Sitting of 21 March 2000

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

    CITY OF NEWCASTLE UPON TYNE BILL [LORDS]
    Order for Third Reading read.
    To be read the Third time on Tuesday 28 March.

    GREENHAM AND CROOKHAM COMMONS BILL (By ORDER)
    Order for Second Reading read.
    To be read a Second time on Tuesday 28 March.

Oral Answers to Questions
  SCOTLAND
  The Secretary of State was asked—
  SCOTLAND

    Scottish Economy
    Mr. Russell Brown: By what mechanism he liaises with the Chancellor of the Exchequer in order to inform him about the state of the Scottish economy. [114008]
    The Secretary of State for Scotland (Dr. John Reid): I meet my right hon Friend the Chancellor of the Exchequer regularly and discuss various matters. The last occasion on which I met him was in Cabinet this morning. We had a particularly fruitful discussion, and no doubt my right hon. Friend will share the details with the House later.
    Mr. Brown: I thank my right hon. Friend for his reply, and was delighted to hear what he had to say.
    When my right hon. Friend visits my constituency this weekend, will he tell the people of Dumfries that, as a direct result of the Chancellor's effective stewardship of the economy, thousands of families and individuals—including pensioners—have benefited from the working families tax credit, increases in child benefit, the national minimum wage and the pensioners minimum income guarantee? Will he ensure that the people of Dumfries understand that, if the Conservatives were ever returned to power, they would scrap each and every one of those measures?
    Dr Reid: My hon. Friend is absolutely right. Labour's economic policies have not only established the best environment for business in Scotland for many decades, but given us an opportunity to start distributing some of
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    the wealth created in order to create a fairer and better society in Scotland. A great many pensioners in my hon. Friend's constituency have benefited not only from the restoration of the free eye tests so disgracefully abolished by the Conservative party, but from the guaranteed minimum income that pensioners now receive, and from the cuts in value added tax on fuel that we promised and the winter fuel allowance. Pensioners, like others, are benefiting from this Government's commitment to social justice.
    Sir Robert Smith: Obviously the Secretary of State cannot tell us what response he received from the Chancellor today, but he can tell us what advice he gave the Chancellor. Did he, as Secretary of State for Scotland, make clear how much damage is being done in Scotland by the cuts in public finance that his Government have imposed since the election? Did he convey the message from the Deputy First Minister in the Scottish Parliament that what the Scottish economy needs is not another tax cut in a pre-election period, but vital investment in education, so that we can give our children the skills that they need for their own and the country's economic benefit?
    Dr Reid: The last thing that the Chancellor needs from me, and especially from the Liberals, is advice on how to run the Scottish economy.
    It will not have escaped the hon. Gentleman's notice that in Scotland we now have the highest employment that we have had for 33 years, the lowest unemployment for 24 years, the lowest inflation for decades, and the lowest mortgage and long-term interest rates, all because of the stewardship of the present Chancellor. I should have expected the hon. Gentleman to wait with bated breath in anticipation of the next step in the step-by-step reconstruction of the Scottish economy under the Chancellor: getting rid, once and for all, of the boom-and-bust policies of the Tories.
    Mr. Crispin Blunt: Given that Scotland's position relative to many English regions improved considerably during the 18 years of the last Conservative Government, does the Secretary of State believe that the Barnett formula can be justified indefinitely, especially in regions such as the north-east which have suffered so severely, in relative terms, because of this Government?
    Dr Reid: The hon. Gentleman obviously thinks that the whole Scottish nation is suffering from collective amnesia. It is not: it remembers the 18 years of the Tory Government who decimated our industries and destroyed so many communities.
    The hon. Gentleman is partly correct, in that since May 1997 there has been a marvellous recovery in Scotland, as well as throughout the United Kingdom. The Barnett formula ensures the fair and proportionate distribution of resources to Scotland in terms of need and sparsity of population, and there is no reason for us to consider us changing that distribution.
    Mr. David Marshall: Does my right hon. Friend agree that the biggest boost to the Scottish economy since the last election has been the substantial reduction in unemployment? Has he seen the latest research paper produced by the House of Commons

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    Library on unemployment by constituency? Does he welcome, as I do, the fact that my constituency has at long last lost its position as the constituency with the highest unemployment in Scotland, and is now number nine? More significantly, it has gone from number 15 in the United Kingdom to number 55. Does that not show that the Government's economic policies are working for the greater good of the poorest areas in the country?
    Dr Reid: My hon. Friend has made a valid point not just about his constituency, but about the effects of the Government's policies in Scotland. Unemployment is not only an evil for those whom it affects, but a debilitating factor in any country's economy. We take some pride in the fact that, in the two and a half to three years during which the Government have overseen the stewardship of the Scottish economy, we have reduced youth unemployment by more than half—by up to 69 per cent. We have had massive reductions in long-term unemployment. We have the lowest unemployment for almost a quarter of a century and the highest number of jobs—2.3 million—for 33 years. Incidentally, all the old records were set under the previous Labour Government, just as the new records are being set by the present one.
    Mr. John Swinney: In his discussions about the Scottish economy, has the Secretary of State told the Chancellor that, since Labour came to power, Scotland has lost 22,000 jobs in the manufacturing sector due to the Government's economic policy? Does he think that that factor contributed to the Labour party's tremendous achievement last Thursday of entering a two-horse race in Ayr and coming third?
    Dr Reid: I remind the hon. Gentleman that, in the global economy in which we work, there will be job losses as well as job gains, but he was slightly churlish not to point out that the job gains in Scotland under this Government far outweigh the job losses. Indeed, employment in Scotland is at a record high: 2.3 million people are in employment.
    Ayr was a poor result for Labour, particularly as we are not used to losing, but I suppose that I should return the compliment to the hon. Gentleman and the Scottish National party. I congratulate them on having made it eight in a row: eight consecutive by-election defeats for the SNP under the present leadership. Any football manager in Scotland with that record would be swiftly dispatched.
    Mr. Dominic Grieve: In the light of the Secretary of State's last reply, I rather look forward to hearing him congratulate the Conservatives on their by-election success in Ayr—but I turn to the Scottish economy. Is it not true that Scotland has the lowest business start-up rate in the United Kingdom: 20 per cent. lower than elsewhere? Job prospects in Scotland for the coming year are the worst in the UK and it is likely that job losses will outweigh job gains. To what does the Secretary of State attribute that? Could it in part be the fact that £1,500 of taxation has been added to every job in Scotland since Labour came to power?
    Dr Reid: No. As a matter of fact, Scottish manufacturing industry is recovering at a quicker rate than in the rest of the UK, as are Scottish exports. In terms of
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    gross domestic product, Scotland is now the third most prosperous region or nation in the UK. I repeat: employment in Scotland is at its highest level for 33 years.
    The allowances that have been made, for example, on the roll-over tax for North sea oil and gas, the reductions in long-term capital gains tax, the reduction in national insurance and the reductions in income tax for working people in Scotland have had an enormous effect, so the hon. Gentleman is wrong on all those matters. He is right on one thing. I will congratulate the Scottish Conservative party. It has managed to achieve something that the British Conservative party has not achieved for many decades.
    Dr Julian Lewis: Yet.
    Dr Reid: The hon. Gentleman should not hold his breath. I congratulate the Conservative party without any churlishness on achieving its first by-election win and, indeed, its first win under the first-past-the-post system for the Scottish Parliament. It will be a lonely life for that Tory Member, but I am sure that he will have the character to sustain it to the next Scottish parliamentary elections. He will not need to sustain it after that.

    Petrol Prices (Highlands and Islands)
    Mrs. Ray Michie: What recent representations he has made to the Chancellor of the Exchequer about the economic impact of petrol prices in the highlands and islands. [114009]
    The Minister of State, Scotland Office (Mr. Brian Wilson): My right hon. Friend the Secretary of State and I have regular contact with my right hon. Friend the Chancellor of the Exchequer and discuss various matters.
    Mrs. Michie: Has the Minister made the Chancellor aware of the damage done to the highlands and islands by the high cost of fuel and the constant hike in petrol duty without the proper compensatory measures which the Liberal Democrats have long advocated? Can he explain the contradiction between the Government's policy to develop the area and to encourage tourism and social inclusion and the persistently high fuel costs which undermine and work against those laudable aims? It looks as though the right hand does not know what the left hand is doing. What happened to joined-up government?
    Mr. Wilson: I recall very well from my time as a Back Bencher that there is a real problem in tabling questions two weeks before they are answered. I fully understand that when the hon. Lady tabled her question, she did not know that last Thursday the Liberal Democrats would announce that they did not think that fuel tax was too high, but that it was too low. Therefore, in their alternative Budget, they have proposed increasing tax on petrol by 5p a litre. I think that the hon. Lady has some sorting out to do between her left hand and her right hand.
    Mr. Calum Macdonald: Does my hon. Friend agree that the real problem with fuel prices is the policy of the major oil companies in imposing higher prices in the highlands than in the rest of Scotland? When

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    does he expect the Office of Fair Trading to report on that policy, and will he undertake to implement in full the findings of that report when it is delivered?
    Mr. Wilson: As my hon. Friend suggests, the structure of fuel prices in the highlands—and indeed everywhere else—is extremely complex and various elements within it produce the final total. He is quite right to say that the OFT is investigating the matter. I look forward to receiving the report in the very near future. In the meantime, I have been having discussions with the oil companies about tackling the problem of differentials in order to give an advantage in terms of the wholesale price to rural outlets which sell small volumes of petrol. If the oil companies gave them such an advantage, the problem of differentials would be largely eroded.
    Mr. James Gray: As the Minister says, the price of petrol in the highlands is indeed a complicated matter. Will he therefore answer two simple factual questions? First, in pounds and pence per gallon, what is the price of petrol in the highlands; and secondly, how does it compare with the prices in England and the continent of Europe?
    Mr. Wilson: There is no simple comparison because there is no uniform price in England, Scotland or the highlands and islands. I am trying to erode the differential so that no part of the country is discriminated against significantly in terms of petrol prices any more than they are discriminated against in terms of postage charges, for instance, which are within the public sector.

    Parliament Building
    Mr. Nigel Evans: What requests he has received for the provision of extra funds from the United Kingdom central Government in relation to the Scottish Parliament building; and if he will make a statement. [114010]
    The Secretary of State for Scotland (Dr. John Reid): I have received no requests for additional UK funds for the Scottish Parliament. The construction project for the new Scottish Parliament building is the responsibility of the all party corporate body of the Scottish Parliament.
    Mr. Evans: It would appear that the Secretary of State has no control over the costs of the new Scottish Parliament building and that the Scottish Parliament appears to have lost control over those costs. Does the Secretary of State feel no embarrassment at all in his discussions with the Chancellor of the Exchequer over the block grant—at a time when the number of police officers in Scotland has fallen by 375, crime is on the increase and three prisons have closed under the present Administration—in asking for more money for those services when so much money is being flagrantly wasted on what has been called "Donald's Dome"?
    Dr. Reid: I am inclined to ask who the author of that comment is. I know that the hon. Gentleman neither supports nor understands devolution, but it is actually quite a simple principle: when we transferred power to the Scottish Parliament, responsibility went with it. This
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    is a matter for the Scottish Parliament, which must take the decisions and the responsibility, over this and other matters that have been devolved to it.
    Sir Teddy Taylor: As the Minister is aware, I tabled question 9, which will never be reached. Would he be willing to say, first, what is his latest estimate of the cost of the new building? Secondly, would he say precisely who will pay for it? The impression that some people south of the border have is that there is a major scandal here, and that it is time that the facts were told to Parliament.
    Dr. Reid: I congratulate the hon. Gentleman on his ingenuity. However, the matter of the cost of the Scottish Parliament is squarely for the Scottish Parliament itself and for the corporate body. As for who will pay, the Scottish Parliament will pay for that. That is as clear as I can be to the hon. Gentleman. I do not see the arrangement as in any way a scandal. It is in the nature of devolution: we pass over power on a whole range of topics, including the cost of the Scottish Parliament, and the Scottish Parliament takes not only the power, but the responsibility for them. The Scottish Parliament will have to make that decision.
    Sir Patrick Cormack: Is it not clear from the breath of fresh air that we had last week that there are very many people in Scotland—a vast majority—who believe in the integrity of the United Kingdom? Does it not follow from that that it is entirely reasonable for all Members of the United Kingdom Parliament to take an interest in the location and cost of the Scottish Parliament? Cannot the right hon. Gentleman be a little more forthcoming and tell us precisely what the cost is now envisaged to be?
    Dr. Reid: A great many issues arise in the Welsh Assembly and in the Scottish Parliament in which we might take an interest, just as they might take an interest in what we are doing in this place. That is an entirely different matter from intervening in an issue that is the responsibility of a devolved institution. As I told the hon. Member for Rochford and Southend, East (Sir T. Taylor) and repeat, the costs of the Scottish Parliament are a matter for the corporate body of that Parliament. That is an all-party corporate body on which—I think, although I stand to be corrected—the Scottish Conservatives sit. That is a constant item of explanation that we have to give to Conservative Members, who neither supported devolution, nor seem to understand its nature.

    Winter Fuel Payments
    Miss Anne Begg: How many pensioners in Scotland will benefit from the United Kingdom Government's winter fuel payment scheme. [114011]
    The Secretary of State for Scotland (Dr. John Reid): About 900,000 eligible people in Scotland have benefited this winter from the winter fuel payment scheme. Payments are £100 per eligible household.
    Miss Begg: I am very glad to see that the winter fuel payment has resulted in well over £1 million being paid to pensioners in my constituency of Aberdeen, South.

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    However, will my right hon. Friend confirm that those payments are only one of the things that the Government have done for pensioners?
    Dr. Reid: First, I congratulate and welcome back my hon. Friend to Scottish Question Time. I confirm that almost 14,000 payments were made, totalling more than £1 million, to pensioners in her own constituency of Aberdeen, South to help them to meet fuel costs. It is part of the extra £4 billion that the Government have already pledged in this Parliament to assist pensioners. Of course we have cut VAT on fuel, as we promised. Of course we have restored free eye tests for pensioners, as we promised. Of course we have introduced the guaranteed income for the poorest and free television licences for those over 75. Under this Government, the average pensioner is more than £5 a week better off, and the oldest and the poorest are already more than £10 a week better off.
    I do not claim that we have done everything, but—certainly when one considers that all those actions would be reversed by Conservative Members—pensioners are better off under a Labour Government than they were under almost 20 years of the previous, Conservative Government.
    Mr. Archy Kirkwood: One of the principal and welcome advantages of the winter fuel payment scheme is that the payment is universal and automatic. However, will the Secretary of State confirm that, for some time now, the Government have been advertising the fact that they will introduce a take-up campaign for elderly people on pensions who are not claiming their entitlement, particularly under the minimum income guarantee? When will the Government clarify the exact terms of the take-up campaign, and when will that campaign start to take effect, providing much needed income to pensioner households in Scotland?
    Dr Reid: The hon. Gentleman is right that we do not regard these measures as hand-outs, but as entitlements on the part of our senior citizens. We will launch a campaign on 29 March to further explain the entitlements of our senior citizens to one of the many benefits that the Government are gradually introducing for them. In the same way, we have established a hotline for the 145,000 families in Scotland who might benefit from the working families tax credit. We are committed not only to introducing measures to increase social justice, but to making sure that potential recipients are aware of them and claim what is rightfully theirs.

  The Advocate-General was asked—
  ADVOCATE-GENERAL

    Staff Increases
    Miss Anne McIntosh: What representations she has received on her plans to increase her staff; and if she will make a statement. [114032]
    The Advocate-General for Scotland (Dr. Lynda Clark): I have nothing to add to my written answer on 22 February 2000, Official Report, column 860W.
    Miss McIntosh: I do not know whether or not I should be grateful for that answer. Will the Advocate-General share with the House what her responsibilities are for Scots law in the House of Commons, and why she needs any staff?
    The Advocate-General: I am grateful to the hon. Lady for her interest. I know that she is a distinguished—although no longer practising—member of the Scottish Bar. My responsibilities are many. I inherited the opinion work of the Lord Advocate and the Solicitor-General. I advise not only on Scots law in relation to devolved and reserved matters but, with the Attorney-General, I advise in relation to the European convention on human rights and European law. That is my main advisory work. It has taken one woman to do the work of two men.
    In relation to my new statutory powers under the Scotland Act 1998, there are a number of different aspects to them. I have the power, but not the duty, to take matters to the Judicial Committee of the Privy Council if I think that any Scottish Parliament legislation is outwith its legislative competence. I also have certain powers in relation to devolution issues. These matters can arise in any court in Scotland, in civil or criminal matters. I think that today's was the 500th devolution issue intimated to me. I have looked at all 500, and I have intervened in a number of them. Some will come to the Privy Council, and I hope—certainly initially—to do those cases myself. I also have—[Interruption.] Will the hon. Member for Vale of York (Miss McIntosh) be satisfied with that for now?
    Miss McIntosh indicated assent.
    Mr. Desmond Browne: Could my hon. and learned Friend share with the House what considerations she takes into account when she is deciding whether or not to enter an appearance in a case involving a devolution issue?
    The Advocate-General: I thank my hon. Friend—another distinguished member of the Scottish Bar, which is having a good run today. I consider each case individually, and there are a range of criteria that I take into account. The first matter that I might consider is whether or not there is a UK interest. For example, in relation to the road traffic cases which came before me recently, the legislation is common to Scotland and to England and Wales, which raises certain issues. Many of the cases have been raised at sheriff court level throughout Scotland. Generally, I have not intervened in such cases. Each case is considered individually, and I consider a range of criteria in relation to them.
    Mr. Dominic Grieve: The Advocate-General has today answered a question which, a month ago, she refused to answer. I asked about her involvement in Starr v. the Procurator Fiscal, but she said that she would not answer because the matter was confidential between her and the Government. Will she confirm that it is nothing of the kind, and that it is part of her statutory duties under the Scotland Act? In future, can

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    we please have answers from her to Members of this House on the discharge of her responsibilities under the statute?
    The Advocate-General: The hon. Gentleman is a member of the English Bar, which might explain the way in which he put his question. It had a certain lack of finesse. Earlier I made some general comments about the way in which I approach individual cases. It would not be my practice to give reasons for individual cases, especially if they are sub judice.

  LORD CHANCELLOR'S DEPARTMENT
  The Parliamentary Secretary was asked—
  LORD CHANCELLOR'S DEPARTMENT

    Public Record Office
    Mr. Gareth R. Thomas: What steps the Lord Chancellor is taking to improve the performance of the Public Record Office. [114039]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The Public Record Office is already providing an excellent service to the public and to the Government. To improve matters further, I am establishing goals for it in three areas: first, extending access to the public records by electronic means; secondly, helping the Government to make the transition to electronic records management; and thirdly, developing the PRO's educational services for schools and lifelong learners.
    Mr. Thomas: I am grateful to my hon. Friend for that reply. Will he continue to ensure that his ministerial spotlight is kept firmly and squarely on the performance of the PRO in terms of its work with schools? Will he ensure, in particular, that a proper, proactive education policy is developed to bring schoolchildren, especially those from London, into contact with many of the great historical documents that the PRO has in its collection?
    Mr. Lock: Schoolchildren are already making more than 200,000 visits a year to the PRO's online educational service, the learning curve, from their classrooms and homes. They will be able to visit the PRO's new education and visitor centre at Kew, which will be open on 11 April by the Lord Chancellor. Schoolchildren will be able to see there a wide range of historical documents, including the Domesday Book. If my hon. Friend's constituents look at folio 127, they will find out that 900 years before Harrow had the privilege of being represented by him, it had one archbishop, a total population of 120 and 2,000 pigs.
    Dr Julian Lewis: Despite the somewhat querulous tone in which the previous question was put, will the Minister join me in congratulating the staff of the PRO? I spent many years working there in the 1970s and early 1980s and I have recently started using it again. Will he accept that the service has tremendously improved, both online and in the actual services displayed
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    on the premises? Will he also accept that the standard of courtesy shown to me and other researchers over 20 years has been outstanding?
    Mr. Lock: It gives me pleasure to agree with everything that the hon. Gentleman says. The PRO is one of the Government's success stories. Its staff are unfailingly courteous and I am sure that it provides an excellent service to the public.

    Judiciary
    Dr Ian Gibson: What plans the Lord Chancellor has to review the entry procedures into, and career structures of, the judiciary. [114040]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The qualifications for professional judicial appointments are prescribed by statute; they are open to those with the relevant legal qualifications, whether solicitors or banisters. In general, the pool of candidates for judicial appointment reflects those entering the legal profession 20 years ago and those who have progressed within it. The Government have no plans to change that policy but are keen to ensure that opportunities exist for promotion within the judiciary.
    Dr Gibson: Could my hon. Friend confirm that the job description of the Lord Chancellor is under review and is somewhat onerous and contradictory in places? Could he also tell the House how the public perception of the higher echelons of the judiciary can be changed, because people think they are full of Oxford-educated, public school, genetic morons? While those are easy questions, will he also tell us what steps he is taking to inspect institutionalised racism in the judiciary?
    Mr. Lock: First, I shall deal with the issue of the Lord Chancellor. The independence of the judiciary is a fundamental principle of our constitution. In this country, we do not have separation of powers, but rely on a series of checks and balances on the three branches of Government. The office of Lord Chancellor has evolved as one of those checks. The value of the Lord Chancellor is that he upholds judicial independence and can mediate between the Executive and the judiciary when needs be. His office is not under review.
    I can tell my hon. Friend that recent research by Professor Hazel Genn has confirmed that while those who gain their impression of the judiciary from newspapers follow the somewhat jaundiced view that he has relayed, those who have experience of appearing before judges have a much better impression of them and are impressed by their professionalism and the public duties that they are undertaking.
    As for racism in the appointment process, I am sure that my hon. Friend will know that a thorough review of the process was recently carried out under the former Commissioner for Public Appointments, Sir Len Peach, which was highly complimentary. However, it suggested a number of improvements, which my noble Friend the Lord Chancellor has accepted in principle and is carrying through.
    Mr. David Trimble: Can the hon. Gentleman tell the House whether the Lord Chancellor's Department has had any communication with the criminal justice review group that was established by the Secretary of State for Northern Ireland? If so, what are its suggestions for judicial appointments? Does the hon. Gentleman agree that it is crucial that precisely the same standards apply to judicial appointments throughout the United Kingdom?
    Mr. Lock: I can confirm that copies of the draft report to which the right hon. Gentleman refers have been under discussion. The Government are not yet in a position to make any final conclusions on that draft. I entirely agree with him that it is important to ensure that the best people become judges. It is an important position and all appointments must be made on merit regardless of sex, race or the community from which the individual comes. Judges are a vital part of our constitution and the merit principle must be the only guiding factor that determines who should become judges.
    Mr. Nick Hawkins: I am tempted to say to the Minister after the astonishing attack by the hon. Member for Norwich, North (Dr. Gibson), who asked the main question about the role of the Lord Chancellor and that of the judiciary that, with friends like that, he does not need enemies. However, I ask him to reinforce the fact that we are proud of our judges. We have a proud tradition of judges who are completely independent of political influence. Will he confirm that the new judicial appointments commission set up under the recommendations of Sir Len Peach will not impose any ridiculous notions of political correctness? Will he endorse the calibre of our judiciary, of which we are proud?
    Mr. Lock: I can certainly confirm that the Government's view is that the vast majority of our judges in the vast majority of courts perform a valuable public service day in and day out. They do so in a professional, efficient and sensitive manner. The proposals in Sir Len Peach's review that have been carried through will improve our ability to ensure that we select the best people to carry out the important role of judges.
    Mr. Andrew Dismore: Does my hon. Friend agree that Sir Len Peach's recommendations will bring greater objectivity to the appointment of judges, which could in turn encourage people from less representative groups to come forward? Does he further agree that promotions, particularly from the district judge bench, could do much to improve the balance of the more senior levels of the judiciary, bearing in mind that the district judge bench is more representative?
    Mr. Lock: I agree that in the past there may have been too great a tendency to promote the best advocates from Bar to bench without sufficient attention being paid to the need for other skills, which are just as present in the litigation solicitor as they are in the successful barrister. As for promotion from one level of the judiciary to another, I assure my hon. Friend that all appointments, whether internal or external, are made on merit. It will be open for district judges to apply for promotion to circuit
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    judge, and they will have to compete on merit with others who are applying to come into the judiciary at that higher level.

    Women Judges
    Jackie Ballard: If he will make a statement on the progress the Lord Chancellor is making on the appointment of women judges to the High Court and higher courts. [114041]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): All appointments are made strictly on merit, but I am pleased to say that there are now more women judges, in more senior positions, than ever before. There are now 11 female judges in the High Court and above, including the president of the family division. Out of the 11 senior appointments made since last April, five are women.
    Jackie Ballard: All the 12 judges in the House of Lords are men, as are 34 out of the 35 judges in the Court of Appeal, and 89 out of the 100 judges in the High Court. When will the Government take meaningful action to increase the representation of women in the higher levels of the judiciary? Do we have to wait for a judicial appointments commission to recognise that many able women are hitting their heads against a glass ceiling in the Crown court and in the legal profession?
    Mr. Lock: I hear what the hon. Lady says, but I hope that she will give the Government some credit for ensuring that women make up nearly half of recent appointments to the High Court bench. That shows the Lord Chancellor's commitment to appointing the best people to the judiciary. Appointments are made on merit—they are not based on race or gender. Talented women and members of ethnic minorities will secure appointments.
    However, she should compare the membership of the Liberal Democrat Benches with that of the Labour Benches. Given that there are so few women among her colleagues at the top in her party, when will the Liberal Democrats practise what they preach on equal opportunities?

    Judges
    Angela Smith: What powers the Lord Chancellor has to remove a judge who does not display the skills and experience suitable for judicial office; and how often such powers have been used. [114042]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The constitutional principle of judicial independence requires judges to have security of tenure during good behaviour. Lords of appeal in ordinary, lords justices of appeal and High Court judges may only be removed by the sovereign on an address presented by both Houses of Parliament. For other full-time judges, the Lord Chancellor's powers of removal vary depending on the office but, in general, are exercisable only in relation to incapacity or behaviour.

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    The only judge removed from office in recent times by the Lord Chancellor was a circuit judge removed in 1983 for misbehaviour.
    Angela Smith: I am grateful to my hon. Friend for that answer, but is he satisfied that his powers to remove a judge, which apply only to cases of incapacity or misbehaviour, are adequate? Is not it strange that judges, unlike so many other professions, are not subject to review and evaluation? I am aware that judicial decisions are subject to review, but is not there a case for examining the efficiency of judges and their willingness to deal with cases effectively? Should not there be management scrutiny of decisions that are administrative rather than judicial? I appreciate that there has been some reluctance in this regard, but is not it time to introduce Ofjudge?
    Mr. Lock: I am grateful to my hon. Friend, as always, for her novel and interesting suggestions, but the constitutional principle of judicial independence means that the Lord Chancellor cannot interfere with, or comment on, judicial decisions. I can assure her that my noble Friend the Lord Chancellor treats all complaints about judicial conduct very seriously. Since he took up his post, he has established a dedicated team of officials in his Department, who make thorough inquiries on his behalf into all complaints about judicial conduct. He considers every complaint to determine whether it is justified and, if so, what action should be taken. However, I emphasise that we are talking about a tiny proportion of judges, and that the vast majority serve extremely professionally and efficiently. We are very grateful for all their work.
    Mr. John Butterfill: A judge gave summary judgment in a case in which a constituent of mine was the plaintiff without allowing that constituent to put his case in court or be present for the decision. Does the Minister consider that that judge demonstrated the necessary skills and abilities?
    Mr. Lock: It would be infringing the principle of the constitutional independence of judges, to which I have just referred, to comment on an individual case. Clearly, the appeal courts give any litigant with a good case that did not get a proper hearing first time around the opportunity to have it considered by a higher court.

    Lichfield Magistrates Court
    Mr. Michael Fabricant: If she will make a statement on the future of Lichfield magistrates court. [114043]
    The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): I am currently considering the appeal against the proposed closure of Lichfield magistrates court. I expect to announce my decision shortly.
    Mr. Fabricant: For more than 600 years—week in, week out and one way or another—there has been a magistrates court in Lichfield. At present, there is no such court, pending the announcement of the result of the appeal. I have spoken to the Minister, her predecessor and
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    her predecessor's predecessor about this matter. Will she please make a statement soon, saying that the magistrates court in Lichfield will remain open?
    Jane Kennedy: I have on previous occasions complimented the hon. Gentleman on his assiduous pursuit of his constituents' interests. However, I cannot confirm precisely when the decision will be made. I want to pay careful attention to all the representations made during the course of the appeal. I will make my decision known on both Lichfield county court and the Lichfield magistrates court at the same time.

  HOUSE OF COMMONS
  The President of the Council was asked—
  HOUSE OF COMMONS

    Oral Questions
    Mr. Geoffrey Clifton-Brown: If she will propose to the Select Committee on Modernisation of the House of Commons that it examine the cut—off time for the tabling of oral questions. [114054]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): My right hon. Friend has no plans to do so, but is always happy to respond to Members' concerns. However, work on this subject was considered by the Procedure Committee in 1991 and 1993.
    Mr. Clifton-Brown: Will the Minister consider referring the matter to the Modernisation Committee? It seems unnecessarily restrictive that hon. Members have to table their questions by 5 pm. Would not a cut-off time of 7 pm, when there is often a vote—particularly on a Monday—be more appropriate on Mondays and for the rest of the week?
    Mr. Tipping: The Procedure Committee and the Speaker are always willing to consider such matters. With new technology, a later cut-off time could well be considered. I think that it would be important to have the same cut-off time for every day of the week. However, if the hon. Gentleman is anxious to pursue the matter, we ought to refer it to the Procedure Committee.

  The hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, was asked—
  HOUSE OF COMMONS COMMISSION

    Nursery (Palace of Westminster)
    Mr. Jeremy Corbyn: To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, if the Commission will bring forward plans to establish an on—site nursery in the Palace of Westminster. [114056]
    Mr. Archy Kirkwood (on behalf of the House of Commons Commission):I commend the hon. Gentleman for the tenacity with which he is pursuing this important

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    matter. The House of Commons Commission takes its responsibilities as an employer very seriously. However, given the constraints on space and cash, we remain of the view that the fairest way of dealing with staff child care needs is by means of the existing and highly popular staff voucher scheme. I regret that I have nothing further to add to my written answer of 14 December—that we have no plans to establish an on-site nursery.
    Mr. Corbyn: Will the hon. Gentleman take back to his Committee the feeling of many people in the House and outside that we should at the very least set an example by providing on-site child care facilities in this building, and that the voucher system discriminates against parents with responsibility for young children because it comes out of the office cost allowance budget, which then militates against other staff? Of the 3,500 staff surveyed in 1998, more than 75 per cent. supported some kind of child care facility. If we can find space for bars, gyms and many other things, I am sure that we can find space for on-site child care facilities. Will he and his Committee kindly reconsider?
    Mr. Kirkwood: I hear what the hon. Gentleman says. To establish an on-site creche would cost in the region of £600,000. The current voucher system costs £100,000. We think that that is a better balance in terms of protecting the taxpayers' interest. That £600,000 would have to come out of the taxpayers' money, which would be difficult to justify. Certainly, that was the recommendation of the Administration Committee when it conducted its latest research in 1998.

  HOUSE OF COMMONS
  The President of the Council was asked—
  HOUSE OF COMMONS

    Legislation Timetables
    Mr. Nigel Griffiths: If she will make a statement on the use of timetables for legislation in the House this Session. [114057]
    The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): This Session there have been only two programme motions, one for the Northern Ireland Bill and one for the Financial Services and Markets Bill, both in February.
    Mr. Griffiths: Can the Leader of the House confirm that on six occasions since January, the House has met to consider serious legislation after 2 am? After three years, the Modernisation Committee has, sadly, failed to bring about the changes that are needed. Will she now act quickly to give the House a free vote to ensure that important items of legislation are debated not in the middle of the night but during the sober light of day?
    Mrs. Beckett: My hon. Friend is right to refer to the importance of the sober light of day. I cannot confirm his figures offhand, but the Modernisation Committee is reviewing progress on the timetabling of legislation,
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    which was originally proposed by the Jopling Committee in previous Parliaments, but has been pursued in this one. It will report to the House.
    Sir George Young: Are not the Government's difficulties in getting their programme through the House entirely of their own making? Is not the House presented with too many ill-considered and ill-drafted Bills? Does the Leader of the House recognise that if she wants to salvage her legislative programme, she must abandon some Bills, beginning with the Criminal Justice (Mode of Trial) (No. 2) Bill?
    Mrs. Beckett: The right hon. Gentleman is entirely wrong; there is no substance to his point. Our programme for this Session is more than paralleled by those of previous Sessions at the same stage of a Parliament. In the previous Parliament, at the equivalent stage, programme motions were used, and we have had more time for discussing legislation rather than discussing when it should be discussed. We have given that more time, not less.
    Mr. Peter L. Pike: Is it not a fact that timetabling is good for Governments, good for Oppositions, and, more importantly, good for ensuring proper scrutiny of legislation? Is it not also a fact that it cannot be achieved by voluntary agreement, and must be put in Standing Orders if we are to ensure that timetabling is rigidly adhered to?
    Mrs. Beckett: My hon. Friend is correct. If such a step were to be taken, it would have to be through some such means. He is also right that timetabling is in the interests of the whole House, which is why successive Governments have proposed it. It is in the interests of a competent Opposition who want to discuss the merits of legislation, but that may be one reason why it has not been popular lately.
    Mr. Paul Tyler: Is the Leader of the House aware of the widespread view across the House that the pace of modernisation is slackening and that the Modernisation Committee has a lot more work to do in the current Parliament, particularly on the handling of legislation? Will she confirm that the difference between an agreed programme motion and a timetable motion is critical? Will she insist that the Modernisation Committee and the House be given another opportunity to consider the precise procedure that would allow for more agreed programme motions and avoid the unfortunate antics in the middle of the night that we have suffered because of Conservative Members?
    Mrs. Beckett: I do not accept that the Modernisation Committee's work has slowed. Several important experiments are under way, but I accept that it would be in the interests of the whole House, and of better, more effective management, if we spent our time on issues of importance rather than on discussing how we should discuss them. The Modernisation Committee will continue to give its attention to that point.

    Modernisation
    Mr. Denis MacShane: If she will make a statement on progress in the modernisation of the House. [114059]
    Dr George Turner: What assessment she has made of the impact of recommendations of the Select Committee on Modernisation of the House of Commons on the operation of the House. [114060]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): The great majority of the Modernisation Committee's recommendations that were directed at Government have already been implemented. I hope that the House will agree that those changes have increased the House's ability to hold Government to account, increased opportunities for debate and enabled the working week to be better balanced between Westminster and constituency work.
    Mr. MacShane: I thank my hon. Friend. Does he agree that now that "News at Ten" has been abolished, the 19th century habit of endless votes after 10 pm could also go? Hon. Members could have a night's sleep and debate matters during the day.
    Will my hon. Friend also consider modernising the facilities for our friends, the gentlemen and ladies of the press? It may be an axiom of political journalism that the nicer we are to the journalists, the nastier they are to us. In the spirit, however, of kissing the hand that slaps us, and as their working conditions are worse than those of battery hens, might it not be that if we improved those conditions, the journalists would stop writing like battery hens about us?
    Mr. Tipping: My hon. Friend can consider the matter from both sides of the fence in his professional life. I know that he is a specialist in nastiness, both in the press and, occasionally, in the House. However, he is right; we need to respond to the needs of people who work in the House. I am delighted that members of the Lobby are allowed to have tape recorders in the Press Gallery and that the Administration Committee has allowed filming in Members' offices as a result of representations.
    Dr Turner: Does my hon. Friend agree that the extra debating time available in Westminster Hall has meant that, for the first time in many years, there have been significant opportunities to debate Select Committee reports? Does he also agree that we need to enhance further the role of Select Committees, and that careful consideration should be given to the recommendations of the Select Committee on Liaison?
    Mr. Tipping: My hon. Friend has used the facilities of Westminster Hall assiduously to advance the cause of his constituency. As he points out, 150 extra Back-Bench debates are possible because of Westminster Hall. It is now possible to discuss an extra 18 Select Committee reports. I am sure that he realises that the Liaison
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    Committee report has only just been received, but the Government will consider it carefully and report according to normal practice.
    Mr. Nigel Evans: May I urge the Minister to encourage the Modernisation Committee to consider the timetabling of oral questions? Seven o'clock has been suggested, but in this day and age there is no reason why the time could not be extended until the end of the parliamentary day. Furthermore, we could shorten the cut-off time for the tabling of questions.
    Mr. Tipping: I made it clear in my earlier answer that such matters are not set in stone. The Select Committee on Procedure examined that point in 1991 and in 1993. Given the advance of technology, it may be possible to change the cut-off time. If hon. Members make representations on the matter, they will be considered.
    Mr. William Cash: In the context of the modernisation of the House, will the Minister examine the Whip system, as currently used by the Government, to consider whether it contributes to control freakery, to too much centralisation in No. 10 Downing street and to the emasculation of the British Parliament?
    Mr. Tipping: I am sure that, given the hon. Gentleman's experience in the previous Parliament, he knows all that there is to know about the benefits and disbenefits of the Whip system.

    Information Technology
    Ms Margaret Moran: What plans she has to increase the use of information and communication technology in the pre-legislation scrutiny of Bills by the House. [114061]
    The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): It is up to the Committee scrutinising draft legislation to decide how best to use information and communication technology in its work. However, I am sure that hon. Members would be interested in any suggestions from my hon. Friend.
    Ms Moran: I thank my hon. Friend for that reply. Will he seriously consider the opportunities offered by e-mail, such as allowing evidence to be taken from a wide range of interests during pre-legislative scrutiny? That would more fully inform our legislative process by obtaining advice from wider groups of people in the community. Would that not enhance pre-legislative scrutiny and inform our policy processes?
    Mr. Tipping: I shall follow carefully the experiment on internet use being undertaken by the all-party group on domestic violence, chaired by my hon. Friend. Some Committees use video technology and video conferencing at present; and the internet is used fairly widely. Those are matters for the Committees. Given the advance of technology, she is right that such developments will continue and increase.

  The hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, was asked—
  HOUSE OF COMMONS COMMISSION

    Staff Costs (Late Sittings)
    Fiona Mactaggart: To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what has been the cost this Session of staff of the House remaining on duty as a result of sittings after midnight. [114063]
    Mr. Archy Kirkwood (on behalf of the House of Commons Commission): This Session, the total cost of staff remaining on duty for sittings that continued after
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    midnight has been approximately £35,000. Overtime costs for police and security staff, due to sittings after midnight, totalled £64,000.
    Fiona Mactaggart: Has the House of Commons Commission made any assessment of the impact of those usually unannounced late-night sittings on the morale of the people who work in this institution? Such sittings make Members of the House do their job less well. I am confident that they make the people who work in the cafes, the Library and so on do their jobs less well. Will he consider their impact on the recruitment and retention of the staff who serve us so well?
    Mr. Kirkwood: The House of Commons Commission is always considerate of the needs and demands of staff, especially as regards late-night sittings. However, I assure the hon. Lady that such sittings are well-established parts of contracts of employment. The people who work in the House know exactly the conditions that apply. I assure her that if Members have at heart the long-term interests of the staff who have to work late, they will not vote to sit after 10 pm.

ROYAL ASSENT
Madam Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Consolidated Fund Act 2000.

Orders of the Day
  WAYS AND MEANS

    Budget Statement
    Mr. Deputy Speaker (Sir Alan Haselhurst): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, copies of the Budget resolutions will be available to hon. Members in the Vote Office.
    3.31 pm
    The Chancellor of the Exchequer (Mr. Gordon Brown): A year ago the Government forecast the British economy would grow at 1 to 1.5 per cent.
    Today, I can report that in 1999, instead of the recession that many forecast, the British economy grew by 2 per cent.
    And Britain has been growing steadily while meeting our inflation target.
    Today inflation is 2.2 per cent.
    For the third year running inflation is in line with our target. And the target of 2.5 per cent.—which I reaffirm today—will be met this year, next year and the year after that.
    Because of the action we took in 1997 to stop inflation getting out of control, inflation in Britain has now been lower for longer than at any time since the 1960s.
    For almost 30 years, Britain's long-term interest rates were, on average, 3 per cent. higher than those of Germany. Now British long-term rates are down to the levels of Germany and today they are lower than those of the USA.
    Amid the risks of an unstable and often uncertain global economy, we are determined to maintain our disciplined approach: determined not to make the old British mistakes of paying ourselves too much today at the cost of higher interest rates and fewer jobs tomorrow, determined not to make the old mistakes of putting consumption before investment, the short term before the long term. Britain does not want a return to boom and bust.
    That is why the Bank of England has been right to take pre-emptive action on interest rates and to be vigilant on wage inflation.
    It is because the foundations on which we build are strong that the economy can both meet our inflation target and achieve steady growth.
    Our forecast is that growth this year will rise to 2.75 to 3.25 per cent., and next year and the year after that it is forecast to be 2.25 to 2.75 per cent.—in line with our view of trend growth. Manufacturing is growing by 1.75 to 2.25 per cent. this year and next year.
    And business investment grew by 7.7 per cent. last year to 14.5 per cent. of our national income, since 1998 Britain for the first time investing more of our national income than our major European competitors, even more invested as a proportion of national income than America.

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    This budget is built on the realities of the new economy—that we will meet and master a new tide of technological change by continuing to remove the old barriers to investment and enterprise and by continuing to expand employment opportunity for hard-working families.
    I can report that unemployment today is at its lowest for 20 years, that there are 800,000 more people in work since 1997 and that there are 1 million vacancies on offer.
    Take-home pay is rising—by next year, for the typical family, a real-terms rise in living standards of 10 per cent. since 1997.
    Britain's economic success depends not only on monetary stability but on fiscal stability.
    Today, I can report that because of tough decisions to cut the deficit in our first two years and lower long-term interest rates, debt interest payments will be £4 billion a year lower.
    Because of the welfare-to-work reforms that have cut unemployment, social security spending on economic failure this year is a total of £3 billion less than the plans we inherited.
    Today, Mr. Deputy Speaker, the state of the public finances is sound.
    In 1997 we inherited a current deficit exceeding £20 billion.
    A year ago I estimated that this year's current surplus would be £2.5 billion.
    I can report today that we have not only balanced the current budget but our current surplus this year is forecast to be £17 billion.
    We have met and we will continue to meet, even on the most cautious of cases, our first rule of fiscal prudence, the golden rule.
    And we are also meeting our second rule, the sustainable investment rule.
    This year debt as a share of national income will fall well below the 44 per cent. we inherited—to 37.1 per cent.
    Last year we forecast that the overall budget would be in deficit for this financial year—that public sector net borrowing would be £3 billion.
    I can now report that due to the performance of the economy and to prudent management, the budget is not in deficit by £3 billion but in surplus by £12 billion.
    We inherited a deficit of £28 billion. This year we will make a debt repayment of £12 billion.
    Too often in the past, at the first sign of a surplus, Governments have fallen back into imprudent ways.
    It is because we have learned from the mistakes of the last 40 years that this Government will maintain their prudent and responsible approach. The figures I am announcing today show that we will meet our fiscal rules over the economic cycle. We will meet our fiscal rules even in the most cautious case, on the most cautious assumptions, including the most cautious view of trend growth at 2.25 per cent.
    And Mr. Deputy Speaker, I can announce today that I have decided to lock in a greater fiscal tightening next year and the year after than we promised in last year's Budget and pre-Budget report.
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    After the measures I announce today, our projection is for a current surplus next year of £14 billion and for the years after that surpluses of plus 16, plus 13, plus 8 and plus 8.
    Debt to GDP, which was 44 per cent. in 1997, will fall to 35 per cent. next year, then 34 per cent. and then 33 per cent. in each of the next three years.
    Net borrowing will be minus £6.5 billion next year, that is, we will make a debt repayment next year of £6.5 billion.
    Then net borrowing in 2001–02 will be minus 5, a debt repayment of £5 billion, with net borrowing for the years after 2002–03 of plus 3, plus 11, plus 13, well within our fiscal rules.
    So from this stable platform of sound finances I am able to set out today our prudent and responsible approach for future years. Having met all of our fiscal rules, having paid off £18 billion of debt this year and next, and locked in a greater fiscal tightening, we are able both to set a new envelope for public spending and investment for the years from 2001 and to cut taxes for hard-working families.
    I can report that our fiscal rules enable us to increase current public spending by 2.5 per cent. a year in real terms for the three years from 2001 and double net public investment as a share of national income from 0.9 per cent. next year to 1.8 per cent. in 2004.
    Mr. Deputy Speaker, I have always said that our prudence is for a purpose.
    And in this Budget, because of our continuing prudence, we can now take the next steps towards that purpose—a Britain of opportunity and security not just for a few but for all: with stability locked in and enterprise growing, we can meet our prosperity goal—to close the productivity gap; with 800,000 more people in jobs and the work ethic being restored in every community, our full employment goal—employment opportunity for all; with 50,000 more students already and standards rising, our education goal—50 per cent. of young people in higher education by 2010; with 800,000 children already lifted out of poverty and Britain's civic society renewing itself, we can meet our anti-poverty goal—to halve child poverty by 2010, on the way to ending it by 2020.
    First, I announce major reforms today to reward enterprise and entrepreneurship, to open up competition in banking, to promote new and growing businesses and e-commerce, and to promote balanced growth across all the regions and nations of the United Kingdom.
    To remove more of the old barriers to new investment, I have decided on radical reforms of capital gains tax, beyond the tax cuts that I set out in the pre-Budget report. When we came into government and cut the long-term rate of capital gains tax for business assets held for 10 years or more, capital gains tax had been fixed at 40 per cent. for nearly 10 years. I have now decided that, to promote enterprise, we should radically cut these rates.
    I am announcing that from 6 April this year, the new capital gains tax rates for business assets will be cut from 40 per cent. to 35 per cent. after one year, to 30 per cent. after two years, to 20 per cent. after three years, and down to 10 per cent. after four years.
    I will make further tax cuts to remove the barriers that hold small and growing businesses back. Today, business investors who own between 5 per cent. and 25 per cent.

    861
    of a new and growing business do not benefit from the 10p rate. I will now cut their rate to 10 per cent. for all investments above 5 per cent. held for four or more years.
    I will make a further radical change, this time for Britain's unquoted companies. All investments held for four years in them will benefit from the 10 per cent. rate.
    With both the lowest corporate tax rates for businesses ever and the lowest ever capital gains tax rates for long-term investors, Britain is now the place for companies to start, to invest, to grow and to expand.
    I have a decision about one other tax on capital—inheritance tax. The threshold for inheritance tax is £231,000. I will raise it next year to £234,000—96 per cent. of people will be exempt from inheritance tax.
    I have one further cut in capital gains tax to be introduced from 6 April. So that millions more hard-working people have a stake in the businesses whose wealth they create, we will remove the old barriers to a share-owning democracy. The all-employee shareholding scheme, with the best tax incentives on offer, which starts on 6 April this year, has one defining requirement: that shareholding should be open to all employees.
    I can confirm that the 1.7 million people now in the save-as-you-earn scheme will continue to enjoy its benefits.
    I have also decided that high-tech firms recruiting essential personnel will be able to offer share option incentives of £100,000 for up to 15 employees.
    The Financial Secretary will now consult on a technical solution to the tax treatment of share options in unapproved schemes.
    I can go further. In future, all employee shareholders will secure all the benefits of the 10 per cent. capital gains tax rate.
    Taken together, these measures are the biggest boost for employee shareholding that our country has ever seen. It is the next step on our road to a wealth-owning democracy.
    Yesterday, in response to the Cruickshank report, my right hon. Friend the Secretary of State for Trade and Industry and I referred small business banking to the Competition Commission. Mr. Cruickshank estimated that competition could reduce banking costs and charges by up to 10 per cent., or between £3 billion and £5 billion a year.
    The money transmission system affects every cheque, every credit card and every debit transaction. It reaches from every local cash dispenser to every corporate inter-bank transfer. Today I am announcing that we will legislate to ensure that the UK payments system is open to new competition.
    The international competitiveness of the bond market in the City of London depends upon a level playing field. That is why today I am announcing that from April 2001 we will abolish the withholding tax on the interest paid on international bonds. We will legislate so that we can proceed on the basis of exchange of information nationally and internationally. This change should be widely welcomed in all parts of the House. There is no clearer indication of our determination to stand up for what is right for Britain.
    Since 1997, the number of small businesses in Britain has risen from 1.2 million to 1.3 million—a 100,000 increase.
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    Today I want to continue to remove the old barriers to small business growth.
    Having already cut small business corporation tax from 23 per cent. to 20 per cent. and, for the first £10,000 of their profits, to just 10 per cent, I am today making a further tax reduction. For all small and medium-sized businesses the 40 per cent. capital allowances—which I introduced in the 1997 Budget—will be made permanent.
    This will be of special help to manufacturing companies.
    Half manufacturing employment is in small and medium-sized firms, so manufacturing will derive further benefit from the £150 million I am allocating to our new research and development tax credit, which will be introduced on 6 April, to finance 30 per cent. of the research and development costs of small firms.
    I also want to make Britain the best environment for e-commerce and for us to catch up with America as swiftly as possible.
    To encourage 1 million small businesses to go on line, we will introduce a special tax reduction. For the next three years, any small business buying computers, or investing in e-commerce and new information technologies, will be able immediately to write off against tax the full 100 per cent. of the cost in the year of purchase.
    Side by side with this incentive, the Small Business Service will offer consultancy, advice and planning to help small businesses get on line and become e-companies—and with the additional resources that my right hon. Friend the Secretary of State for Education and Employment is providing for the university for industry, which starts this autumn, it will be able to offer small business employees training on the internet.
    We are determined to lead in e-commerce and the internet. Today we are introducing new rules for work permits in areas of highly skilled information technology where there is a global shortage.
    To promote the use of the internet we will legislate for other tax cuts—a £100 tax cut for electronic filing of tax and VAT returns, and a further £50 tax cut for electronic filing for those paying the working families tax credit.
    Tax cuts since 1997 are now worth £1 billion a year for small businesses alone.
    After today's measures, Britain now has the lowest small business corporation taxes we have ever had, the lowest in the industrialised world. Since 1997, for small companies there has been an average tax cut of almost 25 per cent.
    To encourage the next generation of entrepreneurs, we are forming a partnership with the CBI, the Institute of Directors and the chambers of commerce to encourage enterprise in all communities. Two new enterprise funds will target business loans and management scholarships to high unemployment areas.
    Stage by stage we are moving from the Britain where enterprise was a closed circle for the few, to a Britain where enterprise will be open to all.
    We must also remove the old barriers of under-investment and neglect that for too long have held our regions back.
    Working with the new regional development agencies and the Small Business Service, our aim is balanced economic development across all the regions and nations

    863
    of the United Kingdom, with a modern regional policy supporting local innovation, investment and improved infrastructure.
    To finance a network of regional venture capital investment funds, we are today announcing a partnership with the European investment bank and the private sector—with a target of £1 billion for new economic development for our regions and nations.
    The regional targets will be £85 million for the south-west, £120 million for the north-west, £130 million for the north-east and Yorkshire, £250 million for the midlands and the east, and £250 million for London and the south-east. Scotland, Wales and Northern Ireland will have their own funds.
    To promote further a modern regional policy, the Secretary of State for Trade and Industry will be announcing a regional innovation fund to facilitate the formation of local clusters in high-tech industries.
    For years, Britain has lagged behind America in business access to venture capital investment. It is only half as much per head here as in the United States.
    I am grateful to Mr. Paul Myners, who has agreed to head a review of institutional investment, to report to me in time for the next Budget.
    Our goal for the whole of the United Kingdom is to remove the old barriers to full employment.
    We know that greater opportunity for all means greater prosperity for all.
    Since 1997 the number of unemployed on benefits has fallen by 30 per cent.
    Youth unemployment is down 70 per cent. and nearly 200,000 more young people have now found jobs.
    Long-term youth unemployment, which in the mid-1980s was 500,000, and even in 1997 was as high as 200,000, is already down to 50,000.
    The new deal demonstrates how false was the old choice between enterprise and fairness, between efficiency and equality. By delivering employment opportunity for all, we are making Britain more enterprising and more fair, to the benefit not just of the high unemployment areas, but the whole country.
    And because we have succeeded in this Parliament in removing the old barriers to employing the young, I can announce that starting from April next year we will extend the opportunities and the obligations of the new deal to the long-term adult unemployed with four options: work, work-based training, work experience including in the voluntary sector, and self-employment—but no fifth option, no staying at home on benefit doing nothing.
    The relationship we are forging between rights and responsibilities is firmly rooted in both economic opportunity and individual responsibility.
    Instead of being left to draw benefit at a social security office, the unemployed who are able to work will sign on to seek work, with the long-term unemployed offered the help of a personal employment adviser.
    To ease the transition back to work, the Government will introduce a new job grant for long-term unemployed starting at £100 and help with rent or mortgage.
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    Instead of benefits paying more than work, work will pay. And we will extend the principle of the working families tax credit.
    From 1 April, as a first stage, all long-term unemployed over 50 who want to return to work will be guaranteed a minimum income for their first year back—for wages of up to £15,000 a year, an extra payment of £60 a week.
    And building on the forthcoming rise in the national minimum wage, I am today also increasing the working families tax credit. It is already being paid to 1 million families in our country. And with today's family tax cut, the minimum family income will rise next April from £200 a week by 7 per cent. to £214 a week.
    Full employment is not just about the right to work, but, where there are jobs, the responsibility and the requirement to do so.
    We will implement the report of Lord Grabiner QC.
    Starting in May, a confidential phone line will advise claimants on how to move from the hidden economy and end fraudulent benefit or tax claims, and how to get work, register as a business, or become self-employed. After six months, from 1 January, for those who fail to respond, tougher rules and penalties will be imposed.
    From October, in the 20 highest unemployment areas of Britain covering 120,000 unemployed, local special action teams will be set up to help local unemployed people into nearby vacancies.
    The number of lone parents on income support has fallen by almost 100,000 since 1997.
    But the employment rate among lone parents in Britain is still only 45 per cent., far below the 70 per cent. to 80 per cent. rates of America, France and Scandinavia.
    In this Budget we also remove old barriers to work and I can today announce an extension of the new deal in a new way to half a million lone parents.
    Piloted from this autumn, and starting nationally from next April, lone parents with children over five will be invited to work-focused interviews and encouraged to take up new choices: the choice to train for work with a new cash payment of £15 a week on top of benefits for training; the choice of a few hours work a week, with the first £20 of earnings allowed with no reduction in benefit; the choice of part-time work with a guaranteed £155 for 16 hours of work, or the choice of full-time work on a guaranteed £214 a week; and on every rung of this ladder of opportunity there will be help with back-to-work costs and with child care.
    Just as we remove old barriers to lone parents working when their children go to school, so we will help mothers who want to be at home in the first months of their child's life.
    Today, too many children are born into poverty because the family income drops when the mother stops work. Yet this is the time when many mothers feel they need to be at home with their young child.
    The Secretary for Trade is announcing today he will review what improvements can be made in maternity pay and parental leave to improve family friendly employment.
    Today I can announce immediate decisions which recognise the extra costs families face when a child is born.

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    For all low-income mothers who meet the basic requirement of health check-ups for their young child, we will increase the maternity grant from £200 to £300—helping over 200,000 low-income mothers.
    Mothers on paid maternity leave who would otherwise fall into income support will now stay on working families tax credit.
    Families receiving the credit where the mother wants to stay at home will no longer have to wait as long as six months for additional support after the child is born and this support will be worth up to £30 pounds a week for a mother.
    I have examined the alternative that has been put to me of a transferable tax allowance for husbands and wives when mothers stay at home.
    Under this system, a family with two children on £15,000 a year would receive £965 a year. The working families tax credit is far better. With the improvements in it announced today the same couple would receive not £965 a year but £2,200 a year.
    The Prime Minister has set a national goal for our country—to abolish child poverty in 20 years, and to halve it by 2010.
    A sure start for all Britain's children is not only right but it is the best anti-crime, the best anti-drugs, the best anti-unemployment and the best anti-dependency policy for this country's future.
    Our strategy starts from the foundation of universal child benefit for all 7 million families with children.
    When we came to office, child benefit was just £11.05 for the first child.
    Child benefit will now be £15.50 from April 2001, 40 per cent. more than in 1997.
    For young children in the poorest families, weekly support in 1997 was just £28.
    We have raised that in every Budget and today the Social Security Secretary is announcing a further increase for the poorest children of £4.35 a week.
    So maximum support is up from the £28 of 1997 to up to £50 a week next year.
    As a result of all our measures, the poorest two-child family on income support will be £1,500 a year better off. The low-paid family with two children on a wage of £10,000 will now be £2,700 a year better off.
    This is what we mean by tackling child poverty and making work pay.
    I can now report that the numbers of children lifted out of poverty this year will rise beyond 1 million, and next year reach 1.2 million children—it is the greatest reduction in child poverty in 50 years and our country is now at last fulfilling this generation's obligations to the next.
    As we move forward to take the second million children out of poverty, I can confirm that the Social Security Secretary and I have agreed on the next major reform.
    Over the next three years, building on the foundation of universal child benefit, we will create an integrated and seamless system of support for children paid to the mother.
    The war against child poverty needs more than finance and it needs more than the efforts of government alone.
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    It can only be won by the combined efforts of private, voluntary, charitable and public sectors all working together.
    After consultation with charities and voluntary organisations, we will proceed to set up, in every region of our country, and with cash allocated in our spending review, not just one children's fund but a network of local and regional children's funds to support work by the voluntary sector in meeting the needs of children.
    A strong civic society is built not by rights alone but by rights and responsibilities and by the shared pursuit of the common good—which every year in this country enlists the energies and realises the idealism of more than 22 million citizens.
    It is time for government to do more to extend and encourage this civic patriotism.
    All voluntary organisations and charities will benefit from the tax reforms we are announcing to make it easier to give money and to give time.
    From 6 April this year for every pound any taxpayer gives to charity, the Government will add an extra 28 pence.
    To encourage payroll giving, for every pound contributed through the pay packet, the Government will add up to 50 pence worth of tax relief.
    Tax relief will be available not just for cash donations, but for gifts of shares.
    To encourage corporate giving, any company, from 1 April, can receive tax relief on the full amount of any donation.
    Within prescribed limits, I will go further in exempting ticket sales for charitable fund-raising events from VAT, so that the contributions people make will go straight to the charities they support.
    And each of these measures will also help those charities and non-governmental organisations which, with the Churches, have for decades led the crusade to combat third-world poverty and secure debt relief.
    With these reforms, the Government match their commitment because the Government share their cause which is a virtuous circle of debt reduction, poverty relief and economic development for the poorest countries of the world.
    A strong civic society takes seriously its obligations to our elderly: to the very poor pensioners whom we must help out of poverty; to those just above benefit levels whose lifetime savings should not—as in the past—be a barrier to securing a better retirement income; and to those who, while better off, are on fixed incomes.
    The Secretary of State for Social Security is to launch a consultation on how, for the next Parliament, we can develop a new pensioners credit designed not only to lift the poorest out of poverty, but also to do more for those with modest occupational pensions and those with savings who should not be penalised for having worked hard all their lives and saved for their retirement.
    Under the framework on which we will consult, an older pensioner with income, for example, of less than £100 a week, or a couple with less than £150 a week, would qualify for a credit to raise their income.
    While we consult on this reform, we will also make immediate changes. The pensioners tax allowance will be set this year at £5,790, and for those over 75 at £6,050.

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    Nearly 6 million pensioners will not pay any income tax at all. With the new 10p rate on savings, one and a half million pensioners will, for the first time, pay tax at half the rate of the past—at 10p, not 20p.
    And I have decided to do more today for elderly citizens with modest savings whose thrift has perversely and unfairly debarred them from receiving the income they need. For years any pensioner with savings over £3,000 has lost out on income support. The last Government froze the limit at £3,000 in 1988. I have decided from next April to double the limit, raising it from £3,000 to £6,000.
    The cut-off point for income support was frozen at £8,000 of savings in 1990. We will raise that to £12,000. As a result, 500,000 elderly people—previously penalised for their thrift and savings—will be on average £250 a year better off. Many will be better off by £1,000 a year.
    Fuel poverty has scarred our country for too long. That is why in our first Budget we cut VAT on fuel, and why in the second Budget the winter allowance was introduced at £20. Then in our third Budget it was raised to £100, available to all eight and a half million households with a resident over 60.
    Under this Government, the winter allowance will be paid this year, and it will be paid every year. I have considered whether to raise the allowance in line with inflation, which would put it up by £3 to £103, or in line with earnings, which would raise it to £104.50. I have decided in this Budget not to raise it by £4 or even £5, but to raise it by £50 to £150. This winter allowance, at £150, will now cover up to four winter months of a hard-pressed pensioner's fuel bill.
    I can also announce that 600,000 of our elderly will benefit from the new affordable warmth programme to install fuel-efficient central heating in a million homes throughout Britain.
    Beginning on 1 November, all pensioners over 75 will receive the free TV licence, worth £104. And I can announce that any pensioner over 75 who has an unexpired licence which runs beyond 1 November will be eligible for a refund for every unexpired month.
    These new measures will complement next year's rise in the retirement pension. Based on forecast rates of inflation, we can expect the pension rise in April 2001 to be more than £2 for single pensioners and over £3 for couples.
    Of all the measures to lift our poorest pensioners out of poverty, the minimum income guarantee is the most essential. We will raise it in line with earnings next year. For a single pensioner it will be worth £82 a week, for those over 80 it will be £90 a week, for couples it will be £127, and for those over 80 it will be £137.
    Taking these measures together—the winter allowance, the TV licence and the higher minimum guarantee—by April next year 1 million pensioners in our country, compared with 1997, will be £20 a week, or £1,000 a year, better off.
    As we look to the future, I want all to be able to achieve the security of a wealth-owning democracy, with prosperity reaching the people and places the economy has too long forgotten.
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    We want to do more to help people start a bank account and start saving, more to help people invest in their pension, more to help people get on the first rung of the savings ladder and make provision for their future.
    Today in Britain, unfortunately, up to 3.5 million adults have no bank account. The Cruickshank report has revealed that a basic affordable bank account would be profitable for the banks and that using banking facilities—and not the cash economy—just to pay gas and electricity bills alone could save families £50 a year, or £1 a week.
    So I am now inviting the banks and the Post Office to work together to offer this basic banking service to all, and I want working families to be able to move seamlessly from starting an account to starting to save.
    I have already announced measures to reward pensioner savings.
    This year 6.5 million individual savings accounts have already been started. For the coming year, the ceiling was announced at £5,000 of savings. Instead, for one more year I will keep the ceiling at £7,000.
    I said last November that I would, in future, make an annual Budget decision on one matter: real-terms rises in road fuel duties—the money to go to a new ring-fenced fund for roads and public transport.
    Since the pre-Budget report, world oil prices have risen rapidly from $23 to $30 a barrel.
    So, in this Budget I have decided that, beyond the automatic inflation rise of 2p a litre, there will be no real-terms rise in road fuel duties.
    To encourage the use of ultra-low sulphur petrol, I will set that fuel duty at 1p per litre below other petrol from 1 October.
    An extension to the new lower rate vehicle excise duty comes in on 1 March next year. Until that date and for the rest of this year, I have decided—for all cars—to freeze vehicle excise duty.
    At present, the lower rate—at £55 below the standard rate—is available for 1.5 million cars.
    From next year I will extend the reduced rate of vehicle excise duty to cars at 1200 cc or below.
    This will cut vehicle excise duty to £105 for 2.2 million additional cars and the reduced rate will now cover almost 4 million cars.
    I am also introducing from 1 March next year, for newly purchased cars, a four band vehicle excise duty rewarding the most environmentally friendly vehicles.
    Under the rates I am publishing this afternoon, 95 per cent. of new cars will pay less than they would under the current vehicle excise duty system. Half of them will pay at least £30 less.
    We will also cut the vehicle excise duty for 40,000 38-tonne and 41-tonne lorries by £500; the 40-tonne class lorries will have their rate cut by £1,800; for all other heavy lorries rates will be frozen.
    The environmental impact of these tax cuts—taken together with the revenue neutral proposal for company cars—will be a reduction in carbon emissions of 1 million tonnes by 2010, helping to meet the Kyoto targets that were negotiated by my right hon. Friend the Deputy Prime Minister.
    This is on top of the 5 million tonnes reduction in carbon emissions by 2010 as a result of the climate change levy, which is also revenue neutral and on which the Financial Secretary to the Treasury is publishing further details today.

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    To further cut pollution we will legislate the aggregates levy, which will again be made revenue neutral through a further 0.1 per cent. cut in employers' national insurance.
    These two measures taken together cut employers' national insurance contributions by £1.35 billion.
    There is also a strong environmental case for reducing stamp duty for development of brown-field sites, as recommended by the Rogers report. The Paymaster General will now consult in detail on that measure.
    For the property market, in addition to the previously announced withdrawal of mortgage interest tax relief, stamp duty on property sales will be raised for sales above £250,000 to 3 per cent. and for sales above £500,000 to 4 per cent. For properties below £250,000 I propose no change and I also propose to freeze insurance tax.
    Last year I froze duties on all spirits.
    This year an inflation rise would push the price of whisky up by 22p a bottle.
    Because of the competitive position of the industry, I will this year continue to freeze duty on all spirits.
    Beer will rise only by inflation—by 1p a pint—and wine only by inflation—by 4p a bottle.
    Now that the return-leg exemption for air fares has been found in breach of single market law, I am taking the opportunity to introduce a new, fairer and lower air passenger duty—at an overall cost to the Exchequer of £80 million a year. The tax on economy flights within the UK will be the same or lower. For economy flights outside Europe the rate will remain at £20 and there will be a new business-class rate of £40.
    Thirty million economy passengers travelling to Europe will have air passenger duty cut in half—from £10 to £5—and on flights from the Scottish highlands and islands, I will abolish air passenger duty altogether.
    On tobacco, my hon. Friend the Paymaster General will tomorrow announce tough new measures to tackle smuggling.
    Cigarette taxes will rise by 5 per cent. above inflation from tonight by 25p a packet—with every penny of the extra revenue going, as I promised, to funding our hospitals and the national health service.
    I am also commissioning a long-term assessment of technological, demographic and medical trends over the next two decades that will affect the health service, to report to the Treasury in time for the start of the next spending review in 2002.
    I have a number of other fiscal decisions to make. Debt interest payments are down by £4 billion a year and because we have not spent and we will not spend more at the expense of being prudent, we have also made the tough decisions to tackle benefit fraud, to move people from welfare to work, and to control the social security budget.
    Social security spending, which grew by nearly 4 per cent. a year in the last Parliament, will grow by less than 1 per cent. a year in this Parliament.
    In fact, compared with last year's Budget forecast, social security spending is lower this year by £2 billion and will be another £2 billion lower next year, a saving of £4 billion in all.
    Because we have cut borrowing and reformed the welfare state, cutting the costs of social and economic failure, and because we have been financially disciplined, extra resources are now available for our priorities. A Budget is about priorities.
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    In my pre-Budget consultations I have read carefully detailed Budget representations and examined proposals from both sides of the House, including one from the current shadow Chancellor, who said on 6 March
    he can either reduce taxes or increase public spending. What I would recommend is that he use that money to reduce … taxes.
    I have examined proposals for transferable tax allowances costing £4.25 billion, for private health insurance tax reliefs at £½ billion, for abolishing capital gains tax at £3.9 billion and top rate tax cuts at £690 million for every 1p and I have established that, for these last two alone, 75 per cent. of such tax cuts would go to the wealthiest 5 per cent. of the population, leaving us nothing extra for public services like the national health service. Because the proposals are made irrespective of economic circumstances, they would risk a return to boom and bust.
    I have decided instead on a prudent and responsible approach that allows us to repay debt and lock in an even greater fiscal tightening, and that allows us, even after meeting our fiscal rules, to target tax cuts on hard-working families and to release for our public services in the coming year alone additional resources of £4 billion. These extra resources are not at the expense of our prudence; they arise because of our prudence.
    I can announce an immediate new investment of £280 million in transport, £250 million of it to a ring-fenced fund for improving roads and public transport, including transport in rural areas. My right hon. Friend the Deputy Prime Minister will be making a statement on individual allocations for the coming year later this week.
    I am able to announce an additional £285 million to be spent from April on fighting crime. Later this week my right hon. Friend the Home Secretary will announce further details.
    I am also announcing additional investment in UK education starting on 1 April of an additional £1 billion.
    Under the leadership of the Secretary of State for Education and Employment, class sizes for 5–7 year olds in primary schools are being cut and significant improvements in reading, writing and maths achieved. Last year, he made a payment to every primary school for books of £2,000. Now this year, cash also will go directly into the classroom. To support his drive for literacy and numeracy, every one of the country's 18,000 primary schools will, from 1 April, receive a new payment for books, equipment and staffing of £3,000 for the smallest school, rising to £9,000 for schools with more than 200 pupils. This money will go straight to the head teacher. Schools offering special tuition to help the weakest pupils catch up will be able to draw on an extra £20 million to boost pupil results.
    The Secretary of State is also proposing to back up reforms in secondary schools with new measures to boost the performance of those falling behind and to raise the performance of all pupils by the age of 14. To support these reforms in our secondary schools, he will now make a payment to every head teacher for books, equipment and staffing.
    Last year, we were able to make an extra payment for books and equipment of £2,000. This April, every one of these 3,500 secondary schools will receive a minimum payment of £30,000, and £50,000 for schools with over 1,000 pupils.
    Those measures alone amount to £300 million in new investment—money paid direct to the school for use in the classroom.

    871
    To advance our goal of 50 per cent. of young people in higher education, the Secretary of State for Education and Employment will announce that three times as many 16-year-olds will, from this autumn, benefit from the new educational maintenance allowances, which are worth up to £30 a week, to persuade people to stay on at school. Next month, he will launch a national campaign to raise school staying-on rates.
    Further announcements on the full allocation of additional moneys for education will be made by the Secretary of State, on Thursday, and by the Scottish and Welsh Administrations and the Northern Ireland Secretary. However, I can announce that, for the year from 1 April, the real-terms rise in the UK's educational expenditure will next year be 8 per cent.
    After these new spending decisions, I have a decision to make on income tax. Our prudent approach allows us to repay debt, invest in public services, and cut taxes for hard-working families. So I will proceed from 6 April with our 1p cut in the basic rate of income tax, from 23p to 22p—the lowest basic tax rate for 70 years. I am also combining this cut in income tax with a further direct tax cut—a family tax cut.
    Next April, for 5 million families with children, the new children's tax credit will be increased from £416 to £442. For those families, this credit will now be worth twice as much as the old married couples allowance it replaces. It reduces the family tax bill, from next April, by a total of £8.50 a week, on top of rises in child benefit. Taken with the 10p income tax rate, the 22p basic rate and the normal indexation of tax allowances and thresholds, next year's tax burden for the working family will be the lowest since 1972—a fall from the 21.5 per cent. we inherited, to 18.8 per cent.
    As I said, a Budget is about priorities. A choice has been posed in these last few months between investing in a national health service financed by public expenditure with access based on need, and privatised health care dependent on private insurance. This Government are committed to a publicly funded national health service true to the original principles of its founders. Securing the long-term future of the NHS is one of the great challenges this country must and will meet.
    Tomorrow, the Prime Minister will make a statement to the House on the work he and the Health Secretary will lead over the next four months on reforms and modernisation of the health service. The Government's plan, to be published in July alongside the detailed public spending allocations, will address long-standing variations in efficiency performance and health outcomes, and the right balance between preventative, primary and hospital care.
    Now that the overall public spending total is set for the years until 2004, I have decided that we can back long-term reform with long-term resources for the health service by today announcing the NHS allocations not just for one year, but for the next four years.
    Since its creation, national health service spending has risen by an average 3.3 per cent. a year above inflation. Under the last Government, it rose by 2.9 per cent.
    872
    We have decided that in the years from now until 2004 the NHS will grow by twice as much—by 6.1 per cent. a year over and above inflation; by far the largest sustained increase in NHS funding of any period in its 50-year history.
    Last year, the equivalent of just over £1,850 per household was spent on the NHS. By 2004, more than £2,800 per household will be spent—half as much again for health care for every family in the country.
    In the last year alone, there has been an increase of 4,500 in the nurses working in the health service. This is just a start. With today's extra resources, and the reforms still to come, we can plan next year and the year after to recruit at least 10,000 more nurses, and with new money announced today, we will train and recruit even more in the years to come.
    Let me emphasise that more resources must mean more reform and modernisation. The Prime Minister, in his statement to the House tomorrow, will set out how, with the guarantee of sustained investment, the Government, the professions and the whole of the NHS can come together to rise to the challenge of delivering better health care for all.
    I can make one further announcement. In 10 days' time—at the beginning of the new financial year—the NHS was scheduled to have a £2.9 billion addition on last year.
    I have decided that we should raise that figure with immediate effect by allocating not only the £300 million in tobacco revenues I promised last autumn, but by adding to that to achieve in total an extra £2 billion, making a rise next year of £4.9 billion—extra money the NHS can start using from 1 April.
    So health service spending will rise from last year's £45.1 billion, and this year's £49.3 billion to: next year, £54.2 billion; the year after, £58.6 billion; then £63.5 billion; and then from April 2003, £68.7 billion—over these five years, a cash increase of 50 per cent., a real-terms increase of 35 per cent.
    This is new money we can provide because we have made our choice. It is a Budget that unites the whole country, a Budget for all the people.
    We have been prudent for a purpose: a stronger, fairer Britain. I commend this Budget to the House.
    Mr. Deputy Speaker: Under Standing Order No. 51, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate. The version that I will put to the House is on a single sheet, headed "Revised", and not the one in the main booklet of resolutions.

    PROVISIONAL COLLECTION OF TAXES
    Motion made, and Question,
    That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:

    (a) Hydrocarbon oils (rates of duty and rebate) (motion No. 5):

    (b) Tobacco products (rates of duty) (motion No. 10):

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    (c) Vehicle excise duty (rates for goods vehicles etc.) (motion No. 17):

    (d) Disposal of assets for which a VAT repayment is claimed (motion No. 19)—[Mr. Gordon Brown.]

    put forthwith, pursuant to Standing Order No. 51 (Ways and means motions), and agreed to.
    Mr. Deputy Speaker: I now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the law". It is on that motion that the debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the Budget debate next week, and they will then be decided without debate.

Budget Resolutions and Economic Situation

  AMENDMENT OF THE LAW
  Motion made, and Question proposed,
  That it is expedient to amend the law with respect to the national Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting a supply, acquisition or importation;

  (b) for refunding an amount of tax;

  (c) for varying any rate at which that tax is at any time chargeable; or

  (d) for any relief, other than a relief which—

  (i) so far as it is applicable to goods, applies to goods of every description, and

  (ii) so far as it is applicable to services, applies to services of every description.—[Mr. Gordon Brown.]

  4.25 pm
  Mr. William Hague: As ever, I congratulate the Chancellor on his delivery of his speech. Last year I seem to remember that I compared him to meeting a man in a pub who says, "Lend me a fiver and I will buy you a drink." This year, the Chancellor actually did borrow a fiver to buy his breakfast this morning in the Treasury, and that makes a serious point—much of the money that people pay in taxes disappears into the Chancellor's pockets without being used for any practical benefit for anyone else. I have no doubt that we will see more of that happening after today's Budget.
  The Chancellor's Budgets have tended to follow something of a pattern, in which he gives his account of the Budget which—to put it charitably—is often incomplete, as we have discovered on previous occasions. All his hon. Friends behind him then play the role of the useful idiot, cheering in the naive belief that they have got the full picture. Then it turns out, a few hours or days later, that the full picture is rather different.
  This year, we have seen elements of the Red Book in the past few minutes, and they show many things to which the Chancellor did not allude in his speech. For instance, he did not give many figures on the tax burden in the speech that he just delivered. [Interruption.] Well, he said it was falling last time and that turned out not to be the case, as the Prime Minister's press secretary has now revealed. There is no point the Chancellor now claiming that the tax burden is falling.
  From the figures in the Red Book, it turns out that the savings ratio has been revised downwards again, and that after being 5.75 per cent. this year, it will be 5.5 per cent. in the next year. That is much less than forecast in the pre-Budget report. Of course, that is one of the reasons why interest rates are higher than they would otherwise be, why the pound is higher than it would otherwise be and why the balance of payments deficit is higher than it would otherwise be. The Red Book shows, but the Chancellor failed to inform the House, that that deficit is set to grow from £15.5 billion to £28.25 billion over the next three years. There was a time when such figures would have featured in the Chancellor's speech when he

  875
  gave the Budget to the House, but they do not feature in the speeches of this Chancellor, who gives a selective account of the Budget to the House and to the nation.
  It was interesting, too, that when the Chancellor gave the forecast figures for growth over the next two years and referred to business investment growing by 7.75 per cent. this year, he then did not read out the figures for next year. That is because the growth falls from 7.75 per cent. to 2.5 per cent. next year. Why was he curiously unable to read out that figure, having read out the comparable figure for the next year on every other parameter on which he chose to comment? That shows productivity growth slowing down and business investment flattening out and declining as a share of gross domestic product, after six years of growth. One thing we know for sure is that the account of the totality of the measures that we have heard is incomplete, and the most cursory, momentary analysis of the booklets that are produced with the Budget show that to be the case.
  The Chancellor stood up to address the House as a tax-raising Chancellor, and he sat down as a tax-raising Chancellor. He sat down as the stealth Chancellor who taxes more and delivers less. Nothing he said in his speech will stop the £4.5 billion of new taxes set to hit people next month, which have already been announced in previous Budgets—or at least in the documents that accompanied them. That is a £4.5 billion total of new stealth taxes heading people's way in a few weeks' time. Of course, those come on top of a lot of previous tax announcements. Any reductions announced today pale into insignificance beside the huge increases that are already in place or in the pipeline. The Chancellor is like a mugger who grabs someone's money and then wants that person to thank him for providing the bus fare to get him home. At the same time as he has done that, hospital waiting lists have risen, police numbers have fallen, class sizes have increased, asylum controls have collapsed and the transport system is at a standstill.
  As usual, the Budget included one or two reannouncements, such as the 1p reduction in the rate of income tax. The Chancellor enjoyed reannouncing that. But what about reannouncing the abolition of the married couples allowance, which will cost people £200 a year from next month? What about reannouncing the abolition of tax relief on mortgages, which will cost families £225 a year from next month? What about reannouncing that millions of single-earner married couples with a mortgage will be paying more income tax next year even with the cut in the basic rate? What about reannouncing the imposition of national insurance on benefits in kind such as health insurance? What about reannouncing all the other new taxes that people are now paying as a result of the right hon. Gentleman's activities—for example, the pensions tax, increased savings tax, fuel duty increases, taxes on charities, rises in stamp duty, the abolition of tax relief on health insurance for pensioners, higher taxes on smokers and drinkers, increases in gaming duty and increased taxes of many other sorts? Where were they? Why did not they feature in the right hon. Gentleman's speech?
  The Chancellor talks, seemingly with great authority, about e-commerce, the internet, promoting enterprise and competing in the internet age. However, his new stealth tax on self-employed contractors is destroying all that.
  876
  That tax did not appear in this Budget or in the previous one. It is known as IR35 because it appeared only as Inland Revenue press release No. 35. It is a £475 million tax on our future that is driving many high-tech businesses abroad.
  I received a letter the other day from a person with such a business, who wrote—[Interruption.] I will send the Chancellor the letter. He wrote that he was in the process of closing down the company because IR35 had damaged his business to the extent that it was not worth continuing any more. It is—[Interruption.] The right hon. Gentleman is not listening because he does not like to listen to the truth about what his policies do to people. He should listen to people who are in business because he has not worked in a business for one day in his life.
  The business man who wrote to me said:
  My financial adviser told me that something like 70 of his existing … clients are either leaving the UK or seeking other ways of making a living.
  The right hon. Gentleman is the first person since Lord Healey to create a brain drain in this country. He talks about e-commerce and the internet but he taxes businesses in those areas and drives them out of Britain. He talks also about charities, and of course I welcome his decision to increase tax breaks for charities. As ever with the right hon. Gentleman, we shall need carefully to examine the detail.
  It speaks volumes about the Chancellor and the Government that even charities have found that while he gives with one hand he has taken more away with the other. In the light of the tax increases on charities, dividend tax credit changes and other tax rises, the chief executive of Barnardos has said:
  We applaud Mr. Brown's commitment to a "new age of giving", but feel that many corporate and individual donors would be surprised to learn just how much of their contributions are being clawed back by the Government.
  For everyone else it is a new age of giving, but for the Chancellor—taking together his Budget and its impact on charities—it is an age of taking, and taking again.
  Last year, the Chancellor announced the abolition of the married couples allowance. He announced that it would be replaced by the children's tax credit, and he made further announcements about that today. Yet the replacement arrives a year after what it is replacing has gone. The Chancellor has done nothing to address that problem. We now have a new definition of the gap year: it is a gap year for parents and children. Even the Deputy Prime Minister would not be very happy with a train operating company that phased out the 9.15 to Waterloo a year before it phased in the replacement bus service. However, that is now the Chancellor's method.
  The Chancellor is taxing more and delivering less. That is why taxes are increasing, and no amount of weasel words, Government spin and stealth taxes can disguise the truth that the tax burden is rising and will continue to rise. The Organisation for Economic Co-operation and Development now describes it as the fastest-rising tax burden in the industrial world. The Institute for Fiscal Studies has stated that
  there is no question but that UK taxes are rising … there is no way Labour can get the tax burden back down to the level it was at the beginning of this Parliament.
  Even the Fabian Society has said that the

  877
  Government may like to emphasise its headline tax cuts, but in fact the overall burden of taxation has risen since it came to power.
  The Chancellor said, just after I started my speech, that the tax burden is falling. However, he has been saying that for the past three years, and we know that it is not true. No amount of fiddling the official figures can hide the fact that the overall tax burden is much higher than when the Government came to power.
  The Chancellor claimed today to be cutting taxes and increasing spending on public services. That will come as news to the Prime Minister, who said for months that it was impossible to do both at the same time. He has therefore torpedoed the argument that the Prime Minister often uses in the Chamber—but perhaps he was only getting revenge for what the Prime Minister and his press secretary did to him a few days ago.
  Whenever the Chancellor was in trouble previously, he claimed—as he did a few moments ago—to be cutting taxes. However, the Prime Minister's press secretary last week blurted out the truth. Thanks to the decision to hold Lobby briefings on the record, I have a transcript from last Tuesday. The press secretary began by saying,
  Please don't ask me complicated questions about tax.
  In that, he takes a lead from his boss, the Prime Minister. When figures were put to him showing that the tax burden was rising, he came clean, and his actual words are worth listening to. He said:
  Yeah … those are the figures as set out in their last the PBR—either Budget or, whatever, red book, the projections, Tory projections had they been—yeah—I dunno—whatever.
  That is how the Prime Minister's press secretary conceded that the tax burden was rising. It is no consolation that the real Deputy Prime Minister is no more eloquent than the official one. That is what he actually came out with.
  Let us examine some of the other proposals in the Budget. The Chancellor made a lot of announcements about public spending on health and education. To prevent the Government distorting the Opposition's position in the future, I state that the Opposition unambiguously welcome the new money for hospitals and schools—new money that the Conservative Government were always able to find.
  Mr. Giles Radice rose—
  Mr. Hague: Is the right hon. Gentleman asking me to give way?
  Mr. Deputy Speaker: Order. I shall deal with this. There is no need for the right hon. Gentleman to persist on his feet, as it is quite clear that the Leader of the Opposition is not giving way. Indeed, it is not customary to do so at this stage of the debate.
  Mr. Hague: I should be happy to change the custom, if the Chancellor would give way during his Budget statement in future. We could then correct him as he goes along, instead of having to correct him afterwards, as happens now. That would be the basis on which I would give way in return.
  However, we have all learned from bitter experience not to take the Chancellor's Budget soundbites at face value. We shall examine very carefully all the announcements about public services that he has made today. We know all about the Chancellor's triple
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  accounting, according to which two plus two equals 12 for three years. When one looks at the figures, the £21 billion extra health spending promised in previous announcements turns out to be £3 billion a year for three years.
  The Chancellor's announcements occasionally grab the headlines on Budget night, but they often leave a sour taste in the mouths of doctors, nurses and patients, whose expectations are raised and then dashed and who see waiting lists getting longer and longer. Last week, the chief executive of the respected King's Fund said on the "Panorama" programme:
  I think it's very misleading … it is the wrong way of actually presenting these figures. I've never seen it done before, and I have to say it is not just the NHS, it's in education and other spending areas where they've done the same thing.
  The Chancellor's other favourite trick is the constant reannouncement of Government spending. We shall have to look carefully for that in the speech that he just made. We remember the new money for IT in schools, and the Chancellor spoke about that again today. However, money for IT in schools was originally announced by the Chancellor in 1997. It was reannounced by the Secretary of State for Education and Employment in October 1997, by the Prime Minister in November 1998, and again by the Secretary of State for Education and Employment in April 1999. There were 16 announcements of the same money, with the same gullible people falling for it every time. [Interruption.] There is no point in Labour Members making a din when being informed that they were taken for a ride on 15 separate occasions. That is how the Government tend to do these things.
  After all that, the Government have not delivered on their promises. 1999 was meant to be the year of delivery. Then a Blair aide was reported in The Independent on Sunday as saying:
  Did we say 1999 was the year of delivery? It was always going to be next year when things really started to happen.
  What does the Prime Minister do when faced with that reality? He orders up a round of speeches to show that the Government are delivering. But no amount of talking will achieve that when police numbers have fallen, the waiting lists to get on the waiting lists are longer and class sizes have actually increased.
  The Chancellor said that he would meet some of those problems with his increase in tobacco duty, ring-fencing it for use in the health service. [Interruption.] I have some questions to ask—occasionally we have questions that the Chancellor ought to answer. Can he confirm that despite increasing tax rates, tobacco duty revenue actually fell between 1998–99 and 1999–00? That is due, at least in part, to the increase in the amount of tobacco smuggled into the country, avoiding the payment of tax at all. The right hon. Gentleman does not seem to have read the report of the Government's smuggling tsar—they now have a smuggling tsar because so much smuggling takes place—which concluded that increased duty was a major contributory factor to increased smuggling.
  The Chancellor's hypothecated money for the health service may be another announcement of extra money that does not arrive. If it is additional to planned health service spending, we are entitled to ask what happens when it varies or when the amount is lower than expected. If it is not additional, what is he going on about? It is a sad comment on his failure to deliver that he has to rely on

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  the hypothecation of taxes to try to persuade people that the money is going somewhere useful, which he has failed to persuade them of in the past.
  The right hon. Gentleman had more to say about his tax credit programme—a programme so complicated that I think he hopes nobody else will understand it. His repeated announcements always impress Labour Members of Parliament, but as we have seen in recent elections, they have not impressed Labour voters very much, who, it turns out, are not as stupid as their Members of Parliament. Labour voters have listened to all this stuff about reviewing the proposed integration of his integrated proposals, seen through it and cut to the bottom line. The bottom line, very frequently, is that his complexity and confusion costs them and it costs business. The right hon. Gentleman will not explain it to the House, so let me.
  By replacing family credit with the working families tax credit, the Chancellor has ensured that a quarter of a million families face marginal rates of tax and benefit withdrawal of more than 60 per cent.—more than 60p in the pound. By extending the means testing of the working families tax credit, he has produced a benefit so poorly targeted that it can be claimed by upper rate taxpayers. By replacing married couples allowance with children's tax credit, he has made sure that no families pay tax at his much-trumpeted 10p lower tax rate. His entire system not only refuses to recognise marriage but is systematically biased against one-earner couples who are not entitled to child care credit.
  The Chancellor's claims about tax credits, just like his claims about the new deal, ring very hollow. His own figures show that fewer lone parents found work through the pilot new deal for lone parents than in the comparison areas where the new deal was not put into practice. No wonder the heartlands are rather unimpressed by this. It is only some people in here who live in a fantasy world in which anything that the Chancellor announces happens.
  Some Labour Members believe that all the things that the Chancellor talks about on Budget day get delivered to the voters, but the voters know best. It is left to Ministers to live in this fantasy world in which everything is delivered, the dome is a great success, everyone wants to join the euro, everyone wants to get rid of section 28, and no doubt they saw Elvis in the supermarket last night. If the Chancellor said that he had seen Elvis in the supermarket, no doubt some of his right hon. and hon. Friends would run out and issue a press release saying that they had seen him too. That is how gullible Labour Back-Bench Members are about his Budgets. [HON. MEMBERS: "One of them is leaving."] She is one of the less gullible; we should never taunt the hon. Member for Hackney, North and Stoke Newington (Ms Abbott).
  The Chancellor talked about the eurobond market. He has been told many times that forcing it to exchange information with foreign tax authorities would be extremely damaging to that huge market in the City of London. He has rightly rejected that option previously; why has he agreed to it now?
  The Chancellor announced new schemes for businesses, and claimed to be delivering a Budget for enterprise. Few claims deserve to be heard with more scepticism: every time he delivers a so-called Budget for enterprise, he increases the burdens on business, as he has done hugely
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  in past Budgets. Last year, he said that he was providing tax cuts for businesses in his Budget. But the Association of British Chambers of Commerce estimates that that Budget contained £3.2 billion in tax increases for the remainder of this Parliament. Last year, the Prime Minister had the brass neck to say that business taxes had come down under Labour. The Confederation of British Industry president responded:
  The Government has introduced a series of well camouflaged taxes which have put the tax burden firmly onto business. Changes by the Chancellor will push up business taxation by almost £5 billion a year for the first five years of the Labour Government.
  When people hear what the Chancellor says about business, they will remember the £30 billion in extra taxes already imposed, the 3,000 new regulations imposed in 1,000 days and previous Budget day distortions and broken promises. They will probably not be inclined to believe a word about Budgets for enterprise.
  The Chancellor has announced—at least, he has referred to; he did not think that the House merited having the detail described—his reforms of his energy tax, the climate change levy. It is ironic that the Chancellor's great reform is directed at a tax he himself announced only a year ago. He has had to reform his own tax because it contained what he was pleased to call, in his pre-Budget statement, "practical constraints". In plain English, it does not work. There was never any chance of its working.
  The tax as originally conceived attacked many parts of manufacturing industry, exported jobs and probably exported pollution. I pointed that out to the Chancellor—this is why he should listen to my responses—only a few minutes after he had delivered last year's Budget. Within a few weeks, Labour Members of Parliament had pointed it out to him after they had begun to hear from their constituents. Eventually, the news reached the Treasury, and now we have the great reform in 2000 of something announced in 1999.
  The great reform package fails to address the essential problems, and in many respects it makes them worse. Introducing a tax that requires exemptions for renewable sources of energy and discounts for energy-intensive industries has made that aspect of our tax system yet another example of common sense utterly defeated by Brownian complexity. What makes all that I am saying so sad is that the Chancellor has fallen into complexity. He is trying to retain a stealth tax that is fundamentally unsound. That is the story of the delivery of so much of what he has put before the House today.
  The Chancellor talked about pensioners, but he forgot to remind us of some points. People retiring after 6 April 2000 will lose married couples allowance and age-related allowance, which were worth a total of £500 off their tax bills. He may say that the Government are keeping those allowances for those over 65, but anyone who reaches 65 after April will not receive it.
  Retired couples are being attacked by the right hon. Gentleman's changes, but they are supposed to be grateful to him for offering them a variety of additional payments worth a fraction of what they will lose. They are supposed to be grateful for being offered a study of how things will be improved in future. The Chancellor has had months to think about all that. He has had months to try to deal with the problem of the increased taxes that he imposed on pension funds: Tesco employees are finding out all about that because they are having to pay an extra 1.5 per cent. in pension contributions now that his greatest tax increase of 1997 is catching up with people.

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  The Chancellor boasts of tax cuts, but although he has given with one hand, he has taken away much more with the other over the past four years. The Chancellor's speech contained plenty of figures; he gave out figures, but he did not want us to figure out their meaning. One figure was conspicuous by its absence: how much more tax people will be paying next year under a Labour Government.
  If the Chancellor will not tell people the truth about that, I shall. The increase in the tax burden under the Labour Government, shown in his own Red Book, is the equivalent of an 8p rise in the basic rate of income tax—that is after taking account of everything that he has announced today. For every extra pound that he is letting people keep in their pay packets, he is stealing nine times as much from their back pockets. That is what it means in practice.
  The Chancellor has done what all Labour Chancellors do: he has increased taxes. The only difference is that he is much stealthier about it. Under him, taxes are up 9p in the pound and down 1p. After three Labour Budgets that is the bottom line; that is the figure that matters. It means that the overall tax burden will have gone up by £20 billion during his Chancellorship thus far.
  This is the Budget of a Government who tax more and deliver less. The Chancellor gave a rosy account of the economy, but he forgot about the difficulties currently faced by many manufacturing businesses and about the present crisis in agriculture. He has done nothing about that.
  After four Budgets, it is clear from all that he has done and all that he has failed to do that the stealth Chancellor is failing to meet the needs of the country. We needed Budgets that stimulated enterprises, rather than taking more money away from them; that made this country a low-tax magnet for investment, rather than driving out high-tech entrepreneurs; that reduced regulation, rather than adding massively to it. We needed Budgets that reformed welfare, but they have not done so. Instead, welfare costs have soared, the benefits system has been reduced to a tangled mess, and there has been a complete failure to deliver better public services.
  We needed Budgets that prepared us for an internet age; instead, they promote a brain drain. We needed Budgets that helped communities and kept families together; instead, there have been increased taxes on charities and the abolition of the last recognition of marriage in the tax and benefit system. We needed Budgets that tax less and deliver more; we need a Chancellor and a Government who do that. Instead, once again, the Government are taxing more and delivering less.
  4.53 pm
  Mr. Charles Kennedy: [Interruption.] I thank Conservative Members for the warmth of their welcome—it is much appreciated. Although I offer the Chancellor the customary congratulations, it is clear that his prudence has a purpose—spending for a second term.
  The whole country will welcome the additional investment in the national health service. We have certainly been calling for that, although the other Opposition party has not. However, in putting those additional resources into the NHS, the Chancellor has given way on two of the arguments that he and the Prime Minister used consistently against the Liberal Democrats.
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  First, we argued that such sums could and should be put into the NHS. That was described as financially irresponsible but it is now the mantra. Secondly, in the controversy over objective 1 match funding that affects Cornwall, Yorkshire and Merseyside, the Chancellor constantly argued that one cannot pre-empt the comprehensive spending review to give a commitment on such funding—until this afternoon, in relation to the NHS. Therefore, it is worth pointing out that the Government make great play in so many ways of their rectitude but, when political expediency and public pressure are brought into play, they are willing to bend. None the less, we are glad that they have responded to public and political pressure on the NHS. We only regret that they did not do it after the general election but sought to constrain its finances in the first half of this Parliament. It would not then have been so necessary for the Government to produce the package that has been announced this afternoon, after too many operations have been cancelled and too many patients have died in the intervening period.
  Another point about the balance of the Budget and the headline figures is that about four times the amount of resources are being spent on tax cuts of one kind or another as are being invested in education generally. That tells us a lot about the Government's priorities. Indeed, the Chancellor drew appreciative gasps from Labour Members when he detailed what the headline figures for education expenditure would mean when broken down for schools. However, he is devoting only about £1 billion extra to education spending and if he had forgone the tax cut worth nearly £3 billion, the figures that were cited—and that Labour Members calculated in terms of their effect on their own constituencies—would have been trebled. That is the fact of the matter for educational spending.
  There will be genuine anger in the country about the Budget's greatest defect. It adds insult to injury for pensioners. What did the Chancellor actually say? He recycled a number of minor points—minor in terms of the totality of pensioner income—because many of them are already in the public domain. For example, he referred to television licences. There have been one or two welcome moves on income support capability and the winter allowance will go up to £150. That is marvellous; the measure will mean just one quid a week extra for pensioners. However, let us be fair to the Government, because £1 a week is significantly more generous than the 75p that pensioners were previously given.
  That is the great missing morality at the centre of the Budget, because what detailed announcements were there for pensioners in what the Chancellor said today? He said that he would have a consultation. Will that be a consultation like the royal commission on care of the elderly, which considered, reported and was effectively shelved? By the time this consultation reports—never mind whether the Government choose to move on its recommendations—how many more pensioners will have died as a result of not getting access to the hospital care, the operations or heating that they need? The brutal truth is that simply to announce consultation for pensioners rather than direct income support action now means that, for many, action will be literally too late.
  The environment is another issue that has not received great attention from the Chancellor. He promised us another consultation on brownfield taxes, but surely the time has come for the country to bite the bullet on

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  environmental protection. When he referred to vehicle excise duty, he slipped through, in passing, remarks about the acceptability of trucks of more than 40 tonnes, and that goes against what the Labour party said some time ago before the last general election. On environmental priorities, the Government are failing badly and the Budget proves that that is so.
  One must not be too churlish. Employee share ownership has long been advocated by the Liberal party and by the Liberal Democrats. We shall certainly welcome anything that extends its scope, although we shall of course want to consider the detail. When in his statement the Chancellor announced that he was freezing spirit duty and getting rid of the air taxes that affect the islands and highlands, I began to think that we were making progress in our joint Cabinet committee and that it was beginning to deliver results at last, even if not as yet on proportional representation.
  In a week that has seen the massive problems with Rover, the country will be amazed that the Budget did not touch on the priorities of the wider economic context: the strength of the pound and the failure to give a lead on British entry to the euro. That is hitting manufacturing—Longbridge, obviously, in particular—and surely the Government must accept their share of the responsibility, however the management of BMW may have acted recently.
  The uncertainty created by the fence-sitting on the euro is deterring inward investment and pushing up the value of the pound. That, coupled with high interest rates, which are twice those of our European competitors, constitutes a double whammy. It is worth recording that since last November, the trade deficit has doubled, rising from £10 billion to £20 billion. It is a remarkable Budget that makes no reference to any of those facts.
  The other area that was not touched on, which has suffered so significantly as a result of that combination of circumstances, is agriculture. I am beginning to think that the Chancellor must have believed the Prime Minister when he went to the south-west a few weeks ago and told an incredulous local population that life in rural Britain was really going rather well. That is not the case. The farming industry is in deep recession, and it is an absolute disgrace that the Chancellor, with vast sums at his disposal, is unable to announce today that he will access the agri-compensatory funds available from Europe; and Liberal Democrat Members will continue to campaign on that issue.
  This is in many ways an ingenious Budget, set against a benign economic scenario, but for pensioners, farmers, those who care about the environment and educationists it will be a deep disappointment. This Budget is delivered with more than an eye on a general election and on the Chancellor's own political future beyond that, but however long that time scale of political calculation is, for too many, particularly the elderly and the most vulnerable in our community, this Budget will have come just too late.
  5.2 pm
  Mr. Barry Jones: I am glad to support the Budget, which is clever, cautious and compassionate. I am glad to follow the right hon. Member
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  for Ross, Skye and Inverness, West (Mr. Kennedy), the leader of the Liberal Democrats, and the right hon. Member for Richmond, Yorks (Mr. Hague), the Leader of Her Majesty's Opposition, who both made a good fist of their speeches following a tour de force by the Chancellor.
  I liked the fact that the Chancellor referred to the work ethic, that he declared that he wants to see the renewal of British civic society, that he wants to reward enterprise, that he has obtained the lowest corporate tax rates and that he wants to boost employee shareholding. I welcome also the maternity grant, the big boost in child benefit and all the measures to attack and end child poverty.
  The Chancellor's talk of a shared pursuit of the common good was more than inspiring, and a Budget that aims for that has to be more than good. I appreciated the measures for pensioners and the £4 billion injection for public services. The Chancellor ended by saying that this is a Budget to unite the nation. Surely that must be true.
  I welcome the tax cut and the aim to get more people than ever off benefit and into work. I welcome the reinforcing of the schools service and of the national health service. That will build on the success of the minimum wage and the working families tax credit.
  I shall try to summarise by saying that this is a popular Budget and a genuine Labour Budget. It will help those in genuine need. I know that it cares for children and invests in the fabric of the welfare state, chiefly our schools and hospitals. It surely reaches out to help the underprivileged.
  I have a question to put to Ministers: will the sign-posted new moneys for the schools service mean more teachers at the chalk face? I know that the millions of parents at the school gate want, above all, more teachers in the school. They want the money itemised by the Chancellor translated urgently into extra teachers. I understand that one part of the money will be paid directly to head teachers, and that it will avoid the dead hand—the aldermanic grip—that can sometimes prevent moneys going into schools.
  Will the new moneys for the health service cut waiting lists? How soon should they do so? We are endowing the health service with national treasure in the form of billions of pounds. I wonder whether the dragon in the path to progress is the existence of too much bureaucracy in the service. Why is progress in slashing the waiting lists so maddeningly slow? I support the Chancellor's proposal that if he is to pump billions into the service, there must be reform in the organisation of the service.
  Mr. David Maclean: Will the right hon. Gentleman give way?
  Mr. Jones: No, I will not at this stage. The Leader of the Opposition did not give way, and I want to make a brief speech.
  For certain, our children require more teachers. We need more teachers to guarantee the right of every child to achieve his or her potential.
  None of our constituents should be sick with worry while waiting and waiting for the consultation and examination that will tell them the significance of their symptoms, which in themselves create fear and anxiety in patients.

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  If we are to put people into productive work, we need to secure our manufacturing industries. I remain anxious about an industry that I know well—the British steel industry. I am anxious after the merger of British Steel and the Dutch company, which overnight formed the new company, Corus. I do not want the closure of any steel plant in our nation. I do not want a programme of redundancies, whether voluntary or compulsory. I do not want dumping—which has taken place—by ruthless, cheating competitor companies from abroad.
  In my own country, Wales, we have magnificent steel plants such as Port Talbot, Llanwern and the Shotton works in my constituency. I do not want them to lose jobs. I do not want any steelworks in Britain to be mothballed or closed.
  A complicating factor in the continuing struggle of the United Kingdom's steel industry is the strength of the pound. Those are the matters about which the union leaders and their managers on the Shotton steelworks committee tell me. They tell me that the situation is worrying.
  I know that a strong United Kingdom manufacturing base requires a powerful, stable seedcorn industry such as steel. There is no wealth in our nation without powerful seedcorn foundation manufacturing industries. I shall look closely at the Budget in the weeks and months ahead to see how it might further assist our manufacturing, as the Chancellor has done before.
  I thank the Government, specifically my right hon. Friends the Secretary of State for Trade and Industry and the Secretary of State for Wales. They have delivered for my constituency some £530 million of repayable loan investments for the A3XX airbus project. My constituency will be the project's principal beneficiary, to the tune, at the very least, of 1,400 new jobs, and that is in addition to the existing 4,200-strong Broughton works in my constituency.
  The good news is that, thanks to the action of the Treasury, the Department of Trade and Industry and the Welsh Office, that factory now faces a generation of prosperity. Already, ahead of the £530 million, it has had a £123 million repayable launch investment for the A340 aircraft, which is now flying, and has also recently seen an on-site investment of some £230 million. That is a massive injection of about £883 million.
  I can only thank Her Majesty's Government for that input, and tell this honourable House that my constituents are more than pleased. Here is a world-beating, world-class, high-tech success story in my constituency on Deeside. The Government have backed us all the way. The Treasury has been the fulcrum, but I cannot praise too highly the work of the Secretary of State for Trade and Industry and the Secretary of State for Wales in the Cabinet Committee system.
  I am proud of the campaign for that £530 million, led by the convenor at the Airbus works, John Hamilton, and his senior stewards. They collaborated successfully with, first, the now ex-works director, Mr. Bill Travis, and then with the current works director, Mr. Brian Fleet. That collaboration has been superb. Again, I put on record my thanks to my right hon. Friends.
  I now ask the Welsh Assembly to contribute to the A3XX project by giving that mighty aerospace project a £25 million regional grant. I have given the First Secretary a petition of more than 1,000 names which was prepared
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  by the works convenor, John Hamilton, at the Airbus factory. Deeside, and all of north Wales, refused to vote for an Assembly at the time of the ballot. The electorate was questioning and sceptical. This is the first big decision for the Welsh Assembly in its short life, and that big decision just happens to reflect life, industry, the hopes and the future in Alyn and Deeside in north-east Wales.
  I cannot overestimate the negative reaction that there would be to a refusal to give the £25 million grant following the £530 million signalled by the Government. Not to have that regional grant from Cardiff would give rise to the belief that the fledgling Assembly was indifferent to the hopes of those in the north of Wales, particularly on Deeside. However, I thank the First Secretary for his courteous and positive response to the petition that I gave him, and the helpful and positive letter that he sent me this very week. I know that in all this the Secretary of State for Wales has been a powerful advocate of my constituents' interests.
  Does the Budget contain measures to enable a county authority such as Flintshire—my authority—to tackle the problems of modernising and maintaining our large and ageing post-war council estates?
  My councillors, who are Labour and of whom there are many, work hard. They want only the best for their tenants. They want to install central heating, new doors and windows in hundreds of decaying streets. They want to improve and modernise pensioners' accommodation and they want the urgent and generous release of council house sale receipts. I support their objective. I hope that Ministers will be able to say at the end of the debate that the objective will be achieved.
  Accepting the specific requests on housing that I have made on behalf of my county authority members is a means of helping the poor, the unhealthy, one-parent families, the unemployed and those without hope. I should like to believe that we can renew the fabric of decaying social housing, and that that has the potential to increase the sum of human happiness. I hope that the detail of the Budget will provide a positive answer. At this stage, I do not know, but it is my duty to speak up for those of my constituents who are trapped on ageing, decaying, post-war council estates.
  No. 10 Downing street is tenanted by arguably the most powerful premier in the history of the office. He established the social exclusion unit because he means to change society. For example, he made more than £800 million available to enhance the toughest council estates. I want social justice; it is my priority. The Budget points to social justice, and I believe that the Prime Minister is committed to it.
  No. 11 Downing street is tenanted by arguably the most successful Chancellor in the history of Labour Governments; possibly the best Chancellor of modern times. That impression was given this afternoon, when a man, a Chancellor, a Minister in his prime delivered a Budget that he said would unite the nation.
  I support full employment. The Chancellor seeks high and stable employment levels. That Attlee-esque phrase encapsulates my hopes for a society where there is work for all and health and security for the retired. For as long as the Prime Minister and the Chancellor collaborate positively, the Government are impregnable and re-electable. The signs for that are more than good.

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  I renew the call for a stronger manufacturing base. Without strong steel and aerospace industries, Britain will not generate sufficient wealth. If Britain allows the so-called underclass—the underprivileged and the dispossessed—to continue to grow, our nation will not be united and cohesive. Our social problems will increase, and we will need many more positive Budgets such as today's. Social justice and high and stable employment remain my priorities. Today, the Government have decided that those objectives are their priorities.
  The Budget delivers. Her Majesty's Government have invested well and generously in my constituency of Alyn and Deeside. For the sake of the nation and my community, there is no room for complacency while the dispossessed are measured in many millions. The Budget is a fine one; it is a Budget for social justice, and I commend it.
  5.20 pm
  Sir Michael Spicer: I can agree with one remark made by the right hon. Member for Alyn and Deeside (Mr. Jones): this is a Labour Budget. Like all socialist Budgets, it will—despite the rhetoric and the propaganda—ultimately undermine the strong economy which the Government inherited from their predecessors.
  On the surface and for the moment, these seem like good times for the economy. On the surface, the Budget seems to reflect those good times. But as the Leader of the Opposition, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), said in a brilliant speech—in 27 years as a Member of the House, I have rarely heard a riposte to the Budget that was so coherent, so on the ball and so to the point—if we delve a little below the surface and into the Red Book all is not quite what it seems. The productivity, investment and balance of payments figures all show serious deterioration.
  The economy is not as soundly based as the Chancellor would have us believe. Let us take the fiscal position—the point on which he would seem to be strongest, but one on which Labour Members were silent. They do not like hearing about his fiscal soundness and his prudence, of which he keeps reminding us. That also is not quite what it seems when he flashes his mirrors. The immediate Budget surplus is clearly present because at this stage in the economic cycle the tax take is exceptionally high, and—they cannot have this one both ways—as we now know, the Government have consistently put up total tax rates since coming to office. They cannot say that there is a surplus and at the same time not accept that there has been a massive increase not only in the rates, but in the tax take.
  The Lombard Street research group has recently shown that a disturbing picture emerges when that rate of growth in taxation is compared with the trend growth rate in public expenditure. Since 1998, there has been a relentless rise in the growth of public spending—a trend that accelerated when the Government broke loose from the expenditure programmes that they inherited from the Conservatives. That is confirmed today in annexe A, paragraph A20, of the Red Book, where it is unashamedly stated that even current public expenditure will rise considerably faster than the projected rate of growth in gross national product. The Government say that they will
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  achieve that without breaking their fiscal rules, which they set themselves and which apply effectively to capital expenditure.
  Under the new laxer rules for public borrowing undertaken with the private sector—the public-private partnership—the official public expenditure figures probably understate the explosion in public expenditure which is currently under way. No doubt that pleases Labour Members, but they cannot have it both ways: they cannot claim to be prudent and at the same time accept that enormous increase. That is what the right hon. Member for Alyn and Deeside was really saying when he said that this is a Labour Budget. He approves of the enormous growth in public expenditure, which is one of the things that the Government are disguising.
  The trend growth rate in public spending is accelerating even faster than the trend rate growth in taxation. All independent observers are reaching that conclusion. It means, first, that the fiscal position is much less secure than the Chancellor made it out to be this afternoon. Secondly, it is undoubtedly one reason why interest rates are high—and why the value of the pound is high, as well. Thirdly, from a business point of view, it means not only that interest rates and the value of the pound are high, but that the burden of the public sector is growing in all its facets. That must be one of the reasons why there is a new deterrent to investment, why trends in productivity are now down, and why a potentially serious balance of payments problem is emerging.
  One feature of the growing public sector that was not mentioned in the Budget statement is the vast and expensive growth in regulation and in regulatory bodies, for which there is no economic justification. Authorities such as Ofgem, Ofwat, Oftel, the Financial Services Authority, the Rail Regulator and the Post Office regulator—some of which were established in embryo form by the last Administration to put competitive pressure on the otherwise uncompetitive utilities—have now become the unaccountable means by which the Government impose costly political objectives on industry.
  Rather than dealing primarily with competition issues, which would have made sense in terms of some of the objectives mentioned by the Chancellor—he referred to the banking system, for instance—the Post Office regulator now decides the level of privatisation, the Rail Regulator decides transport strategies, Ofwat decides the level of environmental investment, Oftel decides the distribution of telephones and the FSA decides matters relating to social banking. The implication of what was said today was that, in some respects, that would mean something verging on compulsory banking. Ofgem, meanwhile, is concerned with income distribution in the context of fuel poverty, which was also mentioned today.
  No wonder, in a recent paper from the Institute of Economic Affairs, Professor Stephen Littlechild, the former electricity regulator, bemoaned the fact that the duty on regulators to promote competition was no longer unqualified. He warned that, among other things, the move could open the floodgates to a wave of appeals against the regulators to the Competition Commission. He also issued a heavy warning that the regulators were setting themselves up as a sort of shadow Cabinet, and were beginning—no doubt guided by the Government—

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  to develop strategies that had nothing to do with the country's economic performance, and everything to do with the increasing burdens on industry.
  Those burdens are both direct—industry has been asked to pay the costs of the regulators, which amount to hundreds of millions of pounds—and indirect. Imposed on industry are a range of objectives and costs that have nothing to do with providing business, and everything to do with politics—and with taxation in many cases, and income distribution in others.
  Far from this being a pro-business or even a pro-consumer Budget, as the Government proclaim, the Government are now systematically undermining business. They are doing that through higher taxation and with it higher public expenditure, and consequently through higher interest rates which in turn lead to a high value of the pound.
  Above all, through their ham-fisted intervention, the Government are undermining the strong economy that was left behind by the Conservative Administration. Sometimes, it is directly ham-fisted, as with Rover last week, but it is also covertly ham-fisted: a vast regulatory regime is arising. They have introduced nationalisation by the back door in many cases, equipping the new regulators, incidentally, with draconian enforcement powers—in the case of the FSA, powers effectively to imprison people should they not comply with rules that it is in many instances allowed to set up subjectively.
  Therefore, the Budget must be seen in the context of what is going on with the management of the economy. The spin, the flashing minors and the distorted propaganda will in the end be no match for the reality, which, as with all socialist Governments, is anti-business and, ultimately, destructive of the economy.
  5.30 pm
  Mr. Michael Clapham: The previous speech was rather uncharitable. I shall not be attracted down that path—but, for my locality, the economy has been managed with great effect. I will deal with the point that was implicit in the speech of the hon. Member for West Worcestershire (Sir M. Spicer), namely, that low taxes tend to be a moral imperative.
  The Budget builds on previous ones and continues the principle of redistribution, as well as providing stimulation for industrial growth. My locality has been assisted in the past two years. The Budget will be extremely helpful for localities such as Barnsley that are rebuilding their economic and social structure after considerable neglect during the Tory years.
  I want to point out the benefits that have accrued to my community. For example, 2,785 households will benefit from the working families tax credit. A total of 15,366 pensioners will benefit from the pension increases and 6,146 pensioners aged over 75 will benefit from free television licences. Youth unemployment in my constituency has fallen by some 67 per cent. in the past year or so. About 11,200 recipients of child benefit will benefit from the increases that have been announced by the Chancellor. In my constituency, 1,307 businesses will benefit from his announcement today on corporation tax.
  The Budget contrasts with the ideas of the Conservative party and the ideas that were implicit in the speech of the hon. Member for West Worcestershire. For example, the
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  Conservatives believe that leaving private finance to provide public services would benefit Britain. They do not see that it would create a two-tier Britain. Their view is that British society would be better if sectors such as health were privately financed. That view is totally out of keeping with the majority view among the British public.
  Mr. Maclean: If that is the way, why is it that every new hospital that is built is a result of the private finance initiative, and the Government boast about and take the credit for private finance in the health service?
  Mr. Clapham: If the right hon. Gentleman can hold his fire for a moment, I shall come to the moral imperative of private finance. To answer his question directly, the private finance initiative is part of the Government's overall approach to hospital building, which was so neglected by the previous Government that a radical approach was required, pulling in all partners to the hospital building programme.
  The Leader of the Opposition implied that low taxes were a moral imperative for any Government. That approach is nonsense. It is totally out of touch with the majority of the public, as the global picture demonstrates. For example, low-tax Russia is a disaster, while high-tax Holland and Denmark are the fastest growing economies in the European Union.
  In any society, a progressive tax system is the best way of stimulating the economy and reinforcing the social structure. The British public have shown clearly that they want high-quality public services. They also want fairness in the workplace and that is why they support the minimum wage, the social chapter and parental leave. Eventually, we should press for parental leave to be paid, so that we can match the paid parental leave provided by our European partners.
  The public support the tax credit system and the largest ever increase in child benefit that will help to lift families out of poverty. They know full well that that cannot be achieved merely by financing private sources. Services are not free—schools, hospitals and roads have to be paid for out of taxation. Taxation makes it possible for those services to be available to all free of charge.
  In my view, progressive taxation—and here I shall answer the point raised by the hon. Member for West Worcestershire—is a contract between citizens who contribute according to their ability and the democratic undertaking by the Government to build a better society for all. The previous Administration, in which the right hon. Member for Penrith and The Border (Mr. Maclean) was a Minister, did not provide a better society for all; they concentrated on the few rather than the many. The present Government are doing the opposite.
  The Budget makes further substantial resources available for health and education, and that will be most welcome in Barnsley. Health service reforms are already well under way in the area, but the town has a high rate of heart disease, strokes and cancer. Although the health authority received an increase in its budget of more than 7 per cent. this year, because it started at a very low level, it is still £2 million short. The extra help announced by my right hon. Friend the Chancellor for the health service will be very welcome in Barnsley.
  There is already a health action zone in South Yorkshire covering Doncaster and Rotherham. It is pulling together across the region and helping to focus resources on the

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  problems identified in the health improvement plan for the region. The extra help that my right hon. Friend has announced will help the health action zone to focus resources where they are badly needed.
  The United Kingdom has more people in employment now than at any time in the past and today's Budget will help to continue the economic dynamism that has created an extra 800,000 jobs since 1997. Referring to the point that the hon. Member for West Worcestershire made about whether the Budget assisted industry, I can tell him that in Barnsley and South Yorkshire the endeavour to regenerate the local economy is going apace. In the Dearne valley area, for example, 6,000 jobs have been created over the past two or three years. It is probable that by 2005 another 4,000 jobs will be created in the area. They will replace jobs lost in the mining industry, which was so cruelly shut down by the Conservative Administration, when very little help was given to the locality. The measures to assist business will therefore be very welcome. They will assist in the work currently being done in the locality by the local authority, and help the locality to recover from the structural blows inflicted in the 1980s and 1990s, when very little assistance was provided.
  Britain is now competing in a global economy. If we are to compete successfully, we have to have a well-educated and well-trained labour force. The Chancellor's boost for education today will help regions such as South Yorkshire and particularly localities such as Barnsley.
  The educational achievement of pupils in South Yorkshire, for historical reasons, has been lower than the national average. Prior to the previous general election, only 29 per cent. of pupils in Barnsley, compared with the national average of 44 per cent., were achieving five or more A-levels at grades A to C. There was little that the local education authority could do about that as it had been starved of resources. Some of our schools even had bucket monitors.
  Since May 1997, the situation has gradually been reversed, assisted by the commitment of the local education authority and the Barnsley education action zone. The education action zone has played a very important part in increasing achievement in the past year or so. Achievement levels have started to increase.
  Last Friday, with my two Barnsley colleagues—my hon. Friends the Members for Barnsley, Central (Mr. Illsley) and for Barnsley, East and Mexborough (Mr. Ennis)—I met the director of the Barnsley education action zone to discuss some of the improvements that have been made and generally to see what was being done at the chalk face. We had to remind ourselves that the education action zone had been created only in September 1998. Although the project was established initially to operate for only three years—funded by a £750,000 grant from the Department for Education and Employment—it has already started to make quite important improvements. It has, for example, produced increased achievement levels in standard assessment tests and in GCSEs.
  At the school that I visited on Friday, it was clear that the provision of information technology instruction is having an enormous impact in increasing pupils'
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  commitment to getting stuck in at school and to working hard. That achievement has been made possible by the way in which the education action zone has been able to focus resources on information technology equipment.
  The Budget is good for industry and it will certainly be good for Barnsley's regeneration. It is also good for local health and education. The Budget is good for pensioners, and it is good for the British public's quality of life. The Budget will help to make Britain a better place to live.
  5.43 pm
  Mr. David Maclean: I am glad that the hon. Member for Barnsley, West and Penistone (Mr. Clapham) can find something to welcome in the Chancellor's Budget, and that he thinks that it will benefit his constituents.
  I am afraid that, in my large rural constituency—the largest rural constituency in England, covering almost 1,500 square miles—in Cumbria, not many people will be cheering in the valleys tonight, as Bill McLaren might have said. They will not be cheering because the Chancellor has done nothing to reduce the crippling roads costs that he has created in the past few Budgets; nothing to save the rural economy, which is dying under this Government; and nothing to redress the burden that he has imposed in the tax system on married couples.
  The first thing to say about taxation under this Government is that, today, we were presented with only about one quarter, or perhaps one tenth, of the picture. If today's Budget were the first delivered by this Chancellor, we would probably all leave the Chamber saying, "Not a bad bloke—very good on delivery. It sounded quite a good Budget; not too bad after all." However, we have bitter experience of this Chancellor's Budget statements. We know that what we hear from the Dispatch Box is not the full story—it is nothing like half of it. In his last Budget, the Chancellor did not mention IR35, and then £400 million of extra taxes were imposed on business and small entrepreneurs. We heard not a cheep from the Dispatch Box. That came out a few days later, in an Inland Revenue press release called IR35.
  The Chancellor did not have the courage to spell out by how much he raised petrol duty in his last Budget. He said that it was a few pence above the normal rate of inflation. I remember when Chancellors used to say that that meant that duty would go up by 20p a gallon—or by 17p a gallon, as it did following the last Budget. In this Budget, the duty has gone up by 8p a gallon. The Chancellor did not spell that out.
  The Chancellor did not spell out the full effects of his Budget, which will dribble out in the next few days. That is why there will be a muted reception for the Budget in the City tonight, and in households across the country. There will be a muted response in Longbridge and at Rover, as well as in manufacturing industry. People are waiting to hear what the real Budget is, when the truth will come out.
  On taxation, the truth began to come out last week, when Alastair Campbell admitted, for the first time, what the figures were on taxes. Despite headline tax cuts—such as the reduction in the basic rate of income tax to 22p from April—overall taxes have gone up under this Government.
  The Treasury's own figures show a rising tax burden—that is, net taxes and social security contributions as a percentage of gross domestic product. When we count in

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  the working families tax credit, which it is legitimate to do, we see that, in 1996–97, the Treasury was taking from the British public 35.3 per cent. In the current year, it will be 37.3 per cent., rising to 37.7 per cent. The overall tax take from the pockets of our people is rising under the Government. Despite all the flim-flam, dross and bluff from the Chancellor, the overall tax take is increasing.
  Until last week, Ministers refused to admit that taxes were rising. We have heard claims that, next year, the tax burden on the typical family will be at its lowest level since 1972, and that the figures show that the tax burden is falling. Last November, the Prime Minister said that the Chancellor did not say that the tax burden was increasing, because it was not—it was going down. That is typical of the assertions that we have had from the Government time and time again—until last week, when the Government finally admitted that the burden of taxation had risen. On Monday 13 March, the Prime Minister's official spokesman, Alastair Campbell, admitted that the tax burden had gone up.
  On Wednesday of last week, the Prime Minister was put on the spot by my right hon. Friend the Leader of the Opposition, whose response today was the finest that I have heard in the House in 19 years. My right hon. Friend quoted back to the Prime Minister what the Prime Minister had said before the election. For the avoidance of doubt, let us briefly refresh our memories. Before the election, the Prime Minister said that Labour had no plans to increase tax at all. He said that Labour's proposals did not involve raising taxes. He said that the programme of the Labour party did not imply any tax increases. That seems pretty clear to me, although I am a layman in these matters.
  When the Prime Minister was challenged last week by my right hon. Friend, he said that Labour had promised not to raise the basic, standard or higher rates of income tax and that it had kept that promise. We have a new form of weasel words. The Prime Minister, apparently, did not make those pledges before the election—he did not say that his policies involved no increase in taxes at all. The Prime Minister is now trying to claim that what he said, meant to say or should have said was that the Government would not raise the basic, standard or higher rates of income tax.
  We were conned. The British people were conned by this Government before the election, which is why my right hon. Friend was right to accuse the Government of telling barefaced lies.
  Mr. David Chaytor: I have a simple question for the right hon. Gentleman. During the election campaign, what did he see on the hundreds of large billboards around the country on the subject of the Labour party's position on tax? Did he see what my hon. Friends and I saw—a specific commitment not to raise the standard or the higher rate of income tax? Did he and his colleagues not see that message spelled out clearly on billboards? And it has been delivered.
  Mr. Maclean: Of course one saw Labour propaganda posters, but I am not talking about them. I am talking about the words of a man who is a Privy Councillor, who was the Leader of the Opposition and who is now the British Prime Minister. Surely we are entitled to pay more attention to the words of the British Prime Minister when
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  he makes three solemn declarations in various interviews. Is the hon. Gentleman saying that we should have ignored what the British Prime Minister said and read the propaganda posters, because the fine print on them had a different story to tell?
  Mr. Alan W. Williams: Does the right hon. Gentleman remember the last year of the Conservative Government? How large was the public sector borrowing requirement? It was some £28 billion, or about 3.5 per cent. of GDP. If the Conservatives had been returned and if they had had a policy to balance the books at any stage, that 35.3 per cent. tax burden would have implied an increase of 3.5 per cent.
  Mr. Maclean: I remember that. I also remember that the PSBR was declining, following the recession that the country had gone through. I remember how many extra police officers we had under the previous Government, and the fact that waiting lists were shorter and class sizes smaller. I can remember some other promises made by the Labour Government before they got into power, and we will come to some of those in a moment.
  Mr. Peter Bottomley: Is not the simple point that Labour Members who wish to intervene in my right hon. Friend's speech should either say that the Prime Minister did not say what has been quoted, or that he did not mean it?
  Mr. Maclean: I am grateful to my hon. Friend, who, in his usual erudite way, has made an important point. The Opposition have a problem—[Interruption.] I mean the Government, although they are my opposition and my constituents' opposition. The Government have a problem. The Prime Minister made solemn promises about income tax, which have clearly been broken. He has been informing the House for three years about a situation that, it turns out, is no longer correct—I choose my words carefully. The Government either have to say that the Prime Minister got it wrong or did not mean what he said, or they have to admit properly that taxation has risen and that the Prime Minister got it wrong and, for three years, every week, inadvertently misled the House.
  The Government had better realise that those promises by the Prime Minister will come back to haunt them. They do not have to take my word for it; they can look at the growing number of independent surveys that show that the tax burden is rising. Figures published in late 1999 by the Organisation for Economic Co-operation and Development show that Britain has the fastest rising tax burden in Europe and now pays more tax than Germany, for the first time in a generation. The increase in this country is also greater than in any other developed country. While the international trend is towards lower taxes, the first full year of a Labour Government saw the biggest annual rise in taxation for 16 years.
  In addition to the OECD report, the Office for National Statistics published figures on 18 November that showed that the tax burden had increased since the 1997 general election. In the second quarter of 1997, the tax burden in the UK was 35.6 per cent. of GDP and in the second quarter of 1999, it was 37.7 per cent. The OECD and the ONS both used longstanding and internationally accepted

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  methods of measuring the tax burden and their figures are irrefutable. They are not Conservative propaganda dreamed up out of thin air.
  A March 2000 analysis by the accountancy firm PricewaterhouseCoopers has predicted that the cumulative increase of discretionary taxes imposed since Labour took power will be £10.8 billion by the end of the Parliament. Although net changes in personal taxation will be negligible, the report said that the extra revenues had been generated through a mixture of higher taxes on companies and institutions, and increased levels of expenditure. It beggars belief that the Chancellor could stand at the Dispatch Box today and start boasting about the Government's tax record. Taxes are rising under this Government. They have gone up by 9p in the pound and have come down by 1p in the pound, as my right hon. Friend the Leader of the Opposition said earlier.
  The Chancellor made a big play about pensioners. Ministers like to boast that they have given £1.6 billion to pensioners, but they have failed to say how much they have taken away from them, such as the £5 billion a year tax on pension funds. Future pensioners will be worse off because the Chancellor has loaded £5 billion a year of tax on to pension funds. To make matters worse, the most popular savings vehicles of all time—TESSAs and PEPs—have been abolished and the amount of money that people can save tax free each year for their future has been halved.
  The Chancellor did not mention the abolition of dividend tax credits, which means that 300,000 pensioners whose income is so low that they do not even pay income tax will have to pay, on average, an extra £75 a year in tax. He did not mention today the scrapping of the married couples allowance in the 1999 Budget. He gave the impression that pensioners would retain the MCA, but the small print revealed—as we always discover with this Chancellor, after all his rhetoric at the Dispatch Box—that those turning 65 after next April will not be able to claim the allowance, which will cost them an extra £500 a year in tax. Those people had neither expected nor planned for that increase, and constituents have come to see me and have written to me on that point. A £500 extra tax bill is a tremendous blow to people who have budgeted carefully for their old age.
  Neither did the Chancellor mention the scrapping of the widows bereavement allowance. Labour has abolished the allowance granted to widows aged 60 to 65 following the husband's death and replaced it with a payment that will be available only to widows under pension age. That was worth £285 a year to people. It may be small beer to the champagne socialist party opposite, but it is a lot of money to those people who counted on it. Labour's first Budget in 1997 also abolished tax relief on private medical insurance for the over-65s, so we do not need to hear more rhetoric from the Chancellor on how well he is looking after pensioners. The record of what the Government have taken away from pensioners speaks for itself.
  Today, the Chancellor tried to make the most of the fact that he was not putting up fuel duty by more than the rate of inflation. That simply means 8p a gallon extra on fuel and diesel duty tonight. We should be grateful, because it was 17p a gallon last year. However, that still means that our fuel and diesel costs are a third more than
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  the highest priced diesel of any of our competitors on the continent. Refuelling a lorry with a 1,000-litre tank would cost £443 in Italy, £417 in France and £401 in Denmark—and they are the most expensive countries in Europe. In the cheapest countries, it would cost much less—£293 in Portugal, for example. If we take the most expensive countries, it would cost about £420 on average to fill that tank with diesel. In this country, it costs £663 to fill that lorry with diesel, and after the Budget it will cost another £20, bringing the cost to £683. That is almost £700 to fill the tank in the UK compared with £400 in France and Germany, which are competitor countries. Is it any wonder that our road haulage industry is being crucified?
  Let us take vehicle excise duty and the nearest countries to us, which are Belgium, Denmark, France, Germany and Ireland. In Ireland, it is £1,278 for a 40-tonne vehicle; in Belgium, it is £860; in Denmark it is £462; and in France and Germany it is £450 and £1,700 respectively. It is £1,800 in Sweden. Germany is a good example, because it is one of the most expensive VED countries in Europe. That is, until we come to the charge in Britain, which is £5,750.
  If my constituency in the Lake district in north Cumbria does not have good transport links, it will die. The way in which the Government are clobbering transport through vehicle excise duty and fuel duty is crucifying the road haulage industry in my area and increasing the costs of every other industry that requires goods and commodities moved round the country.
  I remind the House briefly of some of the other points in the Budget. Of course, the Chancellor made much of national health service expenditure. I wonder how many times that money has been triple counted already, and how many times it will be triple counted in the next few days. The extra £21 billion is now being claimed to be another £50 billion. By the general election, it will no doubt be an extra £150 billion.
  Did we not see in last week's "Panorama", a programme that is not usually critical of a Labour Government, doctors, leaders, nurses and other experts in the NHS complaining that, in their view, the Government had lied about the figures? They talked about the Government having taken credit for the extra doctors coming out of training school when those doctors were in the system in any event and due to leave training school. They talked about how the Government have triple counted the money going into the NHS.
  When listening to the Chancellor this afternoon, we could only think, "Good, there will be extra expenditure on the health service." No doubt when we read the small print we shall find that it is nothing like the expenditure that the Chancellor has claimed, and that the Government will still have failed to tackle the real problems of the health service.
  We heard nothing from the Chancellor about the Home Secretary making a statement in a couple of days about more funding for law-and-order issues. If the Government are allocating less than £300 million for such issues, that will not deal with the huge cuts in police numbers that we have seen under the Government and will see in future. They have boasted about an extra 5,000 officers, but they will not be extra officers. They will be the officers who will be recruited in any event to try to fill the gaps that will be left by the 10,000 officers leaving the police service or retiring from it.

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  We have had a great deal of spin from the Chancellor, but we have had nothing from him that gives me any satisfaction that the real problems of rural deprivation in the far north of England will be dealt with. A dying agricultural economy and severe transport problems have an effect on all rural areas. We cannot have social inclusion, which the right hon. Member for Alyn and Deeside (Mr. Jones) was talking about and of which the Government were boasting, if thousands of pensioners in rural areas cannot afford to drive to towns and villages. They cannot afford to go out because the cost of motoring has increased under the Government. They have never had bus services in sparsely populated rural areas, and they never will have. It is not social inclusion to exclude those people, and there is nothing in the Budget to help them.
  I suspect from what I have heard today that there is nothing to cheer for in the Budget. I am certain that, as more of the fine print dribbles and leaks out from Inland Revenue and Customs and Excise press releases over the next few weeks, as details are winkled out in Committee as the Finance Bill is considered, and as the Chancellor is forced to make clarifications, we shall have nothing to cheer about. We shall find that the stealth taxes are continuing and that the 1p that the Chancellor is giving us back in the rate of income tax is in reality 10p more in the pound, and not the 9p in the pound that my right hon. Friend the Leader of the Opposition talked about.
  6.5 pm
  Mr. James Plaskitt: The right hon. Member for Penrith and The Border (Mr. Maclean) said that he would give the Budget a muted reception. I can tell him that it will receive a much more positive reception in schools in Warwick and Leamington, given the extra funding that will come through to them shortly. It will receive a warm welcome from the national health service in my constituency, and by all those who are concerned about the proper funding of the NHS.
  The Budget will be welcomed also by working families and low-income families, who have much to gain from the measures that have been announced today. The Budget will be welcomed by all those in my constituency who have found work in the past two and a half years. Unemployment has fallen by 40 per cent. as a result of the Government's measures. The Budget will certainly receive a warm welcome from pensioners in my constituency, who will have several reasons to cheer the measures that have been announced today.
  I certainly welcome the Budget because it represents further progress in delivering some of the Government's vital objectives, which brought me into the House. These include tackling child poverty and eventually eradicating it, helping pensioners on low incomes and helping working families to get the best return from the work that they do. We want to boost the vital services of education and health and ultimately deliver full employment. These are the Government's vital social objectives. We have already made dramatic progress towards achieving them, and the Budget takes us much further down that road. That has been possible because we have created a sound base for the economy. That makes possible the mix of tax cuts that are targeted at certain areas and the public investment increases that are similarly targeted at important areas. For the long term, it is essential to maintain all the sound fundamentals that have made such progress possible.
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  The Budgets and measures that the Government have introduced since taking office have helped the country start to overcome three traditional weaknesses in the UK economy. First, there has been a tendency to move towards inflation as soon as there is a period of growth. Secondly, there has been a tendency to under-invest. Thirdly, there have been problems as a result of low productivity. These three structural and fundamental problems have plagued the economy for decades, and the Government are making more progress in tackling them than any of their predecessors.
  Inflation has been held at a low and stable rate for three years. On average throughout this Parliament it has been precisely on the 2.5 per cent. target. There is no precedent for delivering that sort of inflation in modern times.
  Mr. John Hayes: I do not detract from what the hon. Gentleman has said about inflation, but in that context will he say something about the savings ratio and the impact that it has on the strength of the pound?
  Mr. Plaskitt: If the hon. Gentleman has studied recent economic history, he will know that generally the savings ratio declines as inflation falls. That being so, there is nothing unusual in the present economic cycle. I am pleased that the hon. Gentleman acknowledges that the Government are doing well on inflation. We are meeting the declared 2.5 per cent. target that the Bank is steering towards, and if we take the standardised or harmonised index of inflation that is used across Europe, we have the lowest inflation rate in the European Union.
  That is no accident. It is happened because of the measures that the Government have taken. Granting the Bank of England operational independence on the management of monetary policy made a direct contribution towards the success with inflation, as has the principle of using inflation targeting. The sound fiscal stance that the Government have taken has also contributed directly to our impressive inflation record.
  The interesting question is whether through the medium and longer term we can hold our excellent track record on inflation. The chances of doing so are good.
  We are at a point in the economic cycle when traditionally the Bank of England has started to have inflation worries. We have had several years of steady growth in the economy, and we can look forward to more ahead, as my right hon. Friend the Chancellor promised today. Historically, at this point in the cycle, there has been much anxiety about inflation prospects. By contrast, inflation pressures at present are pretty subdued, and there are many fewer such pressures in the economy than at this stage in earlier economic cycles.
  There are plenty of promising signs for the economy. The money markets believe that we are on track to maintain, and to deliver, continued low inflation rates. Our long-term interest rates are lower than in the United States. Inflation expectations are well down across the board. We are seeing the fruits of better and stronger competition in the economy. That is another structural change that is helping to keep inflation down. There is also improved price transparency. That is important, given that 50 per cent. of our gross domestic product is traded.
  Wage growth at this point in the economic cycle is also quite moderate. The Monetary Policy Committee and the Governor of the Bank of England have expressed some

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  concern at wage settlements, and in recent months the total earnings figures have been edging up. They have gone above 5 per cent., and I know that the Governor of the Bank of England has sounded some alarm signals.
  However, beneath the top figure that I have quoted is the settlement figure, which tells a more interesting story. The settlement figure has held pretty steady at around 3.5 per cent.—precisely the sum that one obtains when one adds inflation to productivity growth. That suggests that the underlying rate of wage growth in the economy is perfectly consistent with keeping to the inflation target. Again, that is unusual for this point in the economic cycle and it represents something of a breakthrough in terms of controlling inflation.
  There is evidence to show that many of the fundamental relationships in the economy are changing. The Bank of England and the Monetary Policy Committee need to study the changes carefully, as it is likely that the monetary policy rule book is in the process of being rewritten.
  The Government have a part to play in underpinning the progress that has been made. That would all be lost if we were ever to return to management of the economy based on boom and bust, or if we were about to embark on a tax-cutting spree—as happened in the late 1980s, when the Conservative Treasury had reasonably full coffers. It is essential to hold fast to the golden rule introduced by my right hon. Friend the Chancellor. I was pleased that today's Budget statement makes it clear that he is doing just that. He is locking in the fiscal surpluses, and he is forecasting Budget surpluses for each of the next four years.
  It is also important that we hold to our achievement in reducing the ratio of public debt to GDP. The Government inherited a ratio of 44 per cent. on assuming office, and my right hon. Friend the Chancellor announced today that that will fall to 33 per cent. in the medium term. The combination of the golden rule and delivery on the ratio between public debt and GDP represent a substantial breakthrough and show that the Government's prudence has contributed to the strong record on inflation.
  In the run-up to the Budget, many commentators and analysts urged fiscal tightening, as they were worried that the Budget would cause interest rates to rise. In fact, fiscal policy has been tight for some time—rightly, given the strength of the economy. Over the past four years—so before any of the measures announced today—fiscal tightening was equivalent to 5 per cent. of GDP. It was 0.9 per cent. in the past financial year alone. My right hon. Friend the Chancellor has ensured that that is all locked in, and he is right to have done so, as it will help us to continue to deliver comparatively low interest rates.
  It is worth underlining the benefits that have accrued from granting the Bank of England operational independence. Since that independence was granted, to control the cycle of the economy, interest rates have had to move in a band of 225 basis points—between a low of 5 per cent. and a high of 7.25 per cent. That compares with an interest rate band of 1,025 basis points in the previous Parliament, under the different system. We are therefore able to control cycles in the economy with a far narrower movement in interests rates than previously. That is what we mean by economic stability, and it is
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  good for business. It is much easier for businesses to operate when the movements of interest rates are so much smaller.
  The Budget holds to the prudent fiscal line, while providing targeted tax cuts and increases in public spending. The hon. Member for West Worcestershire (Sir M. Spicer), who unfortunately is no longer in the Chamber, was wrong when he spoke of an explosion in public expenditure that was out of control. His speech told us more about his personal view of public spending, which is not one that I share. The truth is that public spending is projected to grow at 2.5 per cent. in real terms per annum.
  That is exactly in line with the trend of growth in the economy. It is one of the results of the economic stability that the Government have brought about, and it enables us to lock in the growth in real-terms public spending as well as the fiscal surpluses without any risk to inflation. I therefore urge the Monetary Policy Committee to intensify its study of monetary mechanisms. I suspect that we can run the economy on low interest rates without any risk to inflation. However, I agree that no risks should be taken with inflation.
  The progress that I have described helps us to tackle the other two structural problems in the economy that I mentioned earlier—under-investment and low productivity.
  Under-investment has plagued the British economy for far too long. We have had a relatively low rate of capital formation, and there has been far too much short-termism in the economy. The boom/bust management of previous Governments has infected the whole of industry, so a stable macro-economic framework is essential for driving investment up and for overcoming our historical problems.
  The Government have already done much to help. They have lowered corporation tax rates, and their support for research and development has been supplemented by £150 million in the Budget today. There have been changes to capital allowances, and capital gains tax on five-year investments has been cut to just 10 per cent. Corporate venturing has been supported in previous Budgets as well as in today's, as has the extension of share ownership schemes. In addition, my right hon. Friend the Chancellor today announced the lowest rates of capital gains tax and lower corporation tax.
  The Chancellor also announced 100 per cent. capital allowances for IT investment. That very important measure will be widely welcomed by small businesses, of which Britain now has 100,000 more than in 1997. That reflects the fact that taxes for small businesses have been cut by 25 per cent. since then.
  The measures that we take are designed to deliver increased levels of investment, and the evidence is that we are making progress. Business investment is up 16.5 per cent. in real terms since 1997. Investment now represents 14 per cent. of gross domestic product, compared with an historical average of just 10 per cent. Inward investment to the United Kingdom has risen by 45 per cent. since the election. It now totals £220 billion a year, and Britain is the leading location in the European Union for preferred inward investment.
  The strength of sterling is an important issue for manufacturing companies and farmers in my constituency. However, it is important to understand that the problem

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  is not one of sterling strength so much as one of euro weakness. After all, sterling's value against the dollar and the Asian currencies is fairly level. All the strong inward investment in the past three years has taken place in the context of a weak euro and a relatively high pound. The fact is that manufacturing output is rising—it is up by 5 per cent. on the previous year—and manufacturing exports are rising also.
  Mr. Tim Loughton: I am glad that the hon. Gentleman has come round, in terms of what is happening to the euro. Will he therefore condemn the Chancellor for today's fifth round of sales of our gold stocks at a time when the gold price is falling further and the largest chunk of that money is being reinvested in the euro, which the hon. Gentleman has just admitted is weakening?
  Mr. Plaskitt: No, I will not. The hon. Gentleman, who serves with me on the Select Committee on the Treasury—
  Mr. Loughton indicated dissent.
  Mr. Plaskitt: I beg his pardon—he does not. He should nevertheless know that the Treasury Select Committee has had detailed breakdown figures from the Treasury on the gold sales, and the reinvestment in not just in the euro but in a basket of currencies. So far, the Treasury's move in switching the nature of our deposits has produced a net gain for the Exchequer. So the hon. Gentleman does not need to worry about the gold sales.
  There is no getting away from the fact that it is hard going for manufacturing companies which predominantly export to the euro zone. I believe that the Government and the Bank of England are right not to attempt to lower sterling against the euro artificially—it would not work. Sterling's strength against the euro does, after all, help to hold down inflation. Far bigger risks of inflation would result from a sterling devaluation than from holding the current position.
  The best bet, and the best way in which to help hard-pressed manufacturing companies in the west midlands and in my constituency, is to deliver the measures in this and previous Government Budgets to give direct assistance with investment. That is why, despite the export struggle that many in the manufacturing sector face, we see growing investment, growing output and—certainly in my constituency—growing employment. The combination makes it possible to live with the weak euro until the rate improves, as the European economies grow.
  Mr. Nick St. Aubyn: Is there not a more fundamental reason why the euro is weaker against sterling? The European labour markets are far more inflexible than ours. That is why the euro is weaker—it is a fundamental difference. In the past few years, the Government have gone in the same direction and made our labour markets less flexible, with the danger that our currency may also weaken in the future.
  Mr. Plaskitt: I am interested in the line that I often hear from Conservative Members, who have spent years extolling the virtues of the free market. The euro is doing what I think an international currency is supposed to do
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  in free currency markets. It has depreciated to enable the European economies to recover. The likelihood is that, as the European economies grow, which they are beginning to do, the euro will strengthen.
  I turn to the third problem, which I cited at the outset and which has plagued our economy for so long. I refer to the productivity gap and skills shortages. There is a significant productivity gap between us and our competitors. It is part of the under-investment by both industry and Governments. Indeed, Governments have been responsible for historical under-investment in education and training. There is no more important investment than in the skills of the work force. The economy needs a strong skills base. Hence it is vital to raise education investment, across the board, as we are doing. It is vital to help reskilling across the board, as we are doing. The labour market needs to grow not only in quantity but in quality. It is therefore impressive that 800,000 more people are working than in 1997. It is also impressive that the quality of the work force is improving through greater opportunities to train and reskill.
  Government measures across the board are helping us deliver on these objectives. The minimum wage, the working families tax credit, child support, the new deal—now extended—all help to make work pay and raise productivity. The lower marginal rates of tax and national insurance for those moving into work are also extremely important. We inherited from the previous Government a situation in which more than a million people moving off benefit into work faced an effective marginal tax rate of 70 per cent. That marginal tax rate is now virtually eradicated, and the further measures announced by my right hon. Friend today in extending the new deal to those over 50 are very welcome.
  Finally, the headlines in tomorrow's newspapers will undoubtedly be grabbed by a few key features. They are, of course, excellent features. However, the real story of the Budget is that it makes it possible to have targeted tax cuts and increased public investment in vital areas without any short or long-term risk to the economy. It is possible to do those things only because of the platform of stability that we have created.
  The real test of this Budget, as with any Budget, is whether it adds to the fundamental strengths of the economy and to that platform of stability. In my view it does, and that is why it should be commended to the House.
  6.26 pm
  Mr. William Thompson: As someone from one of the minority parties, I perhaps feel able to look at the Budget more sympathetically and impartially than members of the two main Opposition parties.
  What we have heard today is certainly very interesting. When the Chancellor of the Exchequer comes to the Dispatch Box, he paints a glorious picture of the economy. He tells us that we have never had it so good, and that it is going to get better. Then Conservative Members say that that is not true—it is all a con trick. I can perhaps be more impartial and see where the truth really lies.
  From experience, I have discovered that many people believe that they are saving on tax when their income tax comes down. When many people hear today's news that the basic rate of income tax is to drop from 23 per cent.

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  to 22 per cent, they will think, "My wage packet will be bigger in the months ahead." What they fail to recognise is that, when the Government reduce income tax, they generally take the money back through indirect taxation. That has been the pattern of all Governments, as well as the pattern of this Government. It has been acknowledged that the overall percentage of tax has been rising. Income tax may have gone down, but the total amount of taxation has gone up.
  With the increases announced in today's Budget, many people will indeed be worse off. For example, someone who smokes will find that a packet of cigarettes is going up by 25p. I am not in favour of smoking. However, because of the continual increase in cigarette prices, the Exchequer is getting less money from taxing cigarettes than before. There is also the problem of smuggling. As the price of cigarettes goes up, more and more smuggling takes place. It is difficult to control or stop, with the result that the tax benefit will probably continue to go down.
  We are told that 1 million pensioners will be 20p a week better off. What a paltry sum! A pensioner who buys one packet of cigarettes a week will lose that 20p immediately. If he drives a car, he will be much worse off, because every gallon of petrol will cost 8p more. When the reduction in income tax is seen against what will be taken back in indirect taxes, the country at large will probably be worse off.
  Vehicle excise duty and road fuel duty cause tremendous problems in Northern Ireland. Diesel prices will increase, and, as the right hon. Member for Penrith and The Border (Mr. Maclean) said, excise duties differ greatly between European Union countries. That is a particular problem for Northern Ireland, because the excise duty for a 40-tonne lorry is £1,278 in the Republic of Ireland and £5,750 in Northern Ireland. Many road hauliers cross the border to buy diesel, and many register in the Republic of Ireland to save considerably on excise duty. My constituency is adjacent to the border, and nearly every petrol pump for 20 miles on the United Kingdom side has been closed down because people cannot keep them going. Drivers cross the border to fill up. Inevitably, a tremendous amount of money—estimated at around £200 million—is being lost to the Exchequer. The Chancellor must consider whether any remedial action can be taken.
  Northern Ireland's proportion of the consumption of petrol in the whole of Ireland is falling. It was 35.9 per cent. in 1994, and has dropped to 24.2 per cent. In the Republic of Ireland, it was 64.1 per cent. and is now 75.8 per cent. In 1995, diesel sold in Northern Ireland represented 27.7 per cent. of the whole of Ireland's consumption, but that fell in 1998 to 16.1 per cent., and has probably fallen further since. A lot of money is being lost to the Exchequer and remedial action is necessary.
  Rev. Martin Smyth: It might be argued that the same form of taxation should apply to the whole of the United Kingdom, yet the highlands and
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  islands have been excused aviation taxes even though the same problems of transport to and from the mainland affect Northern Ireland.
  Mr. Thompson: I thank my hon. Friend for making that point, which emphasises mine. I hope that those on the Government Front Bench will not just listen but do something.
  Mr. Maclean: I hope that my hon. Friend the Member for West Tyrone (Mr. Thompson) will communicate his message to the BBC newsroom. Last week, a BBC programme waxed lyrical about the wonderful benefits of joining the single currency, giving the example of how much cheaper fuel was in the Republic of Ireland. The BBC newsroom put that down purely to the benefits of the single currency, but my hon. Friend could point out that fuel is cheaper in the Republic because the Irish Government levy less tax on it than the British Government do.
  Mr. Thompson: I thank the right hon. Gentleman and concur with all that he says. Fuel is not taxed to the same extent in the Republic of Ireland as it is in the United Kingdom.
  I welcome what the right hon. Member for Penrith and The Border said about the strong pound. We have become accustomed to talking about the strong pound as if it were a crime or a sin. In fact, we should talk about the low euro: the pound has tracked the United States dollar over the year because of the nature of our economy and exports, and it would be disastrous for us to join the euro as that would endanger our exports to countries outside the eurozone.
  The Chancellor of the Exchequer must know of the difficulties of the farming industry because of representations by the Minister of Agriculture, Fisheries and Food on the need for money for farmers in desperate need. The Government could match, up to 50 per cent., agrimonetary compensation available under EU rules, both this year and next. The Chancellor has missed the opportunity to do that today. Our milk and beef farmers are suffering greatly and need compensation.
  Although pig farmers have suffered more than anyone else, they are not covered by the European regime and would not be eligible for the compensation. The Chancellor may have been generous to other sections of the community, but he should have been as generous to pig farmers, who are desperate as they face bankruptcy. We sympathise with those who lose their jobs in the motor industry and others, but the Government should show the same sympathy for those who, through no fault of their own, are made desperate by the state of the pig industry. I regret that the Exchequer did not take its chance to help them today.
  There are points to welcome in the Budget, particularly the additional money for education and books for primary and secondary schools. The education budget will rise by 8 per cent., and we welcome that. The trouble with increasing it, of course, is that we will have to keep increasing it. I hope that today's announcement will not be a one-off, but will continue.
  We welcome increased health service spending. The NHS does a wonderful job, but it is facing a tremendous crisis. How best to organise and pay for it, given that the

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  demand is inexhaustible? There are more procedures and they cost more. There are more elderly people who need the health service. Furthermore, restrictions on the royal colleges add to the pressures on the NHS. We welcome the fact that there will be more money for the NHS, but we are also glad that there will be a review so that we can institute better procedures to run the service more efficiently and effectively for our people.
  The Labour Government claim that they are doing well. Perhaps, with a little humility, they might realise that the previous Government left them a reasonably firm foundation on which to build. We have been through enough pain over the past few years; we should now be reaping the benefit that we paid for then.
  6.41 pm
  Ms Sally Keeble: I appreciate the chance to speak in the debate.
  The hon. Member for West Tyrone (Mr. Thompson) welcomed the improvements that are being made in health service spending. However, many of his other remarks—and many of the remarks of other Opposition speakers—made me wonder whether they had been listening to the same speech from the Chancellor as I had. And have they considered the same economic factors over the years as my colleagues and me?
  There has been much discussion of the overall tax burden and of the fact that we made no commitments to increase taxes. However, I distinctly remember—as will my Labour colleagues—that one of the earliest pieces of legislation passed by the Government was that introducing the windfall tax. We campaigned openly on that tax; it was a key part of our election strategy. It was used exactly as we said it would be: to increase jobs, and for spending on schools and the health service. That was an open part of our commitment; it was probably the largest single tax take of this Parliament.
  I listened with some astonishment as the right hon. Member for Penrith and The Border (Mr. Maclean), who is not in the Chamber at present, said that we were doing nothing about rural transport. I distinctly heard my right hon. Friend the Chancellor say that the Deputy Prime Minister would make a statement about a package of about £285 million for transport, which would include measures for rural buses. I did not have to look that up in my right hon. Friend's statement; I remember hearing it and thinking that it was a good thing. It will be welcomed by many Labour Members who represent rural constituencies.
  Mr. Hayes: I know that the hon. Lady has a great interest in rural affairs, partly because of the time that she spent as a member of the Agriculture Committee. I hope that she will acknowledge that there was nothing specific in the Budget about an aid package for the countryside, and also nothing about agriculture. Furthermore, no earmarked figure for rural transport was given anywhere in the Red Book or in any of the accompanying documents. That £285 million is a global figure—all that rural transport received was a mention from the Chancellor.
  Ms Keeble: I appreciate the hon. Gentleman's comments. However, I was referring to comments made by his colleague the right hon. Member for Penrith and
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  The Border, who said that there was nothing for rural buses. There was: it was distinctly mentioned by the Chancellor.
  I take the point that the hon. Member for South Holland and The Deepings (Mr. Hayes) made about agricultural measures; I shall deal with that matter later in my speech. If we are to repeat what the Chancellor said, however, we might at least do him the credit of doing so accurately, which the right hon. Member for Penrith and The Border did not do.
  Several hon. Members referred to attacks on family life through the abolition of the married couples allowance. However, the Conservatives seemed to have realised that the continuance of that allowance was an anomaly—I think that is how the shadow Chancellor described it. It is wrong to talk about supporting family life without providing support when it is needed—when people have children.
  The Budget shows a real commitment to creating a dynamic economy and to maintaining high-quality public services. That is certainly what my constituents and the public want. We always thought that the Tories were committed to one side of that equation—the creation of a dynamic economy. However, the legacy that we were left suggested the opposite. Furthermore, when they were in government, the Tories failed to address one of the key factors—the need to deal with supply-side problems, especially the skills gap. That matter still needs to be tackled, and I am extremely pleased that the Budget begins to tackle it. The Conservatives learned nothing from their defeat in 1997 about the value that people attach to high-quality public services.
  The Budget deals with the consequences of economic success. In my constituency, the challenge is no longer to bring the economy back from the brink of crisis—as it was to a certain extent in 1997—but to ensure that the economy can expand as it should over the coming decade. It is a measure of the Government's achievement that people in my constituency and elsewhere in Northamptonshire can look forward to a secure future.
  During the general election campaign of 1997, unemployment was not an issue in Northampton, North, so I wondered whether the new deal would have an impact on my constituents. However, even during our short term in office, we have improved the situation. Through the new deal, we have been able to help some important sections of the community. Not only did the increased number of young people employed through the new deal produce a fall of 68 per cent. in youth unemployment, but women, who were for the first time given the opportunity to go out to work through the new deal for lone parents and through the child care tax credit, are £60 to £65 a week better off thanks to the Labour Government.
  I draw the attention of the House to a small measure that helps women, although I am not surprised that neither the Chancellor nor other speakers have referred to it. As I read through the Red Book, thinking about what the Conservatives might come up with, my eyes lit on paragraph 5.112, which states:
  To make the tax system fairer for women, VAT on women's sanitary products will be cut from the standard rate of 17.5 per cent to a reduced rate of 5 per cent.
  The right hon. Member for Penrith and The Border said that he was sure that various tax changes would be revealed over the coming weeks. That change is small—

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  it might seem trivial to the Opposition, and I understand why—but it is something for which women's groups and women's magazines have campaigned for years.
  Mr. Ken Purchase: So did the Co-op.
  Ms Keeble: Indeed. When I organised an event in my constituency so that girls from all the secondary schools could talk about what they thought the Government should do, that was the only point they mentioned—much to my surprise. They placed a high importance on it. I hope that the Chancellor is given credit for that farsighted support for women.
  We have also ensured that work pays by taking steps to help families who, historically, have suffered from low wages. In my constituency and the surrounding area, about 2,700 families will be helped by the working families tax credit.
  However, many large challenges continue to face the local economy. The Budget will help to address them. Last week, the east midlands agent for the Bank of England visited Northampton and met members of the local business community. It belied most people's impression of the Monetary Policy Committee to see one of the agents who provide the regular information on which interest rate decisions are made out and about, meeting all sectors of the business community. He met people from small and large manufacturing firms, as well as people from services industries and—for the benefit of the hon. Member for South Holland and The Deepings—the farming community.
  There was a sense of a dual economy; the service sector was buoyant, while some parts of the manufacturing sector were held in check by the strong pound, depending on where their exports went. The farming industry faced difficulties, but it was recognised that they would not be resolved by short-term fixes of financial aid. Its problems are very much deeper and more structural.
  I am sure that many of the people who met the agent from the Bank of England will welcome the measures that are in the Budget. Those measures will encourage long-term investment and provide stable patterns for existing investment plans. They will encourage innovation, which is important if we are to develop businesses in the new sectors and encourage sound investment in new technology. Everyone in the meeting that I organised agreed on the fact that one of the biggest problems facing the local economy was the difficulty of recruiting skilled employees.
  Sir Robert Smith: The hon. Lady said that agrimonetary compensation would be seen as a short-term fix and that bigger structural problems faced the industry. The common agricultural policy contains a mechanism for agrimonetary compensation which other countries use to help their agriculture. Does she not accept that, if the Government do not want to use that mechanism, they should not unilaterally opt out, but should reform the common agricultural policy across the European Union rather than penalising British farmers?
  Ms Keeble: Substantial amounts of compensation have been provided under this Government, but we have to top
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  that up ourselves—it is not free money that comes from Europe—as a result of agreements into which this Government and the previous Government entered. The package of measures available helps at the edges, but it does not deal with the deep structural problems of agriculture. I completely agree with the hon. Gentleman about the need to reform the common agricultural policy, and the Government have led the way in getting agreements through Europe. Had it not been for this Government, I suspect that we would have achieved an even worse deal on CAP reform. I was about to discuss the skills gap. Agriculture, even in rural areas such as South Holland and The Deepings and parts of Northamptonshire, is a small sector of the economy, and the skills gap is particularly important for new and growing sectors. That gap puts pressure on what should be an expanding and thriving national economy.
  Mr. Hayes: The hon. Lady is right in terms of the percentage of the population employed in agriculture, although I would point out to her that the number employed in that sector in South Holland and The Deepings is well above the national average. She is wrong, however, in the sense that agriculture is pivotal to many other related industries. In my constituency, as in many others, the food and food-related industries are based on our having a strong agricultural economy.
  Ms Keeble: Agriculture is important in many ways other than in employment and financial terms. It is important to the food industry, to the environment and to leisure and recreational activities. The Government have shown their support for those aspects of agriculture, not least in terms of the importance attached to access to the countryside and the need for proper land management. However, the Conservative party opposed the Bill on those issues when it came before the House yesterday.
  The skills gap is a problem nationally. In Northamptonshire, the A-level pass rate in schools is below that for comparable counties and, at almost all other stages, achievements in schools in Northampton are the lowest in the county. That is a source of great concern to me. That means that the extra money in the Budget that is earmarked for schools will not just meet some public service pressures, but will deal with pressing economic pressures.
  The extra money for the health service will relieve some of the biggest pressure points in that service. Conservative Members have scoffed at what that money will mean but, in practical terms, it will mean that my health authority will be able to makes plans for winter fuel with some certainty. On the scale announced, the money could also provide extra intensive therapy unit and high dependency beds that will make it possible for heart surgery to be carried out in a more planned way.
  Most important of all, that money means that it will be possible to provide the extra services that are needed to keep old people out of hospital. It is a disgrace that many old people in my constituency and elsewhere see their own homes for the last time from the back of an ambulance as they are taken to hospital. From there, they go to nursing homes. If we are serious about providing high-quality health care for old people, we must consider developing the new services that can support them in their own homes and give them much more dignified care if they suffer from illness.

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  The Budget and in particular the Tories' response to it show up weaknesses in Tory thinking and policies. That point will be strongly echoed by people outside the House. Sometimes, Tories say that they welcome extra health spending, but sometimes—and we have heard this today—they describe it as taxation by stealth. They must come clean about what they want. Do they want improvements to the health service, and are they, therefore, prepared to support the tax and spending programmes that are needed to achieve that?
  Mr. Oliver Letwin: I do not know whether the hon. Lady heard the speech given by my right hon. Friend the Leader of the Opposition, but he made it perfectly clear that we welcome the increased spending on health. That does not imply accepting tax increases, because we are talking about a heap of other spending that she has not mentioned.
  Ms Keeble: The hon. Gentleman proves my point. When one talks about increased spending on the national health service, one must explain to the public how that increase will be achieved. I heard most of the speech of the right hon. Member for Richmond, Yorks (Mr. Hague). It was extremely amusing, but it did not deal with any of the issues that face my constituents and are of major concern to them.
  The Conservatives have now welcomed the minimum wage, but they have not accepted the other side of the equation—the working families tax credit, which will ensure that families have not just the minimum wage but a decent living wage. Conservatives have rejected virtually all our measures to combat child poverty, but they talk to us about the moral duty of Government to cut taxes.
  Conservative Members have not shown any understanding of the measures that this Government have taken to help women. I understand from today's announcement that women on maternity pay will be able to receive the working families tax credit, and that is a substantial benefit to women who wonder what they will do when their maternity pay tapers off and fear that they will have to return to work because they cannot afford to live on statutory maternity pay. I am pleased about that provision, but the Opposition do not seem to understand such measures.
  Conservative Members do not seem to be prepared to admit that they still believe in a minimalist role for Government and that the Government's purpose is to create the right conditions for some sections of the economy, such as the south-east service sector, but not for all. Everything else will be left to trickle down. After 18 years of Conservative Government, the public know that trickle-down does not work: they want the much more responsible approach that this Government are showing. They want a dynamic economy and public services. That is why the sense of social justice shown by the Government and, in particular, by the Budget will be so important and will resonate so well with the public.
  The public will enthusiastically support policies that progressively lift out of poverty the 4.4 million children whom the Tories left in poverty when they left office. The public will support the short-term measures for pensioners—and see them for the real gains that they are—and long-term restructuring.
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  The Tories have shown no understanding whatever of what it means to bring up a family in middle England when one earns only £12,000 or £13,000 a year. The public will fully support the Government's strength of commitment, as shown in the Budget, to provide a stable economy so that families can plan securely for the future; to provide low interest rates so that people can pay their mortgage; and to provide incentives for small business men to enable them to build up their business and plan for the future so that they can be part of a growing, dynamic economy.
  The public will respond extremely well to the Government's commitment, which is particularly evident in this Budget, to high-quality public services, which support people at every stage of their family life, in school, in hospital and, through their pension, in retirement. In the Budget, the Government have demonstrated their commitment to building a strong, dynamic economy and to supporting the highest-quality public services, and it will be welcomed by the country at large.
  7.1 pm
  Mr. Peter Bottomley: I congratulate the hon. Member for Northampton, North (Ms Keeble) on being the first hon. Member to mention measure 5.112, which is the £35 million a year tax relief on sanitary products. Sanitary towels and tampons are significant. I have calculated that people will save about £3.30 a year because there will be a 10 per cent. drop in price as a consequence of the much greater drop in VAT.
  That measure is the result of a successful campaign over many years, and it is right that the Chancellor has acknowledged that campaign. It would have been slightly more impressive if he had not tucked away the press notice on that measure right at the back of the bundle, because many people will have spent some time trying to find it.
  It is curious that in No. 19 of the notes for editors in press notice HMT/DETR 1 we hear about 44-tonne lorries being approved for use in this country. That proves my old rule: "Read the notes for editors and you will find the interesting points that the Minister doesn't want to say in public." I shall spare the House the greatest excitement, which is in example 3 in the annexe to Inland Revenue press notice BN2A; it is probably indescribable, and I am not surprised that the Chancellor did not mention it in his speech.
  Page 176 of what is commonly referred to as the Red Book—not that it has been red for some years—details the forecast issues and risks. There is an interesting overall question about what has happened and what will happen to household disposable incomes, household spending and the savings ratio. What I am about to say is qualified by the fact that we do not know what will be the impact of stakeholder pensions. The forecasts suggest that the cost of stakeholder pensions to the public revenues will be about £650 million a year, and that implies a fair amount of extra saving for retirement, which will be welcome.
  The Treasury, looking back at the last year and forward at the next two or three years, has rightly said that household incomes grew more slowly than expected, but household spending rose faster than expected, and that is the explanation for the savings ratio dropping from about 10 per cent. to about 5 per cent. Projections show that the

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  savings ratio may increase to 6 per cent., but that is a vulnerable figure. If we had continued to have a savings ratio of about 10 per cent., that would have had a greater impact on people's retirement incomes. We need to watch those figures.
  We need to be aware also that the way in which the Chancellor dealt with the alterations to self-assessment taxpaying led to a significant increase in the amount of tax paid by many people during the transition period, and that increase is now slowing down. Such hiccups tend to be ignored by the commentators, because they require a reading of the Budget 2000 book, rather than simply reading the press notices, the Chancellor's speech or these debates.
  When we are discussing health we always praise the people who work in the health service—in hospitals, in the community and in GPs' surgeries—and in praising the Chancellor's delivery of his speech, let alone the content, we ought to acknowledge the efforts of people not only in the Treasury and the Revenue, but throughout Whitehall. It is quite an achievement to get the product out on the day that the Chancellor makes his speech, so I pay tribute to those people.
  I move on to measures that I wish had been in the Budget. I have not yet noticed the Government facing up to the problem of annuities. If there is to be a transformation in the Government's repayment of debt and we will still require people to turn their personal pension pot into an annuity, the reduction in the amount of available Government debt that will match the annuity payments will mean that the returns on annuities will drop. Unless there has been a consultation exercise or taskforce that I have not noticed, the Government should be far more open and consult about how to deal with that. There has been independent sector work on the matter.
  I have many constituents who are above retirement age. Many of them have private pension pots and have put off turning them into annuities on the assumption—which I hope is correct—that the Government will take action. It is wrong to require people to wipe out capital, even though it has been built up tax free, on a rate of return that is lower than they get from many other forms of investment that do not wipe out their capital. That is not only anomalous but unacceptable. Will Ministers find a way to discuss that problem out into the open and find a solution within the next 18 months to two years? The solution may be a transitional set of changes, but one is required.
  I move on to another issue that affects retired people. In my constituency, 45 per cent. of people are above retirement age, and these issues matter to them. Married couples in which neither partner will be over 65 by the end of the tax year will lose an estimated £500 a year because their birthdays are in the wrong month. On the type of calculation used by the Government, that will mean a loss of £5,000 over 10 years—because of a birthday. Frankly, that is a bad decision by the Government, and it is wrong that it was endorsed by Parliament in previous Budgets.
  I hope that the Government will hear my plea and reverse that decision. If, for some reason, they have to eliminate the married pensioners tax allowance, they should do so by reducing it by 10 per cent. a year over
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  several years, so that it is not a cliff-edge change. There is no justification for that sudden change. It may require a reversal of policy by the Government and may look to outsiders as though they are admitting that they have made a mistake, but I am asking for fairness.
  I hope that if the Conservatives table an amendment on that, the Government will take it seriously, and I hope that it can be debated on the Floor of the House, rather in the Committee upstairs, because the issue affects people in every constituency. That is the only example that I have come across of a cliff-edge change, and I have gone back through Budget changes in most of the 24 years that I have served in the House.
  Many other issues are of interest to my constituents, but it would not be right to deal with too many of them. One that matters to Worthing, West, which is a seaside constituency, is the change in Customs and Excise press notice 1, which abolishes betting duty on amusement machines with prizes, where the stake is 10p or less. That saving of £645 a year, or £450 a year in non-profit clubs, will be welcome. It is not desperately important to overall finances, but it will be a significant advantage to people who provide low-cost, low-return entertainment in Worthing and elsewhere. I say that although I have not had a major contribution from Connaught Leisure in my constituency. However, its owner worked with me in Battersea funfair, back when I was in my teens and trying to fund my education, or at least my debts.
  I move on to energy saving and home security, on which VAT is coming down to 5 per cent. There is an ambiguity in Customs and Excise press notice 6. The VAT reduction is not applicable to DIY installation. It is not clear whether that applies only to home security devices or to energy saving materials as well. I do not expect that to be clarified today, but perhaps we could have an answer later. The notes to editors do not make the position clear, but it would be of interest to the trade press and those who do DIY work.
  Inland Revenue press notice 8 deals with the installation of new boilers and radiators in social housing owned by councils or registered social landowners, where there is provision for leased boilers and radiators. To many people, this may sound trivial, but if tenants buy homes from their registered social landlord or council that contain radiators and boilers leased from other companies, will that lead to a conveyancing nightmare?
  The fact that the boilers and radiators are leased presumably does not require them to be taken out if the house changes ownership. This could be a matter of great importance to people who want to buy the home in which they have been living, rather than being forced to move elsewhere because they cannot afford the lawyers to work out the complications involved.
  On charities, I do not remember in which year I first suggested that the Treasury, or rather the Inland Revenue, ought to recognise that if money is given to charities other than through the Charities Aid Foundation, Gift Aid or Give As You Earn, it comes in the main from people who have taxable income or from people below the taxable threshold. Rather like the old system of MIRAS—mortgage interest relief at source—which eventually imputed to all payments of mortgage interest the notion that it came from taxed income or from income below the tax threshold, so that the tax relief could come back to

  913
  everyone, it would be far simpler if donations to charities were presumed to come from taxed income or from income below the tax threshold.
  The only accounting for such donations should relate to those paying the higher rates of tax. That is roughly the case with earnings from dividends and savings, where the tax credit applies to the ordinary rate of tax, and only the higher rate requires a complicated paper transaction. Getting rid of paper matters.
  My last point, as I do not want to prevent others from speaking, concerns small employers and small employees—not necessarily in size, but in terms of work. I do not think that the situation has changed from the time 13 or 14 years ago when I was on a ministerial group looking into the reduction of bureaucracy. Suppose I employed someone on relatively low earnings—say, a part-timer for household assistance of one kind or another—and I wanted to pay that person a certain amount of money after tax. If I wanted the person to have £120 a week, there ought to be a simple system whereby I could sign a single sheet of paper, instead of dealing with two offices. Obviously, amalgamating tax and national insurance helps, but the last time that I raised the issue, there were at least two offices involved and the guides were extremely complicated.
  Up to a certain amount of money, and for one or two employees, if people want to be straight and want their employee to be straight, it would be a good idea to work out a rough and ready system that produces justice and brings people into the white economy, rather than having them not provide employment or go off the books because the alternative is too complicated. Being open and simple worked if one had a single lodger in one's home up to a certain limit, and the same ought to apply to such simple employment.
  7.14 pm
  Mr. Ken Purchase: The Budget will be widely welcomed throughout Britain. It has many good features, which will improve the standard and quality of life for thousands, if not millions, of people throughout the coming years as the improvements announced by the Chancellor are introduced.
  In the context of my constituency, I welcome the extension of the new deal to older workers. It has been a tremendous success in the case of younger workers, halving the rate of youth unemployment and halving long-term unemployment, so three cheers, or perhaps even four, for the extension of the new deal to older workers today.
  There is much else that is good for Wolverhampton, but I should begin by saying that I am sponsored by the Co-operative party, which paid almost a quarter of my election expenses at the last general election. I am proud to be a member of the Co-operative party, but as I intend to speak on the business measures, it is right that I remind the House again of my background in the Co-operative movement.
  The Budget recognises that prudence is a good thing, but that in the present financial situation, there is room for improvements in life in Britain, in the public services, in business and for individuals. That must be welcomed, and I am sure that it will be welcomed by people who understand such matters and by ordinary men and women. When the press releases are fully analysed, no doubt
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  wrinkles will be ironed out and parts will unravel, but we will have a better understanding of the impact of the Budget.
  On the business measures, I especially welcome the capital expenditure reliefs. Let me illustrate that. It is an important fact of British economic life, particularly in manufacturing, that although we show good returns on capital employed, we show poor returns on the use of our people. Why is that? It is not hard to find out. First, there has been massive underinvestment over decades, so that a great deal of machinery and other kit in our companies is very old indeed. I have worked in companies where some of the machinery must have been dragged up off the North sea bed following not the second, but the first world war.
  That is how rusty, out of date and hopeless in competitive terms some of the plant and machinery is, and it is still being used in Britain today. No wonder we can say that the return on capital employed shows a good ratio, compared with many of our continental competitors. However, the return on labour is poor. Our unit costs are high and productivity gains have usually been made at the expense of jobs, so that there are fewer people doing more work. We have not got to grips with the idea of constant improvement to our methods and way of working, and the investments needed.
  I welcome any encouragement, particularly to smaller companies, that will allow them to invest, knowing that remission has been granted on capital investment sums.
  The corporation tax measures mean that conditions in Britain are now the best in Europe, if not among the best in the world. It can no longer be argued that Government overtax and overburden the corporate sector. Far from that, a case could be made in other circumstances for an increase in corporate rates of tax. At this stage, however, the Chancellor is right to stay on course and ensure that investment opportunities are at the top of the agenda. One way of doing that is to keep corporate taxes relatively low.
  However, I hope that the Chancellor will rethink the rate at which he taxes co-operative enterprises. At the moment, the co-operative sector pays the standard rate of corporation tax but, given the structure and nature of co-operative enterprises, it would be fairer and more equitable if they were to pay the small firms rate. I remind those who want to be reminded that, before the 1997 general election, we considered the restoration of the lower rate of corporation tax for co-operative ventures. I am not talking simply about the big co-ops; the UK has a growing co-operative sector which needs, among others, tax incentives. Community facilities, which had been lost over many years, are now being offered by many co-ops which are helping to revitalise the communities in which they operate.
  The banking reforms proposed by the Chancellor are most welcome. Today's Cruickshank report shows that the banks take in tariffs £4 billion to £6 billion more than is necessary to run their businesses effectively. I am reminded of the Woody Guthrie story that, when being questioned by the House Committee on Un-American Activities about capitalism and banking generally, he replied, immortally, that he had been robbed many more times by a man with a fountain pen than he ever had by a man with a six-gun. That is exactly how I feel. I have dealt with banks for many years, both in business and

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  personally, and there is no question but that bank charges need reforming. The Chancellor has opened the curtains on that and we should put much effort into it.
  Hats will be thrown in the air at the amount of money that is to be given to schools, which is well deserved and necessary. However, I sound a cautionary note. Education committees, which were formerly responsible for the distribution of education grant and other moneys, now have little control over what is happening in schools. Many authorities now hold less than 5 per cent. for central purposes, and that is a step too far. Inequalities between schools can be redressed, not by a simple formula, but only by an education committee taking an overview and determining where money would be best spent to obtain the best return on that scarce resource.
  As I say, at schools throughout Britain hats will be thrown in the air at the generous and welcome amount of money that they are to be given, but we should be cautious and recognise that education committees—there will always be poor ones, but for 150 years they have done an excellent job overall—have local knowledge that is often far superior to anything that exists in Whitehall. The money is welcome, and on this occasion the distribution is fine, but let us not overlook the fact that local knowledge, through our education committees, is extremely important.
  The employment measures aimed at getting workers into jobs are also welcome, and that is especially true in the west midlands where, in the past few weeks, we have been "Rovered", which is not a pleasant sensation. We face in the region of 50,000 job losses. The Secretary for State of Trade and Industry has already announced that between £120 million and £130 million, which would otherwise have gone into the black hole of BMW, will now be rescued and used for regeneration in the west midlands, but that is not enough. Despite the apologies that we have been given for having been told less than the truth about Rover, we still do not know the full story, but we fear that, in the weeks, months and years to come there will be more unemployment and more to think and worry about. Those employment measures need to be built upon. They are an insignificant start when set against the task that faces us.
  Before the collapse of Rover, workers at the European headquarters of Goodyear in my constituency were on 21 days' notice of short-time working, which, it is rumoured, may be as little as half-time working. That will affect another 4,000 workers, and the knock-on effect of that, not just in Wolverhampton but throughout the region, will mean the loss of many more thousands of jobs.
  Therefore, in welcoming the employment measures, I have to tell the Chancellor that much more is needed. The £500 million in loans to BAe in the north-west and elsewhere is exceedingly welcome, and will help the west midlands, through its aerospace industries, but the blow to our automobile industry is most serious and cannot be exaggerated. The Secretary of State for Trade and Industry is working exceedingly hard on these issues, but I hope that he will seek a solution not only within our own nation, but Europe-wide. This may be the trigger for a Europe-wide auto industry, developing a world-beating science and technology.
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  The west midlands has a conglomeration of universities, all with extensive contacts with the auto industry. If we diminish much further in the west midlands an already impoverished skills base by taking away the work in the universities that filters out into our communities and educates and informs the rest of the skills base in the region, we shall be heading for serious and deep trouble, which, if left unattended, will be irreparable, at least in the medium term. That is a major problem. We welcome today's employment measures, but much more is required.
  Workers in the west midlands are often thought to be highly skilled and able to move around between jobs. During the past 15 years or so, far from being inflexible, workers in places such as Goodyear and Rover have developed flexible working arrangements. But in process work, such as that at Rover and Goodyear, skills are specific and non-transferable, and we do not have the skills base that we had 40 years ago when I was an engineering apprentice. I worked with skilled people who could pass on skills that are now long forgotten but which are still relevant and cannot be replaced by machinery, equipment and kit, however high-tech it might be. People working in the west midlands require certain skills and mathematical knowledge that are being lost, and retraining will be particularly important.
  Mr. David Taylor: Does my hon. Friend agree that, even in the so-called bleak years of the midlands manufacturing industry, when industrial relations were certainly a contributory factor to its demise, there was at least an equivalent contribution from poor management and low levels of investment, and at least the Government and this Budget are starting to tackle the latter?
  Mr. Purchase: My hon. Friend makes a good point. I worked for the truck and bus division of British Leyland, and the management there did not exactly cover itself with glory. My abiding memory is of building the chassis of trucks and buses. Management were confident that people all over the world would buy them and that no one would make them except us. It was a miracle; we survived for about 20 years believing that, before everybody overtook us.
  It is hard to describe the track we worked on as a track because when the lads had got so far with a bus or a truck, they would say, "We'll have a tea break now, but somebody had better move the track along." It was not a moving track; someone had to wind the damn thing. We worked with that sort of kit in the mid-1970s. Management were amazed when suddenly we could not sell buses and trucks. Why were the buses in Latin America, the sub-continent of India and the far east suddenly gleaming and new when we no longer had the technology or the investment? We had genuinely lost the plot. As my hon. Friend said, much of that was due to lack of management drive, perception and vision.
  Matters have improved, but we have deskilled massively. Part of the answer is education, education, education. However, a new co-operation and a new vision is also required to replace current activities at Rover and elsewhere.
  My next point is not frivolous. Announcements were made about maternity pay and services today. They are most welcome. We should do as much as we can for

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  women who have babies and return to work. However, the Chancellor made no mention of provision for paternity pay. I am worried that he might expect companies to make such payments for time off. The bad news is that, in my constituency, across the west midlands and no doubt in other constituencies, there are innumerable companies that have perhaps six or 20 workers, half of whom are young men with the engine running. They are bound to have more and more babies.
  Imagine a press shop where a skilled fitter, a press setter and four or five operators work. Two of the lads announce, "Well, the missus is pregnant and I'm off for this month." That means that the other five will be idle. Small companies cannot sustain the loss of one or two young men for three, four and five weeks at a time. Neither is it possible for the state to pay. When we consider proper provisions for maternity pay, we should also consider the effects on small companies whose workers are predominantly male, where key workers such as tool setters may be off for a month. That will hurt, and we must be careful.
  The Budget will be welcomed in the west midlands. We have considerable difficulties and I hope that the Chancellor and the Secretary of State for Trade and Industry will be able to tackle them in the coming days. Nevertheless, the Budget will be widely welcomed.
  7.34 pm
  Mr. Tim Loughton: The Budget was heralded in many of the leaks to which we have become accustomed as a Budget that had something for everyone. Taken with the many announcements that were made before today, there was something for everyone.
  I represent the part of Worthing that my hon. Friend the Member for Worthing, West (Mr. Bottomley) does not. We do not have young men with their engines running, as the hon. Member for Wolverhampton, North-East (Mr. Purchase) put it, so much as older pensioners who are having their engines overhauled. As my hon. Friend the Member for Worthing, West said, those people, especially those whose birthdays happened to fall from 5 April 1945 onwards, stand to lose £500 a year through the abolition of the married couples allowance. I strongly endorse my hon. Friend's suggestion that if the married couples allowance has to be abolished, the changes should be phased. That would be preferable to the current cliff-edge arrangement.
  The abolition of mortgage interest tax relief at source constituted another aspect of the something-for-everyone Budget that was trailed. There is something for 10.5 million mortgage payers in this country—the loss of tax relief on their mortgages.
  The Budget contains something for everyone who happens to work in or own a business: the energy tax. They will face additional burdens that will make manufacturing businesses in particular uncompetitive, especially when compared with other businesses overseas. There is much more in the Budget for those who have a pension fund—the continuing raid on pensions that the Government started a couple of years ago.
  The Budget was also described as a Budget for hard-working families. However, hard-working families will be £600 worse off through additional taxes. They will have to work harder and longer to stand still because of this and previous Budgets.
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  The Chancellor took a dismal rearguard action to defend the mantra, which we hear so often from the Dispatch Box, that the tax burden is falling. We all know that that is not true. At last, the Prime Minister's press secretary has admitted that the tax burden has been rising and will continue to increase during this Parliament.
  Ms Keeble: Does the hon. Gentleman agree that the figures that he cites appeared in last year's Red Book and that they refer to tax take as a percentage of gross domestic product? When people talk about tax, they usually mean the amount of money that they pay in tax and the benefits that they gain.
  Mr. Loughton: There is no point in trying to fudge the issue again; the cat is out of the bag. The Prime Minister's press secretary has admitted that the amount of tax taken as a percentage of GDP has been increasing and will continue to do so. It was 35.3 per cent. when the previous Government left office, it is currently more than 37.5 per cent. and it will be more than 37 per cent. at the end of the Government's five-year term of office if they stay for the whole term. Yet the Prime Minister said, "We are cutting taxes" and also that the Government had no plans to increase tax. The hon. Member for Northampton, North (Ms Keeble) should throw in the towel, because the tax burden is increasing. Even after the Budget, it will continue to increase.
  It is difficult to get to the bottom of any Government figures. The chief economist of the Confederation of British Industry recently said:
  It has become extremely difficult to analyse the Red Book … The document is now far too political and this can conceal what the numbers are really saying … The book's become unreadable. The thing might as well be published by Millbank Tower.
  Mr. Andrew Love: Opposition Members have a theme. I have also read the Red Book, and chart C3 on page 204 shows that in the early 1980s, at the height of Thatcherism, the tax to GDP ratio was 2 per cent. or 3 per cent. higher than it is now. If it was right for the previous Government to raise taxes in a recession, why are we tarred with the brush of doing something unusual?
  Mr. Loughton: The hon. Gentleman is being even more selective than the Chancellor. He knows that the tax take fell in all but one Parliament under the Conservative Government. Every year under this Government, the tax take has increased. It is predicted that that will continue. Labour Members should stop trying to re-fudge the figures on which the Front Bench has at last come clean.
  I want to move on to some of the announcements that the Chancellor made today, because there was a lot of recycling. It is favoured by the Environmental Audit Committee, of which I am a member and a great fan. The Government are exceedingly good at recycling—not waste, but spending announcements that they have made before and continue to make time and again. We welcome the announcements on increased spending on health and schools—my right hon. Friend the Leader of the Opposition made that absolutely clear—but nobody in my constituency and nobody out there in the real world believes that public services are getting better.
  Nobody believes that the health service is delivering a better service, and we are waking up to the fact that the number of people who have to wait to get on waiting

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  lists has doubled. My constituency has the longest waiting times in the country for the oldest population in the country and nobody believes that waiting times are coming down, because they are not.
  Nobody believes that class sizes in most schools are coming down, because they are not. In most cases in my constituency, successful schools are bursting at the seams and people are trying to get their children in. Class sizes are going up. Nobody believes that the service offered by the police force, in very difficult circumstances, is getting better when police numbers are coming down and, for the first time in the past six years, the crime rate, particularly for serious crime, is going up.
  Nobody believes that the Chancellor is improving services. People are saying, "Look, we've paid all this extra tax and we're waking up to the fact that the Government are masters of stealth taxes." Over this Parliament, about £40 billion in extra tax will be taken by the Government. What have they done with it? We are told time and again that we need to raise taxes to plough them back into public services, but we are not seeing the successful effect of that money going into them. This is a traditional Labour Budget—a "9p up, 1p down" Budget—that taxes yet more and delivers less.
  I want to deal with two main themes: capital taxes and the environment. Stamp duty has not been mentioned by Labour Members and received only a glancing mention from the Chancellor, but stamp duty on property has gone up for the third time. It will be 3 per cent. for properties costing more than £250,000 and 4 per cent. for properties costing more than £500,000.
  Ms Keeble: Stamp duty on properties costing under £250,000 will stay the same and, since becoming a Member of Parliament, I have seen only one property in my constituency advertised at more than £250,000. The measure will not hurt everybody.
  Mr. Loughton: I did not suggest that it will hurt everybody, but many properties in the south-east and London cost more than £250,000 and the picture there is very different. Beyond that, there is growing evidence that stamp duty acts as a serious disincentive to moving house, particularly for those who move into smaller houses in later years or in retirement. The housing shortage logjam in the south-east is being exacerbated and, although the tax is easy to collect and brings in more than £2 billion, it is hurting the housing situation in my part of the country in particular.
  Mr. Hayes: Is not the hon. Member for Northampton, North (Ms Keeble) also ignoring the fact that the change will have an impact on commercial properties? The knock-on effect in that sector will be devastating. She may argue that she has seen no houses in her constituency worth more than £250,000, but I am sure that businesses there will understand that knock-on effect and be as disappointed as we are.
  Mr. Loughton: That is absolutely right. My hon. Friend's point is also pertinent because more than 75 per cent. of the properties attracting increased stamp duty are business properties.
  Mr. Love: Will the hon. Gentleman give way?
  Mr. Loughton: In a moment. I want to make progress, but I am giving way an awful lot.
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  We are led to believe that one of the intentions behind the measure is to curtail overheating in the property sector, but its effect will be relatively small because most properties are business properties.
  Mr. Love rose—
  Mr. Loughton: I shall give way once more, then I must make progress.
  Mr. Love: I thank the hon. Gentleman for being so generous with his time. Does he accept that, according to the press statement that has been released, only 5 per cent. of residential properties are affected by the increase?
  Mr. Loughton: I have said that most of the properties are business properties and the hon. Gentleman will find that the figure of 5 per cent. of residential properties, certainly in the south-east, is out of date, given what has happened in the property market. Stamp duty is an easy target. The tax is easy to collect, but its implications go far beyond what the Chancellor led us to believe, and it is biased against the south-east of England in particular.
  Mr. Chaytor: Will the hon. Gentleman give way?
  Mr. Loughton: I said that I had given way for the last time, but I shall do so again.
  Mr. Chaytor: I am extremely grateful to the hon. Gentleman. Does not he accept that the value of a residential property owned by an elderly person who wants to move will have increased dramatically as a result of house price inflation in recent years? That increase represents a windfall and it is therefore perfectly reasonable to accept a marginal increase in stamp duty to acknowledge that windfall, which has not been available to people in other regions of the country. Does not he accept that people moving house will be able to afford such a mortgage only if their earnings are at that level? The measure is not a tax that will impact on people with ordinary earnings and I find it staggering that he defends people whose income is very high indeed as against the marginal increase in stamp duty.
  Mr. Loughton: I am grateful for that lengthy intervention, but the hon. Gentleman is suggesting that people should forfeit the gain that they have made in the property market not through speculating, but by staying in a family home, perhaps for many years. People selling such houses are subject to 40 per cent. capital gains tax because no changes were made to it as it affects individuals. All the stuff and guff was targeted at companies, but he will have to take my word for it—the measure is a serious cause of a logjam in property markets, in the south-east of England in particular.
  The second part of the point about stamp duty relates to stamp duty on equities, which was not mentioned in the Budget. There were expectations, and it might have been more reasonable if the increases in stamp duty on property were recycled into reducing or even abolishing that on equities. That is now a serious problem. The Government make an awful lot of money out of charging stamp duty at 0.5 per cent. on equities and the amount that that brings in has trebled since 1994, partly on the back of the rising stock market. The United Kingdom

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  charges the highest stamp duty rate of all the major world markets and we are glaringly uncompetitive. The rate is 0.3 per cent. in France, one three-hundredth of 1 per cent. in the United States and zero in Japan and Germany. Companies are portable, listings are available on markets around the world—particularly Nasdaq, which can be based anywhere—and 100 of Europe's top 300 stocks are listed in London, but can be traded on other exchanges. We stand to lose an enormous amount of revenue.
  Market trading is versatile and can happen anywhere. It brings in some £3 billion, but if the Government do not address this problem seriously, that £3 billion, or a large part of it, could disappear overnight. Stamp duty, as an expert has said, is
  an anachronism that is inconsistent with UK ambitions to remain a premier financial centre.
  I ask the Government to re-examine the stamp duty problem and leaving it at 0.5 per cent. will not do.
  The Chancellor mentioned the Cruickshank report. I have raised concerns about some of the practices that banks have been up to. The way to ensure that banks open up to fairer competition is to promote competition, which is why, during the last year's progress on the Financial Services and Markets Bill, Conservative Members suggested time and again that the Bill should make it not just a principle but an objective for the FSA to promote competition. Their proposal was rejected, and I think the Government may come to rue the day in the light of the Cruickshank report.
  The Chancellor said something about simplifying capital gains tax, but the Budget does nothing of the sort. There are some 54 different rates of income tax and capital gains tax. As the Institute of Chartered Accountants has said, the huge number of alterations to the tax regime in recent years has made life increasingly difficult for taxpayers. None of the changes made today struck me as simplifying the tax system, let alone the capital gains tax system. The system is enormously complicated and exceedingly cumbersome, and it is costly for private individuals in particular to keep track of their capital gains. Those people were offered no hope and no improvement today.
  As I said earlier, all mentions of capital gains were targeted on business start-ups. This was a Budget for internet millionaires. We say good luck to them, but what about all the individuals who were given nothing in terms of capital gains tax?
  Let me now deal with the related subject of savings. Conservative Members have referred to serious problems with the savings ratio. The figure has been revised down from that of last year's Red Book. When the Government came to power, the savings ratio was 10.6 per cent. Last year, it was 5.75 per cent., and in this year's Red Book it is down to 5.5 per cent. The savings ratio has virtually halved over the last three years, and that is storing up problems for the future.
  Perhaps it is no wonder that the Chancellor, in a generous gesture, has extended the £7,000 limit on ISAs for a second year. I hope that that move constitutes an
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  admission that the savings ratio is causing serious concern and that the Government should take action to promote savings.
  Ms Keeble: Will the hon. Gentleman give way?
  Mr. Loughton: I want to make progress. I have already taken time in responding to interventions, and I do not want to exclude other speakers.
  The Budget does nothing to deal with the fact that nearly 25 million adults have less than £500 in savings. Moreover, it takes no account of the fact that two thirds of the population buy lottery tickets each week. The whole savings culture has gone wrong under the present Government. They had another opportunity to address many of the anomalies and complications involved in the PEP and ISA system. There are many complications in the ISA system: people have been taking up maxi and mini ISAs, and have been given some sort of amnesty. The Government had a golden opportunity to merge PEPs and ISAs and to streamline the whole system. We were promised that two years ago. When I mentioned it in the Standing Committee considering the Finance Bill, I was told that the Government wanted ISAs to run for a year before they considered any streamlining, but a year has passed, and there is no mention of this in the Budget statement.
  Ms Keeble: Will the hon. Gentleman give way?
  Mr. Loughton: I will, for the last time.
  Ms Keeble: I thank the hon. Gentleman for being so patient.
  According to the M & G Great Britain savings survey, which was published this month—the consumer research was done last month—9 per cent. of the population held an ISA, while 10 per cent. held a TESSA and 10 per cent. had a PEP. It must be borne in mind that many people will have had both PEPs and TESSAs. That constitutes a resounding success for ISAs: a couple of months ago, at the end of the first year, 9 per cent. of the population already had one. I emphasise that the survey was independent.
  Mr. Loughton: We could continue this discussion in another debate. I know that figures from the M & G survey, and other surveys, show that the number of people who have taken out ISAs has not yet equalled the number of people who have taken out PEPs.
  I want to say something about the environment. Last year we were promised 22 environmental tax areas; we were also promised hypothecation of environmental taxes for the first time. We were promised that by a Government who claimed that they would put the environment at the heart of decision making. I welcome parts of that, and I have looked carefully through all the press releases; but, as so often happens with a Chancellor who wants us to believe that black is white, green becomes brown on closer inspection.
  The Chancellor has tinkered with vehicle excise duty on cars—the qualification is to go up from 1,100 cc to 1,200 cc. That will have very little impact on emissions. The Chancellor has recycled his announcement about four bands for company cars in the future. We have been told

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  about a possible relief for stamp duty on new brownfield developments. It is nothing to do with reducing VAT on brownfield developments, which we were promised. Indeed, the Deputy Prime Minister claimed just a few weeks ago in the financial press that this was a bit of a done deal with the Chancellor.
  The Chancellor recycled the announcement of an increase of £1 per tonne in landfill tax, but that tax is not being recycled to help good causes such as local charitable or environmental concerns, as it was when the tax was invented under the last Government. There was nothing in the Budget to promote recycling of any kind, at a time when recycling is being threatened by a crash in the prices of raw materials.
  When we look at the small print, we see that there is an aggregate tax. I think that that is a shame as the voluntary agreements offered by the industry offered considerable improvements. According to the fine detail, aggregates dug out of the ground for export will not be subject to the tax, but those for use in this country will. We are allowed to dig holes in the countryside if we are exporting aggregates overseas, and will not be taxed, but that will not be the case if we are using them to build roads and hospitals in this country. That strikes me as an anomaly. Opencast coal mining will also be exempt from the tax. This is supposed to be an environmental measure, but opencast coal mining is possibly one of the biggest blights on the countryside. In many respects, the Bill is more brown than green.
  I welcome the end of the fuel duty escalator, but diesel fuel duty is still going up. Business is still going abroad, and foreign trucks are still taking over from British trucks on British roads. Cars using unleaded petrol will still have to pay more for their petrol—1.89p per litre. A study carried out just this week has shown that families in Sussex now spend more on running their cars than any other household bills. That is more than is spent in any other part of the United Kingdom. The average Sussex family spends £78 a week—17 per cent. of household income—on cars. That is more than food and more than housing costs.
  There was nothing in the Budget to encourage travel by bus, tram, metro or bicycle, apart from the recycling of some of the grants relating to rural buses. Despite the early announcement on rural buses, the number of bus passenger miles travelled has continued to fall. We still have the worst record in Europe for passenger miles travelled on public transport—a third of the amount in Denmark and half of the amount in the Netherlands.
  The Budget does nothing to deal with the fact that we have the longest commuting times per day in Europe. It does nothing to deal with the problem that more road links are congested for at least one hour a day here than in any other country in Europe, apart from Poland. I am glad that road fuel gas duty has been frozen, but I wish that the Chancellor had shouted more loudly about that. Last year the Government reduced it by 29 per cent., which was very welcome, but the Chancellor did not mention that today. The trouble is that, despite all the Government's claims, this and previous Budgets have done nothing to encourage the conversion of public transport vehicles such as lorries to the use of road fuel gases.
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  According to a written answer last week, since 1996 the number of heavy goods vehicles that have converted to the use of liquid petroleum gas has increased from 24 to the grand total of 68, while the number of buses now able to use it has increased by 15 to 36. In the whole country, despite all the tax measures promised and shouted about by the Government, 36 buses have taken advantage of the tax breaks to convert to LPG.
  For all Labour Members' talk of capital allowances for business, there was no mention in any of the notes or in any part of the Chancellor's speech of the use of capital allowances to encourage innovative environmental technology, a measure that was supported by 94 per cent. of business leaders. That underlines the need for a green tax commission to check the Government's green credentials and to build consensus between the Government, business, industry and environment advisory boards.
  I could mention energy tax, too. I hope that we will debate that another day. Suffice it to say that there were no great improvements to energy tax in the Budget—a tax that will make many parts of British industry, particularly the steel industry and horticulture, very uncompetitive.
  In my constituency, the BOC Group is a large employer. Electricity represents some 78 per cent. of production costs: the cost will be some £8.5 million in the first year. The company is being taken over by a French and United States consortium, which will mean that production in this country can easily move to either of those countries.
  Understandably, the company has said:
  We would have no choice, faced with such a massive cost, but to reflect it in our prices to customers, therefore passing a burden to other competitive British companies as well.
  It is no surprise that, just yesterday, the Select Committee on the Environment, Transport and Regional Affairs said:
  We do not believe that the Climate Change Levy meets the tests of good taxation. The system of exemptions, negotiated agreements and reduced rates has produced an extremely complex and cumbersome market instrument which will result in a relatively modest emissions reduction.
  There is an old Budget adage: the louder Government Members cheer on Budget day, the more they will regret it later, when the Budget has been properly analysed in the cold light of day. Today's Budget is no exception. The devil is in the detail. It is a classic socialist Labour Budget—tax up 9p with one hand but down just 1 p with the other. Labour Members seem to have had difficulty in working that out.
  After the Budget, the United Kingdom will still have the fastest rising tax burden in the industrialised world. No amount of fudging the figures, glossy brochures or spin doctoring will conceal that fact. With productivity growth slowing, with all help for industry targeted on new technology sectors—there is little help for traditional industries, which are increasingly tied up in red tape—and with the savings ratio plummeting, the Budget just stores up trouble for the future.
  People are not stupid. They have woken up to the fact that services are getting worse and that they are paying more tax by stealth. They will treat with contempt a Chancellor who is more intent on building a war chest for election bribes than delivering effective services. The Government have been sussed. They are taxing more and delivering less.
  8.3 pm
  Ms Rosie Winterton: I am grateful for the opportunity to speak in the debate. It is a Budget that will be welcomed in my constituency and in south Yorkshire not only because of the extra money that it puts into health and education, but because of the emphasis on full employment—what welcome words they are for my constituency—and on tackling social exclusion. One of the major challenges that the Government face is to ensure that areas such as south Yorkshire, which suffered industrial devastation under the previous Administration, as my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said, can reap the benefits of a Government who are putting economic regeneration at the top of their agenda.
  So severe were the consequences of the previous Government's actions that GDP in south Yorkshire was at such a low level that the area now qualifies for objective 1 status. During the Conservative Administration between 1979 and 1997, poverty and unemployment rose dramatically in south Yorkshire. That is why measures such as the national minimum wage and the working families tax credit are so important for people in Doncaster and south Yorkshire. The action to tackle unemployment is crucial to regeneration in the area.
  The fact that youth unemployment has fallen by 79 per cent., long-term unemployment by 65 per cent. and overall unemployment by 30 per cent. is due largely to the new deal, but the establishment of Yorkshire Forward, the regional development agency, has also been an important catalyst in regenerating the area. Indeed, a survey of 1,500 leading business men in the area by the Yorkshire Insider magazine showed that Yorkshire Forward was considered the most influential body in the region.
  In the Yorkshire and Humber area, sub-regional economies can vary greatly. That is another major challenge for us to tackle. For example, Leeds has become a boom town, but, only a few miles away, there is quite severe deprivation, which was recognised by the designation of south Yorkshire as an objective 1 area. In my constituency, affluent streets lie almost alongside streets with high levels of poverty, poor housing and the poor health that go with that. Tackling social exclusion means ending that huge disparity in people's wealth and opportunities—people who live close together, but who are far apart economically. The regional development agencies have been tasked to iron out inequalities not just between regions, but within regions.
  Objective 1 status will be crucial in ironing out the inequalities in south Yorkshire. That means a cash injection of around £90 million every year for six years, but it is important that match-funding be found. I know that that is something that Treasury Ministers are aware of. I hope that, during discussions on the Budget, they will feel able to give us some reassurances about that. I hope that they can look at how money, for example, from the Coalfields Regeneration Trust could be used to match objective 1 fund money.
  One of the things that the Doncaster chamber of commerce has been examining closely is how to use objective 1 money to regenerate our area. Yesterday, I spoke to its chief executive about the Budget and local businesses' attitude to it. He emphasised how vital it
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  would be for the Budget to assist small and medium businesses if the Government were serious about regeneration.
  As my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) said, the changes in capital gains tax, the permanent extension of capital allowances and the crucial steps to ensure that venture capital funds are used at regional level mean that it is a Budget for small and medium businesses. In an area such as south Yorkshire, that will help the economic base to diversify from traditional industries, which the previous Government ripped the heart out of, to important new industries. It will also help to attract new business start-ups and inward investment to sites that have been developed, such as the one at junction 4 of the M18, which is now attracting new businesses, thanks to the work of the local chamber of commerce, the local council and Yorkshire Forward.
  One important way in which the regional development agency has been able to capitalise on the lead given by the Government is by encouraging partnership between local businesses and the community. That has resulted in a much greater awareness of what is required and of the importance of regenerating the local economy.
  In my constituency, Peglers, a company that makes bathroom fittings and employs more than 900 people, also helps other local companies to flourish. It is trying to get one of its suppliers of coatings to open a subsidiary on its site in Doncaster as an offshoot from its other office in the north-east. It is considering how to help the smaller company with finances, personnel and research and development, so that it will grow within Yorkshire and help the local economy. That is an example of a business becoming involved in the community and using factors such as purchasing power to help other local enterprises
  We are increasingly making demands on businesses to become involved in local communities. Perhaps we should consider providing a fiscal incentive for businesses that invest in deprived communities. I know that there are special incentives for businesses to give money to charities and it may be possible to extend that principle.
  The Red Book refers to the Government's national strategy for neighbourhood renewal. It says:
  The Government is committed to ensuring that the most disadvantaged neighbourhoods are given the support they need to maximise their economic potential.
  I hope that we can do much more to develop partnerships between local businesses and communities. Perhaps the Government could assist businesses to invest in severely deprived communities.
  Danum school in my constituency is looking to raise some £50,000 from the private sector to kick start its efforts to become a specialist technology school. Perhaps we could do more to encourage local businesses to invest in such projects. Danum school has placed strong emphasis on new technology, realising that such knowledge is vital if south Yorkshire is to compete in the changing industrial world. The regional development agency has emphasised that too. One of its requests for the Budget was that it would include measures to assist companies to get online and invest in new technology. Today's announcement of 100 per cent. capital allowances in respect of information technology for small firms and the £50 million package to get more small firms online will be welcomed in south Yorkshire by the

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  regional development agency, the chamber of commerce and larger industries that want smaller businesses to get on-line too.
  Today's announcement will also enable local communities to put together a coherent strategy, which may need more work, to look at how information technology can be spread further. Technology and training are vital for regions such as south Yorkshire, which is moving away from traditional industries and towards the new industrial world. That means a change of culture, with companies being encouraged to take more responsibility for investing in the future of their local communities and helping to provide better training. That change in attitude comes across strongly because the Government have taken the lead and stressed the need for partnership.
  Good transport links are at the heart of helping businesses to grow and attracting new businesses to an area. Doncaster is well served by transport links. Last week, I spoke to representatives of a company who told me that they had come to the area particularly because of the motorway and rail networks. Transport is important to us, so we welcome today's announcement of extra investment in transport. Getting the go-ahead for Finningley to become a commercial airport would provide an enormous boost, not only because it would improve airport links for passenger and freight services, but because it would provide enormous potential for employment and lay solid foundations for future regeneration.
  In addition to its objective 1 status, Doncaster will benefit from the new deal for communities. The Doncaster regeneration partnership is establishing business forums that bring together the local authority, the health authority—and all the social partners—and local businesses to give us an idea of what businesses want and to give the regional development agency better feedback about what skills are needed so that the skills action plan can effectively meet the needs of business. That is crucial for training and developing skills and is an example of partnership in practice. The new deal for the community will also enhance town centre communities.
  The hon. Member for East Worthing and Shoreham (Mr. Loughton) talked about stamp duty. The review of stamp duty relief in respect of new developments on brownfield sites is most welcome. I hope that the proposed stamp duty relief will extend to refurbishment—for example, where a warehouse is converted.
  Since the Government came to power, my constituents, who were neglected by the previous Administration, have witnessed a sea change in their economic prospects, individually and regionally. The lead shown by the Government has meant that businesses are focusing on their contribution to the community. Companies, the council and the community are working together to turn round the local economy. Hope has replaced despair. Whereas there was a crisis of confidence under the previous, Tory Administration, we now have a climate of confidence. I believe that this Budget will build on that new-found confidence, and I welcome it wholeheartedly.
  8.20 pm
  Mr. Paul Burstow: This Budget is the work of a master craftsman. Every statistic chosen by the Chancellor for today's Budget statement has been
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  very carefully honed and shaped, to paint the rosiest picture possible. The statistics are intended to try to direct and divert both the eye and the ear of the beholder from the substance to the gloss, perhaps misdirecting our attention from some of the Budget's more important details. As other hon. Members have already rightly said, the devil will be in the detail. The Budget may escape more detailed scrutiny in Budget week, and only subsequently be revealed for what it truly is.
  Although I welcome any additional resources that the Chancellor has made available today, I should like to deal with three specific matters that will cause my constituents real concern: education, pensions and health.
  One should compare today's announcement of an additional £1 billion for education with the tax cuts—which are four times greater than the increase for education—and examine some of the details of the practical effects that that funding increase might have in the constituencies. As I listened to the Chancellor, I was reminded of some papers that I recently received from a constituent of mine, Mr. Coolen, who is a parent governor of Nonsuch primary school, which is in my constituency. In the coming year, his school faces a funding cut of £28,000.
  People might think that the school faces that cut because the local education authority has been mean and not done the decent thing by ensuring that the benefits of increased standard spending assessments are fully passported to schools. They would be wrong to think that. People might also think that the local authority has not done enough to ensure that it meets all the tests for the standards fund, and is therefore not benefiting from the Government's largesse in that fund. However, that is not correct. People might even argue that the local authority has not fully funded teachers' pay awards, and has thus shifted the burden on to the poor governors, leaving them to try to make up the difference. That would not be true, either.
  In every single case, my local authority—the London borough of Sutton—has done what the Government have asked of it. It has ensured that the money that it says is available is put into schools. The simple fact is that there is not enough money. That is why not only one school, but many of my schools are facing financial difficulties in the coming year.
  The specific school that I mentioned is a relatively small primary school. It is finding the going particularly hard and has a particularly severe squeeze on its budget because the number of pupils attending it is being reduced, partly as a consequence of the Government's initiative on reducing class sizes for younger pupils.
  So although I entirely welcome the fact that the headmistress will eventually be receiving a cheque for about £3,000 for books and equipment, I urge Ministers not to expect huge parties to be thrown by staff and governors across the land to celebrate the arrival of such a cheque. All that money will do is make good the cuts that have been made because of the general underfunding of education. A good headline in today's press is not an adequate replacement for ensuring that our schools are funded adequately and properly, year in and year out.
  Mr. Richard Ottaway: Before the hon. Gentleman moves on from the subject of education in Sutton, will he join me in condemning Sutton's Liberal

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  Democrat-controlled council, whose funding of grant-maintained schools has led to pupils and their parents conducting a whip-round, simply to make up for the council funding deficit?
  Mr. Burstow: I am delighted that the hon. Gentleman has given me the opportunity to nail the Tory myth that is being peddled in my constituency. The hon. Gentleman may be a little detached from such matters now—although a few months ago he was responsible for whipping up such matters—but I should tell him that all the GM schools have had to accept that the LEA has bent over backwards to ensure that they receive fair funding. This year, in the budget that has just been approved by the local authority, there has been a substantial increase in the funding going to all secondary schools, but particularly to GM schools, to compensate for the fact that the Government's fair-funding formula—which he declined to mentioned—has now been properly funded. That is the consequence of a collaborative and co-operative approach, rather than the confrontational approach that the Conservative party wants to try to foster in my constituency.
  The Government hope that many pensioners will have felt a very warm glow when listening to the Chancellor's words today. However, let us examine some of the truth and detail underlying those words. On 1 April, most United Kingdom pensioners will be receiving through their letter box a 75p increase in the basic state pension. People—not only pensioners, but many people—feel very angry about the Government's failure this year to provide a decent increase in the basic state pension. They feel insulted, and that will not be assuaged by today's warm words from the Chancellor.
  The situation is worse than that, as many pensioners will be receiving less than a 75p increase. It is worth reminding the House that one quarter of pensioners—about 2.5 million of them—will be receiving a far smaller pension increase this year. Moreover, most of those pensioners are women. Many women pensioners may not have complete contribution records, or are widows, or are on pensions of no more than £39.95 per week. What does the Government's inflation increase amount to for them? It amounts to a weekly basic state pension increase of about 45p. That is what the Government are giving 2.5 million of our poorest women pensioners.
  What would the Liberal Democrats do? Last week, in our alternative Budget, we outlined precisely what we would do. This year, we would have paid a £2 increase in the basic state pension. That is not a dramatic sum, but it is certainly more than the Government were willing to find—they had the money in the social security budget—to increase the basic state pension.
  The evidence is very clear: the poorest of our pensioners are the oldest of our pensioners; and the majority of the oldest of our pensioners are women. We must therefore look at ways in which we can most effectively target help to reach those pensioners.
  The Government place their hopes and aspirations on the so-called minimum income guarantee. However, that guarantee is no guarantee at all, as it requires people to undergo a means test. Many hundreds of thousands of people in the United Kingdom, some by choice, simply do not undergo that means test. On the Government's own figures, 700,000 people do not claim under the minimum income guarantee, and are consequently living below the poverty line.
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  Liberal Democrat Members say that the Government, in this Budget, should have moved towards adopting a different strategy for targeting help. They should be targeting help on the basis of age, not only on means, and using the basic state pension as the vehicle for delivering that help. We say that that could be done in age additions, starting at the age of 80.
  In 1971, the Conservative Government introduced a 25p age addition, which provided a little help for pensioners. In 1971, 25p was worth something; today, it does not even cover the cost of a first-class postage stamp. The addition has not been uprated, on the basis of any index, since 1971. Hon. Members should go to a meeting of pensioners groups in their constituency, mention that 25p and see how delighted they are about how generous successive Governments have been on the addition. Year after year, they have expected the figure to be uprated, but it has not been. If it had been uprated on the basis of earnings, it would now amount to £3.70. Liberal Democrat Members believe that there should be a £5 age addition at the age of 80. We believe that that is affordable, and that it could have been afforded in this Budget.
  What about those who are 75? Currently, they receive no age addition whatsoever. We think that wrong. The Government themselves recognise in their minimum income guarantee that there should be an age addition at 75, but they do not believe that it should be provided in the basic state pension. We propose that a £3 age addition should be included in the basic state pension.
  How would our proposals affect increases for pensioners? They would result in an increase of £2 per week for anyone retiring at 60 or 65. At 75, pensioners would receive an extra £5 a week in their pension, and they would receive it now. Those over 80 would receive an extra £6.75 a week in their pension, which would begin to make a difference to pensioners who are living in poverty.
  Beyond that, we have seen the Chancellor's announcement about the generosity of the winter allowance—an extra £1 a week for pensioners. That is the sum total of what the Government are doing to try to help some of the poorest of our pensioners, alongside, perhaps, some of the richest. There are still thousands of pensioners in my constituency waiting to receive their winter allowance. Some have been told that they will probably not get their outstanding backdated payments until next winter, when they will be portrayed, no doubt, as a bonanza for pensioners.
  No one would wish to say that the free television licence proposal for those over 75 is not welcome; I know that it is in my constituency. However, there is a question. There are pensioners receiving just a 45p increase in the basic state pension who are below the age of 75. Where on earth are they to find the money to pay for the increase in the television licence until they turn 75? The money is not there. The Government have not provided it, and they are making it harder for those pensioners to make ends meet.
  On tax—and the tax situation for pensioners in particular—it is welcome that, one year on, the Government have accepted that the 10p tax rate ought to be applied to the savings income of pensioners. That issue, as my colleagues and I argued during debates on the last Finance Bill, should have been addressed then.

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  However, the Government said that it was not necessary because they were being generous enough, and that the measure was not intended to help the income of pensioners. It is welcome that the Government have decided to make the rate retrospective and to apply it a year back. That is a welcome acknowledgment that the Government were wrong not to have included the measure in last year's Budget.
  In the detailed press releases, there is a reference to the tax back campaign—something that is long overdue. Millions of pounds of taxpayers' money are sitting in the Treasury: money that should not have been paid because the pensioners were not on the income to warrant paying the tax. They do not know that they are entitled to claim it back. The Government campaign appears to be that they will have an extra page on the Inland Revenue website. Wow—that is how those people who do not know they have money sitting in the Treasury are to learn that they can get tax back. This is not a tax back campaign, but a way of maintaining the Treasury's grip on money that does not belong to it. The Treasury should be doing more to notify those pensioners of their right to get that money back.
  Another tax issue that I hope the Government will act on concerns pensioners whose incomes are below the threshold for paying tax but are nevertheless obliged every year to fill in tax assessments. What a waste of time—what a waste of public money in sending out those forms. Why cannot we have some form of certification process, where pensioners can exclude themselves by declaring that they will not be in receipt of incomes above the tax thresholds, thus saving the taxpayer the need to administer a system that is generating no income but is causing a great deal of worry and anxiety for many pensioners?
  On health and long-term care, the £2 billion announced today by the Chancellor—to be reannounced tomorrow, and probably many times after that by other Ministers—is welcome. It is undoubtedly a welcome acknowledgement by the Government that they got it wrong on NHS funding for the first three years of this Parliament. An emergency infusion of cash now is necessary because the Chancellor left the NHS bleeding to death for the first two years the Government were in office by sticking to the Conservatives' spending plans.
  The extra emergency money is coming in ten days before the beginning of a new financial year. That is boom and bust gone mad—it is absolutely crazy. How can we expect NHS managers to plan sensibly in an environment where they are told ten days before the beginning of a financial year that they have an additional £2 billion to spend? At this moment, we do not know the details, because the Prime Minister and the Secretary of State will spend four months working out how to spend the money.
  Mr. David Taylor: That £2 billion represents about £3 million per average parliamentary constituency, and represents about £10,000 per day. It is not as if the money must be spent on the first day, the first week or the first month. The hon. Gentleman is exaggerating the difficulties that any health authority or trust will have in dealing with the money.
  Mr. Burstow: Try telling that to the 512,000 people who are currently on waiting lists to see a consultant
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  before they even get treated. Try telling that to the people who have had their operations cancelled in the last year. Try telling that to my health authority, which has been told that, on the current allocation, it will be £4 million short if it honours the Government's commitment—made on its behalf—to fully fund the nursing and doctors' pay awards. That is why a system where the Chancellor announces at the Dispatch Box ten days before a financial year begins that, suddenly, there is an extra £2 billion to be made available is not a sensible way of spending public money.
  Mr. Philip Hammond: Does the hon. Gentleman agree that the real test of the usefulness of this additional money will be whether it is to be passported through to health authorities and trusts, so that people at the sharp end can spend that money to deliver better health care, or whether it will be held back by the Government to use for its pet projects?
  Mr. Burstow: We await with bated breath what the Prime Minister has to say to the House tomorrow. There must be a real fear that there may be a similar approach in education, where the standards fund is used as a way of following Ministers' pet projects, rather than meeting local priorities. We will judge on what the Government say and what they then do in practice.
  Mr. Alan W. Williams: I find the hon. Gentleman's comments on pensions and health extraordinarily grudging. We are talking about £2 billion on a budget of £40 billion. There is an extra 4 per cent., when the Budget this year is 5 per cent. up in real terms on last year. Cannot the hon. Gentleman find it in the bottom of his heart to give the Labour Government credit for doing something right?
  Mr. Burstow: If I sound grudging—Labour Members think that I do—it is because many of my constituents feel grudging. They have suffered over the last two years from an underfunded NHS and a Government who over-hyped and over-promised in opposition and have subsequently failed to deliver. The announcement today is about trying to put right the fact that the promises were unfunded. To the extent that the announcement puts in place the necessary funding to deliver these proposals, of course I welcome it. However, that is as far as I go in welcoming this sum today.
  The crucial question—as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said—is how the money will be spent. It must be invested in building up the capacity of the NHS. That means, as the Government have rightly acknowledged, more nurses and doctors. We must make it worth while for some of the 70,000 nurses who are currently outside the health service to come back into it, to start to fill some of the 15,000 nursing vacancies.
  There is a need to invest in physiotherapy and occupational therapists. If all the money goes to the acute sector, it will not meet people's real needs. We need investment in recuperative and rehabilitation services so that we will have easier discharging from hospitals and reduced emergency re-admissions to hospitals, which all too often is one of the biggest problems. We need to look at ways to ensure that we help older people to continue

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  living in their own homes, rather than being prematurely consigned to care homes, as is all too often a byproduct of our current health care arrangements.
  On the funding of long-term care, the Government's silence—which continued today—is deafening. A royal commission was established in December 1997 and it reported, as it was requested to do, in just over a year, in February 1999. We then waited week after week, month after month, for the Government to say what it was going to do in response to its recommendations. We were told in December that we would have a debate in which the Secretary of State would outline the Government's proposals. However, we were then told in December that the Government were going to review the matter still further and that we would have a White Paper in June this year.
  All this means that there will have been no legislation in this Parliament to change the legal framework under which long-term care is financed and operated. So much for the Government who promised before the general election that they would do something to prevent hundreds of thousands of people from being forced to sell their homes to pay for their care. Under this Government, 100,000 more people have been forced to sell their homes to pay for their care, because the Government have done nothing to implement the royal commission's proposals.
  It is hardly surprising that we have constituents coming to our surgeries who have been confronted by local authority accountants proffering a bill to them to pay for their care. That has happened to families such my constituent's, Mr. Albert Philo. His family cannot believe that after decades of hard work and diligent taxpaying, they have to pay for nursing care. Mr. Philo has a medical condition—dementia—and his family thought that the NHS was free at the point of use on the basis of need. However, Mr. Philo's wife is being pursued for payment for his care, pushing her into debt and causing great anxiety. The Budget does nothing to sort out the chaos that is long-term care finance.
  The Government have made much of their support for carers. We have had a national carers strategy, and that was welcome because it codified much good practice around the country. However, we heard nothing today about carers, and the Government have allocated a mere 15p extra a week for carers. The vast majority of carers are older people, caring for a husband, wife, parent or adult child. Because those carers are pensioners, they are not entitled to the invalid care allowance. If the Government valued older carers, they would extend ICA to all pensioner carers.
  In the Budget today, the Chancellor offered pensioners an inflation increase in the basic state pension of £2—in April next year. Wow! He also offered them an extra £1 a week in their pocket through the winter allowance, and a consultation on the income tapers on the minimum income guarantee. But what does the Budget do now to make a difference to pensioners? It puts 75p in the pockets of pensioners, with possibly a little bit more through the winter allowance in due course. When pensioners come to examine the rabbit that the Chancellor has pulled out of his hat for them this year, they will find that it was not just emaciated but well and truly dead before he even drew it out of his hat.
  8.42 pm
  Mr. David Chaytor: I am pleased to congratulate my right hon. Friend the Chancellor on his Budget speech. By contrast with the hon. Member for Sutton and Cheam (Mr. Burstow), I shall try to bring a note of enthusiasm and gratitude into the debate and not repeat the Liberal Democrat approach of occasional helpful suggestions spoiled by opportunism and grudging acceptance of what are major improvements to the public services and quality of life of people in this country.
  The Budget will be warmly welcomed by my constituents in Bury, North. Whether they are pensioners, parents bringing up children, patients, doctors, nurses or ancillary staff in our hospitals or teachers in our schools, they will be pleased that the Chancellor has listened in the past few months and responded to many of their pleas. I also welcome the fact that the Budget moves our party forward in its historic commitment not just to achieving full employability but to achieving full employment.
  In my constituency, the most recent recorded figure for unemployment was 2.7 per cent. Not everyone will need reminding that that figure is below the 3 per cent. recommended by Beveridge in his definition of full employment in 1945. That 2.7 per cent. represents a dramatic fall in unemployment in the past two years, including, most notably, a 70 per cent. reduction in youth unemployment.
  I was astonished by the line of attack on the Budget from the official Opposition. Since I was elected a Member of Parliament three years ago, thousands of people have written to me and come to my surgery and I have had thousands of discussions in the street, at social events and on constituency visits, and no one has ever said to me, "I am really worried about the tax burden and the percentage of GDP being taken by tax."
  The Conservative party has failed to move on from the election campaign that it fought in 1987, which was dominated by its obsession with tax cuts. It does not understand that people are now calling for more investment in public services, and fails to grasp that they understand that there is a price to be paid for that. My constituents tell me—I have no reason to think that they are different from people in any other part of the country—that their priority is more investment in jobs, education, the national health service, better public transport, an improved environment and a lower level of crime. The Conservative party's obsession with the tax burden does not address those issues.
  In most western European democracies, tax as a proportion of gross domestic product varies only slightly. Perhaps there is a limit below which it should not fall, and that may be 35 per cent. Equally, there is a limit beyond which it should not increase, and that could be 40 per cent. Within that band, and allowing for the circumstances of different countries and different stages in the economic cycle, the tax burden as a proportion of GDP is not the main issue in the debate about tax, public services and the economy.
  The distribution of the tax burden and the way in which the revenue raised is invested are the most important matters. We are seeing a much fairer distribution of the tax burden. Those who can afford to pay are expected to pay a little more, and many hundreds of thousands of the lowest-paid workers have been taken out of the tax net. We are seeing also that the Government are spending tax

  935
  revenue more productively than ever before. We are investing for the future rather than picking up the economic problems that we inherited from the previous Government.
  Mr. Steve Webb: The hon. Gentleman and I probably have more in common than either of us would care to admit. The hon. Gentleman talks about fairness in the tax burden, however. The Government have abolished the married couples allowance, which has led in reality to a flat-rate subsidy to all taxpayers—worth the same to them all. Mortgage interest tax relief now has the same quality. Would it not have been better to use progressive rates of income tax? Is not that the best way to get a fairer distribution through the tax system, with a higher rate for the highest earners?
  Mr. Chaytor: The hon. Gentleman raises an interesting point. However, if a party makes a commitment in an election manifesto not to raise income tax rates, it should adhere to it. When we come to the next general election, I think that the electorate will be pleased that it has had a Government for four or five years who have stood by their commitments on tax, in contrast with the previous regime.
  I shall refer briefly to three issues. First, my local authority is one of the most successful in the country in terms of organisational efficiency and support for schools—which was recognised in the recent Ofsted inspection. That applies also to the results delivered by both primary and secondary schools in the area. Bury's primary and secondary schools deliver astonishingly good results on the basis of a meagre level of resource. They will be delighted to learn of the 300 per cent. improvement in the books and equipment allocation to primary schools and of the new £30,000 allocation to secondary schools.
  I am delighted that my right hon. Friend the Chancellor has started to make direct allocations to schools. One of the remaining problems in funding education is not that the overall increase is too small but that the method of distribution through the standard spending assessment system remains grossly unfair. Despite Bury being in the top 10 per cent. in terms of examination results at various primary and secondary schools, it is in the bottom 20 per cent. in terms of funding. On all the socio-economic indicators, it should be somewhere in the middle. Following the announcements of my right hon. Friend and those of my right hon. Friend the Secretary of State for Education and Employment, we are seeing direct net cash allocations to schools to compensate to some extent for the deficiencies in the SSA system.
  Mr. David Taylor: I thank my hon. Friend for giving way, and I note that the £1 billion announced today is equivalent to about £1.5 million per parliamentary constituency, and to about £10 million for the county constituencies in Leicestershire. That money will be welcomed and well used, but the difficulty is that the SSA distribution in Leicestershire leaves us £13 million adrift of the average county. Does my hon. Friend not agree that the reform of SSAs, for which we have called for so long, cannot be long delayed?
  Mr. Chaytor: I can only agree with my hon. Friend. I urge him and other hon. Members with constituencies
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  whose local authorities are in the bottom 40 of the funding league table to continue to argue for complete reform of local government finance. Perhaps they should argue specifically for the use of the DETR index of social deprivation as the main tool for the allocation of education funding.
  I turn now to the question of health. Again, my constituents are delighted with the new health spending that has been announced already. After many years of neglect, it has helped us finally to merge our two hospitals on to one site, and to modernise our accident and emergency unit.
  However, my reservation is that far more money could be squeezed out of the total health budget if we completed the modernisation of the structure of the national health service and moved away from the internal market, which reproduced bureaucracy as if there were no tomorrow. I urge the Government to build on the new investment allocated to health by continuing the process of merging trusts and reconfiguring health authorities, which is taking place in the context of establishing primary care trusts and primary care groups. Far too much money in the NHS is tied up in duplication and bureaucracy.
  Even so, I must tell the House that the nurses and midwives who have lobbied me recently about levels of understaffing and recruitment problems will be delighted with the new investment announced today. The general practitioners who have been talking to me for two and a half years about the need for higher funding will also be delighted, as will those patients in Bury still on waiting lists—although I must note that those lists have fallen dramatically in the past two years.
  Mr. Hammond: Can the hon. Gentleman tell the House what the out-patient waiting list—the list of those waiting for a first consultation in out-patient departments—is in Bury?
  Mr. Chaytor: No, I cannot. However, if the hon. Gentleman has a particular interest in the subject and wants to discuss it with me afterwards or write to me about it, I am sure that I shall be able to find the information for him.
  Finally, I want to say a few words about environmental policy and the issue of green taxation. Two Budgets ago, my right hon. Friend the Chancellor was criticised by environmental groups for doing nothing to advance the cause of the environment. I think that he received an award for being a very un-green Chancellor. Last year, his reputation changed dramatically. He was widely praised for the various initiatives that he introduced, and was applauded as the first green Chancellor. That was thanks to his changes in transport policy and the fuel duty escalator; to the climate change levy; to the taxes on aggregates and pesticides, and to other measures.
  This year, I imagine that the verdict on the Budget will be a little more neutral. However, I welcome the slow but steady progress towards a green tax policy that my right hon. Friend the Chancellor is still making. I welcome, too, his announcements on the aggregates tax and the landfill tax. I expect that the Opposition will say that that is just another recycled announcement, but we are talking about the Budget: if a proposal is relevant to this year's measures, the fact that it was announced last year is insufficient reason not to mention it again.

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  I also welcome the implementation of the commitment to reform the taxation of company cars. That has been a central plank of the welfare state for the middle classes for many years.
  Nevertheless, I want to raise one or two reservations. I understand the political reality behind the doubling of the oil price over the past 12 months, and I also understand why it is impossible to continue with the fuel duty escalator. However, we should not believe that we can carry on burning hydrocarbon fuels as if there were no tomorrow. Frankly, hon. Members who believe that it is environmentally sensible or sustainable to argue for lower fuel duties on petrol or diesel are living in cloud cuckoo land.
  We need to develop the debate about fuel tax policy and get away from the Dutch auction on tax. Underlying this is a very serious problem. We need to ask ourselves why the price of oil has risen by 100 per cent. in the past 12 months. Why does it cost $30 a barrel? What is likely to happen to oil prices and oil reserves in the years ahead? Can we conceivably carry on using oil as we have done in the past, even if there is oil still to be used?
  Within 10 years, we will reach the peak of global oil production. After that time, existing oil reserves will start to run down. There may be new discoveries, but as each new oilfield is discovered and exploited, the cost of extracting the oil becomes greater. As more and more countries industrialise, demand for the use of oil will increase. The idea that we can continue for ever to live in a cheap oil economy is nonsense. We must get used to the fact that oil will become scarcer, more expensive and, as oil reserves diminish, an increasing proportion of global oil reserves will be controlled by middle eastern countries, particularly Iraq.
  There is only one intelligent solution, which is dramatically to increase the use of alternative fuels. In the press notices that the Chancellor has provided, I am delighted to see that there is a fiscal incentive for the use of alternative fuels in the proposals for a banded vehicle excise duty and in the reform of company car taxation. However, I still do not think that that goes far enough. In the next 10 years, we must dramatically reduce our dependence on oil as a fuel for motor vehicles and increase our use of liquid petroleum gas, compressed natural gas, fuel cells and various hybrid forms of motor engine. If not, in five, 10 or 15 years' time, we will be completely dependent on oil supplies that are in the stranglehold of Iraq. There is no question about that.
  This has been a marvellous Budget. However, although huge strides have been taken on the green tax dimension of the Budget in the past two or three years, we still have a long way to go. We may be on target to meet our Kyoto target of a 12.5 per cent. reduction in carbon dioxide emissions by 2010, but beyond 2010 the reductions in emissions that we will have to achieve will increase dramatically. There are estimates of 60 per cent. cuts by 2030. We cannot achieve those cuts in carbon dioxide emissions, which are crucial if we are to stabilise the problem of climate change, without realising that our chronic high dependence on hydrocarbon fuels must come to an end.
  Finally, I congratulate my right hon. Friend. I will be delighted to catch the 9.30 pm train from King's Cross this evening and go back to my constituency with the good news. I am confident of a very positive response.
  8.59 pm
  Mr. John Hayes: I hope that my contribution to the debate will raise new issues rather than repeating what has already been said—which is unusual in itself. I always think that a person who speaks on the first day of the Budget debate is either very bright or very bold. I should like to think I am the former, although by the time I have finished, hon. Members may think I am merely the latter.
  The Chancellor spent the first part of his speech talking about the prevailing economic circumstances. He talked about employment and inflation. He did not, however, speak about the decline in the savings ratio, which has halved during the Government's time in office, and the consequent damaging effect on manufacturing, particularly on exports.
  The Budget contained nothing for manufacturers, despite all that we have heard in recent days and weeks about the plight of exporters. Nor did the Chancellor give much attention to investment. Some concessions have been made, particularly on high-tech investment, to which I shall refer later, but investment in manufacturing industry is below that of most of our world competitors and that is a serious problem for our economy.
  The Budget certainly taxes more and delivers less, particularly for rural Britain. It contains no aid package for agriculture, which has been badly hit—in spite of protests in the House and in Parliament square. Pig producers can scarcely produce pigmeat economically; they cannot sell it for what it costs to produce. The dairy and beef industries are in crisis, and the arable sector faces prices equivalent to those of 25 years ago.
  My constituents, such as pig farmer Stewart Stables, and Jane and Michael Cook, who farm cattle, are hard pressed by prevailing circumstances which the Government have failed to address in this Budget. Unlike the hon. Member for Bury, North (Mr. Chaytor), they will be not pleased: they will be deeply disappointed. There is nothing for poultry farmers, who face ever more competition from abroad.
  There is nothing for rural services either. We heard a lot about spending increases for education, health and transport—on which I shall elaborate later—but little about how the money might be skewed to favour disadvantaged areas, particularly rural areas. Rural Britain has missed out. Given the nature of the crisis in rural Britain, that is extraordinary.
  Let me turn to the national health service. I have had a chance to study the detailed proposals for the NHS, and Labour Members may be surprised to learn that, although great play has been made of the extra money, the figures for year-on-year growth fail to match the aspiration—I use that word advisedly; the Prime Minister told us that that was what it was—that NHS spending as a proportion of gross domestic product should match the European average. The increases do not provide a foundation for meeting that aspiration. There is a 7.9 per cent. increase for 2000–01, but growth tails off to 5.8 per cent. for the next three years, averaging out at 6.3 per cent. overall. To meet the Prime Minister's aspiration, the figure should average closer to 7.5 per cent. The pledge—which later became an aspiration—has gone out of the window.
  The problem behind the Government's approach to NHS spending is that they do not understand the difference between affordability and cost-effectiveness.

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  They do not understand the difference between political judgments and the clinical judgments on which NHS spending should be based. The distortion created by their obsession with waiting lists has badly damaged the NHS.
  Health service managers have been left confused by the continual reannouncement of figures. The British Medical Association wrote to the Prime Minister to complain that it was impossible for health service managers to plan effective delivery of services when they did not know how much they would receive. Today's Budget statement was peppered with reannouncements.
  Naturally, we welcome extra spending on the NHS. We have heard some silly nonsense from the Labour Benches to the effect that the Conservatives do not welcome justified and targeted spending on public services to benefit the disadvantaged. Of course we support that. The point made by the hon. Member for Bury, North—that all tax and all spending were good—was primitive to say the least. Do Labour Members not understand the difference between tax yield and tax rate? Do they not understand the difference between targeted effective spending and spending per se? The Conservatives are merely saying that if the Government take money from people, they have a responsibility to ensure that it is spent wisely and accountably. That is the point that we have made repeatedly.
  Dr Lynne Jones: Is the hon. Gentleman suggesting that the Government's proposals for increased spending on health and education would not be a wise use of taxpayers' money?
  Mr. Hayes: I was about to come to that point. We do not yet have the details about the £1 billion that was announced today, but the certain problem with that proposal is that it takes a broad brush approach to education expenditure. To target that money at the most disadvantaged pupils and schools, we need to address the formula funding package. That is understood by professionals in the education service.
  Of course, no school will say no to extra cash, but all schools will admit that the root of the problem is the way in which we fund education. I admit that the previous Government were responsible for formula funding, although it was based on preceding traditions—as was brought out in one of our recent debates on education. However, the formula needs adjustment so that the extra money goes where it is most needed. It is not good enough to take a broad brush to education expenditure; one has to spend money differentially—in favour of disadvantage—to raise standards throughout.
  Let me offer the hon. Lady an example. The schools that will suffer most from today's proposal—or that will benefit least—will be small rural ones, or those in inner cities that have the lowest number of pupils. Is it right or wise to allocate £1 billion on that basis? Would it not have been better to allocate the money in favour of disadvantage? The proposal is headline-gathering; it does not involve the intelligent use of the funds to increase the quality of education for the majority of the children who need the most help.
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  There was also an announcement on e-commerce and investment in high-tech industries and information technology. We should consider that in parallel with the attack on IT skills that was the result of the IR35 changes. The Budget states its aim:
  To encourage firms to take up the challenge to get online, the Chancellor announced … that firms would be eligible for discounts for electronic filing and payment of tax returns.
  There was a reference to 100 per cent. tax relief on investment in IT.
  To be fair and accurate—qualities for which I am known—it was suggested that in addition to the 100 per cent. first-year capital allowances for small enterprises investing in information and communication technology, there would be a £60 million package
  to help SMEs understand what getting online means.
  However, that £60 million is relatively small fry, so those changes will breed an acquisition culture in high-tech and ICT, rather than an application culture.
  We should be encouraging small and medium-sized enterprises to make more effective use of ICT. We do not want people to make more and more investment in hardware, if that hardware is not applied effectively and fruitfully in the development of their business. The changes will encourage acquisition without necessarily encouraging good application. That has been the story in the past for both the private and the public sectors. Any hon. Member who doubts that should read the surveys of good IT practice, which suggest that, despite investment in IT, much of it has been under-utilised through lack of understanding. Given that people will find it harder and harder to acquire the skills, the consultancy and the training that they need as a result of the Government's attack on the industry's private consultants through the IR35 changes, the future is gloomy for IT investment as a result of the Budget.
  The Budget is big on headlines and soundbites, but as we have seen in previous Budgets, we can trust and value only what is actually delivered, rather than what we are told will be done. It is certainly true that the tax take has increased during the lifetime of the Labour Government. That has come home hard to people. I was amazed to hear Labour Members claim that they had never received a single letter complaining about tax increases. Are they telling us that people have not written to them complaining about the abolition of the married man's tax relief, the abolition of MIRAS or the possible introduction of a pesticides tax, which has now, happily, been abandoned because of the campaigning of mainly Conservative Members? Have they not received letters about the threat that the climate change levy will represent to arable farmers and to horticulture? The Red Book recognises that those industries are energy intensive, but sufficient help is not being provided to help them to cope with the levy.
  I do not know how the Government can have the brass neck—that was the phrase used by my right hon. Friend the Member for Richmond, Yorks (Mr. Hague)—to announce measures that are headline and soundbite oriented against a background of profound disappointment in communities throughout the country. Someone talked about more humility. I would like more humility, but I would also like more accuracy. I welcome extra spending when it is targeted and is effective in doing good, raising standards and in providing a better quality of life. I do not

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  welcome stealth taxation and ineffective spending, but that is what lies at the heart of the Government's policies and of this Budget.
  9.11 pm
  Mr. Alan W. Williams: At last, we have heard a 10-minute speech, and I shall try to keep my speech to that length to allow other hon. Members to take part.
  I very much welcome the announcements in the Budget. I have listened to four or five hours of speeches and many comments from Opposition Members, including from Liberal Democrats, have been very grudging, nitpicking and mean-minded. My right hon. Friend the Chancellor of the Exchequer, the Treasury team and the Government have a terrific grasp of the economy. We are in a strong position, with steady growth of 2.5 to 3 per cent. a year and low inflation, which is well under control at less than 2.5 per cent.
  We also have an incredible surplus in the Government accounts. Last year, it was projected to be £2 billion, but it will, in fact, be £17 billion. Why should the Government be in surplus? Would it not be wiser to invest the money in health, education, pensions and other services? I know that my hon. Friend the Member for Birmingham, Selly Oak (Dr. Jones) will agree when I say that I do not understand why we have a preoccupation with repaying debt. The debt burden was 44 per cent. when we came to office and it will be 33 per cent. in a few years' time. Why pay it off? We have one of the lowest debt burdens in Europe.
  Money is abundantly available to increase public expenditure. I am delighted that an extra £1 billion for education was announced today and that it will go to individual schools, bypassing local education authorities. I am pleased that there will be more piloting of educational maintenance allowances for 16 to 18-year-olds who stay on at school. I hope that they will be important during the next Parliament and especially in areas where participation rates in further and higher education are low.
  I welcome the £2 billion for the national health service. In a budget of £44 billion, it represents an extra 4 per cent. and a substantial rise when we had already budgeted an extra 5 per cent. for the health service this year. In real terms, the increase is 9 per cent. Over the next four years, that is an average 6.1 per cent. increase in spending each year. We need such investment and I am pleased for my constituents that it will be made.
  Over the past three years, we have done many things for pensioners. The one thing that they particularly want is the restoration of the earnings link, but we have refused to do that because of the long-term implications. However, every measure will help and the extra £50 for the heating allowance is very welcome.
  I also look forward to the new pensioners' credit, and to the consultation that will take place over the next year about its nature. I am certain in my mind about where it should be directed. We have a minimum income guarantee that helps the bottom decile of pensioners, but the pensioners in the bottom five or six deciles need help, so the pensioners' credit should be directed at them.
  Mention was made earlier of nursing care. I hope that when the comprehensive spending review announcements are made in July, it will be made a Government
  942
  responsibility and become part of the NHS. That would particularly help older pensioners, who are the poorest pensioners.
  Don Cruickshank's report on banks, which was published yesterday, is very welcome. It comes as no surprise to hear that he thinks that the banks are making unjustifiable profits to the tune of between £3 billion and £5 billion a year. I am pleased that the matter is being referred to the Competition Commission. This morning, The Guardian published a powerful editorial about imposing a windfall tax on the excess profits that the banks have been making in the past three to five years and using that money for the NHS. Certainly, the politics of that would be well justified; it would be popular, although not of course with the Opposition. We ought to look at that suggestion very carefully.
  The Government have done very well on prices. The Department of Trade and Industry has put pressure on the regulators to investigate prices for water, electricity and other utilities. On average, water bills in Wales are £34 lower this year, electricity prices will be 10 per cent. lower by the end of the year, and action is being taken on supermarket prices and car prices. That is better than tax cuts, because water and electricity costs bear more heavily on low income households. We are making very good progress on that.
  My one concern about the economy is the value of the pound. I know that the issue is never directly addressed by the Treasury or the DTI, and it is certainly not addressed in the Budget, but it is a problem. We have been sanguine about the high pound during our period in office, but it is certainly causing great pain to manufacturing, including the steel and coal industries. As we have heard over the past week, Rover has suffered. Farmers are also badly affected.
  Mr. Hayes: Will the hon. Gentleman give way?
  Mr. Williams: No, I will not because others want to speak.
  We have a high pound-weak euro paradox. Those factors are different sides of the same coin. One of the problems with the weak euro is that it makes membership of the euro almost impossible at present exchange rates—membership is not on the horizon. When I hear the Chancellor, the Secretary of State for Trade and Industry and the Prime Minister say that we want stability in the economy and an end to boom and bust, of course I agree with those mantras, but industry also wants a sustainable, competitive pound, which we do not have at the moment. We must fulfil that aspiration as soon as we can.
  I am pleased with the Budget, particularly the measures on health, education and small businesses, and with what they will do for my constituents. I now look forward to the announcements in July in the comprehensive spending review, because the Chancellor has put £4 billion into the economy today, and there is a lot more left where that came from. I hope that he will put it to good effect later this year.
  9.19 pm
  Mr. Nick St. Aubyn: To judge by the comprehensive spending review, one would not have believed that today, on Budget day, the hospital in Ashford would announce that the accident and emergency

  943
  unit just up the road from my constituency would nevertheless still be closed. One would not have believed that today, on Budget day in the year 2000, the accident and emergency unit in Guildford is still under threat.
  If the extra £20 billion in health and the extra £20 billion in education that the Chancellor announced in the CSR cannot stop the closure of key services in our constituencies, why on earth should we be impressed by the additional £2 billion in health and £1 billion in education that he proposes to spend in the coming year?
  The problems that we have are far too deep-seated for the Chancellor's announcements simply to spirit them away. I accept that waiting lists in the west Surrey area and in the south-east as a whole have gone down by 4,000, but the numbers waiting to go on the waiting list—the numbers waiting to see a consultant—have gone up by 40,000 in the same region.
  The truth is that the Government tax more and deliver less. That is because they have not tried to manage the money that they have raised. They thought themselves so clever to have picked everyone's back pocket without anyone realising it that they have not recognised that that is real money, which needs to be looked after carefully and used wisely.
  In education, the Government came up with the idea of cutting class sizes in the first three years of a child's education. We are in favour of lower class sizes, but we would not have done that in a way that meant that class sizes for every other year group in schools have had to go up. The Government said in their class size pledge that in the lifetime of this Parliament the cost would be £100 million. Now we know that its cost will be at least £620 million—more than six times the amount that they budgeted for.
  When we did our own analysis and asked what would have happened if the Government had tried to use the independent sector to provide some of the places that were needed for the first three years in education, we found that the cost of delivering their class size pledge would have been less than £60 million—a tenth of what they propose to spend to deliver it.
  That example illustrates that it does not matter only how much a Government are raising in tax or how much they propose to spend in key services such as health and education but how they intend to spend the money to maximise its value. That is how the Conservatives have previously taxed less and spent better, and how they will do so again.
  Mr. David Taylor: It is interesting to hear the hon. Gentleman stating how important it is for Governments to use taxpayers' money wisely. How would he categorise the £5 billion that is the approximate current cost of the BSE crisis, the £10 billion cost of the poll tax debacle, and the £28 billion overspend in the last year of the Conservative Government, largely because of the cost of social and economic failure?
  Mr. St. Aubyn: The hon. Gentleman should study the figures more carefully. This Government inherited a deficit of only £9 billion. That was the outturn. We were so cautious that we provided for a bigger deficit, but the outturn from the previous Government was only £9 billion.
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  That leads to my next point. The Budget today demonstrates that the panic measures introduced by the new Chancellor in 1997 were an overreaction. There was no need to attack savings with his pensions tax and his abolition of TESSAs and PEPs. There was no need to do that in order to bring the country's finances back into balance. Today's figures and today's projections for revenue from taxes demonstrate that. The damage that the Chancellor did to the economy three years ago is being paid for now in much lower levels of saving, after his attack on saving, and, therefore, much higher interest rates, with real damage to the real economy.
  But what was really missing today in this, the first Budget of the new millennium, was any indication that the Chancellor understands the implications of the new economy that is sweeping the world. We know that from all the evidence before our eyes and from what is already happening in the United States. We know that from the Government's statements about their aspirations for Britain's role in the new economy. Instead, the Chancellor was bogged down in his analysis of the old economy.
  Let me give one example: stamp duty on share transactions. In a week when three stock markets in Europe, those of France, Belgium and Amsterdam, have combined to create a real rival to the London stock market, with far lower dealing costs from stamp duty than we have in Britain, the Chancellor was silent on that critical subject. If he fails to address that issue, the revenue from stamp duty will be spirited away as more and more share trading happens on that alternative rival market, and the more that happens, the more other profits and revenues, which flow back to the Exchequer in increased taxation, will also disappear across the channel. By failing to address the new economy, the Chancellor is undermining his ability to raise tax in the future.
  Mr. Hayes: Another example of the Chancellor being bogged down by assumptions about the old economy was the section of his Budget speech dealing with share ownership. He talked about share ownership with a maximum value of £100,000 for up to 15 employees. That will allow small firms to stay small rather than allow medium firms to grow bigger. The Chancellor needs to understand that, when he cuts capital gains tax, many of the dot.com companies' life cycles may be only two to five years, so reducing it to 10 per cent. in four years is not good enough.
  Mr. St. Aubyn: I am grateful to my hon. Friend for anticipating my next point. The other day I visited a firm in my constituency called Lionhead, run by a gentleman called Peter Molyneux, who before that had started a company creating some of the world's most successful computer games. Having sold on that business, which grew from employing two to 500 people in the Guildford area, he started the new company, developing some exciting computer games. He made exactly that point to me.
  In an industry such as computer games, which now has a turnover in Britain which exceeds that of our film industry and has the potential to grow many more times over if it is treated correctly, the penal rates of capital gains taxation, and the regime that will still apply after the Chancellor's announcement this afternoon, mean that many businesses like that of my constituent's, without his dedication to wanting to see Britain succeed in this critical part of the economy, will be sited overseas.

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  As computer games will soon be sold over the net—there will be no shop to go to, they will simply be downloaded—they can be sold from any part of the world and there is a tax competitive global market here. Yet our Chancellor completely failed to spot the fact. Here in the new millennium he does not understand what the new economy means.
  The Chancellor's concession on capital gains tax will cost him £250 million in the coming year, but his additional revenue in the short term from capital gains tax in the same year will go up by an extra £1 billion. He is taking four times more in extra capital gains revenue than he is giving back with his pettifogging concessions. The result again will be that, while he has revenue in the short term from capital gains, as he will have revenue in the short term from stamp duty, in the long run he will undermine the economy's ability to generate any valuable tax revenue at all in the areas where our economy must compete as a soundly based service economy.
  We need to consider comprehensive tax reform for the future. Our structure of capital taxation—capital gains tax, inheritance tax, stamp duty—is decades old. Indeed, some of it is centuries old. We need thorough-going reform, which the Chancellor lacks the courage to deliver, even if he had the imagination to realise that it was necessary.
  The Chancellor's attack on savings in the past three years has created the problem that an increasing number of people choose to spend the gains that they make through investment and houses rather than reinvesting it, saving it and passing it on.
  If the changes have to occur, we must begin by applying a great deal more honesty than the Chancellor displayed this afternoon. He attacks the tax cheats in our economy; perhaps we should consider the person who has done most to cheat the taxpayer: the Chancellor with his billions of pounds in stealth taxes.
  One of the press releases stated that a helpline would be established for those who wanted to ring up and find their way out of the hidden economy. Perhaps the Chancellor needs a helpline to find his way out of the stealth tax economy. Such a helpline is available to him: it is the shadow Chancellor's telephone number. If the Chancellor needs it, I can give it to him without delay. He needs help if we are to rescue our economy and our tax system from the fiddling, meddling, stealth taxes and confusion that the Chancellor has built up in the past three years.
  9.31 pm
  Ms Chris McCafferty: I shall be brief because I realise that other hon. Members want to speak. I congratulate my right hon. Friend the Chancellor on his Budget. In reading the very small print on the last page of the Budget document, I am especially delighted that the Chancellor has listened to hon. Members from all parties who supported a reduction in VAT on sanitary products to 5 per cent. The 250 hon. Members who signed my early-day motion on the subject will applaud the Chancellor's sensitivity in acknowledging that those products are not luxury items and his understanding that the measure helps not only women but families, especially poor families. Perhaps it is a pity that the Chancellor missed the opportunity to announce the measure himself.
  As was previously mentioned, the campaign to reduce VAT on sanitary products began in the 1970s after the failure to categorise them as essential items in the family
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  budget. Many Members of Parliament who were involved in that campaign are still in the House. In the 1980s, Shirley Williams, now Lady Williams, held a campaign on the issue, and in the early 1990s my hon. Friend the Member for Vauxhall (Kate Hoey), who is now a Minister, led another campaign. A petition that contained 500,000 signatures was presented to Mrs. Thatcher in the 1980s, but it was completely ignored.
  Despite all efforts, previous Chancellors have refused to right the glaring wrong. My right hon. Friend has recognised that while VAT on sanitary products is a female issue, it is also a family issue and a poverty issue. A family with a mother and two teenage daughters on a low income or benefit cannot avoid the expense of sanitary products. They are not like bread or jam; women cannot decide, "I'll skip it this week."
  Today's measure is fair and lowers the cost of a necessity. It sends a message to women that the Government will continue to work towards equality in the tax system as well as in the workplace and in society.
  Life without sanitary products would be unpleasant, unhygienic and unthinkable. That is why 15 million women spend so much throughout the year on sanitary protection. I welcome an important measure for women everywhere.
  9.34 pm
  Mr. Owen Paterson: It is a pleasure to follow the hon. Member for Calder Valley (Ms McCafferty) and I am touched that so many hon. Members have stayed behind to hear what I have to say.
  The Budget is typical of the Chancellor. His description of the economy and the colour of his language made a marked contrast with the reality of what we find buried in the Red Book and the reality that I see on the ground in Shropshire. The Shropshire economy is in crisis. My pig farmers are emigrating to Saskatchewan, dairy farmers are applying to get out of dairy farming and get rid of their quota at the rate of 10 or 12 a week, high-tech businesses write to me about the iniquitous imposition of IR35—which was not mentioned in last year's Budget—and the director of a construction business has already clocked up 9,000 miles this year in a pursuit of payment, made ludicrous by the fact that he has to present an identity card carrying his picture to get paid. There has been a £30 billion explosion of tax on business and extra regulation has cost £5 billion. The average family is £600 a year worse off and, pertinently for a rural area, the average car owner is £900 a year worse off.
  In previous Budgets we were promised that extra money would be spent on services, but I do not know where it has gone. It has not filtered through to my part of the country. West Mercia police force, which gained 405 officers under the Tories, has lost 78 since the Government came to power. It applied for 36 under the new scheme but has been given only 18, so we are 60 down. The fire brigade is 47 per cent. underfunded by central Government and has to be bailed out by council tax raised by the council. On education, spending on a primary pupil in Shropshire is £2,220, but £3,396 in Southwark. On the national health service, people were turned away from urgent treatment during the Christmas period and there are patients in my constituency who are not being given beta interferon. Above all, my constituents resent the £1,000 million or more that the

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  Government are spending on themselves—Parliaments, Assemblies, reviews, special advisers and general hangers on.
  Mr. Hayes: I interrupt my hon. Friend to prevent him from becoming even more distressed about the plight of his constituents. The Government recognise the problems in areas such as his and the Cabinet Office report on rural areas says that the rural economy is in crisis. But does he agree that we heard nothing about how the Government will address that countryside crisis?
  Mr. Paterson: My hon. Friend is absolutely right. We heard nothing at all about the rural economy and that report says that Shropshire's average income is 22 per cent. less than the British average.
  Some threatening figures are tucked away in the Red Book. The savings ratio is dropping from 5.75 per cent. to 5.5 per cent. That accounts in part for the unnecessarily high interest rates that we have suffered over the past couple of years, which have made the pound even stronger against the pathetically weak euro and damaged agriculture and small business. Tax and social security contributions as a proportion of gross domestic product are also increasing from 36.9 to 37.3 per cent., and it is obvious that the Government have not controlled social security spending. Benefits are set to increase from £93.3 billion in 1998 to £104.5 billion. If we throw in the working families tax credit—which we should, according to the Organisation for Economic Co-operation and Development method of computing—that amounts to £110 billion.
  Extra taxation and regulation have led to an explosion of the black economy, which can be glimpsed in the collapse of tobacco duty. The take has dropped from £8.2 billion last year to £5.7 billion this year. The most obvious manifestation of the increase in the black economy is the large number of anonymous white vans in the country. I should very much like to know Ministers' estimate of the size and the rate at which the black economy is growing.
  Turning to legal road users, £36 billion is taken from them in taxation each year, but only £6 billion is spent on roads. For every £10 of fuel, £8 is tax. Of every £8 of tax, only £1.50 is put back. The Automobile Association estimates that £12 billion needs to be spent on the roads and Shropshire, my own patch, has a £100 million backlog of road repairs. That represents a stark contrast with the United States, where about £50 billion is raised in tax and £49 billion spent on the roads. In an area such as mine, the car is the basic means of getting around and two thirds of people in Shropshire drive to work in a car. The price of petrol has been increased by 8.6p a gallon today and the vehicle excise duty changes assume that drivers have the choice of running a smaller car. That is not necessarily so in a rural area as people's very jobs probably depend on having a larger car or a van. In a rural area, tax changes have no marginal impact. People must drive: their jobs depend on it. Taxation simply reduces their spend, and makes every business less competitive.
  The most dramatic manifestation of that is the road haulage industry, which I have mentioned before. As of this morning, diesel was 65p a litre; it is now 67p a litre. Let us compare that with the equivalent of 35.5p in
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  Belgium, 36p in Luxembourg and 37p in Spain. This morning, vehicle excise duty was £5,750; on a 40-tonne lorry, it has been reduced to £3,950. Apparently, the BBC reports that the road haulage industry is ecstatic, but I do not think so, because the difference between us and the rest of the continent is still marked. VED is £358 in Luxembourg, £328 in Spain and £308 in Portugal.
  I have been present for most of the debate, but I slipped out earlier to talk to the man who was cited in last year's infamous KPMG report as one who was happy with the current haulage taxation regime. He has calculated that, although VED improvement and changes in fuel duty make him £61,472 better off, he is still worse off by £1,367,788 running a business based in the United Kingdom rather than one in Luxembourg. There is a vast difference between the benefits of lower social costs and corporation tax in this country, and the gains from cheaper VED and fuel duty in Luxembourg. He says of the Budget:
  I don't think it helps at all. We're still not competitive against a European haulier who comes here with cheap diesel, ridiculous VED and no vignette or road tolls. I will still continue to move my vehicles abroad.
  I warned of this last year. I do not take any pleasure in reporting to the House that that haulier has since reduced his trucks from 100 to 75, and reduced the number of his employees from 160 to 125.
  We are looking at another Longbridge here. There are 2 million people in haulage, distribution and goods vehicle manufacture. Although a cap has been imposed and we have been held to the rate of inflation on fuel, it is estimated that 26,000 haulage jobs will go, along with 27,000 associated activities. My constituent Mr. David Yarwood, who runs a business called Greyroads Ltd, has injected a little Shropshire common sense into the situation. He says:
  We must look on the bright side. It can now be only a matter of time before the government realises they too could soon be joining the out of work hauliers, then perhaps this country could get back to some sort of normality.
  This is an entirely stupid policy. If we add the loss in cabotage to the loss of international business, the loss represented by fuel bought abroad and the cost of job losses, we find that the difference to the Exchequer is £1.1 billion.
  The allowance to 44-tonne trucks today is a clear breach of Labour's manifesto. On 4 February 1997 the Prime Minister, then Leader of the Opposition, said:
  This cannot make sense and a Labour government will not agree to heavier lorries.
  That was a manifesto pledge, and it is even in the Government's White Paper. That shows that the Government do not understand the environmental impact of their policies.
  It is clear that there is no environmental gain: 97 per cent. of goods are carried by road, and if they are not carried by British hauliers they will be carried by foreign hauliers. Figures issued by the Library today show an astonishing increase from 155,000 foreign vehicles leaving the country in the third quarter of 1997 to 220,000 leaving it in the third quarter of 1999. We have the road damage and the pollution, but everything else goes abroad: the corporation tax, the VAT and all the other benefits.

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  I envisage further damage to the economy from the energy tax proposals. What on earth is the environmental, social or economic advantage of flying in horticultural products on jumbo jets that do not pay aviation fuel duty?
  Ominous indications are buried in the Red Book. Substantial increases in public expenditure are planned. Those will be sustainable only if the economy does not turn down. The Government's outrageous increase in taxation will not encourage the creation or growth of a single business in north Shropshire in coming years.
  9.45 pm
  Mr. Gareth Thomas: I am grateful to the hon. Member for North Shropshire (Mr. Paterson) for abbreviating his speech to allow other Members to get in. Indeed, I will confine my comments to a few remarks, so that others may speak.
  The Budget will be welcomed in both my constituency and the country at large because it addresses the economic and social priorities: the need to build on the foundations of stability, sustained growth and low inflation that have been laid by the Government; the need to improve public services, which were allowed to run down under the previous Government; and the need to tackle the blight of poverty that scars society and that, again, is part of the legacy of the Conservative party.
  One of the most striking features of the Budget is that the purse strings have been loosened, but prudently. It is welcome that the Budget gives a very large boost to national health service funding: there will be real growth of 6 per cent. per annum, increasing from £45 billion last year to £69 billion by 2003–04. That represents the largest spending increase for the NHS, which will be warmly welcomed by my constituents.
  The £1 billion increase in education spending will also be welcomed. The figures for Wales—as I am a Welsh Member, it is pertinent to refer to the matter—have not been announced. Of course, we have a directly elected Assembly, which is charged with responsibility for allocating funds, but I would be surprised if it did not follow broadly the same pattern of spending.
  The Chancellor is right to introduce measures to support families and to tackle child poverty. I am particularly gratified with the increase in child benefit to £15 for the eldest child. That represents a 26 per cent. increase over the duration of the current Parliament. The 1p cut in the basic tax rate will mean that the tax burden on working families will be at its lowest since 1972.
  The Government are spending an additional £7 billion on pensioners over the Parliament. Many will share my view that more needs to be done to tackle pensioner poverty, but let us give credit where credit is due. The increase in capital limits attached to the minimum income guarantee, the increases in the winter fuel allowance, together with other measures that have been introduced during the year, will substantially improve the quality of life of many pensioners.
  Great strides have been made in increasing employment opportunity and in making work pay for many millions of low-paid families. Extending the new deal to the long-term unemployed is particularly to be welcomed, as are the Chancellor's announcements on building stronger businesses and on help for small and medium enterprises. I am pleased to note the cuts in capital gains tax and corporation tax, which will create an environment that is amenable to growth and job opportunities.
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  In conclusion, it would be remiss of me, as a Welsh Member, not to refer to objective 1 and the need to ensure match funding, which is very much a vexed issue in Wales, where the debate has raged for the past year or so. I fully accept that the Government can make no commitments until the conclusion of the comprehensive spending review. I note that my right hon. Friend the Prime Minister has undertaken not to let Wales down, and I take comfort from the fact that the Red Book includes some interesting indications of the thrust of Government policy.
  On page 52, the Government state that part of their economic strategy is to
  encourage balanced economic growth across all regions and to enable each region to make the most of its comparative advantages.
  My hon. Friend the Member for Doncaster, Central (Ms Winterton), who is in her place, represents an objective 1 area. She will also take comfort in the commitment on page 28 of the Red Book that the CSR process is aimed at determining how departments' programmes can best
  contribute to the achievement of the Government's objectives …
  One of those objectives must be to ensure balanced development across the country.
  This year's Budget is proof that the Government's sound management of the economy is allowing us to achieve our overall objectives of social justice, equality of opportunity, full employment and the eradication of poverty.
  9.52 pm
  Dr Lynne Jones: I also congratulate my right hon. Friend the Chancellor of the Exchequer on giving short shrift to the siren voices on the Conservative Benches calling for tax cuts. That is the last thing that we need in the west midlands, where we are still reeling from BMW's betrayal of Rover. Tax cuts would certainly result in higher interest rates and further strengthening of the pound, which, in the debate on Rover, Conservative Members claimed to be against.
  Even if Conservative Members do not understand, my right hon. Friend the Chancellor stated three times that fiscal policy and monetary policy must work in tandem. First, he said that fiscal stability was needed; secondly, he said that the Budget would lock in greater fiscal tightening; and then he said that the Budget would lock in even greater fiscal tightening. Despite that, the tax take will still be lower than it was during seven years under Mrs. Thatcher's Government.
  There is clearly no need for tax increases. The Government have concentrated on making sure that taxation is fair and tax reductions are targeted on those who are less well-off. I commend my right hon. Friend for that, although I would prefer less reliance on means testing.
  Of course, there is only so much that my right hon. Friend can do to bring down the value of the pound to a more competitive rate that would assist our manufacturing industry. One reason for the strength of the pound is the weakness of the euro, and that is partly due to mismanagement by the European investment bank. I urge my right hon. Friend the Chancellor to use whatever influences are available to him to impress upon the

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  European Central Bank the importance of adopting a symmetrical inflation target, as that policy has been most successful here.
  Mr. St. Aubyn: Does the hon. Lady feel that we should on no account join the euro unless the European Central Bank adopts the suggestion that she has made?
  Dr Lynne Jones: I think that the sooner we can join the euro, the better. However, I should like there to be better management by the European Central Bank—[Interruption.] That is not inconsistent. Fundamentally, the European economy is sound. Bankers should have greater confidence in that fact and not try artificially to stimulate the euro by increasing interest rates. The euro should be allowed to fall to its natural level, after which it will start to bounce back. However, whenever the euro rallies slightly, that seems to encourage major holders of the currency to sell, which is counterproductive in reaching the ultimate objective.
  The euro could be managed better. If the bankers took advice from the Chancellor, I am sure that it would be better managed, and that we could eventually have a more competitive pound and an enhanced ability to join the common currency.
  In this Budget, we are starting to see a Labour Government recognising that taxation is not such a bad thing. We pay our taxes because we receive services in return. As the fourth most wealthy country in the world, we should be able to afford excellent public services. The Government realise that, despite the extra cash that has gone into the health service, a great deal more needs to be done.
  I do not necessarily believe that, ultimately, health spending must be increased to the same level as that in other European countries. The NHS, by its very nature, is more efficient in the provision of services. Nevertheless, we need a more service-oriented approach in health provision—as I discovered to my cost yesterday. After sustaining a small injury to my hand, I had to sit for two hours, with a whole crowd of other people, in my local hospital's casualty department. We expect to be able to make appointments in the private sector—whether it is to see a hairdresser, to reserve a table in a restaurant or to have a car repaired—and we do not expect to have to wait. We should demand the same level of service in the public sector, in our NHS, as we demand in the private sector.
  The Governments who have been pandering to the idea that we have to keep taxes down have artificially prevented the British people from spending more on health and education services. As society becomes more wealthy, we expect to have excellent public services. I congratulate the Chancellor on his announcements on spending boosts for those services.
  I have some concerns, however, about other matters. I thoroughly agree with my hon. Friend the Member for East Carmarthen and Dinefwr (Mr. Williams) when he points out the need for greater capital investment. Although the extra money for transport—£250 million—is welcome, in the west midlands, Birmingham city council is arguing that we should be increasing investment in public transport by about £400 million, although
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  obviously not all in one year. We need such up-front capital investment to boost business investment and to encourage greater investment in our region.
  The Chancellor said that he was committed to balanced economic development across the regions. We need more capital spending on our infrastructure. Even with the planned increases, we shall still not return to the capital investment level as a percentage of gross domestic product that was reached in 1994–95 by the previous Government. We are still far from the capital investment levels achieved by previous Labour Governments.
  There is no need for us to use private finance for public sector capital investment. I am not advocating that we should let borrowing rip, but there is clearly scope for investment that will reap dividends in future revenue income. Transport is a very good example of that. If we make up-front capital investment, we can introduce environmentally friendly congestion charges, which would pay for that capital investment. It would also be beneficial—
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

PETITION

  Benefit Payments
  10 pm
  Mr. Adrian Sanders: I wish to present a petition from residents of Torbay—collected in sub-post offices in the constituency—who are concerned about changes to the methods of benefit payment. It reads:
  To the House of Commons.
  The petition of residents of Torbay declares that the proposed changes in the method of benefit payments will have a detrimental effect on the post office network in Devon and Cornwall.
  The petitioners therefore request that the House of Commons urge the Secretary of State for Social Security to reconsider these proposals.
  And the petitioners remain, etc.
  To lie upon the Table.

Flights (Windsor)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]
10.1 pm
Mr. Michael Trend: I welcome the Under-Secretary of State for the Environment, Transport and the Regions to the Dispatch Box for what I understand is his third Adjournment debate of the day. That will be good for the CV, if not one for the records. I am sure that he is the master of all the subjects in question.
I am grateful to have the opportunity to bring back to the House a matter of the greatest concern to my constituents. Many people who live in and around Windsor work at Heathrow airport and for the airlines. Many constituents use the airport for business and leisure travel. We are not anti-airport, but we do have a fundamental objection to the night flights which come over us and the west of London. We want to enjoy good neighbourly relations with the airport, and that is simply impossible so long as we are woken up night after night by the planes thundering by overhead.
I believe it is high time the Government introduced a complete ban on night flights into Heathrow. Other airports all over the world have done so, so why cannot we? Other Governments have ordered their priorities so that the citizen's wish to sleep well at night is, rightly, put before the commercial convenience of airlines. Why cannot we do the same?
Fiona Mactaggart: Is not one way of dealing with the commercial considerations of airlines and the need of our constituents in Slough and Windsor for a peaceful night's sleep to accept the case for the development of terminal 5, at the price of ending the night flights?
Mr. Trend: The Under-Secretary will know that many people's views on the proposed new terminal 5 are profoundly and unfavourably influenced by the continued obstinacy of successive Governments on night flights. Why should the airport be allowed to expand, with all that might follow, when the Government still compel Heathrow to be such a bad night-time neighbour?
The Under-Secretary will know also that a case will shortly go before the European Court of Human Rights concerning how the decisions are made. At Strasbourg, the Government will have to argue their case in a degree of detail that we cannot go into on an occasion such as this. The Under-Secretary may know that local authorities have a good track record of judicial review over night flights. My local authority, the Royal borough of Windsor and Maidenhead, has already said that it will seek to challenge any new proposal through the judicial process if necessary.
Does the Under-Secretary not see that the Government bring all this trouble on their own head because, when dealing with night flights into Heathrow, we are still living almost in the days of Crichel Down, rather than contemporary Britain? The man in Whitehall apparently still knows best, but will not tell us why. His sleep-deprivation studies demonstrate any ludicrous proposition that is advanced.
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In the absence of other evidence, we must assume that the Government's position is that economic arguments in favour of night flights are convincing, important and should prevail. But what are these arguments? The airport has publicly stated that night flights are not central to its commercial interests, so it must be the airlines. What is at stake for them commercially? I would be much obliged if the Minister tried to answer that question tonight.
Typically at the moment, there are around 15 or so flights a night. Can the Minister tell us, roughly, how he evaluates the economic benefit of these services? How does he calculate the cost of the fundamental disruption to people's lives? Has the Minister ever attempted the roughest casting off of commercial interest, which I expect is minimal, against the human misery that I and my constituents experience every night those planes are allowed to land over our heads, or the cost to the country as a whole of what follows from that mass sleeplessness?
I am sure that a time will come when some Government will realise their proper responsibilities to the people who live around the airport, but meanwhile we have to accept—like it or not—that we are engaged in yet another round of consultation over night flights, a round that has been dragged out to an almost cruel extent. The delay, far from being seen as an act of fairness of the part of the Government, has had the effect of drawing out anxieties and fears to an intense degree in all the communities that live around Heathrow—what one might call misery blight.
The Minister will know that those who live to the west of the airport have already expressed a clear preference for the status quo. That response shows that the strength of feeling on the night flight issue is especially strong in the communities to the west of the airport. Indeed, I cautioned the Minister's predecessor that the odium that the Government would incur from people who live west of the airport for any change in landing preferences would far outweigh any thanks they might receive from those who live to the east.
The Government have tried to present their position as fair, on the grounds of the numbers affected by noise, but that is a false position. Far from there having been an in-built bias in favour of those who live to the west of the airport, the reverse has always been the case. In fact, the difference in scale of the numbers has already been accounted for. The original reason why there was any preference at all was because the noise of aircraft taking off was substantially worse than that of landing. That meant that a benefit was built in for those who lived to the east of the airport and that was the reason for the so-called Cranford agreement. Because of some welcome developments in technology, take-offs are no longer the major problem. Noise from landings is now the major problem. The Government's attitude seems to be that because people on the west side of the airport had the worst of it in the old days, they might as well have the worst of it now that landings are the big issue. I do not understand how or why that is fair.
With the decision already announced at the close of the second part of the tripartite consultation process, to introduce runway alternation for night landings that take place from the west, the Minister will appreciate that the Government have already doubled the area that will be affected on our side of the airport. It gets worse. The deadline has just passed for the third stage of the current consultation on night flights into Heathrow. No attention was paid in that consultation process to the great majority

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who want an end to night flights or to retain the status quo. My constituents have already been told that the misery of night flights will be extended to two flight paths rather than one, and now they have been asked how much misery they want.
The choice is between roughly three times or more than four times as much noise as at present. My constituents have told me that that is Hobson's choice and that they do not want to be cast in the role of Hobson. Moreover, there is a growing suspicion that in the closing stages of the consultation process, the Government are attempting to set those who live on one side of the airport against those who live on the other.
If one asks the people who live to the east of the airport if they want less noise, of course they will say, "Yes, thank you very much." If they are asked how much less noise they want, they will say: the greatest amount available. However, my constituents have not been given that easy choice. Many of them are inclined to demand that the status quo be retained. I have tried to put it to them that we have a powerful Government who can do as they please. If they wish to inflict added misery on us, that is what they can do.
I have put it to my constituents that if the Government are offering a choice between two evils, the sensible thing to do is to opt for the lesser evil. However, many people to the west of the airport are not prepared to accept that argument. They are so angry with the whole process and the way in which it has been handled that I expect many of them will cut through all the technical jargon in the highly complex consultation paper—which was a disgrace in itself—and reiterate their view that all scheduled night flights should be ended or at least that the status quo should be maintained.
I hope that the Minister will understand the predicament for those of us who live to the west of the airport with respect to the choice that we have been given. I hope also that he will treat seriously those who are not inclined to play the Government's game. We see a trap, and we do not want to walk blindly into it.
Let us assume for the sake of argument that the worst happens and the Government use their undoubted powers vastly to increase the night noise over Windsor and its surrounding area. What will happen next? People who have bought houses and moved into Windsor and the surrounding area are aware that they are close to Heathrow airport. Indeed, they are much closer than many other people think. My constituency comes within a mile of the airport's boundary. I cannot imagine anybody moving into the area in recent years who did not know that. People are realistic and they weigh the pros and cons and make up their minds on sensible grounds. However, I believe that they will not take lightly a substantial worsening of the circumstances that will be brought about by the Government's diktat.
Surely those days have passed. Why should people put up with such a situation? The quality of their lives will be diminished and the value of their property may well suffer. Quite reasonably, they will seek redress, and where will they seek it? After 18 months of campaigning on the issue locally, I am sure that the great majority of those who live around the airport understand that the decision belongs entirely to the Government, not to the airport. They will therefore be banging on the Government's door.
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Furthermore, my local borough points out that, with road traffic, it is a requirement in law that noise mitigation be available to properties that are subjected to an increase of 1 decibel or more above a predetermined limit as a result of alterations to the highway. Should we not expect consistency with that policy from the Government in respect of changes that are made to the night flights regime; or will someone have to slog his way through the courts to test the position, especially as the proposed increase in night flights over Windsor is substantially worse than that covered by road traffic law?
I ask the Minister whether it is fair suddenly and greatly to increase noise and nuisance for any part of our population? I teased an earlier Minister with the prospect of setting up a loudspeaker van outside his house and relaying the noise of planes landing at the same time and at the same volume as night flights over Windsor. Rather humorously, I thought, I was told that that would be impossible. When I asked why, I was told that it would be against the law. That is precisely my point. If it is against the law in another part of the country, why should it not be so for my constituents?
As a civilised country, we should not allow one interest to affect to such a degree the basic rights of the people as a whole. If the Minister told BA tomorrow that it must rearrange the few planes affected by a night flight ban, it would no doubt protest, grumble and then quickly find a way of coping and rearranging its schedules. If the hon. Gentleman did that, he would at a stroke become a hero to the hundreds of thousands of people who live round the airport. These people believe that they have a right to a good night's sleep. Does he not believe that all the people on both sides of the airport who are afflicted by dreadful noise in the middle of the night have a right to a good night's sleep?
The Minister must believe me. When aircraft are flying during the day, it is sometimes impossible to hear what someone is saying on the other side of the room. He must believe me also when I say that when one is woken up in the middle of the night, it is extremely difficult to go back to sleep because of the continuing noise of the aircraft. I think that I can speak for hon. Members on both sides of the House in saying that our constituents deserve, and have a right to, a good night's sleep.
10.14 pm
Mr. Tony Colman: This is the fourth debate that we have had on this subject this Parliament. The hon. Member for Windsor (Mr. Trend) spoke on it in 1998, and I have done so in 1997 and 1999. I unite with his strong and strident call for a ban on all night flights. It is about time that the Government stood up to the airline industry. The 16 flights could be reallocated to times after 6 o'clock, and I do not understand why there has been delay year after year.
In the brief time allowed to me, I shall support the proposed changes in relation to the preferential use of Heathrow's runways at night. It is time for fairness and justice on both sides of the debate. I have pointed out to the House before that 64,000 people live under the runway approach on the easterly preference, and that 580,000 live under the runway on the westerly approach. The latter include my constituents in Putney. The figures are from the House of Commons Library, but I believe that they grossly underestimate the numbers of people involved, given that millions of people in central and east London are also affected by the flights.

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The consultation process closed on 17 March. I hope that my hon. Friend the Minister will say tonight that he will alleviate the misery suffered by people living to the east of the airport. I remind him that only 11 per cent. of flights come in over Windsor, whereas 89 per cent. of them come in over Putney.
10.15 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr.Chris Mullin): The hon. Member for Windsor (Mr. Trend) put his case very powerfully. I understand the frustration that he and his constituents feel. My flat in Lambeth—which I readily acknowledge is miles away from Windsor—is also directly under the flight path. Although that causes me no special problem, I know that sleeping with the window open means that I wake up, and that I can hear every night flight coming over. I know that the problem is much worse for people in constituencies such as those of my hon. Friends the Members for Putney (Mr. Colman) and for Slough (Fiona Mactaggart), and for people in the constituency of the hon. Member for Windsor.
The hon. Member for Windsor was generous enough to say that the policy in dispute was espoused by successive Governments. However, as his speech progressed, I began to think that he was suggesting to his constituents in Windsor that it was only the present Government who were responsible. He was right to say that the policy had drifted for years under successive Governments—the policy to be reviewed in the court case to which he referred was made in 1993. I am sure that the hon. Gentleman pursued previous Governments on this important issue as rigorously as he pursues the present Government.
The hon. Gentleman said that his constituents would prefer the status quo. I completely understand why people in Putney and Windsor would want a total ban on night flights, but that may not be possible, as I shall say in a moment. If a ban is not possible, it seems only right that the pain should be reasonably shared. I notice that the burden of the consultations that have been carried out is that that view coincides with public opinion on the matter.
In his short contribution, my hon. Friend the Member for Putney cited relevant figures from the Library. I do not believe that people living on one side of the airport can be exempt from 90 per cent. of the pain while larger numbers of people living on the other side are obliged to live with it. I say that even at the risk of forgoing the privilege of being a hero in Windsor: I have enjoyed my 15 seconds of fame and I know that it is very fleeting.
I turn now to the ban on night flights and to the consultation process referred to by my hon. Friend the Member for Putney. The consultation document entitled "Proposals for Changes to the Preferential Use of Heathrow's Runways at Night" was issued on 23 November. The consultation process ended last Friday. I hope that my hon. Friend will forgive me if I say that the process of studying the approximately 6,000 responses has barely started. I am not in a position to say what the outcome will be, although I assure hon. Members that all responses will be carefully considered before a decision is reached.
The Government undertook the consultation in response to calls for fairer and more equitable arrangements. That process began in 1996, when the
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Heathrow airport consultative committee carried out a review of the westerly preference, which has operated at Heathrow since the 1960s. It provides for westerly operations to continue, day and night, when there is a light following wind. Its purpose is to reduce the number of occasions when aircraft take off in an easterly direction over the more densely populated areas east of the airport, where noise preferential departure routes cannot be designed to avoid built-up areas. To the west of the airport, over the hon. Gentleman's constituency, the departure routes pass between the main built-up areas. The airport consultative committee also undertook two trials of runway alternation at night, in 1996 and 1997.
The consultative committee reported its findings to my Department, and it was decided to consult widely on the many and complex issues raised. Ten options for possible changes to the preferential use of Heathrow's runways at night were set out in part 2 of the Government's second stage consultation paper issued in November 1998. Some 2,803 responses were received. Most respondents were concerned to have the least possible number of flights overflying their particular areas, which is understandable, and most—by a ratio of 16:1—supported the introduction of runway alternation at night.
Given that clear response, the Government were able to enter into early discussions with BAA plc, leading to the introduction of runway alternation at night on 19 December. However, the responses to the 1998 consultation on the options for modifying the directional preference at night did not provide a clear basis for reaching a final decision at that stage. People expressed strong views east and west of the airport—just as happened this evening. There was, however, recognition among many of the representative bodies that the current arrangements were not fair and equitable, and that they could be improved. The Government share that view, as I said in my written answer to a parliamentary question from my hon. Friend the Member for Putney last November.
The underlying message in the responses to the November 1998 consultation was that fair and equitable arrangements were considered more important than alternatives that would reduce disturbance to the absolute minimum in terms of the population affected. For this reason, we decided not to take forward various options, such as introducing a 5-knot easterly preference at night, and using the southern runway only during easterly operations.
When the westerly preference was introduced in 1962, and for many years afterwards, night-time departures at Heathrow were significant enough to warrant its operation at night. In 1971, some 43 per cent. of night movements were departures; today, the figure is only 4 per cent. We consider that it no longer makes sense from a noise amelioration point of view, and is incompatible with our broad aim of reducing the impact of the airport on the local environment, deliberately to increase the number of occasions on which early morning arrivals need to overfly the most densely populated areas east of the airport by maintaining the westerly preference at night. We made that view clear in the latest consultation paper.
During a typical year under the present arrangements, about 89 per cent. of arrivals between 4 am and 6 am overfly the built-up areas of London to land in a westerly direction. Around 11 per cent. land in the other direction over Windsor. It was no surprise to us that many

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respondents considered that unfair. The population distribution under the final approach paths, east and west of the airport, is described in the latest consultation paper. By far the greatest number—the ratio is 9:1—live east of the airport. The present arrangements clearly fail to recognise that.
A Government who failed to recognise these fundamentals would be failing in their duty to minimise the nuisance caused by aircraft noise for all communities around the airport. We have therefore invited views on two proposals. The first is to suspend the westerly preference at night after the last departure until the first departure the next morning. Over the long term, that would be likely to result in 64 per cent. westerly operations and 36 per cent. easterly operations.
Secondly, for the same period of the night, it is proposed to put in place a fixed weekly rotation between easterly and westerly operations subject to overriding weather conditions, which would be likely to result in about 53 per cent. westerly operations and 47 per cent. easterly operations over the long term. Either option would be much fairer that the present arrangements.
Night flights formed the substance of the speech by the hon. Member for Windsor. As he made clear, many people want a complete ban, for reasons that I readily understand, and as people made clear in their responses to the 1998 consultations. We carefully examined the arguments for and against such a ban, and I continue to review them. As previous Governments had, we found a need to strike a balance between protecting local communities from excessive aircraft noise at night and providing for air services to operate at night where they benefit users and the local, regional and national economy.
The Government's decision not to introduce a ban was announced on 10 June last year, and the new arrangements came into effect in October. Noise quotas for Heathrow were reduced by up to 20 per cent. Important long-haul services to and from Heathrow need either to land or take off at night at one or other end of their journeys. Many departures from Heathrow are required to take off before the start of our night restrictions and arrive during the night at their destinations. Whether they land here during the night, or land or take off at night at the other end of their journey, they make an important contribution to the economy and help to ensure that London maintains direct daily links with countries that produce 90 per cent. of the world's gross domestic product.
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The case for night flights was examined in 1998. It is not possible to attribute economic values to individual flights as they form part of an integrated system of air services. However—and this addresses one of the specific points made by the hon. Gentleman, in 1998—the industry estimated the value of an additional daily long-haul scheduled flight to be between £20 million and £30 million a year in revenue terms, taking no account of wider economic factors. Whether or not we use the services ourselves, most of us benefit directly or indirectly from their contribution to the economy and to London's strong position both in world markets and as a popular destination for tourism. As a trading nation, we ignore that at our peril.
The hon. Gentleman said that many countries had introduced bans on night flights. I have asked about that point, and I cannot find any example of a major country in Europe. I should be grateful if the hon. Gentleman could draw my attention to any example—if not now, in due course.
The European convention on human rights, to which the hon. Gentleman referred, recognises the necessity of striking a balance between the rights of the individual and the economic well-being of a country. States are allowed a considerable margin of appreciation in striking that balance, the need for which has been recognised by successive Governments. I refer the hon. Gentleman to the example contained in the Official Report, 22 May 1993, at column 1061, and I give him no prizes for guessing who was in Government at the time.
The Guardian report on Monday 13 March touched on that issue. While it did not give a full account of the case to be heard in the European Court of Human Rights next May, it was right to say that the court will have to consider whether the Government reached its decision on night flight restrictions at Heathrow in 1993 in accordance with the law and with important and well-established principles. The Guardian was quite wrong to suggest that the Government had failed to put up a defence in the case: we did so in August 1998. The case is important, but it is for the court to decide it, not for us.
The hon. Gentleman and my hon. Friends the Members for Putney and for Slough, whose constituents are affected, are not the only hon. Members to raise night flights regularly with me since I became the relevant Minister. I recognise the importance of the matter, and I am anxious to maintain a dialogue. I am sorry that I cannot give the hon. Gentleman satisfaction tonight, but I look forward to pursuing the matter with him and with others in future.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.

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

Convention on International Trade in Endangered Species
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Betts.]
10 am
Mr. Tom Brake: I welcome this opportunity to debate the United Kingdom's policies and positions for the 11th conference of the parties to the Convention on International Trade in Endangered Species of wild flora and fauna—CITES—which opens in Nairobi in Kenya on 10 April. I am indebted to the Environmental Investigation Agency, and especially to Claire Perry, for supplying me with such a detailed—and damning—briefing on this subject.
CITES is intended to prevent the extinction of wildlife and plant species threatened by international trade. The parties to CITES, which now number around 150, can ban international trade in species threatened with extinction by listing them in appendix 1. Species threatened by international trade but not in imminent danger of extinction can be listed in appendix 2, which requires countries to issue export and import permits that can be used to monitor the volume of trade. The listing does not provide meaningful conservation protection to most species, especially heavily traded species, because there are usually no limits to such trade.
CITES addresses only international trade in wildlife and plants listed in its appendices. With the exception of rhino products, it has never sought to control domestic trade in wildlife products, nor to involve itself in the management of wildlife within a nation's borders.
When used properly, CITES is the most effective multilateral environmental agreement available to save endangered species threatened by international trade. It is often seriously undermined by poor enforcement, but, without it, endangered species such as tigers and rhinos could well have disappeared from the wild. The elephant would now be wiped out in most of its remaining habitats in Africa and Asia if CITES had not voted in 1989 to list the African elephant in appendix 1.
At the April meeting, the parties to CITES will vote on a wide range of measures relating to the trade in wildlife, and will discuss and vote on the conservation of elephants, whales, tigers and numerous other species. I am pleased that there are many hon. Members present who wish to speak. I shall therefore relate my comments mainly to elephants. I know that my hon. Friend the Member for Lewes (Mr. Baker) wishes to refer to a number of other species.
The United Kingdom is presently the chair of the CITES standing committee—its governing body—which oversees the implementation of decisions taken by the parties. It is a crucial position. The Chamber should be in no doubt that the fate of the African elephant may rest on what the UK does at CITES.
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The UK has played a critical role in decisions that CITES has taken on elephants, which, tragically, have not always been good for elephants. For instance, when the parties voted overwhelmingly at the 1989 meeting to protect African elephants, the UK Government took formally a reservation to the international ivory ban for six months to allow the Hong Kong ivory barons to sell off their vast stockpiles of poached ivory.
Historically, progress has been slow. In 1975, Ghana first proposed listing African elephants in appendix 1. The proposal failed and they were placed in appendix 2. The result was the mass slaughter of elephants by poachers over the following 14 years. CITES was repeatedly urged by pro-trade interests to continue to try to regulate rather than ban the international ivory trade. In the 1980s, poaching became more organised, thriving on conflict in Africa, where the easy availability of arms, marauding armies and their rebel opponents and corrupt Government officials made ivory a highly valued alternative hard currency on the African continent. Instead of poisoned spears, poachers used AK47s to bring down large numbers of elephants. Military helicopters and trucks moved ivory to government camps, where its trade was legalised by officials. South Africa's apartheid regime was notorious for laundering ivory proached from Angola and Mozambique.
The CITES-approved, legal international trade in ivory was as porous as a sieve, and laundering poached ivory for the legal marketplace by acquiring CITES permits was easy. Vast quantities of poached ivory were laundered in that way. The legal trade provided the cover for poached ivory, just as protected whale species are killed and laundered for the Japanese market by being mixed with whale meat produced by the notorious commercial operations that pose as scientific researchers.
In 1979, there were approximately 1.3 million elephants in Africa. By 1988, only 624,000 were believed to have survived. According to a widely accepted estimate, 94 per cent. of all ivory sold legally throughout the world with CITES permits originated from poached elephants. Across Africa, 70,000 elephants were poached each year to provide ivory for the international market, and the continental African elephant population declined by 10 per cent. a year. In short, listing African elephants in appendix 2 of CITES has failed.
The 1989 listing of African elephants in appendix 1 was probably the most successful conservation action taken by CITES, and the most effective elephant conservation measure in history. The international ban led to a virtual overnight collapse in demand for ivory. Prices plummeted and poaching declined dramatically across much of Africa. The ban was enforced in many parts of Africa, and many elephant populations stabilised. Parks and wildlife staff were motivated and empowered by the ban, which simplified enforcement. The public, who supported the ban, knew that ivory came from poached elephants because the sale of ivory was illegal.
However, a small number of countries—Zimbabwe, Botswana, Namibia and South Africa—opposed the ban. Poaching was not widespread in those countries,

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except Zimbabwe, where it is believed that military officials and parks staff became involved in poaching in areas such as the Gonarezhou park. Those countries led a determined campaign to overturn the international ivory ban, on the basis that their elephant populations were stable or abundant.
A week before the CITES meeting in Harare in June 1997, President Mugabe of Zimbabwe hosted a meeting of the Organisation of African Unity and was elected its chairman. He made an unsuccessful attempt to persuade the OAU to support a resumption in the ivory trade, but he succeeded in twisting the arms of other African presidents, who agreed to downlisting and muted their opposition to limited international ivory trade involving the southern African elephant.
After a week of secret ballots, intense pressure from the highest levels of southern African Governments, and manipulated proceedings in which many African state delegates were not allowed to speak, Zimbabwe, Namibia and Botswana secured an experimental export of some 50 tonnes of ivory to Japan, and their elephant populations were transferred to appendix 2. Many African states adamantly opposed the measure, and feared the impact that the resumption of international trade would have on their smaller, more vulnerable elephant populations.
For the sake of completeness, I have outlined some of the history of this subject and the attitude of various Governments, and I turn now to the attitude of the United Kingdom Government and the European Union. Before the general election, the Labour party election leaflet, entitled "New Labour—New Life for Animals", made an unequivocal pledge to
oppose any resumption of the trade in ivory and elephant skins.
In fact, it was the European Union's decision to abstain on the key vote at the 1997 CITES meeting in Harare that allowed the international ivory and elephant skin trade to resume. The 14 EU member states that are parties to CITES seek to vote together as a block during conference, and many non-EU European states and other CITES parties follow the lead of the highly influential EU countries. It is therefore safe to say that Zimbabwe, Botswana and Namibia would not have been allowed to put their elephant populations on appendix 2 if the UK and the rest of the EU states opposed them.
Rigorous conditions were attached to the transfer of the elephant populations to appendix 2. The international sale of 50 tonnes of ivory was supposed to go ahead only if Japan, the only authorised ivory importing country, improved its domestic controls to prevent the on-going laundering of illegal ivory. A further three conditions were attached: that comprehensive international monitoring systems should be in place to establish a possible causal link between the sale of ivory to Japan and any detected increase in poaching levels or illegal ivory trade; that a mechanism should be established to allow the southern African elephant populations to be put back on appendix 1 immediately if poaching and illegal trade increased; and that Zimbabwe, Botswana and Namibia should join a multinational African enforcement body, such as the Lusaka agreement on co-operative wildlife enforcement, which can cross borders to investigate illegal wildlife trade and poaching.
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It is worth noting that even the World Wildlife Fund, which believes that Zimbabwe, Botswana and Namibia deserve support and credit for conserving and managing their elephant populations, acccepts that the monitoring systems that I have just outlined are not in place. The UK had been elected chair of the powerful CITES standing committee, which was charged with deciding if those conditions were fulfilled before the ivory sale to Japan was allowed to go ahead. When the committee met in February 1999, the international system to monitor increased elephant poaching—MIKE—was not in place, and the £8 million to operate it for the first six years had not been found. Even worse, the system could not show causality between increased poaching and the ivory trade to Japan and it would take six years before useful data could be produced. None of the three southern African countries had joined the Lusaka agreement, nor had they produced a similar enforcement accord. Furthermore, despite some cosmetic changes, Japan had not enacted any meaningful enforcement measures to monitor trade in illegal ivory by the 50,000 or so shops that sell ivory hanko or name seals. In fact, there is virtually no domestic enforcement of ivory or other endangered species trade in Japan.
Seven African elephant range states appealed to the UK-chaired CITES standing committee to delay the ivory trade until the CITES-guaranteed safeguard of an international monitoring system was in place. The United States issued a similar caution. Will the Minister explain why the UK, as chair of the CITES standing committee, did not oppose the experimental international ivory sale, given that the critically important enforcement safeguards were not in place? That represents an early breaking of the pre-election pledge to
oppose any resumption of the trade in ivory and elephant skins.
Regrettably, the sale of 50 tonnes of ivory to Japan went ahead in April 1999. Since then, many African and Asian elephant range states have reported a dramatic resurgence of elephant poaching. Kenya has reported a disturbing increase in such incidents, which the director of the Kenyan Wildlife Service, Nehemiah Rotich, attributes directly to the reopening of the ivory trade. Zimbabwe has provided the most dramatic evidence of the emergence of a massive increase in elephant poaching. Last November, a WWF survey estimated that 1,378 elephant carcases had been found along Zimbabwe's Zambezi valley. The carcases were between one and two years old, which shows that poaching erupted not long after the 1997 CITES decision to remove the appendix 1 protection from Zimbabwe's elephants. That was hardly an example of a country conserving and managing its elephant population.
Poaching continued in 1999. Between 300 and 400 elephants had been poached in Zimbabwe by August of that year alone, according to sources who have seen official poaching data. Numerous press reports have claimed that Government officials in national parks or the military are implicated in the poaching spree. One report states:
Suspicions are growing that senior officials in the Zimbabwean government are involved in the recent upsurge of poaching.
Poachers have also been reported to be using radios identical to those used by wildlife scouts, probably obtainable only with the collusion of senior staff of the

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national parks department. The Zimbabwean Government have admitted that there is an increase, but press reports quote a senior park official as saying:
The Department is under-reporting case numbers because they fear the publicity will affect ivory trade.
In my view, such a cover-up qualifies as an abuse of the downlisting process, and the Zimbabwean elephants should immediately be put back in appendix 1. Perhaps the Minister will comment on that in due course.
In addition to an upsurge of poaching since the decision was made to allow the sales, numerous large seizures of illegal ivory have taken place, showing the revival of ivory smuggling networks. For example, in April 1998 ivory valued at $3 million was seized in Taiwan; in October 1998, 600 kg were seized in Paris; in China, 1.6 tonnes were seized in November 1998, and a further 2 tonnes in January 1999; 500 kg were seized in Moscow in April 1999; in Kenya, 350 kg were seized in July last year, and 700 kg in August. Seizures continue to be made in countries as diverse as Dubai, Portugal and China.
In a few weeks' time, the parties to CITES will vote on proposals by Zimbabwe, Botswana, Namibia and now South Africa to sell more ivory to Japan and other consuming countries. An alternative proposal from Kenya and India would, if accepted, return all elephants to appendix 1, totally banning international trade. At a recent meeting of 21 elephant range states in Africa, the Kenyan proposal received the backing of most countries present. South Africa, Namibia, Botswana and Zimbabwe declined to attend that meeting. The proposal is also supported by a broad coalition of most—but, I accept, not all—of the world's major conservation groups.
Last Thursday, a resolution was passed in the European Parliament with the backing of members of all the major political groups. It strongly urged all CITES parties to support Kenya and India's proposal to maximise international protection for elephants by putting them all back on appendix 1. In the United Kingdom yesterday, a MORI poll was released showing that 82 per cent. of the public believe that the UK Government should support the Kenyan proposal. More than 120 Members of Parliament have signed an early-day motion calling for a full ban on the international ivory trade, which can be achieved only by supporting the Kenyan proposal to protect all elephants by putting them back on appendix 1.
The current position is that the United Kingdom is calling for all proposals to be withdrawn. Let us be clear about what that would mean in practice. Poaching would continue and would be likely to intensify during the two or three years before the next CITES meeting. That would be unacceptable. The Government argue that, because the funds from these sales are, theoretically at least, going back into elephant conservation and community projects, they meet their objective to conserve elephants. However, receipts from experimental sales were less than $5 million, whereas the estimated cost of providing the monitoring systems is about $13 million. Many elephant range states argue that the money would be better spent on keeping elephants alive, rather than on counting them once they have been killed by poachers.
In The Guardian on 6 March 2000, an article entitled "Ivory Towers" stated:
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As elephant poaching rises again, Kenya fears that the UK will make things worse.
In the article, Nehemiah Rotich, director of the Kenya Wildlife Service, stated:
We are very unhappy with the UK position on the ivory trade … It is a major point of concern for us. Britain has such a key presence in Kenya as a development partner that I would have expected them to better understand what opening up ivory trade would mean for us … The tourist industry which funds the wildlife service would be badly hit and we would risk a return to the poaching holocaust of the 1980s.
I understand that the Government have not yet decided how to vote, but if they openly oppose Kenya's proposal, they will give implicit support to the southern African position. Failure by the Government to back Kenya and India will horrify the 82 per cent. of the British public who support Kenya and India's proposal. There is a clear duty to ensure that a precautionary approach is taken and the only precautionary approach on the table is that proposed by Kenya and India.
The Government have said that they remain unconvinced that the recent ivory sales have had an impact on poaching or the illegal trade. Given that the 10 largest seizures of illegal ivory in a decade have occurred since the decision was taken to allow the sale of ivory to Japan, to what does the Minister attribute such a clear-cut sign of increased trade and poaching, if not to that decision? Do the Government accept that poaching has increased in Kenya, or do they think that the Kenya Wildlife Service is lying?
Will the Minister investigate the evidence of increased poaching in Zimbabwe and the alleged cover-up by Zimbabwean Government officials of such increased poaching? I remind the Minister of the near reign of terror that the Zimbabwean Government have effected on their citizens, many of whom are terrified to report increased elephant poaching.
Despite the overwhelmingly clear view of the British public, our Governments have not always been as proactive as they should have been in pursuing a global ban on the ivory trade. In the next couple of weeks, the Government will have the opportunity to honour their pledge and to use their influence in the European Union and internationally to push for a full ban on the international ivory trade, and I hope that they will do so. We cannot risk
a return to the poaching holocaust of the 1980's.
10.21 am
Angela Smith: I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing this debate on an issue about which many of us have strongly held views. Speaking in Westminster Hall has an added attraction to Labour Members: it is the only time that we can see Ministers' faces during debate—we normally sit behind Ministers in the Chamber. I hope that we shall see the Minister showing strong support for the issues that we are raising today.
As the hon. Gentleman has said, discussions at CITES are vital for a variety of wildlife, including turtles, sharks and whales, but given the limited time available and that several hon. Members wish to speak, like the hon. Gentleman I shall concentrate on elephants and the ivory trade. I confess that my interest in elephants goes back many years to my time at primary

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school. My primary school teacher was clearly responsible for my interest because he taught me how to tell the difference between an African elephant and an Indian elephant. I have not seen many African or Indian elephants in the flesh, not wanting to go to zoos to see them, but he told me that an African elephant's ears are the shape of Africa and an Indian elephant's ears are the shape of India. I do not know whether that is true, but it has stimulated my interest in elephants and their protection for many years.
I have asked several parliamentary questions about the ivory trade. I attended the International Fund for Animal Welfare press conference on the issue yesterday. The answers that I have received and that press conference have brought home to me how important it is that we take urgent action. In response to the questions that I asked on 10 February, the Paymaster General told me how much ivory had been seized in the United Kingdom. In 1998, Customs and Excise seized 387 items of ivory and a further 15 items were seized in the first nine months of 1999. Several of those seizures involved direct imports from central and southern African states and from India.
However, the problem with those figures is that, unlike other countries, the United Kingdom reports seizures not by weight but by the number of items, so the figures cannot be translated into how many elephants have been killed to produce that ivory because we do not know the weight of ivory involved. It would be helpful if the Minister would examine that matter and perhaps write to me. We should consider recording ivory seizures, as other countries do, by weight rather than by item, because worked ivory and carved ivory items can range from small, artistic, delicately carved pieces to large pieces, although those are less popular now because of problems with illegal trade. We must consider recording seizures not only by number, but by weight.
The importance of recording is shown by experience in France, where two major seizures of more than 1,000 kg were recorded in 1998 and 1999. In addition, about 1.5 tonnes have been seized in both India and Portugal. The worldwide total of seizures is horrific and shows the level of the problem.
I am grateful to have worked on campaigns with the Born Free Foundation in my constituency and nationally. Along with other organisations, it has expressed its wish for a positive outcome from the CITES talks. Born Free told me that only between five and 20 elephants, from an original estimate of 320, remain alive at a major national park in the Democratic Republic of the Congo. In the area surrounding that park, up to 3,000 elephants are reported to have been killed. There lies one of our problems, and the hon. Member for Carshalton and Wallington touched on that. It is obvious that further relaxation in ivory trade laws will lead to an increase in poaching. If there is a legal trade in ivory, how can illegal trade be monitored? How can we tell the difference between the two? Enforcement is made extremely difficult.
The Kenyan Government have reported an increase in poaching, but in some war-torn areas of Africa, such as the Democratic Republic of the Congo, we must establish scientifically that it is the change in the
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international trade laws that has led to an increase in poaching, rather than issues connected with war, natural disasters or the abject poverty facing people in those countries, all of which we have a duty to take action on. That challenge faces our Ministers at the CITES talks. It would be wrong for the countries pushing for relaxation in the laws to use their widespread problems as a cover or excuse to argue for measures that would lead to immeasurable suffering and the killing of elephants. I do not dismiss the problems of those countries, but there can be no argument about the fact that since CITES sanctioned the resumption of the legal ivory trade, seizures of illegal ivory items have increased. It is difficult to argue that there is no relationship of cause and effect between those two events.
Hon. Members attended the launch yesterday of the report entitled "The Ivory Markets of Africa" with representatives of the International Fund for Animal Welfare in the Jubilee Room, and that is reported on in BBC Wildlife Magazine this month. Those hon. Members will have heard of the continuing problem of this trade in death since the partial reopening of the ivory trade in 1997. The debate on what is responsible for its increase will continue, but we must make clear our views to the Minister this morning. We should listen to those who have exposed the effects of the relaxation in the ivory trade, on which the report is damning. We should also listen to the Kenyan Government, who are arguing for greater protection for the elephant, and to the 82 per cent. of British people who, in a MORI poll this week, urged the Government to support the Kenyan and Indian proposals. We should implement our preelection promise to support protection for the African elephant and oppose any resumption of the trade in ivory and elephant skins.
Conservation and animal protection are international issues on which we need to take firm action, and I hope that the Government will help by persuading the European Union to use its block vote at the CITES talks. As a Labour MP, I am somewhat reluctant to get into the argument about the block vote and I use the term with caution. Rather than abstaining as it did in 1997, the EU should be persuaded to use its block vote for good and to take action for animal protection.
I want to make some strong representations on behalf of my constituents, who are concerned about the possible resumption of international trading in whale meat. I have received several letters on that subject, which I would like to be taken into account. As chair of the all-party parliamentary group on Cuba, I see no conflict in using my position to make strong representations to the Cuban Government against their proposal to reopen the trade in hawksbill turtle shells. Closer to home, there is a need for much greater protection of the basking shark. My hon. Friend the Member for North-West Leicestershire (Mr. Taylor) will speak about that. The basking shark is one of the most spectacular sights to be seen off the British coast. That species should be protected internationally, as action by just one Government will have little effect.
Now that we are in 2000, we should be moving forward on worldwide protection issues, not fighting a rearguard action to maintain protection for animals such as turtles and whales. I have strong hopes that representatives of our Government will be in the

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forefront of positive moves at the CITES talks in Nairobi in April, and will recognise that any trade in ivory will lead to an increase in slaughter and the international trade. The internal trade is for countries to deal with themselves.
The debate about CITES and about trade and seizures is, in a sense, a sterile one, but we must recognise that this issue and that of the suffering of animals, at home and abroad—raises great emotion and passion. There is nothing wrong with that, so long as it is not the only issue about which we feel passionately. It is right to be passionate about suffering, whether it happens at home or abroad, to people or to animals. While we talk dispassionately about illegal trade, customs, seizures and the tonnage of worked or raw ivory, elephants are being poached and killed. My attention was drawn this morning to a leaflet that I received from the Born Free Foundation, and I shall quote from it:
Every hour of every day another elephant is illegally killed for its "bloody" ivory tusks.
There is a photograph of a female elephant killed in Kenya. Her ivory has been removed:
She was a nursing female, and her orphaned calf has little chance of survival … The slaughter is horrifying, poachers are shooting elephants with automatic weapons and hacking off their tusks with axes and chainsaws.
None of us wants that to continue.
We have heard the argument that elephant numbers are very low. I am not motivated by the lowness of the numbers—in some ways, that is a red herring. What motivates me is the suffering of the elephants whose ivory is poached. Suffering and justice are crucial to the debate. The ivory trade is thousands of years old, but we know better today, and justice demands that we do much more.
10.32 am
Mr. David Taylor: I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing the debate at exactly the appropriate time: there are just weeks to go before the next CITES discussions in east Africa. He has painted a vivid picture of the background to the debate and the problems that confront the nations that will be represented at Nairobi.
Like my hon. Friend the Member for Basildon (Angela Smith), the hon. Gentleman concentrated on the plight of the African elephant. I turn to the plight of the Cetorhinus maximus, known to its friends—that incudes me, I hope— as the basking shark. I shall set out the facts that make that species vulnerable, before moving on briefly to the international position and the case for its inclusion in appendix 2. I am pleased and proud that our nation is proposing inclusion. The hon. Member for Carshalton and Wallington said that inclusion in appendix 2 was no guarantee that the species concerned would be strongly and successfully defended, but it is, at least, a first step.
Basking sharks are, without doubt, a vulnerable species and are recognised as such in the red list of threatened species drawn up by the International Union for the Conservation of Nature and Natural Resources, also known as the World Conservation Union. The sharks are protected in Great Britain, the Isle of Man, Guernsey, in the waters off New Zealand, in parts of the
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United States and in the Mediterranean sea. However, they migrate extensively and, although they may be protected in one country, are extremely vulnerable to unmanaged and unsustainable fisheries elsewhere.
Commercial fishing of fins and oil for international trade has seriously depleted shark stocks. Fins continue to increase in value as an ingredient in shark fin soup. Indeed, in China last year, one large fin was sold for the equivalent of £10,000, which suggests the economic value of the shark to those who prey on it. Sharks accidentally caught outside the limited protected waters that I mentioned earlier are much more likely to have their large fin removed than they are to be released because the fin is valued so highly. That damages the shark population and is immensely wasteful as killing sharks for fins results in meat being discarded in the ocean.
If unrestricted and unregulated fishing continues, basking shark numbers will probably decrease to a point at which local extinction is highly likely. Most documented basking shark fisheries have collapsed after relatively short periods of exploitation. Reports on the species show a consistent pattern of rapid decline followed by a long period of low population numbers in the past 50 years or so. Indeed, that phenomenon is observed in other large shark populations in many parts of the world, including Europe, north America, Japan and China.
Basking sharks are especially vulnerable to targeted fisheries because they grow slowly, mature late, and bear few young after a long gestation. Estimates show that, at best, the basking shark population may grow by 1 to 2 per cent. per annum. We should consider that carefully, as experience shows that some basking shark populations have not recovered decades after being exploitatively fished. I hope that the member nations of CITES in Nairobi will consider that carefully.
I am delighted that our Government have proposed that the basking shark be listed in appendix 2. Indeed, they have done some active lobbying and, with the support of the wildlife and countryside link, distributed leaflets to all CITES secretariats. I am sure that hon. Members will wish to join me in congratulating them on that.
The proposal is strong and environmentally attractive and undoubtedly appeals to us in the Chamber. However, those states that are adamantly against any form of marine fish listing are sure to oppose it in Nairobi, along with their camp followers. Those countries in the main, Norway and Japan—will argue that no marine fish should be listed until all the marine fish listings have been reviewed by the International Union for Conservation of Nature and National Resources, CITES and the Food and Agriculture Organisation. They will argue that the FAO plan of action for shark conservation and management will give sharks sufficient protection.
Our Government are aware of that and the International Fund for Animal Welfare has discussed the issue with the Parliamentary Secretary at the Ministry of Agriculture, Fisheries and Food, who is extremely worried about the matter. My hon. Friend is not optimistic that the necessary two thirds majority for the proposal will be achieved. It will be a struggle; the Minister has a good understanding of related issues and

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his colleague is especially well placed to handle the negotiations and campaigning on the issue. That is not intended as a criticism of the Minister who is responsible for aviation and countryside access and a rich, wide and astonishing variety of other matters. I hope that my hon. Friend the Fisheries Minister can be encouraged to attend the conference in a few weeks' time.
There are two ways to combat the argument that will be advanced by Norway and Japan, who will oppose the inclusion of the basking shark in appendix 2. They should be told, first, that sharks are not marine fish in the commonly understood definition of that species. A classic example is that of the cod, with its huge reproductive potential; there are other, similar species. The biology and life history of sharks have far more in common with cetaceans; shark populations are slower to recover from harvesting than whales and they are, therefore, much more vulnerable to unregulated exploitation. A significant drop in the numbers of sharks will always be worrying, whatever the outcome of criteria reviews.
Secondly—this matter should be tackled head on—it should be stated that the FAO international plan of action on sharks is a wholly voluntary and untried management tool. It will never carry as much weight as CITES, an established agreement on international trade in species, which is far more appropriate as the monitoring tool for the basking shark. How will the Government counter the arguments that Norway and Japan put before CITES? The nations in Nairobi next month should support the Government's proposal that basking sharks should meet the criteria listed in conference resolution 924, which states:
it is known, inferred and projected that harvesting of specimens from the wild for international trade has, or may have, a detrimental impact on the species by exceeding, over an extended period, the level that can be continued in perpetuity
Appendix 2 listing is necessary to ensure that the international trade in basking shark parts or derivatives is conducted in a sustainable manner and is not detrimental to the survival of the species. Inclusion in appendix 2 would encourage international cooperation, which is not always evident in matters of this kind, for the successful management of basking shark stocks. Sharks that are managed or protected in one country may continue to be highly vulnerable to unmanaged, unsustainable fisheries elsewhere in their range.
A CITES listing would help to monitor the numbers of sharks that are harvested after accidental capture and could help to regulate their significant and sad mortality. It would encourage the introduction of effective fisheries management and research to ensure that future catches are sustainable. Finally, it would help parties to meet the recommendations of the FAO's newly agreed plan of action for the conservation and management of sharks.
I am confident that a strong case can be made for the listing of the basking shark in appendix 2. I am even more confident that the Fisheries Minister should be encouraged to blank out three or four days of his diary, which is not insignificant for a busy Minister, for something that is crucial to the future of the basking shark. The mental image of a basking shark is of a
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Conservative Member bathing off the south coast of the constituency of my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper). Conservative Members are, of course, an endangered species, but the threat to the basking shark is much more serious. I urge the Minister to take these points on board, and discuss them with his hon. Friend the Fisheries Minister as quickly as possible and obtain tickets tomorrow for the flight to Nairobi.
10.45 am
Mr. David Chaytor: I am pleased to be able to contribute briefly. I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing the debate, during which he has eloquently and comprehensively outlined the predicament of elephants and the general issues relating to the CITES conference in Nairobi next month. The timing is appropriate, not only because of the imminence of the CITES conference—I believe that it is the 11 th convention of the parties—but because of last night's Second Reading debate on the Countryside and Rights of Way Bill. This should tell us that, however admirable the attempts by Governments to secure protection for wildlife and conserve their natural resources, ultimately it remains a matter for international negotiation and agreement. The CITES conference is a classic example of the way in which Governments, if they have the political will, can work together to secure international agreement.
When something scandalous, disgraceful or disturbing happens in another country, for whatever reason, there is always a risk of our thinking that our Government should automatically respond. I am as conscious as any other hon. Member that there are limits to the powers of individual Governments. However, on the trade in ivory, the shells of hawksbill turtles or whale meat, our Government can make a difference, depending on the position that they adopt or persuade our European Union partners to adopt at the CITES conference. I want to put one or two powerful arguments for taking a strong line at the conference.
In recent years there has been a huge increase in public interest in matters of animal welfare, the conservation of natural resources and biodiversity. There are now more members of animal welfare and conservation groups than of all the political parties together. There are more members of conservation groups than of trade unions and certainly more than there are active churchgoers. The animal welfare conservation lobby is becoming increasingly powerful, and is especially influential among young people. I wish to draw attention to our ongoing concerns about the involvement of young people in the political process, the apparently growing alienation of young people from the process and their cynicism about politics and what it can and cannot achieve. The Nairobi conference presents an ideal opportunity for the Government to reconnect with young voters and show them that they share an interest that is dear to their hearts by taking firm action on the international trade in animals.
The ban on, and close regulation of, this international trade is crucial for maintaining biodiversity. In last night's Second Reading debate on the Countryside and Rights of Way Bill, there was a brief but interesting reference to the status of the United Kingdom's biodiversity action plan and whether it should have full

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legal status. CITES is an international convention that does have legal powers. It is critical that we use that status to maintain global biodiversity. I argue that on not only the abstract ground that it is important to maintain a wide variety of species, but because the maintenance of a wide variety of species is crucial to the fragile ecology on which we all depend. The environment that supports that wide variety of species is the same as that in which human beings exist.
I do not necessarily accept that western countries should tell people in other parts of the world how to conduct their business and trade. On some occasions, there is a tendency to a form of neo-imperialism; we can be accused of lecturing countries and peoples who have earned their living and constructed their economies for many years through the trade in animals. Nevertheless, we must engage in constructive argument with them. We must raise their awareness of the wider global implications of the threats to biodiversity posed by some of the traditional economic practices. I urge the Government to use their influence with the European Union to take a strong line on any attempts to downgrade particular animals from appendix 1 to appendix 2. I urge my hon. Friend the Minister to take on board very carefully the representations that have been made by all hon. Members.
10.51 am
Mr. David Lepper: I congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing the debate. I also congratulate my hon. Friend the Member for Bury, North (Mr. Chaytor) on the early-day motion on the ivory trade, which has secured the support of a number of hon. Members across the parties. I hope also that my hon. Friend the Minister will take note of the number of Labour Members who want to take part in today's debate; it is a sign of our strong feeling, which is shared throughout the House. The information that has been provided by organisations such as the Whale and Dolphin Conservation Society, the Environment Information Agency, the International Fund for Animal Welfare, Wildlife and Countryside Link and the Born Free Foundation has been of a high quality. It has ensured that we are all better informed about these vital issues.
I hope that the Ministers will take note of the comments that have been made about the importance of CITES for a number of species. I endorse the point made by my hon. Friend the Member for North-West Leicestershire (Mr. Taylor) about the importance of having a ministerial presence at CITES. I have already written to my right hon. Friend the Minister for the Environment, suggesting that he might find time to attend, but following the events yesterday, I suspect that he will be busy on more domestic matters over the next few weeks.
In view of the important role played by my hon. Friend the Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food at the international whaling convention a year or so ago, perhaps he might find time to attend. I suggest that not for the reason that my hon. Friend the Member for North-West Leicestershire has given, but because if the vote goes the wrong way on certain proposals on whaling, it could severely affect the balance that exists between CITES and the international whaling convention. The
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internaitonal whaling convention is recognised as the governing body for whaling matters and some of the proposals from Japan and Norway could upset that balance. My hon. Friend the Fisheries Minister is well respected internationally and he would have a valuable contribution to make to those discussions.
A number of species have been referred to. With the exception of the hon. Member for Lewes (Mr. Baker), I am the only Member with a coastal constituency. I shall perhaps concentrate on Eretmochelys imbricata, the Cuban hawksbill turtle, which is not native to the Sussex coast, as far as we know. One of the problems with the proposal to downlist the Cuban hawksbill turtle to appendix 2 is that its migratory habits are not fully known. I do not think that it has been sighted off the coast of Newhaven or Brighton, but anything is possible. Doubts exist about its habits, which is one reason why it should not be downlisted as Cuba proposes.
Many of us are worried about the way in which alliances have been formed on a number of separate issues in the run-up to the talks. Clearly, Japan and Norway have used their influence in terms of trade agreements and support through aid to try to ensure that their proposals on whaling receive support. We do not know what discussions the Cuban Government may have had with those countries to stitch up a deal on whaling, which might include the downlisting of the hawksbill turtle.
Why is the hawksbill turtle so important? It is the smallest of the six species of marine turtles and is currently on the CITES appendix 1 listing. It is also listed as critically endangered on the red list of threatened animals. The threats to it include illegal trade in its shells, harvesting of eggs, loss of habitat and entanglement in nets. Globally, the species has declined by 80 per cent. in the past 60 years, and approximately half the nesting population is known or suspected to be in decline. The best estimate of the sexual maturity of hawksbills is 20 to 40 years. Only one egg in 500 to 1,000 is likely to survive to adulthood. The species suffers from high early mortality, and its delayed maturity requires large populations to maintain a small but stable adult population.
The danger of removing mature animals from a slowly declining population is severe, although the consequences may not be visible for decades. Decisions taken in a month's time—even though they can be reversed in three years at the next CITES conference—could have severe repercussions. The hawksbills play a critical role in coral reef conservation. Their diet of toxic and armoured sponges creates gaps for the settlement of reef-building species and provides foraging access for fish that cannot penetrate the sponge's armour. It is not only the turtles that are at risk but the ecological system in which they live.
I hope that the parties to the convention, and certainly the EU delegation, will be persuaded by a strong line taken by the United Kingdom Government and representatives on this issue. If the threat to the species were not enough to convince people of the need to retain the appendix 1 listing, the Chamber should be aware of the description given by the Royal Society for the Prevention of Cruelty to Animals of the method used to slaughter the hawksbill turtle. Turtles are difficult to kill humanely—certain drugs are recommended, but

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even with the correct lethal dose and administration the animal can take many hours to die. That is especially true if pentobarbitone sodium is used. In practice, it is likely that the animals will have their shells ripped off while still alive—which I hope that all hon. Members would agree is totally unacceptable—or be decapitated. The only way in which that method can be slightly improved is by administering drugs beforehand and pithing the brain and the spinal cord after decapitation. It is doubted whether turtle poachers would take the time to use even this partly humane method.
There is a strong case for the standpoint of our delegation and the Government can influence it. If there were more time I would have argued the case for Tersiops truncatus ponticus—the Black sea bottlenose dolphin. My interest in dolphins dates back to when I worked with what became the Born Free Foundation to ensure the return to the wild of the dolphins that were once on display in the Brighton dolphinarium. Times have changed, I am pleased to say, and in this country we now think differently about those creatures. Perhaps other hon. Members will talk further about the risks to that species.
Thank you for calling me to speak in this debate, Mr. Deputy Speaker. I am sure that the Minister will have much food for thought as a result of it.
11 am
Mrs. Helen Brinton: I also congratulate the hon. Member for Carshalton and Wallington (Mr. Brake) on securing this important debate. I am grateful for the opportunity to add my voice to all those hon. Members who are attempting to influence the outcome of the CITES talks next month.
We have heard some effective and passionate speeches—for example, that of my hon. Friend the Member for Basildon (Angela Smith), whose interest in these matters was sparked off by a fascination for elephant ears when she was at school. I am sure that her teachers must feel proud of what she is doing now. We have also heard the passionate speech of my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper), whose work is well known. His description of the death of the turtle—I do not know the Latin name—should be enough to convince us, if we need any more convincing, that this terrible practice has to be stopped.
Labour Members are not criticising the United Kingdom Government staff, but seeking to strengthen commitments by a display of Back-Bencher opinion. I hope that the debate will be reported nationally and internationally. Only 11 hon. Members may be present today, but interest in this matter is increasing—both within and outside the House of Commons. A total of 125 Members from all parties have so far signed early-day motion 342, which relates to the ivory trade.
At the talks, the UK voice will be heard throughout the European Union, so it is vital that our representatives at Nairobi should ensure a united front in line with the best European Union traditions. In 1997, the EU regulations on wildlife trade were enthusiastically welcomed by key organisations such as the World Wide Fund for Nature. Unsurprisingly, implementation is much more difficult in certain member states.
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This good and encouraging news is in complete contrast to the EU position adopted at the last conference of the parties to CITES, in which the EU disgraced itself by abstaining on a crucial vote, which would have transferred certain elephant populations from appendix 1, thereby allowing and promoting the sale of nearly 60 tonnes of raw ivory from elephant populations in Botswana, Namibia and, as we have heard today, Zimbabwe. South Africa has now joined those countries to propose yet further obscene sales of ivory, while Kenya and India propose a total ban by listing all elephant populations in appendix 1.
I am delighted to join my colleagues of all parties in urging the Minister to persuade the EU to support the Indian and Kenyan position. I hope that he will find time, notwithstanding his busy diary, to attend the conference for those four days, as he has been urged to do today. I understand that the Indian and Kenyan position was generally supported at a recent meeting of 21 elephant range states.
As we have heard, the other major proposed downlistings concern whales, and my hon. Friend the Member for Pavilion has talked passionately about the basking whale. Japan and Norway are behind the proposals to remove protected status from certain whale populations. Japan in particular has exploited legal exceptions to continue whaling for so-called scientific purposes. It also wants to sever the links between CITES and the International Whaling Commission, the recognised body for the conservation and management of whales stocks and the regulation of whaling activities. Even worse, Japan is in effect using aid to bribe smaller and developing countries to support its position at the talks. If those moves are successful, other countries, such as Russia and Iceland, are likely to resume whaling.
As time is tight and we are looking forward to hearing the Minister's response, I shall cut short my remarks and end on this point. We must use the instruments and organisations that we have to tackle the most pressing issues. The preservation of whales and elephants is just such an issue, and I urge the Minister to give it his most forceful consideration.
11.5 am
Mr. Damian Green: I add my congratulations to the hon. Member for Carshalton and Wallington (Mr. Brake) not just, in conventional terms, on securing the debate but also on what he said. He not only gave us a fascinating and important history of the operation of CITES since its formation and of other protection measures, but gave a compelling analysis of the problems that the Government face and, in particular, revealed that they are in the throes of betraying their pre-election promise, which he read out.
I hope that the multi-portfolioed and multi-talented Minister, as we have discovered him to be in the past 24 hours or so, will be able to explain what the Government's position will be and how that squares with what they promised before the election. He will recognise the importance not only of the intrinsic issues but of the tone that the Government adopt.
I agree with the hon. Member for Bury, North (Mr. Chaytor), who used the phrase "neo-imperialism". There are two great dangers in the debate. The first is that the House thinks that it should urge the

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Government to find a solution to problems that essentially belong to other countries; the second, more serious, danger is that this country will adopt a tone of imperialism or moral superiority. The Government should avoid such a tone, simply because it will be less effective in the long run in obtaining the animal and species protection that Members on both sides of the House want.
I hope that the Government will continue many of the CITES policies that the UK has adopted for a number of years. The Minister will be aware that at the 1992 CITES conference the previous Government were instrumental in persuading many other countries to maintain the ban on the sale of ivory. There was then, as there is today, a group of countries that wished to change the situation and the UK was successful in persuading them not to do so. Similarly, under the previous Government the UK supported the decision to stamp out the illegal trade in rhino horn and tiger parts. We welcome the Government's recent initiatives to give the remaining tiger population extra protection. To revert to the subject that has dominated most of our debate this morning—the protection of elephants—the previous Government contributed considerable sums of taxpayers' money to elephant conservation projects.
Clearly, what is of most interest today is the forthcoming Nairobi conference. There is a great disparity between what, on paper, appears to be a good and efficient regime and what is actually happening, so how does the Minister propose to help CITES enforce its own rules? Even if Kenya and India are successful in their bid to maintain the bans on trade in appendix 1, countries can seek a reservation allowing them to continue with ivory sales. Under existing CITES rules, proceeds from ivory sales must be spent on elephant conservation. For countries such as Zimbabwe, which faces a worrying political position and considerable economic hardship, funding for such essential conservation work is not easily come by. None of us would want the position on conservation to become even worse than it is. I therefore accept that the Minister's position is not easy.
The most worrying aspect of the debate about the sale of ivory concerns its direct effect on the level of illegal poaching. The position was rather bad in the 1970s, became extremely bad in the 1980s and improved slightly after international limits were imposed, but the thrust of evidence shows that it is now worsening again. We can only conclude that the new monitoring system—the MIKE system mentioned by the hon. Member for Carshalton and Wallington—and the related elephant trade information system are not yet effective. Until they are effective and generate information leading to enforcement, parties to CITES will not be able to take appropriate remedial action.
The interim system is not adequate to perform the systematic role that the long-term monitoring system is expected to have and which was proposed by the 10th conference of parties to CITES. Indeed, the parties have not yet agreed the thresholds and precautionary criteria needed to trigger remedial action. So the Minister, along with fellow Ministers attending the Nairobi meeting, is in a rather dangerous position. I echo suggestions that having a ministerial presence in Nairobi would be symbolically significant for this country, but I accept that the Minister and I will discuss wildlife protection in
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a more domestic forum during the period in which the conference takes place. However, I accept what hon. Members on all sides of the House have said about the expertise in such matters demonstrated by the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food.
Long-term enforcement is the key to a return to a gradual improvement in the condition of elephants and an increase in the number that can thrive and survive in the wild. Clearly, that will be one of the most important issues to be considered at Nairobi. However, as hon. Members have said, the elephant will not be the only species to be affected by ministerial decisions at Nairobi.
The whale population is another matter of deep concern; the World Wide Fund for Nature regards the position on whaling as the most important decision to be taken at Nairobi. I have some sympathy with that view. We know how strongly Norway and Japan feel about the matter and that they are trying to assemble a coalition to relax the proposals on whaling. That would be damaging and I urge the Government to stand firm. No country should move back to damaging large-scale commercial whaling and countries that follow the lead of Norway and Japan are likely to have even fewer domestic controls than those two countries, so the situation may become worse than it was before.
The World Wide Fund for Nature rightly said that there is no information on proposals for domestic controls in any other potential whaling nations. Any country that started taking whales in international waters, whether or not that country was a member of the IWC, could issue itself with an introduction from the sea certificate, or a state ship could transport its catch directly to an importing country under such a certificate and bypass the international security arrangements currently in place. That would be an extremely dangerous development that would make the position more damaging than it was before. Any attempt to introduce annotations to the proposals, such as zero quota for commercial whaling purposes, would create a major loophole because, under the CITES terms, a party that is also a party to the international convention on the regulation of whaling, which includes Norway and Japan, would be exempt from CITES restrictions for whale species listed in appendix 2; thus, a zero quota would be inoperative, and there would not be an adequate safeguard. As in so many international agreements on whaling, the devil may be in the detail and I urge the Government to stand firm on the issue.
The Government will also have to answer to the House and to CITES on our domestic record. Last October it was reported that the Government were permitting illegal wildlife trade in some of our overseas territories in the Caribbean. I should be grateful if the Minister would tell the Chamber what action the Government have taken since then.
On a final note of optimism in a debate that, rightly, has mostly been pessimistic, it is a pleasure to read newspaper headlines such as "Tigers surge back from the brink", showing that the action taken on tigers in the past few years is working. I hope that the Minister will take that as inspiration. Some international agreements

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can achieve their objectives. Positions are not irreversible and any decent action that he can take will be worth while.
11.19 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): The hon. Member for Carshalton and Wallington (Mr. Brake) made a powerful speech and asked some sensible questions. I say to him, gently, that it would be helpful to know in advance what is on his mind. My office attempted to contact him last Thursday, again on Friday and again yesterday, but we succeeded in establishing contact only when I passed him a note during the debate on the Countryside and Rights of Way Bill yesterday. The title of his debate is wide-ranging, but his speech was specific. If detailed answers are required, it helps to give as much notice as possible.
Mr. Brake: I apologise for not giving the Minister more advance notice. It was not intentional; I am not trying to catch him out in any way. 1 would welcome a written response from the Minister in the near future.
Mr. Mullin: I am grateful. I shall certainly follow up in writing any outstanding matters from today's debate.
My hon. Friend the Member for Bury, North (Mr. Chaytor) said that we had to be wary of becoming neo-imperialists lecturing poor countries on animal welfare issues when there is sometimes a mote in our own eye. His point was taken up by the hon. Member for Ashford (Mr. Green). I agree: there are some motes in our own eye. I am a member of Compassion in World Farming, which takes an interest in factory farming in this country. Many questions certainly need to be answered about the way in which we treat animals. However, a debate about that is for another day, and perhaps another Minister.
The CITES conference in April will consider more than 100 proposals, ranging from technical issues such as how the convention should treat operations that ranch and harvest animals, to high-profile proposals involving elephants, whales, turtles and sharks. I shall not go into great detail, but we shall be majoring on three issues: the listing of the basking shark; a paper on bush meat; and, together with colleagues in Germany and Switzerland, a proposal on DNA, which will help to preserve biodiversity sources by speeding up the diagnosis and treatment of wildlife disease.
Let me first deal with elephants, which the hon. Member for Carshalton and Wallington spoke about in his opening speech. He asked why the UK and other EU states abstained in the 1997 vote. We did so after securing significant safeguards, including the new monitoring system and agreement on a mechanism, however inadequate, to return elephants to appendix 1 if there were signs of increased poaching. The system now in place in Japan to monitor trade in ivory is, I am advised, the most comprehensive in the world. I will, however, reflect further on the hon. Gentleman's points about it.
We shall oppose all proposals to open up the trade in ivory, and will continue to do so until the monitoring system, which we worked so hard to achieve, provides
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proper results. I acknowledge the hon. Gentleman's points but, as I said, the monitoring system is the most extensive and comprehensive ever developed and should continue to be supported.
The hon. Gentleman also asked whether we accepted that elephant poaching in Kenya had risen. We accept that there has been a small increase in poaching incidents this year. The figures are lower than in 1993—but only just—and are a long way short of the terrible situation in the 1980s. We also accept the view of the CITES secretariat that the increase is not statistically significant, and that there is no evidence to link it to the experimental one-off sale in ivory. Our knowledge of poaching in Kenya is based on information supplied to CITES by the Kenya Wildlife Service. To put the figures in context, the 1999 elephant population in Kenya was approximately 28,000. In the 1980s, about 2,000 a year were killed. According to figures given to us, 57 have been killed so far this year.
My hon. Friend the Member for Basildon (Angela Smith) quoted the Born Free Foundation. I understand that the CITES secretariat has written to complain about the statistics quoted on the Born Free website. Members of the secretariat reviewed all available information and visited Kenya to follow up reports of increased poaching, and they consider the figures to be a gross distortion of the true picture. The Save the Elephants report stresses the importance of not exaggerating the amount of poaching that is taking place because doing so can help to fuel demand.
The hon. Member for Carshalton and Wallington referred to what he called the terror in Zimbabwe. I cannot quite subscribe to that because one must be careful about commenting on another country's internal political situation. However, the vigorous political debate that is taking place in that country recently resulted in its Government losing in a referendum, so all the signs are that freedom of speech and thought are still alive and well in Zimbabwe, whatever other problems it faces.
I was asked whether we shall send a Minister to the CITES conference. I do not think that there were any votes for my attending. For reasons that I understand perfectly, my hon. Friend the Fisheries Minister has been mentioned frequently. As far as I know, there are no plans for a Minister to attend the conference: Ministers do not usually attend CITES conferences. However, strong representations have been made and I shall draw them to my hon. Friend's attention.
Mr. Norman Baker: Will the Minister give way?
Mr. Mullin: No. I have only four minutes left and I want to comment on a couple of other subjects.
My hon. Friend the Member for Basildon and the hon. Member for Brighton, Pavilion (Mr. Lepper) referred to turtles. We have already made clear our objection to the Cuban proposal to harvest hawksbill turtles for Japan. However, there are mixed views within the EU on a secondary proposal to allow a one-off sale of stockpiled shells. Cuba devotes significant resources to managing its fishery. Its protection of nesting sites and breeding areas has resulted in increases in the local hawksbill population. However, although we are

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supportive of Cuban efforts to improve the conservation status of the species, we are aware that their biology remains complex. They range widely, and Cuba has yet to produce convincing evidence that its proposals will not have an impact on turtle populations elsewhere in the Caribbean. Our feeling is that there should be no international trade in hawksbill products other than as part of a wider initiative, possibly under the convention on migratory species, to protect nesting sites and breeding areas and to tackle accidental by-catch.
My hon. Friends the Members for Basildon and for Peterborough (Mrs. Brinton) spoke about whales. There is agreement among EU countries to oppose Norwegian and Japanese proposals to allow international trade in minke and grey whales. We also oppose proposals to change the existing relationship between the CITES convention and the International Whaling Commission. Under agreements that they have backed since the early days, CITES parties have accepted that the IWC should be the lead body in determining issues relating to whaling. CITES has long respected the moratorium on catching whales by putting great whales in appendix 1 of the convention, thereby preventing international trade in whales and their products. We see no reason to change that, and we shall continue to work hard to persuade the CITES parties that are unfamiliar with the IWC that opposition to the proposals is the only way of preventing an upsurge in commercial whaling.
My hon. Friend the Member for North-West Leicestershire (Mr. Taylor) mentioned basking sharks. He will be glad to hear that the United Kingdom has proposed to list the basking shark in appendix 2, which would regulate the worldwide trade in the sharks.
I have only one minute left before I turn into the Minister responsible for aviation but, before doing so, I will say something about elephants. We and other EU states are disappointed that several African countries submitted proposals that may have a further impact on the conservation status of elephants. We have urged those countries to withdraw their proposals until monitoring and control systems have had time to bed down and produce meaningful results. There are encouraging signs that some countries are preparing to withdraw their proposals.

Aircraft Emissions
11.30 am
Mr. Tony Colman: I am grateful to Madam Speaker for agreeing to this Adjournment debate on aircraft emissions and the Kyoto protocol. I am not sure whether my hon. Friend the Minister is as pleased as I am; he is dealing with at least three Adjournment debates, following the work that he did in winding up the debate on the Countryside and Rights of Way Bill last night. I am pleased that he is here as the Aviation Minister.
The recently pubished draft United Kingdom programme for dealing with climate change has a thermometer on the front cover, with the red of the mercury going up to, but not reaching, a pictogram of an aircraft, clearly depicting that as yet the Government have a limited programme for dealing with aircraft emissions, as shown on pages 91 and 92. Furthermore, we are still waiting for the civil aviation daughter paper to the main White Paper on integrated transport, published by the Government in early 1999. The purpose of this debate is to ask the Government to flesh out the options for action.
The Minister will know of the Adjournment debate that I secured on the need to remove all night flights from Heathrow, the need for strict controls on noise and the lack of a need for terminal 5. Those concerns form the backdrop to this debate.
The intergovernmental panel on climate change in 1999 estimated that aircraft might be responsible for 5 to 6 per cent. of the warming caused by greenhouse gases. However, some of the study's authors believe that the figure could be 10 per cent. or more—that is, amounting to more than half the global warming potential emissions from road transport. Emissions from aircraft are alleged to be doubling every 10 years. The Kyoto protocol excludes aircraft because the negotiators could not agree on how to allocate responsibility for emissions made during international flights.
The International Civil Aviation Organisation prepared its own special report on aviation and the global atmosphere, in which it confirmed those figures. The Kyoto negotiators at last put aircraft emissions back on the agenda at the fifth conference of the parties—COPS—in Bonn last October. However, emission reductions of 60 to 80 per cent. on 1990 levels by 2050 are needed to stabilise the earth's climate systems, according to the IPCC. Clearly, a world agreement is needed and I look forward to the Government taking a strong line at COP6 in the Netherlands this autumn.
I congratulate my right hon. Friend the Chancellor of the Exchequer on his successful advocacy earlier this month to his European Union colleagues, securing agreement to the basis for an aircraft fuel kerosene tax. The discussions now move to the ICAO meeting next week. It is important that a worldwide agreement is reached. If such a tax were imposed only in the EU, avoidance tactics might be used elsewhere. I should like a commitment that the proceeds of such a tax will be used to commence work on the zero-emission engines and aircraft that will be needed in the next 50 years; only a zero-emission aircraft requirement will ensure that the availability of flying to the people of the world is not restricted.

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At an excellent display in the mind zone of the dome, the audience is asked questions on the impact of emissions from aircraft, and it is stated that 99 per cent. of the people of the world have never flown and should do so only if their flying does not harm the atmosphere. Furthermore, such an expansion in the availability of flights requires an airports policy for the 21st century, with new airports well away from conurbations with high-speed train links. Terminal 5, with its supposed 8 per cent. ceiling on more flights, and no second runway at Heathrow, of which we are assured, will not provide the answer.
I have mentioned EU agreement on aviation fuel taxation. The EU research programmes on such matters are accelerating and, as with the auto-oil proposals, the European Parliament is likely to force changes in aircraft design and acceptability before 2010. The United Kingdom should not wait for Europe or the ICAO to agree a regional or world way forward; we have shown leadership in such matters and we should do so again. Voluntary agreements are being reached, industry by industry, to reduce carbon dioxide and greenhouse gas emissions in the United Kingdom, and there are reductions in the climate change levy for industries that do so. The airline industry has an equivalent to a climate change levy in its consumer tax—air passenger duty, which could be significantly reduced, perhaps by 50 to 80 per cent.
Mr. David Chaytor: On air passenger duty, does my hon. Friend agree with the chief executive of easyJet, who said that the existing air passenger duty structure is unfair and simplistic? It penalises passengers who take short-haul flights, but fails to levy an appropriate charge on intercontinental flights, which by and large are made by affluent individuals and those on corporate business. Does he think that there is scope for a fairer structure?
Mr. Colman: I thank my hon. Friend for that interesting intervention. Certainly, my speech is about equity and enabling people to fly, but my concern is that easyJet's aircraft should have low or zero emissions. We must recognise that short-haul journeys are often better made on high-speed train links such as Eurostar than on flights. Having said that, I admire the attempt to lower the cost of flying for the people of Europe. In introducing air passenger duty, Nigel Lawson described it as a replacement for tax on air fuel, and we regard it in the same way as climate change levies. As I have said, a significant reduction in air passenger duty 50 per cent. to 80 per cent., say—will be available to airlines that commit to stretching targets for emissions reduction. As the APD reduction could be made in lieu of compliance costs associated with stretching fuel efficiency targets in other ways, the scheme should not distort competition.
The Association of European Airlines has, I am told, secured agreement from its members to an efficiency improvement target of 22.4 per cent. for 1990–2012. Of that figure, 14.1 per cent. resulted from fleet renewal and an improvement in load factor and the remaining 8.3 per cent. is predicated on fleet replacement. I am pleased to say that British Airways has committed to a 30 per cent.
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improvement on its 1990 fuel efficiency figures by 2010. However, those are assertions; there is no formal check. The Minister should make, if you like, binding agreements, so that UK and, if you like, European regulations can nail down the voluntary arrangements.
Mr. Deputy Speaker (Mr. John McWilliam): Order. Whether I like binding agreements or European regulations has nothing to do with the debate. The hon. Gentleman should remember that, in using the word "you", he is referring to me and no one else.
Mr. Colman: I apologise, Mr. Deputy Speaker.
The airline industry also claims that a further 10 per cent. saving could be made if the Government agree to operational efficiency in air traffic control and air traffic management. I am sure that the matter will arise again in discussions on public-private partnership and National Air Traffic Services. Will the proposals, which would make a start on taking aircraft emissions seriously, be taken up by the Government and discussed at next week's meeting of the International Civil Aviation Organisation?
I have five key questions for the Government. First, do they support the inclusion of aviation emissions in their national greenhouse gas inventories in time for this year's climate change treaty conference of the parties? Secondly, will they make the reduction of greenhouse gas emissions an explicit objective of the new White Paper on airports? Thirdly, in developing that White Paper, will they introduce explicit demand management measures in respect of airports if there is no way forward for zero-emission aircraft? Fourthly, do they support measures for a Europewide charge on aircraft emissions to help to reduce the contribution of aviation to climate change? Fifthly, will they enter into an agreement—as they have done elsewhere—with the airline industry and use the air passenger duties as an equivalent to the climate change levy to negotiate binding agreements in the UK?
In addition to those questions, I should like to take up the cause of manufacturing industry, which has been much in the news in the past two weeks. Earlier this month, everyone was delighted to hear the announcement of the £500 million Government loan guarantee to BAE Systems to enable it to start work on the wings for the new Airbus A3XX, which was dubbed the "green giant" by my right hon. Friend the Secretary of State for Trade and Industry. He said that it will use
20 per cent. less fuel per passenger
and will be
quieter and cleaner than comparable planes.
Clearly, airframe improvements can deliver fuel efficiencies, but the key to lower aircraft emissions is the motor power source—the engines. Where was an announcement about support to Rolls-Royce for the development of a new generation of zero-emission non-fossil-fuel engines—the sort of quantum leap that the RB211, which was supported by the previous Labour Government, represented in the 1970s?
I am told that current technology on hydrogen and fuel cells is not practical at present—hydrogen is bulky to transport and fuel cells are not light enough for air travel. Similar objections were recently made about the feasibility of land-based transport using that

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technology, but those were overcome. I was disappointed to discover that none of the current foresight panels is working on that. Other programmes are going ahead. The work on "Air Travel— Greener by Design" by the Society of British Aerospace Companies seems to take a more general approach. The foresight link award for the work on fuel control sensors to help reduce aircraft pollution that is being carried out by Cranfield university, the university of Sheffield, Rolls-Royce and Lucas Aerospace sounds promising, and I hope that it will be incorporated in the A3XX. Proper enforcement of the Kyoto protocol should mean more jobs and prosperity for the new technological industries, and new aircraft design is part of that change.
In addition to a response to those points, I hope to hear from my hon. Friend and his colleagues at the Department of Trade and Industry about the good news for manufacturing industry at Rolls-Royce in the midlands and Scotland.
Aircraft emissions are not on the agenda for the subsidiary body for implementation, which is meeting in Bonn on 12 to 16 June, prior to the sixth conference of the parties. Yesterday, I spent two hours ploughing through 44 pages of text on the internet to discover that. I look forward to faster engines in those systems as well. The UK must be proactive—there is still time before June. That proactivity is needed to establish solutions, some of which I have suggested in my speech. The key must be to ensure that everyone on earth who could fly, can. Without new technology, they will not be able to do so, and without control on aircraft emissions, the advent of global warming will inevitably accelerate.
Last month, Michael Zammit Cutajar, the executive secretary-general of the United Nations framework convention on climate change, said at the 10th UN conference on trade and development:
The ultimate objective of the strategy is to halt the build-up of greenhouse gases in the atmosphere before it becomes dangerous. Efficiency in limiting further emissions of these gases is vital for success. Equity in distributing responsibility for these limitations is vital for political engagements. Visions of the economic opportunities of a climate-friendly future would transform the language of negotiation from "burden sharing" to "win-win".
It is this linkage with the economy that relates the climate change scenario to that of globalisation. Climate change is a by-product of two centuries of economic growth, so action to address it must pass through the economy of the 21st century. Greater efficiency and cleaner technologies are needed in the energy, transport and industrial sectors, among others. This can be a driver of technological change, "green jobs" and "green profits". The international response can also generate a new push in favour of the transfer of technology and know-how to developing countries and capacity building.
Aircraft building and design is a perfect example of the clean development mechanism—the CDM. The UK leads the world in that, and it could be our gift to the world to solve the problem of aircraft emissions and lead to effective implementation of the Kyoto protocol, which is not happening at present.
11.43 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions(Mr. Chris Mullin): My hon. Friend the Member for Putney (Mr. Colman) has raised an important issue, which I
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know is of great interest to him and his constituents, who have many noisy planes flying over them. He asked me several detailed questions.
Mr. Colman: It is not only the problem of aircraft noise that I am concerned about, but that of the pollution and emissions coming from those aeroplanes.
Mr. Mullin: Indeed. Those emissions are the main subject of our discussions today. No doubt we shall discuss noise another day.
My hon. Friend asked me a number of detailed questions. May I gently say to him what I said to the hon. Member for Carshalton and Wallington (Mr. Brake)—that it is helpful to have advance notice of such questions? I shall do my best to answer them, but if I do so inadequately we shall follow up the matter with correspendence.
The International Civil Aviation Organisation meeting next week will be a working group that the United Kingdom and the United States will chair jointly. The decisions will be made at the ICAO assembly in September and October 2001. My hon. Friend the Member for Bury, North (Mr. Chaytor), who is no longer in the Chamber, made a point about air passenger duty, which is a matter for my right hon. Friend the Chancellor of the Exchequer. I have noted the point and will draw it to the Chancellor's attention.
My hon. Friend the Member for Putney asked a question about the inclusion of international emissions. I am advised that that is a matter for discussion at the conference of the parties, not for the ICAO. The agenda for the working party has not yet been settled, but all the options will be considered. Demand measures are unlikely to be one of the Government's objectives.
The use of air passenger duty to negotiate binding agreements is only one option. The Association of European Airlines efficiency targets are proposals for voluntary agreements, and the ICAO is considering a range of market-based options.
The United Kingdom played a key part in negotiating the Kyoto protocol, in which developed countries agreed to cut their combined emissions of greenhouse gases by an average of 5.2 per cent. between 2008 and 2012. The European Community agreed a larger reduction of 8 per cent. and that target was subsequently shared out, with the UK agreeing to a 12.5 per cent. cut. We are developing our programme to deliver that target and to meet our domestic goal of a 20 per cent. cut in carbon dioxide emissions by 2010.
On 9 March, the Government published their draft UK climate change programme. This will form the basis for action to fulfil our obligations. The final UK programme will be prepared by the autumn, and the UK will then be in a position to rafity the Kyoto protocol. Many issues remain to be settled and we are working closely with our European partners and other countries to ensure that the protocol comes into force as soon as possible. In November, the sixth conference of the parties will be held in The Hague and countries will need to reach agreement on a range of outstanding issues.
Aviation is an important issue in relation to the Kyoto protocol and plays an important part in our lives. It is vital for trade and makes a significant contribution to our economy. It is a major growth industry and air

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traffic is forecast to double in the next 15 years. However, that growth will not be without problems of both noise and emissions. Aviation contributes to climate change with worldwide emissions constituting some 2 per cent. of all man-made carbon dioxide. Aviation also produces other emissions, many of them going directly into the sensitive upper atmosphere. They include oxides of nitrogen—which lead to the formation of ozone—particulates and water vapour, which lead to the formation of contrails. There are uncertainties about their exact effects of climate change, but they could be as great as those of carbon dioxide alone.
Globally, aviation emissions are expected to increase from 115 million tonnes of carbon in 1992 to between 245 and 265 million tonnes in 2015. Of those emissions, international aviation accounts for approximately half. Emissions from domestic aviation are already included in the Kyoto targets and United Kingdom domestic aviation accounts for only about 10 per cent. of the 9 million tonnes of aviation fuel sold annually. The remainder is international. Emissions from international aviation are not included in the targets agreed by Kyoto.
Mr. Colman: My hon. Friend seemed to imply that while international aviation emissions are not within the Kyoto targets, domestic aviation emissions are. Will he confirm that that is so and that they will be included in the final proposals on climate change, because they are not included in the draft document?
Mr. Mullin: I said that emissions from domestic aviation are already included and that emissions from international aviation are not, which also applies to international shipping. To date, there has been no agreement on how or whether to allocate them to individual countries—the subject is very complex. Instead, the Kyoto protocol requires developed countries to limit or reduce emissions by working through the ICAO.
In 1996, the ICAO invited the intergovernmental panel on climate change to prepare a report on the effects of aviation and the steps needed to be taken to address them. The result was the special report on aviation and the global atmosphere published last June. It was the first panel report on a single sector and represents an authoritative and policy-neutral assessment of the science and technology of the effects of aviation on the atmosphere and the measures that have been taken and need to be taken to mitigate them.
The ICAO is also working, through its committee on aviation environmental protection, to develop policies and measures to encourage development of aircraft and engine technology so that it is less polluting. In the United Kingdom, Rolls-Royce and the Defence Evaluation and Research Agency are at the forefront of research into improved engine technology. The Department of Trade and Industry is also sponsoring research on how the environmental impact of air travel
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can be reduced. The Department for the Environment, Transport and the Regions works closely with my Department on that research.
The ICAO is also considering how market-based options such as an aviation fuel tax, emissions trading or voluntary agreements might be developed. They could provide fiscal incentives to use and develop more efficient aircraft. It is considering how aircraft could be flown on more direct routes and how less fuel might be wasted, for example, in holding stacks of aircraft waiting to land. In Europe, Eurocontrol is also involved. On 28 January this year, European Ministers issued a statement identifying the need to take account of environmental impact in future strategy.
Improved aircraft and engine design is leading to reductions in emissions and improvements are constantly being researched, but it should be recognised that it is unlikely that the industry will ever reach a point at which aircraft emit no noxious gases or water vapour. Even hydrogen would produce water vapour. That does not mean that no improvement can be made and, in the light of our goals under the Kyoto protocol, emissions reduction will remain very much on our agenda.
The committee on aviation environmental protection has been asked to report to the next ICAO assembly, which will be held in September next year, and the United Kingdom is playing a leading role in developing policy options ahead of the assembly.
Action is also being taken in the European Union. The Commission published a communication on air transport and the environment, which suggested a coherent strategy within the EU. In particular, it addressed how the EU could maximise its influence at the ICAO assembly, where the United Kingdom is one of the key players. Ministers will consider their response at the Transport Council on 28 March, but we expect it to be supportive.
The EU published a communication on its policies and measures to reduce greenhouse gas emissions. It also published a document on the environmental, economic and legal implications of taxing aviation fuel. It recommends that the EU allows member states to impose taxes on aviation fuel domestically and permits bilateral agreements to tax fuel. However, it notes that for environmental and economic reasons it would not be practicable or desirable for the Community as a whole to introduce taxation targeting only intra-Community services. I am sure that my hon. Friend understands the logic of that. One concern is that fuel would be tankered in by airlines to avoid high taxes, leading to a net increase in fuel emissions.
My hon. Friend raised an important issue that will undoubtedly occupy everyone concerned with the aviation industry for years to come. It is also important in dealing with the survival of the planet and reducing overall levels of pollution. I am grateful to him for raising the subject and I hope that he is reassured that we are at least on the case, even if we do not have all the solutions.
11.56 am
Sitting suspended.

Housing (Hampshire)
12 noon
Mr. Andrew Hunter: I welcome this short debate on the implications for Hampshire of the Government's housing policies. I also welcome the presence of my right hon. Friends the Members for North-West Hampshire (Sir G. Young) and for Fareham (Sir P. Lloyd), my hon. Friend the Member for Gosport (Mr. Viggers) and the hon. Member for Winchester (Mr. Oaten). During nearly 17 years as a Hampshire Member, no other issue has so consistently generated so much concern among my constituents as new house building. We acknowledge that there are legitimate pressures for new housing, but not to the extent accepted by the Government. We also know that the vibrant economy demands a vibrant work force, but we do not accept the reasons that have so far been given for the urbanisation of so much of our countryside.
I am concerned about the number of houses to be built up to 2016. The south-east regional planning committee—Serplan—originally envisaged an annual average of 5,212 new houses in the county. The Crow report proposed a preposterous 8,450 houses each year. Subject to five-year monitoring, and based on previously proposed distribution, the Government now appear to be thinking in terms of approximately 6,500 new houses each year. It is not surprising that the county council dismissed that proposal as unjustified in a recent brief for Members of Parliament.
The situation is even worse in the north of the county. On 7 March, my right hon. Friend the Member for Wokingham (Mr. Redwood) sought an assurance from the Secretary of State for the Environment, Transport and the Regions that Berkshire would be able to say no to any new settlement south of the M4. In Basingstoke, we have nightmares about what we have dubbed "Readingstoke"—urban development devouring much of the remaining countryside between Basingstoke and Reading. My right hon. Friend was given no assurance, so we fear the worst.
The Secretary of State claims to have abandoned what he calls the old predict and provide system. In reality, he has done no such thing. He pretends, and asks us to accept, that he has introduced a new approach—plan, monitor and manage. There is no significant difference whatever between the two approaches. The planning process cannot be other than a combination of predicting, planning, monitoring and managing.
The Government have introduced a change that undermines strategic planning. On 7 March, the Secretary of State told the House:
Local authorities should plan to provide 43,000 additional dwellings a year outside London, subject to regular review … every five years.—[Official Report, 7 March 2000; Vol. 345, c. 865.]
However, the services that accompany housing development—education, health care, transport and roads—cannot be planned effectively and efficiently on the basis of a succession of five-year reviews, each of which is itself subject to review.
The planning of key infrastructure services requires greater certainty over a longer time span than five years. Five-year monitoring, of which the Government boast, is a fundamental flaw in their housing policy, from which Hampshire and other counties will inevitably suffer.
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The Secretary of State told the House that the Government have
set a national target that 60 per cent. of new homes should use recycled land or buildings.
He added:
planning authorities must in future give preference to recycling previously developed sites and empty properties—brownfield first, greenfield last.—[Official Report, 7 March 2000; Vol. 345, c. 863–64.]
I fear, and I believe that my right hon. and hon. Friends will agree with me, that the Secretary of State's words are virtually meaningless for Hampshire and are certainly meaningless for the borough of Basingstoke and Deane.
The overwhelming consensus of informed opinion maintains that 60 per cent. of the likely new housing requirement cannot be achieved in the county by previously developed sites and empty premises. The cities of Southampton and Portsmouth are the only parts of the county where that figure could remotely be achieved. The paradox is that that is not where the bulk of the county's development is likely to take place.
In the parliamentary constituency of Basingstoke and the borough of Basingstoke and Deane, which is partly in my constituency and partly in that of my right hon. Friend the Member for North-West Hampshire, we expect an absolute minimum of 7,500 houses over the next few years. The land has already been earmarked; some of it is being prepared for development. It is not being alarmist to say that that number of new starts could easily rise to more than 10,000 and the environmental implications of that are horrendous.
Local planners tell me that, with the currently agreed density of about 16 to 18 houses per acre, only 20 per cent. of the required new homes will be constructed on brownfield sites. If one reverses that, 80 per cent. of the house building requirement in the borough of Basingstoke and Deane has to take place on greenfield sites. Even with the higher density, to which the Government are so far only paying lip service, it is impossible to see how anything approaching their 60 per cent. target of brownfield new housing can be achieved. Even if it could be, the implications from such a concentration of habitation for the provision of health care, education, transport and roads are so enormous that there would be public consternation.
Mr. Peter Viggers: Is my hon. Friend aware that if the available brownfield sites in locations such as Gosport were to be developed, the road infrastructure and the other matters to which he has referred simply could not cope with the additional population?
Mr. Hunter: My hon. Friend reinforces my point. I do not know his constituency as well as I know my part of the county, but what he says about it marries with our interpretation and our concerns in the north of the county, so I thank him for that contribution.
Mr. Deputy Speaker (Mr. John McWilliam): Order. I ask all hon. Members to address the Chair when they speak, not because I feel touchy about it, but because it means that the Hansard transcribers can hear what is being said and report it accurately.
Mr. Hunter: Thank you, Mr. Deputy Speaker. I apologise. I shall enjoy addressing you from now on.

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In addition to the problems that my hon. Friend mentioned, there would have to be a total rethink of the provision of all service infrastructure if the Government's required housing density were to be achieved.
Derelict brownfield sites do not exist in the greater part of Hampshire, where new housing development is effectively synonymous with greenfield development. The emphasis of the Government's policy is wrong. With regard to the regeneration and investment that is associated with housebuilding, the needs of other parts of the United Kingdom are greater than those in Hampshire. We also need to consider the scandalous fact that there are 700,000 empty houses in Britain. The Chancellor could start putting things right today by reducing VAT on refurbishing empty buildings—the rate is currently 17.5 per cent. but it should be changed to the 5 per cent. rate that is charged on new house construction.
Mr. Mark Oates: Does the hon Gentleman agree that the Chancellor could also introduce a greenfield levy, which would dissuade builders from building on greenfield sites? That positive step would help, especially in Hampshire.
Mr. Hunter: I do not know—or care very much—whether we should introduce deterrents in relation to greenfield sites or offer incentives in relation to brownfield sites, but we need a fiscal balance to tempt developers into the urban environment.
The Environment Committee recommended two years ago that the 60 per cent. figure for brownfield development should be a requirement, not a guideline or an aspiraton. That figure would determine the amount of development in each planning authority. My hon. Friend the Member for Totnes (Mr. Steen) is introducing a private Member's Bill that would require local authorities to undertake urban capacity studies and to publish audits of derelict, vacant or underused sites.
When the Secretary of State made his statement on 7 March, he sought to reassure, but he failed to do so in relation to Hampshire. He gave the figure of 43,000 houses a year in the south-east outside London. Previously proposed distribution means that the associated provisions will increase the requirement for Hampshire by more than 1,200 houses a year, compared with the original Serplan proposals. The Secretary of State's plan, monitor and manage concept is nothing new and his five-year strategy will undermine the planning and development of key service infrastructure. From Hampshire's point of view, his objective of 60 per cent. brownfield site development is a confidence trick. It is small wonder that the people of Hampshire are angry and disillusioned with the Government.
12.13 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): I am hesitating because the hon. Member for Basingstoke (Mr. Hunter) informed me before this debate that two other hon. Members wanted to speak, but that does not appear to be the case. No matter.
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I congratulate the hon. Gentleman on securing this debate. He raised an important subject that is of concern to the Government and to local people, wherever they live. Housing provision in structure plans is always likely to be contentious with regard to the amount of provision to be made and to the location of new houses. Those who seek to ensure that housing needs can be met—the Government and those at local level—and those who live in areas where future development may take place usually have competing views.
The hon. Gentleman outlined some of his constituents' anxieties, which arise predominantly in relation to the proposals in the review of the county structure plan, which is due to be adopted later this month. The document identifies four major development areas. The proposal is that they will be the principal locations for new housing development in the period up to 2011. One of those areas, as he acknowledges, is Basingstoke.
I know that progress on the review plan has not been straightforward. It was introduced by the county council in 1996 and initially made some progress through the early stages, including its examination in public that year. The panel report followed in 1997, when two new authorities were created in Hampshire, as a result of which the review plan became the joint responsibility of Portsmouth and Southampton councils, together with the county council.
The authorities reached substantial agreement early on how they might deal with the recommendations made by the examination in public panel. However, as I said, the conclusions on housing provision provoked contention between the authorities, and there followed a long period during which they failed to reach agreement on the overall level of housing provision. I mention that because there is a history of contention at local level about some of the issues covered in the plan. Later, I shall challenge the hon. Gentleman's assertion that the issues faced by his constituents in Basingstoke are solely the result of a top-down approach by the Government to what the response to housing need in his county should be—they are not.
Central to consideration of the plan is the extent to which it conforms to regional planning guidance, as outlined in RPG9. The current guidance, which the review plan must take into account, was published in 1994. It covers the period from 1991 to 2006 and sets out indicative figures for housing provision for the region, down to county level. The housing requirement for Hampshire is given as 6,133 new homes a year over that period.
At the outset, my right hon. Friend the Secretary of State lodged an objection to the review plan. He considered that the proposed provision, which was substantially below that suggested in the regional guidance, needed full justification. The first modifications introduced by the three structure plan authorities in May 1999 proposed a base-line figure of 80,290 dwellings for the plan period from 1996 to 2011. Those were to be distributed among the districts, including the major development areas. A reserve figure of 10,000 dwellings was also proposed for land that would be released, if needed. My right hon. Friend objected to the proposals because he considered that the arguments put by the authorities were not sufficiently strong to justify a level of provision that was 14,000

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dwellings lower than that indicated by the regional guidance. He also objected to the fact that the reserve provision of 10,000, which should have been allocated on an indicative basis, had not been allocated on that basis in the development plans.
The structure plan authorities responded positively to the objection and produced further modifications in October 1999. Those modifications proposed an overall provision of 94,290 dwellings and, within that, a reserve provision of 14,000 dwellings distributed around the districts, as required by the guidance. My right hon. Friend considered that that met his earlier objection and did not oppose the new policy, which was designed to allow the release of the reserve provision. I emphasise that use of the reserve would be justified only when there was a compelling argument for it. In other words, it is headroom and not necessarily part of the core provision.
The distribution of the reserve allocation has meant that some authorities in Hampshire now have an additional requirement that was not present when the structure plan authorities produced their first modifications in May 1999; Basingstoke is one such authority. Within its allocation of 12,060 dwellings for the period from April 1996 to March 2011, provision is made for a major development area of 4,000 dwellings in the period from 2001 to 2011.
In welcoming the further modifications by the structure plan authorities, my right hon. Friend made it clear that he did not oppose the objective of the new reserve allocations policy; he did not comment either way on the distribution proposed. It is for the structure plan authorities, with their local knowledge, to distribute structure plan provisions in the district, and they are best placed to undertake the task. They must take into account the principles of sustainable development as set out in the policy guidance and consider where major development is to be located in relation to existing or proposed public transport infrastructure, so as to minimise reliance on the car.
In future, development plans will be reviewed in the light of the new regional planning guidance, which the Secretary of State will issue for consultation. It was announced that the proposed annual rate of new dwellings in the south-east outside London will be 43,000 houses a year. Better use of land and better layout will reduce the land take so that new allocations of land will not be needed. It will be for the authorities, supported by their new powers, to plan the mix and location of housing to meet the need for a wider variety of dwellings and to reduce land take at the same time. I hope that Opposition Members will support the authorities in that task and not propose a return to past policies.
The hon. Member for Basingstoke made some political points about the expected regional planning guidance and the 43,000 houses. As he knows, the regional planning guidance process is expected to lead to an agreed regional target for net additional dwellings, subject to review. The Serplan estimate was discussed in examination in public, but in the panel's view it was an underestimate of need and capacity. We agreed, but not to the extent that the panel suggested.
I reject the hon. Gentleman's contention that plan, monitor and manage is not new or that it is a subterfuge. It is a fundamentally new approach and, in
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implementing it, we propose a rate of growth for the south-east outside London of the rate to which he alluded. It is an on-going rate of development and it will be reviewed every five years.
I take issue, too, with the hon. Gentleman's contention that incorporating a review process creates uncertainty. It does not; it means that we can respond flexibly to the real world. We can say not that we must have X number of houses, come what may, by 2016, but that at present our assessment of local need and of the gap between need and provision is that 43,000 dwellings a year for the first five years will meet the need but circumstances may change and we will review the situation. That is planning with flexibility, not with uncertainty.
I want to dispel the myth that we are planning only for the next five years and abandoning any responsibility for the longer term. The regional planning guidance will not be a five-year plan; it will show the rate of building to be applied through the plan period, which will be reviewed at least every five years and sooner if circumstances warrant it. The annual rate represents a benchmark that is monitored continuously and reviewed every five years. It is regrettable that the Opposition cannot accommodate an approach that, on account of its potential for flexibility and responsiveness on the part of the Government and local planning authorities, deals with a big issue—a situation of genuine need. Opposition Members appear to want a completely rigid approach.
Let us consider the Opposition's approach. It does not seem to admit that X number of houses will be needed by 2016. It is an approach that says, "We do not want any more housing in our area. Let parochial interests alone determine the amount of provision." They claim that it is a more responsive, bottom-up process, but in practice it is little more than a NIMBYists' charter. It battens down the hatches, saying, "Sorry, we are full up in Hampshire. We do not want to recognise the needs of local people."
Mr. Hunter: The Minister has entirely misunderstood the point that I made. The service infrastructure has to be planned in advance and I point no further than to the provision of primary schools. The problem in Hampshire is that planning and delivering a new primary school takes a number of years and I dare say that that applies all over the country. If a local education authority does not know what the demand for primary school places will be, how can it decide in advance to invest the money in building primary schools?
Ms Hughes: The recently published planning policy guidance PPG3 makes clear the extent to which the infrastructure of all kinds that will be needed to support further housing development in all parts of the country must be a material consideration at all levels of the development planning process. We recognise that, but the fact that the infrastructure does not exist to such an extent at present does not mean that our response should be not to plan for more housing. Instead, we must consider how to accommodate those difficult issues and competing imperatives, and consider ways to plan flexibly and responsively for housing need and the need for consequential planning.
Mr. Viggers: The Government came to power prating about integrated transport. The Minister's speech

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would have carried more conviction if she had mentioned the contribution that integrated transport could make to ameliorating the housing situation in Hampshire.
Ms Hughes: That is an extremely important issue, which the Government have pressed strongly. It is dealt with in PPG3 and has been anticipated by the planning authorities. They have tried to accommodate it in the plans that we are discussing. They propose that 30 per cent. of the anticipated housing need be met mainly around the four areas designated for major development. They are located on major transport modal corridors and were selected precisely because they reduce travel by private transport and maximise the potential for using the existing transport infrastructure.
On the brownfield issue, when the proposed changes to Serplan's draft regional planning guidance are published next week, it will be seen that areas such as the Thames gateway and other areas for economic regeneration will be given priority. That will apply in Hampshire, too. There is also the unrealised potential for Hampshire to reconsider the designation of land in its current plan and further to increase the provision for housing on previously used land. The 60 per cent. brownfield target is a national target. We have always acknowledged that the figure will not necessarily be achieved in every county and perhaps not in every region. It is a national target and there will be local variants in the extent to which the contribution to that national target is reached. These are complex issues, but unlike the previous Government we are not ducking them. We are proposing a thorough, robust but flexible approach to some of the most difficult problems that face people in the hon. Gentleman's area and nationally in the next 10 to 15 years.

Parish and Town Councils
12.30 pm
Mr. David Drew: I am delighted to have a second opportunity to talk about the future of parish and town councils following a debate that I initiated just over a year ago. I shall not speak for long because 1 know that my hon. Friend the Member for North-West Leicestershire (Mr. Taylor) would also like to speak. We should like to respond to a campaign launched by the official Opposition to say that the Government are attempting to abolish parish and town councils. As we are both councillors, we hope to put across the authentic voice of local councillors today. I should also like to put a positive slant on what these councils do and can do.
It first came to my notice some weeks ago that it was being suggested that the Government were considering abolishing these councils. That came as a shock to me as someone who continues to sit on Stonehouse town council in my constituency. The Stroud Conservative association has organised a conference this weekend to consider local government and the environment. I have no problem with that, but it has sent out a letter, which starts:
Government Threat to Abolish Parish Councils and Town Councils
As you may know the Government is currently considering whether to abolish Parish Councils. It has been suggested that 'neighbourhood forums' will replace them.
'Neighbourhood forums' are meetings where any resident can attend to talk about local issues and make comments and suggestions about any council service. This would be the end of representative democracy and accountability at this most local level. Furthermore, too many—indeed most—might not feel able or willing to attend such meetings and they would therefore lose their democratic voice.
That is an example of some of the nonsense that is being put abroad. I hope that my hon. Friend the Minister can confirm that that is not the case and that we can look forward to enhanced powers at this, the first, not the lowest, level of democracy.
The campaign may emanate from some of the press coverage given to the comments of my right hon. Friend the Minister for the Environment at the last Labour party conference. I went to all the conference gatherings that he attended and he made three speeches that related to this area. Unless I was at different meetings, on no occasion did I hear him talk about abolishing parish councils. He talked about some of the problems, such as getting people to stand and to take their due responsibility and the ways in which parish councils could be more effective by working together. That is something with which I would totally concur. On no occasion did I hear him say, "We intend to abolish parish councils." Again, I wonder where the idea came from.
I am not against the idea of neighbourhood forums as they may have their place. In urban areas, where there is under-representation because of the lack of local councils, it may be a way forward, but I see this as an enhancement, not a denigration, of local councils. Everyone from the Prime Minister and the Deputy Prime Minister downwards has said that there is no truth in the story. I know that my hon. Friend the Minister has commented on the Government's views on

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local councils and I am sure that she will speak for herself later. I am using this Adjournment debate to set the record straight and to look positively at the issue.
For good or ill, the Government have created an additional 50 parish councils since coming to power in 1997, which demonstrates their interest in this area and suggests that they want to increase the number rather than reduce it. I will now deal with the positive agenda. During my 13 years as a parish councillor, I have realised that parish councils can be a source of considerable local activity and continual local good. We await the rural White Paper, which I hope will cover local government in rural areas—not only parish councils, but representation in general. It would be good if the Minister could tease out some of the themes that will be in the White Paper.
In my previous Adjournment debate on this topic, we discussed planning and village blueprints as ways for local people to take responsibility for how their communities evolve. There is no better way to achieve that than through the operation of local councils. I am eternally grateful to my good friend Stephen Wright, from the Gloucestershire rural community council, who has frequently suggested countryside stewardship to me as a way of examining how parish councils can enhance their powers and integrate their activities. By providing a parish blueprint, councils can ensure that they maximise their powers. In my previous speech, I made the argument—in which I still strongly believe—that parish councils often do not appreciate the full value of the powers available to them, whether through section 137 and the so-called penny rate or through training and education, by means of which they can lead their communities. Countryside stewardship has now been taken up by the Countryside Agency, so I flag it up as relevant.
It is important to consider enhancing the roles of clerks and councillors to ensure that they can perform the full range of tasks available to them. I wholeheartedly congratulate the Cheltenham and Gloucester college of higher education on its courses for new parish clerks and councillors, which inform them of the opportunities of which they may take advantage. Perhaps my hon. Friend the Minister can set out additional ways in which we can offer training to new and existing parish clerks and councillors, so that they can tackle the challenges that face them.
I would like to identify the relationship between neighbourhood forums and parish councils, because it is clear that those are different bodies and not alternatives. It would be good to know what ideas the Government have for neighbourhood forums and how they may further enhance the first rung of local democracy. I do not see those bodies as a challenge, because they could work in some places by helping parish councils to operate in an integrated manner.
Problems clearly affect this local rung of democracy. I have mentioned that there may be unwillingness to use the powers that exist in statute, and that using such powers should perhaps be encouraged or made the subject of review. I have talked about auditing arrangements at length and my hon. Friend the Minister for Housing and Planning has responded. They are still a cause for concern, but I gather that there has been some progress. The same applies to best value and how it is bedding down in this first rung of democracy.
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There is a debate about how we should situate parish and town councils in the wider reform of local government. I hope that my hon. Friend the Minister will mention that and that the Government will state categorically that they see an important role for those councils, as those of us who are involved in them do. The more that can be done to make that view apparent, the better.
I should like to put on record how important I found my involvement with local councils. All Labour Members have always welcomed the opportunity to talk to parish councils and many of us who represent constituencies with many such councils try to get out and about to do so. I commend Stroud town council for the work that it has done on its local plan analysis, which has been important in drafting the district's overall local plan, and Dursley town council for the work that it has done in setting up its town centre partnership. Those are examples of the good work that town councils can do. Leonard Stanley parish council has led the attempts to reopen the village post office. I could cite many other similar examples.
I hope that my hon. Friend the Minister will clarify the position and confirm that parish councils have not only a past and a present but a strong future and that they will be developed in many different ways.
12.40 pm
Mr. David Taylor: I congratulate my hon. Friend—and fellow parish councillor—the Member for Stroud (Mr. Drew), who was elected on the same day as me in May 1997, on securing this debate. I am immensely encouraged because my hon. Friend the Minister has replied positively to the questions on the future of parish and town councils that I have asked her, and now is the appropriate time to underline the current position.
I was lucky enough to catch your eye, Mr. Deputy Speaker, during the first of this morning's debates on protecting endangered species. I believe that there is no link between that debate and this one, because parish councils still have much to offer.
Mr. Deputy Speaker (Mr. John McWilliam): Order. I hope that the hon. Gentleman is not implying that I am the link.
Mr. Taylor: There is no link between the two debates, Mr. Deputy Speaker.
My fact-finding visits to all but two of the 25 parish councils in North-West Leicestershire have convinced me that, as my hon. Friend has said, they are not the lowest tier of democracy; they are its front line in rural areas. At their best, they can respond quickly, as they have done in rundown mining areas, where they have initiated economic regeneration and environmental restoration projects and tackled problems of social cohesion.
Parish councils can do an awful lot and have much to offer. They are the starting point for citizenship and political inclusion in areas that sometimes feel remote from the county halls or the local council offices of this world. I hope that my hon. Friend the Minister will tell us, and that the rural White Paper will make it clear, that community councils will not become mere consultative

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groups. I welcome the possibility of creating rural forums, but they should be complementary to parish councils, which should continue to be independent and elected and have real powers. I suggest an additional power: a right of appeal against certain contentious planning permissions granted by planning authorities. Such a power is long overdue.
I share the view expressed by my hon. Friend the Member for Stroud that it is a great pity that the countryside lobby has attempted to hijack parish councils; it has falsely claimed that our policies threaten parish councils. It is not Panglossian to suggest that most parish councils do an exceptionally good job and are responsible, accountable and efficient. There are problems, but we can tackle them and revive democracy in those areas where it has perhaps lapsed in recent times. At their best, parish councils are active and self-confident community leaders. Their role and influence could, and should, be extended.
I am sufficiently confident about the Government's priorities in such matters to expect a positive view of the role of parish councils in my hon. Friend the Minister's reply and in the rural White Paper. The Government have ideas about how parish councils' powers might be extended and how to transfer best practice to other parts of the country. I am proud to be a parish councillor and hope that I shall long have that role, perhaps in parallel with my role as a Member of Parliament—but that remains to be seen. Parish councillors such as my hon. Friend the Member for Stroud and I, as well as others who are interested in the Minister's comments, look forward to some reassurance. I hope that we can lay to rest the canard that has sprung up—if that is not mixing three metaphors.
12.45 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Beverley Hughes): In replying to an Adjournment debate, it is customary to thank the hon. Member who secured it. I always give such thanks sincerely, but on this occasion I do so with particular sincerity because my hon. Friend the Member for Stroud (Mr. Drew) has not only enabled this important issue to be aired but, in the light of certain press reports and the use in recent months of parish councils as a political football by various bodies, including the Conservative party, enabled us to make clear our record on and proposals for parish and town councils and scotch completely the wholly unfounded rumours that have been circulated for political ends.
I am particularly grateful to my hon. Friend for his comments on speeches made by my right hon. Friend the Minister for the Environment at various fringe meetings. My hon. Friend was in attendance and can testify that subsequent press reports were inaccurate, to say the least. That is extremely helpful and reflects my right hon. Friend's repeated comments on what was said at those meetings.
In some ways, I am a little surprised that the media and various lobbies continue to suggest that the Government are planning to abolish parish councils. As my hon. Friends have noted, my colleagues and I have stated in Parliament and in numerous items of ministerial correspondence that the Government have
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no plans to abolish town and parish councils. My right hon. Friend has made the same point in the national press. I hesitate to say, "Read my lips", although I could, because the statement is absolutely true. My hon. Friends speak from considerable personal experience, as my hon. Friend the Member for Stroud is a parish councillor and vice-president of the National Association of Local Councils, an organisation with which the Government have a good relationship, and my hon. Friend the Member for North-West Leicestershire (Mr. Taylor) is also a parish councillor of long standing.
Our policy on parish and town councils was set out in the White Paper "Modern Local Government: In Touch With the People". It stated that parish councils are
an essential part of the structure of local democracy in this country
and
will continue to play a key role in many of our towns and villages.
That is our policy.
In setting the record straight on that policy, we should explain our record and our intentions. Our commitment to the parish tier of local government is demonstrated by the creation of 62 parish councils since we came to power. In the past nine months, it has been my pleasure to sign many orders that created those parish councils. Moreover, we propose to create a further 22 parishes in the next few months. In the first three years of this Government, we expect to have created between 80 and 85 new parish councils. That record speaks for itself, in terms of our commitment to existing parish councils and the future of parish and town councils. I should make it clear that, as far as the Government are concerned, dynamic parish and town councils have a key role in the democratic constitution of this country.
My hon. Friends raised our local government modernisation agenda and I shall make a few comments on how parish councils will fit into that. They represent the tier of government closest to the citizen. They are in touch with people and with how they live their lives. I take the point that this is not an issue for rural areas only. There is a town council in my very metropolitan urban constituency in Manchester.
However, the pattern of life in rural areas is changing rapidly and parish councils must be flexible to cope with that change. They must be free of old-fashioned, rigid working practices; they must put people first. They have many strengths and traditional values on which we need to build, but there is scope for development. There is no room for complacency at any level of local government. Too many local councillors are elected unopposed and too few people vote in local elections.
Our response is not that we see no future role for parish and town councils but that their role will be very important. We need to develop and strengthen their potential because of their position in the democratic structure as a voice for local people. We must strengthen the democratic link between parish councillors and the people who elect them. That is why the White Paper on local government is so relevant to town and parish councils.
Many other provisions that we have introduced, as well as those in proposed new legislation, are relevant to parish councils. The duty of best value will apply only to the larger parish and town councils, but we want all councils to adopt its spirit because they also play an important role in delivering local services. That spirit is

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embodied in the drive for continual improvement in local services and is a way in which councils at all levels—especially parish councils—can demonstrate to local people their ability to provide services and to strengthen that democratic link.
There are provisions in the new Local Government Bill for a new ethical framework for parish councils. We have listened carefully to parish councils while drawing up those provisions. The councils will be subject to a uniform national code of conduct that all councillors must endorse. That will not demand more, unnecessarily, from parish councillors, but will tell them that they are as important as the other elements of the democratic local government structure. The issues about transparency and demonstrating ethical standards must therefore apply equally to them. We want parish councils to embrace those new ethical standards.
My hon. Friends wanted me to comment on neighbourhood forums, because of the way in which the possibility of their introduction has been used to argue that the Government intend to abolish parish councils. We have no such intention. We are keen to increase community participation in decision making at all levels. That is the core of our aim in strengthening local democracy. Neighbourhood forums may be a way of achieving that in some areas, but we do not intend them to take the place of parish councils.
Parish councils should be at the forefront of identifying their local community's needs and priorities, working in partnership with other bodies in helping to implement innovative, locally determined solutions to local problems. A parish council that is modern in outook, involving local people, will be impossible to ignore. Modern district and county councils need to work with modern partners. Neighbourhood forums may be an option for areas that do not have that layer of local governance. However, in areas that have parish and town councils, those councils fulfil that function more than satisfactorily.
It is not our policy to bring in something new to replace parish councils. Rather, we are considering whether a different forum might provide people living in areas that do not have that level of governance with what those with parish councils already have. It is an addition, an extension, an enhancement, not a replacement.
My hon. Friends particularly wanted me to comment on the rural White Paper. We have consulted widely with parish councils and their representatives on how parish councils can be a focus, particularly for rural communities, and play their part in every aspect of rural governance.
We want the preparation of the rural White Paper to be an inclusive process. In February 1999, we issued a consultation document on rural England, which posed questions on a wide range of rural issues. More than 100 parishes or parish associations responded to that document, and many other responses referred to the role of parish and town councils in developing our policy. It was a consistent view that local people should be
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consulted on policy development and be more closely involved in decision making and in implementing decisions. Many saw parish councils as a neglected resource and felt that they could play a bigger part in representing local interests. They also thought that there was scope for councils to work more closely with other bodies, to take on more service delivery and to have greater powers and bigger budgets.
Concerns were expressed about the accountability of parish councils. This goes back to my point about bringing all parish councils up to the standard of the best to strengthen local democracy. There were also queries about the competence of parish councils and to what extent they were representative of their communities. Some of the responses touched on the issues raised by my hon. Friend the Member for Stroud about the need for training and development for councillors, as well as for clerks and other officers.
We are considering the responses. In preparing the rural White Paper, we are actively considering how we can build into those proposals not only the issues raised during the consultation exercise but the enhanced role that parish councils can play in meeting the White Paper's overall objectives—rural regeneration and improving the quality of life.
I was interested in my hon. Friend's concept of community stewardship, which is something that we are considering and trying to unpack. However, we believe that parishes have now, and will have, a key role to play in many towns and villages as part of the framework to improve the quality of life and achieve regeneration, together with other agents and councils.
An important strength of parish councils is their ability to be a voice for local people. As I have said, this issue runs through the foundation of our modernisation agenda for local government and will be a theme of the rural and urban White Papers. They will set out the building blocks that local areas will need to develop their own priorities and regeneration plans, starting with local views on the problems in their areas and carrying through to implementing the solutions to those problems.
I hope that I have satisfactorily addressed the core issue of this debate, which has clarified the Government's long-stated and often-repeated commitment to the future of parish town councils. We see them as not only playing a general role in future but as a key agent in implementing some of the changes that the Government are trying to introduce to strengthen local governance and to regenerate rural and urban areas. The content of the rural White Paper will become clearer in the summer. I cannot give my hon. Friends detailed proposals on the roles for town and parish councils or other councils, but they are under active consideration and the White Paper will deal with them in detail.
Again, I am grateful to my hon. Friends for providing the opportunity to debate this matter. I hope that I have reassured them and the wider audience of our commitment to parish and town councils.
It being One o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.

ENVIRONMENT, TRANSPORT AND THE REGIONS

  M25
  Mr. Blunt
  To ask the Secretary of State for the Environment, Transport and the Regions how much compensation has been paid and is expected to be paid to householders following the widening of the M25 between junctions 8 and 9. [112543]

  Mr. Hill
  [holding answer 2 March 2000]: I have asked the Chief Executive of the Highways Agency, Mr. Peter Nutt to write to the hon. Member.

  Letter from Peter Nutt to Mr. Crispin Blunt, dated 21 March 2000:
  The Secretary of State for the Environment, Transport and the Regions has asked me to reply to your question about the compensation levels paid and expected to be paid following widening of the M25 between junctions 8 and 9.
  Compensation under part 1 of the Land Compensation Act 1973 is awarded for the effects of the full M25 8–10 widening scheme, which include the provision of road lighting. The estimate of £20M provided last week in reply to your Parliamentary Question 111815 relates to the full 8 – 10 scheme and we do not hold detailed information in the form you require.
  We are however, able to give an indication only as to the levels of compensation already paid to residents living between junctions 8 and 9. This is in the region of £7.052M paid to around 680 claimants, giving an average settlement so far of some £10,300.
  Of those, around 500 claimants live near the porous asphalt section between Leatherhead and Ashtead and have received in the region of £5.9M, an average settlement of £11,508 per claim.
  The compensation still to be paid for the outstanding claims should be in the region of £5.2M. This makes an indicative total in the region of £12.25M for the 8 – 9 section.

  Liquid and Gas Spills
  Mr. Clapham
  To ask the Secretary of State for the Environment, Transport and the Regions how many reported incidents involving liquid and gas spills caused by hose failures there have been in the United Kingdom in the last five years for which figures are available; what was the cost of cleaning up each incident and who met the cost in each case; what the estimated cost was of the(a) environmental damage and (b) property damage caused by each incident; and how many people sustained injuries in each incident. [114220]

  Mr. Meacher
  [holding answer 13 March 2000]: Incidents involving liquid and gas spills are reported to HSE under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995. From April 1996 to date (a period of just under four years), there were 69 incidents defined as "Dangerous occurrences" and "chemical transfer" (including transfer by hose, pipeline or vehicles). Dangerous occurrences include the release of 100kg or more of flammable liquid, or 10kg of a
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  flammable gas or vapour. Information that would allow us to ascertain how many were caused by hose failures and the number of people sustaining injuries is not always recorded or readily available in all cases.

  Mundic (Housing)
  Ms Atherton
  To ask the Secretary of State for the Environment, Transport and the Regions what research his Department has(a) commissioned and (b) evaluated on the incidence of Mundic in housing. [115193]

  Ms Beverley Hughes
  My Department has an on-going programme of research into the better understanding of the deterioration mechanism which affects housing constructed using mundic aggregate. The work is developing methods of testing and assessment to enable the maximum number of houses to be safely accepted by mortgage lenders for obtaining mortgages. Initial recommendations were made in 1994 and 1997 from which the Council of Mortgage Lenders agreed to mortgage about 80 per cent. of houses that had previously been blighted. Further recommendations covering a proportion of the remaining houses will be made in the next few months.

  Company Car Drivers
  Miss McIntosh
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he has to ensure that company car drivers pay their own insurance. [115221]

  Mr. Hill
  None. The law requires the user of a vehicle to have valid insurance cover. It does not require that he pay for it himself.

  Transport Strategy (Gloucestershire)
  Mr. Robertson
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement about the public inquiry in Gloucestershire concerning the transport strategy for the region. [115027]

  Ms Beverley Hughes
  [holding answer 16 March 2000]: The Public Examination of the draft revised Regional Planning Guidance for the South West prepared by the South West Regional Planning Conference, is currently taking place in Exeter. The draft Guidance includes a draft Regional Transport Strategy, which will be examined on 30 and 31 March. The final version of the Guidance including the Regional Transport Strategy, will be issued by the Secretary of State next winter in the light of the advice of the Panel for the Public Examination and following consultation on any significant changes.

  Carbon Monoxide Detectors
  Mr. Robertson
  To ask the Secretary of State for the Environment, Transport and the Regions what investigation he has carried out into the use of carbon monoxide detectors in homes; and if he will make a statement. [115028]

  Mr. Meacher
  [holding answer 16 March 2000]: My Department, with the Health and Safety Executive and the Department of Trade and Industry commissioned the Building Research Establishment to investigate the optimal siting of electrical carbon monoxide (CO) detectors/alarms in domestic premises. The summary report of this work entitled "Evaluation of carbon

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  monoxide detectors in domestic premises" was published in 1999 by HSE. In partnership with some members of the gas industry we are also currently supporting further research work by BG Technology on the sensitivity and long term reliability of electrical carbon monoxide detectors.

  The role of these detectors/alarms is being addressed in the HSE' s fundamental review of the health and safety regime for the installation and use of gas. Currently responses to a discussion document are being evaluated and Ministers should receive a report this Summer.

  My Department's view is that carbon monoxide detectors/alarms have a role to play in reducing risks from carbon monoxide but the need to properly maintain combustion appliances is paramount.

  PPG17 (Sport and Recreation)
  Mr. Bennett
  To ask the Secretary of State for the Environment, Transport and the Regions when he intends to issue for consultation a revised draft Planning Policy Guidance Note 17 (Sport and Recreation). [115376]

  Mr. Raynsford
  I hope to publish a consultation draft soon.

  London Underground
  Mr. Brake
  To ask the Secretary of State for the Environment, Transport and the Regions how much London Transport has spent on external consultants to date in relation to the public-private partnership for London Underground, stating both(a) actual and (b) budgeted costs. [115420]

  Mr. Hill
  I refer the hon. Gentleman to the answer given to my hon. Friend the Member for Harrow, West (Mr. Thomas) on 21 December 1999,Official Report, column 525W. I will provide an up-dated figure in due course, in line with the commitment we have given to the House.

  Local Government Bill
  Mr. Coaker
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the transparency of the decision-making process of those authorities which have experimented with the cabinet-style arrangements envisaged by the Local Government Bill [Lords]. [115491]

  Ms Beverley Hughes
  We have made no general assessment of experimental arrangements. However, any such experiments have been carried out within the existing statutory framework which was not designed to deliver the transparency of decision-making which will be put in place by our proposals in the Local Government Bill.

  Mr. Coaker
  To ask the Secretary of State for the Environment, Transport and the Regions what steps he will take to ensure transparency in the decision-making process of the cabinet-style arrangements envisaged by the Local Government Bill [Lords]. [115489]

  Ms Beverley Hughes
  The arrangements we are proposing in Part II of the Local Government Bill 468W
  and draft guidance are designed to ensure transparent and inclusive decision-making. These new arrangements involve:
  an inclusive process of formulating a council's policy framework and budget, which will be the responsibility of the full council in public;
  publicly known individuals—the executive—being personally responsible for implementing this framework and budget;
  accurate recording of decisions and their reasons, and timely publication of these and of the background and factual papers available to the decision-maker(s); and
  powerful overview and scrutiny committees, meeting in public:
  to discuss and make recommendations on the development of policies; and
  to hold each executive member to account for what he or she has done and is planning to do.

  Mr. Coaker
  To ask the Secretary of State for the Environment, Transport and the Regions what assessment he has made of the responses to the Consultative Draft Guidance and Regulations with respect to the Local Government Bill [Lords]. [115490]

  Ms Beverley Hughes
  We have received very many helpful and constructive responses to the consultative draft guidance and regulations on new constitutions for councils. We are currently analysing these responses in detail and will consider them all carefully when revising the drafts for further consultation.

  Climate Change Levy
  Mr. Green
  To ask the Secretary of State for the Environment, Transport and the Regions how many meetings his officials have had with European Commission officials on the climate change levy. [115264]

  Mr. Meacher
  [holding answer 17 March 2000]: Recognising the crucial importance of state aids guidelines for our climate change levy policy, my Department's officials have met five times since September with the European Commission to discuss the climate change levy. They will continue to have further meetings to take forward our notification of the arrangements proposed for the levy.

  Westminster Station
  Mr. Kaufman
  To ask the Secretary of State for the Environment, Transport and the Regions if he will call for a report from London Underground as to why lifts are not operating, walls are unfinished and netted off, and considerable areas have been left unsightly, untidy and strewn with garbage at Westminster underground station. [115136]

  Mr. Hill
  [holding answer 17 March 2000]: I understand from the London Underground that three of the five lifts at Westminster station are in service. The work required, and safe methods for carrying it out, on the remaining two are under discussion with contractors and HM Railways Inspectorate. The walls of the station are finished to the approved architectural design. The netting is to catch any foreign objects, which might be thrown by passengers. The Bridge Street underpass is currently cordoned off by contractors to allow for the permanent lighting to be installed; this may look untidy until the work is completed.

  Hedges
  Mr. Jim Cunningham
  To ask the Secretary of State for the Environment, Transport and the Regions when he will announce the results of the consultation on the Government's proposals for the control of hedges; how many letters of support he has received from individuals and organisations with regard to each of the four options outlined in his proposals; which option gained the most support; which option he will seek to implement; and what his timescale is for putting forward his proposals. [115242]

  Mr. Meacher
  [holding answer 20 March 2000]: The deadline for responses to the consultation paper "High hedges: possible solutions" was 31 January. We are currently analysing the thousands of replies that we have received, and so are not yet in a position to provide the information requested. We will be taking account of all comments in considering the best way forward on this issue. We will announce the results of consultation, and our conclusions, when that consideration has been completed.

  London Mayoral Election
  Mr. Jenkin
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to his answer of 14 March 2000,Official Report, column 120W, on what date the Greater London Returning Officer made (a) a provisional and (b) a firm order for the necessary paper for the Greater London mayoral elections booklet. [115510]

  Mr. Hill
  [holding answer 20 March 2000]: A provisional order for the printing of this booklet, including the paper, was placed on 2 March. A firm order was placed by the Department on 7 March.

  Ms Buck
  To ask the Secretary of State for the Environment, Transport and the Regions what briefing from him is available for prospective mayoral candidates for the Greater London Authority election. [116033]

  Mr. Hill
  Briefings for prospective Mayoral candidates on organisational and administrative matters are available on request to the Greater London Authority Transition Team.

  Rail Services
  Kali Mountford
  To ask the Secretary of State for the Environment, Transport and the Regions what provision he is making for the cost of rail services secured by English passenger transport executives in 2000–01. [116034]

  Mr. Hill
  A special grant report has been laid before the House today for the payment of Metropolitan Railway Passenger Services Grant in 2000–01 to English Passenger Transport Authorities (PTAs). The main purpose of the grant is to provide support to those PTAs for the local rail services provided by franchise operators and secured by the PTAs' Passenger Transport Executives under the terms of franchise agreements with franchisees and the Director of Passenger Rail Franchising.

  Partnership Investment Programme
  Mr. Hilary Benn
  To ask the Secretary of State for the Environment, Transport and the Regions what plans he 470W
  has to seek an amendment to the Treaty of Rome to allow the continuation of the gap funding mechanism of the Partnership Investment Programme; and if he will make a statement. [115504]

  Ms Beverley Hughes
  We are working with the European Commission to try to identify a means of continuing to work in partnership with the private sector to regenerate derelict sites and buildings, within the existing Treaty rules. Ministers have recently held discussions with Commissioner Monti on the problems we face since the Commission ruled that the Partnership Investment Programme (PIP) breached the State aid rules. These discussions are continuing at official level.

  Sewerage Agency Payments
  Mr. Paul Marsden
  To ask the Secretary of State for the Environment, Transport and the Regions, pursuant to the letter to him from the hon. Member for Shrewsbury and Atcham dated 18 February on sewerage agency agreements, if he will ensure that regulations are introduced to preserve local authority employees' pension entitlements; and if he will make a statement. [115730]

  Ms Beverley Hughes
  Under the provisions of the Local Government Pension Scheme Regulations 1997, local authority employees who are members may already preserve their pension entitlements, indexed in line with inflation, on leaving. Alternatively, the regulations also allow for suitable actuarial transfers to be arranged to provide an equitable service award in any new scheme.

  The extent to which employees in local authorities work on the delivery of privatised water company services through agency agreements, and the availability of alternative broadly comparable pension arrangements to those employed under them, is currently being established with the co-operation of the United Kingdom Steering Committee on local government pensions. The results of that survey will be considered carefully.

  Commission for Integrated Transport
  Mr. Syms
  To ask the Secretary of State for the Environment, Transport and the Regions if he will give an itemised breakdown of the £1,550,000 budget of the Commission for Integrated Transport in 1999–2000. [115635]

  Mr. Hill
  The Commission for Integrated Transport's provisional budget for 1999–2000 had to be allocated well before its launch. A sum of £1.5 million was originally allocated from within DETR's programme budget for this purpose.

  Because CfIT was not launched until July 1999, however, it will spend much less than the £1.5 million figure. Its projected spend to the end of this financial year is £269,000.

  £

  Projected spend to end of March 2000

  Salaries

  90,000

  Consultancy

  125,000

  Travel and Subsistence

  24,000

  Hospitality

  5,000

  Publicity

  25,000

  Total

  269,000

  Local Government Finance
  Jean Corston
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on progress with the review of local government finance. [115998]

  Ms Armstrong
  Joint reports prepared by central and local government officials on the revenue grant distribution and capital finance reviews will be discussed at the next meeting of Central Local Partnership on 22 March. Copies of these reports will be available from the House of Commons Library and the DETR and LGA websites after the meeting.

  Decisions about the merits of the various options for reform will not be taken until we have consulted widely this summer.

  Railway Yards (Handheld Radios)
  Mrs. Dunwoody
  To ask the Secretary of State for the Environment, Transport and the Regions if he will make the issuing of licences for the use of handheld radios on railway yards site-specific. [114514]

  Ms Hewitt
  I have been asked to reply.

  The issue of licences for railway operational purposes requires that hand radios are listed in the licence, according the site where they will be used.

TRADE AND INDUSTRY

  EU Trade Agreements
  Dr. Starkey
  To ask the Secretary of State for Trade and Industry what steps the European Community takes when, in respect of existing trade agreements with other countries, there ceases to be an agreed definition and interpretation of their territorial scope of applicability. [115314]

  Mr. Caborn
  The Community continues to apply agreements while they remain in force.

  MedicAlert
  Mrs. Gillan
  To ask the Secretary of State for Trade and Industry what safeguards he will put into place to ensure that(a) charities and (b) MedicAlert will not be faced with a third change to telephone numbers and consequent expenses; and if he will make a statement. [115120]

  Ms Hewitt
  Numbering is a matter for the Office of Telecommunications (Oftel). The current change to London telephone numbers is the result of Oftel's wide 1996 consultation of consumers, businesses and other organisations. The new scheme ensures that there is now a large amount of additional capacity to meet new demand (for example London will now have 80 million numbers behind the 020 code). The extra capacity created is far in excess of forecast demand and will last for the foreseeable future. However, it is impossible to predict all the new services which technological change and market developments may bring into being this century. It is therefore not possible for Oftel to be certain that it will never need to change the scheme further, or that charities, including MedicAlert, will never be faced with such a472W
  change again. Oftel has ensured the current change has been widely publicised in advance to allow organisations to plan for it.

  British Astronauts
  Mr. Paul Marsden
  To ask the Secretary of State for Trade and Industry if he will make a statement on when he expects the next British astronaut to take part in a space mission. [115192]

  Ms Hewitt
  Following wide consultation with industry and the science sector, the Government concluded that the provision of an astronaut did not best meet our space priorities of commercial exploitation and good space science. Within the inevitably limited funds we have available, we must prioritise in the best interests of the British space science community and industry. A British astronaut is not therefore anticipated in the near future. It is still possible, however, for British nationals to apply for overseas astronaut training schemes.

  Israel (EU Agreements)
  Dr. Starkey
  To ask the Secretary of State for Trade and Industry if, prior to the conclusion of an internationally-recognised final settlement between Israel and its Palestinian and Syrian neighbours, the Commission has authority to conclude and implement agreements on behalf of the European Community without the consent of member states that would allow the benefits of trade preferences to accrue to Israeli settlements and enterprises established in the territories occupied by Israel since 1967. [115315]

  Mr. Caborn
  No.

  Dr. Starkey
  To ask the Secretary of State for Trade and Industry if Israel and the European Community established a single specific definition and interpretation of the territorial scope of their agreements' applicability prior to concluding them. [115313]

  Mr. Caborn
  No.

  Utilities Bill
  Dr. Cable
  To ask the Secretary of State for Trade and Industry, pursuant to his answer of 10 March 2000,Official Report, column 839W, what consultations, on what dates, he held with consumer groups concerning the decision to remove the provisions concerning telecommunications and water industries from the Utilities Bill; on what date or dates he received representations from the National Consumer Council and the Consumers Association; and if he will make a statement. [115383]

  Dr. Howells
  There were no consultations. Representations were received from the National Consumer Council on 1 March and from the Consumers Association on 29 February.

SOCIAL SECURITY

  Family Credit (Southwark)
  Ms Harman
  To ask the Secretary of State for Social Security what was the average payment per week of
  473W
  (a) Family Credit and (b) child care allowance via Family Credit in Southwark in the last year of Family Credit. [114839]

  Angela Eagle
  It is not possible to provide a reliable estimate of the average Family Credit award at a local authority level. However, for Great Britain as a whole, the average amount of Family Credit received was £62.05 at August 1999 and, for the London Government Office Region, the average amount of Family Credit received at August 1999 was £66.16.

  Within Family Credit, eligible child care is treated as a disregard and can be offset against earnings when Family Credit is calculated. Due to the relatively small numbers, it is not possible to provide a reliable estimate of the amount of child care disregard either by local authority or by region. However, for Great Britain as a whole, the average amount that recipients benefited from the child care disregard was £22.04 at August 1999.

  Notes:

  1. Average weekly payment figures are based on an average of four quarters of November 1998 to August 1999.

  2. Numbers are based on a 5 per cent. sample and are therefore subject to a degree of sampling error.

  3. Family Credit was replaced by Working Families Tax Credit in October 1999.

  4. The amount of Family Credit quoted represents the average amount for all Family Credit recipients—including those with the child care disregard.

  Source:

  Family Credit 5 per cent. sample of awards.

  Ms Harman
  To ask the Secretary of State for Social Security how many people in Southwark were in receipt of(a) family credit and (b) the child care allowance in each of the last five years. [114835]

  Angela Eagle
  The information is in the tables.

  Number of Family Credit recipients in Southwark local authority area, August 1995–99

  Thousand

  Year

  Family Credit recipients

  August

  1995

  1.6

  1996

  2.0

  1997

  2.1

  1998

  2.5

  1999

  2.6

  Notes:

  1. Caseload figures are taken at a point in time for which the month is August.

  2. Sample size is 5 per cent. As the numbers are based on a relatively small number of sample cases the estimates are subject to a high degree of sampling error i.e. for an estimate of 2,000 the true value will lie somewhere in the range 1,628 to 2,382.

  3. Family Credit was replaced by Working Families Tax Credit in October 1999.

  4. Local authorities are assigned by matching the postcode against the 1999 version 1 of the postcode directory.

  5. Numbers are rounded to the nearest hundred and expressed in thousands.

  Source:

  Family Credit 5 per cent. sample of awards
  474W

  Family Credit recipients benefiting from the child care disregard, London Government Office Region August 1995–99

  Thousand

  Year

  August

  1995

  2.0

  1996

  2.7

  1997

  3.1

  1998

  3.7

  1999

  4.8

  Notes:

  1. Caseload figures are taken at a point in time for which the month is August.

  2. Numbers are based on a 5 per cent. sample and are therefore subject to a degree of sampling error.

  3. Family Credit was replaced by Working Families Tax Credit in October 1999.

  4. Numbers are rounded to the nearest hundred and expressed in thousands.

  Minimum Income Guarantee
  Mr. Stevenson
  To ask the Secretary of State for Social Security how many pensioners in(a) Stoke on Trent, South parliamentary constituency and (b) the City of Stoke on Trent are in receipt of the minimum income guarantee. [115081]

  Mr. Rooker
  The information is in the table.

  Income Support pensioners aged 60 and over, by parliamentary constituency/local authority: November 1999

  Thousand

  Area

  Pernsioners aged 60 and over

  Stoke on Trent, South parliamentary constituency

  2.9

  Stoke on Trent local authority

  8.3

  Notes:

  1. Samples size 5 per cent., therefore subject to sampling error.

  2. Pensioners are defined as benefit units where either the claimant and/or their partner is aged 60 years or over.

  3. Figures have been rounded to the nearest hundred and quoted in thousands.

  Source:

  Income Support Quarterly Statistical Enquiry, November 1999

  Severely Disabled Children
  Mr. Ennis
  To ask the Secretary of State for Social Security what estimates he has made of the number of severely disabled children aged three and four years who will benefit from the provisions of the Welfare Reform and Pensions Act 1999 in(a) Barnsley and (b) Doncaster. [115199]

  Angela Eagle
  This information is not available in the format requested. Such information as is available is as follows.

  In 2001–02, we estimate that approximately 7,000 severely disabled children aged three or four in Great Britain will become entitled to the higher rate mobility component of Disability Living Allowance (DLA). If the proportion of gainers in the areas requested were in line with the proportion of all DLA higher rate mobility recipients in these areas, about 60 children would qualify in both Barnsley and Doncaster.

  Single Pensioner Income
  Mr. Gardiner
  To ask the Secretary of State for Social Security on what basis he has calculated the net average income of single pensioners at £132 per week. [115115]

  Mr. Rooker
  The £132 per week figure refers to mean incomes of single pensioners from all sources, after tax payments and before housing costs have been deducted. The figure quoted is for the financial year 1997–98 and is expressed in July 1997 prices.

  The figure is taken from "The Pensioners' Incomes Series 1997/8" (PI) which is based on data from the Family Resources Survey (FRS). The PI series looks at cash incomes directly received by pensioners in Great Britain. The FRS does not collect information on people living in institutions, such as prisons or nursing homes, therefore the PI series does not cover these people.

  Family Credit (Norwich)
  Dr. Gibson
  To ask the Secretary of State for Social Security what was the average payment per week of(a) Family Credit and (b) child care allowance via Family Credit in Norwich in the last year of Family Credit. [115099]

  Angela Eagle
  It is not possible to provide a reliable estimate of the average Family Credit award at a local authority level. However, for Great Britain as a whole, the average amount of Family Credit received was £62.05 at August 1999 and for the East Government Office Region the average amount of Family Credit received at August 1999 was £61.29.

  Within Family Credit, eligible child care is treated as disregard and can be offset against earnings when Family Credit is calculated. Due to the relatively small numbers, it is not possible to provide a reliable estimate of the amount of child care disregard either by local authority or by region. However, for Great Britain as a whole, the average amount that recipients benefited from the child care disregard was £22.04 at August 1999.

  Notes:

  1. Average weekly payment figures are based on an average of four quarters of November 1998 to August 1999.

  2. Numbers are based on a 5 per cent. sample and are therefore subject to a degree of sampling error.

  3. Family Credit was replaced by Working Families Tax Credit in October 1999.

  4. The amount of Family Credit quoted represents the average amount for all Family Credit recipients—including those with the child care disregard.

  Source:

  Family Credit 5 per cent. sample of awards.

  Government Pensions Liability
  Mrs. Lait
  To ask the Secretary of State for Social Security what the Government's liability is for(a) the basic state pension, (b) SERPS and (c) state second pension in (a) 2000, (b) 2005, (c) 2010, (d) 2015, (e) 2020, (f) 2030, (g) 2040 and (h) 2050 at current real values. [115102]

  Mr. Rooker
  The information is in the table.476W

  Estimated future liability for basic state pension, state earnings-related pension (SERPS) and state second pension— 1999–00 prices

  £ billion

  Year

  BSP

  SERPS

  State second pension

  Total

  2001–01

  33.7

  4.9

  0.0

  38.6

  2005–06

  34.8

  7.0

  0.1

  41.9

  2010–11

  37.5

  8.6

  0.9

  46.9

  2015–16

  39.1

  9.4

  1.9

  50.4

  2020–21

  40.4

  9.7

  3.1

  53.1

  2030–31

  48.7

  9.5

  7.7

  65.8

  2040–41

  52.2

  6.9

  12.9

  72.0

  2050–51

  50.5

  3.6

  19.0

  73.1

  Notes:

  1. The figures have been calculated based on the following assumptions:

  SERPS expenditure is based on the assumption that State Second Pension is introduced from 2002 and so any SERPS expenditure after that date is on earlier accruals.

  SERPS expenditure does not include the effects of the Inherited SERPS scheme and accompanying deferral announced on 15 March 2000.

  State Second Pension expenditure assumes the scheme becomes flat rate from 2006 onwards.

  From 2006 everyone aged under 40 and earning over £9,500 (in 1999 earnings terms) chooses to contract out of State Second Pension. Contracting out is based on the proposals contained in the current Bill.

  2. Increases in contracted out rebates as a result of introducing State Second Pension and Stakeholder pensions are not included in the table.

  3. The figures are consistent with those in the Government Actuary Department's report on the Child Support, Pensions and Social Security Bill 1999.

  4. As the costs are based on long-term estimates and assumptions the figures given for early years, particularly 2000–01, are very broad brush estimates and are subject to uncertainty.

  5. The figures are shown rounded to the nearest £0.1 billion and may not sum to totals due to rounding.

  Source:

  Government Actuaries Department

  Computers
  Mr. Webb
  To ask the Secretary of State for Social Security what assessment he has made of automated systems for cross-checking the consistency of data between different departmental computer systems as a means of reducing fraud and error. [115367]

  Mr. Rooker
  A continuous programme of data matching activities has taken place since 1995. Results confirm matching data from a number of sources across the Department is an effective tool in identifying losses to programme expenditure caused by fraud and error.

  Between April 1998 and March 1999, cross checking data held on departmental computer systems resulted in 139,292 referrals for further investigation, 63 per cent. of which were found to be incorrect, resulting in savings estimated at £114.8 million.

  Correspondence
  Mr. Cousins
  To ask the Secretary of State for Social Security when the hon. Member for Newcastle upon Tyne, Central will receive a reply from the Chief Executive of the Benefits Agency to his request for details
  477W
  of the implications of the outcome of the Lawrence inquiry for the recruitment and career development procedures of the Benefits Agency. [115503]

  Angela Eagle
  A reply was issued to my hon. Friend on 17 March 2000.

  Mortgages
  Mr. Jack
  To ask the Secretary of State for Social Security, pursuant to his answer of 8 March 2000,Official Report, columns 731–32W, what notification of interest changes he has received from the Office for National Statistics since 11 May 1999. [114821]

  Angela Eagle
  The information is in the table.

  Percentage

  Date of notification from Office for National Statistics

  Average interest rate notified

  11 May 1999

  6.66

  9 June 1999

  6.65

  7 July 1999

  6.65

  12 August 1999

  6.60

  7 September 1999

  6.59

  29 October 1999

  6.58

  9 November 1999

  6.62

  8 December 1999

  6.67

  12 January 2000

  6.88

  8 February 2000

  6.88

  8 March 2000

  6.92

  Note:

  Information extracted from table 7.1L Building Societies: interest rates

  Source:

  Building Societies Commission; Bank of England

  Inherited SERPS Entitlement
  Mr. Webb
  To ask the Secretary of State for Social Security if he will estimate the cost of exempting all persons who have reached pension age by April 2000 from the proposed 50 per cent. cut in inherited SERPS entitlement, on a basis consistent with his estimate of a cost of £2,500 million for his proposed deferral of the cut until October 2002, assuming that this policy was implemented in place of his proposals announced on 15 March. [115528]

  Mr. Rooker
  The estimated cost is £7,100 million.

  Notes:

  1. The cost has been estimated by the Government Actuary's Department (GAD).

  2. The cost is expressed as the net present value of the annual figures from 2000–01 to 2050–51 in 1999–00 prices, discounted at an annual real rate at 6 per cent.

  3. It has been prepared on a basis which is consistent with the latest GAD Quinquennial Review.

  Disability-related Living Costs
  Mr. Wyatt
  To ask the Secretary of State for Social Security what plans he has to carry out research into calculating disability-related living costs in a manner which allows them to be taken into account when deciding local authority service charges. [114715]

  Mr. Hutton
  Our White Paper "Modernising Social Services" recognised that the scale of variation in discretionary charges is unacceptable. The Audit 478W
  Commission is preparing a report on home care charges and we shall take this into account when considering how to address these variations.

PRIME MINISTER

  Korean War (50th Anniversary)
  Mr. Walter
  To ask the Prime Minister what plans the Government have to commemorate the 50th anniversary of the Korean War. [115037]

  The Prime Minister
  The United Kingdom will be represented at the Opening Ceremony of the Commemoration Programme taking place on 25 June in the Republic of Korea, to recognise the 50th Anniversary of the outbreak of the Korean War. The ceremony will be held at the Korean War Cemetery, Seoul. My right hon. Friend the Secretary of State for Defence will attend. Contingents of veterans are being invited.

  A comprehensive series of commemorative events are planned over the next three years in the Republic of Korea. The United Kingdom will be represented at a number of these events at an appropriate level.

  Synchrotron
  Mr. Gordon Prentice
  To ask the Prime Minister what factors led him to decide that the new synchrotron should be built at Rutherford Appleton Laboratory in Oxfordshire. [115138]

  The Prime Minister
  [holding answer 17 March 2000]: The Government's position is that the scientific case was marginally in favour of Rutherford and site issues were neutral.

  Both partners expressed the view that they favoured the Rutherford site. The French Education Ministry stated publicly that
  This site was strongly supported by the French partners in the project and we are delighted with this choice.

  The Wellcome Trust stated that they would withdraw from the partnership if the decision was taken to locate the project at Daresbury.

  Chechnya
  Mr. David Atkinson
  To ask the Prime Minister if he will make a statement on his recent meetings with Acting President Putin; and what assistance he agreed to provide in Chechnya. [115604]

  The Prime Minister
  I had useful and constructive meetings with Acting President Putin in St. Petersburg on 11 March which focused on Chechnya and the Russian economy. I made clear that the Russian response to events in Chechnya had to be proportionate and strongly urged that independent international observers be given access to assess whether human rights violations had taken place. I stressed the urgent need for a political process to begin in Chechnya. Mr. Putin assured me that Russia would permit access by the UN High Commissioner on Human Rights, Mary Robinson, and by international bodies such as the International Committee of the Red Cross, the Council of Europe and the Organisation for Security and Co-operation in Europe.
  479W
  I also discussed with Mr. Putin prospects for the Russian economy and British investment in it. I made clear the need to improve conditions for investors. Mr. Putin stressed his intention to develop a liberal market economy.

  The United Kingdom has already provided £1.4 million for humanitarian assistance to IRC/UN appeals for Chechnya. We have also donated through the EU which has provided 3.3 million euros. The UN launched a further appeal for Chechnya on 15 March and we are giving urgent consideration to a further UK donation.

  Iraq
  Mr. Dalyell
  To ask the Prime Minister if he will meet Mr. Hans von Sponeck, on his return from Baghdad to discuss(a) sanctions against Iraq, (b) water problems and (c) the effects on the children of Iraq of trauma in relation to bombing. [115633]

  The Prime Minister
  I had detailed discussions about Iraq with the UN Secretary General when he visited London earlier this month. I see no need to discuss this further with Mr. von Sponeck.

FOREIGN AND COMMONWEALTH AFFAIRS

  Websites
  Mr. Maclennan
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list the expenditure incurred by his Department, agencies and non-departmental public bodies on(a) the setting up and (b) the operation of websites, indicating the cases in which the expenditure has been above that budgeted; and if he will list for each website (i) the topics which have been covered, (ii) the current average number of hits per month and (iii) the estimated expenditure on each website for each of the next three years. [115393]

  Mr. Hain
  The FCO has four websites:

  (a) The main FCO website (www.fco.gov.uk) covers all aspects of the UK's external relations, including regular updates on current developments, travel, consular and trade matters, as well as providing material on British domestic policy for overseas audiences. Relaunched in 1998 it receives c. 1.5–2 million hits per month.

  (b) The 'Planet Britain 2000' (www.planet-britain.org) website and accompanying CD-ROM is a wide-ranging site aimed at a youth audience overseas. It carries a wealth of information about British education, culture, music, sport, technology and fashion. It receives 350,000 hits per month.

  (c) 'Information From Britain' (ww.informationfrombritain.com) is Whitehall's first e-commerce site, allowing customers worldwide to order and pay electronically for Foreign Office publications. It was set up in 1998 and receives c. 40,000 hits per month.

  (d) The FCO's Human Rights Project Fund database is published on the Human Rights in Foreign Policy site (hrpd.fco.gov.uk) which receives about 16,000 hits per month.

  The set up costs of the above sites were:

  (a) £55,225

  (b) £100,000

  (c) £96,000

  (d) £18,000.

  480W
  All contracts were awarded by competitive tender. Expected running costs over the next three years are the staff costs for the FCO's three Internet editors and ancillary staff, amounting to under £130,000 p.a.

  The FCO main website has won six major international awards in the last two years.

  Atomic Energy Counsellor (Tokyo)
  Mr. Llew Smith
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to appoint an experienced member of an appropriate non-Governmental organisation as atomic energy counsellor to the British Embassy in Tokyo. [115357]

  Mr. Hain
  None.

  Kosovo
  Mr. Wilshire
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many mass grave sites have been identified in Kosovo; and how many of these have been investigated in detail. [115335]

  Mr. Hain
  The International Criminal Tribunal for the former Yugoslavia (ICTY) have said that there are in excess of 500 reported grave sites. ICTY have already investigated 195 sites which yielded over 2,000 bodies. Further investigations will begin again shortly with the spring thaw.

  Mr. Wilshire
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is his estimate of the number of Kosovar Albanians killed by Serb police and armed forces in Kosovo between June 1998 and June 1999. [115334]

  Mr. Vaz
  Our estimate for the number of Kosovar Albanian civilians killed in Kosovo between June 1998 and June 1999 is at least 10,000.

  Iran
  Mr. David Atkinson
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations have been made to the Iranian Government on the sentences on(a) Mr. Zabihullah Mahrami, (b) Mr. Musa Talibi, (c) Mr. Ataollah Hamid Nasirizadeh, (d) Mr. Zabihi-Moquaddan, (e) Mr. Kashefi-Najafabadi and (f) Mr. Manuchehro Khulusi. [115605]

  Mr. Hain
  We and our EU partners regularly raise with the Iranian authorities our concerns over their treatment of the Baha'i religious minority, particularly cases where the death sentence is involved. Most recently I raised the cases of Mr. Zabihi-Moquaddam, Mr. Kashefi-Najafabadi and Mr. Khulusi with Deputy Foreign Minister Sarmadi during a meeting on 7 March.

  Millennium Forum
  Mr. Chaytor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will provide assistance to NGOs from less developed countries to enable them to participate in the Millennium Civil Society Forum in May. [115146]

  Mr. Hain
  To be truly representative, the Millennium Forum needs to secure the participation of civil society groups from developed and developing countries. The
  481W
  Government have therefore in principle offered financial assistance to the Forum to help fund the attendance of civil society representatives from less developed countries.

HOME DEPARTMENT

  Speed Cameras
  Mr. Cox
  To ask the Secretary of State for the Home Department how many motorists were convicted of speeding in the Greater London area as result of the use of speed cameras during 1999. [114992]

  Mr. Charles Clarke
  Figures relating to convictions for speeding following the use of speed cameras are not available.

  However, there were 8,297 prosecutions taken and 15,323 fixed penalty notices issued for speeding offences as a result of the use of speed cameras in the area covered by the Metropolitan Police in 1997, the latest year for which figures are available. There were none in the City of London.

  Metropolitan Police
  Mr. Cox
  To ask the Secretary of State for the Home Department what the recruitment target is for the Metropolitan Police for the current year. [115033]

  Mr. Charles Clarke
  I refer my hon. Friend to the reply I gave to the hon. Member for North-East Hertfordshire (Mr. Heald) on 13 March 2000,Official Report, columns 91–92W.

  Mr. Heald
  To ask the Secretary of State for the Home Department what was the number of entrants to the Metropolitan Police Service on intake start date 13 March. [115758]

  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis tells me that the information requested is 65.

  Mr. Wilshire
  To ask the Secretary of State for the Home Department how many investigations were carried out between 1 April 1998 and 31 March 1999 by the South West Area Major Investigation Pool of the Metropolitan Police; how many of those investigations concerned one or more deaths; how many officers worked in the pool; and what was the total sum available to the pool in that period for overtime payments. [115728]

  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis has informed me that between 1 April 1998 and 31 March 1999 the South West Area Major Investigation Pool undertook 37 investigations. The number of investigations involving one or more deaths was 31. There were approximately 95 police officers employed by the Pool over the year. The actual cost of overtime worked by police and civil staff was £525,756.

  Ms Perham
  To ask the Secretary of State for the Home Department what was the rate of absenteeism of Metropolitan police officers for each of the years 1990 to 1999. [115223]
  482W
  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis tells me that records are kept of sickness absences. Figures before 1994–95 are not readily available. Details over the last five financial years are shown in the table:

  Working days lost

  1994–95

  369,140

  1995–96

  375,829

  1996–97

  386,001

  1997–98

  395,395

  1998–99

  289,789

  Ms Perham
  To ask the Secretary of State for the Home Department how many Metropolitan police officers were serving in specialist units for each of the years from 1990 to 1999. [115224]

  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis tells me that the numbers of officers other than recruits in training, or in units other than Boroughs and Holding Branch, since 1990 are given in the table:

  Metropolitan police officers employed in some form of specialism

  December 1990

  7,825.00

  December 1991

  8,151.00

  December 1992

  8,551.18

  December 1993

  7,882.35

  December 1994

  7,550.39

  December 1995

  7,654.47

  December 1996

  7,541.41

  December 1997

  7,502.65

  December 1998

  7,420.10

  December 1999

  7,670.73

  Jill Dando Murder Investigation
  Mr. Paul Marsden
  To ask the Secretary of State for the Home Department how much the Jill Dando murder investigation has cost to date broken down into(a) salary, (b) expenses and (c) other costs; and if he will make a statement. [115238]

  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis has informed me that, as of 16 March 2000, the salary costs of the officers employed on the Jill Dando murder investigation were approximately £1,342,000; expenses were approximately £26,000; and other costs approximately £542,000.

  Mr. Paul Marsden
  To ask the Secretary of State for the Home Department how many(a) full-time and (b) part-time police officers and (c) civilian police staff are working on the Jill Dando murder investigation. [115360]

  Mr. Charles Clarke
  The Commissioner of Police of the Metropolis has informed me that, as of 16 March 2000, the investigative team comprised 38 full-time police officers and seven full-time civilian staff. There are no part-time officers on the team.

  Prison Places
  Mr. Cox
  To ask the Secretary of State for the Home Department what estimate he has made of the number of prison places required within the prison Service in England and Wales over the next five years. [114994]

  Mr. Boateng
  The estimate of the number of prison places required over the next five years is determined by the latest prison population projections, which were published on 10 February in Home Office Statistical Bulletin No. 2/00, "Projections of Long Term Trends in the Prison Population to 2007", a copy of which is available in the Library and a summary of which is available on the Home Office website http://www.homeoffice.gov.uk/rds/ index.htm. The projection provides three variants. The projected average prison population for each of the next five years for the central variant is given in the table.

  Under existing plans, the Prison Service will increase planned operational capacity from an average of 67,800 in 1998–99 to 71,400 in 2001–02—the third year of the Comprehensive Spending Review settlement. The number of places to be provided after 2001–02 will be determined as part of the next spending review.

  Prison population projections for 1999–2000 to 2004–05

  Year

  Central variant

  1999–2000

  65,300

  2000–01

  68,100

  2001–02

  70,100

  2002–03

  70,800

  2003–04

  71,300

  2004–05

  71,900

  Peat Compost
  Mr. Paul Marsden
  To ask the Secretary of State for the Home Department, pursuant to his answer of 22 February 2000,Official Report, column 875W, on peat compost, what percentage of the compost used in his Department's estate gardens is peat; when use of peat compost will be phased out on his Department's estates; and if he will make a statement. [115237]

  Mr. Straw
  No central records are kept of the amount or percentage of peat used on the Department's estate. This information could be obtained only at disproportionate cost. However, the Department's Greening Operations Policy (published in 1998) and its Procurement Manual both state that peat free composts should be used and the current estimate is that if the Home Office makes any use of peat at all this is minimal.

  Road Accident Victims
  Mr. Bob Russell
  To ask the Secretary of State for the Home Department what discussions he has had with the Association of Chief Police Officers concerning the decision by the police to prevent the release of names and addresses of people injured in road accidents; and if he will make a statement. [115298]

  Mr. Charles Clarke
  My officials have been in close contact with the Association of Chief Police Officers (ACPO) Media Advisory Group which has been monitoring the effect and operation in practice of the ACPO guidelines "Naming of Victims or Witnesses 484W
  Involved in Crime, Road and other Incidents". ACPO is currently reviewing the application of the guidance. Initial findings are expected to emerge by Easter.

  CS Gas
  Mr. Wood
  To ask the Secretary of State for the Home Department how much was spent by each police force in England and Wales, and in total, on the purchase of CS gas in the year April 1998 to March 1999. [115093]

  Mr. Charles Clarke
  The quantities of CS incapacitant spray purchased by police forces in England and Wales is a matter for individual Chief Constables. The amount purchased and total expenditure are not collated centrally and could be obtained only at disproportionate cost.

  Tariff Setting
  Mr. Cohen
  To ask the Secretary of State for the Home Department what criteria he uses in reaching decisions on whether to refer decisions on tariffs for prisoners to the Lord Chief Justice for determination. [115415]

  Mr. Boateng
  The statement made by my right hon. Friend the Home Secretary to Parliament on 13 March 2000,Official Report, columns 21–24, announced transitional tariff-setting arrangements for those sentenced to be detained during Her Majesty's pleasure. Under those arrangements, detainees whose tariffs have not expired will be invited to make representations to the Lord Chief Justice. Where they do so, he will consider them and make a recommendation to the Secretary of State who will then regard himself as bound to set fresh tariffs no higher than those recommended by the Lord Chief Justice.

  The tariff-setting arrangements for adult murderers remain unaltered. The Secretary of State will continue to set their tariffs after considering a report from the trial judge, the judicial recommendations on tariff and any representations from the prisoner on the tariff information disclosed to him.

  City Status
  Jane Griffiths
  To ask the Secretary of State for the Home Department which towns with populations of less than 200,000 have been awarded city status since 1970. [115713]

  Mr. Mike O'Brien
  There have been four grants of city status since 1970. Of these, St. David's and Armagh. both granted city status in 1994 in recognition of their long and venerable Christian traditions, have populations of less than 200,000.

  Electoral Procedures
  Ms Coffey
  To ask the Secretary of State for the Home Department what pilot schemes of innovative electoral procedures he has approved for the May local elections. [115903]

  Mr. Mike O'Brien
  I am making orders to enable the following pilot schemes to take place at this May's local elections:

  Amber Valley—extension of entitlement to postal vote

  Blackburn with Darwen—early voting

  Blackpool—early voting

  Bolton—all postal ballot

  Broxbourne—electronic counting

  485W

  Chester—early voting

  Coventry—early voting

  Doncaster—all postal ballot

  Eastleigh—extension of entitlement to postal vote

  Gateshead—all postal ballot

  Gloucester—extension of entitlement to postal vote

  Kingston upon Hull—early voting

  Knowsley—early voting

  Leeds—extended hours of poll

  Manchester—early voting

  Milton Keynes—extension of entitlement to postal vote

  Mole Valley—extended hours of poll

  Plymouth—early voting

  Redditch—early voting

  St. Helens—early voting

  Stevenage—all postal ballot

  Stoke-on-Trent—early voting

  Sunderland—early voting and mobile voting

  Swindon—all postal ballot

  Wigan—all postal ballot

  Windsor and Maidenhead—mobile early voting facility.

  In addition, I hope to be able to make orders in relation to the following schemes very shortly:

  Bury—electronic voting and counting

  Norwich—all postal ballot, mobile polling facility and early voting

  Salford—electronic voting and counting

  Stratford—electronic voting and counting

  Three Rivers—electronic counting

  Watford—mobile polling facility, early voting, weekend voting and freepost facility.

  Animal Experiments
  Mr. Baker
  To ask the Secretary of State for the Home Department (1) what powers are available to him governing the movement of monkeys from holding centres to research establishments; what documentation must be provided to allow such movements; and if he will make a statement; [115731]

  (2) what steps he is taking to establish what will happen to monkeys held at the Shamrock Farm once that establishment is closed; and if he will make a statement. [115729]

  Mr. Mike O'Brien
  I am advised that most of the animals were pre-allocated to purchasers on arrival at Shamrock Farm. The remaining animals are in the process of being allocated now. The establishment will remain open and continue to be licensed and regularly inspected until this process has been completed and all of the animals have been removed. I understand that there will be no surplus animals.

  The Animals (Scientific Procedures) Act 1986 requires both dispatching and receiving establishments in the United Kingdom to keep detailed records of the source and disposal of animals moving from one location to another. The Ministry of Agriculture, Fisheries and Food regulates the transportation of live animals, including primates. The Welfare of Animals (Transport)
  486W
  Order 1997, which is administered by the Ministry of Agriculture, Fisheries and Food, requires that the animals must be fit to travel, carried in a way that does not cause injury or unnecessary suffering, and be accompanied by someone competent to look after their welfare.

  Mr. Baker
  To ask the Secretary of State for the Home Department how many investigations were carried out in 1999 under the Animal Scientific Procedures Act 1986; how many of these revealed that a criminal offence had been committed; and if he will make a statement. [115732]

  Mr. Mike O'Brien
  The Animals (Scientific Procedures) Inspectorate carried out one major investigation commissioned by the Secretary of State in 1999. This was the Harlan UK investigation. My reply to my hon. Friend the Member for South Thanet (Dr. Ladyman) on 8 March 2000,Official Report, columns 661–62W, reported the outcome of that investigation.

  The Inspectorate also investigated a number of other alleged infringements of the Animals (Scientific Procedures) Act 1986 in 1999. Most of these were self-reported. A number of these cases have yet to be completed. A report on infringements, and their outcomes, will be included in the Statistics of Scientific Procedures on Living Animals 1999 to be published in July.

  Correspondence
  Mr. Kaufman
  To ask the Secretary of State for the Home Department when he intends to reply to the letters to him dated 13 December 1999 and 13 January and 17 February with regard to Mr. M. Ahmad. [115631]

  Mrs. Roche
  My right hon. Friend the Home Secretary wrote to my right hon. Friend today. I am sorry for the delay in replying.

  Senator Pinochet
  Mr. Loughton
  To ask the Secretary of State for the Home Department what approaches he has made to the Spanish Government regarding sharing the costs to the UK taxpayer of the legal action brought against Senator Pinochet. [114048]

  Mr. Straw
  It would not be appropriate for me to make any such approach. The European Convention on Extradition, to which Spain and the United Kingdom are both parties, requires, under Article 24 of the Convention, that:expenses incurred in the territory of the requested Party by reason of extradition shall be borne by that Party.

  Costs under the Convention are, therefore, borne on a reciprocal basis. Spain bears the costs of the extradition requests which it receives from the United Kingdom.

  Prisoners (Purposeful Activity)
  Mr. Stinchcombe
  To ask the Secretary of State for the Home Department what was the average number of hours per week spent by prisoners on purposeful activity in 1990. [115757]

  Mr. Boateng
  The average number of hours spent by prisoners in purposeful activity in the 1990–91 financial year was 22.3 hours.

AGRICULTURE, FISHERIES AND FOOD

  Animal Feed
  Mr. David Heath
  To ask the Minister of Agriculture, Fisheries and Food what plans he has to introduce a novel feed regulation to ensure the safety and labelling of genetically modified animal feedstuffs. [113764]

  Ms Quin
  [holding answer 13 March 2000]: Animal feed legislation is a harmonised area under European law, and it is not therefore possible to introduce national rules on such labelling. We are, however, pressing the EC Commission to bring forward proposals for control within this area as soon as possible. We expect these to be submitted to the Council later this year.

  Mr. Livsey
  To ask the Minister of Agriculture, Fisheries and Food (1) what plans the Government have to implement an authorisation process for livestock feed additives under the provisions of Regulation 13 of Article 9K of Council Directive 96/51/EC; [115246]

  (2) when he will announce the Government's proposals for the implementation of Regulation 13 of Article 9K of Council Directive 96/51 concerning additives in feedstuffs. [115245]

  Ms Quin
  [holding answer 20 March 2000]: The consultation on the Feeding Stuffs Regulations specifically requested comments on the proposed Regulation 13. This was in order that all the implications of a prohibition on livestock additives used outside feeds could be assessed. The Advisory Committee on Animal Feedingstuffs (ACAF) has recently recommended that non-feed uses of additives should be retained but should be subject to controls.

  We will be in a position to make a decision on this issue shortly, when we have studied all the responses to the consultation and considered how we may be able to carry forward the ACAF recommendation.

  Over-30-Months Scheme
  Mr. Randall
  To ask the Minister of Agriculture, Fisheries and Food how many carcases he estimates will be rendered under the over-30-months scheme in each of the next five years. [114828]

  Ms Quin
  The Intervention Board's current estimate is that around 600,000 over-30-months scheme (OTMS) animals a year will be rendered.

  Mr. Randall
  To ask the Minister of Agriculture, Fisheries and Food how tallow produced as a byproduct under the over-30-months scheme is classified by his Department. [114830]

  Ms Quin
  Tallow from OTMS animals is classified as a waste because of the need for material from such animals to be destroyed. As such it is managed and disposed of in accordance with waste management controls. All disposals to date and those planned for the future involve energy recovery.

  Mr. Randall
  To ask the Minister of Agriculture, Fisheries and Food if he will list the locations where tallow from Over-30-Months Scheme cattle is stored, indicating the tonnage at each site. [114829]
  488W
  Ms Quin
  Tallow produced from the rendering of animals under the Over-30-Months Scheme is being stored at three locations in the UK. As at 29 February 2000, the stock level at each site was:

  Store location

  Tonnage as at 29 February 2000

  Canvey Island, Essex

  104,229

  Eastham, Merseyside

  80,001

  Bootle, Merseyside

  24,121

  Mr. Randall
  To ask the Minister of Agriculture, Fisheries and Food what was the price(a) per carcase and (b) per tonnage paid by the Intervention Board in each year since 1996 to each company awarded a contract to render cattle under the Over-30-Months Scheme. [114827]

  Ms Quin
  Renderers are paid according to the tonnage of OTMS material processed. In 1996 and 1997 a centrally negotiated rate of £105 (£110 in Northern Ireland) per tonne of Over-30-Months Scheme (OTMS) material processed (equivalent to around £52.50 per animal) was paid to contracted renderers. This rate included the cost of collection of raw material from abattoirs, estimated at £10–15 per tonne. Since 1998, and following a competitive tender, the average rate paid for the rendering of OTMS material is as set out in the reply given to the hon. Member on 24 January 2000,Official Report, column 11W.

  Slaughterhouses
  Mr. Hurst
  To ask the Minister of Agriculture, Fisheries and Food how many premises were licensed as slaughterhouses in England and Wales in the years(a) 1979, (b) 1989 and (c) 1999. [114949]

  Ms Quin
  The table gives end of year figures for 1979, 1989 and 1999 for red and poultry meat slaughterhouses in England. Prior to 1993, slaughterhouses in England and Wales were not licensed by MAFF, but by local authorities. The England figures for 1979 and 1989 have therefore been derived from records of State Veterinary Service visits during those years and are approximate. For poultry meat slaughterhouses in England, no figures are available prior to 1983.

  Year

  Red meat

  Poultry meat

  1979

  975

  —

  1989

  690

  107

  1999

  339

  119

  The licensing of slaughterhouses in Wales is a devolved matter. The National Assembly for Wales, which now has responsibility for the administration of such matters, has provided the following information in relation to slaughterhouses in Wales. No poultry meat slaughterhouse figures are available for 1979 or 1989:

  Year

  Red meat

  Poultry meat

  1979

  79

  —

  1989

  66

  —

  1999

  34

  12

DEFENCE

  CVR(T) (Transmission Mechanisms)
  Mr. Key
  To ask the Secretary of State for Defence what exemptions from procurement rules have been granted to Alvis for the supply of transmission mechanisms for the CVR(T); and for what reasons. [113191]

  Dr. Moonie
  [holding answer 6 March 2000]: Alvis Vehicle Ltd. have been granted no exemptions from procurement rules for the supply of transmission mechanisms for the CVR(T).

  Tritium Production
  Mr. Cohen
  To ask the Secretary of State for Defence what is the unit cost of production of tritium for use by his Department. [114444]

  Mr. Hoon
  I am withholding details of the unit cost for tritium production under the terms of the Exemption Categories 1 (Defence, Security and International Relations) and 13 (Third party's commercial confidences) of the Code of Practice on Access to Government Information.

  Service Quarters
  Mr. Lidington
  To ask the Secretary of State for Defence how many repossession proceedings his Department initiated in respect of RAF quarters in each of the last three years; how many of those proceedings resulted in a court order for the eviction of the occupants; and if he will make a statement. [114209]

  Mr. Spellar
  [holding answer 13 March 2000]: DHE manage Service Family Accommodation (SFA) as a Tri-Service resource and records are not kept centrally or on a single Service basis. To obtain the information requested, a manual search of every repossession case over the past three years would have to be made and this could be provided only at disproportionate cost.

  Anti-ballistic Missile Treaty
  Mr. Baker
  To ask the Secretary of State for Defence if he will make it his policy to prohibit activities by United States authorities on his Department's land, which are contrary to the terms of anti-ballistic missile treaty. [114423]

  Mr. Hoon
  [holding answer 14 March 2000]: The interpretation of the anti-ballistic missile treaty is a matter for the parties to that treaty, not for the United Kingdom or any other non-party.

  Mr. Key
  To ask the Secretary of State for Defence what recent discussions his Department has had with the United States regarding a European-wide ballistic missile defence system. [114326]

  Mr. Hoon
  [holding answer 14 March 2000]: We continue to monitor the threats posed by ballistic missiles, and the development of the technology available to counter them. We will continue to consult closely with the US and take account of the work they are doing, to help us take an informed decision on whether to acquire such a capability ourselves in the future.

  Strategic Defence Initiative
  Mr. Key
  To ask the Secretary of State for Defence if he will place in the Library a copy of the 1985 Strategic Defence Initiative Memorandum of Understanding. [114325]

  Mr. Hoon
  [holding answer 14 March 2000]: No. I am withholding this information under Exemption 1 (Defence, Security and International Relations) of the Code of Practice on Access to Government Information.

  Scientific Research Projects
  Mr. Key
  To ask the Secretary of State for Defence if he will list those scientific research projects on which his Department is collaborating with other European countries. [114328]

  Dr. Moonie
  [holding answer 14 March 2000]: Details of specific projects could be provided only at disproportionate cost but, under bilateral or multilateral arrangements relating to research, my Department has significant numbers of joint programmes or information exchanges with the following countries or organisations:

  Country/organization

  Number of programmes

  France

  85

  Sweden

  26

  Netherlands/Norway

  25

  Germany

  17

  WEAG1/EUCLID2

  30

  GARTEUR3

  8

  Miscellaneous

  10

  1 Western European Armaments Group: informal grouping of European Defence Ministers providing policy direction for armaments and research issues

  2 European Cooperation for the Long-term in Defence (EUCLID) based on competition and contracts placed on lead contractors, usually with some industrial funding

  3 European aerospace forum involving UK, France, Germany, Netherlands, Spain, Sweden and Italy

  International research collaboration also takes place under the umbrella of NATO. Details are not included as NATO also includes non-European countries.

  Many technologies are involved, including:

  Energetic Materials and Plasmas

  Structural Materials and Structural Effects Analysis

  Sensor Systems

  Computer Applications and Information Processing

  Design Aspects—Platforms and Weapons

  Photonic/Optical Materials and Devices

  Electronic and Electrical Devices

  Signature Control and Signature Reduction

  Computing Technologies

  Operating Environmental Issues

  Communications and CIS Related Technologies

  Integration and other Systems Issues

  Guidance and Control Systems (Weapons and Platforms)

  Propulsion and Powerplants

  Electronic Materials

  Manufacturing Processes/Design tools/Techniques.

  Towers of Excellence
  Mr. Key
  To ask the Secretary of State for Defence if he will list the scientific areas covered by his Towers of Excellence initiative. [114327]

  Dr. Moonie
  [holding answer 14 March 2000]: As part of our strategy for defence science and technology, the Ministry of Defence has been developing an approach known as the "Towers of Excellence" model. The intention, in partnership with industry, is to identify areas in which technological excellence might best be concentrated and defence-specific technologies enhanced to the level required to produce world class equipment for our Armed Forces.

  To do this on a systematic basis requires a comprehensive view of industrial capabilities and aspirations. There must be sufficiently coherent clusters of technology to enable UK industry to continue to be able to bid for a substantial proportion of UK defence equipment. These towers must therefore align with industry's own plans. We expect this alignment to be informed by the defence industries' own technology strategy which they have prepared to complement that of MOD.

  Industry and MOD have agreed on a process for bringing their respective strategies together and defining priorities for constructing technological "towers of excellence" within available resources. Work is likely to continue through to the end of 2000.

  RN Vessels
  Mr. Hancock
  To ask the Secretary of State for Defence what plans his Department has for the use of HMS Birmingham; and if he will make a statement. [114767]

  Dr. Moonie
  HMS Birmingham is no longer operational and is currently awaiting disposal.

  Mr. Hancock
  To ask the Secretary of State for Defence what plans there are to fit further Royal Navy ships with Sonar 2087; and if he will make a statement. [114803]

  Dr. Moonie
  We plan to fit Sonar 2087 to all Type 23 frigates. In the longer term it might also be a contender for fitment to the Future Surface Combatant.

  Transport Aircraft
  Mr. Wilkinson
  To ask the Secretary of State for Defence what was the sum invoiced to his Department by Air Foyle Ltd. for the charter of an Air Foyle Antonov 124–100 aircraft to Transport four Royal Air Force Puma helicopters from RAF Brize Norton to South African Air Force Base Heudspruit on Friday 3 March. [114744]

  Dr. Moonie
  [holding answer 15 March 2000]: I am withholding details of the sum invoiced to the MOD by Air Foyle Ltd. for the charter of an Antonov 124–100 under Exemption 13 (Third party's commercial confidences) of the Code of Practice on Access to Government Information.

  Mr. Wilkinson
  To ask the Secretary of State for Defence what is the maximum number of RAF Puma helicopters which can be carried in(a) Hercules C130K, (b) Hercules C130J, (c) Boeing C17 and (d) Antonov
  492W
  124–100 transport aircraft; and how many refuelling stops each aircraft requires, carrying its respective maximum complements of Puma helicopters, on a flight from RAF Brize Norton to South African Air Force Base Heudspruit. [114745]

  Mr. Spellar
  [holding answer 15 March 2000]: The Hercules C130K Mk1 cannot carry the Puma helicopter. Both the Hercules C130K Mk3 and the C130J can carry one Puma helicopter and would normally require three en-route stops to complete the flight from Brize Norton to SAAF Base Heudspruit.

  According to information publicly available the Boeing C17 is capable of carrying three Puma helicopters and would normally require two en-route stops to complete the flight.

  The AN124–100 is capable of carrying four Puma helicopters and would normally require two en-route stops to complete the flight.

  The degree to which the Puma is dismantled dictates whether or not the maximum number of airframes can be loaded into transport aircraft. The requirement for en-route stops can vary according to prevailing weather conditions.

  Railtrack (Training)
  Mrs. Dunwoody
  To ask the Secretary of State for Defence what is the cost of the facilities being offered to Railtrack for training by his Department; what is the length of time for the course; where it is taking place; and what facilities exist for re-charging Railtrack for these facilities. [115085]

  Mr. Spellar
  The Army has provided Railtrack with limited assistance in the form of presentations and involvement in a Railtrack seminar. Discussions have also been held at working level with the company on the possible provision of Logistic Planning Workshops by the Royal Logistics Corps. The presentations and attendance have lasted around two days and Railtrack have paid the full costs of this help. Any further assistance provided will be charged for at appropriate rates.

  Peat Compost
  Mr. Paul Marsden
  To ask the Secretary of State for Defence, pursuant to his answer of 10 March 2000,Official Report, column 828W, on peat compost, when his officials began their assessment of the full impact of phasing out the use of peat on his Department's estate; and if he will make a statement. [115234]

  Dr. Moonie
  My officials began their formal assessment on 7 February 2000.

  Mr. Paul Marsden
  To ask the Secretary of State for Defence, pursuant to his answer on 10 March 2000,Official Report, column 828W, on peat compost, if he will list all his Department's estate gardens; and if he will make a statement. [115235]

  Dr. Moonie
  This information is not held centrally and could be provided only at disproportionate cost.

  Gulf War Illnesses
  Mr. Hancock
  To ask the Secretary of State for Defence what experts from outside the Department he
  493W
  consulted in preparing rebuttal arguments relating to the views of Professor Hooper at the meeting of the Independent Panel on Gulf War Illnesses on 29 March 1999; if he will place copies of the Government's evidence to the Panel in the Library; and if he will make a statement. [115540]

  Mr. Spellar
  No outside experts were consulted. The Panel is briefed on the current state of interactions research at its meetings and has therefore received copies of MOD papers on Gulf veterans' illnesses, copies of which are already in the Library of the House.

  Procurement
  Mr. Hoyle
  To ask the Secretary of State for Defence when he will decide on the contracts for the(a) beyond visual range air-to-air missile and (b) future transport aircraft. [115128]

  Dr. Moonie
  [holding answer 17 March 2000]: My right hon. Friend the Secretary of State for Defence hopes to announce decisions on both of these projects in the next few weeks.

  British Commonwealth Occupation Force
  Mr. David Taylor
  To ask the Secretary of State for Defence what plans he has to issue a campaign medal to those who served in the British Commonwealth Occupation Force in Japan in the years 1945 to 1948; and if he will make a statement. [115593]

  Dr. Moonie
  There are no plans to institute a medal for service in the British Commonwealth Occupation Force in Japan between 1945 and 1948. The Committee on the Grant of Honours, Decorations and Medals, which advises the Sovereign on all matters relating to the institution of medals, has a longstanding policy that it will not consider cases for the retrospective award of medals for service given many years ago.

  Strategic Export Controls
  Mr. Robertson
  To ask the Secretary of State for Defence what plans he has to publish the numbers of weapons and items of equipment being exported from the United Kingdom in the next Annual report on Strategic Export Controls on a country by country basis; and if he will make a statement. [115425]

  Mr. Hoon
  The Government will continue publishing details of weapons and equipment exported in the Annual Report on Strategic Export Controls using information obtained from the United Nations Conventional Arms Register and HM Customs and Excise. The Government are committed to strengthening the Arms Register and also to achieving greater international transparency in the sales overseas of major defence systems. Information relating to the two previous years is contained in Part III of the 1997 and 1998 Reports, copies of which are available in the Library of the House. It is planned to publish the 1999 Report later this year.

  Service Personnel (Trade Unions)
  Dr. Godman
  To ask the Secretary of State for Defence what discussion he has had with other NATO countries about allowing members of the armed services to become members of trade unions; and if he will make a statement. [115145]

  Mr. Spellar
  There have been no discussions with other NATO countries about this issue. Due to the unique nature of Service life it is Ministry of Defence policy not to have a Service trade union, or federation, for members of the Armed Forces. There are no plans for change.

  The Ministry of Defence has agreements with a number of major trade unions, as well as concessions with professional associations, whereby Service personnel may be recognised as eligible for membership. No restrictions are placed on attendance at meetings of civilian trade unions, professional associations, or courses of instruction run by them intended to enhance trade skills and professional knowledge, provided Service uniform is not worn, Service duties are not impeded and no action is taken which would bring the Services into disrepute. It is important that the Armed Forces maintain a position of political neutrality. Service personnel may not therefore participate in industrial action, or any form of political activity organised by a civilian trade union, or professional organisation, to which they belong.

  Porton Down (Animals)
  Mr. Baker
  To ask the Secretary of State for Defence what procedures have been put in place to ensure that overbreeding of animals at Porton Down is minimized; and if he will make a statement. [115272]

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

  Letter from Sir John Chisholm to Mr. Norman Baker, dated 21 March 2000:
  I am replying to your parliamentary question about the animal breeding programmes at Porton Down since the laboratories are part of the Defence Evaluation and Research Agency (DERA).
  As I explained in my letter to you on 19 January 1998 the animal species currently bred at Porton Down are mice, rats, marmosets, rhesus monkeys and a few pigs. Apart from the unusual circumstances arising in 1994/95, when 94 marmosets had to be culled, there has been no excess breeding of non-human primates. Any surplus pigs, as I explained previously, are sent to market.
  As you know, the independent Animal Welfare Advisory Committee (AWAC) which reviews animal care and welfare arrangements within DERA addressed the issue of animal breeding during the period of its last report (31 October 1998–1 November 1999). In particular, the breeding of mice and rats was considered as this leads to the largest surplus. The Porton strain of mice and rats has been used for many years and the outcome of current research programmes relies on the accumulated background data derived from these strains. For this reason, the preferred option is to continue the rodent breeding programme at Porton. The alternative would be to purchase mice and rats from a supplier, which would mean carrying out additional experiments to produce base line data for the different strain.
  The scientists at Porton are, of course, mindful of the need to minimise overbreeding in this area. Porton maintains a small number of breeding pairs of mice and rats to supply ongoing research programmes. The number of breeding pairs in the colony is adjusted to meet the estimated demand of the research programmes. Research programmes, however, are not entirely predictable and on occasions there may be an urgent need for animals. Estimates for animal use

  495W
  are regularly reviewed. To an extent research programmes are adjusted either by bringing forward an experiment to use a surplus or, in the case of a shortage, utilising smaller groups over a longer period or by widening the weight range where possible.
  The Committee was satisfied overall that the animals bred at Porton are well cared for and only culled when necessary. The AWAC report also pointed out that all culled rodents are donated to wildlife sanctuaries to feed wild birds and so are not wasted.
  I hope that this is helpful.

NORTHERN IRELAND

  Lawyers (Intimidation)
  Mr. McNamara
  To ask the Secretary of State for Northern Ireland what representations he has received from the Law Society and Bar Council for Northern Ireland concerning allegations of intimidation of lawyers; what surveys or research have been undertaken to determine the extent of intimidation; what assessment he has made of(a) under-reporting of intimidation and (b) malicious or unfounded allegations; and if he will commission a study to determine the extent of intimidation and make recommendations. [111946]

  Mr. Ingram
  [holding answer 2 March 2000]: The current Secretary of State for Northern Ireland has received no representations from the Law Society or the Bar Council for Northern Ireland concerning allegations of intimidation of lawyers.

  On surveys and research, the Government are aware that the Independent Commission for Police Complaints undertook a survey into the specific area of complaints relating to allegations of improper conduct by police officers towards, or in respect of, solicitors. Furthermore, the Commission monitors and supervises all complaints of intimidation of lawyers or any attempts to undermine their professional integrity. I am not aware of other survey or research work.

  On under-reporting, the UN Special Rapporteur on the Independence of Judges and Lawyers in his March 1998 report concluded that there had been under-reporting, again in relation to police complaints. I note that the Special Rapporteur recommended that solicitors should lodge formal complaints and that he welcomed the steps taken by the Law Society to introduce a complaints procedure for solicitors.

  Given that there have been no representations by the Law Society or Bar Council, and that there are procedures for investigation of allegations (including the Law Society's own) and these are to be enhanced in respect of complaints about police conduct when the Police Ombudsman is introduced later this year, the Government are not currently persuaded that they should commission a study.

  Mrs. Rosemary Nelson
  Mr. McNamara
  To ask the Secretary of State for Northern Ireland, pursuant to his reply of 19 January 2000,Official Report, column 445W, if he will set out the Government's response to the specific concerns about Mrs. Nelson's safety raised by the UN Special Rapporteur in his 1998 report. [113863]
  496W
  Mr. Ingram
  The United Nations Special Rapporteur on the Independence of Judges and Lawyers referred in his March 1998 Report to complaints made by Mrs. Nelson. The Government had already informed the Special Rapporteur that the complaints by, and on behalf of, Mrs. Nelson were under investigation, under the supervision of the Independent Commission for Police Complaints.

  In addition, the Government had already sought, in February 1998, an assessment from the police on Mrs. Nelson's security. The RUC determined that they had no intelligence to substantiate a specific threat to Mrs. Nelson.

  Mr. McNamara
  To ask the Secretary of State for Northern Ireland, pursuant to his answer of 24 January 2000,Official Report, columns 5–6W, if he will place in the Library a copy of the assessments of Mrs. Rosemary Nelson's security made by the RUC in February and August 1998. [113472]

  Mr. Ingram
  [holding answer 10 March 2000]: No. The assessments are confidential and are not made public. My reply on 24 January 2000, Official Report, columns 5–6W, however, indicated the outcome of the Chief Constable's threat assessments on Mrs. Nelson.

  Road Arches
  Mr. Corbyn
  To ask the Secretary of State for Northern Ireland how many applications were made under Article 73 of the Roads (NI) Order 1993 for permission to erect arches over roadways between 16 June and 11 July 1999; if he will list those applications(a) granted and (b) refused; of those granted, what level of public liability insurance against claims in respect of injury was required in each case; how many arches were erected where no application was made; and how many prosecutions were brought for breach of Article 73 of the Roads (NI) Order 1993 during 1999. [115277]

  Mr. George Howarth
  Responsibility for this matter has been delegated to the Roads Service under its Chief Executive Mr. C. James. I have asked him to arrange for a reply to be given.

  Letter from C. James to Mr. Jeremy Corbyn, dated 21 March 2000:
  The Secretary of State for Northern Ireland has asked me to respond to your recently tabled Parliamentary Question about arches over roads.
  Between 16 June 1999 and 1 I July 1999, the Department's Roads Service received 4 applications under Article 73 of the Roads (NI) Order 1993 for consent to erect arches over roads. In each case, consent was given and the applicant was required to have public liability insurance of £5M. These applications were in respect of arches over the following roads:

  Market Square, Lisburn, County Antrim;

  North Street, Upper Ballinderry, Lisburn, County Antrim;

  Bridge Street, Edenderry, Portadown, County Armagh; and

  Garvaghy Road, Portadown, County Armagh.

  At least a further 100 arches were erected over public roads where no applications for consent under Article 73 had been made. No prosecutions were brought for breaches of Article 73 during 1999.
  I hope this information is helpful.

CULTURE, MEDIA AND SPORT

  BBC Film Projects
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport which BBC film projects have been awarded National Lottery funding; to what value in each case; and on what conditions. [114350]

  Mr. Chris Smith
  [holding answer 13 March 2000]: There have been no National Lottery awards to the BBC for film production. However, the BBC has co-financed with The Arts Councils of England and Wales, and with other financiers, the films on the following list which shows the amount of National Lottery money received.

  Standard conditions for film production awards are published in the guidelines for applicants, a copy of which has been placed in the Library of the House. Conditions specific to a particular project are a commercial matter and regarded as confidential for that reason.

  Project

  Award amount (£)

  Distributing body

  Features

  Ratcatcher

  615,000

  Arts Council of England

  The Darkest Light

  708,000

  Arts Council of England

  The Last Yellow

  550,000

  Arts Council of England

  A Room for Romeo Brass

  850,000

  Arts Council of England

  Among Giants

  665,000

  Arts Council of England

  Divorcing Jack

  800,000

  Arts Council of England

  Hideous Kinky

  1,070,000

  Arts Council of England

  Love is the Devil

  364,551

  Arts Council of England

  Speak Like a Child

  433,896

  Arts Council of England

  The Governess

  907,075

  Arts Council of England

  Frantz Fanon

  84,000

  Arts Council of England

  Love and Death on Long Island

  750,000

  Arts Council of England

  Metroland

  865,000

  Arts Council of England

  My Son the Fanatic

  750,000

  Arts Council of England

  Peggy Su!

  500,000

  Arts Council of England

  Photographing Fairies

  890,000

  Arts Council of England

  Sixth Happiness

  469,727

  Arts Council of England

  The Revengers Comedies

  950,000

  Arts Council of England

  Wilde

  1,500,000

  Arts Council of England

  Pandaemonium

  655,094

  Arts Council of England

  Five Seconds to Spare

  1,009,500

  Arts Council of England

  One of the Hollywood Ten

  450,000

  Arts Council of Wales

  Y Mabinogi

  207,137

  Arts Council of Wales

  Shorts

  The Night Frontier

  18,635

  Arts Council of England

  The Albatross

  29,000

  Arts Council of England

  The Queen's Monastery

  35,000

  Arts Council of England

  Tourism (North Yorkshire)
  Miss McIntosh
  To ask the Secretary of State for Culture, Media and Sport what plans he has to promote tourism in North Yorkshire. [114945]

  Janet Anderson
  The Yorkshire Tourist Board (YTB) will receive £367,000 for tourism projects in the region in 2000–01 from the English Tourism Council—an increase of 26 per cent. on the current year. These projects include development of the Yorkshire brand and sub-regional brands and developing training that is customised to meet customer needs, which will help promote tourism throughout Yorkshire. North Yorkshire, in common with all parts of England, also benefits from the promotion work of the British Tourist Authority (BTA), which 498W
  promotes Britain as a visitor destination in overseas markets. The BTA is receiving £36 million from my Department this year.

  The Chartered Institute of Public Finance and Accountancy estimates that local authority expenditure on tourism promotion in North Yorkshire in 1997–98 was £1.775 million. In addition, tourism in Yorkshire has also benefited, both directly and indirectly, from the National Lottery, (649 projects in the country have received awards totalling £44,710,497 according to the Department for Culture, Media and Sport's National Lottery Awards Database which uses information supplied by the distributing bodies.

  Millennium Dome
  Mr. Baker
  To ask the Secretary of State for Culture, Media and Sport what plans he has to alter the ticketing arrangements for the Millennium Dome; and what effect the changes will have on the(a) 12 million visitor target and (b) anticipated income stream. [114542]

  Janet Anderson
  [holding answer 14 March 2000]: From 1 April, the New Millennium Experience Company (NMEC) is introducing extended opening times. Visitors can enjoy the Dome from 09.00 to 20.00 on Sundays to Thursdays, and from 09.00 to 23.00 on Fridays, Saturdays, Bank Holidays and during school holidays and the peak summer periods—providing a maximum potential visit time of 14 hours.

  The Government are extremely encouraged by the continuing upward trend in visitor numbers to the Dome. Ten million paying visitors will enable the Company to deliver a break even operating budget. However NMEC's target remains at 12 million.

  Miss McIntosh
  To ask the Secretary of State for Culture, Media and Sport how many people from North Yorkshire have bought tickets to visit the Millennium Dome in January and February 2000. [111406]

  Janet Anderson
  I refer the hon. Member to the reply I gave the hon. Member for West Suffolk (Mr. Spring) on 17 March 2000,Official Report, column 368W. NMEC are unable to provide a regional break down of ticket sales.

  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport who owns the copyright associated with each of the exhibits in the Millennium Dome. [109727]

  Janet Anderson
  [holding answer 11 February 2000]: The contractual terms of each exhibit vary reflecting the different nature and type of exhibit—both in terms of structure and content. Similarly arrangements regarding copyright and intellectual property rights vary. As is normal practice, these contracts contain confidentiality clauses applicable to both parties. NMEC considers that publication of details, including ownership of copyright, from individual contracts runs the risk of adversely impacting on its relationships with its designers and, therefore, on its ability to operate in an effective and commercial manner.

  Mr. Baker
  To ask the Secretary of State for Culture, Media and Sport if he will list the payments overdue to zone designers at the Millennium Dome at 7 February. [109959]
  499W
  Janet Anderson
  [holding answer 14 February 2000]: The policy of the New Millennium Experience Company (NMEC) is to pay suppliers within the terms of the contractual arrangements agreed, which is usually 30 days from the day of the invoice, subject to resolution of any queries on the invoice within the 20 day period. As at 7 February, a total of £1.8 million of invoices registered in NMEC's Finance Department remained the subject of on-going discussion with zone designers outside the 30 day period; a total of £2.1 million overdue on the 30 day basis at 7 February—and following resolution of queries where they arose—was released for payment on 14 February.

  Athletics
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport what discussions he has had with Sport England concerning the availability of £60 million to fund world-class athletics facilities. [115734]

  Mr. Chris Smith
  We have established the principle with Sport England that, subject to the details being worked out a viable application coming forward, the £20 million coming back from the Football Association and up to £40 million which will not now be required for the conversion of Wembley may be available to fund world-class athletics facilities.

  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport which sites are still under consideration as possible venues for the 2005 world athletics championships. [115735]

  Mr. Chris Smith
  Sport England and UK athletics are currently considering four London locations—Crystal Palace, Hillingdon, Lee Valley (Hackney Wick/Pickett's Lock) and Twickenham.

  Mr. Faber
  To ask the Secretary of State for Culture, Media and Sport, pursuant to his answer of 14 March 2000,Official Report, column 155W, concerning a national athletic stadium, if his Department has discussed with Manchester City Council its proposal for a 18,000 to 20,000 seat permanent athletics stadium to be built on the UKSI site adjacent to the City of Manchester Stadium. [115755]

  Kate Hoey
  As explained in the written reply of 14 March 2000,Official Report, column 155W, officials from my Department and Sport England have discussed proposals for holding the 2005 World Athletics Championships in Manchester with the Chief Executive of Manchester City Council. These discussions included a presentation by Manchester on 21 January at Sport England's offices to officials from UK Athletics, Sport England and DCMS. One of the options discussed during that meeting was the possibility of a permanent national athletics facility on the UKSI site adjacent to the City of Manchester Stadium. However, as my reply of 14 March explained, the decision by UK Athletics to submit a London bid for the 2005 World Athletics Championship and the British Olympic Association confirming that it will only consider a London based Olympic bid has effectively ruled out Manchester as a venue for staging these major events.

  Wembley Stadium
  Mr. Faber
  To ask the Secretary of State for Culture, Media and Sport, pursuant to his answer of 13 March 500W
  2000, Official Report, column 13W, what amendments to the Lottery Funding Agreement relating to Wembley National Stadium were discussed at his meeting with Mr. Ken Bates on 22 December 1999. [115230]

  Mr. Chris Smith
  None.

  Regional Cultural Consortiums
  Mr. Peter Ainsworth
  To ask the Secretary of State for Culture, Media and Sport, pursuant to his answer of 15 March 2000,Official Report, columns 245–50W, if he will list political affiliations, where known, of the members of each regional cultural consortium. [115725]

  Mr. Chris Smith
  Apart from the Chairs, who are appointed by the Secretary of State, members of the Consortiums are appointed from within each region by a variety of nominating bodies. Additional individual members may be co-opted. Where political affiliation is known—which is mainly where representatives are drawn from local Government—it is as follows:

  Member

  Nominating body

  East of England

  Jeremy Clover

  Local Government

  Con

  Irene Macdonald

  Local Government

  Lab

  Anthony Rowlands

  Local Government

  Lib Dem

  Jacqualine Russell

  Regional Development Agency

  Lab

  Wendy Silby

  Local Government

  Con

  Hazel Simmons

  Local Government

  Lab

  East Midlands

  Sandra Barnes

  Local Government

  Con

  Ted Cassidy

  Regional Development Agency

  Lab

  Ian Croft

  Local Government

  Con

  John Dickie

  Local Government

  Lab

  Ian Maclennan

  Local Government

  Lab

  Fiona Martin

  Local Government

  Lib Dem

  Ned Newitt

  Local Government

  Lab

  Christine Rose

  Local Government

  Lab

  North East

  George Gill

  DCMS

  Lab

  John Burton

  Local Government

  Lab

  Aileen Handy

  Local Government

  Lab

  Dorothy Long

  Local Government

  Lab

  Winnie Lowes

  Local Government

  Lab

  Bob Pendlebury

  Regional Tourist Board

  Lab

  Ione Rippeth

  Local Government

  Lib Dem

  Don Robson

  Regional Sports Board

  Lab

  North West

  John Commons

  Local Government

  Lib Dem

  Guy Harkin

  Local Government

  Lab

  Pam Hayward

  Area Museums Council

  Lab

  Steven Matthews

  Local Government

  Lab

  Graham Morgan

  Local Government

  Lab

  David Newton

  North West Sport

  Lab

  Peter Pimbley

  Local Government

  Con

  Kath Reade

  Regional Development Agency

  Lab

  Kath Robinson

  Local Government

  Lab

  South East

  Mary Baldwin

  Local Government

  Lib Dem

  Freddie Emery-Wallis

  Local Government

  Con

  Cheryl Hall

  Local Government

  Lab

  Jon Hartley

  Local Government

  Lab

  Heather Hawker

  Local Government

  Con

  Roger Thomas

  Regional Tourist Board

  Con

  South West

  Robin Bush

  Local Government

  Lib Dem

  Andrew May

  Local Government

  Lab

  Pat Roberts

  Regional Tourist Board

  Lab

  Norman Thompson

  Local Government

  Con

  Viv Vines

  Regional Sports Board

  Con

  501W

  Member

  Nominating body

  West Midlands

  Baroness Crawley

  DCMS

  Lab

  Jeff Carpenter

  Area Museums Council

  Lab

  Stephen Clee

  Local Government

  Con

  Maureen Compton

  Local Government

  Lab

  Phillip Davis

  English Heritage

  Lab

  Elizabeth Edmonsdon

  Local Government

  Lab

  John Fletcher

  Local Government

  Lab

  Mike Freeman

  Local Government

  Lab

  Jean Holder

  Local Government

  Lib Dem

  Sir William Lawrence

  Regional Tourist Board

  Con

  Carl Rice

  Local Government

  Lab

  Gwyn Roberts

  Local Government

  Lab

  Yorkshire

  Chirs Heinitz

  DCMS

  Lab

  David Ashton

  Local Government

  Con

  Tina Davey

  Local Government

  Lab

  David Gemmell

  Regional Tourist Board

  Lab

  Sue Knowles

  Local Government

  Lab

  Reg Littleboy

  Library and Information

  Lab

  Pat Marsh

  Local Government

  Lib Dem

  Christopher Price

  Regional Arts Board

  Lab

  Peter Price

  Regional Sports Board

  Lab

  Mike Pye

  Area Museums Council

  Lab

  Alan Smith

  Local Government

  Lab

  Direct Funding
  Mr. Fearn
  To ask the Secretary of State for Culture, Media and Sport what discussions his Department has held with representatives of the national institutions which receive direct funding from his Department over proposals to replace this direct funding arrangement; and if he will make a statement. [115524]

  Mr. Chris Smith
  There are no proposals to change the funding relationship between my Department and those national institutions which receive direct funding.

  Free Television Licences (Morecambe and Lunesdale)
  Miss Geraldine Smith
  To ask the Secretary of State for Culture, Media and Sport how many pensioners in Morecambe and Lunesdale will benefit from free television licences for those persons aged over 75 years. [115746]

  Janet Anderson
  I refer my hon. Friend to the reply I gave to my right hon. Friend the Member for Alyn and Deeside (Mr. Jones) on 2 March 2000,Official Report, column 350W.

TREASURY

  Aviation Fuel
  Mr. Jenkin
  To ask the Chancellor of the Exchequer what the Government's policy is on the European Commission's proposals to compel member states to impose a tax on aviation fuel. [115288]

  Mr. Timms
  There are no such proposals.

  Mr. Jenkin
  To ask the Chancellor of the Exchequer if he will make a statement on the ECOFIN meeting of 13 March; and what discussions took place concerning taxation of aviation fuel. [115287]
  502W
  Miss Melanie Johnson
  I refer the hon. Gentleman to the answer I gave to my hon. Friend the Member for Dumfries (Mr. Brown) on 17 March 2000,Official Report, columns 352–53W.

  Government Borrowing
  Mrs. Lawrence
  To ask the Chancellor of the Exchequer if he will give details of the Government's borrowing programme in 2000–01. [115904]

  Miss Melanie Johnson
  The main details of the Government's borrowing programme are set out in Annexe B of the Financial Statement and Budget Report, published today. The financing remits for 2000–01 (including the Exchequer Cash Management remit) set by the Government for the Debt Management Office and for National Savings are also published today, in the 2000–01 Debt Management Report. Copies of the Report have been placed in the Libraries of the House. The Report sets out the Government's debt management policy, reviews the Government's borrowing programme in 1999–2000, and provides details of the Government's borrowing programme in 2000–01.

  Small and Medium Enterprises
  Mr. Chope
  To ask the Chancellor of the Exchequer when the report commissioned from Lord Trotman into finance for small and medium enterprises is to be published. [114443]

  Mr. Timms
  This report was published by the Treasury today. Copies are available in the Library.

WALES

  Tourism
  Mr. Barry Jones
  To ask the Secretary of State for Wales what plans he has to discuss with the First Secretary the prospects of the tourist industry in Wales; and if he will make a statement. [115201]

  Mr. Paul Murphy
  I meet the First Secretary regularly and we discuss a range of issues. I am very aware of the importance of the tourist industry to the Welsh economy and was pleased to note that the National Assembly's Economic Development Committee recently endorsed the new tourism strategy of the Wales Tourist Board.

  Welsh Language Road Signs
  Mr. Llew Smith
  To ask the Secretary of State for Wales if he will estimate the cost to public funds of the erection of Welsh language road signs in Wales for each of the years 1990 to 1999. [113301]

  Mr. Hanson
  Expenditure on road signs is incurred by a number of public bodies in Wales and information on costs from 1990 to 30 June 1999 is not held centrally.

  On 1 July 1999 responsibility for this matter transferred to the National Assembly for Wales.

EDUCATION AND EMPLOYMENT

  Higher Education (Student Awards)
  Mr. Boswell
  To ask the Secretary of State for Education and Employment if he will list areas where local education authorities currently may exercise discretion in connection with higher education student awards. [115142]

  Mr. Wicks
  [holding answer 20 March 2000]: Under the Education (Student Support) Regulations 1999, local education authorities (LEAs) are able to exercise discretion in three broad areas: eligibility for support, assessment of income and payment of support.

  LEA discretion when assessing a student's eligibility for support is limited to specific circumstances relating to: the time limits for applying for support and its duration; the information required to assess eligibility; whether a student meets the residence conditions; whether support may be transferred to another course; and whether a student is unfitted to receive support. LEAs also have discretion in determining whether students meet certain conditions for receiving particular elements of support. There is discretion in determining eligibility for fee support when students have previously attended a higher education course or are repeating part of a course. There are specific circumstances in which LEAs have discretion when determining: eligibility for and the amount of disabled students allowances; the amount of care leavers grant for which a student is eligible; the income of dependants; and the maximum student load for which a student is eligible.

  There are also circumstances in which LEAs are able to exercise discretion in determining the residual income of the student, the student's parent or the student's spouse relating to: the financial year of assessment; treatment of a student's income when payments are made as a result of previous obligations incurred; and determining which parent's income to assess when the parents do not live together. LEAs also have discretion to pay support for periods when students are absent from a course and in determining the method of recovering overpayments of support.

  Agricultural Education
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what plans he has to facilitate rationalisation of provision for agricultural education at higher and further levels to reflect changing economic conditions in that industry. [115760]

  Mr. Wicks
  LANTRA, the National Training Organisation for the land based industries, has recently carried out a Labour Market Information and Skills Foresight Survey covering the land-based industries. This exercise provides the foundation for the forthcoming Workforce Development Plan to meet the skill and educational needs of the land-based industries, including agriculture, for the short and medium term. LANTRA is also consulting the agricultural industry on the viability and value of vocational qualifications. A project is underway to revise standards of competence within the land based sector to reduce duplication and increase the relevance of vocational qualifications. The work is due to be completed by 31 December 2001.
  504W
  For higher education, it is for individual institutions to make their own decisions about the scope of agricultural provision.

  Mr. Yeo
  To ask the Secretary of State for Education and Employment if he will make a statement on the decision by the Qualifications and Curriculum Authority to end the setting of GCSEs in agriculture after 2002. [114750]

  Mr. Wicks
  [holding answer 15 March 2000]: The Qualifications and Curriculum Authority (QCA) is working with the awarding bodies to develop advice on the list of GCSE titles to be offered from 2001, QCA will consult widely as part of this exercise, and no decisions have been reached at this stage. There is a wide range of vocationally-related qualifications in agriculture and horticulture already available, including GNVQs in land and environment. We shall ensure that there continues to be an appropriate range of such qualifications in the future for young people.

  E-University
  Mr. Boswell
  To ask the Secretary of State for Education and Employment if he will make a statement on progress in developing the e-university concept. [115766]

  Mr. Wicks
  The Higher Education Funding Council for England has responsibility for the development of the e-Universities project. It is intended to harness expertise in the public and private sectors to exploit information and communication technology and provide novel means of teaching and learning. To date, HEFCE has:established a Steering Group to commission studies to the concept and give practical and detailed advice on options for implementation;
  approved and invited tenders for an initial feasibility study to flesh out the e-Universities concept, to begin by the end of February and report by summer;
  commissioned a study into the market for virtual distance learning.

  Disabled Students
  Mr. Boswell
  To ask the Secretary of State for Education and Employment if special arrangements are made to equalise the level of support for disabled students who have to cross from one part of the United Kingdom to another to study on account of their disability. [115768]

  Mr. Wicks
  Currently, disabled students' allowances (DSAs) are available to all eligible students across the United Kingdom on the same basis. Additional travel costs, incurred by reason of a student's disability, are covered by the DSAs. Students with disabilities studying at least 50 per cent. of a full-time course in Scotland are currently eligible for DSAs. From September 2000, part-time disabled students in England, Wales and Northern Ireland will also be eligible for DSAs.

  Teaching (Quality Assurance)
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what, in relation to the current assessment of academic teaching quality is(a) the annual cost to public funds in each of the last three years, (b) the estimated cost of compliance by the higher education sector and (c) the assessed benefits of the process. [115767]
  505W
  Mr. Wicks
  The Higher Education Funding Council for England has a statutory responsibility under the Further and Higher Education Act 1992 for assessing the quality of the provision which it funds. Quality assessment/subject reviews are carried out under contract between HEFCE and QAA, the cost of which for the last three years is:

  £ million

  1997–98 (HEFCE and DENI)

  4.1

  1998–99 (HEFCE only)

  4.2

  1999–2000 (HEFCE only)

  5.6

  The cost of compliance by the HE sector is not collected centrally.

  Quality assurance provides: accountability for the use of public funds; public information on the purpose and quality of provision to prospective students and other stakeholders; encouragement to improve; and opportunities for sharing best practice across the sector.

  Free School Meals
  Mr. Hilary Benn
  To ask the Secretary of State for Education and Employment if he will list(a) the percentage of pupils entitled to free school meals in each of the grammar schools in England and (b) the average percentage of pupils entitled to free school meals in each local education authority where there are one or more grammar schools. [115505]

  Ms Estelle Morris
  Information on free school meals for individual schools is not published centrally.

  The available information on school meals is shown in the table.

  Percentage of pupils known to be eligible for free school meals in maintained secondary schools 1 in those local education authorities with one or more selective grammar schools, January 1999

  Percentage of pupils known to be eligible for free schools meals

  England

  16.9

  Barnet

  15.9

  Bexley

  14.1

  Bromley

  13.0

  Enfield

  21.4

  Kingston-upon-Thames

  8.8

  Redbridge

  17.7

  Sutton

  8.3

  Birmingham

  33.6

  Walsall

  18.7

  Wolverhampton

  21.6

  Liverpool

  37.6

  Wirral

  26.6

  Trafford

  19.0

  Calderdale

  17.1

  Kirklees

  18.6

  North Yorkshire

  6.9

  Buckinghamshire

  7.4

  Poole

  8.2

  Bournemouth

  11.8

  Stoke on Trent

  24.9

  Wiltshire

  6.9

  Reading

  13.5

  Slough

  16.5

  Devon

  10.1

  506W

  Percentage of pupils known to be eligible for free school meals in maintained secondary schools 1 in those local education authorities with one or more selective grammar schools, January 1999

  Percentage of pupils known to be eligible for free schools meals

  Plymouth

  15.4

  Torbay

  16.2

  Essex

  11.0

  Southend-on-Sea

  15.5

  Kent

  12.3

  Medway

  11.8

  Lancashire

  17.3

  Telford and Wrekin

  19.1

  Cumbria

  13.1

  Gloucestershire

  8.2

  Lincolnshire

  8.7

  Warwickshire

  8.3

  1 Includes selective grammar schools

  Mr. Hilary Benn
  To ask the Secretary of State for Education and Employment what was the average percentage of pupils entitled to free school meals in the(a) 100 and (b) 200 schools with the (i) highest and (ii) lowest proportion of pupils achieving five grade A*-C passes at GCSE in the last year for which figures are available. [115533]

  Ms Estelle Morris
  The proportions of pupils"known to be eligible for free school meals"

  averaged over the 100 maintained, mainstream secondary schools with the highest, and lowest, percentages of 15 year old pupils achieving five or more GCSE/GNVQ grades A*-C in 1999 were two and 44 per cent. respectively.

  The proportions of pupils
  "known to be eligible for free school meals"

  averaged over the 200 maintained, mainstream secondary schools with the highest, and lowest, percentages of 15 year old pupils achieving five or more GCSE/GNVQ grades A*-C in 1999 were 3 per cent. and 42 per cent. respectively.

  School Standards
  Mr. Clappison
  To ask the Secretary of State for Education and Employment (1) in how many secondary schools fewer than 15 per cent. of pupils achieved five A*-C grades at GCSE in 1999; [115291]

  (2) what was the average improvement in science at Key Stage 2 in (a) schools in education action zones and (b) all schools between 1998 and 1999; [115293]

  (3) what proportion of pupils in schools in education action zones obtained five A*-C grade GCSEs in (a) 1998 and (b) 1999; [115295]

  (4) how many pupils were excluded from schools in education action zones, expressed as a proportion of the number of pupils on roll, in (a) 1998 and (b) 1999; [115296]

  (5) what was the rate of truancy of pupils in schools in education action zones, expressed as a proportion of the number of pupils on roll, in (a) 1998 and (b) 1999. [115297]
  507W
  Ms Estelle Morris
  There were 126 secondary schools in England where fewer than 15 per cent. of pupils achieved five A*-C grades at GCSE/GNVQ in 1999. The average improvement, between 1998 and 1999 in the percentage of pupils achieving Level 4+ in KS2 science test was,(a) 12 percentage points in schools in those education action zones which began in 1998–99, and (b) 10 percentage points in all maintained mainstream schools in England.

  The percentage of pupils who attained 5 A*-C GCSE/GNVQs in schools in those education action zones which began in 1998–99 was 20 per cent. in 1998 and 23 per cent. in 1999.

  The permanent exclusion rate for schools in Education Action Zones was 0.25 per cent. in 1997–98. (This is the latest year for which data are available. Exclusion data for 1998–99 from the 2000 Schools' Census will be published in June).

  The percentage of half days missed by pupils due to unauthorised absence in schools in Education Action Zones was (a) in 1997–98, 1.8 per cent. and (b) in 1998–99, 1.7 per cent.

  City Technology Colleges
  Mr. Kenneth Clarke
  To ask the Secretary of State for Education and Employment what differences there will be in legal status and powers between his proposed new academies and existing city technology colleges; and if he will facilitate the creation of more city technology colleges. [115727]

  Ms Estelle Morris
  Details of the legal arrangements for city academies are under consideration. We expect academies to be established under the city technology college (CTC) legislation. However, there will be a different approach to funding, curriculum and the diversity of promoters.

  Computers
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what proportion of the adult population is computer-literate to at least basic level; and what was the annual percentage increase in that figure over the last three years. [115765]

  Mr. Wicks
  A survey carried out in November 1999 showed that 44 per cent. of the adult population in Britain consider themselves to be very or fairly computer literate. 36 per cent. consider themselves to be not at all computer literate. The Department has not collected this information on an annual basis. Therefore no information can be given regarding increases in the overall level of computer literacy.

  Mrs. Dunwoody
  To ask the Secretary of State for Education and Employment if he will list(a) the areas in which he has approved pilot projects for Computers within Reach and (b) the criteria for such projects; and what estimate he has made of the number of people who will benefit from such projects. [115375]

  Mr. Wills
  The selection of computer suppliers for the Computers within Reach initiative is currently underway, and includes assessment of proposals submitted in response to the prospectus published in autumn 1999 and follow-up visits to shortlisted suppliers. The successful 508W
  suppliers, with the geographical areas which they intend to cover, will be published later this spring. In selecting computer suppliers the following criteria are being taken into account:
  evidence of status, financial stability and accountability
  ability to provide quality reconditioned or unsold equipment in sufficient quantities for geographical coverage
  in the case of reconditioning, evidence of a reconditioning track record and the ability to ensure reconditioning to relevant functional and technical standards
  ability to guarantee quality control, safety and software licence protection
  ability to ensure a complete delivery service
  evidence of a plan for set-up and basic training on delivery
  evidence of links with local charities and communities in delivering reconditioned or remaindered computers to low income learners and families learners
  firm proposals for the future continuation of the project once DfEE funding ceases and for other sources of funding (which should be named).

  We anticipate that up to 100,000 people could benefit from the project.

  Education Action Zones
  Mr. Clappison
  To ask the Secretary of State for Education and Employment if he will list the businesses involved in the leadership of each education action zone. [115294]

  Ms Estelle Morris
  Each EAZ is led by a forum made up of the main partners in the zone. In all cases this includes business partners.

  The following EAZ forums are chaired by business people: Barnsley (Non-Executive Director for a number of local companies), Barrow (Furness Building Society), Bedford (Chamber of Commerce), Blackburn and Darwen (MTM Associates), Brighton (KPMG), Bristol (HSBC), Corby (Grant Thornton), Dingle, Granby and Toxteth (ICI), Easington and Seaham (Seaward Electronics), East Cleveland (Cleveland Potash Mining), Grimsby (Tioxide UK), Hastings and St. Leonards (Marshall Tufflex), Lambeth (Shell), North East Sheffield (Yorkshire Water), Salford and Trafford (Kellogs), Wednesbury (Spring), Weston-super-Mare (Ron Fowler Communications), Wigan (North West Water), Wythenshawe (Manchester Airport). Some of the new EAZs have not yet elected their Chair.

  Mr. Clappison
  To ask the Secretary of State for Education and Employment how many education action zones have attracted maximum matched funding from his Department as a result of funds raised from business or other partners. [115292]

  Ms Estelle Morris
  Direct pound for pound match funding of private sector sponsorship was introduced for the second round of EAZs. We will be in a position to provide a detailed statement when they submit their audited financial accounts.

  Education Services (Islington)
  Mr. Hilary Benn
  To ask the Secretary of State for Education and Employment if he will place in the Library
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  a copy of the contract between Islington Local Education Authority and Cambridge Education Associates for the provision of education services. [115637]

  Ms Estelle Morris
  The final contract between Islington Local Education Authority and Cambridge Education Associates is commercial in confidence. However, I have already placed in the Library the "Invitation to Negotiate" that was issued to selected bidders in August. This includes a draft contract, proposed performance standards and their link to the payment mechanism and a description of the services to be outsourced.

  School name

  LEA

  Pupil numbers January 1998

  Pupil numbers January 1999

  Blakelaw/Firfield

  Newcastle upon Tyne

  361

  404

  Earl Marshall/Firvale

  Sheffield

  403

  439

  Regis School/The King's School

  Wolverhampton

  626

  631

  Information on the number of applications for each school is not collected centrally.

  Teachers' Employment Conditions (Disparities)
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what appraisal he has made of disparities in respect of(a) remuneration, (b) conditions and (c) access to Government professional development initiatives for (i) teachers and (ii) further education lecturers. [115764]

  Ms Estelle Morris
  Disparities in pay and other employment arrangements are inevitable in different sectors where staff are employed by different employers. My right hon. Friend has acted to improve the quality of schoolteachers and the attractiveness of school teaching as a profession as a response to the particular issues relating to that profession.

  The terms and conditions of the staff who work in further education are a matter for the employers to determine. The Government play no part in the discussions between the employers and staff representatives on questions relating to terms and conditions of service and are not involved in the setting of pay levels in the sector.

  Age Profiles (Academics)
  Mr. Boswell
  To ask the Secretary of State for Education and Employment what reply he has sent to the representations by the Association of University Teachers on the age-profile of teaching academics. [115071]

  Mr. Wicks
  [holding answer 20 March 2000]: As independent bodies, higher education institutions appoint and retain the staff they need to run their academic programmes. It is for individual institutions to tailor their recruitment policies if they wish to alter the age balance of their staff or to plan for the forthcoming retirement of a particular age group.

  Fresh Start Schools
  Mr. Clappison
  To ask the Secretary of State for Education and Employment how many Fresh Start schools(a) have increased pupil numbers and (b) are oversubscribed. [115290]

  Ms Estelle Morris
  The official school census is undertaken in January of each year and we do not yet have data for January 2000. We can therefore only provide a comparison for the three schools which were opened as Fresh Start schools in September 1998, and not for the other seven Fresh Start schools which opened in September 1999 or later.

  Head Teachers
  Mr. Rammell
  To ask the Secretary of State for Education and Employment (1) when he expects the revised versions of the document entitled "Head Teachers Facing Allegations" to be circulated; [115601]

  (2) what progress his Department has made in the current review of the document entitled "Head Teachers Facing Allegations"; [115602]

  (3) who has been consulted on the current review of the document entitled "Head Teachers Facing Allegations". [115603]

  Ms Estelle Morris
  The document referred to was not produced by my Department. It was produced jointly by representatives of local government employers and the teacher unions.

  Mr. Rammell
  To ask the Secretary of State for Education and Employment how many head teachers in(a) secondary, (b) primary and (c) special schools have been dismissed for misconduct in each of the last three years. [115600]

  Ms Estelle Morris
  The Department does not collect information on the number of head teachers who have been dismissed for misconduct.

  Mr. Rammell
  To ask the Secretary of State for Education and Employment how many head teachers in(a) secondary, (b) primary and (c) special schools were suspended under accusations of misconduct in each of the last three years. [115599]

  Ms Estelle Morris
  The Department does not collect this information.

  Education Spending (Tyne and Wear)
  Mr. Cousins
  To ask the Secretary of State for Education and Employment if he will list the(a) SSA and (b) total estimated spending per head in each local education authority in Tyne and Wear in each year from 1995–96 to 1999–2000; and if he will estimate the comparable figures for 2000–2001; and what assessment

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  he has made of the impact of changes in (i) school population, (ii) overall population and (iii) take-up of free school meals on these figures. [115286]

  Ms Estelle Morris
  [holding answer 20 March 2000]: The tables list (a) the SSA per pupil, calculated by adding primary and secondary SSA together and dividing by total

  Table A: SSA per pupil

  Local Education Authority

  Gateshead

  Newcastle upon Tyne

  North Tyneside

  South Tyneside

  Sunderland

  1995–96

  2,223

  2,337

  2,124

  2,211

  2,200

  1996–97

  2,299

  2,401

  2,237

  2,305

  2,299

  1997–98

  2,355

  2,461

  2,295

  2,409

  2,379

  1998–99

  2,471

  2,599

  2,412

  2,530

  2,500

  1999–2000

  2,597

  2,736

  2,529

  2,662

  2,625

  2000–01

  2,721

  2,878

  2,653

  2,800

  2,743

  Note:

  Cash figures: no allowances have been made for Nursery Vouchers, or for changes in SSA methodology.

  Table B: Spend per pupil

  Local Education Authority

  Gateshead

  Newcastle upon Tyne

  North Tyneside

  South Tyneside

  Sunderland

  1995–96

  1,897

  1,985

  1,892

  1,753

  1,871

  1996–97

  1,934

  2,119

  1,928

  1,771

  1,880

  1997–98

  1,937

  2,167

  1,938

  1,767

  1,870

  Changes in the size of the school population do not have a direct impact on the SSA per pupil, nor do changes in the overall population and take up of free school meals, since they do not form part of the calculation of an authority's education SSA. No assessment can be made of the impact of changes in population and take up of free school meals on overall expenditure per pupil.

  Special Educational Needs
  Hesford
  To ask the Secretary of State for Education and Employment how pupils with special educational need will be supported and advised in Excellence in Cities areas. [115048]

  Jacqui Smith
  Pupils with special educational needs (SEN) in all areas of the country, including Excellence in Cities (EIC) areas, are supported by schools and LEAs in accordance with the guidance in the SEN Code of Practice. My right hon. Friend aims to consult publicly later this year on a revised SEN Code of Practice. The revised Code is expected to come into effect in September next year. Within EIC areas pupils with SEN in mainstream schools benefit from all aspects of Excellence in Cities. In addition special schools are eligible to become specialist or beacon schools as part of the specialist and beacon school expansion under EIC.

CABINET OFFICE

  Relocation
  Mr. Hunter
  To ask the Minister for the Cabinet Office what relocation companies the Government makes use of when relocating civil servants. [115379]

  Mr. Stringer
  Departments and agencies have delegated authority to make their own arrangements for employing relocation companies. No central record of relocation companies is maintained.
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  numbers of pupils between five and 15 used in the SSA methodology; and (b) spending per pupil in LEA maintained primary and secondary schools for 1995–96 to 1997–98, the latest year for which finalised figures are available, based on Net Institutional Expenditure, which is not directly comparable with the SSA figure.

  Civil Service Entrants
  Mr. Hilary Benn
  To ask the Minister for the Cabinet Office what is the average starting salary for new graduates employed by the Civil Service. [115487]

  Mr. Stringer
  Salary ranges and pay arrangements vary from Department to Department. Information is not held in the form requested. Entrants to the Civil Service Fast Stream Development Programme can expect salaries in London to start from around £17,500, with additional amounts for relevant experience.

  Many graduates join the Service as junior managers. The average starting salary at this level during 1998–99 was £15,640.

LORD CHANCELLOR'S DEPARTMENT

  Property Law Report
  Mr. Clifton-Brown
  To ask the Parliamentary Secretary, Lord Chancellor's Department what plans the Lord Chancellor has to implement the Law Commission report No. 152, entitled "Property Law: Liability for Chancel Repairs." [114045]

  Mr. Lock
  My noble and learned Friend, the Lord Chancellor, announced in response to a written parliamentary question on 29 July 1998,Official Report, House of Lords, column WA201, that the Law Commission Report No. 152, "Liability for Chancel Repairs" would not be implemented. This remains the Government's position.

  Court Fees
  Mr. Brady
  To ask the Parliamentary Secretary, Lord Chancellor's Department what meetings he has had with the Law Society over the Lord Chancellor's proposals to raise court fees. [114046]
  513W
  Mr. Lock
  I have had no meetings with the Law Society over proposals concerning court fees, and there has been no request for such a meeting. We have however consulted the Law Society regarding our proposals, in the usual way. Its response has been considered along with the other responses received.

  Mr. Burns
  To ask the Parliamentary Secretary, Lord Chancellor's Department what meetings the Lord Chancellor has had with the National Association of Citizens Advice Bureaux over his proposals to raise court fees. [114050]

  Mr. Lock
  We have had no meetings with the National Association of Citizens Advice Bureaux (NACAB) over proposals to raise court fees and there has been no request for such a meeting. We have however consulted NACAB regarding our proposals, in the usual way. Its response has been considered along with other responses received.

  Small Claims Courts
  Mr. Gapes
  To ask the Parliamentary Secretary, Lord Chancellor's Department what plans the Lord Chancellor has to assess the effectiveness of the enforcement of decisions of the small claims courts. [114049]

  Mr. Lock
  Since March 1998, we have been engaged in a comprehensive review of the enforcement of all civil court judgments, including small claims decisions. I anticipate being able to report the conclusions of the review in June.

  Crown Court Juries
  Mr. Kidney
  To ask the Parliamentary Secretary, Lord Chancellor's Department what research the Lord Chancellor's Department has commissioned regarding the gender balance of juries in Crown court trials. [114051]

  Jane Kennedy
  The Lord Chancellor's Department has not commissioned any research into the gender balance of juries in Crown court trials.

  Civil Actions
  Mr. McWalter
  To ask the Parliamentary Secretary, Lord Chancellor's Department what plans the Lord Chancellor has to make provision for those for whom the cost of civil actions is increased by a change mid-trial of presiding judge. [114052]

  Jane Kennedy
  Under section 53 of the Administration of Justice Act 1985, the Lord Chancellor may consider claims from parties in respect of those costs incurred where a judge is incapacitated, or dies during a trial and the case has to be re-heard.

  Judiciary (Training)
  Ms Moran
  To ask the Parliamentary Secretary, Lord Chancellor's Department what plans the Lord Chancellor has for training for the judiciary in respect of child contact in cases of domestic violence. [114053]

  Jane Kennedy
  Judicial training is the responsibility of the Judicial Studies Board (JSB) which is a non-departmental public body and is chaired by Lord Justice Waller.
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  Circuit Judges, Recorders and Assistant Recorders newly authorised to hear Private Family Law cases attend a JSB Family Law induction seminar. Thereafter they attend a JSB Family Law continuation seminar every three years. Training on the issues relating to child contact in cases involving domestic violence is given at these seminars.

  Magistrates Courts
  Ms Blears
  To ask the Parliamentary Secretary, Lord Chancellor's Department what steps the Lord Chancellor is taking to ensure that local communities have access to justice in local magistrates courts. [114047]

  Jane Kennedy
  It is the Government's policy that the administration of magistrates courts is best decided locally. It is for each magistrates courts committee to decide how best to deploy their resources, in order to fulfil their statutory responsibility to provide an efficient and effective service to court users.

  The Department does encourage each Committee to take account of new legislation and administrative initiatives.

  Magistrates Courts (Devon)
  Mr. Bradshaw
  To ask the Parliamentary Secretary, Lord Chancellor's Department what recent representations he has received about the future of magistrates courts in Devon; and if he will make a statement. [114044]

  Jane Kennedy
  I have recently received 11 representations from hon. Members, justices of the peace and other local interested parties, following Devon and Cornwall magistrates courts committee's proposals to close 13 of its 25 courthouses.

  The Government's policy is that magistrates courts in Devon are best managed by the local magistrates courts committee. Decisions concerning the number of magistrates courts in its area are for Devon and Cornwall magistrate courts committee to determine.

  Court of Protection
  Mr. Alan Williams
  To ask the Parliamentary Secretary, Lord Chancellor's Department what arrangements have been put in place to monitor the financial affairs of people who lack capacity and who no longer come within the protective jurisdiction of the Court of Protection since the capital threshold was raised to £10,000; what plans he has to raise the threshold further; and what further safeguards he plans to enable ministers to exercise their responsibility for the protective oversight of the financial affairs of the people affected. [115724]

  Jane Kennedy
  The capital threshold of £10,000 is one of the criteria used when considering the appropriate arrangements which need to be made to protect peoples finances where they lack capacity. It is one of a set of stringent criteria applied when determining what level of intervention is required in day-to-day affairs of clients who have widely differing circumstances. The level of monitoring is considered in every individual case.

  I will consider raising the threshold further when the effectiveness of these new arrangements has been assessed.

  Websites
  Mr. Maclennan
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will list the expenditure incurred by his Department, agencies and non-departmental public bodies on(a) the setting up and (b) the operation of websites, indicating the cases in which the expenditure has been above that budgeted; and if he will list for each website (i) the topics covered, (ii) the average number of hits per month and (iii) the estimated expenditure on each website for each of the next three years. [115089]

  Mr. Lock
  The information sought regarding the websites of my Department, agencies and non-departmental bodies is as listed:

  Websites

  1. The Lord Chancellor's Department

  a. Set up costs: £7,368

  b. Operating Costs (1999–2000): £16,200

  c. Topics covered: What's New?; Press notices; The department; LCD research; The courts; Judges & QCs; Magistrates; Speeches; Civil Procedure Rules; Consultation papers; Access to Justice; Legal aid; Civil matters; Individual and Family matters; Criminal matters; Statute Law database; Year 2000; Complaints procedures; and links to related sites.

  d. Average number of unique access hits per month: 22,000

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £65,000

  ii. 2001–02: £65,000

  iii. 2002–03: £65,000

  f. The Department is currently developing a Community Legal Service website which will be launched in April. Final costs are not available at this time.

  2. The Court Service

  a. Set up costs: £18,542

  b. Operating Costs (1999–2000): £16,000

  c. Topics covered: What's New; Court of Appeal and High Court judgments; Practice Directions; Daily Lists for the Supreme Court and the Crown Court (together with their Warned Lists); Supreme Court Costs Office; Crown Court and county court contact details; county court Parish Index; Courts with Divorce, Family and Care jurisdiction in England and Wales; Vexatious Litigants; Civil Procedure Rules Practice Directions; court forms and information leaflets; Court Service Annual report (in English and Welsh); Court Service Plan; Job Opportunities; Judicial Statistics; an Introduction to the Court Service; the Courts' Charter; the Office of the Social Security and Child Support Commissioners; the Immigration Appellate Authority; Special Commissioners for Income Tax; VAT and Duties Tribunal; and links to 19 Related Sites

  d. Average number of unique access hits per month: 27,280

  e. The estimated expenditure on the website for each of the next three years;

  i. 2000–01: £16,000

  ii. 2001–02: £16,000

  iii. 2002–03: £16,000

  3. The Northern Ireland Court Service

  a. Set up costs: nil

  b. Operating Costs (1999–2000): nil. The NICS maintains a number of pages on the Northern Ireland Civil Service website.

  c. Topics covered: Courts Charter and complaints procedures

  d. Average number of unique access hits per month: not monitored by NICS

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  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: unknown at this stage

  ii. 2001–02: unknown at this stage

  iii. 2002–03: unknown at this stage

  4. The Public Trust Office

  a. Set up costs: £2,500

  b. Operating Costs (1999–2000): £2,000

  c. Topics covered: introduction to the PTO; charter statements for each business area; details of the complaints procedure; "dormant funds in court" and links to other relevant sites.

  d. Average number of unique access hits per month: Not currently monitored.

  e. The estimated expenditure on the website for each of the next three years:

  s: i. 2000–01: estimated at £20,000. A contract to re-design, build and maintain the website is about to be let. This will provide both for initial work and ongoing development over the next year.

  ii. 2001–02 and 2002–03: the future location of the work done by the PTO is under consideration, following the Quinquennial Review of the agency published in October 1999. Due to this, it is not possible to say what the expenditure will be nor by which department it might be incurred.

  5. The Public Record Office

  a. Set up costs: Total development cost £2,100,000.

  b. Operating Costs (1999–2000): £70,000.

  c. Topics covered: the public records; the services provided by the PRO and Family Records Centre; the operation of the public records system; the PRO contribution to the National Grid for Learning; information for records managers, conservators and the archives profession; the interactive enquiries service; interactive consultation on new developments; and links to other sites of archival or historical interest.

  d. Average number of unique access hits per month: 1,430,262

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £80,000 (development costs—£500,000)

  ii. 2001–02: £90,000 (development costs—£500,000)

  iii. 2002–03: £100,000 (development costs—£500,000)

  6. Her Majesty's Land Registry

  a. Set up costs: £1,000

  b. Operating Costs (1999–2000): £31,350

  c. Topics covered: About the Land Registry; Exhibitions and Events; Complaints procedure; Areas served by the Land Registry; Direct Access Service; Fees Calculators; Online publications including Annual Report and Accounts; Business Plan; information leaflets; application forms, District Land Registries, Residential Property Price Reports; Guide to Land Registry Services; Feedback facility; Online Property price database.

  d. Average number of unique access hits per month: 29,000

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £44,431

  ii. 2001–02: £44,431

  iii. 2002–03: £44,431

  7. The Law Commission

  a. Set up costs: £2,400

  b. Operating Costs (1999–2000): £12,000

  c. Topics covered: library containing full text of all Law Commission publications since March 1997; background information on the organisation of the Law Commission; summary of projects currently being undertaken by the

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  Commission; information on current recruitment campaigns; information on all law reform projects underway in all government departments ("Law Under Review").

  d. Average number of unique access hits per month: 3,500

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £18,500

  ii. 2001–02: £18,500

  iii. 2002–02: £18,500

  8. The Official Solicitor's Office

  a. Set up costs: nil

  b. Operating Costs: (1999–2000): £120

  c. Topics covered: History of the Office; current legal basis and staffing of the office; areas of work covered and workloads; information for the legal profession and for individuals.

  d. Average number of unique access hits per month: not known.

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £120 (but website development to be reviewed)

  ii. 2001–02: £120

  iii. 2002–03: £120

  9. The Judicial Studies Board

  a. Set up costs: £925

  b. Operating Costs (1999–2000): £1,080

  c. Topics covered: the structure and work of the JSB and its committees; all publications that are available free of charge to members of the public (for example, the "Annual Report" and "Annual Lecture") as well as those publications whose circulation on paper was previously limited simply for financial reasons (for example, the "Equal Treatment Bench Book" and the "Specimen Directions").

  d. Average number of unique access hits per month: 450

  e. The estimated expenditure on the website for each of the next three years:

  iv. 2000–01: £1,000

  v. 2001–02: £5,000

  vi. 2002–03: £3,000

  10. HM Magistrates' Court Service Inspectorate

  a. Set up costs: £7,000.

  b. Operating Costs (1999–2000): £7,208

  c. Topics covered: What's new; Who MCSI are; what MCSI do; how to contact MCSI; Published documents—field inspection, thematic review, business plan and guidelines; Order forms; feedback from the public; links to other related sites

  d. Average number of unique access hits per month: 116

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £15,000

  ii. 2001–02: £6,500

  iii. 2002–03: £6,500

  11. The Legal Aid Board

  a. Set up costs: £47,000.

  b. Operating Costs (1999–2000): £12,920

  c. Topics covered: the Legal Aid Board's Regional Legal Services Committees; details of the Legal Aid Franchise Quality Assurance Standard; Civil contracting documentation; guidance issued by the Legal Aid Board in relation to the current legal aid scheme, the franchising quality assurance standard and on contracting regime; details on the development of legal aid policies and research reports together with draft consultation documents and final versions of documents for the new funding scheme under the Access to Justice Act 1999, including the Funding Code and the guidance on the Code; addresses and locations of legal aid area/regional offices; details of how to obtain legal aid forms; information on current legal aid leaflets;
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  News about legal aid—copies of Press releases, issues of FOCUS, the Board's newsletter to legal aid providers; and other information of importance; Links to other related websites (e.g. LCD/NACAB etc.).

  d. Average number of unique access hits per month: 15,000

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £43,000

  ii. 2001–02: £25,000

  iii. 2002–03: £25,000

  12. The Civil Justice Council

  a. Set up costs: £1,116

  b. Operating Costs: £1,175

  c. Topics covered: the background of the Council; the membership of the Council and its Sub-Committees; and summary reports of Council and Sub-Committee meetings.

  d. Average number of unique access hits per month: Not monitored.

  e. The estimated expenditure on the website for each of the next three years:

  i. 2000–01: £1,175

  ii. 2001–02: £1,175

  iii. 2002–03: £1,175.

HEALTH

  Alcohol Strategy
  Ms Atherton
  To ask the Secretary of State for Health what progress there has been on the National Alcohol Strategy; and if he will make a statement. [111086]

  Yvette Cooper
  The Department is committed to tackling alcohol misuse including its impact on our key priorities of cancer, heart disease and mental health and are continuing to work with key stakeholders across Government, the alcohol field and the alcohol industry, on a coherent and balanced framework for action that we plan to publish later this year.

  Concrete Recycling Plants
  Mr. Oaten
  To ask the Secretary of State for Health what assessment his Department have made on the impact on health of silica dust from concrete recycling plants. [111162]

  Yvette Cooper
  [holding answer 21 February 2000]: The Department has not undertaken any specific studies into the effects on health that might be produced by exposure to dust generated by recycling concrete. Crushing or drilling of concrete releases silicious dust and exposure can lead to silicosis. This is uncommon, but can occur among those exposed through their work. Regulation of levels of dust in the workplace is the responsibility of the Health and Safety Executive while regulation of emissions is the responsibility of the Environment Agency and local authority environmental health departments. Research shows that it is very unlikely that members of the public exposed to low concentrations of dust near to concrete crushing activity would be placed at any significantly increased risk.

  Residential and Nursing Care
  Mr. Kidney
  To ask the Secretary of State for Health what assessment he has made of the variations in local authorities' baseline fee rates for residential and nursing care in England. [110699]

  Mr. Hutton
  The Social Services White Paper, "Modernising Social Services", made clear that contract prices should be determined having regard to providers' costs and planned outcomes for users. The costs of providers of residential care and nursing home care vary across the country.

  Mr. Burnett
  To ask the Secretary of State for Health what proportion of nursing home patients means-tested by social services were granted fully-funded NHS nursing care(a) between 1980 and the judgment of the Court of Appeal in the Coughlan case and (b) from the Coughlan judgment to date. [114739]

  Mr. Hutton
  Information is not available in the format requested. Information on people newly meeting eligibility criteria for continuing National Health Service in-patient care is collected on a quarterly basis. Between 1 April 1995 and 30 June 1999, 125,429 people newly met eligibility criteria for continuing NHS in-patient care. From 1 July 1999 to 31 December 1999 12,076 people newly met eligibility criteria for continuing in-patient care funded by the NHS. Changes in the way the data have been collected since April 1995 may mean that the figures are not comparable.

  Mr. Burnett
  To ask the Secretary of State for Health what funding arrangements exist in other European Union countries for individuals whose needs are primarily for nursing rather than social care; and if he will make a statement. [114738]

  Mr. Hutton
  Information is not available in the format requested. Information on international provision of nursing home care in other European Union countries is contained in Chapter 6 of Research Volume 1 which accompanied the report of the Royal Commission on Long Term Care "With Respect to Old Age", copies of which are available in the Library.

  Mr. Blizzard
  To ask the Secretary of State for Health if he will list by local authority(a) the average cost per resident per week of providing accommodation in council non-residential care homes and (b) the rate paid per resident per week for accommodation in privately run residential care homes. [115117]

  Mr. Hutton
  Information on reported gross expenditure per week of residential placements by local councils for older people on a per capita basis in 1997–98 is contained in the Department's Key Indicator Graphical System, copies of which are available in the Library.

  Coughlan Case
  Mr. Burnett
  To ask the Secretary of State for Health (1) for what reason he has not issued guidance to area health authorities following the Court of Appeal judgment in the Coughlan case; [114737]

  (2) what steps he is taking to ensure that eligibility criteria issued by area health authorities following the judgment of the Court of Appeal in the Coughlan case are lawful. [114736]
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  Mr. Hutton
  We issued interim guidance on 11 August 1999 (Health Service Circular 1999/180 and Local Authority Circular (99) 30). This requires health and local authorities, in consultation with each other and, where appropriate, involving primary care groups, to satisfy themselves that their continuing and community care policies and eligibility criteria and other relevant procedures are in line with the Court of Appeal judgment on the Coughlan case and existing guidance, and to take further legal advice where necessary. The interim guidance also states that where authorities revise eligibility criteria following any review, they should consider what action they need to take to reassess service users against the revised criteria.

  Revised continuing care guidance will be issued in the autumn. In the meantime we continue to monitor the situation.

  NHS Walk-in Centres
  Mr. Dobbin
  To ask the Secretary of State for Health (1) how many NHS walk-in centres have been introduced to date; [115260]

  (2) how many further NHS walk-in centres are planned. [115259]

  Ms Stuart
  There are 36 walk-in centre pilots approved last year. Four have opened to date, with the remaining sites to open by December 2000. Walk-in centres will improve access to and convenience of services for patients.

  No decisions have been made about the number of further walk-in centres which might be developed in the future.

  Private Health Care
  Mr. Dobbin
  To ask the Secretary of State for Health what guidance he gives local authorities on the regulation of private health care. [115282]

  Ms Stuart
  Local authorities do not hold responsibility for the regulation of private healthcare. Private hospitals and clinics are regulated by health authorities under Part II of the Registered Homes Act 1984. Health authorities apply the Act with reference to guidance on the Registration and Inspection of Nursing Homes issued in 1985 by the then National Association of Health Authorities and Trusts. In addition, the Department issued guidance to health authorities in 1995 which was aimed at promoting a more consistent application of regulation by regulation authorities. The Care Standards Bill, currently before Parliament, seeks to introduce a new regulatory system for care homes and private and voluntary healthcare which will be administered by a single body, the National Care Standards Commission.

  Elderly People (Sunderland)
  Mr. Etherington
  To ask the Secretary of State for Health what plans he has to improve the standard of(a) nursing and (b) residential home care of elderly people in Sunderland; and if he will make a statement. [115078]

  Mr. Hutton
  Nursing home standards are maintained and improved through the Nursing Homes Registration and Inspection Unit, which is the responsibility of
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  Sunderland Health Authority and Sunderland Social Services. Residential care homes standards are maintained and improved through the Registration and Inspection Department, which is the responsibility of the City of Sunderland Council. In the future, the inspection and regulation of nursing homes and residential care homes will become the responsibility of the National Commission for Care Standards.

  Mental Health Services (Sunderland)
  Mr. Etherington
  To ask the Secretary of State for Health what plans he has to extend provision for(a) hospital-based and (b) community-based mental health services in Sunderland. [115079]

  Mr. Hutton
  Sunderland health authority has indicated that it plans to expand provision for(a) hospital and (b) community based mental health services through the following initiatives:

  (a) Hospital
  A strategic review of bed provision at the Cherry Knowle Hospital site.

  (b) Community
  Development of an assertive outreach service.
  Out of hours community practice nurse/social worker team.
  Roll out of pilot scheme looking at multi-disciplinary working between a community practice nurse team and social services.

  Social Services
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Health how much was spent on social services(a) nationally and (b) in London in each year from 1979 to 1999. [115104]

  Mr. Hutton
  Gross expenditure on local authority personal social services for England and London is provided in the table.

  Local authority personal social sercives gross expenditure 1979–80 to 1997–98 England and London

  £ million

  Year1

  England

  London 2

  1979–80

  1,489

  3—

  1980–81

  1,844

  3—

  1981–82

  2,038

  3—

  1982–83

  2,249

  3—

  1983–84

  2,492

  645

  1984–85

  2,642

  681

  1985–86

  2,804

  716

  1986–87

  3,080

  794

  1987–88

  3,423

  865

  1988–89

  3,776

  963

  1989–90

  4,204

  829

  1990–91

  4,698

  1,140

  1991–92

  5,127

  1,214

  1992–93

  5,470

  1,294

  1993–94

  6,278

  1,401

  1994–95

  7,503

  1,595

  1995–96

  8,393

  1,771

  1996–97

  9,263

  1,898

  1997–98

  9,984

  2,064

  1 Data for 1998–99 are expected to be published in May 2000

  2 Includes all 33 inner and outer London authorities

  3 Denotes information not available

  Source:

  RO3 return

  Ministerial Visit (Worcester)
  Mr. Luff
  To ask the Secretary of State for Health for what reasons he cancelled his visit to Worcester on 17 March to top-out the new hospital building; what plans he has to reinstate this visit; and if he will ensure that hon. Members whose constituents will be served by the hospital are given adequate notice of such visits. [115630]

  Yvette Cooper
  Owing to other unforeseen diary engagements my right hon. Friend regrets that he was unable to visit Worcester on 17 March. The visit will be rearranged as soon as possible. Hon. Members whose constituents will be served by the hospital will be notified of the revised arrangements.

  Private Treatment
  Rev. Martin Smyth
  To ask the Secretary of State for Health what recent representations his Department has received from patients who have been on NHS waiting lists but have paid for private treatment. [115337]

  Ms Stuart
  We have received a number of letters from patients and hon. Members on this subject.

  Correspondence
  Mr. Swayne
  To ask the Secretary of State for Health when he will reply to the letter of 26 January from Mr. John Wood of 21 The Martels, Barton on Sea. [114728]

  Ms Stuart
  A reply was sent to Mr. Wood on 20 March.

  Telecommunications Masts
  Mr. Breed
  To ask the Secretary of State for Health what assessment he has made of the need for further investigation into the health effects of mobile telecommunications masts. [114189]

  Yvette Cooper
  I refer the hon. Member to the reply I gave him on 16 March 2000,Official Report, column 300W.

SCOTLAND

  Oil and Gas Industry
  Mr. Savidge
  To ask the Secretary of State for Scotland if he will make a statement on the future of oil and gas industry businesses in Scotland. [114012]

  Mr. Wilson
  I am a member of Pilot, the successor body to the Oil and Gas Industries Task Force. It has set up a support group for the oil fabrication sector, involving government agencies and the industry. This group is charged with identifying the way forward, and ensuring that the skills base is maintained.

  Mr. David Stewart
  To ask the Secretary of State for Scotland if he will make a statement on the export opportunities for Scottish businesses in the oil and gas industry. [114025]

  Mr. Wilson
  The Government are working hard to promote exports by the oil and gas industry. It is essential we do everything possible to maximise opportunities for
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  Scottish companies. For example, I recently undertook a four-nation tour of the Far East where the oil and gas sector was central to many of my discussions.

  Scottish Economy
  Mr. Ernie Ross
  To ask the Secretary of State for Scotland when he last met representatives of business and trade unions to discuss the state of the Scottish economy; and if he will make a statement. [114013]

  Dr. Reid
  I meet regularly with representatives of the business community and the trade unions in Scotland. There is widespread recognition of the benefits which the Government's economic policies are producing.

  Mr. Tynan
  To ask the Secretary of State for Scotland if he will ensure that the Chancellor of the Exchequer takes into account the state of the Scottish economy when drawing up his next Budget. [114017]

  Dr. Reid
  My right hon. Friend the Chancellor of the Exchequer will have regard to the economy of the whole UK, including Scotland, in preparing for his Budget.

  Working Families Tax Credit
  Mr. Jim Murphy
  To ask the Secretary of State for Scotland if he will make a statement about the impact of the Working Families Tax Credit in Scotland. [114014]

  Dr. Reid
  We estimate that around 70,000 families in Scotland have taken up the Working Families Tax Credit.

  Mr. Hood
  To ask the Secretary of State for Scotland if he will make a statement on the criteria under which people living in Scotland will be able to take up the Working Families Tax Credit. [114021]

  Dr. Reid
  The Working Families Tax Credit is available to families, either couples or lone parents, who have one or more children; work at least 16 hours a week; are resident in the UK and entitled to work here and have savings of £8,000 or less. We estimate that the WFTC could provide help to 130,000 families in Scotland and that the current take-up in Scotland is around 70,000 families.

  Mr. Worthington
  To ask the Secretary of State for Scotland what reports he has received on the impact of the Working Families Tax Credit on the Scottish economy. [114024]

  Dr. Reid
  The Working Families Tax Credit, along with other measures we have taken, will lift an estimated 60,000 Scottish children out of poverty by the year 2002.

  New Deal
  Mr. Nigel Griffiths
  To ask the Secretary of State for Scotland if he will estimate the number of Scots who have moved from benefits into work under the New Deal scheme; and if he will make a statement. [114015]

  Mr. Wilson
  By the end of December 1999, 21,370 young people in Scotland had secured jobs through the New Deal. A further 2,870 people had found work through the New Deal for those aged 25 or over.
  524W
  Mr. Connarty
  To ask the Secretary of State for Scotland how many people in Scotland have moved into unsubsidised employment as a result of the New Deal; and if he will make a statement. [114027]

  Mr. Wilson
  At December 1999, 18,300 young people in Scotland have moved into unsubsidised employment as a result of the New Deal. A further 1,700 people have entered into unsubsidised employment in Scotland as a result of the New Deal 25+.

  Mr. Brady
  To ask the Secretary of State for Scotland if he will make a statement on the cost of the new deal scheme in Scotland. [114029]

  Mr. Wilson
  Up to the end of January 2000 the cost of New Deal scheme for Young People, in Scotland, was £45 million.

  Parliament Building
  Sir Teddy Taylor
  To ask the Secretary of State for Scotland what recent discussions he has had with the Scottish Executive about the new Parliament building at Holyrood. [114016]

  Dr. Reid
  Responsibility for the new Parliament building rests with the Scottish Parliamentary Corporate Body.

  Disabled People
  Mr. Tom Clarke
  To ask the Secretary of State for Scotland if he will make a statement on the implementation for disabled people in Scotland of the new deal. [114018]

  Mr. Wilson
  New Deal for Disabled People pilots are making good progress. As of January 2000, 2,180 people across Britain previously on incapacity benefits have found work through the programme, including over 300 for pilots based in Scotland. The Government are actively considering what can be provided across the country as a whole, including Scotland. An announcement is expected shortly.

  Scottish Parliament (Elections)
  Mr. Donohoe
  To ask the Secretary of State for Scotland if he will bring forward proposals to amend the Scotland Act 1998 in respect of the method of election of members of the Scottish Parliament. [114019]

  Dr. Reid
  I have no plans to review the system of election of members of the Scottish Parliament.

  Exchange Rate
  Mr. Swinney
  To ask the Secretary of State for Scotland what assessment he has made of the effect of the level of sterling on Scottish manufacturing industry, tourism and agriculture. [114020]

  Dr. Reid
  The Government understand the concerns of organisations and businesses, particularly manufacturers trading within Europe, about the value of the pound. But it is determined to take a long-term view and it would be wrong to let short-term pressures lead back to policies that produced boom and bust in the past. Short-term fixes
  525W
  would be the biggest threat of all to industry, tourism and agriculture with the illusion of temporary relief followed by the reality of long-term damage.

  Scottish Executive (Shared Objectives)
  Mr. Browne
  To ask the Secretary of State for Scotland in what areas of policy he is working jointly with the Scottish Executive to deliver shared objectives. [114022]

  Dr. Reid
  We are working jointly with the Scottish Executive across a wide range of issues to optimise the benefits of devolution for the people of Scotland. The Joint Ministerial Action Committees on Poverty and the Knowledge Economy are good examples of such joint working.

  National Pay Awards
  Mr. Malcolm Bruce
  To ask the Secretary of State for Scotland if he will bring forward measures to compensate local authorities for national pay awards above inflation through an appropriate contribution to the block grant; and if he will make a statement. [114023]

  Dr. Reid
  The Scottish Executive have the responsibility for determining the level of support which it makes available to local authorities in Scotland. The total budget that is available to the Scottish Executive for this and other purposes is determined in accordance with the Statement of Funding Policy published by HM Treasury in March 1999.

  Forth Bridge
  Mr. Dalyell
  To ask the Secretary of State for Scotland if he will make a statement on his role in respect of the safety and maintenance of the Forth Bridge. [114028]

  Mr. Wilson
  My right hon. Friend takes an active interest in the safety and maintenance of the Forth Bridge but it is primarily for the Rail Regulator to ensure that Railtrack complies with its obligations under the Railways (Safety Cases) Regulations 1994 and other legal obligations in relation to the safety of the bridge and its operation.

  Pig Industry
  Mr. Nicholas Winterton
  To ask the Secretary of State for Scotland what discussions he has held with the First Minister on the future of the Scottish pig industry. [114030]

  Mr. Wilson
  My right hon. Friend has regular discussions with the First Minister on a wide range of issues.

  Television Reception (Rural Areas)
  Mr. Alasdair Morgan
  To ask the Secretary of State for Scotland what discussions he has had with the Secretary of State for Culture, Media and Sport regarding television reception in rural areas of Scotland. [114031]

  Mr. Wilson
  The Government are aware of the particular problems in receiving terrestrial television signals in rural areas. I understand that, with the introduction of digital television, new analogue transmitters are no longer being 526W
  planned. However, the BBC and Independent Television Commission, which are responsible for the television transmission network, are now considering, in consultation with the digital broadcasters, the Government, and other interested parties, how to develop the coverage of digital television across the whole of the UK. The Government will ensure that no fewer than those who presently receive analogue television (in Scotland 98.1 per cent. of the population) can receive the main free-to-air channels digitally before the analogue signals are switched over. The process of switch over is subject to close liaison and consultation with all those involved, including viewers.

  Unemployment
  Mr. Wray
  To ask the Secretary of State for Scotland if he will make a statement on the claimant count rate of unemployment in Scotland(a) currently and (b) a year ago. [114026]

  Mr. Wilson
  The claimant count rate of unemployment in Scotland in February 2000 was 5.1 per cent., down from 5.6 per cent. in February 1999, and the lowest rate since April 1976.

ADVOCATE-GENERAL

  Scottish Legislation
  Mr. Savidge
  To ask the Advocate-General if she will make a statement on the arrangements for considering whether Bills passed by the Scottish Parliament are within its legislative competence. [114033]

  The Advocate-General for Scotland
  I receive copies of all Bills introduced to and passed by the Scottish Parliament to enable me to consider whether their provisions are within the legislative competence of the Scottish Parliament. Similar arrangements enable all UK Departments with an interest to do likewise.

  Responsibilities
  Sir Teddy Taylor
  To ask the Advocate-General if she will make a statement on the opinions for which she has inherited responsibilities from the Lord Advocate. [114034]

  The Advocate-General for Scotland
  One of my functions as a UK Law Officer is to give opinions, when required, to the UK Government on Scots law. This function was performed by the Lord Advocate before devolution.

  European Convention on Human Rights
  Mr. Browne
  To ask the Advocate-General what recent discussions she has had with the Lord Advocate and Solicitor-General regarding the incorporation of the European convention on human rights into Scots law. [114036]

  The Advocate-General for Scotland
  I have regular discussions with the Lord Advocate and Solicitor-General regarding a variety of matters of mutual interest.
  527W
  Mr. David Stewart
  To ask the Advocate-General what steps she is taking to monitor the impact of the European convention on human rights in Scotland. [114037]

  The Advocate-General for Scotland
  Questions relating to the European Convention on Human Rights may now be raised as "devolution issues" in courts or tribunals in Scotland and must be intimated to me under schedule 6 of the Scotland Act 1998.

  Devolution Notices
  Mr. Connarty
  To ask the Advocate-General what subjects have been raised with her as devolution issues; and how many cases have now been intimated to her. [114038]

  The Advocate-General for Scotland
  Since May 1999 around 500 devolution notices have been intimated to me. A variety of subjects have been raised and almost all have been in criminal cases. Common subjects include: delay in raising proceedings; access to a solicitor; legal aid; temporary sheriffs; questioning in road traffic cases; and use of hearsay evidence.

  Lockerbie
  Mr. Dalyell
  To ask the Advocate-General what discussions she had with the Solicitor-General for Scotland before his recent visit to Washington to discuss the Lockerbie trial. [114035]

  The Advocate-General for Scotland
  I meet the Lord Advocate, as he now is, from time to time, and our discussions are wide-ranging.

HOUSE OF COMMONS

  Trade Union Recognition
  Angela Smith
  To ask the President of the Council to ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, if it will formally recognise the TGWU 1/427 parliamentary staff branch which represents the staff of hon. Members. [114064]

  Mr. Kirkwood
  No. The Commission is not responsible for the pay and conditions of service of Members' staff. Therefore, the question of formal recognition of a union by the Commission does not arise.

  Modernisation
  Mr. Rammell
  To ask the President of the Council what assessment she had made of the impact of the work of the Select Committee on Modernisation of the House of Commons on the way in which the House operates. [114065]

  Mr. Tipping
  I refer my hon. Friend to the oral answers I gave earlier today to my hon. Friends the Members for Rotherham (Mr. MacShane) and North-West Norfolk (Dr. Turner),Official Report, column 853.

  Mr. Gapes
  To ask the President of the Council if she will make a statement on future plans to modernise the working hours of the House. [114066]
  528W
  Mrs. Beckett
  My hon. Friend will be aware that at present, we have experiments both on providing extra sittings in Westminister Hall and on bringing forward the hours of sitting on Thursday.

  I have no further proposals to change sitting hours at present.

  Westminster Hall
  Helen Jackson
  To ask the President of the Council if she will make a statement on the progress of the experiment with sittings in Westminster Hall. [114067]

  Mr. Tipping
  The experiment of sittings in Westminster Hall appears to be successful and will be evaluated by the Select Committee on Modernisation of the House of Commons in due course.

  Miss McIntosh
  To ask the Chairman of the Accommodation and Works Committee what plans the Committee has for improving the acoustics for sittings in Westminster Hall. [115250]

  Sir Sydney Chapman
  An additional loudspeaker is being installed adjacent to the press table in the Grand Committee Room, which should improve audibility in that area; however, as Sittings of the House in Westminster Hall are still an experiment, it would be premature at this time to allocate additional funds, which could prove to be nugatory, in order to improve the acoustics further.

  If my hon. Friend has been experiencing problems with the acoustics in the Grand Committee Room, she may wish to discuss the nature of the problem directly with the Director of Parliamentary Works.

  Legislation Timetables
  Mr. Levitt
  To ask the President of the Council what progress there has been in the development of timetables for legislation in the House this Session. [114068]

  Mrs. Beckett
  I refer my hon. Friend to the oral reply I gave earlier today to my hon. Friend the Member for Edinburgh, South (Mr. Griffiths),Official Report, column 851.

  Parliamentary Website
  Mr. Baker
  To ask the Chairman of the Information Committee what plans the Committee has to review the design of the parliamentary website. [115248]

  Mr. Allan
  As part of its ongoing examination of the information services provided for Members, the Information Committee has discussed the design and content of the parliamentary website with officials. I am advised that a number of improvements have been initiated. These include the addition of Bound Volume text of Hansard back to Session 1988–89, a rebuilding of the publications search engine, the introduction of links to a redesigned internet POLIS and the preparation of a site map.

  Discussions are also taking place with the House of Lords about site design. These include consideration of a major redesign of the site. The work is being undertaken by the Joint Working Party on Information Management and the Parliamentary Intranet, who will be identifying priorities for improvements to the site

  529W
  and making recommendations accordingly. Members of the Information Committee have agreed to provide feedback on their use of the parliamentary website as part of this process.

  E-mail and Internet Service
  Mr. Fabricant
  To ask the Chairman of the Information Committee if he will make a statement concerning the continued provision of free remote access to the parliamentary e-mail and internet service. [114055]

  Mr. Allan
  There are currently no plans to withdraw the arrangements for free access to the PDVN. As the hon. Member knows, the Parliamentary Communications Directorate is presently conducting trials of Virtual Private Network (VPN) technology, which would enable Members' constituency offices to connect to the PDVN using an Internet Service Provider (ISP). VPN access to the PDVN would be quicker and more reliable than the current system. No choice of ISP has yet been made and no decision about any charging arrangements has been taken. The Information Committee is closely monitoring developments.

  Committee members generally are committed to the principle of providing the best information services at the least cost to Members. We will consider the proposals
  530W
  from PCD from that point of view and make recommendations accordingly. However, the Committee does not have the authority to make spending decisions of this nature and any recommendation from the Committee with financial implications will have to be passed to the Finance and Services Committee and then on to the House of Commons Commission for decision.

  Refreshment Department
  Miss Kirkbride
  To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what the salaries are for the two most senior positions in the Refreshment Department in financial year 1999–2000; and what the percentage increase in those salaries will be in the next financial year. [115252]

  Mr. Kirkwood
  Information on the salary ranges of staff of the House is published in the Commission's Annual Report (Annexe B, Appendices 1 and 2). The pay rates shown in Appendix 2 to Annexe B were increased by 2.9 per cent. and 2.3 per cent. for Band 3 and Band A2 respectively, on 1 April 1999. The pay remit for the next financial year has not yet been approved by the Commission. Pay increases for staff in these pay bands are linked to performance and the salaries of individual members of staff are not published.

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

Royal Assent
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Consolidated Fund Act.

Tax Policies
2.36 p.m.
The Earl of Northeskasked Her Majesty's Government:
Whether their tax policies are redistributive.
Lord McIntosh of Haringey: My Lords, taxation policy is a matter for the Chancellor of Exchequer. As the noble Lord may be aware, the Chancellor of the Exchequer will this afternoon be delivering a Budget Statement in another place.
The Earl of Northesk: My Lords, I am bound to say that I did not anticipate much more of an Answer. Can the Minister confirm that net public investment has fallen in the past year? Does not that fact, taken together with the undoubted size of the Chancellor's war chest, show that the Government's tax policies, far from being based on the altruism of redistribution of Robin Hood, are more akin to a cross between the Artful Dodger picking our pockets by stealth and Scrooge hoarding the loot?
Lord McIntosh of Haringey: My Lords, the noble Earl may be at liberty to say in advance what the Leader of the Opposition will say in response to the Budget, but I am not in a position to anticipate what the Chancellor of the Exchequer will say. If I said something different, I would probably be fired; and if I got it right I would probably be fired.
Lord Newby: My Lords, does the Minister agree with Martin Wolf yesterday? In commenting on the latest effusion from Mr William Hague on tax policy, he described it as intellectually infantile?
Lord McIntosh of Haringey: This is safe ground! Yes, my Lords.
Lord Saatchi: My Lords, is the Minister aware of the recent admission by No. 10 that the tax burden is going
136
up? In the light of that admission, what would the noble Lord say to your Lordships about his statement at col. 1246 of Hansard of 23rd July 1999:
"[The noble Lord. Lord Saatchi,] said that the tax burden has increased"?
The Minister continued:
"Those claims about … tax are wrong".
He added:
"Even if the claims were true—and they are not—there is no need for us to spend any more time on the issue".
How does the Minister describe his statement?
Lord McIntosh of Haringey: My Lords, I would refer the noble Lord now, as I did then, to the pre-Budget report and the figures on which all the calculations of the tax burden are based.

Euro/Sterling Exchange Rate
2.38 p.m.
Lord Boardmanasked Her Majesty's Government:
By what percentage the euro has depreciated against sterling since its introduction and what is the effect of this upon the British economy.
Lord McIntosh of Haringey: My Lords, the euro has depreciated against sterling by around 12 per cent since its introduction at the start of 1999. Over this period the euro has also depreciated by around 17 per cent against the dollar and by around 23 per cent against the yen.
It is, however, difficult to isolate the effects of exchange rate changes from other influences on the economy.
Lord Boardman: My Lords, because of the depreciation of the euro against sterling, are not United Kingdom exporters under severe pressure? Since the Chancellor of the Exchequer handed over the control of monetary policy to the Monetary Policy Committee, have the Government proposals to help our export industries in the present climate?
Lord McIntosh of Haringey: My Lords, I do not want in any way to underestimate the difficulties of a strong pound for manufacturing industries. However, our exports in the last quarter—October to December—of last year were 4.8 per cent above the figures in the similar period for 1998. Manufacturing output has risen by 2.7 per cent compared with the comparable period. Although the difficulties are great, manufacturing industry and our economy generally are responding well to the challenge.
Lord Marsh: My Lords, exporters are undoubtedly having a difficult time. However, importers are having a happy time as a result of the strength of sterling. Does the Minister have a net benefit/disbenefit figure?
Lord McIntosh of Haringey: My Lords, I imagine that there must be hundreds of benefit/disbenefit figures which vary according to where one's interest lies. If one is an importer one's interests are one way; if one is an exporter they are another way. If one is a consumer it depends on whether the balance of one's consumption is from imports or home grown goods. I do not think that conceptually, let alone in terms of facts available, there is any such single figure.
Lord Taverne: My Lords, is it not becoming more evident by the day that in important parts of the manufacturing industry—I refer to the shipbuilding and motor industries—the high pound is having a devastating effect? Will the Government consider seriously the suggestion I made on 27th January that they ask the Bank of England to intervene on the exchanges by way of sterilised intervention? That can be done in a way which can bring down the value of the pound without adverse effects on interest rates or inflation.
Alternatively, do the Government take the same view as the Conservative spokesman in this House? The noble Lord said:
"If we have a strong exchange rate for our currency, we should simply say 'Hooray—.[0fficial Report, 27/1/00; col. 1665.]
Lord McIntosh of Haringey: My Lords, my answer has to be the same as that which I gave to the noble Lord on 27th January. I said:
"the best contribution the Government can make to exchange rate stability consistent with their objective of a stable and competitive pound over the medium term is to maintain sound public finances and low inflation".—[Official Report, 27/1/00; col. 1661]
I believe that the Chancellor will give some force to that statement later today.
Lord Stoddart of Swindon: My Lords, in the light of my noble friend's Answer, is it not dishonest of BMW to blame the strength of the pound for its difficulties when in fact what is to blame is the weakness of the euro? The euro has depreciated and the pound has appreciated. Will my noble friend confirm that since 1992 sterling has been firm and stable against the yen, the dollar and other currencies? Therefore, is not the BMW position just an excuse for wanting to get out of the British car industry?
Lord McIntosh of Haringey: My Lords, BMW gave a number of reasons for its action, but it is not appropriate for me to indulge in a detailed critique of the company. The Secretary of State for Trade and Industry has already made his views clear. However, as regards my noble friend's second point, it is true that the pound is strong principally against the euro and not against the dollar or the yen. Therefore, I believe that it is correct to say that instead of appreciation of the pound it is depreciation of the euro.
Lord Forsyth of Drumlean: My Lords, does not the Minister's original Answer and his last answer indicate that if the pound had been abandoned and we had joined the euro at the same time as other countries, the
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savings and pensions of people in this country would now be worth 12 per cent less? Had we taken the advice of those who wished to abandon the pound, our future purchasing power against other world countries would be greatly diminished. Therefore, given the figures that the Minister has announced, does he not believe that the enthusiasm on his Benches for the euro ought to be reconsidered?
Lord McIntosh of Haringey: My Lords, in response to the question from my noble friend Lord Stoddart, I refrained from saying—he would not have liked it— that one of the reasons BMW gave for selling Rover was that we had not entered the single currency. However, I really do think that noble Lords opposite must make up their minds as between attacking the strong pound as being damaging and saying, as did the noble Lord, Lord Forsyth, that a weaker pound aligned with the euro would be damaging in other ways. Of course there are swings and balances; some things are better and some things are worse.
Lord Tomlinson: My Lords, does my noble friend agree that, notwithstanding the impact on manufacturing, it is a far more satisfactory position to be grappling with the strength of sterling than the situation we were in a few years ago when we were forced into humiliating exit from the exchange rate mechanism?
Lord McIntosh of Haringey: My Lords, I believe that that is too simple. With due respect to my noble friend, there are advantages and disadvantages. As I tried to say to the noble Lord, Lord Taverne, and as some noble Lords opposite have said, we do not fully understand what makes exchange rates tick. Attempts to deal with them by direct intervention are likely to be doomed to failure.
Earl Ferrers: My Lords, may I ask the Minister an even simpler question? He said that the British manufacturing industry was coping well with the strong pound. Can he say how British agriculture is coping with the strong pound and what, if anything, the Government propose to do about it?
Lord McIntosh of Haringey: My Lords, British agriculture has much the same difficulty and for much the same reason. I acknowledge those difficulties, but as regards future government policy it would be unwise for me to venture comments just before the Budget Statement.
Lord Pearson of Rannoch: My Lords, bearing in mind the Minister's answer to the noble Lord, Lord Stoddart of Swindon, will he go further and agree that, as some 60 per cent of all world and British trade is conducted in dollars, and as the pound has been the most stable of all world currencies against the dollar for the past six years, he will do his best to persuade his colleagues in government and others of a Europhile

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tendency that they must stop referring to the strong pound and talk instead more accurately about the weak euro?
Lord McIntosh of Haringey: My Lords, I thought that I had answered that question by acknowledging that the pound is particularly strong against the euro and stronger than against the dollar or the yen. That was the thrust of my first Answer as well as of supplementary answers.
Lord Lea of Crondall: My Lords, does my noble friend agree that, contrary to what has been stated from the Opposition Benches, when the euro was introduced as the ecu in 1979 it was at parity with the dollar and that today it is at parity with the dollar? Does he further agree that that means that in a broad sense these two great currencies have been equal to each other for 20 years and that the American and European economies are equal with each other? The only difference is that the American economy has a deficit of 200 billion dollars a year whereas Europe's is in surplus?
Lord McIntosh of Haringey: My Lords, my noble friend rightly identifies the beginning and the end of his statistical series. He will agree that the dollar/euro, or dollar/ecu, parity has varied considerably at different times in the intervening period. However, in terms of the original Question, it is true that the euro has depreciated against sterling by around 12 per cent since its introduction at the start of 1999. That was a particularly high period for the euro, when at the end of 1998 it rose in anticipation of the creation of the single currency. The longer term trend had been much closer to the present position than it was at the beginning of 1999.
Lord Saatchi: My Lords, can the Minister say whether the House should attach the same weight to his denials about European tax harmonisation as it does to his earlier denials about the domestic tax burden? In case, by some mischance, the Government do not live up to their promises on vetoing European tax harmonisation, will he tell the House the amount of extra tax that the average British family would pay if Britain's tax burden was the same as that of Euro-land?
Lord McIntosh of Haringey: My Lords, there has been no change in the answers that I have given about tax harmonisation, and I have no intention of announcing further tax policies this afternoon.
Lord Boardman: My Lords, does the Minister agree that the increased interest rates which have arisen since 1997 and the extra burden of taxation which has been imposed during the same period are making it particularly difficult for industries which are dependent largely on exports to survive?
Lord McIntosh of Haringey: My Lords, all higher rates of interest make it harder for exporters in
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particular and, indeed, for any business to finance its own operations. That is a matter of fact. However, the relatively narrow bands within which interest rates have changed since May 1997 have been very much smaller than those experienced in the years of the government of the party that the noble Lord supports.

Iraq: UN Sanctions
2.50 p.m.
Lord Hoosonasked Her Majesty's Government:
What benefits accrue to the people of Iraq from United Nations sanctions; and whether they will take steps to get the sanctions lifted.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, sanctions have contained for almost 10 years the threat that the Government of Iraq pose to their neighbours and to their own people, including the Kurds and the Shia. Resolution 1284. a British initiative which was adopted in December 1999, provided for the first time for the suspension of sanctions if Iraq co-operates with UN weapons inspectors. It also unconditionally makes major improvements to the UN humanitarian programme which Kofi Annan said last week has already provided substantial assistance in addressing the pressing humanitarian needs of the Iraqi people.
Lord Hooson: My Lords, I thank the Minister for that reply. Does she and do the Government appreciate that there is great public concern about a policy which seems to inflict an enormous amount of hardship on the common people of Iraq, particularly the children, and which at the same time seems to have entrenched Saddam Hussein and his entourage in power and prosperity? Surely, those cannot have been the objectives of this policy. Therefore, is the policy not only flawed but, after all these years, has it not also failed? Should not the Prime Minister now take the initiative and seek to negotiate with President Clinton in the United States and other international leaders to have the policy reviewed urgently?
Baroness Scotland of Asthal: My Lords, first, I acknowledge the concern expressed by the noble Lord. We must be absolutely clear as to who is responsible for the suffering. Resolution 1284, which was a British initiative, was pressed hard and was successful in assisting the suffering people in Iraq. Iraq now has the advantage of 8 billion dollars' worth of aid which it can use for humanitarian processes if it so chooses. It is a matter of deep regret and highly reprehensible that Saddam Hussein has chosen—that is what it is; he has chosen—to allow his people to suffer when the means for their relief is immediately available. Sanctions have contained him for a period of 10 years, and because of the way in which the Kurds and the Shia people have suffered, we know that he needs containment. The resolution of this issue is in his own hands. The most

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recent resolution enables him, if he so chooses, to obtain suspension. I regret to say that it is a matter for him.
Lord Moynihan: My Lords, pursuant to that answer, and given Iraq's rejection of UN Security Council Resolution 1284 and Saddam Hussein's track record of nearly nine years of violation, can the Minister envisage a scenario in which he will comply with UN Security Council resolutions? If he does not, as I anticipate, does the Minister agree that it will be essential to find ways to lift the burden of sanctions from the Iraqi people so as to prevent Saddam Hussein from using them as political pawns, while maintaining sanctions on his regime so as to deny him simultaneously the ability to reconstitute his weapons of mass destruction and to rebuild his armed forces?
Baroness Scotland of Asthal: My Lords, we have looked at those issues very carefully. The current resolution enables him to do that. We cannot legislate for his behaviour. We cannot push him to behave properly. One has to ask how the suffering of the people of Iraq would be relieved if the sanctions were not in place. Saddam does not care for his people. That is the reality of the situation. I draw your Lordships' attention to the way in which the northern part of Iraq, which is not under his direct administration, has prospered as a result of the resolution in comparison with what has happened in the south. Before the war came about, Saddam's subjugation of the people in the north caused acute suffering. As a result of the sanctions and the liberalisation of the situation, the position of the northern Iraqis, who are in control of their administration, has improved steadily. We have looked at this matter carefully again and again. The resolution which is currently in place is the best that can be devised, and it keeps pressure on the administration, which must change.
Lord Islwyn: My Lords, will the Minister recognise that the oil quota is inadequate for humanitarian needs? That is why many thousands of children are dying in Iraq. Is that not a terrible tragedy? Is that not also the reason why two senior United Nations officials resigned over this sanctions policy? Is it not time for the Government to recognise that sanctions, which have now been in operation for 10 years, simply will not topple Saddam Hussein and his regime?
Baroness Scotland of Asthal: My Lords, I say again that the purpose of sanctions is not to topple Saddam Hussein's regime. However, it is effective in containing him. He has not been able to develop his weapons of mass destruction over the past 10 years. He has not been able to visit the kind of horror on the people of Iraq and his neighbours that he did previously. Sanctions have been mitigated by virtue of the new resolution. We care passionately about the people who are suffering in Iraq. For that reason, we put all our energy into making sure that the most recent resolution was passed successfully. There are opportunities for humanitarian aid to be delivered,
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and it is being delivered. If Saddam Hussein wants to ensure that that happens, he can do so. We know, for example, that one-quarter of the medical supplies sent to Iraq are not distributed. Therefore, although I empathise deeply with and share the concerns of noble Lords, regrettably the resolution of the problem is not the removal of sanctions.
Baroness Williams of Crosby: My Lords, I fully accept the sincerity and passion of the Minister. Although we on these Benches have broadly supported the sanctions policy against Iraq, perhaps I may ask the Minister if she would be so kind as to look at some of the details. I am troubled by the fact that in Committee 661 the United States and the British Government objected specifically to the supply of railway spare parts. The railways provide the main means of transporting humanitarian aid throughout Iraq. In consequence, many aid programmes have, in effect, been stopped at the ports because they have not got beyond them. Does the Minister accept that many of us, like the noble Lord, Lord Moynihan, and others, believe that we are beginning to come to the end of this policy and need to look at more focused and, perhaps I may say, harsher sanctions addressed at the ruling elite in Iraq and not at the ordinary people?
Baroness Scotland of Asthal: My Lords, I certainly understand the sentiment expressed by the noble Baroness. I shall of course undertake to look at the situation regarding Committee 661. However, I make it clear to the House that Britain has put a stop to only about 1 per cent of the contracts, usually because of lack of information or a failure to make a clear division between those matters which are permitted and those which are not. Non-clearance of contracts is extremely limited. We are doing everything in our power to make sure that the process is smooth, speedy and that it directly affects only those issues which it should properly do.

Gold Auctions
2.59 p.m.
Lord Fraser of Carmyllieasked Her Majesty's Government:
Whether the outcome to date of their auction of United Kingdom gold reserves is satisfactory.
Lord McIntosh of Haringey: My Lords, the purpose of the programme of gold auctions is to achieve a better balance in the reserves portfolio. It is a medium-term programme. The auctions held to date have demonstrated that they can be successfully used to sell gold in an open and transparent way.
Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for his reply. In rejecting the unequivocal advice of the Governor of the Bank of England that those bullion sales should not take place, was it not the declared intention of the Government that those decisions should make the poor people of the world

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richer? Can the Minister say whether those poor people of the world have been made richer or poorer as a result of those decisions?
Lord McIntosh of Haringey: My Lords, the original decision was a matter for the Government, not for the Governor of the Bank of England. As to what happened to the money received from the sale of gold, as the noble and learned Lord may know, it has been invested in dollars, euros and yen. The Governor has described that policy as perfectly reasonable.
Of course, the issue of the poor people of the world has been in our minds at all times when considering the policy, but 25 tonnes, which is the amount sold at each auction, is 1 per cent of the annual world gold mining supply. The groundstocks of gold are something like 100,000 tonnes. We must keep the size of the auctions in proportion.
Finally, if the auctions had had an effect, they would have reduced the price of gold. They have not. The price of gold now is within a few dollars of what it was on 6th May 1999.
Lord Taverne: My Lords, are the Government aware that the speed of the sales is causing considerable concern to the government of South Africa?
Lord McIntosh of Haringey: My Lords, that concern was expressed at the beginning of the programme and has been expressed from time to time since then. We believe, frankly, that it is 'wrong. It is not the speed of the sales but the size which matters. Our views, which we expressed to the government of South Africa at that time, have been confirmed by the fact that there is no evidence that the sales have forced down, or helped to influence, gold prices internationally.
Lord Dubs: My Lords, at a time of floating exchange rates, what purpose do the gold reserves actually serve?
Lord McIntosh of Haringey: My Lords, that is a good question. Of course, gold reserves bring nothing to us in interest payments. Since the gold disposal policy began in May last year, we have received in five auctions, including one this morning, over 1.2 billion dollars in receipts and we have made something like 1.9 million dollars up to 15th December in interest received on the currency reserves; I do not have the more recent figures. That is of considerable benefit to the Exchequer.
Lord Forsyth of Drumlean: My Lords, will the Minister indicate why the Government chose to announce in advance of the sales their intention to sell the gold? Will he tell the House what is his estimate of the cost to the taxpayer of that decision and whether, with the benefit of hindsight, it would have been better not to have done so?
Lord McIntosh of Haringey: My Lords, the decision to announce in advance the auction of gold was taken in accordance with our general principles of
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transparency in our economic policy. There is no evidence that there has been any cost to the taxpayer. As I said, the gold has been sold at, or very close to, market prices, including the sale this morning. The market price has not come down since the commencement of the gold sales policy. I do not know what other evidence the noble Lord can adduce to say that the policy has cost the taxpayer money. I have shown that the interest on currency reserves has been nearly £2 million.
Lord Saatchi: My Lords, in terms of cost to the taxpayer, is the Minister aware that on the Bank of England's website he will find confirmation that the Chancellor decided to sell gold just before it went up in price and to buy euros just before they went down, and that the net cost is £40 million?
Lord McIntosh of Haringey: My Lords, Ihe Chancellor did not decide to sell gold just before it went up. The price at 6th May 1999 at the beginning of the process was 289.5 dollars per ounce. The sales this morning were at 285.25 dollars per ounce. There has been no increase in the price. There had been a decrease in the price prior to that. As to the investment in the dollar, the euro and the yen, I have given the figures to show the benefit that there has been to the taxpayer.
Lord Pearson of Rannoch: My Lords, if the Government were so fortunate as to reach their Elysian field of joining economic and monetary union, does the Minister agree that that would require us to commit all our gold reserves—and, indeed, all our foreign currency reserves—to the control of the unelected bankers in Frankfurt? The Minister would then no longer be able to pursue the brilliant policy about which he is presently telling us.
Lord McIntosh of Haringey: My Lords, I am glad to have the noble Lord's support for the policy which his noble friends on the Front Bench and elsewhere attack. The noble Lord is, strictly speaking, correct—if we remove his emotional language—that our reserves would be merged with those of the European Central Bank.

Race Relations (Religious Discrimination) Bill [H.L.]
3.6 p.m.
Lord Ahmed: My Lords, I beg to introduce a Bill to extend the Race Relations Act 1976 to religious discrimination. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.— (Lord Ahmed.)
On Question, Bill read a first time, and to be printed.

Consolidation Bills: Joint Committee
The Lord Chancellor: My Lords, I beg to move the Motion standing in my name on the Order Paper.

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Moved, That, pursuant to Standing Order 51, the following Lords be appointed to join with a Committee of the Commons as the Joint Committee on Consolidation Bills:

L. Campbell of Alloway,

L. Christopher,

L. Clyde,

V. Colville of Culross,

E. Dundee,

B. Fookes,

L. Hobhouse of Woodborough,

L. Janner of Braunstone,

B. Mallalieu,

L. Phillips of Sudbury,

L. Razzall,

L. Strabolgi;

That the Committee have the power to agree with the Committee of the Commons in the appointment of a Chairman;
That the minutes of evidence taken before the Committee from time to time be printed and, if the Committee think fit, be delivered out; and
That a message be sent to the Commons to propose that the Joint Committee do meet on Tuesday 28th March at a quarter-past four o'clock.—(The Lord Chancellor.)
Earl Ferrers: My Lords, perhaps I may ask the noble and learned Lord a boringly naive question. The second instruction on the Order Paper is that,
"the minutes of evidence taken before the Committee from time to time be printed and, if the Committee think fit, be delivered out".
What does that mean? How does one "deliver out" a minute? Does it mean "to publish"? If so, why does it not say so?
The Lord Chancellor: My Lords, externally delivered means published.
On Question, Motion agreed to.

Powers of Criminal Courts (Sentencing) Bill [H.L.]
The Lord Chancellor: My Lords, I beg to move that this Bill be now read a second time.
I am always pleased to bring consolidation Bills before your Lordships. It is important that access to our legislation should be made easier and that judges, lawyers and people with an interest should not have to go on a paper chase through half a dozen enactments or more to find out what the law is.
This consolidation Bill is particularly valuable. It brings together all the main legislation governing the powers of the courts in sentencing. It will be in daily use in the criminal courts. The last consolidation Bill on sentencing was the Powers of Criminal Courts Act 1973. This Bill repeals that Act and also consolidates provisions in 13 other Acts. To ensure that the Bill will work satisfactorily, it gives effect to a small number of
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recommendations by the Law Commissions to correct errors and omissions, and to remove inconsistencies, in the Acts being consolidated.
The courts have emphasised on a number of occasions the need for consolidation of judicial sentencing powers. In R v Governor of Brockhill Prison ex parte Evans [1997] QB 443, the Lord Chief Justice, the noble and learned Lord, Lord Bingham of Cornhill, and other members of the Divisional Court expressed the hope that the task would be given a high degree of priority.
Sentencing powers are always controversial, but I remind your Lordships that, apart from the minor modifications to which I have referred, this Bill does not change the law and it is not open to either House to seek to amend it in order to do so.
Members of the judiciary and other interested people who have been consulted by the Home Office about the Bill have raised no objections. I am sure that your Lordships will be grateful to the Law Commissions, the Home Office and the draftsman for producing the Bill. It is a substantial and impressive piece of work.
If your Lordships are content to give the Bill a Second Reading, it will be referred to the Joint Committee on Consolidation Bills in the usual way.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
On Question, Bill read a second time, and referred to the Joint Committee on Consolidated Bills.

Financial Services and Markets Bill
3. 10 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Schedule 3 [EEA Passport Rights]:
Lord McIntosh of Haringeymoved Amendment No. 121:
Page 232. line 7. leave out ("its proposed main agent") and insert ("the person proposed as the branch's authorised agent for the purposes of those directives").
The noble Lord said: I turn to a very important part of the Bill for the financial community: the mechanisms whereby firms from other member states in the European Economic Area exercise their rights under various European directives and the treaty to carry on regulated activity on the basis of their home state authorisation. It also concerns the equivalent mechanism whereby UK firms can exercise their directive rights in other member states.

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The European single market represents a great opportunity for the UK financial services industry, which is the strongest and most competitive in Europe. It also increases the openness of the UK financial markets, to the benefit of those markets and the UK consumer. The amendments in this group relate to Schedule 3, which deals with the directives. We shall turn to Schedule 4 and treaty rights when we deal with the next group of amendments.
Government Amendments Nos. 121 and 123 concern Part III of Schedule 3 which sets out the arrangements for UK firms to passport into other member states. They tidy up provisions relating to the carrying on of insurance business by a UK firm exercising EEA. rights that derive from the EC insurance directives. Amendment No. 121 replaces the defined term "main agent" in the context of firms operating on an establishment basis with language consistent with that used in the insurance directives. Amendment No. 123 removes the incorrect reference to "main agent" as the arrangements for authorised agents do not apply to an undertaking operating on a services basis.
I turn to Amendments Nos. 122 and 124 tabled by noble Lords opposite. Amendment No. 122 would make it a condition for an outgoing UK firm to exercise a passport right under the ISD to provide cross-border services (that is, without a permanent establishment in another member state) of which the FSA has notified the host state regulator. Amendment No. 124 would require the FSA to pass on a notice of intention to provide services within a month and to inform the firm that it has done so as soon as practicable.
We accept that those changes would be consistent with the directives and would make our implementation of the requirements more explicit. At present, it is intended to deal with those points using the rule-making power under paragraph 19(8) of the schedule. We shall consider further whether we should make changes along those lines, in which case we should also cover the position under the second banking directive. If we make changes along those lines we would probably also delete the rule-making power as it would be unnecessary.
On that basis, I would be grateful if noble Lords would not press those two amendments.
Lord Elton: Can the Minister tell the Committee the time-scale of the reconsideration that may involve the abolition of the rule-making power?
Lord McIntosh of Haringey: If it were to be done by an amendment it would have to be done on Report. If it were to be done within the rule-making power we could do it at any time.
Lord Kingsland: If I understand the Minister correctly, he is inclined to accept the substance of Amendments Nos. 122 and 124 but does not wish to
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put them on the face of the Bill. He would rather wait until they can be implemented through delegated legislation.
Lord McIntosh of Haringey: The matter is slightly more complicated than that. In the spirit of trying to be helpful, we have not yet decided whether it would be desirable to put it on the face of the Bill. We may be able to do it by using rule-making powers, but if we have to put it on the face of the Bill we are prepared to do so. Fundamentally, we agree with the objectives of the amendments and they raise a valid point.
3.15 p.m.
Lord Kingsland: I am obliged to the Minister. As he is aware, it is argued that both these amendments are necessary. They are not an optional extra. I see the noble Lord shrug so perhaps I should give my reasons why I think that is the case. If it turns out that the noble Lord has second thoughts, I shall wish to return to this matter on Report.
On Amendment No. 122, in our view Part III of Schedule 3 does not appear to reflect the requirements of the investment services directive. If those requirements are not complied with, the host state regulator can properly refuse to allow the passport to operate. If a United Kingdom firm thought that it was using the passport to avoid local authorisation requirements, it could be breaking the local law and, indeed, on the UK model it could find that its investment agreements are unenforceable.
That oversight relates to the notifications that need to be given under the investment services directive. Paragraph 19(1) of Schedule 3 provides that a UK firm can exercise an EEA right under the investment services directive as soon as it has given the authority notice of its intention to provide the relevant services. Only in the case of the insurance directives must it wait until the authority has given notice to the host regulator and told the firm that it has done so. With great respect to the Treasury, I believe that there has been an omission by the Government in that regard.
On my interpretation of the second banking directive and the investment services directive, the position in relation to cross-border services is as follows: under Article 20(1) of the second banking directive a United Kingdom credit institution merely has to notify the authority and thereafter can use the passport. Article 20(2) provides that the authority must notify the competent authorities of the host member state within one month, but that is not a condition precedent to using the passport. That was confirmed by the Brussels Commission in Part C of its June 1997 guidance on the second banking directive.
However, the equivalent provision under the investment services directive—Article 18—is phrased differently. Like Article 20(1) of the second banking directive, Article 18(1) requires the United Kingdom firm to notify the authority. Article 18(2) provides that the authority must within one month notify the competent authorities of the host member state, as in

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Article 20(2) of the second banking directive. However, crucially, Article 20(2) goes on to provide that the firm,
"may then start to provide the investment service in question".
That clearly means that a United Kingdom firm cannot use its passport to provide cross-border services under the investment services directive unless it has notified the authority and the authority has actually notified the competent authorities of the host member state. That is what the amendment seeks to achieve.
The second banking directive requires that the actual notification received by the authority must be sent and the investment services directive requires that the information received must be forwarded to the host state regulator. Therefore, merely notifying does not appear to be sufficient.
Amendment No. 124 imposes the obligation on the authority to inform the host state regulator within one month, as required both by the second banking directive and by the investment services directive, and to tell the firm that it has done so. This latter requirement is to enable the firm, if it is an ISD firm, to know that it can now use the passport because the requirement in new paragraph 19(1)(b) has been fulfilled. There is no need for the authority to notify a firm under the second banking directive; but it seems sensible that the authority should tell the firm so that the firm knows that there will be no problem when it provides cross-border services in the host member state, even though, as is made clear in paragraph 19(1)(b), the freedom to provide cross-border services does not depend on that taking place.
Lord McIntosh of Haringey: I am grateful to the noble Lord for his detailed exposition of the two amendments. If I have failed to cover some of the points in my original speech, that is only because when moving my amendment I took the opportunity to speak before he had done so. However, I certainly do not claim that his amendments are not necessary and I should now like to consider how best to give effect to their substance. The noble Lord is quite right to say that we need to deal with the second banking directive at the same time. My point was only that when we are making these changes it could be that there will be other changes that we shall wish to make concurrently, including examining the possibility of doing away with rule-making powers.
The noble Lord made two points on which I should like to comment. First, as regards the risk of leaving UK consumers exposed, I should make it clear that the FSA will have the power to act if necessary, but it is only right that the main responsibility should lie with the EEA firm's home state authority. Secondly, on the question of whether the FSA can intervene against an EEA firm, the FSA can intervene using its powers in Part XII in respect of the passport activities. It can also intervene in the normal way in respect of any additional permissions under Part IV.
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The noble Lord's exposition of Amendments Nos. 122 and 124 will be most helpful when we consider our next move between now and Report stage. If we may, we should like to talk to the noble Lord about this in more detail, if he can spare the time.
Lord Kingsland: The noble Lord has been most generous and I am almost entirely reassured.
On Question, amendment agreed to.
[Amendment No. 122 not moved.]
Lord McIntosh of Haringeymoved Amendment No. 123:
Page 233, line 5, leave out ("or its proposed main agent").
On Question, amendment agreed to.
[Amendment No. 124 not moved.]
Schedule 3, as amended, agreed to.
Schedule 4 [Treaty Rights]:
Lord McIntosh of Haringeymoved Amendment No. 125:
Page 234, line 20, leave out ("has the same meaning as in section 5(3)") and insert ("means persons who are consumers for the purposes of section 129").
On Question, amendment agreed to.
Lord Kingslandmoved Amendment No. 126:
Page 234, line 27, at end insert ("; and
"EEA credit institution" means an EEA firm falling within paragraph 5(b) of Schedule 3 whose authorisation under the first and second banking co-ordination directives covers one or more investment services (within the meaning of the investment services directive)").
The noble Lord said: In moving Amendment No. 126, I should like to speak also to Amendments Nos. 127, 128, 130, 131, 141 and 142.
Amendment No. 126 seeks to insert into Schedule 4 (at line 27 on page 234) the above definition relating to banks that are excluded from the investment services directive because their authorisation covers one or more investment services. The reference to paragraph 5(b) of Schedule 3 is to limit the relevant definition of EEA firms to credit institutions. In fact, the United Kingdom has voluntarily granted the equivalent of the investment services directive passport to these EEA credit institutions, even though they are legally entitled only to the second banking directive passport.
The key activities which were covered by the investment services passport, but not the second banking directive passport, are the receipt and transmission of orders and the arrangement of transactions in the secondary market. These are treated as included in the receipt and transmission of orders as a result of, I believe, the 13th preamble to the investment services directive.
The Bill does not allow for the grant of this voluntary ISD passport and therefore EEA credit institutions will find the position under the Bill rather worse than they did with its predecessor, the Financial Services Act 1986, which surely was not intended.
Amendment No. 127 seeks to insert at line 37,
"except where the firm is an EEA credit institution".

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This amendment seeks to provide for the voluntary investment services directive passport. I accept that it could have been put into Schedule 3 itself, but it seemed to me that this would require substantial consequential amendments to be made to Schedule 3. I hope that the Minister will find the solution suggested here more satisfactory.
Since at present the voluntary investment services directive passport requires home state authorisation to carry on the regulated activity and the bank quite clearly has no EEA right to carry on these ISD passport activities, as they are not covered by the second banking directive passport, it seems to me that the EEA credit institution complies with conditions (a) and (c) in paragraph 3(1). Therefore, all that is necessary is to exclude paragraph (b).
As regards Amendment No. 128, firms which do have an EE.A right cannot use it where they are dealing or giving advice by means of a remote communication from outside the member state where the customer or counter-party resides. This results from the guidance issued by the European Commission in June 1997 on the use of the second banking directive passport and probably also applies to the use of the investment services passport, although that is not entirely clear. The second banking directive passport applies only where both parties are within the same member state. The European Commission guidance states that, in these circumstances, the credit institution will not be in the member state where the customer or counter-party is. Therefore, the credit institution needs to rely on its rights to provide cross-border services directly under Article 49 of the Treaty of Rome.
I emphasise that the Commission's guidance results from lobbying by our own Treasury and the FSA and is the consequence of that which the UK wanted to see in place; that is to say, where a bank in the United Kingdom provides services by telephone, fax or screen from its United Kingdom branch to customers or counterparties in another member state, the regulator of the United Kingdom branch is the authority and not, as the Commission previously indicated would often be the case, the regulator in that member state.
I now turn to Amendment No. 131 which is to Schedule 4, page 235, line 15, and seeks to substitute the expression "permitted" for "regulated". Paragraph 5(1), Schedule 4, provides that a treaty firm must give the authority notice of its intention to carry on a regulated activity and it cannot carry on that regulated activity for the following seven days. I am concerned that this notification requirement and corresponding delay should only apply to the activities which the treaty firm is allowed to carry out under Schedule 4. However, the expression, "regulated activity" means all the activities which need authorisation. Therefore, as written, the notification and delay requirement applies to any activity for which the treaty firm obtains authorisation under Part IV.
I turn to Amendment No. 141 to Schedule 6, page 238, line 4, which leaves out the expression "an additional permission" and inserts "permission under Part IV". This amendment and the one that follows are
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drafting changes. Both amendments are intended, in effect, to clarify the references to "'additional permission" in paragraph 7, Schedule 4. We believe it would be more accurate to refer to a permission under Part IV rather than an additional permission. I beg to move.
3.30 p.m.
Lord McIntosh of Haringey: We are all searching for the same or similar solutions on these amendments. I have a suggestion. Both the noble Lord and myself have folders. Let us take the bits out and shuffle them and see which bits come out on top.
Lord Kingsland: The noble Lord says that, and it is good to find him in such a jesting mood this afternoon. The fact is that the Opposition in another place tabled similar amendments at both Committee and Report stages in another place and did not get anything like the positive reaction that we now receive from the Minister. So it was well worth while tabling the amendments. I shall be delighted of course, in the constructive way in which the Minister is approaching the matter this afternoon, to talk to him about it at some time between now and Report stage.
Lord McIntosh of Haringey: Perhaps I had better make my full speech before giving the noble Lord, Lord Kingsland, too much encouragement.
Schedule 4 enables firms from other member states to exercise treaty rights to carry on regulated activities here. The government Amendment No. 129 concerns the interaction of EEA and treaty rights under the two schedules. Amendment No. 128, tabled and spoken to by the noble Lord, Lord Kingsland, may be intended to address the same point.
At present, paragraph 3(1)(c) of Schedule 4 rules out the use of that schedule to exercise a treaty right to carry on an activity which the person has an EEA right to carry on. It does not matter for these purposes whether the person is exercising or even intending to exercise their EEA right. The provision is necessary because it is an established principle underlying the passport directives that they provide the exclusive route for exercising the rights they cover.
Member states must ensure that the rights cannot be exercised by some parallel route that bypasses the notification procedures laid down in the directives. That is what paragraph 3(1)(c) does. However, the problem with paragraph 3(1)(c) as it stands is that it refers only to an EEA right to carry on "that activity", but makes no reference to the manner in which the firms may carry on the activity in question.
Following discussions in another place—I am sorry it appeared as though there was no response—we are persuaded that, although the circumstances may be unusual or rare, it is conceivable that, as a matter of Community law, the EEA right and the treaty right that the person proposes to exercise could be parallel rights to carry on the same activity by different means. Thus the person could have an EEA right to provide services by establishing a branch in another member

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state or providing services within the territory of another member state. They may or may not be exercising that right, or proposing to exercise that right. But that should not stop them also exercising a treaty right, if they have one, to carry on the activity in a way that is covered by the directive. An example might be if they were proposing to provide services to persons in the UK in a way which meant that they were not regarded, under the directives, as providing those services within the territory of the UK.
Amendment No. 129 narrows the exclusion in paragraph 3(1)(c) so that it only excludes treaty rights where the manner in which a regulated activity is to be carried on in exercise of the treaty right would be the same as that covered by an EEA right that the firm has. By introducing this concept of the manner in which a firm may have a right to carry on an activity, Amendment No. 129 resolves the problem, I hope to the satisfaction of the noble Lord, Lord Kingsland. On that basis, I hope that the noble Lord will not move his amendment and support ours.
Amendment No. 130 deals with the situation where a person from another EEA member state has permission to carry on activities under Part IV but then acquires or asserts a treaty right to carry on those activities. This might occur, for example, if the home state law is changed so that the activity then becomes regulated by the home state authority. Or the person may simply not have chosen to assert their treaty right before. The amendment provides that, when the treaty right is established, the relevant part of the person's existing Part IV permission is cancelled unless the authority has some good reason for maintaining the coverage of the Part IV permission.
I now turn to the opposition amendments. Amendments Nos. 126 and 128 would disapply for EEA banks the requirement under paragraph 3(1)(b) that for a firm to enjoy those treaty rights, their home state laws must afford equivalent protection to consumers, or must meet harmonised EEA standards if there are any in the area of activity concerned.
The need to be satisfied as to the protection offered by home state law or, where there is a Community instrument setting out minimum standards, that it has been implemented, is an important condition for recognising rights under the treaty. I am grateful to the noble Lord, Lord Kingsland, for his explanation. As he said, these amendments were tabled and discussed in another place, but at that time we were at a loss to understand the aim of the Opposition in tabling the amendments. However, we can still see no reason to suspend the requirements under paragraph 3(1)(b) for EEA credit institutions. Why should this group of institutions which already enjoys rights under the directive, be able to exercise rights that go beyond the treaty?
I turn to Amendment No. 131. I can understand the concern of the noble Lord, Lord Kingsland, that paragraph 5 might prohibit the treaty firm from carrying out any regulated activity in the seven-day period after it gives notice. That would be an unfortunate result if the regulated activity was
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something the firm had an additional Part IV permission for, or for which they enjoyed an exemption. We feel that they have a point but need to think about the solution. We are not convinced that changing "regulated" to "permitted" fully addresses the issue as it would still leave a treaty firm unable to exercise a Part IV permission. I shall be grateful if the noble Lord does not move the amendment and we will do our best to come up with a more complete solution.
Finally, I turn to Amendments Nos. 141 and 142 to paragraph 7 of Schedule 6, which deals with the application of the threshold conditions to treaty firms. I can see that the intention is simply to align this paragraph with the previous paragraph applying to EEA firms. We will consider further whether exact alignment is appropriate given the way in which EEA and treaty firms are dealt with under the Bill.
I hope that explanation deals with this rather complex and obstruse but nevertheless important issue.
Lord Kingsland: I thank the Minister for his response. There was not perhaps quite as much there for me this time as there was in his response to the previous set of amendments. But, nevertheless, there is sufficient to enable me to say that I will read carefully what the Minister said in Hansard. I hope that between now and the Report stage there will be an opportunity for me to have a discussion with the noble Lord to see whether we can resolve the outstanding difficulties. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 127 and 128 not moved.]
Lord McIntosh of Haringeymoved Amendments Nos. 129 and 130:
Page 234. line 43, at end insert ("in the manner in which it is seeking to carry it on").
Page 235. line 12, at end insert—
("(3) If, on qualifying for authorisation under this Schedule, a firm has a Part IV permission which includes permission to carry on a permitted activity, the Authority must give a direction cancelling the permission so far as it relates to that activity.
(4) The Authority need not give a direction under subparagraph (3) if it considers that there are good reasons for not doing so.").
On Question, amendments agreed to.
[Amendment No. 131 not moved.]
Lord McIntosh of Haringeymoved Amendment No. 132:
Page 235, line 20, leave out sub-paragraph (3).
On Question, amendment agreed to.
Schedule 4, as amended, agreed to.
Clause 30 [Partnerships and unincorporated associations]:
Lord McIntosh of Haringeymoved Amendment No. 133:
Page 14, leave out line 24.

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The noble Lord said: Clause 30 provides that when an "authorised person" is a partnership it will not lose its authorisation merely because of a change in membership. However, it also provides that authorisation will be lost unless the members of the succeeding firm are substantially the same as those of the former firm and the new firm has taken over substantially the whole of the business of the old firm. This is necessary because, unlike limited companies, partnerships in England and Wales and Northern Ireland do not have a legal personality that is distinct from their members. When a partner joins or leaves the business, the existing partnership is technically terminated and a new partnership formed.
The intention behind the clause is that a partnership should not have to apply for authorisation simply because, for example, it was dissolved and reformed when one of its members retired in the normal course of events and was replaced by a new partner. In contrast to England, Wales and Northern Ireland, partnerships in Scotland have a legal personality distinct from their members. Despite that, a change in the composition of a Scottish partnership can sometimes result in its dissolution and reformation. Therefore, this amendment extends the coverage of the clause to partnerships constituted under the law of Scotland. I beg to move.
On Question, amendment agreed to.
Clause 30, as amended, agreed to.
Clause 31 [Withdrawal of authorisation by the Authority]:
3.45 p.m.
Lord Kingslandmoved Amendment No. 134:
Page 14, line 28. leave out ("This section applies") and insert ("A person ceases to be an authorised person").
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 135, 136 and 146 to 150. Amendment No. 134 proposes to amend Clause 31 by deleting the expression "This section applies" and inserting the words:
"A person ceases to be an authorised person".
Amendments Nos. 134 to 136 all apply to Clause 31, which deals with the withdrawal of a person's status as an "authorised person". However, the concept of the authority withdrawing a person's status as an "authorised person" seems to me at any rate to be a hangover from the passage of the Bill in the other place. Since then, the authorisation provisions of the Bill have undergone significant amendment. In my submission, the current provisions of Clause 31 represent something of an anomaly.
In particular, Clause 29(1)(a) provides that,
"a person who has a Part IV permission to carry on one or more regulated activities".
is authorised,
"for the purposes of this Act".
It follows, therefore, that if an authorised person's Part IV permission is cancelled he must automatically cease to be an "authorised person". There is no requirement on the authority to give a direction
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withdrawing that person's status as an "authorised person", as provided by Clause 31(2). My amendments provide instead that a person ceases to be an "authorised person" if his Part IV permission is cancelled. As a result, there is no regulated activity for which he has permission.
I turn now to Amendment No. 146, which seeks to amend Clause 42 by replacing the expression,
"it is no longer necessary to keep",
with the words,
"there is no good reason for keeping.
Clauses 42 and 43 deal with a variation of an authorised person's Part IV permission either at the request of that person or upon the initiative of the authority's own powers. In both cases:
"If as a result of a variation of a Part IV permission … there are no longer any regulated activities for which the authorised person concerned has permission",
the authority must,
"once it is satisfied that it is no longer necessary to keep the permission in force",
cancel it.
It is unclear what is intended to be cove red by the words,
"it is no longer necessary",
in both Clause 42(4) and Clause 43(2). We have suggested alternative words; namely,
"there is no good reason for keeping the permission in force".
We believe that that form of words is preferable. It should be easier to determine whether there is good reason for keeping the permission in force, rather than trying to determine whether there is reason that makes it necessary to keep the permission in force.
Amendment No. 148 deals with Clause 45 and seeks to amend it by leaving out the expression "at the request" and inserting the words "on the application". I unashamedly admit that this is a drafting amendment. Clause 45(7) provides:
"In subsections (4) and (5) 'request' means a request of a kind mentioned in subsection (1)".
Clause 45(1) does in fact refer to two types of request. The first two lines of the subsection refer to the authority's power to,
"vary or cancel a Part IV permission otherwise than at the request of an authorised person",
while reference is made in the third and fourth lines to the authority exercising its powers,
"in respect of an authorised person at the request of, or for the purpose of assisting, a regulator",
outside the United Kingdom. In my submission, it would be clearer if the first use of the words "at the request" were replaced by the words "'on the application", as this is a form of words used in Clause 42(1) and (2).
As far as concerns Amendments Nos. 149 and 150, these are consequential drafting amendments that are intended to make the drafting of Clause 45(4) more consistent with that in Clause 45(3). I beg to move.
Lord McIntosh of Haringey: The effect of the current provisions in Clause 31 is to provide certainty as to

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whether a person continues to have "authorised person" status. There is a definite act of withdrawing authorisation which identifies the end of this status. The effect of the amendments proposed would be to remove the requirement for a separate administrative act. Without such a definite act, the status of a person who has had his Part IV permission cancelled would depend on whether it is true that,
"as a result there is no regulated activity for which he has permission".
I must say that that sounds simpler than the provisions in the Bill as drafted. However, there are other means by which a person may have permission to carry on a regulated activity—for example, EEA or treaty firms qualifying under Schedules 3 or 4. I am sorry to say that the effect of these amendments would be to make the question of their status unclear.
Government Amendment No. 143 does two things. First, it clarifies that the power to specify additional conditions for non-EEA insurance companies is a power for the Treasury to make orders. In practice, it is intended that this will be used in relation to persons who are not covered by the single market directives, including a general requirement on applicants from outside the UK (including EEA applicants), to reproduce existing requirements that they maintain a general representative office here.
Secondly, the amendment enables the Treasury to make orders which vary, remove or add to any of the existing conditions. This will enable the Treasury to ensure that the threshold conditions remain up to date and consistent with any changes to EC law. This is particularly important as many of the existing conditions reflect minimum requirements applicable to authorised persons covered by the directives.
Amendments Nos. 146 and 147, to which the noble Lord, Lord Kingsland, has spoken, are concerned with cases when the FSA has varied a firm's Part IV permission so that there are no longer any regulated activities which it is permitted to carry on. The authority must—I quote again what the noble Lord, Lord Kingsland, quoted—
"once it is satisfied that it is no longer necessary to keep the permission in force, cancel it".
There are all sorts of reasons why the FSA might need to keep a permission in force; for example, the firm may have contravened a requirement and be subject to some form of investigation, or enforcement or disciplinary proceedings. Alternatively, the FSA may be concerned that the firm might have contravened a requirement and may wish to satisfy itself that the firm is not trying to hide something.
There is a balance to be struck here. We do not want the FSA to keep a person's permission in force unnecessarily. On the other hand, the FSA's ability to enforce its requirements for the protection of consumers would be seriously undermined if there were no means of dealing with issues such as the ones I have described merely because a person had ceased to be an authorised person permitted to carry on any regulated activities.
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The effect of the proposed amendment would be to make it easier for the FSA to keep a permission in force if it thought that there might be a good reason for doing so. However, we think that the question which the FSA should be asking itself is not whether there might be a good reason, but whether, in the light of all the information that it has about the authorised person concerned, it is necessary to continue to be able to exercise control over that person. We think that the existing wording provides the right balance in that it allows the FSA to keep a permission in force if it is not yet satisfied that a person's permission can safely be cancelled. But it does not allow it to rely solely on the possibility that there may be something it might regard as a "good reason" for keeping the permission in force.
As the noble Lord, Lord Kingsland, admitted, Amendments Nos. 148 to 150 are drafting amendments to Clause 45 which concerns the exercise of the FSA's powers in support of an overseas regulator. Amendment No. 148 would make it clear that the FSA's own-initiative power does not include cases in which an authorised person has formally applied for variation or cancellation under Clause 42. However, there may be other circumstances in which an authorised person might effectively request the FSA to vary or cancel its permission. For example, if a firm with an existing Part IV permission subsequently qualifies for authorisation under Schedule 4, Amendment No. 130, which we have just agreed, requires the FSA to cancel the firm's existing permission unless it considers that there are good reasons not to do so.
Therefore, we think that it is appropriate to use a generic description such as "request" rather than include a specific reference to an "application". However, I appreciate the intention behind the amendment and I can confirm that the reference to "request" is intended to include such an application.
Amendments Nos. 149 and 150 would also make minor drafting changes to Clause 45. Subsection (3) requires the FSA, in deciding whether or not to exercise its own-initiative powers, to consider whether it is necessary to do so in order to comply with a Community obligation. Clearly if the FSA considers that this is necessary, it must comply. In any other case, the FSA has a discretion whether to do so and subsection (4) sets out some of the matters it can take into account.
The amendment would turn subsection (4) around and restrict the circumstances in which this discretion applies to cases in which the FSA considers that compliance is not necessary. But that amendment is in our view unnecessary. Subsection (3) already requires the FSA to consider whether it is necessary to exercise its power to comply with a Community obligation. If it fails to consider this, it will be in breach of that requirement. So, in summary, we think that subsection (4) is fine as it is.
Lord Kingsland: I have learned in the course of the past two-and-a-quarter days that the Opposition have two types of amendment: those that are just wrong; and those that are right, but unnecessary.
Lord McIntosh of Haringey: A considerable number of opposition amendments have been helpful; we have received them with pleasure and with thanks and we have agreed to take them away and consider them. We actually accepted one.
Lord Kingsland: These are questions of ratios and proportions. I think that I shall do my mathematics at the end of today!
I was not happy with the Minister's reaction to Amendment No. 134. I may have misheard him. However, I wonder whether he can think of an illustration of a situation in which someone ought to have his permission cancelled, but the FSA does not think that it could be safely cancelled. Did I hear the Minister right in saying that, or words to that effect? It seems to me that if someone ought to have his permission cancelled, his permission ought to be cancelled. I cannot conceive of any circumstances in which there would be flanking reasons for the FSA wishing to continue to authorise someone even though it thought that he ought not to have that status.
Lord McIntosh of Haringey: I do not think that is quite the question. The point is that under the amendments the status of a person who had had his Part IV permission cancelled would depend on whether, as a result of that, there was no regulated activity for which he had permission. There are other means by which a person may have permission to carry on a regulated activity; for example, EEA or treaty firms qualifying under Schedules 3 or 4. We have to take those into account. The amendment does not provide for that additional complication.
Lord Kingsland: I thank the Minister for those comments. I shall consider his response to the amendments and I may wish to return to some of them on Report. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 135 and 136 not moved.]
Clause 31 agreed to.
Clauses 32 to 34 agreed to. Schedule 5 agreed to.
Clause 35 agreed to.
Clause 36 [Exemption orders]:
[Amendment No. 137 not moved.]
Clause 36 agreed to.
Clauses 37 to 39 agreed to.
Schedule 6 [Threshold Conditions]:
Lord McIntosh of Haringeymoved Amendment No. 138:
Page 237, line 25, leave out from beginning to ("the in line 26 and insert—
("(2) In reaching that opinion, the Authority may—

(a) take into account the person's membership of a grpup and any effect which that membership may have; and

(b) have regard to—

(i)") £
The noble Lord said: In moving Amendment No. 138, I should like to speak also to Amendments Nos. 139, 140 and 145. These amendments will enable the FSA to take proper account of the risks arising from an authorised person's membership of a group. The amendments to Schedule 6 make it clear that in assessing the adequacy of a person's resources for carrying on regulated activities, the FSA can have regard to implications that group membership may have for persons who are members of a group. When making the assessment, the FSA must take account of a person's membership of the group, as defined in Clause 396, and the implications that this may have in terms of provisions against liabilities and contingencies and the means whereby business risks are managed.
The amendment to Clause 41 inserts the provision that if the authority imposes a requirement as part of an authorised person's permission to carry on particular activities under Part IV, it may frame this requirement with reference to the person's group or to members within that group; for example, by placing a limit on exposures to other members of the group, or imposing a requirement to hold more capital to reflect risks elsewhere in the group.
These are important amendments that ensure that the existing approach to consolidated supervision can be maintained in line with European Community law, the Basle principles for banking supervision, and good banking practice generally. I beg to move.
On Question, amendment agreed to.
4 p.m.
Lord McIntosh of Haringeymoved Amendments Nos. 139 and 140:
Page 237, line 26, after ("makes") insert ("and, if he is a member of a group, which other members of the group make").
Page 237, line 28, after ("manages") insert ("and, if he is a member of a group, which other members of the group manage").
On Question, amendments agreed to.
[Amendments Nos. 141 and 142 not moved.]
Lord McIntosh of Haringeymoved Amendment No. 143:
Page 238, line 15, at end insert—
("(3) "Specified" means specified in, or in accordance with, an order made by the Treasury.
. The Treasury may by order—

(a) vary or remove any of the conditions set out in Parts I and II;

(b) add to those conditions.").

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The noble Lord said: This amendment was spoken to with Amendment No. 134. I beg to move.
On Question, amendment agreed to.
Schedule 6, as amended, agreed to.
Clause 40 [Giving permission]:
Lord McIntosh of Haringeymoved Amendment No. 144:
Page 17, line 25, at end insert—
("( ) If the applicant—

(a) is a person to whom, in relation to a particular regulated activity, the general prohibition does not apply as a result of Part XIX, but

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

the application is to be treated as relating only to that other regulated activity.").
The noble Lord said: In moving Amendment No. 144, I shall speak also to Amendments Nos. 159 to 163 and Amendment No. 277A. Clause 40 sets out the authority's basic power to give permission for the applicant to carry on the regulated activity or activities to which his application relates. Under Part XIX the Society of Lloyd's is to be authorised to carry on certain regulated activities. The permission will be defined by the authority as if it had been granted under Part IV.
Under Clause 55, the FSA is able to make an order prohibiting any individual whom it considers to be unfit and not proper to perform the functions in connection with regulated activities from performing such activities. Amendment No. 144 is a technical amendment which allows a Lloyd's member to hold a Part IV permission at the same time as benefiting from the provisions of Part XIX which deals with Lloyd's. Its effect will be to reduce the activities for which Lloyd's members need to seek FSA authorisation. Thus an application to the FSA by a Lloyd's member will be treated as relating only to the regulated activity for which he is seeking Part IV permission. The amendment would introduce a provision which would be equivalent to that provided for recognised investment exchanges in subsection (3).
Amendments Nos. 159 to 163 are to Clause 55 which deals with prohibition orders. They are technical amendments extending the scope of the clause so as to ensure that the FSA has the requisite powers to prevent a person performing functions in relation to regulated activities carried on by members of a profession or persons controlled or managed by members of a profession and who benefit from the exemption under Part XX. As such, it ensures that members of professions are treated consistently with other authorised persons in respect of prohibition orders.
Amendments Nos. 159 to 162 are consequential to the changes made by Amendment No. 163. Opposition Amendment No. 277A proposes that we insert wording at the end of the definition of "exempt person" in Clause 392 so as to bring professional firms which have the benefit of the Part XX exemption within this definition. The effect of that will be to subject professional firms carrying on exempt
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regulated activities to the Clause 55 regime. As will be clear from Amendments Nos. 159 to 163, those amendments perform that function. I hope that the Committee agrees that that makes Amendment No. 277A unnecessary. I beg to move.
On Question, amendment agreed to.
Clause 40, as amended, agreed to.
Clause 41 [Imposition of requirements]:
Lord McIntosh of Haringeymoved Amendment No. 145:
Page 17. line 43, at end insert—
("( ) A requirement may be imposed by reference to the person's relationship with—

(a) his group; or

(b) other members of his group.").

The noble Lord said: This amendment was spoken to with Amendment No. 138. I beg to move.
On Question, amendment agreed to.
Clause 41, as amended, agreed to.
Clause 42 [Variation etc. at request of authorised person]:
[Amendment No. 146 not moved.]
Clause 42 agreed to.
Clause 43 [Variation etc. on the Authority's own initiative]:
[Amendment No. 147 not moved.]
Clause 43 agreed to.
Clause 44 agreed to.
Clause 45 [Exercise of powers in support of overseas regulator]:
[Amendments Nos. 148 to 150 not moved.]
Clause 45 agreed to.
Clause 46 [Prohibitions and restrictions]:
Lord Kingslandmoved Amendment No. 151:
Page 20. line 45. after ("A") insert ("or contravene any other obligation or duty the institution may owe A").
The noble Lord said: In moving this amendment, I should also like to speak to Amendments Nos. 152 to 154. As the Committee is well aware, Clause 46 concerns prohibitions and restrictions. Amendment No. 151 at page 20, line 45, states,
"after ('A') insert ('or contravene any other obligation or duty the institution may owe A')".
Clause 46 explains the consequences if the authority imposes an assets requirement (as defined in Clause 46(3)) on an authorised person—that is A—when it gives or varies a Part IV permission. Clause 46(5) excuses institutions from breach of any contract with an authorised person if the institution does what the authority tells it to do, and we want to extend this exclusion of liability. It is wrong that the institution should incur any liability to pay for complying with the authority—for example, in the case of a breach of fiduciary duty.
As regards Amendment No. 152, on page 22, line 4 of the Bill, after the word "instruction", it seeks to insert "without reasonable excuse". Clause 46 gives the authority power to impose requirements on authorised

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persons and to give notice of these requirements to any institution with whom the authorised person keeps account. The institution does not act in breach of any contract with the authorised person if, having been instructed by the authorised person to transfer any sum or otherwise make any payment out of the authorised person's account, the institution refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with a requirement imposed by the authority.
However, if the institution complies with the instruction from the authorised person, it is liable to pay to the authority an amount equal to the amount transferred. It does not seem reasonable that the institution must be automatically liable when complying with such an instruction when it appears that the requirement imposed by the authority is not an absolute requirement. Therefore, to balance the approach adopted in Clause 46(5)(a) it would be reasonable to include the words "without reasonable excuse".
I can deal with Amendment No. 153 much more telegraphically. The amendment relates to page 21, line 15, where the expression "the liquidator" is left out and the expression "a liquidator of A" is inserted. It is a drafting amendment. Clause 46(7) refers to a "liquidator" but does not specify whose liquidator is being referred to. It is probably a liquidator of A, and hence the amendment.
Finally, I turn to Amendment No. 154. This relates to page 21, line 18, where we leave out the expression "A" and insert the expression "the Authority".
Clause 46(8) dictates the circumstances in which assets are treated as held by a person as a trustee, and so are subject to the assets requirement referred to in subsection (3). In another place, the Government argued on Report—as indeed they had in Committee—that if, as we had originally suggested, both A and the authority could notify the trustee, they both would do so and so would confuse the trustee. However, we want the authority to be included as a party notifying the trustee because otherwise, if A decides not to notify, as is quite likely, the asset requirement will not apply and investors will lose out. To avoid the Treasury's justification for refusing our amendment, therefore, we should provide that it is only the authority that notifies the trustee.
In this context, I should mention that the European Court of Human Rights has just agreed in two cases that it would make the trial unfair if any evidence was not given to a defendant, even if the evidence was subject to a public interest immunity certificate. The important thing is that disciplinary proceedings are probably within Article 6(1) of the European Convention on Human Rights, and, indeed, the Treasury confirmed in its submission to the Burns committee in May 1999 that it thought that that was the case. Article 6(1) requires that the hearing should be "fair"; and therefore these protections would apply in the case of disciplinary proceedings, at least before the tribunal. I beg to move.
4.15 p.m.
Lord McIntosh of Haringey: I should say first that, since the side headings to clauses are not part of the Bill, I think the side heading to Clause 46 is misleading. The clause relates to assets management, not prohibitions and restrictions more generally.
However, I am grateful for these helpful amendments, which seek to clarify the effects of assets requirements imposed by the authority under Clause 46. The FSA may impose requirements on authorised persons either restricting the use or disposal of their own assets or requiring the transfer of their assets or investors' assets to an approved trustee. These restrictions might be imposed if the FSA has concerns about the authorised person's solvency or suspects fraudulent behaviour and the FSA wishes to safeguard the position of consumers.
The clause provides for notification to other institutions, such as a bank where the person subject to restriction has an account. It protects those institutions from actions for breach of contract if they comply with the terms of the restriction.
Amendment No. 151 seeks to extend that protection to other obligations or duties to which the institution may be subject, such as a fiduciary duty or a duty of care. We fully agree with the intention of the amendment in that the bank needs to be able to rely on the restriction as a defence to an allegation that it has acted in breach of such a duty.
I also think it is desirable that the implications should be clear, so that there is no doubt in the minds of the financial institution, the firm or of any third party as to whether the protection extends beyond contractual duties. It should not be necessary for the parties to have to obtain legal advice before complying. On the other hand, this amendment is arguably unnecessary because the existence of such a restriction would normally be recognised as a defence in equity or in tort in any event.
So I should like to consult parliamentary counsel on the exact drafting of this provision. For example, we might not want the terms of a restriction to override, say, the terms of a binding statutory obligation or duty. However, I undertake that we will consider this amendment further and, if appropriate, table an amendment on Report.
Amendment No. 152 concerns the liability which is imposed under subsection (5)(a) on a financial institution which acts in breach of a requirement notified to it by the authority. It would give the financial institution a defence to that liability if it could show that it had a "reasonable excuse" for having paid out or transferred any part of the account.
Again, I can see the intention behind the amendment. However, it is important to remember that we are not dealing here with punishment of the institution for an offence, but with safeguarding assets which may be owed to consumers or to other creditors. The effect of a breach of the requirement may well be to allow the firm subject to the restriction to dissipate its assets in a way that puts them out of reach of the firm's customers or creditors.

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In such circumstances it is only right that an institution which has notice of the requirement should comply with it. Clearly there may be circumstances in which the notification has been garbled or not received, but in those circumstances no liability would attach to the institution in any event.
It is difficult to imagine any other circumstances in which the institution would have a reasonable excuse for having failed to comply with a requirement. However, even if it did, we do not think that it would be right to deprive the firm's creditors or other persons to whom the assets may properly belong. To allow institutions to look for excuses for failing to comply with requirements could seriously undermine the effectiveness of the requirements and would expose smaller institutions to undue pressure from unscrupulous and perhaps desperate firms.
Amendment No. 153, which the noble Lord dealt with in telegraphic form, is a drafting amendment. I appreciate the thinking and probably the grammatical correctness, but I do not think that there is any real doubt that the liquidator referred to must be the liquidator of the authorised person, A, and so I would ask that the amendment is not moved.
Amendment No. 154 concerns the position of a trustee appointed to hold assets pursuant to an assets requirement. Subsection (8) provides that assets will only be treated as being held in accordance with such a requirement if the authorised person has instructed the trustee to do so by written notice.
The amendment would require that notice to come from the FSA rather than the authorised person. I can see why it might be desirable in a few cases for the authority to be able to back up this notification, but I think this would cause more problems than it would solve. The requirement to transfer the assets to a trustee is imposed on the authorised person, and although the FSA must approve the trustee that the authorised person selects, it is the authorised person's obligation to transfer his assets to the trustee. He will not have complied with the requirement if he fails to notify the trustee that those assets are to be held in accordance with the requirement.
The proposed amendment raises all kinds of issues of principle and practice about the relationship between the FSA, the authorised person and the trustee. Transferring property without the cooperation of the owner of the property would be controversial. Courts can do it, but, even before the Human Rights Act, a person's right to quiet enjoyment of property has been taken very seriously.
At this point, perhaps I may say a word about the ECHR judgment to which the noble Lord, Lord Kingsland, referred. He was correct in what he said about a defendant's rights, and the arrangements under the Bill—notably for the independent tribunal—protect those rights. The SFA's actions in respect of authorised persons are generally civil, so it is not necessary in such cases to provide the criminal protections for market abuse that we have included in the Bill.
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If the assets are in an authorised person's possession, then it is no use the authority telling the trustee that he must hold assets that he does not have on trust. The only way the assets will get to the trustee is by directing the authorised person to get them there. The proposal that the authority should be able to instruct the trustee that he should hold property on trust always overlooks this case.
If a third party actually has assets that belong to the authorised person in his possession, then, if it is an institution at which he holds an account, a restriction under Clause 46(3)(a) can be imposed and that person cannot deal with the assets. This limited interference with third parties reflects the special role played by banks in holding and transferring assets.
But in any other case, giving the FSA power to tell the third party what to do is not only an interference with the authorised person's enjoyment of property but a significant imposition on the third party. If the third party does not want to hold the assets on trust, the FSA would then have to go around trying to find a home for them and transferring them from one person to another on the way; or it would have to be given power over third parties to tell them that they have to have the assets and do what they are told (and what would happen if they disobeyed).
When a person becomes a trustee he is generally under an obligation to deal with property in accordance with the instructions of the owner. To interpose the FSA into this relationship would completely distort the relationship of trustee and beneficiary, and run the risk of souring the relationship. I should be surprised if there was not a lobby out there ready to make the case of what a great commercial disadvantage this would be to the trustee.
Under the current provision these questions are avoided. The FSA has powers over authorised persons who have voluntarily accepted the authority's jurisdiction over them by entering the field of financial services. The authority can direct them to do things. It can take action against them if they do not. In practically all cases it ought to be able to achieve the intended result.
The small number of cases in which this might not work or is inconvenient is part of the balance between an effective system and an intrusive one. So far, the FSA has little or no power over third parties. It does not have power to interfere with ownership of property over the head of the owner. I believe that it should stay that way.
Lord Kingsland: I shall read carefully in Hansard the Minister's response and, if necessary, return to the matter on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 152 to 154 not moved.]
Clause 46 agreed to.
Clauses 47 and 48 agreed to.
Clause 49 [Applications under this Part]:
Lord McIntoshmoved Amendment No. 155:
Page 22, line 28, after ("may) insert ("reasonably").
The noble Lord said: In moving this amendment, I should like to speak also to Amendments Nos. 156, 165, 238, 239, 254 to 257 and 263.
In another place, the Economic Secretary to the Treasury made a number of commitments to review the Bill to ensure that various provisions that appeared throughout the Bill were consistent. One such commitment related to the procedures, including consultation, for the exercise of the authority's legislative powers. That matter was addressed in the Bill before it was brought to this House.
Another matter on which a commitment was given was to review the extent to which actions were qualified by the word "reasonable"—or "reasonably"—and indeed to look again at provisions where those words did not feature. We had a certain amount of fun with this subject yesterday. The Government have now completed that review and these amendments reflect that work.
During the Bill's passage through the Commons, it was suggested on a number of occasions that it would be helpful, in particular provisions of the Bill, to make an express requirement for the authority to what is required by the provision in a way that is "reasonable".
As a matter of administrative law, it is well understood that a body exercising public functions under statute must act "reasonably". That requirement will apply to the authority just as it does to other bodies, such as the Treasury or the Secretary of State. If the authority were to act in a way in which no reasonable authority would, that would give rise to a risk of challenge by judicial review.
It goes without saying, I hope, that the Government would not wish the authority not to act reasonably in carrying out the functions conferred on it by or under the Bill. Imposing express requirements for the authority to act reasonably in certain clauses might, therefore, make little real difference in the way the authority was required to act under those clauses. But at the same time, it might have the effect of casting possible doubt on the need for the authority to act reasonably in other clauses where the requirement to act reasonably was not made explicit.
Against that background, we have not sought to impose requirements on the face of the Bill for the authority to act reasonably in every particular circumstance. However, we have identified some inconsistencies of approach which the amendments seek to correct. With the exception of Amendment No. 263 to Clause 331, the effect of the amendments is to restrict the authority's ability to request information, or further information, in connection with applications for permission, approval, authorisation and recognition. The amendments have the effect of limiting requests to information that the authority may reasonably require for relevant purposes.
We believe that that is helpful, since the effect of importing a "reasonableness" test to such provisions is to qualify not so much the way in which the authority
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acts, but the kinds of information that may be requested. That also achieves consistency with certain other provisions where a reasonableness criterion is applied; for example, where the authority must allow a "reasonable period" for consultation, or charge a "reasonable amount" for copies of drafts and final versions of rules.
Amendment No. 263 is different only in that it applies a similar reasonableness criterion to access to information; but in that case, it relates to the access that auditors and actuaries are entitled to have to an authorised person's records and information under the arrangements in Clause 331. I commend the amendments to the Committee and beg to move Amendment No. 155.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 156:
Page 22, line 30, leave out ("further information") and insert ("such further information as it reasonably considers necessary to enable it to determine the application").
On Question, amendment agreed to.
Clause 49, as amended, agreed to.
Clauses 50 and 51 agreed to.
Clause 52 [Procedure on exercise of the Authority's own-initiative power]:
Lord Kingslandmoved Amendment No. 157:
Page 23, line 33, at end insert—
("( ) The Authority must allow the authorised person access to the evidence which it has in relation to the matters causing it to propose to exercise the power.
( ) The Authority's procedures in relation to the giving of warning notices as determined pursuant to section 375 shall apply in relation to the giving of the notice referred to in subsection (3) as if it was a warning notice.
( ) The Authority's procedures in relation to the giving of decision notices as determined pursuant to section 376 shall apply in relation to the giving of the notice referred to in subsection (4) as if it was a decision notice.").
The noble Lord said: In moving this amendment, I should like to speak also to Amendments Nos. 158 and 185A.
Clause 52 allows the authority to cancel or vary an authorised person's permission to carry on a particular investment activity. Under the market abuse parts of the Bill, individuals against whom the offence of market abuse is alleged are entitled to a particular form of protected procedure involving warning orders, warning notices, decision notices, and ultimately access to a tribunal. Those protected procedures are denied to authorised bodies when they themselves are pursued for one or another reason by the authority.
Amendments Nos. 157 and 158 both seek the same objective; that is, to give the protection of a warning notice to authorised parties. Amendment No. 185A seeks, on the same principle, to provide similar protection under Clause 88. Clause 88 brings in the warning notice procedures if the authority, as the competent authority, wants to impose a penalty on a listed company, or indeed other persons, for breach of

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listing rules. In our view, here also the decision notice protections ought to he imported into these procedures.
The Minister will be aware that there was a substantial debate on this matter in the Joint Committee. Much of it revolved around the scope of Article 6.1 of the European Convention on Human Rights. The legal arguments in support of what I seek to do in the Bill have been well rehearsed. The noble Lord will be relieved to hear that I do not intend to embark on yet another exegesis of those matters. Nevertheless, the Opposition consider this to be a vital matter and hope that the Minister has had time for reflection since his colleagues in another place dealt with these issues. I am hopeful that I may receive a better reply from him than Members of the Opposition received in another place. I beg to move.
4.30 p.m.
Lord Sharman: I support these amendments. I am not a lawyer and I do not wish to embark upon any form of legal argument. However, I believe that these are important amendments in terms of establishing confidence in the market-place in the activities of the FSA. Where an authorised person can be accused of misbehaviour, it is vitally important, in terms of maintaining confidence in the regulator and confidence in the market-place, that it should be on the basis of relatively open government. It is fundamental that the evidence upon which an accusation is based should be available to the accused. It is more than a question of legal argument; it is a matter of establishing confidence in the regulator.
Lord McIntosh of Haringey: The noble Lord, Lord Kingsland, asked me whether I had had time to reflect. I have had time to reflect but I have not had enough time to reflect. This is the point at which I completely grovel to the Committee. We announced at Second Reading our intention to bring forward amendments to rationalise the decision-making process in the Bill. I very much regret that we have not been able to bring forward these amendments in time to have them discussed at this stage of the debate. This is a highly technical area, though I recognise that it covers important issues of concern that were extensively debated in another place. It is important that we should get the drafting of these provisions right. We should not try to do it piecemeal.
Before dealing with the noble Lord's amendments, I shall briefly describe what our amendments will achieve. The amendments that we intend to bring forward will distinguish three categories of decision to which subtly different sets of procedures will apply.
First, there will be disciplinary type decisions such as decisions to impose a penalty or make a public statement about misconduct. These may be under Parts V, VI, VIII or XIV. For this category, there is no particular urgency for the decision to take effect. Accordingly, the warning notice and decision notice procedures set out in Part XXVI will apply in full. We therefore accept the thrust of Amendment No. 185A,
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although we hope that it will not be moved in due course pending the introduction of our own amendments.
For these disciplinary decisions there will be a right of access to the evidence relied on and to evidence considered by the FSA which might undermine its case. The decision will come into effect only when the full procedure, including any judicial stages, is complete. I hope that my confirmation of this important point deals with one of the main concerns that has been expressed about the arrangements in the Bill.
We intend that the benefit of this same procedure should also be extended to certain types of case which, although not truly disciplinary in nature, involve particularly serious action by the FSA. This will include decisions by the FSA to cancel all permission (and therefore authorisation) under Part IV, to withdraw approval or make a prohibition order under Part V, and other similar types of action in relation to collective investment schemes under Part XVII, the professions under Part XX and auditors and actuaries under Part XXII. It will also cover cases where the FSA proposes to order restitution under Part XXIII. All these cases involve serious action, but action which need not necessarily come into effect with great urgency because, for example, there are other means by which the FSA can protect consumers in the short term.
The second category will cover the remaining supervisory type decisions, such as varying permission and imposing requirements under Part IV and suspension or discontinuance of listing under Part VII. Although these decisions can have a considerable impact on the persons concerned, their main objective is to ensure that consumers are properly protected. A more flexible procedure is therefore required which will allow the FSA's decision to take effect with the urgency required by the circumstances.
For these supervisory cases, we propose to follow the procedural model already set out in Clause 314 for Lloyd's directions. The decision would take effect on a specified date, whether or not the matter had been referred to a tribunal in the meantime. In some cases it will be necessary for the decision to take effect immediately, but we will ensure that the FSA cannot set any date that comes into its head. Instead, we propose that the date would have to be reasonable having regard to the harm that might be done if the requirement did not take effect then. For example, if no harm would be done by affording a longer time for representations to be made and for the tribunal to consider the matter, the person concerned should not be subject to the immediate imposition of the requirement.
The subject of the supervisory type decision would enjoy the rights currently provided for under Part IV to know the reasons for the decision, to make representations and to refer the matter to the tribunal. However, the rights of access to evidence will not apply. That is because these decisions will often be relatively routine. Full criminal style rights of access

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would be excessively bureaucratic and would seriously undermine the ability of the regulator to regulate responsibly and effectively.
For that reason, we cannot accept the thrust of Amendments Nos. 157 and 158, which seek to apply too much of the disciplinary procedure to these inherently supervisory decisions. I realise that I am using new definitions which are not contained in the Bill and with which noble Lords may not be familiar.
The third category will concern the grant or refusal of applications for permission, approval and recognition in respect of, for example, applications under Part IV (permission for authorised firms), Part V (approval for individuals), and Part XVII (authorisation of collective investment schemes). Where applications are granted in full or subject to changes to which the applicant consents, there should be a fast-track notice procedure which allows the applicant to benefit from the decision at the earliest time and with the minimum of procedural formality.
Where applications are refused, granted only in part or granted subject to requirements, the applicant should be entitled to receive a warning notice setting out the reasons for the decision, the standard opportunity to make representations, a decision notice and the right to refer the matter to a tribunal if still aggrieved by the decision. However, we do not consider that it is appropriate or necessary for the right to access to evidence to apply in this category of case.
Pending completion of the procedures, the FSA's decision will stand. That will ensure that the applicant can benefit from the permission or approval to the extent that it has been granted, while also ensuring that unfit applicants cannot carry on as if their applications had been granted while the judicial process runs its course.
I grovel once more! We should have been able to bring forward these amendments in time for this debate; we have not been able to do so. I have sketched out the changes that we propose to make. I hope to table amendments shortly. Meanwhile, I hope that noble Lords will trust me when I say that our amendments will meet the point in Amendment No. 185A, although we cannot accept Amendments Nos. 157 and 158 which would go too far in applying the disciplinary procedures to supervisory decisions.
Lord Kingsland: Your Lordships will, of course, trust the Minister. We look forward to seeing the new set of amendments which the Minister will undoubtedly table at Report stage in relation to these matters.
The distinction between disciplinary and supervisory powers is a seductive one, and one is tempted to think that they are differences of kind rather than simply differences of degree. In my submission, what matters in any of these proceedings under the Bill is the effect that they will have on the individual—that is to say, the nature of the penalty and the extent to which he can adduce evidence in his defence. As matters stand, it is my contention that the difference between an authorised person effectively losing his job as a result of a supervisory proceeding
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under the clauses that we are now reviewing and a non-authorised person losing his job as a result or a proceeding under the market abuse provisions of this Bill is, whatever language one uses to describe the procedures, a distinction without a difference under the European convention. That is the issue.
However, I accept that we are not in a position to address this issue at Committee stage. If the Minister is considering a substantial rewriting of this part of the Bill, I would request that we be given as much time as possible to reflect upon it before Report stage.
Lord McIntosh of Haringey: I give that assurance to the noble Lord. I do not believe that a substantial rewrite of this part of the Bill is required. While we are dealing here with a specific problem, it would not be described as fundamental.
Lord Kingsland: The noble Lord may find that it is fundamental to the people who are affected by this part of the Bill. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 52 agreed to.
Clause 53 [Exercise of own-initiative power with immediate effect]:
[Amendment No. 158 not moved.]
Clause 53 agreed to.
Clause 54 agreed to.
Clause 55 [Prohibition orders]:
Lord McIntosh of Haringeymoved Amendments Nos. 159 to 163:
Page 24, line 24, leave out ("or an exempt person").
Page 24. line 31, leave out ("or exempt persons").
Page 24, line 32, leave out ("or exempt person").
Page 24, line 36, leave out ("or exempt").
Page 24, line 41. at end insert—
("( ) This section applies to the performance of functions in relation to a regulated activity carried on by—
( ) a person who is an exempt person in relation to that activity, and
( ) a person to whom, as a result of Part XX, the general prohibition does not apply in relation to that activity,
as it applies to the performance of functions in relation to a regulated activity carried on by an authorised person.").
The noble Lord said: Amendments Nos. 159 to 163 were debated with Amendment No. 144. I beg to move these amendments en bloc.
On Question, amendments agreed to.
Clause 55, as amended, agreed to.
Clauses 56 and 57 agreed to.
Clause 58 [Approval for particular arrangements]:
Lord McIntosh of Haringeymoved Amendment No. 164:
Page 25. line 24, after ("must") insert ("take reasonable care to").
The noble Lord said: In moving Amendment. No. 164, I should like to speak also to Amendments Nos. 164A and 16413 in the name of the noble Lord,

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Lord Saatchi. These amendments are related to Clause 58 which requires authorised persons to obtain the approval of the FSA before allowing persons to perform certain important, or controlled, functions. A controlled function would be one that involved a person in dealing with customers or their property in connection with a regulated activity, or one that involved exercising significant influence over the conduct of the authorised person, such as a senior management position.
Currently, Clause 58(1) stipulates that an authorised person must ensure that no person performs a controlled function under an arrangement of the kind to which Part V applies, such as a contract of employment or contract for services, without the approval of the FSA. That could mean that the authorised body was in breach of its duty even where it had taken all reasonable care to make sure that it complied with this requirement. For example, a firm could be caught if an unapproved employee, having been quite properly employed on functions which were not controlled functions and did not require approval, went on to perform a controlled function without the consent of the firm but in breach of the firm's internal rules. The breach would unfairly expose the firm to FSA disciplinary action and give rise to a right of action under Clause 71.
The Government believe that that goes too far and leaves authorised persons exposed even when they have done everything they could reasonably be expected to do to guard against this kind of breach. The position is different from that which would apply under Clause 55(5) which deals with the situation where a person is employed in relation to a regulated activity in breach of a prohibition order, or Clause 58(2) which deals with the situation where an unapproved person is employed by a contractor of the authorised person. In those cases the Bill provides the test of "reasonable care".
The approach is a familiar one in legislation of this kind which imposes a duty on someone. The body is required to do what it reasonably can, but leaves it some reassurance where it is unable to foresee or avoid a breach. Amendment No. 164 is, therefore, designed to give authorised persons the same assurance in respect of their own employees or contractors so that, where they have taken reasonable care to avoid a breach of this clause, they will not face disciplinary action under Clause 71.
Amendment No. 164A in the name of the noble Lord, Lord Saatchi, contains slightly different wording which is intended to achieve the same effect. I hope that Amendment No. 164 gives the noble Lord the reassurance that he seeks. Amendment No. 164B would change the prohibition in subsection (7) so that it referred instead to people "handling" the property of customers. One reason that a function may be controlled is that it involves dealing with the property of customers. Subsection (7) relates to those people who deal with the property of customers in connection with the carrying on of a regulated activity. It is right that people such as fund managers should require
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approval. The positions that they hold and their direct responsibility for customers' property mean that they are in a position to cause direct harm to those customers if they do not meet high standards of integrity.
The term "dealing with" takes its ordinary meaning: it means receiving, handling, investing and looking after the property of the customer in connection with the regulated activity. To amend the subsection which deals simply with the "handling" part of "dealing with" narrows it too far. These are semantic points rather than matters of very great significance. I am afraid that in this case we cannot accept the amendment. I beg to move Amendment No. 164.
4.45 p.m.
Lord Kingsland: Amendments Nos. 164A and 164B are both concerned with Clause 58. I should have thought that what they sought to achieve was perfectly reasonable. Amendment No. 164A deals with the problem that Clause 58(1) contains an absolute prohibition on an authorised person employing someone who has not been approved by the authority to perform a controlled function. The amendment simply seeks to provide that the authorised person will not be treated as being in contravention merely because that happens. It seems to me to be a perfectly reasonable amendment.
As to Amendment No. 164B, subsections (5) to (7) of Clause 58 set out the controlled functions. Subsection (7) refers to dealing with the property of customers. That is all very well. However, as I understand it the authority has interpreted that as covering those cases where a person acts as an investment manager. I believe that that function is caught only by subsection (6). The amendment seeks to make clear that subsection (7) relates only to the holding of physical assets; for example, keeping them in safe custody.
Lord McIntosh of Haringey: I rather think that in dealing with Amendment No. 164A the noble Lord has much more succinctly and clearly described what I said at inordinate length in relation to Amendment No. 164. We look to the same end: "take reasonable care" is the same as "seek to". I prefer Amendment No. 164, not because it is all that different in effect but because it uses the same wording as appears later in the clause.
On Question, amendment agreed to.
[Amendment Nos. 164A and 164B not moved.]
Clause 58, as amended, agreed to.
Clause 59 [Applications for approval]:
Lord McIntosh of Haringeymoved Amendment No. 165:
Page 26, line 33, leave out ("further information") and insert ("such further information as it reasonably considers necessary to enable it to determine the application").
The noble Lord said: Amendment No. 165 was spoken to with Amendment No. 155. I beg to move.
On Question, amendment agreed to.
Clause 59, as amended, agreed to.
Clause 60 [Determination of applications]:
[Amendment No. 166 had been withdrawn from the Marshalled List.]
Lord Eatwellmoved Amendment No. 166A:
Page 27, line 8, at end insert ("and to whether the candidate demonstrates a commitment to engage in continuing professional education and development").
The noble Lord said: The objective of Amendment No. 166A is to assist in raising professional standards in the financial services industry and, in particular, to ensure that standards of competence keep up with the changing circumstances of financial markets. Clause 60 as currently drafted is peculiarly static for what is one of our most dynamic industries.
In evaluating the characteristics of a candidate, the authority is required to consider only his or her current qualifications with no regard to any commitment to maintain competence in the future. Unfortunately, the skills, say, of 10 years ago, if someone had been authorised then, are likely to be quite inadequate for today's markets, and the skills of someone authorised today are likely to be inadequate in 10 years' time. Things move on. The amendment recognises the nature of the industry and requires that, to be authorised, candidates will make a reasonable commitment to engage in continuing professional education and development. By adding the amendment, the clause will ensure that authorised persons are committed to maintaining their competence and skills in line with the development of the financial services industry over time. I beg to move.
Lord Lipsey: I support the principle of the amendment. None of us would like to be treated by a doctor who had not read a medical magazine since leaving medical school—50 years after he qualified. The same point should apply to financial advisers. Just taking the exam is not enough. To some extent the existing regulator recognised that when it decided against "grandfathering" being allowed in the industry—that is, one cannot carry on doing the job just because one has been doing it for a long time; one has to obtain the necessary qualifications. In the same way, it is right in principle that qualifications should be continually updated in the way suggested by the noble Lord, Lord Eatwell.
However, I can see some practical difficulties with the amendment. I sit on the PIA membership committee. We receive great bundles of papers for each of the applications for individual registration. If Members of the Committee think that there is a great deal of paperwork for this Bill, they should see what I receive for a PIA membership committee meeting. It is essentially a "tick the boxes" operation. The applicants state that they have the necessary exams and the necessary experience. They state that they have the right financials resources or are backed by their firms. It is rather harder to assess whether an applicant whom one will not see in person really has the continuing commitment to which the amendment of the noble Lord, Lord Eatwell, refers.
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I very much hope that the Minister will accept the principle of the amendment and before the Report stage will think a little about the practical difficulties. Perhaps there is some different wording of the amendment which would achieve the objective, to which the noble Lord, Lord Eatwell, is rightly directing us, without causing the practical problems to which I have referred.
Lord Sharman: I support the principle of the amendment, although I wonder whether it goes far enough. As the noble Lord, Lord Lipsey, said, demonstrating a commitment at a point in time is difficult enough. What does one do? One says "Yes, I am going to do it" and then one signs a piece of paper. Many professional bodies now require their members to demonstrate that they have maintained what is commonly known as continuing professional education. The objectives of the amendment would he well served by some form of approach which requires maintenance of authorisation by reference to continuing professional education. Nevertheless, I support the principle of the amendment. I just wonder whether it goes far enough.
The Earl of Home: I support the principle of the amendment. At my bank we constantly encourage people to seek the latest qualifications. However, there are times when experience and age have to be considered because it may not interest an individual to move on to the next stage of qualification. I should have thought that it is up to the management of the institution to ensure that those people get to the right stage of qualification for the job that they are asked to do. If they have to go further, either by statute or by the wish of management, they will move forward. I think that it is best to leave it to the management of the institutions to decide the qualifications of that person and whether by going one stage further the Peter principle may apply whereby he is promoted beyond what he is capable of doing and therefore cannot necessarily give the best advice to the client.
Lord Saatchi: We have some concerns about this amendment. In order to move forward, I wish to make a suggestion about it because, as Members of the Committee have said, the principle behind it is admirable. In order to explain the suggestion, perhaps I may address some of our concerns about Clause 60 in general. One of our concerns is that Clause 60 appears to take over the responsibilities of firms and to allocate matters to the FSA which in our opinion ought properly to be the responsibility of the firms and the employer. We think that the thrust of this is strange, given the comments on page 20 of consultation paper 26, in which an earlier Treasury document, an overview of financial regulatory reform, is referred to. It states:
"Regulation of the financial services industry should be directed first and foremost at the level of the firms operating in the industry. As now, the organised firm will continue to be the entity on which rules are imposed by the FSA and which is responsible for complying with those rules and for the consequences of not doing so".

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The document goes on to argue:
"That justifies the FSA regulating and authorising directors and other senior members of the firm. It could also be used to support the concept that once the FSA has authorised those senior members, the firm—i.e. its directors and senior officers—should then be responsible for ensuring that more junior middle management conform to the rules and standards required in the Bill".
We should contrast that with what appears to be happening in the Bill, especially in Clause 60. The FSA is introducing itself directly into the regulation of middle management in attempting to assess not only whether someone is a fit and proper person, by ensuring that he has no record of dishonesty or of breaking rules elsewhere, but also in trying to assess whether people are fit for the jobs and activities at a micro-level. We believe that that is probably undesirable and, as the noble Lord, Lord Lipsey, hinted, perhaps unworkable. Perhaps it would be better if the FSA concentrated on regulating the firm and ensuring that it introduces and adheres to strict internal arrangements to ensure that more junior staff conform to these standards. We have to remember that 150,000 to 200,000 people in the City will have to be regulated and approved within the meaning of the clause. Out of that total, about 10,000 people change jobs every month. There is constant movement. Therefore, this will be an active area for the FSA.
As far as we can tell, Clause 60 already gives the FSA a veto on the appointment of directors, salesmen, corporate finance managers and other senior line management. That is set out in greater detail on page 23 of consultation document 26. We believe that the problem with the clause is that the tentacles of the FSA can reach right to the heart of decision making in any business by addressing and influencing staffing and remuneration—two issues usually considered to be the function of management. In that sense it is highly intrusive and takes a great deal of justification. We believe that the Government have acknowledged that point. In consultation document 26 the Treasury stated, in its overview of financial regulatory reform:
"It is not the role of regulators to try to run regulated businesses".
It went on to say:
"The regulator clearly needs however to have some direct influence over individuals in positions of senior management responsibility".
Those are the reasons why we believe that Clause 60 has already gone a little too far. Amendment No. 166A would take the process even further. The amendment is more or less the same as one tabled by the Liberal Democrats at the Committee stage of the Bill in the House of Commons. It was not accepted by the Government. The amendment describes the matters which the FSA must take into account when considering whether to grant an application to an individual to become an approved person.
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In Clause 63(13) the definition of "approved person" is,
"a person in relation to whom the Authority has given its approval under section 58".
Approved persons are the individuals employed by an authorised person to carry on the controlled functions of the authorised person. Controlled functions must satisfy one of the conditions set out in subsections (5), (6) or (7) of Clause 58.
In summary, approved persons are the individuals who, among other things, provide investment advice, carry out investment management, arrange deals and securities, deal with client assets or have management functions which allow them to exercise significant influence on the conduct of the authorised person's affairs.
The amendment would require such a person, when applying to become an approved person, to demonstrate to the FSA a commitment to engage in continuing education and development. That is, as other noble Lords have said, a laudable objective, but perhaps I may respectfully suggest that the amendment may be in the wrong place. The FSA would find it very difficult to make a judgment on a person's commitment to engage in continuing education and development. A better approach might be to require the FSA to introduce continuing education requirements for approved persons so that an approved person would run the risk of ceasing to be approved unless he maintained a certain level of continuous training.
5 p.m.
Lord McIntosh of Haringey: The noble Lord, Lord Saatchi, has raised the ante on the amendment by calling into question not only the provisions under Clause 60(2)—it is what others were discussing—but also the whole basis of Clause 60 and, by implication, of the whole approvals regime in Clauses 58 to 62. He seems to think that Clause 60, and presumably therefore the other clauses, go too far in taking over the responsibility of firms. I think that that is what he says.
If we go back to the beginning, Clause 2(3)(b) requires the FSA to have regard to,
"the responsibilities of those who manage the affairs of authorised persons".
They will have to bear that principle in mind in developing a proportionate approach to the use of the powers under Part V of the Bill. The Bill limits the types of functions which require approval.
If we take the section under the chapeau approval, it is the authorised person who has to ensure that no person performs a controlled function. As amended now, he has to take reasonable care to ensure that this applies to contractors. There are conditions in Clauses 58, 59 and 60 about applications for approval. If we were to debate the whole issue of approval we should take a good deal longer than would be justified on this amendment.

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I have a past interest, I suppose, to declare on the question of professional education and development. I was the chairman, and many years later the president, of my professional organisation, the Market Research Society. Professional education and development was one of the aspects I was most keen to develop in the society. It did not always involve qualifications. Indeed, when it involved qualifications it did not work well. It did not always involve what one might call training; and it did not always involve (although it sometimes did) a level of competence. Therefore I recognise that professional education and development as a concept may well go beyond the training, competence and qualifications mentioned in Clause 60(2).
The difficulty I have with the amendment is one which has been referred to. It refers to a commitment to professional education and development. A commitment could mean, as the noble Lord, Lord Sharman, said that the applicant ticks a box saying, "Yes, I am committed to it" and thereafter does nothing about it. So we have to think again about the wording. We have to be sure—I am not yet sure—that professional education and development as a concept adds to the other criteria set down in Clause 60(2).
Having said that, I should like to think again about the relationship between professional education and development and the other aspects before Report stage. Of course, I cannot make any commitment, but I hope that my noble friend will not press an amendment which is not acceptable at present because of the aspect of commitment, and as presently worded.
Lord Eatwell: I am grateful to noble Lords who supported the principle of the amendment, although most were somewhat critical of the formulation that I chose. I am particularly grateful, if slightly amazed, at support from the noble Lord, Lord Saatchi. His earlier remarks criticising Clause 60 and preceding clauses had led me to scribble on my notes a series of colourful remarks with which to upbraid what appeared to be an attempt to weaken the regulatory process of authorisation. However, I am delighted that he went through a remarkable sea change. At the end of his speech he declared that he would be happy to see the Bill—I hope that I cite him reasonably accurately—impose continuing education requirements on authorised persons. One says, "Hear, hear". That is far stronger than I put forward from my rather timid position.
I hope that when the Minister thinks again, he will not only take my advice but also the more draconian advice of the noble Lord, Lord Saatchi, which is clearly more in tune with the goals that I sought to achieve. Given my noble friend's commitment to think again, it is only right at this stage that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 60 agreed to.
Clauses 61 to 70 agreed to.
Baroness Turner of Camdenmoved Amendment No. 167:
After Clause 70, insert the following new clause—
REVIEW OF CONDUCT IN REGULATED ACTIVITIES
(" . The Authority may—

(a) require all authorised persons carrying on a regulated activity of a specified kind to review their conduct of the activity in relation to a specified category of consumers and report the results to the Authority; and

(b)if satisfied as a result of the review that an authorised person has contravened any requirement made by the Authority under this Act, order him to pay compensation to consumers who have suffered loss as a result of such a contravention.").

The noble Baroness said: The Personal Investment Authority ordered a review of the selling of personal pensions when it became clear that they had been sold to many people for whom they were not suitable because their occupational pensions offered a better product. It should be said in passing that, culpable as the industry was, it nevertheless received substantial support and encouragement from government policy at the time.
More recently the FSA has started a similar review into the selling of free-standing additional voluntary contributions as top-ups for occupational pensions. These top-ups are usually more expensive for consumers than additional voluntary contribution schemes run through occupational schemes. Where it has been found that there has been mis-selling the authority has required compensation to be paid to consumers and has established the calculation to be used in deciding the sum to be paid. In most areas where individuals have been sold a product which is not suitable for them, it is up to them to seek compensation through the ombudsman if necessary. But where there is evidence of widespread systematic mis-selling to people who can easily be identified as falling within a category of consumers for whom the product in question is unsuitable, a group approach co-ordinated by the FSA is likely to be more effective to alert individuals early on that there may be problems, and to get them compensation without the duplication of effort.
The Bill allows the FSA to require an authorised person to provide information and to apply to the court for an order of restitution. The purpose of the amendment is to allow the FSA to set up a widescale review covering all authorised persons doing business in a specified area, and to work out a compensation scheme if mis-selling is revealed. I beg to move.
Lord Saatchi: The noble Baroness, Lady Turner, described her aim well and I can see what her amendment aims at. However, when I read it, it suggested something different; that if requested to do so by the FSA, authorised persons would have to prepare a report only up to their regulatory breaches.
The difficulty might be in the drafting. As it stands, the scope of the report which will be prepared under those circumstances is not specified, other than that it covers the conduct of the authorised persons' regulatory activities. The fact is that the FSA has wide

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powers to carry out investigations and to require authorised persons to produce information. We doubt whether the additional power is necessary.
My reading of the amendment could well be wrong, but if the result of preparing a report into a person's own affairs would be the receipt of an order requiring the authorised person to pay compensation, I doubt whether the reports would be forthcoming or have great value. I am sure that that is a function of the drafting, which perhaps I have misunderstood.
Lord McIntosh of Haringey: I am grateful to my noble friend for tabling the amendment and for the way in which she introduced it. It touches on an important issue: reviews by firms of past business and the need for the Bill to ensure that it can require such reviews. The requirement is in the light of the cases of mis-selling—most notably of personal pensions—which have come to light.
The Government have been considering whether to introduce their own amendment to allow such reviews, and we welcome the matter being brought back to the Committee's attention. In Committee in another place on 4th November 1999, the Economic Secretary to the Treasury said:
"We broadly intend that, where appropriate, the basic rule-making power should cover reviews of past business, such as pensions mis-selling. We are considering whether further exchanges are needed to put that measure beyond doubt".
Having done so, we intend to bring forward our own amendment on reviews of past business, but we shall do so in Part X relating to rule-making powers. I hope that we shall be able to table those amendments speedily so that they can be debated when we reach Part X next Monday. I hope that in the light of that commitment my noble friend will not press her amendment.
Baroness Turner of Camden: I am delighted by my noble friend's reply. Of course I am happy to withdraw my amendment. I am pleased that the Government are giving it favourable consideration and I look forward to seeing their amendment next Monday. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 71 agreed to.
5.15 p.m.
Clause 72 [The competent authority]:
Lord McIntoshmoved Amendment No. 168:
Page 33, line 5, leave out ("Stock Exchange") and insert ("Authority").
The noble Lord said: We now come to Part VI, which is concerned with official listings. As Members of the Committee will know, the competent authority for listing is responsible for maintaining the official list of securities in the UK. Its job is to control admission of securities to the official list and to monitor and police the compliance of issuers with the ongoing requirements that have to be met by the issuers of officially listed securities.
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The requirement to have a competent authority and the bulk of the requirements which issuers of officially listed securities have to meet are laid down in the various European Community directives on official listing. Of course, they antedate those directives. There is no obligation on issuers of securities to apply for listing on the official list. It is a choice that they make. Admission to the official list acts as a kind of kite-mark. If a security is on the official list, investors and potential investors know that the issuers of the securities admitted to official listing are obliged to meet, and to continue to fulfil, certain requirements, particularly concerning the release of information to the markets.
The London Stock Exchange has been the UK's competent authority since the concept was first introduced into UK law in 1984. It has performed the function well, creating and enforcing the listing rules in a way which gives confidence to investors while meeting the commercial needs of users. That is why the Bill as introduced into Parliament continued to name the Stock Exchange as the competent authority. However, last year the Exchange announced its proposal to seek to demutualise. Indeed, last Wednesday, the Exchange held its Extraordinary General Meeting and voted in favour of demutualisation.
In the light of those developments, the Government have concluded that it is no longer appropriate for them to continue to exercise the competent authority function. Indeed, the London Stock Exchange itself—I cannot over-emphasise this—suggested that that would be inappropriate. A demutualised Stock Exchange will be a for-profit organisation. Quite rightly, its focus will be on the interests of its shareholders. Clearly, if the statutory functions of the competent authority were to be exercised by a commercial for-profit company,there is the possibility of conflicts of interest, or at least the perception of them. That is especially so given the background of increasing competition between existing exchanges and with new entrants coming into the market such as Nasdaq Europe.
Therefore, the Government announced last October that they intended to transfer the competent authority function to the FSA. The Exchange's timetable for demutualisation is rapid. It is expecting that once it has reregistered as a public company, trading in its shares will begin around May. As a result, the Government decided to lay regulations under the European Communities Act to effect the transfer from the Stock Exchange to the Financial Services Authority. The target date for the transfer to become effective is 1st May. Those regulations, which were approved by another place last Thursday, will come before this House soon.
The transfer under the EC Act will, of course, relate to the existing legislation contained in Part IV of the Financial Services Act 1986. The changes we are proposing in the Bill are more far reaching in that they will apply many of the accountability and

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transparency arrangements which the Bill is introducing for the FSA to the competent authority and put all its powers on a statutory footing.
This group of amendments—Nos. 168, 173 to 178, 195, 196 and 278—is concerned with who the Bill should name as competent authority. We shall come to the powers and accountability arrangements of the competent authority shortly. It makes sense to appoint the FSA as the competent authority. Although the function of competent authority and financial services regulator are different, there are useful synergies. The FSA already has a great deal of expertise in the area, a strong interest in the market in officially listed investments and a strong concern to ensure that such markets are not abused and that investors are protected. Having the financial services regulator perform this role is in line with the practice in a number of other countries including France, Germany, the US and Japan.
Locating the competent authority in the FSA will also ensure that competent authority staff—there are fewer than 100—have the opportunity to develop their careers within a larger organisation. It will also mean that central resources can be shared, keeping costs down. While the provisions of the Bill do mean that the statutory framework will change, with accountability and transparency arrangements improved, the key message for issuers and potential issuers is that it will be business as usual.
The FSA, in consultation paper No. 37 on the transfer of the listing function, stated:
"The FSA believs that, following the transfer, it will be important to maintain the current level of service provided by the UK listing authority and to ensure as much continuity as possible in order to maintain current standards of investor protection and to provide access to the capital markets for issuers".
The majority of the current listing department staff, including the head of the listing department at the London Stock Exchange, will be making the move to the ESA. Neither we, the Stock Exchange nor the FSA consider that the FSA's assumption of the competent authority function will overburden it or slow down its ability to respond.
The first of the amendments in the group, Amendment No. 168, names the FSA as the competent authority. It provides that the FSA rather than the Stock Exchange will exercise the functions of the competent authority on the coming into force of Clause 72. Amendments Nos. 178, 195 and 278 then make consequential changes, removing references to the "Stock Exchange" in the Bill and replacing them, where appropriate, with references to the "Financial Services Authority".
The other amendments in the group are concerned with the provisions of Schedule 7. That schedule allows the Treasury to transfer some or all of the functions of the competent authority from whoever is exercising it at a particular point in time to another body if certain conditions are met or if it is otherwise in the public interest. We considered whether it was appropriate to keep that power in the Bill following the decision to transfer the function to the FSA. We
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concluded that it was. The Delegated Powers and Deregulation Committee has approved our retaining the power.
Although, as I said, there are useful synergies with the FSA's role as the financial services regulator, the listing function is distinct. Most importantly, the duties of the competent authority are not so wide ranging. Essentially, it is concerned with ensuring that issuers provide the necessary information for the market, with the bulk of the requirements laid down in the directives. It is not concerned with the conduct of an issuer's business in the way that the FSA is concerned with the manner in which authorised persons deal with their customers and with each other. Therefore, it is not a function which must be carried out by a financial services regulator. There are advantages in this and that is why we are transferring the function.
However, there are plausible alternatives, such as creating a stand-alone competent authority. Therefore, we are retaining the power in Schedule 7 to transfer the functions. However, the grounds for exercising the power set out in paragraphs 3 and 4 of the schedule are no longer appropriate. Those grounds, which concern competition, were necessary when the function was carried out by a stock exchange in a world of competing stock exchanges. However, the FSA is not a commercial body, so the concerns about possible exploitation, or the perception of exploitation, of the role do not apply.
Of course, it is possible that the FSA, as competent authority, might carry out its functions in an anticompetitive way or cause others to engage in anti—competitive practices or agreements. However, at Report stage we intend to introduce competition scrutiny arrangements along the lines of those which apply to the FSA more generally. Under those provisions it will be possible for the competition authorities to investigate the competent authority's regulatory provisions and practices. If necessary, the Treasury will be able to direct them to make changes.
Therefore, Amendments Nos. 173 and 174 delete the competition grounds and make consequential drafting changes. The Treasury will still be able to transfer the function if it is satisfied that someone else can carry out the function better, if it is otherwise in the public interest, or if the competent authority agrees to the transfer. Any order which transfers the function would need to be subject to a debate in both Houses of Parliament.
Finally, Amendments Nos. 175, 176, 177 and 196 make consequential changes to the transfer power resulting from the decision to apply to the competent authority a number of provisions of the Bill which apply to the FSA. That will ensure that if we ever transfer the function, we can continue to apply appropriate accountability and transparency arrangements to the new competent authority. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 169:
Page 33. line 6, at end insert—
("( ) Schedule 6A modifies this Act in its application to the Authority when it acts as the competent authority.").
The noble Lord said: Amendment No. 169 is grouped with Amendments Nos. 170 to 172, 179 and 191. These amendments make changes to the accountability arrangements which surround the competent authority in the light of the transfer of function from the Stock Exchange to the FSA.
We considered the merits of possible changes on a case-by-case basis, given the different nature of the competent authority function and the fact that those responding to consultation were generally content with Part VI of the Bill when the London Stock Exchange was named as the competent authority. We concluded that it was appropriate to make some changes. Although the Stock Exchange has carried out the function in a satisfactory manner, we believe that, as a result of the transfer to a body which has not carried out the function before, it is right to import a number of statutory checks and balances into Part VI.
Therefore, Amendments Nos. 169, 170 and 172 would ensure that the provisions of the Bill which apply to the FSA in its main role would apply also when the FSA acts as a competent authority. The provisions are applied subject to modifications set out in the new schedule inserted by Amendment No. 172. That means that all the arrangements in Schedule 1 which relate to the constitution of the FSA, the role of the non-executive members of the board, arrangements for the discharging, monitoring and enforcement of functions and the FSA's status all apply to the FSA as competent authority as well.
The provisions in paragraph 7 of Schedule 1 also apply. The complaints investigator will be able to investigate complaints about the competent authority in the same way as he investigates complaints about the FSA more generally. The FSA's annual report must cover the discharge of its functions as competent authority, as must the annual general meeting provided for in paragraph 11.
Only three matters in Schedule 1 are not applied directly to the competent authority. First, the provisions of paragraph 19 on the exemption of liability from damages are not applied. As for the FSA more generally, statutory immunity for the competent authority is extremely important in ensuring that it can carry out its job effectively. Let there be no doubt about that. It is simply that that is provided for separately in Clause 97.
Secondly, the provisions of paragraph 16 on penalties are not applied. Equivalent provision is provided by Amendment No. 192, which inserts a new clause after Clause 195. We shall debate that in a later group.
Finally, the provisions of paragraph 17 of Schedule 1 are disapplied. Amendment No. 191 introduces a similar provision for the competent authority concerning fees. The new schedule also disapplies a
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number of subsections in Clause 2(4). The effect is that neither the objectives in Clause 2(2) nor the principles in Clause 2(3) apply to the competent authority.
When we originally drew up the provisions of Part V1 of the Bill, we considered carefully whether we should set objectives for the competent authority in the legislation. We concluded that there was no need to do so for two reasons. First, this is an area where the directives permeate all that the competent authority does. Secondly, given its ability to transfer the functions to another body, the Treasury has a different role vis-à-vis the competent authority from the one that it has in relation to the FSA generally. Therefore, we intend that, as now, the Treasury will continue to agree annually the competent authority's objectives and to hold regular meetings to assess progress. The Treasury will, of course, be accountable to Parliament for how it goes about that.
However, we did consider it appropriate to introduce principles along the lines of those in Clause 2(3) to ensure that the competent authority was subject to appropriate constraints on the manner of its regulation. Therefore, Amendment No. 171 inserts a new clause after Clause 72 which requires the competent authority to have regard to a number of matters in discharging its general functions. I shall not list them because they are broadly equivalent to the matters set out in Clause 2(3), subject to changes which are necessary to take account of the fact that the competent authority is concerned with listed securities rather than regulated activities.
That aside, the only substantive difference is that there is no equivalent to the principle concerning the responsibilities of senior management. That is because the competent authority is not concerned with the conduct of the business of issuers in the same way as the FSA, as financial services regulator, is concerned with the conduct of authorised firms.
Paragraph 3 of Schedule 7 provides that Clause 7 of the Bill, which requires the FSA to consult the consumer and practitioner panel, does not apply to the competent authority because the constituencies concerned are different. The current arrangements, under which the competent authority consults a Listing Authority Advisory Committee, composed of issuers, corporate finance practitioners and investors' representatives, work well. Proposals for new listing rules or changes to existing rules are also referred to the Listing Rules Committee for its advice prior to public consultation.
We considered that incorporating those committees into the legislation would remove the current flexibility which the competent authority has without bringing any real gain. Here, we are talking about a completely different scale of operation from the FSA generally. As I said, the competent authority has fewer than 100 staff. Almost all the listing rules are derived from directive requirements. There is no point building in bureaucratic arrangements simply for the sake of it.
However, in modifying Clause 146 as it applies to the FSA in this context, paragraph 4 of the new schedule puts a statutory requirement on the FSA,

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when acting as a competent authority, to consult publicly, as it does now, on changes to the listing rules and new listing rules. It will also have to consult on rules which provide for the payment of fees. The procedural requirements concerning rules set out in Part X apply also to listing rules. Public consultation is vital in exposing what the regulator is proposing to do to the widest possible scrutiny.
Paragraph 4 also concerns the ability of the FSA to issue general guidance under Clause 148 in its capacity as competent authority. Again the procedural requirements, including the duty to consult, apply in the same way to competent authority guidance as for FSA guidance more generally.
The final element in the accountability and transparency arrangements is not yet fully in place. This concerns the warning notice and decision notice procedure and rights to refer competent authority decisions to the tribunal.
Amendment No. 179 provides for a right for an issuer to refer a competent authority decision to discontinue or suspend listing to the tribunal. That is not the end of the story as regards tribunal rights. We shall be bringing forward amendments on Report to align the decision procedures we shall be applying to other FSA decisions to competent authority decisions. And we will also be giving a right to refer competent authority decisions to the tribunal. Specifically there will be a right to refer decisions: to refuse admission to listing; to suspend or discontinue listing; to impose a penalty or issue a public censure; and decisions to refuse admittance to the list of sponsors or to remove people from that list.
Taken together the changes we are making to enhance the accountability arrangements for the competent authority should provide the Committee with the assurance that the FSA will carry out the function in a way which continues to give investors confidence while meeting the needs of issuers wishing to access the capital markets. I beg to move.
5.30 p.m.
Lord Sharman: I am rather confused by Amendment No. 171. If the Bill creates the FSA as the competent authority for listing, which I understand is required by the European listing directive, I am at a loss to understand why it is necessary to insert this clause. All the provisions of this clause are covered in Clause 2, which places a duty on the authority in carrying out its general functions If it were the competent authority, I must assume that that would include acting as the competent authority. Therefore, it seems to me to be repetitive and I do not understand why it is necessary. Perhaps the Minister will explain that to me.
I wish also to raise a point of detail which returns to the issue of facilitating competition. Paragraph (1)(f) in Amendment No. 171 states:
"In discharging its general functions the competent authority must have regard to … the desirability of facilitating competition in relation to listed securities".
I spent a lifetime working in areas around that and I am at a loss to understand what that means.
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Does that mean facilitating competition between individual listed securities in terms of the liquidity of the market; or does it mean facilitating competition in regard to the listing of securities—that is, competition between the various types of market which might list securities; or does it mean competition in regard to the trading of listed securities; or does it mean all of those? Perhaps the Minister will help me.
Lord McIntosh of Haringey: The answer to the first question requires a textual analysis between Clause 2(3) and the new clause inserted by Amendment No. 171. Doing that as rapidly as I can, I see that Clause 2(3)(b) refers to,
"the responsibilities of those who manage the affairs of authorised persons".
That is not included in Amendment No. 171. It is for that reason that the matter is dealt with in this way. I believe that the other items are the same, which is why I did not read them out. But that textual difference, apparently, makes it more convenient to deal with it by having a new clause rather than by reference back to Clause 2.
As regards the second question, the reason is that we have the power to transfer the function under Schedule 7 and it is simply a matter of drafting convenience. I believe that the note which I have been handed tells me what I have already said but I cannot read it!
Lord Sharman: Will the Minister answer the point on competition which I raised?
Lord McIntosh of Haringey: I shall have to write to the noble Lord on that matter. I apologise.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 170:
Page 33, line 10, leave out subsections (3) to (8).
On Question, amendment agreed to.
Clause 72, as amended, agreed to.
Lord McIntosh of Haringeymoved Amendment No. 171:
After Clause 72, insert the following new clause—
GENERAL DUTY OF THE COMPETENT AUTHORITY
(".— (1) In discharging its general functions the competent authority must have regard to—

(a) the need to use its resources in the most efficient and economic way;

(b) the principle that a burden or restriction which is imposed on a person should be proportionate to the benefits, considered in general terms, which are expected to arise from the imposition of that burden or restriction;

(c) the desirability of facilitating innovation in respect of listed securities;

(d) the international character of capital markets and the desirability of maintaining the competitive position of the United Kingdom;

(e) the need to minimise the adverse effects on competition of anything done in the discharge of those functions;

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(f) the desirability of facilitating competition in relation to listed securities.

(2) The competent authority's general functions are—

(a) its function of making rules under this Part (considered as a whole);

(b) its functions in relation to the giving of general guidance in relation to this Part (considered as a whole);

(c) its function of determining the general policy and principles by reference to which it performs particular functions under this Part.").

On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 172:
Before Schedule 7, insert the following new schedule—
("SCHEDULE 6A
THE AUTHORITY AS COMPETENT AUTHORITY FOR PART VI
General
1. This Act applies in relation to the Authority when it is exercising functions under Part VI as the competent authority subject to the following modifications.
The Authority's general functions
2. In section 2—

(a) subsection (4)(a) does not apply to listing rules;

(b) subsection (4)(c) does not apply to general guidance given in relation to Part VI; and

(c) subsection (4)(d) does not apply to functions under Part VI.

Duty to consult:
3. Section 7 does not apply.
Rules
4. — (1) Sections 140, 144, 145 and 147 do not apply.
(2) Section 146 has effect as if—

(a) the reference in subsection (2)(c) to the general duties of the Authority under section 2 were a reference to its duty under section (General duty of the competent authority); and

(b) section 95 were included in the provisions referred to in subsection (9).

Statements of policy
5.— (1) Paragraph 5 of Schedule 1 has effect as if the requirement to act through the Authority's governing body applied also to the exercise of its functions of publishing statements under section 89.
(2) Paragraph 1 of Schedule 1 has effect as if section 89 were included in the provisions referred to in sub-paragraph (2)(d).
Penalties
6. Paragraph 16 of Schedule 1 does not apply in relation to penalties under Part VI (for which separate provision is made by section (Penalties)).
Fees
7. Paragraph 17 of Schedule 1 does not apply in relation to fees payable under Part VI (for which separate provision is made by section 95).
Exemption from liability in damages
8. Schedule 1 has effect as if paragraph 19 were omitted (similar provision being made in relation to the competent authority by section 97).").
On Question, amendment agreed to.
Schedule 7 [Transfer of functions under Part VI]:
Lord McIntosh of Haringeymoved Amendments Nos. 173 to 177:
Page 238, line 25, leave out from beginning to first ("that") in line 27 and insert—
("(b) the Treasury are satisfied that the manner in which, or efficiency with which, the functions are discharged would be significantly improved if they were transferred to the transferee; or
(c) the Treasury are satisfied").
Page 238, line 29, leave out paragraphs 2 to 6.
Page 239, line 27, after ("VI") insert (", IX or XXVI").
Page 239, line 28, at end insert—
("( ) for reviews similar to that made, in relation to the Authority, by section 10;
( ) imposing on the new authority requirements similar to those imposed, in relation to the Authority, by sections 143, 146 and (Authority's duty to co-operate with others);
( ) as to the giving of guidance by the new authority;
( ) for the delegation by the new authority of the exercise of functions under Part VI and as to the consequences of delegation;").
Page 239, line 43, at end insert—
(" . If the Treasury have made an order under paragraph 1 ("the transfer order") they may, by a separate order made under this paragraph, make any provision of a kind that could have been included in the transfer order.").
On Question, amendments agreed to.
Schedule 7, as amended, agreed to.
Clause 73 [The official list]:
Lord McIntosh of Haringeymoved Amendment No. 178:
Page 33, line 30, leave out ("continue to").
On Question, amendment agreed to.
Clause 73, as amended, agreed to.
Clauses 74 and 75 agreed to.
Clause 76 [Discontinuance and suspension of listing]:
Lord McIntosh of Haringeymoved Amendment No. 179:
Page 35, line 4, at end insert—
("( ) If the competent authority discontinues or suspends the listing of any securities, the issuer may refer the matter to the Tribunal.").
On Question, amendment agreed to.
Clause 76, as amended, agreed to.
Clauses 77 to 82 agreed to.
Clause 83 [Publication of prospectus]:
Lord McIntosh of Haringeymoved Amendment No. 180:
Page 38, line 25, leave out subsection (6).
The noble Lord said: In moving Amendment No. 180, I should like to speak also to Amendments Nos. 197 to 201 and Amendment No. 231. These amendments make a number of relatively minor changes to the provisions on official listing and related provisions.
Amendment No. 180 deletes subsection (6) in Clause 83. That is consequential following changes made in another place and is simply tidying up.

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Amendment No. 197 corrects a technical error with Clause 98. The definition of "sale" in subsection (6) should read through to both paragraphs (a) and (b) of subsection (3).
Amendments Nos. 198 and 201 are a bit of housekeeping. Schedule 10 sets out a number of cases in which offers of securities are not to be regarded as made to the public. Paragraph 8 of that schedule covers offers of securities made to a public authority while paragraph 23 covers offers made by public authorities. The amendments simply define public authorities to mean UK central government, foreign governments, UK or foreign local authorities, and any international organisation of which the UK, or another EEA state, is a member. The amendment also gives the Treasury a power to specify other bodies, should that prove necessary.
Amendments Nos. 199 and 200 make changes to Schedule 10. Paragraph 18 of the schedule deals with securities issued by charitable bodies. The amendments are intended to ensure that charities defined under Scots law are covered by that provision.
Finally, Amendment No. 231 provides that there is no right of action for breaches of listing rules under Clause 141. There is no right of action at present, but following the changes made by the new schedule we have just debated, which applies Part X to listing rules, it is necessary to disapply Clause 141. That is not to say that there is no right of action in any circumstance where there has been a breach of listing rules. Clause 86 in Part VI allows those who suffer loss because of untrue or misleading statements in prospectuses or listing particulars to seek compensation. Clause 83(5) makes actionable a failure to publish a prospectus before making an initial public offer. I beg to move.
Lord Peyton of Yeovil: I hate to be tiresome, but could the Minister spare a moment to explain how it was that subsection (6), which he is now seeking to delete, ever appeared in the Bill?
Lord McIntosh of Haringey: To which amendment does the noble Lord refer?
Lord Peyton of Yeovil: To Amendment No. 180, which states,
"Page 38. line 25. leave out subsection (6)".
I am just wondering how subsection (6), now that it is unwanted, ever got into the Bill. Perhaps I may remind the Minister that subsection (6) states,
"For the purposes of this section, sections 141 and 142 are to be disregarded".
I wonder whether they are still to be disregarded.
Lord McIntosh of Haringey: Amendment No. 180, which deletes subsection (6), refers to Clause 83, which makes it a criminal offence for any person to offer certain new securities to the public if listing rules require a prospectus to be published before the securities are admitted to the official list. Prior to an amendment on Report in the Commons, the clause provided that a breach of the prohibition by an
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authorised person was to be treated as a breach of rules. Subsection (6) was therefore necessary to provide that no private rights of action arose as a result of a breach of the prohibition in the clause. However, in the light of the consultation responses, we amended the clause so that authorised and unauthorised persons were treated alike, both being subject to the criminal offence. As a result, subsection (6) is redundant. The noble Lord has read it correctly in relation to Clauses 141 and 142.
On Question, amendment agreed to.
Clause 83, as amended, agreed to.
Clauses 84 and 85 agreed to.
Lord McIntosh of Haringeymoved Amendment No. 181:
After Clause 85, insert the following new clause—
("Sponsors
SPONSORS
. — (1) Listing rules may require a person to make arrangements with a sponsor for the performance by the sponsor of such services in relation to him as may be specified in the rules.
(2) "Sponsor" means a person approved by the competent authority for the purposes of the rules.
(3) Listing rules made by virtue of subsection (1) may—

(a) provide for the competent authority to maintain a list of sponsors;

(b) specify services which must be performed by a sponsor;

(c) impose requirements on a sponsor in relation to the provision of services or specified services;

(d) specify the circumstances in which a person is qualified for being approved as a sponsor.

(4) If the competent authority proposes—

(a) to refuse a person's application for approval as a sponsor, or

(b) to cancel a person's approval as a sponsor, it must give him a warning notice.

(5) If, after considering any representations made in response to the warning notice, the competent authority decides —

(a) to grant the application for approval, or

(b) not to cancel the approval,

it must give the person concerned, and any person to whom a copy of the warning notice was given, written notice of its decision.
(6) If, after considering any representations made in response to the warning notice, the competent authority decides—

(a) to refuse to grant the application for approval, or

(b) to cancel the approval,

it must give the person concerned a decision notice.
(7) A person to whom a decision notice is given under this section may refer the matter to the Tribunal.").
The noble Lord said: The amendment gives the competent authority the power to require issuers to employ the services of a person known as a "sponsor". The current competent authority, the London Stock Exchange, already requires the use of a sponsor. Sponsors are a concept deriving from the listing rules rather than a requirement of the EU directives or statute. Essentially, although employed by issuers, sponsors also have the role of providing assurance to the competent authority that applicants for listing fulfil their responsibilities and have exercised the

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necessary due diligence; for example, in producing proper working capital statements and profit forecasts.
In order to be a sponsor at present a person has to be on an approved list maintained by the competent authority. The criteria are: being an authorised person or the passported equivalent from another member state; satisfying the competent authority that you are competent to perform the role of sponsor; and giving a commitment to discharge the sponsor responsibilities set out in the listing rules and paying the prescribed fees. At present the competent authority enters into a contractual relationship with sponsors as regards compliance with the listing rules. Now that the function is to be transferred to the FSA we consider that the better approach is to provide for sponsors in the Bill.
The new clause is a permissive one. It allows the competent authority to require issuers to employ sponsors. The FSA is currently engaging in consultation on its role as competent authority. Although that is primarily focused on the operation of the function in the period between 1st May—the target date for the transfer—and the bringing into force of the relevant Bill provisions, the FSA is seeking views from sponsors and others on the sponsor regime in general. What role sponsors should play going forward will be for the FSA to decide following consultation. The Bill allows the competent authority to continue with the regime if it thinks it appropriate. Our understanding is that the view of the London Stock Exchange and the FSA is that sponsors currently play a key role in ensuring that applicants for listing fulfil their responsibilities. Treasury officials have talked to a number of market participants who expressed the same view.
As well as allowing the competent authority to require issuers to use the services of a sponsor, the new clause will continue to allow listing rules to set out what must be done by sponsors and how; and to specify the circumstances in which a person is qualified for being approved as a sponsor. It provides also for the procedures that must be followed if the competent authority proposes to refuse an application for approval as a sponsor or to remove a person from the list of sponsors. Those procedures will be subject to change on Report to bring them into line with changes we are proposing on procedures more generally. I beg to move.
5.45 p.m.
Lord Sharman: I should like to ask the Minister to clarify a couple of matters. I endorse his remarks in terms of the importance of sponsors and the critical role they play in listing securities. For that reason, it is critically important that the acceptance or removal of the right to operate as a sponsor is as important as many of the other regulatory actions that the FSA may take under the Bill. I understand all the requirements. The only issue on which I should like clarification is the content of the written notices of decisions; for example, do they, or is it intended that they should,
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give the reasons for the decisions? At the moment as it stands, there is a provision for issuing warning notices and for removing the right to operate as a sponsor or declining the right to commence operating as a sponsor. But nowhere other than where the Bill mentions a written notice of decision is there an indication that the reasons for the decision would be disclosed to the sponsor. Will the Minister clarify that point?
Lord McIntosh of Haringey: I am rising slowly to my feet—yes; it will provide for reasons.
On Question, amendment agreed to.
Schedule 8 agreed to.
Clause 86 agreed to.
Schedule 9 agreed to.
Clause 87 [Penalties for breach of listing rules]:
Lord McIntosh of Haringeymoved Amendment No. 182:
Page 40. line 2, leave out from ("that") to end of line 12 and insert ("—

(a) an issuer of listed securities, or

(b) an applicant for listing,

has contravened any provision of listing rules, it may impose on him a penalty of such amount as it considers appropriate.
( ) If, in such a case, the competent authority considers that a person who was at the material time a director of the issuer or applicant was knowingly concerned in the contravention, it may impose on him a penalty of such amount as it considers appropriate.
( ) If the competent authority is entitled to impose a penalty on a person under this section in respect of a particular matter it may, instead of imposing a penalty on him in respect of that matter, publish a statement censuring him.
( ) Nothing in this section prevents the competent authority from taking any other steps which it has power to take under this Part.").
The noble Lord said: In moving the amendment, I shall speak also to Amendments Nos. 183 to 189, and 192. The amendments concern the action which the competent authority can take if there has been a breach of listing rules. Clause 87 provides the competent authority with a power to impose a monetary penalty on an issuer or applicant for listing who contravenes the listing rules or who is knowingly a party to the contravention by an issuer of which he is, or was, a director at the time of the contravention.
This is a new power which is being introduced to fill a gap which exists under the current legislation. At present, the only sanctions available to the competent authority in the face of a breach of the rules are to censure, publicly or privately, those concerned, or, as a last resort, to suspend or cancel listing. Suspension or cancellation is a sanction that is available only in limited circumstances. This provision will better enable the competent authority to match the sanction imposed to the gravity of the misconduct committed.
By allowing the competent authority to impose penalties on directors who are knowingly concerned in a contravention of the listing rules, it can get at the right people. Under its current powers the effect of sanctions imposed by the competent authority, which

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extend only to issuers, hit shareholders. Where the issuer is at fault, that is right—shareholders own the firm—but where a director is at fault, clearly the sanctions should bite on him or her.
The amendments that we propose make a number of substantive changes to the disciplinary arrangements. First, Amendment No. 182 extends the power to issue public censures to directors and former directors. At present the only sanction in the Bill available against such persons is a monetary penalty.
That is at odds with disciplinary provisions in Parts V and XIV of the Bill which allow the FSA to issue a public statement where that is the more appropriate course of action. The Bill already allows listing rules to make provision for censures to be imposed on issuers.
Amendments Nos. 183, 188 and 189 make consequential changes on the extension of the power to directors. On Report, we also intend to extend the power to issue public censures to breaches of the listing rules by sponsors as well as by directors and issuers, although we do not intend to extend the sanction of a monetary penalty in the case of sponsors.
The other amendments in this group concern the safeguards already built into the disciplinary process. Amendments Nos. 184 and 185 bring Clause 87 fully into line with Clause 65(4). At present, Clause 87 provides that the competent authority may not impose a penalty on an individual after the period of two years from when it first became aware of the contravention.
Amendments Nos. 186 and 187 make changes to Clause 89 which requires the competent authority to consult on and publish a policy statement on the imposition and amount of penalties for breaches of the listing rules. Amendment No. 186 simply aligns the language of this clause with that more generally in the Bill, which talks about the "issuing" rather than the "publishing" of statements.
Amendment No. 187 implements the Joint Committee recommendation on the factors to be taken into account when setting the level of a fine.
Finally, Amendment No. 192, which inserts a new clause after Clause 95, provides the same safeguards concerning costs and the destination of penalty income as does paragraph 16 of Schedule 1 in the case of the FSA generally. Again, that reflects Joint Committee recommendations.
Under the provisions of the new clause, the competent authority must take no account of its costs in determining the amount of penalties. Of course, the Bill states that elsewhere. It also provides that the competent authority must prepare and operate a scheme for paying out penalty income that it receives to issuers of listed securities. Again, that is comparable with provisions elsewhere in the Bill.
Together those provisions ensure that there are no incentives for the competent authority to impose inappropriate levels of penalties and that people are not deterred from pursuing their rights by the risk that they may have to bear the FSA's costs. As for the FSA more generally, the competent authority is required to consult on the details of the scheme.
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One thing that is not covered here is the right to refer competent authority decisions to impose penalties and issue public censures to the tribunal. On Report, we shall introduce that right, and align the procedures with those that we shall introduce elsewhere in the Bill. As a result of the decision to give people a right to go to the tribunal, we propose to oppose the inclusion of Clause 91 in the Bill. That currently requires the competent authority to maintain arrangements for hearing appeals against its decision to impose penalties. I beg to move.
Lord Peyton of Yeovil: I have two points that I hope the Minister can answer. I am giving him an opportunity to rest his vocal chords. It has been a while since a Bill has come before the House in which the Minister has sung solo for so long without any interruptions or contributions from any other noble Lord. I believe my noble friends are extremely restrained and courteous in their behaviour.
Lord McIntosh of Haringey: They are happy!
Lord Peyton of Yeovil: I cannot speak for them, but I believe that that is going too far. I cannot possibly say that I am happy. I am just depressed and oppressed by the bulk of legislation with which we are faced and, as I said yesterday, the fruit that it is likely to bear in due course.
First, Amendment No. 182—I refer to the second subsection on page 12 of the Marshalled List—states:
"If the competent authority is entitled to impose a penalty on a person under this section in respect of a particular matter it may, instead of imposing a penalty on him in respect of that matter, publish a statement censuring him".
Previously was there anything to stop the authority making such a statement if it wanted to? I wonder why that provision is necessary.
Secondly, Amendment No. 183 proposes leaving out the words,
"impose a penalty on a person under subsection (1)(b)".
and inserting the words,
"take action against a person under this section".
Would that alter in any way the degree of jeopardy in which the wrongdoer may find himself?
Lord McIntosh of Haringey: On Amendment No. 182, it is reasonable, as in the rest of the Bill, that the competent authority should have the option of imposing a financial penalty or stating the equivalent of a reprimand or a caution in the criminal law—"You have behaved very badly"—where a financial penalty may not be appropriate.
Lord Peyton of Yeovil: Was there anything to stop the competent authority issuing a statement before? I do not understand why this provision is necessary.
Lord McIntosh of Haringey: There is a power to make a statement about an issuer so it is not necessary for that purpose, but there has never been a power to make a statement relating to a director, and that is covered by this amendment.

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The noble Lord questions the need for Amendment No. 183. The change from imposing a penalty to taking action is precisely because the options include both imposing a penalty and issuing a censure, and taking action includes both the penalty and the statement.
Lord Fraser of Carmyllie: I may have missed something that the Minister said; if so, I apologise. In regard to the penalties to be imposed under Schedule 1, the language in the new clause exactly reflects that. Is there some reason why that has been put in as a new clause and the other remains in a schedule? Is this just a quirk of the drafting?
Lord McIntosh of Haringey: It certainly will not be a quirk of the drafting. Believe me, there is some good reason for that on which I shall write to the noble and learned Lord.
Lord Borrie: Although it seems that these amendments are useful, particularly those on the statement of policy which amplifies what was in the Bill in the first place, I am still somewhat puzzled with regard to penalties. Unlike other legislation dealing with criminal or quasi-criminal penalties, such as the Competition Act 1998, why is no maximum set out in the legislation?
Lord McIntosh of Haringey: These are not criminal or quasi-criminal penalties.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 183 to 185:
Page 40, line 14, leave out ("impose a penalty on a person under subsection (1)(b)") and insert ("take action against a person under this section").
Page 40, line 19, at end insert ("unless proceedings against that person, in respect of the contravention, were begun before the end of that period").
Page 40, line 19, at end insert (": and
(b) proceedings against a person in respect of a contravention are to be treated as begun when a warning notice is given to him under section 88.").
On Question, amendments agreed to.
Clause 87, as amended, agreed to.
Clause 88 [Warning notices]:
[Amendment No. 185A not moved.]
Clause 88 agreed to.
Clause 89 [Statement of policy]:
6 p.m.
Lord McIntosh of Haringeymoved Amendments Nos. 186 and 187:
Page 40, line 31, leave out ("publish") and insert ("issue").
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Page 40, line 34, at end insert—
("( ) The Authority's policy in determining what the amount of a penalty should be must include having regard to—

(a) the seriousness of the contravention in question in relation to the nature of the requirement contravened;

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

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

On Question, amendments agreed to.
Clause 89, as amended, agreed to.
Clause 90 agreed to.
Clause 91 [Appeals against penalties]:
On Question, Whether Clause 91 shall stand part of the Bill?
Lord McIntosh of Haringey: I have given notice of my intention to oppose the Question that Clause 91 shall stand part of the Bill.
Clause 91 negatived.
Clause 92 agreed to.
Clause 93 [Obligations of issuers of listed securities]:
Lord McIntosh of Haringeymoved Amendments Nos. 188 and 189:
Page 42, line 7, leave out from beginning to ("if") in line 10.
Page 42, line 10, after ("information,") insert ("they may include provision").
On Question, amendments agreed to.
Clause 93, as amended, agreed to.
Lord McIntosh of Haringeymoved Amendment No. 190:
After Clause 93, insert the following new clause—
APPOINTMENT BY COMPETENT AUTHORITY OF PERSONS TO CARRY OUT INVESTIGATIONS
(" . — (1) Subsection (2) applies if it appears to the competent authority that there are circumstances suggesting that—

(a) there may have been a breach of listing rules;

(b) a person who was at the material time a director of an issuer of listed securities has been knowingly concerned in a breach of listing rules by that issuer;

(c) a person who was at the material time a director of a person applying for the admission of securities to the official list has been knowingly concerned in a breach of listing rules by that applicant;

(d) there may have been a contravention of section 81, 83 or 94.

(2) The competent authority may appoint one or more competent persons to conduct an investigation on its behalf.
(3) Part XI applies to an investigation under subsection (2) as if—

(a) the investigator were appointed under section 158(1);

(b) references to the investigating authority in relation to him were to the competent authority;

(c) references to the offences mentioned in section 159 were to those mentioned in subsection (1)(d);

(d) references to an authorised person were references to the person under investigation.").

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The noble Lord said: In moving Amendment No. 190, I shall speak also to Amendment No. 264. This amendment introduces a power for the competent authority to appoint investigators where it appears to it that there are circumstances suggesting that there may have been a breach of the listing rules, that a person who was or is a director of an applicant for listing or an issuer was knowingly concerned in a breach or that there may have been a contravention of the criminal offences in Clauses 81, 83 or 94.
Investigators appointed under this clause have the same power as persons appointed under Clause 158 in Part XI of the Bill. The investigator can, under the provisions of Clause 162, require the person who is the subject of the investigation or any person connected with him to attend and answer questions or otherwise provide such information as the investigator may require.
The reason for putting the investigation power onto a statutory footing is twofold. First, as matters stand, the competent authority has no statutory power to require an issuer of listed securities and those involved in running the issuer's affairs to provide information where it appears that there may have been a breach of listing rules. We think that that is unsatisfactory and consider it important that the competent authority should have effective powers to police the listing rules.
Secondly, we want procedural checks concerning the conduct of investigations to apply. These are set out in Clause 161 of the Bill. Among other matters, the competent authority will be required to give written notice of the appointment of investigators to the person who is the subject of the investigation and to make the person aware of any significant change in the scope or conduct of the investigation. I beg to move.
On Question, amendment agreed to.
Clause 94 agreed to.
Clause 95 [Fees]:
Lord McIntosh of Haringeymoved Amendment No. 191:
Page 43, line I, at end insert—
("( ) applications under section (Sponsors) for approval as a sponsor; and
( ) continued inclusion of sponsors in the list of sponsors.
(2) In exercising its powers under subsection (1), the competent authority may set such fees as it considers will (taking account of the income it expects as the competent authority) enable it—

(a) to meet expenses incurred in carrying out its functions under this Part or for any incidental purpose;

(b) to maintain adequate reserves: and

(c) in the case of the Authority, to repay the principal of, and pay any interest on, any money which it has borrowed and which 'has been used for the purpose of meeting expenses incurred in relation to—

(i) its assumption of functions from the London Stock Exchange Limited in relation to the official list; and

(ii) its assumption of functions under this Part.

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(3) In fixing the amount of any fee which is to be payable to the competent authority, no account is to be taken of any sums which it receives, or expects to receive, by way of penalties imposed by it under this Part.
(4) Subsection (2)(c) applies whether expenses were incurred before or after the coming into force of this Part.
(5) Any fee which is owed to the competent authority under any provision made by or under this Part may be recovered as a debt due to it.").
On Question, amendment agreed to.
Clause 95, as amended, agreed to.
Lord McIntosh of Haringeymoved Amendment No. 192:
After Clause 95, insert the following new clause—
PENALTIES
(".— (1) In determining its policy with respect to the amount of penalties to be imposed by it under this Part, the competent authority must take no account of the expenses which it incurs, or expects to incur, in discharging its functions under this Part.
(2) The competent authority must prepare and operate a scheme for ensuring that the amounts paid to it by way of penalties imposed under this Part are applied for the benefit of issuers of securities admitted to the official list.
(3) The scheme may, in particular, make different provision with respect to different classes of issuer.
(4) Up to date details of the scheme must be set out in a document ("the scheme details").
(5) The scheme details must be published by the competent authority in the way appearing to it to be best calculated to bring them to the attention of the public.
(6) Before making the scheme, the competent authority must publish a draft of the proposed scheme in the way appearing to it to be best calculated to bring it to the attention of the public.
(7) The draft must be accompanied by notice that representations about the proposals may be made to the competent authority within a specified time.
(8) Before making the scheme, the competent authority must have regard to any representations made to it under subsection (7).
(9) If the competent authority makes the proposed scheme, it must publish an account, in general terms, of—

(a) the representations made to it in accordance with subsection (7); and

(b) its response to them.

(10) If the scheme differs from the draft published under subsection (6) in a way which is, in the opinion of the competent authority, significant the competent authority must (in addition to complying with subsection (9)) publish details of the difference.
(11) The competent authority must, without delay, give the Treasury a copy of any scheme details published by it.
(12) The competent authority may charge a reasonable fee for providing a person with a copy of—

(a) a draft published under subsection (6);

(b) scheme details.

(13) Subsections (6) to (10) and (12) apply also to a proposal to alter or replace the scheme.").
On Question, amendment agreed to.
Clause 96 agreed to.
Clause 97 [Exemption from liability in damages]:
[Amendments Nos. 193 and 194 not moved.]
Clause 97 agreed to.
Clause 98 [Interpretation of this Part]:
Lord McIntosh of Haringeymoved Amendments Nos. 195 to 197:
Page 44, line 6, leave out ("Stock Exchange") and insert ("Authority").
Page 44, line 13, at end insert—
("( ) If, as a result of an order under Schedule 7, different functions conferred on the competent authority by this Part are exercisable by different persons, the powers conferred by section 87 are exercisable by such person as may be determined in accordance with the provisions of the order.").
Page 44, line 24, leave out ("(3)(a)") and insert ("(3)").
On Question, amendments agreed to.
Clause 98, as amended, agreed to.
Schedule 10 [Offers of Securities]:
Lord McIntosh of Haringeymoved Amendments Nos. 198 to 201:
Page 244, line 21, leave out ("has such meaning as may be specified") and insert ("means—

("(a) the government of the United Kingdom;

(b) the government of any country or territory outside the United Kingdom;

(c) a local authority in the United Kingdom or elsewhere;

(d) any international organisation the members of which include the United Kingdom or another EEA State; and

(e) such other bodies, if any, as may be specified.").

Page 246, line 29, at end insert—
("( ) a recognised body within the meaning of section 1(7) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990,").
Page 246, line 31, after ("1985,") insert—
("( ) section 1 of the Housing Associations Act 1985,").
Page 247, line 41, leave out from ("a") to end of line 42 and insert ("public authority.
( ) "Public authority" means—

(a) the government of the United Kingdom;

(b) the government of any country or territory outside the United Kingdom;

(c) a local authority in the United Kingdom or elsewhere;

(d) any international organisation the members of which include the United Kingdom or another EEA State; and

(e) such other bodies, if any, as may be specified.").

On Question, amendments agreed to.
Schedule 10, as amended, agreed to.
Clauses 99 to 105 agreed to.
Clause 106 [Sanction of the court for business transfer schemes]:
Lord McIntosh of Haringeymoved Amendment No. 202:
Page 48, line 11, at end insert ("Parts I and II or).
The noble Lord said: In moving Amendment No. 202, I shall speak also to Amendments Nos. 203 to 208 and 272. We have now reached Part VII of the Bill, which was introduced on Report in another place. It largely carries forward arrangements under Schedule 2C to the Insurance Companies Act 1982 for the transfer of insurance business from one company to another. This is something that is required by the single market directives for insurance. However, the current provisions in Schedule 2C have developed over
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the years and have, over that time, become unnecessarily complicated. Noble Lords might well be familiar with the concept of matters of this kind being unnecessarily complicated. They vary depending on whether the insurance business includes general or long-term insurance and whether the business is direct insurance or reinsurance. We have therefore taken the opportunity to rationalise these arrangements.
Another feature of Part VII is that it plugs a gap in existing legislation that in the past has always meant that banks have needed to resort to the Private Bill procedure in the event of a business transfer. That process often leads to a complex, burdensome and inefficient process to achieve a corporate restructuring. However, of greater concern, and the reason for making provision in a Bill related to financial services regulation, is that under a Private Act procedure the regulator does not have a suitable role in determining whether a transfer should be allowed to take place.
The Committee will wish to note that the problems that are addressed by this part are specific to the insurance and banking industries. Other companies can restructure and amalgamate with relative ease under the provisions of the Companies Act 1985. Transfers from building societies and friendly societies are provided for separately under the Building Societies Act 1986 and the Friendly Societies Act 1992. For that reason, there is no need to bring them within the scope of Part VII.
It might be helpful if I clarify that we are talking about transfer of a business from one company to another—often, though not always, when two companies within a group are being restructured. It is not directly linked to mergers and take-overs, where the ownership of the company may change, although where a take-over has occurred the new parent company may subsequently decide to amalgamate or restructure the business of its subsidiaries. Another situation where such transfers occur is when a company is failing and, in order to protect the interests of its creditors or customers, another company agrees to take over part of the business of the failing firm.
Turning specifically to the amendments, while we felt it was appropriate to introduce at as early a stage as possible the key elements of our policy in this area, it was always the case that we would need to revisit the detail of the provisions. This group of amendments, which I commend to the Committee, is a result of that further work.
It will be for the courts to decide whether to sanction a business transfer. Amendment No. 206 introduces a new clause after Clause 107 to allow a court to require that an independent actuary be appointed to report on the transfer of business from an insurance company. This is particularly aimed at circumstances where a firm is in financial difficulties and the transfer may depend on the company taking over the policies being able to reduce the amount of the liability to policyholders. In practice, the court would only sanction the transfer where the effect of the transfer was no worse than if it did not go ahead and the insolvent company was instead left to run off its business.

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In considering whether to allow such a transfer, the court will need to be sure that policyholders' interests will be properly protected. This clause is designed to enable the court to take an informed decision by enabling it to secure the appropriate advice from an independent expert about any proposed reduction in benefits.
Amendments Nos. 203 and 207 give the FSA powers to issue certificates where the business of an overseas insurer is being transferred to a firm authorised and regulated in the UK. This carries forward equivalent provisions in the Insurance Companies Act 1982. The procedure will allow the FSA to confirm to an overseas regulator whether the transferee company in the UK meets the necessary solvency requirements; in short, whether it is capable of accepting the business to be transferred.
Amendment No. 202 simply makes a consequential change to Clause 106 to reflect the fact that Amendment No. 203 introduces a new part into Schedule 11, so the current reference to Schedule 11 needs to be restricted to Parts I and II of the schedule. Amendment No. 208 introduces a new clause, again carrying forward provisions currently in the Insurance Companies Act. It ensures that where an insurance business transfer has been approved in another EEA member state, the transfer will have effect in UK law in relation to relevant policies. This will mean that a person in the UK who has an insurance policy affected by such a transfer, will have their rights and obligations transferred to the new company.
As I have already mentioned, Part VII replaces provisions currently within the Insurance Companies Act 1982. Amendment No. 272 is a minor amendment reflecting that. It replaces a reference to Schedule 2C of that Act with a reference to Part VII of the Bill. The group also includes two minor Scottish amendments to Clause 107. Amendments Nos. 204 and 205 simply reflect the fact that the Scottish equivalent of an English law concept of a mortgage is a security over property. I beg to move.
6.15 p.m.
Lord Peyton of Yeovil: Again, in the interests of cordiality, I should like to congratulate the noble Lord on the wonderful job that he is doing as regards rewriting this Bill. It is quite a task for him to undertake. He has all the sympathy of compassionate people like myself on this side of the Chamber.
If a Bill of this bulk is produced, it not only generates a lot of work, but also a lot of questions. We have been astonishingly restrained in not testing the noble Lord's wisdom and knowledge more severely. But I want to ask a serious question.
I understand exactly what is meant by the "Necessary margin of solvency". But how will the authority decide what that is? Will it be decided upon purely Financial grounds and the amount of money involved, or upon the general appearance of the transferee which may not have made a favourable
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impression upon the authority? I should like some idea as to how this important point will be decided and how the amount will be arrived at.
Lord McIntosh of Haringey: There can never be a single answer to that point. The "Necessary margin of solvency" is defined in sub-paragraph (6) as,
"the margin of solvency which the transferee, taking the proposed transfer into account, is required by the authority to maintain".
The noble Lord may feel that that is equivalent to the famous Groucho Marx contract in "Night at the Opera",
"The party of the first part shall hereinafter be called the party of the first parr";
that is always my favourite legal maxim. But in introducing the amendments I said that the necessary solvency requirements—for example when the FSA has to confirm to an overseas regulator whether the transferee company in the UK meets those requirements—relate to whether the company is capable of accepting the business being transferred. The answer to the "Necessary margin of solvency" depends on the size of the business to be transferred. The authority must make its judgment from time to time, on a case by case basis, depending on the premium income or the claims paid. But in any case, if it is any help to the noble Lord (and it probably is not) these matters are set out in more detail in the European Community directives.
Lord Peyton of Yeovil: I am tremendously grateful for that last piece of guidance from the noble Lord. He will not be surprised if I do not avail myself of it.
Of course I understand that the amount of money being moved will be important in deciding the margin of solvency. But what I was delicately trying to inquire into was whether the character of the transferee may be a source of concern and worry to the competent authority.
Lord McIntosh of Haringey: Since we are talking about margins of solvency, we are talking about financial calculations rather than the more philosophical matters to which the noble Lord referred. If he goes on like this he will catch me out properly. He knows that perfectly well.
On Question, amendment agreed to.
Clause 106, as amended, agreed to.
Schedule 11 [Transfer schemes: certificates]:
Lord McIntosh of Haringeymoved Amendment No. 203:
Page 251, line 6, at end insert —
("PART III
INSURANCE BUSINESS TRANSFERS EFFECTED OUTSIDE THE UNITED KINGDOM
.—(1) This paragraph applies to a proposal to execute under provisions corresponding to Part VII in a country or territory other than the United Kingdom an instrument transferring all the rights and obligations of the transferor under general or long-term insurance policies, or under such descriptions of such policies as may be specified in the instrument, to the transferee if any of the conditions in sub-paragraphs (2), (3) or (4) is met in relation to it.
(2) The transferor is an EEA firm falling within paragraph 5(d) of Schedule 3 and the transferee is an authorised person whose margin of solvency is supervised by the Authority.
(3) The transferor is a company authorised in an EEA State other than the United Kingdom under Article 27 of the first life insurance directive, or Article 23 of the first non-life insurance directive and the transferee is a UK authorised person which has received authorisation under Article 6 of either of those directives.
(4) The transferor is a Swiss general insurance company and the transferee is a UK authorised person which has received authorisation under Article 6 of the first life insurance directive or the first non-life insurance directive.
(5) In relation to a proposed transfer to which this paragraph applies, the Authority may, if they are satisfied that the transferee possesses the necessary margin of solvency, issue a certificate to that effect.
(6) "Necessary margin of solvency" means the margin of solvency which the transferee, taking the proposed transfer into account, is required by the Authority to maintain.
(7) "Swiss general insurance company" has the same meaning as in paragraph 2.
(8) "General policy" means a policy evidencing a contract which, if it had been effected by the transferee, would have constituted the carrying on of general insurance business.
(9) "Long-term policy" means a policy evidencing a contract which, if it had been effected by the transferee, would have constituted the carrying on of long-term insurance business.").
On Question, amendment agreed to.
Schedule 11, as amended, agreed to.
Clause 107 [Effect of order sanctioning business transfer scheme]:
Lord McIntosh of Haringeymoved Amendments Nos. 204 and 205:
Page 49, line 13, leave out ("mortgage or").
Page 50. line 5. at end insert—
("( ) "Charge" includes a mortgage (or, in Scotland, a security over property).").
The noble Lord said: I have already spoken to Amendments Nos. 204 and 205. With the leave of the Committee I shall move them en bloc. I beg to move.
On Question, amendments agreed to.
Clause 107, as amended, agreed to.
Lord McIntosh of Haringeymoved Amendment No. 206:
After Clause 107, insert the following new clause—
APPOINTMENT OF ACTUARY IN RELATION TO REDUCTION OF BENEFITS
(".— (1) This section applies if an order has been made under section 106(1).
(2) The court making the order may, on the application of the Authority, appoint an independent actuary—

(a) to investigate the business transferred under the scheme; and

(b) to report to the Authority on any reduction in the benefits payable under policies entered into by the authorised person concerned that, in the opinion of the actuary, ought to be made.").

On Question, amendment agreed to.
Clause 108 agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 207 and 208:
After Clause 108, insert the following new clause—
("Business transfers outside the United Kingdom
CERTIFICATES FOR PURPOSES OF INSURANCE BUSINESS TRANSFERS OVERSEAS
. Part III of Schedule 11 makes provision about certificates which the Authority may issue in relation to insurance business transfers taking place outside the United Kingdom.").
After Clause 108, insert the following new clause—
EFFECT OF INSURANCE BUSINESS TRANSFERS AUTHORISED IN OTHER EEA STATES
(".— (1) This section applies if, as a result of an authorised transfer, an EEA firm falling within paragraph 5(d) of Schedule 3 transfers to another body all its rights and obligations under any UK policies.
(2) This section also applies if, as a result of an authorised transfer, a company authorised in an EEA State other than the United Kingdom under Article 27 of the first life insurance directive, or Article 23 of the first non-life insurance directive, transfers to another body all its rights and obligations under any UK policies.
(3) If appropriate notice of the execution of an instrument giving effect to the transfer is published, the instrument has the effect in law—

(a) of transferring to the transferee all the transferor's rights and obligations under the UK policies to which the instrument applies, and

(b) if the instrument so provides, of securing the continuation by or against the transferee of any legal proceedings by or against the transferor which relate to those rights and obligations.

(4) No agreement or consent is required before subsection (3) has the effects mentioned.
(5) "Authorised transfer" means—

(a) in subsection (1), a transfer authorised in the home State of the EEA firm in accordance with—

(i) Article 11 of the third life directive; or

(ii) Article 12 of the third non-life directive; and

(b) in subsection (2), a transfer authorised in an EEA State other than United Kingdom in accordance with—

(i) Article 3la of the first life directive: or

(ii) Article 28a of the first non-life directive.

(6) "UK policy" means a policy evidencing a contract of insurance (other than a contract of reinsurance) to which the applicable law is the law of any part of the United Kingdom.
(7) "Appropriate notice" means—

(a) if the UK policy evidences a contract of insurance in relation to which an EEA State other than the United Kingdom is the State of the commitment, notice given in accordance with the law of that State;

(b) if the UK policy evidences a contract of insurance where the risk is situated in an EEA State other than the United Kingdom, notice given in accordance with the law of that EEA State;

(c) in any other case, notice given in accordance with the applicable law.

(8) Paragraph 6 of Schedule 11 applies for the purposes of this section as it applies for the purposes of that Schedule.").
The noble Lord said: I have already spoken to Amendments Nos. 207 and 208. With the leave of the Committee I shall move them en bloc. I beg to move.
On Question, amendments agreed to.
Clause 109 [Market abuse]:
Lord Kingslandmoved Amendment No. 208A:
Page 51, line 1, leave out from ("which") to ("the") in line 3 and insert ("falls below").
The noble Lord said: We now come to deal with Clause 109 and the offence of market abuse. In moving Amendment No. 208A, I shall speak also to Amendments Nos. 208B, 209A, 211A, 212A, 212B, 213A. It has always been the view of the Opposition that the problem which the offence of market abuse seeks to confront would be better confronted by changes in the criminal law. However, that approach has been steadfastly resisted by the Government. At the same time, the Government have refused to tackle the really fundamental problems connected with the offence as contained in the Bill: its territorial scope is uncertain, and its definitions are too wide and ill considered.
However, its biggest defect is, perhaps, what I would describe as its "effect-based philosophy". The offence catches individuals who unwittingly or mistakenly mislead the market. Those individuals are subject to precisely the same penalties as individuals who intend to mislead the market. The approach that the Opposition are taking, which is reflected in these amendments, is to inject into the Bill the requirement of intent and to insist that, in order to proceed for market abuse, the authority has to go to the courts.
In taking that approach, we have been greatly influenced by what happens in the United States of America. In this regard I am happy to acknowledge the help that we have received from one of the partners—a former general counsel to the Securities and Exchange Commission—at the well-known Washington law firm of Debevoise and Plimpton.
As I understand it, the position in the United States is as follows. Section 10(b) of the Securities Exchange Act 1934, and under it the Exchange Rule (10)(b)(5), are broad anti-fraud provisions that prohibit manipulative, deceptive or fraudulent conduct in connection with the purchase or sale of any security through inter-state commerce.
The United States Supreme Court has held that the Securities and Exchange Commission must establish that a defendant acted with scienter, which the court has defined as,
"a mental state embracing an attempt to deceive, manipulate or defraud".
The same standard also applies in private actions brought under the Federal securities laws alleging securities fraud. While the Supreme Court frequently notes that negligence simply will not suffice, it has left open the question of whether or not "recklessness" could constitute a mental state sufficient to establish liability under these provisions. One of the leading Federal appellate courts has defined "recklessness", in this context, as a form of intentional conduct, rather than of gross negligence.
Over the years, Section 10(b) and Rule 10(b)(5) have been used to combat various forms of securities fraud, including insider trading, accounting irregularities and market manipulation. In each case, liability under
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these provisions must arise from knowing or reckless conduct involving manipulation or deception. Negligence, let alone strict liability, is simply not enough.
Congress and the SEC (through its delegated rule-making authority) have addressed problems caused by the misuse of market information through detailed and sophisticated regulation. But when the use of market information may harm the operation of securities markets, they provide that a person in possession of material non-public information must do one of two things: either disclose it completely or not trade.
The SEC may initiate an enforcement action in a Federal court alleging violations of Section 10(b) and Rule 10(b)(5) thereunder. The SEC is also authorised to institute administrative proceedings alleging violations of Section 10(b) and Rule 10(6)(5). These administrative proceedings are conducted before an SEC hearing officer, an administrative law judge designated by the agency. Initial administrative decisions may be appealed to the commission itself and then, if necessary, to a Federal appellate court.
When proceeding administratively, the SEC is limited to seeking an administrative order sanctioning the alleged violator. Monetary penalties and other sanctions are available in both forms, but in administrative proceedings monetary proceedings may only be assessed against a regulated entity and its associated persons—unlike the provisions for market abuse in the Bill.
Congress has established in certain circumstances, including insider trading and SEC administrative proceedings against regulated entities, tiers of monetary penalties that vary as to the degree of harm. In order to obtain certain civil monetary remedies for insider trading, the SEC must proceed in court. Therefore, it is quite clear from American practice that the mental state required under Rule 10(6)(5) is the intention to commit a fraudulent act, albeit that "recklessness" is treated in some court decisions as intentional. Accordingly, the US equivalent of market abuse is not strict liability or negligence.
Moreover, the SEC has to go to court whether for criminal or civil fraud, although it can impose monetary penalties itself. That is the pattern which has infected the amendments that we have tabled this evening.
Amendment No. 208A deals with subsection (1)(c) of Clause 109, which refers to market abuse as behaviour,
"which is likely to he regarded by a regular user of that market who is aware of the behaviour as a failure on the part of the person or persons concerned to observe the standard of behaviour reasonably expected of a person in his or their position in relation to the market".
Our amendment redrafts that paragraph to read:
"which falls below the standard of behaviour reasonably expected of the person or persons concerned in his or their position in relation to the market";
in other words, the standard becomes an objective one.

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Amendment No. 209A deals with Clause 109 (2)(b). It seeks to remove the word "likely", which appears after the reference to "behaviour", and replace it with the words,
"intended or might reasonably be presumed to be intended".
So we accept that intention can be proved by proving a series of events which, if not inevitably or completely conclusive, point beyond an appropriate degree of doubt to an offence.
Amendment No. 211A seeks to amend Clause 109(2)(c). At present the clause states,
"a regular user of the market would, or would be likely to, regard the behaviour as behaviour which would, or would be likely to, distort the market in investments of the kind in question".
The amendment seeks to add,
"and the behaviour is intended or might reasonably be presumed to be intended to cause that distortion".
In Clause 109(3) the expression,
"In determining whether behaviour amounted to market abuse by a particular person or by particular persons, regard must he had (among other matters) to the extent to which that person, or those persons",
is excised and replaced by,
"A person's behaviour shall not be regarded as amounting to market abuse if he—

(a) took care to avoid engaging in market abuse; or

(b) believed that the behaviour in question would not amount to market abuse".

At the end of that final part of paragraph (b), new paragraph (c), we seek in Amendment No. 213A to add the expression,
"believed on reasonable grounds that the behaviour in question would not amount to market abuse".
6.30 p.m.
Lord Fraser of Carmyllie: Before my noble friend develops his argument—I very much wish to avoid interrupting his line of thought—it would help me to understand all of his argument, much of which I support, if I could understand the following point a little more clearly. My noble friend's Amendment No. 208A to Clause 109(1)(c) states,
"Page 51, line 1, leave out from ("which") to ("the") in line 3 and insert ("falls below").
The concept of a regular user of the market is eliminated with that deletion. However, Clause 109(2) refers to,
"a regular user of the market".
My noble friend does not seem to be concerned to remove the concept of the regular market user in that provision. I wonder whether that is intentional. If it is, I should be grateful if he could expand on that.
Lord Kingsland: It is clear that regular users of the market will sometimes need to give evidence in disputes about how the market would behave, or ought to have behaved, in a particular set of circumstances. We have no objection to that. The reason that expression was sought to be removed by
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Amendment No. 208A was that, used as it is by the Government in Clause 109(1)(c), it gave the offence a subjective element which we wish to exclude.
I wish to comment on one government amendment in this group before I sit down, and that is Amendment No. 214. My understanding, from what had happened in another place, was that the status of the code, which had originally been intended to be evidential, has become, in effect, a safe harbour. Therefore, if an operator in the market performed in a way which conformed precisely with the code, he or she would be safe from pursuit by the authority. It now appears, as a result of the noble Lord's amendment, that things are not so simple. As I understand his amendment, it is not enough for a particular form of behaviour to be included in the code. It appears that that form of behaviour will only provide a safe harbour to a market operator if in addition it has an expression which says that it should do so.
It is my impression—I hope that the Minister will correct me if I am wrong—that the Government are resiling from the position they took at the end of the Bill's stages in another place. It is also my view that, if the situation has changed, it appears that an operator—the Minister will correct me if I am wrong—will, on the one hand, be obliged to follow the code which, on the other hand, gives him no guarantee of a secure haven.
Throughout the financial sector great concern has already been expressed about the uncertain conditions in which operators will function as a consequence of the Bill. I hope that the interpretation that I have put on Amendment No. 214 is incorrect; because if it is not, we shall have to reconsider the code to see what additional amendments we would have to make to that part of the Bill.
I had hoped that we had reached the stage where the code was now accepted as a safe harbour and we could move on to consider improving the provisions in relation to guidance which at the moment does not provide a safe harbour. The biggest uncertainty in the City at the moment is not the price of any particular commodity or the price of any particular share but what the regulator is going to do this time next year. Certainty now is at a huge premium. My concern is that the Minister's amendment is a step back rather than a step forward in this respect. I beg to move.
Lord Eatwell: I speak to my Amendments Nos. 209, 210, 211 and 213 which are grouped with the amendments that we are discussing. But, first, I wish to comment on the amendments in this group tabled by the Opposition Front Bench. At Second Reading I expressed concern that, as currently drafted, Clause 109 weakened the current protection against market abuse by authorised persons.
The Opposition amendments would severely weaken the protection of the market and, indeed, of the consumer. Not only does the noble Lord, Lord Kingsland, wish in Amendment No. 212B to degrade the standards of regulation to, "generally accepted market practice", but he also wishes to riddle the

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clause with the canker of intent—the noble Lord made this quite clear—knowing full well that the need to prove intent is extremely difficult. Hence their amendments would strip the regulator of most of the effective powers that he has against market abuse.
I do not think that reference to American practice in this case is relevant since the noble Lord has not argued that he wants to construct the whole highly litigious apparatus of regulation associated with the Securities and Exchange Commission and cherry pick arguments from American practice without confronting the whole structure of American practice. I feel that that does not do justice to the discussions which we have had and to the Bill as drafted. I am sure that this wrecking of the regulatory process is, let us say, unintended, but these amendments serve the interests of those who would abuse the market.
I now turn to my amendments. I shall deal first with Amendment No. 209. At Second Reading I pointed out that the regular user test proposed in Clause 109 would reduce market standards to a kind of median common denominator. Moreover, in two examples close to real cases I pointed out that the regular user test would have provided unwarranted protection for those who have been successfully prosecuted under the current regime.
Finally, the Committee may remember that, using the analogy of Association Football, I noted that the regular-user test would legitimise the orgy of shirt-pulling which disfigures soccer today because it is behaviour expected of regular professional footballers.
Amendment No. 209 deals with these problems by maintaining the role of the regular user, but adding the requirement of an expectation of "reasonable and ethical" standards. It should be noted that that is not wildly optimistic. It does not ask for high ethical standards, only those which might be expected by a reasonable person. I think of this as the "Stanley Matthews memorial amendment". It seeks to raise standards by focusing the sights of the regular user on the standards displayed by ethical participants in the market. Applied to soccer, it would eliminate rampant shirt-pulling; applied to financial markets it provides the foundation for raising standards and rescues Clause 109 from its present endorsement of low regulatory standards. Amendment No. 209 makes sense of the regular-user test.
I turn now to Amendments Nos. 210 and 211. Their purpose is to make Clause 109(2)(c) consistent with paragraphs (a) and (b) with which it is currently inconsistent. Paragraphs (a) and (b) are objective tests: of information available, in paragraph (a); and, in paragraph (b), of giving a false and misleading impression. But paragraph (c) is inconsistent because it introduces a subjective test; namely, the view of the regular user. My amendment corrects that mistake and transforms paragraph (c) into an objective test; the behaviour that would be, or would be likely to, distort the market in investments. It is not what the regular user believes would distort the market, but what would
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distort it. Amendments Nos. 210 and 211 make paragraphs (a), (b) and (c) consistent with one another.
I shall not speak to Amendment No. 213 as I concur with my noble friend's Amendment No. 212, which makes my amendment irrelevant. However, his replacement Amendment No. 218 contains a worrying flaw. That amendment replaces a provision which has been eliminated by my noble friend's amendment. Amendment No. 218 proposes that the authority may not impose a penalty for market abuse if,
"there are reasonable grounds for it to be satisfied",
that the abuser did not believe that he or she was committing abuse, or had taken reasonable precautions to avoid abuse. The problem with that is the issue of the balance of probabilities that always arises in these particular judgments. There may be reasonable grounds to let the abuser off and there may be equally reasonable grounds for not doing so. Indeed, the balance of probabilities may be 40 per cent reasonable grounds on the side of the abuser and 60 per cent against the abuser, but under Amendment No. 218 the abuser would get off even though the balance of reasonableness was against him or her. Surely that is not right.
Lord Stewartby: Being surrounded by many who are experienced in the legal aspects of this group of amendments, I hesitate to do more than make one observation and ask a question. The observation refers to the regular user. I do not see how that can be objectively implemented. Some of what the noble Lord, Lord Eatwell, said was sensible.
As chairman of a public company, I had recent conversation with a very experienced investment manager. At the end of the discussion I was rather taken aback because he said, "Have you made me an insider?" Being a cautious chap, I did not answer the question in the way that he had put it. But it led me to ask myself questions as to how reliable the regular-user test could ever be if some of those most professionally involved with these processes may frequently come across situations which they cannot determine with certainty. After all, if one cannot determine where one stands with certainty on this kind of issue, inevitably one is undergoing a risk in the light of the provisions in the Bill. Therefore, I believe that the regular-user test needs further consideration both as regards its workability and the hazards which it puts in the way of those who operate in the market.
The noble Lord, Lord Eatwell, said that he thought this was a weakening in the defences against market abuse. Seen from the other side it could be regarded as a strengthening, but that again illustrates his point about the balance of reasonableness. It is an area where the Bill, even with the amendments which have been put forward, has not necessarily reached a lasting and satisfactory form.
I was encouraged by reading Amendment No. 218 in the name of the noble Lord, Lord McIntosh. It seemed to me that it went a long way towards dealing with the question of mens rea. I shall await his comments on that.

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I am sure that the Minister is aware of the fact that the takeover panel has been concerned whether the provisions of this part of the Bill could up-end its ability to make binding decisions in the course of a takeover bid in the market. If these provisions allow the authority to decide that market abuse could arise as a result of a breach of the takeover code, that could easily lead to the threat of litigation within the course of a takeover bid. That would invalidate the non-statutory but binding activities of the takeover panel. I am sure that the Minister will have considered this issue, but I hope that during the course of his responses and contribution to this course of amendments he will be able to comment on that question.
6.45 p.m.
Lord Lipsey: I rise briefly to speak in support of the amendments put forward by my noble friend Lord Eatwell to which I have appended my name. I repeat the general background; namely, the concern that the market abuse regime, as it stands now in this Bill—it has been considerably watered down in the process of discussion—is not strong enough. It is probably accurate to report the view of the FSA as lying in that direction and in saying that the market abuse regime under this Bill is really not a lot stronger than what exists now. As the purpose of the Bill was to crack down on market abuse, that is something of a worry.
I am wary of football analogies because I am a racing man. However, the Bill, as drafted, might be regarded as the "Maradonna Bill"; I am sure that his behaviour in scoring a goal by unconventional means at a crucial moment in an international match would have been regarded as absolutely reasonable by participants in the Argentine football team of the time. That is not an adequate justification for that being the standard set. Our amendment is designed to toughen it up in a moderate way.
Perhaps I may illustrate what I have in mind. Let us take an imaginary market, although I could put some real names to some markets. Let us imagine the "dodgy bonds futures market". As Members of the Committee will know, that market is infested with sharks, to use the phrase which my noble friend Lord Grabiner used yesterday. The average behaviour in that market is extremely poor. Insider dealing is par for the course. That would be caught by the criminal law, but as we know, criminal cases are extremely hard to conduct in this particular area.
If wrong behaviour is rife in a given market—perhaps in a new market where standards have not been improved to the normal high levels which apply in all London markets—our concern is that this clause would not catch that behaviour because it is common in the market. The effect of this amendment is that the standards set will not be acceptable to a bunch of crooks.
If the Minister cannot accept these amendments tonight, I hope that he will reflect on these points between now and Report stage—I do not think it should be a matter of tremendous controversy within
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the House—and then accept our amendments, in particular the one which states that the standards should be those of a reasonable and ethical person and not those prevalent in the market.
Lord Fraser of Carmyllie: There is some validity in the worry about the assumption that a regular user of a market—simply by reason of the frequency with which he uses the market—is a non-abusing and honourable member of that market. That assumption requires detailed consideration. Indeed, I can think of one circumstance where the difficulty was not that the abuser was an infrequent user of the market but that he used it too frequently and caused big problems.
What troubles me most is that if one envisages a circumstance where a market abuse is being investigated and the case goes before a tribunal to determine whether it is indeed market abuse, it would not be difficult to contemplate a set of circumstances where all manner of people are paraded before the tribunal to say, "I am a regular user of the market and, in my view, what is going on is perfectly acceptable. It is certainly something that has been prevalent for the 10 years in which I have been using the market". So, in those circumstances, it would seem a rather curious test to apply unless one improves it in some way—possibly along the lines suggested by the noble Lords, Lord Eatwell and Lord Lipsey. I am not entirely sure that I buy into their amendment, but I understand the intention behind it and the drift of it.
My other difficulty in regard to the issue of the importance of examining the reaction of a regular user of a market to determine whether or not there has been an act of market abuse, is the relationship between Clauses 110, 111 and 112 in regard to the code. As I understand it, this issue is causing the Financial Services Authority some alarm as well.
As I read the provisions in Clause 110, the authority must prepare and issue a code—it has no option—and, among other things, that code has to specify descriptions of behaviour that, in the opinion of the authority, amount to market abuse. It is not clear whether, in those circumstances, the authority has to make investigations to discover whether the conduct is of a kind that a regular user of the market would regard as not misleading or giving a false impression. There is absolutely no tie-up between the two. Furthermore, Clause 112(2) states:
"Otherwise, the code in force under section 110 at the time when particular behaviour occurs may be relied on so far as it indicates whether or not that behaviour should be taken to amount to market abuse".
In the way that these two sets of provisions lie alongside each other, it seems to me that there are, in a sense, two market abuses. One is a pattern of behaviour covered by Clause 109, where one examines the behaviour in the context of a regular user of the market; and the other is when the FSA looks at that conduct, regards it as being an abuse of the market, and spells it out clearly for everyone to see, saying, "If you do this, we shall regard it as market abuse". That is how Clause 112 seems to tie in. Then Clause 113

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states that in those circumstances it would be open to the Financial Services Authority to prosecute for market abuse.
Clearly both propositions cannot be right. I agree with other noble Lords who have said that this is not something that we can hope to resolve tonight, but I do hope that the issue will be more carefully re-examined before Report stage in order to avoid any concern or suspicion that there may be two sets of provisions. The risk may be that if the provisions to be found in Clause 109 are to reign supreme, the FSA may as well avoid wasting its time and put out nothing. If it does not square what is already within Clause 109, it does not seem that it can expand the ambit of market abuse—which, whether or not I like it, was certainly what I understood was intended by the Bill.
Having spelt out my concerns—which I believe are shared by a number of other noble Lords—I hope that we can return to this issue on Report. Like my noble friend on the Front Bench, I am bound to say that many of the difficulties that we are now confronting would have been much more easily resolved if the criminal law on which this should be based was more clearly stated.
Lord Grabiner: Perhaps I may put forward a suggestion which is not consistent with a point made by a number of noble Lords. Clause 109(1)(c) is drafted in entirely objective terms; it is not subjective at all. I emphasise the words in the first line of page 51, which states:
"which is likely to be regarded by a regular user".
That does not mean the person who is, so to speak, being charged with market abuse on a particular occasion; it concerns "a regular user"—the nominal person; the anthropomorphic version of the human being we are concerned with. In the third line, the paragraph goes on to say:
"the standard of behaviour reasonably expected of a person in his or their position".
In my view, the key to this is to be found in Clause 109(11)—to which no one has yet referred—where one finds a definition of the expression "regular user". That definition provides:
"in relation to a particular market, means a reasonable person who regularly deals on that market in investments of the kind in question".
This is a Stanley Matthews clause; it is not a Diego Maradona clause. The point about "a reasonable person" is that he does not pull people's shirts in or near the penalty area or handle the ball; he is concerned to comply with the rules of the game. The concept of the "reasonable person" is someone who complies with the rules; someone who is ethical; someone who is by definition reasonable. For those reasons I have difficulty in supporting the suggested amendments of my noble friends Lord Lipsey and Lord Eatwell. The position is adequately covered by the language of the existing drafting.
Leaving that issue aside, perhaps I may say something about "intent", a point made by the noble Lord, Lord Kingsland, in his opening remarks. It is
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obvious that the introduction of a subjective intent test would significantly weaken the quality of the clause in terms of the position of the authority and the protection of the market place. I readily accept that "weaken" is not appropriate when looked at from the point of view of the person being charged with wrongdoing.
However, one has to bear in mind that the conditions for the operation of Clause 109 are spelt out very clearly in Clause 109(2). We know the kinds of circumstances where this problem could conceivably arise. They are defined very precisely. If one or other of the conditions in subsection (2) are not present, one does not get into the clause at all. The context in subsection (2)(a) is effectively inside information—information that is not generally known to the marketplace; and in paragraph (b) it is a "false or misleading impression" given in the market-place; in paragraph (c), distorting the market. One of those situations must be in play before there is any risk of being made the subject of an abuse charge under these provisions.
The effect of that is that someone who behaves exhypothesi in that context in a way which engages the risk that his behaviour may be thought to offend against the legislation is someone who ought to know the consequences of his actions. It is rather like my six year-old son throwing a cricket ball in the general direction of the conservatory window. When the ball hits the window and goes through it, he protests loudly, "But, Dad, I didn't mean to do it". In those circumstances I do not have a debate with him about whether he ought to have appreciated that if he threw the ball in that direction it might go through the window and that that was indeed likely.
I suggest that in the kind of market-place with which we are concerned here, given the very specific circumstances in which such a liability could arise, the strength of the clause as drafted is that it would oblige people, where appropriate, to err on the side of caution. It means: "If there is a risk that your conduct may be likely to produce the result that you fall foul of the abuse provisions, you had better beware". We are dealing here with sophisticated people; we are not dealing with my six year-old son. In those circumstances, I have great difficulty in understanding any justification for saying to those grown-up, sophisticated people that nothing short of intention will do—in other words, "You are off the hook, notwithstanding the fact that you will be able to say, 'I did not intend to do it', but notwithstanding the fact that it would have been likely to happen had you really given your mind to the circumstances in which you found yourself that you would in fact have fallen foul of these provisions". In those circumstances, I certainly do not support such of the amendments as are inconsistent with anything that I have just said.
7 p.m.
Baroness O'Cathain: I am now very confused about all this. I suppose that that is not surprising. There is one thing about which I am extremely confused. It took me many years in this House to learn what a Henry VIII clause was. Now, I shall have to learn what

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a "Diego Maradona clause" is, and a "Stanley Matthews clause"—and the last one is the "cricket ball through the conservatory window clause". I really do not know where I shall be!
My noble friend made the point that in Clause 109 paragraphs (a) and (b) of subsection (1) were fairly specific, whereas the provision in paragraph (c) was subjective. The noble Lord, Lord Grabiner, has just said that he does not believe that paragraph (c) is subjective. I have given the matter some thought, and I believe that it is. The phrase used is:
"which is likely to be regarded by".
I am not talking about a "regular user"; we have a definition of that, and that is fine. But this provision is likely to be regarded as subjective. If it is not to be so regarded, surely it should read, "which would be regarded by a regular user as". There is further reference to,
"the standard of behaviour reasonably expected of a person in his or their position in relation to the market".
For the provision to be firm, as in paragraphs (a) and (b), surely the paragraph should read, "to observe the standard of behaviour expected of a person in his or their position in relation to the market". I still support my noble friend on this point. The provision is quite subjective and opens up an element of doubt.
Lord Phillips of Sudbury: I should like to speak in favour of Amendment No. 209. Perhaps I may take up one or two of the points made by the noble Lord, Lord Grabiner. I was rather impressed by his six year-old son. I think he might do better on some of these ethical issues than some of the more aggressive traders in certain markets in the City do from time to time. He might have a much clearer idea of the ethics of what he was doing, if not the technical ability of the throw, than some of those whom one unfortunately has cause to meet in the City. I have worked in the City for 35 years. I cannot say that I have been in the thick of it, but I have been in enough parts of it to feel that there is a need for the bracing addition of the words "reasonable" and "ethical". I do not see any danger in those words. They will not render the clause susceptible to subjective interpretation: I disagree with the noble Baroness. Paragraph (c) must be construed objectively, and the addition of these words would continue to require the construction of the clause objectively.
Returning to the noble Lord's vivid metaphor of Stanley Matthews, Stanley Matthews died a long time ago—
Noble Lords: No, he did not.
Lord Phillips of Sudbury: I beg the Committee's pardon—he stopped playing a long time ago. Unfortunately, if paragraph (c) were to be applied to the professional football scene today, the noble Lord, Lord Grabiner, might have a bit of a task on his hands. To take the example of the captain of the most prestigious team in Britain, Manchester United,
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Mr Keane was sent off a month ago for the sixth time in his career. What would the court view as the standards of regular behaviour in the football market these days? It would certainly not be a close observance of the rules.
There are aspects of the workings of various City markets that are not clear in terms of the effect of their rules in any event: where there is a degree of latitude and where the question of good dealing and bad dealing is to be looked at in terms of the best standards and the worst standards. In relation to Lloyd's, for example, if we go back to the time when baby syndicates were almost, as some would say, the norm, how would the provision in this clause stand up? There was some extraordinary behaviour in the City in the early days of the futures markets. How would the clause stand without the addition of the words "reasonable" and "ethical"? At best, it would be highly confusing to any judge.
Lord Grabiner: I am grateful to the noble Lord for giving way. I suggest that in the case, for example, of baby syndicates, had the facts had been known at the time, everyone would have appreciated that they represented a grossly improper piece of activity.
Lord Phillips of Sudbury: I am grateful for the noble Lord's intervention; however. I believe that the facts were well known. Throughout the Lloyd's market the existence of baby syndicates was commonplace. That is the problem with which the noble Lord must contend. Amendment No. 209 makes it absolutely clear that, whether or not a practice is standard, whether or not it breaks particular rules, it is not ethical. I do not think that anyone at the time of the flourishing of baby syndicates would have stood up in public and pretended that such a practice was ethical. The amendment would put such a matter beyond doubt. I view it as an innocent amendment at worst and a useful amendment at best. Therefore, I urge the Committee to support it.
Lord Saatchi: Earlier, my noble friend Lord Peyton said that the Opposition Front Bench had shown restraint during the Committee stage today, and I was pleased to hear that.
Lord Peyton of Yeovil: Did I hear my noble friend correctly? Did he say that I wished that the Front Bench had shown restraint? I congratulated my noble friends on the Front Bench on the incredible restraint that they had shown. I just wanted to be quite clear about that.
Lord Saatchi: My noble friend congratulated the Front Bench on showing restraint. I was pleased to hear him say that and I thank him. It is true.
As we said at the beginning of this Committee stage, we do not see a party-political advantage in the Bill and we have tried to operate in that way. But we now come to something that is of fundamental and deep concern to our Benches. My noble friend Lord

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Kingsland explained why. I shall try to add to that explanation and to respond to some of the remarks that noble Lords have made.
The provision in this Bill which has probably attracted the most concern from practitioners and commentators on the financial system is the one relating to market abuse. Before we jump to the conclusion that the Government have thought this through magnificently, we should remember that this is a brand new provision, not seen in any of the previous systems, and therefore quite capable of being slightly incorrect. Our Benches believe that there are two aspects of the provisions which, as currently drafted, are not quite correct. I shall focus on those two aspects. The first is that of uncertainty of outcome. The second is that of intent.
I shall deal first with uncertainty. In our opinion, "market abuse" is given too wide a definition in Clause 109 and covers a situation in which someone engages in behaviour which, were it publicly known, would damage the confidence of informed market participants that the market is true and fair. The behaviour involved in subsection (2) must, as the noble Lord, Lord Grabiner, said, be based on information which is unavailable to informed participants, but which would be regarded by them as relevant in deciding whether to enter into a transaction involving such an investment, or which would be likely to create a mistaken impression about the market for that type of investment, of which would be likely to distort the market for that type of investment. This wording is too vague and too wide. As was stated by my noble friend Lord Stewartby in relation to the regular-user test, it can attract completely opposite views. This is proof of the difficulty that lies in the present wording.
In our Second Reading debate, the noble Lord, Lord Eatwell, said—he repeated it again today—that the wording as currently drafted is too lax. If I have understood it correctly, his point is that if regular users are abusers, the regular-user test cannot be strict enough, because regular users who are abusers will obviously acquit each other of any abuse and, therefore, the clause is too weak.
On the other hand, other people take the exact opposite view. It is extraordinary that the wording of a clause of such importance can provoke such completely opposite views. The exact opposite view to that of the noble Lord, Lord Eatwell, was put forward by the Justice in Financial Services organisation. It is of the opinion that the vagueness of the clauses will potentially leave too wide a range of workers in financial services vulnerable to a charge of market abuse. The organiiation, Justice in Financial Services, as I am sure the Minister is aware, made scathing criticism of this clause of the Bill. It believes that the Bill,
"will allow the FSA to impose penalties on virtually everyone, as its remit covers any utterance that could have an effect on any investment or any person's perception of any investment".
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In other words, without judging which of the two views is right, surely we can come to the conclusion that the wording is such that it attracts opposite views, and that cannot be a good thing when we are dealing with an offence as serious as this one.
It is true that the Financial Services Authority has published a code of market conduct which is intended to fill some of the vacuum which we perceive exists in the generalities of this clause. It is also true that the Government have strengthened the status of the code, so that it now acts as a safe harbour. In other words, compliance with the code will mean that a firm will be taken not to have breached the general prohibition covered in the market abuse clauses.
Guy Morton, a partner in the firm of Freshfields, a top City law firm, explained to the Joint Committee that this provision left too much unclear. He is regarded as an authority on the subject, and I shall therefore quote him at some length. He told the Joint Committee:
"The main point about market abuse is the need for greater certainty in the definition, which does not seem to give us an adequately clear impression of what behaviour is regarded as objectionable.
If you look at the definition of market abuse, clause [109(1)] in particular, that is not. I submit, a prime example of something which gives people a very clear indication of what conduct is permissible".
My noble friend Lord Stewartby made a similar point. Guy Morton of Freshfields went on to say to the Joint Committee that the clause as drafted,
"is asking you to make a hypothetical judgement about the attitude of a some other described group of people to a set of behaviour. I do not think that that would give the great majority of people any clear idea of what they can and cannot do".
The noble Lord, Lord Lester of Herne Hill, took the view that the underlying provision was so vague that it would breach the requirement of legal certainty laid down by the European Convention on Human Rights. I shall also quote him at some length. He said:
"It is strongly arguable that the very high level of generality of the market abuse offences ! offends against Article 7(1) [of the ECHR] ! Not only are the offences far less clearly defined than their criminal counterparts contained in the Criminal Justice Act and Financial Services Act. but, most strikingly, the FSA's own consultation document on the proposed Code on Market Abuse illustrates the range of open questions as to whether a particular course of action not only will be but should be treated as falling within the market abuse offences".
7.15 p.m.
Lord Eatwell: It may assist the noble Lord to know that when those gentlemen, including the noble Lord, Lord Lester of Herne Hill, gave evidence to the Joint Committee, the regular-user test was not before them. Therefore, they could not possibly have commented on it. It was introduced only at a later stage.
Lord Saatchi: That is true, on the definitions of "market abuse" that are contained in the Bill. I believe that it is nevertheless relevant to consider what they said. Our argument is that we are not convinced that what has been put there to deal with those points has achieved that which was required. In other words, the problem remains that the scope of the application of

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these clauses is too wide. So far, the Government have not been forthcoming on this question of certainty. They have agreed to increase the status of the code to provide a safe harbour for those who comply with it. However, the Government seem determined to keep the prohibition and do not seem able to bring themselves to reformulate these clauses in a clearer fashion. That is the first point regarding uncertainty.
The second aspect to which I wish to draw the Committee's attention was described in detail by my noble friend Lord Kingsland. It concerns the matter of intent. My noble friend Lord Kingsland described the views in America of this type of offence. He described the degree of intent required to establish a violation of the anti-fraud provisions of the United States Securities Exchange Act. He specifically drew attention to the standard regarding Section 10(b) and Rule 10(b)(5). He showed that several elements need to be satisfied to establish a violation of those provisions in America, of which one is the degree of intent required to establish a violation.
It is true, as he pointed out, that the US Supreme Court has held that the SSE, the federal agency charged with enforcing all federal securities laws, must establish that a defendant acted with a mental state embracing an intent to deceive, manipulate or defraud. Securities legislation enacted in America in 1995 requires plaintiffs in securities fraud actions to,
"state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind".
These two aspects of the present provisions of market abuse, uncertainty and the lack of an intent provision, have attracted the large number of amendments that we have put forward. We believe that these are fundamental weaknesses in the Bill, in relation to which I hope that the Government will do more than present us with the sound of their famous tape recorder.
Lord McIntosh of Haringey: I am very interested in the suggestion that the Opposition Front Bench should be restrained! I am not sure whether it was really congratulation on the part of the noble Lord, Lord Peyton, but it was certainly welcomed by the noble Lord, Lord Saatchi.
I am reminded of the South African poet, Roy Campbell, and his quatrain on some modern poets:
"You praise the firm restraint with which they write —
I'm with you there, of course:
They use the snaffle and the curb all right,
But where's the bloody horse?"
Let us see how much of a horse we have to respond to this evening.
Before I deal with the government amendments and respond to the others in the group, perhaps it would be helpful to say something about the market abuse regime in general. Legislative provision to deal with it has built up as the Bill has progressed. Too often we have lost sight of the big picture by quibbling over hard cases, albeit not this evening. The aim of the market abuse regime is to enhance the protection of financial markets in the UK. It is vital that those markets are
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protected. Markets such as the London Stock Exchange and LIFFE ensure the allocation of resources where they are best employed and provide a mechanism for channelling funds to industry, and hedging and spreading risk. If those markets are damaged, not only will those who deal in them suffer but the markets themselves will become less efficient and less liquid. The costs of raising funds and of hedging risks will rise. Increased costs for business will lead to increased costs for consumers which, ultimately, will have an adverse effect on economic growth.
We all have an interest in making sure that these markets continue to work well. At present we protect the markets in two ways: through the criminal law and through the regulatory regime. But there is a gap in the protection. The criminal offences of market manipulation and insider dealing cover all market participants but only a narrow range of very serious behaviour. This is right. These are serious criminal offences which carry a maximum gaol sentence of seven years. On the other hand, the regulatory regime covers a wider range of behaviour but extends only to members of the regulated community. Rather than extend the criminal law to close this gap, as the noble Lord, Lord Kingsland, appears to suggest, we have decided that a more proportionate response is to extend the regulator's reach to cover those who abuse the markets, regulated or unregulated. The new regime will thus complement, not replace, the existing criminal offences.
Before I leave the point made by the noble Lord that the criminal law should be extended, perhaps I may quote paragraph 256 of the Joint Committee's report:
"We accept in principle the need for a market abuse regime that complements the existing criminal offences".
The committee did not refer to the extension of the criminal law but to a market abuse regime to complement the existing criminal offences. I thought that that was the view of the Joint Committee representing all sides of both House. Certainly, no dissenting view was expressed.
Lord Kingsland: It is true that the Joint Committee said that. However, it also recommended, as a result of its analysis of ECHR, that a defendant in market abuse proceedings should have all the protections provided by the criminal law. The noble Lord refers to market abuse in the context of the Bill, but the Joint Committee had in mind market abuse in the context of its recommendations relating to the convention.
Lord McIntosh of Haringey: I shall turn to protections and the European Convention on Human Rights in due course.
An effective civil regime for tackling market abuse is, in the view of the Government, in contrast to that of the noble Lord, Lord Kingsland, long overdue. It is

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inevitable that a regime of this kind will give rise to new questions, particularly among the lawyers, as to exactly what is and is not caught at the margins. I intended to say that no one could seriously argue that that was undesirable, but the noble Lord, Lord Kingsland, has just done so, in which case perhaps his amendments should be much more far reaching than they are. The noble Lord appears to accept the general principle. He tinkers with the wording rather than expresses opposition in principle, which I thought was being expressed by his noble friend Lord Saatchi who was not particularly restrained about it.
Lord Kingsland: Does the noble Lord suggest that the amendments that I have tabled which incorporate intention are minor amendments?
Lord McIntosh of Haringey: I do not regard them as minor amendments, but they do not provide what the noble Lord appears to seek; namely, an extension of the criminal law rather than a civil market abuse regime.
I say to the noble Lord, Lord Saatchi, that, true enough, the Joint Committee made a number of recommendations to improve certainty in this area. We believe that we have met those concerns by the changes made in Committee in another place and the amendments that we propose today which will also improve this part of the Bill.
I turn to the group of amendments which relate to intent, which are basically Amendments No. 209A and 211A. In order to be abuse, behaviour must get through a series of tests. It must be behaviour which occurs in relation to qualifying investments traded on a market to which Clause 109 applies (subsection (1)); it must be behaviour of a type that comes within subsection (2) which, broadly speaking, is behaviour based on unavailable information (subsection (2)(a)); it must be behaviour which is likely to mislead the market (subsection (2)(b)) or behaviour which distorts, or is likely to distort, the market (subsection (2)(c)); and, finally, it must be behaviour which falls below certain expected standards. I shall return to the objectivity of those standards in a moment.
The effect of these amendments would be to make it impossible to take action where behaviour misled or distorted the market unless the FSA could prove that the behaviour was intended, or might reasonably be presumed to be intended, to have the relevant effect. Noble Lords opposite have moved a long way from the position taken by the Opposition in another place. I did not hear them say so, but that is the position. In another place the Opposition tried to make it a general requirement that only where it could be proved that someone intended to abuse the market could a penalty be imposed. They have now accepted, at least in part, our argument that markets can be damaged even when people do not intend to do so. They have not proposed an "intent" test n Clause 109(1)(c), and have left untouched the test on misuse of information in Clause 109(2)(a).
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Since this is a very important point perhaps I may quote the words of the then Economic Secretary when she gave advice to the Joint Committee:
"When we are looking at the broader category of non-criminal market abuse, it must be right to look at the effects of the behaviour, not the intention behind it. What we are concerned about is the efficient operation of the market, not the moral culpability of the individual player in the market".
Confidence in the markets is affected and can be damaged by people's actions even when they do not intend to do something fraudulent. That emerges from the first report of the Joint Committee. What damages a particular market will depend on the expected standards of that market. That may or may not involve some mental element in particular circumstances. What those circumstances are is not for me to say; it is a question for the users of the various markets which are to be covered by this regime. To accept a blanket carve-out for behaviour which is not intended to distort or mislead the market would make it impossible to take action against behaviour which in practice might damage a market in some circumstances. Although I am aware of the legal implications of the word "reckless", I believe that that would be a reckless change to make.
The Joint Committee, which examined this part of the Bill in considerable depth, acknowledged the force of our arguments against requiring proof of intent. I believe that my noble friend Lord Grabiner has made that point with exceptional clarity. The Joint Committee recommended that we introduce greater certainty by providing a safe harbour for behaviour that complies with the FSA's code of market conduct. The Committee will be aware that from the outset the Bill has required the FSA to consult on and publish a code of market conduct, the purpose of which is to give people more certainty about what kinds of things are or are not abusive. Following the Joint Committee's first report, we announced that we would make compliance with things expressly permitted by the code a complete defence to the charge of market abuse. That went further than the Joint Committee's recommendation. Therefore, I cannot accept the amendments relating to intent. We propose to strengthen the protection afforded by the Bill to those who reasonably believe that what they did was not abusive—I shall deal with that when I speak to the government amendments—but intent should not be a necessary feature of a non-criminal regime that is designed to protect markets.
Lord Donaldson of Lymington: The Minister has said on several occasions that this is a non-criminal regime. But is it? I gather that the noble and learned Lord, Lord Hobhouse, told the Burns committee that he had no doubt at all that this is a criminal regime. I think that it is. If I, as an unauthorised person, choose to go into the market and commit market abuse, what civil obligation have I infringed? It is a criminal obligation.
7.30 p.m.
Lord McIntosh of Haringey: Of course I read the memorandum to the Joint Committee of the noble and

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learned Lord, Lord Hobhouse, and I read the much longer submission from the noble Lord, Lord Lester of Herne Hill. The conclusion which the committee drew was not the conclusion of the noble and learned Lord, Lord Hobhouse, but the conclusion, which I thought had been accepted, that this is a matter of degree. Clearly, at one end, there is a criminal aspect to market abuse. But what we are seeking to create, and believe that we can create, is a civil regime at the other end of the spectrum.
Lord Fraser of Carmyllie: I am grateful to the noble Lord for giving way. He has now repeatedly gone back to the paragraph where we indicated that we wanted any regime on market abuse to complement the criminal law. I do not depart from that at all. What I want to see as clearly as possible is a proper boundary between the criminal law and the civil law. I certainly do not understand the idea that complementing the criminal law contains within it an idea that there should be an unclear overlapping between the two. I should be interested to hear from the Minister at some time what conduct he believes would be caught by subsection (2) which in no respects would ever be caught by the criminal law. Under paragraphs (a) and (b) I can envisage circumstances in which one would be caught by insider trading. The noble Lord should remember that this is a UK regulatory provision where, in terms of paragraph (b), it would not be caught by the criminal law of fraud in Scotland.
Lord McIntosh of Haringey: How many successful prosecutions for insider trading have there been in the past few years?
Lord Fraser of Carmyllie: That is exactly what we wanted to extract from the noble Lord. He has now given the game away. He is not trying to determine a precise description or a precise complementing between the criminal law and market abuse. What he is trying to achieve, and what the Government have been trying to achieve, is in some way a looser approach which gets over the problem of the difficulties that have been encountered in London in prosecuting for serious fraud, insider trading and the like. That could not underline more clearly what the noble and learned Lord, Lord Donaldson, is saying. What the Government are really trying to impose here is a criminal system or a criminal set of provisions and they think that they can get away with it by describing it as civil.
Lord McIntosh of Haringey: I was quite explicit in my opening remarks before I moved to the individual amendments. I said that there is a criminal regime. There is no doubt about that. Insider dealing and other matters are covered by the criminal law. There is no attack on that. On the other hand, there is a regulatory regime with which the rest of the Bill is concerned which does and can apply only to the regulated financial community. There is a gap here. There is an element which is not covered. There is an element of abuse which I think everyone who is objective about
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the matter recognises to be abuse. It is occasioned by persons who are not regulated, but it is not serious enough to be covered by the criminal law. That is the scope for the market abuse regime and that is why we and the Joint Committee have always said that there has to be a market abuse regime in addition.
I have also said—I have made it clear and have not concealed it—that there is a spectrum; that there is a point which will differ in different circumstances between a criminal regime and a civil regime. Perhaps I may give an obvious example. Even though we have put in place European Convention on Human Rights criminal protections, what is criminal for ECHR purposes is not the same as what is criminal for domestic purposes. I shall give an example of the non-criminal behaviour which we are rightly to be able to get at: a range of potentially damaging behaviour which is not the subject of an offence which it would not be appropriate to criminalise. Let us take the Sumitomo case. That involved an unauthorised person trading through authorised firms establishing large off-market positions in the copper futures market and, through his dominant position, manipulating the market and distorting the copper price. The effect on the price of copper, which was felt all over the world through contracts, was very large indeed. But a criminal prosecution was not possible. This comes right to the heart of one of the motivations for the market abuse regime.
Perhaps I may take the issue of insider dealing. Insider dealing is not referred to in the Bill. Subsection (2)(a) refers to information,
"which is not generally available to those using the market".
The new regime fills a gap beneath the criminal regime covering market abuse. The gap is that the regulators cannot take action against unregulated market participants who damage the market. We decided not to extend the boundaries of the criminal regime to deal with that because that would not have been proportionate. But the criminal offences will remain. Where criminal offences have been committed and the public interest and evidential tests for criminal proceedings are satisfied, they will be taken.
Perhaps I may deal with the government amendments. The policy has never been that this regime should capture behaviour which has an effect that no one could have foreseen. Again, I can do no better than to quote Patricia Hewitt's evidence to the Joint Committee. She said:
"We want people to act with due care when they are interacting with the financial markets, but of course we do not want to sanction people for the effects of actions that are unforeseeable. The regime is designed to protect the efficiency of markets. It is designed to deter unacceptable behaviour, not acceptable behaviour, and clearly there needs to be a degree of certainty in achieving that".
The Government will be looking at ways to ensure that people who take proper precautions to ensure that they do not commit market abuse cannot have a penalty imposed upon them.
The Joint Committee said that it was satisfied that what the Government proposed would broadly meet the recommendation in its first report for more

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certainty. That was in paragraph 23 of its second report. We have introduced these protections in Clause 109(3) of the Bill. That subsection provides that in determining whether behaviour amounts to market abuse, regard must be had to the extent to which the person concerned took care to avoid engaging in abuse or believed that the behaviour would not amount to abuse.
A number of amendments have been put down by noble Lords opposite and by the noble Lords, Lord Eatwell and Lord Lipsey. Perhaps I may continue to describe my amendments first. The effect of our Amendment No. 212 is just to delete that subsection. The overall effect that the amendment and our related amendment, Amendment No. 218, to Clause 113 have means that everyone ought to be in agreement about that. I have not heard anything other than that. We have decided to divorce these matters from the question of whether abuse has taken place and impose them as fetters on the FSA's powers to impose penalties or make statements. Amendment No. 218 provides that the FSA may not impose a penalty on a person or make a statement if, having considered representations, there are reasonable grounds for it to be satisfied that the person concerned believed on reasonable grounds that his behaviour did not amount to abuse or that he took all reasonable precautions and exercised all due diligence to avoid engaging in market abuse. Whether there were reasonable grounds for the FSA to be satisfied in a particular case is something which the tribunal will be able to consider.
In addition to improving the nature of these protections in line with our general approach towards certainty and transparency, we are proposing in Amendment No. 220 that the FSA will, as part of its policy statement on the imposition of penalties, have to give indications of the circumstances in which it is to be expected to regard a person coming within these protections. The FSA has to consult on and publish this policy statement.
The noble Lord, Lord Eatwell, said that Amendment No. 208 was flawed. But the reason the test is drafted in this way is so that the tribunal ultimately can decide whether there were in fact reasonable grounds for the person believing that his behaviour was not abusive. This provision does not stop the FSA from proceeding to issue a decision notice if it is satisfied that the person's grounds are not reasonable.
The effect of the amendments is to provide more effective protection against the allegation of market abuse than Clause 109(3) does at present. I hope that it meets the substance of Amendment No. 212A in the name of the noble Lord, Lord Kingsland. We have also taken the opportunity to restrict the protection to belief where there are reasonable grounds for the belief. That is in line with Amendment No. 213—I understand from what he said that the noble Lord will not pursue it—and Amendment No. 203 tabled by the Opposition Front Bench.
While referring to protection, let me deal with Amendment No. 214. Clause 109(9) already provides that behaviour which conforms with FSA rules does
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not constitute market abuse. We have been accused of resiling from the position that we took in the House of Commons. We believe that, as drafted, this goes too wide. Of course it is not, and never has been, our intention that behaviour in conformity with any completely unrelated FSA rules should protect a person against an allegation of market abuse. I do not believe that noble Lords opposite, or honourable Members of the Opposition, thought that that was the case. While we do not think that the provision would be read in this way, we are taking the opportunity to clarify the matter. That is the reason for Amendment No. 214. But the protection in Clause 109 still provides a safe harbour for behaviour conforming with rules such as price stabilisation rules.
We are proposing that the protection should apply only where the rule in question states that behaviour conforming with it does not amount to market abuse. The obvious examples are rules on price stabilisation and Chinese walls, but the amendment deliberately gives the FSA the flexibility to specify other rules if that is appropriate.
Finally, I turn to the amendments which deal with the reasonable regular user of the market's role in determining whether abuse has taken place. I have heard it said that we are too strict; and that we are too lax. I am glad to have the support of my noble friend Lord Grabiner, who confirms our view: that the issue is objective, not subjective. This is very much at the heart of the regime. It was, quite rightly, the subject of debate at Second Reading. I think that there may be some misunderstanding as to how it works.
The Bill as considered by the Joint Committee did not have the concept of the reasonable regular user. We introduced that following a review of the legislation in the light of the Joint Committee's concern that the definition of market abuse in the Bill lacked the necessary clarity. In carrying out this review we consulted with industry representatives and the FSA.
Let me take one step back before I describe the reasonable user test. The purpose of the regime is to protect from the effects of abuse the markets which will be covered by it. It will allow action to be taken against the bad apples who abuse the trust of other market participants whether they are regulated or unregulated. But it is not telling those markets how they should operate and what standards they should have. That is not the purpose of the market abuse regime. The then Chief Secretary made this clear when announcing the proposals in May 1998. He said:
"It is not our intention that the new regime should stop generally acceptable market behaviour—far from it. Nor do we want to deter proper innovation in the financial markets".
That is why we have those provisions in Clause 3. That must be right. Were the market abuse regime to allow the FSA to take action solely in the light of its own view of what are the proper standards, what market participants thought was right or wrong or what they thought was the best way of running their market and ensuring its liquidity and efficiency would be neither here nor there. The only relevant standards would be those of the FSA.

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Let me make clear that I am not advocating self-regulation. The FSA may, of course, have a role in raising standards in markets, but only where the adoption of particular standards by market users means that there are investor protection or market confidence issues. Where that is the case, the FSA will be able to take action under its rule-making powers or under its powers to enforce the recognition requirements for exchanges.
The job of the market abuse regime is to police accepted and acceptable standards of behaviour. Of course, good markets depend on those who use them having confidence in their fairness and efficiency. So the standard of behaviour which is reasonably to be expected will be one which takes into account the need for the market to operate fairly and efficiently. That is why we introduced the regular user of the market. The view of the regular user is the view which an impartial third party who regularly uses the market would take on an objective and reasonable basis as to whether a particular person's behaviour represented a failure to observe the standard of behaviour reasonably to be expected of someone in that position. A reasonable man is someone who knows right from wrong.
Let me give a couple of examples. Let us suppose that someone is engaged in a squeeze on a commodity market. He holds a large number of contracts which require delivery of, say, a metal of a certain quality to him on a particular date; and he has control over a large amount of the supply of the metal of that quality. He takes advantage of that position to extract artificially high prices; that is, he squeezes the market. If the reasonable regular user would take the view that the squeeze fell within Clause 109(2)(c) the next question he would have to ask is whether there was a standard of behaviour reasonably expected of any person in the same position as the squeezer in relation to the market.
The hypothetical regular user addresses the question from the viewpoint of an impartial person who regularly uses the market. He does not decide whether there is a standard of behaviour reasonably expected of a person in the position of the alleged abuser by looking at the personal characteristics of the alleged abuser. That is what would happen if Amendment No. 208B were accepted. He asks himself whether there is a standard of behaviour which a person in the position of the alleged abuser is reasonably expected to observe. If the answer is that there is no such standard, then the alleged abuser will not have engaged in market abuse.
However, if the answer is that there is such a standard, then there will have been market abuse. But the question will turn in each case on whether an impartial regular user of the market would take the view that there is a reasonable expectation that a person in a particular position should not take advantage of that position to squeeze the market.
I do not think that I can bear to take the football example. I do not understand what it is about. I do not know who Stanley Matthews was. I do not understand
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about pulling sleeves; although I am advised that the Stanley Matthews example is very helpful to the government case.
Amendments Nos. 210 and 211, in the name of my noble friend Lord Eatwell, would remove the regular user from the condition concerning distortion of the markets in Clause 109(2)(c). If we did that, who is to judge whether the behaviour would or would not be likely to distort the market in the investment? Surely the best person to take that judgment is the regular user. He is the person who is considering whether behaviour lives up to expected standards.
Lord Eatwell: If the Minister holds that view—who is to judge?—then who is to judge what gives a misleading impression in Clause 109(2)(b)? And who will judge whether or not information is generally available in the market under Clause 109(2)(a)?
Lord McIntosh of Haringey: The amendment about which we are talking does not refer to subsection (2)(a). I was talking about a misleading impression as to supply and demand for the price or value of investments of the kind in question.
I am advised that I have taken far too long already, as I appreciate. If I have not responded to noble Lords on any particular point—I have not done so on the take-over code—I shall write to noble Lords.
After serious consideration of all the amendments—it has taken far longer than the 30 minutes I have been speaking—I conclude in general that what we have done is neither too lax (as is suggested by my noble friend Lord Eatwell), nor too rigid (as suggested by noble Lords opposite), and I commend the government amendments to the Committee. I ask the Committee to reject the other amendments.
Lord Peyton of Yeovil: I realise that for some reason or other the noble Lord is in a great hurry. I have quite a number of things I should like to say. I can be very short. If the Minister has now finished speaking, I should like, first, to add my congratulations to the Members on my Front Bench on their admirable restraint in the handling of this Bill, slightly tinged with regret at the absence of protest and unease at the length of the Bill. I believe, rightly or wrongly, that that is at the root of the Government's troubles. The more you put into a Bill, the more you try to fill every gap and provide for every possible occurrence, the more difficulties you will be in.
Perhaps I may point out to the Minister that Clause 109(11) states:
"In this section … `behaviour' includes action or inaction".
I could have told him that. It also states that:
"'investment' is to be read with section 20 and Schedule 2".
I suspect that most people know what "investment" means. It goes on:
"'regular user', in relation to a particular market, means a reasonable person who regularly deals on that market in investments of the kind in question".

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I believe that the obesity of the Bill lies at the root of the Government's problems in handling it.
I agree that it is not a Bill which need arouse party passions, but, with reference to the amendment proposed by the noble Lord, Lord Eatwell, it will not be further improved merely by sprinkling adjectives over it. In my view, the addition of the word "ethical" will not help to stop the abuses which we all want to see stopped.
Furthermore, I am deeply indebted to the noble and learned Lord, Lord Donaldson, for his intervention. I am still far from clear as to where the boundary lies between the so-called civil market abuse regime and criminal activity, and nothing that the Minister said has explained it to me.
He must deal with it sooner or later, because I do not understand the matter. He went on to deal with the Sumitomo case, stating that the mere fact that a criminal prosecution did not follow did not mean that a criminal offence had not been committed. It seems to me that the mere use of the term "market abuse" suggests that there is some criminal conduct.
I believe that one is entitled to make some protest. It is difficult for people who are not as well prepared or briefed as Ministers to follow answers delivered at such speed. I am not sure why the noble Lord had to hurry so much, but I want to make the modest and restrained protest that what he said at that speed—he is normally very clear—was extremely hard to follow.
Lord Bagri: As I know something about the Sumitomo case perhaps I may congratulate the Minister on trying to deal with it. I know how difficult it was to deal with. That is why we welcome the extension of the market abuse regime to cover both non-authorised persons and off-exchange activity which has a manipulative effect on the exchange market.
I listened with interest to the Minister's reference to a hypothetical situation about market abuse, dealing with metal futures and so forth. It was a relevant reference as we have to deal with it almost every day.
Lord Kingsland: I want to take a few minutes to respond to the Minister's reply. I am surprised that he was not attracted by the elegance of the solution I offer in my amendments. First, we have a clear statement of the standard of behaviour; then we have the conditions under which it is capable of being broken; and to each of those conditions is attached a requirement of intention. Finally, in subsection (3), we have an absolutely clear, safe harbour. We have the standard set out, the requitement of intention, the actus reus of the offences and a clear, safe harbour. In my submission, that gives the offence of market abuse the predictability it needs if it is to survive the European convention test which will be applied to it after 2nd October.
The Minister referred to remarks made by the then Minister of State, Ms Hewitt, in another place. He quoted her as saying that what matters are the adverse effects on the efficiency of markets, not moral
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culpability. If that is so, why have the Minister and his Government introduced fines into the offence? If it is merely a question of effects and the efficiency of markets, why is not restitution sufficient? That would solve all the noble Lord's problems because, if there were no fines, the element of criminality would be banished from market abuse. I put it to the noble Lord that he cannot have it both ways. If he wants fines, he has to have intent, or at least recklessness, as well. The two things go together.
I was surprised that he failed to make reference to my observations about the SEC. The United States has more experience of supervising successful securities markets than any other country. It introduced the regime based upon the criminal law on the one hand and the regulated market on the other. Throughout, it has insisted that its regime is conditioned by intention and a form of recklessness which its courts say goes beyond gross negligence. The Minister did not attempt at any stage of his speech to demonstrate why that experience in the United States has no relevance whatever to the United Kingdom.
Nevertheless, despite those strongly expressed views, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 208B not moved.]
Lord Eatwellhad given notice of his intention to move Amendment No. 209:
Page 51, line 4, after ("a") insert ("reasonable and ethical").
The noble Lord said: The Minister said that in his speech he did not have the opportunity to address the matters raised in my amendments. I look forward to receiving his letter on those issues. Having said that, I shall not move the amendment.
[Amendment No. 209 not moved.]
[Amendments Nos. 209A to 211A not moved.]
Lord McIntosh of Haringeymoved Amendment No. 212:
Page 51, line 18, leave out subsection (3).
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Ampthill): As a result of that amendment, I cannot ca II Amendments Nos. 212A to 213A. They have been pre-empted.
[Amendments Nos. 212A to 213A not moved.]
Lord McIntosh of Haringeymoved Amendment No. 214:
Page 52,1ine 1, leave out from ("Behaviour") to end of line 2 and insert ("does not amount to market abuse if it conforms with a rule which includes a provision to the effect that behaviour conforming with the rule does not amount to market abuse.").
On Question, amendment agreed to.
Clause 109, as amended, agreed to.
Lord Bach: I beg to move that the House do now resume. In moving the Motion, I suggest that the Committee stage begins again not before 9 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Agriculture: IACS Payments
7.59 p.m.
The Earl of Caithnessrose to ask Her Majesty's Government what effect the new rules on Integrated Administration and Control System (IACS) payments will have on farmers and wildlife.
The noble Earl said: My Lords, it is with some sadness that I raise this issue in your Lordships' House this evening. The matter should never have reached this stage and this debate should not be necessary. I declare my interest as a countryman, a surveyor, an ex-land agent and an ex-agricultural valuer.
The problem before us relates to a change in interpretation. Many years of customary practice have been discarded and a new ruling has been imposed upon farmers. Perhaps I may take your Lordships back to 1994. In accordance with EU policy, in January 1994 the government of the day issued advice to farmers in The Integrated Administration and Control System, Guidance note on mapping and field data requirements. Paragraph 22 of the guidance notes stated:
"When giving your crop, set-aside or forage area, the area indicated by an Ordnance Survey or professionally produced map will generally be acceptable, provided that the field is fully planted or utilised according to normal agricultural practice (and there has been no change in boundary). It is not necessary to reduce the area to take account of small parts of the field which have been left unplanted to accommodate narrow field margins, tractor turning areas, hedges and ditches. In determining whether an area should be deducted you should consider whether the areas left unplanted are larger than the areas which are traditionally left unplanted".
That is the basis on which farmers worked before the guidance was produced. It was in line with EU policy; it has been the guidance on which farmers have worked since then; and that has all been overturned by the unelected, unaccountable Eurocrats in Brussels, who now say that normal farming practice in whatever country one lives is not acceptable for hedges because the definition of a hedge or a field margin is now two metres either side of the central line of the field boundary, and any area in excess of that nullifies the whole area.
It is for that reason that I have considerable sympathy with the Minister, as I am sure does the whole House. It cannot be much fun to be placed in that position. What is the result of the unenviable position in which the Minister and her department have been placed? First, farmers are now faced with a dilemma. They must lose a great deal of income, in some cases probably thousands of pounds in perpetuity; that is, on an annual basis. For example, I know of one 200-hectare farm which has eight miles of hedges, all approximately two metres wide. They must
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all be measured and some will have to be trimmed back. If the farmer is not prepared to lose the income, he will have to trim back the field margins to below two metres from the centre line in order to be safe. That has already led to radical hedge-cutting wherever possible.
The second category of losers is wildlife. Everyone knows that big, bushy hedges support three times the density of birds and twice the number of species. It is those very hedges that will suffer, are suffering and have suffered along with the wildlife in them. The third area to suffer is the scenic value of the countryside.
Having directed my attention thus far to the result, I believe that MAFF has been culpable in the decision-making. It has not made matters easier for farmers, and many farmers are saying that MAFF has changed and is no longer the organisation that they used to be able to trust. Perhaps I may give one example. Farmers were not notified of the new rule until well into the winter planting season for winter crops. Farmers who had already planted their winter crops had no time to make alterations or to plan.
The second reason why I believe that MAFF is culpable is that the advice which comes from the department is and remains unclear. That is bad for farmers. Perhaps I may draw your Lordships' attention to a Written Answer by the Minister on 9th February to my noble friend Lord Tebbit in which, among other things, she says,
"we are currently analysing what effect it might have and evaluating the options for minimising any problems [that might] arise".
Therefore, if MAFF does not know where it stands, how can farmers know where they stand?
I have a number of questions for the noble Baroness. As she knows, with her approval I spoke to her department to advise them what I wish to ask. If the field margin is in excess of two metres, why will the farmer lose the whole of that area? Why does not the farmer lose only the excess? In other words, a 200-metre hedge line with a field margin of two metres is perfectly acceptable; but if a farmer has a 200-metre hedge line with a two-and-a-half metre field margin, then he loses the whole of the two-and-a-half metres, and not just the extra half metre.
Can the noble Baroness confirm that there will be no retrospection? There are two aspects to this question. Can she confirm that there will be no retrospection whatever before 2000? In a Written Answer to my noble friend Lord Courtown on 14th February she said that she would "not expect" there to be retrospection. That is unclear and, therefore, unacceptable.
Let us go forward to the year 2004. If a farmer is found to have a field margin in excess of two metres and that has been his farming practice, is he penalised for the year 2004 or is he held responsible retrospectively for the previous four years as well?
I turn to regional yield review. If farmers are producing the same yield on less acreage, surely they should be compensated for that by higher area payments. I hope that the noble Baroness will confirm that that is the case.

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The original customary practice took account of practice throughout the country. I know that in some areas the OS map and the parish boundary are one and the same. However, in some parts of the country the parish boundary is deemed to be four feet from the far side of the hedge of a cultivated field. Therefore, the farmer certainly will be penalised if that tradition exists in his area.
Where does a farmer now go for advice? Does he go back to MAFF? MAFF has the same people who for years told him to do something and are now saying, "No, you don't do it that way. You do it another way and you will be penalised if you don't". Therefore, I do not believe that. MAFF commands the trust that it should.
English Nature said that the current ruling by Brussels threatens its ability to meet the Biodiversity Action Plan and other sustainable development objectives. I wonder how MAFF can take part in the biodiversity plan as a leading partner when it is the sponsoring department for the radical cutting-back of hedgerows. That is a total contradiction in duty.
It is sad that farmers have lost their trust in this Government. Their incomes have been slashed and are decreasing to even lower levels. Unless farmers cut back their hedges, they will lose yet further income straight off the bottom line. The cutting back of hedges and the detriment to wildlife is there for us all to see. Farmers are doing it throughout the country, and who can blame them? If I were still a land agent, I regret to tell your Lordships that, whether I liked it or not, that is the advice that I would have to give to my clients. Surely the totally wrong message is now going out to farmers: "never take up an environmental scheme if it makes economic production more difficult". What a tragedy that that message is now going out after years of hard work.
8.8 p.m.
Baroness Young of Old Scone: My Lords, I thank the noble Earl, Lord Caithness, for highlighting this problem. I declare an interest as the chairman of English Nature.
I believe that we need to give a sense of proportion to the issue this evening. It is important, but not quite the disaster that the noble Earl described. I shall not go into detail on the importance of hedgerows for wildlife. I say simply that they are one of the most important landscape features for biodiversity. They have a unique distinction in that they are not like people: the older and fatter a hedge, the better. I wish that it was like that for people! Old, fat hedges with ditches are even better. However, in IACS terms, they are even wider and therefore more likely to be penalised.
The Commission's recent guidance on IACs claims and field margins, including hedgerows, could result in environmental damage as a result of two circumstances. In addressing the first of those, perhaps I may gently defend MAFF—and that is not a position which I am always in—because it has made a very careful analysis of the issue. It is important that we
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understand the reality as well as the perception of the matter. About 4 per cent of farmers will actually be affected by the rule. As the noble Earl said, they may lose money or have to cut back and destroy hedges.
We should not underestimate that 4 per cent because it represents several thousand farmers; but, nevertheless, it is only 4 per cent. Perhaps as important, however, is the fact that other farmers may anticipate the impact of the rule, whether or not it would penalise them in practice, and take prophylactic action to reduce or destroy their hedges in any event.
There has been considerable publicity about this issue in the farming and general press. For example, on Saturday, 11th March, the Western Daily Press misleadingly stated:
"Eurocrats are insisting that any hedge which is more than two metres wide will have to be ripped up or else farmers will lose vital subsidies".
It is that sort of overstatement of the issue which may cause many farmers who are not in fact threatened to panic prematurely.
In terms of this issue, the Government have several options available to them. There are two steps which they need to take. First, the Government must steady farmers' nerves by stating clearly the calculated percentage of farmers who in reality will be affected. They must reassure those farmers that the Government are pressing the European Union for a solution and are confident that one will be found. The Government really must urge farmers not to attack their hedges prematurely.
Secondly, in terms of the real impact, I urge the Minister to press Europe for a flexible interpretation of the two metre rule because 96 per cent of boundaries are compliant with the two metre margin in any event. A derogation should be sought for the remaining 4 per cent, accompanied by a simple self-certification process to make it clear that the boundary which exceeds the two metre margin is of environmental importance. It may be possible to have a system of validation, sample or other basis undertaken by a number of agencies which are already involved with individual farms—the countryside and wildlife agencies, the FRCA, the Farming and Wildlife Advisory Group and other such agencies. I believe that such a step would reflect within Europe the future multi-purpose nature of support to farmers, which is an approach which the Agriculture Commissioner has himself endorsed in the past.
However, perhaps I may urge the Minister to take a more imaginative approach to the issue. Under Article 3 of the horizontal regulation in Agenda 2000 which allows for environmental conditions to be applied to mainstream agricultural subsidies, it is possible to make a move to define landscape features such as hedges, ditches and field margins which extend beyond two metres from the boundary as features to be protected by all farmers as a condition of the receipt of arable area aid.
Alternatively, environmental conditionality could require an additional uncropped strip beyond the two metre margin which would be likely to encompass

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most wider boundaries. The introduction of such environmental conditions to the 96 per cent of mainstream agricultural subsidies, which are currently unreformed and environmentally, socially and economically damaging, would demonstrate admirably the Government's broader commitment to help to guide and support farmers to a more environmentally and economically sustainable model of agriculture for the future. Indeed, that would make a major contribution to the Government's headline quality of life indicator—the number of farmland birds. I hope that it would also be popular with farmers because this issue, which is clearly vexing them, would be resolved. It would be an excellent complement to the Government's recent splendid decision to increase funding for agri-environment schemes.
But this issue also raises the general question of the revision of the hedgerow regulations which the Government intend to introduce. The existing regulations deal only with the removal of hedgerows and not with their management. So under the existing regulations farmers can cut back their hedges. The revised regulation needs to take account of the importance of the condition, size and management of hedgerows.
This is indeed a pressing issue. The rule change applies from 15th May and the notification is already impacting on farm management. I am sure that the Minister will tell us what are her hopes for the resolution of this issue.
8.14 p.m.
Earl Peel: My Lords, I too thank my noble friend Lord Caithness for drawing our attention to this very important and—perhaps I may say—rather tragic incident.
I am amazed to hear the noble Baroness, Lady Young, say—although I am sure she is right—that only 4 per cent of farmers will be affected by this diktat. My information is that it will affect a great many more than that but, of course, I shall listen with interest to what the Minister says. But if it does affect only 4 per cent, then the situation is perhaps not as bad as some of us thought.
Having said that, on Monday, I was at a conference in Scotland where we were discussing land management issues. This was one of the major points of discussion. Everyone involved with land management was absolutely astonished that such a diktat could have arisen from Brussels, particularly at a time when we have been putting out messages for the past decade or so that farmers should try to have a higher regard for habitat and the environment.
I must declare an interest in this debate in that I am chairman of the Game Conservancy Trust, which has been very much at the forefront of research into habitats and the way that they are managed not only for game birds but also for a whole range of other species. At the trust, we have a model conservation farm at Loddington in Leicestershire where we have done a great deal of work on the restoration and
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management of habitats. The director of the farm, Nigel Boatman, wrote on 16th December to Janet Purnell, who is head of the CAP Schemes Management Division. Among other things, he wrote:
"We believe that this ruling will cause considerable damage and destruction of wildlife habitat on farmland which could affect populations of wildlife species, many of which are already in decline".
So there is a man with great practical knowledge who is convinced that that new ruling from Brussels will have a very significant effect.
On our farm, which is approximately 800 acres, we have calculated that the cost will be in the region of £1,700 per year. Quite frankly, in this day and age, with farmers struggling to keep their heads above the financial waterline, £1,700 on an 800 acre farm is an awful lot of money. Whether it is 4 per cent, 10 per cent, 50 per cent or 100 per cent of farmers who will be affected, there is no doubt that habitat management will suffer very considerably indeed.
But there is one other point which I wish to make which is absolutely essential in this debate. Grass strips and the bottom of hedges are not just important from the point of view of producing a habitat and a food source for wildlife; they harbour the very important aphid predator insects which result in farmers using less spray.
We must not, please, lose sight of that because if we are to see those grass strip margins reduced, I fear that that will inevitably lead to a greater amount of agricultural spraying. Again, that is something which we have been discouraging and farmers are now taking much more seriously than they have in the past.
But where I become confused by this new diktat, if I may call it that, is that as my noble friend Lord Caithness said, the original Article 6 referred to the customary practices of member states. And yet this new arable aid payment scheme guide suddenly substitutes "customary" with that so-called two metre or less reference but it is called a guidance. Is it a guidance or is not a guidance? If it is a guidance then I presume that the noble Baroness and her ministry will be able to adhere to the status quo. However, if it is not a guidance, but a diktat, then clearly we appear to have some difficulties.
Furthermore, there appears to be an anomaly, in that in paragraph 117 on page 34 of Part II of the same guide, there is advice on managing hedgerows to benefit wildlife which suggests, among other things, leaving a grass strip. That surely is a totally conflicting message coming out of the same guidelines.
I realise that that is a difficult problem for the Minister and for the Government. There is talk about environmental assessments, but I can see no point whatever in them. We know what the environmental consequences will be if that diktat from Brussels is carried out. I hope most sincerely that the Minister will say that she will resist it at all costs to ensure that confusing messages do not go out to farmers at this difficult time.
8.20 p.m.
Lord Hardy of Wath: My Lords, I am grateful to the noble Earl, Lord Caithness, for the initiative he has shown in securing the debate. It is perhaps unfortunate that it occurs today, after such a splendid Budget. The fact that not that much attention has been paid to the proposals so far will not continue if they take effect. In the regions there will be much outcry.
The Government seem to be caught in a conflict of interests. The Department of the Environment, Transport and the Regions is currently consulting—I believe that the consultations are due to end in June—on the protection of hedgerows, while MAFF appears to wish to see considerable destruction of hedgerows in May. That conflict should be considered as a matter of urgency.
I have a number of questions for my noble friend. The noble Earl, Lord Peel, referred to environmental impact assessments. While I should share his view of the matter, an environmental impact assessment carried out independently and reputably would be a good idea. There should have been one before the proposals emerged. If there has not been one, I urge that one is sought.
MAFF may rest its case on the position of Brussels. But was the national natural interest robustly presented in Brussels? Has Brussels been made aware that the proposals seem to conflict remarkably with Brussels' own commitments? I refer to the Birds Directive and Brussels' involvement in and sustenance of the Berne Convention on Wildlife and Habitat. Has Brussels carried out any environmental impact assessment of the consequences of that policy were it applied to Britain? Do we need to apply it with any great urgency? Some of our partner states are rather slower to implement decisions affecting their countries.
I have several further questions. Has the ministry considered the enclosure hedgerows? Seventeen years ago in the Commons I was told by the Minister that the old Enclosure Acts no longer had effect. Then MAFF accepted that they did. I then said to MAFF, "When you were giving out grants for grubbing out hedgerows, you did not ask the farmers whether the hedgerows they were grubbing out were already protected. What will you do about the grants that were illegally paid?" MAFF said that if it found out, it would demand that the money was repaid, which would have been absurd in many ways.
But what about the situation where, after I had raised that point, grants for grubbing out hedgerows were stopped and the government introduced grants to encourage people to plant new ones? What happens if someone has received a grant for grubbing out a hedgerow, then receives a grant for building a new one and then finds out that under this proposal that is also to be pulled out? Even if it was not an enclosure hedgerow, the confusion seems rather ripe.
I hope that the Minister will ensure that farmers are advised that, while they may be tempted to grub out hedgerows in response to this policy, they must not do so. The noble Earl, Lord Peel, will understand if I refer
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to the Flamborough judgment, where our wildlife trust demonstrated the validity of our case that the enclosure awards—probably all 4,000 of them—provided for the perpetual maintenance of hedgerows. I said as a condition of ownership, but we shall leave that aside for the time being.
The Government need to understand that at the last election many people were delighted by the green character of our manifesto; a manifesto which promised wise and sensible protection of hedgerows. That was quite right, for we had strongly criticised the flawed and absurd regulations published in 1996. If we are to protect hedgerows—and we have a manifesto commitment to do so—we must reconsider the matter extremely carefully.
I am sorry to appear rather critical of the Government, but I must make this point: from my youth I have been a strong supporter of our party, but at the same time from my youth I have been committed to the cause of a green and pleasant land. In my youth, I could see industrial degradation to the north. Immediately to the south, I could see woodlands, trees and fields; an extremely pleasing landscape. The noble Baroness, Lady Byford, has seen the area. I should hate to believe that the progress we have made in transforming the degradation to the north will be matched by the devastation of our natural heritage to the south. I greatly hope that the Minister will reconsider the matter. We have a moral obligation to do so.
8.25 p.m.
Lord Monro of Langholm: My Lords, I too thank my noble friend Lord Caithness for the opportunity to raise this important issue. I declare an interest as a farmer and as a former Minister of Agriculture in Scotland. I raised many of the arguments about IACS in Brussels when they were introduced.
I hope that by now the Minister appreciates that this is an industry in crisis. Yet this afternoon I listened to the whole of the Chancellor's speech and he did not once mention agriculture. That was a desperate letdown for the industry. The noble Lord. Lord Hardy, believes that it was a great Budget. I hope that he listened to it being demolished by the Leader of the Opposition.
We know now that incomes are down by 75 per cent. Milk, pigs and livestock are all in dreadful trouble. That is one of the many reasons why Labour did so poorly in the Ayr by-elections last week. In such. Circumstances it is quite illogical—actually, incredible—that the Government should have accepted the two-metre rule. It will inevitably raise costs. Let us consider the Minister's official going, round every headland and field to see whether a farmer has a two, two-and-a-half or one-and-a-half metre margin. It will inevitably cost money to the farmers. My noble friend Lord Caithness indicated the great problem that would arise if a farmer exceeded the two-metre limit by even a few inches.
I am sure that the noble Lord, Lord Hardy, would agree with me that it is extremely illogical that the Countryside and Rights of Way Bill—which contains

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some good provisions, including improvements to the environment and to SSSIs—began yesterday in the Commons, but, as Members of all sides of the House have indicated, we are setting out to see the demolition of a large number of hedgerows in order to please those in Brussels. It is an incredible somersault; on the one hand, trying to improve matters and on the other, accepting that order from Brussels.
With respect to the noble Baroness, Lady Young, she and her agency are being complacent. I should have liked to think that she would have come in with guns blazing, saying that the provisions for the environment are totally opposed to what one would expect from the Government and that they must, without any hesitation, go back to Brussels to try to reverse the decision.
I hope that the Minister will consider the practical implications of what farmers are being ordered to do. I know that she cannot be expected to have driven a large horsepower tractor with four, five or six furrow ploughs, but it is extremely difficult to get within two metres of a hedge, particularly if there are obstructions along the hedge line or the fence line. My noble friend Lord Peel emphasised the practical consequences with regard to spraying, but, in terms of ploughing and cultivation with the large equipment essential today with a small workforce, the Minister will be asking farmers virtually to do the impossible from the point of view of ploughing, harrowing and seeding.
I should like to ask her, as part of the issue of the environment, why she has accepted a change in the extensification rule relative to IACS. That is the formula, as she knows, which relates to the relationship between the headage of cattle on a farm and the acreage. If it is below a certain figure, the extensification grant comes in and if it is above it does not. This year the Government have insisted that farmers include heifers among the headage in the field that is available for the extensification grant. Why should that be accepted? Inevitably, it will lead to a significant number of farmers losing a grant that helps the environment.
At the end of the day, we shall have the same number of beasts on the same acreage, but the farmers will lose a grant that helps the environment in many ways. That shows that in Brussels the Government are losing out all the time by not standing up for the farming industry, which, at present, is suffering a terrible crisis.
Why do we also have to consider having a monthly return of the extensification grant on the headage relative to the acreage? That will be so complicated. Who will check all the figures? Why does it have to be done? I do not believe that the noble Baroness realises the amount of red tape coming out of MAFF and the ministry in Scotland. Farmers hardly have time to get out to do the work in the fields. In the past week or two I have been at home when lambing has been taking place and it has been difficult to find the time to deal with the paperwork that the Government throw at farmers.
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It would not matter if the Government were being more sympathetic towards the future of farming, but bear in mind that the Government have done little towards helping various industries. I know that the Prime Minister will meet the NFU and others next week. If he does not then announce something substantial, we shall find farmers marching on London, Edinburgh, Cardiff and, no doubt, Belfast, highlighting the way the Government are letting down the industry by not helping it in this time of crisis.
8.31 p.m.
Baroness Miller of Chilthorne Domer: My Lords, noble Lords on these Benches warmly thank the noble Earl, Lord Caithness, for instigating this debate. I want to address three issues. Other noble Lords, including the noble Lord, Lord Monro of Langholm, have spoken of the effects on farmers. At a time when the Government hope to cut red tape, it is strange that this regulation is so bound up in it.
While preparing for the debate, I looked at the MAFF guidelines, with their carefully drawn little maps. I saw what farmers are supposed to measure. When I asked the NFU office in the South West the length of boundary a farmer in that region would have to walk in order to measure it according to the careful AAPS guidance, the estimate was an average of 20 kilometres.
Can the Minister say whether in September 1999 MAFF knew that these complications would arise? What representations did it make to the European Union at that time? I understand that this instruction has come from the European Court of Auditors. It appears to be an accountant's decision because it conflicts considerably with the report that the European Commission published in December 1999, entitled Agriculture, Environment, Rural Development—Facts and Figures, which was encouraging to the environmental approach. That document went into some detail about the point of hedges in terms of soil degradation and erosion. It talked further about the impact of agri-environment measures. It seems to me that the Court of Auditors has not caught up with what the Commission's agricultural and environmental sections have been doing and the polices that they are promoting. What representations has MAFF made about that conflict?
I am also surprised that only 4 per cent of farmers are likely to be affected by the regulations. Although I accept that perhaps that may be the case in the whole of the United Kingdom, I feel that the effect by region will be far more substantial, particularly in regions such as the South West, which I know best, that depend for their regional distinctiveness on the sort of wide hedges, the bank hedges of Devon, the beech hedges of Exmoor and the rhynes of the Somerset Levels, all of which will be under threat because of this directive.
I understand that the Minister, Mr Meacher, is considering bringing in some further protection for AONBs. I wonder how that will stack up, because one of the distinctive features of AONBs is often the small

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field pattern and the sorts of features that I have mentioned. Can the Minister say whether there could be a regional approach to the matter if the guidelines are to stay in place? It seems that the western regions of Britain and perhaps Brittany and Normandy will be badly affected by these new rules. Those areas will be affected completely differently from the plains of Poitiers and East Anglia.
This matter is particularly regrettable in the light of the fact that encouraging wide margins and hedgerows in arable areas is essential. The RSPB has highlighted the way in which the loss of those features in cereal growing areas will be detrimental. Also farmers who are mainly dairy producers may be discouraged from growing any arable crops at all. That would have a similar detrimental effect, because mixed farming encourages biodiversity.
I wonder what will be the guidance of MAFF where there is a stream, a hedge and a margin, which is an ideal set-up in terms of biodiversity. What will they advise should go? Will it be the hedge that should go so that compliance can be sought, or should the stream be piped, which will make it is far less useful for wildlife? Can the Minister tell the House how MAFF has explored with Brussels where the policy statement about the environment, the new direction under Agenda 2000 and the CAP will fit into a directive that seems to be so backward looking?
Farmers are absolutely desperate. I asked the NFU in the South West for an estimate of the costs. These varied widely from £52 for a particularly small farm up to around £3,000 for a larger farm. In this House no dissent has been expressed about the fact that farmers are having a difficult time. It seems incredible that the Government cannot seek, as the noble Baroness, Lady Young, suggested, some form of derogation or cannot press Brussels to say that the way in which a field is fully utilised—that is a key phrase—should include the hedgerows for reasons of biodiversity and soil containment. A fully utilised field should not just mean the area where the crops are grown. It should be a forward looking definition. I wonder whether MAFF has taken that into account.
8.38 p.m.
Baroness Byford: I thank the noble Earl, Lord Caithness, for introducing this debate. He covered what is clearly a ridiculous rule and asked many questions of the Minister, and I shall not repeat what he has said.
Like other Members of the House, I too declare an interest, in that my family has a farm in East Anglia, one of the hearts of the arable-growing countryside.
I acknowledge that there has been no change to the rules of IACS payments since 1992. What has changed, and what this debate is about, is the interpretation of those rules. The European Court of Auditors has insisted on strict enforcement of the guidance issued in 1992. Perhaps the Minister will make it clear whether it is guidance or a diktat. As other noble Lords have said, the two-metre rule will be applied from 15th May this year. That states that field boundaries measured
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from the mid-point of a hedge or a ditch to the edge of the growing crop must be no more than two metres in width. If they are wider than that, farmers will lose part of the subsidy that they receive for growing arable crops.
A farmer has choices. First, he can submit the claim for the IACS payment as usual, knowing that in future he may find himself breaking the law. Secondly, he ca n rip out his hedges, knowing that he will be destroying the wildlife that he has sought to protect. Thirdly, he can apply for a grant under the new stewardship scheme, knowing that approval may not be given, or at least not be forthcoming in the required time. Lastly, should he take the time—and face the consequent expense and fees—to reassess his acreage ploughed?
What will happen if he miscalculates the crop? We have all heard horrific stories of farmers who, in the past, have miscalculated their areas and have then found themselves heavily penalised. I repeat, they have been heavily penalised. What prospect is there for them? As I understand it, there is no appeal mechanism. Perhaps the noble Baroness will confirm that point for me.
The length of our farm hedgelands stretches for many miles. Although the noble Baroness, Lady Young of Old Scone, has said that this ruling will affect only 4 per cent of farmers, it will affect many miles of hedgerows. Furthermore, farmers will have to take on this work at a time when so many are struggling even to survive, as my noble friend Lord Monro spelt out so explicitly.
Hedgerows provide crucial and important havens for small mammals, birds, plants, insects and butterflies. Hedges also act as windbreaks. I have already mentioned East Anglia, where my family has a farm. The hedgerows help to slow the rate of soil erosion, which is a very important issue as regards arable land. Is it not incomprehensible, therefore, that this Government, who claim to put the environment high on their list of priorities, are not standing against what they know will cause damage to wildlife and to our countryside? The Government say that they are seeking a compromise with Brussels. However, to date—I hope that the Minister will tell me that I am wrong about this—that is only a recipe for delay.
On 28th April last year we had a full debate introduced by the noble Lord, Lord Hardy of Wath, to call attention to the current arrangements for the protection of hedgerows. In her response, the noble Baroness, Lady Farrington of Ribbleton, made it clear that the Government were committed to providing strong and effective protection for hedgerows. She went on to explain that sums were available for agri-environmental schemes and would be increased by £40 million over the next three years. Is that sum intended to compensate for this new ruling, or is that not the case?
I understand that only last week 16 environmental groups, including farm organisations, co-ordinated by the Wildlife and Countryside Link, wrote to the Minister of Agriculture, Nick Brown, asking him to postpone the decision on implementing this ruling.

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Robert Macklin, the agricultural adviser for the National Trust, which is one of the organisations supporting the letter, wrote:
"Penalising farmers for retaining field boundaries over 2m width just does not make sense. Such features should not only be permitted but should be actively encouraged within the arable subsidy system across the entire European Union".
May 14th is less than two months away. Will the Minister make money available to farmers to prevent them from ripping up their hedges? Will the Minister also arrange a speedy response to those who are applying for assistance under the stewardship scheme? Obviously, those farmers need to know what is going to happen. Will the Minister continue to negotiate with Europe to lessen the impact of this ruling? Finally, will the Minister assure the House that money will be made available now to cope with the likely influx of applications for the Countryside Stewardship schemes, let alone those that will follow the implementation of this ruling?
My noble friend Lord Peel asked directly whether this is a rule, a guidance or a diktat. We hope to hear the answer to that question tonight. Is it not ridiculous that those land managers who spent time and money encouraging their hedgerows to grow and flourish are now to be the ones who will be punished, and are those farmers who, in the past, have grubbed out their hedges—as the noble Lord, Lord Hardy, observed, they received money for doing it—and thus gained larger acreages and benefited from higher yields and larger subsidies on their crops, to be doubly blessed?
Finally, when will this Government stand up for our farmers and use their common sense when dealing with some of the orders emanating from Brussels? They are piling extra regulatory burdens on to our very hard-pressed farmers at a time when they can ill afford it.
8.44 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, I, too, am grateful to the noble Earl, Lord Caithness, for raising an issue which I know is causing great concern in your Lordships' House and, indeed, in another place. I thank him also for giving me the opportunity to respond to some of the strongly felt points that have been made tonight. I hope to set out clearly the history and provenance of the issues that have generated such concern and depth of feeling. No one listening to our debate could be in any doubt about that concern, which of course stems from a desire to safeguard the environment and to ensure that we foster the kind of farming practices that promote the preservation of wildlife and the environment and, in particular, protect and encourage our hedgerows.
I hope that noble Lords will forgive me if I deal with the situation before us by looking back a little and taking noble Lords through the circumstances that led us to the conclusion that it was necessary to introduce clearer guidance on field margins and why we believe that the potential environmental impact—although it is serious and we want to minimise it—has been exaggerated in some parts of the media. I shall also
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explain what we are trying to do to minimise the effect on wildlife habitats, biodiversity and the scenic value of the countryside. Those are all issues that have been raised in our debate.
As the House will be aware, CAP payments to farmers are linked to the Integrated Administration and Control System. IACS is a mechanism for controlling expenditure and preventing fraud. The areas of land and numbers of animals for which farmers can claim subsidies are subject to strict controls. Each year, for each field on which they make a claim, farmers must provide details of the area and the use to which it has been put. According to IACS rules, the total areas recorded on official maps can be used as a basis for the claims on fields that are fully utilised. Where the quality of official maps is not good enough, the actual cropped area must instead be used as the basis for the claim.
Almost everywhere in the EU apart from the UK claims are based on cropped areas only. By contrast, here we are lucky enough to have maps of a very high quality from the Ordnance Survey. Since the CAP schemes were introduced in 1993, we have allowed the great majority of applications to be made on the full area of fields as shown on Ordnance Survey maps. This feature of IACS was hard won at the time—I expect that the noble Lord, Lord Monro, will remember when it was agreed with the Commission—and it has benefited UK farmers. In most cases, it means that they can work out their field areas directly from the maps without having each year to go to the trouble of measuring each field under crops or available for grazing livestock.
However, in recent years there have been indications from the European Commission's audit teams and from the European Court of Auditors of increasing concern about the extent of uncropped areas at the edges of fields. As noble Lords have pointed out, our policy has been to allow full Ordnance Survey areas to be used. But that is not to say that in the past we did not exercise any controls. Our inspectors look at 5 per cent of arable area claims each year and have always been under instructions to deduct ineligible features like ponds as well as margins that were considered to be too wide. Last year, MAFF inspectors carried out on-the-spot checks on 3,400 IACS claims covering 88,000 fields. As a result of those inspections, the ministry was becoming concerned about the width of uncropped margins.
Several noble Lords have asked me whether this is a new ruling, guidance or diktat. I can tell the House that it is not in any way a new ruling, guidance or diktat, in the sense that the guidance from the Commission has specified a limit of 2 metres for field margins since 1994. I believe that the noble Baroness, Lady Byford, accepted that.
The reason why EU auditors have drawn our attention to this only recently is that during the early years of IACS they were primarily concerned that member states should put the main features of the integrated system into place. Only once the comprehensive databases and arrangements to avoid

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paying aid twice on the same field had been taken care of has the auditors' attention turned to the more detailed aspects of member states' implementation of IACS guidance.
It was in the light of increasing concern from the auditors that we took the decision that it was necessary to clarify the position last year and to operate a stricter policy on margins from this year onwards. The reason for doing that is not out of any desire to have an adverse effect on the environment. Had we not acted, two undesirable consequences might have followed. First, the Commission could have been expected before long to start to disallow the total sum under which MAFF pays farmers under the Arable Areas Payments Scheme. In other words, it would have declined to reimburse the Exchequer out of the EU for the percentage of expenditure involved. As an absolute minimum, this would amount to 2 per cent of the total, or about £20 million, and could be much greater.
The second possible consequence was that the European Commission might sooner or later decide to change the regulations so that the farmers' claims could he based only on actual cropped areas, and that would be extremely disadvantageous to our farmers. Those two reasons taken together—the threat of disallowance and the risk of a damaging change in the regulations—led us to conclude that we had no realistic option other than to apply the 2-metre rule where the full Ordnance Survey is claimed.
Of course we recognise the real concern; that is, that the rule will have a damaging effect on the environment and on wildlife, and we certainly wish to avoid that. But as my noble friend Lady Young pointed out, we need to separate out some of the facts from some of the fiction here. Some reports in the media claimed that the rule will result in wholesale destruction of hedgerows and other environmentally valuable field margins throughout the country. We do not believe that is so, because the results of our inspections indicate that only a small proportion of fields will be affected by the application of this guidance.
Last year we inspected 89,000 fields. We issued a warning that margins would not be acceptable this year on fewer than 4,000 of them. Hardly any of those—less than 500—were fields claimed as forage or pasture. That means that the rule will not have any impact on such fields unless the margins are ungrazeable for one reason or another. The remaining 3,500 involve claims for arable area payments accepted on the basis of full OS field areas in 1999 but had margins that were found to be wider than 2 metres. That was less than 4 per cent of the total number of fields inspected.
The noble Baroness, Lady Miller, queried that percentage and asked whether it would be different from region to region. I expect there will be some regional variation and impact. However, if we can get the flexibility we are hoping for in terms of application, we believe that that will be of particular benefit to areas such as the south-west. Perhaps I can come on to what we are trying to do to obtain that flexibility in a moment.
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In cases where we believe that arable payments claims may need to be reduced because of the guidance, we expect that reduction to be small. But we recognise, as my noble friend Lady Young said, that there is a risk that some farmers, in a desire to avoid any reduction in their claims, will cut back their hedges or reduce the width of other types of environmentally valuable field margins, and many more may feel that they have to go out and measure all their margins just in case. That is why we raised this issue—I can assure my noble friend Lord Hardy that we raised it robustly at ministerial level with the Commission on several occasions—and why we are still actively exploring with the Commission whether there is any scope for flexibility in the way in which the rule is applied.
As noble Lords who have spoken pointed out, the Commission shares our concerns about the potential for damage to the environment and wildlife. But it is also concerned that the value of IACS as an effective anti-fraud mechanism should be preserved and that any flexibility that our farmers are given should not be seen as driving some sort of coach and horses through the IACS rules. We must achieve a balance and in so doing—in response to the noble Earl, Lord Peel—we do not want farmers (I understand that what might have been in good years a small amount of money is a significant amount of money in the current state of the industry) to cut back instead on their hedges too severely or plough them right up at the base.
We have advised farmers who face a problem to seek help from regional service centres. In some cases the answer may be to adjust the claimed area. In others, they may be able to enter the land into set-aside or into an agri-environmental scheme. We have sent out detailed briefings on these issues. As the noble Earl is aware, we have significantly extended the amount of help that will be available under the funding for agri-environmental schemes so that we have an opportunity and a mechanism for funding support in order to obviate any effect of the rule which will run counter to environmental objectives.
The noble Earl, Lord Caithness, asked why it would not be possible for a farmer who has a field margin that is slightly above two metres wide simply to deduct the amount that it is above the two metres rather than the whole two metre plus X margin. The simple answer is that EU regulations do not allow for that. They permit only two choices for area measurement: the whole ordnance survey of the field where it is utilised—in other words, where the margins are two metres or less—and the cropped area only where margins are more than two metres. So the option is not available. That is the reason why a margin wider than two metres has to be treated as an ineligible feature like a pond, a copse or a footpath and deducted from the OS area.
My noble friend Lord Hardy asked about important hedges. As he knows, hedgerows are protected by the regulations of 1997. It is not legally permissible for farmers simply to plough them up. Some important hedges are protected. Before any action is taken against hedges overall there has to be an application to the local planning authority. We want to encourage farmers to seek advice about minimising

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the environmental impact of any action that they may need to take in this area. This is a situation which is potentially extremely difficult.
On the issue of retrospectivity about which I was asked, I make clear that unless we have any reason to believe that the field margin in the years before 2000 has been so wide that we would not during that time have expected a claim based on full ordnance survey areas, any deductions and penalties made this year would not be retrospective. In relation to future years, any sanctions applied as a result of the two metre rule will only be made retrospective as far back as 2000 and no further.
The noble Lord, Lord Monro, asked about the extensification premium. Agenda 2000 made significant changes to various CAP schemes. The changes to the extensification payments were part of that and the detailed rules as to how farmers should claim those payments are laid down in EU regulations.
In relation to cross-compliance, I have to say to my noble friend Lady Young that if, as she suggested, there was a condition that wider margins must be maintained, no UK farmer would be able to claim on whole field areas and their arable area claims would be reduced significantly in some cases. That is why we are choosing in the first instance to pursue the other options that she mentioned to seek a flexible interpretation which would not impose significant new costs on farmers.
We are trying very hard in our dealings with the Commission, both at ministerial and at official level, to gain the flexibility that we want. I cannot tell the House what the outcome is or will be. However, I can assure noble Lords who spoke with great feeling on the issue that the Government are working as hard as possible to ensure that our farmers continue to have the option of claiming on the full areas of their fields without being driven to cut back on their natural boundaries.

Financial Services and Markets Bill
9 p.m.
House again in Committee.
Clause 110 [The Code]:
[Amendment No. 215 not moved.]
Clause 110 agreed to.
Clauses 111 and 112 agreed to.
Clause 113 [Power to impose penalties in cases of market abuse]:
Lord Kingslandmoved Amendment No. 215A:
Page 54, line 1, after ("In insert ("the court on the application or).
The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 219A, 220A, 221A and 222A. These amendments really flow from the amendments that we tabled to Clause 109. The Committee will recall that, when I introduced our
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amendments to Clause 109, I said that our approach to that clause through our amendments sought to inject intention into the offence of market abuse, as well as to require the FSA to bring any proceedings for market abuse in the courts, along the lines of practice in the United States.
In pursuit of that policy, Amendment No. 215A seeks to ensure that, if the authority decides to bring market abuse proceedings, it does so on an application to the court. That is followed through in other amendments in this group: Amendment No. 220A seeks to insert the words, "apply to the court"; Amendment No. 221A would require the authority to,
"apply to the court to impose";
and Amendment No. 222A would require the authority to,
"apply to the court to impose a penalty on a person under section 113",
and so on. I beg to move.
Lord Donaldson of Lymington: At the risk of causing indigestion, I shall return to a matter upon which I would have elaborated earlier but for the fact that I realised I would be drummed out for interfering with noble Lords' dinner break. I really do not understand how the Minister can say that the Government have decided to pursue a "civil" regime on the grounds, as far as I can understand it, that we are now talking about lesser offences. The question of whether something is civil or criminal has nothing whatever to do with the enormity of the offence. Indeed, I only have to mention parking fines in that respect. They are a criminal offence, even if the average motorist does not realise it. There are many criminal offences that are of trifling importance; they are regulatory in character, but they are criminal. There is no question of mens rea or anything else arising.
The Government have not imposed on outsiders—that is, unauthorised persons— a duty, for example, in negligence. They have simply said that there is a requirement by society in this respect. That is criminal on any test. At least, I have never heard of any other test that could be applied to make it civil. In a sense, it does not matter and I accept that fact, but I fear that we shall have problems with the Strasbourg Court. I believe that it will say that it is criminal and that, therefore, we must have a criminal standard of proof and a criminal presumption of innocence.
Indeed, I think it will go further. I received a most helpful letter from the Minister suggesting that none of the safeguards that have been built into the Bill in relation to disciplinary activities by the FSA will necessarily apply to the exchanges and clearing houses because, as he says, you do not have to join them. They are, in effect, clubs. That really will not do. I am sure that it will not do for the Strasbourg Court. If I want to deal in cocoa, metal or whatever, I must join such organisations.
We cannot realistically have a situation where, for example, someone who is not an "authorised person" but who acted in conjunction with an "authorised person" who is a member of an exchange is charged

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with an offence of market abuse. In those circumstances, of course, the FSA would call it in because you cannot have two sets of proceedings going on together. But is it seriously suggested that the exchange proceedings are non-criminal and that the non-exchange proceedings are criminal? That just does not make any sense whatever.
One goes on from there to ask what safeguards must be built in for what one might describe as the domestic tribunals. In my book, you have to build in exactly the same safeguards as you build in in relation to the FSA— I say exactly, but mutatis mutandis—you cannot just leave it at that. I have recently sat on a tribunal for a clearing house. I have little doubt that I would be declared to be unacceptable by the Strasbourg Court because I am appointed for only a single case. I understand its point of view but I do not have to agree with it. It would undoubtedly take the view that anyone who is appointed for a single case cannot be independent, particularly if that person is paid, as he may wonder whether he will get the next case. I am bound to say that it is a matter of indifference to me for reasons of age and so forth, but I can well see that that will be said.
I feel strongly that once you go down the criminal route, as you have to do—it is no good the Government saying they are not doing that; they are, whether they like it or not—you then have to build in all the necessary precautions which are part of that. I discussed this matter with the noble and learned Lord, Lord Fraser of Carmyllie. My view was that the FSA had to appoint all these tribunals for the subordinate exchanges because that was the only way to achieve independence, and those have to be fairly long-term appointments. He said that he had talked to the FSA, about this matter and it had thrown up its hands in horror at the prospect. If it was horrified at the prospect on the basis that it would have to be done charge by charge, I can understand that, but long term I think that that must be the case.
I know that I am going outside the scope of the amendments but I think that it is better to get it all off my chest now. The Government must also consider what the attitude of the Human Rights Court—a very peculiar body, as the noble Lord, Lord Kingsland, and I are agreed—will be when someone who is being prosecuted by the FSA can go to the entirely independent tribunal but someone who is being prosecuted by what I call a domestic tribunal cannot. That cannot be right.
Again, I think that serious consideration will have to be given to providing rights of appeal from what I call the domestic tribunals to the tribunal. The only thing that worries me about that is that I think that that might require an amendment to the Bill. Most of the other things can be done by the FSA requiring them to be done as the price of recognition, but I am not sure that what I have just mentioned can be done in relation to giving a right of appeal to the tribunal because it may go to the tribunal's jurisdiction, and it may be necessary to amend the Bill. But no doubt the Minister will give a little thought to that matter,
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although his thought processes will be clogged up by the fact that he is convinced that this is a civil matter, which it is not.
Lord McIntosh of Haringey: I think that it would be better if I respond to the amendment before I approach the wider issues raised by the noble and learned Lord, Lord Donaldson.
The effect of these amendments would be that a penalty for market abuse could he imposed by the court only following an application made by the FSA. That would mean that the FSA would no longer itself be able to impose a fine in uncontested cases. It would also mean that there was no role for the tribunal in a case in which a person wished to contest a decision on the part of the FSA to impose a penalty. In all cases, the FSA would have to apply to the court if a penalty was to be imposed. I can see why this might appear superficially attractive, given that market abuse covers both regulated and unregulated persons. However, I do not think that there would be anything to gain from it.
If a person is willing to concede that his behaviour was abusive and is willing to pay a penalty, it seems unduly burdensome to require the FSA to apply to the court before a penalty can be imposed. If a person wishes to contest a decision to the FSA to impose a penalty on him, then the Bill, as it stands, provides ample safeguards. The tribunal to be established under the Bill is a first instance tribunal, able to look at all the facts and consider all the merits of the case.
The tribunal will ensure that people enjoy their right to a full and fair hearing under Article 6 of the European Convention on Human Rights, with which it will be fully compliant. It will have a broad degree of discretion and the powers to overturn or correct the FSA's decisions as necessary. It will be entirely independent of the FSA. Indeed, it will be run as part of the Court Service and its members appointed by the Lord Chancellor.
There is, therefore, no reason of principle or convenience to insist that a penalty can be imposed only through the medium of the courts following an application to them by the FSA. Indeed, there are positive advantages to the approach which the Bill adopts in contested cases because the tribunal will be concerned only with financial services cases. The noble and learned Lord, Lord Donaldson, may not wish to be reminded of the industrial relations court, but of course one of its benefits—
Lord Donaldson of Lymington: I thoroughly enjoyed it!
Lord McIntosh of Haringey: I am sure that the noble and learned Lord did. One of the reasons was that it was a specialist tribunal dealing with industrial relations. The noble and learned Lord and his colleagues were dedicated to it for a very considerable period of time. That is exactly the position with the financial services tribunal. The Lord Chancellor wi11 be able to appoint people with appropriate knowledge and experience and by dint of hearing cases referred to

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it, the tribunal will, like the industrial relations court, build up a considerable body of expertise in financial services. The tribunal, being concerned solely with referrals from the FSA, will also provide a quick and relatively inexpensive route for cases to be heard.
The fact that market abuse cases can be very serious does not mean that the tribunal is not the appropriate body. It will also hear referrals of FSA decisions to de-authorise firms or to prohibit individuals from being employed in the industry. These are big and equally important decisions.
I do not know whether I can go back to the debate about the civil or criminal regimes. It is very good that the noble and learned Lord has had the opportunity to set his views on the record. I know from what he said earlier that he agrees with the noble and learned Lord, Lord Hobhouse, but it has to be said that many people do not. The Joint Committee took the view that it was proper for the market abuse regime to be set up as a civil regime to complement the criminal law. I know that the noble and learned Lord and the noble Lord, Lord Kingsland, do not agree, but it is the Government's view. They have done so on proper, professional legal advice.
9.15 p.m.
Lord Donaldson of Lymington: I make it clear that I do not agree with the noble Lord, Lord Kingsland. Despite the fact that I believe this matter falls under criminal law, it does not follow that one ought to refer it to the courts. In my view it is a criminal tribunal.
Lord McIntosh of Haringey: I am grateful for that support, but I suspect that it is limited to these amendments and that the noble and learned Lord's disagreement with the Government is much more widely based than that. This is a non-criminal regime for domestic purposes. We could have extended the existing criminal offences so that they applied to a wider range of behaviour. However, we did not believe that that was proportionate or that it was right to create new criminal offences. That is the fundamental issue of social policy with which we have been concerned.
We have built in safeguards to the market abuse regime appropriate to an ECHR criminal regime. That is not because we were convinced that it will be classed as a criminal regime by the European Court, but out of caution that it might be. In our view and that of our legal advisers, the market abuse penalty regime is fully compatible with the ECHR. I hope that the noble Lord will not pursue these amendments.
Lord Kingsland: I have sought to provide the Minister with an American alternative. It seemed to me perfectly reasonable to do so because the United States has experience in this area which stretches back to the early 1930s. Nobody can deny that the United States has an extremely successful securities industry.
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However, and not entirely to my surprise, the Minister has rejected my views. I shall reflect on that rejection in the context of the other remarks he made about the offence of market abuse in general. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringeymoved Amendment No. 216:
Page 54, line 2, at end insert ("("A")").
The noble Lord said: In moving this amendment I speak also to Amendment No. 217. Clause 113 allows the FSA to impose a penalty if someone has engaged in market abuse. I believe that I can speak reasonably fast now that the noble Lord, Lord Peyton, is not here. My articulation is so marvellous that everyone can understand me. The clause also allows the FSA to impose a penalty if someone has encouraged or required another person to engage in market abuse either by taking, or refraining from taking any action. While it is in the end behaviour which actually damages the market in a particular instance, it is right that we should seek to deter people from using other means to abuse a market. That is part and parcel of protecting it.
However, there is a loophole in the clause at present. Let us suppose that person A, an investment adviser, encourages a number of clients to buy or sell particular investments. In doing what A has advised them to do, it is unlikely that any of the clients concerned would be regarded as engaging in behaviour which fell short of the standards reasonably expected of them.
After all, each was simply acting on the advice of a person whose business it is to offer such advice. As a result, it may be that the reasonable user of the market would not consider that any of A's clients had engaged in market abuse. None may have failed to observe expected standards in this case.
However, the overall impact on the market of all the transactions effected by A's clients may be to produce a misleading impression as to the market in the investments concerned, and this may have been A's objective as he may have had a holding in the investments concerned which he wished to dispose of at an advantageous price. Perish the thought. If he had effected himself the transactions which he advised his clients to effect, he would almost certainly have engaged in abuse. The amendment to this clause simply closes this loophole by providing that a penalty can be imposed if the behaviour would have been abuse if person A had engaged in it himself. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendments Nos. 217 and 218:
Page 54, line 5, leave out ("market abuse") and insert ("behaviour which, if engaged in by A, would amount to market abuse").

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Page 54, line 6, at end insert—
("( ) But the Authority may not impose a penalty on a person if, having considered any representations made to it in response to a warning notice, there are reasonable grounds for it to be satisfied that—

(a) he believed, on reasonable grounds, that his behaviour did not amount to market abuse; or

(b) he took all reasonable precautions and exercised all due diligence to avoid engaging in market abuse.").

The noble Lord said: I spoke to Amendments Nos. 217 and 218 in the debate on Amendment No. 208A. I beg to move.
On Question, amendments agreed to.
Lord McIntosh of Haringeymoved Amendment No. 219:
Page 54. line 6, at end insert—
("( )lithe Authority is entitled to impose a penalty on a person under this section it may, instead of imposing a penalty on him, publish a statement to the effect that he has engaged in market abuse.").
The noble Lord said: In moving Amendment No. 219, I shall speak also to Amendments Nos. 221, 222, 223 and 235.
Clause 113 allows the FSA to impose a penalty if someone has engaged in market abuse or required or encouraged another person to do so. If the FSA imposes a penalty, either following a reference to the tribunal or in the absence of one, under the provisions of Clause 376(5) it must publish such information about the matter in such a way as it considers appropriate.
However, what the FSA cannot currently do under Clause 113 as it stands is to make a public statement about someone as an alternative to imposing a penalty. This is an option which is open to the FSA under Clause 65(3) of Part V of the Bill on approved persons and under Clause 198 in the general disciplinary regime in Part XLV of the Bill. On reflection, we think that this is a useful alternative power to introduce into Part VIII as well. Amendment No. 219 therefore allows the FSA to make a statement in situations where it could impose a penalty but does not wish to do so.
Let me make i t clear that this does not mean that it can only make a statement where it would be appropriate to impose a penalty, but rather where it has the power to impose a penalty. It may be that in some cases a financial penalty is a disproportionate response given the circumstances surrounding particular abusive behaviour but that some sanction is nevertheless warranted. The new power will allow the FSA to make a statement as an alternative to imposing a penalty.
Amendments Nos. 221, 222 and 223 make consequential changes to reflect the fact that a penalty will not be the only option open to the FSA when someone has engaged in market abuse.
The amendment to Clause 165 made by Amendment No. 235 treats statements in the same way as penalties as regards the prohibition on the use of statements obtained under compulsory powers in proceedings.
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Clause 165, which we shall debate later, provides that statements obtained under such powers cannot be used in proceedings to impose a market abuse penalty against the person who gave it—and noble Lords with a memory of the Guinness case will realise why this is necessary. This is a consequence of the Government's decision to apply, as a precautionary measure, the ECHR criminal protections to the market abuse penalty regime.
Having considered the issue carefully, the Government are of the view that for the same reasons it would be appropriate to treat proceedings to make public statements—which, after all, could be quite embarrassing for those about whom the statements are being made—in the same way. Public statements and monetary penalties are both sanctions and, given the nature of the market abuse regime, it is not appropriate to differentiate between them for the purposes of the ECHR protections.
Legal assistance will therefore also be available, where appropriate, for proceedings to make a public statement in the same way as for proceedings to impose a monetary penalty for market abuse. Thai is the effect of Amendment No. 223, since under Clause 125 legal assistance is available to those who meet any prescribed criteria if he is an individual who has referred a matter to the tribunal under Clause 117(4). I beg to move.
On Question, amendment agreed to.
Clause 113, as amended, agreed to.
Clause 114 [Statement of policy]:
[Amendment No. 219A not moved.]
Lord McIntosh of Haringeymoved Amendment No. 220:
Page 54, line 19, at end insert—
("( ) A statement issued under this section must include an indication of the circumstances in which the Authority is to be expected to regard a person as—

(a) having a reasonable belief that his behaviour did not amount to market abuse: or

(b) having taken reasonable precautions and exercised clue diligence to avoid engaging in market abuse.").

The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 114, as amended, agreed to.
Clause 115 agreed to.
Clause 116 [Warning notices]:
[Amendment No. 220A not moved.]
Lord McIntosh of Haringeymoved Amendment No. 221:
Page 55, line 13, leave out ("impose a penalty on") and insert ("take action against").
The noble Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 221A not moved.]
Clause 116, as amended, agreed to.
Clause 117 [Decision notices and right to refer to Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 222:
Page 55, line 20. leave out ("impose a penalty on") and insert ("take action against").
On Question, amendment agreed to.
[Amendment No. 222A not moved.]
Lord McIntosh of Haringeymoved Amendment No. 223:
Page 55, line 27, leave out ("impose a penalty on") and insert ("take action against").
On Question, amendment agreed to.
Clause 117, as amended, agreed to.
Clauses 118 to 120 agreed to.
Clause 121 [Guidance]:
Lord McIntosh of Haringeymoved Amendment No. 224:
Page 56, leave out lines 37 and 38.
The noble Lord said: This clause provides a power for Treasury Ministers, together with the Attorney-General and the Secretary of State, to produce guidance for the purpose of helping the relevant authorities—that is, the FSA and the various prosecuting authorities—to determine the action to be taken in cases where behaviour occurs which could potentially be either prosecuted as a criminal offence, or dealt with under the market abuse provisions. Perhaps I may ask the noble and learned Lord, Lord Donaldson, whether we had better start to call these "either way" offences. Insider dealing might be an example of this, since it is a criminal offence under Section 52 of the Criminal Justice Act 1993 and will come within the test in Clause 109(2)(a).
We have made it clear all along that where behaviour comes within the criminal offences, it is the firm intention of Ministers that, provided the evidential test and public interest tests for a prosecution are met, then criminal prosecutions should be taken.
The FSA is currently working with the Serious Fraud Office, the Attorney-General's Office, the DTI, the Crown Prosecution Service, the Association of Chief Police Officers and the Scottish Executive to agree guidelines on the handling of cases in which one or more of these other agencies may have an interest. The Treasury is represented on these groups. Once these guidelines have been finalised, it is envisaged that they will be published.
I also emphasise that this is very much a reserve power. We do not envisage formal guidance being given as a matter of course for any part of the UK when the Bill comes into force. Only if the agencies concerned could not agree among themselves how to handle particular cases would we expect guidance to be given. But I stress that we have no reason to believe that such a situation is likely to arise.
In England, Wales and Northern Ireland there are a number of different prosecuting authorities with powers over the offences specified in Clause 121,
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including the Secretary of State, the Serious Fraud Office, the Director of Public Prosecutions and the FSA itself. It is therefore appropriate that the Treasury should take on the responsibility for giving guidance in consultation with the Secretary of State and with the Attorney-General, who has ministerial responsibility for the DPP and the SFO.
In Scotland, however, the position is somewhat different. The Lord Advocate is the sole prosecuting authority in Scotland for all criminal offences. Given that, and given his position as head of the Scottish criminal prosecution system, it would be inappropriate for him to be subject to guidance issued by the Treasury. These two amendments therefore provide that in Scotland it is for the Lord Advocate to issue any necessary guidance to the authority after consultation with the Treasury.
Finally, since these amendments deal with the responsibilities of the Lord Advocate, who is a Minister of the Scottish Executive, we have, of course, discussed them in advance with the Executive and they have confirmed that they are content with the proposed approach. I beg to move.
On Question, amendment agreed to.
Lord McIntosh of Haringeymoved Amendment No. 225:
Page 56, line 41, at end insert—
("( ) Subsections (1) to (3) do not apply to Scotland.
( ) In relation to Scotland, the Lord Advocate may from time to time, after consultation with the Treasury, issue written guidance for the purpose of helping the Authority to determine the action to be taken in cases where behaviour mentioned in subsection (1) occurs.").
On Question, amendment agreed to.
Clause 121, as amended, agreed to.
Clauses 122 and 123 agreed to.
Schedule 12 [The Financial Services and Markets Tribunal]:
Lord McIntosh of Haringeymoved Amendment No. 226:
Page 254. line 7. leave out sub-paragraph (6).
On Question, amendment agreed to.
Schedule 12, as amended, agreed to.
Clause 124 [Proceedings: general provision]:
Lord Kingslandmoved Amendment No. 226A:
Page 57, line 30. at beginning insert ("The Authority shall not take any action pursuant to a decision notice during the period referred to in subsection (1) and").
The noble Lord said: The Committee will be aware that Clause 124(5) provides that a decision which is referred to the tribunal is not to have effect until the reference has been disposed of. I am concerned about what happens in the period before the decision is referred, which may be as long as 28 days. It is important that the authority does not jump the gun (if I may use that colloquial expression) and put a decision into effect while the defendant is still thinking about whether or not to refer the decision to the tribunal.

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As I understand it, the Treasury agreed at Committee stage in another place that it intended Clause 124(5) also to cover that earlier period, in the same way that Clause 376(6) excludes the ability to publicise any information while the decision is open to review. This amendment achieves the same result. I beg to move.
Lord McIntosh of Haringey: The Government entirely understand the concerns expressed by the noble Lord. This point was debated in some depth in another place, as the noble Lord recognised. As Ministers made clear, it is not our intention that the FSA should be able to demand the payment of penalties during the period when the person concerned has a right to refer the matter to the tribunal.
I had hoped that today we would table amendments relating to the decision-making procedures in the Bill generally. There will be an opportunity to debate those next week. Among those amendments is one which addresses exactly this concern. We propose a new clause after Clause 376 in Part XXVI which creates the concept of a "final notice". It will be that notice which gives effect to any decision; for example, by requiring the payment of a financial penalty. The FSA will not be able to issue a final notice during the period following the issue of the decision notice in which the person concerned has a right to refer the matter to the tribunal. We shall return to Clause 124 on Report to make that clear here as well.
If the matter referred, the final notice must give effect to the determination made by the tribunal or, if the decision is appealed, to the judgment of the higher courts. There will be no question of the FSA being able to require a penalty to be paid or to make a public statement in the period allowed for the decision to be referred to the tribunal or appealed to the higher courts. However, I should make it clear that some decisions will be capable of taking effect ahead of any reference to the tribunal. The amendments that we shall table draw a distinction between those decisions to which the full warning and decision notice procedure should apply and those where provision must be made for more urgent action to be taken. I made the distinction between disciplinary and supervisory action.
All decisions which are essentially disciplinary in nature—to impose financial penalties or to make public statements of censure—will be covered by warning and decision notice procedures, and the decisions will not take effect until all the procedures have been completed. The same will apply to decisions which permanently exclude persons from carrying on various activities or fulfilling particular roles: cancellation of permission, authorisation, approval or recognition under Parts IV, V, XVII or XVIII, and the making of prohibition orders under Part V. But where the powers are essentially supervisory rather than disciplinary in nature, the need to avert some potential harm to the interests of consumers may make it necessary for the decision to take effect on a faster time-scale. This principle has been widely endorsed in discussions in another place.
260
In due course we shall also amend Schedule 12 to make it clear that the tribunal procedure rules to be made by the Lord Chancellor under Clause 123 may make provision to give the tribunal discretion to suspend any decision which has taken effect before it has considered the matter. In light of those assurances, I hope that the noble Lord will agree to withdraw his amendment.
Lord Jenkin of Roding: I intervene today for the first time because I had other commitments in the House earlier today. I do not want to comment on the substance of what the Minister has just told the Committee, but I really do feel that the House must make a protest about the way in which it is being asked to legislate. Steady progress has been made on the Bill by my noble friends and by other noble Lords, but at the same time one is given the impression that the Government are having to run very hard indeed to keep up with the progress in the Committee.
I am reminded of nothing so much as those western films. There is the train, steaming steadily along the railway track and there are the Government, driving their coach and four, desperately trying to keep up, whizzing across a level crossing. The train goes steadily on. Sometimes the Government get behind and amendments cannot be tabled until the next stage of the Bill or until next week. It is a hell of a way to legislate.
The Minister, who has already apologised for the number of amendments, owes the Committee an apology for the way in which they have been tabled. My noble friends on the Front Bench should not be asked to deal with the matter in this way. If the previous government had done that, and the noble Lord, Lord McIntosh, was sitting on this side of the Committee, I have no doubt whatever that he would have been every bit as critical as I have been, but with a great deal more eloquence. I think it is shocking.
Lord McIntosh of Haringey: The noble Lord, Lord Jenkin, was good enough to say that he was not going to attack the substance of the amendments. Indeed, he had better not, because the supervisory and regulatory principles were debated in his absence at considerable length this afternoon. As far as concerns his point about the amendments to the Bill, I have already "grovelled" to the Committee about the way in which to some extent amendments are being introduced late in the process of the Bill. But on this occasion I am certainly not going to grovel. We are responding to pressure from the Opposition. We respond to pressure when pressure comes. If that pressure comes at this stage, we have to respond as best we can at this stage or at a later stage. I am not going to apologise for that.
Lord Jenkin of Roding: The noble Lord really cannot get away with that. He said himself that he had hoped that the amendment to meet my noble friend's point would have been tabled today. Yet it has not been, and somehow it will have to be tabled so that it can be reached next week. The noble Lord will then have to come back to the clause on Report to table the

261
amendment. That is something for which the noble Lord should apologise. It is no way to legislate. I shall be astonished if the Bill emerges from this procedure without need for substantial further amendment very quickly thereafter.
Lord Kingsland: In relation to the substance of the matter, I am experiencing an emotion of cautious optimism in response to what the Minister said. However, in articulating his reasons for a positive approach, the noble Lord raised again the distinction between supervisory and disciplinary, a distinction which he himself said earlier in the day, I think very openly, had not yet featured in statutory form. His answer underlines the general point made by my noble friend Lord Jenkin that there are still important parts of the Bill with which we cannot grapple until the underlying principles have been finally formulated by the Government. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 124 agreed to.
Clause 125 [Legal assistance scheme]:
Lord Kingslandmoved Amendment No. 226B:
Page 58, line 6, leave out ("under section 117(4)").
The noble Lord said: Amendments Nos. 226B and 235A are plainly consequential on the line of amendments to which I spoke earlier, beginning with Amendment No. 215A. In that context, I beg to move.
9.45 p.m.
Lord McIntosh of Haringey: I cannot be quite as terse as the noble Lord. Perhaps the word is "telegraphic".
Clause 125 gives the Lord Chancellor the power to establish a subsidised legal assistance scheme by regulations. This is a free-standing scheme for legal assistance and not an extension to legal aid.
The effect of opposition Amendment No. 226B would be to widen the coverage of the scheme. It is not the Government's intention to make legal assistance available for tribunal cases across the board. Legal assistance is not generally available in tribunal proceedings which are intended to be speedier and less formal than court proceedings.
As I said, the additional protections that have been put in the Bill in relation to market abuse were included as a precautionary measure because of concern expressed about the possibility that the market regime might be judged to be "criminal" for ECHR purposes. What is criminal for ECHR purposes is not, as noble Lords will know, the same as what is criminal for domestic purposes.
The reasons for deciding to import the ECHR criminal protections into market abuse penalty proceedings were set out in some detail by the former Economic Secretary, Patricia Hewitt, and the Government's legal advisers, Sir Sydney Kentridge QC, and James Eadie, in evidence to the Joint Committee.
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However, there is no question that the disciplinary regime might be considered as criminal. I note that the noble and learned Lord, Lord Donaldson, is listening to this. It is concerned with policing the standards of the regulated community and in that respect is analogous to the regulation of professions. The ECHR jurisprudence is clear that such regimes are civil, not criminal. There is, therefore, no need to extend the scheme further. Since authorised persons are to pay for the legal assistance under the scheme, they are entitled to be sure that we should keep the scheme within proper bounds. I hope that the noble Lord will withdraw the amendment.
I do not know whether the noble Lord would like me to speak to Amendment No. 235A. I do not recall him speaking to it in introducing the amendment.
Opposition Amendment No. 235A seeks to extend so-called "Saunders-proofing" to procedures involving disciplinary measures under Part XIV as well as penalties for market abuse. Again, the amendment is unnecessary as a matter of law, as we stated in our evidence to the Joint Committee. It is also undesirable as a matter of policy.
It would place an unhelpful constraint on the FSA's ability to deal with misconduct by regulated persons. Criminal offences or market abuse may be committed by a wide range of people, but civil penalties under Clause 199 apply only to authorised persons. Authorisation is not just a privilege which allows a person to do financial services business; it also involves obligations. One of the most important of those is the obligation to be frank with the FSA about how the authorised person's business has been conducted, including cases where there has been misconduct.
It would be quite mistaken to allow authorised persons who have committed serious misconduct that would justify a financial penalty to escape the consequences just because the evidence took the form of a statement they had made to investigators.
On that basis, I hope that the noble Lord will withdraw the amendment.
Lord Donaldson of Lymington: Is it possible to refer a matter to the tribunal other than under Clause 117(4)?
Lord McIntosh of Haringey: I think that with anyone who is subject to a penalty or falls to make a statement, the matter can be referred to a tribunal.
Lord Donaldson of Lymington: That is not under Clause 117(4).
Lord McIntosh of Haringey: Basically it is. If there are other places in which a reference can be made, I shall write to the noble and learned Lord.
Lord Donaldson of Lymington: It seemed a somewhat futile amendment if one could not do it any other way.
Lord Kingsland: On Amendment No. 226B, we shall return to the matter at Report stage.

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As I said at an earlier stage of today's proceedings, in my submission Article 6.1 of the European convention applies to all proceedings, whether civil or criminal. To limit the effect of that article to criminal proceedings is incorrect. Nevertheless, in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 125 agreed to.
Clause 126 agreed to.
Clause 127 [Funding of the legal assistance scheme]:
Lord Kingslandmoved Amendment No. 226C:
Page 59, line 10. leave out paragraphs (b) and (c).
The noble Lord said: Clause 127 covers the funding of the legal assistance scheme which is brought in for individuals accused of market abuse. I believe that it is wrong to provide that only authorised persons have to fund the scheme because, typically, it will not be authorised persons who commit the offence.
However, assuming that the Government stay firm on that, the most important change is to prevent the FSA being able to use surplus levies from fines owed to the authority by authorised persons merely for an ordinary breach of the rules. The money should be returned to the individuals who paid it in the first place.
I believe that the legal assistance scheme should also apply to disciplinary proceedings. It seems clear that disciplinary proceedings are covered by Article 6.1 of the convention and the convention requires the hearing to be public and fair. That also ought to be covered in the case of a tribunal, even though Article 6.3 expressly spells out the obligation to provide legal assistance in the case of criminal offences only. I beg to move.
Lord McIntosh of Haringey: The effect of Amendment No. 226C would reduce the flexibility on how the funding is accumulated and distributed. The legal assistance scheme will be paid for by levies raised by the FSA from authorised persons. The Lord Chancellor will determine the costs of the scheme and set the total which the FSA is required to raise in levies from authorised persons during a particular period, which will normally be a financial year. The FSA will decide on how to distribute that amount among authorised persons.
It will not he possible to forecast precisely the amount required for legal assistance in any forthcoming period, so subsection (1) provides for
264
levies to cover anticipated or actual costs. That enables the levy to be set to cover both anticipated costs in the period ahead and any amount by which the actual costs in the preceding period had exceeded the anticipated costs for that period.
The forecast of anticipated costs could be an overestimate, so subsection (7) is necessary to allow the FSA to distribute the money among persons who originally paid it. Specifically, paragraph (a) allows it to repay the money directly to those who paid the levy, while paragraph (b) allows it instead to reduce the amounts which those persons are required to pay. Paragraph (c) allows it to use a combination of those methods.
The amendment would remove that valuable flexibility. It is intended to ensure that, for example, the FSA does not have to send out separate invoices for small amounts which it can more sensibly and economically offset against the following year's fees or levy for invoicing purposes. Removing options (b) and (c) could lead to costs being incurred sending out cheques for derisory amounts.
Of course, the FSA will need to exercise its discretion in a way that is fair and reasonable and it will still have to be able to account separately for levies raised for different years and between levies and fees. I can confirm that disciplinary proceedings are covered by Article 6.1, but disciplinary proceedings are not criminal for ECHR purposes. Legal assistance is expressly required only for proceedings which are criminal for ECHR purposes.
I hope that on the basis of that explanation the noble Lord will not press the amendment.
Lord Kingsland: I shall not press the amendment tonight, but at the Report stage I shall certainly return to the issues which underlie it. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 127 agreed to.
Clause 128 agreed to.
Lord Bach: I beg to move that the House be now resumed.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at five minutes before ten o'clock.

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