensure that our great insurance industry remains not just competitive, but capable of competing in every market throughout the world and of maintaining its predominant market share in general insurance in this country. That should be our objective.
      I understand that, from time to time, we must consider how insurance companies are taxed. However, we must not hamper them in a way that drives business away and allows competitor companies overseas to gain a bigger share of our market than is justified.
      Miss Melanie Johnson: So that Opposition Members are clear about the position, let me reiterate what I said in Committee about the costs involved. The hon. Member for Arundel and South Downs (Mr. Flight) remarked on the figure of £250 million. That sum builds up over a 10 or 11-year period and it is the figure per annum from that time.
      Hon. Members have referred to fairness. The issue comes down to the fact that the insurance sector uniquely has not had its liabilities discounted previously. That is
      488
      unique to the United Kingdom and it means that the sector has obtained its tax deductions on a wholly undiscounted basis.
      Mr. Flight: I wish to make two key points on the fact that the industry is apparently unique. First, the banking industry is a greater maker of provisions against bad debts. Those provisions are sometimes inadequate and sometimes too high but, as far as I am aware, they do not need to be discounted. Secondly, it is the normal practice of the insurance industry to discount its own provisions; they are already discounted. In Committee, the Economic Secretary made the point that the data of the Department of Trade and Industry have generally shown a tendency to under-provisioning and not to over-provisioning as a tax avoidance measure.
      Miss Johnson: This is getting complicated. I said that the DTI's reports are based on non-discounted reserves, so one cannot draw the conclusions that the hon. Gentleman wants to draw from those reports. I was comparing insurance companies and I said that their position was unique in the UK. At this hour, it is perhaps wise not to start a debate on banking at the same time as a debate on the insurance industry. However, to base tax deductions on the discounted value of liabilities, it is necessary for the tax to move on to a different basis for that account.
      The position has been unusual. Although the hon. Gentleman says that, in effect, the companies have discounted in any case, the point is that that has not been a requirement of the system. They have therefore been in an unusual position. He mentioned the way in which the proposals could add significantly to companies' capital requirements on balance sheets However, the clause will give companies a choice and I thought that I had made that point clear. If they wish, they can choose to base their tax deductions on the discounted liabilities. If they do that, they will not be obliged to include any tax liability on their balance sheets through the clause and the amendment. There will be no effect on capital requirements if companies make that choice. If they do not, capital requirements will be affected. However, that is not inevitable.
      The hon. Member for Arundel and South Downs also asked for confirmation about the allowance for risk in the discount rate and whether a margin of error would continue to exist. An allowance for risk may be combined with a margin of error. However, two sorts of allowance for risk are related. The existence of a margin of error may therefore have a bearing on the extent of the allowance for risk in the discount rate. It is important to achieve a proper balance in secondary legislation between the different means of recognising risk. There will probably be further discussion with the industry and the Inland Revenue to achieve the right balance. We do not need to determine it today. I hope that that reassures the hon. Gentleman.
      Let me revert briefly to safe harbours because I did not argue much of the case on them. I do not believe that the hon. Member for Arundel and South Downs has taken account of a couple of central points. First, a safe harbour depends on the notion of a discounted best estimate. Integral to that notion is some method of determining what constitutes a best estimate. I suggest that that simply moves the question a stage further down the line. It would therefore be a matter of determining the calculation,

      489
      which could involve extensive debate between insurance companies, the Inland Revenue and possibly the courts. Tax inspectors in the courts are not well placed to make decisions about insurance reserves. Certainty would not therefore ensue.
      Let us consider certainty. Even for, for example, oil rigs and nuclear decommissioning, where matters are uncertain, all the provisions are discounted. There should probably always have been discounting in the insurance industry, too. On safe harbours, there is no way of creating certainty for something that is inherently uncertain, namely the insurance business. Companies accept uncertainty from their business. Nobody is certain about future tax charges. Apart from uncertainty about future business results, there is always the possibility of changes to tax law.
      Whenever deductions are made for unpaid liabilities, it inevitably adds to uncertainty about future tax. Some uncertainty is inherent in the insurance business. I do not believe that Conservative amendments would have the intended effect of removing the tax uncertainty. However, they have great potential for litigation. They would increase uncertainty and lead to greatly increased costs for the insurance companies and the Inland Revenue.
      I hope that hon. Members accept that the assurances that I have given will be helpful to them and the industry. We have reached greater agreement with the industry through our discussions in the past few weeks. I hope that hon. Members will support the amendment.
      Amendment agreed to.
      Amendments made: No. 65, in page 79, line 33, leave out "and (b)" and insert—
      '(a) subsection (2) below applies if.
      No. 66, in page 79, line 35, at end insert—
      'and
      (b) subsection (2A) below applies if it becomes apparent in such a period that that amount was insufficient.'.
      No. 67, in page 79, line 40, at end insert—
      '(2A) For the purpose of making good to the general insurer the loss occasioned by the deficiency, an amount calculated by applying, for a prescribed period, a prescribed rate of interest to the amount of the deficiency shall be treated as an expense of the general insurer's trade in computing for tax purposes the profits of that trade for the later period of account.'.
      No. 68, in page 80, line 7, leave out "and (2)" and insert "to (2A)".
      No. 69, in page 80, line 8, after "excessive" insert "or insufficient".
      No. 70, in page 80, line 9, after "excess" insert "or deficiency".
      No. 71, in page 80, line 12, leave out "and (2) " and insert "to (2A)".
      No. 72, in page 80, line 17, after "receipt" insert "or expense".
      No. 73, in page 81, line 39, leave out—
      'above is treated as a receipt'
      and insert—
      'or (2A) above is treated as a receipt or expense'.
      No. 74, in page 81, line 47, after "(2)" and insert "or (2A)".
      No. 75, in page 82, line 4, leave out "and (2)" and insert "to (2A)".
      490
      No. 76, in page 82, line 7, leave out—
      'period of account mentioned in paragraph (a) of
      and insert—
      'first period of account mentioned in'.
      No. 77, in page 82, line 9, leave out "paragraph (b) of".—[Mr. Allen.]

    Clause 111

      PAYMENTS UNDER DEDUCTION OF TAX
      Amendments made: No. 78, in page 89, line 35, after "etc)" insert "—
      (a) after subsection (2) insert—
      "(2A) A declaration under section 48l(5)(k)(i) must contain—

      (a) in a case falling within section 481(4)(a), the name and principal residential address of the individual who is beneficially entitled to the interest or, where two or more individuals are so entitled, of each of them;

      (b) in a case falling within section 481(4)(b), the name and principal residential address of each of the partners."; and

      (b)".
      No. 79, in page 89, line 35, at end insert—
      '( ) In section 477A of the Taxes Act 1988 (building societies: regulations for deduction of tax), after subsection (2) insert—
      "(2A) Without prejudice to the generality of subsection (2)(a) above, regulations under subsection (1) above may make provision with respect to the furnishing of information to or by building societies corresponding to any provision that is made by, or may be made under, section 482 with respect to the furnishing of information to or by deposit-takers.".'.—[Dawn Primarolo.]

    Clause 122

      TRANSFER OF PROPERTY BETWEEN ASSOCIATED COMPANIES: GREAT BRITAIN
      Amendments made: No. 108, in page 97, line 13, at end insert—
      '(1A) In subsection (2) (instruments on which stamp duty not chargeable) in paragraph (a) for "to another" substitute "("the transferor") to another ("the transferee")".
      (1B) In that subsection, after paragraph (b) insert—
      "unless at the time the instrument is executed arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the transferee but not of the transferor.".'.
      No. 109, in page 97, leave out lines 23 to 29.
      No. 110, in page 97, line 37, at end insert—
      '; but this is subject to subsection (5A).
      (5A) In determining for the purposes of this section whether a body corporate is the parent of the transferor, paragraphs 5(3) and 5B to 5E of Schedule I8 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (2B).'.
      No. 111, in page 97, line 38, leave out "subsection (2C)" and insert "this section".
      No. 112, in page 97, line 40, leave out "on or".—[Dawn Primarolo.]

    Clause 123

      TRANSFER OF PROPERTY BETWEEN ASSOCIATED COMPANIES: NORTHERN IRELAND
      Amendments made: No. 113, in page 98, line 2, at end insert—
      '(1A) After subsection (2) (instruments on which stamp duty not chargeable) insert—
      "(2A) But this section does not apply to an instrument by virtue of subsection (2)(a) if, at the time the instrument is executed, arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the transferee but not of the transferor.".'.
      No. 114, in page 98, leave out lines 12 to 18.
      No. 115, in page 98, line 26, at end insert—
      '; but this is subject to subsection (6A).
      (6A) In determining for the purposes of this section whether a body corporate is the parent of the transferor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (3AA).'.
      No. 116, in page 98, line 27, leave out "subsection (3AAA)" and insert "this section".
      No. 117, in page 98, line 29, leave out "on or".—[Dawn Primarolo.]

    Clause 124

      GRANT OF LEASES ETC BETWEEN ASSOCIATED COMPANIES
      Amendments made: No. 118, in page 98, line 31, at end insert—
      '(l A) In subsection (1) (stamp duty not chargeable on leases etc) at the end insert the following paragraph—
      "This subsection is subject to subsection (4A) below."
      (1B) After subsection (4) insert—
      "(4A) An instrument shall not be exempt from stamp duty by virtue of subsection (1) above if at the time the instrument is executed arrangements are in existence by virtue of which at that or some later time any person has or could obtain, or any persons together have or could obtain, control of the lessee but not of the lessor.".'.
      No. 119, in page 98, line 41, leave out from beginning to end of line 3 on page 99.
      No. 120, in page 99, line 11, at end insert—
      '; but this is subject to subsection (10AA).
      (10AA) In determining for the purposes of this section whether a body corporate is the parent of the lessor, paragraphs 5(3) and 5B to 5E of Schedule 18 to the Income and Corporation Taxes Act 1988 shall not apply for the purposes of paragraph (b) or (c) of subsection (8) above.'.
      No. 121, in page 99, line 12, leave out "subsection (8A)" and insert "this section".
      No. 122, in page 99, line 14, leave out "on or".—[Dawn Primarolo.]

    Clause 125
      FUTURE ISSUES OF STOCK
      Amendment made: No. 123, in page 99, line 26, leave out "on or".—[Dawn Primarolo.]
    Clause 126
      COMPANY ACQUISITION RELIEFS: REDEEMABLE SHARES
      Amendment made: No. 124, in page 99, line 41, leave out "on or".—[Dawn Primarolo.]
    Clause 127
      SURRENDER OF LEASES
      Amendment made: No. 125, in page 101, line 17, leave out "on or".—[Dawn Primarolo.]
    Clause 132

      SUPPLIES TO WHICH REDUCED RATE APPLIES
      Amendment made: No. 80, in page 104, line 33, at end insert—
      '( ) Subsection (2) does not apply to the amendment made by paragraph 8(5) of that Schedule.
      That amendment has effect in relation to supplies made after the day on which this Act is passed.'.—[Dawn Primarolo.]

    Schedule 35

      VALUE ADDED TAX: CHARGE AT REDUCED RATE
      Amendments made: No. 81, in page 543, line 51, at end insert—
      'and for "neither of those sub-paragraphs" substitute "none of those paragraphs".'.
      No. 82, in page 544, line 26, at end insert—
      '(5) After paragraph (e) (which is inserted by sub-paragraph (4) above) insert—
      "(f) wind turbines;
      (g) water turbines."'.[Dawn Primarolo.]

    Schedule 40

      REPEALS
      Amendments made: No. 92, in page 566, line 21, at end insert—

      '1992 c. 48.

      The Finance (No.2)

      In Schedule 6,

      Act 1992.

      paragraph 3.

      No. 93, in page 566, line 29, leave out "that Act" and insert—
      'the Taxes Act 1988 and the repeal in Schedule 6 to the Finance (No.2) Act 1992'.
      No. 126, in page 571, line 18, at end insert—

      '1986 c. 41.

      The Finance Act 1986.

      In sections 67(9), 70(9), 95(1) and 97(1), the words "and is resident in the United Kingdom" and "and is so resident".'.

      No. 127, in page 571, line 23, column 3, at end insert—
      'Section (Stamp duty and stamp duty reserve tax: transfers between depositary receipt systems and clearance systems).'.
      No. 128, in page 571, line 27, at end insert—
      '1A. The repeals in the Finance Act 1986 have effect in Ito cordance with section (Stamp duty and stamp duty reserve tax: transfers between depositary receipt systems and clearance systems)(5) of this Act.'.
      No. 129, in page 571, line 28, leave out—
      'repeal in section 131 of this Act has effect—
      (a) so far as it relates'
      and insert 'repeals of sections 131 and (Stamp duty and stamp duty re serve tax: transfers between depositary receipt systems and clearance systems) of this Act have effect—
      (a) so far as relating'.
      No. 130, in page 571, line 31, leave out "it relates" at id insert—
      'relating to stamp duty on instruments other than bearer instruments, in accordance with section 108 of that Act; and
      (c) so far as relating'.—[Dawn Primarolo.]
      Order for Third Reading read.
      10 pm
      Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
      I say that with great pleasure and true feeling on behalf o f a number of hon. Members who served on the Finance Bill Committee.
      This Finance Bill continues to deliver Labour's promises and enacts Budget decisions to deliver opportunity and security for the hard-working families of Britain. Working families are seeing the benefit of that. Thanks to sound economic management, we have been able to cut their taxes. We have brought in not only the working families tax credit and the new lop tax rate but now, in clause 31, we have cut the basic rate of income tax to 22p—its lowest level for nearly 70 years.
      By April next year, personal tax and benefit changes in this and previous Budgets will mean that, on average, households will be £460 a year better off and that families With children will, on average, be £850 a year better off. The tax burden on a single-earner family on average warnings with two children will be the lowest since 1972. Coupled with low inflation, low interest rates, low mortgage rates and economic growth, that adds up to a substantial increase in living standards, which is what really matters. For a single-earner family on average earnings with two children, living standards will have risen by more than 10 per cent. during this Parliament.
      Our measures will help to achieve our goal that.every child should have the best possible start in life. That is why we have set out in the Budget our ambition to halve child poverty by 2010 and to eliminate it altogether by 2020. The measures introduced so far in this Parliament will lift 1.2 million of Britain's children out of poverty and by next year the Government will be spending an extra £7 billion a year on support for children.
      The Finance Bill takes a further step to increase support for children with the introduction in April 2001 of the children's tax credit, which is worth up to £442 a year for a family claiming it. Rising living standards and tackling child poverty will be reinforced by further improvements in public services.
      The immediate boost for health in the Budget of £2 billion this year is partly funded by the real increases tobacco duties in clauses 12 to 15. The decision of the
      494
      Conservative party not to vote for the tobacco tax on Budget day is another confirmation that their sums do not add up and that they could not deliver Labour's pledges on health and education, as we saw yesterday.
      Businesses and jobs will benefit from our commitment to enterprise in the Bill. We have cut main and small business rates of corporation tax to their lowest levels and to the lowest levels of any industrialised economy. The Finance Bill contains a number of measures to promote enterprise and help business: the cuts in capital gains tax in clause 37; the research and development tax in clauses 68 and 69; and the permanent 40 per cent. capital allowances for small and medium-sized enterprises in clause 70. Those provisions especially help manufacturing business.
      The new all-employee share ownership plan in clause 47 and the enterprise management incentives in clause 62 help high-risk companies recruit key personnel. The share option provisions in clause 56 and the corporate venture provisions in clause 63 are also important. These measures have been widely welcomed by business, along with the introduction in the Budget of a three-year 100 per cent. capital allowance for investment in information and communications technology equipment and the extra £100 million for the new £1 billion target umbrella fund for enterprise growth across the regions. That is a huge commitment to business success, from a Government who believe that enterprise and economic prosperity can and must go hand in hand with fairness.
      Clause 82 introduces an optional ring-fenced regime for so-called tonnage tax, whereby shipping companies can opt to work out taxable profits on the basis of the tonnage of the ships that they operate. That innovation, which follows Lord Alexander's inquiry, is part of the Government's commitment to encouraging the British shipping industry.
      As was said earlier, the Budget introduces changes in the corporation tax rules, such as limiting the use of so-called offshore mixer companies to shelter low-taxed foreign profits from UK tax. The new arrangements cap the relief on dividends at 30 per cent., and ensure that no UK tax benefit can be gained from "mixing" in an offshore holding company.
      As was also said earlier, the introduction of offshore mixing with a cap of 45 per cent. will benefit companies greatly. For the first time, the UK will allow onshore mixing in non-abusive circumstances. That answers industries' concerns about international competitiveness. The UK will be in a position similar to that of the US, but the UK rules are less complicated and therefore better for business.
      The Bill also helps us to meet our international commitments to the environment. Following last year's Budget, it is an important part of the largest package of environmental tax measures to be introduced in the UK. Clause 30 introduces the climate change levy. Clauses 20 to 23 reform vehicle excise duty for cars. Clause 59 fundamentally reforms the company car taxation regime, providing an incentive for low carbon dioxide emissions and removing the perverse incentive for people to clock up business miles to achieve more generous thresholds. Clauses 137 and 138 increase the landfill tax rate, and clarify liability.
      The changes in the affordable warmth programme in clause 79, and the reduced rate of VAT on the installation of energy-saving materials and grant-funded installation

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      of heating systems in clause 132, will help to ensure that pensioners feel the benefit of warmer homes and cheaper fuel bills, as well as the £150 winter allowance. That programme implements the Government's commitment to combat fuel poverty by supporting the installation of energy-efficient heating systems and insulation in up to 1 million low-income homes.
      The Bill also does a great deal for charities and charitable giving. It helps communities to become more democratic, more open and more socially inclusive. Clauses 38 to 46 give effect to our radical package of measures to boost donations to charities, and to improve the operation of the tax system for charities. Clause 39 abolishes the minimum limit on tax relief for donations. Clause 138 boosts payroll giving with the three-year 10 per cent. Government supplement, and abolishes the maximum limit on donations. Clause 40 cuts red tape in regard to corporate donations, and clause 43 introduces new income tax relief on gifts of shares and securities. The Bill frees charities from the need to set up subsidiaries for small trading and fundraising ventures, and broadens the VAT zero rate for the sale or hire of donated goods. It is a good package, which has been widely welcomed by charities.
      Along with the new children's fund which we announced yesterday—it will have a £450 million budget over three years—these measures point to how we can help our country to make the most of one of our greatest strengths: the readiness of our people to give so much of their time and money to voluntary and community activity, for the benefit of all.
      The Bill demonstrates that the Government are working hard for a purpose—to build a Britain that is strong, modern and fair. At last, economic prosperity and fairness are no longer seen as opponents; instead, they are seen as partners in the process of building Britain for the future.
      The Bill also demonstrates that, with a Labour Government, there is more enterprise, more opportunity, more fairness and more investment in Britain. Britain is better off with a Labour Government, and I commend the Bill to the House.
      10.10 pm
      Mr. David Heathcoat-Amory: This is not quite the worst Finance Bill that the Government have produced in the past three years, but it comes very close to it. It is certainly easily the longest Finance Bill. It is now a two-volume monster which has grown during our proceedings to 572 pages—most of which raise taxes in one form or another, and all of which make the British tax and benefits system a great deal more complicated.
      Contrary to what the Paymaster General has just said, this is a tax-raising and tax-increasing Finance Bill. It comes as the last in a series of tax-raising Budgets. Taken together, this Government's Finance Bills have increased taxes on the hard-working families of Britain by £670 per year each. That is not just damaging to individuals, but involves piling taxes on to the business sector, which in itself undermines the competitive advantage that the previous Government built up during our period in office. The country and the Government will pay dearly for the mistake of eroding those advantages that our firms enjoy in international markets—in which, until fairly recently, they were comparatively lightly taxed and lightly regulated.
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      The Government's instinct is to tax, to regulate and to intervene. They believe that their decisions are superior to those made by free people and free companies operating in a free market.
      This two-volume Bill contains its full quota of stealth taxes. Stamp duty on more expensive properties has quadrupled since the previous general election. The Chancellor is fond of pretending that that increase is borne entirely by the private householder but, in fact, the great majority of stamp duty is paid by businesses. The Government's refusal even to contemplate removing stamp duty from share transactions is again threatening to cause an erosion of business—indeed, a migration of business from this jurisdiction to the continent.
      There is another stealth tax that has not been introduced yet, but has been announced. Indeed, we spent many hours debating it in Committee. It is the energy tax, or climate change levy, which the Government now seek to put into law in the Bill and which will come into effect in Apr it 2001. I declare an interest in that I have registrable interests in companies that will pay that tax. I am in fairly good company, however, because every single business of whatever size and in every part of the United Kingdom will pay that energy tax. It will be particularly damaging for the manufacturing sector, and most especially for those companies struggling to earn a living and make a return in international markets.
      Mr. Timms: At an earlier stage in our consideration of the Bill, the right hon. Gentleman told the House that the companies in which he has an interest will—like the majority of United Kingdom companies—be better o because of the climate change levy package. Will he confirm that that is the case in the instance of the companies that he is involved in?
      Mr. Heathcoat-Amory: No; not for the first time, was misled by the Government. They told me that the sectors in which my companies operate would in fact be better off. On further investigation, however, I am assure' by the management that we—along with most other businesses in the United Kingdom—will be substantially worse off.
      What is particularly unfortunate is that the tax, although in the Bill and supposedly in its final form, is still undergoing an evolution. We are told by outside interests and the CBI, for instance, that certain companies will be eligible for rebates of up to 80 per cent., but that man other companies in the intensive energy sector will not The reason for that is truly bizarre. In order to qualify for the rebate, a company has to be part of a polluting industry. It has to be regulated by the integrated pollution prevention and control directive. So a company such as' British Oxygen, which separates air—a highly energy-intensive, but non-polluting operation—will not qualify for the rebates and will have to pay the full tax. British Oxygen operates in an intensely competitive environment and such firms will increasingly invest overseas and not here. At the same time, the Government talk about the need to improve productivity and promote competitiveness. They are good at lecturing other people about such things, but what they do undermines the very competitiveness that they urge on others.
      The tax may also fall foul of the European Commission on grounds of state aid. Companies that are negotiating in good faith to try to obtain rebates are uncertain about

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      whether the whole thing may be torpedoed by the European Commission. The companies have been told that they have to wait until the end of the year before they receive any assurances, and perhaps—even at this late hour—the Government could provide certain assurances. Above all, it is an unnecessary tax. We believe in meeting our Kyoto obligations, just as the previous Government met the Rio convention obligations, but there are many other ways to maintain the downward trend in carbon dioxide emissions, such as voluntary agreements, emissions trading and increased use of gas burning for electricity generation.
      The House will recall that IR35 was announced last year, not—typically—by the Chancellor or a Minister at the Dispatch Box, but in the 35th press release put out on Budget day by the Inland Revenue. It amounts to an attack on people who provide services through companies, especially in the high-tech sector that the Government say that they wish to encourage. The Government are obsessed by tax avoidance, but their approach in this case is hitting legitimate businesses that set up companies to help the companies that they serve. They are not avoiding tax and, what is more, they provide the very flexibility in the labour market that the Government say is an asset. The Government criticise other European Union countries for their lack of labour market flexibility, but domestically the Government are piling on more regulation and bringing out more tax measures that undermine that national asset about which they boast.
      I turn to the saga of double taxation relief, which has been ably tackled by, among others, my hon. Friend the Member for West Dorset (Mr. Letwin). He spotted early on that the proposal was a tremendous own goal. The Government seem to recognise that we need to be a magnet for overseas investment and business, but in their attack on double taxation relief they are eroding that possibility. Companies based here do not have an advantage, because they are effectively on the same taxation basis as their counterparts in the United States and on the continent. By removing the existing double taxation provisions, the Government will put companies based here at an actual disadvantage compared with those based overseas.
      After much bluster, the Government conducted a series of inelegant retreats during consideration of the Bill. First, they postponed the measures until next year. Then they tabled some highly complicated amendments to their own provisions which have gone a long way to reversing the damage and preventing the folly.
      However, the damage had been done with the business sector. Last year and the year before, businesses consulted in good faith with the Inland Revenue about how to tackle issues of tax avoidance. The Government ignored that consultation, and brought forward their own clumsy provisions. They ignored the warning signals when they were published.
      The Government and the Chief Secretary to the Treasury owe a particular apology to Peter Wyman, a senior partner in PricewaterhouseCoopers, who was the first to point out that the Government had got the matter wrong. Instead, he was insulted by the Chief Secretary, who told the House that the Treasury was entirely right and that the accountancy world had got the matter wrong.
      It is now clear that Mr. Wyman was right—and not about that matter alone. One of the first of what has turned out to be a series of leaks from officials at the centre of
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      government came from Andrew Fraser, head of the Invest in Britain Bureau. A memo from him to the Secretary of State for Trade and Industry found its way into the popular prints. It stated:
      We can do better to avoid shooting ourselves in the foot … at a time of real pressures on manufacturing it must make sense to (a) to be careful about the impact of new initiatives—especially from the Treasury and (b) extremely sensitive over their presentation.
      Mr. Fraser was referring to three measures—the climate change levy, the imposition of national insurance contributions on share options and the changes to double taxation relief. All of them in their various ways are damaging, and a Government servant told a Minister the truth about that.
      In addition, the Bill does nothing to reverse the decline in savings in the economy. The problem is getting worse. When the Conservative Government left office in 1997, the savings ratio—the proportion of national income being saved rather than spent—was 11 per cent. That has fallen in every year since the election—to 7, 5.75, and 5.5 per cent, respectively. In the last quarter, it fell to 3.8 per cent. Yet the Government say that they want to promote self-reliance and long-term savings. They say one thing, but do another.
      Finally, I turn to indirect taxes. We debated yesterday at some length the Government's pick-and-choose attitude to indexation and uprating. They uprated pensions by 1.1 per cent., and fuel duty and other indirect taxes by 3.4 per cent. In Committee, we debated the fact that the tax on tobacco has risen relentlessly in every Budget. Those rises represent failures in the Government's health, crime and fiscal policies. The yield from tobacco duty fell last year, so it is just as well that we were not relying on that for national health service funding. Moreover, there has been an explosion in smuggling.
      All that was set out in a report that the Government commissioned from Mr. Martin Taylor. Where is that report? It is secret. We are not allowed to see it, even though we paid for it, because Mr. Taylor made the rather obvious observation that it is no good being tough on the crime of smuggling without being tough on the cause of that crime—the large and growing duty differential between Britain and the continent. That is getting worse, and it increases smuggling and encourages criminality. It encourages drink-related crimes, which the Government now say that they are worried about: when drink from smuggled sources is sold in uncontrolled outlets, it increases the danger of criminal behaviour following excessive alcohol consumption.
      Mr. Christopher Leslie: Are we hearing a guarantee that the Conservatives will cut tobacco duty?
      Mr. Heathcoat-Amory: The hon. Gentleman sounds rather worried, so I invite him to join us in the Lobby to express his concern. The Opposition have voted against those increases in every Finance Bill since the general election. I remind him that, even when we had a Budget deficit, in our last two Budgets we froze duty on alcohol and cut it on spirits precisely because of the problems that I have described. The Labour party entered office and reversed that policy; they increased duty on all those products and made smuggling and racketeering worse. If the hon. Gentleman cares to follow up his concern with a little action, he will have an opportunity to do so shortly.

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      The abiding impression we have of the Bill is that it is another tax-raising measure; furthermore, it is a measure of almost stupefying complexity. In its excellent publication "Towards a Better Tax System", the Institute of Chartered Accountants in England and Wales gave the Bill marks out of 100 based on the institute's 10 principles of good taxation. The final score was 30. I am tempted to give the same score but, on reflection, I have decided that that would be over-generous. The Bill will continue to annoy and baffle taxpayers for many years after it has become law. We shall vote against it.
      10.27 pm
      Mr. Edward Davey: One hundred and fifty-seven clauses, 40 schedules and 572 pages later, the House should consider striking medals for veterans of the Committee on the Finance Bill. With its complexity and length, the Bill does this country's tax system no good. We are left with the question of whether we should support the Bill's Third Reading, and I suggest that the House applies two tests to find the answer. The first is a cost-benefit analysis of the contents—the Bill contains some good measures, but, as I shall demonstrate, many bad ones as well—and the second is the wider role of the Finance Bill and what it adds or subtracts from the management of the public finances.
      As I said, the Bill contains some good measures, albeit small ones: for example, the change to amusement machine licence duty, which is a small measure, but one that will be welcomed in British Legion and nonprofit-making clubs throughout the country, and a measure which my hon. Friend the Member for Twickenham (Dr. Cable) pressed to be included in last year's Finance Bill. Air passenger duty exemptions are likewise welcome to those living in the Scottish highlands and islands. As I told the Financial Secretary in Committee, I hope that the exemption will be extended, for example, to cover the special case of the Scilly Isles, and to ensure that passengers benefit when they arrive at airports in the highlands and islands. Gift aid is also a welcome measure.
      A large measure that we support is the climate change levy, although we have had some concerns, which we have expressed in a forthright manner. My hon. Friend the Member for Hazel Grove (Mr. Stunell) moved amendments and spoke on various issues relating to the levy in an effort to improve it. Unfortunately, the Government did not listen, but we decided ultimately to support the schedule's inclusion in the Bill because we believe that, on balance, it is better to have the measure in the Bill than not to have it—it is certainly better than the status quo left by the previous Government.
      Those are the good things in the Bill, but, I am sorry to say, there are quite a few negatives.
      Ms Rosie Winterton: Will the hon. Gentleman give way?
      Mr. Davey: I will not give way. [Interruption.] Perhaps I will give way later.
      Fuel duty increases have raised costs for motorists, but have not been offset, as we have advocated, by substantial reductions in vehicle excise duty. The Government have
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      also failed to sort out the employers' national insurance contributions impost on share options. The most significant negative point, however, is IR35, with which we disagree profoundly. The abuse on which the Government have tried to clamp down is far more narrow than Ministers have made it out to be. Measures to clamp down on tax avoidance could have been more narrowly targeted and far more effective. The way in which the Government have chosen to act means that many small companies in the information technology sector will be seriously hit.
      What has concerned us most is that the Government have at no stage admitted that market forces require many small firms—in the IT industry, the oil industry and the engineering consultancy sector—to form limited personal service companies. At no time were the Government prepared— [Interruption.]
      Mr. Deputy Speaker (Mr. Michael Lord): Order. Far too many private conversations are going on. I cannot hear the hon. Gentleman.
      Mr. Davey: Thank you, Mr. Deputy Speaker.
      At no time on Second Reading or in Committee have Ministers acknowledged the fundamental objection to IR35. Many companies are forced into the arrangements that they make by market pressures and by the larger companies. The Government seem unaware of that in spite of all our arguments.
      The wider role of the Finance Bill also raises some serious concerns. The Government have said many times that they have not sufficiently increased expenditure on our public services over the first two or three years of this Parliament because they were trying to get the public finances under control. There are three ways in which to do that—increasing taxes, restraining public expenditure and taking benefits from the growth dividend. Over the past few years, tax rises have been introduced and there has been significant growth. Those measures, coupled with tax rises introduced by the Conservative Government, have ensured that the public finances are extremely healthy. No objective observer could say otherwise.
      That is why there was no need for the Government to curb public expenditure in their first three years. There have been problems in the health service and a loss of police officers, and our schools have been starved of the funds that they need. The real reason why the Government imposed that public expenditure restraint was that they were trying to build up an election war chest. That was one of the major political reasons for their decision, and that is a great shame given the need in our public services.
      A second political reason was that the Government felt the need to convince the City that they could be trusted on public finances. That is their legacy, through no fault of the people who use the public services. They have played politics with our country's public services.
      The Government are offering tax cuts in the Bill. There is a penny cut in the basic rate of income tax in clause 31. But that is being done ahead of the huge and very welcome investments in public transport announced in the comprehensive spending review yesterday. Why is income tax being put ahead of investment? The Chancellor talked about deficit reduction. That was necessary, and he is right to point out the mismanagement

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      of the economy by the Conservative Government. Frankly, however, deficit reduction is becoming almost a fetish for the Chancellor. Why must pensioners wait for an increase in the basic state pension when the Chancellor is using a lot of money to reduce the deficit? He has his priorities wrong.
      Ms Rosie Winterton: Is the hon. Gentleman saying that we are taxing the country too little?
      Mr. Davey: The Liberal Democrats have often argued that targeted tax increases are necessary for public service investment. The House cannot say that that is a secret.
      There is one argument for supporting the Finance Bill and the overall management of the public finances, which is that the Conservatives' proposals are even more ludicrous. They have been saying that the Government's spending proposals are reckless and that spending is getting out of control. Unfortunately, nothing could be further from the truth, and when they look at the facts, the Conservatives will be unable to continue making that point.
      In this financial year, total managed public expenditure, as a proportion of GDP, is at a level that has not been seen since 1963–64, so it starts at a low base. At the end of the comprehensive spending review period, 2003–04, it will reach 40.5 per cent. of GDP. In only three years of the Conservatives 18 years in Government was public expenditure as a proportion of national income lower than that. If the Conservatives claim that public spending is out of control, they must acknowledge that it was out of control for 15 of their 18 years.
      There is no way that we could support the Conservatives' approach to the management of public finances. The problem, however, with the management in the Finance Bill is that the Government's proposals are too modest and do not put public services first. We shall vote against Third Reading because the Bill puts a tax cut before public service investment and includes an outrageous measure in IR35.
      10.36 pm
      Mr. Jack: At the conclusion of consideration of the longest Finance Bill in history, I would like to put on record my appreciation of the way in which my Front-Bench colleagues have solidly and resolutely attacked and unmasked the Government's tax-raising agenda. They have done it despite all the difficulties that any Opposition face in dealing with highly technical and complex matters, and they have done it with great skill and exposed the truth of the Bill.
      It is a pity that when we tried to use modern equipment such as laptop computers in the Standing Committee to assist us in our job of probing the Government, and suggested having the notes on clauses in a modern electronic form, the somewhat arcane rules about what one may or may not bring into a Standing Committee meant that I got my knuckles rapped because I was out of order in bringing in a laptop. I hope that the Chairmen's Panel will consider that matter in due course because we ought now to be allowed to use modern aids further to enhance the ability of the Opposition—and, indeed, right hon. and hon. Members on both sides of the House—to have access to the complex information needed to consider the Bill.
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      I want to put on record my appreciation of the Inland Revenue for drafting excellent notes on clauses, which helped us to understand the Bill. I wish that the same clarity of explanatory information about the Bill had been available to the Chancellor of the Exchequer yesterday, when I challenged him on the tax burden that results from these measures. In this House, he denied that this country's tax burden is rising. For the record, I point out that in the financial year that ended in April, total Government receipts, excluding the windfall tax, came to 39.6 per cent. of GDP; in the current financial year, that proportion rises to 39.7 per cent., and by the end of the Parliament, it will have reached 39.9 per cent. I wish that the Government had the honesty to admit what their own figures say and what will result from the Bill.
      The Bill contains a number of measures on energy saving. As my right hon. and hon. Friends have said, they are too complex and will not work. I make this prediction: the climate change levy will, if the Government continue, be turned into a nice little earner. They say that it is fiscally neutral because of the national insurance rebate, but that claim will go out of the window, as it has with the landfill tax. The Government's increase in that tax did not result in a corresponding decrease in national insurance payments.
      The Bill has worsened Britain's international competitiveness, as clauses 103 and 104 bear testament. The Government have taken little note of the impact of that aspect of the measure on their tax policies.
      I conclude—[HON. MEMBERS: "Hear, hear."]—on one important point. I am glad to hear the cheers of Labour Members. My right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) and the hon. Member for Kingston and Surbiton (Mr. Davey) pointed out the length and complexity of the Bill.
      Even if Treasury Ministers do nothing else in response to what the Opposition have said, they should expand, with immediate effect, the remit of the tax law rewrite project to begin the much needed task of mapping out how we simplify, shorten and improve the operation of our tax system. Every company would welcome that and every citizen certainly deserves it. If the Government want to do something for tax—other than raising it—they should make its operation simpler.
      10.40 pm
      Mr. Alasdair Morgan: I want to make only two points—[HON. MEMBERS: "More, more."] I am tempted to filibuster so that my hon. Friend the Member for Banff and Buchan (Mr. Salmond) will have to begin his Adjournment debate in the early hours of the morning. However, I shall continue.
      I suspect that the Government will not take on board my first point. As I pointed out in yesterday's debate on fuel duty, the Government have continued on a course set out by the previous Conservative Government that is detrimental to many people, especially those in rural constituencies such as mine. I regret that the House did not discuss the amendment proposed by my hon. Friends and myself, which suggested that the latest increase in fuel duty, introduced in the Budget, should be suspended until there had been a report on its effect on the Scottish economy and that of the UK.
      There is no doubt that fuel duty is one of the major issues affecting the rural economy and the economy at large. The Rural Affairs Committee of the Scottish

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      Parliament, of which I have the honour to be a member, recently held six or seven hearings throughout rural Scotland—from the far north to the far south—to consider employment prospects. Despite the efforts of the Countryside Alliance to claim that the main issue affecting employment prospects was fox hunting, at all those hearings the foremost issue was fuel tax. The Government make much of targeting benefits on the poorest of society, so it is a matter of deep regret that, at the same time, they are imposing a tax that hits the poorest people in rural society.
      I hope that the Government will take on board my second point. It relates to the effects of the climate change levy on medium-sized hydro-electric stations in the north of Scotland. When we debated amendment no. 98 yesterday, the Financial Secretary responded to my speech by noting the concern
      about a band of hydro-electric schemes … in the 10 to 25 MW capacity range, that, at some point in the future … may want to carry out refurbishment, and that may well be a point that needs to be considered at that stage.—[Official Report, 18 July 2000; Vol. 354, c. 331.]
      I point out to the hon. Gentleman that many such schemes were constructed in the late 1940s and the early 1950s. They have a lifespan of about 50 years, so investment decisions to refurbish them must be taken now. If the Financial Secretary is to reconsider the climate change levy on such stations, it must be done within the next year or so. When he responds to the debate, will he give some consideration to the genuine concerns of the hydro-electric industry in the north of Scotland?
      10.44 pm
      Mr. Timms: In this year's Budget and with yesterday's spending review, my right hon. Friend the Chancellor set out the next steps on the road to a modern and decent Britain, where security and opportunity are open to everybody.
      The Bill and the spending review maintain the commitment to stability and prudence, ensuring that we remain on track to meet our fiscal rules and to deliver the steady growth we need. That is why we can make progress and look forward after 18 long years of catastrophic underinvestment in public services under the Tories
      In the Budget, we announced sustained increases in resources for improving our public services. As the spending review shows, we are putting in sustained investment to improve standards and deliver modern, responsive services—in health, education, transport, and law and order. What is the Tory response? Some £16 billion worth of cuts.
      The Government's aim is for every child to have the best possible start in life. That was clear from what was announced yesterday. That is why we set out in the Budget and in this Bill our ambition to halve child poverty by 2010 and end it altogether by 2020.
      We are continuing to ensure fairness for pensioners. This package targets help at the least well off pensioners, while boosting the incomes of those who have managed to put a little aside and do not currently qualify for help.
      We are making huge progress towards full employment. The number of people in jobs is at a record level, up by 1 million since the election. Long-term
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      unemployment is at its lowest for 20 years, and the Bill contains a series of measures to improve things further still. There are action teams to help match people in areas where pockets of high unemployment remain close to vacancies nearby. We are rolling out nationally the new deal for the 50-plus. Employment zones are providing tailored support to around 50,000 long-term unemployed individuals in 15 areas of high unemployment. There is also the cut in the basic rate of income tax. All those measures are promoting employment and moving us further towards full employment.
      The platform of stability that we have built is essential for businesses as well. We now have the lowest rates of small business corporation taxes ever—the lowest in the industrialised world. Since 1997, small companies have received an average corporation tax cut of nearly 25 per cent.
      We have made further progress on protecting the environment. We have introduced the vehicle excise duty discounts for small-engined cars, the incentive for ultra-low sulphur petrol and a whole range of other important measures.
      When growth made a fleeting appearance under the previous Government, their response was reckless and irresponsible. They blew the proceeds of North sea oil and privatisation on current spending instead of investment. We are making sure that that catastrophic mismanagement will not be repeated. We are locking the stability in.
      Our prudence over the past three years has been for one purpose and one purpose only—to build a Britain that is decent as well as modern, where, acknowledging that we all depend on each other, we provide opportunity and security for all. The Bill takes us a giant step closer to that goal, and I commend it to the House
      Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 310, Noes 170.

      Division No. 280]

      [10.47 pm

      AYES

      Adams, Mrs Irene (Paisley N)

      Bradley, Keith (Withington)

      Ainger, Nick

      Bradley, Peter (The Wrekin)

      Ainsworth. Robert (Cov'try NE)

      Bradshaw, Ben

      Alexander, Douglas

      Brown, Russell (Dumfries)

      Allen, Graham

      Buck, Ms Karen

      Anderson, Donald (Swansea E)

      Burgon, Colin

      Anderson, Janet (Rossendale)

      Butler, Mrs Christine

      Armstrong, Rt Hon Ms Hilary

      Caborn, Rt Hon Richard

      Ashton, Joe

      Campbell, Mrs Anne (C'bridge)

      Atkins, Charlotte

      Campbell-Savours, Dale

      Austin, John

      Cann, Jamie

      Banks, Tony

      Caplin, Ivor

      Barnes, Harry

      Casale, Roger

      Bayley, Hugh

      Caton, Martin

      Beard, Nigel

      Cawsey, Ian

      Begg, Miss Anne

      Chapman, Ben (Wirral S)

      Bell, Stuart (Middlesbrough)

      Chaytor, David

      Benn, Hilary (Leeds C)

      Chisholm, Malcolm

      Benton, Joe

      Clapham, Michael

      Bermingham, Gerald

      Clark, Rt Hon Dr David (S Shields)

      Berry, Roger

      Clarke, Charles (Norwich S)

      Best, Harold

      Clarke, Eric (Midlothian)

      Betts, Clive

      Clarke, Rt Hon Tom (Coatbridge)

      Blackman, Liz

      Clelland, David

      Blears, Ms Hazel

      Clwyd, Ann

      Blizzard, Bob

      Coaker, Vernon

      Boateng, Rt Hon Paul

      Coffey, Ms Ann

      Borrow, David

      Cohen, Harry

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      Coleman, Iain

      Hoon, Rt Hon Geoffrey

      Colman, Tony

      Hope, Phil

      Connarty, Michael

      Hopkins, Kelvin

      Corbett, Robin

      Howarth, Alan (Newport E)

      Corbyn, Jeremy

      Howells, Dr Kim

      Corston, Jean

      Hoyle, Lindsay

      Cousins, Jim

      Hughes, Ms Beverley (Stretford)

      Cox, Tom

      Hughes, Kevin (Doncaster N)

      Cranston, Ross

      Humble, Mrs Joan

      Crausby, David

      Hurst, Alan

      Cryer, Mrs Ann (Keighley)

      Hutton, John

      Cryer, John (Hornchurch)

      Iddon, Dr Brian

      Cummings, John

      Illsley, Eric

      Cunningham, Jim (Cov'try S)

      Jackson, Helen (Hillsborough)

      Curtis-Thomas, Mrs Claire

      Jamieson, David

      Darling, Rt Hon Alistair

      Darvill, Keith

      Jenkins, Brian

      Davey, Valerie (Bristol W)

      Johnson, Miss Melanie(Welwyn HatHeld)

      Davies, Rt Hon Denzil (Llanelli)

      Davies, Geraint (Croydon C)

      Jones, Rt Hon Barry (Alyn)

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

      Jones, Helen (Warrington N)

      Jones, Ms Jenny (Wolverh'ton SW)

      Dawson, Hilton

      Dean, Mrs Janet

      Jones, Dr Lynne (Selly Oak)

      Denham, John

      Jones, Martyn (Clwyd S)

      Dismore, Andrew

      Jowell, Rt Hon Ms Tessa

      Dobbin, Jim

      Keeble, Ms Sally

      Dobson, Rt Hon Frank

      Keen, Alan (Feltham & Heston)

      Doran, Frank

      Keen, Ann (Brentford & Isleworth)

      Dowd, Jim

      Kemp, Fraser

      Dunwoody, Mrs Gwyneth

      Khabra, Piara S

      Eagle, Angela (Wallasey)

      Kidney, David

      Eagle, Maria (L'pool Garston)

      Kilfoyle, Peter

      Edwards, Huw

      King, Andy (Rugby & Kenilworth)

      Efford, Clive

      Kumar, Dr Ashok

      Ellman, Mrs Louise

      Ladyman, Dr Stephen

      Ennis, Jeff

      Lawrence, Mrs Jackie

      Fisher, Mark

      Laxton, Bob

      Fitzpatrick, Jim

      Lepper, David

      Fitzsimons, Mrs Lorna

      Leslie, Christopher

      Flint, Caroline

      Levitt, Tom

      Flynn, Paul

      Lewis, Ivan (Bury S)

      Follett, Barbara

      Lewis, Terry (Worsley)

      Fyfe, Maria

      Liddell, Rt Hon Mrs Helen

      Gardiner, Barry

      Linton, Martin

      George, Bruce (Walsall S)

      Lloyd, Tony (Manchester C)

      Gibson, Dr Ian

      Love, Andrew

      Gilroy, Mrs Linda

      McAllion, John

      Godsiff, Roger

      McAvoy, Thomas

      Goggins, Paul

      McCabe, Steve

      Golding, Mrs Llin

      McCartney, Rt Hon Ian (Makerfield)

      Gordon, Mrs Eileen

      Griffiths, Jane (Reading E)

      McDonagh, Siobhain

      Griffiths, Nigel (Edinburgh S)

      Macdonald, Calum

      Griffiths, Win (Bridgend)

      McDonnell, John

      Grocott, Bruce

      McFall, John

      Grogan, John

      McGuire, Mrs Anne

      Gunnell, John

      McIsaac, Shona

      Hall, Mike (Weaver Vale)

      McKenna, Mrs Rosemary

      Hall, Patrick (Bedford)

      Mackinlay, Andrew

      Hamilton, Fabian (Leeds NE)

      McNamara, Kevin

      Hanson, David

      Harman, Rt Hon Ms Harriet

      McNulty, Tony

      Healey, John

      MacShane, Denis

      Henderson, Doug (Newcastle N)

      Mactaggart, Fiona

      Henderson, Ivan (Harwich)

      McWalter, Tony

      Hepburn, Stephen

      McWilliam, John

      Heppell, John

      Mahon, Mrs Alice

      Hesford, Stephen

      Marsden, Gordon (Blackpool S)

      Hewitt, Ms Patricia

      Marshall, David (Shettleston)

      Hill, Keith

      Marshall, Jim (Leicester S)

      Hinchliffe, David

      Marshall-Andrews, Robert

      Hodge, Ms Margaret

      Martlew, Eric

      Hoey, Kate

      Meacher, Rt Hon Michael

      Home Robertson, John

      Meale, Alan

      Hood, Jimmy

      Merron, Gillian

      506

      Michael, Rt Hon Alun

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Michie, Bill (Shef'ld Heeley)

      Miller, Andrew

      Smith, Jacqui (Redditch)

      Mitchell, Austin

      Smith, John (Glamorgan)

      Moffatt, Laura

      Smith, Llew (Blaenau Gwent)

      Morgan, Ms Julie (Cardiff N)

      Snape, Peter

      Morley, Elliot

      Soley, Clive

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

      Southworth, Ms Helen

      Spellar, John

      Mountford, Kali

      Squire, Ms Rachel

      Mullin, Chris

      Starkey, Dr Phyllis

      Murphy, Jim (Eastwood)

      Steinberg, Gerry

      Naysmith, Dr Doug

      Stevenson, George

      O'Brien, Bill (Normanton)

      Stewart, David (Inverness E)

      O'Brien, Mike (N Warks)

      Stewart, Ian (Eccles)

      O'Hara, Eddie

      Stinchcombe, Paul

      Olner, Bill

      Stoate, Dr Howard

      O'Neill, Martin

      Strang, Rt Hon Dr Gavin

      Organ, Mrs Diana

      Stringer, Graham

      Osborne, Ms Sandra

      Stuart, Ms Gisela

      Pearson, Ian

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Pendry, Tom

      Pickthall, Colin

      Taylor, Ms Dari (Stockton S)

      Plaskitt, James

      Taylor, David (NW Leics)

      Pollard, Kerry

      Thomas, Gareth R (Harrow W)

      Pond, Chris

      Timms, Stephen

      Pope, Greg

      Tipping, Paddy

      Pound, Stephen

      Todd, Mark

      Powell, Sir Raymond

      Trickett, Jon

      Prentice, Gordon (Pendle)

      Truswell, Paul

      Prescott, Rt Hon John

      Turner, Dennis (Wolverh'ton SE)

      Primarolo, Dawn

      Turner, Dr George (NW Norfolk)

      Prosser, Gwyn

      Turner, Neil (Wigan)

      Purchase, Ken

      Twigg, Derek (Halton)

      Quin, Rt Hon Ms Joyce

      Tynan, Bill

      Quinn, Lawrie

      Vis, Dr Rudi

      Radice, Rt Hon Giles

      Walley, Ms Joan

      Rammell, Bill

      Ward, Ms Claire

      Rapson, Syd

      Wareing, Robert N

      Reid, Rt Hon Dr John (Hamilton N)

      Watts, David

      Rooker, Rt Hon Jeff

      White, Brian

      Rooney, Terry

      Whitehead, Dr Alan

      Ross, Ernie (Dundee W)

      Wicks, Malcolm

      Roy, Frank

      Williams, Rt Hon Alan (Swansea W)

      Ruane, Chris

      Ruddock, Joan

      Williams, Alan W (E Carmarthen)

      Russell, Ms Christine (Chester)

      Winnick, David

      Ryan, Ms Joan

      Winterton, Ms Rosie (Doncaster C)

      Salter, Martin

      Woodward, Shaun

      Sarwar, Mohammad

      Worthington, Tony

      Savidge, Malcolm

      Wray, James

      Sedgemore, Brian

      Wright, Anthony D (Gt Yarmouth)

      Shipley, Ms Debra

      Wright, Tony (Cannock)

      Short, Rt Hon Clare

      Wyatt, Derek

      Simpson, Alan (Nottingham S)

      Skinner, Dennis

      Tellers for the Ayes:

      Smith, Rt Hon Andrew (Oxford E)

      Mr. Gerry Sutcliffe and

      Smith, Angela (Basildon)

      Mr. Don Touhig.

      NOES

      Ainsworth, Peter (E Surrey)

      Brand, Dr Peter

      Amess, David

      Brazier, Julian

      Ancram, Fit Hon Michael

      Breed, Colin

      Arbuthnot, Rt Hon James

      Browning, Mrs Angela

      Atkinson, Peter (Hexham)

      Bruce, Ian (S Dorset)

      Baker, Norman

      Bruce, Malcolm (Gordon)

      Baldry, Tony

      Burnett, John

      Ballard, Jackie

      Burns, Simon

      Beggs, Roy

      Burstow, Paul

      Beith, Rt Hon A J

      Butterfill, John

      Bell, Martin (Tatton)

      Campbell, Rt Hon Menzies (NE Fife)

      Bercow, John

      Body, Sir Richard

      Cash, William

      Boswell, Tim

      Chapman, Sir Sydney (Chipping Barnet)

      Bottomley, Peter (Worthing W)

      Bottomley, Rt Hon Mrs Virginia

      Chidgey, David

      507

      Chope, Christopher

      Hughes, Simon (Southwark N)

      Clappison, James

      Jack, Rt Hon Michael

      Collins, Tim

      Jackson, Robert (Wantage)

      Cormack, Sir Patrick

      Jenkin, Bernard

      Cotter, Brian

      Johnson Smith,

      Cran, James

      Rt Hon Sir Geoffrey

      Davey, Edward (Kingston)

      Keetch, Paul

      Davies, Quentin (Grantham)

      Key, Robert

      Davis, Rt Hon David (Haltemprice)

      Kirkbride, Miss Julie

      Day, Stephen

      Kirkwood, Archy

      Donaldson, Jeffrey

      Lait, Mrs Jacqui

      Dorrell, Rt Hon Stephen

      Lansley, Andrew

      Evans, Nigel

      Leigh, Edward

      Ewing, Mrs Margaret

      Letwin, Oliver

      Fabricant, Michael

      Lewis, Dr Julian (New Forest E)

      Fallon, Michael

      Lidington, David

      Fearn, Ronnie

      Lilley, Rt Hon Peter

      Right, Howard

      Livsey, Richard

      Forth, Rt Hon Eric

      Lloyd, Rt Hon Sir Peter (Fareham)

      Foster, Don (Bath)

      Loughton, Tim

      Fowler, Rt Hon Sir Norman

      Luff, Peter

      Fox, Dr Liam

      Lyell, Rt Hon Sir Nicholas

      Garnier, Edward

      MacGregor, Rt Hon John

      George, Andrew (St Ives)

      McIntosh, Miss Anne

      Gibb, Nick

      MacKay, Rt Hon Andrew

      Gidley, Sandra

      Maclean, Rt Hon David

      Gill, Christopher

      McLoughlin, Patrick

      Gillan, Mrs Cheryl

      Madel, Sir David

      Gorman, Mrs Teresa

      Malins, Humfrey

      Gorrie, Donald

      Maples, John

      Greenway, John

      Maude, Rt Hon Francis

      Grieve, Dominic

      Mawhinney, Rt Hon Sir Brian

      Gummer, Rt Hon John

      May, Mrs Theresa

      Hamilton, Rt Hon Sir Archie

      Michie, Mrs Ray (Argyll & Bute)

      Hammond, Philip

      Moore, Michael

      Hancock, Mike

      Morgan, Alasdair (Galloway)

      Harvey, Nick

      Moss, Malcolm

      Hawkins, Nick

      Norman, Archie

      Heald, Oliver

      Oaten, Mark

      Heathcoat-Amory, Rt Hon David

      O'Brien, Stephen (Eddisbury)

      Hogg, Rt Hon Douglas

      Öpik, Lembit

      Horam, John

      Ottaway, Richard

      Howard, Rt Hon Michael

      Paice, James

      Howarth, Gerald (Aldershot)

      Paterson, Owen

      508

      Portillo, Rt Hon Michael

      Taylor, Ian (Esher & Walton)

      Prior, David

      Taylor, John M (Solihull)

      Rendel, David

      Taylor, Sir Teddy

      Robathan, Andrew

      Thomas, Simon (Ceredigion)

      Robertson, Laurence

      Tonge, Dr Jenny

      Roe, Mrs Marion (Broxbourne)

      Townend, John

      Ross, William (E Lond'y)

      Tredinnick, David

      Rowe, Andrew (Faversham)

      Trend, Michael

      Ruffley, David

      Tyler, Paul

      Russell, Bob (Colchester)

      Tyrie, Andrew

      St Aubyn, Nick

      Viggers, Peter

      Salmond, Alex

      Waterson, Nigel

      Sanders, Adrian

      Webb, Steve

      Sayeed, Jonathan

      Welsh, Andrew

      Shephard, Rt Hon Mrs Gillian

      Whitney, Sir Raymond

      Shepherd, Richard

      Whittingdale, John

      Simpson, Keith (Mid-Norfolk)

      Widdecombe, Rt Hon Miss Ann

      Wilkinson, John

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

      Willetts, David

      Soames, Nicholas

      Willis, Phil

      Spelman, Mrs Caroline

      Wilshire, David

      Spicer, Sir Michael

      Winterton, Mrs Ann (Congleton)

      Spring, Richard

      Winterton, Nicholas (Macclesfield)

      Stanley, Rt Hon Sir John

      Yeo, Tim

      Streeter, Gary

      Young, Rt Hon Sir George

      Stunell, Andrew

      Swayne, Desmond

      Tellers for the Noes:

      Syms, Robert

      Mr. John Randall and

      Tapsell, Sir Peter

      Mr. Geoffrey Clifton-Brown.

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

      BUSINESS OF THE HOUSE
      Ordered,
      That, at the sitting on Friday 28th July, the Speaker shall not adjourn the House until—

      (a) any Messages from the Lords shall have been received; and

      (b) she shall have notified the Royal Assent to Acts agreed upon by both Houses—[Mr. Mike Hall.]

  Horseracing (Starting Prices)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mike Hall.]
  11.1 pm
  Mr. Alex Salmond: I am delighted to move the Adjournment of the House on a debate that is of substantial interest to many people in the country. Indeed, if my memory serves me correctly, Mr. Deputy Speaker, it might have been of interest to your late father.
  Before I move on to the substance of the debate, may I say that as I will shortly have more time on my hands, I am intensely grateful to hon. Members in all parts of the House for speculating on what I might be doing with that time? As a long shot, I might move in as a compromise candidate for Speaker of the House. Despite the overwhelming demand in all parts of the House, that might well be a long shot.
  A favourite's chance would be the proposition put to me by the hon. Member for West Ham (Mr. Banks). who suggested that I might front up the Scottish bid for the Euro 2008 championships—an attractive prospect, particularly if the hon. Gentleman gives me the benefit of all his experience after the glittering success of the English world cup bid. That could be the favourite's chance—but we must move on to the substance of the debate on starting prices.
  The intricacy of the matter is important. Since January last year, the racetrack odds and margins have swung in favour of the punters—a remarkable occurrence—as a result of the opening up of the pitch positions at the racetracks, which has made the betting market at racetracks rather more competitive. That in turn led to better starting prices, which are available to punters in betting shops around the country.
  Not surprisingly, the big bookmakers were not at all happy with the resultant fall in their profit margins. At last year's Levy Board annual general meeting, Rob Hughes, the chairman of the Levy Board, announced publicly that the big bookmakers, including John Brown of William Hill and Chris Bell of Ladbrokes, had telephoned him, complaining about the fall in their profit margins. More generally, they complained of "economic ruin" and "financial suicide".
  I am reminded of Adam Smith's comment that whenever two or three men of business are gathered together, what takes place is a conspiracy against the public interest. What has taken place as a result of the moaning and groaning of the big bookmakers is most certainly a conspiracy against the public interest.
  It came to pass on 22 May this year that the starting price executive, which has responsibility for administering the returns system, issued new rules. There had been no demand whatever for any change, except from the big bookmakers. There was no consultation before the new rules were instituted. As many have pointed out, the old system was not broke so there was no need to fix it, but the new rules were none the less imposed unilaterally by the starting price executive.
  Under the new system, two starting price returners operate at race meetings and are each required to draw up a list of at least five bookmakers—a total of 10 per meeting. The list must be determined before the start of
  510
  racing. The final starting price is determined from a majority of the bookmakers' quoted odds. Under the old, more flexible system, the returners had assessed prices through the racecourse betting ring, for the betting ring as a whole. It was a more flexible system that was related to the new competition in the ring. It depended, of course, on the integrity of the starting price returners. It was a well-tried system that had worked extremely well. Above all, it was perceived by all concerned to be fair and above board.
  What has been the outcome of the changes? The evidence to date clearly indicates that starting price returns have moved in favour of the bookmakers to the detriment of the punters, improving the profit margins of the large bookmakers. Evidence collected by the Racing Post shows that the overround—that is, the theoretical profit margin of bookmakers—has improved substantially under the new system. For example, at the bank holiday meetings, when there were 10 race meetings on 9 May, the evidence showed improved margins for bookmakers compared with the corresponding fixtures for 1999.
  Who made the decision on the starting price executive? Two of its members are from the Press Association, two from Trinity Mirror and two from Satellite Information Services. The chairman of the executive is Mr. Terry Ellis of S1S, who was once employed by Ladbrokes. The big bookmakers have a substantial interest in SIS. As The Observer pointed out, the perception of the betting shop punter must be that
  the arrangement must seem as clean as coal.
  What has been the reaction to the changes? As John McCririck of Channel 4 has pointed out—a weel kent face as we would say in Scotland—every body, every responsible person and every spokesperson in racing, apart from SIS and the big bookmakers, are opposed to the changes that have taken place
  Keith Elliott, an independent member of the Levy Board appointed by the Home Secretary, describes the new system as
  a scandal and a disgrace.
  He added:
  It is not appropriate for SIS to have such a prominent role in the determination of starting prices. We cannot let the fox look after the chickens. It will certainly damage customer confidence.
  He said:
  I would like us to go back to the previous system…That system worked well. It did what it was designed to do—return the prices that were available to punters on the racecourse.
  Viscount Falkland said that
  this development has caused monstrous damage to the perception of…racing…This is the most dangerous development in racing in recent times. It has to be changed. I hope that punters around the country will clamour for it to be changed.—[Official Report, House of Lords, 14 June 2000; Vol. 613, c. 1737.]
  To show that the dividing lines on these matters are not purely between bookies and punters, I shall cite Andy Smith, an on-course bookmaker, who says:
  It's being wholly done in the interests of Ladbrokes, Coral and Hill and absolutely against the interests of their betting-shop customers.
  Rather disturbingly, when Channel 4's "The Morning Line"—an estimable programme—broadcast an interview with Keith Elliot expressing his views, the reaction of Terry Ellis and SIS was not to debate the issue but to put

  511
  lawyers on the job. They extracted an apology from "The Morning Line", but I would suggest that instead of adopting these bully-boy tactics, Mr. Ellis should be prepared to debate the issue.
  Mr. Ellis has indicated that he will stand down as chairman of the starting price executive. I have a fellow feeling for people who take that decision. That being so, I shall not say as much about Mr. Ellis as perhaps I would have done before he made that particular decision. However, people in public life should be prepared to debate matters of public interest and should not censure debate by calling in lawyers.
  The fact that Mr. Ellis was a senior executive for Ladbrokes is a substantial matter of concern when he becomes chairman of the starting price executive, which introduces unilaterally a system which is to the benefit of Ladbrokes, Hill and the other big bookmakers. These are matters of public concern and they should be debated without fear or favour, which is, I hope, what I am doing and what the Minister will do when he replies.
  The Minister is well known as a friend of the betting shop punter. He is concerned about fairness and competition, and ensuring that people get a decent deal. I hope that his reply will indicate substantial concern on the part of the Government about what is going on.
  I believe that what is required is a return to the old system—it worked. It was perceived to be fair and provided a reasonable deal for punters. We also need a reform of the starting price executive itself. It should have an independent chairman, two representatives from the Press Association, two from Trinity Mirror and two from the National Joint Pitch Council. Crucially, there should be no place for SIS, except perhaps as observers. The starting price executive needs to be perceived as clean and above board and definitely not as representing the interests of the bookmakers.
  I suggest that those reforms should be instituted now. With great respect to the Minister, I do not think it is good enough to wait for Sir Alan Budd's committee on gambling which is not due to report until next summer. There are rumours, after all, that Hill and Coral are due to float on the stock market and that Labrokes' betting operation could be floated off, too. It is reasonable to believe that one of the reasons for the changes is to see profit margins increase so that there can be big pay-offs when the companies are floated. If that is so, it should not be at the expense of the betting shop punter.
  I shall summarise my argument. The new starting price system introduced on 22 May this year has undoubtedly proved to be to the bookie's benefit and to the detriment of punters in the shop. The new system has improved profit margins for the big bookmakers and led to worsening starting price odds for the betting shop punters. The starting price executive has let punters down by introducing the new system; and the fact that Terry Ellis, the chairman of the starting price executive, is a former Labrokes employees and that his company, SIS, is substantially owned by the big bookmakers gives reasonable grounds for concern. As Keith Elliott, the independent member of the Levy Board, said:
  We cannot let the fox look after the chickens.
  512
  If we are serious about protecting the interests of punters and defending the integrity of racing, the new starting price system must be scrapped. The big bookmakers already get a fair deal from racing; they should not be allowed to rip off the punters.
  11.12 pm
  The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): I begin by congratulating the hon. Member for Banff and Buchan (Mr. Salmond) on raising an important issue. Horse racing and betting on horse racing have a long and honourable history in Great Britain. He is one of many hon. Members who have taken an active interest in racing—attending race courses and, no doubt, betting either on or off course. I also congratulate him on his decision to retire. I hope that he has a long and honourable retirement and spends a lot more time at the races rather than in this place causing problems to Ministers.
  I am glad that the hon. Gentleman has brought this issue to the attention of the House, because there is much concern about it. The turnover on horse race betting is an important matter for the Government and for the economy as a whole. It helps to support 8,000 licensed betting shops in Britain, and a growing internet and telephone betting industry in which many people are employed. The total amount staked on horse races with off-course bookmakers in 1999–2000, including bets with the Tote, was about £5 billion. That is an indicator of the widespread popularity of horse racing, its importance and its value to the Exchequer as a source of revenue.
  As hon. Members know—some to their cost—the tax on off-course betting stands at 6.75 per cent. Government revenues from off-course horse race betting therefore approach £350 million a year. What happens in the industry is important to the Government.
  I make no secret of my concern at what the hon. Gentleman has said tonight. There has been a debate in the racing industry and in the media for some time on an issue that I have monitored closely, including by watching the estimable John McCririck, the racing commentator, in full flow on television on a number of occasions expressing his concern about the dangers to the integrity of the industry and the need to protect the punter.
  The way in which on and off-course betting is organised developed over the years and has largely stood the test of time. It has a reputation for integrity. It is plainly important that the majority of punters, who place bets in the betting shop rather than on the race course, know that they are getting a fair deal. It is also important that off-course bookmakers can run a commercially viable operation. There is therefore a balance to be struck.
  The organisation of off-course betting is not always understood by those who know little of the industry. Leaving aside betting on the Tote, which is a separate system, it is up to the punter at the betting shop to decide whether to back a horse at starting price or at whatever odds the bookmaker offers. As a race approaches, betting shops will offer fixed odds, based on early shows of the betting on the course. For some races, they might offer fixed prices throughout the day. In some cases, especially for major races, such as the National or the Derby, the bookmaker will offer ante-post prices on the horses for days, weeks or even months in advance. The odds that the betting shop offers on a horse will move up or down according to the state of the market.

  513
  Betting shop customers have a choice and can place their bets at fixed odds. However, many choose not to do that; instead, they place their bets at the starting price—the odds given by the bookmakers at the race course when the race is about to start. When punters place their bets, they do not know exactly what the starting price will be and therefore how much the bookmaker will pay them if they win.
  The key question, to which the hon. Member for Banff and Buchan has rightly drawn attention, is the maintenance of public confidence in the way in which the starting prices are worked out. It is important that punters who bet on the starting price get a price that fairly reflects the prices that are available on the course just before the off, and that the way in which the price is calculated is transparent.
  Arrangements for working out starting prices depend on starting price returners at the race course. They note the varying prices that bookmakers offer in the betting ring just before the start of the race. They must decide on representative prices for each horse and notify betting shops around the country of them. The task is organised by the starting price executive, which brings together the three major media companies—the Press Association, Trinity Mirror and Satellite Information Services—which employ the returners.
  The arrangements have never been directly a matter for the Government. Nevertheless, as the hon. Member for Banff and Buchan said, some recent changes have been made; I understand that the executive made them in May. The aim was to offer a more transparent, accurate and efficient method of assessing starting prices. The returners had previously tried to take account of the prices offered by a wide range of bookmakers in the ring. That is difficult to do properly and fairly, especially in the limited time available in the run-up to a race.
  The starting price returners now concentrate on a smaller sample of bookmakers. Allegations have been made that that reduces the starting price, of which the starting price executive notifies betting shops around the country. If that were so, it would shade odds at which off-course bookmakers paid their starting price customers. The bookmakers would be richer and the punters would be poorer. Tonight and on other occasions, I have heard arguments to support that proposition.
  It is said that other changes that the National Joint Pitch Council made to controls on the betting ring a year or two ago led to a more customer-friendly betting market on the course. It is suggested that the restructuring of the on-course betting market led to an overall increase in the starting prices of which betting shops are notified, and that there was therefore an incentive for off-course bookmakers to do something about circumstances in which their profits were being cut.
  Off-course bookmaking interests have always hedged their bets with an on-course bookmaker to manage their liabilities. Consequently, the weight of their money may affect the starting price. However, it has now been suggested that, because the new starting price system takes account of fewer on-course bookmakers, who are thus easier to identify, the larger off-course bookmakers may be able to hedge their bets more strategically with a view to manipulating the starting price in a way that is favourable to their business.
  514
  I have listened carefully to the comments of the hon. Member for Banff and Buchan and other observers on the matter. I understand their anxieties and I am watching developments with great care and not a little concern. If the punter is being ripped off by the bookmaker, the Government may need to express their views strongly to the industry. I am well aware that early signs show an apparent decrease in the starting prices at some races compared with those returned for the same races in previous years. The position will vary from course to course and race to race. However, I am advised that it is too early to say that the evidence has conclusively proved that there is a problem in which we need to intervene. We are monitoring developments with a great deal of concern and care.
  Our job as a Government is to ensure that punters are not ripped off. However, we will not intervene in the market unless the evidence is clear. I am watching matters with interest and concern, but the true effect is unlikely to be apparent yet.
  Mr. Alan Meale: I congratulate the hon. Member for Banff and Buchan (Mr. Salmond) on raising an important matter. I draw the attention of my hon. Friend the Minister to the evidence given to the Select Committee on Home Affairs—of which the hon. Member for Banff and Buchan was a key member—by Mr. Peter George, the then chief executive on betting of Ladbrokes, who admitted openly that the company was proactive rather than reactive in terms of hedging bets on race courses. The major bookmakers already have considerable influence on the course in lowering the price for off-course betting, which the large bookmakers control. In terms of the geographical remit to which my hon. Friend refers, the problem will not show up, as the large bookmakers have that remit right across Britain. I take this matter very seriously and it is an important example of how, yet again, the big bookmakers are trying to take advantage of the ordinary punter by hedging bets even further before there is a return in the betting shop.
  Mr. O'Brien: My hon. Friend puts his point strongly and it is right that Members should express the concerns of constituents. As it stands, the Government have no legal base on which they can intervene in this market. If we wanted to intervene, we would have to take powers and pass legislation. However, I am sure that the industry and the bookmakers will listen with great care to what is said in the House.
  Mr. John Greenway: May I also congratulate the hon. Member for Banff and Buchan (Mr. Salmond) on raising this matter, which is an issue of concern? I have a great deal of sympathy with what the Minister has said. I do not see a basis on which he can intervene. However, if the matter persists—quite apart from the prospect of considering whether, as an outcome of the gambling review, this may be a matter for legislation—would he consider referring the matter to the Secretary of State for Trade and Industry and the competition authorities? If the consumer—the punter—is being disadvantaged by this kind of practice, the House ought to unite behind a call to do something about it.
  Mr. O'Brien: I hope that the bookmaking industry is listening with care to the debate. It is important that we

  515
  look at the issue of confidence in the industry. It is not just a matter of doing things the way that they ought to be done, or doing things honestly. There is also a question of perception; things must be perceived to be open and above board. There should not be public concern. It is important that the punter believes that, when he places a bet, he is getting a fair deal. There is concern about the way in which things are done. The hon. Gentleman is right to say that the odds at which punters are prepared to back horses and the odds that bookmakers are prepared to offer them are not things that the Government regulate.
  Mr. Salmond: I welcome the Minister's concern, and his words should be listened to carefully by those concerned. I welcome also the fact that Members on both sides of the House share that concern. However, let us say that we were not talking about betting shops and race meetings but about the financial markets. If we had a situation in which a company—in this cases SIS, which is owned by the big bookmakers—were in a position to regulate the profits available in the market, that would not be allowed legally in the financial markets. If it would not be allowed in the financial markets, why should it be allowed in this market, which affects a substantial number of people in the UK?
  Mr. O'Brien: The hon. Gentleman knows well that the law has a different approach to gentlemen's agreements or gambling than it does to contracts involving financial matters, such as deals and agreements in the City. To that extent, there has historically been a different legal basis for the approach to these issues. The hon. Gentleman needs to be careful; he appears to be suggesting going much further than I think that he really wants. I think that he is identifying a particular concern that a number of punters feel about a particular issue. In his intervention, he almost seemed to be saying "Let us go much further, and regulate, on a legal basis, all contracts under which these bets are placed." I do not think that he wants to do that.
  I think that, to some extent, this is a commercial matter between bookmaker and customer. If the punter does not accept the terms of one bookmaker, he can always go to another, at least in theory. Of course, he could also use the Tote—and, for obvious reasons, the Government want to encourage use of the Tote.
  I accept that the betting industry is important, and we want it to succeed. I understand the hon. Gentleman's concern about something that is important to the success and integrity of the industry as a whole. After all, the industry trades on its integrity, and, as I have said, the industry is important to Britain. If it compromises its integrity, it damages our economy and the Inland Revenue's income. We are therefore watching what is happening very carefully.
  Integrity must be both real and perceived to be real. When people do not believe that integrity is present, even if in reality it is, they will be reluctant to rely on it. The bookmakers need to remember that.
  I was glad to learn recently that the starting price executive had responded to concern expressed in the racing press and elsewhere. It has said that it will commission independent consultants—a major accounting
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  firm—to undertake a review of the new SP system, to see how it is working in practice and to compare its operation with the previous arrangements. It has also said that it will use two SP returners at all race meetings except minor ones that do not feature in the betting shops' service. Each returner will monitor a minimum of five bookmakers, and the two will compare the prices that they have recorded and determine the SP.
  I welcome the executive's announcement. I trust that it will take account of what has been said here tonight, and that, when it reaches its conclusions with the help of the accountants, it will consider not just the views of those independent consultants, but the views of hon. Members. If there is a problem, it is important for it to be identified, and it is important for the bookmakers to be prepared to address it.
  There is a possible issue of consumer protection. The Government have set up a review of gambling legislation as a whole. The review body is chaired by Sir Alan Budd, and is due to report next summer. It has extensive terms of reference, which include a requirement to make recommendations on the kind and extent of regulation that is appropriate to gambling activities in Great Britain. That wide remit will enable Sir Alan and his team to consider whether there might be controls in this area, and, if so, what they should be.
  No doubt Sir Alan would want to consider evidence on this matter if it were put to him. That would be part of the whole process of ensuring that the gambling industry has not only integrity in reality, but a reputation for integrity. We are acting, at some degree of risk, because there is public concern—because people feel that they may be ripped off by bookmakers. If that is the case, we want to ensure that the bookmakers address the issue. They may want to do that by convincing people that what they are doing is proper, fair and appropriate: that is the approach that they are taking. However, they may well have to conclude that, whether what they are doing is fair or not—it may well be fair—they must bear in mind the perception that people may have, and therefore consider whether to adopt a particular course.
  Mr. Meale: Given the resignation of Mr. Ellis, might it not benefit this side of the industry if the new chair had independent status? That might make it easier for people to deal with the discrepancy involved.
  Mr. O'Brien: My hon. Friend makes an interesting point. Although the issues will have to be examined, I shall certainly bear in mind what he said and consider whether it is appropriate to take that action.
  The hon. Member for Banff and Buchan is to be congratulated on initiating this debate. As he will know, Adjournment debates usually involve a Minister and only one other hon. Member. For this debate, however, at a late hour, quite a few hon. Members have stayed because they are seriously concerned about the issue. It is right that we should have this debate, and it is right that others should listen to it.
  The Government are concerned that future gambling legislation should properly balance the interests of business with the need to protect consumers and the

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  public. I assure the hon. Member for Banff and Buchan that the Government are perfectly prepared to act in the interests of betting customers and of the industry as a whole if there is a need to do so. The Government are watching the situation with care, as are other hon. Members. When the House returns in the autumn, if we
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  need to have another debate on the issue because there is still serious concern about it, I am sure that the bookmakers will realise the seriousness of the situation
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes to Twelve midnight

Preamble
[SIR ALAN HASELHURST in the Chair]

EU Incineration Directive
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Sutcliffe.]
9.30 am
Mr. David Amess: Since I was fortunate enough to win the ballot for this debate, I have become more and more popular. Many organisations have contacted me to make sure that I am appraised of their worries about the draft directive and, as a result, I am becoming increasingly alarmed. I recognise fully that the Minister has our best interests at heart, but several organisations are concerned that, unless we are firm about our position, we shall be rolled over.
I am sure that the Minister will tell us that a deal has been brokered that meets all our anxieties. That may be so, but practice has shown us that what comes out of the European Community does not always hold fast for organisations in the United Kingdom. I am worried about the impact of the directive on businesses throughout the country. I have been contacted by the Retail Motor Industry Federation, the Countryside Alliance and the Association of Private Pet Cemeteries and Crematoria— to mention three organisations. If the Minister can allay all our worries, I shall be delighted, but I suspect that the problem will not be solved by our debate today.
I am not targeting the Government's plans to establish a network of mega-incinerators to deal with household waste, but European legislation can spin out of control if the Government do not do their homework properly and defend United Kingdom interests. I am referring in particular to the inappropriate application of aspects of the European waste incineration directive to pet crematoriums and to farmers. The directive is now nearing the final stages of the legislative process and the danger is that the Government may have woken up too late to the harm that they are about to inflict on various industries.
I shall deal first with the worries of the Retail Motor Industry Federation. It believes that the directive would have a serious impact on small and medium enterprises, which make up the bulk of businesses in the retail motor industry. Those businesses, which have vehicle maintenance and repair workshops, are the primary users of small waste oil burners. Contrary to the statements of the Department of the Environment Transport and the Regions, neither the federation nor any of its constituent associations was approached by Entec, the environment consultancy employed by the DETR to gather views on the proposed directive. Consequently, it was not until 22 February this year in a meeting with the Environment Agency that the federation was made aware of the impact of the directive on small businesses.
Similarly, there was at no stage direct consultation by the DETR with the Oil Firing Technical Association for the Petroleum Industry, heating equipment
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manufacturers or the Building Services Research and Information Association. During the past two years BSRIA has been actively engaged in the development of an industry standard for appliances burning waste oil. That valuable work has been conducted on behalf of equipment manufacturers.
As there is no threshold to the application of the directive, the same flue gas monitoring requirements are equally applicable to major country waste incineration projects and to small workshop heaters. The initial monitoring and control equipment for the heaters will cost as much as £40,000, whereas the initial cost of the heaters is only £6,000. The equivalent value of the heat from burning the engine and gearbox oils taken from vehicles is £1,800 to £2,000 a year. The cost of the emissions control equipment is clearly disproportionate, given the fact that the heaters will no longer be able to burn waste oil. The alternative is that garages will buy gas oil if the heater can burn it, and will have to pay for waste oil to be taken away. That will add at least £3,000 a year to the cost of small businesses, and more if an alternative form of heater has to be purchased.
I believe that the industry is right. The directive is another example of gold-plated legislation being supported by the DETR with no concern for the impact on small businesses. The DETR needs to recognise its inadequate consultation on the subject, and to insist at the European level on the introduction of a threshold in the directive so that it will not apply to heaters of less than 0.4 MW.
The Countryside Alliance believes that if the directive goes ahead unamended, it will lead to the closure of small incinerators operated typically by farmers, hunt kennels and veterinary practices.
Mr. Mark Todd: Has the hon. Gentleman read the Entec report that covers this aspect of the regulation? It is clear in its advice to the Government on the impact on small farm-based incineration, stating that it would be almost impossible to pass on the compliance costs of the regulation. For a small business with a turnover of around £75,000 a year, the capital cost of compliance would be £200,000 and the annual running cost £12,000. Hardly surprisingly, one would expect that business to close. Does the hon. Gentleman agree?
Mr. Amess: I certainly do. The hon. Gentleman makes an excellent point. If the directive goes ahead unamended, it will have a devastating impact on small farmers. I know that there are such farmers in his constituency, and that many of them will go out of business. It is desperately disappointing that the Government did not cotton on to those concerns earlier.
The Countryside Alliance's policy team has spoken to the directive rapporteur, Hans Blokeland. He was aware of the difficulties that the directive would create in Britain and assured the Countryside Alliance that an amendment was still possible. He claimed:
I cannot give you promises but I can give you hope,
and added that changes and exemptions were possible at the conciliation process. That will require all concerned to make them an issue and convince the Minister that it

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is worth the trouble of having the directive changed. I ask the Minister to take that point seriously, because it is more than worth the trouble.
Mr. Todd: One might understand the rigour with which the sector was being tackled if the environmental gains to be achieved from its regulation were substantial. However, the Entec report suggests that the gains will be trivial. Will the hon. Gentleman comment on the apparent proportionality of that approach?
Mr. Amess: The hon. Gentleman again makes an excellent point, which I shall address in some detail. Obviously, we do not blame Ministers directly for such matters—[Interruption.] Perhaps some of my hon. Friends would blame Ministers directly; they seem slightly worried about that weakness on my part. However, Ministers cannot be expected to monitor everything. The Entec report suggests that the effects of proportionality should have been thought through much more clearly.
The conciliation process began in June. I am advised that when an amended draft of the directive becomes available, the Countryside Alliance policy team will examine it to assess the outcome and other options. I am also advised that if the directive is passed as amended, two further options will be available. First, as existing incinerators will have four years to comply with the directive, it may be possible to incorporate a review clause into the directive to assess the impact of regulation in four years' time. That might provide an opportunity to reform the law in future.
The second option is a small additional directive to provide an exemption from the directive. Pointless though that sounds, it would be the least painful option if the Government were minded to choose it. It could provide the United Kingdom with the best available opportunity for a positive legislative role.
The draft directive requires higher standards for all incinerators equipped with flue gas monitoring. Small incinerators, costing on average £5,000, will have to fit that equipment, at an estimated cost of between £30,000 and £40,000. As I mentioned, the plant will also cost an extra £3,000 to £5,000 a year to operate.
No one is suggesting that incineration should not be undertaken at the highest standards possible, a point to which I shall return. However, it is important that the effect of the proposal on several business sectors is properly evaluated.
As the hon. Member for South Derbyshire (Mr. Todd) said, the Government employed consultants Entec UK to examine the effect of the proposal on pet crematoriums in particular. There are about 60 pet crematoriums around the country, providing a caring service for many families when they are bereaved by the loss of a cherished pet. Some people might consider that a huge joke, but when I return to my house in Chalkwell, the only thing that I can guarantee is that my dog is always pleased to see me. For many people in the United Kingdom, their animal is everything. Therefore when an animal dies—by and large, with the exception of tortoises and parrots, animals do not live as long as human beings—it can be devastating.
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I have my own views on cremation. When I pass on, I want to be—
Mr. Charles Wardle: Not yet.
Mr. Amess: As my hon. Friend says, I have no plans to do so at the moment. However, I would prefer to be put in the ground. Other people have different views on the matter, but increasingly more people are of the view that when they lose their beloved pet they would like it to be cremated. It is a very big issue for many people. An important article appeared in the Sunday Express at the beginning of the month, which dealt movingly with the trauma of losing a pet and the impact of the directive if it were passed unamended.
Entec's small-business litmus test on a pet crematorium showed that businesses will have to close. The Association of Private Pet Cemeteries and Crematoria estimates that upgrading each site would cost a minimum of £75,000—a huge amount of money—and that the majority of pet crematoriums would have to close as the increase in the cost of pet cremations would be prohibitive for a large section of the community.
Mr. Todd: The hon. Gentleman has been very kind. What is his view of the impact of the policy on the Government's approach towards diversification on farms? That is clearly an option for many farmers, including at least one in my constituency, but it would clearly be ruled out by a regulatory environment on such a scale.
Mr. Amess: The hon. Gentleman makes another splendid point far better than I could. I hope that the Minister, who has been listening carefully to the debate, will take that option seriously. Small farmers would certainly welcome such an opportunity.
When they came to power, the Government—ominously—renamed the deregulation unit the better regulation unit, a renaming at which some of us might groan, although it is an interesting piece of Orwellian socialist rebranding. The small business litmus test on every proposed piece of legislation or regulation rightly remains part of the Government's better regulation guidelines. However, in this case, we discover a remarkable new principle of applying the litmus test, but then deciding that the result does not matter. That is absolutely ridiculous—all spin and no substance.
In August 1998, in a foreword to the "Better Regulation Guide", the Prime Minister wrote:
I have therefore decided that no regulatory proposal which hasan impact on business, charities and voluntary bodies should be considered by the Government without a thorough assessment of the risks, costs and benefits, a clear analysis of who will be affected and an explanation of why non-regulatory action would be insufficient.
We all say amen to that. He especially wanted to avoid
excessive or poorly conceived legislation,
which risked being
particularly damaging to our small firms.
Yet two years later, an entire small business sector, largely composed of family businesses, is about to be wiped out. What an earth is the purpose of all the spin? There has been no substance and absolutely no delivery.

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I now turn to small farm incinerators, an issue that concerns many hon. Members with farms in their constituencies. After subsidies were removed from the United Kingdom rendering industry, the big increases in rendering charges encouraged a move towards the use of burial for disposing of animal waste. For the protection of animal and human health and to avoid contaminating the water table and perpetuating long-lived BSE-infected material in water or soil, the Ministry of Agriculture, Fisheries and Food began to crack down on landfill. It was very much at the prompting of the previous Government, acting on scientific advice, that farmers began increasingly to invest in on-farm incineration. On-farm incinerators are used for quick, hygienic disposal of carcases, including casualty stock, mainly on intensive livestock farms and poultry units.
Especially relevant to United Kingdom farmers is the strict regulation of the disposal of bone-meal and meat, which does not operate elsewhere in the EU and means that carcases have no value. Incineration is therefore the disposal method of choice, backed and encouraged by Government policy. A regulatory impact assessment was undertaken, based on sound scientific advice. Entec reckoned that there were about 60 on-farm incinerators. William White Fabrications Ltd., one of the manufacturers of the incineration units, had already installed about 300 units in the United Kingdom and wanted to raise production by 80 units in the coming year before the threat of the directive hit home. The company stated:
At a stroke it will wipe out all the benefits and gains that our development has achieved.
Sun Valley Foods used 90 small incinerators in its operations. A fair estimate of the number of on-farm incinerators would be 3,000. I congratulate the Government on admitting that the assessment was wrong; going wrong by a factor of 50 is quite something.
As to the impact assessment, based on a total figure of 120 animal remains, Entec estimated the capital cost of the directive at £43 million, with annual running costs of more than £2.6 million. If we accept that there are 3, 120 farm and pet crematorium incinerators rather than 120, a quick bit of maths—assuming rough parity between incinerator types—will produce a broad estimate of the capital burden on the sector of more than £1 billion, an extra running cost of £68 million a year. Those are huge figures.
Another principle of better regulation is proportionality, a matter raised by the hon. Member for South Derbyshire. The "Better Regulation Guide" advises fitting the remedy to the risk and regulating only when necessary. What are the risks that are worth destroying pet crematoriums and the small incinerator construction industry and burdening farmers with millions of pounds in extra costs at what is already a very tough time for them?
The quantifiable cash benefits identified by Entec amount to £40,000; the quantifiable health benefits are virtually negligible. Even allowing for Entec getting it wrong again, those insignificant pluses may be completely outweighed by the risk to health involved in implementing the directive.
As an alternative to the incineration of animal remains, farmers are being pushed back to burial on site, with endangers human and animal health. Even if they
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could be persuaded to pay more to transfer animal waste to centres with large incinerators, there would be environmental drawbacks. For example, how long would carcases remain on the farm and what condition would they be in before being transported? Would the transport be odour-free? How many extra miles would be travelled by the juggernauts transporting the material? What extra pollution that is harmful to human health would be emitted by those heavy lorries? Would the transport of rotting carcases in skip lorries between farms increase the risk to human and animal health?
We are facing a nightmare scenario. How does that fit in to joined-up government? What price would be paid for the Government's reliance on the proximity principle for waste disposal? The DETR proclaimed only in May
Waste should generally be disposed of as near to its place of origin as possible…the proximity principle is particularly applicable to hazardous wastes as they are intrinsically hazardous and moving them over long distances may increase the risk of damage arising.
How did the Government get themselves into this pickle, which conflicts with so many of their policies and rides roughshod over environmental, agricultural, health, transport and employment concerns?
Mr. Todd: Once again, I thank the hon. Member for Southend, West for giving way. I draw his attention to one of the common failings in the regulation, which we shall debate tomorrow when we discuss the integrated pollution, prevention and control regime: the lack of any attempt to look at the comparative picture throughout Europe. How are other members of the European Union that are affected by the regulations responding to them? Regrettably, there seems to be complete ignorance about the matter.
Mr. Amess: The hon. Gentleman is very sharp in summing up how angry the public are because the United Kingdom, being honourable through and through, adheres to the regulations while the rest of Europe turn up their noses and do their own thing. That is most unfair and damages the Government's position in our developing relationship with the European Union.
It is not too late for the Government to extricate themselves from their self-inflicted pickle. I hope that even at this extremely late stage the Government will press to exempt animal remains from the scope of the directive as they are already covered by the animal waste directive. I accept that it needs reviewing and updating and that some incinerators on farms do not conform to an acceptable standard. However, that should be dealt with by batch certification of incinerator models.
There must be consultation, which has been lacking so far; and the Government must try to avoid serially shooting the nation's interests in the foot. I hope that the Minister will respond positively to my plea, which I make on behalf of 120 small businesses that perform a much-valued service to the community, a dozen or so manufacturers of small incinerators, hard-pressed farmers who are trying their best to do their environmental duty and for the sake of common sense.
9.56 am
Mr. Charles Wardle: I am grateful for the opportunity to speak in the debate and I congratulate my hon. Friend the Member for Southend, West (Mr. Amess) on his success in the ballot and on his excellent and typically powerful and persuasive opening speech. My emphasis will be different from that of my hon. Friend.
I have tried for many weeks to obtain a similar debate on Government waste incineration strategy. Since their strategy hinges on the European Union directive, our interests are, broadly speaking, one and the same. I understand my hon. Friend's anxiety about the effects on small business of too rigid an interpretation of the draft directive, but the directive as interpreted by the European Parliament is also full of loopholes, in typically European fashion.
As my hon. Friend said, the public are angry and anxious; my interest this morning is in the toxic fallout from major new and planned, but not yet built, high-chimney incineration plants. Small incinerators as part of small businesses on farms would be better than major new plant, as my hon. Friend said. The hon. Member for Lewes (Mr. Baker) also has an interest in the subject.
My concern about waste incineration and the EU directive was prompted by East Sussex county council's proposal last December to site a waste incineration plant at Mountfield in my constituency. I shall not detain the House with a blow-by-blow account of the tortured deliberations of the joint committee of East Sussex and Brighton and Hove councils, which failed dismally to come up with an agreed joint waste strategy for the two authorities. However, after that committee had made its best—or worst—attempts, East Sussex county council turned to its own plans; the councillors went against the recommendations of their officers and opted for an incineration plant to be sited at Mountfield, which is slap in the middle of the designated High Weald area of outstanding natural beauty and close to three important water reservoirs. It is also close to the Tunbridge Wells to Hastings railway line, with all that that implies for shipped-in waste, on the A20100 into the historic town of Battle; the A21 trunk road to Hastings is nearby. The country lanes around the tiny village of Mountfield would become impossibly congested if the proposal became a reality.
However, what concerns me this morning are not just the arguments for and against Mountfield as a site for an incinerator, but the underlying principle of waste incineration as an appropriate and adequately safe technology. Whatever the outcome of the debate, Mountfield may yet be let off the hook because a sub-committee of East Sussex county council recently recommended dropping that proposal. I hope that the rest of the council will have the good sense to endorse that decision in a few days' time. Whether or not that happens and the people living in and around Mountfield are able to brief a collective sigh of relief, the dangers to public health, the contamination from toxic emissions and, in particular, the carcinogenic threat will continue wherever major high-chimney waste incineration plants are allowed to operate.
I am indebted to Councillor Harmer and his colleagues on Mountfield parish council, to Mr. Thorogood, Rosalind Hodges, Lucinda Fraser of
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the Mountfield Heritage Group and to many more of my constituents who have diligently researched the health risks arising from waste incineration. They have surfed the net for informative websites and have collected data from as far afield as the United States, Japan, Italy, France, Germany, Switzerland, Scandinavia and the Netherlands, as well as from eastern Europe. All the findings point to the conclusion that waste incineration technology is not yet completely safe.
The Minister, responding to the hon. Member for Lewes in an Adjournment debate on 31 January, seemed to argue that waste incineration was justified because recycling and composting alone will not enable Government targets to be met. He stated that
waste incineration and energy from waste will have an important part to play in an integrated system of waste management.—[Official Report, 31 January 2000; Vol. 343, c. 885.]
Since that debate, and rather later than the Department of the Environment, Transport and the Regions originally anticipated, Waste Strategy 2000 has been published. Paragraph 5.59 states that waste incineration is
among the most strictly regulated waste management options available
which will soon be subject to even more stringent requirements under the directive that we are now debating.
Paragraphs 5.62 and 5.63 offer comforting words about the importance of high environmental pollution standards and the noticeable improvements that have been made in the environmental performance of United Kingdom waste incinerators. However, is that what the draft directive really implies?
The European Parliament's common position paper on the draft directive, which was adopted last November, noted that a high level of environmental protection requires the setting of stringent operational conditions. It also provides a loophole for the less-than-assiduous member states by stating that where this is not practicable the limits set should do no more than
reduce as far as possible the negative effects on the environment and the resulting risk to human health.
Later, in paragraph 18, we are told that
there may be grounds for exemption from emission limits.
In other words, for all the expensive Euro-bureaucracy, member states will be able to proceed with standards as lax as they choose in some of the major incineration plants. So, no matter how virtuous the Government and the Minister sound in Waste Strategy 2000, and regardless of the good intentions of the Environment Agency, there appears to be little in the EU legislative framework that will prevent the breaching of emission control standards in major new waste incineration plants.
I have something different in mind. It would be a far better world if we allowed small businesses to get on with their own incineration practices, with small-scale plants. The same could apply to farms. My worry is about major new high-chimney installations. Highly toxic material, spreading fall out in the form of fly ash over extensive areas, and gathering in the incinerators as bottom ash too, is a matter of genuine concern. Dioxin

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exposure has been shown, in as yet unfinished research in the United States, to have a strong causal relationship with cancer, as well as with changes in male biochemistry and physiology, affecting reproductive hormones, and with reductions in glucose tolerance, therefore having possible links to diabetes.
The risks were well summarised in a paper given by an American professor, Dr. Paul Connett, to the Waste to Energy conference on 24 November 1998 in Amsterdam. He said:
Incineration of municipal trash with energy recovery has been an experiment which after 20 years has left the citizens of industrialized countries with a legacy of unacceptably high levels of dioxins and related compounds in their food, their tissues, their babies and in wildlife.
He spoke about the formation of hydrogen chloride, the generation of nitric oxide, the release of toxic metals such as lead, cadmium, arsenic and mercury into the atmosphere and the unmonitored spread of dioxins contaminating human tissue and the food chain alike.
It is therefore imperative that the Government think again about the importance of further research into the damaging fallout from major new waste incineration plants and the effect that that may have on human and animal health. It is much better to operate on a small scale than to release fly ash into the air over wide areas, contaminating water supplies and crops, and affecting health.
If the dangers are ignored, in future, the Government of the day and local authorities could face huge compensation demands from cancer patients and others made ill by toxic fly ash. Without seeking to be unduly dramatic—hon. Members know that it is not my style—the sums involved for compensation from court orders could even dwarf the gigantic payout ordered a few days ago by the US courts against cigarette manufacturers. We should act now to safeguard our future health.
10.6 am
Mr. Norman Baker: I am delighted to take part in this morning's debate to consider the EU incineration directive. I intend to concentrate on the implications for East Sussex. I fear that those of us who represent East Sussex constituencies might hijack the debate, but other hon. Members will appreciate that this is a hot issue—no pun intended—for my constituents and those of the hon. Member for Bexhill and Battle (Mr. Wardle), just along the coast.
I am grateful to the Minister for making time available last week for a meeting with members of the public in my constituency and me. I fear that he might have to listen again to some of the points that I made then, but it is helpful to put them on the record.
I am worried that the incineration directive represents a further step towards making mainstream a form of technology that still has question marks over it on safety and environmental advisability, as the hon. Member for Bexhill and Battle rightly said. One of the worst aspects of incineration is that, because an incinerator has a high capital cost, a large amount of waste must be processed in order to repay the capital investment. In other words, once the plant exists, it is important for the person who runs it to secure as much waste as possible to try to recoup the initial investment. That undermines any
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attempt made by the local council to increase recycling. An incinerator is a hungry mouth that wants to be fed continually with ever more waste.
The Minister will be aware of the situation in Cleveland, before the system was abolished. The local council had a deal with the operators of the local incinerator to provide them with a certain amount of waste. As the council was so successful at recycling, it could not provide the contracted amount of waste and therefore had to make a penalty payment to the operators of the incinerator. We all want to avoid such consequences.
I accept that the Minister and the Government have a difficulty. The EU landfill directive sets the maximum amount of municipal waste to be deposited in landfill at 35 per cent. by 2014. The Minister for the Environment admits that the Government's recycling figure is a "pathetic" 8 per cent. That leaves a 57 per cent. gap. I am disappointed that the Government's answer is to take the easy way out and establish a chain of incinerators largely to fill that gap—[Interruption.] The Minister shakes his head and denies that that is the Government's position. No doubt he will expand on their view in his response, however, in yesterday's comprehensive spending review, the recycling target of 25 per cent. by 2005 appeared to be downgraded to 17 per cent. by 2004. That may achieve the same target in the end, but nevertheless, many of us wanted the target to be increased massively, not simply reiterated or at worst, diminished. We need to change the Government's approach, which I shall discuss shortly.
East Sussex has identified potential incinerator sites in my constituency and that of the hon. Member for Bexhill and Battle. Two places in my constituency have been mentioned. The first site is at Beddingham, not far from where I live—I suppose that I should declare that as a matter of interest. Beddingham is a village in an area of outstanding natural beauty. Local landmarks, such as Mount Caburn, feature regularly on postcards and drawings and are recognisable landmarks of a beautiful part of East Sussex. Yet Brighton and Hove borough council suggested that an incinerator should be placed not far from those landmarks in the middle of that pristine countryside. No development or industrial land surrounds the site, which is above a water table. The landfill site has already polluted the ground water supply.
The incinerator might replace the landfill site. When that was opened, the people of Beddingham were told that once it was full, that would be the end of the matter. The landfill site application described its purpose as restoring chalk downland and not as the precursor to an incinerator. It is impossible to imagine any environmental justification for placing an incinerator on that site. Unlike most people in East Sussex, Brighton and Hove councillors have argued for a south downs national park to take away power from democratically elected local councils. They have been the first to argue for an incinerator in the middle of the area of outstanding natural beauty and a football stadium at Falmer, as soon as the national park is designated and the boundaries are redrawn, as they would like them to be.

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That choice of location is out of order, as is the suggestion of a site at Newhaven, which is even more worrying. I can show the Minister and hon. Members last week's front page of The Leader, which is delivered free to every door. An article contains quotes from Marek Lorys of the Newhaven chamber of commerce, who says that businesses will leave Newhaven in droves if an incinerator is built in the town. That is also the view of the Newhaven economic partnership, a private-public partnership established by the previous Government, which has support across industry and the councils. In many ways, that group speaks for the town. Its chief executive, Julian Rea, takes the view that an incinerator in Newhaven would send all the wrong signals to those who have tried so hard to boost Newhaven recently, including the Government office for the South East, and that it would set back those efforts.
Last Thursday, the Minister admitted to me that it was perfectly possible under EU law for waste to be imported for incineration in Newhaven, Mountfield or elsewhere. Importing waste for landfill is prohibited, but there is no such prohibition on importing waste for incineration, or energy from waste, as the Government prefer to call it. Newhaven is a major port, situated directly opposite Dieppe. For the reasons that I gave, it is not beyond the bounds of possibility that an incinerator operator would want to maximise the amount of waste processed by importing waste into Newhaven. The proximity principle is thrown out of the window when we talk about dealing with French waste from "Monsewers", as the Sunday People said. That must be avoided, but that is the Pandora's box that we will open if we pursue incineration in East Sussex.
Whether or not any incinerators are built in East Sussex, will the Minister pledge that in no circumstances will waste be imported from France, Belgium or anywhere else for burning in incinerators?
Mr. Damian Green: Or Brighton.
Mr. Baker: I shall come to that in moment. In fact, the point leads me on happily to Brighton.
The Minister's strategy is "A way with waste". There is a gap between "A" and "way", which is just as well, because waste is not diminishing overall, but increasing at 3 per cent. a year. The Government's strategy rightly emphasises the proximity principle. Yet Lord Bassam, the Under-Secretary of State, Home Office, when he was leader of Brighton and Hove council, said that Brighton and Hove would never have an incinerator—so much for the proximity principle when it suits Lord Bassam and his colleagues. They are happy to dump waste over the fence into rural East Sussex—an area designated as a national park.
Brighton and Hove's stance is hypocritical. If it is arguing that incineration is perfectly safe—as the Minister may argue—under the proximity principle, the incinerator should be located in Brighton and Hove. If the argument is that incineration is dangerous, how dare Brighton and Hove council impose its dangerous waste on my constituents and others in East Sussex. The council cannot have it both ways. Either incineration is safe or it is not: its logic should follow on from that.
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For the reasons that I have outlined, we do not want an incinerator at Beddingham or Newhaven. My hon. Friend the Member for Carshalton and Wallington (Mr. Brake) will deal with safety issues in his speech.
I want to raise another serious matter relating to the East Sussex Brighton and Hove waste plan. There are six bidders for the contract, one of which is Viridor—the operator of the landfill site at Beddingham. Under the previous Government's arrangements, landfill tax funds went to a body called Entrust, and Viridor now has a role in the distribution of those funds. It has advised on distribution to pet projects for Brighton and Hove council and East Sussex county council. I am not blaming Viridor, which never asked for those circumstances to be created. Nevertheless, it has been put in a difficult position. It is helping the councils that created the plan with largesse running into hundreds of thousands of pounds. At the same time, it is bidding for a contract from those same authorities to deal with their future waste stream. That is worrying. Under those circumstances, does the Minister believe that Viridor should be allowed to bid for the waste contracts?
Finally, let me suggest some possible ways forward. It is easy to identify what is wrong with the Government's strategy and with incineration. I have not mentioned safety issues, which were dealt with by the hon. Member for Bexhill and Battle and will be addressed by my hon. Friend the Member for Carshalton and Wallington. However, there must be a presumption against incineration until such time as the scientific community is convinced that it is safe. There is no scientific consensus and there is no confidence in the population at large that incineration is safe. Recent reports from the US Environmental Protection Agency and others suggest the opposite and show increasing concern about the safety of incineration.
We should also redirect available funds to help local authorities. We should abolish Entrust, which is a private-sector body accountable to nobody and whose funding decisions are obscure at best and bear little relation to the waste stream. I am pleased to say that I have persuaded the body to fund some projects in my constituency, including Beddingham church, but I have achieved that through exploiting the system. I have received the funds for my constituency, but remain committed to the abolition of Entrust. The funds would more properly be invested in dealing with the waste stream.
Entrust money should be used for waste minimisation, recycling and re-use schemes, but it is not. Indeed, in my constituency, an innovative application for funding for recycling was rejected. That cannot make sense. One might argue that those who seek to build incinerators and are involved in the bidding process might have an interest in rejecting bids from other bodies. There is a clear conflict of interest. Entrust should be abolished and the money should be handed over to local authorities who should undertake that work.
We also need some fiscal measures. I am not sure what the small print in yesterday's comprehensive spending review says the DETR is doing about waste. I hope that the Minister will tell us that there will be some money for that.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): There is an awful lot of money.
Mr. Baker: Yes, but is it for waste? It is important that we have direct fiscal measures from the Chancellor. Even if local authorities are given more money or the Government do something themselves through the DETR, it is not sufficient to deal with the problem of waste. We must look at fiscal measures to discourage packaging. It is not enough to rely on the European directive on packaging. We must consider fiscal measures to discourage the use of virgin materials and to encourage the use of recycled materials. We need to take measures to encourage waste minimisation generally and, most importantly, we need action from the Government to develop a market for recycled products. My local authority in Lewes is good at collecting material for recycling, but it cannot always find a market for it. That is very dispiriting for an authority that makes the effort, as many do. We need action from the Government on those fronts.
I hope that I have made it clear today that there are severe difficulties with the Government's strategy and that there is a lack of public confidence in incineration as a technology that the Government have not addressed. I have identified a way forward which, if it did not eliminate incineration, would go a long way to reduce the need for this chain of incinerators which, I fear, may stretch across East Sussex and the rest of the country before very long.
10.21 am
Mr. Tom Brake: I congratulate the hon. Member for Southend, West (Mr. Amess) on securing the debate. He is having a busy week: incineration today and the Warm Homes and Energy Conservation Bill on Friday. The former could help with the latter in some respects.
It is often said that pollution recognises no boundaries, and that is clearly the case. It is one of the reasons why we should co-operate at a European level on many environmental matters, and incineration is no exception. It is also, however, a source of concern to my constituents, most recently expressed when my local authority put forward proposals for a crematorium. The waste incineration directive has taken on new significance since the Government published their waste disposal strategy at the end of May. Although it was presented by the Minister for the Environment as a strategy to boost recycling, it was effectively a blueprint for the building of hundreds of incinerators all over the UK. Unlike the hon. Member for Southend, West, I will target Government plans for incinerators.
New fears about the impact of incineration have been raised following the leaking and subsequent publication of research by the US Environmental Protection Agency. According to the Environmental Data Services report, the ENDS report, the EPA has suggested that dioxins could pose considerably higher health risks than previously thought. The EPA has an on-going project to reassess dioxin exposure and human health risks, and a key finding has been that dioxins are more toxic than previously realised. It puts the chances of dioxins producing cancers at 10 times the previous levels.
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I should point out that the report notes that there is currently no indication of ill effects in the general population from dioxin exposure, but it warns that there is no strong evidence for no effect either. It could be that deficiencies in scientific knowledge, as with CreutzfeldtJacob disease, prevent those clear links from being seen. The EPA's dioxin risk management strategy is due out this autumn and I do not want to pre-empt the report. We do not know whether it will impose even tighter controls on dioxin emissions from waste incinerators. Currently, the US national rules, which were passed in 1995 and 1997, aim to achieve a 95 per cent. reduction in dioxin emissions. The same Environmental Data Services report states:
The European Commission has claimed that a draft EU directive on waste incineration…will cut European emissions of dioxins from the same source by over 99 per cent.
In the context of the EPA report and continuing fears locally about the impact of incineration on human health, we should welcome the broad thrust of the EU directive.
I and my colleagues think that a much better way to protect human health and the atmosphere from the undesirable effects of incineration would be to minimise the amount of incineration that is carried out. We therefore have concerns about the Government's strategy. In many respects the strategy is a missed opportunity and risks continuing a landfill and incineration policy. It would have been better to have a commitment, backed up by funding, to a massive increase in recycling, re-use and waste minimisation and a reduction in landfill, without having to resort to incinerators. I hope that the Minister can explain what portion of the increase in the Department of the Environment, Transport and the Regions' budget, which was announced in the comprehensive spending review yesterday, will be dedicated to increasing recycling and composting. As my hon. Friend the Member for Lewes (Mr. Baker) said, perhaps the Minister will explain whether Government recycling and composting targets have changed. In terms of a graph, an increase from 17 per cent. in 2004 to 25 per cent. in 2005 would not be a straight line but an exponential increase. If I am wrong, I hope that the Minister will correct me. If I am right, I hope that he will explain how that exponential increase between 2004 and 2005 will be achieved. Currently, I cannot see how it will. We believe that the number of incinerators is set to soar. The Government should have adopted a precautionary principle, as it should for other matters such as telecommunications masts. The Government's waste strategy targets are weak. In many cases, they are being achieved by the best local authorities, and are already being achieved in many European Union countries.
I often take the opportunity to quote the record of my borough, the London borough of Sutton, which has promoted recycling policies effectively since the 1980s.[Interruption.] I would welcome interventions from Conservative Members on that. I am proud of my borough's record, which has been praised by the hon. Member for Brent, East (Mr. Livingstone), the London Mayor, and the Under-Secretary, the hon. Member for Sunderland, South (Mr. Mullin). Sutton's strategy aims to encourage recycling and divert waste from landfill. The Minister will know, as it has been well publicised, that the local authority has dual bins—green bins and

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brown bins—which are collected on alternative weeks. There is also a free clear plastic sack collection, running between May and November, which people can use to recycle their garden waste, and composters are available to anyone who wants one.
The Association of London Government has used Sutton as an example of good practice. During 1999–2000, Sutton recycled 34.7 per cent. of its household waste compared with a London average of only 12.8 per cent. The Audit Commission has confirmed that Sutton not only recycles the most waste but has the second most cost-effective waste management service. The local authority in Sutton has achieved in 2000 the target set by the Government for 2015—15 years ahead of schedule. The hon. Member for Ashford (Mr. Green) attacked the scheme. He may want to comment on it further, although the fact that such schemes run in other local authorities, such as Conservative-controlled Daventry, may discourage him from doing so. Sutton has set itself the target of recycling 80 per cent. of household waste by 2005 and believes that it is on track to achieve that target. The approach adopted locally could, therefore, be replicated nationally. I hope that incineration can begin to be seen as the last resort.
I also hope that the draft EU directive will clarify whether energy from waste is renewable, or, if not, that the Minister will do so. The Government seem to believe that energy recovered through combined heat and power is renewable. I would argue that that is complete nonsense. No internationally recognised definition of renewable energy deems energy from waste to be renewable. It is a pity that the Government did not accept the amendment of my hon. Friend the Member for Lewes, which sought to clarify that point. Even in Westminster there is confusion about definitions of environmental matters. In response to a parliamentary question that I asked about recycled paper, I was told that vast quantities of paper are recycled, but that it is then incinerated. I am sorry, but that is not recycling. It was a bizarre response.
Waste contains large quantities of plastics and that is another reason why it cannot be considered renewable. Indeed, the director and general manager of SELCHP, a combined heat and power plant, readily accepts that energy from waste cannot be defined as renewable when plastics goes into the incinerator. A further source of concern, as expressed by the Paper Federation of Great Britain, is that much waste paper currently going to recycling will, if large numbers of incinerators are built, end up in incinerators, because paper has a high calorific value that keeps incinerators burning, instead of going into recycling. I hope that the Minister will assure us that that will not happen.
The hon. Member for Southend, West elegantly expressed the commercial concerns about the proposal. I remind him that Opposition Front-Bench spokesmen have taken a clear position against incineration. It is surely illogical not to address the issue of the incinerators that are currently in place. It is not good enough to say, "Well, we don't want to build any more incinerators but we are happy to let the ones that exist carry on burning, with the potential health risks of that."
Mr. Green: I should like to address that point now. Can I take it that it is now Liberal Democrat policy that all small incinerators on farms and pet crematoriums should be closed down? That is the logic of what the hon. Gentleman just said, but—despite the characteristic incoherence that one expects from Liberal Democrat policy—he cannot mean that.
Mr. Brake: It would have been better if the hon. Gentleman had just listened to what I was about to say on the issue. That is not Liberal Democrat policy, but it may well be our policy that the Government should consider measures to assist owners and users of small incinerators. It is entirely illogical to argue against incinerators while also arguing that smaller incinerators, about which there may be health concerns, should be left to continue their production.
The hon. Member for Southend, West outlined clearly concerns about incinerators used on farm premises and in the motor trade industry, and I hope that the Minister will respond to those points. Can he confirm that the compliance costs are in the region of £200, 000 to £300, 000 and, if so, can he offer any assistance? Has progress been made on clarifying whether animal carcases are covered by the directive? I look forward to the Minister's response and I hope that he can deal with some of the commercial anxieties that have been outlined, as well as the genuine environmental concerns about the proposed plans for an expansion of incineration.
10.35 am
Mr. Damian Green: I join other hon. Members in congratulating my hon. Friend the Member for Southend, West (Mr. Amess) on securing this morning's debate. I do so for two reasons. First, the issue is significant and, in that regard, it is noteworthy that of the 417 Labour Members of Parliament, the only one who has turned up for the debate is the Minister, who is a pressed man and whom we always welcome to such debates. Not one Labour Member who did not need to be here has bothered to turn up for this important debate.
Mr. Mullin: To be fair, my hon. Friend the Member for South Derbyshire (Mr. Todd) has been present in the debate. He intervened four times on the hon. Member for Southend, West.
Mr. Green: Yes, the hon. Member for South Derbyshire (Mr. Todd) made important and helpful interventions. I shall rephrase what I said. No Labour Member who is not a Minister has bothered to make a speech. That is significant.
The second reason why my hon. Friend the Member for Southend, West should be congratulated on securing the debate is that the Department has made a catalogue of mistakes in dealing with the directive and, as negotiations are continuing, it is important to ensure that such errors do not continue. I shall address the bulk of my remarks to what my hon. Friend said about the specific effects of the directive on small farm incinerators. However, as the wider issue of the directive has been highlighted by my hon. Friend the Member for Bexhill and Battle (Mr. Wardle) and by the

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hon. Members for Lewes (Mr. Baker) and for Carshalton and Wallington (Mr. Brake), I shall also seize the opportunity to make points about the Government's general incineration policy as it deals with the effects of the directive and the promotion of a cleaner, greener Britain to which the Liberal Democrat Members have referred and which has been described by many environmental groups as an important move towards greener policies from the Conservative party and, rightly so.
A key issue is the interaction between the amount of incineration that is required, the number of incinerators that are needed and the amount of recycling that is undertaken. Yesterday's announcement by the Chancellor of the Exchequer exposed the Government's dishonesty in their claim of how much extra money they will spend on recycling. They are trying to give the impression that they are improving their targets for recycling. The hon. Member for Lewes made a generous formulation of what the Government have done, however, if hon. Members read the national waste strategy that was published two months ago, they will see that the Government were aiming at a target of 17 per cent. recycling by 2003.
Yesterday, we were told with a great fanfare that the Government are aiming at a target of 17 per cent. recycling by 2004. They have weakened their targets over two months. The Government seem to think that the general public have a memory span of a goldfish and cannot remember what the Government said previously about certain issues. However, some of us can remember what the Government said. We have copies of their national waste strategy and they announced yesterday a reduction in their recycling target from the one that they published two months ago.
Mr. Brake: By way of clarification, I think that the 17 per cent. target applies to recycling rather than to recycling and composting, so there is a difference.
Mr. Green: I am not sure whether that is right. In the national waste strategy, the general target was 17 per cent. However, I am sure that the Minister will clear the matter up. As the hon. Member for Carshalton and Wallington intervened, I feel that I should congratulate him on his nice try at defending the Liberal Democrat council. It must be the most unpopular council in Britain in terms of its waste collection. In return for all the recycling that it manages, it commits its residents to the misery—especially at this time of year, when it is hot—of having their rubbish collected only once every two weeks. He will be aware that many thousands of signatures have been put on a petition presented to the Prime Minister by Lady Olga Maitland. Sutton council's waste collection policy is fantastically unpopular, and will be a significant factor in respect of the hon. Gentleman's seat at the next general election.
Mr. Baker: We are descending into party politics. In my constituency, a similar policy is operated on collection in the Polegate area by Wealden district council, which is controlled by the Conservatives. It is a very popular policy.
Mr. Green: As well as being run by Conservative councillors, the council is presumably run efficiently,
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which is why the policy is popular. Even the hon. Member for Carshalton and Wallington will admit that Sutton council is extremely unpopular.
Mr. Brake: I am sorry, but I cannot let that go without comment. The hon. Gentleman may not be aware that Sutton council regularly has one of highest, if not the highest, council satisfaction ratings in the country in opinion polls carried out by MORI.
Mr. Green: We shall see the effect at the election next year.
There is one key question for the Minister about incineration, given his recycling targets, however they are being softened and changed by the month. How many incinerators do the Government think need to be built to meet the target? He shook his head at the figure of 160 or 170, which Friends of the Earth suggested. It beggars belief that the Department does not have a range of calculations about how many incinerators will need to be built. Unless and until the Government can give us some figures, hon. Members on both sides of this Chamber are entitled to be sceptical about the Government's performance in respect of recycling and their commitment to a significant improvement in recycling as a way of meeting our international obligations on reducing landfill.
My hon. Friend the Member for Southend, West made several points when he introduced the debate. When the Government negotiate the terms of a European directive, it is clearly their duty to ensure that it does not damage the country. I am sure that all hon. Members welcome the thrust of the directive, which is meant to make incineration cleaner and safer. No one could argue with that intent, but we all know that the devil is often in the detail. Therefore, the Government have a duty to negotiate the detail properly, and they have lamentably failed in that duty.
The history of the Government's action in response to the directive is worth my rehearsing before I ask the Minister to deal with some specific points. As my hon. Friend the Member for Southend, West eloquently said, the directive will have a significant effect, especially on small incinerators. They cost an average of £5, 000, and will have to fit new equipment at an estimated cost of between £30, 000 and £42, 000. Clearly, that will have deleterious effects on many farmers and on pet crematoriums.
The hon. Member for Carshalton and Wallington brought up a specific environmental point. I am glad that he has clearly read our waste strategy. As he said, we would like to see the emphasis moved much more towards recycling rather than large incinerators. There will be some role for incineration, large and small, and I hope that he would welcome a commitment to small, local incinerators. Pet crematoriums and on-farm incinerators not only provide a useful service, but mean that less transport of waste and carcases is needed. The unnecessary use of transport, especially polluting lorries, leads to an increase in the noxious emissions that cause global warming.
Mr. Baker: I accept and understand the point that the hon. Gentleman is making, but will the small incinerator not have the same capital costs in terms of

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environmental protection? In fact, those costs will rise as a consequence of the new directive, which is something that we welcome in some ways—though not all—because it will give greater protection from unwanted emissions. Will that not work against the network of small incinerators to which he refers?
Mr. Green: It will not necessarily work for the existing ones. I agree with the point made by my hon. Friend the Member for Southend, West that a derogation is needed and a balance needs to be struck. In purely environmental terms, it would be foolish to close down the entire network of small incinerators, as the Government propose. That might reduce emissions, but it would certainly have the effect of increasing greenhouse gases as all the carcases were transported around the country. Therefore, the policy would be to our environmental disadvantage.
The Government were faced with the possibility of significant industries being closed down. What did they do? The answer is, not a lot. I refer to two written answers that I received from the Parliamentary Under-Secretary of State for the Environment, Transport and the Regions, the hon. Member for Streatham (Mr. Hill). I asked him about the assessment that he had made of effect of the directive on the disposal of animal carcases, and his reply began:
No assessment has been made of the effect of the proposed waste incineration directive on options for disposing of animal carcases.
By any standards, that is neglectful. I commend the Under-Secretary on the honesty of the answer, but the Department should do better than that. However, it gets worse.
We have had much discussion of the Entec report. In my second question, I asked what estimate had been made of the number of United Kingdom incinerators that failed to meet the terms of the EU waste incineration directive. In the course of his answer, the Under-Secretary said that Entec had undertaken a cost-benefit analysis, which we have discussed. He went on to say that the report
identified numbers of incinerators in different sectors, although subsequently we have received information that the report significantly underestimated the number of animal carcase incinerators.—[Official Report, 13 June 2000; Vol. 351, c. 543–44W.]
I would not simply use the word "significantly". Entec thought that there were 60 incinerators when, in fact, there were 3,000.
The failures of that report, on the basis of which one assumes that Ministers have acted, have made public policy worse than it might otherwise have been. Will the Government tell us how much they paid Entec for that report, and whether they have paid the bill in full? In the instance to which I referred, the report has been damaging.
The Government have failed to negotiate the proper derogations as they should have done. There is now some hope that the directive will exclude from its scope animal carcases, which will be regulated by a different directive, but that would be without prejudice to any future amendments. The Government have been
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claiming a great breakthrough over the past few days but, given their performance so far, hon. Members would be right to be sceptical until the matter is nailed down and the derogations set out in detail.
The Minister owes hon. Members some specific guarantees, and I ask him to address the specific point about Entec. Will he guarantee an exemption for small farm incinerators and, separately, ensure that pet crematoriums will not be hit by the directive as they will not fall under the derogation to which I have referred? Will he give an estimate of when the process will finish? The Government have one last chance to rescue themselves from this disastrous episode and, for the sake of farmers and of those who run and use pet crematoriums, I hope that they get their act together and take it.
10.49 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): The debate has ranged more widely than we were led to believe. However, the clever people who advise me suspected that it might.
I shall start by touching on the points raised by the hon. Member for Southend, West (Mr. Amess), as he secured the debate. He raised an important issue, as has been made clear by the speeches that we have heard today, and he made some interesting points, which the Government have already taken on board. To some extent, his points have been overtaken by events, therefore much of his indignation is misplaced. Suffice it to say that it was not until 10.48 this morning that the hon. Member for Ashford (Mr. Green) referred to the fact that an agreement has been reached that meets the points about which he is concerned. I shall return to that in a moment.
The hon. Member for Southend, West, in a throwaway line in his opening remarks—on which later contributions elaborated—said that the Government have a plan for a network of mega-incinerators. We do not. Anyone who pretends that we do is misleading people, although I can see the political advantages of pursuing that line in certain areas. Questions such as how many incinerators are built, and where they are built, are matters for local authorities. There are plenty of alternatives to incineration and we expect them to be pursued.
The hon. Member for Lewes (Mr. Baker) was right to say that it would be undesirable if big incinerators were driving our waste disposal policy. Those issues should be taken into account by local authorities when deciding whether incineration should be part of their programme. The hon. Member for Bexhill and Battle (Mr. Wardle) referred, as did other hon. Members, to the dispute between East Sussex county council and Brighton and Hove council. That is private grief, on which I should not intrude. Clearly, as I am a Minister in a Department to which that dispute—or a similar one—may be referred for arbitration, he cannot expect me to get bogged down in the details of an application.
There are plenty of alternatives to waste disposal, and the best one is recycling. The hon. Member for Carshalton and Wallington (Mr. Brake) referred to his authority's record in that regard, and other authorities also have good records. The Government are making

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substantial sums of money available—to which only passing reference was made—the details of which will be announced in the next few days. The headline figures were available yesterday.
Mr. Brake: Will the hon. Gentleman give way?
Mr. Mullin: I have only seven minutes remaining to deal with the large number of questions that were asked. I hope that the hon. Gentleman will forgive me if I plough on.
For years, waste has been shovelled into landfill. Nobody wants an incinerator or a landfill site on his doorstep. The landfill policy cannot continue, so we must address the alternatives maturely. There is no doubt that incineration, in some shape or form, must be a factor in waste disposal; indeed, it already is. Many European countries that have a better record than us on waste disposal already use a good deal of incineration. Part of the concern about the environmental effects of incinerators—which is perfectly legitimate—arises from problems in relation to an older generation of incinerators. I agree that we should not be complacent, but the technology has moved on considerably and we should bear that in mind. Many countries with a better record on waste disposal and environmental matters—Denmark and Holland, for example—use incineration much more than we do. It is interesting to observe an alliance between a new, green, compassionate and merciful Conservative party—different from the one that we kicked out three years ago—and Friends of the Earth. However, I have heard representatives of Friends of the Earth privately admit that there is a place for incineration in our waste disposal policy.
The hon. Member for Lewes made some interesting and important suggestions, some of which he mentioned when he came to see me the other day, and the Government are actively considering them all. His stance verged between the high ground of lofty moral principle and nimbyism—and he needs to decide which of those two he intends to pursue. He is right to take a close interest in this important issue and we all respect his views, but at times I felt that his sleeves were rolled up and that he was taking part in a local brawl, which did not help his argument.
The hon. Member for Ashford asked about the number of incinerators, but the Government have no figures. I repeat that the Government have no target to aim for. I have heard a figure of 160 bandied about,
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but I would be amazed if anything like that number were required. I would be surprised if even half that number were necessary. The hon. Gentleman asked how much the Government paid Entec. I shall have to write to him about that, but I understand that the bill has been paid. I was asked about recycling targets, about which there has been some misunderstanding. They are 17 per cent. by the financial year 2003–04, and 25 per cent. by 2005–06. Those national targets will be backed up with local authority recycling targets.
In the few remaining minutes, I should address the point made by the hon. Member for Southend, West. Last Thursday, an agreement was reached between all parties on the amendments proposed to the common position following its Second Reading. Agreement was reached about small-scale animal carcase incinerators and Commissioner Wallstrom issued a press release on Friday heralding this. Although the agreed text is yet to be published we are confident that, as a result of UK efforts, the directive will be adopted with the specific exclusion from its scope of animal carcase incinerators—with the proviso that appropriate controls will be brought in via the proposed revision to the animal waste directive. It will cover pet and farm incinerators. The hon. Gentleman may also be aware that Commissioner Wallstrom stated separately that the incineration of animal waste must comply with environmental standards, which will be included in a proposal for legislation to amend the animal waste directive.
The environmental regulation of animal carcase incinerators is necessary. As farmers and pet crematorium operators would agree, it is part of their commitment to safe disposal. In the context of the revision to the animal waste directive, we shall continue to propose controls to ensure appropriate environmental standards while minimising the burden on small-scale animal carcase incinerator operators. We have not yet received any information on the environmental controls that the Commission will include in the revision. In supporting a clear exclusion from the directive, we recognise that the Entec report significantly underestimated the number of small-scale animal carcase incinerators operating in the UK. The full requirements of the directive will be disproportionate for small-scale animal carcase incinerators.
I am conscious that time has not allowed me to comment on all the points that have been raised. I shall comb through Hansard and write to hon. Members to whose points I have been unable to respond.

Park Homes
11 am
Mr. Hilton Dawson: I am pleased to have secured today's debate. This is the second time in 15 months that the subject of park homes has been discussed in an Adjournment debate. I took part in such a debate on 21 April 1999. Today's debate follows early-day motion 750, which called for major legislation to resolve the fundamental problems of the sector. That indicates the interest and the concern across the House: at the last count, the motion had been signed by 98 Members from all parties.
The debate comes in the wake of the report of the park homes working party which was published on 12 July, in the middle of consultation on the housing Green Paper. Next week, in another place, my noble Friend, that redoubtable campaigner on park homes and on many other issues, Lord Ted Graham, will participate in a similar debate on the reform of park homes.
We are reaching the culmination of a major national campaign led by Sam Hart, the excellent reporter with The Big Issue, which has taken place at a time when hon. Members of all parties have expressed great concern about this sector. I have seen a petition from constituents of my hon. Friend the Member for Peterborough (Mrs. Brinton), and on Thursday my hon. Friend the Member for Stroud (Mr. Drew), who is another inveterate campaigner on such issues, will deliver a petition from his constituents calling for urgent attention to be given to reform of this sector.
This is an issue whose moment has come. For many people, park homes are a comfortable, safe and extremely pleasant way of life, and a delightful way to spend one's retirement in fine rural areas similar to those that I and numerous other hon. Members represent. They are also a good business opportunity for decent people who are prepared to work hard, invest money and time and treat people properly. However, people throughout the country are beginning to realise that in the midst of all that a serious problem of harassment and exploitation has been uncovered. Cheats and rogues are at work in this sector of housing.
I do not intend to name names, nor need I. We know who those rogues are because we have received letters from people all over the country who have suffered at their hands. Those in the park homes sector who suffer certainly know who they are. Ministers and officials of the Department of the Environment, Transport and the Regions have been fully informed by many park homes residents and their organisations about the iniquitous treatment meted out to a proportion of the people who live in park homes. We know about the abuse. We have heard about the threats and harassment that people who live in this sector suffer. We have heard about the lack of basic facilities: the electricity supply that blows when a few people put on a kettle at the same time.
We have heard of the park owner who refuses to advertise a home that is for sale, who puts off prospective purchasers and puts obstacles in the way of residents who want to sell. He then makes an offer that cannot be refused, and makes a killing when the home is resold. We have heard of vast increases being demanded in pitch fees-the annual fee for maintaining a park home on a particular site. We have heard of the increases
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imposed, without discussion, information or justification, and of absurd charges levied for basic information about reselling, utilities and other aspects of daily lives on parks.
In the worst instances we have heard of homes damaged and wrecked and of downright criminal behaviour from people who should be brought to book. There are brave people in the park homes organisations. There are steadfast individuals who have striven for many years to bring example after disgraceful example to official attention. It is time for their voices to be clearly heard and action to be taken to right the wrongs. There should be no room in the 21st century for the park owner who abuses the vulnerable, the elderly, the isolated, and who benefits himself by taking advantage of the deeply inadequate law and his position of utter and overwhelming power.
I was proud to be a member of the all-party delegation, led by my noble Friend Lord Graham, which met my right hon. Friend the Minister for Local Government and the Regions, in late 1997. I was delighted that she agreed to establish the park homes working party to take a full look at the way in which controls operate in the park homes sector.
I should like to commend all the members of the park homes working party for a job well done, especially the members of the Independent Park Homes Advisory Service, the British Park Home Residents Association, the National Association of Park Home Residents and the representatives of the owners' organisations such as the British Home and Holiday Parks Association and the National Park Homes Council. It is an enormous credit to them and to the civil servant, Michael Faulkner, who chaired their proceedings for almost two years, that they were able to work together to share problems, to achieve compromises and to acknowledge differences openly and straightforwardly. Their actions show that there is hope for the industry, for the decent and responsible people for whom it is a livelihood and for the decent and responsible people for whom it is a way of life.
There are some excellent recommendations in the report, which should be commended to the House. The written statement should be provided in advance of the sale and should be signed at the time of the sale and in the presence of witnesses. It is a vital contract and an important legal document. It should be deemed that a sale has approval unless the park owner expressly withholds it in writing within a maximum period. In some circumstances, a park owner could and should resist the sale of a home on his site—for instance, if the park were for retired people, the park owner should be entitled to prevent the sale of a park home to people who did not meet the eligibility criteria because they did not fall within the specified age band. However, we must have strictures to prevent people from inordinately delaying a sale.
Some park home owners have taken up the inspirational idea of collectively purchasing their parks when the owner places the park on the open market. It is good that the working group recommends deleting the age criterion for ending agreements. Park homes are becoming increasingly sophisticated, and major parts

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are becoming easier to replace. There is no reason why a well-maintained park home should not last for a long time.
Residents associations should be recognised with rights to consultation and information. It is obvious that decent park owners have nothing to fear from the establishment of residents associations.
As the report says, we must take action on the resale of utilities. That is one of several opportunities for the unscrupulous to exploit what amounts to a monopoly position. I understand the working party's recommendation for a statutory maximum price for the resale of liquified petroleum gas, to bring it in line with all other utilities, but I do not understand why the park owner should make money from supplying the basic services that are essential to obtaining a site licence. Whatever the outcome of that recommendation, it is essential that, whether the park owner makes a profit from reselling services or simply levies a charge to recover costs, full information about charges is given as of right to consumers.
The report makes many worthy recommendations and demands scrutiny. We should encourage the 200,000 park residents throughout the land to participate in the consultation, which lasts until 31 October. I hope that the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Sunderland, South (Mr. Mullin), can assure me that at least the summary document will be widely disseminated. We know where park residents live and we should encourage the greatest participation in discussions about their future. I represent some 1,000 park owners—about 0.5 per cent. of the park residents in the country—so I was sorry to hear from my office that the Department of the Environment, Transport and the Regions can provide us with only 100 copies of the summary document. That is not good enough. I hope that we can obtain one copy per person, because every park resident should have one.
The document has some significant flaws and omissions. It acknowledges that there is some way to go on some important issues relating to park homes. The major question of commission on pitch fees remains to be resolved. We must have a full independent report on park homes financing. I find it difficult to accept that such a tenuous concept as the commission on turnover that might be achieved is a good basis for financing such significant business ventures. If a key element of park owners' income is dependent on a proportion of residents moving on, that is a serious and significant anomaly. Surely we should promote security and stability, particularly for the older people who form the majority of those who live on parks, rather than accept that a large part of park owners' income and sustenance comes from people deciding to move. That anomaly needs to be addressed.
The issue of good practice guidance crops up a little too readily in the document. Such guidance is fine when it has an adequate statutory basis, but we have problems if there are flaws and holes in the legislation. We need statutory duties from sound laws.
The best word in the document is "housing", which appears in the biggest print on the cover. Park homes constitute housing. Most park homes are extremely
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affordable, although they are not caravans. They are mobile in that they are taken to the parks, but it is hard to think of them as mobile when they have been bricked into position and are receiving mains services. It is extremely unhelpful to regard park homes as caravans or mobile homes.
Modern park homes are constructed to high standards. They are flexible and can be used for a variety of purposes. They are particularly adaptable for older or disabled people. They often provide a real option for people to realise hard-earned capital and take up residence in extremely pleasant, safe and caring communities, often at a quiet time in their lives. Put on a proper footing, the industry could address important aspects of housing needs for young and old people in urban and rural communities. Park homes could play an important part in the regeneration and diversification of both urban and rural areas.
Caravans and mobile homes are associated with the leisure and tourism industries or, more regrettably, with life on the margins. However, park homes should be regarded as mainstream housing. Almost all the serious problems can be traced to inadequate legislation, which has utterly failed to keep up with social changes and trends over the past 20 or 30 years. It is time to scrap all references to caravans and mobile homes and include park homes in mainstream housing legislation.
The housing Green Paper "Quality and Choice: A Decent Home for All" has been published. The title says it all. That paper rightly promotes a stronger role for local authorities. They must be given new statutory duties to register, monitor and enforce conditions on parks. Those duties must be informed by model standards that are suitable for good-quality homes—rather than inadequate caravans—and good-quality parks run by fit and proper people who are capable of providing an acutely important housing service for vulnerable and needy people.
The housing Green Paper states that the Government will build on developments in the Rent Service. That is right. Surely the rigorous and consistent independence of the rent officer could be brought to bear on pitch fees. That would provide an accessible and authoritative adjudication in an area that is currently ripe for exploitation, where issues are so easily clouded and where power is so readily wielded by those with easy access to the threatening power of the solicitor's letter.
The housing Green Paper also states that the Government will build on existing laws against harassment, recognising that some people have difficulty securing adequate protection from local authorities and the police. That is good and is also mentioned in the park homes working party report. Few aspects of life in this country could be more open to harassment than park homes, where the vulnerable and isolated are not properly protected by the law and lack access to sources of help.
The housing Green Paper also notes the development of a pilot tenancy deposit scheme, which aims to provide security for deposits and, backed by the independent housing ombudsman, swift independent resolution of disputes at the end of tenancies. Residents own and pay for their park homes, but they also have to pay a pitch fee to be sited on particular parks. Park home residents

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could benefit from such a service or scheme. It could help to resolve some of the crucial issues about commission and transfer of written agreements.
The housing Green Paper is keen to promote the provision of affordable housing in rural areas. That is great. We have a thriving park homes industry, which is crying out for more land to meet increasing demand. Many people choose to live in the sector and many good park homes are being built. There are good opportunities to develop park homes, which I support in the longer term. However, revisions to PPG3 and to general planning guidance should not go ahead until major reforms to put park homes on a proper footing have been implemented. We must drive out the rogues and villains and allow decent people to flourish in what should be a fine industry and a thoroughly good way of life.
Several hon. Members intend to speak on this issue. The full range of political views is represented on the all-party park homes group. Much work is being done at many different levels, and many Members of Parliament often deal with people in the park homes sector in their constituencies. The cause of park homes has been a hard road for many people for a long time. I now feel, however, that there is hope for the sector—hope for the people who live in it and who want to enjoy a pleasant and peaceful life; and hope for the decent responsible people who want to contribute by responding to good business opportunities.
The park homes working party report and the housing Green Paper provide the Government with the opportunity to introduce the serious and thoroughgoing legislation that this sector has never had before and so badly needs. It is an issue whose time has come, and it will not go away. I look forward to the rest of the debate, and hope that my hon. Friend the Minister will assure us of the Government's intentions to take this serious matter forward.
11.24 am
Mr. Christopher Chope: I congratulate the hon. Gentleman for Lancaster and Wyre (Mr. Dawson) on securing the debate and on his speech. In my constituency, almost one in 10 households lives in a park home. Fortunately, almost all those households are satisfied with the quality of the accommodation and the way in which it is managed. There are obviously exceptions to that, but my plea to the Government is to consider the variety of park homes and the different arrangements that apply to them. I hope that the Government will ensure that any change to the legislation will not militate against current best practice. In some park homes in my constituency, any change to the arrangements for the payment of fees would be unpopular with the residents, whereas in others that would be popular.
I hope that the Government will recognise the enormous variety of park homes that exist, even on one site. I spoke today to the proprietor of a family firm that owns a site in my constituency with about 150 park homes, ranging in value from over £100,000 to £25,000 or £30,000. A large new park home brought on to the site could cost as much as £120,000. When a home is
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sold, 10 per cent. of its value goes to the site owner, who obviously gets more money for the more expensive homes. If the legislation is changed so that site owners no longer take 10 per cent. when a home is sold, that may militate against owners of less valuable homes.
Many people put much of their capital into buying a retirement park home, so they do not want high outgoings. There is a trade-off: they may not want to pay so much in annual pitch fees because if and when they move they will pay around 10 per cent. of the value of their home to the site owner. The site owner to whom I spoke today told me that he employs two full-time maintenance people and provides a personal service for the 150 homes on his site. There is so much satisfaction among the residents that there is not even a demand for a residents association. By contrast, some sites are owned by multinationals and the quality of the management depends largely on the quality of the manager who is employed. There can sometimes be difficulties in that regard.
My instinct is that we should enable the variety of park homes to continue. I welcome the recommendations in the report on relaxing some planning controls and enabling the development of more park home sites. Park homes are popular and have proved their worth over time. Why should we not develop more sites such as those already in existence?
I should like to concentrate on recommendation 8 in the report, on pitch fees and commission. That issue is highly contentious—as shown by the fact that, although the working party met for more than two years, it was able only to conclude that the Government should hold an inquiry. It stated:
The Government should commission as soon as possible an independent study of the economics of the park homes industry, to identify the maximum level of commission to be set and give clarification of the items to be included in the calculation of the commission. The study should also identify the principles on which pitch fees should be set and reviewed.
I hope that the Minister will announce that the Government will now commission such a study. There is no need to wait until the expiry of the consultation period for the report. It would not be contentious to commission such a study. I have every confidence that doing so would enable a balance to be struck between the interests of residents of the sort of park home that I described at the beginning of my remarks and those who occupy park homes that, in the words of the hon. Member for Lancaster and Wyre, have as owners those who are rogues and interested in harassment and exploitation. Fortunately, not many of those are found in the Christchurch constituency. However, it would be desirable for the Government to commission such an independent study on the subject as soon as possible. That would give me every confidence that we could deal with the worst circumstances and accommodate existing practice where it enjoyed the support of park home residents.
My constituents frequently raise the issue of council tax band A, which normally applies to park homes. In some cases, band B now applies. However, in the example that I cited earlier of a site of 150 park homes, including some worth more than £100,000 and others worth only £25,000, the current council tax banding system tends to band them all together. That can lead to injustice and resentment, especially among those who

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occupy homes that are significantly below the top threshold for band A. I am disappointed that the Government have not yet said anything about their intentions towards band A council tax, as the information will interest several park home residents.
11.32 am
Mr. Paul Burstow: I support many of the comments made by the hon. Member for Christchurch (Mr. Chope). I congratulate the hon. Member for Lancaster and Wyre (Mr. Dawson) on having secured the debate. I know from my reading on the topic that he has been active in pursuing the matter on behalf of his constituents, and I welcome the opportunity to participate in the debate.
As the working party report highlighted, the legislative framework that governs the matter is inadequate and needs attention. It offers little protection to home owners and, as has already been mentioned, allows unscrupulous owners, albeit perhaps a minority of park home owners, to exploit, harass and extort money from their residents. It is right for debate on park homes to focus on permanent residents, as a clear case has been made for change in that respect. The park homes working party report makes interesting and encouraging reading. I hope that the Minister will tell us that it will lead to early legislation, guidance and various other developments that will effect genuine change in standards in the not-too-distant future.
I shall highlight the plight of recreational park home owners, who, when I began to investigate the matter as a result of a constituency case, did not seem to have been the subject of a debate in the House. The focus has, rightly, been on permanent residents. However, whereas the law affords little protection to permanent residents, it seems to offer almost none to those who decide to invest in a park home as a place of retreat, rest and recreation. A constituency case drew my attention to the matter. I shall ask the Minister a few questions and draw his attention to that case.
I shall briefly share the chronology of events relating to a case raised by a constituent of mine. It involves a site that is not in my constituency but is of interest to my constituents. I shall identify the site no more closely than by saying that it is in West Sussex. The site changed hands in 1996 after many years of good stewardship by a family-run business that paid great attention to the management of the site. Immediately, the fees were increased by 23 per cent., without consultation, explanation or, certainly in the eyes of many home owners on the site, good reason. At the same time, there was an electricity overcharge of £24 per caravan. The new owner insisted that insurance should be taken out for the caravans and their contents directly through him, at an increased rate.
In 1997, a caravan owners association was set up on the site to champion owners' causes and concerns. Rents were raised again and the electricity continued to be subject to overcharging. The association took up the matter with management. Its chairman wrote various letters on behalf of the members and received a fine of £130 for his pains. My constituent, who was a member, also took up the cause and wrote to challenge the owner on electricity overcharging. He, too, received a fine. All the fines have been repeated in the years since 1997. The chairman of the association's fines now total £270 and my constituent's fines total £440.
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The owner was simply being required to respond to the concerns. It appears that fines as a form of response can best be characterised as extortion and as harassment of those trying to enjoy some recreational time on the site. When the owner took on management of the site, he also insisted that all the owners sign yearly licences. That does not fully comply with the current voluntary code of practice. Over the past four years, the park has deteriorated. The gardens, which were immaculately kept by the family owners, have now been transformed into open fields which are less attractive and appealing to the residents. The Office of Electricity Regulation has confirmed that the park owner has acted at least incorrectly and possibly unlawfully.
Even if the home owners seek to enforce their rights in respect of the overcharging, they face retribution or the fear of retribution in the form of further fines and being asked to leave the site. Annual licences make that incredibly easy to do. These people have made substantial investments. The hon. Member for Christchurch described the large sums that can be involved in purchasing such homes. On the site, investments of more than £10,000 are being made. It is often difficult to move and sell homes, especially if one does not have the co-operation of the park owner.
A case was referred to me about a deaf and dumb couple who had to leave the site because the fees had gone up so much. In the end, they sold their home to the park owner for £750. He resold it for £3,750. By any measure, that is a substantial mark-up for the park owner. The park homes working party report does not directly address itself to the plight of recreational park home owners, but many problems that it identifies undoubtedly exist across the sector. Caravan sites used for recreational purposes do not come under the definition of protected sites, and so do not benefit from the limited protections afforded by the Mobile Homes Act 1983. Their protection is based solely on the terms of contracts and there is sometimes doubt about whether contracts have been constructed fairly.
Recreational park home owners deserve greater protection, perhaps on a different level from that of permanent home owners. Park associations should have the right to information and consultation. The Office of Electricity Regulation should be proactive in using all its powers to protect residents and ensure that information is supplied to them. There must be clarity about what fees are for and how they are to be reviewed and set. I agree with the hon. Member for Christchurch that the research suggested in the working party report should be commissioned, but in a way that deals with not only permanent but recreational home owners.
I hope that such a different group of home owners will be subject to greater certainty and that the current voluntary code of practice will be enforced properly in the future. I hope that it will become something that can be relied on by park home owners and regarded as a national standard against which licences will be issued and services can be judged. That is how to ensure that those who suffer an inferior service and poor treatment will receive a better deal.
Mr. Dawson: Will the hon. Gentleman give way?
Mr. Burstow: I hope that the hon. Gentleman will forgive me, but I shall not give way to him as other hon. Members wish to take part in the debate.

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I hope that the valuable work undertaken by the working party, albeit focusing on permanent residents, can also be translated into lessons to be learned to deal with the recreational sector. Will the Minister undertake to deal with the worries of recreational home users as well as permanent users? They need to be helped just as much as permanent users.
11.41 am
Mr. Harry Barnes: I congratulate my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson) on securing today's debate and on the fact that he has previously pressed the issue in the House. He has flagged it up as an important matter, drawn from his experiences of the wide provision of park homes in his constituency. Many of us share similar problems, although we also have experiences of acceptable park home site operators. How such sites function and operate is largely a matter of luck and the attitude of a particular site owner, rather than an obligation to act according to best practice.
Many changes take place in site ownership; new owners move in and regard it as a highly profitable area and press it considerably. There are many techniques by which a person can make money. A person can be a good owner and good employer, can make sure that people are satisfied with matters and can work well by using that technique. Others press like mad every avenue to exploit people. Such action is taken by many site owners in respect of pitch fees, utilities and the exploitation of the site rates.
As my hon. Friend said, many park home owners are vulnerable people and have great difficulty in coming forward publicly and expressing their views. That is why Members of Parliament are under a duty to do so on their behalf. Although some people, because of the publicity that surrounds the matter, are willing to sign The Big Issue petition and forward it to their Members of Parliament, they do not want the site owners to know that they are involved in such activity.
One or two brave individuals act as leaders of their communities and are willing to take the flak, but many people are frightened of coming forward. It must be made clear that the consultation process is open to all home owners, and when people submit their views they can say that they do not want such documentation to be made public. I hope that will be able to flex their muscles more freely. However, that is dependent on implementation of some of the measures contained in the party homes working party report. My hon. Friend has said that there are additional issues that he wants to advance and develop.
One of the extra issues brought to my attention by park home owners is council tax banding. I pursued that matter on many occasions with the previous Government, which introduced the banding, and have done so with the present Government. I have suggested that there should be extra banding so that park home owners are not charged such high council tax. There should be a wider extension at the other end of the scale, giving a closer relationship with reasonable and decent standards of charging which would benefit the people whom we are discussing.
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The problem of unadopted roads has been brought to my attention and affects a wide area in my constituency. If an unadopted road leads to a site, there may be great difficulties in ensuring that, although other people have properties in that area, the site owner has the major responsibility. There are two national bodies for site owners, operating a type of self-regulatory system, but the way in which that system works depends on the organisation of which the site owner is a member. In my constituency, there are sites that are not tied in with those bodies, so the best practices of the industry cannot be fed in.
It is clear that we need legislation in line with the best interpretations of the proposals in the report. There is a worry that that may take some time. One of the recommendations, in connection with pitch fees, claims that another study is required. It is important to gather the correct information before making decisions, but the process has been going on for a long time. During the years of the Conservative Government, the park homes group did some valiant work, initiated by Lord Graham, with which many of us have been associated. At last, the Government have made some progress, but we need to ensure that, in the not-too-distant future, we produce effective legislation that tackles the serious problems faced by park home owners.
11.48 am
Mr. Roger Gale: Until my appointment to the Chairmen's Panel forced my resignation, I was chairman of the all-party group that the hon. Member for Lancaster and Wyre (Mr. Dawson) now chairs. I congratulate him and Lord Graham on the working group, on which my fingerprints are very light and on which he has done good work.
During my time as chairman, I discovered two things about this issue. I attended several conferences on the subject and managed to upset most of the mobile home owners and park proprietors present, which means that either I was completely right or completely wrong—I leave my hon. Friends to work out which. The issue tends to polarise people. People on both sides of the argument have the unhealthy attitude that if one is not for them, one is against them. As my hon. Friend the Member for Christchurch (Mr. Chope) said, most mobile home park proprietors are good and most mobile home parks are well managed.
Most residents live out what is often their twilight years—because that is the nature of the occupancy of many of the parks—in comfort and happiness. A small minority of rogue proprietors cause misery. They are usually outside the membership of the professional associations. If we are to do anything useful, we have to target those people so that we discern the baby from the bath water and do not over-react to a situation that is serious but relatively confined. It is obviously wrong for someone to run a site in which the roads and footpaths are in a dangerous condition, where gas supplies are overcharged, where electricity or gas supplies may even be dangerous and where a local authority exercises no control. That is absurd: it could not happen with any other form of housing—which is what we are talking about.
There is also the issue of commission and of how properties are bought and sold. The people who buy such homes are often trading down by selling larger

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houses to release capital to provide for their old age or, in some cases, an overseas home. Some residents of good parks in my constituency spend the summer in the United Kingdom and the winter somewhere sunnier; that is their choice. If we are to concentrate on the problem parks, we need to persuade the Minister to legislate and to deal with the rogues by giving local authorities the powers to license all sites and all individuals. The hon. Member for North-East Derbyshire (Mr. Barnes) made the good point that parks change ownership. What has been a well-run, well-managed and fairly charged park can deteriorate rapidly, if not overnight then within a matter of months, if it falls into the hands of someone who is not a member of a professional association—other than the professional association of crooks—who rips off the elderly, escalates charges and creates mayhem where there was once tranquillity.
The all-party group that has been considering licensing laws for licensed houses has recommended that, in addition to the licences for premises, there should be licences for licensees through some kind of professional qualification. Proprietors will not thank me for saying this, but I believe that not only properties but those who run them should carry a licence. If we could achieve that, we would get to grips with most of the rogues in what can be an unpleasant business, although usually it is not.
The way in which park homes are traded has always perplexed me. People who put down large sums of money to buy such properties have few rights, and those on whose sites the properties are located are on occasion encouraged to exploit the conditions of onward sale. I have never understood why there is not a system similar to that for leases on flats. If one buys a flat with a 99-year lease one knows how much of the lease is left, and that the property is devalued as the lease decreases, even though property prices may be rising.
Madam Deputy Speaker, that is a sensible way forward, although I add a note of caution. [Interruption.] It is being indicated to me, Madam Deputy Speaker, that the proper form of address for you in this Chamber is "Mrs. Roe". As a member of the Chairmen's Panel, it is my view that if this Chamber is to have proper recognition, the person in the Chair, whether formally a Deputy Speaker or not, should be so addressed. I shall therefore continue so to address you.
I urge caution on the matter of leases, which may allow the unscrupulous landlord of a block of flats, of whom there are many, to impose exorbitant service charges through devious means. If we are to take the proposed route, as we probably must, we should ensure that the bad practices of more traditional leasehold property are not inherited.
Malcolm Kent, who is the proprietor of a good park in my constituency, urged me to say that the Minister's proposals must be proportionate. If we do not get the balance right, there is a danger that those good proprietors who might otherwise invest in parks will not do so. We may thus inadvertently encourage the bad proprietors and deny resources to those who wish to maintain parks properly and keep them in good order.
An equitable solution must be found that is fair to the park proprietor and does not lead to residents, many of them elderly, ending their days in misery and discontent as a result of exploitation.
11.56 am
Dr. Peter Brand: Mobile homes and park homes make a tremendous contribution to the quality of life on the Isle of Wight, where, I am glad to say, the parks are at the respectable end of the market. I am honoured to be the patron of the Medina park residents association, which does a brilliant job.
I endorse the remarks of the hon. Member for North Thanet (Mr. Gale). Parks need a regulatory framework in which to operate, which includes recognition of residents associations. It is essential to have a residents organisation that can negotiate with park owners and managers so that, for example, the cost of providing services and maintaining the roads, which the hon. Member for North-East Derbyshire (Mr. Barnes) mentioned, can be verified by residents before licence fees go up. There must be openness between the residents and the people who run the park.
I make a special plea to the Minister to consider council tax banding, as highlighted by the hon. Member for Christchurch (Mr. Chope). There is an anomaly in that park homes, which often have sophisticated and expensive fixtures and fittings, are compared with ordinary homes, which are often empty shells. There is a perception among park home owners that they are penalised because their homes come with fittings already attached, which puts them in a more expensive bracket than would be the case if they lived in a small house or bungalow. People in my neck of the woods feel aggrieved, as it is not unusual for park homes to be in band B or even band C. That is unfair to people who decide to convert from bricks and mortar, which have a much higher resale value—it would be extremely unusual for a park home resident on the Isle of Wight to pay £120,000—and to invest in a property that has a shorter lifespan but provides a high quality of life.
11.59 am
Mr. Andrew Miller: I apologise for my absence at the beginning of the debate, which was for reasons that I explained to you, Mrs. Roe.
I endorse the remarks made by my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson). I congratulate him on following the work undertaken by Lord Graham and the hon. Member for North Thanet (Mr. Gale), which started the ball rolling. I too have encountered inconsistencies in the council tax banding. I urge my hon. Friend the Minister to look into that matter carefully. The answer lies in increasing the number of bands.
Certain other anomalies need to be dealt with in a regulatory regime, and I suspect that some of them come under the direct responsibility of my hon. Friend the Minister. Colleagues will remember the fiasco a few years ago when electricity companies gave households a rebate. They refused to give a rebate to individual home owners, but gave one to the site. The site owner did not gain greatly—only the electricity companies gained. Those issues need to be incorporated in any change.
There has been a steady move in the right direction. The voluntary code has been extremely helpful, but as the hon. Member for North Thanet said, there are the occasional rogues. We need to control them firmly, but without imposing a regime that will make it more difficult for those sites that are extremely well run. I am

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grateful to my hon. Friend for raising the debate today. I hope that the Minister can offer some hope to those people who live on parks run by that small number of rogues.
12.01 pm
Mr. David Rendel: I join in the congratulations to the hon. Member for Lancaster and Wyre (Mr. Dawson) on securing this Adjournment debate. Although the issue of park homes is not of enormous importance to a large number of the population of Great Britain, it is of enormous importance to those who either live in them or own the sites. It is therefore just the sort of thing that we should be discussing in an Adjournment debate. My interest in this matter goes back a long way, before I entered the House. There are several sites in my constituency, some of long standing, some better run and some worse run. I am a founder member of the all-party group and am proud to have been a member ever since.
As has already been mentioned on several occasions, the industry's first difficulty is the vulnerability of many of the park home owners. Many are elderly and have chosen to move into a park home either because it was the only home that they could afford for their retirement or because they wanted to use the capital that became available from the sale of their previous home as a source of income in their old age. Such people are vulnerable and desperately need to retain that capital to give themselves a reasonable standard of living in their old age. It can cause huge difficulties if it is whittled away by increased pitch fees.
The second difficulty, which has not been mentioned by other hon. Members is that some of the licences under which the park sites operate came into existence many decades ago. That is certainly true in my area, where several licences were originally granted by the local authority before the change in the local authority structure in 1974, and a number go back two previous changes. It is sometimes difficult to ascertain why the original licence was set as it was. Some of those licences are rather inadequately worded, as we have now discovered.
Park homes form a vital component of the supply of affordable housing, particularly in rural areas. In many parts of the country that supply is now critical, and in my area it is by far the biggest housing issue. My party's policy is that local councils should be given much greater powers to insist that developers include low-cost housing for local people in all new developments. If the Government followed that policy, the industry would enjoy a significant boost.
Although most people who run residential parks are honest and honourable, some owners are on the fiddle. They are the rogues who give the industry a bad name and from whom the public need to be protected. Britain has a fine and important industry that is being undermined by a minority of unscrupulous park owners who profiteer by overcharging residents for sales, site fees and basic necessities such as running water and electricity. That is why the House needs to consider passing new legislation to clarify existing laws and to ensure that the standard of service provided by park owners is evenly maintained across the country.
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I am grateful to the Government for establishing the working group on park homes, which the all-party group has wanted for some time. That has provided all those with an interest in solving the industry's problems with several important recommendations. I broadly welcome the recommendations and hope that we can develop them during the consultation period set out by the Minister.
The Mobile Homes Act 1983 has many deficiencies. One of the most frequent complaints is that it gives park home owners insufficient rights over increases in pitch fees demanded by site owners. It helps that many site owners use a standard agreement drawn up by the National Federation of Site Operators. That agreement contains a pitch fee review clause that takes into account such factors as the retail prices index and the sums expended by the owner on the upkeep of the park.
However, even if that agreement is used, difficulties can arise when occupiers feel that the owner has done little to warrant the increase or that the increase is well above the inflation rate. One interesting statistic from the review conducted by the Department of the Environment in 1991 showed that although one third of park home site owners felt that they had consulted park home owners about their most recent pitch fee increase, only 3 per cent. of park home owners felt that they had been consulted. That is an anomaly. I welcome the recommendation that residents associations should have the right to information and to consultation by park owners on some matters. However, to make real progress on pitch fees, the Government should seriously investigate the proposal, originally made by Shelter, that rent officers should have powers to fix pitch fees whenever there is disagreement.
The issue of commission on sales causes frequent complaints. Site owners are entitled to claim commission of up to 10 per cent. on the sale of park homes on their sites. The justification for that charge is that the site value forms part of the overall price. That is a rather odd justification, because once the site has been sold, the site value should not stay with the original site owner but should go to the person who owns the park home that is to be sold. However, it is true that commission is a crucial way of financing new investment in parks. Without it, pitch fees would rise and that might make some park homes less accessible to those who need them.
I am pleased by the recommendation that the Government should commission an independent study into the economics of the industry to identify the maximum allowable level of commission and to clarify what can be considered when calculating commission. Such a study could also identify the principles on which pitch fees should be set and reviewed.
Another important problem is council tax, which other hon. Members have mentioned. Almost all park homes are in band A, which covers properties originally valued at up to £40,000. However, many park homes were worth nothing like that at the time of valuation, and people are understandably angry about being charged in band A. My party has long advocated the creation of a new council tax band A to resolve the issue. We are delighted that the hon. Member for Christchurch (Mr. Chope) supports that proposal.

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I must tell him that when I pressed the previous Conservative Government on the issue, they were not entirely happy about that suggestion.
I was pleased by the inclusion of a recommendation regarding the sale of utilities. I fully support the introduction of a statutory maximum resale price for the resale of gas supplied by cylinder and bulk tank. I also welcome the possibility of a review of the park homes charter promoting good practice in the industry in relation to the supply and pricing of utilities.
Before I finish my speech, I want to make one point to the Minister on behalf of park owners. Although the rights of park home owners need to be clarified and enhanced, it should not be at the expense or to the discouragement of the majority of responsible site owners. Currently, park owners, unlike the owners of other small businesses, do not benefit from any relief on inheritance tax. That point has so far been ignored by the Government. I hope that the Paymaster General or the Chancellor of the Exchequer will review that apparent anomaly, which, when a park site owner dies, has the potential to cause uncertainty and distress for the owner's and previous owner's heirs. Park homes provide a vital source of affordable housing across Britain. With the co-operation of both sides of this House, legislation can be introduced that will benefit owners and residents.
12.10 pm
Mr. Nigel Waterson: This has been a good debate. I, too, congratulate the hon. Member for Lancaster and Wyre (Mr. Dawson) on securing it. He was right to stress two points: the industry is thriving in many parts of the country, as is clear from the attendance at this debate, and it provides a livelihood for some people, which we must constantly bear in mind. For other people, it is also a way of life. That epitomises the balance that we must preserve in approaching the matter.
As always when we debate such subjects, we have heard a great deal about the bad operators. It is right that those who abuse tenants and their financial position should be dealt with. We have not heard as much about good and exemplary operators, who regard parks as a way of providing fairly high-quality accommodation, either on a long-term residential basis or for recreational purposes.
Harassment is probably the worst aspect of the problems that we have discussed. It should be deplored and there should be a cracking down, especially as many parks attract the elderly and vulnerable, who can be preyed on by less desirable operators. Local authorities have clear powers to deal with harassment, about which we have heard little. If harassment and intimidation are taking place, we must ask whether local authorities are doing their job in looking after those people.
I want to join other hon. Members in encouraging those of all persuasions on this issue to respond to the recommendations that are subject to consultation. The hon. Member for North-East Derbyshire (Mr. Barnes) made a point in that regard. If people want to retain anonymity, I presume that they can do so. It is important to send out the message that anyone with views on the matter should send them to the Minister. I was therefore slightly puzzled when the hon. Member
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for Lancaster and Wyre asked the Minister to give a clear indication today. I should have thought that that is the last thing that the Minister can give, and I am sure that he will refer us back to the consultation exercise with a slight sense of relief. He smiles broadly, so I may not be completely off-target, Mr. Winterton.
Mr. Deputy Speaker (Mr. Nicholas Winterton): Order. Because of the status of Westminster Hall, anyone speaking should address the Chair as Mr. Deputy Speaker or Madam Deputy Speaker.
Mr. Waterson: We had an interesting debate before you joined us, Mr. Winterton, and I was under the impression that the opposite was the case.
Mr. Deputy Speaker: If a member of the Chairmen's Panel chairs the meeting because of the unavailability of the four members appointed Deputy Speakers in Westminster Hall, he is addressed by name or as Mr. Chairman.
Mr. Waterson: I am grateful to you, Mr. Deputy Speaker. Nothing gives me greater pleasure than to refer to you as Mr. Deputy Speaker.
It is important that we do not allow the obvious and well-known malpractices of the few to blacken the name of all operators, because that will make them less likely to run parks or open new ones. We do not want to chase out of a thriving business—as the hon. Member for Lancaster and Wyre said, it is just that—those who are the best in the business.
The hon. Member for Sutton and Cheam (Mr. Burstow) spoke about unscrupulous landlords. He used the phrase "perhaps a minority". Perhaps, on reflection, he will want to rethink. On any view, this is a minority, but that is not to say that we should not take the problem seriously. The hon. Gentleman rightly talked about recreational owners. With respect to him, one problem with trying simply to treat these occurrences as any other housing situation by applying the whole panoply of housing legislation and regulation is that there is a dichotomy: some people regard park homes as their long-term homes and others keep them for recreational purposes, which causes problems of definition.
My hon. Friend the Member for Christchurch (Mr. Chope) spoke about well-run sites from personal knowledge of his constituency and we should not lose sight of that perspective. I join him in saying to the Minister that I cannot think of a good reason for our not just getting on with the independent study into the economics of the business. We have had a couple years of the working party, as my hon. Friend said. We are in consultation until 31 October, so why wait? Most people who are involved in these questions would be happy to see a start made because so much else flows from it. The issue is complex and requires careful examination.
My hon. Friend the Member for North Thanet (Mr. Gale) spoke with great knowledge, especially as a former chairman of the all-party group. He was right to talk about throwing out babies with the bath water. I agree with him that the problem is serious, but relatively confined: we must constantly keep that perspective before us. My hon. Friend touched on the

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role of local authorities, as I have. We have heard little about them, although they have a role under existing legislation. My hon. Friend's interesting thoughts on the sort of twofold licensing approach that he commended need further examination. I will not follow him down the leasehold path, not least because so far the Government have signally failed to meet their preelection promises on reforming the law of leasehold and commonhold. I would not want park homes owners to become enmeshed in that scenario.
We heard from the hon. Member for Isle of Wight (Dr. Brand) and the hon. Member for Ellesmere Port and Neston (Mr. Miller), who also talked about such matters as council tax banding charges and roads, which are often a problem for these sites. I believe that the hon. Member for Newbury (Mr. Rendel) made a point about the need for balance, as I am doing. We are talking of up to a quarter of a million people who live in these parks in some 2,000 licensed sites.
It is wrong to suggest that existing legislation is inadequate. Of course improvements can be made, which is why consultation is so important. We already have the Caravan Sites Act 1968, the Mobile Homes Act 1983 and the voluntary charter, which is to be commended; but it is important to bring the responsible park operators on board. One example is the National Park Homes Council. It supports the majority of the working group's recommendations, the advance provision of an agreement, the project to look into the economics of parks and the independent redress mechanism, all of which are constructive and important. However, it has great concerns about simply applying housing regulations and law to the sites. It talks about the prosperous holiday caravan business. I have already mentioned that there is a different side to the issue.
The council also refers to occupiers' safety requirements and the significance of British standard 3632. It does not agree with the principle of offering first refusal on purchasing a park to its tenants or proposals to reduce the commission rate to 2.5 per cent. However, it is happy to await the outcome of research. The key point, which has been made more than once, is that the economics are fundamental. Tinkering with pitch fees or commissions could produce a counter-productive result.
People can be greatly encouraged by the way in which serious and responsible people in the industry are prepared to work together. This is an important debate, and I again congratulate the hon. Member for Lancaster and Wyre on securing it. I hope that the Minister is deluged with representations during the consultation period.
Mr. Deputy Speaker: I call the hard-worked Minister to reply to the debate.
12.20 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): I join other hon. Members in thanking my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson) for raising the important issue of park homes. From the contributions that we have heard, it is
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clear that the issue has not always enjoyed the prominence that it deserves, as it affects a large number of people. Some are residents and others enjoy recreational use of their park homes.
I pay tribute to the work of the all-party group, and particularly the work of my noble Friend Lord Graham. As the hon. Member for Eastbourne (Mr. Waterson) predicted, I shall not make any definitive announcements today, because the object of the consultation is to consult. When the consultation closes, we shall consider carefully the representations made to us, including those made by hon. Members today. In the short time allowed, I shall try to deal with some of the main concerns, particularly those raised by my hon. Friend the Member for Lancaster and Wyre.
I share the view of hon. Members that the park homes sector can play a useful part in providing decent, affordable homes. Many park home owners live in good-quality, attractive accommodation in well-run parks and enjoy the park homes life style. However, I also appreciate the concerns expressed about the need for park home sites to have an appropriate control regime that balances the needs and interests of residents and site owners.
That is why we set up the working party, which consisted of members of residents' bodies, site owners and local authorities. The hon. Member for Eastbourne was right to say that local authorities already have some powers in harassment cases. The report, published last week, made 30 recommendations for change. They included changes to the arrangements for the sale of homes, the issuing of written agreements, harassment procedures and site licensing. We shall consider the recommendations carefully, as hon. Members would expect, and we look forward to receiving responses in the next two or three months. We have set a deadline of 31 October for comments. My hon. Friend the Member for Lancaster and Wyre mentioned that he was having difficulty obtaining an appropriate number of the summary documents to distribute to park home owners in his constituency. I shall ensure that he receives what he requires. If other hon. Members have problems, I should be glad to raise those, too.
An important aim of the working party was to reach a consensus between residents and site owners. An impressive amount of agreement was achieved on a range of issues, and we are grateful to the working party for its efforts. It may be useful if I comment on some of its recommendations and the timetable for further action.
Most of the recommendations are for legislative change. Their broad aim is to provide greater clarity on the rights and responsibilities of residents and site owners and to improve the level of protection available to residents. For example, there is a proposal for the resident and the park owner to sign a written agreement at the time of a home's sale, so that both parties are aware of their obligations from the outset. There is also a proposal to tighten arrangements that currently allow park owners to exploit their power of veto on the proposed purchaser of a home.
Other proposals welcomed by my hon. Friend were the deletion of the age criterion to justify the ending of agreements between residents and park owners and the setting up of formal residents associations with

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statutory rights to receive information from, and to be consulted by, park owners and local authorities. The working party also recommended changes to the rules on the sales of utilities, such as liquefied petroleum gas, about which a couple of hon. Members expressed concern.
As my hon. Friend the Member for Lancaster and Wyre said, the working party proposed that there should be a new statutory requirement on local authorities to impose and monitor conditions for mobile home site licences and to consult residents on those conditions. That would require authorities to carry out their responsibilities for site licensing more methodically and consistently.
My hon. Friend referred to the harassment of residents, and the hon. Member for Sutton and Cheam (Mr. Burstow) described a particularly shocking case, which perhaps calls for naming and shaming—it is for him to investigate the matter and deal with it in his own way. The report proposes changes to the legislation to bring the provisions on harassment of residents into line with those that apply to tenants in the private rented sector so that the same level of protection applies across both tenures.
My hon. Friend mentioned the possibility of involving rent officers in disputes about pitch fees. Voluntary arbitration arrangements run by the Chartered Institute of Arbitrators operate in respect of such disputes, and the independent housing ombudsman makes his services available in some cases, given the agreement of residents and park owners. Working party members were in favour of developing properly independent arbitration agreements, but did not make any recommendation about the involvement of rent officers in resolving disputes. However, we are prepared to consider that possibility.
The proposals requiring amendments to legislation must be further developed and their impact properly assessed. A legislative opportunity must then be found to implement them. All hon. Members will be aware of the tremendous pressure that the legislative programme is under. We are therefore anxious to make progress as quickly as possible on aspects that do not require legislation, while bearing in mind the fact that it may be required in due course. We are also anxious to have a consistent and thorough approach to the issues.
My hon. Friend suggested that mobile homes should be subject to housing legislation, and referred to The Big Issue campaign. I share his concern about providing residents with adequate protection against exploitative treatment, but the proposal in his early-day motion did not find agreement among the members of the working
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party. Nevertheless, we are willing to consider a wide range of suggestions in the interests of developing an appropriate control regime for mobile homes.
In addition to legislative changes, the report suggests the provision of good practice guidance to local authorities on the way in which they carry out their statutory responsibilities on harassment and site licensing. I accept the working party's view that there are wide variations between authorities in that respect, and we shall issue good practice guidance following the findings of recent Department of the Environment, Transport and the Regions research. Our aim in disseminating good practice is to improve the quality and consistency of the service that authorities provide to residents and site owners on harassment and site licensing. The working party identified a willingness on the part of residents and park owners' bodies to consider further provisions, which are included in the industry's voluntary agreement between the parties. I commend the parties for that.
The parties were unable to reach an agreement on pitch fees and sales commission payable by the resident to the park owner—the most controversial aspect considered by the working party. Several hon. Members referred to the proposal that research should be carried out into the economics of the industry, and we are not waiting until the end of the consultation period to deal with that. Talks are already under way to discuss the basis for such a study.
We are willing to consider action across a broad front—in the form of the good practice guide and, when the opportunity arises, legislation—following the publication of the working party's recommendations. At this stage, I cannot rule anything in or out. The matter is in the hands of my solicitors, as we say. I am especially keen to take forward those issues with clear support from the working party and other consultees.
A couple of hon. Members referred to a possible revision of the council tax band—
Mr. Deputy Speaker: Order. Time is up. The matter may be in the hands of your solicitors, Mr. Mullin, but you are now in the hands of the Chair.
We now move to the debate initiated by the hon. Member for Chatham and Aylesford (Mr. Shaw). Before I call him, I advise hon. Members that a number of other Kent Members have the hon. Gentleman's permission to participate in the debate. They have sought the sanction not only of the Chair but of the Minister, and that has been granted. As long as they stick religiously to the commitment that they have entered into, I hope to be able to call them all.

North Kent Economy
12.30 pm
Mr. Jonathan Shaw: I shall present the case for the north Kent economy, and the principal purpose of this debate is to spell out the opportunities that lie within the area, not only for north Kent and the south-east region, but for the United Kingdom economy as a whole.
North Kent is characterised by traditional industries—heavy industries that have been in decline for a long time. That was particularly the case during the two Tory recessions, under which we suffered greatly, and nowhere more than on my own patch. When Chatham dockyard closed in 1984, 3,000 jobs were lost at a stroke. In the dark days of the mid-1980s, unemployment in the Medway towns rose to nearly 20 per cent.
Fortunately, those days are behind us. Unemployment in my constituency is now down to 3.9 per cent.—a fall of nearly 50 per cent. since 1997. However, north Kent Members of Parliament know that the headline unemployment rate sometimes places a shadow over pockets of deprivation in our communities where need is still very great. We are determined to play our part in relieving that deprivation, and if we can unlock the development potential of the area, it would be a sizeable contribution towards that end.
In this short debate we shall highlight the achievements of the Thames gateway in Kent, and spell out how, with the right investment and Government assistance, we can secure the economic regeneration that we all desire. In an Adjournment debate just over a year ago, I and my hon. Friends who represent the north Kent constituencies from Dartford down to Swale, called for assisted area status for the Thames gateway area of Kent. I am pleased to see my hon. Friends here in Westminster Hall today. As you have said, Mr. Deputy Speaker, they hope to catch your eye later.
Since that earlier debate, we have experienced the rollercoaster of celebration and disappointment. There was celebration when the Government responded to our calls and recommended to the European Commission that north Kent be included on the new map of assisted areas. That was followed by disappointment when the Commission turned down the Government's recommendation.
Last year, we made the case for north Kent with confidence. That confidence remains as strong today as it was then, because we, the north Kent Members of Parliament, are united in a common approach, as are our local authorities and the business community. We recognise that, throughout the gateway, we are interdependent, and that interdependence will bring success. Investment that brings jobs to Gravesham means job opportunities for people in Dartford and the Medway towns. The second Swale crossing—a key piece of infrastructure that my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) has fought hard to secure—benefits not only his constituents but all of us, throughout the gateway.
Many years ago, we woke up to the fact that people do not live their lives according to district council boundaries. Therefore, all our economic plans have a
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north Kent focus. If there is any doubt about that in Medway, we need only to remind ourselves that, in a population of 250,000, 50 per cent. of the work force work outside the Medway towns. Success for one means success for all. There are key development sites, but the right investment in the area can fulfil all the expectations that the previous Government and the present one have had for it, to relieve west London from the heat of over-development, and bring to north Kent the prosperity to which we have all referred.
However, we should also make it clear that there has not been stagnation. We in north Kent have not sat back and wrung our hands, waiting for Government assistance. It has not been simply all talk; we have made great efforts to lay the foundation stones for regeneration. However, we need financial assistance to complete our key projects, and the Government have recognised that. Principally, they recommended assisted area status so that we can unlock that potential, but they also recognised our track record of delivery, and I should like to point out a couple of success stories.
First, there is the Rochester and Chatham riverside development of 80 acres of brownfield land in the heart of the Medway towns. Plans for a high quality mixed-use development are now well advanced. New housing, which is essential to our prosperity, will be developed alongside businesses and leisure outlets. That is the essence of the recommendations in Lord Rogers' report "Towards an Urban Renaissance". Such projects do not appear overnight. Six years ago, Rochester city council, of which I was a member, decided to transform that derelict wasteland on the River Medway. We brought together finance and landowners, and in time created a sufficiently large area to enable development on a waterfront that is a stone's throw from the finest castle and cathedral in Britain.
The partnership has been formed, we have chosen a developer and the community.is about to be consulted. This weekend, the community will participate in a planning conference that will shape one of the most exciting developments in the south-east. We have brought together the brownfield site and the landowners, and, where necessary, used compulsory purchase orders to buy land. There was a tendering process, through which developers put forward proposals, and we are involving the community in shaping that development. However, behind any project there is always an initial driving force—someone who is determined to get things started. That person was my former colleague, the late Tim Robson, who, before his untimely death in 1995, was chairman of the planning committee and a prospective parliamentary candidate for Chatham and Aylesford. He would have had great pride in seeing the community discuss the implementation of his vision.
Secondly, we in Medway are bringing together learning and economic development. The Medway innovation centre, in partnership with the council, the South East England development agency, the universities of Greenwich and Kent, and the Kent institute of art and design, will provide much needed research and development in advanced engineering, creative industries and electronics. Medway council has already invested £500,000 in the project, yet a further £3.5 million is needed to complete the necessary capital works.

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Here I come to my final point. The Medway innovation centre is typical of many key projects in that, although the project is almost within our grasp, we need help to make it a success. There is massive potential for growth in north Kent. Brownfield sites in Dartford and Gravesham could generate some 50,000 jobs, and the Isle of Grain has the largest brownfield site in the south-east. Adjacent to the rail-head is the second largest container port in the United Kingdom, yet the infrastructure is woefully inadequate, particularly the A228, which is put to uses entirely different from those that were originally envisaged. There have been many fatalities and serious accidents along a stretch of that road.
Rail investment is a source of frustration in Medway. In particular, we want the Hoo junction to be developed. We have one of the best rail links to London, but we need faster delivery of improved rolling stock. It is vital that Railtrack and the train operators listen to local authorities and, importantly, user groups. The north Kent user group has an important role to play in the development of rail infrastructure.
We know that the Government recognise our area's potential, and we welcome yesterday's announcements in the comprehensive spending review, especially those involving transport investment. In this debate, north Kent Labour Members of Parliament have set out our case for the area. If the Minister provides the means, we shall continue to do what we do best, namely, to deliver for the people of north Kent.
12.39 pm
Mr. Paul Clark: I congratulate my hon. Friend the Member for Chatham and Aylesford (Mr. Shaw) on securing the debate.
My right hon. Friend the Minister for Local Government and the Regions is well aware that, during the past six months, all local authorities, including Kent county council, have invested much work in the area, as have private and voluntary sector groups, and others, and they have sought to deliver a partnership. My hon. Friend the Member for Chatham and Aylesford said that what is delivered in one area is important to the rest of the Thames gateway corridor, which is a sub-regional part of Kent. My colleagues and I, and those who work to realise the opportunities in the Medway towns, welcome the Government's initiatives and the creation of the new ministerial-led strategic partnership.
The Minister expressed slight doubts when my hon. Friend referred to our having the best castle and cathedral in Rochester—
Mr. Shaw: In Britain.
Mr. Clark: Sorry—in Britain. I extend to you an invitation to visit the north Kent Thames gateway as soon as possible so that we can show you some of its gems, including the finest castle and cathedral.
All local authorities and the private sector want to deliver the agenda that we believe in—it involves jobs, environmental issues and combating social exclusion. However, gap funding is involved. My hon. Friends referred to the Isle of Grain, and we hope that tomorrow a major Railfreight initiative will be announced which will help in that regard.
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We welcome yesterday's comprehensive spending review announcement on regeneration budgets, the strengthening of the Regional Development Agency's role, the neighbourhood renewal fund and a national centre for neighbourhood renewal. We want to deliver the objectives that will benefit the Thames gateway in north Kent.
Mr. Deputy Speaker (Mr. Nicholas Winterton): The hon. Member for Gillingham (Mr. Clark) spoke for a little longer than he said he would in the commitment that he gave earlier. He also extended an invitation to me, rather than to the Minister, to visit his constituency and the Medway towns. I am sure that he meant to invite the Minister, but I should be delighted to accept.
12.43 pm
Mr. Derek Wyatt: I, too, congratulate my hon. Friend the Member for Chatham and Aylesford (Mr. Shaw) on securing the debate.
We have fortunately recently received the go-ahead for a second crossing of the Swale. The current bridge is called Kingsferry, and I wonder whether we shall be allowed to call the second bridge Queensferry. I have been in correspondence with the Minister about that. It would be a welcome way to twin the bridges.
Yesterday's announcement contained fantastic news about science—I am a great science supporter. We have a huge research centre, which is nearly full although it was empty four years ago. That shows how the north Kent economy has changed.
We do not hear too much about tourism and the north Kent coast, although earlier we discussed castles and cathedrals. At the end of a Remembrance Sunday memorial service, a constituent told me that HMS Cavalier, a destroyer in the second world war, would not be located at Chatham. However, through the good hands of a great Select Committee, we managed to persuade the lottery to give us £800,000. It will be fantastic to see the Cavalier at Chatham.
I want to discuss what will happen during the next 10 years, when the Labour party win the next election and the one after that. We shall make a cultural capital bid—a north Kent culture bid, where we have hardly any decent culture—for Rochester and Canterbury. We have no practice rooms, conference centres and little theatre, which was mentioned in yesterday's spending review. I also bring to the Minister's attention the east London-north Kent bid to host the Olympics in 2012—we are beginning to group together to make a bid.
On regeneration, we are missing a rail link to Ashford. Because the Canterbury stations are about half a mile apart we need a nodal point, but we have been in conversation with Railtrack about it until we are blue in the face. The cost would be £30 million, but it would link the docks at Sheerness to Ashford and on to Europe. The question is not whether it would make any money; it would provide the infrastructure to secure the regeneration of the whole area.
12.44 pm
Mr. Robert Marshall-Andrews: I join the general paean of praise to my hon. Friend the Member for Chatham and Aylesford (Mr. Shaw) for initiating

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this important debate. I want to use the opportunity to bring two matters to the attention of my right hon. Friend the Minister for Local Government and the Regions, both of which have been touched upon.
The first is higher education. Much has been done by an exemplary Labour-controlled council during the past two years to improve higher education in the Medway towns, but we remain the largest conurbation in Europe without its own university. My right hon. Friend will accept that it is impossible to unlock the full potential of the Medway towns until we have such a foundation, but I know that that is not specifically her responsibility. I have brought the matter to the attention of many other Ministers, but I mention it now to bang another marker into the ground. I hope that if enough markers are banged into the ground, there will be a seismic shift.
That brings me conveniently to the Strood tunnel. As my right hon. Friend knows, it has been closed or mainly closed for the past six months, which has caused immense aggravation and distress to my constituents. Railtrack cannot be blamed for that—I say that rather unwillingly—because the problem has been 150 years coming. However, it draws attention to the second matter that I want to bring to my right hon. Friend's attention.
The infrastructure serving the Medway towns remains lamentable. The outskirts of the Medway towns and the Isle of Grain have the largest potential inward investment site in the whole of the south of England. We need the key to unlock that because it would extend the prosperity not just of north Kent but of the whole south-east region. What we require from Government is the funding for that infrastructure. We also require pressure on the new utilities, specifically British Gas which owns the site, to make it available.
I hope that my brevity will earn me your accolade, Mr. Deputy Speaker.
Mr Deputy Speaker: I shall trust the hon. Member for Gravesham (Mr. Pond) to speak very briefly.
12.47 pm
Mr. Chris Pond: I shall speak briefly and quickly at 78 rpm.
I want to extend an invitation to you, Mr. Deputy Speaker, and to my right hon. Friend the Minister for Local Government and the Regions. My hon. Friend the Minister for Tourism, Film and Broadcasting recommended in the House last week that every hon. Member should visit Gravesham. I described Gravesend as the latest tourist hotspot, but that applies to the whole of north Kent where our cultural heritage is an important part of the regeneration potential, as are the available brownfield development sites and the transport links. In particular, the rivers Medway and Thames have enormous potential for regeneration and development.
Local authorities and other agencies in north Kent, as well as hon. Members who represent the area in Parliament, are committed to ensuring that we achieve regeneration to allow all the communities in the area to share in the growing prosperity and employment in a way that provides a driving force for prosperity and
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social justice. The Minister will agree that yesterday's announcement, particularly with regard to the 15 per cent. increase in regeneration budgets, brownfield sites and transport, will help. As other hon. Members have said, we have the commitment, determination and energy to make it work. What we need from the Government is the means to achieve that.
12.49 pm
The Minister for Local Government and the Regions (Ms Hilary Armstrong): I thank you, Mr. Deputy Speaker, and those hon. Members who represent north Kent constituencies for the debate. I am delighted to be here, although, coming from Durham, I will need a lot of persuading that any cathedral is better than Durham cathedral. I want to thank hon. Members not just for the debate, but for their work to ensure that we make progress in the Thames gateway and that we work together effectively at central and local government level and with the other partners who want to ensure that the Thames gateway is developed. We especially want the north Kent area within the Thames gateway to be developed in a way that really does enhance the opportunities of local people to achieve a better quality of life in all senses.
Hon. Members have outlined their particular aspirations. People and organisations in the public, private and voluntary sectors of north Kent have done much to respond to the vision of long-term regeneration strategy in the Thames gateway. They have worked hard to put good ideas into practice. Increasingly, that is being done in partnership, which is essential to identify and co-ordinate action on local priorities and ensure that regeneration does not exclude the needs of the existing community. A reflection of that approach is the decision to set up the new north Kent Thames gateway partnership on which the private and voluntary sectors are represented, together with the leaders of all the local authorities in the area. I welcome the efforts that have been made, and are continuing to be made, by all north Kent partners to deliver regeneration in the area.
The South East England development agency is also a member of the partnership. As hon. Members will know, the RDAs were set up to develop strategies to drive forward sustainable economic development in the regions. I was pleased to see and happy to endorse the high priority given in SEEDA's strategy to the Thames gateway in Kent. In part, that will be about bringing brownfield sites back into use, but it will also be about social regeneration, which local authorities, the Government office for the south east, SEEDA and, above all, local communities are tackling.
I recognise that the decline of traditional industries has left significant pockets of deprivation in which the community is excluded from opportunity. Five strategic single regeneration budget schemes are helping to address that problem. They are directing significant funding to local projects, helping to provide disadvantaged and unemployed people—especially young people and those from ethnic communities—with the skills required in the modern north Kent economy. Some projects include day care centres with facilities and support for young people with addiction problems. The people that such schemes are helping are some of the most excluded from our society. The ultimate aim is to offer them direct help, so that they can play a positive

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role in the north Kent community. A good example of that is the role that the Kent Learning and Business Link Company has played in community economic development and lifelong learning initiatives.
I know that my hon. Friends welcome as much as I do yesterday's announcement of the outcome of the comprehensive spending review. That includes a major strengthening of the role of RDAs, giving them the flexibility that they have asked for to play a strategic role in delivering regeneration. The spending review will give RDAs nationally an extra £500 million by 2003–04 to deliver economic regeneration and growth. The settlement will allow the RDAs to provide an effective input, including via direct development where necessary. The spending review settlement also sets out substantial increases for housing and transport, tackling crime and the health service. It will lead to improvements in public services that we all want to see.
I cannot explain in detail today what that will mean for north Kent. However, the Government are committed to sustainable regeneration in the Thames gateway, an area of regional and national importance for regeneration and growth. As the 10-year transport plan is developed and local authorities do their part by producing local transport plans, I am confident that transport issues will be addressed. The same is true for other areas, such as regeneration and housing. That is why the area has been identified as a priority for public and private investment in the draft regional planning guidance for the south-east, and that it is why, to help delivery across the Thames gateway, we are setting up the new Minister-led strategic partnership to provide a focus for the whole of the Thames gateway area. That will bring together Government, regional and local bodies, and local partnerships including representations from the public, private and voluntary sectors, across the Thames gateway in Kent, London and Essex. It will also ensure that the area's economic and housing potential are married to its infrastructure needs.
I am particularly keen to see good progress in Kent. As has been said, Kent Thamesside offers huge potential for sustainable urban development, as set out in planning policy guidance note 3. New communities can be created, with integrated public transport provision, quality homes, jobs and supporting facilities, such as GP surgeries and schools, and the other cultural and educational opportunities, to which reference has been made, to meet local and regional demand for affordable homes and improved public services.
On business investment, continuing progress is being made on the construction of the channel tunnel rail link, which will give an enormous boost to the north Kent economy. In the borough of Swale, we have recently given the go-ahead to the second crossing of the Swale river, which will bring opportunities for inward investment and jobs for the islanders.
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In Medway itself, in and around the constituency of my hon. and learned Friend the Member for Medway (Mr. Marshall-Andrews), much good progress has been made. It is an area well placed to make the most of business opportunities that provide the right environment to attract inward investment. Thousands of jobs have been secured by the merger of Medway's largest employer, Marconi Avionics, and British Aerospace, creating BAe Systems, a company of world-class status.
Medway council's positive approach is illustrated by the development of the partners for growth scheme, a project that is closely linked to the development of the small business service. The scheme offers financial assistance to small and medium enterprises of up to £25,000 per company in key sectors such as advanced engineering and high technology industries. That is an excellent example of what can be achieved when the public and private sectors work in partnership. Medway council is also considering the potential to develop financial services and supply clusters to focus inward investment on the flagship site at Chatham maritime development, and the proposed mixed-use regeneration at Rochester riverside. The urban task force report recognised the good work that the council is doing there.
Other plans include the development of a business incubator centre, focusing on the advanced engineering and design sectors and the "learning city" concept, referred to by my hon. and learned Friend the Member for Medway, which involves the establishment of a university for industry, a university for Medway, and a European business school. All those factors, allied with the remarkable built and environmental heritage of the area, make Medway a prime area for a successful urban renaissance. I know that the decision on the assisted area map review in north Kent was disappointing for partners in several areas, but enterprise grant is available to assist small and medium firms to undertake investment projects.
In summary, there is every reason for continued confidence in north Kent. There is the on-going process of the channel tunnel rail link and the regeneration benefits that that will bring, and the establishment of the new Kent partnership, which will provide a coordinated approach to support and complement delivery by local authorities. There is also the new Minister-led strategic partnership, which will play an important role in ensuring co-ordinated action in Kent and across the gateway. As a Minister, I am determined that we shall play a full part in ensuring that that partnership works. In addition, the generous spending review will give the RDA, local authorities and other key players the tools for the job.
Mr. Deputy Speaker: Time is up, Minister. We move to the next debate, initiated by the hon. Member for Eddisbury (Mr. O'Brien).

Waste Dump (Winsford)
1 pm
Mr. Stephen O'Brien: I am glad to have secured, through Madam Speaker's office, the opportunity to introduce a debate on an application being made in my constituency for the dumping of toxic waste into part of the worked-out areas of the famous Winsford rock salt mine in Cheshire. On 18 May and 6 July, I asked the Leader of the House to make time on the Floor of the House for a debate on the Government's "Waste Strategy 2000 for England and Wales", which was, interestingly, published a week after my first request. However, although it is such a critical issue for the country, a debate in Government time was rebuffed on both occasions. Therefore, I am doubly glad to have the opportunity to raise issues relating to that application, which is of deep concern to a vast number of my constituents.
Those constituents are here in force today, in the form of RAMP—Residents Against Mine Pollution. I pay tribute to them for their energy and tenacity in highlighting the issues for the local residents of north Winsford and the villages most directly affected, Moulton and Davenham, and the representatives of local newspapers and the regional and national media, who are all taking a keen interest. I welcome to the debate my neighbouring Cheshire Members, my hon. Friend the Member for Congleton (Mrs. Winterton) and the hon. Member for Tatton (Mr. Bell). The proposed waste disposal site would extend under their constituencies, as well as mine, traversing the constituency borders, the River Dane and Cheshire Ring canal in a subterranean manner. In advance of what I hope will be a helpful response from the Government in fully acknowledging and acting upon the concerns that I shall outline, I also thank the Minister in what I know is, for him, a week full of adjournment debates.
The site is unique, as it is the only dedicated rock salt mine in Britain. The rock salt is mined 560 ft below the surface of the Cheshire plain for use in de-icing on roads the length and breadth of the country. Anyone who has been down the mine, as I was with representatives of the applicants last November, cannot fail to be impressed by the extent and scale of the caverns. Some 110 miles of underground roadways, around 75 ft wide and 23 ft high, have been created at Winsford since mining began over 150 years ago. They are being added to each year as rock salt extraction continues. The temperature in the mines is a constant 12 to 13 deg C throughout the year, regardless of climate above ground. Humidity remains steady at 70 per cent.
It is a combination of those conditions, the vast size of the caverns and the fact that every part of the worked-out area underground remains open and accessible, that makes the mine available for other uses. For example, the underground environment has prompted a leading chemical firm and a major pharmaceuticals manufacturer to use one area as a document storage facility. Because radio waves are unable to penetrate so far underground, an international computer company has found the mine an ideal place in which to test electronic equipment. In the area, in addition to farmed grassland and a network of busy roadways, lie the villages of Moulton and Davenham and the northern
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part of the town of Winsford, which has by far the largest population density in my constituency, numbering nearly 30,000 out of a constituency population of approximately 90,000 people.
The applicant is Minosus Ltd., a joint venture between Namsco (UK) Ltd. and SARP Industries SA. Namsco is the parent of Salt Union Ltd., the mine operator, and is itself part of the United States-based IMC Global Inc. SARP is a European waste management company and a subsidiary of France-based Vivendi, which was formerly known as Compagnie Generale Des Eaux. I have maintained an open dialogue with the applicants and met them again yesterday evening. They have sought to discharge their consultation obligations in a professional manner, which has also characterised the approach that they have taken to the presentation of their application.
The application was submitted on 1 April 1999—I do not draw any jovial conclusions from that date, Mr. Deputy Speaker, especially as it is also my birthday—and seeks consent for the disposal of industrial waste in a specified 75 hectare area of the mine. That waste includes fly ash resulting from flue gas cleaning at municipal incinerators, slag from smelting operations and the output from waste solidification plants. It is submitted that the facility could reach its anticipated 100,000 tonnes-a-year capacity about five years after the start of the operation. That operation would be based at the mine's No. 4 shaft in Jack lane, near Winsford, now a cul-de-sac since the opening of the bypass. All deliveries, offloading, sampling and mine access will be concentrated there. It is a commercial application aimed to take toxic waste from Cheshire and the north-west. However, the issues raised reach far beyond north-west England.
As it has become better known and understood, the application has engaged widespread interest and has caused monumental anxiety and a vast range of fears and concerns among local people. My predecessor, Sir Alastair Goodlad, registered his objection to the proposals, and I became aware of the issue on my first day as a candidate in the Eddisbury by-election campaign last year. Having met with RAMP, and having studied the wide-ranging and complex issues, I called for a full, public, independent inquiry in the early days of my campaign. That call was subsequently made by the Labour and Liberal candidates in that campaign.
Since being elected on 22 July last year—almost a year ago to the day—by far the greatest number of the thousands of letters, faxes and e-mails that I have received have been from local people objecting to the Minosus application. Not one—apart from my correspondence with the applicant, naturally—was infavour. I have brought my files to this Chamber, and they include exchanges with the Minister. A host of public meetings have taken place, and the issue raised most frequently by constituents in my weekly surgeries has been the application and their objections to it.
One of the two local newspapers, the Winsford Chronicle, has mounted a stop the dump campaign, which has been backed by the Vale Royal environment network, whose president is the hon. Member for Tatton. I was recently presented with a petition of 1,400 signatures, which was gathered in response to a tear-off slip in that newspaper. I shall refrain from handing it to the Minister now, as I have requested a meeting with the

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Secretary of State so that I may lead a delegation of my constituents to press him to call the application in and establish a full public inquiry. I have yet to receive confirmation of his willingness to meet me and an offer of a date, but I live in great hope that the Secretary of State will accede soon to such a crucial component of our democratic process.
Before I set out the reasons for the concern and what it is that my constituents so fear and distrust, I shall quickly outline the progress of the application so far. Following Minosus' submission of a planning application, and the accompanying environmental statement to Cheshire county council in April last year, Minosus submitted a site licence application to the Environment Agency in October 1999. After requesting a more detailed list of the types of waste that were proposed to be brought to Minosus for disposal, the Environment Agency reported. In May 2000 the Cheshire county council environmental planning and operations sub-committee decided, on a majority of Labour and Liberal Democrat county councillors—who are politically indistinguishable on Cheshire county council as they operate a formal pact—that it was minded to grant planning permission. Conservative councillors voted against granting permission. The documents were sent to officials in the Government office for the north west on the grounds that the proposals were considered to be a departure from the adopted Vale Royal borough plan, because the area is one of significant local environmental value and because the proposed surface development is contrary to the employment policies in the adopted and emerging local plans, and to the new natural environment policy in the emerging local plan.
Sadly, that was the first time that the all-party approach had been breached. Primarily, it had been on the pusillanimous grounds that the county council would have faced substantial costs. One might well ask those councillors, "What price representation in our democracy?" All of that was admitted by the Liberal Democrat deputy leader of the council in a letter to the Winsford Chronicle on 21 June. In fairness to the applicant, Minosus never publicly stated that it would have pursued any such action against the council. The council apparently did not ask Minosus. In my meeting with Minosus yesterday I was assured that it had never indicated or manifested any such intention privately, let alone publicly. We are therefore bound to ask why the Labour and Liberal Democrat county councillors were so craven when their primary duty is to represent the people who elected them. I find it impossible to believe that their postbags have contained a series of representations from local people supporting the application. It was my contention, and still is, that the county council should have deferred the decision until a full and conclusive debate had taken place on the Government's national waste strategy. The application could therefore have been put in a proper context.
Furthermore, the ruling Labour and Liberal Democrat group had the cheek to spin, as reported in the press—I beg the Minister's forgiveness, but those in the Labour party are the spinning tops of politics—that, being mindful of local residents' concerns, they had called for a public inquiry. They did no such thing, more is the pity. It was a cop-out by the ruling Labour-Liberal Democrat coalition on the county council.
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In June, the Government office for the north west indicated that it had a number of questions—not surprisingly, given the scale and complexity of short and long-term implications of the application—and required more time than the standard initial three weeks before reporting to the Secretary of State, and, to quote the letter of 11 July from the Minister for Housing and Planning,
to provide the Secretary of State with an opportunity to consider whether it should be called in for his own determination.
Although the application is a county matter, the planning committee on the local borough council, Vale Royal, discussed the application on 11 April. To its credit, it resolved that Cheshire county council be told
That in view of the significant public concern…the application be referred to the Department of the Environment, Transport and the Regions for a public inquiry so that the following issues can receive full and open consideration: Access to the site…The impact of the proposed new surface buildings on the character and appearance of the open countryside…The long term implications of the underground storage of the proposed waste material.
Mrs. Ann Winterton: I congratulate my hon. Friend on his initiative in securing the debate on a matter which is important not only to his constituents, but to mine, especially those living in Middlewich, where the major part of the proposed subterranean waste disposal facility would lie. Is he aware that my constituents and I support him in his call for a full independent inquiry for the reasons that he has given? Also, does he know of the concerns of residents from the surrounding area? He has access and egress to the site at Davenham in his constituency, but rural roads already have tremendous local traffic problems. That issue ought to be considered thoroughly.
Mr. Deputy Speaker (Mr. Nicholas Winterton): That was a very long intervention. I do not like such things.
Mr. O'Brien: I shall pass over that and thank my hon. Friend for her intervention. My constituents and I are most grateful for her support and that of her constituents. We share the grave concern about the traffic congestion issues that arise as a result of this application and many other such waste disposal facilities, a subject on which I might touch later.
As I was talking about the current climate of political objection, I should add that the relevant parish councils and Winsford town council have expressed objections and concerns. The application is now with the Secretary of State and the debate is timely.
I have looked in vain for guidance on the application in the Government's waste strategy. In essence, the strategy rightly asserts that we are all responsible for waste. It encourages a change in culture and practice to recycle and compost more, and to encourage industries to design out hazardous waste over time. It acknowledges the continuing need for landfill, but nowhere does it consider or tackle the subject of a deep mine waste management facility. That application is unique in this country. The only parallel, which is prayed in aid by the applicants, is German experience of the disposal of industrial waste in a salt mine in Heilbronn. However, all mines, by definition and geology, are unique. I advocate great caution to those who, without the exposure, rigour, independence and

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depth of examination of a public inquiry, say that something will be all right in Winsford if it is happening in Germany.
There is reasonable doubt about the application and reach of the landfill legislation in this country to a deep mine. It has not been tested because there is no precedent. Many of the protections regarding waste disposal, especially of special wastes, derive from that landfill legislation. Is special legislation required to cover waste disposal in a deep mine as opposed to surface landfill?
With the cessation by 2004 of co-disposal of domestic and hazardous waste required under the European Community landfill directive, the Winsford application is predicated on the need for sites exclusively for the disposal of special wastes. By that, I mean hazardous and difficult wastes such as fly ash, metal slag and dross, contaminated soils and resin wastes. Disposal of such material is a continuing need, as it cannot be recycled, treated or incinerated using today's technologies.
The list of Minosus that names permitted wastes is voluminous, coming to 10 pages in length. I am no expert, and cannot judge it, but I am informed that it includes poisons, carcinogenic neurotoxins, skin irritants, items that contain mercury in a toxic form and products that may emit vapours and hydrocarbon gases at standard temperatures and pressures. The proper forum for those wastes to be assessed and understood is a public inquiry, in which extensive evidence and a full range of qualified experts could assist all those involved, including, above all, the Secretary of State, with whom the buck ultimately stops.
The application is restricted to solid, non-flammable, non-explosive, non-volatile, non-reactive, suitably packaged wastes, and it is proposed to exclude waste that is radioactive, liquid, explosive, flammable, vaporising, fuming, biodegradable or odorous. That may be fine, but the control is a self-regulatory, sampling-only regime by Minosus of the lorry samples at the surface head of the mine shaft, with the test lab to be only initially independent of Minosus. That means that samples are no guarantee that a non-permitted waste could not slip through the net, which would mean that rejected wastes would have to be stored, albeit temporarily, at the surface before being transported back through the local area whence they came. Is that a fair safety hazard to impose on local residents? Does it amount to an "acceptable risk", to use the infamous words of the county engineer?
Although the industrial and commercial special wastes involved are intended to come from a local and wider north-western catchment area, is there not a risk that a Winsford deep mine waste dump could grow to become the national dumping ground? How can we be sure that we bind future generations, in a commercial operation that is close to deep water ports, international airports and the motorway network and, under future laws that we cannot predict, not to accept toxic wastes from other countries whose controls and integrity may not conform to our standards and procedures? The cost of transportation is no deterrent over time, as the value-to-weight ratio and fuel costs of the future cannot be predicted against the changing economics of the value of sites for dumping special wastes.
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Why are my constituents so desperately worried? Why do they fear and distrust this application so palpably? I make no apology for listing their anxieties. Anxieties about matters above ground include the increase to 25 lorry deliveries, which will mean 50 lorry movements a day. That will increase noise levels, especially from exiting empty lorries with load-weight, high-pressure tyres moving along a narrow, unlit lane and on to the bypass via a junction with fast traffic. Residual dusts may be open to the atmosphere as a result of uncovered hoppers or flatbeds. Paragraph 9.23 of the draft regional planning guidance for the north-west, which was issued only on Monday, states:
The traffic generated by waste management facilities have a significant effect on the highway network—
as my hon. Friend the Member for Congleton mentioned—
in the vicinity of the site and for some distance away and it will be important to include an assessment of this likely impact when considering the facilities.
Other anxieties relating to above ground matters include the erection of buildings in a designated open space near residential areas; the health and environmental risk arising from accidents; the storage of non-permitted wastes prior to return to sender, and the impact on house prices. There is already anecdotal evidence that blight has taken root as a result of the application.
Anxieties about below ground matters include the health and safety of mine workers; the risk of fire; the consequential environmental risk of land heave, water penetration and mine flooding, leading to contamination; accidents from transportation underground, and the cumulative build-up of particulate emissions.
Alternative uses are available in addition to those already identified, such as those that appeared in The Sunday Times last weekend for the treatment of asthma sufferers in the allergen-free atmosphere of such a mine, known as speleotherapy, which is being used in Romania and Austria today.
Especially when quality of life and genuine fears are involved, and given our responsibility as a generation for the generations that follow us, we have a duty to ensure that we subject risk to the utmost possible scrutiny. That is integral to our democratic system. I submit with all the force at my command that the only full, fair, transparent, open and democratically legitimate way to scrutinise an application for the unique use of a unique asset is an independent public inquiry with terms of reference to consider the application in the context of both local and national interests.
We are in uncharted territory. This is a pioneering proposal. It is a unique application for a unique site with unique characteristics that raises unique issues and anxieties. It would be an extremely courageous Secretary of State who approved such an application without the scrutiny of a public inquiry and bore the responsibility for the fact that, contrary to the Government's laudable aims in updating and demanding an overarching national waste strategy, approval at this stage would smack of a piecemeal, unintegrated approach. I take the Secretary of State at his word when he says that he wants an integrated

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approach to waste management. Only a public inquiry will provide the opportunity, information and judgment to enable the Secretary of State to assess the application in an integrated manner.
The planning process in this case has to date not proved up to the task of demonstrably satisfying the democratic principles demanded by the residents of Moulton, Davenham and north Winsford. The burden of proof must lie with the applicant.
It is not my task today to prejudge a public inquiry. I believe in the democratic process. However, in the absence of such an inquiry, I confirm my objection on behalf of my constituents to the application on the grounds of lack of due process in the absence of a public and independent inquiry, and on the basis of the anxieties that I share with my constituents about the nature of the application itself. As their elected Westminster representative, I urge the Government to prove to my constituents that the Government have their democratic rights and interests both at heart and as an over-riding priority by the Secretary of State calling in the application and establishing a full, public and independent inquiry.
1.19 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): We meet again, Mr. Deputy Speaker, but for the last time today, I am sorry to say.
The hon. Member for Eddisbury (Mr. O'Brien) raises an issue that is obviously a matter of great anxiety to his constituents. The application to which he refers also raises wider issues. Almost all plans for waste disposal are controversial. Everyone wants waste to be disposed of in someone else's back yard. It is a simple fact of life, which local and national politicians should try to deal with in a mature and responsible manner.
The general principle followed by all Governments is that it is desirable, as far as possible, for decisions to be taken locally by people who are accountable locally. A Conservative Government would face the same difficult decisions, on this and many other applications, as we do.
As the hon. Gentleman explained, the planning application submitted by Minosus Ltd. relates to proposals for the disposal of industrial waste at Winsford rock salt mine. The specific waste title is a matter for the Environment Agency when determining an application for the waste management licence, which is required in addition to planning permission. I understand that the applicant has entered into a legal agreement under the Town and Country Planning Act 1990 to provide that, should planning permission be granted, the facility will not be used for the deposit of radioactive waste.
In support of the planning application, the company also submitted an environmental statement. The main aim of the procedure is to ensure that the public and the local planning authority properly understand the predicted effects and the scope for reducing them. The hon. Gentleman mentioned that Cheshire county council has responsibility for the development and control of waste sites in the area, has examined the proposal closely and is minded to grant planning permission. The council believes, however, that the development is a departure from the provisions of the
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Vale Royal local plan and, in line with established procedures, it referred the matter to my right hon. Friend the Secretary of State, who has to decide whether it would be appropriate to use his reserve powers to call in the application for his own determination. He is currently in the process of doing so.
The hon. Gentleman said that he hoped to take a delegation to my right hon. Friend to discuss the issue. The Secretary of State will take into account the representations that he and others have made in writing, and the powerful points that have been made in the debate today. It is unusual, however, for Secretaries of State to receive delegations at this stage in this sort of inquiry.
I appreciate the fact that the hon. Gentleman has several concerns about the proposal, particularly about the number of lorry movements, the geology of the area, the effects on residential amenities, the unique nature of the proposals and the catchment area on which the facility would draw. That broadly summarises the points in his speech. He will appreciate that I cannot comment on the merits of the proposals or on those specific issues, because the matter is currently before my Department. I can, however, make some comments that might be helpful.
The general approach of the Secretary of State on the use of his call-in power is not to interfere with the jurisdiction of local planning authorities unless it is necessary to do so. Parliament has entrusted those authorities with the responsibility for day-to-day planning control in their areas, so it is right that they should generally be free to carry out their duties with the minimum of interference from the centre.
The Secretary of State's policy is to be selective about calling in planning applications. He will, in general, take that step only if planning issues of more than local importance are relevant. Each case will continue to be considered on its individual merits and I can assure the hon. Gentleman that my right hon. Friend will give his most careful consideration to all the issues raised by this application before deciding whether to exercise his call-in power and to hold a public inquiry. He will also have heard the points made today.
It may also be helpful if I explain some of the key principles of national planning policy on waste, against which planning applications for waste disposal facilities need to be considered. Guidance to planners taking waste management decisions is provided in planning policy guidance note 10. The strategy, which was published in May, highlights three important principles that must be taken into consideration with regard to waste planning applications.
The overarching principle is that of the "best practicable environmental option" which weighs the benefits and disbenefits of each individual case. All options have benefits and disbenefits. There are no perfect solutions in this tricky territory. The procedure establishes the most beneficial, or least damaging, environmental option, taking into account costs and long and short-term time scales. Secondly, the regional self-sufficiency principle advises that most waste should be treated or disposed of within the region in which it is produced. Thirdly, the proximity principle suggests that waste should generally be disposed of as near to its place of origin as possible. It serves as a means of raising

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awareness in local communities that the waste that they produce is a problem with which they must deal. That also helps to control the environmental impacts of transporting waste.
As I have already mentioned, in addition to the requirement for the applicant to obtain planning permission, there is an entirely separate requirement to obtain a waste management licence. The planning function and the waste management licensing function complement each other, rather than duplicating controls. There are, of course, stringent controls in place to ensure that waste is dealt with properly. Under the Environmental Protection Act 1990, it is unlawful to deposit, recover or dispose of waste without a waste management licence, contrary to the conditions of a licence exemption, or in a way that causes pollution of the environment or harm to human health. The Environment Agency is responsible for administering and enforcing the waste management system and has the power to take action against anyone who contravenes the controls, and the penalties are potentially severe.
I understand that an application for a licence was submitted to the agency last October and that it is currently under consideration. I am advised that the agency intends to carry out an extensive consultation process before reaching its decision. The agency is aware of the use of mines for this purpose in Germany and France, and will use that in its determination of the licence application. A waste management licence is granted with conditions that the agency considers necessary to prevent pollution of the environment and harm to human health, including provisions for safety monitoring, aftercare and restoration of the site. Conditions must also cover the types and quantities of waste to be disposed of at the site.
The licensing process enables the agency to give full consideration to safety issues and any potential pollution risks, to ensure that there is no pollution of the environment or harm to human health. In addition, under the Environmental Protection Act 1990, the agency must be satisfied that an applicant for a waste
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management licence is a "fit and proper person" before granting the licence. The hon. Gentleman will appreciate that I cannot comment on these matters in detail, because of the Secretary of State's quasi-judicial role in relation to waste management licensing appeals.
Under the 1990 Act, the applicant or holder of a waste management licence has a right of appeal to the Secretary of State under certain circumstances. The details of that licence application are subject to proper consideration by the agency. With regard to concerns about whether waste would be imported from abroad, I should add that the current UK exports/imports plan allows imports for disposal by landfill only in exceptional circumstances.
I should also explain that the Government consider this form of disposal of waste to be, alongside landfill, at the bottom of the waste hierarchy, and such operations will be required to obtain a permit under the landfill directive, once it comes into force in 2001.
Mr. O'Brien: Will the Minister give way?
Mr. Mullin: I can do so only at the expense of not concluding.
Mr. O'Brien: The most important point is to persuade the Secretary of State that this has more than local importance. The Minister was just touching on that and I wanted to reinforce the point.
Mr. Mullin: The landfill directive introduces additional requirements over and above existing waste management licensing controls. Those include ceasing to dispose of hazardous waste mixed with nonhazardous waste; a requirement to treat waste prior to disposal; and a ban on certain waste in landfill.
I appreciate that I could not deal with the matter in the detail that the hon. Gentleman and his constituents would like, but he in turn will appreciate the constraints on my Department, which has to act in a quasi-judicial role. I assure him, however, that his representations and those of other hon. Members will be taken seriously.

Kidney Dialysis UK
1.30 pm
Mr. George Stevenson: I am extremely grateful for the opportunity to raise the issue of dialysis services required by United Kingdom citizens on holiday in this country.
I requested the debate because my constituent Mr. Robert Huson, who was infected with hepatitis C through no fault of his own a few years ago, came to see me about it. Like many other sufferers, he wants to live as full and as normal a life as possible, which includes taking holidays. He has taken holidays abroad in Majorca, Malta and other sunny climes. Because of his condition, prior to booking a holiday, he has to ensure that dialysis facilities are available at his chosen destination.
My constituent tells me that he had little difficulty in securing dialysis services in Majorca and other places in Europe and no doubt his holidays do him the world of good. However, he cannot take such holidays unless he is sure that he can use a dialysis machine two or three times a week when he is away.
Mr. Huson wanted to book a holiday in the United Kingdom and he tried the Isle of Wight, south Wales, north Wales and the west country, but he was unable to secure the necessary dialysis services. That raises serious issues, to which I hope for a positive response from the Minister. First, why cannot the national health service provide those vital services to people who want to lead as normal a life as possible? Secondly, why can my constituent make arrangements for dialysis abroad, but not in this country? Mr. Huson was awarded a British Empire Medal for services to the community, but when he needs help it is not available.
Why can places such as Majorca provide the service? Is it because those places depend heavily on tourism and therefore recognise that dialysis must be provided for tourists who might need it? It appears that in areas of the United Kingdom that also depend heavily on tourism the NHS closes the door to people who need dialysis facilities.
During my representations on this issue, I met my noble Friend Lord Hunt, the Under-Secretary of State for Health. He understood the issues entirely and was very sympathetic and patient. However, the responses that I have received from him leave me dissatisfied. They revolve around two fundamental issues. In his letter to me dated 25 October 1999, my noble Friend openly took the view that although my constituent might feel that he was subject to discrimination because he had hepatitis C, which is a nasty blood-borne infection, he should not be. The letter stated that Mr. Huson
should not be refused simply because of this and units do dialyse patients with hepatitis C.
Mr. Huson is determined to fend for himself and to live as full a life as possible despite his infection. He takes care of himself and is determined to take on his full responsibilities. He wanted to take a holiday on the Isle of Wight, so he made inquiries at St. Mary's hospital in Newport, which was a responsible thing to do. The patient applied personally to the unit in early 1999 and was accepted—so far, so good. However, only a little later, when the unit found out that he had hepatitis C, it
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was decided that it could not treat him. My noble Friend Lord Hunt's assertion that Mr. Huson should not be refused dialysis because of hepatitis C does not appear to be backed up by experience.
The second reason given to me by my noble Friend for the unavailability of the services in question is a potentially significant cost element. In a letter of 9 May he said:
The dialysis of patients infected with a blood-borne virus such as hepatitis C requires significant extra resources, not only in terms of equipment but also of staff. Unfortunately there is a serious shortage of renal nurses in many areas.
I am prepared to accept that there are shortages of experienced staff, but the notion that the procedure requires significant additional resources and staff does not seem to be borne out by the experiences of my constituent when he is dialysed at the North Staffordshire hospital.
I know the North Staffordshire hospital well, and you, Mr. Winterton, may know it too. Its staff are highly professional and efficient and I have nothing but praise for them. What do the professionals say about the issue of significant additional staffing, additional costs and other procedures to prevent infection of other people as a result of dialysis? A letter from the clinical nurse specialist in the hospital's renal directorate states:
The only precaution other than the universal precautions that are applied to all dialysis patients, is that his machine goes through a full clean after his treatment session. He has dialysed in this manner for more than 2 years without any spread of infection.
It seems that the point made by my noble Friend Lord Hunt about significant extra resources, staff and equipment is not borne out by the professionals who treat Mr. Huson two or three times a week at North Staffordshire hospital. Are we to ponder the notion that the treatment offered at North Staffordshire hospital, a highly professional first-class unit, is of a lower standard than that which is acceptable to the Department of Health? I doubt that very much indeed. The record shows that the staff at that hospital are highly professional and would not take any risks, yet they say that they can carry out the treatment without any additional, unnecessary or unacceptable burdens being placed on their resources and staff. If that is the case at North Staffordshire hospital, which has the highest possible standards, why is it not the case elsewhere?
This week, I read an interesting report that suggested that hepatitis C is on the increase, so the issue is not just one of current concern but will grow in significance and importance. Why is it, therefore, that the flexibility that is necessary to deal with the issue, not only in relation to my constituent but potentially in relation to hundreds or thousands of other hepatitis C sufferers, is not being shown elsewhere? Why is it that the highly professional staff at North Staffordshire hospital can provide that service, yet we are told by my noble Friend Lord Hunt that it cannot be provided elsewhere because that would require significant extra resources?
There was a ray of hope following my meetings with my noble Friend, which is evident in his correspondence to me. I refer again to his letter dated 25 October 1999 in which he says:
We are addressing the need to increase the provision of dialysis services. Centrally used guidance on specialised commissioning and the National Priorities Guidance have both emphasised the need for Health Authorities and NHS Trusts to review the existing provision of renal services and to plan for increased provision.

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Therefore, my question to my hon. Friend the Minister is when is that increased provisin likely to see the light of day. When will people such as my constituent, Mr. Huson, have the opportunity at least to take a holiday in the United Kingdom without being effectively debarred because of an illness?
My noble Friend Lord Hunt went on to say:
Further guidance to be issued shortly—
the letter is dated 25 October 1999—
will provide specific information to assist with this process. In addition, the pressures on renal services are identified and taken into account during the Comprehensive Spending Review process.
So there is every sign that my noble Friend realises that the situation is unacceptable and realises that people such as my constituent, Mr. Huson, find it incomprehensible. Although people have no problem receiving such services when they go abroad, they are effectively debarred from going on holiday in the United Kingdom.
I hope that I have demonstrated the significant issues that need to be addressed without undue delay. I and many other hon. Members enthusiastically welcome the Government's determination to resource and modernise the national health service to make it fit for the 21st century. The Government are taking a realistic approach. They have repeatedly said that much has been achieved, but that a great deal more remains to be done. Unless the issues that affect people directly in their daily lives are effectively and urgently addressed by the Government, I fear that we shall have a long journey in convincing my constituents and the general public that the NHS is there for them. I hope that I will be able to reassure my constituent on this important matter.
1.46 pm
The Minister of State, Department of Health (Mr. John Denham): I congratulate my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) on raising the issue of kidney dialysis treatment for patients who want to travel to other areas of the United Kingdom. As he said, he took his constituent's case to my noble Friend Lord Hunt. The problem affects the quality of life of perhaps 10,000 patients and their families in England. They are in end-stage renal failure and need constant high-quality treatment with haemodialysis.
There are three modes of treatment for end-stage renal failure. The first is haemodialysis, the second is peritoneal dialysis, and the optimum treatment is transplantation. Unfortunately, for familiar reasons, transplants are not available on request, so the majority of patients continue to be treated by dialysis to remove the waste products from their blood. Dialysis allows waste products to diffuse across a membrane into dialysis fluid, which is then disposed of. Haemodialysis means that the patient is connected to a dialysis machine for four to five hours three times a week. That process usually takes place in a hospital unit although some patients have an appropriate machine at home.
The alternative to haemodialysis is peritoneal dialysis. A fluid is introduced into the peritoneal cavity, or abdomen, where dialysis occurs. That takes 30 to
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40 minutes, three or four times a day, every day. The patient is not connected to a machine. Patients on peritoneal dialysis have more flexibility about where they carry out their treatment and therefore find it easier to organise holidays. Once a holiday destination has been decided, patients can ask their renal unit to arrange for their supplies of dialysis fluids to be delivered to their holiday address. They can continue their treatment in the same way as they do at home.
My hon. Friend referred to patients who wish to travel to other areas of the UK. As in the case of his constituent, the most common reason is to take a holiday, but there are other reasons, not least to deal with family and business matters. I am grateful for this chance to contribute to a practical debate on issues that affect everyone who requires haemodialysis. It is a lifesaving treatment. Patients are completely dependent on it and cannot take a holiday from it, much as they may wish to do so. We are very conscious of that. They have a right to a quality of life that includes everyday pleasures that most of us take for granted and expect. Patients with end-stage renal failure are no different from the rest of us in that they expect to be able to participate in such activities with the minimum of fuss.
Holidays for patients on haemodialysis are complex to organise. Once a patient has decided on a UK holiday destination, his or her hospital trust will usually arrange holiday dialysis. The arrangements are made through hospital trusts because they can provide the clinical information required by the host trust for the patient's visit. There is no obligation on health authorities or trusts to provide holiday dialysis for their patients. People who care for patients with kidney failure are sympathetic to their need for a holiday and will do their best to make the necessary arrangements, but treatment of their own local patients must come first when facilities are limited.
Mr. Stevenson: Will my hon. Friend comment on the fact that my constituent was accepted when his arrangements for the Isle of Wight were made through the North Staffordshire hospital? It was only later, when it was discovered that he had hepatitis C, that the door was closed.
Mr. Denham: I shall deal with that point in a moment.
In April 1999, we introduced the system of out-of area treatments to replace extra-contractual referrals. In that system, a patient's usual NHS trust will make arrangements for holiday dialysis with the chosen holiday trust and will also agree the funding. Service agreements between patients' health authorities and their home trusts will reflect those other agreements. There is a cost to the home trust in that patients pay for the holiday dialysis, but the saving is only minimal as patients' usual dialysis slots cannot be used during the holiday period.
In the past, some renal units have run an exchange system for patients so that they swap dialysis slots for the period of the holiday. That practice has been diminishing because renal patients are more susceptible to illness and may have to cancel their holiday at short notice. If that happens, one unit will find that it has an extra patient to accommodate and, with the growing pressure on services, it will not always be able to provide that care.

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Hospital trusts may find it more difficult to arrange holiday dialysis for patients who have blood-borne infections such as hepatitis. Such patients create extra demands on nursing care and special equipment. For example, patients with hepatitis B should be cared for on dedicated machines by different staff from those who care for non-infected patients. Furthermore, dialysis machines that are used by patients with hepatitis C should not be used by patients who do not have that infection. Those standards have been accepted as those towards which the NHS should be working. They were drawn up by the Renal Association and the Royal College of Physicians and were set out in a document entitled "Treatment of Adult Patients with Renal Failure".
As I said, it is recommended that machines used for patients with hepatitis C should not be used for uninfected patients. Some people believe that each patient should have a dedicated machine, but that is not usually possible. It is recommended that carriers of hepatitis C should be dialysed where possible in separate or single shifts and that, whenever possible, staff should care only for infected or uninfected patients during one shift. If that is not practicable, the more experienced staff should be assigned the task of caring for a mixed group of patients.
My hon. Friend asked about North Staffordshire hospital. I cannot respond to the matters to which he referred in this debate, but I shall look into them. The procedures in place in English units to control the transmission of such viruses make them among the safest in the world. Renal units that do not have their own patients with blood-borne infections will be unlikely to be able to accept infected patients, as that can restrict the service that they can offer to their own patients. Likewise, if their facilities for infected patients are under pressure they may not be able to accommodate holiday dialysis at a particular time. That goes to the heart of the issue raised by my hon. Friend. Bearing in mind the guidance on best practice, I believe that it is practical constraints that have caused particular problems with constituents, such as the one to whom my hon. Friend referred, who are infected with hepatitis C.
I was asked to comment on the provision of facilities overseas, but I do not feel able to do so now, certainly in respect to any particular country. I have set out the standards that are being sought and which we are trying to achieve in this country. As I understand it, in most holiday destinations, dialysis is purchased under private medical arrangements. Understandably, my hon. Friend's constituent seeks a service under the national health service as a citizen of this country.
Mr. Stevenson: Is my hon. Friend saying that the Department will consider private provision if the NHS is not prepared to provide such treatment in such cases?
Mr. Denham: I was referring to the arrangement between the patient and the service provider, which is a private one. The Government have recently made it clear that we do not wish to be dogmatic about provision, but I should not like to be drawn further on the specific point raised by my hon. Friend.
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I come now to wider issues affecting holiday travel. Some NHS trusts have dedicated hospital facilities for patients able to arrange for dialysis unassisted by medical staff. That is obviously not suitable for all patients. Apart from NHS trusts there are private hospitals that provide general renal services, and there are some private facilities for dialysis, many in holiday destinations in the UK. We know that some NHS patients have already been able to utilise such services, such as the dialysis service offered by a private hospital in St. Ives. The Dialysis Travel Company Ltd. provides dialysis at the Butlins resorts of Bognor Regis, Skegness and Minehead. The resorts can dialyse six patients a day, and another such unit has recently opened at Warner's Lakeside centre, near Portsmouth.
I commend the National Kidney Federation, the major voluntary organisation for kidney patients, which is currently constructing a website on holiday dialysis in the UK and abroad. Unfortunately, private facilities do not usually accept patients with blood-borne viruses such as hepatitis. As with the arrangements between NHS trusts, there is no obligation for the home renal unit to pay for patients to attend private holiday facilities.
I acknowledge that the existing renal services are under immense pressure to accommodate the growing number of patients with end-stage renal failure. Holiday dialysis can really be made more available only by expanding dialysis provision generally. We have taken several steps to ensure that patients will have access to high-quality services. I have spoken about the recommended standards for the treatment of patients with renal failure. We identified renal services as a priority in the new arrangements for regional commissioning of specialised services, which came into force last year. The arrangements will facilitate planning on a wider and more long-term basis. The first reports of the regional commissioners will be available in August and we will have the opportunity to reflect on what has been achieved so far and to identify the areas to be addressed in the next year.
Later this year we will also have the results of the updated national renal survey and the renal chapter of the health care needs assessment. Both documents will be important in helping us to model renal services. They will enable us to see how far we have progressed, how steep the growth rate is and how far there is to go. All evaluations will be based on best available knowledge and will be fed into the work of the regional commissioners.
Renal services have benefited from the Government's overall increase in NHS funding. In the Budget we announced significant increases in NHS funding for the next four years, which were confirmed yesterday. In addition, we have made £10 million available this year from the capital resources allocations specifically for haemodialysis services. That will provide facilities for at least 500 more patients to be treated. Each region will be able to demonstrate an increase of at least 15 dialysis units or capacity for at least 60 additional patients. We announced approval of the regions' plans on 12 July and renal services and provision will expand in the next 12 months. Regions have added to the centrally

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allocated capital so that £18 million capital investment in total will be spent, supported locally by the revenue consequences. That money will be spent on 53 schemes in 42 trusts.
My honourable Friend has asked about holiday facilities in Portsmouth, the Isle of Wight and Plymouth. All three of those health authorities have benefited from the allocation of new money, and a total of 20 new dialysis stations will be provided in their units, which in turn will improve the possibility of holiday dialysis. However, I am afraid that I cannot make a firm commitment with regard to Mr. Huson, my hon. Friend's constituent, on the information that I have.
There is a real issue concerning the shortage of nurses, which constrains several aspects of the development of the NHS, and renal services are no exception. I am sure that my hon. Friend is aware of the strenuous efforts that the Government have made to increase the number
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of nurse training places, to encourage former nurses to return to the national health service and to encourage wider take-up of nurse training courses. It is good news that applications for nursing and midwifery diploma courses rose by 73 per cent. last year. Several thousand nurses have already rejoined the NHS, and that will help us to meet needs in renal care and in other parts of the health service.
In conclusion, the issues raised by my hon. Friend on behalf of his constituent are important. At root, they do not reflect a discrimination against hepatitis C sufferers; they reflect the fact that we need to expand our renal services so that we can offer the best possible care to patients, whether they seek it at home or on holiday. The Government have embarked on that programme of work, although I accept that there is still a considerable way to go.
Question put and agreed to.
Adjourned accordingly at Two o'clock.

AGRICULTURE, FISHERIES AND FOOD

  Official Visits
  Mr. Matthew Taylor
  To ask the Minister of Agriculture, Fisheries and Food if he will list the visits outside Britain made by his Department's permanent secretary on official business since 1 January 1999, indicating the date and purpose of the visit in each case. [130491]

  Mr. Morley
  The MAFF permanent secretary has made 12 visits outside Britain since 1 January 1999. The date and purpose of each visit are set out in the following table.

  Date

  Destination

  Purpose

  18–19 January 1999

  Brussels

  Agriculture Council

  16 February 1999

  Brussels

  Bilateral with German Presidency

  22–26 February 1999

  Brussels

  Agriculture Council

  5 March 1999

  Brussels

  Agriculture Council

  9–11 March 1999

  Brussels

  Agriculture Council

  17 May 1999

  Brussels

  Agriculture Council

  30 May-1 June 1999

  Dresden

  Informal Agriculture Council

  27–28 September 1999

  Brussels

  Agriculture Council

  15 November 1999

  Brussels

  Agriculture Council

  14–15 December 1999

  Brussels

  Agriculture Council

  24–25 January 2000

  Brussels

  Agriculture Council

  6 March 2000

  Brussels

  Bilateral with Commissioner Byrne

  Non-food Crops
  Mr. McNamara
  To ask the Minister of Agriculture, Fisheries and Food what the response was to the consultation on non-food crops launched by his Department on 7 April. [132014]

  Ms Quin
  Thirty-seven replies were received to this consultation, and I have arranged for copies to be placed in the Libraries of the House, and also to be made available for public inspection in the Ministry library at Whitehall Place. The proposal for a Government-industry forum on non-food crops was widely welcomed. My Department is now studying the responses in detail and considering how to put the proposals into effect.

  Pesticides Safety Directorate
  Mr. McNamara
  To ask the Minister of Agriculture, Fisheries and Food when he will publish the 1999–2000 Annual report of the Pesticides Safety Directorate. the Minister of Agriculture, Fisheries and Food, [132015]

  Mr. Nick Brown
  The 1999–2000 Annual Report and Accounts for the Pesticide Safety Directorate were laid before Parliament today. Copies are available in the Library of the House.

  European Food Authority
  Mr. Gareth Thomas
  To ask the Minister of Agriculture, Fisheries and Food what recent discussions he has had with his European counterparts and the European Commission in respect of plans to establish a European Food Authority. [130926]

  Ms Stuart
  I have been asked to reply.

  The proposal to establish a European Food Authority and associated work has been discussed in various Councils this year. Department of Health Ministers and the Chairman of the Food Standards Agency have also had informal meetings with the Commission.

SOLICITOR-GENERAL

  CPS (Essex)
  Mr. Bob Russell
  To ask the Solicitor-General if he will order an inquiry into the handling by the Essex Crown Prosecution Service of a case of alleged careless driving in respect of a fatal accident at Colchester on 6 May 1999; and if he will make a statement. [131076]

  The Solicitor-General
  I shall be speaking to the Chief Crown Prosecutor for Essex to discuss the circumstances of this case and will be seeing the hon. Member within a week.

TRADE AND INDUSTRY

  Inventors
  Mr. Coaker
  To ask the Secretary of State for Trade and Industry what specific grants are available to help inventors start up businesses. [130974]

  Ms Hewitt
  Last year the Government introduced the Smart Micro Project grant, worth up to £10,000, specifically to help lone inventors—including those starting up in business—and micro firms develop simple, low-cost prototypes of new products or processes which involve technological advance or novelty. Investors may also apply for other elements of the Small Business Service Smart scheme, which offer grants of up to £45,000 for technical and commercial feasibility studies into innovative technology or up to £5,000 for technology consultation.

  Departmental Initiatives
  Dr. Lynne Jones
  To ask the Secretary of State for Trade and Industry if he will list each departmental initiative since May 1997 requiring bids for funding together with the total resources available, the number of successful bids and the proportion this represents of total bids received; and what data he collects on the average expenditure of organisations bidding for funding through each initiative. [131084]

  Dr. Howells
  I refer my hon. Friend to the statement made by my right hon. Friend the Chancellor of the Exchequer on 18 July 2000,Official Report, columns 219–29.

  Universal Bank
  Mr. Lilley
  To ask the Secretary of State for Trade and Industry if the proposed universal bank will be expected to operate on an arm's-length commercial basis without subsidy. [130648]

  Mr. Byers
  [holding answer 17 July 2000]: Until a business case has been completed and approved, it is too early to say what, if any. Government contribution may be required.

  Mr. Lilley
  To ask the Secretary of State for Trade and Industry if the proposed universal bank operating through sub-post offices will be competing with the Alliance and Leicester Girobank in the provision of certain services. [130649]

  Mr. Byers
  [holding answer 17 July 2000]: A major strength of the Post Office is the extensive reach of the post office network and its ability to provide access to a wide range of banking products on behalf of its clients. The extent to which the universal bank may compete with certain services offered by Alliance and Leicester Girobank or other banks will depend on the range of basic banking services these banks wish to make available through the post office network.

  Mr. Lilley
  To ask the Secretary of State for Trade and Industry what consultations have taken place between his Department, the Post Office and Alliance and Leicester Girobank about the establishment of a universal bank operating through sub-post offices. [130695]

  Mr. Byers
  [holding answer 17 July 2000]: Consultations are in progress between the Post Office and a wide range of banks including Alliance and Leicester Girobank, about the establishment of a universal bank operating through the post office network.

  Electricity Pylons
  Miss McIntosh
  To ask the Secretary of State for Trade and Industry, pursuant to his answer of 4 July 2000,Official Report, column 136W, on electricity pylons, if the replacement of trees felled as a result of the proposed construction of the Lackenby to Shipton overhead transmission line is intended (a) to mitigate the impact of consented development or (b) as an environmental measure. [131344]

  Mrs. Liddell
  The replacement tree planting scheme is intended to serve both purposes.

  Miss McIntosh
  To ask the Secretary of State for Trade and Industry, pursuant to his answer of 4 July 2000,Official Report, column 136W, on electricity pylons, who is responsible for the payment of compensation to farmers and landowners affected by the tree planting scheme. [131343]

  Mrs. Liddell
  Compensation for actions which the National Grid Company carries out on other people's land is a matter for the company.

  Renewable Energy
  Mr. Colman
  To ask the Secretary of State for Trade and Industry what arrangements his Department has made to purchase the electricity supply from renewable 176W
  energy sources for its main headquarters building; and what percentage of its electricity is supplied from such sources. [131403]

  Dr. Howells
  As part of the annual tendering exercise for electricity supply, energy from renewable sources was procured for one of our buildings on the London HQ estate. This supply amounts to 26 per cent. of the electricity purchased for the London HQ buildings.

  Computer Disasters
  Mr. Fabricant
  To ask the Secretary of State for Trade and Industry what estimate he has made of the time it would take to get new computers running in the wake of a major computer disaster in his Department. [130970]

  Dr. Howells
  The Department and our Agencies have a range of computer systems in use to support our day-to-day work. The responsibility for support of these is in the main outsourced to the private sector. For each of them disaster arrangements are in place to enable recovery of each system appropriate to the criticality of the business it supports. This includes the basic IT infrastructure on which each of these systems operates. The arrangements include built-in resilience, aimed at minimising loss of service generally. In the event of a major disaster impacting DTI's building, priority users have also been identified so that vital services can be restored first to these key personnel in the event of such a disaster.

  The Department's disaster recovery programme covers appropriate testing of arrangements and any lessons learned are applied to strengthen the supporting processes and procedures.

  Postal Workers Dispute
  Mr. Burstow
  To ask the Secretary of State for Trade and Industry if he will make a statement on the current postal workers dispute in London. [131422]

  Mr. Alan Johnson
  This is an operational matter for the Post Office.

  Mr. Burstow
  To ask the Secretary of State for Trade and Industry what estimate he has made of the size of the backlog of delayed post caused by the current postal workers dispute in London. [131423]

  Mr. Alan Johnson
  None. This is an operational matter for the Post Office.

  Insolvency Service
  Mr. Salter
  To ask the Secretary of State for Trade and Industry what targets he has set his Department's Insolvency Service Executive Agency for 2000–01. [131887]

  Dr. Howells
  The Insolvency Service's planning assumption is that compulsory insolvencies will total 26,500 in the year to 31 March 2001. On that basis and with the resources allocated to it, I have set the following performance targets:To complete sufficient bankruptcy and compulsory liquidation case administrations so that the number of open current cases at 31 March 2001 are no more than 17,225 cases—that is, equivalent

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  to no more than eight months of new case input; with no more than 5 per cent. of those cases being more than 36 months old;
  To maintain in real terms the unit cost of administering bankruptcy and compulsory liquidation cases over the period 1999–2002 at the level of 1998–99, taking account of the additional shorter-term costs of its new IT infrastructure and the delivery of improvements in its services to users;
  To reduce in real terms the unit cost of its investigation of bankruptcy and liquidation cases by 10 per cent. over the period 1999–2002, also taking account of the additional shorter-term costs of its new IT;
  To continue to achieve the level of disqualification proceedings and orders against unfit directors as in 1999–2000;
  To continue to submit reports of criminal misconduct at a level consistent with the Service's investigative caseload and resources;
  To report to creditors on assets and liabilities within eight weeks in at least 97 per cent. of all cases: and within 12 weeks in 98 per cent. of all cases;
  To hold the initial meetings of creditors within 12 weeks in 96 per cent. of all appropriate cases, and within four months in 98 per cent. of all appropriate cases;
  To submit reports within 10 months in at least 90 per cent. of bankruptcy cases and at least 80 per cent. of compulsory liquidation cases where there is evidence of criminality;
  To submit disqualification reports within 12 months in at least 65 per cent. of cases and within 15 months in at least 80 per cent. of cases where there is evidence of unfit conduct by directors; and
  To check and action at least 97 per cent. of Insolvency Services Account payment requisitions within four days or by the due date.

  Service is expected to action 100 per cent. of invoices for payment within 30 days of receipt and the Agency Chief Executive is expected to reply within 10 days to all Members of Parliament delegated to him for reply.

  I have asked the Agency Chief Executive to develop for 2001–02 and beyond one or more outcome-based targets for the Service's activities; and to review its quality of service performance in the light of its experience of its new IT infrastructure and the views of its users.

  Sunbeds
  Mr. Gordon Prentice
  To ask the Secretary of State for Trade and Industry if he will take steps to ensure that the regulations relating to sunbeds and their use are reviewed; and if he will make a statement. [128334]

  Yvette Cooper
  I have been asked to reply.

  There are no current plans to amend legislation as it applies to sunbeds and their use but the situation is kept under review.

  The use of sunbeds is a matter of personal choice. However, people should be aware that their use entails exposure to ultraviolet radiation and that there is strong evidence that this is a cause of skin cancer.

HOME DEPARTMENT

  Multi-agency Helpline
  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department if he will assess the benefits of the Audit Commission proposal for the creation of a178W
  multi-agency helpline to relieve pressure on the existing 999 emergency number; and if he will make a statement. [128533]

  Mr. Mike O'Brien
  [holding answer 5 July 2000]: I have asked officials, in consultation with the Association of Chief Police Officers, to develop proposals for a new call handling strategy. Relieving pressure on the 999 service and using new technology to receive from and provide information to the public will be considered as part of that strategy.

  Police Numbers
  Mr. Simon Hughes
  To ask the Secretary of State for the Home Department what the total number of police officers and police civilian staff was(a) in England and Wales and (b) in each force on (i) 31 March 2000, (ii) 30 September 1999 and (iii) 31 March 1997; and if he will make a statement. [130027]

  Mr. Straw
  The information is set out in tables. At the end of March 2000, the total number of police officers in England and Wales was 124,418 and there were 53,227 civilian support staff in the police service. Table VI additionally compares the percentage change in police numbers over the 12 month period 31 March 1999 to 31 March 2000, against the percentage increase in police budgets for 1999–2000 in both cash and real terms.

  A reduction in police numbers for March 2000 was forecast in the projections on police numbers in the reply my hon. Friend the Minister of State gave to the hon. Member on 15 March 2000, Official Report, columns 177–79W.

  I have already announced my plans to reverse the decline in police numbers. The Crime Fighting Fund was intended to provide funding for the recruitment of 5,000 more officers—3,000 this year and 2,000 next, over and above the number that forces would have planned to recruit over the three years from April 2000. As a result of the Spending Review, we will be making funding available for the recruitment of a further 4,000 officers—making 9,000 in all. The additional 4,000 will come on stream in 2001–02 and 2002–03. So forces will be able to recruit up to a maximum of 3,000 this year, 3,000 next year and 3,000 in 2002–03.

  Though numbers are important, tackling crime is more than a matter of police numbers. I am announcing today a major increase in resources for policing to boost police effectiveness. By 2003–04, annual funding will have increased by over 20 per cent.—£1.6 billion of which £1.3 billion is newly announced.

  In my reply to my hon. Friend the Member for The Wrekin (Mr. Bradley) on 15 June 2000, Official Report, column 714W, I announced that £15 million had been earmarked from the Police Modernisation Fund this year to enhance the policing of rural areas. Allocation of this new money will be announced very shortly. This extra funding should contribute to a further increase in police numbers in the rural forces.

  I am also stepping up efforts to tackle robbery with a cash boost this year from the Police Modernisation Fund. £20 million will be shared between the Metropolitan Police (£9.1 million), West Midlands Police (£3.3 million), Greater Manchester Police (£3.2 million), West Yorkshire

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  Police (£2.6 million) and Merseyside Police (£1.8 million). This additional funding will help these forces fund and develop additional initiatives to tackle robbery in their areas.

  The Government's £400 million Crime Reduction Programme, too, has expanded rapidly. The Programme includes:

  £153 million under the Closed Circuit Television Initiative;

  £62 million targeted on two million homes in 500 neighbourhoods in England and Wales with high burglary rates;

  £31 million for the long-term initiative "On Track" aimed at children aged between 4–12 at risk of getting involved in crime;

  £30 million has been earmarked for problem-oriented or intelligence-led policing projects; and

  £13 million to enable 70 Youth Inclusion schemes to be set up to prevent youth offending and the associated risk factors.

  The various initiatives we have put in place will help the police and local communities work more effectively towards the reduction of crime and make our country a safer place in which to live.

  The relevant tables have been placed in the Library.

  Elderly Prisoners
  Mr. Boswell
  To ask the Secretary of State for the Home Department how many prisoners are aged over 60 years; and what arrangements are made to meet their needs. [130642]

  Mr. Boateng
  On 30 June 2000, there were 1,266 prisoners who were aged 60 and over. There are no separate arrangements for this group of prisoners. The Prison Service aims to assess each prisoner in order to identify their individual needs.

  Integrate Services (Warrington)
  Helen Jones
  To ask the Secretary of State for the Home Department when the Charity Commission will publish the report of its investigation into Integrate Services in Warrington; and if he will ensure that a copy of the full report is placed in the Library. [130704]

  Mr. Boateng
  [holding answer 18 July 2000]: I understand that the Charity Commissioners expect to complete their Inquiry into Integrate Services and publish a report in September. A copy of the report will be placed in the Library.

  Tagging and Curfews
  Mr. Lidington
  To ask the Secretary of State for the Home Department what the basis is for the statement on page 35 of the Government's Annual report 1999–2000, that tagging and curfews are more effective ways of punishing offenders; to what Government initiatives this statement refers; and if he will make a statement. [131379]

  Mr. Boateng
  [holding answer 18 July 2000]: The introduction of curfew orders enforced by electronic monitoring as a sentence to all courts in England and Wales on 1 December 1999 built on four years of successful trials. Home Office research has shown that the successful completion rate of 82 per cent. during the first two years of the trials of the sentence compared
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  favourably with other community sentences (the completion rate for probation orders was also 82 per cent., while that for community service was 71 per cent.).

  The evaluation of the trials found that curfew orders were more strictly enforced than other community sentences, a fact that places greater value on rate of completion. The primary reason for this is the fact that the electronic monitoring contracts leave little discretion in the enforcement of breaches. The monitoring equipment ensures that violations of curfew are detected immediately, and offenders in breach of their order are very quickly returned to court by the contractors.

  Curfew orders enforced by electronic monitoring provide the courts with a flexible sentencing option for use in respect of those offences for which the sentence is not fixed by law. Firstly, as a stand-alone sentence, it provides the punitive element of restricting an offender's liberty during the period of the curfew, while enabling those who have families to support to continue to do so. A curfew order can also be used in conjunction with another community sentence to help structure the times of attendance at, for example, probation or drug rehabilitation appointments. The trials of the sentence demonstrated that in this way, electronic monitoring could help to address the chaotic lifestyle of some offenders.

  Given the operational effectiveness of curfew orders enforced by electronic monitoring, the sentence can also be shown to provide a cost-effective alternative to a custodial sentence.

  The operation of the sentence in England and Wales is the subject of an evaluation by the Home Office Research, Development and Statistics Directorate. The findings of the evaluation of the first two years of the trials of curfew orders enforced by electronic monitoring are published in Home Office Research Study 163 and 177.

  Human Rights
  Miss Widdecombe
  To ask the Secretary of State for the Home Department (1) what assessment he had made of the compatibility of Government legislation enacted in the 1997–98 parliamentary session with the Human Rights Act 1998; and if he will make a statement; [131383]

  (2) what estimate he has made of the number of declarations of incompatibility that will be made by the courts under the Human Rights Act 1998 (a) in the year from 2 October and (b) subsequently in each year; and if he will make a statement. [131385]

  Mr. Straw
  The Human Rights Act 1998 gives further effect in United Kingdom law to rights and freedoms in the European Convention on Human Rights. Successive Governments have sought to comply with the provisions of the Convention since 1951. Therefore we should not expect major changes to have to be made once the Human Rights Act is fully in force. Following its enactment, Departments have reviewed their legislation and procedures in the light of the Human Rights Act. Where changes have been judged appropriate, these have been made or are in hand.

  Miss Widdecombe
  To ask the Secretary of State for the Home Department what assessment he had made of the impact of the Human Rights Act 1998 on(a) total Government and (b) individual department's spending in (i) 2000–01, (ii) 2001–02 and (iii) 2002–03. [131384]
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  Mr. Straw
  I refer the right hon. Member to the reply given by my hon. Friend the Under-Secretary to the hon. Member for New Forest, West (Mr. Swayne) on 23 May 2000,Official Report, column 401W.

  Fire Extinguishing Sprinklers
  Mr. Andrew George
  To ask the Secretary of State for the Home Department (1) what assessment he has made of the potential hazards to disabled people of having domestic fire extinguishing sprinklers installed in their homes; [129023]

  (2) what proposals he has to fund the installation of domestic fire extinguishing sprinklers in the homes of disabled people. [129024]

  Mr. Hutton
  [holding answer 4 July 2000]: I have been asked to reply.

  Local housing and social services authorities have responsibilities for funding housing adaptations for disabled people under the Housing Grants, Construction and Redevelopment Act 1996 and the Chronically Sick and Disabled Persons Act 1970. These responsibilities include making housing safe for disabled people. Decisions about the funding of adaptations in individual cases are taken at local level following an assessment of need. We have no plans to change these arrangements in respect of domestic fire extinguishing sprinklers. No specific research by either the Department of the Environment, Transport and the Regions or the Home Office has been conducted into the potential hazards to disabled people of having domestic fire extinguishing sprinklers in their homes.

DEFENCE

  Presentation of Information
  Mr. Hoyle
  To ask the Secretary of State for Defence what changes he intends to make to the presentation of information on the strength of the armed forces. [131788]

  Mr. Spellar
  In order to provide a more accurate and relevant picture of the overall full-time manpower available to the Armed Forces, we plan to include in the definition of the strength of the Services all full-time personnel including Full-Time Reserve Service personnel and, in the case of the Army, Gurkhas. In view of their discrete and specialised task in a particular location the Royal Irish (Home Service) will be reported separately. This change will take effect from September 2000.

  The inclusion of Full-Time Reserve Service personnel is in line with our aim to make reserve forces more relevant and usable and is a natural consequence of the Reserve Forces Act 1996 which provides for the employment of reservists in place of full-time regular personnel.

  Royal Ordnance Factory, Nottingham
  Mr. Coaker
  To ask the Secretary of State for Defence (1) what discussions he plans to have with British Aerospace and the trade unions about the future of the Royal Ordnance factory in Nottingham; and if he will make a statement; [130508]
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  (2) he has had with British Aerospace and the trade unions about the future of the Royal Ordnance factory in Nottingham; and if he will make a statement. [130507]

  Mr. Hoon
  [holding answer 17 July 2000]: My ministerial colleagues and I meet representatives of BAe Systems regularly to discuss a wide range of business. Most recently I met Mr. John Weston of BAe Systems on 25 May, when he briefed me on a number of matters arising from the recent acquisition of the defence business of GEC Marconi. Mr. Weston confirmed then that the future of the site at RO Nottingham was under review and I understand that work on the review continues. My noble Friend Baroness Symons, the Minister of State for Defence Procurement, met Trade Union representatives on 6 July to hear their views on the future prospects for RO Nottingham and expects to meet Trade Union representatives again shortly.

  Departmental Initiatives
  Dr. Lynne Jones
  To ask the Secretary of State for Defence if he will list each departmental initiative since May 1997 requiring bids for funding together with the total resources available, the number of successful bids and the proportion this represents of total bids received; and what data he collects on the average expenditure of organisations bidding for funding through each initiative. [131078]

  Dr. Moonie
  I refer my hon. Friend to the answer given to her by my right hon. Friend the Chief Secretary to the Treasury on 17 July 2000,Official Report, column 93W.

  Arms Sales
  Mr. Cousins
  To ask the Secretary of State for Defence if, pursuant to the reply given to the hon. Member for Leyton and Wanstead (Mr. Cohen) of 10 July 2000,Official Report, columns 375–76W, on arms sales, memoranda of understanding of the type described apply to any arms sales in the Middle East; and if Memoranda of Understanding restrict the availability to third parties for training purposes of defence material exported from Government to Government. [130803]

  Mr. Hoon
  [holding answer 17 July 2000]: Not all sales of defence material to the Middle East are subject to Government to Government Memorandum of Understanding arrangements.

  Where there are MOUs, restrictions on transfer would typically include transfers for training purposes.

  Parliamentary Answers
  Mr. Field
  To ask the Secretary of State for Defence how many parliamentary answers from his Department have been amended following publication using the mechanism of a pursuant answer in the past month. [131033]

  Dr. Moonie
  [holding answer 17 July 2000]: The Ministry of Defence has used the mechanism of a pursuant answer on three occasions from 13 June to 17 July 2000.

  Golf Courses
  Mr. Bob Russell
  To ask the Secretary of State for Defence if he will list the locations of possible golf
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  courses which have been provisionally selected to be sited on military land; which sites will be (a) leased and (b) sold to private operators; how many other sites (i) within the Colchester Garrison estate and (ii) elsewhere were investigated but will not be proceeded with; and if all revenue obtained from leasing or selling land for such golf courses will be retained by his Department. [131074]

  Dr. Moonie
  The information requested is not held centrally. I will write to the hon. Member and a copy of my letter will be placed in the Library of the House.

  Flight Data Recorders
  Mr. Martin Bell
  To ask the Secretary of State for Defence what progress is being made in fitting flight data recorders to Lynx, Puma and Sea King helicopters. [130472]

  Dr. Moonie
  Both the Royal Navy and Army Lynx aircraft are to undergo major upgrades: for the Royal Navy aircraft this will be through the Mark 8 Enhancement package, and for the Army aircraft through the Future Lynx programme. In both of these programmes, the aircraft will be fitted with a Health and Usage Monitoring System which includes Cockpit Voice and Flight Data Recorders (CVFDR). Work has been taking place to assess how to fit the equipment to the aircraft, and we aim to place a contract in the spring of 2001.

  A proposal to fit CVFDRs to our Sea King and Puma fleets is under consideration.

TREASURY

  Computer Disasters
  Mr. Fabricant
  To ask the Chancellor of the Exchequer what discussions he has had with financial institutions regarding disaster contingency measures. [131069]

  Miss Melanie Johnson
  Treasury Ministers frequently discuss a wide range of issues with representatives of financial institutions. The Financial Services Authority, as financial regulator, works closely with the institutions it supervises to ensure that their risk management processes follow good practice.

  Fuel Duty
  Mr. Russell Brown
  To ask the Chancellor of the Exchequer if he will investigate the feasibility of introducing different fuel duties in rural and urban areas. [130407]

  Mr. Timms
  [holding answer 13 July 2000]: The Government have no plans to do so.

  Differential fuel duties would be difficult and expensive to administer. No new arrangements for differential rates of road fuel duty have been sanctioned by the European Commission since the completion of the single market.

  Endowment Mortgages
  Dr. Cable
  To ask the Chancellor of the Exchequer (1) how many, and what percentage of, 25 year endowment contracts(a) with profits and (b) unit linked
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  purchased (i) one year ago, (ii) five years ago, (iii) 10 years ago, (iv) 15 years ago and (v) 20 years ago are still in force today; [129952]

  (2) what research has been conducted in the last 10 years by (a) the Treasury and (b) the Financial Services Authority and its antecedent bodies, into long-term persistency rates on endowments, particularly linked to mortgages; and if he will publish figures for overall persistency for that period. [129953]

  Miss Melanie Johnson
  The Personal Investment Authority collects and publishes information on the persistency of endowment contracts, but only for terms of up to four years after the contract is effected. The latest figures were published in October 1999 in the Personal Investment Authority's "Fifth Survey Of The Persistency of Life And Pensions Policies", a copy of which has been placed in the House of Commons Library. Persistency data are collected on endowments generically without distinguishing endowments used to repay mortgages from endowments used for savings purposes and without distinguishing with-profits endowments from unit linked endowments. There has been no specific research commissioned into the persistency of mortgage endowments.

FOREIGN AND COMMONWEALTH AFFAIRS

  Sierra Leone
  Mr. Maude
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on(a) the Indian peacekeepers detained by the RUF in Sierra Leone and (b) the UN personnel surrounded by the RUF in the south east of Sierra Leone; and what the conditions for their release are. [127657]

  Mr. Hain
  The 21 Indian peacekeepers detained by RUF at Pendembu in Sierra Leone were released unconditionally during the last week in June. We are pleased that the 233 UN personnel surrounded by RUF in the south east of Sierra Leone at Kailahun are now safe following the successful action by UNAMSIL forces on 14–15 July.

  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs what was the nature of the support offered by British officials observing the Lomé peace negotiations. [130788]

  Mr. Hain
  British officials were present in Lomé in order to observe the peace negotiations. They were in close touch throughout with the negotiators and other observers helping to facilitate the negotiations.

  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the application of Article XVIII of the Lomé Peace Agreement to the Government of Sierra Leone's helicopter support. [130831]

  Mr. Hain
  The application of Article XVIII of the Lomé Peace Agreement to the Government of Sierra Leone's helicopter support is a matter for the Government of Sierra Leone.

  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 23 June 2000,Official Report, column 318W, if the

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  Commonwealth Secretariat was used as a medium to transmit the views of Her Majesty's Government on the best method to reach a settlement in the Lomé Peace Accord; and if he will make a statement. [130853]

  Mr. Hain
  We remained in close touch with the Commonwealth Secretariat throughout the Lomé peace negotiations, as well as with other observers and the negotiators themselves. The decision on reaching a settlement rested with the Government of Sierra Leone and the Revolutionary United Front.

  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 26 June 2000,Official Report, column 400W, on Sierra Leone, if he will identify the (a) Cabinet positions and (b) Deputy ministerial positions occupied by RUF members; and what their present positions are. [130839]

  Mr. Hain
  The Cabinet positions occupied by members of the Revolutionary United Front (RUF) were the Ministry of Trade and Industry; the Ministry of Energy and Power; and the Ministry of Lands, Housing, Country Planning and the Environment. The Deputy ministerial positions occupied by members of the RUF were in the Ministry of Rural Development and Local Government; the Ministry of Transport and Communications; and the Ministry of Agriculture, Forestry and Marine Resources.

  None of these positions is now occupied by members of the RUF. We have made clear our view that, after the attacks by the RUF on United Nations peacekeepers and the RUF's clear violation of the Lomé Peace Agreement, there can be no role for members of the RUF in the present Government of Sierra Leone.

  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 26 June 2000,Official Report, column 400W, on Sierra Leone, if the Government persuaded negotiators in the Lomé Accords to modify their negotiating position to (a) take account of the Government's position, and (b) to facilitate the reaching of a peace agreement. [130837]

  Sir John Kerr, permanent under Secretary at the Foreign and Commonwealth Office has made the following official visits since 1 January 1999

  Date

  France

  For the Franco-British Colloque in Versailles

  14–16 January 1999

  Nigeria

  For talks in Lagos and Abuja with senior Nigerian officials

  10–13 February 1999

  Korea

  For talks with the Korean Government in Seoul

  9–11 March 1999

  France

  To attend Club of Three conference in Paris, and for talks at the Quai D'Orsay

  5–6 March 1999

  Germany

  To attend the Konigswinter Conference in Cologne

  18–20 March 1999

  Japan and China

  Talks with senior Japanese and Chinese officials in Tokyo and Beijing

  23–27 May 1999

  Austria

  To attend a meeting of other EU Secretaries-General in Vienna

  10–12 June 1999

  Germany

  For talks with senior German officials in Bonn

  16–17 May 1999

  Hungary and Slovakia

  For talks with the Governments in Budapest and Bratislava

  12–14 September 1999

  Norway and Sweden

  For talks with senior officials in Oslo and Stockholm

  16–20 September 1999

  Romania and Ukraine

  To deliver the opening address at a Wilton park Conference in Romania, and for talks with the Governments in Bucharest and Kiev

  26–29 September 1999

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  Mr. Hain
  The Lomé Peace Agreement was negotiated and entered into by the Government of Sierra Leone and the Revolutionary United Front. Negotiating positions were a matter for the parties concerned.

  Observers in Lomé, including Britain, remained in close touch with the negotiators throughout, and were able to offer advice in order to help facilitate the negotiations where requested.

  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 26 June 2000,Official Report, column 401W, on Sierra Leone, for what reason the Commission for the Management for Strategic Resources, National Reconstruction and Development was not fully established by the end of April; and if all the Commission's funds are accounted for. [130838]

  Mr. Hain
  A number of factors hampered the establishment of the commission for the Management of Strategic Resources, National Reconstruction and Development. The United Nations Secretary-General's report dated 19 May states that the Commission, chaired by Foday Sankoh, had not produced a plan of action, and that there appeared to be a lack of political consensus on the role of the Commission vis-a-vis existing Government Ministries.

  As far as we are aware, the Commission had received no direct funding, although at least one donor had indicated a willingness to provide funds to help it to become established.

  Official Visits
  Mr. Matthew Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list the visits outside Britain made by his Department's Permanent Secretary on official business since 1 January 1999, indicating the date and purpose of the visit in each case. [130492]

  Mr. Robin Cook
  The information is as follows:
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  Sir John Kerr, permanent under Secretary at the Foreign and Commonwealth Office has made the following official visits since 1 January 1999

  Date

  South Africa

  To attend the Commonwealth Heads of Government Meeting in Durban

  9–16 November 1999

  Iran

  For talks with the Iranian Government in Tehran

  27–29 November 1999

  Italy

  To attend a meeting of EU Secretaries—General in Venice

  17–19 December 1999

  Finland

  To attend the European Council meeting in Helsinki

  9–11 December 1999

  Ireland

  For talks with the Irish Government in Dublin

  18–20 February 2000

  Turkey

  For talks with the Turkish Government in Ankara

  18–21 March 2000

  Uzbekistan and Kazakhstan

  To Tashkent, Almaty and Astana for talks with the Uzbek and Kazakh Governments

  28 March-1 April 2000

  Libya

  For talks with the Libyan Government in Tripoli

  15–16 April 2000

  Russia

  For talks with senior Russian officials in Moscow

  29–31 May 2000

  South America

  To Santiago, Sao Paulo, Brasilia and Rio de Janeiro for talks with senior officials

  1–6 May 2000

  Slovenia

  To deliver the opening address of the Wilton Park Conference in Slovenia, and for talks with the Government in Ljubljana

  7–9 May 2000

  Portugal

  To attend the European Council at Feira

  18–20 June 2000

  South East Asia

  For talks with the Government in Bangkok, Jakarta, Kuala Lumpur and Singapore

  3–8 July 2000

  UN Resolution 520
  Mr. Colman
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on UN Resolution 520. [131171]

  Mr. Hain
  We welcome the withdrawal of Israeli troops from Lebanon, in compliance with UNSCRs 425 and 426, as demanded by UNSCR 520. We look forward to the Lebanese Government taking measures to assert its authority throughout its territory. We support UNSCR 520's call for the sovereignty, territorial integrity, unity and political independence of Lebanon to be respected. We also support the Resolution's reaffirmation of support for the rights of the civilian population of Lebanon.

  Departmental Initiatives
  Dr. Lynne Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list each departmental initiative since May 1997 requiring bids for funding together with the total resources available, the number of successful bids and the proportion this represents of total bids received; and what data he collects on the average expenditure of organisations bidding for funding through each initiative. [131086]

  Mr. Hain
  I refer my hon. Friend to the answer given by my right hon. Friend the Chief Secretary to the Treasury on 17 July 2000,Official Report, column 93W.

  Israel
  Mr. Bercow
  To ask the Secretary of State for Foreign and Commonwealth Affairs what estimate he has made of the(a) costs and (b) benefits to Israel of acceding to its agreement with the European Communities, 2000/384/EC
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  (L147, volume 43, 21.6.2000); what benefits are denied to accedants of such an agreement which are granted to EU member states; and if he will make a statement. [130782]

  Mr. Vaz
  It is primarily for Israel or any other third country to estimate the costs and benefits to their country of entering into agreements with the EU. The EU-Israel Association Agreement is a reciprocal agreement which confers specific benefits on both parties. It is in no way comparable to EU membership.

  EU Enlargement
  Mr. Mackinlay
  To ask the Secretary of State for Foreign and Commonwealth Affairs what advice has been given to the countries most recently given EU candidacy status about the need to have on their statute book a process providing for(a) restoration of property rights and (b) a compensation regime which is subject to both arbitration and judicial review, in relation to property arbitrarily seized during the period of totalitarian rule, after 1945. [130662]

  Mr. Vaz
  [holding answer 18 July 2000]: The EU monitors applicants' progress in meeting the political and economic criteria for membership of the EU, including issues related to the restitution of property, in the Commission's annual progress reports and the EU's regular dialogue with the applicant countries concerned. However, property restitution is a bilateral issue for the states concerned and does not fall within the scope of the accession negotiations.

  We have not bilaterally offered advice to those countries recently given EU candidacy status but we have taken a particular interest in the situation in Poland, which affects a number of British nationals of Polish origin. We have continually made clear to the Polish authorities the

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  need for a speedy resolution of the problem. At the end of last year the Polish Government presented its proposals to Parliament, which is still discussing them.

  Human Rights
  Mr. Russell Brown
  To ask the Secretary of State for Foreign and Commonwealth Affairs when his Department will publish its Annual report on Human Rights. [131789]

  Mr. Hain
  The Foreign and Commonwealth Office annual report on human rights will be published as a Command Paper at 2.30pm on 20 July. Copies will be placed in the Libraries of both Houses and distributed throughout Parliament in the usual way. The report will be placed on the FCO websites www.fco.gov.uk and hrpd.fco.gov.uk and will be available through The Stationery Office.

  UNITA (Sanctions)
  Mr. Jim Cunningham
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the UN Secretary-General's recent appointment of experts to look into breaches of UN sanctions against UNITA. [131486]

  Mr. Hain
  The UK has given full support to the ground-breaking work of Ambassador Robert Fowler, Chairman of the Angola Sanctions Committee, to ensure that UN sanctions against UNITA are made to bite. We financially supported the Angola Expert Panel to the tune of 200,000 US Dollars. The Panel investigated reports of sanctions breaking and reported to the UN Security Council on 15 March. The Security Council welcomed the Panel's report in UN Security Council resolution 1295, adopted on 18 April 2000.

  The report gave a detailed analysis of the problem of sanctions breaking. It reports the alleged involvement of a number of individuals. For example, it states that the central figure in UNITA's external procurement and diamond trade operations is Marcelo Moises Dachala, known as "Karrica", based in Ougadougou and that Imad Kabir
  has been purchasing weapons for Savimbi which were being delivered to Kinshasa. From 1995–96 until the fall of Andulo in October 1999, Kabir is said to have served as UNITA's primary broker for importing arms and military equipment.

  Security Council resolution 1295 (2000) requested the UN Secretary-General to establish a monitoring mechanism to collect further information and investigate relevant leads relating to allegations of violations of UN sanctions against UNITA and report to the Security Council by 18 October 2000. That mechanism has now been established. On 11 July the Secretary-General appointed five experts to serve on it.

  We greatly welcome the fact that Ms Christine Gordon, a British national and independent writer, consultant and researcher, has been appointed to the monitoring mechanism, and wish her well in her important task.

  Sanctions breaking must be stopped. The Expert Panel's report, the adoption of Security Council resolution 1295 (2000) and the establishment of the monitoring mechanism show that the international community will no longer tolerate sanctions breaking.

  Fiji
  Mr. Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on(a) the political settlement of the recent crisis in Fiji, including its racial aspects, and (b) Fiji's future membership of the Commonwealth. [131413]

  Mr. Battle
  We are relieved that all the hostages have now been released, but dismayed that George Speight and his supporters have been allowed to overthrow Fiji's democratically elected Government at the point of a gun, and that the 1997 Constitution has been abrogated. We continue to call for the restoration of a democratic and constitutional Government which respects the rights of all Fijians. Unless Fiji's new interim administration can demonstrate a clear road map for returning Fiji to democracy, the Commonwealth may wish to consider further measures at the next meeting of the Commonwealth Ministerial Action Group (CMAG) in September.

  Uganda
  Mr. Tony Lloyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the fairness of the Ugandan referendum on the Movement System of 29 June; what discussions he has had with the Government of Uganda(a) during and (b) since the campaign; and if he will make a statement. [131414]

  Mr. Hain
  In its statement of 1 July, the International Donor Referendum Group, which includes the UK, concluded that although the voting had been peaceful and orderly, the Referendum campaign as a whole had not been conducted on a level playing field. While noting that it was not clear that these shortcomings were on a scale significantly to influence the result of the Referendum, the Group expressed its hope that the presidential elections scheduled for 2001 would resume momentum towards more inclusive Government.

  The Group has since met with President Museveni to discuss progress towards greater pluralism, good governance and democratic accountability.

  East Timor
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress has been made with his plans to help train members of East Timor's civil and foreign service. [131467]

  Mr. Battle
  We are preparing to bring a group of East Timorese diplomats to the United Kingdom later this year for an intensive four-week tailor-made training course. These students will form the nucleus of East Timor's Diplomatic Service. We are also exploring other projects for East Timor's fledgling civil services, to be funded through our Support for Democracy Programme.

CABINET OFFICE

  COI Trading Fund
  Mr. Borrow
  To ask the Minister for the Cabinet Office when she will publish the accounts of the Central Office of Information Trading Fund. [131672]
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  Mr. Ian McCartney
  I have arranged for the accounts of the Central Office of Information Trading Fund to be laid before the House today.

  Rural Issues
  Mr. Breed
  To ask the Minister for the Cabinet Office what work is being carried out on rural issues by(a) the Social Exclusion Unit, (b) the Performance and Innovation Unit, (c) the Women's Unit and (d) the Regulatory Impact Unit. [128046]

  Marjorie Mowlam
  These units often carry out work on issues that are relevant to both rural and urban areas. Their recent work specifically on rural issues, or with a rural theme, includes:

  (a) the Social Exclusion Unit's recent consultation framework document on a National Strategy for Neighbourhood Renewal;

  (b) the Performance and Innovation Unit's reports on Rural Economies (published December 1999) and the Post Office network (published June 2000); and

  (c) the work of the Women's Unit in ensuring that the preparation of the Rural White Paper takes account of issues of importance for rural women.

  Departmental Vehicles
  Mr. Pearson
  To ask the Minister for the Cabinet Office if she will list for her Department and its agencies the approved list of manufacturers of(a) cars and (b) commercial vehicles; and if she will make a statement on her Department's leasing and purchasing policy. [128983]

  Mr. Ian McCartney
  The make and model of car which the Government Car Service (GCS) can offer to Ministers, senior officials and other approved customers are set out in the Prime Minister's guidance on ministerial travel. Currently, GCS can offer the following cars:

  Make

  Model

  Ford

  Mondeo

  Jaguar

  Sovereign, Daimler

  Nissan

  Primera

  Rover

  R45

  Vauxhall

  Omega, Vectra

  Other than for the GCS, my Department does not operate approved lists of cars or commercial vehicles. Purchase, or leasing, decisions are taken on the basis of best value for money based on while life costs.

  Pesticides Tax
  Mr. Alan Simpson
  To ask the Minister for the Cabinet Office if she will list(a) the representations her Department has received and (b) meetings it has held on the proposed pesticides tax with the (i) UKASTA, (ii) NOAH, (iii) the National Farmers Union, (iv) the Country Landowners Association, and (v) agrochemical companies, indicating which companies; and what was the date and duration of each of the meetings. [131102]

  Marjorie Mowlam
  I refer my hon. Friend to the answer given by my hon. Friend the Financial Secretary on 18 July 2000,Official Report, column 110W.

  Disaster Contingency Measures
  Mr. Fabricant
  To ask the Minister for the Cabinet Office (1) what representations she has received from consumer and pensioner groups about the need to have in place effective disaster contingency measures; [130965]

  (2) what recommendations she has made to the principal Departments of state about disaster contingency measures. [130966]

  Mr. Mike O'Brien
  I have been asked to reply.

  I refer the hon. Member to a reply I gave to the hon. Member for Mid-Bedfordshire (Mr. Sayeed) on 5 July 2000, Official Report, column 219W.

INTERNATIONAL DEVELOPMENT

  Pakistan and Bangladesh
  Mr. Sarwar
  To ask the Secretary of State for International Development if she will make a statement on her Department's programmes in Pakistan and Bangladesh. [130961]

  Clare Short
  The main goal of our programmes in Pakistan and Bangladesh is systematic reduction of the unacceptably high levels of poverty which prevail in both countries. In Bangladesh, Pakistan and elsewhere we work to help them move towards the achievement of the International Development Targets. Our plans for addressing this in Bangladesh are described in our relevant Country Strategy Paper, a copy of which is in the House of Commons Library. In Pakistan, where our work was disrupted by last year's military coup, we are providing technical assistance to the Pakistani administration to support action to reduce poverty and corruption and support the development of genuine democracy.

  Ilisu Dam
  Dr. Tonge
  To ask the Secretary of State for International Development what discussions she has held with the UK Executive Director of the World Bank since the findings of the Independent Inspection Panel's report on the Ilisu Dam became available. [131314]

  Clare Short
  I have had no discussions with our Executive Director about the findings of the Independent Inspection Panels on Ilisu Dam as neither my Department nor the World Bank is involved in the project.

NORTHERN IRELAND

  Decommissioning
  Mr. Robertson
  To ask the Secretary of State for Northern Ireland if he will make a statement on recent developments regarding the inspection of paramilitary weapons dumps. [129863]

  Mr. Hilary Benn
  To ask the Secretary of State for Northern Ireland what recent discussions he has had with General de Chastelain regarding decommissioning. [129865]
  193W
  Mr. Mandelson
  Mr. Ramaphosa and Mr. Ahtisaari have reported that they have completed their first inspection of several IRA arms dumps. We welcome this development—it represents substantial progress and an honouring of commitments given at the beginning of May I am confident the inspectors will report any further progress that has been made when they deem it appropriate to do so.

  Equally significant is the renewal of contact by the IRA's representative with General de Chastelain's Decommissioning Body, and they will resume their discussions so that IRA arms are ultimately put completely and verifiably beyond use.

  Mrs. Betty Williams
  To ask the Secretary of State for Northern Ireland what recent discussions he has had with General de Chastelain about progress to date in decommissioning. [129875]

  Sir David Madel
  To ask the Secretary of State for Northern Ireland what progress has been made on the decommissioning of illegal arms and explosives in Northern Ireland. [129876]

  Miss McIntosh
  To ask the Secretary of State for Northern Ireland what recent representations he has received on progress towards decommissioning; and if he will make a statement. [129882]

  Mr. Ingram
  Under the Good Friday Agreement, the Decommissioning Commission operates as an independent body to resolve the decommissioning issue. The Commission has provided written reports on progress on a number of occasions.

  Mr. Grieve
  To ask the Secretary of State for Northern Ireland when he expects the decommissioning of illegal arms and explosives to begin. [129879]

  Mr. Ingram
  We hope decommissioning will start as soon as possible.

  Oversight Commissioner
  Mr. Temple-Morris
  To ask the Secretary of State for Northern Ireland when he last met the Oversight Commissioner. [129867]

  Mr. McWalter
  To ask the Secretary of State for Northern Ireland when he last met the Oversight Commissioner. [129883]

  Mr. George Howarth
  The Secretary of State last met with Mr. Tom Constantine, the Oversight Commissioner, on 31 May 2000.

  Parades
  Mr. Fabricant
  To ask the Secretary of State for Northern Ireland if he will make a statement on recent violence at parades. [129868]

  Mr. George Howarth
  The Government condemn the violence which occurred during the past week. The behaviour we witnessed on occasions was nothing less than pure vandalism and thuggery. We should, however, congratulate the security forces for their efforts to maintain order and uphold the lawful ruling of the Parades Commission.
  194W
  Mr. Gordon Prentice
  To ask the Secretary of State for Northern Ireland what recent discussions he has had with the Parades Commission concerning the criteria it uses to determine parade routes. [129878]

  Mr. Ingram
  The criteria used for making decisions are set out in legislation and in the guidelines and Code of Conduct produced under this legislation. It is for the Parades Commission to determine the appropriate factors to be taken into account, and to take the final decision.

  Security Situation
  Mr. Stephen O'Brien
  To ask the Secretary of State for Northern Ireland if he will make a statement on the security situation in Northern Ireland. [129869]

  Mr. Soames
  To ask the Secretary of State for Northern Ireland if he will make a statement on the security situation in Northern Ireland. [129870]

  Mr. George Howarth
  The Government believe the main paramilitary groups are maintaining their ceasefires. There remains, however, a threat from dissident paramilitaries on both sides who are opposed to the Good Friday Agreement.

  Devolved Government
  Dr. Palmer
  To ask the Secretary of State for Northern Ireland if he will make a statement on progress in respect of devolved Government in Northern Ireland. [129871]

  Mr. Mandelson
  Assembly Members resumed their positions quickly and Assembly procedures are operating efficiently. Two Bills—Appropriation and Members' Allowances—have already been passed by the Assembly and more legislation is expected to follow soon after the summer recess. The Executive Committee is now preparing its programme for Government. I have every confidence in the Assembly's continuing success and wish it well.

  Young Offenders
  Mr. Fitzpatrick
  To ask the Secretary of State for Northern Ireland if he will make a statement on the range of schemes available to deal with young offenders. [129872]

  Mr. George Howarth
  The Criminal Justice Children (Northern Ireland) Order 1998 was introduced in January 1999 and brought in a new juvenile justice centre order of between six months and two years, half of which is spent in custody and half under close supervision in the community. The Community element of the sentence is delivered by the Probation Board for Northern Ireland.

  A range of programmes for young people, both in custody and in the community, has been developed. Programmes such as cognitive behaviour training to tackle offending and the associated causes and problems such as drugs and alcohol misuse, car crime, aggressive behaviour and sex offending, have been developed on a multi-agency basis.

  EU Structural Funds
  Mr. David Stewart
  To ask the Secretary of State for Northern Ireland what consultation he has had relating to the future of EU structural funds allocated to Northern Ireland. [129873]

  Mr. Mandelson
  I met Commissioner Barnier on 18 May during the suspension of devolution in Northern Ireland. The allocation of EU structural funds is now a matter for the Northern Ireland Executive.

  Peace Process
  Mr. Salter
  To ask the Secretary of State for Northern Ireland when he last met the Irish Prime Minister to discuss progress towards peace. [129874]

  Mr. Mandelson
  I last met with the Taoiseach on 31 May in the course of a visit to Dublin to hold discussions with the Irish Foreign Minister.

  Prisoners (Early Release)
  Mr. Clifton-Brown
  To ask the Secretary of State for Northern Ireland if he will make a statement on the early release of terrorist prisoners. [129877]

  Mr. Ingram
  The early release of prisoners is dependent on the continuation of the current ceasefires. The Secretary of State is in constant touch with his security advisers and keeps the security situation continually under review.

  Crime Statistics
  Mr. Randall
  To ask the Secretary of State for Northern Ireland if he will make a statement on the current levels of recorded crime in Northern Ireland. [129880]

  Mr. Ingram
  I refer the hon. Member to the answer given today to the hon. Member for Epping Forest (Mrs. Laing),Official Report, column 363.

  School Links
  Helen Jones
  To ask the Secretary of State for Northern Ireland what steps he is taking to encourage links between schools in Northern Ireland, the rest of the United Kingdom and the Irish Republic; and if he will make a statement. [129881]

  Mr. Mandelson
  Responsibility for this subject has been devolved to the Northern Ireland Assembly, and is therefore no longer a matter for the Secretary of State for Northern Ireland.

  Police Ombudsman
  Mr. Quinn
  To ask the Secretary of State for Northern Ireland when he last met the police ombudsman. [129884]

  Mr. Ingram
  The Ombudsman met with the Secretary of State on 1 November 1999.

  Good Friday Agreement
  Mr. Ivan Lewis
  To ask the Secretary of State for Northern Ireland what progress is being made on implementation of the Good Friday Agreement. [129885]
  196W
  Mr. Mandelson
  The Government are committed to the full implementation of the Belfast Agreement. The provisions for policing, criminal justice, equality and rights, prisoners and security are progressing with all due speed. The prospects for decommissioning are good. I am confident we will fulfil our commitment to implement the Agreement in full by June 2001.

  Crimes of Violence
  Ms Southworth
  To ask the Secretary of State for Northern Ireland what progress he is making on tackling crimes of violence in Northern Ireland. [129886]

  Mr. Ingram
  Figures on violent crime for the period April 1999 to March 2000 show an increase of 12.6 per cent. on the number of offences recorded for the same period during 1998–99. The total number of violent crimes cleared during 1999–2000 increased by 25.3 per cent. compared with the previous year. Overall the clearance rate for violent crime rose from 55.7 per cent. in 1998–99 to 62 per cent. during 1999–2000. The ongoing progress being made by the RUC towards moving to `intelligence-led policing' will, it is believed, assist in tackling the problem of violent crime.

  Abortion and Contraceptive Services
  Fiona Mactaggart
  To ask the Secretary of State for Northern Ireland if he will make a statement on access to abortion and contraceptive services for women in Northern Ireland. [129887]

  Mr. George Howarth
  Responsibility for this subject has been devolved to the Northern Ireland Assembly and is therefore no longer a matter for the Secretary of State for Northern Ireland.

  Royal Ulster Constabulary
  Mr. Evans
  To ask the Secretary of State for Northern Ireland what discussions he has had with former members of the RUC concerning the Patten report on the future of the RUC. [129888]

  Mr. Ingram
  During the three-month period of formal consultation on the Patten Report, and in discussions since then, Ministers have met a wide range of police representative groups to discuss the Patten Report and the future of the RUC. These have included retired officers, disabled officers, police widows and their families. Ministers have also received, and replied to, many letters from former RUC officers.

EDUCATION AND EMPLOYMENT

  New Deal
  Mr. Paul Marsden
  To ask the Secretary of State for Education and Employment how many people aged over 50 years are eligible for guaranteed minimum take-home pay under the New Deal for the over 50s in Shrewsbury and Atcham; and if he will make a statement. [131147]

  Ms Jowell
  New Deal 50 plus is a major new programme of personal advice, support and financial help for people over 50 who are looking for work. The programme is aimed at unemployed and economically inactive people in receipt of benefit for six months or
  197W
  more and their dependent partners. The following table shows the number of people who are directly eligible for New Deal 50 plus. However, in addition, dependent partners of these benefit recipients may also be eligible, as will be men aged 60–65 receiving National Insurance credits automatically.

  The £170 minimum income guarantee applies to those people going into full-time work and additionally receiving the Employment Credit of £60 per week. It is not possible to say how many people will be eligible for the Employment Credit, but our assumption is that about 90 per cent. of those who apply will be eligible for this important new support for people aged 50 or over.

  Income Support, Jobseekers Allowance, Incapacity Benefit and Severe Disablement Allowance recipients aged 50 or over with a current claim duration of six months or more, as at February 2000

  Thousand

  Shrewsbury and Atcham

  Income Support

  2.8

  Jobseekers Allowance

  0.1

  Incapacity Benefit

  1.4

  Severe Disablement Allowance

  10.2

  1 Numbers are based on very few sample cases and are subject to a high degree of sampling error. These figures should be used as a guide to the current situation only.

  Notes:

  1. Income Support figures exclude claimants who also receive IB/SDA

  2. IB figures exclude those persons receiving National Insurance Credits only

  3. Jobseekers Allowance figure for June 2000

  Ms Buck
  To ask the Secretary of State for Education and Employment if he will make a statement on the impact of the New Deals for(a) 18 to 24-year-olds and (b) lone parents in (i) Westminster and (ii) Kensington. [130230]

  Ms Jowell
  The New Deal for Young people is aimed at people aged 18–24 who have been claiming unemployment benefits for six months or more. Claimant unemployment among this group has fallen by 56 per cent. since April 1998 when the New Deal was introduced. Part of this is due to the delivery of a strong and stable economy, but the New Deal for Young People has helped unemployment to fall even faster. The 56 per cent. fall in youth long-term unemployment compares with a fall of 18 per cent. in total unemployment, 23 per cent. in total youth (18–24) unemployment and 26 per cent. in the total number unemployed for six months or more. The effect of the New Deal is confirmed by independent research from the National Institute of Economic and Social Research.

  It is not possible to measure the New Deal effect exactly in each area of the country. However, in Westminster and Kensington the falls in unemployment among the New Deal client group have also been substantially faster than for other groups. In Westminster in the two years since April 1998 claimant unemployment amongst those aged 18–24, unemployed for six months or more, has fallen by 43 per cent. from 418 to 238. This compares with a fall of 16 per cent. in total unemployment, 25 per cent. in total youth (18–24) unemployment, and 18 per cent. in the total number unemployed for six months or more.
  198W
  In Kensington and Chelsea, over the same period, claimant unemployment among those aged 18–24, unemployed for six months or more, has fallen by 41 per cent. from 280 to 165. This compares with a fall of 23 per cent. in total unemployment, 23 per cent. in total youth (18–24) unemployment, and 28 per cent. in the total number unemployed for six months or more.

  New Deal for Lone Parents aims to help lone parents in receipt of Income Support to improve their job readiness and help them take up paid work. Independent evaluation by the Institute for Employment Research suggests it has attracted substantial numbers of participants and secured very positive feedback from them. Analysis has also shown that after 18 months more people had left IS in NDLP prototype areas than in comparison areas.

  It is also not possible to measure the effect of New Deal for Lone Parents exactly in each area of the country. Local information on NDLP performance is produced for parliamentary constituencies. Up to the end of April 2000, in the Cities of London and Westminster constituency, 95 lone parents had started on NDLP, of which 18 had moved into work, while in the Regent's Park and North Kensington and Kensington and Chelsea constituencies, 388 had started on the programme and 80 had moved into a job.

  Mr. Cox
  To ask the Secretary of State for Education and Employment how many(a) men and (b) women aged between 18–24 years have entered the New Deal within the Greater London Authority area to date. [130770]

  Ms Jowell
  The latest figures to April 2000 show that 47,850 young men and 24,200 young women have entered the New Deal in the Greater London area. 27,470 of these young people have gained jobs which is a significant contribution to our being on target to meet the manifesto commitment to help 250,000 young people into jobs through the New Deal. At the end of April we had reached a total of 216,200.

  Youth Unemployment (Cumbria)
  Mr. Martlew
  To ask the Secretary of State for Education and Employment if he will make a statement on youth unemployment in(a) Cumbria and (b) Carlisle. [131409]

  Ms Jowell
  There are currently (June 2000) 2,037 claimant unemployed people aged 18–24 in Cumbria and 447 in Carlisle. In the three years to June 2000 unemployment among young people has fallen by 36 per cent. in Cumbria and by 37 per cent. in Carlisle. The equivalent fall in the UK as a whole over this period is 36 per cent.

  Part of this improvement is due to the delivery of a strong and stable economy, but the New Deal for Young People has helped youth unemployment to fall even faster. The New Deal for young people is aimed at people aged 18–24 who have been claiming unemployment benefits for six months or more.

  In both Cumbria and Carlisle the fall in unemployment among the New Deal client group has been substantially faster than for other groups. In Cumbria, in the three years to June 2000, claimant unemployment among those aged 18–24, unemployed for six months or more, has fallen by

  199W
  71 per cent., from 1,397 to 402. This compares with a fall of 31 per cent. in total unemployment and 51 per cent. in the total number unemployed for six months or more.

  In Carlisle, in the three years to June 2000, claimant unemployment among those aged 18–24, unemployed for six months or more, has fallen by 70 per cent., from 274 to 81. This compares with a fall of 31 per cent. in total unemployment and 46 per cent. in the total number unemployed for six months or more.

  The impact of the New Deal is confirmed by independent research from the National Institute of Economic and Social Research, though it is not possible to measure the New Deal effect exactly in each area of the country.

  Pre-school Places (Middlesbrough)
  Dr. Kumar
  To ask the Secretary of State for Education and Employment how many new pre-school places have been created in the constituency of Middlesbrough, South and Cleveland, East since May 1997; and if he will make a statement. [131205]

  Ms Hodge
  [holding answer 18 July 2000]: Since this Government came to office, 120,000 new, free, early education places have been created for three and four-year-olds nationally. Data on early years education places are not available by constituency, but we have provided sufficient funding to ensure that all four-year-olds and the majority of three-year-olds in Middlesbrough South and East Cleveland receive a free, part time, early education place.

  Sex and Relationship Education
  Mr. Leigh
  To ask the Secretary of State for Education and Employment what the meaning is of the word(a) inappropriate, as used in (i) paragraph 8 of the introduction, (ii) paragraph 1.8 of and (iii) paragraph 1.14 of and (b) research, as used in paragraph 1.7 of, the Sex and Relationship Education Guidance issued in July 2000. [131195]

  Jacqui Smith
  [holding answer 19 July 2000]: We have made it clear that head teachers and governors must not use teaching and materials which are inappropriate with regard to the age and the religious and the cultural background of the pupils concerned. In making their judgments, head teachers and governors should have regard to the Personal, Social and Health Education framework, which sets out what is expected at each Key Stage in education, and to the law.

  There is a variety of research that shows that effective sex and relationship education does not encourage early sexual experimentation. These are summarised in the Social Exclusion Unit's Report on Teenage Pregnancy. Copies are available in the Library.

  School Science Laboratories (Middlesbrough)
  Dr. Kumar
  To ask the Secretary of State for Education and Employment what steps he has taken to update school science laboratories in the constituency of Middlesbrough, South and Cleveland, East; and if he will make a statement. [131206]
  200W
  Jacqui Smith
  [holding answer 18 July 2000]: Under the initiative "School laboratories for the 21st Century", £60 million is being allocated from the Capital Modernisation fund to tackle deficiencies in secondary school science accommodation over the next two years. This will enable around 400 improvement projects to be carried out at those schools most in need.

  In line with the Department's policy of reducing bureaucracy and paperwork, grants are being allocated to local education authorities (LEAs) by formulae. LEAs will then distribute funding to schools according to need. Middlesbrough LEA is to receive £115,109 this year and a further £115,109 in 2001–02.

  Additionally, LEAs have been able to apply for funding from the New Deal for Schools (NDS) programme to improve the condition of school laboratories. So far, 151 such projects have been funded, at a cost of just under £37 million. They may also have incorporated improvements to science accommodation within larger schemes of school expansion or rationalisation.

  Computer Disasters
  Mr. Fabricant
  To ask the Secretary of State for Education and Employment what estimate he has made of the time it would take to get new computers running in the wake of a major computer disaster in his Department. [130969]

  Mr. Wills
  Contingency plans exist for all of the major computer systems in the Department and they should be operational again within three working days.

  Departmental Initiatives
  Dr. Lynne Jones
  To ask the Secretary of State for Education and Employment if he will list each departmental initiative since May 1997 requiring bids for funding together with the total resources available, the number of successful bids and the proportion this represents of total bids received; and what data he collects on the average expenditure of organisations bidding for funding through each initiative. [131080]

  Mr. Wills
  I refer my hon. Friend to the reply given by my right hon. Friend the Chief Secretary to the Treasury on 17 July 2000,Official Report, column 93W.

  Health and Sex Education
  Mr. Coaker
  To ask the Secretary of State for Education and Employment what rights parents have to withdraw their children from the health and sex education element of National Curriculum Science at Key Stage 2 for religious reasons. [130976]

  Jacqui Smith
  Section 405 of the Education Act 1996 gives parents the right to withdraw their children from any or all parts of a school's programme of sex education, but not those elements of health and sex education which are required by the National Curriculum Science Order. We encourage schools and governors to consult parents over their Sex and Relationship Education policy.

  Learning Support Units
  Mr. Coaker
  To ask the Secretary of State for Education and Employment (1) how many Learning Support Units will be established in Nottinghamshire; [131068]

  (2) what the timetable is for setting up the new Learning Support Units for disruptive pupils; and if he will make a statement. [130979]

  Jacqui Smith
  The 223 Learning Support Units (LSUs) in the 24 Local Education Authorities (LEAs) in Phase 1 of the 'Excellence in Cities' (EiC) programme have been established progressively over the current academic year and are now operating. The LSUs in the 22 LEAs in Phase 2 of the EiC programme, which includes the City of Nottingham, will start to be set up from September 2000. Most should be operating from January 2001. We are currently assessing these LEAs' final plans. The LSUs in LEAs outside EiC areas, which includes Nottinghamshire, will be established progressively from September 2000. Most should come into operation between January and March 2001.

  The City of Nottingham is planning for all of its 21 secondary schools to have an LSU. Information about Nottinghamshire LEA' s plans is not yet available. The Authority was notified on 30 June of its allocation—a total of some £671,000 to cover both capital and recurrent expenditure over the financial years 2000–01 and 2001–02. It is now for the LEA in consultation with its schools to decide how many LSUs to establish within those resources and in which schools.

  Learning Support Units are a proven strategy for improving behaviour and reducing exclusions, and they are cost effective. They enable schools to get disruptive pupils out of the classroom quickly while not excluding them. We aim to have over 1,000 established by 2002.

  Grammar School Ballots
  Mr. Dismore
  To ask the Secretary of State for Education and Employment which grammar schools have not provided to Electoral Reform Ballot Services the information required to determine the number of signatures needed for a trigger ballot within the time limit provided by the relevant regulations; and if he will make a statement. [130942]

  Ms Estelle Morris
  One grammar school has not provided to Electoral Reform Services (ERS), within the time limit, all the information required to determine the number of signatures needed to trigger a ballot. This is the Latymer School in Enfield. The school raised queries before providing a list of feeder schools. ERS have written to the feeder schools and are processing replies.

  School Organisation Committees
  Mr. Willis
  To ask the Secretary of State for Education and Employment what plans he has to carry out an assessment of the effectiveness of schools' organisation committees; and if he will take steps to give their role greater clarity. [131246]

  Ms Estelle Morris
  We shall be reviewing the issues which arise for School Organisation Committees as they increasingly become involved in complex school 202W
  organisation decisions. This review will help us determine whether further guidance or changes in the procedures governing the conduct of Committees would be helpful.

  School Playing Fields
  Mr. Chidgey
  To ask the Secretary of State for Education and Employment, pursuant to the answer of 22 June 2000,Official Report, columns 269–70W, how many sales of school grass areas smaller than a sports pitch he has (a) approved and (b) rejected in each month since October 1998; what the acreage is of the school grass areas smaller than a sports pitch whose disposal he has (i) approved and (ii) rejected in each month since October 1998; and what has been the total sale value of such areas whose disposal he has (A) approved and (B) rejected in each month since October 1998. [131214]

  Jacqui Smith
  The Department has approved the sale of 18 school grass areas smaller than a sports pitch of 2000m2 between October 1998 and June this year. The following table shows the information requested.

  Sale of grass areas smaller than a school sports pitch approved under section 77 of the School Standards and Framework Act 1998 since 1 October 1998

  Number of sales approved

  Number of sales rejected

  Area (m2)

  Total sale value (£)

  1998

  October

  1

  —

  300

  5,000

  November

  —

  —

  —

  —

  December

  —

  —

  —

  —

  1999

  January

  1

  —

  1,250

  72,000

  February

  —

  —

  —

  —

  March

  1

  —

  600

  115,000

  April

  —

  —

  —

  —

  May

  2

  —

  1,680

  3,300

  June

  3

  —

  2,100

  241,000

  July

  —

  —

  —

  —

  August

  2

  —

  1,870

  97,250

  September

  —

  —

  —

  —

  October

  1

  —

  640

  50,000

  November

  —

  —

  —

  —

  December

  —

  —

  —

  —

  2000

  January

  1

  —

  50

  3,000

  February

  —

  —

  —

  —

  March

  —

  —

  —

  —

  April

  1

  —

  530

  20,000

  May

  3

  —

  2,985

  305,000

  June

  2

  —

  910

  37,500

  Notes

  1. In this table a sports pitch is regarded as being an area of open grassed land equal to, or greater than, 2000m2.

  2. All sale proceeds are used to provide new or improved education or sports facilities at maintained schools.

  Holy Trinity Church of England Primary School, Sunningdale
  Mr. Trend
  To ask the Secretary of State for Education and Employment how many children applying for places at the Holy Trinity Church of England primary school in Sunningdale have been refused on the ground that admission would breach the maximum class size of 30; how many of these have siblings in the school; and how many of those referred were new to the area. [131304]
  203W
  Ms Estelle Morris
  I understand from my officials, who have contacted the school, that no applications were refused on the ground that admission would breach the class size limit. Thirteen children were refused admission because there were forty-three applications for only thirty available places. The school's standard number of thirty, which indicates its capacity, pre-dates our class size legislation.

  The thirty places were allocated to Sunningdale residents, thirteen of whom had siblings in the school. Of those applicants refused, four were non residents of Sunningdale with siblings in the school. The school gives priority for admission to children resident in the ecclesiastical parish of Sunningdale. A further four applications from the Sunningdale area were received after places had been allocated, and were refused.

  Ministerial Code
  Mr. Robathan
  To ask the Secretary of State for Education and Employment (1) on how many occasions since May 1997 Ministers in his Department have made a declaration of interest to their colleagues under circumstances envisaged in Paragraph 110 of the Ministerial Code; [129146]

  (2) if he will list the occasions on which ministers in his Department have sought the advice of the Permanent Secretary under the circumstances envisaged in paragraphs 118, 121 and 123 of the Ministerial Code. [129180]

  Mr. Wills
  Information relating to internal advice and consultation is not disclosed under Exemption II of the "Code of Practice on Access to Government Information".

PRESIDENT OF THE COUNCIL

  Early-day Motions
  Mr. Sayeed
  To ask the President of the Council what the total cost of early-day motions was in(a) 1999 and (b) 1998. [130028]

  Mr. Kirkwood
  I have been asked to reply.

  The printing and publication costs associated with early-day motions was (a) approximately £597,000 in 1999 and (b) approximately £750,000 in 1998. Other costs associated with early-day motions, such as editorial preparation and control and electronic publication, are not separately identifiable. I am informed that costs arising in Government Departments could be provided only at disproportionate costs.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  Incineration
  Mr. Pickthall
  To ask the Secretary of State for the Environment, Transport and the Regions what is the Government's assessment of the relationship between rates of death and projected increases in incineration of waste. [126470]
  204W
  Mr. Meacher
  [holding answer 20 June 2000]: A methodology for assessing the health impacts of air pollution (particles, sulphur dioxide and ozone) from industrial sources, including waste incinerators, is being considered by the Committee on the Medical Effects of Air Pollution (COMEAP), which advises the Department of Health, and a full statement from COMEAP is expected in due course.

  Emissions from incineration are already tightly controlled, and incinerators can now be designed to meet the standards in the forthcoming Waste Incineration Directive, which will further reduce emissions, for example reducing emissions of total dust by 67 per cent. and of dioxins by 99 per cent. An assessment of the health benefits of the tighter standards in the Waste Incineration Directive has been made by my Department for the regulatory and environmental impact assessment of the proposed Directive. The relevant consultants' reports are available in the House Library.

  Public Water Supply
  Mr. Etherington
  To ask the Secretary of State for the Environment, Transport and the Regions if he will list the chemical compounds added to the public water supply in England and Wales, indicating which is used for(a) water treatment, (b) ingestion and (c) other purposes; and if he will give details of the most recent safety tests carried out by his Department on each such compound. [130203]

  Mr. Mullin
  The Water Supply (Water Quality) Regulations 1989 provide for the approval of products, substances and processes used in the provision of public water supplies. The Secretary of State is advised on approvals issues by the Committee on Chemicals and Materials for Use in Public Water Supply. The Secretary of State's List of Approved Products, which includes all chemicals approved for use in public water supplies, is published annually by the Drinking Water Inspectorate. The list is installed on the Inspectorate's website www.dwi.detr.gov.uk

  Approved chemicals are classified according to whether they are used for water treatment or other purposes. Where residues of the chemical are likely to be ingested, a condition of approval imposes a maximum dosing concentration as a public health protection measure.

  Household Waste Collection
  Mr. Green
  To ask the Secretary of State for the Environment, Transport and the Regions what guidelines he has given local authorities about the frequency with which they should collect household waste; and if he will make a statement. [130527]

  Mr. Meacher
  Under section 45 of the Environmental Protection Act 1990, local authorities have a duty to collect household refuse, but the Act does not stipulate the frequency with which local authorities should collect it. We have not provided any guidance on the frequency with which collections should take place.

  A30
  Mrs. Browning
  To ask the Secretary of State for the Environment, Transport and the Regions when the A30 Honiton to Exeter road will be resurfaced. [130540]
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  Mr. Hill
  [holding answer 17 July 2000]: Our 10-year Transport Strategy, which will be published shortly, will include further proposals for dealing with road noise. Those roads with the worst noise problem will be dealt with first.

  Aggregates
  Mr. Gill
  To ask the Secretary of State for the Environment, Transport and the Regions on what grounds the Quarry Products Association's proposed preferential purchasing scheme for aggregates was considered incompatible with the green purchasing commitments set out in his Department's publication entitled "Building a better quality of life—a strategy for more sustainable construction". [131094]

  Ms Beverley Hughes
  The proposals in the Quarry Products Association's Q-mark scheme were carefully considered by my right hon. Friend the Chancellor in preparing his Budget Statement. However, the proposed conditions of entry to the Q-mark scheme, which would qualify suppliers for preferential purchasing of aggregate by the public sector were, on the basis of the information provided, felt to be incompatible with UK competition law and EU procurement law. The burden of meeting the Q-mark entry conditions would have borne differentially on different sizes of operators, and in particular could have been harder for the small and medium-sized enterprises in the industry, including those not in QPA membership, to meet.

  Home Energy Efficiency Scheme
  Mr. Green
  To ask the Secretary of State for the Environment, Transport and the Regions (1) how many contractors he expects to use under the New Home Energy Efficiency Scheme; [131310]

  (2) how many contractors used by the Home Energy Efficiency Scheme in the period up to April 2000 are not eligible for the New Home Energy Efficiency Scheme; [131311]

  (3) what guidance he has issued to determine which contractors are eligible to be considered under the New Home Energy Efficiency Scheme; and if he will make a statement. [131312]

  Mr. Meacher
  Some 100 insulation and heating installation contractors are currently appointed to the New Home Energy Efficiency Scheme, which started in June. The two Scheme Managers for New HEES expect to appoint up to a further 45 contractors. The New HEES scheme, which started in June, provides vulnerable householders with a comprehensive package of insulation, together with efficient central heating for householders over 60 in age, through grants of up to £2,000. The previous scheme provided householders with one insulation measure per household, mainly draughtproofing, with a maximum grant of £315. Funding for the scheme has been increased from about £76 million last year to around £122 million this year and around £153 million next year.

  Some 130 insulation contractors were involved in the previous scheme.

  The Scheme Managers for New HEES, Eastern Energy and the EAGA Partnership Ltd., were appointed by my Department following UK Public Procurement Rules and
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  Regulations. They are contractually required to appoint installers using the same competitive tendering process and following the same Regulations. All existing installers were eligible to tender for appointment to the new scheme. Installers have been chosen on the basis of their technical abilities to deal with the wider range of measures provided through New HEES, their ability to meet the quality standard, and the price tendered.

  Mr. Paul Marsden
  To ask the Secretary of State for the Environment, Transport and the Regions (1) how many council homes in Shrewsbury and Atcham will benefit from home energy efficiency measures by the end of this year; and if he will make a statement; [131157]

  (2) how many households will be helped out of fuel poverty by 2002 through energy-efficiency schemes in Shrewsbury and Atcham. [131137]

  Mr. Meacher
  The Government have introduced a wide range of programmes to tackle poor energy efficiency, one of the main causes of fuel poverty. These are as follows.

  From 1 June, the Home Energy Efficiency Scheme provides grants of up to £2,000 for comprehensive packages of insulation and heating improvements. The scheme is aimed at those households which are most vulnerable to cold-related ill health: older people and families on low incomes, and the disabled and chronically sick. HEES has a budget of £275 million for the first two years, which is expected to help some 460,000 households. The scheme is focused on the private sector, where nearly 70 per cent. of the fuel poor in England are found. However, limited funds will still be available for social housing in the first two years.

  We have released substantial additional funds to help improve our housing stock; in total some £5 billion is being made available over the lifetime of this Parliament for investment in housing. Most of the additional resources are going to local authorities and will be spent according to the needs and priorities identified in their housing strategy. We estimate that around one third of the money is likely to lead directly or indirectly to improvements in energy efficiency.

  Government-funded programmes operated by the Energy Saving Trust improve the energy efficiency of both fuel poor households and others. In addition, some of the Government funded regeneration schemes will help to improve home energy efficiency in specific areas.

  To support the installation of energy efficiency measures, from 1 July 1998 the Government have reduced VAT from 17.5 per cent. to 5 per cent. for the installation of energy efficiency materials through Government-funded grant schemes such as HEES. The Spring 2000 budget extended the reduced rate of VAT of 5 per cent. to include the installation of energy saving material in "all" homes and the installation of heating measures through Government funded grant schemes.

  The Government are also introducing provisions to enable lessors to claim capital allowances on their investment in boilers, radiators and controls installed in residential properties under the Affordable Warmth Programme. The Programme will operate from 2000 to

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  2007, with the aim of helping up to 1 million low income households, primarily in the social sector, benefit from improved energy efficiency.

  In addition to Government energy efficiency programmes, since 1994, public electricity suppliers have, under the Energy Efficiency Standards of Performance, been required to encourage and assist customers with energy efficiency measures. The new Director General of the Office of Gas and Electricity Markets has, from this year extended these to also include public gas suppliers and the overall size of the programme has been doubled to £50 million a year. 65 per cent. of this expenditure will be allocated to low income households.

  Under the Home Energy Conservation Act (HECA) 1995, local authorities with housing responsibilities were required to prepare, publish and submit to the Secretary of State an energy conservation report identifying energy conservation measures considered to be practicable, cost-effective and likely to result in a significant improvement in the energy efficiency of all residential accommodation in their area.

  Date

  Court

  Offence

  Fine (£)

  Cost (£)

  16 October 1991

  Whitehaven magistrates court

  On 19 May 1991 caused trade effluent, namely chlorinated water, to be discharged into Ben Ghyll, a tributary of the River Ehen from Ennerdale Water Treatment Plant. Contrary to Sections 107(i)(c) and 107(6) of the Water Act 1989

  5,000

  435

  29 January 1992

  Darwen magistrates court

  On 28 May 1991 caused sewage effluent to be discharged into Eagley Brook from Belmont Waste Water Treatment Plant. Contrary to Sections 107(l)(c) and 106(6) of the Water Act 1989

  9,000

  4,815

  20 May 1992

  Chorley magistrates court

  On 4 October 1991 caused sewage effluent to be discharged into Brook Lane Stream, Charnock Richard from Brook Lane Pumping Station. Contrary to Sections 107(i)(c) and 107(6) of the Water Act 1989

  6,000

  400

  1 October 1991

  Huyton magistrates court

  On 28 January 1992 caused sewage effluent to be discharged into Court Hey Brook from surface water outfalls at Court Hey Road. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  10,000

  420

  3 February 1993

  Ashton Under Lyne magistrates court

  On 21 September 1992 caused trade effluent to be discharged from Lumb Lane Pumping Station, Droylsden. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  10,000

  510

  2 March 1993

  Ormskirk magistrates court

  On 23 April 1992 caused sewage effluent to be discharged into Hurlston Brook from Smithy Lane Pumping Station, Hurlston Green. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  3,000

  250

  2 March 1993

  Ormskirk magistrates court

  On 13 August 1992 caused sewage effluent to be discharged into Hurlston Brook from Smithy Lane Pumping Station, Hurlston Green. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  5,000

  250

  28 July 1993

  Reedley magistrates court

  On 21 May 1992 caused a discharge from the storm sewage overflow at Burnley Waste Water Treatment Works, Burnley to Walverden Water. Contrary to Sections 85(3)(a) and 85 (6) of the Water Resources Act 1991

  2,000

  989

  14 September 1993

  Leyland magistrates court

  On 27 April 1992 caused sewage effluent to be discharged into the River Lostock at Lostock Hall, Bamber Bridge, Preston. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  9,000

  860

  3 November 1993

  Oldham magistrates court

  On 5 February 1993 caused trade effluent to be discharged into the River Medlock at Waterhead, Oldham. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  3,000

  515

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  In England, authorities are now reporting annually on the progress being made in implementing the measures identified. Furthermore, we have now asked local authorities to report on their policies and achievements specifically in combating fuel poverty, at the same time as they submit their HECA progress reports. The next HECA progress report from local authorities is due by 31 July 2000.

  The energy conservation report prepared by Shrewsbury and Atcham Borough Council, and their most recent progress report, should be available from the Council.

  North West Water
  Mr. Martlew
  To ask the Secretary of State for the Environment, Transport and the Regions how many successful prosecutions the Environment Agency has undertaken against North West Water; and what level of fines have been imposed. [131404]

  Mr. Mullin
  Listed in the table are details of the successful prosecutions carried out against North West Water by the Environment Agency since October 1991 and the fines imposed:
  209W

  Date

  Court

  Offence

  Fine (£)

  Cost (£)

  9 November 1993

  Leigh magistrates court

  On 9 August 1992 caused sewage effluent to be discharged into a tributary of the River Glaze from Latley Common Pumping Station at Leigh. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  1,000

  719

  25 January 1994

  Ellesmere Port magistrates court

  On 11 May 1993 caused trade effluent to be discharged into Mill Brook. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  2,000

  700

  25 January 1994

  Ellesmere Port magistrates court

  On 17 August 1993 caused trade effluent, namely reactivated sewage sludge, to be discharged into Mill Brook from Ellesmere Port Sewage Treatment Works. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  4,000

  686

  3 February 1994

  Preston magistrates court

  On 3 July 1993 caused sewage effluent to be discharged into Savick Brook, Fulwood. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  3,000

  453

  28 March 1994

  Barrow in Furness magistrates court

  On 19 September 1993 caused sewage effluent to be discharged into the River Leven Estuary from Ulverston Waste Water Treatment Works. Contrary to Section 85(6) of the Water Resources Act 1991

  6,000

  764

  7 April 1994

  Chorley magistrates court

  On 31 August 1993 caused trade effluent, namely surface water containing Chlorine, to be discharged into the River Douglas from Rivington Water Treatment Plant, Bolton Road, Horwich. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  5,000

  898

  25 May 1994

  Chorley magistrates court

  On 21 September 1993 caused sewage effluent to be discharged into the River Chor diversion from Outlet 3A at Chorley Waste Water Treatment Works. Contrary to Sections 85(6) of the Water Resources Act 1991

  2,000

  596

  7 June 1994

  Leyland magistrates court

  On 11 January 1994 caused sewage effluent to be discharged to the River Darwen from premises known as Blackburn Waste Water Treatment Works. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  4,000

  736

  26 August 1994

  Lytham magistrates court

  On 30 November 1993 caused polluting matter to enter Main Dyke from Western Waste Water Treatment Works. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  4,000

  744

  13 September 1994

  Ellesmere Port magistrates court

  On 31 January 1994 caused sewage effluent to be discharged into Thornton Brook at Ellesmere Port which did not comply with a Condition of the Company's Consent to Discharge. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  3,000

  319

  21 September 1994

  Liverpool magistrates court

  On 23 September 1993 caused sewage effluent to enter Courtney Brook. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  10,000

  495

  21 September 1994

  Liverpool magistrates court

  On 8 July 1993 caused sewage effluent to enter Courthey Brook. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  10,000

  484

  3 October 1994

  Huyton magistrates court

  On 9 March 1994 failed to take reasonable steps to ensure water discharge as a result of aeration tank cleaning into Knowsley Brook from Knowsley Water Treatment Works was free as reasonable possible from solids and polluting substances. Contrary to Section 165(3)(b) of the Water Industry Act 1991

  500

  903

  18 November 1994

  Penrith magistrates court

  On 1 July 1994 caused sewage effluent to be discharged into Shap Beck from premises at Shap Waste Water Treatment Works. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  3,000

  1,292

  7 February 1995

  Leyland magistrates court

  On 28 May 1994 caused sewage effluent to be discharged into Black Brook at Hoghton near Blackburn. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  2,500

  922

  15 February 1995

  Preston magistrates court

  Between 8 August 1994 and 15 August 1994 caused sewage effluent to be discharged into Eaves Brook from Victoria Road CSO, Preston. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  5,000

  721

  210W 211W

  Date

  Court

  Offence

  Fine (£)

  Cost (£)

  18 March 1995

  Oldham magistrates court

  On 23 November 1994 caused sewage effluent to be discharged into Wince Brook from Brookside Business Park, Chadderton. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  5,000

  699

  10 November 1995

  Barrow in Furness magistrates court

  In the one year period from 27 July 1994 to 26 July 1995 caused sewage effluent to be discharges into Blea Beck from Askam Waste Water Treatment Works contrary to Condition C1 of Consent. Contrary to 85(6) of the Water Resources Act 1991

  7,500

  490

  18 January 1996

  Blackburn magistrates court

  On 30 April 1995 caused sewage effluent to be discharged into Sheet Bridge Brook from Morris Brow Pumping Station, Tock Holes Road, Blackburn. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  5,000

  1,889

  7 March 1996

  Windermere magistrates court

  On 6 May 1995 caused sewage effluent to be discharged into the River Rothay from Ambleside Waste Water Treatment Works. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  4,000

  1,931

  21 January 1998

  Stockport magistrates court

  On or about 17 July 1997 caused polluting matter namely sewage sludge to enter Torkington Brook from land at Lower Barnfold Farm, Hawk Green near Marple. Contrary to Sections 85(1) and 85(6) of the Water Resources Act 1991

  5,000

  560

  21 January 1998

  Stockport magistrates court

  On 4 August 1997 caused polluting matter namely sewage sludge run-off to enter Norbury Brook. Contrary to Section 85(1) of the Water Resources Act 1991

  6,000

  531

  2 March 1998

  Preston magistrates court

  On 4 February 1997 caused sewage effluent to be discharged into the River Ribble from land at Riversway Docks. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  3,000

  834

  16 March 1998

  Preston magistrates court

  On 18 April 1997 caused polluting matter namely silt to enter Eaves Brook and Savick Brook from a water supply main at Deepdale, Fulwood. Contrary to Sections 85(3)(a) and 85(6) of the Water Resources Act 1991

  1,500

  1,183

  1 July 1999

  Leyland magistrates court

  On 8 July 1998 caused polluting matter to enter Holes Brook from Blackburn Waste Water Treatment Works. Contrary to Section 85(1) of the Water Resources Act 1991

  5,000

  793

  28 October 1999

  Bury magistrates court

  On 7 December 1998 caused sewage effluent to be discharges into the River Irwell. Contrary to Sections 85(3)(a) of the Water Resources Act 1991

  5,000

  810

CULTURE, MEDIA AND SPORT

  Opinion Research
  Mr. Don Foster
  To ask the Secretary of State for Culture, Media and Sport, pursuant to his answer of 25 May 2000,Official Report, column 581W, if he will place copies of all unpublished results of market and opinion research relating to the work of the Millennium Commission and the operation of the Dome in the Library. [124905]

  Janet Anderson
  [holding answer 8 June 2000]: The main focus of the Millennium Commission is the distribution of grants through its funding programmes. A small amount of market research has been carried out in relation to the way in which the Millennium Commission is viewed rather than the work that it has funded. The results have only internal relevance and are used by the Commission's Communications Department to assess the impact of their communications strategy. For this reason it would not be appropriate to publish or release this research. However, the Commission did undertake
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  opinion research which looked at how MPs regard the work of the Commission. A summary of the results of this work will be placed in the Library.

  The majority of market research relating to those projects funded by the Millennium Commission is undertaken by the projects themselves. As part of the application process and subsequent development and operation of projects, market research is often carried out. However, this research is the property of the projects and is provided to the Commission on a confidential basis.

  Osborne Convalescent Home
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport what legislative process is required to(a) repeal the Osborne Estates Act 1902 and (b) close the Osborne convalescent home. [127308]

  Mr. Chris Smith
  [holding answer 22 June 2000]: An Act of Parliament is required to repeal the Osborne Estate Act 1902. Closure of the King Edward VII Convalescent Home does not require legislation. My responsibility under the 1902 Act is to devote part of Osborne house to

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  the benefit of members of the Armed Forces and Civil Service, but the running of a convalescent home is not a specific requirement.

  Dome (Loans)
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport what recent discussions he has had with interested parties concerning the loaning of public money to the Dome; and if he will make a statement. [129280]

  Janet Anderson
  [holding answer 6 July 2000]: My right hon. Friend the Secretary of State has had no discussions with interested parties concerning the loaning of public money to the Dome.

  New Millennium Experience Company
  Mr. Baker
  To ask the Secretary of State for Culture, Media and Sport for what reason the signed-off accounts of the NMEC relating to the period ended 31 December 1999 have not been placed in the Library. [130395]

  Janet Anderson
  [holding answer 13 July 2000]: The New Millennium Experience Company (NMEC) will publish its Annual Report and Financial Statement before the start of the Parliamentary recess as planned. Copies of the Report will be placed in the Libraries of the House.

  Annual Reports
  Mr. Rendel
  To ask the Secretary of State for Culture, Media and Sport what the cost of producing the annual report of(a) the Arts Council of England and (b) the National Lottery was in each of the two most recent years in which they were published. [131121]

  Kate Hoey
  [holding answer 18 July 2000]: I have asked the Arts Council of England to provide the separate costs of producing their grant-in-aid and National Lottery reports for 1998 and 1999. When this information is available, I will write to the hon. Member and place a copy in the Library of the House.

  World Cup 2006
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the value for money obtained by the England bid to host the 2006 World Cup. [130844]

  Mr. Chris Smith
  [holding answer 17 July 2000]: The Football Association's funding agreement with Sport England set out in detail how Lottery money could be used to support the 2006 World Cup bid—primarily the costs of staff, administration, events, exhibitions and technical studies. Sport England is fully satisfied with its monitoring arrangements for ensuring that the Lottery funding allocated to supporting the bid has been used with the maximum of economy.

  The uses to which the bid's other sources of funding have been put are entirely matters for the FA, the Premier League and the bid's commercial sponsors.

  World War II Commemoration
  Mr. Cohen
  To ask the Secretary of State for Culture, Media and Sport if he will implement the recommendation 214W
  of Sir John Mortimer's Advisory Group that there should be in an open space a statue commemorating Women in World War II; and if he will make a statement. [130814]

  Mr. Alan Howarth
  Sir John Mortimer's advisory group considered that, rather than being placed on the vacant plinth in Trafalgar Square, the proposed memorial to Women in World War II should be located in a park or an open space where it could be more easily enjoyed. My right hon. Friend the Secretary of State agrees with the Mortimer group's recommendations. Finding an appropriate location for the memorial is a matter for the Women in World War II campaign charity. My Department is, however, currently exploring the possibility of a site in Whitehall which might be used for the proposed memorial.

  Yorkshire and Humberside Regional Cultural Consortium
  Mr. Denzil Davies
  To ask the Secretary of State for Culture, Media and Sport what has been the total cost to public funds from its inception to the most recent date for which figures are available of administering the Yorkshire and Humberside Regional Cultural Consortium. [131243]

  Janet Anderson
  At 11 July 2000, the Regional Cultural Consortium for Yorkshire and the Humber had spent £15,000 from the budget allocated to it by my Department. Within that total, £12,000 has been spent on work in connection with the preparation of a regional cultural strategy, including the publication of a consultation paper "Towards a Cultural Strategy for the Yorkshire Region", while £3,000 has been spent on what might be deemed administration, for example organising and facilitating meetings and the travel and subsistence costs of Consortium members. It is not possible to cost staff time associated with the work of the Consortium for either the one staff member from my Department in the region, or for other help received from staff of the regional cultural agencies, regional partners and local authorities.

  Note:

  Figures have been rounded to the nearest £1,000.

  ITV Nightly News
  Mr. Kaufman
  To ask the Secretary of State for Culture, Media and Sport if he will call for a report from the Independent Television Commission stating the deadline for compliance by ITV with the ITC's requirement to bring forward the timing of the nightly news. [130857]

  Janet Anderson
  I understand that the Independent Television Commission will consider the matter at their meeting on 20 July.

  Hotel and Restaurant Regulation
  Mr. Matthew Taylor
  To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the Better Regulation Task Force report entitled "Tackling the Impact of Increasing Regulation—A Case Study of Hotels and Restaurants"; and if he will make a statement. [130539]

  Janet Anderson
  [holding answer 17 July 2000]: My right hon. Friend the Secretary of State and I welcome the Better Regulation Task Force's report. It recognises the key importance of hotels and restaurants to the national

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  economy, and the industry's concern about the possible impact of regulation on its successful development. This is something we are already addressing by improving the machinery for considering the effects of policies on hotels and restaurants—one of the outcomes of the first Tourism Summit of Ministers held earlier this year. My Department, as lead sponsor for the tourism industry, will be co-ordinating the Government's formal response to the report over the next three months. The response will be reported to the House.

PRIME MINISTER

  Electronic Test Facility (Capenhurst)
  Mr. Matthew Taylor
  To ask the Prime Minister what representations he has received from the Irish Government with regard to the Ministry of Defence's Electronic Test Facility formerly sited at the British Nuclear Fuels Ltd. site at Capenhurst, Cheshire, since 26 July 1999; when they were received; and from which Irish Government Departments. [130494]

  The Prime Minister
  The Irish Foreign Minister spoke to my right hon. Friend the Foreign Secretary on 24 January about the allegations raised last year in a Channel 4 television programme about the Ministry of Defence's former Electronic Test Facility at Capenhurst.

  I understand that the Irish Ambassador also raised these allegations at meetings with FCO officials on 12 October 1999 and 10 January 2000.

  Kosovo
  Mr. Dalyell
  To ask the Prime Minister what assessment he has made of how long the presence of(a) the British Army and (b) KFOR will be required in Kosovo. [131063]

  The Prime Minister
  UNSCR 1244 did not set a fixed end-point for the deployment of the international security presence in Kosovo. The Government are doing all they can to encourage progress in Kosovo, but it is not possible at this stage to say when KFOR, including the British contribution to it, will be able to leave.

  Engagements
  Sir Peter Tapsell
  To ask the Prime Minister if he will list his official engagements for Wednesday 19 July. [130795]

  The Prime Minister
  This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

LORD CHANCELLOR'S DEPARTMENT

  Public Records
  Mr. John M. Taylor
  To ask the Parliamentary Secretary, Lord Chancellor's Department, pursuant to his answer of 16 May 2000,Official Report, column 114W, about public records, if he will list the correspondence between Mr. Denis McCready and the Chairman or Secretary of the Advisory Council on Public Records
  216W
  during the period from 18 June 1997 to March 2000; and if he will publish the correspondence dated 14 and 17 June 1997. [130929]

  Mr. Lock
  There was no direct correspondence between Mr. Denis McCready and the Chairman or Secretary of the Advisory Council on Public Records during the period from 18 June 1997 to 31 March 2000. The correspondence dated 14 and 17 June was summarised in the answer given by my predecessor on 8 July 1999,Official Report, column 622W. It would not be appropriate to publish the correspondence in full as the letters were between the Advisory Council and a private citizen.

  Mr. John M. Taylor
  To ask the Parliamentary Secretary, Lord Chancellor's Department what action the Lord Chancellor will need to take in the next decade, under the provisions of the Public Records Act 1958, to release the Registrar General from his statutory duty to transfer the 1921 to 1971 census returns to the Public Record Office; and in which years that action will need to be taken. [130930]

  Mr. Lock
  Census returns are subject to 100 year closure, in line with section 1(3) of the Census Confidentiality Act 1991 and with the Government policy set out in the White Paper "Open Government" (Cm 2290, 1993). This is on the grounds that they consist of documents supplied in confidence, the disclosure of which would constitute a breach of good faith.

  At present the census returns for 1921 to 1961 are retained by the Office for National Statistics under section 3(4) of the Public Records Act 1958. The following Lord Chancellor's Instruments (LCI) are current:
  LCI (Retention of Public Records) No 23, 1992: retention of 1961 returns for 10 years (which gives authority for retention until 2003)
  LCI (Retention of Public Records) No 38, 1996: retention of 1921 and 1951 returns for 10 years (which gives authority for retention until 2007).

  The 1971 returns are not yet 30 years old and are therefore not due for transfer to the Public Record Office. In the next decade I would expect the Office for National Statistics to apply for further retention of these records under the Public Records Act 1958.

  The Registrar General remains subject to the Public Records Act 1958 and under that legislation will continue to transfer census returns to the Public Record Office at the appropriate time.

  Departmental Initiatives
  Dr. Lynne Jones
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will list each departmental initiative since May 1997 requiring bids for funding together with the total resources available, the number of successful bids and the proportion this represents of total bids received; and what data he collects on the average expenditure of organisations bidding for funding through each initiative. [131090]

  Mr. Lock
  I refer my hon. Friend to the answer given to her by my right hon. Friend the Chief Secretary to the Treasury on 17 July 2000,Official Report, column 93W, and to the Statement on the Spending Review made by my right hon. Friend the Chancellor of the Exchequer on 18 July 2000, Official Report, columns 219–44.

HEALTH

  Residential Homes
  Mr. Hilary Benn
  To ask the Secretary of State for Health further to his written answer of 19 April 2000,Official Report, column 512W, when he expects to make an announcement on research into the impact on life expectancy of the closure of residential homes for the elderly. [130223]

  Mr. Hutton
  We are aware that when residential homes close, elderly residents may be affected. However, when such a decision is made, it is essential that there should be proper arrangements for the safe and satisfactory transfer of all residents to other suitable homes in a way which creates the minimum possible discomfort to all concerned.

  We take research into life expectancy seriously. This is an issue that the Office for National Statistics tracks carefully and we are considering investing in a longitudinal study to give us information on life expectancy. However, we have concluded that research into life expectancy that focuses narrowly on the closure of residential homes cannot be a priority for public funding. It would be unlikely to have an impact on the life of elderly people or decisions about the closure of homes.

  Parkinson's Disease
  Jane Griffiths
  To ask the Secretary of State for Health what assessment he has made of the efficacy of therapeutic cloning in the treatment of Parkinson's disease. [128877]

  Yvette Cooper
  The application of therapeutic cloning to human healthcare was considered by the Chief Medical Officer's Expert Group on Therapeutic Cloning. The group's report is currently being considered by Ministers.

  Emergency Contraception
  Ms Oona King
  To ask the Secretary of State for Health if he will examine the feasibility of making the morning-after pill available on a non-prescription basis; and what recent representations he has received on making the morning-after pill available through specific certified outlets without prescription. [128764]

  Yvette Cooper
  The Medicines Control Agency is presently consulting on an application to reclassify levonorgestrel 0.75 milligramme for emergency contraception from prescription only to pharmacy availability for women aged 16 years and over. The consultation period ended on 29 June 2000. The responses will then be considered by the Medicines Commission and their recommendations presented to Ministers for a decision. If we decide to go ahead, an Order would be laid before the House later in the year.

  Whatever is decided, emergency hormonal contraception, the morning after pill, will continue to be available, free of charge under existing National Health Service arrangements, from general practitioners, family planning clinics and some hospital accident and emergency departments.
  218W
  Shona McIsaac
  To ask the Secretary of State for Health (1) if he will make a statement on the availability of emergency contraception; [129944]

  (2) what plans he has to make emergency contraception available over the counter at pharmacists. [129943]

  Yvette Cooper
  Emergency hormonal contraception is currently available on prescription through general practitioners, family planning clinics, youth services, walk in centres, and some accident and emergency departments. The Sexual Health/HIV Strategy is looking at improving access to National Health Service contraception services including emergency contraception products.

  The Medicines Control Agency is presently consulting on an application to reclassify levonorgestrel 0.75 milligramme for emergency contraception from prescription only to pharmacy availability for women aged 16 years and over. The consultation period ended on 29 June 2000. The responses are to be considered by the Medicines Commission and their recommendations presented to Ministers for a decision. If it were decided to proceed, an Order would be laid before the House later in the year.

  Shona McIsaac
  To ask the Secretary of State for Health (1) what assessment he has made of the recent trials of over-the-counter prescribing of emergency contraception; [129942]

  (2) what assessment he has made on the impact on levels of abortion in the trial areas for emergency contraception; and if he will make a statement. [129941]

  Yvette Cooper
  There are currently two pilot schemes run by health action zones (HAZs) in Manchester, Salford and Trafford and Lambeth, Southwark and Lewisham where emergency contraception is supplied by pharmacists, under a patient group direction. Both pilots form part of the HAZs' overall strategy to reduce the rate of unwanted pregnancies locally. Both pilots are to be fully evaluated and the results will be published.

  Abortion data by health authority are published annually and provisional data for 2000 will not be available until May 2001. It is therefore too early to make any assessment on the impact on levels of abortion in the pilot areas. Fluctuations in the abortion rate may be subject to a number of different factors and it is therefore difficult to attribute any changes to one intervention or event. There have been no studies which have been able to predict the effect the availability of emergency contraception through pharmacies may have on unwanted pregnancy rates.

  Mr. Gummer
  To ask the Secretary of State for Health (1) for what reasons his Department encourages increased use of the morning-after pill as part of its National Sexual Health Strategy; and if he will make a statement; [130693]

  (2) for what reasons his Department promotes the morning-after pill as a way to reduce the rate of teenage pregnancies; and if he will make a statement. [130692]

  Yvette Cooper
  Emergency contraception is a safe and effective method of preventing pregnancy when a woman has had unprotected sex or when she knows something
  219W
  has gone wrong with her usual method. We therefore want to ensure the best possible access to emergency contraception for those who need it. The sexual health/ HIV strategy is looking at improving access to the full range of National Health Service contraception services, including emergency contraception products. One of the aims of the strategy is to reduce the number of unintended pregnancies in all age groups, and reducing the rate of teenage pregnancy is one of my right hon. Friend the Secretary of State's key priorities.

  Emergency contraception should not be seen as a replacement for regular contraception, as it is not as effective as regular hormonal contraception such as the pill and therefore should he used only as an occasional measure.

  Mr. Gummer
  To ask the Secretary of State for Health (1) what measures are in place to ensure that a woman's medical history is known before she is issued with the morning-after pill; and if he will make a statement; [130683]

  (2) what follow-up care is available to women prescribed the morning-after pill; and if he will make a statement. [130684]

  Yvette Cooper
  The Faculty of Family Planning and Reproductive Health Care at the Royal College of Obstetricians and Gynaecologists have researched the available evidence and published updated Recommendations for Clinical Practice regarding emergency contraception in April of this year1.

  The Faculty recommendations advise that established pregnancy is the sole contraindication for use of hormonal emergency contraception (HEC). The Faculty considers that for all other women the benefits of HEC, particularly the progestogen-only method, generally outweigh the risks.

  Regarding follow up action, the recommendations suggest that future contraception should be discussed sympathetically and, preferably arranged. Advice should be given as to when the woman can expect her next period and an appointment offered and/or arrangements made to discuss any problems including on-going contraception information/supply.
  1 Recommendations for clinical practice: emergency contraception. Faculty of Family Planning and Reproductive Health Care. April 2000 update.

  Mr. Gummer
  To ask the Secretary of State for Health how many prescriptions of the morning after pill there were in the last 10 years for which figures are available; and if he will provide a breakdown by age. [130727]

  Yvette Cooper
  The information requested is in the tables.

  Table 1 shows the number of prescriptions dispensed in the community in England. A breakdown by age of the patient receiving these prescriptions is not available. Table 2 shows the number of prescriptions for hormonal emergency contraceptives prescribed at National Health Service family planning clinics in England from 1989 to 1998. Table 3 shows the number of prescriptions for hormonal emergency contraceptives prescribed at NHS family planning clinics in 1998–99, by age.
  220W

  Table 1: Number of prescriptions dispensed in the community for Schering PC4 ('morning after pill'), 1989 to 1999

  England

  Thousand

  Year

  Number of prescriptions

  1989

  122.7

  1990

  189.6

  1991

  232.8

  1992

  272.2

  1993

  313.3

  1994

  363.8

  1995

  475.4

  1996

  565.6

  1997

  552.8

  1998

  559.8

  1999

  536.8

  Notes:

  1. The data for 1989 and 1990 are not strictly consistent with data from 1991 onwards.

  2. Figures for 1989 and 1990 are based on fees and on a sample of 1 in 200 prescriptions dispensed by community pharmacists and appliance contractors only.

  3. Figures for 1991 onwards are based on items and cover all prescriptions dispensed by community pharmacists, appliance contractors dispensing doctors and prescriptions submitted by prescribing doctors for items personally administered.

  Table 2: Number of prescriptions for hormonal emergency contraceptives prescribed at NHS Family Planning Clinics in England from 1989 to 1998

  Thousand

  Year

  Number of prescriptions

  1989

  36.9

  1990

  45.5

  1991

  63.0

  1992

  76.7

  1993

  92.2

  1994

  112.1

  1995

  157.6

  1996

  193.7

  1997

  205.1

  1998

  209.9

  Source:

  Department of Health Statistics Division SD2B

  KT31

  Table 3: Number of prescriptions for hormonal emergency contraceptives prescribed at NHS Family Planning Clinics in 1998–99, by age

  Thousand

  Age group

  Number of prescriptions

  All ages

  209.9

  Under 16

  21.5

  16–19

  83.4

  20–24

  55.0

  25–34

  40.0

  35 and over

  10.0

  Source:

  Department of Health Statistics Division SD2B

  KT31

  Information about NHS Family Planning Clinic activity is derived from the Department of Health annual return KT31 and is published each year. The latest information is contained in the Statistical Bulletin "NHS Contraceptive Services, England: 1998–99". A copy of the bulletin is in the Library and can also be found on the Department of Health website www.gov.uk/public/sb9930.htm.
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  Mr. Gummer
  To ask the Secretary of State for Health what discussions he has held with the All-Party Pharmacy Group on the morning-after pill; and if he will make a statement. [130688]

  Yvette Cooper
  There have been no discussions between Health Ministers and the All-Party Pharmacy Group on the issue of emergency contraception. However there has been correspondence between my hon. Friend the Member for Dartford (Dr. Stoate), chair of the group, and myself following the group's report on extending access to emergency contraception through community pharmacies.

  Mr. Gummer
  To ask the Secretary of State for Health if he defines the morning-after pill as an abortifacient; and if he will make a statement. [130691]

  Yvette Cooper
  The accepted legal and medical view is that emergency contraception is not a method of abortion. Emergency contraception pills work before implantation and so before a pregnancy has been established. Emergency contraceptive pills will not cause an abortion if taken after implantation.

  My right hon. Friend the Attorney-General, in answering a parliamentary question in 1983, stated that medical practitioners would not be prosecuted for illegal abortion if they sought to prevent implantation by the use of the 'morning-after pill' or an inter-uterine device.

  Mr. Robertson
  To ask the Secretary of State for Health what advice he has issued to general practitioners on prescribing of the morning-after pill; and if he will make a statement. [131381]

  Yvette Cooper
  [holding answer 18 July 2000]: None. Prescribing of emergency contraception is a matter for the clinical judgment of the practitioner concerned. The Faculty of Family Planning and Reproductive Health Care at the Royal College of Obstetricians and Gynaecologists recently researched the available evidence and published updated recommendations for clinical practice for emergency contraception in April this year.

  Smoking Policy
  Mr. Sarwar
  To ask the Secretary of State for Health if he will make a statement on the role of Zyban in the development of the Government's policy on smoking. [128718]

  Name

  Proprietor

  Abortion 20–24 weeks gestation

  Abbey Gisburne Park Hospital, Clitheroe

  Abbey Hospitals Ltd.

  —

  BMI Alexandra Hospital, Cheadle

  BMI Healthcare

  —

  BMI Bath Clinic

  BMI Healthcare

  —

  BMI The Blackheath Hospital, London

  BMI Healthcare

  —

  BMI The Chaucer Hospital, Canterbury

  BMI Healthcare

  —

  BMI The Clementine Churchill Hospital, Harrow

  BMI Healthcare

  —

  BMI The Droitwich Spa Hospital, Worcester

  BMI Healthcare

  —

  BMI The Harbour Hospital, Poole

  BMI Healthcare

  —

  BMI The Highfield Hospital, Rochdale

  BMI Healthcare

  —

  BMI The Nuneaton Private Hospital

  BMI Healthcare

  —

  BMI The Park Hospital, Nottingham

  BMI Healthcare

  —

  BMI The Sandringham Hospital, King's Lynn

  BMI Healthcare

  —

  BMI The Somerfield Hospital, Maidstone

  BMI Healthcare

  —

  BMI The Winterbourne Hospital, Dorchester

  BMI Healthcare

  —

  BPAS Blackdown Clinic, Leamington Spa

  BPAS

  Yes

  BPAS Central London Clinic, London

  BPAS

  —

  BPAS Danum Lodge Clinic, Doncaster

  BPAS

  Yes

  222W
  Yvette Cooper
  Zyban is now available on National Health Service prescription. Zyban is a non-nicotine based treatment which has been shown to be effective in helping smokers to quit in combination with motivational support. This drug is an entirely new approach to treating nicotine dependence and NHS availability will give general practitioners an effective way to help smokers.

  Abortion
  Mr. Amess
  To ask the Secretary of State for Health what requirements abortion clinics must meet to be licensed by his Department. [129412]

  Yvette Cooper
  Any independent sector place wishing to carry out termination of pregnancy must first of all be registered with the local health authority under the Registered Homes Act 1984. All units are inspected and must undertake to comply with the Department's Required Standard Operating Principles (RSOP), which cover a variety of topics. The RSOPs can be found in the "Procedures For The Approval Of Independent Sector Places For The Termination Of Pregnancy". Copies are available in the Library.

  Approved clinics are subject to regular unannounced inspections. Failure to comply with the RSOPs, or to maintain the standards required by my right hon. Friend the Secretary of State may lead to withdrawal of approval.

  Mr. Amess
  To ask the Secretary of State for Health if he will list the private sector clinics and hospitals providing abortions, indicating(a) the number of approved beds they contain and (b) whether they are approved for (i) surgical day care abortions with or without general anaesthetic and (ii) late abortions, indicating the name of the proprietor in each case. [129413]

  Yvette Cooper
  The number of approved beds is controlled by local health authorities under the Registered Homes Act 1984 and this information is not collated centrally. The independent sector places approved to carry out termination of pregnancy are shown in the table. All of them are approved to undertake surgical day care abortions, subject to their conditions of registration under the above Act. Clinics approved to perform abortions from 20 weeks up to 24 weeks gestation are identified in the table. No independent sector place is approved to carry out termination of pregnancy after 24 weeks gestation.
  223W

  Name

  Proprietor

  Abortion 20–24 weeks gestation

  BPAS Dean Park Clinic, Bournemouth

  BPAS

  —

  BPAS Leigham Clinic, London

  BPAS

  Yes

  BPAS Merseyside Clinic, Liverpool

  BPAS

  —

  BPAS Robert Clinic, Birmingham

  BPAS

  —

  BPAS Rosslyn Clinic, East Twickenham

  BPAS

  Yes

  BPAS Wistons Clinic, Brighton

  BPAS

  —

  Bromhead Hospital, Lincoln

  Bromhead Hospital Trust Ltd.

  —

  BUPA Alexandra Hospital, Walderslade

  BUPA Hospitals Ltd.

  —

  BUPA Belvedere Hospital, Scarborough

  BUPA Hospitals Ltd.

  —

  BUPA Chalybeate Hospital, Southampton

  BUPA Hospitals Ltd.

  —

  BUPA Hospital Bristol

  BUPA Hospitals Ltd.

  —

  BUPA Hospital Bushey, Watford

  BUPA Hospitals Ltd.

  —

  BUPA Hospital Clare Park, Farnham

  BUPA Hospitals Ltd.

  —

  BUPA Hospital Leicester

  BUPA Hospitals Ltd.

  —

  BUPA Hospital Norwich

  BUPA Hospitals Ltd.

  —

  BUPA Hospital Washington

  BUPA Hospitals Ltd.

  —

  BUPA Hull and East Riding Hospital

  BUPA Hospitals Ltd.

  —

  BUPA Murrayfield Hospital, Wirral

  BUPA Hospitals Ltd.

  —

  BUPA North Cheshire Hospital, Warrington

  BUPA Hospitals Ltd.

  —

  BUPA South Bank Hospital, Worcester

  BUPA Hospitals Ltd.

  —

  Duchy Hospital, Truro

  Community Hospitals Ltd.

  —

  Duchy Nuffield Hospital, Harrogate

  Nuffield Nursing Homes Trust

  —

  Fitzwilliam Hospital, Peterborough

  Community Hospitals Ltd.

  —

  Foscote Private Hospital, Banbury

  Foscote Court (Banbury) Trust Ltd.

  —

  Marie Stopes Bristol Centre

  Marie Stopes International

  —

  Marie Stopes Ealing Centre

  Marie Stopes International

  Yes

  Marie Stopes Essex Centre

  Marie Stopes International

  —

  Marie Stopes House

  Marie Stopes International

  —

  Marie Stopes Leeds Centre

  Marie Stopes International

  —

  Marie Stopes Manchester Centre

  Marie Stopes International

  —

  Marie Stopes South London Centre

  Marie Stopes International

  Yes

  New Hall Hospital, Salisbury

  Community Hospitals Ltd.

  —

  New Victoria Hospital, Kingston upon Thames

  Trustees of Hospital

  —

  Newcastle Nuffield Hospital

  Nuffield Nursing Homes Trust

  —

  North London Nuffield Hospital, Enfield

  Nuffield Nursing Homes Trust

  —

  Park Hill Hospital, Doncaster

  Community Hospitals Group

  —

  Parkview Private Clinic Ltd, Wanstead

  Parkview Private Clinic Ltd.

  —

  South Manchester Private Clinic, Stockport

  Fraterdrive Ltd.

  —

  The Acland Nuffield Hospital, Oxford

  Nuffield Nursing Homes Trust

  —

  The Calthorpe Clinic, Birmingham

  The Calthorpe Clinic Ltd.

  —

  The Chesterfield Nuffield Hospital, Bristol

  Nuffield Nursing Homes Trust

  —

  The Evelyn Hospital, Cambridge

  Trustees of Hospital

  —

  The Exeter Nuffield Hospital

  Nuffield Nursing Homes Trust

  —

  The Garden Hospital, Hendon

  BMI Healthcare

  —

  The Hampshire Clinic, Basingstoke

  BMI Healthcare

  —

  The Leicester Nuffield Hospital

  Nuffield Nursing Homes Trust

  —

  The London Bridge Hospital, London

  St. Martins Healthcare Ltd.

  —

  The North Staffordshire Nuffield Hospital, Newcastle under Lyme

  Nuffield Nursing Homes Trust

  —

  The Plymouth Nuffield Hospital

  Nuffield Nursing Homes Trust

  —

  The Portland Hospital, London

  PPP/Columbia Healthcare Ltd.

  Yes

  The Rivers Hospital, Sawbridgeworth

  Community Hospitals Ltd.

  —

  The Shropshire Nuffield Hospital, Shrewsbury

  Nuffield Nursing Homes Trust

  —

  The Somerset Nuffield Hospital, Taunton

  Nuffield Nursing Homes Trust

  —

  The Suffolk Nuffield Hospital at Christchurch Park, Ipswich

  Nuffield Nursing Homes Trust

  —

  The Wellington Hospital, London

  PPP/Columbia Healthcare Ltd.

  —

  The Woodland Hospital, Kettering

  Community Hospitals Ltd.

  —

  The Wye Valley Nuffield, Hereford

  Nuffield Nursing Homes Trust

  —

  The Yorkshire Clinic, Bingley

  Community Hospitals Ltd.

  —

  Winfield Hospital, Gloucester

  Community Hospitals Ltd.

  —

  Mr. Amess
  To ask the Secretary of State for Health how many consent forms were signed by women in the years 1995 to 2000 permitting the use of fetal tissue from their aborted babies to be used in(a) research and (b) other purposes. [129411]

  Yvette Cooper
  The information requested is not available centrally.

  Pregnancy Advice Bureaux
  Mr. Amess
  To ask the Secretary of State for Health if he will list the registered pregnancy advice bureaux. [129414]

  Yvette Cooper
  The following pregnancy advice bureaux are registered with the Department of Health.
  225W

  BPAS Basingstoke Branch

  BPAS Bath Branch

  BPAS Birmingham Branch

  BPAS Bournemouth Branch

  BPAS Brighton Branch

  BPAS Bristol Branch

  BPAS Cannock Branch

  BPAS Central London Branch

  BPAS Chester Branch

  BPAS Coventry Branch

  BPAS Doncaster Branch

  BPAS Finsbury Park Branch

  BPAS High Wycombe Branch

  BPAS Leeds Branch

  BPAS Leigham Lodge, London

  BPAS Liverpool Branch

  BPAS Luton Branch

  BPAS Manchester Branch

  BPAS Milton Keynes Branch

  BPAS Newcastle Branch

  BPAS Peterborough Branch

  BPAS Preston Branch

  BPAS Richmond Branch

  BPAS Sheffield Branch

  BPAS Swindon Branch

  BPAS Telford Branch

  BPAS Torquay Branch

  Choice Pregnancy Advisory Service, Bolton

  Choice Pregnancy Advisory Service, Warrington

  East Midlands Pregnancy Advisory Service, Nottingham

  Marie Stopes Basildon Centre

  Marie Stopes Bolton Centre

  Marie Stopes Bradford Centre

  Marie Stopes Brighton Centre

  Marie Stopes Bristol Centre

  Marie Stopes Canterbury Centre

  Marie Stopes Chatham Centre

  Marie Stopes Colchester Centre

  Marie Stopes Crawley Centre

  Marie Stopes Darlington Centre

  Marie Stopes Ealing Centre

  Marie Stopes Essex Centre

  Marie Stopes Golders Green Centre

  Marie Stopes House, London

  Marie Stopes Leeds Centre

  Marie Stopes Maidstone Centre

  Marie Stopes Manchester Centre

  Marie Stopes Milton Keynes Centre

  Marie Stopes Newcastle Centre

  Marie Stopes North London Centre

  Marie Stopes Reading Centre 1

  Marie Stopes Reading Centre 2

  Marie Stopes Sittingbourne Centre

  Marie Stopes South London Centre

  Marie Stopes Staines Centre

  Marie Stopes Tottenham Centre

  Marie Stopes Watford Centre

  Marie Stopes Woking Centre

  Pregnancy Advisory Service, Blackpool

  Pregnancy Advisory Service, Manchester

  226W

  Pregnancy Advisory Service, Stoke

  Pregnancy Advisory Service, Wolverhampton

  Regents Park Clinic, London

  South Manchester Pregnancy Advice Services, Stockport

  The Calthorpe Clinic, Birmingham.

  Bone Marrow Donors
  Fiona Mactaggart
  To ask the Secretary of State for Health what steps have been taken to increase the proportion of bone marrow donors of Asian ethnic origin. [129268]

  Mr. Denham
  The National Blood Service recruits bone marrow donors from existing blood donors and ran a campaign last year to recruit more Asian blood donors. The NBS do not collect data on the ethnic origin of donors, but estimate that 2 per cent. of donors on the British Bone Marrow Donor Registry (which covers England, Scotland and Northern Ireland) are of ethnic origin compared with the United Kingdom ethnic minority population of roughly 7 per cent. Cord blood donation is an alternative to bone marrow donation in the treatment of some illnesses, and information from the NBS's cord blood donation programme indicates that over 40 per cent. of donations are from ethnic minority groups. I have asked the National Blood Service to explore what further steps can be taken to recruit more blood and bone marrow donors from the Asian community.

  Community Nurses
  Dr. Cable
  To ask the Secretary of State for Health what is the percentage change in the real value, adjusted for costs, of the mileage allowance awarded to community nurses since 1994; and what plans he has to grade the allowance. [129462]

  Mr. Denham
  Mileage allowances for staff on national contracts is determined by an agreement of the General Whitley Council. Rates have been set under an agreed formula linked to the Automobile Association schedule of motoring costs which has been reviewed annually by the Council. No increases have been made to these allowances since 1993.

  Increases in mileage allowances which take account of higher fuel costs were offered to Staff Side representatives on 17 July. Trade unions are now considering this offer.

  Hospital Waiting Times
  Mr. Steen
  To ask the Secretary of State for Health what the average waiting times are for NHS(a) cancer treatments, (b) cardiology and (c) transplant therapy in (i) the UK, (ii) England and (iii) Devon. [129662]

  Mr. Denham
  [holding answer 7 July 2000]: The information given relates to England only. Waiting time data for Scotland, Wales and Northern Ireland are a matter for the individual Assemblies.

  Waiting times for cancer treatment are recorded under the relevant specialities and are not identifiable separately. Average waiting times for cardiology and first graft transplants are given in the tables.
  227W

  Average (median) waiting times for cardiology

  1999–2000/Quarter

  Months

  England

  1

  2.5

  2

  2.6

  3

  2.6

  4

  2.7

  South and West Devon

  1

  7.2

  2

  6.4

  3

  6.3

  4

  5.2

  North and East Devon

  1

  3.5

  2

  2.3

  3

  3.0

  4

  4.2

  Source:

  QF01 quarterly return (health authority based figures)

  Average (median) waiting times for first graft transplants since 1996—England

  Transplant

  Days

  Kidney1

  245

  Liver2

  46

  Heart

  81

  Lung

  179

  Heart/Lung

  200

  1 Kidney transplants since 1990

  2 Excludes "super urgent"

  Note:

  Figures for Devon are not provided as the local unit only deals with kidney cases

  Source:

  United Kingdom Transplant Support Service Authority

  Coronary Deaths
  Mr. Hancock
  To ask the Secretary of State for Health by how much deaths from heart disease and strokes have been reduced since May 1997; if Government targets for reducing the number of such deaths are being met in these areas; and if he will make a statement. [130384]

  Yvette Cooper
  Tackling heart disease and stroke is a top Government priority. Our target for reducing deaths in this area was set out in the White Paper "Saving Lives: Our Healthier Nation" published in July 1999. It is to reduce the death rate from heart disease, stroke and related conditions in those aged under 75 years by at least two fifths (40 per cent.) by the year 2010, from a three-year average baseline at 1995/96/97.

  The target was set for the year 2010 because it will take time for interventions in this area to translate into outcomes in terms of mortality rates. Latest available data still pre-date the start of the "Our Healthier Nation" strategy, but show that the three-year average age standardised death rate from circulatory diseases in people aged under 75 fell from 139.6 per 100,000 population in 1995/96/97 to 133.8 per 100,000 population in 1996/97/98—a 4 per cent. fall.

  The downward trend in death rates and the Government's "Saving Lives: Our Healthier Nation" strategy should be reinforced by the National Service Framework on Coronary Heart Disease. The Framework, which we published in March this year, sets out our plans
  228W
  for the development of services for the prevention and treatment of coronary heart disease over the next ten years. It will be a key strand in our strategy to reduce both mortality and morbidity from heart disease.

  Cystic Fibrosis
  Mr. Sheerman
  To ask the Secretary of State for Health what advice his Department gives to doctors on the process of screening for cystic fibrosis. [130389]

  Mr. Denham
  The United Kingdom National Screening Committee (NSC) advises the Government on all aspects of screening policy. The NSC does not currently recommend antenatal screening for cystic fibrosis as there are too many gene mutations associated with early cystic fibrosis identification and too little information on their clinical severity to enable counsellors to facilitate informed choice. The UK National Screening Committee will review this approach in the light of any new evidence. As yet, there is insufficient evidence of benefit to recommend national neonatal screening. The NSC is considering how to make progress on this issue.

  Prostate Cancer
  Mr. Sheerman
  To ask the Secretary of State for Health how much was spent on health campaigns aimed at promoting greater awareness of prostate cancer in each of the past 10 years. [130387]

  Yvette Cooper
  It is not possible to provide information in the form requested. A number of campaigns have covered both prostate cancer awareness and other issues and the sums spent on prostate cancer cannot be disaggregated from the total.

  The Department provides information for the public, in leaflets and through health education campaigns. These encourage people to report to their general practitioner or other health professional any persistent or unusual symptoms which may indicate cancer or other disease.

  We encourage early detection of prostate cancer and have announced that, by December 2000, all urgent general practitioner referrals of suspected cases should be seen by a consultant within two weeks of referral.

  Little research has been carried out worldwide into prevention of prostate cancer and detection. In June, my right hon. Friend the Secretary of State announced an extra £1 million to fund two new research projects. The first of these will be examining the acceptability of the treatment and diagnosis options to men who are randomly offered testing. The second project is looking at innovative new detection and treatment techniques.

  We have also invested £200,000 from the Public Health Development Fund to develop, pilot and evaluate an education programme on prostate cancer especially the risks associated with screening and testing. This money will also go towards developing other materials aimed at changing attitudes among men to facilitate early detection and prevention of cancer.

  We are in the early stages of developing a prostate cancer action plan which we will consult on. The plan will set out the current position on research, diagnosis and treatment of prostate cancer and will propose recommendations for future action.

  Respiratory Diseases
  Mr. Blizzard
  To ask the Secretary of State for Health what plans he has to produce a national service framework for lung and respiratory diseases. [130729]

  Mr. Denham
  We are taking forward the National Service Framework (NSF) programme with the development of one new NSF per year. We will consider the proposed service area or care group for the next NSF against the criteria set out in "A First Class Service", as well as the priorities and targets identified in the National Plan.

  Mr. Blizzard
  To ask the Secretary of State for Health if he will exempt patients suffering from respiratory diseases from charges for on-going prescriptions for inhalers, steroids and water tablets. [130730]

  Ms Stuart
  We reviewed the prescription charging arrangements as part of the Comprehensive Spending Review and concluded that the present arrangements should remain for the rest of this Parliament.

  HIV
  Mr. Borrow
  To ask the Secretary of State for Health if he will estimate the proportion of the total number of HIV transmissions which occurred in the UK through sex between men in the last 12 months. [130474]

  Yvette Cooper
  Figures are not yet available for the whole of the last 12 months. 42 per cent. of HIV infections diagnosed in the United Kingdom in 1999 and reported to the end of March 2000 were probably acquired through sex between men. When diagnoses of infections probably acquired abroad are excluded, the estimated proportion of infections occurring in the UK through sex between men rises to approximately 70 per cent.

  Mr. Borrow
  To ask the Secretary of State for Health what proportion of HIV prevention budgets(a) spent by his Department and (b) spent through health authorities are targeted at men who have sex with men. [130473]

  Yvette Cooper
  In 1999–2000, of the £3 million allocated to national HIV health promotion and prevention, £1.1 million was spent on work targeting men who have sex with men. Health authorities received £53.4 million for local HIV prevention work, of which they were required to spend at least 50 per cent. on groups at increased risk of HIV, including men who have sex with men.

  Pharmacies
  Mr. Borrow
  To ask the Secretary of State for Health what recent representations his Department has received on the regulations governing the provision of pharmacies; and if he will make a statement. [130641]

  Ms Stuart
  The Department regularly receives representations and suggestions from individuals and organisations about the regulations which govern the provision of National Health Service pharmaceutical services.

  Asthma
  Mr. Hancock
  To ask the Secretary of State for Health what assessment he has made of the impact of the 230W
  Government's target of reducing admissions to hospitals of people suffering from asthma on the health of asthma sufferers; and if he will make a statement. [130480]

  Mr. Denham
  The total number of hospital admissions where asthma was the cause has declined over the last seven years. In 1993–94 a total of 92,820 episodes were recorded for asthma, compared with 69,824 admissions in 1998–99. This reduction has taken place during a period when the total number of emergency admissions for other conditions has continued to increase.

  Health Care (Suffolk)
  Mr. Ruffley
  To ask the Secretary of State for Health what estimate he has made of the surplus or deficit in the(a) Suffolk health authority and (b) West Suffolk NHS Trust for health care in each of the financial years (i) 1997–98, (ii) 1998–99 and (iii) 1999–2000. [130742]

  Mr. Denham
  The surplus and deficit positions for Suffolk health authority and West Suffolk Hospitals National Health Service Trust are shown in the table.

  £

  Financial year

  Suffolk health authority

  West Suffolk Hospitals National Health Service Trust

  1997–98

  178,000 (deficit)

  32,000 (deficit)

  1998–99

  964,000 (deficit)

  28,000 (surplus)

  1999–2000

  Information will be available when the audited annual accounts are received in the autumn

  Sources

  Suffolk Health Authority Accounts 1997–98 and 1998–99

  West Suffolk Hospitals National Health Service trust summarisation schedules 1997–98 and 1998–99

  Clozapine
  Dr. Cable
  To ask the Secretary of State for Health which district health authorities prescribe clozapine for schizophrenia; and how many schizophrenics receive the drug, broken down by health authority, in the United Kingdom. [130944]

  Mr. Hutton
  [holding answer 17 July 2000]: The list shows the health authorities in England where clozapine was prescribed by general practitioners and dispensed in the community in 1999. We do not hold equivalent information for hospitals.

  The number of schizophrenic patients receiving clozapine is not available.

  Health authorities in England where clozapine was prescribed by general practitioners and dispensed in the community in 1999

  Avon

  Barking and Havering

  Barnet

  Bedfordshire

  Berkshire

  Bexley and Greenwich

  Birmingham

  Bradford

  Brent and Harrow

  Bromley

  Buckinghamshire

  Bury and Rochdale

  Calderdale and Kirklees

  231W

  Cambridgeshire

  Camden and Islington

  Cornwall and Isles of Scilly

  County Durham and Darlington

  Coventry

  Croydon

  Dorset

  East and North Hertfordshire

  East Kent

  East Lancashire

  East London and The City

  East Riding and Hull

  East Surrey

  East Sussex, Brighton and Hove

  Enfield and Haringey

  Herefordshire

  Hillingdon

  Kensington, Chelsea and Westminster

  Lambeth, Southwark and Lewisham

  Leeds

  Leicestershire

  Liverpool

  Manchester

  Merton, Sutton and Wandsworth

  Norfolk

  North and East Devon

  North and Mid Hampshire

  North Cheshire

  North Cumbria

  North Derbyshire

  North Essex

  North Nottinghamshire

  North Staffordshire

  North West Lancashire

  North Yorkshire

  Northamptonshire

  Nottingham

  Oxfordshire

  Portsmouth and South East Hampshire

  Redbridge and Waltham Forest

  Salford and Trafford

  Shropshire

  Somerset

  South and West Devon

  South Cheshire

  South Humber

  St. Helens and Knowsley

  Stockport

  Suffolk

  Walsall

  Warwickshire

  West Hertfordshire

  West Kent

  West Pennine

  West Surrey

  West Sussex

  Wiltshire

  Wirral

  Worcestershire.

  Newcastle Hospitals Trust
  Mr. Cousins
  To ask the Secretary of State for Health if he has agreed to the release of conventionally financed capital expenditure to prepare the way for the Newcastle Hospitals Trust Private Finance Initiative scheme. [130829]

  Mr. Denham
  [holding answer 17 July 2000]: The consultation draft of a business case relating to the enabling works was received by the National Health Service Executive on 3 July 2000 and is now under assessment alongside the business cases for the later private finance initiative schemes. The National Health Service Executive needs to undertake a full and proper review of the documents in accordance with established procedure to ensure that appropriate approval standards are met. I cannot of course pre-determine the outcome of that review.

  The National Health Service Executive has consistently reported its strong support for this scheme, most notably during the approval of the original strategic outline case during 1998, and when the strategic outline case needed approval reconfirmed in 1999 following the increase in the capital cost of the scheme. The National Health Service Executive is well aware of the Newcastle upon Tyne Hospitals National Health Service Trust's recommendation publicly to fund elements of this scheme, and its justification for that approach. However, final confirmation of public funding will be determined following the assessment of the business cases, and taking into consideration the relative priority of all bids upon the capital programme.

  The National Health Service Executive is in dialogue with the trust and the Newcastle and North Tyneside health authority on this scheme, and a great deal of work is being undertaken to bring this phase of the process to a conclusion as soon as possible.

  Allergies
  Dr. Kumar
  To ask the Secretary of State for Health (1) what the average waiting time was for children requiring tests to determine whether they suffer from nut allergies in the last 12 months; and if he will make a statement; [130999]

  (2) how many of those children tested for allergies, expressed in each case as a figure and a percentage of total tested, were referred by (a) GPs, (b) hospitals and (c) parents; and if he will make a statement; [130997]

  (3) how many children are waiting to be tested to determine whether they suffer from nut allergies; and if he will make a statement. [131000]

  Yvette Cooper
  [holding answer 17 July 2000]: Patients who are suspected of having a nut allergy are normally referred to a clinical immunology and allergy clinic. The outpatient waiting times data do not differentiate between reasons for referral nor between adults and children. During the year 1999–2000 there were 4,304 referrals from general practitioners and 965 from other sources. At the time of their first outpatient attendance 1,923 patients had waited less than 13 weeks; 1,069 patients waited between 13 and 25 weeks; and 508 patients waited more than 26 weeks.
  233W
  Dr. Kumar
  To ask the Secretary of State for Health (1) how many children were diagnosed with(a) asthma, (b) nut allergies and (c) other allergies in (i) the UK, (ii) Teesside Region and (iii) the constituency of Middlesbrough, South and Cleveland, East in each year from 1990 to 2000; and if he will make a statement; [131008]

  (2) how many children were tested for allergies in (a) the UK, (b) Teesside Region and (c) the constituency of Middlesbrough, South and Cleveland, East in each year between 1990 to 2000; and if he will make a statement. [130998]

  Yvette Cooper
  [holding answer 17 July 2000]: Data are not collected centrally to show the number of people who are tested and diagnosed with an allergy. Patients with suspected allergies are often referred to clinical immunology and allergy outpatient clinics where they are tested for allergy. The figures indicate the number of patients attending a clinic in England for the first time.

  Year

  Number

  1992–93

  44

  1993–94

  1,486

  1994–95

  2,293

  1995–96

  1,379

  1996–97

  2,382

  1997–98

  3,355

  1998–99

  3,655

  Source

  DH form KHO9

  These figures do not show all allergy testing as some takes place in other specialities or in primary care. Age groups are not specified. Clinical Immunology and Allergy was only recognised as a medical speciality in June last year. Consequently, detailed statistical information for allergy is only now being collated and is not yet available.Key health statistics for general practice database published in 1996, demonstrated the incidence of diagnosed asthma in children aged 0–15 years per 10,000 population.

  Year

  Number

  1994

  1,010

  1995

  1,023

  1996

  1,012

  Coronary Bypasses
  Mr. Swayne
  To ask the Secretary of State for Health how many coronary bypass graft operations have been carried out on the National Health Service in each of the last five years. [130505]

  Yvette Cooper
  [holding answer 17 July 2000]: The numbers of coronary artery bypass graft operations carried out in National Health Service trusts in England for the past five years for which figures are available are as follows.
  234W

  Year

  Number

  1994–95

  22,433

  1995–96

  21,599

  1996–97

  21,462

  1997–98

  21,110

  1998–99

  22,494

  Last October, we announced an investment of £50 million, which will enable a further 3,000 bypass operations to be carried out by April 2002. In March this year we also published the National Service Framework for coronary heart disease, a 10-year plan for improving the prevention, treatment and diagnosis of heart disease.

  Hip Replacements
  Mr. Swayne
  To ask the Secretary of State for Health how many total hip replacements have been carried out on the National Health Service in each of the last five years; and how many of these were primary hip replacements. [130506]

  Mr. Denham
  [holding answer 17 July 2000]: The information requested is in the table.

  Total hip replacement operations—finished consultant episodes (FCE)1 by selected operation in NHS hospitals, England, 1994–95 to 1998–99

  1994–95

  1995–96

  1996–97

  1997–98

  1998–99

  Primary operation

  36,506

  39,387

  34,256

  33,843

  37,189

  Revision operation

  3,330

  3,693

  3,691

  3,683

  4,013

  Total

  39,836

  43,080

  37,947

  37,526

  41,202

  1 An FCE is defined as a period of patient care under one consultant in one health care provider. The figures therefore represent the number of operations done rather than numbers treated.

  Source

  Hospital Episodes Statistics (HES)—Department of Health

  Training Places
  Helen Jones
  To ask the Secretary of State for Health how many(a) training places available for physiotherapists and (b) applicants for places there were in each of the past 10 years. [130671]

  Mr. Denham
  [holding answer 18 July 2000]: These data are not collected centrally.

  Data on the number of training places and the total number of applicants for places are matters for University and Colleges Admissions Service.

  The number of training places funded by the National Health Service through the Non-medical Education and Training (NMET) levy is set out in the table.

  Total NMET commissioned training places

  Year

  Physiotherapy

  1992–93

  830

  1993–94

  923

  1994–95

  915

  1995–96

  981

  1996–97

  1,093

  1997–98

  1,204

  1998–99

  1,344

  1999–2000

  1,586

  Notes:

  Data for 1998–99 and 1999–2000 are planned and may be subject to change.

  These data are for each year since 1992–93. Figures are not available for years preceding 1992–93.
  235W
  Helen Jones
  To ask the Secretary of State for Health how many(a) training places available for occupational therapists and (b) applicants for places there were in each of the past 10 years. [130667]

  Mr. Denham
  [holding answer 18 July 2000]: These data are not collected centrally.

  Data on the number of training places and the total number of applicants for places are a matter for the University and Colleges Admissions Service.

  The number of training places funded by the National Health Service through the Non-medical Education and Training (NMET) levy is set out in the table.

  Total NMET commissioned training places

  Year

  Occupational Therapy

  1992–93

  831

  1993–94

  806

  1994–95

  871

  1995–96

  939

  1996–97

  958

  1997–98

  1,107

  1998–99

  1,135

  1999–2000

  1,349

  National Health Service Hospital and Community Health Services: Qualified Chiropodists, Occupational Therapists, Physiotherapists and Speech and Language Therapists, in community trusts, and rate per 100,000 population in the North West region as at 30 September 1999

  Whole-time equivalents

  Occupational Therapists

  Physiotherapists

  Language Therapists

  Chiropodists

  All staff

  460

  330

  380

  340

  Rate1

  6.93

  5.03

  5.82

  5.15

  Bay Community NHS Trust

  40

  30

  30

  20

  Blackpool Wyre and Fylde Community Healthcare

  80

  40

  30

  30

  Cheshire Community Healthcare NHS Trust

  10

  30

  20

  20

  Chester and Halton Community NHS Trust

  20

  30

  30

  20

  Communicare NHS Trust

  20

  0

  30

  20

  Comm. Healthcare Bolton NHS Trust

  20

  20

  30

  30

  Guild Community Healthcare NHS Trust

  40

  20

  20

  10

  Mancunian Community Health NHS Trust

  40

  40

  60

  50

  North Mersey Community NHS Trust

  40

  10

  40

  30

  North Sefton and West Lancashire Community NHS Trust

  30

  20

  20

  20

  Salford Community Healthcare NHS Trust

  10

  20

  20

  20

  St. Helens and Knowsley Community NHS Trust

  0

  0

  20

  30

  Tameside and Glossop Community NHS Trust

  30

  20

  10

  20

  Warrington Community Healthcare NHS Trust

  30

  20

  20

  10

  Wirral and West Cheshire Community NHS Trust

  60

  40

  20

  20

  1 Number of qualified staff per 100,000 population based on 1999 projected figures

  Notes:

  1. Figures are rounded to the nearest 10

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

  Sources:

  Department of Health Non-Medical Workforce Census

  Office for National Statistics (ONS)

  Family Planning
  Mr. Robertson
  To ask the Secretary of State for Health what discussions he has had with the Family Planning Association regarding the contents of its information booklet on abortion; and if he will make a statement. [131354]

  Yvette Cooper
  [holding answer 18 July 2000]: The FPA (formerly the Family Planning Association) did not
  236W
  Notes:

  Data for 1998–99 and 1999–2000 are planned and may be subject to change.

  These data are for each year since 1992–93. Figures are not available for years preceding 1992093.

  Section 64 Grants
  Helen Jones
  To ask the Secretary of State for Health if he will list, for each year since 1991, those health authorities that have underwritten liabilities stemming from contracts entered into by another party in receipt of a section 64 grant, indicating in each case the total cost to the NHS. [130511]

  Mr. Denham
  [holding answer 18 July 2000]: The information requested is not available centrally.

  Staffing Levels
  Helen Jones
  To ask the Secretary of State for Health how many whole-time equivalent staff per head of the population in each of the categories(a) Occupational Therapists, (h) Physiotherapists, (c) Speech and Language Therapists and (d) Chiropodists and Podiatrists there were in each community trust in the North West region. [130666]

  Mr. Denham
  [holding answer 18 July 2000]: The available information is in the table.

  discuss with the Department the contents of their booklet "Abortion—Just so you know". The FPA invited the Department's comments on the final draft to ensure that legal and medical information was accurate.

  The booklet should help young people to have a better understanding of abortion. However, any young woman facing an unwanted pregnancy should seek advice from her general practitioner or family planning clinic, in order to explore all options available to her.

  Severalls Hospital
  Mr. Bob Russell
  To ask the Secretary of State for Health when he expects the sale of the former Severalls Hospital at Colchester to be completed. [131115]

  Mr. Denham
  The Severalls Hospital site is not currently being marketed. My right hon. Friend the Secretary of State is currently seeking planning consent for the site, which is dependent on adjoining land and road access to be discussed with Colchester borough council. Subject to this, it is anticipated that the Severalls Hospital site will be put on the market between autumn 2001 and spring 2002.

  Chronic Fatigue Syndrome
  Mr. Paul Marsden
  To ask the Secretary of State for Health if he will review the ALAMA guidelines for Occupational Medicine of 1996 regarding ill-health retirement for people suffering from chronic fatigue syndrome; and if he will make a statement. [124472]

  Yvette Cooper
  My right hon. Friend the Secretary of State for Health does not have the power to review the "Ill Health Retirement Guidelines for Occupational Physicians". The guidelines were produced by a working party of the Association of Local Authority Medical Advisers (ALAMA) to help doctors arrive at equitable decisions when assessing applications for ill health retirement.

  Diabetes
  Mr. Singh
  To ask the Secretary of State for Health what plans he has for increasing diabetes risk awareness among the Asian and African-Caribbean population. [125956]

  Yvette Cooper
  We recognise the importance of raising awareness about the risk factors and symptoms of diabetes among both the public and health care professionals, including the Asian and African-Caribbean populations. We announced last year the development of a National Service Framework (NSF) for diabetes in England, to be published in 2001. The aims of the diabetes NSF are to improve health outcomes for people with diabetes by raising the quality of services and reducing variations between them. The scope of the NSF is broad and covers prevention, identification and management of diabetes and its complications, including rehabilitation and continuing care. The diabetes NSF will pay particular heed to the needs of those who are disproportionately affected by diabetes, such as people from minority ethnic groups.

  Cancer Treatment Centres
  Mr. Cox
  To ask the Secretary of State for Health if he will list the cancer treatment centres available in NHS hospitals in the Greater London area. [127157]

  Yvette Cooper
  The Calman/Hine Report, "A Policy Framework for Commissioning Cancer Services", recommended that networks of care should be developed encompassing primary care, cancer units and cancer centres. The Report provided a broad service model framework for the development of cancer units and cancer centres, but did not set national standards. The first stage of Calman/Hine has reflected early implementation of the Cal man/Hine recommendations, reflected the different 238W
  starting points across the county, and allowed an evaluation of services by health authorities and regional offices, based on general Calman/Hine principles, to fit local needs.

  The London Regional Office has identified five cancer networks in London and the Cancer centres in each network as follows:

  South East London
  Joint Cancer Centre: Guy's and St. Thomas' Hospital NHS Trust
  King's Healthcare NHS Trust (known as GKT)

  South West London
  Joint Cancer Centre: Royal Marsden NHS Trust (Sutton/Fulham)
  St. George's Healthcare NHS Trust

  North West London
  Hammersmith Hospitals NHS Trust
  (Charing Cross and Hammersmith sites)

  North Central London
  Joint Cancer Centre: University College London Hospitals NHS Trust
  Royal Free Hampstead NHS Trust
  Linked with North Middlesex Hospital NHS Trust as a radiotherapy provider

  North East London
  Joint Cancer Centre: St. Bartholomew's and The London NHS Trust
  Havering Hospitals NHS Trust (Oldchurch).

  In addition, the cancer centre at West Hertfordshire Hospitals NHS Trust, located in the Eastern Region provides cancer centre services to some of the population of the London Region especially Hillingdon Health Authority, Brent and Harrow Health Authority and Barnet Health Authority.

  Health and Social Care (Rural Areas)
  Mr. Hancock
  To ask the Secretary of State for Health what plans he has to address health and social care problems of rural areas in the United Kingdom; and if he will make a statement. [127299]

  Mr. Denham
  The National Plan for the National Health Service, due to be published later this month, will address the issue of how to improve partnership between health and social care throughout the country. Our plans to improve services across the board in rural areas will be addressed in the forthcoming Rural White Paper.

  Children's Services
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Health what assessment he has made of local councils' plans to improve children's services; and if he will make a statement. [131790]

  Mr. Hutton
  I have today placed in the Library a copy of the report "Tracking Progress in Children's Services: An Evaluation of Local Responses to the Quality Protects Programme Year 2".

  When we launched the Quality Protects programme in September 1998, we required local authorities to submit annual Management Action Plans to show how they were intending to improve the management and delivery of children's social services. This report presents the key

  239W
  messages and findings from the second round of Management Actions Plans (MAPs) which were received in January 2000.

  Councils have made a good start over the past year in implementing the Quality Protects programme. For example we have seen:
  more corporate working across councils and more partnership working with voluntary organisations
  an increase in the proportion of children looked after in foster care or placed for adoption
  a reduction in re-registrations on the child protection register
  more support being given to care leavers
  an increase in education support being given to looked after children
  more councils listening to children and young people in their care
  improvements in the collecting and using of management information.

  But if there are to be real and lasting gains for children, these early improvements must be built on and further substantial progress made in 2000–01. The Government's determination to support this change is demonstrated by the significant increase in special grant available for funding this year (from £75 million to £120 million). We will expect progress in 2000–01 to be commensurate with this increase in funding.

  Ambulance Services
  Mr. Chidgey
  To ask the Secretary of State for Health in the consultation on the delivery of modern ambulance services in the South East Region of the NHS, what

  Health action zone funding: 1998–99 to 2000–01

  £000

  HAZ

  1998–99

  1999–00

  2000–01

  Total

  1st wave

  Lambeth, Southwark and Lewisham

  1,206

  6,137

  7,415

  14,758

  East London

  777

  5,535

  6,339

  12,661

  Plymouth

  410

  2,043

  2,258

  4,711

  Luton

  309

  1,300

  2,622

  3,871

  Sandwell

  501

  2,302

  2,794

  5,597

  South Yorkshire Coalfields

  820

  5,539

  6,484

  12,843

  Manchester, Salford and Trafford

  992

  7,050

  8,496

  16,538

  Bradford

  502

  3,822

  4,705

  9,029

  Tyne and Wear

  906

  8,709

  9,815

  19,500

  Northumberland

  292

  2,395

  2,773

  5,460

  North Cumbria

  447

  2,298

  2,515

  5,260

  1st wave total

  7,162

  47,141

  55,856

  110,228

  2nd Wave

  Tees

  20

  3,232

  5,381

  8,633

  Wakefield

  20

  1,666

  2,620

  4.306

  Leeds

  20

  3,610

  5,863

  9,492

  Hull and East Riding

  20

  2,824

  4,727

  7,571

  Merseyside

  20

  7,445

  12,246

  19,711

  Bury and Rochdale

  20

  2,004

  3,263

  5,287

  Nottingham

  20

  3,105

  5,047

  8,172

  Sheffield

  20

  2,923

  4,599

  7,542

  Leicester City

  20

  1,502

  2,510

  4,032

  Wolverhampton

  20

  1,388

  2,320

  3,728

  Walsall

  20

  1,376

  2,345

  5,741

  North Staffordshire

  20

  2,056

  3,189

  5,265

  Cornwall and Isles of Scilly

  20

  2,288

  3,641

  5,949

  Camden and Islington

  20

  2,372

  3,734

  6,126

  Brent

  20

  1,294

  1,996

  3,310

  2nd wave total

  300

  39,085

  63,480

  101,064

  Central and other innovations

  364

  1,700

  1,517

  3,581

  Total

  7,826

  87,926

  120,853

  216,673

  240W
  assessment he has made of the cost to fundholders of reorganisation (a) in total and (b) for each of the eight ambulance service trusts; what provision he has made to meet these costs through additional funding; when the allocations made to these trusts to help reach new standards will be dispensed to them in full from the £21 million allocated for this purpose by his Department; what measures he is proposing to ensure that adequate resources are safeguarded for rural services; and if he will make a statement. [131215]

  Ms Stuart
  We have invested an extra £21 million to help ambulance services speed up response times. Of this, the South East Region received a total of £4.2 million.

  All eight ambulance services in the south east have developed and agreed a vision to ensure that the region's population have speedy access to high quality, modern and dependable ambulance services which are integrated with care provided by local National Health Service partners and other agencies.

  Further work is currently being undertaken before final proposals are subject to full public consultation.

  Health Action Zones
  Mr. Swayne
  To ask the Secretary of State for Health if he will list the budget allocation for each health action zone in each year since their introduction and for next year. [130512]

  Mr. Hutton
  The information requested for 1998–99 to 2000–01 is given in the table. Decisions on funding for 2001–02 have not yet been made.
  241W
  Notes:

  HAZ funding comes from a number of sources:

  1. The HAZ central budget comprising three elements:
  programme funding for joint projects with other agencies (1998–99 to 2000–01);
  innovations funding (1999–2000 and 2000–01);
  central and other innovations (1998–99 to 2000–01).
  In 1998–99 a small part of the purchaser development budget was used to provide some start up costs for HAZs;

  2. Funding for smoking cessation for 1999–2000 and 2000–01.

  3. Funding for drugs prevention services in 1998–99 and 1999–2000. In 1998–99 and 1999–2000 1st wave HAZs received the allocation and in 2000–01 2nd wave HAZs receive the money.

  4. Targeted funds for deprived areas. This is allocated to health authorities which include HAZs within their boundaries.

SOCIAL SECURITY

  Postal Service (Benefits)
  Mr. Willetts
  To ask the Secretary of State for Social Security (1) how many claims process errors have been identified by local authorities using the "do not re-direct" postal service for benefit-related envelopes; [131355]

  (2) how many local authorities using the "do not re-direct" postal service for benefit-related envelopes have received (a) no returned mail and (b) returned mail, indicating the volume returned in each case; [131386]

  (3) how many cases of benefit fraud have been discovered by local authorities as a result of the "do not re-direct" postal service for benefit-related envelopes. [131356]

  Angela Eagle
  The information requested is not available. However, from 2000–01, local authorities are asked to provide details of the number of cases where fraud has been established as a result of using the "do not re-direct" service.

  The recent Local Authority Omnibus Survey, published in April 2000, showed that of those authorities surveyed and operating "do not re-direct", around three-quarters said that it had enhanced their ability to protect the system against fraud, and more than half believed that it led to the identification of fraudulent activity. The deterrent effect of the scheme is less easy to quantify.

  Mr. Willetts
  To ask the Secretary of State for Social Security which local authorities have yet to implement fully the "do not re-direct" postal service for benefit-related envelopes; and what reasons they have given for the delays. [131357]

  Angela Eagle
  According to information we have received from the Royal Mail, there are currently 57 local authorities who have not joined the "do not re-direct" postal service.

  The following list shows the authorities that have not joined, or contacted their local Royal Mail sales centre to join, the scheme to date. The Royal Mail, in turn, depends on their local sales centres to keep them informed as authorities join up.
  242W
  Some of these authorities have in place arrangements with their local sorting office which fall outside of the national scheme. Others are proposing to join.

  Argyll and Bute

  Blaenau Gwent

  Bolsover

  Bromley

  Broxbourne

  Caradon

  Charnwood

  Chelmsford

  Dartford

  Daventry

  Derby

  Dumfries and Galloway

  East Ayrshire

  East Dorset

  East Dunbartonshire

  East Hertfordshire

  Easington

  Ellesmere Port and Neston

  Enfield

  Exeter

  Falkirk

  Fenland

  Flintshire

  Gateshead

  Great Yarmouth

  Harborough

  Inverclyde

  Isles of Scilly

  Kettering

  Maidstone

  Malvern

  Mid Devon

  Mid Suffolk

  Milton Keynes

  North Norfolk

  North Somerset

  North Warwickshire

  Newport

  Norwich

  North West Leicestershire

  Perth and Kinross

  South Gloucestershire

  South Holland

  South Kesteven

  Scottish Homes

  Southwark

  Sutton

  Swindon

  Torfaen

  West Dorset

  West Dunbartonshire

  West Somerset

  Wandsworth

  Wansbeck

  Watford

  Westem Isles

  Weymouth and Portland.

  NIRS2
  Mr. Fraser
  To ask the Secretary of State for Social Security how many pensioners from Dorset are suffering a loss of income as a result of the NIRS2 computer problems. [130835]

  Mr. Rooker
  It is not possible to give an accurate answer to this question. I can, however, confirm that the maximum number of pensioners in Dorset whose Retirement Pension will be subject to review is 1,041. We expect to make benefit adjustments to around 600 of these cases. We expect to complete work on these cases by October 2000.

  Lone Parents
  Mr. Brady
  To ask the Secretary of State for Social Security how many people have moved to sustained unsubsidised employment from the New Deal for Lone Parents; and what percentage he estimates would have found employment without the New Deal for Lone Parents. [130682]

  Angela Eagle
  Up to the end of April, 54,241 lone parents had obtained jobs following participation in the New Deal for Lone Parents programme. All NDLP jobs are unsubsidised.

  The evaluation of the programme's prototype phase, which ran from July 1997 to October 1998, estimates how many jobs gained were additional to those that would have occurred without the programme. Copies of the evaluation reports are available in the Library. This estimated that NDLP virtually paid for itself.

  Comprehensive evaluation of the national phase of the NDLP programme is being conducted and will report in 2002.

  Pensioner Benefits
  Mr. Nigel Jones
  To ask the Secretary of State for Social Security what estimate he has made of the administration cost of processing applications for(a) winter fuel allowance and (b) concessionary television licences in the (i) last and (ii) current financial year. [130434]

  Angela Eagle
  In the last financial year (1999–2000), Winter Fuel Payments accounted for around 0.35 per cent. of the total departmental running costs. There were no costs paid in respect of concessionary TV licences for people over 75.

  In the current financial year, administering these two important initiatives to improve the income of older people will account for around 1.7 per cent. of the total departmental running costs (0.93 per cent. in respect of the Winter Fuel Payment scheme and 0.75 per cent. for the concessionary television licence scheme).

  Notes:

  Winter Fuel Payments
  For 1999–2000 (as well as the first two years of the scheme) two of the main conditions of entitlement to Winter Fuel Payments were both age and receipt of a qualifying benefit; those who were entitled were identified through the relevant computer benefit systems and paid automatically. Following a ruling by the European Court of Justice in December 1999, the Winter Fuel Payment scheme was extended to men as well as women from age 60 from the beginning of the scheme (1997–98). The majority of people who are now eligible for a Winter Fuel Payment because of the changes to the scheme are not receiving a Social Security benefit and will have to make a claim.
  The current year's estimates include the one-off costs of developing a claims process and IT systems to enable the correct amount of payment made to the right person for both future and past winters, as well as the continuation of the automatic payment process.

  Concessionary TV licences
  The concessionary television licence scheme for over 75s was announced in this year's Budget and will take effect from 1 November 2000. Estimated set-up costs are included in the costs for this financial year.

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

Her Majesty The Queen Mother
The Lord Chancellor (Lord Irvine of Lairg): My Lords. I have to inform your Lordships that, pursuant to the Order of the House, I, together with the most reverend Primate the Archbishop of Canterbury, the noble Baroness, Lady Jay of Paddington, the noble Lords, Lord Strathclyde and Lord Boston of Faversham, the noble and gallant Lord, Lord Craig of Radley and the noble Lord, Lord Rodgers of Quarry Bank, waited upon Her Majesty Queen Elizabeth the Queen Mother yesterday with the Message of this House of 13th July and that Her Majesty made the following reply:
"My Lords and Members of the House of Commons:
"I was deeply touched by your messages of congratulations and by the sentiments you expressed on the occasion of my 100th birthday.
"I feel fortunate that during the last Century I have been given the opportunity to serve our Country in times of war and peace, and I have always been helped and uplifted by the love of my family, by the fortitude and courage of our people, and by my faith in Almighty God.
"I pray that future generations will live in peace and prosperity, and I send to you all my heartfelt thanks for your kind messages on my birthday."

United Nations: Humanitarian Intervention
2.37 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What new proposals they will be putting to the United Nations millennium meetings on the future of humanitarian intervention by the United Nations, including military intervention.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, we continue to consult with partners on our ideas for guidelines that could help the Security Council decide when and how to respond to large-scale violations of humanitarian law and crimes against humanity.
Discussions on humanitarian intervention will doubtless feature at the millennium summit and millennium assembly in September. We shall, of course, take this opportunity to build further consensus around our ideas as we continue to refine them. We do not envisage tabling any formal proposals on this occasion.
Lord Judd: My Lords, I thank my noble friend for that reply. However, does she agree that it is also essential to develop more flexibility and imagination in supporting the Secretary-General on initiatives, peacemaking and conflict resolution before it becomes necessary to deploy military forces? When military forces are deployed in the name of the UN, does she not agree that it is always essential to have a clear political analysis of how they will contribute towards a political solution, as well as ensuring that there is strengthened administration of those forces both in the field and back in the UN?
Baroness Scotland of Asthal: My Lords, I agree with my noble friend that those issues are of real importance. It is for that reason that this debate has to take place. There has to be a thickening of the understanding between nations in this regard. We are firmly of the view that prevention is far better than cure. This is a matter, therefore, that we shall continue to pursue.
Lord Archer of Sandwell: My Lords—
Baroness Williams of Crosby: My Lords, I am sure the Minister is aware of two specific points made by the Secretary-General in his millennium report. I wonder whether she might comment on them. First, cannot the Government take further the suggestions made in that report about standby arrangements both as regards troops that may be seconded for military intervention, but perhaps more radically the proposal for standby arrangements for non-governmental and civil groups which can enter quickly into a disaster situation? Secondly, the Minister will be aware that the Secretary-General praised, in particular, the United Kingdom Government, along with the Canadian, Swiss and German governments, for their work on targeting sanctions towards the political elites of countries which are in breach of the United Nations humanitarian standards. Can she tell the House what work has been done by the Government in that regard and what she hopes may emerge from it?
Baroness Scotland of Asthal: My Lords, I thank the noble Baroness for the recitation of the praise which rightly attaches to the efforts we have all tried to make in targeting sanctions so that they are more effective. The noble Baroness is right in saying that the highlighting of that by the Secretary-General was most telling.
As regards the suggestions concerning standby arrangements and the use of civil troops, the noble Baroness will know that those issues are being considered in depth and are being explored. I cannot help the noble Baroness as regards the stage which we have reached. However, the important fact is that the issues are being debated and given the appropriate level of informed concern.
Lord Archer of Sandwell: My Lords, does my noble friend agree—
Lord Howell of Guildford: My Lords, does the Minister agree that, while humanitarian intervention is a noble impulse, it is also a nebulous concept and does not appear to be covered properly by the existing UN charter or UN law? There is a need for clarification and either changing the law or defining more clearly when humanitarian intervention is justified. What line will the Government take about either changing the specifications at the United Nations or recognising that NATO has a right to intervene in European security matters regardless of what is decided at the UN?
Baroness Scotland of Asthal: My Lords, at this stage it is critical that we all understand that there has to be definition and clarity. There is a great deal of anxiety about how, when and under what conditions humanitarian intervention should take place. It is for that reason that Her Majesty's Government think it important that the debate, discussion, definition and attempt at increasing and enhancing clarity among nations should start. We have been very clear that this is a matter we wish to promote and talk about with our partners. Noble Lords will be aware that we have already put forward preliminary ideas trying to scope the ambit of the way forward. We shall listen with acuity to the international response we receive to this endeavour.
Lord Archer of Sandwell: My Lords—
Lord Hylton: My Lords—
Noble Lords: Archer!
Lord Hylton: My Lords, while I agree that prevention is by far the best way forward, does the Minister accept that major displacements of population should be one of the criteria? Will she take note of what has happened in eastern Turkey in recent years? Further, can the noble Baroness confirm that, so far, some 300,000 people have been displaced from their homes in the Moluccas in Indonesia?
Baroness Scotland of Asthal: My Lords, Her Majesty's Government firmly believe that we have a shared responsibility to act when confronted with massive violations of international humanitarian law and crimes against humanity. Indeed, we have made that absolutely clear. We note the developments in the areas that the noble Lord has just highlighted, which, of course, are matters of great concern. For that reason, we feel it essential to build the broadest possible consensus on the conditions and circumstances that make international action appropriate and, thereby, strengthen the ability of the
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Security Council to respond effectively and promptly. As I said earlier, we are discussing these issues to try to achieve that consensus. However, we must bear in mind the fact that any intervention must be focused so that it does more good than harm. We must be very balanced in the way we proceed in this area.
Lord Archer of Sandwell: My Lords, does my noble friend agree—
Noble Lords: This side!
Noble Lords: Archer!
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I am sorry. I have not been present throughout the whole of the debate on this Question, but I understand from what is being said around the House that my noble and learned friend Lord Archer has been trying to ask a question for some time. I believe that he should ask his question.
Lord Archer of Sandwell: My Lords, I am most grateful to my noble friend.
Where the Security Council is paralysed by the use of the veto, does my noble friend the Minister agree that it is inevitably left to groups like NATO to exercise a citizen's arrest and that, however necessary that may sometimes be, it is never as satisfactory as enforcing the rule of law in the name of the whole international community? Is my noble friend aware of Charter 99? Further, will the Government be supporting the call of Charter 99 for charter revision in the hope of modifying the veto in the interests of democratic global government?
Baroness Scotland of Asthal: My Lords, not surprisingly, I agree with much of what my noble and learned friend has said, but am unable to agree with some of it. Noble Lords will know that I have said from this Dispatch Box in the past that there is much in Charter 99 with which we concur, although we cannot accept some of it. The veto has played a very important role in the past; indeed, it is something that Her Majesty's Government do not intend to give up. We have not exercised our veto for the past 10 years. We believe that it is incredibly important for those who have the veto to exercise it responsibly and prudently. We would wish others to follow our example. However, I cannot tell my noble and learned friend that we think it would be prudent to do away with it.
Lord Jenkins of Putney: My Lords—
Noble Lords: Next Question!

UK Parliaments and Assemblies: Cost
2.47 p.m.
Lord Renton of Mount Harry Lord Renton of Mount Harry asked Her Majesty's Government:
What is their estimate of the total cost to the taxpayer in the current financial year of the parliaments and assemblies in the United Kingdom; and how this compares with the cost for the last financial year.
Lord McIntosh of Haringey: My Lords, the total cost to the taxpayer in the current financial year of the House of Commons is £246 million compared to £263.7 million in the last financial year. For the House of Lords, the figure is £50 million this year compared to £45.3 million last year. The costs of the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly are a devolved matter and are funded from within the budgets of the devolved administrations.
Lord Renton of Mount Harry: My Lords, if I may put it this way, I thank the noble Lord for escaping answering the point about the Scottish Parliament and the Welsh Assembly. Given the obvious cost of creating more and more elected assemblies, can the noble Lord say whether there is any moment at which the Government might pause and think again about their commitment to nine directly-elected regional assemblies in England? Is he aware of any enthusiasm for that idea, other than perhaps in the North West and the North East? Surely this is a time for reflection and for considering whether it is really wise to go ahead.
Lord McIntosh of Haringey: My Lords, that is an interesting departure, at a tangent, from the original Question. The noble Lord, Lord Renton, will no doubt he aware that in the Comprehensive Spending Review announcement yesterday the Chancellor of the Exchequer said that he was allocating another £500 million to the regional development agencies. Very considerable expenditure is being devolved to the regions of England. Therefore, the case for local democratic control of that expenditure has some significance.
Lord Carlile of Berriew: My Lords, given the fact that the Scottish Parliament and the Welsh Assembly were created by this Parliament and bearing in mind their importance to the whole United Kingdom political process, as well as to Scotland and Wales respectively, would it not be better if there were an effective way of those parliaments reporting to the Parliament that created them so that we can have meaningful debates both in this House and in the other place about their effectiveness?
Lord McIntosh of Haringey: My Lords, it is right that the administrations for Scotland, Wales and Northern Ireland report to their own elected
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assemblies. What notice Parliament in Westminster takes of them is a matter for Parliament. I have not heard any specific demand for a change in our arrangements.
Lord Richard: My Lords, is my noble friend aware that we cannot half-devolve? We either devolve power or we do not. If we have devolved power, particularly to the Scottish Parliament, it is for the Scottish Parliament to take decisions and for the Scottish electorate to judge them. It is not for this House and this Parliament.
Lord McIntosh of Haringey: My Lords, I am grateful to my noble friend for confirming the view that I took in response to the question of the noble Lord, Lord Carlile.
Lord Mackay of Ardbrecknish: My Lords, leading on from the question of the noble Lord, Lord Richard, does not the money that goes to the Scottish Parliament and the Welsh Assembly come from the Barnett formula? If so, it is of some interest to this House and the other place. Can the Minister confirm that the Barnett formula will continue to be used so that the Scottish Parliament, with its new building and so forth, which is very expensive, can he funded? Will he assure us that he will not take the advice of Mr Charles Kennedy and the Liberal Democrats who want to scrap the Barnett formula?
Lord McIntosh of Haringey: My Lords, it is not only Mr Charles Kennedy who wants to scrap the Barnett formula; it is also my noble friend Lord Barnett. But the Government have no plans to depart from the Barnett formula.
Lord Barnett: My Lords, perhaps I should make it clear to my noble friend, as I know he is aware, that I am in favour of scrapping the Barnett formula. It gives disproportionate amounts to certain parts of the country. Parts of the North West and the North East should receive more and Scotland should receive less. But if my noble friend and the Government wish to keep a formula called the "Barnett" formula, I do not object. It could be a Mark II.
Lord McIntosh of Haringey: My Lords, my noble friend is already a Mark II and effectively renews himself from time to time. The Barnett formula has a crude justice. It is based on population. The distribution of revenues to the regions of England is a matter for the Westminster Parliament.
Baroness Carnegy of Lour: My Lords, since the Barnett formula is based on increasing in Scotland the same proportion of expenditure as is increased in England, will account be taken of the increased costs of Parliament at Westminster, both the other place and this House, in so far as they relate to England, in calculating what will be allowed in the Barnett formula for the cost of the Scots Parliament? In other words, will the Barnett formula be consistent when it comes to

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the cost of the Scots Parliament? The noble Lord, Lord Barnett, looks a bit dazed at that suggestion. I am dazed myself, but it seems only fair.
Lord McIntosh of Haringey: My Lords, the question of the noble Baroness contains a complex piece of thinking which I do not entirely follow. The Barnett formula is based on population. What happens to the money allocated to Scotland within the Barnett formula, including the cost of the Scottish Parliament, is entirely a matter for the Scottish Parliament? As to the costs of Parliament at Westminster, the figures I gave show that the cost of the House of Commons is actually lower this year than last, in contrast with the House of Lords, which is higher.

UK Diplomats Overseas: Security
2.53 p.m.
Viscount Waverley Viscount Waverley asked Her Majesty's Government:
Whether, in the light of the assassination of Brigadier Saunders, Defence Attaché in Athens, they will conduct a world-wide security review for overseas United Kingdom diplomats.
Baroness Scotland of Asthal: My Lords, the safety of staff is our prime concern. A thorough review of the terrorist threat to all our missions overseas was conducted last year. A programme of increased protective measures is being undertaken where those are considered necessary.
We are thoroughly examining the events surrounding the murder of Brigadier Saunders. We shall ensure that any lessons learnt are reflected in our application of security measures in Athens and more widely. I am unable to give details without affecting the security of staff overseas.
Viscount Waverley: My Lords, I thank the Minister for that reply. While effective diplomacy does carry risks, and with the fortress approach not being an option, how can United Kingdom diplomats avoid being a soft target in an era of international terrorism and given that the Americans have battened down the hatches? More specifically, as the murder was Kosovo driven, will the Minister ensure that front-line diplomats are suitably protected from contentious policy issues?
Baroness Scotland of Asthal: My Lords, first, perhaps I can say straight away that it is of the utmost importance to Her Majesty's Government, as it has been important to every government before us, to secure the well-being of our diplomats who serve us so bravely abroad. Secondly, this wicked murder demonstrates the real service that our diplomats give to this country and the risks in which they place themselves on a daily basis. Regrettably, that is all too rarely acknowledged.
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However, in line with that we have undertaken the most rigorous reviews. There was a review as a result of the Dar es Salaam incident in 1998 when a matrix was developed to try to identify those missions which may be at most risk of collateral damage. That informed our policy. We have made sure that those issues continue to be examined and we shall spend sufficient money to ensure that they are addressed. This Government have made a large commitment—an additional £22 million—to the security of our people and every penny is well spent.
Lord Mackie of Benshie: My Lords, does the Minister believe that the measures taken by the host countries in many cases are sufficient to protect diplomats?
Baroness Scotland of Asthal: My Lords, we ascertain what measures are in place. That is a factor which is played into our security assessment so that when deciding the level of protection a specific post should have, we are conscious of the security protection provided by the host community. We also look at the mission's proximity to other missions which may also be subject to threat to enable us to make an assessment of the risk of any collateral damage to our mission. It is therefore a matter of which we are very much aware. We take it extremely seriously and try to factor it into our thinking as well as we can.
Lord Howell of Guildford: My Lords, will the noble Baroness accept that we on this side totally associate ourselves with the sentiments she expressed in relation to this tragedy? Also, we welcome her comments about increased security for our diplomats. That underlines what I said from this Dispatch Box the other day: diplomacy today is becoming a dangerous occupation and those who fulfil those duties are extremely brave people Although I recognise that the Foreign and Commonwealth Office has done a fair amount in recent years to increase security for ambassadors and their staff, can the noble Baroness reassure us that any extra money will be used to increase security further? In that way we can try to prevent, although it may never be completely possible, the kind of horrific tragedy that occurred in Athens with Brigadier Saunders.
Baroness Scotland of Asthal: My Lords, I welcome the comments of the noble Lord and entirely associate myself with them. It is right that we continue this effort and I can assure the noble Lord that our energy will be properly directed to that end.
Lord Acton: My Lords, is my noble friend aware that the widow of Brigadier Saunders, Mrs Heather Saunders, and her two daughters visited your Lordships' House yesterday and that all who met them were deeply impressed by their courage and dignity? On leaving, Mrs Saunders expressed their great joy at the day they had spent here. Might it not be appropriate to send a message to the Saunders family

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expressing your Lordships' pleasure at their enjoyment and sending the family the good wishes of your Lordships' House?
Noble Lords: Hear, hear!
Baroness Scotland of Asthal: My Lords, I can assure my noble friend that I was so aware. Indeed, I was privileged to be able to meet and spend some time with both Mrs Saunders and her daughters. We have much to be grateful for. They are great British people and great ambassadors for Britain. They have shown the sort of courage and tenacity that no one could have expected them to demonstrate in these circumstances. It was a small thing that they were able to come here, but I know that the whole House will join me in sending them our heartfelt best wishes. We wish them Godspeed in coming to terms with this terrible, wicked tragedy.
Noble Lords: Hear! Hear!
Lord Roper: My Lords, perhaps I may associate these Benches with the tributes paid to the family of Brigadier Saunders and to the members of the Diplomatic Service, and those from other departments who work with them, who have to put up with very difficult circumstances. Cannot more be done through co-operation with our partners in the European Union to deal with the causes of terrorism, which lead to situations such as the assassination of Brigadier Saunders?
Baroness Scotland of Asthal: My Lords, the noble Lord makes a very good point. This issue is being considered by a number of our partners. It is a tragic reality that terrorism is now truly international. It is something with which, regrettably, we have all to deal.

"Touchstone Issues" Leak
3.1 p.m.
Lord Roberts of Conwy Lord Roberts of Conwy asked Her Majesty's Government:
Whether they will investigate how the Prime Minister's memorandum "Touchstone Issues" came into the possession of The Times.
Lord Burlison: My Lords, steps are being taken to investigate the leak to the press of the Prime Minister's memorandum. The noble Lord will be aware that, in order to safeguard the effectiveness of both the investigation and the security arrangements in place to prevent leaks, it has been the practice of successive governments not to disclose information about how leak investigations are conducted.
Lord Roberts of Conwy: My Lords, I thank the noble Lord and congratulate him on his reply. He is quite clearly above suspicion. But is the Minister aware that as this leak of the Prime Minister's confessional is one
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of five leaks to date this month, there are some people who think that the leak is a new form of twisted spin? Can he give the House an assurance that this leak was in fact a genuine leak which the Government regret rather than a press hand-out, in which the Government delight?
Lord Burlison: My Lords, my colleagues are whispering that all spins are twisted. I think noble Lords perhaps appreciate my background. Before I came into this House, when people mentioned "spinners" to me I thought it was a pop group from the sixties. Although we make light of it at the moment, it is a very serious issue. I know that the noble Lord would wish to support the Government on this issue and to join us in condemning the circumstances surrounding the leak. I should also mention that the Government take the question of security very seriously. All government departments are responsible for ensuring that stringent security measures are in place. Where there has been a leak of sensitive information, inquiries will be undertaken to establish who is responsible.
Lord Tebbit: My Lords, can the Minister tell the House when a leak inquiry last identified and disciplined the leaker? Does he think that it may perhaps be better to take further action on the Freedom of Information of Bill and publish the whole darn lot of these things? It would probably be much to the Government's advantage to get it all over with on a regular basis so that Ministers cannot stab each other in the back in the press so easily.
Lord Burlison: My Lords, I simply say to the noble Lord that successive governments have developed policies similar to that which exists at the moment in relation to leaks of this nature. I can assure the House that they are not routine and are not undertaken on a routine basis. While it may not be possible in some cases to identify the individuals responsible, the inquiry process itself has a guarding effect and raises security awareness within departments. Where leaks occur, the Government will take whatever measures are necessary to ensure that the culprits are found.
Lord Mackay of Ardbrecknish: My Lords, perhaps I can help the noble Lord. I think that the answer to the question of my noble friend Lord Tebbit is "never"—at least that is the experience of those of us who were in government. Is it true that a game of pass-the-parcel was played in the office of the Leader of the House to see who would answer this Question and that the music was rigged by the Minister's elders—and, dare I say, betters—to make sure that the parcel stopped with him? Furthermore, has he read the leaked memo? Has he read in particular the sentence,
"It is bizarre that any government I lead should be seen as anti-family"?
Can I tempt the Minister to agree with me that what is bizarre is that any Prime Minister of the United Kingdom should ever write such self-pitying guff?
Lord Burlison: My Lords, as to the noble Lord's point about me answering the Question, the Cabinet

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Office Minister, for whom I am deputising, is away on official business of a long-standing nature. I simply make one point in response to the noble Lord's comments—that is, that it would seem that the leaks issue is orchestrated against the Government in order to deflect attention from what the Government are doing at the moment. I am quite certain that many noble Lords would rather debate today the £43 billion spending review that the Government announced yesterday than this issue.
Lord Haskel: My Lords, does my noble friend agree that perhaps there is not a leaker; perhaps the culprit is a hacker?
Lord Burlison: My Lords, that is certainly a consideration we should take on board. The Government have announced that an investigation will take place. We are not aware that there is any connection between the recent graffiti on the Cabinet Office website and the latest leak. However, I can assure my noble friend that the inquiry will explore a full range of possibilities, of which this will be one.
The Countess of Mar: My Lords, in view of the apparent dearth of plumbers in Westminster, could some of the £43 billion be spent in training them?
Lord Burlison: My Lords, I am sorry, I did not quite catch the noble Countess's question.
The Countess of Mar: My Lords, in view of the apparent shortage of plumbers around Westminster, could some of the £43 billion be spent on training them?
Lord Burlison: My Lords, I thank the noble Countess for her question. I realise that there is a pun in there somewhere and that there should be one in the reply. However, having said that, the Government take the leaks very seriously. Whether we need plumbers or training in this direction I am not sure, but certainly the Government take the issue of establishing responsibility for these leaks very seriously indeed.

Business of the House: Debates, 20th July
3.8 p.m.
Lord Carter: My Lords, it may be for the convenience of the House to know that the usual channels have agreed to a change in tomorrow's business. Owing to the number of Peers who wish to speak on the Second Reading of the Football (Disorder) Bill and other business tomorrow, the first Committee day of the Countryside and Rights of Way Bill has been postponed until next Tuesday, 25th July, which was to have been the second Committee day. Every effort is being made to ensure that all those with an interest in the Bill are made aware of this change.
Lord Henley: My Lords, I thank the Government Chief Whip for that wise and sensible statement.
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Perhaps I may put on record that we hope that all future statements from the Government about business management will be equally wise and sensible and that we shall have appropriate announcements in due course.
Lord Carter: My Lords, when the Opposition Chief Whip says that I am being wise and sensible I am very suspicious.

Procedure of the House: Select Committee Report
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 Third Report from the Select Committee (HL Paper 85) be agreed to.—(The Chairman of Committees.)
Following is the report referred to:
1. Humble Address for Queen's Consent
When a Private Member's Bill in the Lords is directed substantially to the Queen's prerogative, the practice is for the private Member to move an Address seeking the consent of the Crown before the Bill is introduced. This motion may be debated and opposed.
The origins of this procedure are unclear and it is confined to Private Members' Bills. The procedure does not exist in the Commons. The procedure can have the effect of denying the House any sight of the Bill because the Bill cannot be introduced if the Motion for the Humble Address is successfully opposed.' In the opinion of the Committee, it is not desirable that the House should, on a technicality, be able to reject a Bill before seeing it and debating it.
The Committee therefore recommends that the practice relating to Queen's consent should be the same for Private Members' Bills as for government Bills. In the case of a Bill substantially affecting the prerogative, the Government should, on behalf of the private Member, seek Queen's consent and, if it is granted, a Minister who is a privy counsellor should announce it to the House before Second Reading.
Her Majesty the Queen has been consulted about this recommendation and is content to let the House decide the issue.
2. Human Rights: changes to Standing Orders arising from the appointment of a Joint Committee
In the expectation that the two Houses of Parliament will agree to appoint a Joint Committee on Human Rights before the summer recess, and in view of the coming fully into force of the Human Rights Act 1998 on 2 October 2000, the Committee recommends amendments to Standing Orders consequential on such an appointment. A motion to amend the Standing Orders would only be tabled after the House has agreed to the appointment of a Human Rights Committee.
The changes proposed are set out below. They would have the following effects:
— to add the new Joint Committee to the list of sessional committees whose business is not interrupted by prorogation; and
— to make the Joint Committee responsible for scrutiny of remedial orders made under the Human Rights Act 1998, and to relieve the Joint Committee on Statutory Instruments of that responsibility.
The Committee also recommends that the rotation rule should be applied to the new Joint Committee, giving Lords Members a maximum period of service of four sessions. An extension of three years should be given to any Lord who may be chosen as chairman of the Joint Committee.
The Committee recommends one further amendment to Standing Order 73 (Joint Committee on Statutory Instruments) to bring it into line with an amendment already made in the House of Commons. The amendment is consequential on the devolution legislation. It would exclude from the consideration of the Joint Committee on Statutory Instruments any statutory instrument mad, by a member of the Scottish Executive or by the National Assembly for Wales, unless such a statutory instrument is required to be laid before the United Kingdom Parliament or either House of it.

Procedure of the House: Select Committee Report

  Proposed amendments to Standing Orders
  Standing Order 40 (arrangement of the Order Paper)
  After paragraph (6), insert the following new paragraph:
  ("(6A) Any motion relating to a report from the Joint Committee on Human Rights on a remedial order or draft remedial order laid under Schedule 2 to the Human Rights Act 1998 shall be entered before a motion to approve that order or draft order.")
  Standing Order 64 (sessional committees)
  After ("House of Lords' Offices Committee") insert ("Human Rights Committee")
  Standing Order 72 (affirmative instruments)
  In paragraph (1)(a), after ("Deregulation and Contracting Out Act 1994") insert ("or a draft remedial order or remedial order laid under Schedule 2 to the Human Rights Act 1998")
  In paragraph (b), after ("Delegated Powers and Deregulation Committee") insert:
  ("(c) in the case of a draft remedial order or remedial order laid under Schedule 2 to the Human Rights Act 1998, there has been laid before the House the report thereon of the Joint Committee on Human Rights:
  Provided that the report is laid

  (i) in the case of a draft remedial order, within 60 days of the laying of the draft order or

  (ii) in the case of an order not approved in draft, within 119 days of the making of the original order,

  such periods to be calculated in the manner prescribed by Schedule 2 to the Act;")
  Standing Order 73 (Joint Committee on Statutory Instruments)
  In paragraph (1), after ("Deregulation and Contracting Out Act 1994") insert ("and any remedial order or draft remedial order under Schedule 2 to the Human Rights Act 1998")
  In paragraph (2), line 4, after ("but) insert (—not including any statutory instrument made by a member of the Scottish Executive or by the National Assembly for Wales unless it is required to be laid before Parliament or either House of Parliament and").
  3. The Companion to the Standing Orders
  The Committee considered and approved a revised text of the Companion to the Standing Orders, as drafted by the sub-committee appointed on 4 April 2000. The Committee expressed its gratitude to the sub-committee for undertaking this arduous task.
  The Committee agreed that the Companion should be printed on standard A5 paper and continue to be a single volume.
  It is intended to revise and publish later in the year the Brief Guide to the procedure and practice of the House of Lords, drawing on the new edition of the Companion. The page size of the Brief Guide will be the same as it is now.1 This happened on the motion for an Humble Address on Lord Forsyth of Drumlean's Succession to the Crown Bill: 2 December 1999, HL Deb, cols 917–9.
  On Question, Motion agreed to.

Consolidated Fund (Appropriation) Bill
Lord McIntosh of Haringey: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read a second time.—(Lord McIntosh of Haringey.)
On Question, Bill read a second time; Committee negatived.
Then, Standing Order No. 46 having been suspended (pursuant to Resolution of 18th July), Bill read a third time, and passed.

Cheques (Scotland) Bill [H.L.]
Lord Astor of Hever: My Lords, on behalf of my noble friend Lord Younger of Leckie, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Lord Astor of Hever.)
On Question, Bill read a third time.
Lord Astor of Hever: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Astor of Hever.)
On Question, Bill passed, and sent to the Commons.

Street Works Bill [H.L.]
Lord Peyton of Yeovil: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Lord Peyton of Yeovil.)
On Question, Bill read a third time.
An amendment (privilege) made.
Lord Peyton of Yeovil: My Lords, I beg to move that this Bill do now pass. I know that this is not the moment for a speech but I should like to inject a note of civility and gratitude in the direction of the Government Chief Whip, who has been most helpful. Perhaps I may express the hope that his natural helpfulness and courtesy will prove a means of influencing his colleagues in another place to see the light which is so obvious to himself. Perhaps I may also ask him to pass on to Mary Robertson a note of my gratitude and everlasting admiration. I am most grateful.

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Moved, That the Bill do now pass.—(Lord Peyton of Yeovil.)
On Question, Bill passed, and sent to the Commons.

Television Licences (Disclosure of Information) Bill
Read a third time, and passed.

Regulation of Investigatory Powers Bill
3.13 p.m.
Read a third time.
Clause 2 [Meaning and location of "interception" etc.]:
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton)The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton) moved Amendment No. 1:
Page 5, line 37, leave out subsections (11) and (12)
The noble Lord said: My Lords, the new definition of communications data that we brought forward at Report stage was generally welcomed. The rather complicated amendment that we tabled sought to clarify the definition in such a way as to remove the possibility of catching the content of a communication. The intricate nature of the definition and the complex changes we had needed to make to that definition had led us to believe that we needed some way of coming back to this definition if changing technology required it. Hence our inclusion of an order-making power.
Admittedly, that proposal did not receive universal support. The noble Lords, Lord Cope and Lord McNally, expressed some concern that the order-making power did not include a limitation that any suggested definition would not he widened to include content. Although noble Lords accepted that it was never our intention to include content within the definition of communications data, their misgivings struck a chord, and I agreed to reflect further on the wording of our amendment to see whether we could provide a stricter formulation that would assuage the concerns that had been understandably expressed.
We considered various drafting arrangements to limit the power so that it could not be used to include more data than the current definition, as was always our intention, but the drafting exercise simply became too complex. The Government have therefore tabled Amendments Nos. 1 and 12 and consequential amendments, Amendments Nos. 47 and 49, to remove the order-making powers relating to the definition of communications data. I sense that the amendments will probably be welcomed by the House. I beg to move.
Lord Cope of Berkeley: My Lords, as the Minister said, I was one of those who had misgivings about the order-making power, particularly because it would have enabled the Government, by order, to extend
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some of the definitions in the Bill so as to be able to intercept e-mail traffic without the safeguards provided. That was not desirable. I quite understand that the Minister, his colleagues and advisers found it difficult to draft a different order-making power which would have had precisely the effect that we had suggested. In the circumstances, I believe that the Minister has done the right thing in withdrawing the order-making power through Amendments Nos. 1 and 12 and those that go with them.
Lord McNally: My Lords, if the spirit of this afternoon is to be "When in doubt, leave it out", we shall make very rapid progress indeed,
On Question, amendment agreed to.
Clause 10 [Modification of warrants and certificates]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 2:
Page 13, line 26, leave out subsection (10) and insert-
("(10) For the purposes of this section-

(a) the scheduled parts of an interception warrant are any provisions of the warrant that are contained in a schedule of identifying factors comprised in the warrant for the purposes of section 8(2); and

(b) the modifications that are modifications of the scheduled parts of an interception warrant include the insertion of an additional such schedule in the warrant;

and references in this section to unscheduled parts of an interception warrant, and to their modification, shall be construed accordingly.").
The noble Lord said: My Lords, I am tempted to utter those fateful words, "This is a technical amendment". It is, actually. Noble Lords will recall that an interception warrant comes in two parts. The front part—or "unscheduled part"—contains the name of the target person or premises. The back part—or "scheduled part"—contains, in an ordinary case, the telephone numbers which are to be intercepted. There may be more than one schedule in the scheduled part, with each containing numbers belonging to a particular service provider. The difference in practice between the two parts of the warrant is that only the Secretary of State can modify the front part of the warrant, while the scheduled part may be modified by a senior official or, in urgent cases, by an authorised officer within the intercepting agency.
This amendment removes an ambiguity in the Bill by making it clear that modifying the scheduled part of a warrant can include adding a new schedule. So if a target changes not just his phone number but also his service provider, the necessary modification will keep up with him. This has always been the intention. The amendment seeks only to clarify Clause 10. I trust that the amendment will be satisfactory to the House. I beg to move.
On Question, amendment agreed to.
Clause 12 [Maintenance of interception capability]:
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 3:
Page 15, line 22, leave out ("The person to whom a notice is given may") and insert ("Where a notice is given to any person under subsection (2) and otherwise than by virtue of subsection (5A)(c), that person may, before the end of such period as may be specified in an order under this section,").
The noble Lord said: My Lords, I move this amendment with great hopes of success on this occasion in view of the support given to our amendment by the noble Lords, Lord McNally and Lord Bassam of Brighton. That is probably a winning combination. The amendment and the other amendments grouped with it follow the decision of the House about the introduction of a technical advisory board. In moving that amendment at Report stage, I said that it was the principle which concerned me rather than the detail of the drafting. The Government have suggested some improvements in the drafting which are now embodied in this set of amendments. Those improvements should recommend themselves to the House.
The position remains that the technical advisory board will be set up and will have two duties. First, it will need to examine, together with others, statutory instruments involving the orders put forward by the Secretary of State as regards what are now known as black boxes; namely, the equipment to be put in place with Internet service providers to monitor e-mails and so forth. The technical advisory board will advise the Secretary of State on that matter. The reports that it will submit to the Secretary of State may well be published in part or in full, but that would depend on the members of the board and on the Secretary of State. No requirement has been put in the Bill. Obviously, some of the board's comments and recommendations may well be extremely confidential.
The second role of the technical advisory board will be to act as a form of appeal mechanism if a black box is imposed on a provider which seems unreasonable, either for technical reasons or because the move appears altogether over the top, as it were. In that case, the provider will be able to appeal to the technical advisory hoard, although it will remain for the Secretary of State to take the ultimate decision.
It was suggested in the amendment tabled on Report that the board should comprise six members drawn from the industry (service providers and so forth) and six members from the users of interception (the police, HM Customs and the security services). The amendments tabled today provide for a more flexible arrangement, still allowing for a balance between the two sides, but nevertheless including a provision that others may be appointed at the discretion of the Secretary of State, which might broadly represent consumers—those whose communications are likely to be intercepted. That meets the comments made on Report and at Committee stage by the noble Lord, Lord Desai, when similar amendments were discussed.
I hope that the technical advisory board will lead to greater co-operation within the statutory framework between the security agencies and the police on the one hand and the electronics experts, service providers and
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so forth on the other. That will lead to a greater mutual understanding of the requirements of both sides and hence to a more effective mechanism which, it is hoped, will interfere less than might otherwise be the case with the normal operations of service providers and ultimately with e-commerce. The amendments provided by the Government to this proposal are desirable and I commend them to the House. I beg to move.
Lord Bassam of Brighton: My Lords, I should like, first, to thank the noble Lord, Lord Cope, and the noble Lord, Lord McNally, for working so closely with the Government on this group of amendments. I pay tribute to their pragmatism as regards this issue. In the debate on Report the noble Lord, Lord Cope, said—quite rightly—that the principle was more important than the detail here. He made it clear that he was less concerned about the detail than the basic proposal for a board. Indeed, he has reflected that in his comments this afternoon. In my response on Report I said that not much lay between us on this issue. It was only the vehicle and detailed mechanisms that we were debating. What has been tabled today is a set of amendments which we believe will be far more workable.
Before I address the substance of the amendments, I wish to clarify one point. Some commentators have rather dramatically overestimated the number and range of telecommunications service providers on whom an interception capability requirement may be imposed. The consultation paper we published in June last year set out the kinds of areas we have in mind. These include the Internet service provider industry and the satellite market.
However, notices under Clause 12 will not be served wholesale across a market sector. In particular, I should like to emphasise that we do not envisage serving notices under Clause 12 with respect to telecommunication services provided solely to the financial markets. Interception is only ever used as a method of last resort—that is how we see this matter. We do not believe that requiring such services to develop and maintain an interception capability would be appropriate. I hope that this commitment will reassure those who are concerned that we may serve a notice on such companies and that they will derive further reassurance from the wording of the order which the Secretary of State will make under Clause 12 in due course.
Turning to the set of amendments before us, I shall explain how they achieve three things. First, they seek to clarify the function of the technical advisory board in considering a reference. Secondly, they provide that a notice is effectively suspended pending consideration by the board. Thirdly, they make it clear what may happen when a reference is made. Finally, as the noble Lord, Lord Cope, acknowledged, they introduce an element of further flexibility as to the constitution and membership of the advisory board.
I am glad that noble Lords opposite have joined together in tabling these amendments. On the question of the membership of the advisory board, as I said

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earlier, I know that no firm views were expressed as to the precise membership when this matter was debated last week. Some suggestions were made that voices above and beyond those of the communications industry and law enforcement should be heard on the advisory board. I am not entirely convinced that that would be appropriate. The board is likely to need to consider highly technical issues. It will need to focus its attention on such matters. None the less, the order-making power which is proposed in Clause 13 allows for flexibility here.
More important is that the flexibility engendered by the order-making power gives the Government some further time to consider the question of who should act as the chairman of the board. This is a point that has been raised by the noble Lord, Lord Cope, on previous occasions. It is a difficult issue to which we should like to give proper thought, along with industry. We shall consult with representatives on that matter.
Finally, we are yet to speak to industry about the precise composition of the board and would like to take those views before establishing it in an order made under the Bill. The important point to note is that the board should include representatives of industry, as identified at subsection (2)(a) of the proposed amendment; that the board should include membership from those who apply for interception warrants, as identified at subsection (2)(b); and, crucially, that there should be a balance between these two groups as stipulated at subsection (2)(d)
I shall be happy to work with these amendments. The joint drafting has greatly improved their quality and, as I said earlier, I am most grateful to noble Lords for their assistance in this matter.
Lord McNally: My Lords, before the Minister sits down, perhaps I may make a brief comment. Although the Minister was obviously not in a position to see for himself, when he reached the point he made about a possible chairman for the board, the noble Lord, Lord Desai, clearly indicated that he was a candidate.
Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord for his advice.
Lord Hylton: My Lords, perhaps I may intervene to make a brief remark. I have been a Member of your Lordships' House since 1971. In that time I have seen many all-party amendments being passed on legislation. However, I do not ever recall seeing one to which a Government Minister had added his name. I hope that this is a good omen for the future. The mechanism may be suitable for dealing with technical and complex matters such as this.
On Question, amendment agreed to.
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendments Nos. 4 to 6:
Page 15, line 23, leave out ("to") and insert-
("(5A) Where a notice given to any person under subsection (2) is referred to the Technical Advisory Board under subsection (5)-

(a) there shall be no requirement for that person to comply, except in pursuance of a notice under paragraph (c)(ii), with any obligations imposed by the notice;

(b) the Board shall").

Page 15, line 24, leave out ("and the Board") and insert (", for the person making the reference, of the notice referred to them and").
Page 15, line 25 at end insert ("; and
(c) the Secretary of State, after considering any report of the Board relating to the notice, may either-

(i) withdraw the notice; or

(ii) give a further notice under subsection (2) confirming its effect, with or without modifications").

On Question, amendments agreed to.
Clause 13 [Technical Advisory Board]:
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 7:
Page 16, leave out lines 23 to 26 and insert ("such number of persons appointed by the Secretary of State as he may by order provide.
(2) The order providing for the membership of the Technical Advisory Board must also make provision which is calculated to ensure-

(a) that the membership of the Technical Advisory Board includes persons likely effectively to represent the interests of the persons on whom obligations may be imposed under section 12;

(b) that the membership of the Board includes persons likely effectively to represent the interests of the persons by or on whose behalf applications for interception warrants may be made;

(c) that such other persons (if any) as the Secretary of State thinks fit may be appointed to be members of the Board, and

(d) that the Board is so constituted as to produce a balance between the representation of the interests mentioned in paragraph (a) and the representation of those mentioned in paragraph (b).

(3) The Secretary of State shall not make an order under this section unless a draft of the order has been laid before Parliament and approved by a resolution of each House.").
On Question, amendment agreed to.
Clause 14 [Grants for interception costs]:
3.30 p.m.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 8:
Page 16, line 27, leave out subsection (1) and insert-
("(1) It shall be the duty of the Secretary of State to ensure that such arrangements are in force as are necessary for securing that a person who provides-

(a) a postal service, or

(b) a telecommunications service,

receives such contribution as is, in the circumstances of that person's case, a fair contribution towards the costs incurred, or likely to be incurred, by that person in consequence of the matters mentioned in subsection (2).").
The noble Lord said: My Lords, my name is, I suppose by the luck of the draw, at the top of the list of names to the amendment. It could have been moved by the noble Lord, Lord Cope, or the noble Lord, Lord McNally.
I wish to speak also to Amendments Nos. 9 and 10. These amendments clarify the effect of the amendments to this clause made by noble Lords last week. This clarification is necessary as the effect of the amendments last week was to create two separate but overlapping duties in Clause 14. The first duty, at Clause 14(1), was in respect of marginal costs for postal companies, marginal costs for telecommunications companies and capital costs for both. The second duty, at subsection 14(3), was in respect of the marginal costs of companies which also happen to be the subject of obligations under Clause 12.
Prior to last week's amendments, the obligation on the Secretary of State under subsection (3) was stronger than the discretion under subsection (1). Hence they were treated separately although there was a degree of overlap between them.
The effect of last week's amendments was to introduce an obligation under subsection (1). As both subsections now impose an obligation to pay contributions, or to see that contributions are paid, it is right that they should now be wrapped up into a single duty. The amendment is recast in terms of "arrangements" for securing that contributions are paid, as this allows other means of payment than direct payment from the Home Office. For example, contributions to the marginal costs for telephone interception may well come from the National Criminal Intelligence Service. That is what is now proposed in subsection (1) of this amendment. The issues for which payments can be made—listed in subsection (2)—remain unchanged.
This amendment incorporates a slight elaboration on the requirement to ensure a fair contribution in subsection (1). It specifies that considerations of fairness should look to the particular circumstances of the case in question; in other words, on a case by case basis. Particular notice should be taken of the circumstances of the service provider on whom the obligation is being imposed. We argue that that is the fairest way to deal with the matter. A wide variety of issues may be relevant here but I am pleased that the noble Lords opposite and I have been able to reach agreement that the duty of the Government to ensure fairness in the regime to be operated under Clause 12 carries with it an explicit commitment to consider the circumstances of each individual service provider approached when assessing what is a fair contribution. I would expect this to include a consideration of a wide variety of factors such as comparisons with international practice; the nature of any additional burden to be imposed; the size of the company in as far as that may be related to the ability of the company to absorb the burden, and other factors besides.
Amendment No. 9 includes a new subsection to replace existing subsection (3). This is merely the familiar provision that the Secretary of State may make arrangements for payments to be made out of money provided by Parliament in order to fulfil the duty identified at subsection (1). I beg to move.
Lord Cope of Berkeley: My Lords, as the noble Lord, Lord Bassam, pointed out, my name is also
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added to the amendment, which seeks to implement the decision that noble Lords took on Report with regard to cost.
With regard to the previous group of amendments, the Minister said, most helpfully, that the Government do not expect to make any requirement under Clause 12 to service providers who deal only with the financial services industry. I believe that that measure will be widely welcomed, as the Minister suggested. I hope that there will be great awareness of it.
Neither the amendment nor the Bill defines "fair". The proposed subsection (1) in the amendment states,
"such contribution as is, in the circumstances of that person's case, a fair contribution".
That permits the Government to allocate different proportionate contributions in different circumstances. It is right and fair in some circumstances—particularly in the case of a small company—for the Government to pay the whole cost of what is required; that is, the black boxes. As the black box will carry out the work that is required by the agencies of the Government, the police and so on, the presumption should be that it is fair that the agency concerned should pay the major cost of it.
I appreciate that it is argued that in some cases the equipment will also benefit service providers by providing them with extra information and facilities. Nevertheless, the main purpose of the black boxes is to serve the interests of the Government. Therefore, it is right that the taxpayer should pay the major part of the cost. Anyone who feels aggrieved at the settlement could no doubt seek judicial review in regard to the proportion of the cost that is considered fair.
I turn to the total cost. I admit to having become a little confused with regard to the sum of £20 million. I may have inadvertently contributed to my confusion and perhaps to other people's on this matter. However, my original understanding was that the sum of £20 million was the estimated cost of the black boxes, part of which was to be borne by the Government and part of which was to be borne by the ISPs.
However, my subsequent understanding was that the sum of £20 million was the total cost of the Government's contribution to the scheme. That implies that the total cost of the black boxes will be higher than that. For example, it might be £30 million, of which the Government would pay £20 million and the ISPs £10 million. It is, of course, difficult to estimate the cost because we are not sure how many service providers will be asked to install such equipment, or what the nature of the equipment is. The Smith report began a discussion on that matter but it by no means concluded it. The recommendations of the Smith report no longer appear to be a sound basis on which to proceed.
A large proportion of the costs will comprise the extent to which the facility is used. That is difficult for those inside government, let alone those outside, to determine. The facility may develop over time, but so may the cost of an individual black box. The one thing of which we can be certain is that the technology which

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is appropriate today for this purpose will probably have developed out of all recognition in a year or two, or three years, and probably in an even shorter period. That fact also makes any estimate of costs liable to change. However, this is an important matter. Whatever sum of money is paid by service providers—however large or small—will damage the competitiveness of British service providers compared with those overseas who do not have this overhead.
I appreciate that other countries may, in time, follow the lead given by the Government; so the competitive position may even out slightly if they do the exactly the same and adopt the same charging arrangements. But in the mean time—possibly for ever in regard to some smaller countries, especially tax havens—whatever the figure is, it will prove a competitive disadvantage to British service providers and others subject to the charge. I am sorry to expand at some length on this matter, but it is important. We should do our best to be clear about this before finally sending this piece of legislation on its way.
We have gone along with the Government a great deal in all these matters and they have moved in our direction a great deal. But the question of cost, and of how much of the cost will finally come out of the pockets of British service providers, is important to whether or not British electronics companies remain competitive in the world.
Lord McNally: My Lords, I should like to associate myself with the concerns expressed by the noble Lord, Lord Cope. As he said, we have moved a long way from the Bill's starting-point and the implication that the police, the security services and others could specify whatever equipment they thought necessary and the service providers would pick up the bill. There is now much less of a "blank cheque" approach.
However, the Alliance for Electronic Business has raised the point that service providers will, as their part of the bargain, be responsible for hardware and software, opportunity cost, IT development time and the costs of planning and management time. Is it clear, in return, that what is on offer from the Government is a Treasury-capped £20 million over three years? If that is what is on offer, the approach seems rather churlish. As all sides concede, we are entering unknown territory. It is difficult to understand how it is possible to be "fair" while capping and restricting the nature of the Government's commitment in advance. Industry is eager to know whether its understanding is correct; namely, that it is a hard fact that all that is on offer is £20 million over three years, capped by the Treasury.
Viscount Goschen: My Lords, I welcome the fact that the noble Lord, Lord Bassam, and his department have taken so constructively the decision of this House when this matter was put to a vote on Report. It is definitely an improvement to have the word "fair" included in the Bill, and to have some further explanation of what that means.
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Building on points raised by the two previous speakers, surely the £20 million mentioned previously by the noble Lord, Lord Bassam, is only an example for reference purposes. Clearly, we cannot say on the one hand that it is impossible to specify the amount of money that is to be set aside for this purpose when we do not yet know what the total bill will be, and, on the other, have a categorical statement in the Bill that the contribution by the Secretary of State will be "fair". Estimates of the total bill range from the upper hundreds of millions of pounds to some tens of millions of pounds, as put forward by the Government.
I should be grateful if the Minister will confirm that the figure he mentioned was a Treasury estimate and that it in no way binds the Government, or at least is in no way meant to be used by the courts in interpreting a "fair" contribution.
Lord Desai: My Lords, perhaps I may make one small point. As time moves on, the technology in this field becomes cheaper, not more expensive. That will be of some consolation to my noble friend.
3.45 p.m.
Lord Lucas: My Lords, I support what my noble friend Lord Cope said. It is enormously important that we do not get ourselves into the reverse position of that on flood defences—where people campaign to have the Government spend millions of pounds on defending properties worth a few tens of thousands because they are not required to make any contribution to saving their homes. The situation is to some extent reversed, although it is much better now than it was under the Bill as originally drafted, whereby the contributions required from industry could have been out of all proportion to those asked for from the Government.
It is important that the Government pay their fair share of the cost. It is important, however, that industry should pay something. The idea of people being able to charge the police for helping the police with their inquiries is undesirable. But we need to see the Government making a fair and, in concept, at least an equal contribution to the costs. That will keep the Government honest in terms of what they are asking for. I very much hope that the noble Lord will be able to give us that comfort.
Lord Bassam of Brighton: My Lords, the noble Lord, Lord Lucas, has almost made my argument for me, and I am grateful to him.
A number of valuable and valid points have been made in this brief exchange. I shall try to give such comfort as I can. We believe that the regulatory impact assessment figure of £20 million which we made plain last week is the best possible estimate in the circumstances. It can only be that. But spending up to that figure is in the gift of the agencies involved in carrying out the work. In a sense, how much they require must be their decision. That will obviously affect the amount of money spent.

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As I said, we believe that £20 million is the best estimate in the circumstances, and there is a degree of reassurance in that. I do not always think that we get it absolutely right, but we believe that that is the figure that we need to pay in these circumstances and that it is fair. Although we do not have a precise mechanism to determine "fairness" in each and every case, the fact that our approach is on a case-by-case basis in terms of the individual circumstances of the service provider means that we shall endeavour to operate the regime as fairly as we possibly can. A number of points have been made, but they all come back to the issue of what "fairness" will mean in each circumstance. We shall have to see how the regime works out.
The noble Lord, Lord Lucas, was right to say that it will come down to ensuring that people pay a reasonable price in the circumstances. We believe that we have got it right, but we shall continue to listen to those who make representations to us. We now have a mechanism for achieving that objective.
In the early stages of the debate there was—I shall not say a degree of hysteria, but certainly overblown concern about the costs. We have tried to keep a sense of proportion and we believe that, on balance, we have got it about right. The £20 million will work for a three-year period. During that time we shall have further opportunity to reflect carefully on how the system is working. We do not want to put UK companies at a competitive disadvantage. The noble Lord, Lord Cope, was right to raise that issue. For that reason, the smaller companies will be given rather greater assistance. Clearly, we do not want to do anything that stifles their growth and activity at the outset. We shall take very careful account of matters such as the planning costs of smaller companies, which I am aware is an important issue.
I am grateful to all noble Lords who have made constructive comments. I am aware that there is a great deal of concern about this issue. I believe that we were right to bring fairness into the legislation and to qualify it in a sensible way. I congratulate those who have played a part. I hope that we can now agree these amendments and carefully monitor the operation of the arrangements to ensure that they work in the best interests of industry. In this way we can guarantee the security of the system and combine fairness with a sense of proportion so that in future this part of the legislation works for the benefit of everyone.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendments Nos. 9 and 10:
Page 16, line 43, at end insert-
("() For the purpose of complying with his duty under this section, the Secretary of State may make arrangements for payments to be made out of money provided by Parliament.").
Page 16, line 44, leave out subsection (3).
On Question, amendments agreed to.
Clause 16 [Extra safeguards in the case of certificated warrants]:
Lord Phillips of Sudbury Lord Phillips of Sudbury moved Amendment No. 11:
Page 19, line 12, leave out from ("necessary") to end of line 13 and insert ("for the purpose of preventing acts of terrorism; and").
The noble Lord said: My Lords, Amendment No. 11 harks back to Amendment No. 22 which I moved, at inordinate length, on Report on 12th July at cols. 317 to 320. In response, the noble Lord, Lord Bassarn, spoke at appropriate, not inordinate, length, at cols. 322 to 324. It would be a form of cruel punishment to go through all the issues again. None the less, I shall not be deterred from trying one last time to clarify, for those who must hereafter understand this piece of legislation, exactly what this clause, and the provisions which lock into it, provide in relation to trawled, or indiscriminate, as some would call it, interception of communications. I make no apology for that. We are told by all concerned beyond these walls that these parts of the Bill are of particular concern and potential importance to the industry and ordinary citizens so-called.
When I spoke at Report stage the noble Lord, Lord Bassam, kindly said that he would read Hansard, consider the various questions that I raised and come back to me. I fondly looked forward to discussions with the noble Lord and his officials. That did not take place very long ago. Unfortunately, in the interim I have been abroad and, therefore, there has been no discussion or correspondence.
Lord Bach: My Lords, I am to answer for the Government today on this issue. It is a shame that the noble Lord has been unable to take advantage of the offer made by my noble friend to facilitate further discussions and briefings on these matters. I am aware that the noble Lord, Lord Cope, took advantage of that opportunity which was also available to the noble Lord, Lord Phillips of Sudbury, and his party. It is a minor shame that the noble Lord and the noble Lord, Lord McNally, were unable to take advantage of that offer. I hope that when I come to explain the Government's position all will be put right.
Lord Phillips of Sudbury: My Lords, with respect I thought that that was precisely what I had said. To continue, I shall be grateful if when the noble Lord, Lord Bach, responds he is able to confirm that trawled interception of communications can be lawful only if, first, it takes place subject to a Clause 8(4) certificated warrant, and, secondly, that it can apply only to external communications. If one reads Hansard one sees that at the previous stage the noble Lord, Lord Bassam, said that it was still the Government's intention that Clause 8(4) warrants should be aimed at external communications. There was a scintilla of doubt put into my mind by that formulation.
This matter harks back to the problem of overlapping warrants and the informal regime that has grown up hitherto. I seek reassurance in the clearest possible terms that the regime of overlapping warrants

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does not, and cannot, allow trawling and the utilisation of the material trawled in relation to internal communications.
I make one further plea to the Government. Is it possible that in dealing with these very difficult clauses, with the interlocking parts of the Bill which are necessarily brought in by reference, the Government can develop an extra-statutory protocol with the interception of communications commissioner in order to agree just how a mixed catch of internal and external communications is to be handled in practical terms? I am still mystified by the fact that Clause 16 (Clause 15 at Report stage), which is concerned with extra safeguards in the case of certificated warrants, provides that,
"the requirements of this section … are that the intercepted material is read, looked at or listened to by the persons"—
no definition of "persons" is provided—
"to whom it becomes available by virtue of the warrant",
and so on. How can one know which are the internal and which are the external communications—the sheep and the goats—without reading, listening to or looking at the same?
My first point in relation to the notion of an extra-statutory protocol is that it may cover precisely how the interception of communications commissioner or his staff sit alongside the staff at GCHQ, or wherever, and engage in the business of sorting the sheep from the goats to ascertain, as far as is humanly possible, that the provisions of Clause 16(1) are complied with; namely, that such communications are looked at, listened to or read to the minimum extent necessary to decide which manner of beast they are. Secondly, there should be a regime of destruction of the material that is trawled which is not external. I believe that if that was the case a good number of noble Lords on this side of the House, on the Government Benches—this is not a partisan issue—and many outside this place would be greatly relieved. I shall be grateful if, when the Minister replies, he will consider that suggestion. I beg to move.
Lord McNally: My Lords, the noble Lord, Lord Bach, raised the question of whether or not we should have engaged in private briefings. The Government have been extremely generous and helpful in the progress of this Bill. However, we should not fall into the trap of believing that private briefings, however reassuring, are a substitute for provisions on the face of the Bill or words spoken from the Dispatch Box. I see the noble Lord nodding assent. Sometimes I worry, particularly in the world of spookery, that parliamentarians and politicians become intimidated, perhaps dazzled, by the intelligence world. Sometimes they are beguiled by the luxury of knowing something that the rest of us are not privileged to know, but if only we knew it we would understand why it was being done. In dealing with the intelligence community and its activities Parliament should always resist that tendency and retain a healthy scepticism in these matters.
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Therefore my question is simple and innocent. It has been a recurring theme throughout the Bill. Are we seeing here an extension of the powers of the security services or simply an update of the powers of previous legislation? I have never been quite clear about that. If it is an extension it may be entirely justifiable. If so, it should be justified and should not masquerade as simply an update.
4 p.m.
Lord Bach: My Lords, I am grateful for the contributions of the two Front Bench spokesmen from the Liberal Democrat Party. The noble Lord, Lord McNally, is right: there should always be some separation between the role of Parliament and briefings. It is fair to say that in some cases briefings are more important than others. I suspect that this instance may be one of them. No criticism is implied. Sometimes these meetings cannot take place; sometimes they can. I rather wish that in this instance it had. I think that I can go some way towards satisfying the noble Lords' concerns about this part of the Bill.
The provisions in Section 3(3) of the Interception of Communications Act, which are taken forward in this Bill as Clause 16(3), provide an important weapon for the law enforcement and security agencies. They allow for interception of external messages to or from a named individual in the British Islands, under the specific authority of the Secretary of State. The Secretary of State must consider that the interception is necessary and proportionate to the objects it seeks to achieve, just as he would if he signed an ordinary Clause 8(1) warrant in respect of that individual.
Why is this separate power provided? It is in fact less intrusive than a Clause 8(1) warrant. A warrant under Clause 8(1) would allow interception of all communications to or from a subject. In most cases the majority of these communications would be with other persons in the British Islands, and so would qualify as internal communications. But a certificate under Clause 15(3) refers to a warrant under Clause 8(4), the target of which can only be external communications. Therefore, a Clause 8(1) warrant will allow the interception of all my communications; but a Clause 8(4) warrant—that is what we are discussing in the amendment—with exactly the same safeguards in place will only allow the interception of my external communications, for example my international communications. It is not as intrusive as a Clause 8(1) warrant.
In some cases the external communications are all that is needed, and so there is no justification for obtaining the more intrusive Clause 8(1) warrant. The noble Lord, Lord Phillips, has been full of examples during the passage of the Bill, sometimes using Christian names very similar to those of some noble Lords on this side of the House. However, I shall not fall into that trap but I shall give an example.
Criminals in foreign countries often target victims in the UK, in an attempt to defraud them of large sums of money. The criminals communicate with their victims

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and take forward the fraud by various means, including telephone calls, faxes and e-mail. It is not practical to select these messages by reference to the foreign end, as the criminals take care to use a wide variety of telephone boxes, public fax machines and Internet cafés to hide their tracks. The best way to combat such a fraud will often be to select by reference to the victim's address, wholly innocent as that victim is. There would be no justification for intercepting the whole of the victim's internal communications; but to intercept only the external communications might be a proportionate and effective response. In such a case, the noble Lord's amendment would force the authorities to seek an unnecessary and excessive warrant—a Clause 8(1) warrant. This cannot be right. Using a Clause 8(4) warrant would be less intrusive than a Clause 8(1) warrant.
Why are we removing a safeguard, as it is perceived, that exists in the current Interception of Communications Act? I believe that this is the background to noble Lords' questions. We argue that we are not. The Bill in fact provides a more comprehensive set of rules than the current Act on when communications to or from targets in this country can be looked at under a certificated warrant. First, as I have said, no factor referable to an individual known to be in the British Islands can be used to determine what is "read, looked at or listened to" except with the Secretary of State's personal authority. This is, in terms of safeguards, as good as a warrant; and like a warrant, the permission is limited to three months.
So not only is there an inhibition on what goes into the certificate; there is also a direct connection between what is in the certificate and what may be looked at. This is a connection which is made explicit for the first time. In other words, what is on the certificate is all that cart be looked at. It is not present in the 1985 Act. It offers a legal guarantee that external warrants will not be used to target individuals in this country except in the circumstances I have described.
These provisions are indeed complicated. I am attempting to assure the noble Lord that the safeguards attached to the system are as robust as under the current Act—in some respects more so. The interception commissioners have in the past been careful and diligent to ensure that these provisions are properly followed. It almost goes without saying that we are confident, and the House can be confident, that the new commissioner will confirm this scrutiny.
I hope that my remarks go some way towards relieving the noble Lord's concerns about this part of the Bill.
Lord Chalfont: My Lords, perhaps the Minister can clear my mind about what seems an important issue. Is it not true that the Echelon network can already intercept any telephone call and any e-mail anywhere in the globe from satellite interception? If so, are not some of the warrants somewhat irrelevant?
Lord Bach: My Lords, I do not know the answer to the noble Lord's question. Even if I did, I am not sure
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that I would think it proper to answer his question today. These are matters of important concern. It is necessary to be careful in what one says from this Dispatch Box and anywhere in this House on matters of this kind. If the noble Lord would like an answer to his question, I shall be happy to give it at some future time.
Lord Chalfont: My Lords, there is nothing classified about this matter. It has all been in the public domain and public print. I am not sure why the question cannot be answered.
Lord Bach: My Lords, I am sure the noble Lord is right because he is an acknowledged expert in this field, as I am not. I shall be happy to answer ham when I know the answer myself.
Lord Nolan: My Lords, perhaps I may say from ray experience as commissioner that I see nothing dangerous or objectionable in the proposed new clause. The degree of coverage of external communications appears to be no wider than it has ever been, but more precisely spelt out. The effect of the amendment proposed by the noble Lords, Lord McNally and Lord Phillips, would unduly narrow the scope of what can be intercepted and would, indeed, be against the public interest.
Lord Phillips of Sudbury: My Lords, I am grateful for the Minister's comments. His practical illustration was easier to follow than some of the explanations given hitherto and I suspect that it shed more light on one aspect of the Bill. That is not a criticism, but I wonder whether when we are faced with such difficult and dense Bills it would help those on non-government Benches to have worked-through illustrations. They would make the whole task more approachable.
I am grateful for the Minister's explanation. I shall read Hansard carefully because I am not sure that I picked up every point that was made. The Minister did not refer to my final point about the practical illogicality of not reading and listening in order to sort the sheep from the goats and the prospect of an additional statutory protocol agreed between the Government and the interception of communications commissioner in order to verify this aspect of the workings of the Bill. It is important and we all understand that someone must look at the material in order to decide what is internal and what is external and must then forget all that is internal. Could that form a clear procedure? That would give great reassurance beyond these walls. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 [Lawful acquisition and disclosure of communications data]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 12:
Page 26, line 12, leave out subsections (8) and (9).
On Question, amendment agreed to.
Clause 22[Obtaining and disclosing communications data]:
Lord Lucas Lord Lucas moved Amendment No. 13:
Page 27, line 9, at end insert—
("(5A) Where the communications data in whole or in part comprises data as defined in section 21(4)(a), the designated person shall first obtain a certificate from—

(a) any judge of the Crown Court or the High Court of Justiciary;

(b) any sheriff;

(c) any justice of the peace;

(d) any resident magistrate in Northern Ireland; or

(e) any person holding any such judicial office as entitles him to exercise the jurisdiction of a judge of the Crown Court or of a justice of the peace,

stating that access to the communications data is necessary and proportionate having regard to the sworn statement of the designated person as to the circumstances of the matter.
(5B) If the designated person reasonably believes that the special circumstances of the case are such that obtaining a certificate under subsection (5A) would cause an unacceptable delay to the issuing of a notice or authorisation under this section, the designated person may issue such notice or authorisation without obtaining a certificate but must then make a prompt report to the Interception of Communications Commissioner as to the circumstances of the matter.").
The noble Lord said: My Lords, the main purpose of Amendment No. 13 is to discuss again the level of authorisation appropriate to access communications data. I do not lay any store by the drafting of the amendment—I am sure that the Minister will be able to have fun with it, but that is not the purpose. If we manage to convince the Government that something must be done, I am sure that he will be able to produce a better version than mine.
I should like the Minister to cover two issues in his reply. First, I should like to be sure that we are ad idem on the practical extent of communications data, in particular traffic data. Secondly, I should like to understand what practical safeguards exist, not in a particular instance but over the long term, for ensuring that the wide range of the data is not misused in practice by the law enforcement authorities.
Perhaps like the noble Lord, Lord Bach, I may give an example. Let us examine the putative investigation of the recent leaks from No. 10. I understand that under the definition of "communications data", and under the power which the Bill gives to the authorities, a police superintendent could decide that he wanted to acquire a list of telephone numbers used by everyone in receipt of the memoranda and associated with the newspaper which printed them. On the basis of the communications data, consisting of the telephone bill or the equivalent used in tracking e-mail data, he could accurately match up the two sets of people to see where there had been communication between them. He could not tell the content of the communication but he could tell that communication had occurred.
Using the location data which will be inherent in the next generation of mobile telephones, he could track anyone he suspected of colluding with the other party. Provided that the two parties had their mobile telephones turned on, he could track them in real time, watch where they went and, if they came within 10
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yards of each other, he could know how long they spent there. That is a complete set of data for cracking a crime.
I suspect that the level of authorisation required for delving so far into people's lives should not be left with a police superintendent. As regards, in particular, location data and the details of communications, the authorisation should come from someone at a higher level. We are aware of the use made of telephone bills, but they should not be used casually in respect of minor crime or suspicion. We used to think of them as being used in connection with murder and serious crimes, but we must be careful about the ability we give the average policeman to pry into individual lives. The relationship between the police and their community is important. We must feel that they are, if not our servants, co-operating with us and working on a level with us. If we give them powers over the intimacies of our daily lives and they use them in a way that is uncomfortable to us, there will rapidly be a breakdown in the relationship between the Government and the police. We must be careful about that.
That brings me to the second issue which I hope the Minister will address. How will we become aware of abuses of the system, if they exist? We are all aware that there are abuses of the current system and the Bill is intended to deal with them. It is said that individual officers have used their ability to pick up people's telephone bills and see who has been telephoning whom in order to keep track of their girlfriends. There is nothing in the current system to stop that.
How shall we become aware of abuses if they happen? Who will be looking after the system for us and who will raise their hands and say, "No, this is happening too much and in the wrong way and we ought to do something about it"? I look forward to illumination from the Minister. I beg to move.
4.15 p.m.
Lord Bassam of Brighton: My Lords, the noble Lord has given us a timely reminder of the need to police by consent. Those are wise words. Given the intrusive nature of surveillance, they are well chosen words.
I am sure that the House is aware that the noble Lord and I discussed an almost identical amendment on Report. However, this amendment is different in that the noble Lord seeks to limit his request for judicial authorisation to subsection (4)(a) rather than to paragraphs (a) and (b) of subsection (4), as previously requested. Clearly, on Report my powers of persuasion were limited and insufficient for the task set by the noble Lord. I did not then entirely satisfy or meet the intention behind the amendment, but I trust that I shall have more success today.
At that stage, the noble Lord's main concern appeared to lie with the level of authorisation and I shall try to address that issue particularly as it pertains to the more intrusive communications data. As I explained, under the non-statutory arrangements agreed between the law enforcement agencies and the telecommunications industry, access to more intrusive types of communications data is authorised at a more

1035
senior level within the relevant agency. For example, the most intrusive communications data must be authorised by an assistant chief constable—a very senior level in the police service. More importantly, I can again assure the noble Lord that we intend to insist on higher level authorisations for intrusive data in an order which we shall make under Clause 25(3) and which will be set out in the codes of practice.
It should also be remembered that the Bill introduces the necessary and proportionate requirements, along with the new statutory provisions which provide independent oversight by the interception commissioner. I hope that that oversight by the commissioner's office in the annual report, where the audit team will examine the use made of the power, will offer the noble Lord a degree of comfort with regard to the accountability process. The scope for abuse, which, rightly I believe, is behind the amendment, is the issue on which we need to satisfy not only the noble Lord but others.
I accept that it is not only the level of authorisation which the noble Lord is concerned about; he is also concerned about what that higher level of authorisation should be. However, I am not entirely persuaded of the necessity of calling for a higher level of judicial authorisation. We suggest that access to communications data, even at the top end of the scale, is not more intrusive than directed surveillance—a point that I made before—or the use of covert human intelligence sources as set out in Part II of the Bill.
Quite rightly in our view, those Part II provisions have been approved by both Houses of Parliament without the introduction of judicial authorisation for that type of activity. Instead, the Bill provides for directed surveillance or the use of covert sources of intelligence to be authorised at a specified level within a designated public authority. I would argue that accessing communications data is comparable. Therefore, I see no strong reason why the internal authorisation procedures for accessing them, with the restrictions and oversight provisions that we have already set out, should be any different.
We both agree that there should he different levels of authorisation for the different levels of communications data requested. I believe that we differ only on whether to involve the judiciary in the authorisation procedure.
I hope that I have provided sufficient reasons as to why the Government are not persuaded that it is necessary to go down this route. I believe that the accountability provided by the commissioner's office, the level of authorisation and the seriousness with which we view it, and the important tests of reasonableness and proportionality should offer sufficient satisfaction and confidence in this particular part of the regime. I trust that on the basis of what I have said, the noble Lord will feel able to withdraw his amendment.
Lord Lucas: My Lords, I am grateful for that explanation. I believe that we shall have to wait to see how the matter develops in practice. When the commissioner examines how the power is being used, I hope that he will report to us in sufficient detail so that we may see and understand what is being done. I hope that we shall be able to see from his report that, in particular, location data on mobile phones is used either extremely infrequently or frequently so that we may know whether it is an occasional practice authorised at a very high level or a regular practice due to the fact that it is such a good method of obtaining information in many types of ordinary cases. I believe that if it is the latter, we should examine this area again.
I hope that I can rely on my understanding of what the Minister said with regard to the commissioner; that is, that when he reports he will provide us with sufficient information so that we may know that that is what is happening. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 49 [Notices requiring disclosure]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 14:
Page 54, line 31, leave out from beginning to ("performance") in line 32 and insert ("necessary for the purpose of securing the effective exercise or proper").
The noble Lord said: My Lords, this should be a fairly short debate. The amendment fills out an undertaking we gave on Report. I believe that on Report the noble Lord, Lord McNally, proposed an amendment to raise the test for serving a disclosure notice in what is now Clause 49(2)(b)(ii). I said that I would take the matter away and return with our own change in time for today. This amendment is the fruit of that activity.
I trust that the amendment will be welcomed. It is important that the Bill covers all statutory powers which conceivably may be affected by the use of encryption. However, we are aware that the current test in Clause 49(2)(b)(ii) was regarded by some as being rather too loose. I am sure that that concern was behind the noble Lord's amendment. We propose to tighten the test substantially by introducing a necessity requirement. That would mean that notices could be served only under Clause 49(2)(b)(ii) where it was believed to be necessary for the purpose of securing the effective exercise or proper performance by a public authority. I hope that the amendment will be supported. I beg to move.
Lord Cope of Berkeley: My Lords, I believe that the use of the word "necessary" in this particular sub-paragraph is preferable to the words "likely to be of value" which were used previously. It brings it into line with some of the other clauses, including Clause 49(2)(b)(i) and the others related to it. I believe that it is a helpful improvement to the Bill.
Lord McNally: My Lords, I confirm what the Minister said. My desire was to see the bar cleared and raised a little. I believe that the Minster has done that and I thank him.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 15:
Page 55, leave out line 6 and insert—
("() must describe the protected information to which the notice relates in sufficient detail to enable all those keys which would satisfy the requirements of section 50(3) and (6) to be identified;
() must, except where the notice includes a direction pursuant to section 50(3)(c), provide arrangements for the protected information to be delivered to the recipient in the event that—

(i) it is not already in his possession, or

(ii) it is only likely to come into the possession of any person or service in accordance with some paragraph of subsection (1);").

The noble Lord said: My Lords, in conformity with the spirit of co-operation that now exists in the House, I have copied the Government and the Liberal Democrat Front Benches with the briefing note constructed for me on this and, indeed, two other amendments by the redoubtable Dr Charles Lindsey of Manchester University. Therefore, on this occasion, the purpose and intention of my amendment will be lucidly clear. Due to my inadequacies, I am afraid that on previous occasions that has perhaps not always been the case.
This amendment attacks two related problems. First, currently Clause 49(4) does not explain how the noticee is to identify the required key where he does not have the protected information to hand. He is likely to have a number of keys which he has used on protected information. I believe that it is an important concession, made in the course of the passage of this Bill, that the person who is to release his key has the right to provide a session key if he so chooses. In doing so, he is not in any way breaching his security and he is providing the police, or whoever, with absolute evidence of the correct translation of the protected information.
However, in order to be able to deduce which session key he needs to provide, it will be necessary for him to be provided with information by the police or whoever holds the protected information. The first purpose of the amendment is to ensure that he has the right to receive that information so that he can disclose the correct key; otherwise, by not releasing that information, it would be possible for the police to make him divulge all his keys, and I believe that that would be an extremely undesirable state of play.
On Report, the Minister said that in some cases it would be improper for the Government to give the noticee the protected information. I cannot think of many cases in which that would be true. If the message is encrypted with his key, it must have been intended for his eyes. It would be inappropriate only if the police thought that they did not have all the information and did not want to disclose to the noticee how little they had and were able decrypt.
The amendment would bring that exceptional scenario—in which the police were reluctant to give any information to the key holder that would enable him to divulge the session key or produce the plain text—within the ambit of Clause 51, which provides all the protections that the Minister has graciously given us. Without the amendment, the police would be able to escape from all the new protections in Clause 51 by failing to provide the protected information or sufficient details to enable someone to disclose the right key, thereby forcing them to hand over all the keys without the need for any authorisation at chief of police level or notification to the commissioner.
I find this a difficult and technical concept, but I am sure that, having had sight of my briefing note for a while, the Minister and his advisers will have a better understanding of what I am after.
My final point is the fundamental one. There should not be a way of forcing someone to divulge their key other than under the protections that are available—and, if we pass the necessary amendments, will be available—under Clause 51. I beg to move.
4.30 p.m.
Lord Bassam of Brighton: My Lords, the aim of the first part of the amendment is already implicit in the Bill. Clause 49(4)(b) requires that disclosure notices must describe the protected information to which the notice relates and Clause 49(4)(f) requires that they must set out the disclosure required and the form and manner in which it is to be made. We are not sure that there is a need for the universal requirement suggested by the amendment. If the disclosure of plain text was required from a legitimate organisation, for example, the amendment would be redundant. The requirements set out in paragraphs (a) to (g) of Clause 49(4) set out what all notices must include. They are not optional requirements.
I think that I understand the concern behind the first part of the amendment tabled by the noble Lord, Lord Lucas. He may be worried that persons could be forced to hand over a master key rather than, say, a session key because the authority serving the notice provided insufficient information. Clearly, a notice must contain enough detail to enable the person served with it to know exactly what is being asked of him or her. That is also in the authorities' best interests.
We are addressing that in the code of practice. We have already set out a first stab at what a disclosure notice might look like in the initial draft code that we published last week. As your Lordships will have seen, we suggest, for example, that the notice makes it clear that where the disclosure of keys is required, or where someone does not have the relevant plain text in their possession, they have the flexibility to disclose any key of their choosing that carries out the necessary decryption. To do that, they will clearly need to know to what information the notice relates. That is properly a matter best left for the code of practice.

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The second part of the amendment covers similar ground. We discussed a similar amendment on Report, moved by the noble Lord, Lord Phillips of Sudbury. In this case, if a recipient of a Section 49 notice did not have the relevant protected information in his or her possession and there was no direction in the notice requiring that a key be disclosed, the person with permission to serve the notice would be required to deliver all that information to the recipient to allow him or her to decrypt it or disclose any key of his or her choosing that would decode it.
We cannot accept the amendment. As I said on Report, we recognise that there may be cases in which the recipient of a notice does not have the relevant protected information in their current possession, but has a relevant key. In such cases, providing the relevant protected information to a person may well be sensible, practical and right. There is no statutory bar to giving access to the information. However, there may be other cases in which it is not right to do that, such as when notices are to be served on persons suspected of criminality. That would make no sense. We do not believe it right that people should be supplied with the relevant protected information in all cases.
When the noble Lord, Lord Phillips of Sudbury, moved a similar amendment on Report, he wondered whether someone served with a disclosure notice who was not in possession of the relevant protected information at that time could be penalised unjustly under the Part III powers. I think that he described it as the "Willie and Steve" scenario. The short answer is "No". We recognise that the recipient of a disclosure notice will not always have the relevant protected information in their possession. In the scenario painted so ably by the noble Lord, Lord Phillips, it is entirely possible that someone may have received a message, decrypted it and destroyed it. They cannot be penalised for that. By virtue of Clause 50, they may disclose a key. If the circumstances are right, it may be possible for them to be given the protected information.
As I said on Report, we do not believe it right to include a blanket provision that a person serving a notice must in all cases provide the recipient of a notice with all the relevant protected information that they do not possess. That would be the effect of the amendment. In some cases that will be appropriate, but in others it will not. The issue is best dealt with in the code of practice. As I said on Report, we shall take away the comments of your Lordships and other interested parties and try to reflect them in fleshing out the details of the code on this point.
I hope that that will give the noble Lord some comfort and that he will feel more than able to withdraw the amendment.
Lord Lucas: My Lords, before the Minister sits down, will he answer the last point that I put to him? Am I right in thinking that, under the current wording of the Bill, if, for what everybody considers perfectly good reasons, a person is not provided with the protected information and is in effect required to
1040
hand over keys, he does not enjoy the protection of Clause 51, as he would if there was simply a direct request for the keys? If the police say, "We have some protected information and we require you to provide the plain text, so give us your keys", he has no protection, whereas if they just say, "We want your keys", he has protection. If that is the case, it is very undesirable, because the police will take the easy route. Rather than going to the chief of police to get permission to have the keys, they will just not produce the protected information, so that they can get the keys with a much lower level of authorisation.
Lord Bassam of Brighton: My Lords, I understand the noble Lord's concern. He is probably correct that there is no statutory power. We shall need to examine the issues on a case-by-case basis. The law enforcement agencies will have to approach the issue carefully. We shall take careful note of the noble Lord's comments and give careful consideration to the phraseology in the code of practice, because we can offer more comfort there than we can on the face of the Bill.
Lord Lucas: My Lords, I am grateful to the noble Lord for that reply. I am happy with what he said about the code of practice, and that being the right place to do things, for the first part of this amendment. He is obviously of the opinion that in principle the Bill covers everything which needs to be covered, and that issues can be fleshed out and dealt with in detail in the code of practice.
But, as we come to this part of the Bill, we are placing a great deal of reliance on the amendments which the Government made on Report, in what is now Clause 51, and on the amendments which are to be made to it today. If the amendments are accepted, people can have confidence that their keys will not be divulged on a whim. A very high level of authorisation will be required. Reference must be made to the commissioner, who is an independent member of the judiciary, and that will be done promptly. That is an environment in which people can feel relatively safe and can be sure that things are done well.
There is then apparently a great hole in the Bill where there are no safeguards or authorisations. All that has to happen is that the police have a piece of protected information that the "noticee" no longer has and they can open up his key box with hardly a "by your leave".
The amendment as it is now is not perfect, but unless this amendment is passed now the Government will not have the opportunity to set this matter right in another place. I am sure the Government do not intend that there should be this great hole in the Bill as it stands.
No discourtesy is intended to the noble Lord in pressing this amendment. He has done a great deal to improve this Bill as it is, but it has been done in a great rush. It seems to me that here is a major hole in the reassurances which the noble Lord has been providing, and which we have all been seeking. In respect of everything else that they have done, I seek to give the Government a little more time to consider whether

1041
something should be done to ensure that all of us, in particular major businesses, can feel entirely comfortable that our keys are safe in practice. I commend the amendment to the House.
4.43 p.m.
On Question, Whether the said amendment (No. 15) shall be agreed to?
Their Lordships divided: Contents, 118; Not-Contents, 132.

Division No. 1

CONTENTS

Addington, L.

Liverpool, E.

Alderdice, L.

Lucas, L.

Ampthill, L.

Luke, L.

Anelay of St Johns, B.

Lyell, L.

Astor, V.

McConnell, L.

Astor of Hever, L.

Mackay of Ardbrecknish, L.

Attlee, E.

Mackie of Benshie, L.

Barker, B.

McNally, L.

Beaumont of Whitley, L.

Maddock, B.

Biffen, L.

Mancroft, L.

Boardman, L.

Mar and Kellie, E.

Brabazon of Tara, L.

Montrose, D.

Brittan of Spennithorne, L.

Naseby, L.

Brougham and Vaux, L.

Newby, L.

Burnham, L.

Noakes, B.

Byford, B.

Northbrook, L.

Campbell of Croy, L.

Northesk, E.

Carlile of Berriew, L.

Norton of Louth, L.

Carnegy of Lour, B.

O'Cathain, B.

Chalfont, L.

Onslow, E.

Clark of Kempston, L.

Oxfuird, V.

Clement-Jones, L.

Palmer, L.

Coe, L.

Park of Monmouth, B.

Colwyn, L.

Peel, E.

Cope of Berkeley, L.

Phillips of Sudbury, L. [Teller]

Courtown, E.

Pilkington of Oxenford, L.

Crickhowell, L.

Razzall, L.

Dahrendorf, L.

Redesdale, L.

Dholakia, L.

Rees, L.

Dixon-Smith, L.

Rees-Mogg, L.

Elles, B.

Rennard, L.

Elton, L.

Roberts of Conwy, L.

Ezra, L.

Rodgers of Quarry Bank, L.

Geddes, L.

Rotherwick, L.

Geraint, L.

Russell, E.

Gilmour of Craigmillar, L.

Russell-Johnston, L.

Glentoran, L.

Scott of Needham Market, B.

Goodhart, L.

Selborne, E.

Goschen, V.

Selkirk of Douglas, L.

Gray of Contin, L.

Sharp of Guildford, B.

Greaves, L.

Sheppard of Didgemere, L.

Hanham, B.

Simon of Glaisdale, L.

Harris of Greenwich, L.

Smith of Clifton, L.

Haslam, L.

Soulsby of Swaffham Prior, L

Henley, L. [Teller]

Stodart of Leaston, L.

Higgins, L.

Strathclyde, L.

Hooper, B.

Swinfen, L.

Hooson, L.

Taverne, L.

Howe, E.

Taylor of Warwick, L.

Howell of Guildford, L.

Tebbit, L.

Hunt of Wirral, L.

Thomas of Gwydir, L.

Hylton, L.

Thomas of Walliswood, B.

Jenkin of Roding, L.

Tordoff, L.

Jenkins of Hillhead, L.

Vivian, L.

Jopling, L.

Wallace of Saltaire, L.

Kimball, L.

Watson of Richmond, L.

Lester of Herne Hill, L.

Wigoder, L.

1042

Wilcox, B.

Windlesham, L.

Willoughby de Broke, L.

Young, B.

NOT-CONTENTS

Acton, L.

Irvine of Lairg, L. (Lord Chancellor)

Ahmed, L.

Islwyn, L.

Alli, L.

Janner of Braunstone, L.

Amos, B.

Jay of Paddington, B. (Lord Privy Seal)

Andrews, B.

Jeger, B.

Archer of Sandwell, L.

Jenkins of Putney, L.

Ashley of Stoke, L.

Judd, L.

Bach, L.

King of West Bromwich, L.

Barnett, L.

Kirkhill, L.

Bassam of Brighton, L.

Lane of Horsell, L.

Berkeley, L.

Layard, L.

Bernstein of Craigweil, L.

Lea of Crondall, L.

Billingham, B.

Lipsey, L.

Blackstone, B.

Lockwood, B.

Blease, L.

Lofthouse of Pontefract, L.

Borrie, L.

Longford, E.

Bragg, L.

Macdonald of Tradeston, L.

Brennan, L.

McIntosh of Haringey, L. [Teller]

Brett, L.

McIntosh of Hudnall, B.

Brooke of Alverthorpe, L.

Mackenzie of Framwellgate, L

Brookman, L.

Mallalieu, B.

Brooks of Tremorfa, L.

Mason of Barnsley, L.

Burlison, L.

Massey of Darwen, B.

Carter, L. [Teller]

Mitchell, L.

Castle of Blackburn, B.

Molloy, L.

Clarke of Hampstead, L.

Molyneaux of Killead, L.

Clinton-Davis, L.

Morris of Castle Morris, L.

Cocks of Hartcliffe, L.

Morris of Manchester, L.

Crawley, B.

Nicol, B.

Davies of Oldham, L.

Orme, L.

Desai, L.

Parekh, L.

Dixon, L.

Patel of Blackburn, L.

Donoughue, L.

Peston, L.

Dormand of Easington, L.

Plant of Highfield, L.

Elder, L.

Ponsonby of Shulbrede, L.

Evans of Parkside, L.

Puttnam, L.

Evans of Temple Guiting, L.

Ramsay of Cartvale, B.

Evans of Watford, L.

Randall of St. Budeaux, L.

Farrington of Ribbleton, B.

Rendell of Babergh, B.

Faulkner of Worcester, L.

Richard, L.

Fitt, L.

Rogers of Riverside, L.

Fyfe of Fairfield, L.

Sainsbury of Turville, L.

Gale, B.

Sawyer, L.

Gavron, L.

Scotland of Asthal, B.

Gibson of Market Rasen, B.

Sewel, L.

Gilbert, L.

Shepherd, L.

Gladwin of Clee, L.

Shore of Stepney, L.

Goldsmith, L.

Simon, V.

Gordon of Strathblane, L.

Slim, V.

Goudie, B.

Smith of Leigh, L.

Gould of Potternewton, B.

Stoddart of Swindon, L.

Grabiner, L.

Stone of Blackheath, L.

Graham of Edmonton, L.

Symons of Vernham Dean, B.

Grenfell, L.

Thornton, B.

Hardy of Wath, L.

Tomlinson, L.

Harris of Haringey, L.

Turner of Camden, B.

Harrison, L.

Warwick of Undercliffe, B.

Hayman, B.

Watson of Invergowrie, L.

Healey, L.

Wedderburn of Charlton, L.

Hilton of Eggardon, B.

Whitaker, B.

Hollis of Heigham, B.

Whitty, L.

Howie of Troon, L.

Wilkins, B.

Hoyle, L.

Williams of Elvel, L.

Hughes of Woodside, L.

Williams of Mostyn, L.

Hunt of Chesterton, L.

Williamson of Horton, L.

Hunt of Kings Heath, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.53 p.m.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 16:
Page 55, line 18, at end insert—
("and the time specified for the purposes of paragraph (f) must allow a period for compliance which is reasonable in all the circumstances.").
The noble Lord said: My Lords, I am sure that this amendment will be as uncontroversial as the previous amendment. The noble Earl, Lord Northesk, tabled a similar amendment at Report stage, which I accepted in principle. I undertook to bring back our own amendment which is the result of that further consideration.
We said previously that, in practice, notices will set out a reasonable time for compliance. This amendment puts that requirement on the face of the Bill. What constitutes a "reasonable" time will, of course, vary from case to case. It is for the person giving permission for a Section 49 notice to be served properly to weigh up, having given the matter very careful thought. We have set out in the initial draft code of practice that any timing considerations will need to be fully justified. The code will be fleshed out, as I said earlier, when we receive further comments from interested parties.
There is a safeguard against unreasonable demands being made in Clause 53(4)(a), which provides a statutory defence to the offence of failure to comply where it was not reasonably practicable to do so in the time required by the terms of the notice. Given that this amendment was originally inspired by noble Lords opposite, I am sure that it will be welcomed by your Lordships' House. I beg to move.
The Earl of Northesk: My Lords, I welcome the amendment and thank the Minister for his generosity in tabling it.
Lord Phillips of Sudbury: My Lords, as we do from these Benches.
On Question, amendment agreed to.
Viscount Astor Viscount Astor moved Amendment No. 17:
Page 56, line 10, at end insert—
("() A notice under this section shall not confer any right to production of, or access to, items subject to legal privilege.").
The noble Viscount said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 29 to 33 and Amendment No. 35. We debated at Report stage legal privilege and its protection. At the time the Minister indicated that the Bill would not detract from the position of legal privilege in the area of admissibility of evidence. The common law would apply. We accept that that may offer some protection in the arena of the courtroom. However, it does not address the issue of access to material which is subject to legal privilege.
Since the Minister's reply, we have had time to study the Data Protection Act, referred to by my noble and learned friend Lord Fraser of Carmyllie, and Section 18 of the Proceeds of Crime (Scotland) Act 1995. They
1044
recognise the importance of confidentiality in the solicitor-client relationship. Such communication should be privileged at all stages in the legal process. Provision is made on the face of the legislation to the effect that access will not be given to material which is subject to legal privilege.
If it is deemed appropriate to recognise the common law in this way in these two Acts, it is difficult to envisage why similar safeguards should not be incorporated in the present Bill. At Report stage the Minister correctly identified the protections available under the Police and Criminal Evidence Act 1984. I am advised that that Act does not extend to Scotland. Therefore, there is concern that the Minister's comments do not sufficiently take account of the Scottish situation.
That brings me to the amendments which I have tabled and which largely concern Scotland. Amendment No. 17 provides that there should be no right to require the disclosure of items subject to legal privilege under Clause 49. As the Minister knows, Article 8 of the European Convention on Human Rights enshrines the right to privacy. The law is there to protect the relationship between solicitor and client and has made provision for the doctrine of legal professional privilege. To preserve that relationship and ensure that communications are privileged, provision should be made on the face of the Bill to the effect that a notice under Clause 49 will not extend to the disclosure of information subject to legal privilege.
Amendment No. 29 extends the defences which will be available to persons failing to comply with a notice to take account of the doctrine of legal privilege. We believe that the Bill should make available a defence which takes account of the doctrine of legal privilege in circumstances where a legal adviser fails to comply with a notice.
Amendment No. 30 concerns medical confidentiality. I understand that the BMA is concerned about patient confidentiality, particularly as the NHS net will be an Internet service provider within the terms of the proposed legislation. That will place particular and specific duties on those responsible for the NHS net. The BMA is particularly concerned about the implication of these duties on the handling of confidential, named patient data. I understand that some of that is to be covered in a code of practice. But perhaps the Minister can help us as to aspects of confidentiality in the patient-doctor relationship and explain how it is to be protected by the code of practice.
The next amendment deals with the offence provisions in relation to tipping off and their application to professional legal advisers. The amendment inserts a new subsection reflecting the provisions currently contained within the Terrorism Bill which we believe affords an adequate protection for the concept of legal professional privilege.
Amendment No. 32 is concerned also with the tipping-off provisions in Clause 54 so that they do not extend to the disclosure of information subject to legal privilege. That is acknowledged in other legislation which incorporates tipping-off provisions.
Amendment No. 33 seeks to clarify situations in which information is deemed to have been obtained by a legal adviser in privileged circumstances. There has been debate about situations in which information will be considered to have been obtained in privileged circumstances. Clause 54 presently provides the circumstances in which legal privilege cannot be used as a defence to an allegation of failure to comply with a notice requiring disclosure. The exception to the general rule of legal privilege exists in situations where information comes to the adviser with a view to furthering a criminal purpose. The phrase,
"otherwise than with a view to furthering a criminal purpose",
has been the subject of consideration by the courts. It is unclear who must have knowledge of the criminal purpose.
The Law Society of Scotland has advised me that legal professional privilege could not be claimed in situations where the adviser himself was in possession of the information with the intention of furthering the criminal purpose. However, if the adviser had no knowledge of the criminal purpose, the doctrine could still apply.
So the proposed amendment adopts the definition of legal professional privilege contained in Section 33 of the Criminal Law (Consolidation) (Scotland) Act 1995. We believe that it is helpful to have similar statutory definitions of the concept of legal professional privilege and the amendment seeks to produce a harmony between those provisions.
The last amendment in the group provides a definition of the term "professional legal adviser" so that it is given on the face of the Bill to avoid any ambiguity as to what is meant by that term and when the doctrine of legal professional privilege can be invoked. It is necessary also to take account of the directive 98/5/EC—the EU Lawyers Establishment Directive—when framing this definition.
At an earlier stage, my noble and learned friend Lord Fraser of Carmyllie raised issues about the Data Protection Act 1984. The Minister said on a previous occasion that the common law is clear cut. If so, why was it necessary to include Section 31(2) in the Data Protection Act?
The Minister said that he believed that there are adequate safeguards for the legally protected material and referred to the code of practice. Of course, a code of practice is just that. That is all it is. It is there for guidance—nothing more. Account must be taken of it, but it is not the same as having a provision on the face of the Bill, whether by primary legislation or by order.
The Minister offered to write to my noble and learned friend Lord Fraser of Carmyllie. I realise that, in the short time that has been available in our rather hurried Session before we all go on holiday, that has not been possible. Therefore, it is important that the Government should answer the queries which my noble and learned friend and I have raised. I beg to move.
5 p.m.
Lord Bach: My Lords, we enjoyed several short debates on Report on the protection due to legally privileged material. Our position now is the same as it was then: some of these amendments are unnecessary because the protection they seek is already in the Bill; and other amendments seek to do things which we believe can be done more precisely in the code of practice and with more consultation. But I welcome the opportunity shortly to restate our position on this important subject.
First, we recognise the important status of communications between lawyer and client. Those communications need proper protection, not absolute protection because of the risk, in any sector and any profession, of abuse, but robust protection none the less.
Perhaps I may expand on that. Our starting position is that legal communications should not, in the normal course of law enforcement, be the subject of targeting by police and other agencies. But that is not all. It is also important that police and others are aware of the situations where they may come across legal communications inadvertently and know how to deal with those cases too.
Amendments Nos. 17, 29, 30 and 32 relate to no obligation to disclose legally/medically privileged material. Amendments Nos. 29 and 30 would ensure that a key cannot be required if its disclosure means a lawyer or doctor giving access to legally or medically privileged material. We agree with the sentiment. But we do not think the amendments are quite right, and we do not believe they are necessary. They are not right because they do not take into account the case where a key protects both privileged material and material of a quite different nature which is not privileged. In that case, and remembering that disclosure of a key is going to be unusual in any event, it may make more sense for the key to be disclosed but for law enforcement to be inhibited from looking at the privileged material.
The amendments are not necessary because nothing in the Bill reduces the protection given in law to privileged material. If it is protected from a disclosure requirement now, whether that is by virtue of English, Scots or Northern Ireland law, a notice under the Bill will not override that protection. The code of practice makes that clear. The Bill applies only to material that comes lawfully into the possession of law enforcement. In most circumstances, legally privileged material simply will not find itself in this position.
There is, of course, the question of exactly how far legally privileged material should be protected; for example, if there is no statutory bar on its being accessed by means of some other power, or where its status only becomes clear on decryption. As I said on Report, and repeat, we look forward to getting that question right in the codes of practice, in consultation with the professional bodies in all parts of the United Kingdom.
Amendments Nos. 17 and 32 are similar. Amendment No. 17 prohibits access to any legally privileged material. Amendment No. 32 focuses on the

1047
position of the lawyer confronted by a Section 49 notice. Again, we think they envisage a situation that for the most part simply will not exist. What is the underlying power that would enable the police to say to a lawyer, "Show us the communications you have had with your client"? If there is no such power, Part III of the Bill presents no danger to legal confidentiality.
We agree, however, that we need to get right both the procedure and the precise degree of protection for when a Section 49 notice does encroach on to legally privileged material, for whatever reason. We look forward to doing that, with help from others, in the code of practice.
Amendment No. 31 recrafts the protection given to professional legal advisers against the tipping-off offence. In principle, we do not disagree with the amendment. But we have looked at it closely and do not believe it adds anything to the Bill that is necessary. The amendment covers legal advice from the lawyer to the client or client's representative. So does the Bill, in Clause 54(6) and 54(7). The amendment covers advice in the context of actual or contemplated proceedings. So does the Bill. The amendment covers all other legal advice as well while the Bill at Clause 54(6) limits that to advice about the effect of Part III of the Bill. We believe the limitation in the Bill to be justified. A person served with a disclosure notice containing a secrecy requirement may well need legal advice on what the notice means and its consequences. The Bill allows for that, and the standard form of notice, which will be in the code of practice, will encourage him to seek legal advice.
Finally, the amendment appears to make the protection for legal advice an exception to the offence rather than a defence. Perhaps I may make two points. First, it is quite common for these provisions to be framed in terms of a defence. All the recent tipping-off offences do it in that way. We would find it difficult to accept an argument that that imposes a difficult or unjust burden on the legal adviser, remembering that the defence need only be established on a balance of probabilities, and that the facts supporting the defence are comfortably within the lawyer's reach. Secondly, we do not think that the amendment changes the position. That is because the general rule of law is that statutory exceptions to a criminal defence, available in special circumstances or by persons of specified classes or with special qualifications, are for the defence to prove.
Much of what I have had to say concerns the codes of practice. We are placing much emphasis on them. There is legislation in which some statutes explicitly protect legally privileged material. Here, the precise protection due to this material requires careful consideration. It cannot fall outside it altogether but it needs to be protected. We are convinced that our codes of practice are best placed to achieve that. Why do we say that? Codes of practice are, in effect, much more flexible than words that appear on the face of a statute. At present, we are negotiating with various organisations: legal, medical, spiritual and journalistic, to name but a few. The point is that
1048
safeguards must be specific and drafted in close consultation with representatives of those sections of those professions. We have started the process and had contact with representatives from all those organisations, including the BMA. We look forward to continuing the discussions so that we can put sufficient and appropriate safeguards in the code of practice.
The noble and learned Lord, Lord Fraser of Carmyllie, asked about PACE. He is right; PACE does not apply in Scotland. However, there are other common law protections given to legal material in Scotland. It is not for me to say whether such protections are better or worse than protections in England, nor, we would argue, a matter for the Bill. The key points are that the Bill does not subtract from legal protection given to legal material, whether such protection is statutory or non-statutory. The code of practice will say what should happen if, by virtue of these powers, law enforcement comes across legally privileged material. We repeat what we have often said: we intend the codes to provide tough safeguards against legal privilege being undermined.
We do not agree, should the argument be put forward, that codes of practice are somehow useless and not as good as having the words on the face of the statute. The codes to the Police and Criminal Evidence Act in England and Northern Ireland have done a great deal to regulate and govern police practice to the benefit of citizens.
Clause 72(1) imposes a legal duty on police officers and others, including in Scotland, to have regard to the codes of practice. Relevant provisions in codes of practice not only are, but must be, taken into account by courts when dealing with these matters. I repeat our willingness, indeed, our desire, to have full consultation on the codes of practice.
Amendment No. 35 adds a definition of "professional legal adviser". There is no definition in the Bill as presently drafted. We do not believe that one is necessary. There is no definition in other similar provisions creating tipping-off offences. However, we are confident that the term "professional legal adviser" covers all the things listed in Amendment No. 35.
The noble Lord asked a question about the National Health Service. He was good enough to give me advance warning of the point. At this stage it is impossible to say which Internet service providers will be subject to Clause 12 obligations. We have debated at considerable length how Clause 12 will work. Perhaps the best assurance I can give him is that the grounds for interception are extremely limited. Procedures for dealing with sensitive or privileged material will be addressed in the code of practice.
I am grateful to the noble Viscount for having tabled the amendments today and for a good debate. However, we do not believe that the amendments should be pressed.
5.15 p.m.
Lord Phillips of Sudbury: My Lords, before the Minister sits down, perhaps I may ask a question. In

1049
the light of the importance of the consultation on these difficult issues—which are extremely difficult; particularly, I suggest, as regards foreign lawyers who will be much affected by the Bill—is it the normal pattern of consultation to have a meeting to discuss such issues? Given the complexity and the importance of the issues to be dealt with on this aspect of the consultation, I am sure that the Law Society and the Law Society of Scotland would desire such a meeting.
Lord Bach: My Lords, I believe that consultations take place in different ways and at different times. However, I can see no objection to meetings between the organisations mentioned by the noble Lord and the Home Office. Indeed, I believe that such meetings would be helpful. I am grateful to the noble Lord.
Viscount Astor: My Lords, I am grateful to the Minister for his reply on various issues. As he stated, it is extremely important for full consultation to take place with such organisations as the BMA on the code of practice. Indeed, serious issues are raised concerning the National Health Service and its Internet service providers. It is crucial that the doctor/patient relationship is preserved. It is also crucial that any worries they have do not stop doctors using the Internet, which is of enormous value to them. It would be dangerous and bad for the National Health Service, and for doctors and patients if, as a result of concerns about the use of confidential material, they stopped using the Internet. That is a concern which I realise the Minister took on board. However, I hope that he will take it back to his colleagues in the Department of Health and that there will be full consultation.
I turn to the remarks made about Scottish law. I am standing in for my noble and learned friend Lord Fraser of Carmyllie. I have to admit to being half-Scottish. However, I should not dream of trying to become even half a lawyer. I am a pale shadow of my noble and learned friend. I am grateful for the remarks the Minister made on those amendments. I wish that I knew enough about Scottish law to come back to him on various points. However, I shall have to retire, thank him for his response and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 18:
Page 56, line 21, leave out ("putting it into") and insert ("disclosing it in").
The noble Lord said: My Lords, the noble Lord, Lord Lucas, proposed an amendment on Report which would have substituted "or" for "and" in what is now page 56, line 21. Some commentators have since returned to the subject, so we have given the matter further thought. We believe that the Bill can be clarified.
Where information is protected both by an obstacle to access, such as a password, and by encryption, it is right that the plain text requirement in Clause 50(1) should apply only where the person can overcome
1050
both obstacles. We remain of the view that the amendment tabled by the noble Lord on Report would not have worked. However, where there is a password and no decryption, it should be enough that the person has the password. The Bill implies that in all cases he must also have the means of putting the information into intelligible form. I suggest that that is misleading. In the case I have described, no such means are necessary.
The important thing is that the person must be able to achieve access to the information and be able to disclose it in intelligible form. The first amendment, I hope, makes that clear. If he can do those things, he need only disclose the plain text. We have been round this argument before, but that is primarily our objective. If he cannot do both those things, he must disclose the key. The second amendment, which operates on subsection (3), achieves that.
I hope that we have gone some way to achieving what the noble Lord, Lord Lucas, was seeking to achieve with his amendment and improved it. I beg to move.
Lord Lucas: My Lords, I am grateful to the Minister for taking into account the arguments which I passed on to him, for finding an elegant solution to the problem raised and for explaining the problem so much more eloquently than I did.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 19:
Page 56, line 26, at end insert ("; and
(c) shall be required, where the notice so stipulates, to provide evidence, to the reasonable satisfaction of the person giving the notice, that the disclosure made truly represents the protected information in an intelligible form").
The noble Lord said: In moving Amendment No. 19 I shall speak also to Amendment No. 20. As with the previous amendment, I passed my briefing on these two amendments to the Minister, who will therefore understand that I am looking for a couple of ways to make it ever less likely that keys have to be divulged.
Amendment No. 19 makes it possible for the person requiring the plain text—the police officer—to demand proof that the plain text is the correct text. That means that, in circumstances where producing the key might be a severe embarrassment but the police have reason to be concerned that if they did not have the key they would not get the correct plain text, they have the option—it will be their option and, I suspect, that of the other person—of looking to a third party to provide the decryption or to some other form of evidence. That will reduce the number of occasions on which a key may be required. It does not seem to me, although the Minister may correct me, that at present the Bill contains the powers necessary to allow for that option.
Amendment No. 20 relates to occasions where there are several key holders to a specific piece of information. If that information was of particular value to a company, there might be half a dozen key

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holders of whom four or five are required to act together to open up the information. At the moment, if one of those key holders is served with a notice, he clearly cannot decrypt the information by himself and therefore has to surrender his key. If he was allowed to talk to his fellow key holders, then he would be in a position to decrypt the information without providing keys.
Again, I hope that the amendment is phrased in a way which will allow effective discretion to the police or whoever wants the information so that, in circumstances where such a procedure is inappropriate they will not have to follow it. But it will provide them with the means, the mechanism and the normal arrangements to ensure that, where it is at all possible for sufficient key holders to be brought together to provide the decryption, then that would be the preferred route. I beg to move.
Lord Cope of Berkeley: My Lords, I seek only to emphasise what my noble friend Lord Lucas said. We are all keen to reduce the number of occasions on which keys are required for a variety of reasons which we have discussed on previous occasions. That is why Amendment No. 19 is desirable, or something along those lines. My only hesitation is that I am not sure that what is sought to be done by Amendment No. 19 cannot be achieved by a less formal means than changing the statute. Subject to that, an obligation to prove the correctness of the plain text may help in some cases.
Lord Bassam of Brighton: My Lords, as the noble Lord will appreciate, this amendment takes us back to an earlier discussion. Again, I am grateful to the noble Lord, Lord Lucas, for his earlier suggestions. That is probably as far as I can go on Amendment No. 19, but I can be more encouraging on Amendment No. 20.
As we continue to state, where the authorities are dealing with an entirely legitimate organisation which is not, of itself, of security concern or suspected of involvement in any criminality, requiring the disclosure of the plain text—rather than a key—will be the norm. That is similar to what happens now when, for example, the police need to approach a bank for information stored electronically. They rely on the bank's integrity and, where necessary, use them as witnesses. We envisage the same sort of scenario over encrypted material. So when the authorities are dealing with a legitimate organisation it seems to us unnecessary to stipulate that evidence be obtained attesting to the accuracy of the disclosed information.
So if the provision is unnecessary for legitimate organisations, we must ask when it might be of use. We do not believe it would be appropriate where notices are served on persons or organisations who are suspected of being involved in criminality, for obvious reasons. Let me reiterate a couple of points I made on Report.
First, if someone is a suspected criminal, it does not seem to us to be appropriate to trust that person to go and prove, presumably by means of a third party, the authenticity of the relevant plain text. Secondly, there
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is also the timing point. There may be critical timing considerations involved in a specific investigation. An additional evidential stage or test would mean time taken up for compliance, for reviewing the evidence supplied and for responding to the view taken of the evidence. We really do not see how all of that can be built into the procedure without potentially damaging the effectiveness of the Part III power. I am sure there are few in your Lordships' House who want to undermine an effective and coherent approach to investigation. It would cast the investigating agency into an uncomfortable quasi-judicial role as reviewer of evidence.
Amendment No. 20 would further restrict the cases where a key must be disclosed. I understand entirely the spirit behind the amendment and to a large degree share the intent. I hope by now noble Lords will acknowledge our sympathy with this aim. We have done what we can, even to the extent of recently tabling amendments to bolster the principle that plain text is the norm. I am therefore genuinely sorry to have to oppose this amendment.
The amendment would apply to the person who has the protected information in his possession and a key to that information, but not all the keys necessary to produce plain text. The noble Lord would allow the person to seek the assistance of the person who has the missing key and by that means to deliver plain text.
I hope that those arrangements would normally apply. But as I explained on Report, we cannot allow the recipient of a notice as of right to tell someone else about the Section 49 notice, whether to seek assistance or for some other reason. That is because the notice may contain a secrecy requirement. On the other hand, where there are no operational reasons for preventing that sort of disclosure, I agree that it should be allowed.
This afternoon I give an undertaking that we will expressly make that point in the code of practice. I realise that that may not entirely satisfy the noble Lord's second amendment. However, it may be a neater and ultimately more effective way of achieving what the noble Lord is seeking. I trust with that explanation the noble Lord, Lord Lucas, will feel able to withdraw his amendment.
Lord Lucas: My Lords, I am grateful for the last point made by the Minister. At this stage we should accept the Government's decision on the other matters. I beg leave to withdraw the amendment.
[Amendment, by leave, withdrawn.]
[Amendment No. 20 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 21:
Page 56, line 39, leave out ("putting it into") and insert ("disclosing it in").
On Question, amendment agreed to.
Clause 51 [Cases in which key Required]:
5.30 p.m.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 22:
Page 58, line 15, after ("police") insert ("or by a member of Her Majesty's forces who is a member of a police force").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to government Amendments Nos. 23 and 26 and to Amendment No. 27, which is tabled in the name of the noble Lord, Lord Lucas. Amendments Nos. 22 and 23 represent a technical change. In looking at the change that we made on Report to what is now Clause 51(2), we noted that the military police are not properly covered in subsection (2)(a). We are proposing these technical changes to correct that point.
When, on Report last week, we discussed levels of authorisation for requiring that keys be disclosed, I indicated that we would look at imposing a requirement that any direction given by the persons mentioned in what is now Clause 51(2) should be notified to the relevant independent commissioner. Amendment No. 26 is the result of that undertaking. It means that any directions for the disclosure of keys given internally by the police, HM Customs or Her Majesty's forces be notified within seven days to either the Intelligence Services Commissioner or the Chief Surveillance Commissioner, as appropriate. We have already substantially increased the level of authority required for directions to be given requiring the disclosure of keys.
This amendment introduces what we believe is an additional, but important, safeguard. I expect the cases involving internal agency authorisations to be limited. But in the operational circumstances in which they might arise, I hope that this statutory notification requirement will add a measure of further reassurance. When we discussed the issue of authorisation last week, the noble Lord, Lord Cope, said that the suggestion of notifying a commissioner was well worth consideration. I hope, therefore, that this provision is welcome.
I am most interested in the suggestion made by the noble Lord, Lord Lucas, in Amendment No. 27. Unfortunately—no doubt the noble Lord will accept this—the amendment is technically deficient. Because of the rules of procedure at Third Reading, we have been unable to table a manuscript change to correct that deficiency. In any event, we do not believe that this matter needs to be reflected on the face of the Bill. We clearly agree that chief constables should be required to notify the commissioner as soon as they can. But we do not believe that such a stricture is easily compatible with one specifying a particular time-scale. The time-scale is the important consideration; and the Bill provides for a seven-day limit.
Having said that, we shall ensure that the code of practice should encourage best practice in terms of immediate notification, or something similar. The noble Lord will have ample opportunity to comment on the code, not least when it returns to Parliament
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under the affirmative resolution procedure. I am sorry that we could not be more helpful to the noble Lord; indeed, we desperately wanted to be but the procedure rules prevented us being so. However, in the light of my reassurance, I ask the noble Lord not to move his amendment and I trust that the House will accept the government amendments in this group. I beg to move.
Lord Lucas: My Lords, perhaps I may begin by picking up the Minister's final point. In that way, I can at least have the benefit of the thoughts of my colleagues on the Front Bench on my thoughts, and that might give me some guidance. I turn, first, to my Amendment No. 27. It seems to me that the procedures of this House are in the hands of the House. It is always possible for this House to do what it wants. If the noble Lord would care to indicate what amendment he would like to see, I am sure that with the agreement of the House nemine dissentiente, as the noble and learned Lord the Lord Chancellor said the other day, we could find some way of putting such a provision into the Bill.
However, if that is not possible, the sensible way to deal with the matter is to pass the amendment. The noble Lord could then set it right this afternoon in the other place. Either way, it seems to me that it is a very important reassurance for those companies that will be studying this Bill to know that it is not a seven-day delay. There is much opportunity for things to go wrong and for the situation to be made difficult during a seven-day period, whereas, if the reference is immediate or, in effect, immediate, people will feel pretty confident that the judgment of the commissioner will be the one that holds sway. With the commissioner being an independent judicial figure, I believe that that will give people a great deal of comfort.
I believe, therefore, that my amendment is important. It will cause the Chief Whip a minor inconvenience as regards this Bill making a brief reappearance in this Chamber, to general approbation, sometime tomorrow or, perhaps, the following day. Other than that, it should cause little inconvenience to get this part of the Bill right. In my view, it would make a great contribution to the overall effect of the Bill, as far as concerns the major players on the Internet.
With that in view, I have a few further questions for the Minister in the context of these amendments. First, am I right in thinking that the circumstances under which the Government envisage requiring keys come under two headings only, which might be called "trust" and "timeliness"—in other words, the first is the situation where they do not trust the person to provide plain text, and the second is where they need the information fast? Am I correct in thinking that those are the only two circumstances in which the Government envisage requiring such keys?
Secondly, on looking at the amendments that we have made to the Bill, it seems to me that the Government have an opportunity in another place to address the defect which both sides of the House seem to agree exists and which formed the subject of the

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amendment that I lost earlier. There is a route under Clause 49 for keys to be demanded that does not trigger the safeguards that now exist in Clause 51. I believe that a simple change to the references at the beginning of Clause 51 would put the matter right. I am sure that I could not draft it "on the fly" myself, but if the Government are willing, they will have the opportunity to do this in another place. I should, therefore, very much like to know from the Government whether they agree that this lacuna exists. I also hope that they will agree that it might be put right by such an amendment.
Lord Cope of Berkeley: My Lords, I shall speak, first, to the main amendment in this group, Amendment No. 26. It is good that an element of judicial oversight has been brought into the question of the disclosure of keys. It has been one of the most difficult and criticised aspects throughout our debates on the Bill that government agencies were acquiring the rights to require other people to give them keys.
That requirement has gradually been narrowed down a little during the proceedings on the Bill—notch by notch, as it were—and the safeguards have been increased. I have in mind, in particular, the new safeguard that keys shall be asked for only by direction of a chief officer of police, or the equivalent officer in Customs and Excise. Nevertheless, it was still the police who were going to make the decision. There are occasions when the time-scale would probably make that necessary and essential; for example, when terrorism and other types of very serious crime are being investigated. But, at the same time, for the police to approve such a requirement without any immediate oversight seems to be a disadvantage. Therefore, it seems to me that making the chief constable report to the commissioner that he has given such permission is an extremely important safeguard. That is particularly so when we consider the later amendments—Amendments Nos. 38, 39 and 40—which make it clear that the commissioner can make a report to the Prime Minister at any time.
A chief constable, an equivalent officer from Customs and Excise, or whoever, may require such a key. On learning about this a few days later, the commissioner may think that the officer concerned should not have done so in the particular circumstances. The fact that the commissioner can then report immediately to the Prime Minister that such action has taken place is a great reassurance. I think that will mean that in doubtful cases chief officers of police will obtain clearance in advance from the commissioner before requiring a key.
The commissioner will also be in a position to observe whether a pattern is developing in this regard, perhaps within a particular force or within the Customs and Excise. If he noticed several requests for keys, he could report that to the Prime Minister. It would take a determined chief officer of police not to think carefully before continuing with that course of action. More immediate judicial oversight is likely to prove more effective than the annual report of the commissioner—which, inevitably, is issued well after
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the event—in ensuring that keys are demanded only in special circumstances. This is an extremely important and welcome concession from the Government with regard to keys.
I turn to Amendment No. 27 in the name of my noble friend Lord Lucas, which seeks to speed up the giving of the notification to as soon as possible, and not longer than seven days, after the giving of the direction to which it relates. That is a highly desirable amendment. I accept that it may not be perfectly drafted. It is always possible for amateurs such as my noble friend and myself to overlook some legal point when drafting amendments. I am sure that if the Government and the House wished, we could put that matter right straight away. I hope that the Minister will suggest that. The amendments seem to me to constitute an extremely valuable additional safeguard with regard to the most sensitive aspect of the Bill; namely, demands for keys.
Viscount Goschen: My Lords, the Minister has made some important and welcome concessions. My noble friend Lord Lucas may be only an amateur but he is a gifted one in this regard. The Minister has suggested that my noble friend's amendment cannot be accepted on procedural grounds. However, the amendment could be referred to the other place, should that be the will of the House.
Lord Phillips of Sudbury: My Lords, we on these Benches concur entirely with what has been said by the noble Lords, Lord Lucas and Lord Cope of Berkeley. I suppose that there is a curiosity to see whether or not the reporting requirement to the chief surveillance commissioner on the one hand and the intelligence services commissioner on the other is sufficient. However, I fully accept that there is a right to report to the Prime Minister. In the light of experience Parliament may want to review whether there should be any further embellishment of that requirement and whether the relevant commissioner should have to refer the matter to a High Court judge with the matter in issue being, in effect, suspended until that occurs. Subject to that question mark, we are entirely in support of what is a crucial amendment to one of the heartland provisions of the whole Bill.
5.45 p.m.
Lord Bassam of Brighton: My Lords, I am not the world's greatest expert on procedure but the Companion states that manuscript amendments are not permitted at Third Reading and that the principal purposes of amendments at Third Reading are to clarify any remaining uncertainties, to improve the drafting and to enable the Government to fulfil undertakings given at an earlier stage of the Bill.
I fully accept the spirit in which the noble Lord's amendment is moved. However, it introduces an element of contradiction. Our amendments have imposed a duty on chief constables to notify the judicial commissioner of the giving of a direction within seven days of the giving of that direction. The noble Lord wants to tighten that time-scale to as soon

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as possible after the giving of the direction. We argue that that is not necessary. It would constitute bad policing and poor management to hold back a notification for longer than is necessary. We believe that the duty on chief officers is as robust as that which the noble Lord seeks. The wording that the noble Lord suggests might delay matters. Therefore, I cannot accept an amendment that is outside the procedures of the House. As I said, it is not necessary.
Viscount Goschen: My Lords, with the leave of the House, does the noble Lord accept that, should the House accept my noble friend's amendment, that amendment would then be considered in the other place and it would be open to Members of the other place to amend my noble friend's amendment to correct the drafting problems which the Minister has mentioned and we could all live happily ever after?
Viscount Astor: My Lords, does the Minister agree that if the amendment has been accepted it is within the procedure of the House? To say that the amendment is outside the procedure of the House is wrong and contrary to the rules of the House.
Lord Bassam of Brighton: My Lords, the point I tried to make when I said that the amendment was outside the procedure of the House is that if the noble Lord were to rewrite the amendment, it would be a manuscript amendment. However, I also questioned whether the amendment is necessary. I said that I fully accept the spirit behind the amendment. I also thought that I made it plain that we do not feel that it is necessary to include the amendment in the Bill as we can include it in an appropriate form in the code of practice. The code of practice will be an important measure, particularly in regard to interpreting legislation. As I say, we cannot accept a defective amendment and we cannot, as it were, spirit up a manuscript amendment and accept it simply because we feel that that is the right thing to do. Amendments should be properly circulated to enable them to be fully debated.
Lord Eden of Winton: My Lords, what action would the Minister take if the House accepted the amendment?
Lord Bassam of Brighton: My Lords, it is for the House to decide whether to accept the amendment. If the amendment were to be accepted, we would have to advise the other place that we considered the amendment to be defective. We would invite the other place to reconsider it and suggest a more appropriate wording.
Earlier the noble Lord, Lord Lucas, referred to the matters of trust and timeliness. I readily confirm that those are precisely the values which we seek. We see no reason why anything else should be the case. I hope that I have answered the noble Lord's point.
I am pleased with the debate that has taken place with regard to the Government's amendments. We think that we have the balance right. We have an
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element of judicial involvement. As the noble Lord, Lord Cope, has rightly acknowledged, it would be foolish for law enforcement officers to ignore the reference to a judicial commissioner, particularly where the latter was concerned by the pattern of events.
We feel that we have got an appropriate level of authorisation. I am pleased that there is an acceptance of that. I ask your Lordships to reject the noble Lord's amendment; it would be wrong and inappropriate if it were to be agreed to. I urge the House to accept the government amendments in the spirit in which they have been moved and agreed.
Lord Lucas: My Lords, before the noble Lord sits down, has he any reply to the other question I asked about whether he accepts that there is a lacuna in Clause 49, which allows keys to be obtained without going through Clause 51 procedures? Does he intend to see anything done about that in another place?
Lord Bassam of Brighton: My Lords, I am not sure that I do accept that a lacuna exists. I shall take the point away and give it further consideration. That is the best way I can leave it today.
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 23:
Page 58, line 20, at end insert ("who is not a member of a police force").
On Question, amendment agreed to.
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 24:
Page 58, line 33, after ("proportionate") insert (", having regard to all the circumstances, including the effect on the reputation and business of the person.").
The noble Lord said: My Lords, in moving Amendment No. 24 I shall speak also to government Amendment No. 25—which would appear, on the face of it, to be a better drafted version of my amendment.
We are seeking to ensure that the effect on the business of someone whose key is being sought is taken into account in deciding whether or not the direction that a key should be given is proportionate to what is sought to be achieved by obtaining the key. Sometimes giving up a key may have an appalling effect on a business for which confidentiality is important. We have rehearsed this point in different ways throughout our discussions on the Bill.
The amendment, taken together with the government amendment which allows damages to be awarded if a key is lost, for example, will mean that those making the decisions to demand a key—chief constables and so on—will think carefully about who they are demanding it from. If they are demanding it from a business where huge consequences could follow, they will have to allow for that in making their decision.
This seems a useful amendment. As I said, the Government's version is slightly different from mine; it leaves out the word "reputation", which may be correct. I am glad that the Government are supporting the point which lies behind both amendments. I beg to move.
The Earl of Northesk: My Lords, I, too, welcome the amendment. No doubt we will in due course accept the government amendment; to my mind, too, its drafting is rather better.
I have one question for the Minister. The noble Lord will recall that on Report we debated, as my noble friend said, the interaction of key disclosure provisions with confidentiality requirements from other jurisdictions. As I understood the noble Lord's response, it is not unreasonable to suppose that such obligations will always be compromised to some extent by national rules requiring disclosure of information. I can understand that; I have no problem with it. But this argument does not address the point that it remains possible for the disclosure of a key to compromise the confidentiality of information that is wholly unconnected to that which is subject to the notice.
Of necessity, this class of information would not be subject to a statutory obligation of disclosure. In effect, cross-jurisdiction obligations of confidentiality would be breached without any legal defence. It is perhaps to state the obvious that this has the capacity to create considerable legal uncertainty about the regime among the international business community—and that, in turn, could have serious consequences on the competitiveness of the UK as a centre for e-business and financial services.
Are the Government entirely satisfied that the current provisions on the face of the Bill and in their amendment are free from the legal uncertainty to which I have referred? I should welcome any comment the Minister can make to relieve my anxieties.
Lord McNally: My Lords, this matter continues to be of concern to industry. A brief from the London Investment Bankers Association refers to,
"the particular concerns of our Members about the interaction with other confidentiality requirements to which they are subject in other countries, particularly where disclosure of a key could compromise the confidentiality of information (with possible criminal consequences) which is not the subject of a Section 49 notice".
We have debated this issue many times, but industry is concerned that the transfer of a key will open up doubts about confidentiality, particularly for the members of the London Investment Bankers Association, who have wide and very confidential international responsibilities.
Lord Lucas: My Lords, I shall be popping up on several occasions in the hope that the message will wing its way from the box to the Minister to deal with the back end of the amendment that we lost. My understanding of what the Minister said at that time is, yes, there is a lacuna in the Bill; yes, if the police, or
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whoever, were in possession of protected information that they were not prepared to reveal to the subject of the notice, they could force a disclosure of a key; and that disclosure would not be subject to the Clause 51 safeguards. If that is the case, then this amendment is all very well but it will not achieve anything because there is a great, gaping hole in the Bill around the side of it.
I should like to know at some stage whether I have completely misconstrued the Bill and what the Minister said, or whether there is a problem and we should be looking at ways of dealing with it.
Lord Bach: My Lords, we are at Third Reading and we are dealing with amendments tabled for Third Reading; we are not at Committee stage. I shall reply to the amendment moved properly by the noble Lord, Lord Cope, and suggest why our amendment is to be preferred. Some background questions have been asked. Whether they should have been asked is another matter—but they have been and I shall do my best to respond to them.
As far as concerns Amendment No. 24, we are all on the same side. We can see exactly what the noble Lord is trying to get at. He is trying explicitly to include in considerations of proportionality any considerations related to the potential impact on a business. We do not think that his amendment is in the correct place in Clause 51. We believe our amendment will achieve the same effect by amending subsection (5) of Clause 51. He is quite right, the word "reputation" does not appear in our amendment as it does in his. That is because we believe the value of the reputation in this context lies in its value for business. I ask the noble Lord very gently if he will consider withdrawing his amendment in favour of ours, which I should like to move next in our proceedings.
The point made by the noble Earl, Lord Northesk, concerns information other than the protected information which is covered by a key. That danger led to Clause 51(5), which was inserted at the instigation of the noble Earl, Lord Liverpool. We are as confident as we can be in relation to the matters mentioned by the noble Earl. We know that there are concerns from a business point of view. We have met them as best we can. But I really do not feel that Third Reading is the time to go over matters that were debated fully and properly at the Committee stage.
The Earl of Liverpool: My Lords, I rise only briefly to express my regret—
6 p.m.
Lord Bach: My Lords, we are at Third Reading and the rules of Report stage prevail. I am looking to the Table to see whether I am right about that. The last thing I want to do is to stop the noble Earl speaking, but those are the rules.
Lord Cope of Berkeley: My Lords, as between the two amendments—the government amendment

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and my amendment—I am convinced by the Government's case. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Bach Lord Bach moved Amendment No. 25:
Page 58, line 40, at end insert ("and
(b) any adverse effect that the giving of the direction might have on a business carried on by the person on whom the disclosure requirement is imposed.").
The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 26:
Page 58, line 40, at end insert-
("(6) Where a direction for the purposes of subsection (1) is given by a chief officer of police, by the Commissioners of Customs and Excise or by a member of Her Majesty's forces, the person giving the direction shall give a notification that he has done so-

(a) in a case where the direction is given-

(i) by a member of Her Majesty's forces who is not a member of a police force, and

(ii) otherwise than in connection with activities of members of Her Majesty's forces in Northern Ireland,

to the Intelligences Services Commissioner; and

(b) in any other case, to the Chief Surveillance Commissioner.

(7) A notification under subsection (6)-

(a) must be given not more than seven days after the day of the giving of the direction to which it relates; and

(b) may be given either in writing or by being transmitted to the Commissioner in question by electronic means.").

The noble Lord said: My Lords, I beg to move.
[Amendment No. 27, as an amendment to Amendment No. 26, not moved.]
On Question, Amendment No. 26 agreed to.
Lord McNally Lord McNally moved Amendment No. 28:
Leave out Clause 51.
The noble Lord said: My Lords, with this amendment we should like to discuss Amendments Nos. 50 and 51. We are at Third Reading. The intention behind the amendment is to ask the Government even at this late stage to pause and think. Yesterday's New York Times said of this measure:
"The measure … would make Britain the only Western democracy where the government could require anyone using the Internet to turn over the keys to decoding e-mails messages and other data".
Throughout the proceedings on the Bill, and in the last gasp briefings we have received from the Federation of The Electronics Industry, the CBI, investment bankers and so on, great concern has been expressed that the powers in the Bill will have serious and detrimental effects on business. We want to be absolutely sure that the Government know that the gun is loaded and that it is the considered advice of industry that there are
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consequences to carrying through Clause 51 and Part III. While there are all the other benefits of the Bill, is there not time to pause and consider the implications of Part III for e-commerce and Britain's international standing within it? I beg to move.
Lord Howell of Guildford: My Lords, I know that noble Lords will not want to go over this crucial part of the Bill again and would not want to do so at Third Reading. However, the proposal in the amendments either to drop altogether or delay the introduction of Part III and certainly Clause 51 gives an opportunity to those who are deeply worried about the Bill to ask a final question before it passes from our hands.
We know—it was said at Report stage—that the purpose here is to impose national legislation on what is a global communications system. That is bound to create some limitations on what can be achieved. We also know—again it was said at Report stage—that technology is moving very fast in this area and may well render some of the provisions of the Bill ineffective almost before it becomes a statute. What worries me about Clause 51 is best put as a question to the Minister. What will happen if a handler of data traffic—a person or persons on whom a disclosure requirement is served—or an Internet service provider, when asked for the key, says, "I do not know where it is. I have no idea of its location"? It may be that messages are passing between a giver and receiver within United Kingdom jurisdiction, but it is perfectly possible, as we heard at Report stage, for the Internet service provider to be in Dubai, the application service provider to be in Bangalore and the key to be anywhere. It could be in Bahrain or it could be moving around. It might not be located in any national jurisdiction and therefore would not be available.
Clause 51(5) of the Bill directs its attention towards,
"any protected information, in addition to the protected information in respect of which the disclosure requirement is imposed, to which the key is also a key".
That rings very loud warning bells. The experts and technologists, for good reasons or bad—probably for market driven reasons—will devise, and may already have devised, means by which the location of the key is just not possible. What will happen when the answer to the question, "Where is the key? You must provide the decryption key", is, "We do not know. We genuinely do not know where the key to these data lies. If you do not believe in the plain text and you feel it is justified that a notice should be served for the divulging of the key, I am sorry. We cannot help you. It lies without our jurisdiction and indeed perhaps without any jurisdiction"? How will that problem be solved?
People outside the House are already talking about a world in which the whole attempt to impose the spirit of Clause 51 and the related clauses will be rendered nugatory by the rapid advance in technology and may make our efforts in relation to this part of the Bill look rather ineffective and absurd.
Lord Marlesford: My Lords, perhaps I may support the noble Lord, Lord McNally, and my noble friend

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Lord Howell of Guildford by making one point. I do not necessarily blame the Government for trying to introduce this mistaken approach. I think it is possible that they have been badly advised by their officials. I am going to take two minutes of your Lordships' time to tell a story from the past, which in a sense illustrates that Whitehall officials are not necessarily the best people to advise on what the real electronic world is about.
Just before 1970, when I was young and enthusiastic about the capabilities of computers, I remember saying to a senior official in the Ministry of Health what a good thing it would be if the government were to start to make more use of computers in the administration of the National Health Service. The official said charmingly to me, "Mark, before we spend public money on computers, we have to be sure that they are here to stay".
I use that story as an example because the problem is almost certainly the advice that the Government have been getting. I would suggest that the advice that has been showered upon us from all sides is probably more relevant and should take precedence over the advice that Ministers have received.
Lord Lucas: My Lords, in speaking to Amendments Nos. 50 and 51, I should perhaps start by pointing out that my decision about what to do with the amendments will depend almost entirely on the answer to the question that I have now asked three times without receiving an answer. As Clause 49 is set out, is there or is there not a major hole in the Bill as a result of the ability of a police officer who holds encrypted information to refuse to provide that and instead make someone divulge the key? If there is not, perhaps we should give the Bill a chance to see how this will work in practice. However, if we are looking at a provision that contains a large hole about which the Government intend to do nothing, it is clear that we should not allow this part of the Bill on to the statute book without a long period of further reflection.
Part III covers a system for allowing the police and others to require keys. In practice, this will be largely ineffective. Anyone with a key will presumably carry that key in the form of a password inside their own head. Refusal to give up the key in circumstances where it might damage a person will, first, incur only a light sentence. In any case, there will be a powerful incentive not to divulge it in the first place.
Secondly, it must now be clear to the Government, following the judgment given in the speed camera case, that the Human Rights Act will be invoked on this matter. It is not possible to compel in statute someone to divulge a key held only in their head. That would amount to self-incrimination. If the Government have not yet taken detailed advice on that point, surely it is now time that they do so. As I said, it is clear from the judgment made in the speed camera case how a judgment in a case of this kind will be made. It may be that the Government wish to argue the toss here, but they must realise that the odds are stacked against them.
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This provision confers a right to require keys which is likely, at the end of the day, to reveal very little. It leads the police down a blind alley. It would be far better for them to try to acquire information through forensic hacking and by using conventional techniques such as intercepting communications at the computer; namely, by placing a bug, say, between the keyboard and the computer and collecting sufficient keystrokes to be sure that the password has been picked up during the course of such an operation. Many other procedures can be used rather than acquiring, keys. I do not believe that this part of the Bill will, in practice, do much for law enforcement.
On the other hand, this part of the Bill may do immense damage to the economy of this country. If someone is considering where to site an electronic operation protected by keys, the security of that system will be of enormous importance. During the passage of the Bill, the Government have done a great deal to improve on the original legislation. I had thought that we were moving towards the point where we had something that was worth letting go. However, I am very disappointed by the consistent refusal of the Government to answer my one final question. The noble Lord, Lord Bach, points to his noble friend the noble Lord, Lord Bassam. However, I gave the noble Lord, Lord Bach, an opportunity to respond a little earlier. If he had so responded, I would not have had to make this speech.
Lord Bach: My Lords, I hope that the noble Lord will be a little patient.
Lord Lucas: My Lords, the difficulty about being patient at Third Reading is that noble Lords have only one opportunity to make a point. I want the noble Lord to be quite clear about why I place such importance on my question.
Many international businesses need to decide where to place their keys. Wherever those keys are placed, it is as sure as eggs is eggs that the administration systems will follow. Wherever administration systems are set up, that location is likely to develop into the commercial heart of the business. Over time, if people cannot trust the UK as a safe place in which to store their keys, businesses will flow out of this country. That loss will be felt first in concerns such as Internet service providers, but later it will affect anyone dealing with confidential information on a large scale. The damage will be slow and insidious, but ultimately it will cause devastation in our business community.
As the noble Lord, Lord McNally, remarked, we are sticking our neck out here. This is the only major country that has so far opted to confer powers on its government to acquire keys. If others do not follow that route, we risk allowing every other country to point at the United Kingdom and say to business, "Your keys are not safe in the UK. They will he safe with us. Come here instead". Others will win business as a result. Over time, they will win a great deal of business.
As I said, I had hoped that the Government had moved sufficiently to allow us at least to give them a chance. However, I shall listen carefully to the

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Minister's remarks. If he has not satisfied my concerns, I shall return to the matter when we reach Amendment No. 50.
6.15 p.m.
The Earl of Northesk: My Lords, I am sure the Minister is aware that I could—I am tempted—make a long and impassioned speech on this point. I hope, therefore, that he will be pleased to hear that I intend to limit myself to only one observation.
I hope that the noble Lord will not resort to the argument that the recent announcement from the White House Chief of Staff, John Podesta, that the Clinton administration is considering similar legislation to the Regulation of Investigatory Powers Bill, is proof of how clever has been the United Kingdom in this area. The fact is that Mr Podesta's intervention concerns far more the protection of the dubious legality of the FBI's use of its cyber surveillance system, Carnivore.
My feeling here is that they would be much better advised to rely on the words of Esther Dyson as a commentary on the true position of the United States.
Lord Desai: My Lords, I am a little puzzled about this point. Noble Lords know that I did not much like this Bill in the first place, although my concerns lay more in the area of civil liberties rather than the effects on business. I do not feel any particular loyalty to the Bill. However, it is clear that the Government have moved a long way to clarify, accommodate and adjust the Bill. As a result of those efforts, the measure is now far better than it was when it began its journey through the House.
Two arguments have been advanced here. First, the technology is progressing so fast that it is not worth passing the measure. Secondly, the provisions are so dangerous that business will he driven away. Can a Bill be dangerous and ineffective at the same time? That appears to be a very strange combination. Either the Bill is ineffective, so it does not matter all that much, or it is dangerous, but no one has yet convinced me that it is dangerous.
If the noble Lord seeks to divide the House on this clause, I shall not be able to join him in the Lobby. I hope that he will not choose that course. If we stick by the improvements that have been made, we may yet pass a good Bill.
Lord Cope of Berkeley: My Lords, I think it is a little late to say that we shall still "get a good Bill". Only a few short debates held under strict rules—of which we have been reminded by the noble Lord, the Lord in Waiting—separate us from the point at which the Bill will pass into statute.
At the start of our debates I was impressed, and I remain impressed, by the sustained opposition made against the clauses permitting the police and others to demand keys. That opposition has come from many different groups, ranging from civil liberties organisations through to organisations in the City, the
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CBI, trade unions and so forth. All those groups have expressed their extreme worries about the provisions as a whole.
Nevertheless, while dealing with the Bill, I have adopted the policy of doing my best to improve it. Others have done so as well, both on this side of the House and, it must be said, on the Government Front Bench. I believe that it is now a better Bill for that. However, the point of principle here—the amendment goes to that point—remains as to whether, even though the Bill has been improved and more safeguards have been put in place, the Bill is still dangerous.
With respect to the comments made by the noble Lord, Lord Desai, I do believe that the Bill can be both ineffective and dangerous at the same time. One must consider the different aspects. Should the police and other law enforcement agencies discover that they cannot use this provision to acquire information, it will be ineffective. Criminals may be able to avoid the provisions simply by locating e-mails offshore, forgetting their passwords and so forth. If criminals can take such steps, the Bill will be rendered ineffective from the point of view of law enforcement. However, the Bill will still prove to be dangerous to the economy if it frightens away people who would otherwise consider investing over here.
The Prime Minister, along with everyone else, supports the notion that Britain should be at the forefront of the e-economy. We aim to support not only the e-commerce companies themselves, but all kinds of companies using the Internet and the Web to improve their businesses. That is the way forward. If we include in the Bill a provision for government agencies to demand keys—the only one in the world—even if it is not often used, it could frighten off business. It could be dangerous from a commercial point of view, even if it is not effective. Although we have improved the Bill immensely, there remains the valid question of whether this legislation will prove both dangerous and ineffective.
My noble friend Lord Lucas has returned several times to the question of whether there is a hole in the Bill—not in terms of its effectiveness for the law enforcement agencies, but in terms of the safeguards that we have so carefully piled up in an attempt to better the Bill's provisions. Will those safeguards in themselves be ineffective? If they are, we have wasted our time adding more safeguards. We have an indication that we are about to be reassured on that point by the Minister. However, without it, we may have wasted our time in attempting to improve the safeguards, even though on the face of it we have succeeded in doing so.
Lord Bassam of Brighton: My Lords, I was initially slightly dismayed to see Amendment No. 28 on the Marshalled List. However, it is probably healthy that we should have this debate one more time, and I thank the noble Lord, Lord McNally. It may be useful to bring the amendments tabled by the noble Lord, Lord Lucas, into the debate, as they cover similar territory. The first of the noble Lord's grouped amendments

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seeks to excise the circumstances in which keys can be required; the second seeks to delay Part III of the Bill. They go to the heart of the debate.
I think the noble Lord, Lord McNally, is trying to say that there should be absolutely no circumstances in which the authorities might be justified, or even permitted, to disclose a key or password. That is the stark meaning of the noble Lord's amendment. On a fundamental level, that cannot be right.
The circumstances under which keys can be demanded are a significant matter. We have redrafted Part III of the Bill in terms of a disclosure requirement. As I said, this emphasises clearly on the face of the Bill that disclosure of plain text is what we are after. That is what it is all about. We have rehearsed the reasons why there may be special circumstances in which keys may be required. We have added many different types of safeguards to the Bill to ensure that the keys are demanded only under very strict conditions. Underlying all this is the assertion that it must be possible in some circumstances to demand keys, for very good reasons.
I have no qualms about admitting that the majority of such instances will be cases of individuals suspected of involvement in criminality. There are those who have suggested that the requirement for keys should be limited to individuals alone and should never apply to business. I have no difficulty in reiterating how unlikely it is that keys will ever be asked for from any legitimate business. But, for as long as it remains possible that certain individuals or businesses may involve themselves in corrupt or criminal activities, it will be necessary to retain the power to demand keys in special circumstances.
The party of the noble Lord, Lord McNally, is strong on protecting individual rights—and that means, of course, rights for everyone. I am not sure how the amendment squares with that position since it has the effect of removing a potentially significant weapon which is needed to tackle crime of all descriptions. Society as a whole suffers if the police do not have the powers they need to do their job. Their powers are currently deficient in dealing with the criminal use of encryption. The reality is that there is currently no explicit disclosure power in UK law, nor a power to require anyone to disclose a key or password. This is the gap that we are plugging with Part III of the Bill by providing for a self-standing power requiring proper authorisation and subject to its own specific safeguards.
I am not sure whether the noble Lord, Lord McNally, has discussed this amendment with any chief constable, with the directors of the National Crime Squad or the National Criminal Intelligence Service, or with any of the child protection groups which have an interest in this area. They have a legitimate voice in this debate. The amendment in no way reflects that interest. No one seems to have taken on board the demands of the law enforcement agencies or of legitimate lobbying interest groups.
At Third Reading in another place the Government were criticised for not giving law enforcement the powers it needed in the Bill. We did not believe that the
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criticism was justified. But if there is a sure-fire way of ensuring that law enforcement is effectively hamstrung over encryption, it is by pursuing this amendment. I believe that the noble Lord, Lord Cope, recognises that there may be occasions when keys are required. In Committee on 28th June, when we moved amendments to put greater prominence on the face of the Bill to the disclosure of plain text, the noble Lord, Lord Cope, proposed similar wording which he said would:
"put plain text in the front line and … allow applications for a key only when absolutely necessary".—[Official Report, 28/6/00; col. 966.]
We had a useful debate around that principle. This, I believe, is the position we are currently at in regard to Clause 51.
In the light of the amendment, I have reflected on a couple of remarks made previously by the noble Lord, Lord McNally, about Part III in what has been, as I have said, a wholly constructive process. In Committee, the noble Lord said, at col. 955:
"I am not one of those who believe that the new cyberspace technology is a zone that should be outside the rule of law. I still have a sufficiently strong confidence in parliamentary democracy to believe that, as a necessary protection, all parliaments should be able to construct a framework within which people conduct their activities".
I agree entirely with those sentiments. Part III has been improved immeasurably by discussion in this House. But this amendment threatens to undo that good work. In fact, it would lead to what the noble Lord said should not happen: it would effectively mean that some criminals could operate with impunity. I am not sure that that is what the noble Lord desires.
The noble Lord, Lord McNally, also said in Committee, at col. 958:
"People out there are telling us that this new technology is so footloose and fancy free that it is beyond the powers of parliamentary democracies to control. I put forward the strongly held view that it is not".
Again, I could not agree more. But my point is that the effect of the amendment would be that some criminals would indeed be free from any meaningful effect of the rule of law. If that is so, we shall have failed to carry out our democratic duty.
At its heart, the Bill deals with powers that are necessary for keeping society as a whole safe. I have referred to that already. It is not a trite remark. It is right that these powers are properly regulated. The power to access keys in Clause 51 is closely restricted. I am not at all sure that people who may not have taken a deep interest in the Bill but who nevertheless have every right to live in a society where the police have the powers they need to tackle crime will understand, let alone appreciate, a decision by this House to damage law enforcement's powers in the way proposed by the amendment.
We are working, together with industry—both on the face of the Bill and with the codes—towards narrowing down as far as possible the circumstances under which keys can be demanded from business and to ensure that this is readily understood by everyone

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who may be in a position to demand keys. It is important to remember that when keys are asked for from anyone, the recipient of a notice is free to decide which key to disclose. The choice lies with them. What I do not think we can do is say that it will never be possible to demand keys altogether. In the case of the individual, this would remove a significant weapon against paedophile crime, among others. The Government believe that the power must remain and there is no more that they can give on this issue.
The Bill was sent here by another place with the wish on the part of some Members that it should be improved. At Third Reading in another place Mr Simon Hughes, spokesman for the party represented by the noble Lord, Lord McNally, voted for the Bill but said that he hoped your Lordship's House would deal with his party's one remaining significant objection to Part III. That objection was not about the principle of access to keys but the accusation that the offence under what is now Clause 53 unfairly reversed the burden of proof. We have fixed that, and a good deal else besides. I am grateful to all noble Lords for their part in that process.
I turn to Amendments Nos. 50 and 51. I am grateful to the noble Lord, Lord Lucas, for raising this matter and shall endeavour to answer his "lacuna" question. These amendments are fairly straightforward. However, it is worth informing the noble Lord about our aspirations as to implementation of the Bill because it has a bearing on the point which lies at the heart of the amendments. The priority for implementation rests in Part II and, to a very similar extent, Part I of this Bill. We believe that it is necessary to implement the provisions of Part II before the Human Rights Act comes into force on 2nd October of this year so as to provide reassurance that the daily surveillance operations and use of informants by the police, among others, can continue in a way that is entirely compatible with the requirements of the European Convention on Human Rights. We view that as an imperative and shall make every effort to ensure that Part II can be implemented to that timescale.
We have similar aspirations in relation to Chapter I of Part I of this Bill. The oversight provisions in Part IV are required to support any one of the other three parts of the Bill. For those reasons, we shall work hard to establish the oversight provisions in time for implementation of the Human Rights Act.
There remains the implementation of Part III, which is the specific object of the noble Lord's amendment. Part III involves new provisions with which both law enforcement and industry must come to terms. We need to conduct further work on the code of practice for Part III in conjunction with those in industry. Further, we need to ensure that all those who may impose a disclosure requirement, or the requirement for a key, are fully aware of the implications of what they do. There are powers in the Bill for circuit judges, among others, to impose such requirements. We must ensure that a training package is implemented for each judicial figure.
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In short, there is a considerable amount of work to do before Part III of this Bill can be implemented. We shall take note of the growing menace of the criminal use of encryption and proceed as fast as possible to educate all those who may be affected in one way or another by these provisions. However, this is a considerable workload. I do not believe that it will be possible to implement Part III this calendar year. At this stage we believe that we may be a considerable way into the next calendar year before Part III can be implemented. For this reason, I suspect that the aim of the noble Lord's amendment will be achieved simply through the enormity of the task that lies ahead of us. We do not want to limit ourselves to that stipulation on the face of legislation. We aim to monitor the criminal use of encryption as we go along, and that may alter the timescale. Further, it is possible that our arrangements may be put into place more speedily than seems likely at present.
Finally, I do not believe that if a delay of this kind is stipulated on the face of the Bill industry will be reassured. The real reassurance for industry is that we make progress and implement this legislation and it finds that the threats to its security, which we believe have been more imagined than real during the passage of this Bill, are illusory. The best reassurance to industry is to start this regime and let all see that it does not represent the threat that many fear. To that extent, we do not want to limit ourselves to a particular time frame.
A number of questions have been asked which I believe deserve answers. The noble Lord, Lord Howell, asked what happened when people did not know where the key was. The simple answer is that if they do not have it and cannot disclose it that is the end of the story. In response to a question put by the noble Lord, Lord Lucas, to which he has properly returned on a number of occasions, effectively keys are required by virtue of Clause 53. In those circumstances, Clause 51 does not apply. This is not a lacuna but an inevitable consequence of two facts: first, that the person may not have the protected information; secondly, that it may not be possible to show the individual the information for reasons of secrecy. Usually, that will be possible but in some cases it may not be. The situation described by the noble Lord is one in which the person does not have the information and it is not possible to show it to him. The noble Lord is concerned principally with businesses. It would be very unusual for a key to be required in those circumstances. The circumstance in which there is a withholding of information from the recipient of a notice, especially where the individual is a large or small business, is extremely unlikely. I believe that that should give the noble Lord sufficient reassurance.
The debates on these parts of the Bill have been very constructive. The Government understand the sensitivity of the issue of keys and access to them. I have sought to demonstrate throughout that the Government see very limited circumstances in which a key will be demanded. Plain text will always be preferable, but there will be situations in which it is clear that there is criminality at the root of it. We need

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access to keys in those very tightly constrained circumstances. I believe that we have clarified the narrowness of those circumstances beyond doubt.
Clearly, it is time to draw the debate to a close. However, I urge the noble Lords who have tabled these amendments not to press them. I believe that we have answered the questions put to us.
6.30 p.m.
Lord Swinfen: My Lords, before the noble Lord sits down, he did not answer the question about self-incrimination. If a person has, or is thought to have, possession of a key and fails to provide it, as a defence will he be able to exercise his right not to incriminate himself?
Lord Bassam of Brighton: My Lords, I am not sure that there is a simple answer to that question. As I explained to the noble Lord, Lord Howell, if the individual does not have access to the key or know where it is clearly it cannot be disclosed. In those circumstances, that is not only the end of the story but a perfectly reasonable defence. If those are the circumstances envisaged by the noble Lord that is probably also an answer to the point.
Lord Swinfen: My Lords, before the noble Lord sits down, my question does not relate to circumstances in which the individual does not know the key. I am concerned with those cases in which the individual knows the key but may incriminate himself by disclosing it. As I understand it, in this country no one is bound to incriminate himself.
Lord Bassam of Brighton: My Lords, I believe that in the circumstances described by the noble Lord it would not necessarily be a defence; nor do I believe that in this area the law is finally settled.
Lord Marlesford: My Lords, now that Hansard can be quoted in the courts, was the noble Lord being serious when he said a moment ago that if an individual did not have the key, or did not know where it was, that would be the end of the story? Frankly, if that is all that an individual has to say and there is no possibility of proceeding further it makes the whole exercise pointless.
Lord Bassam of Brighton: My Lords, I rest on my earlier explanation. The advice that we have been given is that that is the case, and we shall stick to it.
Lord Nolan: My Lords, the principle against self-incrimination has been breached many times by statute. Whenever a motorist is required to take a breathalyser test he may well incriminate himself. The principle against self-incrimination can be overridden by Act of Parliament.
Lord McNally: My Lords, many years ago when I served a Minister one of the ways to get brownie points was to introduce in debate a few damning quotations
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from the other side. In those circumstances, I extend my professional compliments to the noble Lord's support staff.
From the very start, everyone has acknowledged that we are trying to ride two horses at once. Perhaps I may cite the late Jimmy Maxton: "If you can't ride two horses at once, you should never have joined the circus". This has been a Home Office security Bill and a trade and industry Bill stitched together rather hastily. It has been our task to try to improve it.
I do not regret tabling Amendment No. 28. In fact as the debate unfolded I felt more and more sure that we were right to do so not least because of the response it provoked from the Minister. At this late stage, at Third Reading, the response contained some useful and clear statements on where the Government believe they have reached on this matter. We have expressed doubts; the Government have expressed their confidence. It has never been the wish of these Benches to wreck the Bill. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 53 [Failure to comply with a notice]:
[Amendments Nos. 29 and 30 not moved.]
Clause 54 [Tipping-off]:
[Amendments Nos. 31 to 33 not moved.]
Clause 55 [General duties of specified authorities]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 34:
Page 62, line 7, at end insert-
("(4) Subject to subsection (5), where any relevant person incurs any loss or damage in consequence of-

(a) any breach by a person to whom this section applies of the duty imposed on him by subsection (2), or

(b) any contravention by any person whatever of arrangements made in pursuance of that subsection in relation to persons under the control of a person to whom this section applies,

the breach or contravention shall be actionable against the person to whom this section applies at the suit or instance of the relevant person.
(5) A person is a relevant person for the purposes of subsection (4) if he is-

(a) a person who has made a disclosure in pursuance of a section 49 notice; or

(b) a person whose protected information or key has been disclosed in pursuance of such a notice;

and loss or damage shall be taken into account for the purposes of that subsection to the extent only that it relates to the disclosure of particular protected information or a particular key which, in the case of a person falling with paragraph (b), must be his information or key.
(6) For the purposes of subsection (5)-

(a) information belongs to a person if he has any right that would be infringed by an unauthorised disclosure of the information; and

(b) a key belongs to a person if it is a key to information that belongs to him or he has any right that would be infringed by an unauthorised disclosure of the key.

(7) In any proceedings brought by virtue of subsection (4), it shall be the duty of the court to have regard to any opinion with respect to the matters to which the proceedings relate that is or has been given by a relevant Commissioner.
(8) In this section "relevant Commissioner" means the Interception of Communications Commissioner, the Intelligence Services Commissioner, the Investigatory Powers Commissioner for Northern Ireland or any Surveillance Commissioner or Assistant Surveillance Commissioner.").
The noble Lord said: My Lords, this amendment addresses a concern that has been put to us on a number of occasions by industry. The concern is that once keys are seized under this legislation and notwithstanding the strict safeguards set out in Clause 55, there remains a possibility that keys could be compromised once they have been seized. Industry is rightly concerned to ensure that that possibility is minimised and that proper sanctions exist in case it occurs. We agree that it would be wrong for the consequences of insecure safeguarding to fall on the owners or users of keys. We also agree, as I indicated on Report, that the duty imposed on public authorities to look after keys should be actionable. In other words, if keys are insecurely stored the responsible public authority can be sued.
Before I spell out what these amendments do in detail, I fear that I need to spell out how unlikely it will be that we shall ever arrive in a position in which keys are compromised in this way or fashion. First, noble Lords will by now be very familiar with the state of preference for plain text on the face of the Bill. I made that clear in the previous debate. Noble Lords will also be familiar with the significant extra hurdles that need to be cleared before the keys themselves can be demanded. Thirdly, noble Lords will see the tight controls we place on the keys once they are seized, as set out in Clause 55.
All those factors considered, it seems most unlikely that keys will ever be compromised. In the past I have drawn an analogy with the intercept material which is subject to similar strict controls at present and which has not, to my knowledge, ever been compromised in the 15 years of operation of the Interception of Communications Act 1985. None the less, I appreciate that it is a matter of perception. I appreciate that were keys to be compromised in this way, the Bill should be clear where liability should lie.
Two elements of the liability are envisaged in this amendment. The first—at new subsection (4)(a)— would be in respect of a person who failed to ensure that adequate arrangements were in place for the protection of keys. The second—at new subsection (4)(b)—would apply to those who did not comply with the arrangements properly and thereby compromised the key. We believe that both elements are required. It could be as a result of failings in either aspect that keys came to be compromised. I believe that it would be an unlikely but hypothetical situation.
New subsection (5) sets out the individuals who may sue for these purposes. They are limited to those who have made a disclosure in pursuance of a Section 49 notice, or those whose protected information or key has been disclosed by someone else in pursuance of such a notice.
We think that that gets the balance about right between proper legal accountability on the one hand and unlimited remote claims on the other. However,
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noble Lords will note that someone whose information is protected by a key, even if that key is not "his" in the conventional sense of the word, is covered by the class of potential litigants. So a bank customer can sue on a failure to look after a bank key that he happens to use. That was a specific point raised on Report. I am happy to make the position clear now at Third Reading.
Finally, Amendment No. 42 allows for an order made under Clause 65 to allocate some or all of these proceedings to the tribunal to be established under Clause 65. Our initial view is that the tribunal should hear such cases where they are related to interception or where there is a secrecy notice attached.
I hope that I have explained in detail the importance of these amendments. They are designed to strengthen the obligation of the state to look after keys in the unlikely event that they are seized and to give industry redress in the still more unlikely event that things go wrong. I beg to move.
6.45 p.m.
Lord Cope of Berkeley: My Lords, I spoke on this point at an earlier stage. I, too, hope that no key is ever compromised. However, I believe that the amendment is necessary, first, in case a key is compromised, inadvertently or in any other way. It will give protection. Secondly, the fact that damages may be available will help to ensure that agencies which gain keys look after them properly. In some cases, they will have a huge financial penalty if they should fail in their duty in this respect.
On Question, amendment agreed to.
Clause 56 [Interpretation of Part III]:
[Amendment No. 35 not moved.]
Clause 57 [Interception of Communications Commissioner]:
Lord Bach Lord Bach moved Amendment No. 36:
Page 64, line 29, leave out from ("State") to end of line 32 and insert (", after consultation with the Interception of Communications Commissioner, shall-

(a) make such technical facilities available to the Commissioner, and

(b) subject to the approval of the Treasury as to numbers, provide the Commissioner with such staff,

as are sufficient to secure that the Commissioner is able properly to carry out his functions.").
The noble Lord said: My Lords, government Amendment No. 36 is designed to respond to Opposition concerns that the interception commissioner may not be provided with sufficient resources to do his job. Voicing those concerns, the noble Lord, Lord Phillips of Sudbury, made telling remarks on Report about the provisions of the Bill which relate to commissioner oversight. We have taken his comments to heart. I hope that he agrees.
We all agree that the commissioners are an important part of the Bill's safeguards; and these amendments have been devised to provide reassurance that the commissioners will be in a position to do their job effectively.
Amendment No. 36 imposes a duty on the Secretary of State to provide the commissioner with the technical facilities and staff as are sufficient to enable him properly to carry out his functions. Coupled with the requirement in Clause 58 that all those involved in the interception regime disclose to the commissioner all the documents and information he requires, I hope that the House will agree that the commissioner and his secretariat will be a force to be reckoned with, and that we have done what we can to give him the tools necessary to fulfil his expanded role as the regime enters a new era.
Amendments Nos. 39 and 40 are aimed to remove any doubts there may have been previously that the interception and intelligence services commissioners may report at any time to the Prime Minister on any matter relating to their functions as they think fit. We have extended this power to both commissioners for consistency's sake. We do not need to do that as regards the Chief Surveillance Commissioner. He has this power in Section 107 of the Police Act 1997. I beg to move.
The Deputy Speaker (Lord Geddes): My Lords, I must advise by your Lordships that if Amendment No. 36 is agreed to, I cannot call Amendment No. 37 due to pre-emption.
Lord Phillips of Sudbury: My Lords, at times during debate on the Bill it has been rather like mapping in a fog. However, one matter has stood out with absolute clarity: unless we have an effective enforcer of those provisions in the Bill designed to protect against abuse of the very large powers to be enacted, the job will be ill done. For that reason, we on these Benches felt strongly about resources as regards the interception of communications commissioner. I am delighted to read the Government's amendment, which appears to be slightly stronger than the amendment I ventured to put forward. I am therefore entirely in accord with the Government's proposal.
Lord Nolan: My Lords, speaking as a former commissioner, I welcome the amendments. When the Bill is enacted, the burden on the interception of communications commissioner will be greatly extended. In Committee I spoke of my fear that it may prove to be too much for one retired judge. It would certainly be too much for a serving judge and it may be necessary to appoint an assistant commissioner to help bear the load. Let us see what my successor feels about that after the Bill has come into force.
As regards access to the Prime Minister, de facto that has always been so. I have never had any difficulty in speaking to any Secretary of State and on one occasion when I thought it necessary I saw the Prime Minister within a very short time. There is no harm, and it would be all the better, to have that position enshrined in legislation. I therefore welcome the measures.
Before sitting down, perhaps from a watching position I may offer a few words of congratulation on the many good things the Bill has done to improve the
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interception process without in any way compromising the principles of safeguarding the citizen on which it is based. I shall not take up your Lordships' time with details, but all sides in your Lordships' House have combined to bring about the measures. There has been virtually no controversy about them and I am sure that the Bill is a welcome result for citizens.
Lord Bach: My Lords, the whole House will be grateful for the comments made by the noble and learned Lord, Lord Nolan, who has huge experience and expertise in this area. I am also grateful to the noble Lord, Lord Phillips of Sudbury, for his comments.
On Question, amendment agreed to.
[Amendment No. 37 not moved.]
Clause 58 [Co-operation with and reports by s. 57 Commissioner]:
Lord Phillips of Sudbury Lord Phillips of Sudbury had given notice of his intention to move Amendment No. 38:
Page 65, line 31, at end insert ("and may at any time report to him on any matter relating to his discharge of those functions").
The noble Lord said: My Lords, I am content with the Government's Amendments Nos. 39 and 40 and shall not move Amendment No. 38.
[Amendment No. 38 not moved.]
Lord Bach Lord Bach moved Amendment No. 39:
Page 65, line 31, at end insert-
("() The Interception of Communications Commissioner may also, at any time, make any such other report to the Prime Minister on any matter relating to the carrying out of the Commissioner's functions as the Commissioner thinks fit.").
On Question, amendment agreed to.
Clause 60 [Co-operation with and reports by s. 59 Commissioner]:
Lord Bach Lord Bach moved Amendment No. 40:
Page 67, line 25, at end insert-
("( ) The Intelligence Services Commissioner may also, at any time, make any such other report to the Prime Minister on any matter relating to the carrying out of the Commissioner's functions as the Commissioner thinks tit.").
On Question, amendment agreed to.
Clause 61 [Investigatory Powers Commissioner for Northern Ireland]:
Lord Bach Lord Bach moved Amendment No. 41:
Page 69, leave out line 3 and insert ("in Northern Ireland-

(a) in any capacity in which he is or was the holder of a high judicial office (within the meaning of the Appellate Jurisdiction Act 1876); or

(b) as a county court judge.").

The noble Lord said: My Lords, we tabled the amendment at the request of colleagues in Northern Ireland. Your Lordships may remember that at an earlier stage we tabled provisions relating to the post of an investigatory powers commissioner for Northern Ireland; and that is now Clause 61 of the Bill. The amendment slightly broadens the range of judicial figures who could hold the appointment. I beg to move.
On Question, amendment agreed to.
Clause 65 [The Tribunal]:
Lord Bach Lord Bach moved Amendment No. 42:
Page 71, line 10, after ("services;") insert-
("() they are proceedings brought by virtue of section 55(4);").
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendment No. 43:
Page 72, line 8, at end insert-
("but conduct does not take place in changeable circumstances to the extent that it is authorised by, or takes place with the permission of, a judicial authority").
The noble Lord said: My Lords, Amendments Nos. 43 to 45 respond to concerns that complaints about Section 49 notices may go to the tribunal established by the Bill if they are authorised by the Secretary of State, and to a court if authorised by that court. But they have nowhere to go otherwise; in other words, there is no avenue of complaint available concerning notices which are authorised internally by the police, Customs and the military. These amendments remedy that omission and ensure that a right of redress is provided in all circumstances. I beg to move.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendments Nos. 44 and 45:
Page 72, leave out lines 16 to 19 and insert-
("(d) a permission for the purposes of Schedule 2 to this Act;
(e) a notice under section 49 of this Act; or").
Page 72, line 36, at end insert-
("(11) In this section "judicial authority" means-

(a) any judge of the High Court or of the Crown Court or any Circuit Judge;

(b) any judge of the High Court of Justiciary or any sheriff;

(c) any justice of the peace;

(d) any county court judge or resident magistrate in Northern Ireland;

(e) any person holding any such judicial office as entitles him to exercise the jurisdiction of a judge of the Crown Court or of a justice of the peace.").

On Question, amendments agreed to.
Clause 73 [Conduct in relation to wireless telegraphy]:
Lord Bach Lord Bach moved Amendment No. 46:
Page 81, line 46, leave out ("(4)") and insert ("(4)(a) or (c) to (g)").
The noble Lord said: My Lords, this is a technical amendment to Clause 73, which amends Section 5 of the Wireless Telegraphy Act 1949. This amendment arises out of concern raised by the Department of Trade and Industry in relation to the activities of Radiocommunications Agency (RA) officials. RA officials monitor radio transmissions to determine whether those transmitting have the appropriate licences for their activities and are complying with
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those licences. This activity currently takes place under the provisions of Section 5 of the Wireless Telegraphy Act 1949.
We are content that the Wireless Telegraphy Act provides sufficient cover, including Human Rights Act cover, for the RA's monitoring activities and that it therefore does not need a Part II authorisation for this monitoring. However, as some of its conduct could be capable of being authorised under Part II, the amendment to Section 5 set out in Clause 73 as drafted might prevent the RA obtaining authorisations under the Wireless Telegraphy Act.
This amendment is required to ensure that the RA is not precluded from obtaining a Wireless Telegraphy Act authority. I beg to move.
On Question, amendment agreed to.
Clause 78 [Orders, regulations and rules]:
Lord Bach Lord Bach moved Amendment No. 47:
Page 86, line 16, leave out ("2(12),").
On Question, amendment agreed to.
Lord Cope of Berkeley Lord Cope of Berkeley moved Amendment No. 48:
Page 86, line 16, after ("12(9),") insert ("13(3),").
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendment No. 49:
Page 86, line 16, leave out ("21(9),").
On Question, amendment agreed to.
Clause 83 [Short title, commencement and extent]:
Lord Lucas Lord Lucas moved Amendment No. 50:
Page 90, line 43, at beginning insert ("Subject to subsection (2A),").
The noble Lord said: My Lords, as the noble Lord, Lord Bassam, explained, the practical effect of the amendment is to give the Government an opportunity to delete Clause 3 from the Bill without having to come back with further primary legislation. Having listened to everything the Minister said today, I think that the Government will need that power. They have deliberately left a lacuna in the Bill. A request from the police for keys must be authorised at the level of chief officer of police and notified to the commissioner. If the police ask for plain text and are refused the protected information, they are therefore entitled to ask for keys. I agree that that should be the case, but if they go about obtaining keys in that way, the authorisation is at a lower level and there is no notification to the commissioner.
That is such a hole in the Bill that I do not believe that it will command confidence to any significant extent among major companies when making decisions about where to locate their business. I do not see how, in 12 months' time, the Government can but wish that they had not passed such legislation. My

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amendment merely gives them the opportunity to forget this provision quietly while causing them little trouble. I beg to move.
Lord McNally: My Lords, as I have already made clear to the noble Lord, these Benches would not support him if he decided to divide the House.
On Question, amendment negatived.
[Amendment No. 51 not moved.]
7 p.m.
Lord Bassam of Brighton: My Lords, I beg to move that this Bill do now pass. In doing so, I believe that it is only right that I spend a few moments reflecting on the progress that has been made with this important piece of government legislation and to offer my thanks and congratulations to all Members of your Lordships' House who have participated and played an important and, I believe, significant role in improving the quality of the Bill. Much has been said today about the role of the House in that regard, and I believe that a good deal of it is absolutely true. Many amendments have been moved, and many have been accepted—if not in absolute "plain text", then certainly in spirit. I have been most grateful for the constructive way in which noble Lords have responded.
We said that we would respond to industry representations and we have done so. There will be further opportunities for that to happen during the course of the discussions, debates and deliberations that will need to take place with regard to the code of practice. I believe that that will contribute significantly to ensuring that the legislation is workable.
An important section of the Bill that we did not debate at great length was Part II. I predict that Part II will be seen unashamedly as good news. It is not an area about which there has been great fuss or controversy, but it is important legislation that will put on a statutory footing the use made by law enforcement agencies of surveillance and covert intelligence sources. I believe that it will provide considerable reassurance to the public and will ensure compliance with the Human Rights Act, which comes into force later this year.
Noble Lords have conducted themselves well. We have had an interesting series of debates and I pay tribute to all who have taken part. I have been most grateful for the advice and guidance that we have received, particularly from time to time from the noble and learned Lord, Lord Nolan. I have also been grateful to my noble friend Lord Bach who has been extremely helpful and supportive in seeing through the debates. I also pay tribute to the good humour and sense of purpose exercised by all who have participated.
This a worthy piece of legislation. It certainly achieves government objectives in the field and I believe that it is something of which, rightly, we should be proud.
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Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)
Lord Cope of Berkeley: My Lords, as the Minister said, we are sending back to another place a very different and much better Bill than we received. I believe that your Lordships' House can claim the credit for that. The Minister acknowledged again today the constructive approach adopted all round—from this Front Bench, from the adjacent Front Bench, if I may describe it as such, from my noble friends behind me and from all parts of the House.
The Minister, his colleague, the noble Lord, Lord Bach, and his officials and advisers have also been most helpful and constructive in trying to improve the Bill, encouraged no doubt from time to time by the noble Lord the Captain of the Gentlemen-at-Arms.
The reason that I believe your Lordships' House can take particular credit for the large number of improvements is not least because, when asked what amendments were likely to be made in the Lords, the Minister of State in another place replied that he considered that only minor and technical amendments would be required. In contrast, we have re-written large sections of the Bill: we have redefined traffic data; we have provided for a technical advisory board to look after the technical difficulties of black boxes; and we have tightened up the provisions for the Government to pay for those black boxes. This afternoon an extremely significant statement was made with regard to the fact that in most cases ISPs, which provide services only for financial organisations, would not require black boxes.
The vital Part III of the Bill concerning key disclosure has been turned round completely so that, instead of keys being demanded and plain text being accepted in lieu, the normal process will be that plain text is demanded and keys asked for only in rare cases. The various safeguards have been tightened up in several respects, notably, that no key is supposed to be demanded unless the chief constable or equivalent asks for it. He then becomes subject to judicial oversight of a kind in having to report to the commissioner. I say "supposed to" because the difficulty, to which my noble friend Lord Lucas drew attention, remains of the possibility of keys being demanded without those safeguards.
We have made various other changes to the Bill, all in all, I believe, leading to an important set of improvements. At the same time, the question remains as to how much damage may be done by Part III in particular to our aim, including that of the Government, that the United Kingdom should be at the forefront of e-commerce and that our companies should be able to use the web and the Internet as much as anyone else. I have no doubt that collectively your Lordships have done a great deal to mitigate that damage. However, at the same time, that possibility remains.
Apart from that part of the Bill, which obviously will require further thought by the Government, the remainder, as the noble and learned Lord, Lord

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Nolan, said a few moments ago, is of value. That is why I support the proposition that the Bill do now pass.
Lord McNally: My Lords, it has been mentioned on a number of occasions that the Bill, which, rightly, we have put through stiff tests, improves and strengthens civil liberties in this country. It brings within statute and within parliamentary control activities which previously were covered only vaguely. Although we have been determined that the Bill should be given the stiffest of examinations, there is, as the noble Lord, Lord Cope, and the noble and learned Lord, Lord Nolan, said, a good deal of satisfaction at the role that this House has played.
Many people have asked what kind of House the reformed House of Lords will be. I believe that the Regulation of Investigatory Powers Bill provides a good example of an advisory and revisory House doing its job properly. We have tried to put the Bill on three firm legs. With regard to the section on e-commerce, I remember in particular the intervention of the noble Lord, Lord Stevenson, as being powerful and influential in relation to civil liberties. The noble Lord, Lord Desai, has acted as a Buddha, watching over us and occasionally intervening on the matter. From their different perspectives the noble Baroness, Lady Thornton, and my noble friend Lady Harris have reminded us of the important issues to be considered in relation to police powers.
It would be remiss of these, and I suspect other, Benches if I did not place on record our thanks to Charles Lindsey, Caspar Bowden and Richard Clayton, who have given us useful advice as the Bill has unfolded. If I may make a plug for lobbying, this has been a useful example of how external experts and outside bodies can and should influence legislation. This House is particularly adept at using such advice well to improve legislation.
I, too, support the Motion that the Bill do now pass. I offer my sincere congratulations to the noble Lord, Lord Bassam of Brighton, who has carried a heavy burden, well supported by the noble Lord, Lord Bach, who, like a good second, has sponged him down whenever he looked like flagging and sent him back in the ring.
On Question, Bill passed, and returned to the Commons with amendments.

Child Support, Pensions and Social Security Bill
7.11 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): 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 Child Support, Pensions and Social Security Bill, has
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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.
Bill read a third time.
Clause 25 [Regulations]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 1:
Page 23, line 7, leave out ("10") and insert ("10(1)").
The noble Baroness said: I shall speak also to Amendments Nos. 45, 46, 62 and 64. The amendments place a cap on the amount of child maintenance payable. The opposition amendments would limit the amount of maintenance that a non-resident parent can be asked to pay for his children to £200 a week for each qualifying child.
In our previous discussions on the subject, I have always acknowledged that the arguments for and against a maximum level of liability are finely balanced. I accepted your Lordships' point that the financial arrangements for very wealthy families on divorce or separation can be substantially more complex than for other families. In particular, the courts could have difficulties in shadowing the CSA rates if the parents are wealthy and have complicated financial arrangements. It was put to us that if child maintenance figures are high, it could be regarded as spouse maintenance rather than child maintenance. I therefore undertook to consider the matter further and report back to your Lordships today.
The government amendments are different from the opposition amendments, although they are similar in effect. The opposition amendments would cap the amount per child—£200 for one, £400 for two, £600 for three or more. We propose a cap on the amount of net weekly income taken into account for the purposes of making a maintenance calculation. That cap will be set at a net weekly income of £2,000, as calculated under Schedule 1 and regulations. That means, effectively, £300 for the first child, £400 for the second and £500 for the third. When there are two children, our method aligns with the opposition amendment, but it is also compatible with the rest of the CSA assessments.
The liability of a non-resident parent with a net weekly income of more than £2,000 who has one child to support and no children in his second family will be capped at £300 a week. If he has two children to support, it will be £400 a week, or £200 per child. If he has three or more children to support, the figure will be £500 per week, or £167 per child if there are three qualifying children.
We propose to take account of any children in the second family against the capped income. If there is one child in the second family, the £2,000 net income will be reduced by 15 per cent before the maintenance for the first family is calculated.
We believe that a cap based on an upper limit of net weekly income rather than an amount in respect of any one child is simpler to administer, simpler for parents to understand and consistent with the rest of the scheme. We recognise that the decision on the upper

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figure is inevitably somewhat arbitrary, but we believe that £2,000 is justifiable, reasonable and pragmatic. A net income limit of £2,000 is broadly equivalent to an annual salary of just under £170,000 gross. That is 10 times higher than the £200 cut-off for low earners and five times the national average wage. That is sufficiently high to ensure that all children benefit from a reasonable level of maintenance, while providing that only those who are likely to have more complicated financial arrangements are affected. We have provided powers to ensure that the upper limit can be amended by regulation, subject to the affirmative procedure, should that prove necessary in the light of experience or future changes in society.
The amendments also provide for the courts to make a top-up maintenance order, in the same way as is currently provided for in Section 8(6) of the 1991 Act. That is another measure that your Lordships pressed for at earlier stages and I gave assurances that I would consider it.
We remain convinced that court-based agreements should, in the main, be settled in line with CSA rates, as that will avoid fluctuations in the level of maintenance when the parent with care moves on or off benefit. That is why, under the reformed child support scheme, we propose to open up access to the CSA for private, non-benefit cases when parents are unhappy and a new court order has been in place for at least a year.
Allowing the courts to make a top-up maintenance order is an important safeguard to ensure that children continue to share in the living standards of non-resident parents, even when the non-resident parent is liable for the maximum amount of child support. Separating parents and their lawyers will need to bear in mind during negotiations on a divorce settlement that a non-resident parent's liability for child maintenance will not necessarily stop because his net income exceeds £2,000 a week.
Very few parents will be exempted. Those who are will have extremely complicated financial arrangements and it will be more appropriate for them to he dealt with by the courts. They will know what level of maintenance they will be taking into the settlement.
I should also make it clear for the record that if the non-resident parent applies to the CSA for a variation of his assessment because, for example, of the cost of staying in contact with the children, the variation will be applied to the full amount of net income rather than the capped income being reduced by a further variation. The income that we are not taking into account in setting maintenance liability will be available to meet other expenses.
I hope that the amendments will alleviate the concerns that were raised previously by the Opposition and others outside your Lordships' House about the effects of the new scheme on the court-based financial arrangements made on separation by a few wealthy parents. The amendments will allow the courts, in establishing financial arrangements for very wealthy parents, to work from a fixed maximum child support
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liability. That should make it easier to establish the other aspects of the financial package and—this is what matters to me—produce stability in the financial arrangements surrounding the well-being of the child.
I hope that noble Lords will not move their amendments and will be content that ours will have the effect that we were pressed to accept on Report. I beg to move.
Earl Russell: My Lords, before the Minister sits down, will she estimate how many are the very few non-resident parents who will be affected?
Baroness Hollis of Heigham: My Lords, we have a case load basis of about 1.2 million parents—both parents with care and non-resident parents. We estimate that between 50 and 100 may be affected.
Lord Higgins: My Lords, this is an important amendment, although, as the noble Earl, Lord Russell, has just pointed out, the number of individuals affected is not very great. None the less, there is a point of principle involved. On Second Reading, back on 17th April—it seems a long time ago—I said:
"Another aspect which causes us concern is that there is no upper limit on the amount which, under the new simplified formula, will be taken from the absent parent. There are important issues here which we can no doubt pursue in Committee—for example, where someone is immensely rich but an absent parent, the extent to which that income should be transferred back to the children of an original marriage".— [Official Report, 17/4/00; col. 469.]
This part of the Bill is—if I may use the expression—the child of the noble Baroness, Lady Hollis. She has done an immense amount of work on it in preparation and behind the scenes. She appreciated our concerns and said at earlier stages of the Bill that she would give them careful consideration.
As the Minister has pointed out, there are two sets of amendments. Our Amendments Nos. 41 and 42 would prescribe a maximum amount for each child, whereas the government amendments refer to a total income. They are broadly similar in intent, but they are not precisely the same. I am sure that whichever one is selected we shall find that one group of wealthy parents with one child will say they like it one way, and another with three children will say they like it another. Nonetheless, on the whole, that is something which we shall be able to tolerate. In particular, the noble Baroness has pointed out the complications which ensue as far as the second, third, or fourth families of a particular individual are concerned.
I have always been strongly of the view in debating such matters that, if the Government are clearly making a concession, which is undoubtedly the case on this occasion, it is wrong to perpetuate the debate more than necessary. I would simply say that we appreciate the care which the Minister has given to it. We welcome the amendment proposed. The matter is very finely balanced, but, rather than call a Division which

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we might lose, I think on balance it is better to accept the noble Baroness's amendment, and we on this side of the House do that with some enthusiasm.
On Question, amendment agreed to.
Lord Goodhart moved Lord Goodhart moved Amendment No. 2:
After Clause 32, insert the following new clause—

Child Support, Pensions and Social Security Bill
  Age addition
    AGE ADDITION
    . For section 79 of the Social Security Contributions and Benefits Act 1992 there shall be substituted—

    Age addition.
    79.—(1) A person who is above the age of 75 and who is entitled to a retirement pension of any category shall be entitled to an increase of the pension to be known as the "age addition".
    (2) A person who is in receipt of a pension or allowance payable by the Secretary of State by virtue of any enactment or instrument (whether passed or made before or after this Act is passed), and who—

    (a) is above the age of 75, and

    (b) fulfils such other conditions as may be prescribed,

    shall be entitled to an increase of the pension or allowance, also to be known as the "age addition".
    (3) A person who is above the age of 80 and is in receipt of age addition shall be entitled to an increase in the age addition, to be known as the "further age addition".
    (4) Age addition and further age addition shall be payable for the life of the person entitled, at weekly rates to be determined by the Secretary of State in regulations."").
    The noble Lord said: My Lords, this is a very important amendment. It is one which we were unable to vote upon at the Report stage because it did not come on for debate until nearly 10 p.m.
    What we are proposing here is that there should be a substantial addition to the basic state pension for pensioners who reach the age of 75, and a further and equally substantial addition on reaching the age of 80. This would, of course, replace the present absurd addition of 25p a week at the age of 80.
    The amendment does not specify the amount, for the obvious reason that the actual rate will need to be varied from year to year by regulations made by the Secretary of State. A recently published Liberal Democrat policy paper on ageing has proposed that there should be a £5 addition at 75 and a further £5 addition at the age of 80. Those are the figures we have in mind.
    The policy paper also proposes that there should be a £5 per week increase in the basic state pension for all pensioners as well as the age additions for the older pensioners. This amendment is confined to the age additions.
    We are particularly concerned with the older pensioners because older pensioners have, in some respects, greater needs. They need more heating and warmer clothes. They may need special food. They may need to use more expensive local shops because they cannot travel to the supermarket and bring back a heavy load of groceries.
    More important than that, old people as a group have lower pensions than younger pensioners. Occupational pensions are linked to earnings, in general, at the date of retirement, but after retirement they are subject at best to an increase in line with the retail price index. That increase may in many cases be capped at 5 per cent. Therefore, so long as real earnings continue to increase, those who retired the longest time ago will have the lowest pensions. Furthermore, the same will be true of the state second pensions. It is also, of course, a fact—and this is a significant fact—that the older pension cohort consists disproportionately of women—who live longer than men—and of pensioners living on their own, because so many of them are widows or widowers. Indeed, we know that some 40 per cent of people over the age of 80 do not have adequate state, occupational or personal pensions and have to rely on the minimum income guarantee to supplement their pension.
    The Minister has said many times before—and will no doubt say again this evening—that age is not a good test of need. She will say that disparity of incomes between older pensioners as a group and younger pensioners as a group is much smaller than the disparity of incomes between richer and poorer pensioners within each age cohort. That statement is, of course, perfectly true. I do not contest it for a moment.
    The Minister will say that we should therefore concentrate extra money on the poorest pensioners through the minimum income guarantee. Of course I welcome the minimum income guarantee. It plays—and will in any foreseeable circumstances continue to play—an important part in ensuring that the poorest pensioners have the means to secure a basic standard of living. However, the logical conclusion of that argument, which we have heard from the Minister, is that we should get rid of the right to a basic pension altogether and should concentrate only on the poorest among the elderly.
    But concentration on the minimum income guarantee ignores the fact that people who have contributed to their parents' pensions through their own national insurance contributions feel—and rightly feel—a need to be fairly treated when they come to draw their own pensions. They do not see an increase in the minimum income guarantee as fair if those who are not on the minimum income guarantee get no benefit for themselves
    The reaction of pensioners to last year's 75p a week increase in the basic pension shows what happens when pensioners feel that they are being treated unfairly, as I believe they plainly were last year. Yesterday we had a spending review promising extra expenditure of £43 billion a year. What do the pensioners get out of that? I will tell you exactly what they get out of that, they get a new telephone service to make it easier for them to contact the Benefits Agency. That is all that they get out of the spending review.
    The Minister may try to hide behind the technical defence that social security benefits are annually managed expenditure and the review deals with

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    something different, which is departmental expenditure limits. But, let me say now that that will not do. Page 5 of the spending review makes it clear that the £43 billion is based on the assumption that social security spending will increase in real terms only by 1.2 per cent a year up to the end of the year 2001–02. That amount is already almost entirely committed to the increase in the spending on the working families' tax credit and in effect leaves nothing for improvement to basic pensions beyond a rise in line with the cost of living.
    I predict that the fury of pensioners at their 75p per week increase last year is as nothing compared with what will be their fury when they realise that they are excluded from the goodies handed out by the Chancellor of the Exchequer yesterday. The Minister may, of course, say that if more of that £43 billion goes to pensioners it means there will be less for other good and worthy causes. My answer to that is, so be it. The Chancellor yesterday poured out a cornucopia of gifts, but what he gave to pensioners was no more than a tiny crumb. The additions which we propose are the minimum that is required to do justice to pensioners. I beg to move.
    7.30 p.m.
    Baroness Carnegy of Lour: My Lords, the noble Lord has made a clarion call for pensioners and as somebody who is over 75, I am extremely sympathetic. However, he does not say what the age addition should be, so we have no idea what sort of sum of money is involved. I should think it would be a very large sum indeed. It is entirely inappropriate for this House, as revising Chamber, to suggest such a thing.
    Of course, it is an excellent idea from the point of view of pensioners. I am not in a position to judge whether or not age is a good criterion but I know that the Government consider that it is not. I do not believe that this House should attempt to pass such an amendment.
    Lord Higgins: My Lords, after the events of yesterday and the speech which we have heard from the noble Lord, Lord Goodhart, it is clear that we on these Benches are certainly the most prudent of the three parties in terms of economic management. For that reason, I do not feel able to support the amendment in the name of the noble Lord, Lord Goodhart. However, I draw his attention to the recent statements which have been made by my right honourable friend the Leader of the Opposition as regards our own proposals on the subject.
    But, like the noble Lord, Lord Goodhart, I thought it appropriate, before taking a view on the amendment, to see what happened in the spending review announced yesterday. It is not insignificant that that is now entitled "Spending Review 2000" rather than "Comprehensive Spending Review". No doubt the Minister will tell us why it is not called the "Comprehensive Spending Review". Our view is—and this was mentioned by the noble Lord, Lord Goodhart—that it is probably because pensioners seem to be excluded to a remarkable extent.
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    I thought that that might be a rather cynical view and felt that I should see exactly what was said in the spending review. So I looked under "Departmental Reviews", which refers to Section 18, Department of Social Security, DSS, page 81. However, page 81 refers to the Ministry of Agriculture, Fisheries and Food. The pensions statements seem not to be there at all. I carried out further intensive research and found that there is a Department of Social Security Section 18 on page 87. I am not quite sure how that happened.
    At all events, the noble Lord, Lord Goodhart, is right to say that the reality of the situation is that all there is for pensioners is a new phone line which is to be established. Perhaps in passing the noble Baroness will tell us whether that will be a freephone number.
    What are pensioners likely to find if they ring up and ask various questions? I suppose someone could ring up and ask whether it is the case that quite a lot of the vast amount of money which the Chancellor is now proposing to spend is as a result of the changes previously made to advance corporation tax, which deprived pensioners of some £5 billion or more.
    Alternatively, pensioners may wish to inquire into a number of other matters. In particular, they may wish to clarify what was meant by the Chancellor in the four lines which he devoted to this subject yesterday, when he said:
    "I can also confirm that, in the autumn, the Government will publish our proposed plans for a new pensioner credit, with a view to further announcements on a Budget timetable".—[Officia Report, Commons, 18/7/2000; col. 224.]
    Of course, we are not in the least bit clear as to what the position will be in relation to a new pensioners' credit. What seems highly likely is that the Government will fiddle the figures in the same way that they did for the working families' tax credit by not conforming with internationally accepted standards for such matters to be treated as public expenditure or as a tax reduction. But clearly, it is the case that this should be treated as a public expenditure increase. But there is no sign of that whatever in the so-called spending review.
    Therefore, we hope that the Minister will clarify those matters, because they are all clearly relevant to the proposals for increased public expenditure which have been made by the noble Lord, Lord Goodhart, in his amendments. We look forward to hearing her defence of the Government's position as regards the overall expenditure situation.
    Baroness Crawley: My Lords, before the noble Lord sits down, the position of pensioners in the Comprehensive Spending Review has been criticised by both the noble Lords, Lord Higgins and Lord Goodhart. Does the noble Lord, Lord Higgins, not agree with me that, out of the £43 billion spending commitment in that review, the extra sums to be spent on health, for example, will have a very beneficial impact on many pensioners who are consumers of the health service?
    Lord Higgins: My Lords, clearly, that is so. But these amendments relate to their pensions. We merely have the throw-away four lines by the Chancellor in the

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    course of his speech which promise jam tomorrow but not jam today. I do not dispute at all the point made by the noble Baroness. Of course, that is so. But one needs also to take into account the extent to which the Government's proposals so far have an adverse effect on many pensioners.
    Earl Russell: My Lords, I shall not dispute the claim made by the noble Lord, Lord Higgins, that in the funding of pensions, his is the most prudent party. The figures which I have, which I hope are roughly the same as those of the noble Lord, show that his party is committing to pensions, over and above what the Government are committing, the sum of £300 million, whereas we on these Benches are offering to commit £3.5 billion. There is a distinct difference.
    In advancing that commitment, the noble Lord, Lord Higgins, illustrated why his party, like Sir Walter Raleigh, in 1066 and All That, is left over from the previous reign. If you follow questions of British social attitudes as regards whether people prefer tax cuts or increases in spending, the proportion favouring increases in spending has risen every year since 1983. At least in the past five years, the balance has clearly changed. The Government, very belatedly, are showing faint signs of realising that. The party of the noble Lord, Lord Higgins, has not yet realised it. It no doubt soon will.
    I say to the noble Baroness, Lady Carnegy of Lour, that I have spent a lot of time reading the passages in the Companion about the financial privilege of another place. As I understand it, the position is—and I have checked it with some care—that this House is always free to ask and the other place is always free to refuse, from which it does not necessarily follow that the other place will refuse on any particular occasion. There are people in another place who feel a certain anxiety about whether they will hold their seats. Some of those people believe that the funding of pensions will make a considerable contribution to the answer to that question.
    Like my noble friend, I was absolutely astonished that the Chancellor of the Exchequer did not take the opportunity in what he said yesterday to provide any increase in pensions. I appreciate, of course, all the technical arguments why it may not have been expedient to do so. But, in political terms, this is an emergency which has been coming for quite some time. I have seen it coming since I spoke to the Brent Pensioners' Forum in 1997, which is a while ago now. It has reached the point where, almost like the dissolution of a marriage, the trust of voters in the Labour Party is on the edge of disappearing beyond the point of recall.
    I suspect that yesterday, the Chancellor of the Exchequer had, and threw away, his last chance. If the effect of his actions is to make Mr Hague Prime Minister, one might wonder why he did that. That is not for me to speculate. But, if that is the case, we have this year left. If pensioners are to be satisfied, something must be done now. We can no longer have before us the amendment of the noble Baroness, Lady
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    Castle, which was disposed of at Report by a show of power that I have not seen produced by a government since the noble Baroness, Lady Thatcher, was in No. 10 Downing Street.
    We could not have supported that amendment, as the noble Baroness, Lady Castle, knows very well. We too have prudence, but we do not put it in quite the same place as the noble Lord, Lord Higgins, does. But since that amendment is not before us, the amendment which my noble friend Lord Goodhart has moved is the only show in town. So, if people on the Labour Benches do not want to see Mr Hague in Downing Street, they might think that this amendment is the best prospect that they have left. It is a lifeboat. We are happy to offer it to them and we will welcome aboard any of those who want to join us.
    I know that the Minister will make arguments about targeting. I remember the Minister herself, in some extremely able speeches in the single parent debates at the beginning of this Parliament, arguing that the hardship of being on benefit was in large part a measure of how long one had received it. I have weighed up those arguments and find them extremely powerful, especially in relation to pensioners. My noble friend Lord Goodhart touched on some of the points which are relevant, such as having to go to a nearer place for shopping and having to get a taxi because one cannot drive.
    But there are things such as the overcoat wearing out. As one gets older one feels the cold more. These big capital sums are one of the great hardships of any life on benefit. For that reason, the figures which the Minister will undoubtedly present will be telling very much less than the full story. This is a much better targeted amendment than the Minister will suggest.
    The Minister will of course sing the praises of the minimum income guarantee. I understand the good intentions behind MIG. I am not going to shoot the Minister; she is doing her best. She is making great efforts. Perhaps the noble Baroness, Lady Castle, would like to share the joke with me. I might enjoy it.
    Baroness Castle of Blackburn: I could not resist it. You said that you were not going to shoot her because she was doing her best. I merely added, "to shoot herself".
    Earl Russell: My Lords, the noble Baroness, Lady Castle, has a lot more confidence in the Minister's aim than I have. The Minister is doing her best to find the people who are entitled to MIG to take it up. But, as the noble Baroness, Lady Castle has explained to this House many times, there are a great many people for whom the obstacle to taking up MIG is a simple, plain matter of pride. They do not take charity. They believe that they have earned it.
    Since there are qualities in our population which I do not want to discourage, I believe that the people MIG is least likely to reach are those who need it most. For that reason I do not think that MIG can ever do what is wanted. I believe that my noble friend's amendment is the only thing that can. I hope that the House will view it with favour.
    7.45 p.m.
    Baroness Hollis of Heigham: My Lords, despite the bait laid down by the noble Lord, Lord Higgins, and to some degree by the noble Lord, Lord Goodhart, I do not intend at Third Reading of this Bill to go into a wider debate on the Comprehensive Spending Review, as opposed to the details of this amendment at Third Reading of this Bill.
    The purpose of this amendment is to allow the payment of an age addition to the basic state pension to people of 75 years of age and to allow for a higher age addition at the age of 80. As we have had a version of this at every stage of the Bill, noble Lords will not be surprised at my arguments any more than I am entirely surprised by the arguments adduced by the noble Lord, Lord Goodhart, this evening. I accept with the noble Lord that on average pensioner incomes tend to decline with age. But the differences within age cohorts are, as the noble Lord, Lord Goodhart, has acknowledged tonight, infinitely greater than the differences between them.
    To put these differences into context, we can look at the median cash incomes that couples are receiving. For couples under 75 years of age, the poorest one-fifth are receiving on average £133 per week; the top one-fifth are receiving £457. For the over 80s, the poorest one-fifth receive £113 and the top one-fifth receive £348. That means that in each age group the richest one-fifth receive more than three times as much as the poorest one-fifth. The difference between age groups is much smaller and only about 12 per cent less. To put it in cash terms, the average income range within each age cohort spans about £250. The average income between age cohorts is approximately £25. In other words, the range within each age cohort is about 10 times greater than the differences between age cohorts.
    In other words, that would mean that the Liberal Democrat amendment would give an additional £10 to those on £350 a week, providing they are over 80 years of age, but give nothing to those receiving £133 per week—about one third of the other group—because they are under 75 years of age. That is the effect of the amendment of the noble Lord, Lord Goodhart. There will be an extra £10 for those receiving £350 a week because they are over 80 years of age, and nothing at all for those receiving £133 per week because they are under the age of 75. What sort of justice is that? There is none.
    The noble Earl, Lord Russell, said that he had been persuaded in an earlier debate by the analogy with lone parents that people, through length of time on benefit, become poorer. That is true if pensioners were in the same position as lone parents. But lone parents are on benefit because they have no other income and therefore, over time, their capital goods wear out. Their income is the same irrespective of whether they have been receiving benefit for five years, 10 years or 20 years.
    The point about pensioners is that they do not all have the same income as lone parents. The point being made by the noble Earl, Lord Russell, substantiates the point made by government. It is precisely because of the
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    inequality of income, unlike the equality for lone parents, that we need to target help in the way that we propose. I give way to the noble Earl.
    Earl Russell: My Lords, I am grateful to the Minister. When we speak of lone parents, it is often assumed—it is most certainly assumed by the Minister—that they may have to return to work at some future date. We do not normally make that assumption about the pensioner in his 80s unless he is a Member of this House.
    Baroness Hollis of Heigham: My Lords, that is not a comment relevant to the point I was making, which was that lone parents are on benefit because they have no alternative income and experience poverty. There is persistent poverty and they are persistently on benefit. That is why we try to get them into work. Pensioners do not have a common income. If they did, my noble friend's amendment that she pressed at Committee and Report stages would have far greater resonance if pensioners all shared the same income in the same way as lone parents. It is because they do not and because the poorest one-fifth have only one-third or so of the income of the richest one-fifth, that to treat them all in the same way as my noble friend would, or treat them differently according to age, as the noble Lord, Lord Goodhart, would do, fails basically, simply and decently to address the poverty that is targeted on the poorest one-fifth, and to some extent the poorest two-fifths, of pensioners. That is why the Government are convinced that the best way to tackle pensioner poverty, and therefore ensure that those who need help get it whereas those who do not need help do not get it, is to produce, with their support, the minimum income guarantee irrespective of age.
    We are aware of the needs of pensioners who have failed to qualify for the minimum income guarantee. That is why we have raised the capital limits from next April from £3,000 to £6,000 and £8,000 to £12,000, to help those with smaller amounts of savings. As the noble Lord, Lord Higgins, perceptively noticed in the Chancellor's Statement, in the long term we shat be publishing in the autumn proposed plans for a new pensioner credit with a view to further announcements on a Budget timetable. That pensioner credit will be designed to ensure that pensioners who have worked hard all their lives are not penalised if they have a modest occupational pension or savings.
    The noble Lord, Lord Higgins, said that that was a throw-away line. On the contrary, that needs to be linked with what we are doing with MIG for those at or below the poverty line. We then need to look at our proposals for raising the capital limits for those just above the midline; the Chancellor's proposals for the autumn timetable for publishing plans for new pensioner credit and what we have been doing in this Bill and last summer's Bill, which has introduced a state second pension and a stakeholder pension. The noble Lord would surely accept that with the pensioner credit we are putting the last of the building blocks into a comprehensive and consistent pensioner programme which I hope will ensure that future generations of

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    pensioners will not suffer the poverty they have inherited over the past 20 years. I give way to the noble Lord.
    Lord Higgins: My Lords, does the Minister not agree that unless the Government fiddle the figures in the same way they did on the working families' tax credit, all the recognised standards of accountancy suggest that that should be treated as public expenditure, and the public expenditure review does not include it?
    Baroness Hollis of Heigham: My Lords, I have no knowledge of the way in which the Chancellor will account for that expenditure; whether that will be through the Inland Revenue and tax credits systems or through the DSS. However, I have somewhat greater knowledge of the working families' tax credit. The noble Lord, together with the noble Earl, Lord Russell, took part in those debates. Unlike family credit which was paid to the parent at home and was therefore a benefit, the working families' tax credit is paid through the wage packet and is therefore a tax credit. That point was well aired. I know that the noble Lord disagrees. I do not think that I shall persuade him, any more than he will persuade me. However, that was perfectly proper and acceptable by all accounting standards of which I am aware. As far as I know, there has been no criticism to that effect, except from the Conservative Party.
    I return to the amendment, rather than a wider debate on the CSR—
    Lord Higgins: My Lords, I apologise for interrupting the noble Baroness again. If it is not the case, as she suggests, that it is accepted by outside accountancy bodies, will she take steps to correct the statement?
    Baroness Hollis of Heigham: My Lords, it is a question of what weight one puts on particular views. I know that the Conservative Party wishes to see that included in the expenditure on the Department of Social Security. The whole philosophic push of the working families' tax credit is that this was no longer a benefit paid to a parent at home but an encouragement to ensure that work pays for those who, for whatever reason—for example, low levels of skill or low regional wages in their local economy—would otherwise find it difficult to manage and to make work pay if they re-entered the labour market. In that sense it was a tax credit to encourage an attractive wage and therefore make it worth while to work.
    We have had this debate. I do not think that it is appropriate to reargue it tonight. At the time, the noble Lord persisted in his points because he and his party are opposed to WFTC in the same way that they are opposed to the New Deal. As far as I can see, the only expenditure the Tory Party opposite is happy to support is that which ensures that people stay at home rather than go out to work and find it worth while to work either through the support of the New Deal or the WFTC. We have seen the Shadow Chancellor recently do a U-turn on the minimum wage. I think that it will not be long before we see the Shadow Chancellor do a
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    U-turn on the New Deal and the WFTC as he recognises that putting this together has ensured that we now have some of the lowest unemployment figures ever. Whereas we inherited youth unemployment of over half a million, it is now down to 50,000. Instead of sniping away at accounting conventions, it would have been gracious rather than churlish if the Benches opposite had joined in congratulating the Government on their performance in terms of their economic record so far.
    I return to the amendment. I am happy to stay on the wider territory of government expenditure if noble Lords wish. However, I suspect that most noble Lords would like me to proceed. The noble Earl, Lord Russell, said that this proposal was an alternative to the indignity of the charity of the minimum income guarantee. Again, either he has not read or listened to the previous debates or he has not addressed the facts. An age-related addition of the sort proposed by the noble Lord, Lord Goodhart, would lift 50,000 pensioners aged between 75 and 79 off MIG; 200,000 would remain on it. For those at £10, the proposal also in the amendment, it would lift 100,000 pensioners over 80 off MIG; 400,000 would remain on it.
    If the noble Earl, Lord Russell, persists in what he says, he must either say that MIG will no longer be necessary—in which case three-quarters of the pensioners who would benefit from the age-related addition as expressed by the noble Lord, Lord Goodhart, would be poorer because they would lose their entitlement to MIG—or accept the Government's position; that is, if we were to do that, they would still need to apply for MIG. Therefore, they would still need to apply for an income-related benefit in addition to an age-related benefit. We cannot have it both ways.
    The same is true of the amendment tabled by my noble friend on the earnings-related link. Because the age addition is so poorly targeted, in the same way as the earnings link, we have to have a minimum income guarantee on top. That means that the vast majority of people would still have to apply for an income-related top-up whether that is an age-related or earnings-related addition. Those facts are inescapable unless we are otherwise to consign three-quarters of pensioners currently eligible for MIG to a life of poverty lower than currently exists. I believe that the noble Earl wishes to intervene.
    Earl Russell: My Lords, I was describing how pensioners think of MIG. That is fact, and I have listened to it more times than I enjoy, even when it was aimed against my own party. I think that it is common ground between all parties that it will be a while before we can do without such a thing. We think—I should like to think that the noble Baroness does too—that there should be something else of right on offer.
    Baroness Hollis of Heigham: My Lords, I am reminded that it is Third Reading. Although I am being tempted by noble Lords opposite, I shall stop. The idea put forward by the Liberal Democrats means that the extra help that we are giving to low and moderate earners through the state second pension will not be

    1095
    available. The noble Lord's amendment will not work. Although it pays some money to older pensioners who need it, it gives a lot of money to older pensioners who do not need it and it does not help poorer pensioners, who will get nothing.
    I repeat that any pensioners who come through age-related cohorts, any more than earnings-related additions, would still need MIG on top if their poverty is to be addressed. That would mean that some money would go to those who do not need it, whereas others would not get enough. On the ground that the age-related rebates are no more adequately targeted on the needs of poorer pensioners than are my noble friend's earnings-related amendments, I ask your Lordships to reject the amendment.
    Lord Goodhart: My Lords, to some extent I believe that the Minister and I, in the course of this debate, have been ships that pass in the night. Our arguments may not have impacted on each other. This amendment is not just about helping those with the lowest incomes. Indeed, I understand that those who receive an amount of MIG which is larger than the amount of the proposed age addition will receive nothing. This amendment is about helping older pensioners who have income just above MIG or, in the 120,000 cases of those who will be taken off MIG by the proposed age increases, it is about getting them out of the need to fill in the forms and to go through what is a serious issue for older people of having to make those applications. Furthermore, the great majority of those 120,000 will receive additional benefits from the age additions we propose.
    So long as we have a contributory system, pensioners expect, and have a right to expect, that they will be treated fairly. That means that they should have been promised at least a small part of the vast sums which the Chancellor of the Exchequer dished out yesterday. The Minister said nothing about the derisory benefits provided for pensioners in the spending review and, indeed, there was little she could have said.
    If we divide on this amendment, we do not expect to win; we shall not receive support from the Conservatives. However, it seems to us that this is a simple but vital matter of justice for pensioners and, whatever the outcome, I shall take the opinion of the House.
    8 p.m.
    On Question, Whether the said amendment (No. 2) shall be agreed to?
    Their Lordships divided: Contents, 25; Not-Contents, 108.

    Division No. 2

    CONTENTS

    Alderdice, L.

    Goodhart, L. [Teller]

    Barker, B.

    Greaves, L.

    Carlileof Berriew, L.

    McNally, L.

    Clement-Jones, L.

    Mar and Kellie, E.

    Craigavon, V.

    Miller of Hendon, B.

    Falkland, V.

    Palmer, L.

    Geraint, L.

    Park of Monmouth, B.

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    Phillips of Sudbury, L.

    Tope, L.

    Roper, L.

    Tordoff, L.

    Russell, E. [Teller]

    Wallace of Saltaire, L.

    Shutt of Greetland, L.

    Watson of Richmond, L.

    Thomas of Gresford, L.

    Willoughby de Broke, L.

    Thomas of Walliswood, B.

    NOT-CONTENTS

    Acton, L.

    Hoyle, L.

    Ahmed, L.

    Hughes of Woodside, L.

    Alli, L.

    Hunt of Chesterton, L.

    Amos, B.

    Hunt of Kings Heath, L.

    Andrews, B.

    Jay of Paddington, B. (Lard Privy Seal)

    Archer of Sand well, L.

    Judd, L.

    Bach, L.

    Kennedy of The Shaws, B.

    Bassam of Brighton, L.

    King of West Bromwich, L.

    Berkeley, L.

    Kirkhill, L.

    Bernstein of Craigweil, L.

    Layard, L.

    Billingham, B.

    Lea of Crondall, L.

    Blackstone, B.

    Lipsey, L.

    Blease, L.

    Lockwood, B.

    Borne, L.

    Lofthouse of Pontefract, L.

    Brennan, L.

    Macdonald of Tradeston, L.

    Brett, L.

    McIntosh of Haringey, L. [Teller]

    Brooke of Alverthorpe, L.

    Brookman, L.

    McIntosh of Hudnall, B.

    Burlison, L.

    MacKenzie of Culkein, L.

    Carter, L. [Teller]

    Mackenzie of Framwellgate, L.

    Chandos, V.

    Mallalieu, B

    Clarke of Hampstead, L.

    Massey of Darwen, B.

    Cohen of Pimlico, B.

    Mitchell, L.

    Crawley, B.

    Molloy, L.

    Davies of Coity, L.

    Morris of Castle Morris, L.

    Davies of Oldham, L.

    Dean of Thornton-le-Fylde, B.

    Nicol, B.

    Desai, L.

    Patel of Blackburn, L.

    Dixon, L.

    Peston, L.

    Donoughue, L.

    Ponsonby of Shulbrede, L.

    Dormand of Easington, L.

    Puttnam, L.

    Elder, L.

    Ramsay of Cartvale, B.

    Evans of Parkside, L.

    Rea, L.

    Evans of Watford, L.

    Rendell of Babergh, B.

    Falconer of Thoroton, L.

    Renwick of Clifton, L.

    Farrington of Ribbleton, B.

    Rogers of Riverside, L.

    Faulkner of Worcester, L.

    Fyfe of Fairfield, L.

    St. John of Bletso, L.

    Gale, B.

    Sawyer, L.

    Gavron, L.

    Scotland of Asthal, B.

    Gibson of Market Rasen, B.

    Shepherd, L.

    Gilbert, L.

    Simon, V.

    Goldsmith, L.

    Symons of Vernham Dean, B.

    Gordon of Strathblane, L.

    Taylor of Blackburn, L.

    Gould of Potternewton, B.

    Thornton, B.

    Graham of Edmonton, L.

    Tomlinson, L.

    Grenfell, L.

    Turnberg, L.

    Hardy of Wath, L.

    Walker of Doncaster, L.

    Harris of Haringey, L.

    Warner, L.

    Harrison, L.

    Warwick of Undercliffe, B.

    Haskel, L.

    Watson of Invergowrie, L.

    Hayman, B.

    Whitaker, B.

    Hilton of Eggardon, B.

    Whitty, L.

    Hollis of Heigham, B.

    Wilkins, B.

    Howells of St. Davids, B.

    Woolmer of Leeds, L.

    Resolved in the negative, and amendment disagreed to accordingly.
    8.9 p.m.
    Baroness Castle of Blackburn Baroness Castle of Blackburn moved Amendment No. 3:
    Before Clause 36, insert the following new clause—

    REPORT ON COST OF PENSION UPRATING IN LINE WITH GENERAL EARNINGS LEVEL
    (" . The Government Actuary or the Deputy Government Actuary shall report to the Secretary of State his opinion on the effect on the level of the National Insurance Fund, and the effect which might be expected on the rates of contributions, in each year up to and including 2005–06 of annual increases in the basic pension by the percentage increase in the general level of earnings; and the Secretary of State shall lay a copy of the report before Parliament.").
    The noble Baroness said: Amendment No. 3 stands in my name and that of my noble friend Lady Turner. As I was about to say to the Minister when I was so rudely interrupted during our last debate on this Bill, her statistics, as always, are dazzling. But I am afraid that, as always, they are also incomplete and therefore misleading.
    It is essential to the understanding of our pensions arguments in this House to get the figures right. One of the things the Minister omitted to point out to the House, which is part of the argument, was that if the earnings link had been introduced when this Government came into office in 1997, it would today have added £9.70 to the basic pension.
    I know the Minister will say, "But you are proving my case"—the case which she had been arguing with such felicity during our last discussion on Amendment No. 2; namely, that that increase would shockingly go all the way up the line. I should point out to her that that happens to be the nature of insurance schemes. Insurance schemes do not add a means test for beneficiaries. If we subscribe, we are entitled to the results of those contributions. And the Minister's total indifference to the strengthening of the basic pension arises from the fact that not only she, but also the Government, abandoned the principle of state insurance altogether.
    I remind the Minister of what we said in our manifesto for the last election. We said that the basic state pension would be the building block of our pensions policy; and it would be without means test. But her whole theme now is targeting, which was, of course, Margaret Thatcher's theme: you should target your resources on the poorest pensioners. She can become very eloquent about it—by cutting off this assent of the basic state pension to a reasonable level through the earnings link, we will have more money to target the poorest pensioners.
    It really is a vital decision that this movement is making in this Bill. I should point out to her that the cost of restoring the earnings link does not fall on the British taxpayer. It is not a bit of welfare: it falls on the National Insurance Fund, which is financed and fed by the contributions of employers and employees. That has been a central part of our provision of security in retirement ever since the war. No government have sought to destroy that up till now. If we always say that you cannot do justice to the contributor to an insurance scheme because you must use your money to target, we are getting perilously near to the old poor law—are we not?—and to the destruction of what has always been the foundation of our policy on this side of the House.
    The other thing that the Minister has also omitted to point out is that the cost, which falls on the contributors, is always offset by rising contributions because this is an insurance scheme. The contributions are earnings related, but the pension that people receive is not. But that does not seem to worry her. I find that a little unfair. However, if that is accepted and we get a more complete statistical picture from the Minister, we find that all the time the revenue coming into the fund is going up along with the cost. In fact, the revenue is far outstripping the cost at present, as we argued last time. I do not intend to go over the old ground.
    The Minister loves to put on the frighteners. "Oh!", she said, "Look at the cost of restoring the earnings link. It would be £1 billion this year". She did not mention that the Chancellor in his Budget this year took away £1.35 billion from the National Insurance Fund to help the employers by reducing their contributions, as a sweetener to them to accept other levies that he wanted to place upon them. So it is the recipients of the pension from the National Insurance Fund who have paid for that sweetener to the employers. That is something that I am surprised she does not find rather distasteful. £1 billion this year, that is nothing. But she said that, by 2010, the cost will have increased to £7 billion and we will not be able to cut taxes. We should not believe that: it is nothing to do with taxes. It is the increased number of people you put on the means test that the taxpayer has to finance at an increased administrative cost. I should have thought that this House would have liked to weigh that in the balance of other arguments.
    This figure was alluded to in another place last March when Oona King tabled a parliamentary Question. She began by asking what would be the increased cost of restoring the earnings link to 2010. The Answer, as the Minister said, was £7 billion. But again today the Minister has not said what is coming in to offset it. So Oona King tabled a second Question. She asked what would be the increased revenue coming automatically into the National Insurance Fund by the year 2010. The Answer was £11 billion. So at least until 2010 there would be a surplus in the fund. That is a very important point.
    Do not the Government care about the insurance principle? They seem to be doing their best to destroy it, denying to the contributor to the fund the treatment that they will give to those on means testing—MIG. It is a new passion for means testing. This Government do not believe in insurance; they believe in targeting. I do not think that this House believes that. Speeches have been made which show that we are unhappy about that.
    The Government Actuary strengthens my argument in that regard. The Social Security Select Committee has now turned its attention to pensioner poverty. The Government Actuary was asked what increase in contributions would be necessary to secure the measure that we seek. That may be considered part of taxation by some people who are not as literate as we all are in this House. It appears that over the next five years no increase in contributions would be required

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    because of the surplus in the National Insurance Fund due to the fact that contributions are earnings related but the payments are not.
    I hope that the amendment we move today will appeal to all sides of the House. We were prevented on the previous occasion by a sleight of hand from resubmitting the earnings link question in the form that the measure then took. Although I agree with a good deal of what the noble Earl, Lord Russell, said, I do not agree that that is out of play. Today we ask the Secretary of State to instruct the Government Actuary to report on the annual adjustments to contributions that would be made necessary by the introduction of the earnings link, and then to report that to the House. If we do not want dazzling statistics but the objective truth, how can we reject such an amendment? The amendment seeks facts. We are not playing a political game of statistical cleverness; we are trying to get at the facts for the sake of all the pensioners who look to us for help. I entirely agree with what the noble Earl, Lord Russell, said about the hostility to means testing that is deeply rooted in pensioners.
    Only yesterday morning a pensioner said to me, "They have even changed the name of the National Insurance Office to the Social Security Office." Why should we label honest contributors as paupers who rely on our charity? There is an important principle here. The Minister need not try to hide the fact that the Government now view this as a matter of charity. In 1974, for the first time since the Beveridge report was introduced, we laid a statutory obligation on the government of the day to uprate pensions annually and to lay down the principle on which they should be uprated. That took the uncertainty out of the matter. I lived through that period and for part of that time I was a member of the Cabinet. Every year there was a kind of jostling for public sympathy. People used to say, "Oh, the poor pensioners—is it not time we gave them a hit?" I do not think that that is worthy of a civilised society today. I believe that we are in danger of undermining the automaticity of adjustment to the pension introduced after the war which we thought had been established for ever.
    I do not want to go back to 1948; I go back merely to 1978. However, I am a little worried when the Minister dismisses my arguments on the grounds that those decisions were taken years ago and the world has changed. I am glad that she is not the Minister of Health because our National Health Service is still rooted in the principles of 1948. I go back to 1997 and to what we could have done to strengthen the basic pension since then but have not done. Let us have the courage at least to establish the facts.
    There have been references to the Chancellor's Statement on his latest Comprehensive Spending Review. I do not know what the credit that he mentioned will involve. That is another thing we have to take on trust when we legislate in this place. However, if our amendment were to be carried, this House would have a regular opportunity to consider the financial situation year by year. I should have thought that is the kind of control we should like to have.
    I salute the Chancellor on his Statement which was a good Statement in most respects. However, the failure to mention pensioners was a little obvious. It took our renowned parliamentarian Mr Dennis Skinner to say to the Chancellor nicely, "We all welcome the fact that there is to be 4 per cent over inflation on this and 4 per cent on that. I am therefore confident that my right honourable friend will tell us that pensioners will get a 3, 4 or 5 per cent increase over inflation as part of the deal". The Chancellor replied, "My honourable friend is trying to get me to anticipate the further consultation which is now going to take place. I ask him to be patient. You have been patient for 22 years; you can wait a few more days or a few more weeks—not until November". What did he mean by that? Will he wait until we are all safely packed off for the summer holidays? What did he mean by a few more days or a few more weeks? Are we to be the only people who do not have a word to say? Cannot we say in this Bill that we want the Government Actuary to report on the cost of this measure year by year? We can then decide what we think should be done for our pensioners.
    Will the Minister tell the House what has been the success of the £15 million persuasion programme in which the Government have indulged to persuade those who qualify for the minimum income guarantee to take it up? I received a leaflet informing me that I may be entitled to the minimum income guarantee and how to apply for it. Presumably that leaflet has been delivered to millions of homes. What has been the increase in take-up of the minimum income guarantee since then? That is important. I refer to the £9.50 or £9.70 by which the basic pension would have been increased under this Government if we had reverted to the policy of 1974. We must remember that there are people whose income is just above the level necessary to qualify for MIG. They would bless her. They are excluded, so apparently we are going to hike it up a little bit. The Chancellor will come along—though why it cannot be part of the whole thing I do not know—and we will be told that some steps are going to be taken to offset a situation in which people who have saved and invested in another pension find themselves above the MIG limit. We are going to add a little bit of credit for them.
    That is what we are asking for with the amendment; that we should be told, year by year, in an official report—not ministerial figures—what is the current situation: how many are not taking it up; how many are excluded; who will benefit. To hear the Minister talk, you would think there were only 1.5 million to 2 million pensioners on income support. But that is out of 11 million pensioners; what about the others who are looking for some relief?
    I hope that the Minister will accept my amendment. The Government should accept it. If the matter is now going to further consultation, let us give them the opportunity to consult us. I beg to move.
    8.30 p.m.
    Lord Higgins: My Lords, the noble Baroness—
    Baroness Hollis of Heigham: My Lords, given the lateness of the hour, it might be for the convenience of the House if I respond right away. I will take the view of the House on this.
    Lord Higgins: My Lords, providing I can speak after the noble Baroness.
    Baroness Hollis of Heigham: Yes, my Lords. By all means.
    Lord Goodhart: Me as well, my Lords?
    Baroness Hollis of Heigham: Yes, my Lords. My noble friend in her amendment is asking the Government to publish information on the effect on the National Insurance Fund of the prices and earnings uprating. At the moment this information is carried in two separate reports: the annual uprating published in January and the five-yearly quinquennial review. My noble friend's amendment seeks that we bring the information from these two reports together.
    There are health warnings to be attached. The forecasts are necessarily uncertain and the information that my noble friend asks for, if anything, does not go far enough; it does not give a full and complete picture. However, my noble friend is asking for facts; we are happy to give them. We think that they will support the Government's case. In the light of that, I am entirely happy to accept my noble friend's amendment.
    Lord Higgins: My Lords, we have heard a truly remarkable speech from the noble Baroness, Lady Castle, this evening. The position of my party on the issue of linking earnings to pensions is clear and well known: we take the view that the state retirement pension should be linked to prices rather than to earnings. But the position of the noble Baroness, Lady Castle, is also well known, and she believes that the link should be restored.
    It is remarkable that she has had a degree of support from a number of sources recently—not least from the Social Security Committee in another place—on the contributory principle. Also, more especially, in the past few days the Scottish Affairs Select Committee on poverty in Scotland has said that,
    "The Government was right initially to concentrate on the poorest pensioners but we recommend it should now ensure at the earliest opportunity that the level of state retirement pension is linked to changes in national average earnings".
    This had a degree of support from a Mrs Irene Adams, who is Labour, I understand; Ms Anne Begg, who I believe is an enthusiastic supporter of Mr Blair; Mr Russell Brown, who is Labour, Mr Eric Clarke, who is Labour; and Mr Bill Tynan, who is also Labour.
    It is therefore important that the information the noble Baroness has asked for is available.
    Baroness Hollis of Heigham: My Lords, perhaps the noble Lord will allow me to intervene. Given that the
    1102
    Government have accepted the amendment and are happy to do so—the information is already in the public domain and we are just splicing together two sets of reports—I wonder whether we need to persist with this debate. I know that the noble Lord has other important issues on the agenda to discuss.
    Lord Higgins: My Lords, most certainly we have. But I must say that I find the attitude of the Government to the noble Baroness, Lady Castle, quite remarkable. The way in which at Report stage Tellers were put in by the Government in order to vote down the noble Baroness, Lady Castle, was one of the most sordid episodes I can remember in parliamentary life. I do not understand why the Minister cannot wait a moment or two before trying to curtail debate.
    Baroness Hollis of Heigham: My Lords, the reason—
    Lord Higgins: No, my Lords, I am not giving way. The noble Baroness is acting in a most extraordinary manner. I shall not delay the House more than a moment more. I believe the way in which the noble Baroness has been treated is disgraceful; I believe the way in which the Government are seeking yet again to curtail debate before we have a chance to speak in support of the noble Baroness, Lady Castle, is very strange. I shall not delay the House further. The situation speaks for itself—the Government are afraid of what the noble Baroness, Lady Castle, is saying and they are determined to try to gag her.
    Having said that, of course I am glad that the Minister has accepted the amendment. We look forward to seeing the figures, particularly in the context of the new proposed pensioner tax credit, which was referred to earlier.
    I shall not delay the House further on this occasion. It is a quite extraordinary episode and shows how the Government are frightened of what the noble Baroness, Lady Castle, is doing.
    Lord Goodhart: My Lords, I shall be very brief. I sat here at the end of the first day of Report stage when the noble Baroness, Lady Castle, was mugged by a number of her noble friends. Like the noble Lord, Lord Higgins, I found that an unpleasant occasion. On this occasion she has been mugged in an entirely different way—she has been mugged with kid gloves instead of boxing gloves by having her amendment accepted.
    The Minister makes a face showing incredulity, but it is obvious that the amendment is simply symbolic and a peg on which the noble Baroness, Lady Castle, could hang a speech in favour of earnings linking. That is not something on which we could have followed her all the way, but what we do believe—and what I am prepared to say now—is that there are times when it is right that the basic pension should be increased for all pensioners by a sum above the rate of the RPI for that year. In view of what happened yesterday in particular, this is one of those occasions. We believe—and I wish

    1103
    to say so now—that the basic pension for all pensioners should have been increased this year, or should be increased next year, by £5.
    Baroness Turner of Camden: My Lords, the amendment also stands in my name and I had intended to make a fairly lengthy speech. I shall not now bore your Lordships with it. I am grateful to the Minister for accepting the amendment; she is very wise to do so. I am glad that there will be an opportunity for both Houses in future to consider information as required by the text of the amendment.
    I am sure that everyone in the House agrees that a case has been made for a thorough look at the basic state pension; hopefully something will emerge in that respect in perhaps a few weeks' or months' time. I hope that we shall have some result. I am glad there has been this opportunity, at this quite late hour, to talk about the basic state pension. It is important that we should do so. I repeat: I am grateful to my noble friend for her statement this evening.
    Lord Stoddart of Swindon: My Lords, the speech I intended to make is not now necessary, but I want to congratulate my noble friends Lady Castle and Lady Turner on their ingenuity and sheer grit in pursuing this matter for so long to a successful conclusion. I congratulate my noble friend on the Front Bench and the Government on sensibly accepting the amendment.
    Baroness Park of Monmouth: My Lords, I support every word spoken by the noble Lord, Lord Stoddart.
    On Question, amendment agreed to.
    [Amendment No. 4 not moved.]
    Clause 50 [Directions for facilitating winding-up]:
    Lord Astor of Hever Lord Astor of Hever moved Amendment No. 5:
    Page 51, line 42, at end insert ("or
    (c) the Authority has made an order under section 11").
    The noble Lord said: My Lords, Amendment No. 5 addresses a less contentious matter. The amendment extends the circumstances in which OPRA can give a direction to facilitate winding-up. Where OPRA exercises its powers under Section 11 of the Welfare Reform and Pensions Act to make an order directing that an occupational pension scheme is wound up, OPRA should have the power to make directions about how the winding-up should be accomplished. The amendment ensures that OPRA has that power. I beg to move.
    Baroness Hollis of Heigham: My Lords, Clause 50 is part of the package of measures aimed at speeding up the winding up of occupational pension schemes. It gives OPRA power to direct action during the winding-up of the scheme. For various reasons the process can come to a standstill. Sometimes it may be because people winding up the scheme cannot get the information they need or that people are not acting as quickly as they should.
    1104
    It is important that those winding up the scheme should get support when they are experiencing difficulties and that any information they need to make progress should be provided to them. The clause allows OPRA to direct that information is provided to the trustees or managers or persons involved in the administration of the scheme, or to any other person that regulations prescribe. Amendment No. 5 would enable OPRA to direct action to speed up the winding up in all cases where it has already used its powers in Section 11 of the Pensions Act 1995 to direct that the scheme should be wound up. It would enable OPRA to issue directions at any time in the winding-up process for those cases, but not for cases where it is the trustees or managers rather than OPRA who have made the decision to wind up the scheme.
    Amendment No. 5 is unnecessary. When OPRA directs a scheme to wind up using its powers in Section 11 of the Pensions Act 1995 it must include in the order it makes any directions as to the manner and timing of the winding-up as it considers appropriate. It is at that stage that it has an opportunity to specify a timescale in which the winding-up must be completed and trustees will have a timescale to work to. The order made by OPRA has the same effect as if it was made under scheme rules. Trustees and managers would be expected to comply with the directions given by OPRA. If they are unable to comply they may request a review of any order made by OPRA.
    These are new requirements. If, in cases where OPRA has directed that the scheme be wound up, it becomes desirable for OPRA to be able to give further directions during the winding-up, this can be done in regulations. With that reassurance that the amendment is unnecessary, I hope that the noble Lord will withdraw it.
    Lord Astor of Hever: My Lords, I am grateful to the Minister for that reply. I am disappointed she feels that the amendment is unnecessary but she has given her reasons for that. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 53 [Jurisdiction of the Pensions Ombudsman]:
    8.45 p.m.
    Lord Astor of Hever Lord Astor of Hever moved Amendment No. 6:
    Leave out Clause 53.
    The noble Lord said: My Lords, I rise to give my objections to Clause 53 of the Bill and, with the leave of the House, to speak to Amendment No. 7. Clauses 53 and 54 introduce powers for the pensions ombudsman to decide matters which directly affect the benefits and interests of members and employers who are not party to the ombudsman's investigation. In our view, these clauses contain a significant extension of the jurisdiction of the pensions ombudsman and the nature of the cases which he or she then has power to determine. It would result in there being no material difference between the jurisdiction of the courts and the jurisdiction of the pensions ombudsman in determining pensions cases. However, the procedures

    1105
    in court contain many checks and balances and the judge will go to great lengths to ensure that all interests are properly considered. Oral hearings take place in court. They rarely take place in proceedings before the pensions ombudsman.
    The provisions contained in these clauses appear to be an attempt to get round the restriction apparently placed on the ombudsman's jurisdiction resulting from the case of Edge v. Pensions Ombudsman. However, in the view of the Law Society of Scotland, the case of Edge simply interpreted the extent of the powers given under the existing statute—the Pension Schemes Act 1993. In the absence of detailed rules protecting an individual's right to a fair hearing, the extension of powers in the way proposed in Clauses 53 and 54 may not be compliant with Article 6 of the European Convention on Human Rights. I beg to move.
    Baroness Hollis of Heigham: My Lords, Amendments Nos. 6 and 7 seek to remove Clauses 53 and 54 from the Bill. These clauses concern the powers and duties of the pensions ombudsman, what types of cases can be accepted and how investigations should be conducted.
    The pensions ombudsman provides a useful service to scheme members and those who run pension schemes. He can consider both complaints of maladministration and disputes of fact or law and provides a cost-effective way in which these issues can be dealt with. Clause 53 will allow the pensions ombudsman to consider five new types of case and fill in gaps in the pensions ombudsman's jurisdiction. There are a range of issues that the pensions ombudsman can investigate but some areas where he currently cannot. On the basis of past inquiries, it is anticipated that these new areas of jurisdiction will increase the pensions ombudsman's caseload by some 2 to 3 per cent. To the individuals concerned, however, each case is important. Scheme members and those who run pension schemes will have access to the pensions ombudsman in more circumstances and thus have those complaints and disputes dealt with in a cost-effective and efficient manner. Without the changes contained in Clause 53, the only option in many cases would be to take the matter to court. That is a daunting prospect and has financial implications.
    Clause 54 is also concerned with access to the pensions ombudsman. It ensures that the pensions ombudsman can look at cases that affect the interests of individuals not directly involved with the case. As a result of a ruling in the Court of Appeal last year, the existing pensions ombudsman legislation means that the pensions ombudsman should not accept a case if the investigation of it would impact on the interests of those not directly involved in the case. Such cases would have to go to court. These changes mean that the pensions ombudsman will be able to accept cases concerning such issues as winding up, death benefits and the use of surplus, which affect the interests of a range of individuals. The clause allows those whose
    1106
    interests may be affected by the complaint or dispute to be linked to the case, including members and those running pension schemes.
    Importantly, it also ensures that all those who have an interest in the case have the opportunity to put their point of view to the pensions ombudsman, either personally or through an appointed representative. They will also be informed of the outcome of the case and be bound by it. We believe that the clauses should remain in the Bill. In the light of that we hope that the noble Lord will withdraw the amendment.
    Lord Astor of Hever: My Lords, before the noble Baroness sits down, will she address my point that the two clauses may not comply with Article 6 of the European Convention on Human Rights?
    Baroness Hollis of Heigham: My Lords, I originally signed a statement to the effect that to the best of my belief, having taken advice at the highest possible level, the Bill is compliant. I have no reason to think that it is not. I shall check that point further. If the noble Lord would like to write to me to explain why he thinks the Bill may not be compliant, I shall be able to give him a fuller answer.
    Lord Astor of Hever: My Lords, I thank the noble Baroness. I shall write to her on the important point of the European Convention on Human Rights. In the meantime, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 54 [Investigations by the Pensions Ombudsman]:
    [Amendment No. 7 not moved.]
    Clause 55 [Prohibition on different rules for overseas residents etc.]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 8:
    Page 59, line 1, at beginning insert ("Except so far as regulations otherwise provide,").
    The noble Baroness said: My Lords, in moving Amendment No. 8, I should like to speak also to Amendments Nos. 9, 10, 11, 38 and 39. These amendments are needed to address concerns expressed by pension industry contacts. The existing practice of some occupational pension schemes is to pay annual increases in pension in payment based on the rate of inflation of the country of residence, not by reference to the rate of inflation in the UK. Our initial legal advice is that this practice would be prohibited under the terms of Clause 55 but the position under the terms of the directive is less clear.
    The amendments have two specific purposes. First, they provide that the clause shall come into effect on a date to be appointed in a commencement order instead of on Royal Assent. That will allow time to investigate fully the circumstances which have given rise to the pension industry's concerns. Secondly, they provide that regulations may specify exceptions to the provisions in Clause 55. Clearly, we want to avoid a situation whereby the legislation in the UK could

    1107
    cause UK schemes to be in breach of the terms of UK law even though the directive was not being breached. The regulation-making power may be used at a later date if necessary to make exceptions that would enable the UK to comply with the provisions of the directive without placing unnecessary restrictions on UK schemes. I commend the amendments to the House.
    Lord Higgins: My Lords, the House will be grateful for that explanation. I should like to add my own thanks to the Minister for writing to me on this issue. She has rightly pointed out that, at this stage, the Government are unable to come to a firm decision and are therefore taking provisional action while they try to sort matters out by statutory instrument once they are clear about the legal position. The noble Baroness referred to the EU directive, 98/49/EC, which is designed to safeguard the position of members of occupational pension schemes with statutory rights.
    However, what is not clear to me is why the Government agreed to this directive in the first place. It is difficult to see how the directive will operate in other member states. Is this measure aimed only at the United Kingdom? I believe that I am right in saying that, until recently, because, for example, of trade union pressure in France in pursuit of higher state pensions, it has been illegal to form company pension schemes. The situation in Germany is also very different. Germany does not have funded schemes. Indeed, the funds invested in British schemes are greater than those in the entirety of company schemes throughout the rest of the European Union. Moreover, in some countries of the European Union, if a company has set up a scheme but then finds that it has run into difficulties, it is able to claw back moneys that have previously been invested in the pension fund; that is a form of legalised "Maxwell" situation.
    Is it right to assume that this directive, to the implementation of which this clause gives effect, will not apply to other countries in Europe? It seems to me that either it should apply to all the countries or that it should not apply to us, unless the Government feel, in their wisdom, that this is an appropriate action so far as concerns this country. In that case, it could be done on a unilateral basis. However, in the context of the European pension system, this entire set-up is very strange.
    Perhaps I may make a further point. The Government, perhaps quite rightly, have decided to extend the provisions of this clause beyond the European Union to all overseas countries where a particular pension scheme takes into account the rates of inflation in the countries of domicile rather than the rate of inflation in this country. The Government are seeking, by dint of the clause and in the amendments, to protect against that. No doubt the noble Baroness will correct me if I am wrong on that point. It would
    1108
    seem strange, therefore, if a pension scheme is told that where the rate of inflation in, say, a South American country is 25 per cent, pensioners will receive rises of 25 per cent, but the scheme members resident in this country will receive rises equivalent only to the rate of inflation in this country. The effect of that on funds and surpluses, about which we all know, may be extremely unfair on members of such a scheme.
    It is clear that the Government were taken by surprise by the provisions of the directive. I feel, therefore, that the clause requires rather wider examination than simply to say, "Do not worry. We shall sort out the whole thing using a statutory instrument". Such an instrument is not easily amended and only very limited time will be allocated to debate it.
    To reach Third Reading of a Bill with such amendments being introduced seems to me to be an unsatisfactory situation. Perhaps, at least on some of the points that I have raised, the Minister can put our minds at rest.
    Baroness Hollis of Heigham: My Lords, I shall do my best to answer the questions put to me by the noble Lord, Lord Higgins, although I may need to follow up in writing some of his more detailed points.
    Why were the amendments brought forward at this stage? We were unaware that some schemes have rules which provide for different treatment for UK resident members from those who live outside the country. That did not come to light during consideration and adoption of the EU directive in 1998. We are now responding to concerns raised by the pensions industry and we need a little time to resolve the issues that have been raised.
    Why did we support the directive in the first place? The directive requires that schemes across the EU comply with practices that are common and universal in the UK; the directive spreads the good practice of the UK throughout the EU.
    Finally, the noble Lord asked whether the directive applies to all countries in the EU. Yes, it applies to them all. I hope that I have answered all the points. If not, I shall write to the noble Lord.
    Lord Higgins: My Lords, I understand that it is difficult for the Minister to deal with these highly complicated matters from the Dispatch Box. I shall look forward to receiving her reply to the points I have made previously.
    However, the Minister has said that the directive applies right across the European Union. It is clear that the departmental officials must have been very badly briefed in 1998 and it is unlikely that they were able to conduct the negotiations all that successfully if they did not know about the particular point which is covered by this clause. In any case, consultations should have taken place with the insurance industry. They would then have discovered exactly what it was that they were negotiating.

    1109
    The noble Baroness knows that I have declared an interest as the trustee of a pension fund, although not a fund affected in any way by this issue. I understand that it is not possible for this directive to apply, for example, in Germany.
    Baroness Nicol: My Lords, I thank the noble Lord for allowing me to intervene. I wonder whether the noble Lord is in order given that we are debating the Bill at Third Reading.
    Lord Higgins: My Lords, I am open to persuasion otherwise and I shall take into account the point made by the noble Baroness. However, in the interests of the pensions industry, it is important that we should be given clear answers to these points. I accept that the Minister will write to me.
    I shall return to the point that I do not believe that it will be possible for this directive to apply to pension schemes in, for example, Germany. If it did, it would be likely to bankrupt the company. No doubt, we shall learn more.
    This situation is unsatisfactory at Third Reading. However, I should point out that these amendments have been tabled only at Third Reading. No mention whatever was made of them at previous stages of the Bill.
    On Question, amendment agreed to.
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 9 to 11:
    Page 59, line 12, at beginning insert ("Except so far as regulations otherwise provide,").
    Page 59, line 27, leave out ("on or after the day of the passing") and insert ("after the coming into force of section 55").
    Page 59, line 35, leave out ("on or after the day of the passing") and insert ("after the coming into force of section 55").
    On Question, amendments agreed to.
    Clause 63 [Loss of benefit for breach of community order]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 12:
    Page 64, line 45, after ("failed") insert ("without reasonable excuse").
    The noble Baroness said: My Lords, we had two lengthy debates in Committee and on Report on the clauses that deal with the loss of benefit for breaches of community sentences. I made it clear that the Government believe that it is right that observing community sentences should be a condition of benefit entitlement. We do not believe that benefit should be awarded unconditionally, nor that those who fail to honour their obligations should receive the same levels of support from the benefit system as those who do.
    However, the proposal to impose the benefit sanction before the court has decided whether there has been a breach clearly raised major concerns, and
    1110
    on Report noble Lords amended the provisions of the Bill to ensure that the benefit loss should follow, rather than precede, the court's determination.
    The Government recognise the strength of feeling among noble Lords on this issue. I am pleased to say that we are willing to meet that point. In the light of the views expressed in this House by the noble Lord, Lord Windlesham, the right reverend Prelate the Bishop of Lincoln, my noble friend Lady Kennedy, the noble Earl, Lord Russell, and others, the Government have responded by agreeing that no benefit should be withdrawn before the court has determined whether a breach has occurred.
    In all but a tiny minority of cases—perhaps 400 out of 30,000 or so—the court does appear to uphold the judgment of the probation officer, but it is clear that for noble Lords this represents an issue of principle which the Government are willing to acknowledge. However, we believe that it is right that offenders should know that if they do not observe their community sentence, they stand to lose their benefits. Indeed, they have a right to know that that would be the case.
    To make that point clear, with the agreement of the noble Lord, Lord Windlesham, we have added a further provision. The Secretary of State (in the person of the Benefits Agency) will write to the offender at the point where he is referred back to court, informing him that he will face a loss of benefit if the court finds that he has breached his community order. The offender will thus be aware, well before the court reaches its decision, that by his actions he has put his benefit at risk. He will be aware also that it is the Benefits Agency, not the court, that will be stopping his benefit if the breach is proven. In order for the Secretary of State to be able to do this, he will need to be notified by the Probation Service (or the courts in Scotland) that an information has been laid or proceedings commenced as well as when the court makes its determination.
    Amendments Nos. 26, 28, 29, 30, 31 and 35 add back into the Bill the essence of the information requirement provisions at the laying of information stage. Amendment No. 33 imposes an obligation on the Secretary of State to notify the offender at that point. There are also a number of technical amendments to ensure that the Report amendments work properly.
    Amendments Nos. 12 and 22 supply appropriate wording in respect of the court's determination of the breach, ensuring that the wording here is consistent with that in criminal justice legislation—that is, a breach is where the failure to comply with the conditions of a sentence is without reasonable excuse. I hope that that will reassure my noble friend Lady Kennedy that we recognise the concerns that she expressed on Report. The insertion of those words means that if, for example, a lone parent has had a childcare crisis, there is a clear discretion to count that a "reasonable excuse". I am confident that that will be welcome.
    Amendments No 19, 23, 27 and 32 provide for benefit to be repaid if the offender successfully appeals the court's finding of a breach, which was overlooked

    1111
    in the amendments passed on Report. Otherwise, without the amendments, someone who was found in breach by the court and that decision was overturned on appeal, would not find himself or herself entitled to have benefits repaid. So, in good faith, we are extending the original amendment.
    The rest of the amendments are technical, tidying up provisions, removing unnecessary words.
    I hope that your Lordships will accept the amendments. We should seek to ensure that the fact that this is a measure about the conditions of entitlement to benefit, and not an additional criminal justice punishment, is well understood by those affected while respecting also the amendments passed on Report which ensure that there is no loss of benefit in the offender's pocket until after the court has determined that a community sentence has been breached. I commend the amendments to the House. I beg to move.
    9 p.m.
    Lord Windlesham: My Lords, this is the fourth and, I hope, last time that I shall speak about loss of benefit in the proceedings on the Bill. At each stage, the Government were left in no doubt about the strength of opinion in all parts of the House, objecting to the novel and misguided idea of linking the withdrawal or reduction of social security benefits to an alleged failure to comply with the conditions of a community penalty. The objections were shared by all ranks of the Probation Service—chief officers as well as line officers—the Magistrates' Association and the Justices Clerks' Society.
    On Report, after a long debate, the House voted by a substantial majority of 170 to 116 to accept a cross-party amendment in the names of the noble Earl, Lord Russell, the noble Baroness, Lady Kennedy of The Shaws, the right reverend Prelate the Bishop of Lincoln, and myself. The effect of the amendment was to delay the implementation of the loss of benefit sanction until after a court had made a determination that an offender had failed to comply with the requirements of a probation order, a community service order or a combination order.
    Although it is a convention of this House not to reopen at Third Reading an issue which has already been fully debated and decided on a Division, the Government have thought again and have come forward with a series of technical amendments which have been drafted by parliamentary counsel. These amendments, most unusually in my experience, are in the names both of the Minister and myself, speaking, as your Lordships will see, from the Opposition Benches. This accord indicates agreement reached at the earlier stage between the Government and my co-sponsors, if I may so describe them, on the key point; namely, that there should be no loss of benefit before a court has determined that a community sentence has been breached. That requirement is now included in the Bill as amended on Report.
    The procedure that will be followed was explained by the Minister in her introduction. In effect, it means that if a probation officer has reason to believe that an
    1112
    offender has failed to comply with the terms of a community order and is referred back to the court in proceedings for breach, at that stage the local benefits office will write to the offender informing him or her that they will face a loss of benefit unless the court finds that the breach is not proven.
    This is not an ideal solution. Speaking for myself, I should have preferred the entire notion of making the observance of a community penalty a condition for the receipt of a state benefit to be abandoned. I thought before, and I still think, that it is a wrong and mistaken approach and is unlikely to have the effects intended. But that is for another day. For now, I congratulate the Minister on bringing forward these changes. It is not an easy thing to do. The opinion of this House was quite clear. What was in doubt was whether or not the Government, with their substantial majority in the elected House, would be willing to accept our view. In the outcome, the Minister and the Government Chief Whip have been successful in ensuring that the decision of this House should prevail.
    This is a notable concession by the Government. It will give effect to the cross-party amendment carried on Report and, thanks to the government draftsman, the Bill will be in a state in which it can be enacted if the House of Commons is willing to accept the amendments made in this House. As such, they have my applause.
    Baroness Kennedy of The Shaws: My Lords, perhaps I, too, may express contentment that the Minister has made this concession. The government amendments go some way to meet the concerns expressed at previous stages by those who put their names to the amendments tabled by the noble Lord, Lord Windlesham. Like the noble Lord, I am deeply concerned that conditionality is to be extended in this way to include behaviour such as breaches of community service or of probation orders. Once the state decides that persons who are not well behaved should lose benefit it treads a very dangerous road. However, for the moment the Government are not to be moved on that matter. I hope that in the fullness of time they may be persuaded not to take this authoritarian route, which I deeply regret. However, I am pleased that the Government recognise the need for due process before anyone is at risk of losing benefit.
    I am also delighted that by Amendment No. 12 my noble friend Lady Hollis seeks to add the words "without reasonable excuse". This means that a probation officer has a greater degree of discretion than originally provided for in the Bill. It also means that there would not be a reference to the court or the benefits office in cases where there had been a failure to attend perhaps because of illness, responsibilities towards children or other matters, which would greatly concern noble Lords and the community at large. Many people on community service and probation orders have multiple social problems and it is difficult to get their lives back on track. This is not about being paternalistic but about recognising the reality of the problems faced by people who are on

    1113
    probation. Sometimes probation officers are very reluctant to see people lose benefit because that loss only adds to their problems and exposes them to greater risk of committing crime. I am grateful that the new wording has been included so that the matter will be referred either to the court or the benefits office only where there is no reasonable excuse. I support the amendments.
    Earl Russell: My Lords, I should like to express my great gratitude to the Minister and the noble Lord, Lord Windlesham, for the work they have put into these amendments. First and foremost, they are a conspicuous demonstration of the virtues of political skill. These days political skill is not always admired as I believe it should be. As with the skill of a good soldier, so the skill of a good politician is often best expressed in the avoidance of unnecessary battles. That is what has happened here, and I welcome it very warmly.
    Like the noble Baroness, Lady Kennedy, I welcome in particular the introduction of the concept of reasonable excuse. I recall that the Minister and I clashed on Report on the interpretation of the old test. The Minister has proved herself to be right in the most delightful manner possible, for which I thank her.
    I shall not reopen the argument about the clause as a whole. I agree with everything said by the noble Lord, Lord Windlesham, and the noble Baroness, Lady Kennedy. However, as the noble Lord, Lord Windlesham, said, that is for another day. Meanwhile, if the Minister will forgive me, I have just one slightly light-hearted remark to make. Whenever I observe a government Minister correcting our drafting, I am irresistibly reminded of a cat washing its kittens. It was needed, and it was well done.
    Baroness Carnegy of Lour: My Lords, earlier today the Minister was kind enough to tell me that she would endeavour to discover whether the changed procedure in Scotland had been worked out. I do not know whether the Minister is yet able to give me that information or will write to me subsequently. However, on 10th July in response to a Question for Written Answer tabled by my noble friend Lord Windlesham, the Minister described the procedure in Scotland before the change. It is important to know whether the new procedure has been settled.
    I remain anxious about the absence of a pilot scheme in Scotland. Obviously, it is possible to tell from a pilot scheme in England the reaction of young offenders to the loss of benefit. However, it is not possible to tell from such a pilot scheme whether the system will work smoothly. My colleague Mr David McLetchie, a Member of the Scottish Parliament, has tabled a Question asking whether the Scottish Executive under its devolved powers is willing to run a pilot scheme. I hope that that is helpful. The Government have not seen fit to ask the Scottish Executive about it.
    1114
    However, if that Question brings about such a pilot scheme, it should help the smooth working of the scheme.
    9.15 p.m.
    Lord Higgins: My Lords, after the matter was raised at Second Reading by my noble friend Lord Windlesham we had fine debates in Committee and on Report on the complex issues raised by the Government's original proposals. Like my noble friend I should have preferred the matter not to have appeared in the form that it did in the first place. None the less I am very glad that the Minister has prepared a series of amendments in conjunction with my noble friend which meet the main points raised even though the situation may not be perfect.
    Much was said in Committee and on Report about whether the Government's original formula was contrary to the European Convention on Human Rights. Despite the fact that there was a division of opinion then, my personal view is that the amendments before us will get the Minister off the hook. If we had not had these amendments, I believe that that would not have been the case.
    As on previous occasions, I am reminded of the late lain Macleod's dictum. When a government Minister made a major concession, he replied, "You don't shoot Santa Clause". I have always taken that to mean that one does not continue to debate indefinitely when the Minister has made the concession. On that basis, I congratulate my noble friend and the other all-party signatories on the matter. I believe that we, as a revising Chamber, have fulfilled the duty which falls upon us.
    Baroness Hollis of Heigham: My Lords, I am grateful for the warm welcome given to the amendments. Perhaps I may respond to the substantive point raised by the noble Baroness, Lady Carnegy of Lour. Because social security is not a devolved matter, the Scottish Executive has no power to pilot the scheme. If the finding of the pilots in England and Wales suggest that a pilot in Scotland would be desirable before the possibility of extending the policy nationally is determined, we shall consider that in consultation with the Scottish Executive. Although the procedures differ between the two, we think that similar operational issues would arise. But if we have any reason to think otherwise we shall pursue the matter further.
    I am grateful for the remark about not shooting Santa Clause, particularly as the noble Lord sought to do precisely that when I was accepting Amendment No. 3 on behalf of my noble friend Lady Castle. To refer to accepting an amendment as "mugging" is not the usual meaning of the word. None the less, in the spirit of good will and harmony I am grateful to your Lordships.
    On Question, amendment agreed to.
    Earl Russell Earl Russell moved Amendment No. 13:
    Page 65, line 7, leave out from ("(5),") to end of line 8 and insert ("the court may impose a loss of benefit at a rate not greater than the prescribed amount, and for a period not exceeding the prescribed period.").
    The noble Earl said: My Lords, in moving Amendment No. 13 I speak also to Amendments Nos. 14 to 18, 20 and 24. This is not intended as a group to reopen any past arguments. The clause is now water under the bridge. The procedure is now water under the bridge. These amendments are concerned with ameliorating the operation of a clause which is not being disputed on this occasion.
    The amendments attempt to do two things to the clause. First, they would make penalties under Clauses 63 to 67 non-mandatory. They would allow a discretion in the extent of penalty to be imposed. Secondly, they would reduce the extent of the penalty: the amount to not above 20 per cent and the duration to not above four weeks. These are serious, practical proposals which contradict nothing which has happened in the House so far.
    I have always thought that if a mandatory sentence happened to be just it could only ever possibly be so by coincidence. The point about a penalty is that the punishment should fit the crime, not the criminal offence. Even with a criminal offence so grave as murder, one murder, as we all know, is not the same as another. I shall not elaborate on the argument. It is familiar. But circumstances must always affect cases.
    I noticed recently a report in the newspapers of a very early case brought under a parenting order. A woman's child was failing to attend school regularly. She made the point, very reasonably I thought, that she was not in a good position to check whether the child was going to school since in this glorious flexible labour market of ours she was required to start work at 4.30 every morning. In those circumstances, I should have thought one might at least think twice about whether some mitigation of penalty were reasonable. On the other hand, if someone were offending for the fifth or sixth time, one might possibly consider whether some increase of penalty might be in order. Simply making it all flat rate, a mathematical tariff, is Plato's theory of justice again. I have never believed in it. I still do not.
    As regards the amount, I am sure that the Minister will argue that the purpose of a sanction is to cause hardship. That is not immediately in issue as at this moment no argument is being made about whether there should be a sanction. The question is one of proportionality between the offence and the sanction imposed on it and how much hardship should be imposed in relation to how much offence.
    I suspect that the Minister will say that there should be enough to cause compliance, but, if you consider the history of the criminal law, that must always be a utopian objective. Even when death was the normal penalty, it never once stopped offending. Even in countries which apply Sharia law, it never stops offending. I am afraid that offending will go on as long as human beings go on. If that is the Minister's objective, she will never achieve it.
    Therefore, we need to know how much suffering is caused and what is the effect of applying sanctions at any particular level. I presume from the present shape of the clause that the Minister believes that 20 per cent is not enough. I look forward to hearing her tell me why she believes that 20 per cent is not enough and we may perhaps carry on the debate from there. I beg to move.
    Baroness Hollis of Heigham: My Lords, these amendments would allow for the court to have discretion over whether or not the benefit sanction is imposed and the amount of the sanction, rather than for the sanction to be imposed automatically after the court determines that a breach has occurred, as we discussed in a previous amendment. It would constrain that discretion by limiting the extent to which any benefit may be reduced to a maximum of 20 per cent.
    The amendments also provide for a maximum 20 per cent reduction to apply to the hardship provisions for JSA recipients. That is redundant as hardship provisions are unnecessary where benefit is reduced rather than removed altogether. Finally, they would limit the maximum period for which benefit may be reduced to four weeks rather than 26 weeks.
    Amendment No. 13 provides that the benefit sanction becomes, in effect, an alternative or additional disposal of the court for breaches of community sentence, alongside the existing criminal disposals. This fundamentally alters the purpose of our proposals, including that discussed in the previous amendment. As a result, I would ask the noble Earl not to pursue the proposal.
    We have said that we are willing to accept that the loss of benefit should not occur until after the court makes its determination of the breach. But to go further and give the court discretion over whether the sanction should be imposed and over the amount of benefit payments would be undesirable and unprecedented. I do not believe that the courts are equipped to make benefit decisions. Their role in these measures is, and should remain, to determine whether or not a breach has been committed and to set the appropriate criminal penalty.
    The remainder of the amendments are designed to water down the benefit sanctions, presumably to minimise their impact on the offender. The Government do not believe it is reasonable to provide unconditional financial support to those who fail to honour their obligation to society to comply with their community sentences.
    The reason for the precise percentages is that the benefit sanctions we propose follow the same arrangements and are set at similar levels to other sanctions in the benefit system which deal with breaches of entitlement conditions. We believe that that is appropriate. It is consistent with other entitlement issues; it is fair; and it can be easily understood by both staff and claimants alike. I believe that the amendments would complicate the system unnecessarily and reduce the effectiveness of the sanction in encouraging offenders to face up to their responsibilities.

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    We believe that the levels and duration of the sanctions we propose for the pilots strike the right balance between ensuring that appropriate sanctions are imposed for failing to meet benefit conditions and the avoidance of hardship.
    The noble Earl did not mention the four and 26 weeks, but perhaps I may mention that the ability to vary the amount and length of the sanctions by regulations is necessary to ensure that the Government are able to respond flexibly to the findings of the pilot. I can assure the House that at this stage we have no intention of increasing the length of sanction beyond four weeks. With that response, I urge your Lordships to reject the amendments.
    Earl Russell: My Lords, I thank the Minister for her point concerning four weeks. Of course, I never intended to vote on these amendments, least of all at this time of night. If I may say so, the Minister has not made that intention particularly easy for me to carry out.
    In response to the question about the extent of the sanction, she said only, "We have always done it this way", which is not by any means entirely true. It is in any case the response of the forces of conservatism. I rather thought that the Prime Minister disapproved of them. However, it does not look as though we shall have a meeting of minds on this subject tonight. We shall doubtless return to it later but, in the meantime, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 14 to 18 not moved.]
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 19:
    Page 65, line 29, at end insert—
    ("(5A) Where the determination by a court that was made in the offender's case is quashed or otherwise set aside by the decision of that or any other court, all such payments and other adjustments shall be made in his case as would be necessary if the restrictions imposed by or under this section in respect of that determination had not been imposed.").
    On Question, amendment agreed to.
    [Amendment No. 20 not moved.]
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 21 and 22:
    Page 65, line 32, leave out subsection (7).
    Page 66, line 23, leave out ("for paragraph (b)") and insert ("after the word "excuse" insert "(or, in the case of a probation order, failed)";
    ( ) for paragraph (b) of that subsection").
    On Question, amendments agreed to.
    Clause 64 [Loss of joint-claim jobseeker's allowance]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 23:
    Page 67, line 31, at end insert—
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    ("(5A) Subsection (5A) of section 63 shall apply for the purposes of this section in relation to any determination relating to one or both members of the joint-claim couple as it applies for the purposes of that section in relation to the determination relating to the offender.").
    On Question, amendment agreed to.
    [Amendment No. 24 not moved.]
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 25:
    Page 67, line 34, leave out subsection (7).
    On Question, amendment agreed to.
    Clause 65 [Information provision]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 26 to 35:
    Page 68, line 4, at end insert—
    ("( ) of the laying by a person employed or appointed by a probation committee of any information that a person has failed to comply with the requirements of a relevant community order;").
    Page 68, line 7, at end insert ("and
    ( ) of any circumstances by virtue of which any payment or adjustment might fall to be made by virtue of section 63(5A) or 64(5A)").
    Page 68, line 9, after ("any") insert ("proceedings are commenced that could result in a").
    Page 68, line 10, leave out ("has been made").
    Page 68, line 12, at end insert—
    ("( ) the commencement of the proceedings;").
    Page 68, line 13, leave out ("the determination") and insert ("any such determination made in the proceedings").
    Page 68, line 14, at end insert ("and
    ( ) any circumstances by virtue of which any payment or adjustment might fall to be made by virtue of section 63(5A) or 64(5A)").
    Page 68, line 14, at end insert—
    ("(3A) Where it appears to the Secretary of State that—

    (a) the laying of any information that has been laid in England and Wales, or

    (b) the commencement of any proceedings that have been commenced in Scotland,

    could result in a determination the making of which would result in the imposition by or under one or both of sections 63 and 64 of any restrictions, it shall he the duty of the Secretary of State to notify the person in whose case those restrictions would be imposed, or (as the case may be) the members of any joint-claim couple in whose case they would be imposed, of the consequences under those sections of such a determination in the case of that person, or couple.
    (3B) A notification required to be given by the Secretary of State under subsection (3A) must be given as soon as reasonably practicable after it first appears to the Secretary of State as mentioned in that subsection.").
    Page 68, line 15, leave out subsection (4).
    Page 69, line 4, at end insert—
    ("( ) For the purposes of this section proceedings that could result in such a determination as is mentioned in subsection (3) are commenced in Scotland when, and only when, a warrant to arrest the offender or to cite the offender to appear before a court is issued under section 232(1) or 239(4) of the Criminal Procedure (Scotland) Act 1995.").
    On Question, amendments agreed to.
    [Amendments Nos. 36 and 37 not moved.]
    Clause 87 [Commencement and transitional provisions]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 38 and 39:
    Page 95, leave out lines 1 to 3 and insert—
    ("(b) Chapters Ito 111 of Part 11 (other than sections 37 and 38 and paragraphs 4 to 6, 8(1), (3) and (4) and 13 of Schedule 5);").
    Page 95, line 6, leave out paragraph (g).
    On Question, amendments agreed to.
    [Amendment No. 40 not moved.]
    Schedule 1 [Substituted Part I of Schedule 1 to the Child Support Act 1991]:
    [Amendments Nos. 41 to 44 not moved.]
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 45 and 46:
    Page 99, line 32, at end insert—
    ("(3) Any amount of net weekly income (calculated as above) over £2,000 is to be ignored for the purposes of this Schedule.").
    Page 99, line 37, leave out ("or 7(7)") and insert (", 7(7) or 10(3)").
    On Question, amendments agreed to.
    Schedule 2 [Substituted Schedules 4A and 4B to the 1991 Act]:
    [Amendments Nos. 47 to 59 not moved.]
    Schedule 3 [Amendment of enactments relating to child support]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 60:
    Page 106, line 46, at end insert—
    ("() in subsection (3), at the beginning insert "Except as provided in subsection (3A),";").
    The noble Baroness said: My Lords, in moving Amendment No. 60, I wish to speak also to Amendments Nos. 61 and 65.
    I announced on Report that I would bring forward government amendments that would allow the courts to continue, as now, to have the power to vary court orders which are made after the child support reforms have been introduced. Clause 2 makes changes to the child support scheme so that more separated parents can apply for child support. It will allow parents who have a court order for child maintenance which has been in place for a year to apply to the CSA for a child support calculation instead.
    Those changes will not affect private clients with existing court orders; nor will they affect current arrangements whereby an existing court order will cease to have effect if a maintenance calculation is made as a result of a parent with care being on benefit.
    Parents with maintenance orders in force at the time that the reforms are introduced and those with written maintenance agreements made before April 1993 will, as now, use the courts for enforcement and variation of child maintenance liability. As your Lordships know, we are introducing a one-year waiting period. New orders will be any court order made after the reformed child support scheme has been introduced.
    The one-year waiting period is to ensure that those applying to the CSA have had time to consider fully the effects. We are also providing a two-month cooling off period. However, Clause 2 indirectly removes the ability of the courts to vary new court orders after they have been in force for a year. In the light of our debates on Report, in particular about Amendment No. 20, I told the noble Baroness, Lady Buscombe, that I would not be unsympathetic to allowing the courts to continue to have the power to vary new court orders made after the reforms are introduced.
    We had taken the view that in those circumstances parents should originally come to the CSA. However, having reflected on the noble Baroness's arguments, I have decided that there is something to be gained from allowing courts to continue to vary new court orders even when, in accordance with the provisions; of Clause 2, the CSA could accept an application for child support. We do not wish to force parents to come to the CSA when they remain content to leave maintenance to the court to decide, as long as the benefit system is not involved. When the courts are asked to vary court orders that were originally based on agreement between the parents, we are happy to leave the choice of whether to come to the CSA to the parents concerned.
    However, if a new court order is subsequently varied by the court, there will be no further 12-month bar to a child support application. In other words, the 12- month clock will continue to tick from the date of the original order. I hope that I have met with good will the arguments put forward by the noble Baroness, Lady Buscombe. I beg to move.
    9.30 p.m.
    Lord Higgins: My Lords, we are grateful to the Minister for the amendments. I know that my noble friend Lady Buscombe will be pleased. In the light of our earlier discussions, the sooner I sit down, the better, but we are grateful.
    Earl Russell: My Lords, perhaps I may say, with the greatest brevity, that I, too, welcome the amendments.
    On Question, amendment agreed to.
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 61 and 62:
    Page 106, line 47, leave out from beginning to end of line 2 on page 107 and insert—
    ("( ) for subsection (3A) there shall be substituted—
    "(3A) Unless a maintenance calculation has been made with respect to the child concerned, subsection (3) does not prevent a court from varying a maintenance order in relation to that child and the non-resident parent concerned—

    (a) if the maintenance order was made on or after the date prescribed for the purposes of section 4(10)(a) or 7(10)(a); or

    (b) where the order was made before then, in any case in which section 4(10) or 7(10) prevents the making of an application for a maintenance calculation with respect to or by that child."; and").

    Page 107, leave out lines 3 to 5 and insert—

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    ("( ) in subsection (6), for paragraph (b) there shall be substituted—
    "(b) the non-resident parent's net weekly income exceeds the figure referred to in paragraph 10(3) of Schedule 1 (as it has effect from time to time pursuant to regulations made under paragraph 10A(1)(b)); and".").
    On Question, amendments agreed to.
    Schedule 5 [Pensions: miscellaneous amendments and alternative to anti-franking rules]:
    Lord Astor of Hever Lord Astor of Hever moved Amendment No. 63:
    Page 118, line 29, leave out (—other benefits" there shall be inserted") and insert (""payment of" there shall be inserted "all of his pension or other benefits").
    The noble Lord said: My Lords, the amendment clarifies the definition of "pensioner member" for the purposes of the Pensions Act 1995. The current definition may include both a deferred and a pensioner member.
    In the view of the Law Society of Scotland, the three categories of acting, deferred and pensioner members ought to be mutually exclusive. Active members and pensioner members are currently mutually exclusive, but the same cannot be said of deferred members. Voluntary contributions can now be taken early and benefits can be taken in payment. If a deferred member had voluntary contributions in payment, they would appear to be a pensioner member as well. We believe that our amendment would rectify that by inserting the word "all". I beg to move.
    Baroness Hollis of Heigham: My Lords, I appreciate the clarity—and brevity—with which the noble Lord moved the amendment. At present, the payment of a pension means that the recipient is considered to be a pensioner member. He cannot be both an active member and a pensioner member. The measures in the Bill will mean that a member who remains in pensionable service will be an active member, as distinct from a pensioner member. Paragraph 8(3) of Schedule 5 will achieve that, facilitating a new flexibility that the Inland Revenue has proposed to allow members of occupational pension schemes who are approaching retirement age to take a part-payment of their pension rights while continuing to work. People who take advantage of that flexibility will be able to continue to contribute to and build up rights in the scheme as active members.
    The amendment would additionally require a pensioner member to be entitled to all of his pension or other benefits. That is unnecessary, in view of the amendment already made by paragraph 8(3) of Schedule 5. Far from clarifying the status of pensioner members, the amendment introduces confusion into the definition, and with it the risk of misinterpretation.
    I understand the noble Lord's concern to protect the rights of those with a pension. We share that concern, but we think that the amendment could cause confusion. It would add nothing to the general protection of pensions in payment afforded by the law in other ways. It might even result in the creation of a
    1122
    special class of member whose rights as an active member might be unclear. It could also reduce the flexibility that the Inland Revenue are proposing.
    Schedule 5 to the Bill seeks, as I have said, to place beyond doubt that a member who remains in employment and continues to contribute to and accrue benefits in his pension scheme has the protection necessary for active members' rights.
    The noble Lord's amendment would not clarify anything, nor would it give any more protection to those who take advantage of the Inland Revenue's proposal for flexibility. I am glad to have the opportunity to make that clear, and, in the light of that, I would hope the noble Lord will withdraw his amendment.
    Lord Astor of Hever: My Lords, I am grateful to the noble Baroness for that reply. It was felt that this was an important issue and I am grateful to the Minister for clarifying it.
    I should also like to thank the Minister on behalf of the Scottish Law Society for pointing out the error in the wording of its original amendment. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Schedule 9 [Repeals and revocations]:
    Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendments Nos. 64 and 65:
    Page 148, line 25, column 3, leave out ("Section 8(6).").
    Page 149, line 15, column 3, leave out ("18(5)") and insert ("18(3) and (5)").
    On Question, amendments agreed to.
    Baroness Hollis: My Lords, I beg to move that this Bill do now pass, with one sentence only: I should like to thank your Lordships for the unfailing courtesy and good humour exhibited, especially when it was believed that the Government were wrong, and perhaps even harder when it was suspected that, despite their Lordships' views to the contrary, the Government might even be right. In the light of that, I should like to thank your Lordships. We now send the Bill, with the amendments made by your Lordships, to the other place. I commend the Bill to the House.
    Moved, That the Bill do now pass—(Baroness Hollis of Heigham.)
    Lord Higgins: My Lords, I shall not delay the House more than a moment or two, but I would like to express our thanks to the Minister, who has carried the entire burden of this Bill on her shoulders. She has done so with consummate skill, knowledge and expertise, and we are extremely grateful to her. If I may say so, I do not believe there is any other Minister who could have dealt with this Bill in a better or more efficient way than the noble Baroness. In particular, of course, the clauses dealing with the Child Support Agency are very much hers. I think she will look back in future years and say that that was a good piece of legislation. It is to be hoped that it works out. I have

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    fears that the combination of working two systems side by side will prove very difficult, but at all events, both behind the scenes and in this House, the noble Baroness has done a magnificent job.
    Earl Russell: My Lords, I, too, would like to thank the Minister, and all those with whom she has worked so hard to get this Bill through.
    Her courtesy and her skill have been very great indeed. We have seen a remarkable example of it tonight. That example is one of many.
    As regards the Bill, as I am sure the Minister knows, that is a different matter. She knows what I think about the CSA proposals and I shall not repeat them. If the issue of benefit and conditionality reaches this House again the Minister will think she has not seen anything yet. But, meanwhile, I thank her very much for everything she has done, and for the kindness and courtesy with which she has done it.
    On Question, Bill passed, and returned to the Commons with amendments.

Social Security Amendment (Students) Regulations 2000
9.33 p.m.
Baroness Amos Baroness Amos rose to move, That the draft regulations laid before the House on 21st June be approved [23rd Report from the Joint Committee].
The noble Baroness said: My Lords, I beg to move that the draft Social Security Amendment (Students) Regulations 2000, which were laid before this House on 21st June be approved.
The draft regulations before your Lordships today amend existing regulations in three ways. First, they improve the interface between the educational maintenance system and social security provision by introducing new provisions for students who are recovered ill and former carers and who want to resume their studies but are required to wait until the education institution permits them to do so.
Secondly, these draft regulations tighten the definition of full-time student for social security purposes to reinforce the policy intention that in general full-time students are not eligible for benefit.
Thirdly, we are taking the opportunity to introduce a better alignment of definitions across the income related benefits. These changes are technical.
In 1998, seeking to clarify the definition of full-time student for social security purposes, we referred draft regulations to the Social Security Advisory Committee. The committee conducted a public consultation exercise, and recommended that we look again at the provisions for students who, for a number of reasons, interrupt their studies.
The Command Paper before your Lordships today comprises three main elements: first, the original draft regulations which we referred to the Social Security Advisory Committee in 1998; secondly, the report produced by the advisory committee following its
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public consultation exercise on the draft 1998 regulations; thirdly, our response to the advisory committee's report. In addition, there are the draft regulations before your Lordships today.
Part-time students are eligible to claim social security benefits just like anyone else. But full-time students are in the main not eligible for social security benefits. This is for the very good reason that full-timestudents are supported by the educational maintenance system, which is designed for their needs; social security is not.
We already make an exception to that rule for prescribed vulnerable group full-time students—for example the long-term sick and lone parents—not because they are students but because they are vulnerable people who need additional support. Those vulnerable group full-time students are therefore eligible for social security benefits—typically income support and housing benefit.
The advisory committee's report focused on the interface between social security and educational maintenance provision. As we make clear in our published response to the committee, we are grateful to it for its observations, which we considered carefully. In summary, the committee recommended that we should not proceed with the draft 1998 regulations, but that we should review the interface between social security and educational maintenance provision.
I have already explained that these regulations clarify the policy that in general full-time students are not eligible for social security. I have also reminded noble Lords that we make an exception to that rule for full-time students in vulnerable groups. We now propose to make another exception. Some full-time students have to interrupt their studies because of illness or caring responsibilities. In some of these cases, when they are in a position to resume their studies, their educational establishment may not allow them to do so immediately. They may often have to wait until the beginning of the next academic year. In such circumstances, those "recovered ill" or "former carers" do not receive educational maintenance, nor are they eligible for social security because they have not finished their courses of full-time study.
The draft regulations fill that gap. Because full-time students in that position are expected to make every effort to support themselves—just like other people—these draft regulations provide that they will be eligible to claim Jobseeker's Allowance and, where appropriate, housing benefit, subject to the normal rules. More specifically, the period during which they will be able to claim benefit is from the date of recovery from illness, or the end of their caring duties, until they are able to rejoin their course or the start of the next academic year, whichever is sooner.
The report of the Social Security Advisory Committee made a number of additional points about full-time students who interrupt their studies for other reasons. Your Lordships have copies as part of the Command Paper, but I want to cover some of the detail here. First, as regards sickness, the Government

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have already acted here: mandatory support from the educational maintenance system has been more than doubled from 28 days to 60 days. If sickness should continue, the relevant education authority has discretion to extend support further. If sickness goes beyond 28 weeks, the student becomes eligible to claim social security benefits as a vulnerable group student as already prescribed in existing regulations.
The committee referred to full-time students who interrupt their studies for other reasons, ranging from academic difficulties to personal or domestic problems. In these cases, support is available from the educational maintenance system at the discretion of the relevant education authority, but officials will continue to keep them under review.
The committee also expressed concern that a full-time student who switched to part time would continue to be treated as a full-time student for social security purposes and therefore would not be eligible to claim benefit. That is not the case in practice. We understand that if a student wishes to change from full-time to part-time study, he or she has to abandon the full-time course. If that happens, the student is eligible to claim social security because our policy is that part-time students are eligible.
The draft regulations respond to a further recommendation by the committee. We originally proposed that, for social security purposes, postgraduates should continue to be treated as engaged on their course full time after the formal part of the course has ended, but while they are writing up a thesis or awaiting an oral examination. The committee asked that we reconsider it, and we have.
We are not proceeding with that amendment.This is not the end of the story. We continue to keep student provision under review. The regulations we are debating today represent positive progress in maintaining the interface between social security and educational maintenance. I commend the regulations to the House. I beg to move.
Moved, That the draft regulations laid before the House on 21st June be approved [23rd Report from the Joint Committee]—(Baroness Amos.)
9.45 p.m.
Earl Russell: My Lords, I must declare an interest in these regulations as a university teacher. They directly affect the interests of no fewer than three students for whom I am responsible at the moment. They affect the interests of students for whom I am responsible every year. These problems take up more time and effort in my working life than any other professional duty I have. I have seen the interface between social security and educational maintenance ruin the lives of large numbers of people who should have had good and successful careers.
These regulations are a missed opportunity. The Minister is a professional and she will not take personally anything that I say. I also thank the noble Baroness, Lady Hollis of Heigham, with whose office
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I have corresponded on many of these cases and on a great many occasions and been received with her usual courtesy and thoroughness.
These regulations were introduced by the Government, in their own words, because court judgments had,
"cast doubt on whether the present Regulations fully support the Government's stated policy intention: that a full-time student is to be regarded as such unless or until he completes, finally abandons, or is finally dismissed from, his course of study".
That sounds fine in theory until one begins to apply it to real cases. Then it becomes a great deal more difficult. One would have thought that it was a basic point of principle that everybody should be entitled either to educational maintenance as a student or to social security maintenance as an ordinary citizen. The problem arises because for a great many people in a great many different anomalous circumstances, that is not the case. Lord Justice Evans, giving judgment in the Webber case in 1997, said that in this case,
"the statute is sought to be interpreted…in order to create, for no apparent reason, 'an anomalous class of people left to destitution without state support of any kind'. I would require express words of the utmost clarity to persuade me that Parliament intended to produce that disgraceful result".
It is my daily responsibility to explain to distressed students that Parliament did intend to produce that result—and it is a very painful process. It brings our political system into disrepute. The trouble is that it was a misconceived policy intention in the first place. When one sets out to clarify a misconceived policy intention, one very often makes confusion worse confounded.
The first misapprehension, as the Minister stated it in 1990, was that students had withdrawn from the labour market. If only they had. The Minister said that students are supported by the educational maintenance system. The case is that they are in part supported by the educational maintenance system, supplemented by a large amount of part-time earnings. The concept of the full-time student is just about dead. The only surviving full-time students I know are those with rich parents, and there are not that many.
The second misapprehension is that student support covers 52 weeks; it does not. They reach their overdraft limits usually around the last week of term. The Minister talked about a concession for sick students of social security becoming available after 28 weeks. They will have been reduced to total destitution well before those 28 weeks are concluded. I think, in particular, of one person; a student estranged from his parents and therefore unable to go home in vacations. He is regularly in my room every June explaining that, unless extra money can be found from somewhere to get him through the long vacation, he has to withdraw immediately.
The Minister will invoke access funds, as she has done. However, access funds are not on a scale to support people through 22 weeks of the year. They are not on a scale to support any student through 28 weeks. I am reminded of the time I was five when I started to feed the hippopotamus at the Philadelphia zoo. I had a bag of peanuts and threw one to him. To

1127
my great pride it landed plum in the middle of his tongue. The hippopotamus simply kept his mouth open waiting to be fed. The position here is just about as appropriate to the occasion as that.
The Minister also mentioned discretionary funds from local authorities. The noble Baroness, Lady Hollis of Heigham made a study of this subject. She knows how difficult it is to get local authorities to dedicate funds to that purpose. I shall not make a speech about the financial difficulties of local authorities; I think that people are familiar with them.
The next misapprehension is that the boundary between being a student and not being a student is non-porous; it is totally porous, especially since the introduction of modular courses, into which universities have been considerably encouraged by people from within the Government and the Department for Education. When dealing with re-sits, which do happen, people may have to go through the process of preparing for a paper again. It may not be offered for examination until the same time the following year. Obviously, they will not be full-time students all through that year, so there we have a problem.
The Minister has allowed for cases of current sickness. However, in my experience the two most common reasons for students having to take time off are either time lost because of past illness, which is not allowed for, or that their debts have become so great that they need to earn money full-time before they can return. Sadly, that is very common indeed. Neither situation is allowed for.
I have not forgotten one of my own pupils who first discovered the existence of that problem in the summer of 1991 when the disentitlement to social security was only a few weeks old. Early in the long vacation she was found to have a cyst and was told that it had to be operated on. It provoked the same sort of fear it might provoke in anyone. Her father had just gone bankrupt. Her contribution cheque had just bounced. Clearly, she would need to spend her long vacation working. She asked me what money she would have to support her should the lump be malignant. The answer was that she could get support only if she withdraw finally from the college, detached herself from the educational institution totally and gave up hope of taking a degree. That was the situation in 1991. As far as I can see, it will remain the situation after the passage of these regulations.
In passing, will the Minister correct one thing she said? She talked about situations in which an educational institution was not willing to take the person back. But if we are dealing with a time in the middle of the long vacation and with somebody who needs regular teaching, in particular with somebody who needs to sit a course which is taught to a class on a regular weekly basis, it would have been a little more relevant to say that the educational institution "was not able" to take them back. When it is individual teaching that is needed, one can easily do it on one's own, and I regularly do. If it is an organised class or an examination, it is not so easy.
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I have one final point. These regulations were put before the Social Security Committee in 1998. It made an excellent report, as always, and I thank the committee for that. There was a small cost implication and, because the Government wished to remain within Conservative spending limits, they put off doing anything. I make no comment on that now; it is not germane. But in fact for the first two years this Government had a £3 billion undershoot on Conservative spending limits. Within that £3 billion they could perfectly easily have implemented the small concessions they have now brought in and I do not see why they did not.
Lord Higgins: My Lords, I cannot hope to match the noble Earl's experience in these matters. I have only ever taught at Yale University in America where different circumstances generally prevail, although I did have a number of students who were working their way through college. My best course of action, therefore, is to leave the Minister to reply to the points made by the noble Earl on the basis of his personal experience.
I wish to make just two points. First, can the Minister say, despite the statement in the Secretary of State's reply to the Social Security Advisory Committee that the Government are now seeking to engage in a joined-up approach to these issues between the Secretary of State for Education and Employment and the Department of Social Security, how many students she expects to fall in the gap between the support systems of those two bodies?
My second point echoes a comment made by the noble Earl and relates to paragraph 30 of the conclusion of the Secretary of State's response, which states:
"The Government acknowledges and regrets the delay in responding to the Report and in proceeding with these Regulations. The Government gave an undertaking to remain within the previous administration's spending plans for the first two years of this Parliament".
I find that to be an extraordinary reason. I do not know the precise amount of money involved; but the Government did not give any undertaking to stay within every single sector, broken down, of the previous allocations, and the kind of sums involved would have been well within the margins of error of the financial calculations which existed. At all events, there were clearly other funds available within the limits which the Government set themselves. So If hope that we can hear why a decision was not announced on what the Government proposed to do and whether there was any real justification for the delay which has obviously adversely affected a number of people in the mean time.
10 p.m.
Baroness Amos: My Lords, the noble Earl, Lord Russell, has always shown a commitment to the welfare of his students; and, indeed, he did so again this evening. Perhaps I may remind him that the main thrust of these regulations is beneficial. The noble Earl asked me a number of questions and mentioned

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specifically the point that I made in relation to sickness and the mandatory dates and times in terms of support from the educational maintenance system.
In my opening remarks I said that mandatory support from the educational maintenance system has doubled from 28 days to 60 days. If sickness should continue, the relevant education authority has a discretion, at that point, to extend support further. If it goes beyond 28 weeks, that is when the student becomes eligible to claim social security benefits. So there are various points along the way at which the student is eligible for support from the educational maintenance system.
As regards the noble Earl's comments about discretionary funds, I can tell him that we consulted with local authorities. We are concerned that the take-up of discretionary funds has been quite low. So it is clear that we need to improve the flow of information to students. We are also giving further guidance to LEAs in relation to the whole area of discretion. Therefore, we are hoping that the take-up will be much higher. As far as we understand it, the discretion is interpreted sympathetically by most LEAs. On the question of funding. I should stress that the money is not the LEA's own money. The Government give a full specific grant to cover any payments that have been authorised.
The noble Lord, Lord Higgins, asked about the number of students who are falling between the social security system and the education system. Again, the LEAs tell us that very few students approach them for discretionary support. Universities and students need to apply before LEAs can respond. Therefore, I am not able to answer the noble Lord's question in terms of the detail. We are giving students more information about the entitlement. However, if I have any further information in that respect, I shall be happy to write to the noble Lord.
As regards the length of time and the cost involved, the noble Lord talked about our commitment to remain within the spending limits of the previous administration for the first two years of the Parliament. The cost of the concession for "recovered ill" and "former carers" is some £3.5 million. Of course, that has to be considered against other spending priorities. I believe that that point was made in the other place by my honourable friend Angela Eagle who answered these questions last week—
Lord Higgins: Was there not an underspend overall?
Baroness Amos: In looking at any underspend, the noble Lord will understand that we considered a number of different priorities and made our decisions in relation to them. I believe I have answered—
Lord Higgins: Did you still then underspend?
Baroness Amos: I shall be happy to write to the noble Lord further on that matter. However, as I said, we considered a range of other issues and came to
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conclusions with respect to priorities which I believe we are perfectly entitled to do. On that basis, I commend the regulations to the House.
On Question, Motion agreed to.

Fur Farming (Prohibition) Bill
10.3 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, I beg to move that this Bill be now read a second time.
The Fur Farming (Prohibition) Bill was introduced in another place on 22nd November, thus fulfilling our pre-election pledge on the issue. It has a simple and a clear basis. The Government believe that it is wrong to keep animals solely or primarily for slaughter for the value of their fur. In the Government's view, fur farming is not consistent with a proper value and respect for animal life. Animal life should not be destroyed in the absence of a sufficient justification in terms of public benefit. Nor should animals be bred for such destruction in the absence of any such sufficient justification. All the indications are that this view is widely shared by the general public in the United Kingdom.
I wish to make clear at the outset that the Government believe that the position of fur farming is quite different from that of food production. Where the primary purpose of keeping an animal is the production of food, that purpose provides a sufficient public benefit to justify breeding the animals for slaughter. This is so even where the production of fur or hide is a secondary purpose of keeping an animal. We breed and kill animals for food. In the balance between respect for the dignity of animal life and our own survival, as a society we put survival first, and do our best to ensure that the animals we slaughter for food are well treated.
The Government are, of course, conscious of the concern that many have for the welfare of farmed mink. We share that concern and so we have sought to ensure that the highest possible standards are applied as long as fur farming continues. But this Bill is introduced on wider grounds and on the basic philosophy that animals should not be killed simply for the business of stripping their skins off their backs. That is, we believe, quite simply inappropriate in the 21st century. I should make clear to the House that the Government's view is that the Bill is compatible both with the Treaty of Rome and the European Convention on Human Rights.
The Bill will make it a criminal offence in England and Wales to keep animals solely or primarily for slaughter for the value of their fur or for breeding progeny for such slaughter. It will provide a winding-down period extending at least until the end of 2002, and it will require the Ministry of Agriculture, Fisheries and Food to make a scheme providing for compensation for certain categories of loss. I understand that the Scottish Executive will introduce

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its own legislation to ban fur farming in Scotland. This will prevent mink farmers from moving from England or Wales to continue fur farming in Scotland.
As far as we are aware, at present only mink are farmed solely or primarily for their fur in the United Kingdom. There are currently 13 licensed mink farms in England and none in Wales. Other animals apart from mink can, of course, be farmed for their fur, for example, arctic fox, chinchilla, racoon dog, sable and fisher. All these will be covered by the Bill.
It is not intended to prohibit the keeping of animals where the primary purpose is the production of meat, with fur production as a secondary purpose, as is generally the case with the farming of rabbits. Nor will the Bill ban the production of fur or wool which can be clipped or shorn without slaughtering the animal, for example, the fur of angora rabbits or alpacas.
The ban will have the effect of preventing the importation of animals into the United Kingdom for the purposes of fur farming. It will also prevent the keeping of animals for the purpose of exporting them from the UK to be used for fur production abroad. The import and export of fur skins and fur products will not be affected.
During the winding-down period, existing farmers will have to dispose of their animals. The method of disposal will be at their discretion. It is likely that most will be slaughtered for their fur. Any such slaughter would be covered by existing animal welfare legislation which would continue in force. Some animals may be sold abroad. This will be legally acceptable, provided the animals are sold before the ban comes into force. I should make clear, however—I know that this is of concern to many in your Lordships' House—that at no point, either during the winding-down period or after the ban comes into force will farmers be permitted to release farmed mink into the wild. It is currently an offence under the Wildlife and Countryside Act 1981 to release mink or to allow them to escape into the wild. It is also an offence under the Destructive Imported Animals Act 1932 to release mink or wilfully allow them to escape. These controls will remain in place.
At all times the Ministry of Agriculture, Fisheries and Food will continue to enforce the security requirements of the Mink Keeping Regulations 1975. These regulations prescribe the precautions that must be taken to prevent mink from escaping. In recognition of the serious damage to the environment that released mink can cause, the Ministry will remain vigilant against the illegal release of mink by animal rights protesters.
Turning to the detail of the Bill, it has seven clauses. Clause 1 creates a primary offence of keeping animals solely or primarily for slaughter for the value of their fur or for breeding progeny for such slaughter. The clause also creates a secondary offence of knowingly to cause or permit another person to keep animals for the prohibited purpose.
A person who keeps animals partly for slaughter for the value of their fur and partly for another purpose will only be guilty of the offence if slaughter is the
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primary purpose for keeping the animals. We anticipate that there will be relatively few cases where a person is guilty of the secondary offence I described. An example would be where the director of an overseas company may have caused the company to have committed an offence. For both the primary and secondary offences, the penalty on conviction is a fine not exceeding £20,000.
Clause 2 gives the court power to make an order for the forfeiture and destruction or other disposal of the animals following conviction for either the primary or the secondary offence. Clause 3 deals with the effect of a forfeiture order. It provides a right of appeal to the Crown Court for anyone claiming to have an interest in the animals being forfeited.
Clause 4 gives a power of entry and inspection to enable the evidence of an offence to be gathered and gives a power to enter premises to carry out a forfeiture order. Intentionally obstructing or delaying arty person in the exercise of either power of entry will be an offence.
Clause 5 requires the Minister of Agriculture, Fisheries and Food to make a scheme for paying compensation to fur farmers who incur losses as a result of the banning of fur farming. The clause also allows the National Assembly of Wales to make a compensation scheme. There will be a duty to consult with those affected before making such a scheme. Such a scheme may provide for compensation to be paid whether or not the fur farmers are still in business at the date on which the ban comes into force.
I know that there is a great deal of interest in the compensation provisions of the Bill. The details of the compensation package—although not the principle of paying compensation—are not contained in the Bill but will be the subject of secondary legislation once the Bill becomes law. Only licensed fur farming businesses in existence on 2nd March 1999 will be eligible to claim compensation. No compensation will be payable for expenditure on assets acquired after that date. Existing fur farmers were reminded on 30th November 1999 of this cut-off date, which was originally announced when the Private Member's Bill to ban fur farming was presented in another place in the previous Session.
The full and exact details of the compensation scheme will be decided in the light of the consultation exercise. I should make clear at this stage that nothing has been definitely ruled out of the scheme and we are willing to consider all reasonable options. At present it is envisaged that the compensation scheme will be used to pay compensation where assets have ceased to have a use and the investment cannot be recouped by resale. We will decide on whether or not to compensate for income after the consultation exercise. The principal assets of fur farming are the land, buildings and equipment, breeding stock and young stock for slaughter. No compensation ought to be required for the land as it has alternative uses. Compensation may be required for buildings and equipment which do not have alternative uses. It may be required for wastage of some livestock over a winding-down period of two to three years. Disputes over compensation claims will be settled by either arbitration or the Lands Tribunal.

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Clause 6 provides that the power to authorise a person to exercise the power of entry and the power to make a compensation scheme rests with the Minister for Agriculture, Fisheries and Food in England and the National Assembly for Wales.
Clause 7 requires the Minister to make the commencement order for the ban to come into force. This may not be done before 1st January 2003. The Bill will thus provide a winding-down period extending at least until the end of 2002. The purpose of this delayed commencement is to give fur farmers an opportunity to adjust their affairs and to wind down their businesses in advance of the ban. In particular, it provides an opportunity to slaughter any existing stocks of animals; to give notice to employees; to make arrangements for future employment and the future use of land on which animals are currently kept; and to avoid incurring any new capital expenditure, other than that which is incurred for the purpose of complying with any statutory obligation.
The power to make a compensation scheme will come into force two months after the Bill receives Royal Assent. The power can be exercised to enable compensation to be paid to fur farmers who close their businesses in advance of the date on which the ban comes into force.
As I said earlier, the Government's view is that the Bill is compatible with the Treaty of Rome and the European Convention on Human Rights. We consider that, although the ban arguably has an equivalent effect to a quantitative restriction on imports, the ban is lawful under EC law, being justified by Article 30 of the EC Treaty. As I have just outlined, there will be a winding-down period before the ban comes into force. That, together with the payment of compensation for certain categories of loss, reinforces the Government's view that the Bill is compatible with the European Convention on Human Rights. On that basis, I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Hayman.)
10.15 p.m.
Lord Kimball: My Lords, I must declare an interest as a member of the National Farmers Union, the body that has been representing the interests of the fur farmers in all the negotiations.
On all sides of the House we have enormous respect and admiration for the Minister. It grieves me to have to say this to her. Does she actually realise that she has introduced into the House a Bill of Attainder which will deprive people of their right to earn a living and which has not been preceded by any trial? The last Act of Attainder was in 1798, the time of the rebellion in the southern Irish states. Lord Edward Fitzgerald had an Act of Attainder passed against him for trying to make the Irish ports available to Napoleon. The first Act of Attainder was under Henry VIII. So I am rather shattered that the noble Baroness should have moved into this area. Many of us on this side of the House are concerned by the draconian nature of the legislation.
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We are all grateful to the Captain of the Gentlemen-at-Arms in that over the past two years he has sensibly realised the danger of allowing this legislation to come forward under the Private Member's Bill procedure. That would have been an absolute disaster.
Lord Carter: My Lords, the noble Lord is doing immense damage to my career. I wish he would stop!
Lord Kimball: My Lords, I am not. I am just saying how important it is for the procedures of Parliament that a Private Member's Bill should not come forward which involves the spending of money. That dangerous habit is proceeding in another place and must be nipped in the bud. We are grateful to the noble Lord for his excellent efforts. But we must face the fact that the fur farming industry has been operating under a form of stricture for the past two years, since the previous Private Member's Bill was muted.
I am privileged to have had a very enjoyable time meeting and consulting the mink farmers of this country. I realise that the worst thing they have had is a period of great uncertainty in the industry and a prolonged period of harassment, culminating with a judgment by the Crown Prosecution Service against the people who had been harassing one major mink farm in Northumberland. Fur farmers as a whole have been terrorised by acts of the animal welfare extremists. If you run a voluntary organisation or a gathering of extremists, what are you going to move on to? You keep the body together only by having something to campaign about. If they cannot campaign against fur farmers, I hate to think who their next victims will be. I hope that the Government will not be so misguided as to give in to them, as they have in this case. Fur farmers have also suffered at the hands of a misguided media campaign.
Having said that, I must admit to noble Lords that the 13 fur farmers have come to the conclusion that the sensible thing to do is to wind up their industry, subject to full and fair compensation. However, when we come to examine what will comprise full and fair compensation, let us be absolutely realistic about it.
Fur farming is a very prosperous agricultural diversification. In reality, which sheep farmer would not be thrilled if his ewes produced four to five lambs each year that could be sold, after seven months, for around £25? That is the reality of the situation. A single breeding mink gives birth on average to between four and seven young. At the end of nine months, the pelt of each mink is worth between £22 and £28. I have taken those figures from auction prices published in Copenhagen. As regards compensation, let us not pretend that this has not been an extremely profitable and worthwhile agricultural diversification.
What has also made an impression on me is the plight of the poor ladies who grade the furs at Christmas time? How will they earn their Christmas money? The industry makes a significant contribution to the rural economy.
Noble Lords will know that each year, early in December, every fur farm must make a return under the Destructive Imported Animals Act 1932. The exact

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number of breeding mink is known. When considering compensation, all that needs to be done is to look at the agricultural return and base the payment on, I suggest, the average stocking rate of mink farms over the past five years, discounting the period of three years of uncertainty. That would be the right and fair way to approach this.
Furthermore, in looking at the level of compensation, will the noble Baroness bear in mind that loss of income is a crucial factor in such compensation? Will she further bear in mind the very large capital expenditure outlay involved in fur farming? I looked around a pelting place where the machinery used to remove the fat from the inside of the skin—a piece of equipment with an extremely limited life—cost almost £20,000. I was relieved that, when referring to compensation, the noble Baroness said that she appreciated the problems as regards restoring the sites on which these farms are based. Very little use can be made of the existing specialised buildings. They will need to be torn down and the sites cleared.
The noble Baroness quoted the European Union. I hate having to use an argument that the EU could in any way be of value to the English countryside, but we must face facts. The only country in the EU to have banned fur farming is Austria, although I appreciate that Austria may not be the flavour of the moment within the EU. However, I checked on the figures and allowed for the difference in exchange rates. It appears that the Austrian Government paid their fur farmers the equivalent of £390 for each breeding female. That is the level of financial compensation that has already been established.
It grieves me greatly to have to take the line that all that can now be done is to secure the best deal possible for the fur farmers because it is time that they gave up. I should like to see the industry continue, underpinned by high standards of animal welfare by means of regulation and enforcement. That is how we normally proceed in this country.
Let us be realistic about mink. The animals are regularly fed and watered in a safe environment. The mink thrive. When one visits a racecourse, one sees many people standing around in the paddock, looking at the horses. What in fact are they looking at? They may decide that they admire the conformation of a certain animal, but what they are really considering is, "What are their coats like? Are the horses thriving?" I promise your Lordships that at any mink farm that I have visited, you can walk down the rows of cages and ask the owner to open a cage-door and produce a mink, and the animals look glossy, well and happy. Of course they do, if the skins are to be sold.
I should like to see well regulated and prosperous agricultural diversification allowed to continue. But that is not to be the case. The Government have decided that they are going to go on with this Bill of Attainder. All I would say to the noble Baroness is: please may we have fair and promote compensation? Can we have an assurance that the mink farmers will not suffer the same fate as the pistol shooters? Two years ago, pistol shooters were promised fair
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compensation, and compensation for their specialist equipment; they have not yet seen it. There has been enough uncertainty affecting the fur farming industry for the past three years. Our job is to obtain an undertaking from the noble Baroness that she will proceed promptly with the quick delivery of a fair compensation scheme.
10.25 p.m.
Baroness Mallalieu: My Lords, I too should declare an interest, albeit a tenuous one. The British Fur Trade Association has affiliated membership of the Countryside Alliance, of which I am the current president. The Countryside Alliance holds no views on the Bill, which it regards as a matter for the NFU, to which, I understand, most of the remaining fur farmers belong. The views I express are entirely my own.
I should make clear as a starting-point my strong dislike of intensive animal husbandry. I particularly dislike the keeping of animals and birds in small cages. Legislation which improves the conditions in which such livestock are kept will have my full support where it is based on proper veterinary advice.
I also dislike the terrible damage which escaped animals—mink, in particular—have caused to our wildlife and our rivers and streams over many years. Many of the escapes were not the fault of the farmer, but the result of deliberate terrorist activity committed by people who said they loved animals. Many of the mink released died of starvation or in road accidents, being unfamiliar with life in the wild. Those which could be rounded up could often not be returned to their original family groups and often fought, with terrible injury or death as a consequence. Some animal lovers!
If the Bill had set out further to regulate and improve welfare conditions, particularly if it had done so in conjunction with other European countries where fur farming takes place, and if it had contained provisions to encourage the small number of remaining farmers to surrender their licences in return for fair compensation, it would have had my full support.
Instead, we have a Bill which seeks to criminalise 13 farmers, some of them in business in a very small way. One must pause for a moment and ask why the Government are proceeding with this matter now, at a time when the Session is crowded to bursting point with other legislation and when, I imagine, every government department has draft Bills of real substance for which it has been unable to secure parliamentary time—particularly when the European Commission has begun to work on its own fur farming directive.
The answer is to be found in the history of this matter. Before the 1997 general election, Mr Elliot Morley, who is now the Parliamentary Secretary to the Ministry of Agriculture, was appointed shadow spokesman for animal welfare. He accepted research assistants from the International Fund for Animal Welfare—which he properly declared in the Register of Members' Interests. That organization, contrary to

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the description sometimes given it by the media, is not a charity. It is an American-based organisation which appeals to the public for money by publishing sensational animal rights advertising campaigns world-wide. It receives donations in vast measure. Successful campaigns are important to it because they generate more funds for future campaigns.
As part of his brief, Mr Morley produced a leaflet entitled New Life for Animals which, among other things, advocated a ban on fur farming. There was no manifesto commitment to that effect. That is the pledge to which the Minister has just referred.
Shortly before the election in 1997, the Political Animal Lobby, a sister organisation of the International Fund for Animal Welfare, from which most of its funds were derived, made donations to a number of political parties, by far the largest of which was a sum well in excess of £1 million to the Labour Party. So it is that as this Parliament moves towards its closing stages somehow the Bill finds a place in the crowded legislative programme.
At Second Reading in another place Mr Morley made it clear, as the Minister has done today, that the Bill was not introduced primarily as an animal welfare measure, quite unlike the Private Member's Bill, introduced in another place by the honourable Member for Liverpool Garston, which did not reach this House. I suspect the reason is that the Government knew very well that if they had tried to do so they would almost certainly have fallen foul of Articles 28 and 29 of the European convention. Instead, they placed before Parliament a public morality Bill in an attempt, which I believe the Minister frankly admitted, to slip it in under Article 30.
In another place Mr Morley said:
"Fur farming is not consistent with a proper value and respect for animal life".—[Official Report, Commons, 15/5/00; col. 41.]
The noble Baroness repeated those words today. According to Mr Morley, apparently it is morally acceptable to rear and kill an animal for its meat but not right to rear it and kill it in order to wear its skin—unless the skin is a by-product of the meat, in which case it becomes morally acceptable again.
The truth is that it is of no consequence to the animal what happens to it after it is dead. It is, surely, the conditions in which it is kept and the way it is treated while alive that should form the basis of legislation which this House should consider. If the conditions in which mink are kept currently are unsatisfactory, by all means legislate to change and improve them. But, please, spare us the politically correct claptrap about public morality in the way this Bill has been introduced.
Significantly, following its examination of the industry in this country, the Farm Animal Welfare Council, which clearly had reservations about fur farming, as I do, did not advise a ban but listed recommendations for improved conditions. The reality is that no single mink will be any better off as a result of the Bill. As the noble Baroness said, the majority will be killed. So long as there is a profitable
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market, mink will be bred and kept, often in less satisfactory conditions, in the 12 EU countries where fur farming continues to be legal.
This Bill will almost certainly reach the statute book because the farmers have, frankly, had enough of terrorism and vilification. Those 13 farmers will lose their livelihoods. The very least that the Government can do if they want this law is to provide proper compensation, which involves giving an undertaking now that that will include loss of earnings. It is not good enough to say, as did Mr Morley in the other place, that the Government will consider that aspect after the Bill has passed into law and the consultation exercise has been completed. After all, the beneficiaries of the Bill are, on the one hand, the Government who will be able to say that they have discharged a debt, and, on the other, the animal rights lobby which will draw some comfort from it.
I warn the Government of this. When you once take the animal rights shilling and begin to dance to its tune the music does not stop when you want it to, and serious problems are likely to follow. It will become increasingly difficult to manage the countryside and its wildlife properly if the Government are afraid to authorise the necessary culling of badgers when TB is shown to be spread by them to cattle. It will become increasingly difficult to license necessary and important research involving animals with the result that that research cannot be done in this country and our finest doctors and scientists will be forced to go abroad to do this work, and others, not Britain, will benefit from their achievements.
Ultimately, what is the moral difference between rearing an animal to eat it or to wear it? Mr Morley says that there is one, but to the animal there is none. The job of Ministers is surely not to give lectures on morality, to seek to force their personal ethics on others or to do the bidding of rich pressure groups. It is to make real improvements for people and animals, to open up new opportunities for the people of this country, not to make them into criminals.
I have known the noble Baroness for over 30 years. Good sense and sound judgment are her trade marks. I am sorry that she finds herself having to present this illiberal piece of politically correct gesture politics to this House. She has my sympathy.
10.36 p.m.
Lord Monson: My Lords, it is an enormous pleasure as well as a hard act to follow the noble Baroness, Lady Mallalieu. It was interesting to observe in the current edition of the House Magazine that she is by no means the only Labour parliamentarian to regard this Bill with disfavour.
I declare, first, that I have absolutely no interest whatsoever to declare. Unlike the noble Lord, Lord Kimball, I have not met, or had any representations from, the few remaining fur farmers. It is sad, as the noble Baroness, Lady Mallalieu, said, that the noble Baroness, Lady Hayman—she is deservedly popular in all quarters of this House, as the noble Lord, Lord Kimball pointed out—has been landed with the task of

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piloting through this House this thoroughly illiberal Bill. It is not only illiberal but dangerous, setting all sorts of alarming precedents. It is not only dangerous but hypocritical. "Hypocritical" is a strong term, so I propose to justify it.
In order to secure the votes of the urban and suburban population, all too large a proportion of whom are unwilling or incapable of making any mental connection between the meat they eat virtually every day of the year and the killing of animals and the shedding of copious quantities of blood in the process, the Government imply that the Bill is designed to stop a unique form of animal cruelty. But it has nothing essentially to do with cruelty, unique or otherwise. If, after careful research, a team of vets, biologists and other scientists concerned with animal welfare were to recommend that the cages in which these animals are kept are too small for comfort and should be made larger, the Government would be totally entitled morally to legislate to remedy that; and I should happily support them. However, it is clear that, even if the cages were 20 times their current size, it would not deter the Government from bringing forward this Bill.
It appears that it is not humane or practical considerations but doctrinaire considerations which drive them. But even doctrine presupposes a certain consistency and at least a degree of logic. The politically correct term "inappropriate" is subjective and therefore quite inadequate. Therefore what philosophy underlies the Bill? Is it that no animal shall be kept in a cage, however large the cage? But then broiler chickens and the rearing of rabbits would have to be banned, to say nothing of zoos.
Is it that no animals should ever be killed by humans, only by predators or the particular diseases of old age, as members of eastern religions and many vegans believe? Obviously not. Is it that animals should be killed only when it is necessary to human health and survival? Obviously not, as humans can perfectly well survive without meat and the Government have not banned meat—at least, not yet! Is it that animals should never be killed other than for food? Obviously not, as animal experiments which end in death continue and leather shoes are still legal.
Is it that animals should be killed only for the production of mundane products as opposed to luxury ones? Here we may be getting nearer the mark but we are not there yet. After all, animals may still legally be killed for their musk glands, producing extremely expensive scent and much meat in the luxury class; for example, the first grouse of the season, expensive cuts of beef and so forth. As regards non-edible luxuries, consider expensive leather coats, handbags, purses, jewel boxes and so on. Some of the leather doubtless emanates from countries whose religious dietary laws make consumption of the carcasses taboo for the inhabitants.
Nor is fur necessarily a luxury. It would not seem a luxury to anyone obliged to spend a winter in Russia or in the eastern or central parts of Canada. So the logic and the arguments do not add up—unless
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veganism prevails in Government circles and this is merely the prelude to a long series of bans. For self-evident electoral reasons, that is probably unlikely.
About 20 years ago I happened to stumble across one of Bertrand Russell's more striking maxims. It had been translated into French, so I do not know exactly how it read in the original English. Unfortunately, the noble Earl, Lord Russell, who might have been able to help, is not in his place. The gist of the observation was that the test of a country's civilisation was whether it treated small minorities as well as it treated larger minorities. That was a typically acute observation, as large minorities who have the capacity to cause trouble and disruption are often, though not always, treated with some respect by governments. On the other hand, the feelings and interests of small minorities—the minority we are discussing is particularly tiny—can be safely ignored. That is all the more reason, especially bearing in mind the dangerous precedent set by the Bill, why their interests should not be ignored by this House.
10.42 p.m.
Earl Peel: My Lords, initially, I had no intention of taking part in this Second Reading debate. That was until I received a briefing supporting the legislation. When I read what I can only describe as the selective nature of the argument supporting such a ban, and was told that it was immoral to keep animals for their fur and that fur was surely a luxury, I began to feel a sense of indignation. Having listened to what the noble Baroness, Lady Mallalieu, told the House about the history of the Bill and the reason why the Government have introduced it, my antagonism towards it has grown. What she said was sad and disturbing. I cannot disagree with anything she said and I believe that those are the reasons why the Bill is before us today.
I do not want to say much, other than to protest. I have little knowledge of fur farming, but I become extremely angry when mindless vandals release mink into the wild. They then cause irreparable damage to wildlife and those responsible have no concern whatever.
From what my noble friend Lord Kimball said, I gather also that the few remaining fur farmers are now resigned to their fate and, quite understandably, are concerned primarily with receiving the maximum compensation, which I believe they are due. That is a point to which I may return in just a moment.
What really bothers me is the imperious way in which this moral diktat is being placed upon us simply because one or two Government Ministers appear to have a hang-up about wearing fur. They try to substantiate their action by saying that the majority of people are in favour of a ban. As the noble Lord, Lord Monson, said—I agree with him—and as has been said elsewhere and in this House many times, that is no reason to ban anything. The whole principle of parliamentary democracy must be broad enough to incorporate the wishes and habits of minority interests.

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In any event, if we are to argue for a majority point, I can only assume that on Monday the Government will give way on Section 28. I doubt it, but the same principle applies. What is more, I have seen figures—I assume that they are right—which show that over 80 per cent of people believe that it is acceptable to farm animals for any purpose provided that the farming principles are supported by proper standards of animal welfare. I believe that that is the absolute key to this argument. As the National Farmers Union said, we want regulation rather than criminalisation.
I believe that the Government are absolutely right to ensure that proper standards are set and adhered to. I do not believe that any right-minded individual could disagree with that. I am only too well aware that there have been one or two dreadful cases where fur farmers have not gone any way to adhering to those standards, and it is only right and proper that they should have been closed down. However, I should like to ask the Minister whether those affected by the legislation were given an opportunity to meet the required standards of welfare before the legislation was introduced; and, if so, how long they were given to meet those standards.
We are told that fur is a luxury and that there is no justification for wearing it. Who says so? Who makes those subjective judgments? From what I have read in the newspapers—so it must be right, must it not?—it appears that fur is the height of modern-day fashion. The fashion comes and it goes. However, I suggest that that is irrelevant. I believe in the right of the consumer to choose to buy fur if he or she wishes to do so.
We are told that producing—
Baroness Hayman: My Lords, I am grateful to the noble Earl. I believe that I made it clear in my speech that there is nothing in the Bill that prohibits a consumer from buying fur. The Bill deals only with the activities of breeding and slaughtering animals for their fur.
Earl Peel: My Lords, I accept what the noble Baroness says but I still believe that consumers should be able to buy fur which would be banned under this legislation. That is my point. I shall come to the question of imports in just a moment because I was not absolutely certain what the noble Baroness said on that particular point.
We are told that producing fur is immoral. I return to the point that, provided that the welfare standards are of a sufficiently high level, this legislation is, quite frankly, irrelevant. Like other noble Lords who have already spoken, I believe that killing an animal for meat is no different from killing an animal for its skin. It is a perfectly natural phenomenon that has happened since time immemorial. The only reason that it is being stopped now is that the Government have decided that it should no longer happen.
I am reminded of a silly story about somebody who was very dear to me and my family. She went into a shop in Middlesbrough to buy a muff and the person behind the counter said, "Yes, madam. What fur?" She
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replied, "To keep my hands warm, of course." The point of that story is simple. Why should not that lady be given the opportunity of choosing for herself whether she wants to buy a fur? She did not want a synthetic product; she wanted the real thing. I see no reason why she should not be allowed to have it.
The Minister said that alpaca farming would not be caught by the Bill. I cannot see much difference between producing alpaca for the hair on the animal and farming for fur. Ultimately, the animal has to die. Whether it is killed immediately or later in its life makes little difference. I should be interested to know whether the Minister can justify the difference.
The Minister also mentioned imports. As I understand it, at least six European countries have decided not to impose any such legislation. Will the fur produced in those countries be banned in this country? If not, that is double standards. If the Government intend to prevent such imports, I should be interested to know how.
Finally, I come to compensation, which the noble Lord, Lord Kimball, mentioned. The Government have said that capital assets will be compensated. However, the fur farmers' operations will not be available for alternative income production. I hope that the Government will take loss of income into account in the compensation package. I think that it was the noble Lord, Lord Kimball, who pointed out that the Home Office has been immensely slow in dealing with compensation for firearms under the two Acts. The Government have a bad record on compensation. I hope that the Minister will assure the House that there will be no delays in compensating fur farmers for what I believe are their rights under this confiscation Bill.
To summarise, I believe that the Bill is a nonsense. It is based on no more than the cynical whims of a few Ministers. It has no logic behind it. It would be only too easy to argue that we do not require meat to survive. That is true. Will we all one day be forced into being vegetarians for the sake of animal welfare and political correctness? I remain bewildered about why the Bill has been introduced in this way. I hope that the Minister will be able to explain further why we have to have it.
10.54 p.m.
Baroness Gale: My Lords, I welcome this Bill to end fur farming in England and Wales. It is possible that I will be a lone voice in the Chamber. I have been involved for many years in animal welfare organisations, including being the vice-chair of the Labour Animal Welfare Society.
I welcome the Bill for a number of reasons. The first is that there is a moral case to be made. Government have a special role in defending the interests of the innocent and the vulnerable, and that is what this Bill addresses.
Most people want to live in a society that discourages the infliction of suffering; to live in a less cruel society. Government cannot make people be

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kind to animals, but they should try and reflect the genuine concern of the majority that cruelty does not prosper. I believe the Bill contains these sentiments.
My second reason for supporting this Bill is that no one needs to wear mink fur. I will quote from a book called Cruelty and Christian Conscience published in 1992:
"In today's sophisticated world, the killing of creatures for the sake of their fur, often with great cruelty, is entirely unjustifiable. Humans do not need to wear fur. There are so many attractive alternatives available for those who want to be seen in 'fur'. It is now possible to buy simulated fur, which is warm and attractive and complimentary to creatures it copies. In a civilised, aware, society the killing of creatures for their pelts has no justification"
I add that fur farms breed mink for the sole purpose of providing the fur for mink coats, mainly for women to wear. As someone who has spent all my working life defending and supporting the rights of women, I could not defend the right of a woman to wear a mink coat. It is not necessary and I believe it is sheer vanity.
My third reason is that there is a clear desire by a majority of people in this country to end fur farming, and public opinion polls have shown that 75 per cent of people support a ban on fur farming. Hardly anyone in this country now wears fur. All big department stores have closed their fur departments. I am not aware of any stores, either big or small, that now sell furs in this country.
This is surely a question of consumers not just voting with their feet, but shouting in a very loud voice that they do not wish to wear fur. The Bill does not state that department stores cannot sell fur in this country if the consumer wishes to buy it. Consumers have clearly shown that they do not wish to purchase fur garments and hardly anybody in this country now wears a fur coat.
I believe this is a good Bill and will end the practice of breeding animals simply for their fur. The fur farmers who would have to cease business would be compensated. The Bill gives them time to adjust to their new circumstances, as Clauses 1 to 4 will not come into force before 1st January 2003. The Bill reflects public opinion and the majority of people welcome it.
In conclusion, this Bill deals with moral issues. it deals with how society cares about creatures for which we have responsibility, and it deals with unnecessary cruelty.
The people of this country in the main welcome it, and, as I understand it, as has been mentioned earlier in this debate, the fur farmers have accepted the Bill.
I am pleased this Bill is with us today. I believe this Labour Government have shown great courage in bringing this Bill forward, and I am very proud to be part of a Government that can bring this measure to us tonight. I look forward to its smooth passage through your Lordships' House.
11 p.m.
Lady Saltoun of Abernethy: My Lords, I have been looking at the feet of government Ministers and at the feet of Members of the Government whose Bill this is.
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I have observed that most government Ministers and most Members of the Government are shod in leather shoes, or at least shoes which appear to be made of leather—what I think the shops advertise as leather uppers. Certainly, the Minister is wearing a very, very elegant pair of shoes which I would suspect have leather uppers at least. I have also observed that a great many female Members of the Government have leather handbags.
I am very sorry and perhaps I am extremely stupid and obtuse but I cannot see the moral difference between killing an animal for shoes or to make a handbag or to eat a steak. I just cannot understand why it is so terribly morally appalling to kill an animal for clothing but apparently not morally appalling to kill an animal for food. I just do not think this makes any sense at all.
What seems to me important is the quality of life that the animal has while it is alive. What we should surely be going towards is enforcing regulations on the keeping and breeding of animals for food or arty other purpose rather than prohibiting their breeding at all. This is just totally idiotic.
If it was the month of February, I would be wearing my fur coat in this Chamber now. Often in February I would very much like to because it gets pretty chilly. I can only say to your Lordships that I did not have a fur coat until animal rights activists started throwing paint at people who were wearing them. When that happened, I went out and bought a fur coat, simply in order to strike a blow for freedom. I want tonight to strike a little blow for freedom.
11.5 p.m.
The Earl of Shrewsbury: My Lords, I declare an interest as a member of the National Farmers Union and of the Country Landowners Association. I congratulate the noble Baroness, Lady Mallalieu, on what I thought was an astoundingly good speech. She hit the nail on the head with every sentence.
I am neither in favour of nor against the farming of animals for their fur. I have no interest in it. But I am totally against the banning of any legal activity without very considerable justification. I firmly believe that the route that this Government should be taking is that of strong regulation of the industry, ensuring that the highest possible standards of animal welfare are enforced and complied with.
I was entirely against the banning of handguns—indeed, I was very much involved in that campaign—first, by the last administration, my party, and then by the present Government. The banning of handguns has achieved absolutely nothing. I am absolutely certain that the banning of farming animals for their fur will also achieve absolutely nothing, for the very reason that this industry in the United Kingdom is minuscule, with only 13 or so producers. Probably the Government would do a great deal better to ban the activities of those who wish to disrupt the legal activities of those who farm animals for their fur and for research purposes.

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Some years ago a cousin of mine owned and ran a mink farm on the edge of Cannock Chase in Staffordshire. I might add that it was a very well-run, humane operation. One night his farm was raided and broken into. The cages were opened and the mink let free. In the morning following the break-in many mink were found cowering in the corners of their pens through sheer fright. A number had been released into the wild and many died from stress. They were captive animals which had never had to hunt for food. They were fed regularly and well and had never lived in a wild environment. Those which were released and were not recaptured caused absolute havoc among the wildlife of the countryside around where I live and they certainly still do. We try to catch them all the time. They have now become feral. So much for animal rights.
The Government justify this ban with the words "public morality". That is a little rich and extremely weak. If fur farming is contrary to public morality, is it publicly moral to kill a sheep and sell its skin? Is it publicly moral to kill a beef animal and sell its hide to be used for leather shoes, jackets, bags and what have you? Is it publicly moral to rear rabbits for human consumption and use their pelts for clothing? I have a serious objection to Halal slaughtering, as do many veterinary surgeons. Is Halal slaughtering against public morality? I doubt it. Perhaps the Minister can tell me: if not, why not?
A recent public opinion poll by Taylor Nelson Sofres plc revealed that the British public, contrary to what the noble Baroness, Lady Gale, mentioned, overwhelmingly support the farming of animals for any purpose provided that good animal welfare is practised. Surely, that is the basis of livestock farming. The poll was not one conducted on behalf of those groups which have lobbied the Government for a ban on fur farming: it had a much wider base than that. It included all the British public from every walk of life, not just the animal liberationists.
I am sure the Government will get their ban. We all know that. It is up to Parliament to make absolutely certain that those who suffer the loss of their legal business are treated fairly. They must be fairly and adequately compensated for their enforced loss of business.
Fur farming is a highly specialist type of farming. The equipment used cannot be used for other purposes. Therefore, when the ban becomes law that equipment will be rendered completely useless. Compensation for that equipment must be paid. The precedent for such compensation is, of course, the handgun ban. Although it took a long while for the compensation to be paid, it paid for the affected weapons and other ancillary equipment. In addition, the farmers who will lose their businesses at the introduction of this ban run profitable businesses from which they derive their living. Their capital is tied up in their businesses.
We in the agricultural industry constantly hear the Government telling us to diversify. What could a fur farmer diversify into? Perhaps the Minister can
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provide your Lordships with a few ideas. It would be grossly unjust if those affected by the ban were not to receive compensation for the loss of their business. Their business should be valued on the basis of a going concern by an independent firm of accountants knowledgeable about fur farming and the Government should pay the full compensation valuation.
I understand that the Minister, Mr Morley, stated in another place that compensation would be looked at after the ban has taken effect. At the beginning of this debate, the Minister mentioned the cut-off date, which I believe is 2nd March 1999. I am not sure of the significance of that date. Perhaps the Minister can advise the House on that.
Mr Morley's comments, as I have heard them, are simply not good enough. This House must fight to ensure that adequate and fair compensation is built into the Bill before it passes into law. The amount of compensation involved will not be particularly large.
In conclusion, I believe the Bill to be wholly unwarranted and completely unnecessary. It is yet another heavy-handed approach by a nanny Government which believes in placating the few with loud enough voices and big enough pockets. It will achieve absolutely nothing, while altering dramatically the lives of the few who have farmed legally, efficiently and humanely for years. The fur trade which will disappear from this country will be replaced by other fur farmers abroad where welfare standards are atrocious in comparison to those practised here. The Government will be doing no favours whatever to those animals which are farmed for their fur in this country.
11.11 p.m.
Baroness Miller of Chilthorne Domer: My Lords, I find tonight's debate most interesting, particularly concerning issues of morality and especially so after yesterday's lengthy debate when the Conservative Benches were arguing for many issues, about which our children must be clear in moral terms, to be strictly laid down in legislation. The Conservatives wanted to impose strict, dogmatic views through legislation, whereas today the moral and philosophical issues should apparently not play any part in the consideration of this Bill.
I find that particularly ironic because the young people about whom we were talking yesterday do not care about very much in politics. However, one issue which usually makes them stand up to have their views heard is that of animal rights. They are interested in animal welfare issues. Indeed, if a poll were taken among the under-30s of their views on fur farming, the results would be very different—
Earl Peel: My Lords, I thank the noble Baroness for giving way. She referred to "animal rights". Does she mean animal rights or animal welfare, because there is a world of difference between the two?
Baroness Miller of Chilthorne Domer: My Lords, I am talking about young people interested in animal

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rights. In addressing the Bill, I shall move on to talk about animal welfare. Young people are interested in the issues of animals and how they are kept, in both animal rights and animal welfare, but they would call it animal rights.
We have moved on and young people are anxious that we move on further. The wearing of fur coats started in the caveman era when there was no other option and when animals lived in the wild. They were taken for their fur coats and died in the wild. Things were very different. Now there are too few animals in the wild for us to want to take them for their coats. We have mostly stopped being hunters and have developed alternative clothes.
The noble Lord, Lord Monson, quoted other examples, such as musk glands. I would add the example of aphrodisiacs from tigers. We do not find that an acceptable way to use our wild animals. It is interesting that no one this evening has differentiated between the fact that mink are essentially wild animals that roam over vast territories and have a semi-aquatic life and that, through tradition, sheep and cows have become domesticated and live more naturally.
Perhaps I may draw the attention of noble Lords to the five freedoms listed by the RSPCA as a measure of whether or not it is reasonable to keep an animal for the purpose man wishes. They are freedom from thirst, hunger and malnutrition; freedom from the need for appropriate comfort and shelter; the prevention or rapid diagnosis and treatment of injury, disease or infestation; freedom from fear; and freedom to display most normal patterns of behaviour.
It is important to hear in mind that the mink is essentially a wild animal and has a semi-aquatic lifestyle when comparing them with sheep. I declare that I am not vegetarian and wear leather shoes. I find the fact that we farm sheep and cows for food acceptable. But I can imagine a time in the distant future—200 or 300 years hence—when people view that differently.
Although we on these Benches are not generally in favour of banning things and it is not a road we enjoy taking, in this instance we will go along with the Government in their wish to introduce this Bill, particularly in view of the fact that the industry has now run down to a very small size and compensation could, if the Government were so minded, be generous to those remaining in it. That is an important consideration in choosing this moment to phase out the keeping of animals for fur.
I am concerned about the issues of compensation. There may be a temptation on the part of the Treasury to say that, because only a small number of businesses are involved, the issue itself is very small. I remind noble Lords of the reply of the noble Lord, Lord McIntosh, to me when I asked a question in relation to the sparkling cider industry. He said, "I am sorry for the individuals concerned, but they are very few". In that case there were 28 or 29. So, although there may be only a few fur farmers involved, to them it is a big issue. I urge the Government to be clear as to what compensation offer they will make. We may need to come back to that issue at a later stage.
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In conclusion, I should like to ask the Minister a question on a point of detail: what will happen to the livestock? Will there be an option to export it to other countries or do the Government expect the stock to be killed? Other noble Lords covered the points in relation to the re-use of assets.
11.17 p.m.
Lord Luke: My Lords, it is very late and I shall do my best not to keep your Lordships too long. I declare an interest as a member of the CLA.
This "nonsense of a Bill"—I forget which noble Lord said that but it thoroughly describes the Bill—is brought before your Lordships with the object of stopping fur farming in this country. It will stop a small band of beleaguered farmers from carrying on their legitimate businesses and from earning an entirely respectable living thereby. It criminalises those people on the grounds of what the Government call "public morality". That is not the same reason as that given on the introduction of the failed Private Member's Bill in another place, which was animal welfare". I wonder why.
However, those farmers are not the real target. Those the Government believe they are getting at are the wearers of fur. So where in this Bill do the Government ban the wearing of fur in this country? Or is it not included because they have created the biggest demand in history for ermine? I fear not. It is because such a Bill would contravene European law and human rights. This Bill, therefore, is a second-best attempt to satisfy their animal welfare paymasters.
Apparently there is a difference between wearing fur from an animal killed specifically for eating and one which is killed to supply clothing. I am afraid that I, like many other noble Lords, cannot see any difference at all and believe that such an argument goes directly against common sense.
If this principle of, "Thou shalt not do this because we don't like it", is enshrined in legislation, as it would be by this Bill, it would be only too easy to extend it to anything that this Government feel that they want to extend it to—a point made by my noble friend Lord Peel and the noble Lord, Lord Monson. The wearing of leather has been mentioned. The argument applies also to sheep fleeces, rabbit skins, the eating of any meat and certainly to the abolition of hunting, shooting and fishing. People's rights do not come into it unless those who might be targeted carry a significant number of votes.
This Bill will not in any way influence the wearing of fur which is now, as was mentioned by my noble friend Lord Peel, on the increase throughout the world; neither will it affect fur farming elsewhere in the EU. It will simply hand an increased share of the market in fur production and trade to our EU competitors. It will not improve the lives of mink anywhere in the world. I should point out to the noble Baroness, Lady Miller, that, although they seem to be pretty wild if you get bitten by one, mink are in fact domesticated and have been so for some 80 years. As has been said, if you

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let them out into the countryside, they do not know what to do. Of course, they soon learn, but they do not know at first.
We on this side of the House are extremely sensitive to any suggestion that we are not in favour of the highest possible welfare standards for animals kept for farming purposes or, indeed, for any purpose. I believe that we have sometimes been impugned on this issue. Indeed, I wonder whether noble Lords are aware of the way in which really wild mink and foxes are trapped in Canada, Russia, South America, and so on. They are caught by the leg and either bleed to death, starve to death or freeze to death; or all three at once, and slowly. Is that what the animal welfare lobby wants? Of course not, but those people want to ban all wearing of fur. I wonder what noble Lords think about Eskimos. They trap a great number of animals in this rather unpleasant way, but they need the fur to stay alive.
Government supporters who oppose the wearing of fur as part of other people's legitimate lifestyle are determined to force their views on to the rest of us. As my honourable friend Malcolm Moss said in another place, quoting the journalist Roger Scruton:
"To imagine that we have the right to outlaw those lifestyles merely because they get up our class-conscious noses, is to base our legislation not on public morality, but on private snobbery"—
I give way.
Baroness Castle of Blackburn: Thank you. I am very grateful. The noble Lord referred to the leg-hold trap. During the 10 years that I was a Member of the European Parliament, I was an active member of the group on animal welfare. One of our prime aims was to get the leg-hold trap banned, not only in Europe—we succeeded in that—but also throughout those countries that traded with us in Europe. Parliament passed that law but, I am sorry to say, our own Commissioner, Sir Leon Brittan (not my party's Commissioner; the Commissioner of the noble Lord's party) argued against it ferociously on the ground that the World Trade Organisation would not tolerate it. So we did know in Europe; and we did care in Europe. We will fight and continue to fight for the abolition of the leg-hold trap. It is the indifference of people like the noble Lord which paves the way for the continuation of this barbaric habit, which I think is contrary to public morality.
Lord Luke: My Lords, we always love to hear the noble Baroness, Lady Castle, speaking; indeed, it is absolutely marvellous. However, I believe that what she has just said is not terribly relevant to what happens in Europe. Unfortunately, due to that intervention, I believe that I have lost my thread completely.
In spite of what the Minister said, it seems that there is a possibility that this Bill may contravene European law, whatever may be the reasons for changing from animal welfare to public morality as a way of getting past it.
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In 1998, fur-bearing animals, together with cattle, pigs and sheep, were identified as being part of the established farming industry. Would the European Parliament and the Council of Ministers have supported that if mink and fox farming were seen as cruel and unnecessary? Incidentally, the British Government voted in favour of that measure. Has the Minister any estimate of the likely cost to the British taxpayer of defending possible actions in European courts?
I shall not enlarge on the public morality argument as it has been covered by other noble Lords, in particular in the interesting and informed speech of the noble Baroness, Lady Mallalieu. As far as I am concerned, it means nothing. However, I remind noble Lords that Nick Brown himself admitted on 22nd June that,
"'Public morality' is not susceptible to an absolute definition: it inevitably involves subjective judgment".—[Official Report, Commons, 22/6/00; WA300.]
The ticklish question of compensation has been mentioned by many speakers. As my noble friend Lord Kimball said, fur farmers have been under threat for many years from both the Labour Party and from a band or bands of terrorists whose motives, beyond an obvious delight in destruction for its own sake, are dubious in the extreme. So, it seems only right and proper that the compensation that the Government have correctly guaranteed to pay to dispossessed fur farmers should reflect the real value of the businesses which the former are closing down. What criteria will be used in assessing levels of compensation?
It will, I think, be legal to buy mink pelts in France after the enactment of this Bill, bring them across the Channel and sell them to retailers here and abroad, so what a waste of taxpayers' money in compensation to achieve precisely nothing. This demonstrates, if nothing else, this Government's fixation with presentation, which they put above substance, and with populism, which they put above the rights of minorities. This, I am afraid, is the act of an illiberal and intolerant government. Public morality means, in effect, public opinion for this Government. As my noble friend Lord Peel said, support for minorities and minority opinion is perhaps the most important factor in a properly democratic system of government. Anything else is an abuse of democracy.
We on these Benches will not divide on the Bill, but, make no mistake, we do not like it at all. I thoroughly agree with my right honourable friend Douglas Hogg, who called it in another place,
"an odious little Bill—political correctness gone mad".
11.27 p.m.
Baroness Hayman: My Lords, we have heard some strong language, as from the noble Lord, Lord Luke, just now, and some interesting arguments. I hope that noble Lords meant to be kind in the words that they addressed to me and that I am not in any sense an "illiberal", if I may coin a noun.
I say to the noble Lord, Lord Luke, that simply because a view or an activity is performed by a minority that does not ipso facto make it either moral

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or acceptable. Judgments have to be made. While he is quite right to say that we should be careful of the rights of minorities, simply because a minority wishes to indulge in something particularly unpleasant does not mean that it should be supported or allowed to be legal.
The Earl of Shrewsbury: My Lords, can I conclude from what the noble Baroness has just said to the House that therefore the activities of the various animal rights terrorists over numerous years are morally acceptable?
Baroness Hayman: Absolutely not, my Lords. I do not think that anything I have said has suggested that they are either morally or legally right, as I think I made clear in my speech. I have made clear recently in the issue of the sabotaging of the Krebs trials in regard to badgers and bovine TB the absolute opposition of the Government to illegal activity and to the disruption of legal pursuits.
I was trying to explain to the noble Lord that the issues which have been explained in very black and white terms today are issues of judgment and value judgment. Simply because something is supported by either a majority or a minority does not mean that the view of the Government of the day must be that it should be enacted in legislation. We can think of many examples of that—for instance, the analogy with Section 28 has been made.
I was interested when the noble Lord, Lord Luke, said that he found it difficult to see the nuance between animals for food production and animals for fur production. The noble Lady, Lady Saltoun, found it difficult to understand the difference between the use of a by-product of an animal that was kept for food—for example, for leather and sheepskin—but the noble Baroness, Lady Miller, did not find it difficult to see the distinction between the two.
I am sure that when we come to the discussion of an issue which will be hotly debated in this House—fox hunting—there will be those on the Benches opposite who will argue for the continuation of the hunting of mammals with hounds but who would not argue for the reinstatement of bear baiting and cock fighting.
Judgments have to be made about what is appropriate and acceptable in a society at any one time. The speech by my noble friend Lady Gale made it clear that it would be wrong for noble Lords, whose opinions I respect and who are perfectly entitled to believe that the line is being drawn in the wrong place at this time with this particular Bill—I disagree with them, but they are entitled to that view—to assume that they are dealing with the views of one or two Ministers in another place. A large number of people support a ban on fur farming. There has been a great deal of correspondence about it and a great many opinion surveys that have borne that out. I am not suggesting that just because something is supported by a large number of people or a small number of people
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it should therefore become government policy, but one should not underestimate the amount of support for this measure.
Earl Peel: Does the noble Baroness accept the findings of the opinion poll which established quite clearly that farming for any purpose is acceptable—I think 81 per cent of the people polled agreed—provided that the animal welfare standards were up to scratch? That is the key issue.
Baroness Hayman: I have not seen that particular poll; I should like to see it. I accept the noble Earl's view that that may well be the view of some people or many people. In many opinion polls, the answer you get depends very much on how you phrase the question. I was not basing the Government's position simply on majority support, as I think the noble Earl accepts, but on the Government's interpretation of public morality at the present time. I am sure that we will have that debate on Section 28 on Monday.
It is important that I should say one thing very clearly. In the course of speeches—which I know were strongly felt—aspersions were cast on the motivation of my honourable friend Mr Elliot Morley in terms of the introduction of this Bill. Noble Lords who know my honourable friend should accept that he has a long-standing and deep and personal commitment on these issues. They may not share his views but I do not think that he should be accused in any way of hypocrisy on this issue.
Baroness Mallalieu: My Lords, I thank the noble Baroness for giving way. It may have been my remarks which gave rise to the comments that she has just made. I would not for a moment intend that anything I said should reflect a suggestion that Mr Elliot Morley is other than wholly sincere in the views which he holds.
Baroness Hayman: My Lords, I am extremely grateful to my noble friend. I felt it important to get that on the record.
I dealt with some of the basic arguments in my opening remarks. I was asked why we consider that it is not right to kill farmed animals for their fur but acceptable to kill farmed animals for meat. That reflects the view that the breeding of animals for slaughter is not right or wrong per se in any circumstances. It depends on the purpose for which the animal is slaughtered. I hope noble Lords will agree that it is incumbent on us always to challenge the motive for killing anything. If the motive or purpose does not justify the slaughter, the slaughter cannot be justified by the fact that the animals were bred specifically to be slaughtered for that purpose. We believe that the primary purpose of keeping an animal for the production of food is justified in terms of sufficient public benefit and that that is so even where

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the production of fur or hide is a secondary purpose of keeping the animal. I accept that noble Lords may not share that view, but that is our view.
Lady Saltoun of Abernethy: My Lords, I am very sorry but I do not think that that is acceptable. That is the doctrine of expediency.
Baroness Hayman: My Lords, it is a doctrine of analysing differences in specific circumstances and coming to judgments about the nuances and rules which one applies. I accept that the noble Lady may not agree, but I am saying that the Government see a distinction. We believe that that distinction around purpose will be seen by other people; that the support of Members in another place, reflecting, one hopes, the views of their constituents, was strongly in favour of the Bill; and that many people can see such a distinction between the farming of animals for food and the farming of animals for fur.
Some specific questions were raised. The noble Lord, Lord Kimball, worried me with his assertions on Acts of Attainder. Erskine May tells us somewhat reassuringly that Acts of Attainder are now of historic interest only. Since they followed on the imposition of death penalties, I am sure the noble Lord will be reassured by that. It was not suggested that the abolition of either bear baiting in 1835 or cock fighting in 1849 was equivalent to an Act of Attainder. However, I understand that noble Lords have strong feelings. I understand that noble Lords have questions to ask. Perhaps I may deal later in my speech with the issue of compensation. I suspect that we shall return to that issue at later stages of the Bill.
The noble Lord, Lord Luke, challenged my assertion that the Bill is compatible with the European Convention on Human Rights. Under Article 1 of its first protocol, the convention guarantees the right to peaceful enjoyment of property and possessions. Any interference with the use of property must achieve a fair balance between the general interests of the community and the individual's right to the enjoyment of possessions. It is the view of the Government that the provisions are compatible with the ECHR. We believe that over-riding moral arguments can be brought forward in favour of a ban. A period of at least two to three years is being allowed before the ban comes into force and compensation will be payable. There will be a duty to consult on compensation with those affected.
Perhaps at this point I may respond to the query raised by the noble Baroness, Lady Miller, about what is to happen to the livestock involved. A variety of options are available at the discretion of the farmer. We believe that the majority will go for slaughter for the pelts, but they could be sold abroad, as long as that is done before the ban comes into force. In terms of exports and imports—a point raised by the noble Earl, Lord Peel—as I tried to make clear, nothing in the Bill affects the trade in fur. Only the trade in animals is affected.
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I believe that the noble Earl also suggested that we should be concerned about animal welfare standards in countries where fur farming is not banned. The noble Earl, along with the noble Lord, Lord Kimball, was absolutely right to point out that the only other country within the EU to have imposed a ban is Austria. I believe that the Dutch are also looking at a potential ban.
I should also point out that the EU directive on the protection of animals kept for farming purposes also covers animals farmed for their fur. That directive lays down minimum welfare standards. We have participated in Council of Europe discussions on changes to raise standards in order to fulfil our obligations as regards animal welfare throughout the Community.
Earl Peel: My Lords, is the noble Baroness saying that mink produced in another European country could still be imported for use in this country? If that is what she is saying—I see that she is shaking her head; that is not what she is trying to say—I would regard that as totally hypocritical. Could she confirm her statement?
Baroness Hayman: My Lords, I am trying to find the exact language to make the position absolutely clear. The difference is that the import of animals to breed and slaughter for fur would be illegal. The import of the fur itself would not be illegal. That difference occurs because each country within Europe is entitled to decide for itself the balance between public morality and the carrying on of a business. Different countries take different views on that issue. That is the situation.
I was trying to suggest to the noble Earl that we have not completely abrogated responsibility for ensuring that, as regards standards in animal welfare, we make every effort to take the lead within the Community. That is because we uphold very high standards of animal welfare in this country. Only last Friday the noble Baroness and I discussed the need to secure a level playing field on this issue.
The noble Earl, Lord Shrewsbury, asked me about the significance of the cut-off date for compensation; namely, 2nd March 1999. That date was chosen because it marked the Second Reading of the Private Member's Bill in another place. Obviously, one needs to put a constraint on the potential of people entering the business theoretically in order to claim compensation.
Perhaps I may move on to the issues relating to compensation. I believe that throughout the debate it has been recognised that, given the support now offered by the NFU and from the affected farmers, the Bill should progress—although I take the point that that acceptance has not come about on the matter of principle. A great deal of interest has been expressed on the issue of compensation. As I explained, the Bill is an enabling measure and it is not appropriate for details of the compensation scheme to be included in the Bill itself. But, on behalf of the Government, I

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should like to reassure noble Lords that we expect fair compensation to be made available to fur farmers put out of business by the ban.
Under the Bill, the Government are required to consult publicly on the details of the compensation scheme. This is in order to allow the views of fur farmers to be taken fully into account in an open and fair manner. I should not want there to be any perception, real or otherwise, that the Government would not take into account the views of the industry.
I have been pressed to say exactly what will or will not be in the compensation scheme—for example, whether it will be based on headage, and whether income and costs associated with closure will be taken into account. We have not ruled out any items at this stage. But to give guarantees now would prejudge the outcome of the consultation exercise, and that would not be right.
Lord Luke: My Lords, I am grateful to the noble Baroness for giving way. She spoke of "consulting publicly". I thought that the consultation was to take place with members of the industry—in other words, the farmers. I did not know that there would be public consultation. Perhaps she would be kind enough to say what that means.
Baroness Hayman: My Lords, I meant that, in the normal sense of the word, it would not be secret consultation. If that is incorrect, I shall of course write to the noble Lord to correct it. It may well be that, for example, trade associations or the NFU are equally appropriate bodies for consultation. Perhaps I may take advice on the point. The answer may be that anyone can comment in a consultation but that the consultation itself will be addressed to the farmers who are affected. As I think I made clear in my earlier remarks, it is from the affected farmers that we particularly want to hear.
In our commitment to providing a fair scheme, we must consider the options with an open mind and be persuaded of the strength of the argument. It will perhaps be of help if I say something about the process that we intend to follow. We are proposing to use professional valuers and accountants to assess the assets and income of fur farmers to assist us in drawing up the compensation scheme. We shall then consult those affected by the Bill over the details of the scheme.
Several noble Lords raised the issue of timing. This is usually done over a two-month period. The Government will then consider the responses to the consultation exercise and draw up a statutory instrument to be laid before Parliament. It would be wrong to suggest that that would not take a number of months, but the Government understand the need to move as fast as possible on the matter. As I said, there
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is no bar to people who have already wound down their businesses, so long as they were in business on the operable date for claiming compensation. So there is some flexibility there.
I suspect that we shall return to specific details of the compensation scheme at a later stage in our consideration of the Bill.
The Earl of Shrewsbury: My Lords, I thank the noble Baroness for giving way. Will the Minister do her utmost to ensure that the compensation issues are fast-tracked? The experience of many people in the hand-gun world when hand-guns were banned was appalling. The inefficiencies on the part of the unit of the Home Office concerned with compensation were awful. Many people had to wait for months—in some cases years—to receive adequate compensation. I ask the Minister to advise her honourable and right honourable friends that it is most important to provide compensation quickly.
Baroness Hayman: My Lords, I understand the strength of feeling about the need for a speedy response. Obviously, one cannot so telescope a consultation exercise as to make it unfair. Equally, I am a great believer in learning from experience. If there are lessons to be learnt about how these matters can be dealt with more smoothly I undertake to do all that I can to ensure that that takes place.
Lord Luke: My Lords, I thank the Minister for giving away. Can we have this in two months' time, and before the Bill passes through both House?
Baroness Hayman: My Lords, I believe I made clear that this is an enabling Bill which contains a responsibility to put in place a compensation scheme. Once the Bill becomes law we can move on to the next stage. That cannot be done in anticipation of the Bill becoming law. On that basis, I hope the House will give the Bill a Second Reading this evening.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
Lord Carter: My Lords, in rising to move that the House do now adjourn, I cannot help observing that proportionately nearly as many interventions were made during my noble friend's wind-up speech as were made during the wind-up speech of my noble friend Lord Whitty on the Countryside and Rights of Way Bill. I make that observation merely as an innocent observer of the passing scene in your Lordships' House. I beg to move that the House do now adjourn.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at eight minutes before midnight.

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