Sitting of 25 June 2001

Preamble
The House met at half-past Two o'clock
PRAYERS

  MR. SPEAKER'S ABSENCE
  The House being met, the Clerk at the Table informed the House of the absence of MR. SPEAKER from this day's sitting, pursuant to leave given on 21 June.
  Whereupon, SIR ALAN HASELHURST, THE CHAIRMAN OF WAYS AND MEANS, proceeded to the Table, and after Prayers, took the Chair as DEPUTY SPEAKER, pursuant to the Standing Order.

  Member Sworn
  The following Member made the Affirmation required by law:
  John William Patrick Smith, for Vale of Glamorgan.

Oral Answers to Questions

  WORK AND PENSIONS
  The Secretary of State was asked—
  Mr. Deputy Speaker (Sir Alan Haselhurst): Before I call the first hon. Member, may I remind the House of Mr. Speaker's recommendation that he expects questions and answers to be short and concise'' We can thus proceed more briskly through Question Time, to the advantage of all hon. Members. I would appreciate hon. Members' co-operation; let us start as we perhaps mean to go on through the Parliament.

  Social Fund
  Gareth Thomas: What plans he has to reform the social fund. [440]
  The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): Since 1997, we have increased the gross discretionary social fund budget by 30 per cent. In 1999, we introduced reforms to make the budgeting loan scheme simpler and faster. Consequently, 82,000 more people got a budgeting loan than in the previous year.
  Gareth Thomas: I congratulate my hon. Friend on his appointment to a new and important Department. In view of the heatwave, today may not be the appropriate day to ask this, but will he reconsider the case for extending winter fuel payments to the disabled? Will he re-examine the claim by the predecessor Department that existing
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  benefits adequately reflect fuel poverty among disabled pensioners, since that is a contention that is disputed by many of my disabled constituents?
  Malcolm Wicks: I am sorry to disappoint my hon. Friend, but we have no plans to extend winter fuel allowances to disabled people. However, I hasten to assure him that as the popular and effective winter fuel allowances go to everyone over the age of 60, the majority of people with disabilities are covered. Fuel allowances go to those over 60 because research shows that older people are physiologically most at risk.
  Disability benefits, including the disability premium and the disability living allowance, provide extra resources for those with disabilities to meet costs which could include heating.
  Mr. Steve Webb: May I add my welcome to the Under-Secretary, who is knowledgeable about social security matters and will be a great asset to the team?
  I want to take up the theme of winter fuel payments. Today, in lovely weather, the Department issued a press release encouraging people to claim next winter's fuel payments. That is welcome, but does the Under-Secretary accept that there was a big problem with take-up last winter? How many people who were entitled to payments missed out as a result of the imposition of a deadline of 31 March for claims for last winter? How much money did the Government save by imposing that deadline?
  Malcolm Wicks: In fact, take-up of winter fuel allowance is very good, but we are not complacent and we will always do more to encourage take-up. I understand that since we do not have names on records for men aged 60 to 65, there may be a particular issue and those people therefore do have to claim. As with all social security rights, we urge everyone to claim what is justly theirs.

  Long-term Unemployment
  Derek Twigg: If he will make a statement on assistance for the long-term unemployed. [442]
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): In the previous Parliament, the new deals and other measures saw growing numbers of people move off benefit and into work. Through the new agency Jobcentre Plus, we shall continue that work in this Parliament. The new agency will provide a new, work-focused service for all benefit recipients of working age, enabling those who can work to do so.
  Derek Twigg: I thank my right hon. Friend for that answer. One of my concerns relates to the ability of people with learning difficulties and those who are suffering from or recovering from mental illness to get into the jobs market when they want to work. As my right hon. Friend knows, work is an important route to social inclusion and we are committed to full employment. Does he agree that there is more scope to improve and build on our support and employment schemes?
  Mr. Darling: I certainly agree with my hon. Friend. There are a large number of people of working age in this

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  country who could work given the appropriate help. My hon. Friend may be aware of the workstep programme, which Ministers announced before the last election. It allocated some £37 million extra, which will provide 20,000 places for people who have special difficulties. We expect some 5,000 disabled people to be helped into work through that route. However, my hon. Friend is right: the Government are determined to do far more to ensure that those who are not unemployed as such but who are of working age and could work get into the labour market as soon as possible.
  Mr. Eric Pickles: I congratulate the right hon. Gentleman on his new title and new responsibilities and wish him every success—within the confines of wishing a political opponent well. I want to start by asking him a very simple question: is it now Government policy to encourage the long-term unemployed on to incapacity benefit?
  Mr. Darling: As this is the first Question Time of the Session, may I thank the hon. Gentleman for his good wishes and wish him well no matter who the new leader of the Conservative party may be?
  So far as incapacity benefit claimants are concerned, the hon. Gentleman seems to be confusing our policy with that of the previous Conservative Government, which was quite cynically to shift people off unemployment benefit and on to incapacity benefit. That is one of the reasons why so many people—especially older people—are on incapacity benefit. It is the Government's policy, through Jobcentre Plus, to ensure that everyone of working age who could work is helped to get back into work. Indeed, the Queen's Speech announced a welfare reform Bill that will include measures to ensure that more and more people are invited in for interview, so that they can see what options and choices there are to enable them to get back into work. I also attach considerable importance to stopping the trend that developed in the 1980s and early 1990s whereby people who could work and who should have been helped back into work were quite cynically put on to incapacity benefit.
  Mr. Pickles: The right hon. Gentleman cannot have been looking at the figures, because there has been a growth in the number of people on incapacity benefit; in the past 18 months that figure has jumped by 65,000. Coincidentally, the figure is at exactly the same level as it was when the Government wrote, in "New ambitions for our country: a new contract for welfare", that incapacity benefit
  "has proved a simple, but costly escape route for government to keep the unemployment numbers down".
  The numbers are now at exactly the same level as when that document was written. That leaves us to draw three possible conclusions: the nation has become iller under the Labour Government; there has been a policy drift by neglect; or there has been a policy change by stealth. Those figures were considered completely unacceptable in March 1998. Why are identical figures quite acceptable, according to the Secretary of State, today?
  Mr. Darling: There is a fourth explanation, and it is the right one. It is that, because more people are living longer and more women are eligible for incapacity benefit than in the past, there has been a 0.3 per cent, increase in
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  the long-term rate of incapacity benefit claims. It is nothing catastrophic but the hon. Gentleman is none the less right to draw attention to the fact that all Governments ought to be in the business of making sure that people of working age who can work do so.
  One of the reasons why we have introduced the Jobcentre Plus regime, which will ensure everybody of working age has to come in for interview, is that we believe that there are people on incapacity benefit who could work and who could be helped to get back into work. In the past, those people got no help whatever. They simply got a benefit cheque and were told to get on with it. Under the new system, that will not be possible, and we will ensure that everyone who can get into work is given the right help to do so. It cannot be right, as the hon. Gentleman says—I agree with him on this point—that a country such as ours has large numbers of people on incapacity benefit and other non-jobseeker's allowance benefits who could be in work if they were given the right support. That is why we have introduced Jobcentre Plus, the new deals and other measures.
  Mr. Kevin Hughes: For 18 years, that lot on the Opposition Benches ripped the heart out of mining communities in my constituency and threw thousands of people out of work, many of whom are still long-term unemployed. Under this Government, unemployment has fallen by 40 per cent, under the new deal. That is an absolutely fabulous start, but there are still pockets in which there is a huge amount of long-term unemployment. Will the Secretary of State tell us what plans he has to help those long-term unemployed people back into work?
  Mr. Darling: My hon. Friend is right and, representing part of the south Yorkshire coalfield, he knows that many people who lost their jobs in the 1980s went quickly on to incapacity benefit and were simply left there with no help whatever. As I told the House a few moments ago, the Government intend to introduce a new agency—Jobcentre Plus—that will bring together the Employment Service and the Benefits Agency. Its first 50 offices will open this October. People living in those areas will have to come in for a work-focused interview to see what help is available to channel them back into work as quickly as possible. In the following 18 months to two years, all the offices will be converted, and a much tougher regime will be there to help people.
  We cannot allow the situation to continue in which many people who could work are simply written off—or allow themselves to be written off—for want of help. That new regime will be introduced and, together with other measures targeted at helping people get back into work, will in time steadily reduce the number of dependent people who could be independent and looking after themselves and their families.
  Mr. Archy Kirkwood: The Secretary of Slate is right to promote an active welfare policy that engenders a culture of work, but does he not accept that, if that is pushed too far, he could stigmatise those who are not able to get into the labour market? In particular, is he as concerned as I am about recent figures that show that, leaving aside students and

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  those on training programmes, some 2.3 million men of working age are economically inactive? What is Government policy to deal with them?
  Mr. Darling: On the hon. Gentleman's first point, I do not believe that the policy is stigmatising people who cannot work—far from it. He knows that, in the last Parliament, we increased the benefits payable to many people who could not work and had no chance of working. Just as the Government should step up their efforts to ensure that all those who can work do so, we should do more for people who are not able to work. However, I agree that we must also redouble our efforts and increase the help available to those economically inactive people of working age who have been out of work.
  That is what Jobcentre Plus and the increased conditionality in the benefit system will achieve, because many people who want to work do not know what help is available to them. Lone parents are a classic example. People said that it was not possible to get more lone parents into work, but we are well on the way to achieving that. We have increased the level of lone parents in work from about 50 per cent, to 70 per cent., which is more akin to levels in comparable countries.

  State Pension
  Mr. David Amess: What recent representations he has received on the level of the state retirement pension. [443]
  The Minister for Pensions (Mr. Ian McCartney): We are providing significant extra help for all pensioners, including a £200 winter fuel payment and a minimum income guarantee of more than £92 a week for single pensioners and £140 a week for couples. This year, we have increased the basic state pension by £5 a week for single people and £8 a week for couples. From April 2002, there will be further increases of £3 a week for single people and £4.80 for couples. In total, we are spending £4.4 billion more on pensioners in 2001–02 alone as a result of the changes that we have introduced. That is nearly £3 billion more than if we had restored the earnings link.
  Mr. Amess: I welcome the Minister to his new role. Does he recall the Labour leader saying during the general election campaign that one of his biggest regrets was the insulting 75p increase that he gave to our pensioners? Why have the Government still got it in for our pensioners? Will the Minister comment on the official House of Commons Library figures that tell us that there are 500,000 more senior citizens living in poverty since this rotten Government came to power in 1997?
  Mr. McCartney: The hon. Gentleman's shouting does not improve the quality of his response to my answer. The truth is that he has some brass neck. The Tory Government doubled means testing and left us a legacy not just of people in poverty, but of a generation of older people in poverty. This Government have tackled poverty in old age. This Government have put in extra spending of £2 billion on the poorest third of pensioners, which is five times more than the earnings link would ever have given them. This Government have introduced the winter
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  fuel payment, free TV licences and the minimum income guarantee, all of which Conservative Members opposed and still oppose. That is why a lot of them were pensioned off at the election and we were put back into power.
  Mr. Bill O'Brien: I welcome my right hon. Friend to his new post. Will he take note of the response that I have received from pensioners who welcome the state retirement pension increase? However, will he also consider the concerns over increased costs for telephones, water and sewerage and carefully monitor energy costs to ensure that pensioners get full value for the £200 winter fuel allowance and receive all that they are entitled to?
  Mr. McCartney: The Government will introduce a new pension service whose purpose will be to ensure, quickly and effectively, that pensioners get all the benefits to which they are entitled. That is also true of our work with local government, and we are considering "Better Government for Older People" to achieve improvements in services for older people. In particular, when local government services are being designed, the needs of older people must be taken into account. With those links, in terms of income increases and improvements in services, this Government have become the first in living memory to put pensioners on the right side—we are the pensioners' advocate and the pensioners' ambassador.
  Dr. Julian Lewis: I warmly congratulate the Minister on his new appointment. Will he give the House an absolute guarantee that the Government will never again give pensioners a miserly 75p increase in their basic state pension?
  Mr. McCartney: I thank the hon. Gentleman for his kind remarks, and I hope that the ride is not as bumpy as some of his hon. Friends would like to make it for me. We will always do the right thing by pensioners, which is why we will introduce a pension credit Bill during this parliamentary Session. We have put other measures in place to ensure that no pensioner in Britain has to live in poverty, as they did under the Tories.

  Employment Trends (North-West)
  Mr. Andrew Miller: If he will make a statement on employment trends in the north-west in the last five years. [444]
  The Minister for Work (Mr. Nicholas Brown): In the past five years, employment in the north-west has grown by 187,000, and 73 per cent, of all those of working age are now in employment, compared with 69.2 per cent, five years ago.
  Mr. Miller: I welcome my right hon. Friend to his new post. May I bring to his attention a success story involving the Cheshire Oaks, Coliseum and Blue Planet complex in my constituency, where partnership between his Department, local government and the private sector has resulted in real jobs for people from some of the areas of highest unemployment in my community? I was pleased to see the Employment Service taking a lead, working

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  with me to help to prepare young people from those areas for work. I commend that policy to my right hon. Friend as a model for other people to consider.
  Mr. Brown: I am grateful for my hon. Friend's comments. The proactive approach underpins the Government's roll-out of Jobcentre Plus. We intend to work as proactively as we can with people who are out of work in order to get them into work and to enhance their incomes.
  Mr. Graham Brady: I welcome the Minister to his brief, and I hope to shadow him for a little longer at least. The Opposition have been warning for a long time that the Government have failed with the new deal because, for far too many people, it is a revolving door that takes them back on to benefits and into long-term dependency. Now that the TUC has also warned that participants in the new deal are being churned through unwaged new deal options, will the right hon. Gentleman take urgent steps to re-focus the scheme on getting people into real, sustained jobs?
  Mr. Brown: I thank the hon. Gentleman for welcoming me to my post, and I note his ambitions for retaining his. I am afraid that I cannot help him with that, as I have little influence over who the new leader of the Conservative party will be. The hon. Gentleman's attitude towards the work of the Employment Service and the proactive approach of the new deal is fundamentally wrong. It is right that the Government should intervene to help those who are out of work into employment, and to work with employers to ensure that the jobs into which we help people can be sustained and provide enduring employment opportunities so that people can be enriched and their standard of living improved, which is what it is all about.

  Pension Credit
  Mr. Peter Pike: What consultation he will have on the proposed pension credit. [445]
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): More than 400 responses were received to the pension credit consultation paper. As indicated in the Gracious Speech, we intend to introduce legislation in this Session of Parliament.
  Mr. Pike: I thank my right hon. Friend for that answer. Does he recognise that, although most pensioners feel that the Government have done an excellent job in the past four years—compared with the previous 18 years under the Tories—pensioners who have small savings or a second pension sometimes end up worse off than those on the minimum income guarantee? Will he assure those people that that is exactly the problem that the Government intend to address with the pension credit, and that the consultation process will ensure that we get it right before we introduce the credit in 2003?
  Mr. Darling: My hon. Friend is right. There cannot have been a candidate in the recent general election campaign who did not meet a pensioner who had modest savings or a modest occupational pension and who asked, "What's in it for me?" The answer is the pension credit.
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  We believe that if pensioners have modest savings in the bank, they should not be penalised for that. We also believe that if someone has a small occupational pension, that should be added to rather than resulting in money being taken away.
  The pension credit will do two things. First, it will provide a basic guarantee of £100 a week. My hon. Friend may be interested to know that, as a result of the recent take-up campaign, more than 100,000 people have now gained extra money through the minimum income guarantee. Secondly—critically—the pension credit will ensure that people receive something for their savings, and that their years of thrift and sacrifice are rewarded rather than their being penalised under the present system.
  Mrs. Jacqui Lait: I, too, congratulate the Secretary of State on his new responsibilities.
  Can the right hon. Gentleman give us some idea of his estimate of the number of people who are eligible for pension credit? What solution does he propose to the difficulty relating to the interaction of housing benefit, council tax benefit and pension credit?
  Mr. Darling: I thank the hon. Lady for her congratulations. Our cup is overflowing today, and we shall make the most of it. I do not suppose that it will last, although we look forward to congratulating one or two Conservative Members in a few months' time, depending on what happens after the leadership campaign.
  The pension credit consultation paper made it clear that we expect just over 5 million pensioners to gain from the proposals. That gives some indication of the large number of retired people who have modest savings, and a small occupational pension, and who I believe lost out for years when they ought to have received a reward for their thrift.
  As the hon. Lady will know, the Government are determined to change the interaction of housing benefit not just with pension credit but with other aspects of the tax system. We are improving the administration of housing benefit, but we also want to introduce more fundamental struc tural changes to it. That will take time: the housing benefit system is extremely complex, and the changes that are needed are far-reaching. Pension credit, however, is an extremely important first step, because it means that for the first time it will pay to save. All those who have been in a quandary about whether they should save for their retirement will now know that, if they qualify for the credit, they will be better off for every pound that they save. We are also making changes to the tax system to help pensioners who pay tax.

  Pension Funds
  Dr. Nick Palmer: If he will take steps to require pension funds to facilitate full transferability of accumulated rights to other funds without deductions. [446]
  The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): Measures are already in place to ensure that people get a fair value for their rights when they transfer from one pension scheme to another.
  Dr. Palmer: I congratulate my hon. Friend on her new responsibilities.

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  People who spend their entire lives in a rut working for one company are often better paid when they retire than those who switch between different employers. In some countries, that is prevented by the requirement on pension funds to pay the same amounts that they would require the employee to pay in if he was joining the company, but in Britain it is possible for someone to lose out successively every time he changes jobs. Does the Minister agree that that is undesirable in principle, and that pension funds should be encouraged to pay the full value?
  Maria Eagle: I thank my hon. friend for his good wishes, and for asking me what is an extremely easy question for me to answer on my first day at the Dispatch Box.
  I understand my hon. Friend's point, but it is important to bear in mind the fact that different schemes provide different benefits, and that transfer values between schemes must be fair both to the person who wants to leave and to all the other members of the scheme.
  I cannot agree with my hon. Friend that staying in one job for many years means that a person is dull. I hope to stay in my present job for a good many years yet.
  Michael Fabricant: The hon. Lady will be aware that some funds suffered more damage than others owing to the £5 billion stealth tax imposed by the Labour Government soon after they took office. What assessment has she made of the final amount by which pensions will be reduced as a result of the stealth tax? Is it true that it could be as much as 23 per cent, in the case of those in their 40s and early 50s—such as myself?
  Maria Eagle: The hon. Gentleman is being a little disingenuous in telling just one side of the story. He is well aware of the fact that we cut corporation tax at the same time as we introduced those other measures.

  Pensioner Poverty (Scotland)
  Sir Robert Smith: What measures he proposes to take to alleviate pensioner poverty in Scotland; and if he will make a statement. [447]
  The Minister for Pensions (Mr. Ian McCartney): Our record speaks volumes. Around 2 million of the poorest pensioner households are now at least £15 a week, or £800 a year, better off in real terms as a result of Government measures since 1997. That is a real-terms rise in living standards of at least 17 per cent.
  Sir Robert Smith: I am sure that the Minister will recognise that the poorest pensioners in our society are those who are entitled to the minimum income guarantee but who fail to claim it. What is his current estimate of the number of people who fail to clam the MIG? What target will his Department set for take-up before it will recognise that the MIG is not succeeding for those pensioners and another way will have to be found?
  Mr. McCartney: This is a parliamentary first: a Rab C. soundalike answering a Rab C. lookalike. I would take the hon. Gentleman's point more seriously if it were not
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  for this fact. In 1997, the Liberal Democrats' policy was clear. They offered a minimum income guarantee credit. They have now changed their position. In doing so, they have divided themselves from the Government.
  The Government are committed to ensuring that no pensioner in Britain lives in poverty. The uptake of the MIG is considerable. Earlier, my right hon. Friend the Secretary of State made it clear that, following the latest take-up campaign, over 100,000 pensioners are now receiving £20 a week more. When we think about it, for a small investment, we are taking people out of poverty for their lifetime. Under the old system, people lived in poverty for the whole of their lifetime. The Government are ensuring that every pensioner in Britain will have a minimum income guarantee, and we will improve on that when we introduce the pension credit Bill.

  Minimum Income Guarantee
  Paul Goggins: If he will make a statement on the level of the minimum income guarantee. [450]
  The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): The level of the MIG was increased significantly in April. Single pensioners are now £15 a week better off in real terms than in 1997 owing to that increase and to other measures.
  Paul Goggins: I thank my hon. Friend for that answer and join hon. Members in welcoming her to her new post.
  I welcome the impressive increases in the level of the minimum income guarantee that have been initiated by the Government, but a retired pensioner whom I met recently was living on £72 a week, unaware that she was entitled to an extra £20. I am pleased to say that she is now receiving that extra amount, but will my hon. Friend's Department redouble its efforts to identify all pensioners who are eligible and encourage them to make a claim?
  Maria Eagle: I am pleased to hear the example that my hon. Friend has related. It is one of many. Of course, we will ensure that as many people as possible who are entitled to the minimum income guarantee claim it. That is the purpose of our take-up campaign. As my right hon. Friend the Secretary of State has said, over 100,000 people are now an average £20 a week better off as a result of taking up the MIG.
  Mr. Geoffrey Clifton-Brown: I welcome the Minister to her post. Hard work and perceptiveness on the Public Accounts Committee have been duly rewarded.
  What does the Minister intend to do about the 40-page form that one has to fill up to apply for the minimum income guarantee? It includes such gobbledegook questions as:
  "Are you involved in a trade dispute?
  Please tell us in part 14 of this form if you want to claim for more than 7 children.
  Are you or your partner pregnant?
  Are you or your partner on parental leave from your employment?"

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  Is it not high time that we did away with such gobbledegook, gave some of the poorest pensioners in the land a decent minimum income, abolished the minimum income guarantee and had a proper basic pension instead?
  Maria Eagle: I thank the hon. Gentleman for his kind words at the beginning of his remarks, which turned into a bit of a rant. I remind him that it was his Government who invented those questions. I assure him that, from October this year, the 40-page form will be down to 10 pages and all those questions will have gone.
  Mrs. Anne Campbell: I warmly welcome my hon. Friend to her new responsibilities. What progress has been made on eliminating that complicated form? Many pensioners are still unable to face the complication of filling in an application form and may be ignorant of the benefits that filling it in would bring. If we could give them the minimum income guarantee without the need for an application form, many more people would benefit.
  Maria Eagle: I thank my hon. Friend for her kind remarks. I assure her that we want to minimise the inconvenience and difficulty that people have to go through to receive the minimum income guarantee. We have to ask some questions to determine whether people are eligible, but those will be kept to the minimum. My hon. Friend will no doubt be pleased to hear that those who are trying to claim can receive help on the telephone from those who know how to fill in the forms. We are trying to ensure that those forms are as simple as possible and that there is as much help as possible for those who need to fill them in.
  Miss Anne McIntosh: May I add my congratulations to the hon. Lady on assuming her new position? Does she share my anxiety, and that expressed by Age Concern, about the forecast that the percentage of households eligible for benefits which fail to take them up because they are means-tested will increase to more than 50 per cent under this Government? What assurance can she give the House that that will not happen over the lifetime of this Parliament?
  Maria Eagle: The hon. Lady calls it means testing, but I call it ensuring that those who have never had a decent pension have a chance to receive one. There may be a different perspective on the matter, but the fact is that we are ensuring that those who have always had too little money to live on in their old age will now have proper provision. That is to be welcomed.

  Income Support
  Mr. Peter Luff: If he will make a statement on the application of the habitual residence test in assessing eligibility for income support. [452]
  The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks): The habitual residence test ensures that income-related benefits, including income support, are paid to people with reasonably close ties to the United Kingdom and who
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  intend to settle here. Its underlying principle is that the taxpayer should not have to subsidise people with very tenuous links to this country.
  Mr. Luff: The Minister should be aware from my correspondence with his Department that I have specific concerns about the application of the test in the case of my constituent, a British-born pensioner who, after a long absence, returned from former Rhodesia and, subsequently, from South Africa. She has received contradictory advice about how the test will affect her. That is not really surprising, however, as the sheer unknown quality of the test—its general principles are known, but its details are not—leads to highly subjective decision making by local authorities and appeal tribunals. Is it not time to be specific about the test?
  Malcolm Wicks: The hon. Gentleman would not expect or desire me to discuss his constituent's case in the House. I understand, however, that she is appealing. We must await the outcome of that, and I shall be happy to discuss the matter with him after that. Factors include the length of stay, future intentions, previous links with the United Kingdom and, in the case of people returning to the United Kingdom, the reasons for their absence. I assure the hon. Gentleman that, in 89 per cent, of cases, people pass the test. People also have a right to appeal, and a proportion of them do pass on appeal. However, I shall discuss his constituent's case at the appropriate moment.

  Pensioners (Means-tested Benefits)
  Mr. John Bercow: What proportion of pensioners he expects to be on means-tested benefits in 2005. [453]
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): Our objective is to end pensioner poverty and reward thrift, and our policies will continue to do that. By 2005, as a result of our policies, more than half Britain's pensioners will have gained.
  Mr. Bercow: I congratulate the Secretary of State on his appointment and, indeed, on his new title. Given that the Chancellor of the Exchequer told the 1993 Labour party conference that he wanted to see an end to the means test for our elderly people, but that the proportion of pensioners on means-tested benefits is set to increase from 39 per cent, in 1997 to 57 per cent, in two years, why does the Secretary of State not accept that the Government have broken their promise and that, far from being the sworn enemy of dependency, they are in fact its closest friend?
  Mr. Darling: At the last election, and at the 1997 general election, we made a clear promise to do two things. First, we wanted to help all pensioners share in the country's national wealth. Secondly, and critically, we wanted to begin to tackle pensioner poverty which had increased in the previous years. The minimum income guarantee is now benefiting more than 2 million pensioners, 100,000 of whom took it up because of the campaign that we ran earlier this year. We now need to

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  move forward and ensure that the millions of pensioners who have modest savings or a small occupational pension gain from their thrift.
  The position of the hon. Gentleman—and, I understand, the rest of the Conservative party, at least at the moment—is to oppose the pension credit. The Conservatives should turn their minds for one moment not to the election of two weeks ago, but to the election that they will be fighting in four or five years. If they oppose what we are doing, they will have to explain to 5 million pensioners why they are going to cut their incomes as a result of what their policy now appears to be.
  Lynne Jones: Pensioners in my constituency are very pleased at the increase in income that they have received recently, but there is growing concern about the disparity in the value of means-tested benefit as compared with the basic state pension. Last year's Labour party conference was very clear about what should be done about that, passing the resolution to restore the link between pensions and earnings. When will the Government implement Labour party policy?
  Mr. Darling: As my hon. Friend will know, I studied that resolution with great interest and it did not say that at all. However, I will give her—at least at this stage of the Parliament—that it was open to a number of interpretations. The position at the general election, which my hon. Friend and I have just finished fighting, was clear. We want to introduce the pension credit because a universal, across-the-board increase would not do anything to address the pensioner inequality that we inherited.
  The incomes of the pensioners with the highest incomes went up by some 80 per cent, in the past 20 years. Those pensioners at the other end of the income scale saw their incomes increase by only 30 per cent. To me, it does not seem right in terms of social justice to perpetuate that inequality, so I must disagree with my hon. Friend on that point. The majority of pensioners in this country want two things: first, that pensioner poverty is ended, which is why we introduced the minimum income guarantee, and secondly, that those pensioners who have saved a little bit of money should be rewarded for their thrift. People who live on the basic state pension alone will automatically qualify for the minimum income guarantee. Most people in this country have two pensions their basic state pension and an occupational one. We want to increase the level of the occupational pension.
  Mr. Paul Burstow: The Secretary of State has acknowledged that people will not receive pension credit if they are in receipt of housing benefit, and said that the Government will look at that. Will he confirm also that those who are in long-term care will not receive the pension credit and, as a result, will be penalised for their thrift? Should not the Government consider the pensions of those in long term care?
  Mr. Darling: The hon. Gentleman will know that, in the last Parliament, we introduced measures to benefit people in long-term care with regard to their nursing care. I appreciate that he wants us to do more and, no doubt, the penny on income tax will pay for that, as well as for everything else that the Liberals promised at the last
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  election. We will propose the exact parameters of the pension credit to the House in due course. I did not say that somebody receiving pension credit would not get housing benefit; the hon. Gentleman misheard me if that is what he thinks I said. However, our overall pensions policy is to make sure that we end pensioner poverty, reward thrift, take more pensioners out of tax and reduce their tax bills and allocate additional resources to help people in long-term care. That is the right thing to do. The difference between our two parties is that we promise what we can deliver because we know we have to deliver. Also, we can actually pay for our policies, something the Liberal Democrats could never do.

  Employment Service
  Mr. Graham Allen: If he will further devolve Employment Service employees to locally based offices; and if he will make a statement. [454]
  The Minister for Work (Mr. Nicholas Brown): We are keen to encourage innovation and a locally targeted approach to the delivery of Employment Service business, for example through employment zones and action teams for jobs. The area covered by the action team in Nottingham is being greatly expanded and tenders are being invited at present for an area comprising 11 wards. Four additional wards will become part of the action team area from July 1, including Bulwell, East and West in my hon. Friend's constituency.
  We are also harnessing new technology to open up access to information about jobs and training. Details of almost half a million jobs are available on the Employment Service website. The Worktrain website combines those details with training opportunities.
  Mr. Allen: I welcome my right hon. Friend to his new position. In many ways, he will be a victim of the Government's success in getting so many of the unemployed back to work, but there is a law of diminishing returns, in that it is more difficult to get those who are still unemployed back to work. Will my right hon. Friend therefore be ever more creative and inventive in looking at the structure of the Employment Service so that pilot schemes such as the ones in my constituency on the Broxtowe estate and in the Bestwood Park area, where Employment Service personnel are based on estates, are taken further? At present, those schemes are often put together voluntarily, using small pockets of money. Will my right hon. Friend look at the structure of the Employment Service so that there can be a more formal devolution to attack such remaining high pockets of unemployment?
  Mr. Brown: I thank my hon. Friend for his kind words, and welcome and largely agree with his general approach. It is true that in our country there are now more people in work than ever before. That does not mean that we, as a society, should condemn anyone of working age to the evils and sustained low income of unemployment. It is right that the service should work proactively with those who are currently excluded from the labour market to get them into work—and into fulfilling work—so that their incomes and their lives are enhanced.

  Age Discrimination
  Simon Hughes: What plans he has for ending age discrimination in employment. [455]
  The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): The Government are committed to eradicating age discrimination in employment, and will legislate by 2006. Meanwhile, our code of practice on age diversity is showing results upon which we can build.
  Simon Hughes: I know that as a result of last year's European Union directive, 2006 is the date by which we are committed to legislate not simply against age discrimination but against discrimination on the grounds of disability. Can the Government be more ambitious than aiming at the latest possible date allowed for in Europe? Given that their manifesto did not contain a commitment to end age discrimination, will the Government introduce early legislation, or support private Members who do so, to outlaw age discrimination and allow people to go on working without regard to age if they are competent to do so?
  Maria Eagle: I hope that the hon. Gentleman heard me say that we will be introducing legislation. He knows as well as I do that it is important to take employers with us. There has to be a balanced approach in making sure that rights are introduced and that those who have to implement them and abide by them know about them and are on board. That is what we will do. I hope that the hon. Gentleman will welcome that, although he seems a bit churlish.
  David Winnick: Without wishing to be churlish, and as someone who tried to introduce a private Member's Bill on this subject in 1996, may I ask why, if it is right to outlaw race, gender and disability discrimination, the same should not apply to age discrimination? Although I recognise that such a law will come into being at some point, would it not be best for the many people who find themselves discriminated against on the grounds of age, not in their late 50s or early 60s but in their early 40s, to introduce a law earlier than the date mentioned by my hon. Friend?
  Maria Eagle: I have every sympathy with my hon. Friend's position, and know of his interest in this respect. We have not been sitting doing nothing—our code of practice on age diversity has started to show results. For example, it is now much less usual to see employment advertisements using age as a criterion, which is a welcome advance. As I said in answer to the hon. Member for Southwark, North and Bermondsey (Simon Hughes), we need to take a balanced approach and ensure that we take everybody with us, and that is what we are doing.

  Pensioners (Means-tested Benefits)
  Mr. John Randall: If he will make a statement on means testing among pensioners. [456]
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): The benefits system has always included universal means-tested and non-contributory elements. In 1979, the proportion of expenditure on means-tested benefits was 17 per cent, by 1997 it was 35 per cent., but it is estimated that this year it will be about 30 per cent.
  Mr. Randall: Has the Secretary of State ever been in favour of ending means testing for elderly people?
  Mr. Darling: I believe that it is right, if the policy is to help people who need it most, to identify pensioners whose incomes are low. The alternative is to give people a universal, across-the-board increase. That is not currently the policy of any of the three major parties in this country and was certainly not their policy at the election. What is intolerable in this country is the situation that we inherited, In which 2 million pensioners were living in poverty. Their incomes were so low that they were automatically eligible for income support. We want to increase the amount that they get. If the hon. Gentleman is telling me that the Conservative party is against means testing, it must follow that he is now in favour of a universal pension.
  Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I must tell the Secretary of State that he should not lapse into speaking about the policies of parties other than his own.
  Kevin Brennan: Does it annoy my right hon. Friend as much as it annoys me to hear Opposition Members bleating on about means testing? Is not it the truth that, whatever one's views about the earnings link, this Labour Government have done more for pensioners in the past four years than the hon. Member for Uxbridge (Mr. Randall) and his party would have done if they had been in power for a further 18 years?
  Mr. Darling: My hon. Friend is right. It is necessary to take steps to end pensioner poverty. First, that involves finding out about pensioners' incomes so that they can be increased. Secondly, we must ensure that we have a policy that rewards thrift—something that did not previously happen in the social security system. Thirdly, we must help all pensioners not only through the universal basic state pension increase, but with other measures, such as removal from tax eligibility. It is worth bearing in mind that, from next year, almost three quarters of pensioners will either pay no tax or will pay it only at the 10p starting rate.
  Mr. James Clappison: May I give the Secretary of State another chance to answer a question that he was asked not only just now, but earlier, by my hon. Friend the Member for Buckingham (Mr. Bercow)? Does he still share the objectives set out by the Chancellor in 1993 to reduce or end means testing?
  Mr. Darling: I was explaining my answer, but was shown the red card, so I shall be careful. The Government's policy is clear. We believe that we must end pensioner poverty. It is therefore necessary to identify pensioner incomes that are so low that they should be increased. We must also ensure that people who have

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  modest savings or a modest occupational pension receive additional help through the pension credit. Both those measures involve ascertaining how much pensioners have. If we do not do that, there is a choice; of alternatives. We can give no help at all—I think that that must be the hon. Gentleman's policy—or go back to universal, across-the-board increases, which would not address the pensioner inequality that we inherited and which we are determined to do something about.

  Disability Rights Taskforce
  Mr. Tom Levitt: What measures he is proposing to take to implement the programme outlined in the Government's response to the final report of the disability rights taskforce. [458]
  The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): Our consultation document "Towards Inclusion" sets out the wide-ranging action that the Government are already taking to improve civil rights for disabled people in all areas of life. That includes the recent introduction of the Special Educational Needs and Disability Act 2001. We will end the exemption of small employers from the Disability Discrimination Act 1995 in 2004 and make the other improvements to the DDA when parliamentary time allows.
  Mr. Levitt: I thank my hon. Friend for that answer. She follows in the tradition of Ministers with responsibility for disability rights in this Government who have a strong record of delivery. I am sure that the document to which she referred will be the basis for continuing that tradition. Will she evangelise on the subject of the employers' threshold, which she mentioned? 'The threshold was a major demand of the disability movement for a number of years and is one of many aspects of the document "Towards Inclusion" that deserve taking forward and preaching from the highest rooftops so that not only disabled people but employers know what we are promising.
  Maria Eagle: I have been asked to do many things in my life, but evangelise is not one of them. None the less, I shall undertake to be extremely positive, because it is important to take everybody with us as we approach 2004, including small firms and business in general, to ensure that the measure can be properly implemented. One thing is for sure: there is no point in having rights if they cannot be enforced or obligations if they cannot be met.
  Mr. Tim Boswell: I, too, welcome the Under-Secretary to her post. Does she feel that, important as disability rights are—we are not arguing about that—the greatest wish of up to 750,000 disabled people today is for a viable job that they can manage to discharge? In that connection, will she undertake to examine the much better record of private sector insurers in providing rehabilitation in a package alongside disability benefits and so getting people quickly into or back to employment?
  Maria Eagle: The hon. Gentleman identifies an important issue that relates to getting people who have just become disabled back into work or to keeping them
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  in their job. That is an important consideration which I undertake to look closely at as I find my way around my new responsibilities.

  Annuities
  Mr. Howard Flight: If he will make a statement on the compulsory purchase of annuities. [461]
  The Secretary of State for Work and Pensions (Mr. Alistair Darling): The Government have made it clear that it is important that pension funds that are built up with the support of tax relief are used for their intended purpose. The Government welcome the wider diversity and choice now available in the annuity market and remain open to workable and affordable alternatives.
  Mr. Flight: Will the Government respond to the comments made by Dr. Oonagh McDonald to the effect that it is not the case that the recommendations of the McDonald report would involve a loss of tax revenue, as the Government have alleged? If there is not a fiscal case for opposing the end of the obligation to buy annuities, what are the Government's objections?
  Mr. Darling: As the hon. Gentleman knows, Dr. McDonald recommended a retirement plan that would provide an income over a 20-year period. The question is what happens after that. We want to avoid a situation in which people do not have a fund with which to provide their pension during their retirement, which can happen if there is early draw-down or a 20-year retirement plan, as proposed by Dr. McDonald. We also want to avoid doing anything that would result in a further reduction in annuity rates, which would, of course, be detrimental for all pensioners. However, we remain open to workable proposals that are seen to improve matters. Although we will respond to Dr. McDonald's proposals, I am not sure that we are quite ready to do so.
  Dr. Vincent Cable: Does the Secretary of State agree that a great many pensioners have been caused much distress by the collapse in annuity values over the past few years? Does he also agree that the Government's objectives could be perfectly well achieved if the element of compulsion were confined to the level of the income guarantee?
  Mr. Darling: The hon. Gentleman is right; annuity rates have come down. There are two principal reasons for that: first, inflation is low, which benefits many pensioner incomes, and, secondly, increased life expectancy, which is a major determinant of the annuity rate. Those are good things, but annuity rates have fallen. One measure will help. He will be aware that in, I think, 1999, a study into pension funds showed that more than one third of the fund was eaten up by charges and fees. The stakeholder pension that we introduced caps charges at 1 per cent., the effect of which has been felt across the industry, and will result in more of the pension fund being available for retirement. As for compulsion, I believe that the hon. Gentleman knows that that already exists in the pension system.

  Pension Credit (South-West)
  Linda Gilroy: What response he has had to the consultation on the pension credit from people and organisations in the south-west of England. [462]
  The Minister for Pensions (Mr. Ian McCartney): We received more than 400 responses, including from the west country, to the consultation exercise. The credit delivered from 2003 will tackle pensioner poverty, first by ensuring that no pensioner lives on less than £100 a week and no pensioner couple lives on less than £154 a week. We are rewarding, not penalising, pensioners for having worked and saved so that they can provide for themselves by giving incomes of up to £135 a week to single pensioners and £200 a week to couples. Secondly, we have reformed the capital limits and the unrealistic rates of return that go with them, abolished the weekly means test and modernised the way in which we deliver pensions by simplifying the rules and significantly reducing from the outset the complex information that is available. Over time, we will reduce the intrusion and hassle experienced by pensioners.
  Linda Gilroy: I thank my right hon. Friend for that reply and welcome him to his new responsibilities. I also welcome the proposal in the Queen's Speech to introduce the pension credit through legislation this Session. May I urge him to ensure, as soon as he can, that straightforward
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  information is made available in good time to the many thousands of people in my constituency who could benefit from that new pension credit?
  Mr. McCartney: I thank my hon. Friend for her kind remarks and give an absolute guarantee we will keep in regular contact with all hon. Members and the pensioners who will benefit from the pension credit so that they receive information on their rights at appropriate times. The purpose of creating the new pension service—a national service delivered locally—is to improve dramatically across the United Kingdom pensioners' access to information and to income.
  Mr. Owen Paterson: Does the Minister agree with Mr. Mervyn Kohler, the director general of Help the Aged, who thinks that the pension credit
  "is far too complex and over-elaborate"?
  Mr. McCartney: The gentleman that the hon. Gentleman mentions may have been misinterpreted because, in principle, his organisation welcomes the purpose of the pension credit, which, as I have said, is intended to reduce complexity, intrusion and hassle and to ensure that people have early access to it. When pensioners see the proposals, they will find that the Government have been true to their word in introducing a credit that gives pensioners easy, transparent and quick access to additional forms of income.

Disturbances, Burnley
3.33 pm
Mr. Peter Pike(by private notice): To ask the Secretary of State for the Home Department if he will make a statement on what action his Department is going to take following the riots in Burnley over the weekend.
The Minister for Police, Courts and Drugs (Mr. John Denham): As the House is aware, outbreaks of disorder took place in Burnley on the evening of Saturday 23 June and, more seriously, yesterday evening, 24 June. I have received an urgent report from Lancashire constabulary, from which at least the outlines of what occurred are clear.
A number of apparently spontaneous incidents occurred in the early morning of Saturday 23 June. They included a fight between two groups of Asian youths outside a local night club, one of which was local to the area and the other from west Yorkshire. Two of the local youths were stabbed, and two people have been arrested.
In the second incident, police were called to the scene of a quarrel between a group of Asian people and a white group, following complaints that the white group was holding a noisy party. In the disturbance that followed, nine vehicles, which belonged to Asian and white families, were damaged by the white youths. At the same time, an off-duty Asian taxi driver was attacked by a group of white men and suffered a fractured cheek bone. Two white males were arrested.
During Saturday evening, residents of the Stoneyholme district reported gatherings of young Asian men near Abel street. Police officers were deployed to the area and began to speak to the youths, but missiles were soon thrown at the police. Damage was caused to the Duke of York public house on Colne road and what are described as minor altercations took place between local Asian and white youths. For the next two hours, there were sporadic incidents of stone throwing at passing vehicles—police cars and private cars—but the police inform me that no large—scale disorder took place. The streets were again quiet by I am.
On the next day, there were a number of minor incidents, to which the police responded, between 5 am and 7 pm. Disorder recurred around 7.30 pm, when, without warning, about 70 white males left a public house and headed for the Stoneyholme area to challenge Asian youths. Serious disorder broke out. Several missiles were thrown at the police and, during the disorder, vehicles were set on fire, together with the public house and shop premises. At the height of the disorder, petrol bombs were thrown at the police. During that period, the police attempted to prevent confrontations between white and Asian youths. Following police intervention, the crowds had dispersed by I am.
I understand from the police that 11 people, eight of whom are white, have so far been arrested for actions arising from the weekend's events. The offences include criminal damage, wounding and public order offences. I am pleased to say that there have been no reports of injuries to the police.
I am sure that the whole House will join me in expressing disgust at the criminal violence that took place on the streets of Burnley over the weekend and at the
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mindless acts of provocation that preceded it. The police strategy has been to protect all sections of the community, to minimise damage to property and to investigate criminal activity.
I welcome the statement made by my hon. Friend the Member for Burnley (Mr. Pike), reported in the Lancashire Evening Telegraph, in which he appealed for calm and urged white and Asian youths to stay off the streets. I also welcome similarly positive statements by the Bishop of Blackburn, the Right Reverend Alan Chesters, and Moulana Ahmed Sidat, chairman of the Lancashire Council of Mosques.
The weekend's events will have been deeply disturbing to everyone living in Burnley. From the information that I have received so far, it appears that a series of apparently unrelated individual incidents sparked the trouble. There can be no excuse for violence or lawbreaking from any section of the community. The whole House will condemn the activities of racist organisations and those who are racially motivated, but my hon. Friend will want to look at how the tensions and problems that were manifest this weekend can be overcome.
My right hon. Friend the Home Secretary and the Under-Secretary of State for the Home Department, my hon. Friend the Member for Wallasey (Angela Eagle), are, of course, seeking advice from our race advisers and the Commission for Racial Equality on any common elements in the disturbances of recent weeks. I shall look in particular at the policing and law and order elements of the events in Burnley.
As at Oldham, the primary job of tackling the underlying problems that give rise to divisions and disturbance must be done at a local level. Indeed, my hon. Friend the Under-Secretary is today in Oldham talking to local people about the way forward there.
I have asked for reports from the police, the Government office for the north west and the local authority on events in Burnley and the issues that might lie behind them. I understand that there is a long tradition of good race relations in Burnley, and I hope that, with the support of my hon. Friend the Member for Burnley, those who want to build on that tradition will identify what needs to be done over the weeks and months ahead.
Mr. Pike: I thank my right hon. Friend for that answer. Will he echo my comments that it is vital that people stay at home tonight and do not go out to create more disturbance? The only way to resolve the problems is to sit around the table and talk. Is not it therefore important that we give our full support to this afternoon's discussions between the police, the council and members of the local community in Burnley, with a view to resolving those problems?
Is not it also important to recognise that, although, regrettably, the racist and extremist British National party received more than 11 per cent, of the vote in Burnley on 7 June, not all those who voted for it are necessarily racist? Many were misled by its comments during the election campaign. Should we not address what is at the core of the disturbances? We should consider the problems of empty houses and poverty in many parts of Burnley, and attack those problems jointly.
Does my right hon. Friend recognise that the money available to a small district council such as Burnley—it is not a unitary authority—is minimal? Although Burnley

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has always fully supported the fact that most of the money made available is no longer core funding but is targeted at particular problems, it faces difficulty in moving funding around in order to meet specific problems that are perceived locally as priorities. Having said that, the main thing is that we want an end to the disturbances. I am sure that everybody in the House condemns all the acts of violence and hooliganism over the weekend.
Mr. Denham: I welcome my hon. Friend's comments. He is right to urge everybody to put the events of the weekend behind them and to sit down and talk about the way forward. We of course welcome and fully support the discussions to which he referred.
My hon. Friend mentioned the issues facing district councils. Elected local representatives, including those on the council and, of course, leaders of local community organisations, have an important role to play not only financially but in uniting the community and tackling the problems that obviously exist. Burnley has received significant investment through the regeneration programme in particular, but it is important that local people identify what else needs to be done in order to find a way forward.
With regard to racist organisations, I join my hon. Friend in condemning those who seek to exploit underlying problems with simplistic solutions to complex and real issues that need to be thrashed out by people talking and working together.
Mr. David Lidington: I welcome the Minister of State to his new responsibilities. As this occasion illustrates, he is taking on responsibility for some very difficult and complex problems affecting our country. We on the Opposition Benches wish him well in the discharge of those new duties.
I join the Minister of State and the hon. Member for Burnley (Mr. Pike) in condemning the violence on the streets of Burnley and in their calls for people in the town, from whatever community, to exercise self-discipline and restraint and to seek to tackle the problems through peaceful and democratic discussion rather than street violence.
I appreciate that there might be legal constraints on what the Minister can say, but is he able to tell the House whether there is any evidence of the involvement of members of the British National party or other far-right groups in provoking the incidents in Burnley? Does he agree that we in this country have laws that make incitement to racial hatred a criminal offence and that, if the evidence exists, they should be rigorously enforced and exemplary sentences given?
I agree that the solutions to Burnley's problems and to the underlying tensions to which the hon. Member for Burnley referred have to be found primarily through local action rather than central Government action, but we should reject the idea, advanced in some quarters, that the answer is to accept that there should be no-go areas of the town for either white or Asian people. I hope that all Members of Parliament, whatever their politics, agree that we should strive to ensure that every citizen of Burnley—or of any other town or city in this country—feels that he or she enjoys the rights and responsibilities of being British citizens, and that no one has to feel afraid to walk down any street or through any district in their home town.
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Will the Minister consider, as part of his reflections on the events of the weekend, some of the reports that de facto segregation of Asian and white neighbourhoods in Burnley has helped some of the problems to emerge, with people from different communities not mixing because they do not live in the same neighbourhoods?
May I ask the Minister—in what I assure him is a non-partisan spirit—whether the Government will, as part of their response to events in Burnley and elsewhere, reconsider the priority that central Government as a whole give to neighbourhood street policing in our towns and cities? The concept has become somewhat unfashionable in recent years, but I believe that it is when police officers have become familiar faces to the people of the neighbourhoods that they regularly patrol that they win the trust of people from all communities in that neighbourhood and can, as a result, be more effective police officers.
Mr. Denham: I thank the hon. Gentleman for his opening remarks and welcome his condemnation of this weekend's violence.
The hon. Gentleman asks whether I have any evidence of involvement by particular organised groups and racist groups in the events of the weekend. The honest answer, as I stand here this afternoon, is that I have received no such indication at this stage, but he will understand that these are early days in terms of receiving full reports. I think that the whole House would draw the distinction between involvement of particular groups and actions that occur because particular groups have been involved in exploiting community issues, but the hon. Gentleman is right to say that there are strong legal powers to deal with incitement to racial hatred and other race crimes.
I agree that no one in a free society wants to compromise that by saying that there should be places where certain people in that free society cannot go. There cannot be no-go areas as either an outcome or an instrument of policy. If there are issues in Burnley or elsewhere relating to where local communities live, those are precisely the sorts of issues that must be addressed in the short, medium and long term through the discussions that should take place at local level.
We recognise that local policing—neighbourhood policing—has an important role to play in many different ways in tackling the fear of crime and building up understanding with local communities, as do the efforts that we have made and will continue to make to ensure that, in the coming years, we in this country have a police service that is fully representative of all the communities it serves.
Simon Hughes: I, too, welcome the Minister to his important responsibilities as the Minister for Police, Courts and Drugs. I join colleagues on both sides of the House in condemning violence as a solution to any community tension or problem and in thanking both the local authority and police, for their leadership and work, and the hon. Member for Burnley (Mr. Pike) for his community leadership over many years.
In the same vein as the hon. Member for Aylesbury (Mr. Lidington), may I put three issues to the Minister? First, will he take time to look at the delivery of three services—police services, housing services and the youth

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service—in Burnley, Oldham and other places where there has been community tension? Wi11 he make sure that those services are sufficient, so that the police respond quickly enough, the housing service has adequate housing and the youth service has adequate resources, and that they are provided in a non-discriminatory way that can be seen objectively to treat equally people from all community groups?
Secondly, although there may not be any immediate evidence of a link between right-wing political activity and the events of this weekend, I have no doubt—from my own constituency experience among others—that the more right-wing activity there is, the more tension rises. I am happy to collaborate on the following matter, and I am sure that my colleagues in other parties are as well: will the Minister investigate whether we are prosecuting adequately the use of language and written literature that appears to incite racial hatred, but which is often not followed up by police or prosecution service activity? We frequently seem to get on to difficult ground when we ban marches, but we do not often take action against individuals, spoken words and printed literature.
Thirdly, so that we do not have a summer of events in one city or town followed by statements, questions and so on, may I constructively suggest that the Minister and the Home Secretary convene a group from at least the three parties in England to try to prevent problems before they arise and to learn the wisdom of community management from mixed-race multicultural communities? There are tensions in many places, but there are many places where the best experience can minimise them and take the community forward. It may be better to anticipate future tensions and difficulties, rather than always to react to them.
Mr. Denham: I thank the hon. Gentleman for his comments. He asked about the delivery of key public services in Burnley and elsewhere, and I am sure that he will recognise the significance of the Race Relations (Amendment) Act 2000, which not only outlaws discrimination in all public authority functions not covered by the Race Relations Act 1976 but places a general duty on listed public authorities to promote racial equality, which is an important change of emphasis. The hon. Gentleman is therefore right that the Government as a whole will look at the way in which many different public services will now fulfil their responsibilities under the 2000 Act.
The hon. Gentleman mentioned activity by racist parties. As I acknowledged earlier, there can be a direct relationship between activities in communities that have been targeted by racist organisations and the level of racial violence or disturbance that takes place, and we must aim to counter that. I will look at the hon. Gentleman's suggestion that activity that falls foul of the law is not being prosecuted, and I am happy to receive from him examples of material or events that give rise to concern. We now clearly have powerful laws on the statute book to tackle racist activity, and we expect them to be used effectively and well.
As for avoiding future events, when we look at areas where there have been problems we often conclude, although I do not want to pre-judge anything that may have happened in Burnley this weekend, that there are common underlying factors and issues specific to that locality. Discussions about community building that will
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now inevitably take place in Burnley, as they have done in Oldham, will also have to take place in many different parts of the country so that people anticipate problems instead of waiting to find out that they have them.
Ms Diane Abbott: Does my right hon. Friend accept that many people are deeply concerned about events first in Oldham and now in Burnley? There is no excuse for violent disorder, and the House supports the police in the action that they have had to take. There are complex underlying issues on which an outsider would not dream of commenting, but clearly race is a factor. We do not want to see what happened in Burnley replicated throughout the summer. Will my right hon. Friend assure the House that as well as considering the short-term public order issue, he will take up the point made by the hon. Member for Aylesbury (Mr. Lidington) from the Opposition Front Bench that we have the necessary law? There is no doubt that the BNP's activity has raised the temperature in certain areas, and that if the law exists it should be used. All the factors should be considered. No community should think that it does not have a voice and that it is not being listened to.
Mr. Denham: I agree very much that no community should feel that it does not have a voice or that it is not listened to. I agree also that the laws that the House has enacted to deal with racist crimes and statements made or activities undertaken by racist organisations should be used. That is why the House passed the measures in the first place. It is true that the issues are complex in particular communities. We must do what we can, but it is important that others consider the problems at local level and try to identify the issues that are specific to local areas.
Mr. Nicholas Soames: May I join in welcoming the right hon. Gentleman to his new position? Does he agree that the events are worrying given, as he rightly said, the generally good state of race relations in Burnley? Does he agree also that the events of last night are therefore untypical?
Will the right hon. Gentleman therefore congratulate the police on the vigorous and robust way in which they rightly stepped in to try to control the situation? Will he ensure that in those areas where he and others remain anxious about tensions, especially in inner cities, his suggestion and that of the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) that people in such areas should be called together before there is any trouble by the police and other community leaders, to try to find a way through and to ensure that a peaceful regime is maintained, is a sensible and proactive way in which to proceed?
Mr. Denham: That was a helpful comment. I understand that the events of the weekend were untypical of the recent history of Burnley. People in other areas will want to ensure that all necessary discussions take place. There must not be a dialogue of the deaf or a failure to talk before problems emerge.
I am happy to repeat my thanks to the police for the way in which they conducted events over the weekend. Effective policing of disturbances such as those that took place over the weekend and good policing all year round

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are essential. At the end of the day, however, these are not problems that can be resolved by policing. They involve relations between communities and underlying economic and social problems within communities, and they must be tackled at that level. The police will always play their professional role, as they did this weekend in Burnley, but we must tackle the root causes that give rise to disturbances.
Sir Teddy Taylor: The House will be united in deploring racial violence, but does the Minister agree that there has been a substantial decline in good race relations? We are aware of that in Southend, where I live and where there were outbreaks at the weekend similar to those in Burnley.
Does the right hon. Gentleman agree that many members of the public think that the decline could be related to what they regard as a lack of effective control and operation of asylum seekers? Does he consider that there could be a substantial improvement in good race relations if the Government would make it a priority to ensure that speedier decisions were taken on asylum applications?
Mr. Denham: That was a very regrettable and unfortunate intervention, and I think that it was wrong. I do not know Burnley well, but I imagine that the majority of those involved in Burnley, from whatever community they came, were born in Burnley and are second or third generation residents in this country. I do not know what connection that would have with the issue of asylum.
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Some politicians have sought to exploit the issue of asylum in a way that has had an unfortunate effect on wider race relations. In general, I do not agree that there has been a marked deterioration in race relations. I do not believe that there is evidence of that. There are still major problems and issues to be tackled, but we have made progress over the past 20 years. We have not gone backwards.

Point of Order
3.54 pm
Michael Fabricant: On a point of order, Mr. Deputy Speaker. Will you give some guidance on protocol in the House? You may have noticed that several new Members of Parliament have tabled oral questions for the next few days. Indeed, a new hon. Member asked a question at Question Time today. I understood that, until an hon. Member had made a maiden speech, it was not proper to ask an oral question or participate in proceedings apart from tabling written questions. Does the protocol continue to exist, or is it in abeyance?
Mr. Deputy Speaker (Sir Alan Haselhurst): I shall try to help the hon. Gentleman and the House. No absolute rule states that an hon. Member may not participate until he or she has made his or her maiden speech, but it is the custom of the House that the maiden speech precedes any other activity in the Chamber. It is often good advice to new Members that they test the nature of the pitch before deciding to play a longer innings, but the new hon. Member who asked a supplementary question this afternoon had already made his maiden speech.

Orders of the Day
  Debate on the Address

    FOURTH DAY
    Order read for resuming adjourned debate on Question [20 June],
    That an humble Address be presented to Her Majesty, as follows
    Most Gracious Sovereign,
    We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Sheerman.]
    Question again proposed.

    The Economy, Trade and Industry
    3.56 pm
    The Chancellor of the Exchequer (Mr. Gordon Brown): The Queen's Speech and the detailed announcements that I shall make today build on the economic foundation of stability that since 1997, has been our priority, which we shall never take for granted. The enterprise Bill proposed in the Queen's Speech will advance our economic objective to match, over the next 10 years, the higher productivity and prosperity of our major competitors. The welfare reform Bill will advance our objective to build on the 1 million jobs that have been created since 1997, to achieve full employment in this decade and to make work pay.
    Today, I shall give details of the tax credit Bill. That measure and the pension credit Bill will advance our objective of ensuring that every child in our country has the best possible start in life and that not one is left behind, and that every pensioner can enjoy retirement in dignity.
    One central, defining idea underlies the measures and the accompanying public service reform legislation. It has made the events of the past month more than simply a competition between parties and a real contest of ideas. For us and, I believe, the British people, opportunity for all, and our actions to secure it, is the key not only to enterprise and a good economy but to decent public services and a good society. We want to ensure opportunity for not only the few but everyone in our country.
    The precondition for the reform programme in the Queen's Speech is that, even when we are tested by exchange rate pressures, oil price movements and the American slow-down, we strengthen, not relax, the monetary and fiscal disciplines and rules that have given this country the lowest inflation in Europe, the lowest unemployment for 25 years and the lowest mortgage and long-term interest rates for more than 30 years.
    The Government will support the Bank of England and maintain our anti-inflation discipline. We shall hold to a fiscal regime that achieves a current budget balance. That has meant that, this year, debt is forecast to fall from the 44 per cent, that we inherited to 30 per cent, of gross domestic product. In future, any party that is serious about political office will need not only to have an inflation target and fiscal rules, but to set and follow clear, tough,
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    monetary and fiscal objectives and disciplines if it is to convince the people that it is doing everything to avoid the old, familiar boom and boost.
    There is an even greater economic challenge for Britain. It is to deliver this decade what has eluded us for too long faster productivity rises than our main industrial competitors. At any point in the past 20 years, it was open to a Government to make not only the Bank of England independent, but our competition authorities independent and free of political influence, to use the criminal law to outlaw cartels, to reform insolvency laws and remove Crown preference, thus reducing the cost of business failure, to introduce an enterprise management incentive scheme for growing high-growth firms and to cut capital gains tax, as we have done, from 40 per cent, to 10 per cent, for transactions in business assets that are held for two years.
    I am pleased, therefore, that it is a Labour enterprise Bill, led by the Secretary of State for Trade and Industry, and Labour Budgets that are pushing forward the agenda for prosperity. Furthermore, our review of planning procedures and our plans for improved workplace skills to provide better links between businesses and schools, and for a research and development tax credit giving special help to manufacturers will advance that agenda for higher productivity.
    These announcements are just the start. Building on the cut in small business taxation, an extension of the new 10p small company rate, a new flat rate VAT scheme and a single system of accounts for small businesses, and building on the 170,000 new businesses that we have created since 1997, we shall publish in the next few weeks our proposals, area by area, for stamp duty exemptions so that we can have business development in our high-unemployment communities.
    Charities and businesses will also join the Government in a £40 million community development venture capital fund to bring work to high-unemployment areas, and regional development agencies in every part of the country will soon publish their prospectuses for what will eventually amount to a £1 billion fund for the UK, to bring new businesses and jobs to every region.
    Michael Fabricant: Will the right hon. Gentleman give way?
    Mr. Brown: I shall give way in a moment.
    I hope that the whole House now agrees not only that regional development agencies are an essential element for achieving balanced regional growth, but that regional policy itself, equipping people and areas to cope with change, will have to be enhanced rather than swept away if we are to achieve high levels of growth in employment in every region of the country. [Interruption]. I see that some Members of the Conservative party have learned nothing from the past few weeks.
    Michael Fabricant: The Chancellor will be aware that, over the past four years, the UK's position in the world competition league has dropped from ninth to 19th place. He will also be aware that Motorola, for example, has closed its plant in Scotland while keeping open its plant in Germany. He has just announced a series of new

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    initiatives. Does he believe that in the next four years we can get back to ninth place, where we were when he started?
    Mr. Brown: Not only are there 1 million more people in jobs and 170,000 new small businesses, but productivity has been rising this year, last year and the year before and it continues to rise. The question that Conservative Members should address with us is how we can do better. I would like to hear from the hon. Gentleman whether he welcomes our new competition policy proposals, our cut in capital gains tax and other measures that we are introducing?
    Michael Fabricant rose—
    Mr. Brown: Oh, he does. I give way to the hon. Member for Twickenham (Dr. Cable).
    Dr. Vincent Cable: I welcome the Chancellor's personal interest in encouraging a tougher line against anti-competitive practices, but why has his Department bottled out of its commitment to an early introduction of a regulator—Paycom—to curb the substantial excess profits that the banks earn from their control over the clearing system?
    Mr. Brown: We have not bottled out of anything. It was us who set up the Cruickshank review, published its proposals and put the performance of banks in relation to small businesses to the competition authorities. We are now waiting for their response on this matter. I thought that the hon. Gentleman would be standing up to congratulate us on taking action to deal with those abuses, as they will certainly have to be dealt with if we are to have the most competitive economy in the future. The Liberal party should be congratulating us, rather than criticising us for what we have done.
    Our measures for opening up enterprise to all are complemented by our measures for opening up employment opportunity to all. Today in Britain, 28.1 million people are in work. That is more than at any time in our history. Long-term unemployment, which stood at 326,000 in the spring of 1997, is now below 100,000—the lowest for 20 years. Youth unemployment, which was once as high as 500,000, is now down to 41,000—the lowest since 1975. The shadow Chancellor might wish to note that in the past four years in his constituency, youth unemployment fell by 79 per cent, and long-term unemployment by 81 per cent, as a result of the new deal.
    Because there is more to do, we shall never be complacent. For too long, Britain's communities—such as the one that I represent—were ravaged by long-term unemployment, youth unemployment, the fear of unemployment and the poverty and insecurity caused by unemployment. The first stage of the new deal tackled unemployment among young people. Now we shall tackle unemployment among all four of the worst hit groups: the long-term and young out of work, lone parents and disabled people, all of whom have been denied their right to work for too long.
    From now on, no one will be excluded from the opportunities of the new deal, so this Session's welfare reform Bill will extend opportunities and responsibilities
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    not just to all long-term unemployed, but to the partners of the unemployed, even when they are not heads of household. In that new phase, we shall offer special coaching help for others who are hard to employ, and we shall not hesitate to take additional measures, including greater sanctions, where they are needed to get people back into work and achieve full employment.
    If only one young person had benefited from the new deal, it would have been justified, but, already, almost 300,000 young people have found work. I hope that there can now be all-party agreement that the Government were right to impose the £5 billion windfall tax, which is still helping to pay for our welfare-to-work programme, and are right about the principle of our approach. An active labour market policy is essential to equip people for the future, and we recognise that, in the modern economy, economic efficiency is bought not at the cost of social justice, but, indeed, by promoting social justice.
    We also believe that decent minimum standards advance not only social justice but economic efficiency. Thus, in October the minimum wage, on which we legislated in the previous Parliament, will rise to £4.10 and, next year, to £4.20. That will mean a £17.50 a week rise. Also, last week, my right hon. Friend the Secretary of State for Trade and Industry announced to 140,000 young people that their minimum rate will rise to £3.20, then £3.50 and then £3.60 in 2002.
    Following those changes, I can also announce that, in October, the guaranteed minimum income under the working families tax credit for full-time working families with children will be raised to £225 a week. That represents an £11,000 a year guaranteed income for working families with children, which means a negative tax rate of minus 200 per cent, as a result of our new proposals. Again, I hope that all parties will affirm that a working families tax credit, which Ronald Reagan himself said was the best anti-poverty and pro-family policy in America and which has been raised most generously by George Bush in the past few months, is also good for Britain's social justice and Britain's economic success.
    The new tax credit Bill, with its targeted tax cuts for work, extends the principle of the working families tax credit to working households without children. Thus, for couples, the employment credit that we are introducing will guarantee for adults working full-time a minimum weekly income of £170, or £8,800 a year. That could not have begun to hat pen without a second-term Labour Government.
    Ms Diane AbbottLabour Members are delighted and relieved to know that aspects of my right hon. Friend's active labour market policies have the endorsement of Ronald Reagan, but he will be aware that statistics published towards the end of the last Parliament appear to show that the gap between rich and poor had widened under the previous Administration. Can he give the House an undertaking that, by the end of this Parliament, the gap between rich and poor will begin to narrow?
    Mr. Brown: Of course, it is as a result of the working families tax credit, the minimum income guarantee for pensioners, raising child benefit and the children's tax credit that low-income families are finding that their income position is being raised. If my hon. Friend talks to

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    people in her—[HON. MEMBERS: "Answer the question."] I am answering the question. If she talks to her constituents, she will find that many are £50 a week better off as a result of the changes that we are making. Precisely for that reason, we are narrowing tie gap between rich and poor in this country.
    I hope that my hon. Friend will take this from me: in the previous Parliament, Conservative Members were unable to support a policy that had the support of Ronald Reagan and George Bush, which was an amazing commentary on the Conservative party between 1997 and 2001.
    Michael Fabricant: Do not worry; I could not get an answer either.
    Mr. Brown: Conservative Members got an answer; it is called the election result.
    In a modern economy, all young people should have the chance to develop their potential to the full, and a party that promises opportunity for all should be prepared to allocate the necessary public spending resources to ensure that every child has the best possible start in life.
    Child poverty is a scar on the soul of our country. It was a matter of shame for Britain that, when we came to power in 1997, one child in every three was born poor. Having taken 1 million children out of poverty in our first term—if the Tory party had been in power, they would have remained condemned to poverty—our ambition in what I believe is the best anti-deprivation policy and the best anti-delinquency and anti-crime 3olicy, is to take the next 1 million children out of poverty. Alongside our commitment to public services, that will be a central priority for next year's Budget and spending review. I am pleased to tell the House that in the Queen's Speech we were able to move closer to achieving that ambition.
    Mr. John Redwood: Will the Chancellor give way?
    Mr. Brown: I am happy to give way to the right hon. Gentleman, who is one of the few people who is not standing in his party's leadership election.
    Mr. Redwood: The Queen's Speech said that the Government would ratify the Nice treaty. Now that the Irish people have voted no in a referendum, does the Chancellor think that no should mean no and that is the end of it, or that the Irish people should be told that they need to think again, vote again and answer yes? We would like to know how strongly he supports referendums.
    Mr. Brown: Trust the right hon. Gentleman—when we are talking about child poverty, he starts talking about the Nice treaty. The Irish Prime Minister has already answered his point. The Irish people will be asked to support the Nice treaty. This is a matter for them to resolve as they choose, and they will do so in the next few months. The right hon. Gentleman's intervention on Europe carries some menace for whoever takes over the leadership of the Conservative party.
    Mr. Redwood: Answer the question.
    Mr. Brown: I have answered the right hon. Gentleman's point. The Irish people will resolve this
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    matter, as their Prime Minister has said. The menace is that the right hon. Gentleman remains committed, under all circumstances, never to consider joining a monetary union and wants to renegotiate Britain's membership of the European Union. He would set this country back many years. That is another sign that the Conservative party, far from having a debate based on candour and frankness with people being prepared to talk fairly among themselves, is about to enter into a big conflict on Europe.
    Since 1997, we have raised child benefit by 40 per cent, in cash terms. We have introduced the new children's tax credit, which for 5 million families is a family tax cut worth up to £520 a year. We have reduced the direct tax burden for a single-earner family on average earnings from 21 per cent, to 18 per cent., which is the lowest level for 30 years. In this Parliament, we shall introduce a tax credit Bill that will provide for a new, seamless system of support for children.
    From the foundation of a universal child benefit for all, which is £15.50 for the first child, the children's tax credit—which is the family tax cut—raises the income of 5 million families by £25.50 or up to the weekly payment for children, which is now £51.50, with most going to those who need help most. The Secretary of State for Work and Pensions is today announcing the transfer of the Child Benefit Centre to the Inland Revenue, so that universal child benefit and the new integrated child credit will be delivered by a single agency with a single aim, which will be to ensure that every child and family have the financial support that they need.
    With the under-one credit set at £1,000 and maternity pay at £100 a week guaranteed for six months, more support is now available. Soon there will also be 1.6 million child care places for families when they need it most: when their children are youngest.
    Caroline Flint: I welcome how much the Government have done in the past four years to improve family life, but could I direct my right hon. Friend to a report by the Daycare Trust, published today, called "Children's Centres", which says that despite the advances being made, and despite the money that has been put in the pockets of working families, there is still a shortage of day care places, the cost of which is still prohibitive? I recommend that my right hon. Friend reads the report and considers whether there are better ways of avoiding the 45 funding streams that child care providers currently have to use to get money to establish child care services.
    Mr. Brown: That is an important point. We have increased the working families tax credit payment for child care. We are also delivering our proposals, with money, to develop the 1.6 million child care places. I agree with my hon. Friend that more needs to be done more quickly. The difference between us and the Conservative party is that we are committed to a national child care strategy for the first time in this country, and we are committed to funding it properly. It is not clear whether that is the Conservative party's policy.
    We spend £3 billion a year on children's social services, on sure start and on the new children's fund. Now that the emphasis has switched from dealing with the consequences of neglect to the prevention of neglect, and now that there is a wide range of providers involving the

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    voluntary and charitable sectors and community action centres, it is right that there be a new review across Departments of all services for children at risk, to ensure that in the next spending round the children in greatest need, wherever they live, have the services that can best meet their needs, so that no child is left out or left behind.
    As part of our spending review, a second review of the voluntary sector will examine how Government and voluntary sectors can best work together to help families and communities in need. In addition to the work done under sure start, to be taken forward in the spending review, a third review of our spending round on health inequalities will tackle the persistent and unacceptable inequalities in infant mortality and in child health.
    Mr. Michael Fallon: Will the Chancellor give way?
    Mr. Brown: I will, but then I must move on.
    Mr. Fallon: Now that the Chancellor has entered the realm of social policy—which is somewhat unusual for a Chancellor—can he clear up one point? Can he confirm that the Deputy Prime Minister has been moved to the Cabinet Office to be in charge of public services, that the Office of Public Service Reform reports to the Prime Minister, and that he himself is still in charge of cross-cutting reviews and public service agreements? Who is actually responsible?
    Mr. Brown: I am talking about the spending review for next year. I know that very strange things happened under the last Conservative Government, but I think that spending announcements were still made by the Chancellor of the Exchequer, and that is precisely what we intend.
    As for public spending control, the public service agreements are an innovation introduced under the Labour Government. They are designed to relate the expenditure of money to the targets and objectives set by the Government for meeting its programmes. The amazing thing is that in 18 years of Conservative government no real attempt was made to relate the spending of money to the priorities and targets set by that Government. I should have thought that the hon. Gentleman, as a member of the Treasury Select Committee, would welcome the fact that our spending review takes into account the public service agreements that set outputs and targets for the future.
    All the measures that I have announced on child poverty today—the new integrated child tax credit, which will form part of the legislation in the tax credit Bill, the transfer of the Child Benefit Centre, and our three reviews of the voluntary sector, children in need and health inequalities—show that, for us, tackling child poverty and ensuring that no child is left behind is not just an economic and social imperative; it is, for us, a litmus test of any political party running for office.
    I hope that all in the House understand that we could not move 100,000 lone parents back into work and lift as many as 1 million children out of poverty if we had done what some argued that we should do—abolished the working families tax credit, removed benefits from lone parents with teenage children, cut the social fund, and abolished the new deal for lone parents.
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    I believe in eradicating child poverty, and I believe the country understands very well that when lone parents are simultaneously denied help to find jobs and faced with a cut of £50 a week in their incomes—as was proposed by the Conservative party at the election—all the rhetoric in the world about social liberalism cannot obscure the fundamental economic extremism of that position. If the Conservative party wants to do some rethinking, this strikes me as a very appropriate place to start.
    Let me turn to the. public finances. Some staked their reputation on saying that our public services plans could not be afforded, that they were inflationary, and that they were unsustainable. I can tell the House that we will implement our public spending plans in full, and that we will now prepare for the spending round from 2003–04 to 2005–06. I can also say that, as well as providing free television licences for the over-75s and raising the basic state pension this April, we plan to pay the winter allowance of £200 this year; and our new pension credit, introduced in 2003 will reward rather than penalise modest occupational pensions and savings, to ensure that every pensioner enjoys a share in rising prosperity.
    Mr. John Bercow: Will the Chancellor give way?
    Mr. Brown: I have given way enough.
    Our obligations are international too. Diseases such as tuberculosis, malaria and HIV-AIDS are avoidable, and drugs are available to make them preventable and curable. This week the Secretary of State for International Development will announce further contributions from our Government to a new global health fund to tackle those diseases.
    Our public service agreements—setting targets and demanding results—are key to securing value for money across Government. In advance of our decisions next summer on matching the resources in our public spending review to reform, the Chief Secretary to the Treasury is setting up seven interdepartmental reviews to examine how we match our spending priorities for the next period with a stepping-up of modernisation and reform to ensure for the public the best outcome and results. The reviews will deal with central themes set out in our manifesto: children at risk, health inequalities and the role of the voluntary sector, public sector labour market issues, improving the use of public space, science and research and small business support.
    Under the previous Government, Britain spent more on debt interest than on schools. The reason that we can invest more in health and education is that we have managed to transfer resources from paying the bills of failure to investing in future success. A total of £9 billion has been cut from the typical annual cost that Conservative Governments paid to tackle debt and pay for unemployment. That has meant that, each year, there is £9 billion more for the national health service and for education. That is what we mean by putting hospitals and schools first.
    There is an even bigger question for the future of our public services: how to meet demographic, technological and expectation-led demands. Instead of the fundamentalist calls to shrink public spending on those services, the challenge for the future is to secure additional public investments as well as the reforms that

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    we need without putting at risk the economic stability that is so crucial. The detailed new policies that the Government are pursuing in the Queen's Speech—the tax credit Bill, the enterprise Bill and the other public service reforms—are central to the direction of our country in future. There are big questions about the role of Government which every political party will have to answer.
    I understand from The Times this morning that the shadow Chancellor will announce in the debate that he will support all-women shortlists and more international aid. We welcome conversions to our policies but we remember what happened over the minimum wage: we supported it, the Conservatives opposed it; we succeeded, they recanted. We can explain our support and they cannot. Their new positions raise prior and profound questions about whether they are changing their policies because of opportunism or because of principle. Does the shadow Chancellor believe that decent minimum standards and social justice are necessary for a modern efficient economy?
    Basic questions of principle inform the Queen's Speech. I ask the Opposition to address them, too. On economic management, it is not enough to say that the old era of rigid monetary targets is over. The question is whether we are to reject and set aside the short-termism of the old free market dogma in favour of not just a solid commitment to monetary and fiscal disciplines, but an industry, regional and skills policy that works with markets and businesses to equip this country for change.
    On employment, it is not enough for the Conservatives to tell us as part of their rhetoric that they support full employment. The first question that we must answer—it is the pre-condition for a modem employment policy in the global economy—is will we reject the old, flawed laissez-faire policy and invest in an active labour market policy that is based on rights and responsibilities, but that lifts people from welfare to work?
    On inclusion and opportunity for all, is it to be the illusion of inclusion for millions, or will we commit the substantial resources that everyone knows are needed if we are to tackle child and pensioner poverty? On health, do we choose to invest more in our NHS, as we have chosen, or do we instead make health care in Britain dependent, as some people want, on imposing new charges and private insurance?
    Do we just talk about being internationalist and about Britain in Europe rather than Britain against Europe; or do we follow the logic for the national economic interest, as I do, that there are circumstances in which we will join the euro? No amount of policy launches, listening exercises or rhetoric about social liberalism can obscure the fundamental choices that have to be made.
    Are we just to talk about good public services, or are we to modernise with the scale of money that is needed, rather than putting across-the-board tax cuts before the needs of public services and stability?
    Sir Peter Tapsell: As a long-standing Tory democrat rather than a social liberal, who has throughout a parliamentary career of some length always supported high levels of public expenditure, and is on the record as saying so throughout the Thatcher years, may I ask the Chancellor to answer the practical
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    question of how his announcements of huge increases in public expenditure can be reconciled with his stability pact commitments to the European Union?
    Mr. Brown: We are talking about public services, but Conservative Members can talk only about Europe. The stability pact asks for Budgets to be at or near balance. Last year, we paid back £36 billion of debt. The hon. Gentleman should be congratulating us on that. Additionally, if he looks at our figures for future years, he will find that public borrowing is at a level that is perfectly sustainable and perfectly adequate not only within the terms of the Maastricht treaty, but within the terms of the golden rule that I have established.
    When we want to talk about the health service and education, only Conservative Members want to move on to talk about the European Union and whether we should be members of it. I think that the country wants us to have a debate on public services. If Conservative Members have not learned that lesson from the general election, I do not think that they will ever learn anything about how to run their affairs.
    The question that I am posing is whether we are prepared not only to talk about good public services, but to invest the scale of money that is needed, rather than putting across-the-board tax cuts before the needs of public services and stability. That issue was raised most helpfully in the general election campaign by the shadow Chief Secretary, whom I am pleased to see in the Chamber today. We did not see much of him in the later stages of the general election campaign, when he gave a new meaning to the word "shadow". We talk of people who are seen and not heard, but he was heard and then not seen. That was a feature of the election campaign. However, although we had no idea where he was, we knew what he was saying. That is the dilemma for Conservative Members.
    The shadow Chief Secretary said:
    "You've got a progression which goes £4 billion, £8 billion, £12 billion, £16 billion, £20 billion. We would like to head downwards"—
    in public spending as a share of national income—
    "to 35 per cent, of GDP … It is 190 per cent, realistic to cut spending growth in this way."
    At today's prices, to reduce public spending to 35 per cent, of GDP, which is the ambition of the shadow Chief Secretary—an ambition that he has never denied—would entail cuts not of £5 billion, £10 billion or £15 billion, but of £50 billion. It is the equivalent of the entire budget of the national health service. Everyone knows that such changes could not be achieved without deep cuts in all of our major public services. That is the choice: to invest or to cut. We say that we cannot will the ends—better public services—without being prepared to will the means, which are investment as well as reform.
    I see that Conservative Members are getting a bit jumpy about the looming leadership election. For the Conservatives, it is a time for reflection, and they have quite a lot to reflect upon—not just a search for power, but a search for a minimum level of coherence in the way they put forward their policies.
    Some of the main contenders for leadership have been out of the country. The shadow Chancellor left the night after the election to visit some ancient relics—these were not Conservative constituency associations—moving

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    effortlessly from one set of ruins to another. While we have been getting on with the business of Government, we have seen the contestants nightly on our television screens. They are closed off in a world of their own. They are nominated and then eliminated week by week in seemingly endless ballots. The last two are to be voted out by whatever is left of a dwindling audience of viewers. What we have ahead of us is the Westminster version of "Big Brother".
    Like "Big Brother", the contest has already turned nasty. Newspapers are filled with accusations of backbiting, there are daily outbursts in front of the cameras and, increasingly, the rest of the contenders are turning on one man who is accused of disloyalty. At some point, the Conservatives will have to re-enter and face the world of reality. At some point, they will have to enter and face the world as we know it.
    The theme of the Queen's Speech has been our commitment to improve public services. Last week, the shadow Chancellor said that his campaign theme was that he would be passionate about public services. However, on election night, in response to a member of the Conservative party who said that the campaign should have been about public services, the shadow Chancellor said:
    "It would have been folly for us to concentrate on the issues—health and education—where Labour had the advantage … It would have been foolish of us to spend our entire campaign on the issues where Labour was ahead."
    His folly last week is his passion this week.
    How does this week's passion for public services square with the cuts manifesto that put large tax cuts before public service needs—a manifesto of which the shadow Chancellor said he was "very, very proud"? He was proud of tax cuts last week, while public services are his passion this week. How does his passion for public services this week square with his personal authorship of the £8 billion spending cuts plan last year? Was that an error? What about his statement that £8 billion of cuts was "just the beginning"—was that also an error? His personal conviction about the increased reliance on private health insurance—was that also an error?
    Perhaps we should also look at the previous convictions that the shadow Chancellor has to his name. What about the record spending cuts when he was at the Treasury? Were they an error of judgment? His conviction about what he called an "ultra-low tax economy"—was that also an error of judgment? His conviction about "clear blue water" and shrinking the state—was that also an error of judgment? His conviction that the highest goal above all others was to minimise the tate—in the context of support for more public services, was that also an error of judgment? His conviction about the poll tax being fair, a vote winner and misunderstood—was that also an error of judgment? Does the shadow Chancellor really ask us to set aside each and every one of his previous convictions?
    It comes down to trust. Just as people will ask whether they can trust with the economy the Minister who, when Chief Secretary, gave us 15 per cent, interest rates, 10 per cent, inflation., £50 billion of borrowing, 22 broken tax promises and record mortgage repossessions and who was a principal architect of boom and bust, so, too, will they ask whether they can trust with public services the
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    Minister who has spent most of his political career, in government and opposition, as the torch bearer for the ultra-low tax economy and for a radical scaling back of the responsibilities for public services.
    One day, the Tories will have to address their fundamental problem. Britain cannot be served by a party hijacked 20 years ago and still imprisoned by a wholly out-of-date and socially divisive dogma. For our part, stability is the foundation. Our policy is investment, not cuts. We say yes to targeted tax cuts for families, pensioners and work, we say no to irresponsible tax cuts, and in this Parliament we put schools and hospitals first. That is why I commend the Queen's Speech to the House.
    4.35 pm
    Mr. Michael Portillo: First, I draw attention to my interests, which are in the register.
    I congratulate the Chancellor of the Exchequer on the election result, which means that he can continue in his office. I thought that his performance this afternoon was curiously edgy, nervous and bombastic—an out-of-date, old-fashioned sort of speech. I remind him that his party did win the election. It is over—he does not have to go over all the old arguments again. [Interruption.] As far as I could tell from looking at Labour Members, the only person in the House who enjoyed the speech was the President of the Council and Leader of the House of Commons, the right hon. Member for Livingston (Mr. Cook). He seemed to enjoy it very much indeed.
    The Chancellor of the Exchequer has shown a consistent interest in the plight of developing nations, and I am glad that that issue features in the Queen's Speech. Britain should play a role that is suited to our standing in the world in helping to relieve world poverty. As a civilised and relatively rich country, we should take pride in doing our duty. We must play our part in extending good governance around the world. We must do all that we can to reduce the causes of disease and of conflict. Even in terms of enlightened self-interest, the richer countries must see that money spent today reducing disease and eliminating the turmoil that gives rise to flows of refugees is repaid by the money saved on having to deal with the tragic consequences of those episodes. We must also work for global free trade, which is disproportionately to the benefit of the poorer nations in the world.
    I also welcome tie proposal in the Gracious Speech to make it easier for women to enter Parliament. The proportion of women here is too low. At this election, the progress made in 1997 has not been sustained. In my party, the under-representation by women is truly chronic. The Conservative party must put it right, and the Government's legislation may help us all in that respect.
    Mr. Bercow: Given that there is now only one more female Conservative Member of Parliament than there was in 1983, and that that 18-year period has too often been characterised by studied inactivity in our own ranks, does my right hon. Friend accept that his recognition of the case for positive action to translate equality of opportunity from a phrase into a fact will be widely welcomed?
    Mr. Portillo: My hon. Friend is very kind. I believe that the Conservative party must have the unshakeable

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    objective of increasing the representation by women in this House, and that that objective must be achieved between now and the next election.
    On the economy, the Chancellor's mettle has not been tested in difficult circumstances. In the first half of the 1990s, 18 countries belonging to the Organisation for Economic Co-operation and Development experienced recessions, but in the second half, only five OECD countries suffered in that way. So the Chancellor of the Exchequer has steered the British economy only through calm waters. The economic conditions have been benign, and obviously we hope that they remain so. The Chancellor has been lucky, but he should ask himself whether his policies are robust enough if his luck should change. The world is more turbulent, as the Chancellor admitted during his speech.
    In recent years, the United States economy has stimulated growth across the world. Last year, the United States grew by 5 per cent., but this year it is expected to grow by less than 2 per cent. United States manufacturing is in recession, retail sales have slowed and capital investment is down. Trade figures are down as well, which carries with it the threat that the United States problem may be exported and have wider effects.
    Further afield, Japan's growth is unlikely to exceed 1 per cent, for the next two or three years. Germany is afraid that growth may have plunged to zero in the second quarter of this year. Growth in the eurozone in the past 12 months is down a full percentage point on the previous year, and industrial production has slowed. The European central bank has had to revise its growth forecast downwards; and European inflation, it 3 per cent., is well above the target. Iraq has suspended oil exports and withheld supplies. Crude oil now sells at $27 a barrel and the price has recently been higher. Higher oil prices mean higher costs for businesses and families.
    Geraint Davies: On growth, is the right hon. Gentleman aware that the International Monetary Fund has cut in half its growth targets for the United States, from 3 per cent, to 1.5 per cent? It has also cut its growth targets for Germany by 40 per cent., but has adjusted only marginally its targets for the United Kingdom, which have moved from 2 8 per cent, to 2.7 per cent. The Treasury forecast is still 2.5 per cent. Does he accept that it is the chancellorship of the economy that is showing great strength in the global environment? While everyone else is seeing their growth cut, ours is still strong, which is a testimony to the good work of the Labour Government.
    Mr. Portillo: Despite all the hon. Gentleman's good work during the previous Parliament in asking such questions, he remains on the Back Benches.
    If there is to be less demand in the world economy, Britain must become more competitive just to maintain our position. We cannot be comfortable with the fact that our tax advantage, by comparison with that of our European competitors, has declined by two thirds since the mid-1990s. How can we be confident that the Chancellor will address the British competitiveness problem to which he alluded, when he refuses even to admit that the tax burden in this country has risen?
    As we all know, the general election showed a dramatic drop in turnout. I believe that part of the disillusionment experienced by the public is caused by politicians failing
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    to be straightforward. People feel insulted when the politicians who drove up their taxes pretend to them that their taxes have not risen. They find it extraordinary that the Chancellor has no scruples about raising their taxes, and has scruples only about admitting what he has done. Today, he had the opportunity to state in plain English that taxes rose under this Government during the previous Parliament and to set out his view on whether they will rise during the current Parliament—and on whether it is right that they should do so. It is a shame that he did not take the opportunity to be straightforward with the House and the British public on that matter.
    On the point made by the hon. Member for Croydon, Central (Geraint Davies), the Government like to pretend that the economy started to grow and unemployment started to fall on 1 May 1997. In fact, the economy has been growing since 1992 and unemployment has been falling since 1993. The OECD's view of the economy before the Government came to office in 1997 was this:
    "The prospects for achieving sustained output growth and low inflation are the best in 30 years."
    That was the situation that the Government inherited. Only a Government who were conscious of their under-achievement on the economy would devote more attention to trying to rewrite history than to trying to build on it.
    The Chancellor's record has been mixed. The economy has continued to grow and unemployment has continued to fall, which are good things. However, the growth of the economy and the fall in unemployment have been slower since the Chancellor of the Exchequer arrived in his office. Our relative position has also declined. In his first Parliament, Britain's growth rate was lower and our inflation was higher than those of our competitors. That is the precise reverse of the position in the Parliament up to 1997.
    Inflation has remained low and stable, as it was when the Government came to office, although the latest figures show that it has risen significantly. The Chancellor was right to make the Bank of England independent. [HON. MEMBERS: "Oh!"] It is hardly new for me to say that. He was right to make the change, but he could have made better arrangements. The Monetary Policy Committee must be seen to be above political interference. That is especially the case if we are approaching a referendum on the euro. Even now, I urge him to make more transparent the selection of Monetary Policy Committee members and to limit them to a single term, albeit longer than that which they presently serve, in order to establish that they are clearly independent of the Chancellor.
    Over the past few days and, again, today, the Chancellor has talked about productivity. He told us back in 1998 that productivity was
    "a fundamental yardstick of economic performance".
    He said today, with unusual frankness, that the quest to improve productivity had eluded us. To be more precise, it has eluded him more than it eluded the previous Conservative Government. Between 1992 and 1997, productivity growth was 2.3 per cent, a year. Since he has been Chancellor, it has averaged 1.8 per cent, a year. It is only by increasing productivity that we can increase the long-term rate of growth in our economy.
    If the Chancellor of the Exchequer had a genuine agenda for improving productivity, we would be the first to support it, but he does not seem to understand that it is

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    not the Government who improve productivity; businesses and working people do that. In a wonderfully telling sentence, he said that "we" have created 170,000 new businesses. I do not believe that he has created any new businesses—certainly not if he stuck to the rules of the House. He has a misconception of how wealth is created and of the people who are responsible for it.
    Mr. Gareth R. Thomas: First, may I thank the right hon. Gentleman for visiting my constituency during the election campaign? It was extremely helpful. Secondly, if the Conservative party is in great peril, is not the shadow Chancellor part of its problem?
    Mr. Portillo: That was a stinging arrow, from which I have not fully recovered. If the hon. Gentleman is alluding to the leadership contest in the Conservative party—which I think, clumsily, he is—most of the candidates are associated either with the catastrophe of 1997 or with that of 2001. My unique contribution is that I am associated with both.
    A recent survey by the Institute of Directors shows that entrepreneurs typically spend six hours a week complying with Government regulations. That is time that they cannot devote to improving their businesses—time which is taken away from the search for ways in which to be better and more productive. There was a time when Britain could feel relatively smug about how smoothly the machinery of government operated in this country compared with the bureaucratic complexities of some of our European neighbours, but we are now horrendously bureaucratic. The foot and mouth crisis was a snapshot that revealed to many of us what the country has become. We saw any number of different Government agencies tripping over each other. No one had the power of initiative or authority. Many farmers watched in dismay as officials were sometimes more concerned about protecting their own patches than dealing with the problem.
    It is a similar story when we talk to constituents, as I am sure hon. Members on both sides of the House do. People who apply for benefits are often sent on the most extraordinary bureaucratic treasure hunt in which they are passed from person to person and office to office. The machinery of government is increasingly unable to relate to people as people, whose complicated problems may defy bureaucratic templates. Under Labour, the cost to business of complying with regulations has risen by £5 billion a year. Last year alone, the Government introduced 3,865 new regulations, which was a record. It is true, as my hon. Friend the Member for Lichfield (Michael Fabricant) said, that as a consequence of the neglect of the bureaucratic burden, Britain has slipped down the competitiveness league table, from ninth position to 19th.
    The Chancellor is fond of saying that Britain needs to learn from America and to become more deregulated, but Americans have dubbed the Prime Minister "red-tape Tony". [Interruption.] Labour Members obviously do not read the world's press, but they should because they would find out what the outside world thinks of the Government. The Queen's Speech contains absolutely no recognition of the problem that Britain faces.
    Mr. Andrew Miller: The right hon. Gentleman referred to the problems that our constituents face when chasing around office after office. Does he accept, therefore, that the previous Administration made a mistake when they demerged the jobcentres and benefit offices?
    Mr. Portillo: The hon. Gentleman needs to focus on the future.
    Mr. Miller: I asked a straight question—answer it.
    Mr. Portillo: I am not going to get into it. I believe that everyone in this country—bar the Chancellor of the Exchequer, perhaps, but certainly including the hon. Gentleman's constituents—knows that bureaucracy has increased enormously in the past four years. I do not claim for a moment that the increase in bureaucracy began only four years ago. I am not in the Chancellor of the Exchequer's black and white school in which it is said that everything that happened before 1997 was perfect. However, the Government's neglect of the problems of regulation and bureaucracy is extraordinary.
    The Chancellor has already massively increased the cost of government, and he plans to go on increasing it during this Parliament. Whatever he may have said for party political reasons during the election campaign, he knows perfectly well that the Government could save billions of pounds, which they currently waste, if he would only put the same effort into controlling bureaucracy as he puts into bullying his colleagues.
    Richard Burden rose—
    Mr. Portillo: I am sorry, but I was only picking up what Mr. Alastair Campbell said when he described the Chancellor as an out-of-control colossus—not an expression that I would apply to him at all.
    Richard Burden: I am listening intently to the right hon. Gentleman's new measured tones and his emphasis on looking to the future, but I want to find out exactly what he is now saying about public services. Now that we are beyond the cut and thrust of the election campaign, can he tell the House whether he has changed his mind about any of the Conservative's public spending plans and statements? Has there, been any change from what he said during the election campaign? Has there been any change at all in his new guise?
    Mr. Portillo: Obviously, the hon. Gentleman had that question written for him before I delivered the last paragraph before he rose in his place, because I have just very clearly said that when spending £400 billion a year—£12,000 a second—of the public's money, it simply is not credible to go to the country and say, "We cannot possibly spend a penny of this money better. We are spending every penny of your money perfectly." The hon. Gentleman's constituents know perfectly well that that is not true. If he went around his constituency claiming that schools and hospitals would close if we tried to save

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    £8 billion out of £400 billion, it may account for the fact that so many fewer people voted for him this time than last time.
    Mr. Bob Blizzard: Will the right hon. Gentleman give way?
    Mr. Portillo: Yes, but I obviously ought to make progress at some point; I do not want to test the patience of the House.
    Mr. Blizzard: The right hon. Gentleman has just referred to the ideas on trying to save £8 billion from the Government's Budget. He claimed that he could save that money many times during the election campaign. Clearly, not many people believed him. On the few occasions those plans were put under scrutiny by media commentators, they fell apart. Let me however accept for the moment that he believes that he could have saved £8 billion from Government spending. If he is committed to public services, why did he not commit that illusory £8 billion to public services rather than tax cuts?
    Mr. Portillo: Well, I shall come to the reason for that in a moment. The reason is that—[Interruption.] I am giving the House a preview of the bit that I shall come to. As the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) said, the point is that this Government have made the poorest people in society poorer. [Interruption.] Well, the hon. Lady said it, and she was right. One of the reasons why the poorest people have got poorer is that they have borne the brunt of the stealth taxes imposed by the Chancellor of the Exchequer—but I shall deal with that point in a little more detail in a moment.
    There are real concerns about the balance of the economy. Consumer spending is strong, but the savings ratio has halved and Britain's share of world exports is down. We have a record balance of payments deficit, and the Chancellor predicts in the Red Book that it will continue to grow. Balance of payments deficits can be funded so long as people are confident that the economy is doing well. Those things can change very suddenly, but there is absolutely no sign that the Chancellor is concerned in any way. That lack of concern about the balance of payments deficit may prove very unfortunate for the Chancellor, as well as the country.
    A strong economy is the pre-condition to any Government's plans. Economic stability allows families, too, to realise their ambitions to buy a better home, to make provision for their retirement, to provide opportunities for their children. The tax increases of the past four years have blunted our competitiveness, and people can see no evidence that those tax increases have led to improved public services. I have never heard the Chancellor say that lower taxes make a country more competitive and that higher taxes do the opposite. Perhaps he would like to tell us this afternoon whether that is his belief. We hear the Chancellor talk about reducing taxes for business, but the director general of the CBI has said:
    "The reputation of the UK as a low tax economy … is under serious threat".
    The funny thing is that, around the world, Governments of every political persuasion are busy cutting the taxes in their economy, and it is the Chancellor who is swimming
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    against the international tide. Britain's taxes rose by the equivalent of 10p in the pound on income tax during the previous Parliament.
    Now, the Government plan rises in public spending during this Parliament faster than the average growth rate of the economy. During the entire election campaign, the Chancellor refused to tell us whether such above-trend rate growth in public spending was the plan for the next two years or the longer term. Is he just turning on the tap now in order that he can turn it off almost immediately, or is he planning for public spending that will, of necessity, require higher taxes? Whenever one asks him those questions, he tends to resort to talking about his rules, but his rules allow him to tax and spend as much as he likes. The only rule is that, as he spends, he must raise taxes in order to match it.
    During the election campaign, the Chancellor considered it a terrible affront that we should ask him which taxes he was thinking of raising during this Parliament. The question was wholly legitimate, since tax rises are indicated by the rate of public spending growth to which he is committed. He repeated his promise during the election campaign not to increase income tax at either the standard or higher rates, but will not make other commitments. He will not even make commitments relating to other taxes on people's incomes, and will not say whether he will raise or abolish the ceiling on national insurance contributions, which, effectively, would lead to a 50 per cent, tax rate on middle-income Britain. He had another opportunity in the House today to make clear what he intended. Raising the issue has at least brought to his face the first smirk of the afternoon.
    The Chancellor now plans to subject one half of Britain's pensioners to the indignity and nuisance of means testing. During one passage in his speech, I think that he meant to say that he was planning that people should have retirement in dignity, but it sounded like retirement indignity. I am afraid that the latter is indeed what the Chancellor is planning for. This is the man who promised that he would remove means testing from pensioners altogether.
    The proposed increase in means testing has important social consequences. The Queen's Speech promises us a pension credit, but that is made necessary by the penalties for saving that the Chancellor has introduced. Indeed, the pension credit itself will increase penalties further up the income scale.
    The Chancellor has spoken today about his plans to tackle child poverty, and that is of course a very laudable aim. However, in referring to the hon. Member for Hackney, North and Stoke Newington, I ask again whether that is credible from this Government, since the Chancellor's stealth taxes have hit the poorest hardest. Since 1997, the poorest fifth of households have seen the sharpest rise in the share of their incomes that must be passed to the tax man. As the Chancellor has said, this Parliament will see huge changes in credits payable to families. We on the Opposition Benches will study those proposals very carefully, but I fear that the Chancellor will, as usual, create a system that is too complicated for people to understand and full of anomalies and perverse incentives. Characteristically, he cannot resist meddling: he cannot resist micro-management. He wants to live everyone's life for them.

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    During the last Parliament, the Chancellor had to show that he could manage the economy better than his Labour predecessors. Given the fiascos of previous Labour Governments, that was not so very difficult. However, he failed completely on his principal promise, which was to improve the public services.
    We in this country used to be able to say that Britain had the best health service in the world. We cannot say that now. People in pain are being made to wait far too long before getting the treatment they need. Many people in this country have to wait more than a year for heart surgery, compared with two months in either Germany or France. In modern Britain, people with heart disease die while waiting for their operations. Britain's children do less well at school than children in Germany or France. Extraordinarily, the proportion of adults in Britain who are unable to read and write is among the highest in the industrialised world. In education, as in health, we should be willing to look humbly at what other countries have done to see how we can do things better.
    Whole communities today feel defenceless against crime. Criminals lord it over residents in some of our worst estates. Many women are afraid to go out at night and many elderly people are afraid to go out at all. Our transport system is failing us. Our roads are congested and our railways are chronically unreliable. No one could reasonably have expected the Government to transform our public services overnight, but people had hoped for some improvement and they have seen no sign of it. The Prime Minister was careful during the election not to repeat his claim that we had 24 hours to save the national health service, but he can never resist giving a hostage to fortune: now he promises that services in this country will become of world standard. That is the yardstick by which he will be judged.
    The size of the Government's majority allows them to make whatever reforms they consider necessary to the public services. Who could possibly stop them? They have an entirely free hand. If the Government can deliver changes that make a real difference to people's quality of life, the Opposition will support them; but if the Government cannot do that, they will be completely out of excuses.
    The Government have targets for recruiting more doctors, more teachers and more police officers. A target makes a good soundbite during a general election, but it is no substitute for a policy. The Government are struggling to retain the professionals that we have in service today. The GPs have threatened to walk out of the health service, there are teacher shortages, and police morale is being undermined.
    I ask the Government to recognise that it is their own interference that has driven our public servants to despair. Labour's style of government—the style of government that seeks a headline every day for a new initiative every day—drives to distraction the unfortunate people who are supposed to implement Whitehall's bright ideas while trying simultaneously to deliver a service that works to the public. Our professionals today are longing to be left alone to work effectively in their chosen vocations.
    We live in the age of the internet, at a time when people have unlimited access to information. Ours is a less deferential age in which people expect to use their
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    initiative and to be able to innovate. The time of national plans and centralisation is over, but the Government show absolutely no sign that they recognise that. Just as businesses see a Government who talk deregulation while imposing countless new regulations, so public servants see a Government who talk decentralisation but hand down ever more directives to them.
    The Government themselves now aim to be the nurse, the teacher, the police officer and even the parent in every home. True, they now promise greater freedom for teachers and say that more money will be given directly to head teachers. That is what the Conservatives have long advocated, but the Government have always been scornful. If the Government's is a genuine conversion, we shall be delighted, but is it genuine? Can we believe that of a Government who organised the abolition of grammar schools, scrapped grant-maintained schools merely because they had been invented by the Tories, and scrapped the assisted places scheme merely because Labour believes that if not everyone can get on a scheme, no one should be allowed to do so?
    The Government spent much of the election campaign claiming that they would reform health care. There were hints that they would be willing to build new partnerships with the private sector, breaking down the absurd ideological division between the two sectors. We Conservatives have long advocated a practical approach based on getting the best possible treatment for patients, but over the years the Government have simply misrepresented our policy and derided us for it. If the Government have now been converted, I welcome that. But again, can we believe them? In the previous Parliament, Health Ministers abolished GP fundholders just because the Tories had invented them. The Secretary of State for Health described work by consultants in the private sector as
    "one of the seven deadly sins".
    This very day, he is out briefing again, emphasising the negative aspects of co-operation between the two sectors in health. It was he who proposed that consultants should not be allowed to practise in the private sector within seven years of signing a contract with the national health service.
    That takes us back a long way. Even Nye Bevan, when he set up the NHS in 1947, recognised that it needed the support of consultants with a mixed practice in the private and public sector, which is why he introduced pay beds in NHS hospitals, so that consultants could treat their private patients there and the NHS could afford to use their skills. Under the present Health Secretary, we have moved backwards from Nye Bevan's stance.
    Ms Abbott: I have listened with rapt attention to a fellow alumnus of Harrow county grammar schools. The right hon. Gentleman spoke about morale among public servants. Is he seriously suggesting that morale was better before 1997?
    Mr. Portillo: It is wonderful to see my schoolfriend here. Yes, I am seriously suggesting that morale was better then—the hon. Lady ought to be deeply shocked by that. Because she is a true believer, she genuinely believed that the problem with morale in the NHS and teaching was caused by a Conservative Government. She had in her mind the soothing idea that, as soon as Labour came to office, those problems would be put right, but she must admit that she has been disappointed.

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    There was no occasion under a Conservative Government when three quarters of GPs said that they would be willing to resign their NHS contracts; that simply did not happen. We did not have four-day weeks in many schools, as we have today, because we did not have as big a crisis with teacher morale as we do today. My unequivocal answer to the hon. Lady is that, however she describes the situation four years ago and however much it horrified her, she must now grapple with the fact that morale in the public services is worse today than it was four years ago. Unless the Government can free themselves from their ideological shackles, I do not expect them to make much progress. I do not deny for a moment that, following its defeat, the Conservative party will have to work hard to win the public's confidence on services to the public. We will do so with an open mind and a willingness to study what works elsewhere.
    The Government's economic policy during this Parliament may be dominated by the question of the euro. Recently, it was curious to see the Government campaigning for re-election, supposedly wanting to focus on the economy, but unable to tell the public whether or not their economic policy was based on the premise that Britain would have its own currency and set its own interest rates. The Conservative party learned during the election that most people agree that Britain should have its own currency, but we also learned that, for now, the issue is not uppermost in most people's minds; they will take an interest in the question of currency if and when there is a referendum. For now, they want us to address their main concerns of education, health, transport and crime; we should listen to what they say about those issues.
    I am glad that this week we shall see the emergence of two groups representing business people, one group in favour of having our own currency and the other against. This is a good time for a debate between business groups. The arguments about whether giving up our currency would be good or bad for business are not by any means the whole issue, but they are clearly an important part. The Conservative party's views, and the views of those in the party who disagree with the party leadership, were set out clearly during the election campaign and, in my view, can now be given a rest.
    In the previous Parliament, the Government enjoyed good luck, on which I congratulate them. My worry is that, during that short four-year period, when global conditions ran in their favour, they developed a sense of invulnerability, which is the enemy of prudence. They eroded Britain's competitiveness and committed us to levels of public spending that will erode it further. They are indifferent to the balance of payments problem and unconcerned about bureaucracy growing like a leylandii—[Interruption.] It is a fast-growing plant or, more exactly, a tree that can be a great nuisance to one's neighbours.
    When the Government talk about the need to reform services—
    The Financial Secretary to the Treasury (Mr. Paul Boateng): The Opposition do not know much about horticulture.
    Mr. Portillo: Representing Chelsea, I resent that very much.
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    The Government talk with forked tongue about the need to reform services. Each briefing that the Government give the media points us in a different direction. They favour radicalism one day, the next day they pour scorn on any change to the arrangements that were set in place in the 1940s.
    I foresee another four years during which the public will be disappointed by a Government who will be unable to live up to the expectations that were raised during the election campaign. For the Conservatives, it must be four years of hard work on the policy areas where we have failed to convince, on the issues that matter most to the public. Under whatever leader the party may choose, I am confident that that work will be done.
    5.10 pm
    Mr. Martin O'Neill: We usually come to the Queen's Speech with a sense of relief that the general election is over. Given the performance of the right hon. Member for Kensington and Chelsea (Mr. Portillo), it is clear that the show will continue for some time. It is rather depressing that, rather like the Bourbons, Conservative Members have returned to this place having forgotten nothing and having learned nothing.
    It is depressing that a debate on the economy, on industry and, understandably, on social services should, from the Conservative standpoint, be unspecific about the nature of improvements in social services. They have not shown that any lessons have been learned over the past four or five weeks about improvements in conditions of business, competitiveness and enterprise.
    Conservatives continue to hammer on about regulation and the burden that it imposes on business. When I talked to business people in my constituency during the election, I was relieved—given past experience, I was somewhat surprised—by their response to questions about the Government's handling of the economy. Indeed, there was almost praise. I would be going too far if I said that Labour was given a dazzling write-up, but there was not the hostility of the past. There was frustration among many traditional Conservative-supporting business people that they could no longer support the party that they had backed for most of their adult lives.
    Former Conservative voters did not support the Conservative party because they felt that the party was singing from a hymn sheet that, if considered relevant, was certainly discordant with present times. When it came to addressing the need to improve competitiveness, it was felt that the Conservatives had little to offer.
    Many of us have had discussions with friends from America. Some of us have had the opportunity to visit the United States to see how the economic revolution of the 1990s and the first part of the present decade has progressed. It is important that we learn—the process has already started—that it is no longer the business of government to create a climate in which failure is punished. Individuals who have been unfortunate to see their businesses go down should not be denied the opportunity to start afresh. It is common in the US for it to be said, "Perhaps it is better to give money to people who have failed in business because they have learned the harshest and severest of lessons in the hardest way. At least these are people who know what the world is about."
    The Conservative party does not say anything about how to help industry and to make life easier for individuals whose businesses, for whatever reason,

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    have gone through difficulty. Given the bankruptcies, disruption to businesses and loss of housing, for example, that was commonplace in the 1990s, especially in the early part of that decade, one would expect Conservatives to begin to examine the issues.
    The United Kingdom also has the problem of attracting money to business. One of the interesting and encouraging aspects of the past four years is the renewed enthusiasm for backing small, start-up businesses. The Chancellor has gone a long way in helping to bring venture capital to many fledgling businesses. I welcome his success with the European Union and the Commission in gaining agreement on the venture capital funds for regional development that he will make available. That is the final piece of the jigsaw for regional development agencies, which will not only have funds of their own, but be able to afford access to additional moneys for businesses that need support and assistance.
    It has already been said that perhaps the most telling aspect of the Government's approach was shown by one of their first actions in the early days of the previous Parliament when they established the independence of the Bank of England. The shadow Chancellor made an interesting point about lengthening individuals' service on the Monetary Policy Committee, but only for one term. Perhaps we should consider that. Closer attention could be paid to aspects of the MPC's activities and terms of reference, but it is early days in the Parliament and we have only four years' experience to draw on.
    The Bank of England's findings and outpourings now enjoy a special status. Last week, the Financial Times reported that it had pointed out the dangers of the two-tier economy: the successful, dynamic business and financial service sector and the sluggish, deteriorating manufacturing sector. There are qualifications of that stark divide. Indeed, several financiers from across the political spectrum, who have written a letter that appears in today's Financial Times, point to the threat to our financial services of remaining outside the eurozone for too long.
    Opening the debate is worth while, because, in the previous Parliament, Labour Members at least paid insufficient attention to the impact of our absence from the eurozone on the manufacturing sector. It is fair to say that the biggest problem was not our absence in the 16 to 18 months of its existence, but the high value of sterling and the impact on exports to other eurozone countries.
    In the past, Ministers said that our competitors—for example, the Federal Republic of Germany—had to contend with a high or overvalued currency, and that the Germans coped with that for many years. Like the United Kingdom, Germany had low inflation and interest rates, but it also had a climate that was conducive to high investment in staff and equipment. Our understandable reluctance to introduce training levies to fund skill improvements or to create additional skills is no excuse for not using fiscal instruments such as tax credits to finance training.
    The Government have correctly identified the digital divide as one of the major barriers to employment mobility. They have been imaginative and supportive in introducing tax relief on computers and help with information technology training, but surely it is sensible
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    to extend such schemes to ensure that support is provided when new equipment that incorporates IT is introduced, for example, in engineering. Greater assistance could be given with training and providing training grants for firms that use new equipment.
    My interests in the area are documented, and I am not engaging in special pleading, but the Government ignore at their peril the present plight of engineering and manufacturing. It is certainly fair to say that too much of the potential profit, which would be the source of such investment, is being denied because margins are being slashed to sustain price competitiveness with other contenders in the eurozone. The failure to invest means that any short-term benefit that could be gained from price cutting will soon be lost as our competitors with a lower cost base invest using resources denied to us.
    All the bold initiatives in the enterprise for all programme, which I welcome, will require more time and support as soon as they can be put into place. Twelve months ago, some of us were saying that we hoped that the gap between the pound and the euro would narrow: our optimism was, sadly, premature. That is due in part to the continued attractiveness of sterling and the dollar, and in part to the lack of confidence that many people have in the structure and control systems of the Eurozone, particularly in relation to the European central bank.
    As I said earlier, one of the Government's great successes has been the Monetary Policy Committee. I wish only that the countries of the eurozone had the courage to adopt a similar framework. Whether we must await changes in structure or the achievement of the five goals to the Chancellor's satisfaction, if we have to devalue and change to become members, Ministers must grasp that nettle.
    Geraint Davies: Does my hon. Friend think that the success of the Monetary Policy Committee—in terms of its constitution, its being transparent and its proceedings being minuted, for example—offers any lessons for the European central bank? The ECB is a black box whose proceedings are not minuted and which is difficult for the markets to understand. The limit on 2 per cent, inflation—as opposed to 2.5 per cent, plus or minus 1 per cent.—means that, in some senses, it is not only misunderstood but, arguably, relatively deflationary.
    Mr. O'Neill: It is fair to say that the MPC represents, in many respects, the brightest and best in the economic field in this country—or, at least, the brightest and best who choose to make themselves available. It is fair to say that, in the European Union, the need for everyone to have a seat at the table and to be represented means that the body may be representative but not necessarily effective. Given the other constraints that my hon. Friend the Member for Croydon, Central (Geraint Davies) has identified, there is a great deal left to be desired.
    I noted the point made by my right hon. Friend the Chancellor when he expressed concern about the way in which the ECB operated. While that is not one of the five conditions, it is perhaps one of a subset of additional anxieties that he is known to express from time to time about the working of the eurozone. We shall need to look at this institution before we shall be able to join it.
    Ministers must grasp the nettle and explain the advantages for business and employment of the currency that they support but do not, as yet, wish to join.

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    The Government were probably right to avoid confusing the electorate before polling day, but we need far more positive signals now. We should be under no illusion—our view on the five conditions must also include an indication of the euro value at which we would be prepared to join.
    If such a package could be announced, it would be at that point—and only at that point—that a Bill for a referendum could be introduced. Assuming that that were to happen within the two years that the Government have set themselves, we would perhaps be talking about June 2003—I suppose, after the local government, Scottish Parliament and Welsh Assembly elections. We could then consider the passage of the legislation, and a referendum could probably be held in September 2003, with entry into the system taking place 18 to 30 months later—perhaps in February 2005 or 2006. Entry could take place later, but that would have implications for a general election in 2005. On the other hand, the matter could be delayed even further.
    Whatever happens, it is abundantly clear that the argument in favour of a common European currency has yet to be put to the British public with sufficient clarity and concision to convince them that sharing power over monetary matters with our European partners will help our export competitiveness and give greater influence over the operation of the currency while still allowing us a degree of independence to establish our own fiscal and social priorities in a way that will benefit people and encourage them to support the new currency.
    Failure to address those challenges will deny the British public access to the truthful and responsible information on the issue and jeopardise the confidence of the same European partners with which we need to work so closely on so many other Community issues.
    There is much in the Queen's Speech that I am happy to support. The enterprise for all initiative has built on much of the work of the Clinton Administration and of my colleagues on the Trade and Industry Committee, in which we argued the case for relaxing a number of fiscal measures, an improvement in respect of capital gains and creating the opportunity to introduce new capital to businesses by removing certain penalties, which did not encourage people to invest.
    We must not only unlock the doors of many closed businesses, but help businesses in which families have been reluctant to give up control, even though successive generations of family members showed no interest whatever in the business. The old guard would say that giving up their controlling interest was not in their financial interest, but, with an imaginative approach to capital gains tax, that will begin to happen.
    I would like to think that we could begin to establish an equity economy such as that which is not uncommon in certain parts of California. In return for services, expertise and assistance of a sort hitherto denied to many small businesses by the corralling character of capital gains tax, fledgling businesses would be able, with equanimity, to hand over part of the equity in the business to people who join it.
    All that, plus a willingness to encourage competition and to root out the cartels and cronyism that often infect areas of our national business life, is to be welcomed. I wish every success to my right hon. Friends at the Treasury and my right hon. Friend the Secretary of State
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    for Trade and Industry, who is in her place. Like me, she has been impatient with cartels. The previous debate in the House in which we both spoke was on motor car prices and it was clear that a sharp axe had to be taken to that Gordian knot. Although it has not quite severed the knot, we have begun to get to the bottom of the problem.
    In a number of examples, in a more competitive environment and with a more fiscally friendly approach to the structure of business, we are achieving the breakthroughs that we need. I would only ask my right hon. Friends the Chancellor and the Secretary of State to reconsider the ways in which we could seek productivity increases. Productivity lies at the heart of our economic regeneration, but if we cannot get our people to produce more and better-quality goods, all the rest is just empty rhetoric.
    I wish my right hon. Friends good luck in their endeavours and I welcome the Queen's Speech, but let us look to the future and try to achieve even more than we anticipate achieving. The Queen's Speech represents an excellent start that enjoys the confidence of the country. It certainly enjoys the confidence of the good people of Ochil and the business community there. Although I have not always regarded it as the strongest supporter and friend of the Labour party, that is the strong message that I got at the election, and I welcome the opportunity to say so today.
    5.29 pm
    Matthew TaylorI apologise to the House, but for family reasons I shall not be present for the winding-up speeches.
    This debate is important for two reasons. First, it started with a debate between two people openly contending for the leadership of their respective parties, and not doing so terribly well. Secondly, it considers the fundamental issues that are likely to dominate the Government's path in the next four years. It is about the delivery of public services, and the degree to which that is about putting money in or about reform and change in the method of delivery. That issue is already dividing Labour Members of Parliament and those in the Labour movement, and is likely to be the crux of the debate.
    The fundamental issues are also reflected in the debate on membership of the euro. The shadow Chancellor said that his party should now set that issue to one side in its campaigning. I take him to mean that he believes that the Conservative party should no longer campaign for or against the euro. He said that two business groups had been set up, one for and one against membership, and that the matter should be left to them. That seems remarkably similar to the position of the Chancellor, who also believes that the debate on the euro should be left to business, so that he need not dirty his hands with the issue.
    This Parliament is also likely to be dominated by the question of the degree to which the private sector should be brought increasingly into play in public services.
    Mr. Portillo: I am accustomed to being misrepresented most of the time on most things, but it was perfectly clear from what I said that the British people will want to debate our membership of the euro and that they will want their political parties to be involved in that debate when

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    the issue is ready for a referendum. The timing of that remains with the Government. As no referendum is in prospect, I made the remarks that I did.
    Matthew Taylor: I think that the shadow Chancellor confirmed that he believes that his party should not campaign for or against the euro until a referendum is called. That seems remarkably similar to the position that the Government, and certainly the Chancellor of the Exchequer, have adopted.
    It was interesting to see the first outing of the revised version of the shadow Chancellor's approach to campaigning—or perhaps I should say the shadow leader of the Conservative party's approach. It was rather like attacking the Chancellor of the Exchequer with a pillow. I am not convinced that trying to be nice will necessarily deliver victory for the Conservative party. It has not worked for us over several decades, but we are always willing to offer advice on such an approach.
    I want to deal with the imbalance in the economy. It is odd that a debate on the economy has involved so little discussion about where we stand. The Chancellor seems to believe that there are no problems facing us, and the shadow Chancellor scarcely touched on the issue, except to outline a policy to do the same as the Labour party but fractionally more efficiently with fractionally less waste. The truth is that there is a serious imbalance in the economy.
    Internationally, American manufacturing industry is slipping into recession, and both the United States and Europe face real difficulties. However, our greatest concern should be about the British economy.
    On the face of it, many things are going well. Growth in consumption in the year to March 2001 was 2.6 per cent. Consumers in the United Kingdom are still spending: private sector consumption is higher than that, at 3.2 per cent. Housing growth is about 7 per cent, on the year, and inflation remains very low. However, we see a different picture in farming and manufacturing. It is a picture of an economy in real difficulties. History has always told us that if we have real difficulties in the manufacturing sector and yet sustained, substantial growth in consumption, we shall run into all sorts of economic difficulties.
    Industrial production and manufacturing output both fell in the first quarter, while services continued to grow almost as strongly as those fell. As a result, imports grew twice as much as exports. The Bank of England's agents report continued weakening of manufacturing in sectors including information and technology, which has provided something of an engine for the support of manufacturing exports in recent years. Productivity growth continues to be weak by international standards.
    The economy is seriously unbalanced, which is reflected in services price inflation of 3.8 per cent, in April, compared to a slight fall in manufacturing prices.
    Geraint Davies: Does the hon. Gentleman accept that the reason why productivity growth is low but rising is simply that in recent years we have experienced a massive influx of unskilled labour, which is reducing average productivity? The pattern of average productivity in the United States is of very low growth, below that in the
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    United Kingdom, which has risen now that it has reached a high threshold of employment. That is a sound foundation on which to build productivity that is accelerating.
    Matthew Taylor: I do not accept the hon. Gentleman's view, on two counts. First, the history of investment in manufacturing under Labour has also been poor: the investment that might deliver later higher productivity growth has not been adequate. Secondly, one factor above all characterises the United States—a continuing large influx of low-skilled labour into employment. In fact, one of the real attributes of the United States economy has been its ability to encourage people into employment, something at which this country has historically been rather poor.
    At its latest meeting, the Bank of England pointed out that the strength of sterling and the weakening world economy would lead to lower interest rates in the medium term, except that that might worsen the imbalances in the British economy that I have described. It drew attention to the very problem that I have illustrated, which it rightly described as a key policy dilemma. This is not something that the Bank of England, through interest rate policy, can resolve alone; Government policy is needed to address it, and we believe that it can be addressed only if we recognise that there is currently a real problem with the exchange rate with the euro. Government policy needs to take that into account, and I share the concern of the hon. Member for Ochil (Mr. O'Neill) in that regard.
    I have argued here, in the past that if the Government made clear their exchange-rate targets in connection with our joining the euro—the levels at which they believe joining could be sustainable—that in itself would drive us towards a more sustainable exchange rate, as it drove every other European country that joined in the first round. That is exactly what we saw happening after the election, when the markets believed that there might be an early move to the euro. As soon as that happened, they started to focus on a long-term sustainable exchange rate rather than on short-term speculation.
    Mr. Fallon: I am grateful to the hon. Gentleman for giving way yet again.
    The hon. Gentleman has asked the Government to clarify the exchange-rate target that they should be pursuing. Perhaps he could clarify what he thinks the target should be.
    Matthew Taylor: We have published a document that examines the conditions for joining, which includes an exchange rate in the range from 1.25 to 1.45 euros to the pound. That document is now nearly a year old. Clearly, any Government will have to look at the position at the time when they join, but we could hardly be clearer than we have been. Indeed, ours is the only party that has been willing to provide any answers. Some Labour Back Benchers have made the case, as have many outside, but few Front-Bench Members have made it here.
    Mr. O'Neill: I do not want the hon. Gentleman to confuse me with others. I think it very dangerous for Governments to think aloud about exchange rates. Only when other decisions are made should such an eventuality be considered. I consider it foolhardy of those on the

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    Government side to start talking in an airy-fairy way about an exchange rate two, three or four years away from the possibility of a referendum. We should be very careful: we would see serious problems in the money markets if we went down that road. I hope that only when we were near to offering the country a choice would the Chancellor and the Cabinet arrive at an appropriate range of figures. No one worries about what the Liberals say, but a lot of people depend on what the Government say.
    Matthew Taylor: The former Chairman of the Select Committee on the Treasury might disagree with the hon. Gentleman. In the previous debate on the matter in the House, the former Chairman took exactly the position that we take. Since 1997, 500,000 people in manufacturing industry and nearly 80,000 people in farming have lost their jobs. That was closely associated with the problems of the exchange rate. They might beg to differ with the hon. Gentleman. Certainly, many in British industry would.
    Mr. Edward Davey: Did not my hon. Friend find it odd that, when the pound was beginning to go towards competitive levels, which was taking some of the pressure off our manufacturing, agricultural and tourism industries, Her Majesty's Treasury started to talk up the pound, making the imbalances in the economy to which he has rightly referred even worse?
    Matthew Taylor: My hon. Friend is right. We must understand that the history of the Labour party—the devaluations in the 1960s—may make it difficult for it to address those real issues, but real they are for those in the manufacturing and farming industries who are attempting to make exporting pay. The sooner those taking responsibility for our economy acknowledge the fact that jobs are draining away day by day with the present exchange rate, the better it will be.
    Geraint Davies: Will the hon. Gentleman give way?
    Matthew Taylor: I have given way to the hon. Gentleman and I shall make a bit of progress.
    I do not want to give the impression that the problems in farming and rural communities are to do merely with the exchange rate. The problems in those communities are severe. There is a crisis there. Any hon. Members who campaigned in rural areas during the general election cannot fail to be aware of that—Labour Members as well as others. I hope that those Labour Back Benchers who represent some of the more rural communities will, as we will, vigorously press the Government for more effective action to tackle the crisis in rural areas—the absence of measures to do so was one of the worst omissions from the Queen's Speech. It was as if a crisis were not happening. I assure Ministers that that crisis is happening: it is there strong and hard for all those in rural communities who have lost services, jobs and homes—for many farmers, the farm is their house as well as a source of income.
    I turn to the issue that I thought might be pressed further today: the future of public services. Recession or not, the Government's cautious assumptions should mean no short-term problems for Government spending plans. Indeed, the assumption of 2.25 per cent. trend growth is
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    arguably over-cautious, but just as in the general election we argued that the Government should be judged on their record on public spending over the previous Parliament as a whole, not simply by pre-election spending, the Government will be judged in the next election on their overall record over their two Parliaments.
    There are serious questions. The Government's spending plans run only to April 2004 and the new ones will be announced only in June 2002, so we have no picture of Labour's plans for the second half of its term in office, but, as the Institute for Fiscal Studies has identified, if public spending were to continue to grow at the current rate of nearly 4 per cent., there would be a gap in Government income of some £10 billion. Of course, the Government have not announced that spending plan. The Conservatives were wrong when they said that there was a tax gap—a funding gap. There is actually a spending gap.
    The question is not how the Government will fund their plans, but what their plans will be in the second half of the Parliament. That goes to the fundamental issue of delivery on pensions, education, health and the other public services. The issue is whether the Government believe that there is a need to fill further the pot for investment in public services, or whether their current spending proposals have gone broadly far enough. If they believe the latter, after the feast in the general election campaign, we shall see a return to famine in the second half of this Parliament.
    The argument that growth will deliver all is made both by Conservative Members, who say that growth will fund tax cuts, and by Labour Members, who say that growth will fund their never-ending spending increases. However, if it were true that growth delivered all, the Thatcher years would have been a time of enormous bounty in the national health service. Year after year, the Thatcher Government used precisely the same argument: that economic growth delivered sufficient real-terms increases in health spending.
    The truth, however, is that wages dominate public sector costs. Consequently, the public sector can deliver more nurses, doctors, operations and teachers only if wage growth is less than economic growth, unlike the private sector. As the figures clearly show, that is exactly what has been happening: the wages of those working in the public sector—teachers, doctors and police officers—have been held back.
    In the previous Parliament, on average, real-terms private sector wage growth was more than 15 per cent., whereas it was only about 10 per cent, for doctors and teachers and about 6 per cent, for police officers. Moreover, that erosion has been not just a short-term process, as improvements have been delivered for a much longer period by restraining public service pay levels. In the 1990s, in real terms, private sector pay levels exceeded those in the public sector by almost 10 per cent., with nominal growth of 42.7 per cent, in public sector pay compared with 51.4 per cent, in the private sector.
    It is the Government's misfortune that that disparity has reached such a point that they are having real problems in recruiting and retaining staff, whereas the previous Government encountered largely complaints about the disparity. The real problems of recruiting doctors, nurses, teachers and police officers are now visible to everyone, and they are one of the main reasons why the Government

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    failed to deliver the improvements that they promised in the previous Parliament. Ministers have made some money available, but they have not been able to find enough people to fill even those posts because the rewards are not sufficient.
    The issue is about not only pay, but conditions and the never-ending revolution in health and education that makes the job unbearable for many who simply want to get on with treating and educating people. Nevertheless, pay is now a real issue.
    I should like finally to touch on the issue of bringing the private sector into the provision of public services, as if that were a panacea. The Government are offering private sector involvement as a partial solution, whereas Conservative Front Benchers seem to offer it as the only solution. However, a couple of myths need to be demolished, the first of which—it has clearly suckered the Deputy Prime Minster, although I very much doubt that it has suckered any Treasury Ministers—is that bringing in the private sector will unlock new revenue sources that would otherwise be unavailable.
    On 20 June, on the "Today" programme, the Deputy Prime Minister said that, "if you can prime" transport investment
    "by private money, you can reduce the pressure on resources that are available for education and health."
    The fundamental truth, however, is that the Government have to pay for public services regardless of whether they are delivered by the private sector or the public sector. Private sector involvement is not a panacea for a shortage of public funds. As those in the public sector know, they are being forced into involving the private sector as a way of getting round Treasury rules. Local government especially is being forced down that route. However, on no basis can it be seen as free money; those services have to be paid for one way or another.
    The Institute for Public Policy Research, effectively, made the case today that if the private sector is to be used in the delivery of public services, it must be on the basis that it can do something better than the public sector. In some way, the private sector must be able to get better value for money or deliver more caring services more efficiently. Whatever it is, there must be some such benefit.
    The problem is that Treasury dogmatism has not allowed a level playing field in the assessment of whether the private sector brings real benefits, issue by issue. The IPPR demolishes Labour's case on National Air Traffic Services and London Underground almost as effectively as many Labour Members and the Mayor of London have already. If we are to judge use of the private sector, it must be on the basis of effective competition, with alternatives. If something can be delivered more cost-effectively and efficiently in the public sector, it can only be ideology that drives the Government into using the private sector.
    Yet all the studies show that, in many cases, the decision is not taken on the basis that there is an effective public sector comparator, showing that the private option is cheaper. We need effective comparators that allow the
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    public sector and other alternatives to be tested so that we ensure that the private sector is not used when it will waste public resources.
    Mr. Nigel Beard: The hon. Gentleman's argument does not allow for the fact that a number of public sector projects over the years have been over-budget and overdue; not just the Jubilee line, which was the most recent case, but a stream of hospital projects. The 39 hospital projects now using private finance initiative money are not in that realm at all. If we were not to recruit expertise from the private sector—which the hon. Gentleman seems to oppose—a large part of the Government's planned investment would go down the drain in wasteful and inadequately managed projects where the risks were not shared adequately with the private sector.
    Matthew Taylor: I challenge the hon. Gentleman to come up with authoritative studies that support his position, because all but one have shown that money has been wasted by going down the PFI route. The IPPR report does not even attempt to defend the use of PFI. We know full well that public sector projects may sometimes overrun, but so undoubtedly do those in the private sector; the channel tunnel link is the most damning example of them all. However, if the hon. Gentleman is confident of his position, I am sure that he will agree that it is important that we test it against proper comparators and with the proper exposure of figures. The Treasury has not made the comparator public, nor has it been willing to publish the evidence.
    Mr. Beard: When the Treasury Committee looked into the matter, we had before us an analysis by Arthur Andersen that showed a range of different projects—both IT and construction projects—for which the average saving was 17 per cent., compared with the public sector comparator. The evidence appears to have been dismissed by the hon. Gentleman.
    Matthew Taylor: The answer is that I made the exception of that one study. The Andersen study is always the one quoted by the Government, but it was based on expected savings and not on those achieved. Those savings were often not delivered, as subsequent reports on these projects have shown. If the Government are so confident of their position, why do they not make the information on the comparators available? They hide behind commercial confidentiality; it is hard to see how the public sector comparator could be a matter of commercial confidentiality.
    Geraint Davies: The hon. Gentleman should know that a number of studies by the National Audit Office were reported to the Public Accounts Committee, which has a summary of them, and show that a large number of the PFI projects do work.
    Matthew Taylor: The hon. Gentleman knows full well that although a series of reports have been published, the Government always quote the Arthur Andersen report because it is the only one to support their position. The survey was based on expected savings, rather than delivered savings.

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    Do not get me wrong; I am not arguing that there is never a role for the private sector. However, just as in the past—when the Conservative party made the mistake of believing that privatisation was always right, no matter what—we now see Labour Front Benchers going down the same route; arguing without being willing to show the public sector comparator that the use of private finance is a benefit. Indeed, they distort the position on the "Today" programme and elsewhere by pretending that they are making available new money, rather than spending Government money in a different way that can be judged only on the basis of whether it delivers better services.
    There is one final point that I want to make. [Hon. Members: "Hear, hear."] I have probably spoken too long for Labour Members and for the Deputy Speaker. However, my final point was not touched on by the IPPR. Labour Members ought to look at the report if they seriously believe that there are no real problems with delivery; there are, and the Government must address them. One area, however, is scarcely touched on by the IPPR and it is the area about which we in this place should be most concerned: accountability.
    There is real concern about people's ability to have a real say over how their public services are delivered and developed when the process is taken out of the hands of publicly accountable authorities. That is particularly so, given the appalling record in the public sector of setting contracts in terms that protect the public when the private sector is brought in. We have heard of everything from the selling on of contracts at huge profit—which can only mean huge losses to the taxpayer or that we are forgoing funding for improvements that might otherwise have been made in the public sector—through to hospitals suddenly finding that their patients are being charged for services that were forgotten about in the contracts. PFI hospitals that even charge people for receiving incoming telephone calls are just the tip of an iceberg of Government ineffectiveness in using the private sector effectively in public services.
    This may be the defining issue of this Parliament, not least because the Government may duck the euro issue, and it will be fundamental to the future of our public services. Those, mostly on the Labour Benches, who believe in the importance of public services and in a national health service and a national education system that guarantee high quality to every child and every patient will know that getting this issue right would mean great improvements in public services. However, getting it wrong could mean that we lose the argument to the Conservative party for ever. Therefore, I say that they must tread carefully.
    5.58 pm
    Mr. Chris Bryant: I realise that pride comes before a fall, but I stand with some considerable pride as the new Member of Parliament for Rhondda. I am proud for two reasons. First, Rhondda is the only seat in the country to have been represented by a Labour man ever since the constituency was created and miners were first allowed to vote, in 1885. Secondly, for any Welshman, the Rhondda is the epitome of our industrial heritage and takes a special place in the hearts of all Labour men and women, especially those from Wales.
    My predecessor, Allan Rogers, took a similar pride in representing Rhondda, something he did for 18 years. I know that many hon. Members will agree that Allan was
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    a persistent and determined representative of the people of Rhondda and a committed and loyal parliamentarian. He was a Member of this House through the toughest of years for mining communities and most of his time was spent on the Opposition Benches, yet his work as shadow Defence spokesman during the Gulf war, on the Security and Intelligence Committee and in the Inter-Parliamentary Union won him respect and friendship from Members across the House. I pay tribute to him.
    There are those who have said, however, that I am scarcely the stereotypical Member of Parliament for the Rhondda, with its macho image and non-conformist tradition. Apart from anything else, I am, thanks to the now repealed House of Commons (Clergy Disqualification) Act 1801, the first Anglican priest to take a seat in this House for 200 years and the last person ever to have resigned his orders under the Clerical Disabilities Act 1870—a recondite piece of legislation that has also now been repealed. It is, I suppose, no surprise that my career has been referred to as more of a Daily Mail headline than a curriculum vitae.
    Most of the stereotypes concerning the Rhondda are inaccurate. Contrary to public perception, the Rhondda is not one valley but two—the Rhondda Fach and the Rhondda Fawr. Its two rivers no longer flow black with coal dust but have herons and wild mallards nesting there. I am sure that Ferndale rugby football club will forgive me for saying that our most successful sports team in recent years is not a rugby team but Britain's premier women's basketball team, the Rhondda Rebels.
    The arts have played a central part in the Rhondda's heritage. Not everyone in the Rhondda sings, although we have at least three truly first-class male choirs—the Treorchy, Meibion and Pendyrus. Nor does everyone play in a brass band, although we have the best brass band in the country. That is not a vulgar boast but a simple statement of incontrovertible fact, as the Cory band, formerly the Ton Temperance band, is not only the British brass band national champion but the British open champion. This is the only time that both titles have been held by one band at the same time.
    The Rhondda's most famous son was neither a Labour leader nor a rugby player, but an actor. The star of "The Guns of Navarone", "Zulu", "The Cruel Sea" and the rather ambitiously named "Sodom and Gomorrah" was one Stanley Baker, who was born in Ferndale and died, aged 49, in 1976, only a month after having been knighted. His ashes are scattered on Old Smokie, the tip behind my house.
    Like all the south Wales valleys, the Rhondda is often portrayed by the London media as parochial and xenophobic. Nothing could be further from the truth. The Rhondda has always welcomed strangers and foreigners. After Paul Robeson's visit to the Pare and Dare theatre in Treorchy many years ago, he was made an honorary Welshman. Thanks to the influx of Italians from the village of Bardi, I suspect that we have more Italian cafes in the Rhondda than in Kensington and Islington combined.
    As for political myths, Conservative Members—the few that there are—will be delighted to know that there are many Conservative clubs in the Rhondda. It was said that if everyone who drank in a Conservative club in the Rhondda voted Conservative, the seat would have been Tory for 150 years. I am delighted to say that the people of the Rhondda stick to just drinking Tory.

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    One stereotype about the Rhondda is, sadly, true. Ever since steam coal was first found in Dinas in the 19th century and the Klondike rush for black gold began, the Rhondda has suffered significant social problems. Many of the most deprived wards in Wales are in the Rhondda. Although unemployment has fallen dramatically under Labour—from 13.9 per cent, in 1997 to 7.9 per cent, and going down today—still far too many people are unable to work. Ill health, especially in the form of chronic conditions such as aeschemic heart disease and diabetes, are a modern plague. For too many households, the only income comes from the benefit system. Four in five people in the Rhondda own their own home but many of those houses suffer from terrible damp and are, frankly, unfit for human habitation. Drug abuse, especially heroin, claims an enormous clutch of lives every year.
    Where do the solutions lie? First, the Rhondda relies on a Government who are committed to sound finances and to combating unemployment. It depends on a Government who are committed to a minimum wage. I particularly welcome the commitment to increasing the minimum wage for young people. The new deal has made a dramatic difference to hundreds of young people whom I have met in the past year.
    Secondly, the Rhondda is not unique in being a geographically hemmed-in community. Like others, we need the infrastructure that makes employment and new businesses a possibility. We need both traditional infrastructure, in the shape of roads—most notably a relief road for the Rhondda Fach—and modern infrastructure, in the shape of high-speed wide-band access. One of the most successful recent ventures in the Rhondda is the Pop Factory, a television and new media studio based in the old Corona factory. I am sure that right hon. and hon. Members remember the advertisement about every bubble having passed its fizzical. This and other ventures need the Government to ensure the fastest possible roll-out of broad-band services. The new economy must be for the whole country, not just for a few.
    Thirdly, we need a real assault on the causes of chronic ill health, including alcohol and drug addiction, so that more people want a job and are able to hold one down. Incidentally, many of the Rhondda's health problems are still the legacy of the mines. Although I recognise the significant steps that the Government have taken to hurry through miners' compensation, no Labour Government can rest until justice is truly and finally done to all our miners, their widows and dependants.
    Fourthly, we need a new spirit of enterprise so that young people do not spend their last year at school wondering where they will be signing on but when they will be starting their first job. I heartily welcome the Government's declared aim of seeing more than 50 per cent, of young people going on to university, but I urge Ministers to do everything in their power to remove any obstacles that prevent young people from poorer communities and families from going on to college.
    The people of the Rhondda are not looking for handouts. People simply want a chance to stand on their own two feet, to build a decent life for their family and to retire in dignity. These are honourable aspirations, and my constituents still look to politicians to make a real
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    difference by waging an all-out assault on the pernicious and often seemingly intractable causes of poverty. Those aspirations an what democratic politics is all about. That is why I believe that the democratic system is so important.
    It is not for a newcomer to lecture the House on its practices, but one of the reasons for young people—and, for that matter, not so young people—failing to take an interest in politics is I believe, because the way in which the House does its business is still incomprehensible to the majority of the population. They hear of a debate and a hefty majority vote in Parliament to ban foxhunting, for instance, and presume that that is the end of the matter. They do not understand why it still has not become law. I hope that my right hon. Friend the Leader of the House will be able to make significant progress on further reform in this House. However, the system is often not as complicated as people think. I was telephoned the other day by someone from a Minister's office who asked whether I would care to come and meet the Minister for tea. When I recounted this to my largely unpolitical partner, he replied, 'I didn't know there was a Minister for Tea. Can I be Minister for Scones?"
    Before I finish, I wish to refer to the first Member of Parliament for the Rhondda, William Abraham. He devoted his first speech, in 1886, to arguing for the disestablishment of the Church in Wales. Mabon, as he was known, said that the Church of England had entirely failed to meet the requirements of the people of Wales. In the spirit of his words, I am delighted that the Queen's Speech includes a commitment to complete the process of reform of the second Chamber, but I still find it difficult to comprehend why it is the exclusive preserve of the Church of England's Bench of Bishops to provide spiritual advice in this place. I believe that Britain would be far better served by a fully secular state, and that the Church of England's political contribution would be far stronger were the Church to be fully and genuinely independent. If we are to retain the Lords Spiritual—I say "if because I would prefer a fully elected second Chamber—surely they should include representatives of all the faiths and denominations.
    In conclusion, the socialism that I espouse is based on some simple moral facts. The market was made for humanity, not humanity for the market. Poverty is not a mysterious dispensation from on high, but has very human causes and is susceptible to human remedies. Inequality gnaws at the moral fabric of society. I refer the House to the words of a former Member of this House who was also a priest in the Church of England, although in a different order from my own. As John Donne said:
    "No man is an Island, entire of it self … any man's death diminishes me, because I am involved in Mankind; And therefore never send to know for whom the bell tolls; It tolls for thee."
    I welcome the Queen's Speech, because it expresses that same belief in hard, practical and pragmatic measures, to ensure a strong and stable economy and to improve public services—measures that give new hope to the people of the Rhondda.
    6.10 pm
    Sir Teddy Taylor: It is a great pleasure and honour to congratulate the hon. Member for Rhondda (Mr. Bryant) on his outstanding maiden speech. It stood out as a model maiden speech

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    among those that I have heard. We have been told that hon. Members should use such speeches to make interesting and non-controversial remarks and to promote their constituencies. He did all those things, and many of us will feel like going to the Rhondoa for our holidays, having heard about all those temperance bands and Conservative clubs. However, the great thing is that he spoke with sincerity. I am sure that hon. Members on both sides of the House will wish him every success and happiness in his future membership of the House.
    It is a great pleasure and honour to speak again as the newly elected Member of Parliament for Rochford and Southend, East, where the Conservative party had a rather remarkable result. We not only gained a substantial swing, but secured a 54 per cent, share of the vote, which I am told makes the constituency the 10th safest Conservative seat in the country. In fairness, I point out that that result was not unique. Essex was rather remarkable, as we achieved similar swings in such places as Upminster and Romford, where we won seats from the Labour party, and in Dagenham, where a previous Labour majority of 17,000 was slashed to such an extent that we think we can win the seat next time.
    I mention those facts, which are in many ways irrelevant, only because all the candidates were good, solid and true Conservatives. That might make people think twice about the idea being promoted almost everywhere by those who suggest that the way to recovery for the Conservative party is for it to adopt policies of delicate confusion that are only slightly to the right of Ken Livingstone. The party may find that other solutions have more merit.
    I want to make six points, the first of which concerns the single currency. I assure my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo) that I am not making any sort of personal attack. He said that we should not mention the issue, but there are some aspects about which we must speak. I returned to the House after the election only because I was looking forward to taking part in arguments on the referendum, which is the last battle over Europe. The impression that I gain from the Government and from people connected with the banks is that the referendum is unlikely to occur in this Parliament, if at all. However, that is not the issue. The Government must give serious consideration not to whether we should prepare for a referendum to enter the single currency, but to what on earth we and our colleagues in Europe should do if that currency collapses, like every previous one.
    That point must be considered, because all hon. Members, including the small number of enthusiasts for the single currency, must be aware that the British Government, the American Government and even the Japanese Government have been doing all in their power to boost the value of the euro, without any real success. We know also that the Governor of the Bank of England was told to sell a massive amount of gold and to put 40 per cent, of the proceeds directly into euros, even though that meant a massive loss for this country. Although that has been done, the euro has still been unable to recover. The hon. Member for Bexleyheath and Crayford (Mr. Beard), who was a member of the Select Committee on the Treasury, will be aware that Eurobonds have been issued as a further means of trying to promote the currency.
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    If hon. Members look back, they will see a plain fact: in respect of all previous single currencies—I can find records of only 11 such currencies—the same thing always seems to happen. First, one area becomes artificially prosperous, as the Republic of Ireland has. Another area then begins to suffer serious hardship, as has begun to happen in Germany, whose Minister of Finance said recently that he was now thinking in terms of zero growth. There is also concern among German banks. A bank chief called Hans Reckers said:
    "There is in Germany a … combination of factors that could lead to recession."
    Business analyst Paul Hoffmann said that a recession before joining the currency would be
    "the financial equivalent of the D Day invasion being stopped on the beaches."
    Although hon. Members may want to ignore it, there is increasing depression and worry in Germany. We have found in relation to all single currencies that widening gaps mean loss of confidence, falling value and interest rate rises.
    Mr. Beard: Will the hon. Gentleman explain how the dollar has survived?
    Sir Teddy Taylor: As the hon. Gentleman knows, a single currency can survive only if there is one Government, one Treasury and a feeling of nationhood. America has one Government and a Treasury that controls its affairs. It also has a feeling of nationhood. If one tells people in New York, "We're doing something nasty to you, but it will help people in Florida", they will understand, as they view Florida as a part of the same nation. However, if one were to tell people in Sweden that something nasty was being done to help people in Greece, they would think that something rather strange and unusual was happening. I say to the hon. Gentleman and to other hon. Members, some of whom remain enthusiastic about the single currency, that they should look around the world at every previous example of such a currency.
    There have been two such examples in Europe: the Scandinavian and Latin currency unions. One might think that the Scandinavian project should have been an ideal union, as it involved the joining together of countries that had no great differences, and ask why it did not work. It failed for the same reason that single currencies never work. If that happened in respect of the euro, what would the Government's policy be? In the Conservative party, things are special, as we are not expected to talk about the issue, but no matter who is in power, we will have to face up to the situation and ask what must be done.
    I suggest that we must find some means whereby European countries can disengage if circumstances work out as I suggest. Of course, it is possible that I am wrong. I fully accept that I might be mistaken, but I suggest that all the available evidence of previous single currencies shows the way they go. If we do not make appropriate provision, there could be disaster not only for Europe but for all the countries associated with it. I hope that the Government will give some indication of what plan they would follow if things went terribly wrong, as the evidence shows pretty overwhelmingly that that is what will happen.
    The second of my six points is a straight question: what will the Government do about the extension of the European Union, which is very important for jobs in the

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    United Kingdom? When the people of Ireland were given a democratic opportunity to express their opinion, they wanted to say something, as has happened frequently in the European Union. Unfortunately, the EU has been depriving people of such opportunities. The people of Ireland were the only ones who were given a chance to express their views on the Nice treaty and we know what they said. If the people of Germany were given a chance to say what they thought about the single currency, they would throw it out of the window. The people of Ireland had a chance to decide, and they said, "No, we don't want the Nice treaty."
    Extension of the EU could have substantial costs for Britain. Various European grants come to Britain. They are not of much help to us, because every pound costs us at least £2 before we start, but if the European Union were extended, most of them would disappear. That would have consequences for jobs, as well as for agriculture. Nobody in agriculture wants to talk about the basic problem of massive over-production in the European Union. Nobody wants to face up to that problem because there is no solution. If Europe is extended, the activities that will occur in at least two of the new member countries—Poland and Romania—will mean a massive increase in agricultural production. What would happen at that stage? What is the Government's policy?
    What worried me most about the Irish decision was that when the people of Ireland said no, which should have meant that Nice did not go ahead, EU officials made various statements indicating that they would proceed irrespective of those views. If the people of Ireland do not change their views, will the Government make it abundantly clear that they will not try, by one means or another, to extend the European Union? The principles of the EU have been undermined in many ways. Unless we are prepared to stand firm and ensure that a member state does not get something that it does not want, we will be letting those principles down
    The third issue that concerns me is economic stability. During the debate on today's private notice question, I asked about asylum seekers. The Minister for Police, Courts and Drugs said that it was unfortunate that I raised that subject. As someone who has never stirred up such problems, I can only say, in all sincerity, that I have seen good race relations seriously undermined in parts of London, in Southend and elsewhere.
    One joy of coming to Southend from Scotland was that there was none of the religious tribalism that unfortunately still exists in Glasgow and other areas. There were good relations between the different races and religions. Indeed, Southend has two mosques and two synagogues. However, the situation has deteriorated alarmingly. A friend of mine—a Turkish Cypriot licensee of a restaurant in Southend—was abused in the high street and told, "Go home, asylum seeker." Another friend, whom I know very well, is a lady from South Korea who has two delightful children; she received similar treatment. I am not saying that Southend is special. Hon. Members know that such behaviour goes on. I accept that it is not an easy issue to resolve, but the basic problem is that the public have gained the impression that asylum seekers are not being dealt with effectively
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    I hope that the Government will introduce legislation to ensure that speedy decisions are reached. Let me give a simple example. A couple from the Congo came to my surgery on Saturday. The London borough of Barnet—I do not know which party is in charge of that organisation—dumped them in Southend in the Palace hotel, which is neither a palace nor a hotel, more than a year ago. The couple have not heard from it since then. Their lawyers wrote; two letters to the Home Office in February and May asking what was happening and what decisions had been made about them, but they have received no word or acknowledgment. Anyone who tries to pretend that such problems can be easily resolved is misleading people. However, something must be done if we are to preserve good race relations because they are a desperately important part of our community and vital for jobs and prosperity
    Fourthly, on public services, special attention should be given to the problem of seaside resorts. The Minister will know that they have a higher proportion of elderly people who require more attention from the health service. In addition, there are housing problems. The concentration of bed and breakfasts and houses in multiple occupation means that we have more homeless families. Rochford, as I have mentioned to the Minister before, has been treated appallingly by Governments of both parties. It has £400,000 less in annual grants than it received six years ago. It would help enormously if Ministers paid brief visits to seaside towns because they would then realise that their problems are special
    My fifth point relates to something raised by the hon. Member for Rhondda. I know that all Governments have problems of one sort or another, but it is important that this Government tell the truth on employment and related matters. I know that the Minister, whom I greatly admire, tells the truth on everything. I hope that she can tell me what the reference to foxhunting at the end of the Queen's Speech means. I appreciate that people are fanatical and passionate about that issue. Some people care more about the welfare of foxes than the welfare of democracy; others consider the abolition of foxhunting to be a greater threat to our democracy and freedom than anything else
    It is crucial that we are told what is happening. As someone who is part of an unpopular minority in my party on the issue, I have the impression—rightly or wrongly—that the Government are not pursuing it. Instead, we will have another private Member's Bill, along discussion, with everyone shouting at each other, and nothing will happen. Some people will say that I am wrong, but the Government should tell us whether they have changed their mind and, if so, why. People who are campaigning on both sides want to know the score. If any Labour Member wants to intervene and explain the position, I shall be happy to give way. I have the impression that no one is clear. The sooner we have a straight answer, the better
    My final point is extremely important. I gained the impression—perhaps because of my advanced age—that local authorities face problems, especially on housing, that are more serious than they have been for a long time. When I arrived in Southend 21 years ago, there was one multistorey block of fiats that everyone wanted to live in. Unfortunately, because of two or three impossible tenants, life in those flats is becoming unbearable for most people. Local authorities are spending more money on maintenance of housing schemes than before, but the

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    activities of small groups of people make it difficult to keep up standards. Local authorities cannot do much about that because of Government rules and regulations on what action can be taken on the removal of tenants. We must face up to the problem fair and square and say that there is a case for concentrating in particular areas difficult tenants who make life impossible for others, and to focus public services on assisting them.
    I hope that I have not bored the House. All I have done is raise issues in which I believe passionately. We will be in deep trouble if we do not face up to them. Unlike the hon. Member for Rhondda, who has just arrived in the House, I have been here for about 37 years and have rowed with all parties and many individuals. One thing worries me more than anything else. Although hon. Members make interesting speeches and give wonderful orations, they do not want up to face and to and talk about many issues, such as the single currency or bad tenants. I wish they did because then, irrespective of who might win the election, more people might come out to vote for MPs.
    6.27 pm
    Jon Trickett: I assure the hon. Member for Rochford and Southend, East (Sir T. Taylor) that he rarely bores the House. I, too, pay tribute to the graceful and self-confident maiden speech of my hon. Friend the Member for Rhondda (Mr. Bryant). He paid a justifiable tribute to his predecessor and constituency while giving a flavour of his political philosophy; and what motivates him. He will have a long and distinguished career in the House
    I am pleased to speak in a debate that was opened by my right hon. Friend the Chancellor. Much has been made of the distinguishing characteristics of this Parliament, but I do not believe that they will be the referendum on the euro or the involvement of the private sector in the public services. Instead, I hope that it will be distinguished by the fight against child and pensioner poverty and the campaign to bring about full employment, all built on a platform of fiscal stability and prudence. Major progress in those aims and adequate funding for public services will distinguish this Parliament
    Before I deal with public services and the role of the private sector, I want to address three other issues. My constituency, like the Rhondda, is a former mining area. Since the creation of the Labour party, such areas have been served by Labour party representatives and, before that, by trade union activists in the mining industry. Sadly, the mining industry was destroyed for vindictive reasons by the Conservatives. They can never be forgiven for that act and its impact on the communities that we represent. We are trying to lift them up off their knees, where they were left by the Tory Administration. The task of regenerating those areas, villages and communities has only just begun
    Four years seems a long time in an individual's life, but it is a relatively short time in the life of a community. During the election campaign, I was confronted with utter desperation, serious deprivation, absolute poverty and the most acute problems, not just in one or two areas, but throughout the former pit villages, which now have nothing at all, not even the infrastructure with which to attract new industry.
    We face very difficult problems on the Yorkshire coalfield, especially in Hemsworth. Although we are bringing about regeneration at a macro-economic level,
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    we must carefully consider the creation of micro-economic tools to attempt to tackle the acute pockets of deprivation found throughout the country, especially in the coalfields.
    No doubt the Chancellor's emphasis on the role of regional development agencies is part of the thinking that suggests that we must somehow reach down much more sensitively into the areas where small pockets of deprivation continue to exist. I look forward to the regional development agencies being developed in the next four years. However, those agencies are not accountable in the way a democratic body would be, so at some time or other we should move towards elected assemblies, to which the local population gives its consent. I am sure that the consent of the local population would easily be found in Yorkshire. I should like elected regional assemblies to deal with regeneration.
    There is a particular problem with long-term disabled and long-term sick people in our communities. Probably about 2 million people are not included in the economic register and thus not counted among the unemployed, but there are large numbers of long-term disabled people and we must find ways to help them back to work wherever possible.
    Drugs have become a very serious problem in the mining villages and probably elsewhere as well. In the area that I represent, the people who push drugs into our communities are gradually winning the war and there is a sense of hopelessness among those communities. Only last Monday, I met some people in South Elmsall, in my constituency, who told me that the drug pushers are waging war on their community. We need to see rapid action
    The Queen's Speech refers to increased powers for those in the criminal justice system. I welcome those powers, but we need far more police on the streets and in the communities—perhaps more than we have committed ourselves to in the manifesto. The war against drugs must be won, because the cancer of drugs is rotting away all the neighbourhoods, villages and communities that we represent
    I want to mention the problem of housing. A housing Bill will be introduced to address some of the points made in the housing Green Paper. However, the most acute problems identified in the Green Paper will not be addressed in the first round of legislation. In particular, I refer to those areas where no demand exists for the houses that are for sale.
    It is impossible to sell houses in communities such as the City and Fitzwilliam, or the Bronx, in South Elmsall, because there is absolutely no demand for them. A street of those houses could not be sold for £5,000 or £6,000. People are trapped in those communities. They are unable to escape and they are gradually sinking further into deprivation. We need urgent action to tackle such low demand, where it is a problem. I know that it is not a problem everywhere throughout the nation, especially not in the south, but it is a severe problem in my constituency
    Allied to that problem, but separate from it, is one that involves private landlords. Unscrupulous private landlords have taken over large amounts of very low-cost housing without a care for the tenants who have been placed in that housing. That has led to the further deterioration of the very communities that I have described. Somehow or other, I hope that we can find a non-bureaucratic

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    technique to license and control private landlords, where their activities are clearly generating further deprivation, poverty and disorder.
    In particular, I want also to refer to the public services. Clearly, the adequate funding of our public services represented the dividing line between the parties at the election. We know where the Tories stand; they are in favour of reducing public spending and, as a corollary, the public services. We must ensure that the public services are adequately funded, but reform is allied to that issue. I would not defend the existing structure of practices in the public sector in all its aspects. The Morrisonian model, on which most of our public services are based, is hierarchial and, in many cases, bureaucratic and unresponsive. Its structure is frequently insensitive to the needs of the customer. Its management systems are frequently uniform, rather than diverse. Clearly, it urgently needs reform.
    I should be happy to see the modernisation of the public services, together with adequate funding. A modernising Government should be involved in reducing the number of layers of management, in tackling bureaucracy and in creating heterogeneity in the public services. I cannot however accept that introducing the private sector to the public services is the solution.
    I stand on my political record as someone who has wanted to modernise the Labour party and our country. As the leader of Leeds city council, I did a lot to try to modernise services. When I was elected to the House at a by-election, I made it clear that I was a moderniser. For the first 18 months, I was Parliamentary Private Secretary to my right hon. Friend the Member for Hartlepool (Mr. Mandelson), who is the arch-moderniser, and I had no trouble with that at all. But modernising the public services in the public sector is one thing; introducing the private sector is entirely different.
    I may be quite a rare being in the House—I was a manual worker in the private sector building industry for 12 years or so, and I know precisely how the private sector works and how poor its management often is. I do not believe that the private sector is a paragon either of managerial excellence or even of particularly cost-effective service provision. There is a range of reasons why one should be extremely cautious about the introduction of the private sector to the public services. I do not believe that it has yet been shown that private sector provision is cheaper than public sector provision. There have been several studies, and the best that can be said is that they are not conclusive.
    From personal experience, I do not believe that private sector management is necessarily and inevitably more efficient than the public sector. The records of some of the larger public sector construction projects that have been led by private companies are, at best, uneven. The private sector is arguably good at cutting costs and making efficiency savings. That would be its claim, but that does not inevitably mean that it is good at providing high-quality public services, especially as those services tend to be monopolies such as those that exist in health, education and, in large parts of the country, transport.
    The private sector does not understand social exclusion at all, while the public sector is largely about addressing the processes of social exclusion. In fact, I would argue
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    that the private sector is in large part the engine of social exclusion rather than the solution to it. It remains to be demonstrated that private sector solutions to social exclusion can be found.
    Geraint Davies: My hon. Friend mentioned that entire rows of houses in his constituency are worth £6,000. Does he agree that the keys to getting rid of social exclusion in his area are regional development agencies, lower capital gains tax, the attraction of venture capital, and investment in transport infrastructure in order to connect his people to the market and to provide more skills; and that the private sector is a crucial, central part of that process of creating prosperity?
    Jon Trickett: I was talking about the public sector provision of health and educational services, rather than housing, but let us take the example of housing. Those of us who are slightly older than others in the House clearly remember the inter-war period and before, when private sector slum landlords operated over huge tracts of our country. The process: of social exclusion in housing is one of the most disgraceful episodes concerning the private sector in this country's social history, throughout the previous century and the one before that. My hon. Friend's example of housing precisely illustrates my point.
    It was only at the end of the first war, when councils—the public sector—began to construct social housing with gardens and adequate sanitation for reasonable rents, that the problems of social exclusion through housing were resolved. Notwithstanding all that, I accept that the private sector may have a role in housing renewal and regeneration, but that was not the point that I was making. My hon. Friend's choice of example was very poor.
    I was talking about social exclusion and how the private sector is an engine of it, not a panacea. The Government's choice of the private sector as an instrument to tackle social exclusion is unusual. The use of the private sector in public service provision will result in increased fragmentation of government rather than joined-up government, which is what we are supposed to be about. If we want to bring together the various agencies of government to tackle social exclusion—perhaps in the pit villages that I represent—we should be trying to form a coherent pattern of public services. To do almost the reverse and use the private sector as a service provider—perhaps in education or health, rather than building council houses—will fragment and make more difficult the process of holistic regeneration. So I am terribly worried about the fragmentation of services that might follow such policies.
    Introducing the private sector to public service provision will blur the lines of accountability, which are very clear in the public sector. If one introduces private sector companies to the public services, the question will be: in whose interests will those private companies operate? Somewhere or other, the role of shareholders must play a part. The accountability of employees, the board of directors and everyone in the private sector will thus be blurred, once again raising the question of fragmentation versus coherence.
    I have already mentioned my doubts about the competence of the private sector, particularly in the construction industry, which I know very well, so I will

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    not repeat the points. [Interruption.] One can usefully caricature the difference between public services and the private sector. It can be summed up in two words: service, which I have already mentioned, and profit. The public sector is there to serve people; the ethos is strongly one of service. Private sector companies, however, are ultimately set up to produce profit. I do not want to condemn the profit motive, but profit and service can be separated where profit is threatened.
    For all those reasons, I warn my right hon. and hon. Friends in the Government—in the most polite and gentle way, having been a loyalist and a moderniser throughout my time in this House—that some of us on the Labour Benches will not easily accept the introduction of the private sector to public service provision.
    6.45 pm
    Chris Grayling: It is a huge honour and a matter of great personal pride to address this House for the first time as the Member of Parliament for Epsom and Ewell. I have the great privilege of representing what I suspect is one of the few constituencies known around the world for its famous racecourse and Britain's most famous horse race. I also suspect that I am one of few Members of Parliament able to stand on the highest point of his constituency and look down across the valleys at the Palace of Westminster.
    The Epsom and Ewell constituency covers not simply the borough of that name, but the north end of the Reigate and Banstead and Mole Valley districts. It runs from Worcester Park and Stoneleigh in the north to Ashtead and the borders of Tadworth in the south. I suspect that it must also be one of the greenest constituencies inside the M25, being well endowed with green spaces and parkland—not just the famous Epsom Downs but also Nonsuch park, the site of Henry VIII's palace, which is sadly no more. The constituency is also the site of the Epsom wells, the point of origin of the world-renowned treatment, Epsom Salts.
    Epsom has always been an important commercial centre. Today, it is home to some of Britain's most successful companies, such as W. S. Atkins, the engineering consultancy, and Bacon and Woodrow. Indeed, I look forward in two weeks' time to attending the opening of Toyota's new British headquarters.
    The real commercial heart of the constituency is not its big businesses but the smaller companies in places such as Ewell, Stoneleigh and Epsom, which are the engine of our local economy. They face real challenges of regulation and doing business in tough climates, and I look forward to being a powerful advocate of their cause in the years ahead.
    Interestingly, I am only the second Member of Parliament for Epsom and Ewell since 1918 to take his seat following a general election and not a by-election, which is probably something of a relief to my predecessor, Sir Archie Hamilton. The adage "a hard act to follow" can be a cliché, but in Sir Archie's case it is genuinely true. In more ways than one he is a giant of a man. Members will see that I had to pass a height test in order to represent the constituency.
    Sir Archie entered the House in April 1978, and served both his constituency and this House for 23 years. In that time, he managed to strike what I suspect can often be a difficult balance for a politician: to be a successful
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    constituency MP and to make a real mark on the national stage. I have been very struck since the dissolution of Parliament—and was during the election campaign—by the number of letters that have arrived in the constituency office praising Sir Archie for his work in Epsom and Ewell and thanking him for the help that he has given individual constituents over the years.
    On the doorstep I met only too many people who were keen to stop me and say, "Sir Archie has been a great help to us over the years. He has been a real tower of strength in this area." I met many, many people who were genuinely sad about his decision to retire. He will be much missed in Epsom and Ewell, and I face a tough challenge to do as good a job in representing the constituency.
    As well as serving his constituents so well, Sir Archie made a distinctive mark on the national stage, in government and in the Chamber. A distinguished member of the last Conservative Government, serving as Minister of State for the Armed Forces, he was a vital part of Baroness Thatcher's team during her years in office. The importance of the role that he played in those years was made very evident last summer, when Lady Thatcher came to Epsom and Ewell to take part in a farewell tribute to Sir Archie. The glowing tributes she paid him on that night spoke clearly of his importance to her Government.
    For the past four years, Sir Archie served a new leadership with distinction, as chairman of the Conservative 1922 committee and as an important prop to my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) during an undoubtedly difficult period for our party. Since my arrival, I have been struck by the affection in which Sir Archie was held by his colleagues. Clearly, he is a loss to the House as well as to his constituency. I hope that Members on both sides will join me in wishing him a long and happy retirement.
    One of the lighter moments of my campaign occurred when I walked up the driveway of a house in Ewell and saw on its wall one of those tourist plaques that are often seen on the sides of houses in and around London. On it was the inscription:
    "On this site, in 1762, nothing happened."
    At first, I thought that it was a tribute to the first four years of Labour Government. That inscription certainly does not hold true of the Epsom and Ewell constituency as a whole. We face real challenges in the next few years and I hope and intend to play an important role in meeting those challenges.
    First and foremost is the future of Epsom general hospital. Over the past few months, many of us in the area have fought hard to protect the hospital against the local health trust's plans to downgrade it and transfer key facilities to another, already overcrowded hospital 10 miles up the road. Our campaign crossed party divides, brought together organisations and individuals from throughout the constituency and beyond, and won the backing of more than 25,000 people. It is to the local NHS trust's credit that it has recognised the strength of the opposition to its plans and decided to take its plans back to the drawing board. The battle is far from over, however.
    It has become only too clear to me that one of the consequences of the reforms and changes currently being made to the NHS is to weaken local services—to centralise at the expense of local people and local

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    services Experience in many parts of the country has shown us that that is a false step. I look to the Government and to NHS authorities to ensure that Epsom general hospital has a secure future, and that the people of my constituency continue to enjoy the services of a strong and effective local hospital
    Our second challenge is the availability of school places in the next few years. As we speak, many parents in my constituency are scared witless about what is to happen to their children this autumn, because places are not available for them. The problem is in part the result of funding cuts made in the past four years, when this country's grant-maintained schools lost funding and the support that they had enjoyed under the previous Conservative Government. In the next few years, between 500 and 1,000 teenagers in my constituency will face the prospect of having no secondary school place. That is clearly intolerable. I shall be beating a path to the Government's door to ensure that a solution is found to the problem—and quickly, because time is not on our side. The parents and children of Epsom and Ewell have the right to expect the secondary school places they need in future.
    I will also be pressing the Government on their proposals to reform the planning system. Ashtead which is at the southern end of my constituency, is one of the many communities that have been blighted by the ill thought out Central Railway proposal that threatens to do so much damage in Kent, Surrey, Buckinghamshire and beyond. Do not get me wrong—I do not think that anyone would disagree with the proposition that it is desirable to take freight off the roads and get it on to rail. However, it strikes me as extraordinary that a company can launch a major infrastructure proposal simply by sketching lines on an Ordnance Survey map, not backed up by any detailed engineering drawings, and can then sit back for years doing nothing.
    That is the problem facing many of my constituents today; while it prevails, houses cannot be sold, or can be sold only at reduced prices. Ashstead and Leatherhead, on the other side of the M25 in Mole Valley, are two of this country's property black spots in which prices are falling. That cannot be right. The current laws must be changed and I shall look to the Government to address those issues in the current Session of Parliament as part of their proposals on the planning system.
    I do not believe that, on his arrival in this place, any Back-Bench Member of Parliament, especially an Opposition Member, can seriously expect to wield much power and influence, but I do believe that we can be powerful advocates for our constituents and constituencies and that by persuasion we can achieve many positive outcomes for them. That is my goal, as I take on the mantle of Sir Archie Hamilton. In the years ahead, I hope and expect to repay the trust that has been placed in me by my constituents, by working tirelessly on their behalf and helping them to solve many of the problems that they face.
    6.56pm
    Richard Burden: I too, welcome the two new Members of Parliament who have made their maiden speeches today. We have just heard
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    the hon. Member for Epsom and Ewell (Chris Grayling), who made a very food first speech in which he clearly stated how passionate he feels about local issues. I am sure that he will be an asset to the House. When he referred to his predecessor in glowing terms and mentioned the height restriction on the seat, there was some twitching on the Bench in front of him: his hon. Friend the Member for Buckingham (Mr. Bercow) will tell him that height and size are not everything. None the less, I welcome the hon. Gentleman to the House.
    My hon. Friend the Member for Rhondda (Mr. Bryant) made a first-class speech that highlighted his commitment to combating poverty in his locality. I was worried—less for myself than for others—by that part of his speech in which he mentioned the number of Conservative clubs in the Rhondda. It was a good thing that the shadow Chancellor and other Opposition Front Benchers were not around to hear that remark, or they would have been straight out of the Chamber and off to the Rhondda to canvass.
    Today, the debate focuses on the economy and trade and industry, and I should like to discuss four issues in connection with the se subjects. First, I shall say a word or two about the contents of some of the enterprise legislation that is to be laid before the House. I shall offer a few thoughts, secondly, on the issues affecting the future of manufacturing and, thirdly, on the relationship over the next four or five years between industrial policy and regional policy. Fourthly, I shall comment on the state of public debate on issues of personal taxation
    I welcome the enterprise legislation prefigured in the Queen's Speech As well as boosting competition and strengthening our competition law, it will begin to destigmatise responsible risk taking by entrepreneurs. I also welcome the proposed legislation to crack down on rogue traders, which is overdue
    The Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), will remember that in the previous Parliament I introduced a private Member's Bill to crack down on a specific type of rogue trader—those who are half rogue trader and half rogue employer and who continue to rip off thousands of people throughout the country using home working and outworking scams. That Bill had the support of the previous Government and of hon. Members on both sides of the House but, sadly, went the way of many other private Members' Bills as it was blocked by a small group of Opposition Members who evidently felt man strongly about the need to play parliamentary games or people's inalienable right to rip off others in the name of enterprise than about the need to protect the vulnerable. Sadly, the Opposition Front Bench acquiesced in that.; hope that, in this new Parliament, as the Government think about what to include in enterprise legislation, they will consider legislation banning payment upfront for outworking schemes. If they do not include that in the original draft of a Bill, I hope that they will consider including t in an amendment when such a Bill comes before the House
    I should like to turn briefly to issues affecting manufacturing, as I come from a region built on that industry. The nature of manufacturing industry is changing beyond all recognition, but it is still a vital part of the future strength of our economy. Without a firm manufacturing base the foundations of a strong economy can become extremely shaky. I therefore appreciate the

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    welcome of my hon. Friend the Member for Ochil (Mr. O'Neill) for the measures already taken by the Government. Rightly, he made particular reference to the efforts of the Chancellor and his colleagues on regional venture capital funds.
    There is no doubt that manufacturing has benefited from the stability that the Government have helped to create, especially the climate of consistently low interest rates, but the sector now faces serious challenges, which cannot be ignored and should note masked by the overall strength and buoyancy of the economy as a whole. One issue is the persistent question of the level of the pound against the euro, which has been and continues to be a problem. While sudden fluctuations, whether up or down, are not good for anybody, the relationship of our currency to that of our major trading partner, the zone to which we export of our goods, is a serious issue. That relationship, our manufacturing industry and exporters cannot be helped if sterling becomes a kind of hedge currency on the outskirts of the eurozone.
    The Chancellor and the Government were right to set clear economic tests both for entry into the euro and a referendum. My hon. Friend the Member for Ochil was right to say that careless talk about this or that exchange rate does not help at this time. What happens to the euro and what happens in the eurozone affects us, whether we like it or not. The relationship of our currency to the euro, our ability to get that into a proper form and ultimately, when the economic conditions are right, look positively at joining the euro, remain important to our manufacturing industry.
    Mr. Edward Davey: I have a lot of sympathy with the hon. Gentleman's remarks. Does he regret a briefing given by Her Majesty's Treasury? When the pressure was, seemingly for the first time for many months, coming off sterling, the Treasury deemed it wise to talk up the value of the pound, thus causing our manufacturing, agriculture and tourism industries even more problems.
    Richard Burden: I heard the Government state that they had a clear position, which, in principle, is that we are in favour of joining a successful European currency, but that clear economic tests have to be met. That is a wise and realistic position. Many manufacturers tell me that, over the coming period, we need a continuing debate about the positive advantages of being part of the euro and that we must recognise, as I said earlier, that we are not insulated from what happens to he euro simply by claiming that we can stay outside or by opposing entry. That has not been the case, is not the ease and will not be the case.
    Mr. Bercow: I applaud the hon. Gentleman's witty and gracious tribute to my hon. Friend the Member for Epsom and Ewell (Chris Grayling), but he has not demonstrated whether or how any economic convergence that is achieved within the eurozone can be regarded as anything more than a meeting of ships that pass in the night. What assessment has he made of the lack of democratic control, on which the treaties proudly insist, in the operation of monetary policy?
    Richard Burden: I fully acknowledge that the single currency has constitutional implications. I raised the issue in our debate on the economy and industry sections of the
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    Queen's Speech precisely because I differ fundamentally from the hon. Gentleman, who seems to think that our trading relationship with Europe, whatever it might be, has something to do with the passing of ships in the night. Our relationship is not like that; the ships are locked together, whether we like it or not. We must accept and act on that.
    When addressing the challenges facing manufacturing industry, we need to do more to boost investment, and paying attention to fiscal rules can help us to do so. I welcome moves in the previous Budget to provide further tax credits for research and development and expand the range of tax incentives to foster and promote such work. It is vital to move from consultation to early action, which would certainly be welcomed by manufacturing. It is right that we recognise and meet the environmental challenge and voice our disappointment with policies currently emanating from the United States Administration on meeting that challenge. As a Government, we must look more at the detail of the way in which our own climate change levy has impacted on small manufacturing firms.
    The commitment to the climate change levy is, rightly, fiscally neutral, which I welcome, but having talked to manufacturers in my area and other parts of the country I think that there is a need to look at neutrality, not simply between sectors and in the economy as a whole but within sectors. In the past few months, some welcome progress has been made from the motor manufacturing perspective, but more work needs to be done and more attention paid to the problems that might be faced by small manufacturing firms.
    The third area that I wish to discuss is the regions. We will not get our industrial policy right or ensure that rising prosperity is spread evenly across our country unless we get regional policy right. People in the regions need far more say about how to map out their economic future and secure and spend the resources to do that. We have faced big industrial challenges in the past few years, some in my own area, and it is no accident that the Government's welcome and important response has been to set up regionally based taskforces that have played and fulfilled a vital role in mapping out responses, bringing together local players and acting as a bridge to government to develop appropriate answers.
    The links with the regional development agencies have been important during those crises, but we need to learn the lesson of how the bits fit together and how partnerships, built during problematic times, can be sustained and nurtured, rather than grafted on to what might be most convenient for existing institutions, whether part of local government, Government Departments, local government offices or whatever. It is important that people in the regions understand how, in the development of the regeneration agenda, they and the institutions that they fashion, relate to government. Many good initiatives are emerging, but there is a danger of confusion of the roles of different departments in regional policy; it is important to clarify those relationships.
    It is important to allow regional agendas to develop in a way that suits localities and regions. Where area-based regeneration is considered appropriate, the impact on areas not designated for regeneration should be considered as well as that on those that are included. There is a danger of moving towards development schemes that link lines on a map rather than consider the needs of communities. I welcome the Government's commitment

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    to maximising the regional agenda, but we must avoid the danger of merely linking lines. We must not fall into that trap.
    We must not draw false distinctions between economic and social regeneration. Regeneration that does not promote social inclusion will not work. That is why I welcomed the announcement of my right hon. Friend the Chancellor of the Exchequer in his Budget speech that there would be consultation on the introduction of a community reinvestment tax credit. It is important that that process develops in a way that builds relationships between firms and communities. There might need to be some changes to the plans that have been outlined to achieve that, but the principle of a community reinvestment tax credit should be welcomed.
    The creative use of tax credits is a means of integrating benefits and taxation and achieving twin advantages. First, there is the advantage of ensuring that work pays. Secondly, the tax system should be allowed to assist those on low and fixed incomes. I look forward to the introduction of a tax credit Bill, which will foster that process.
    However, the public debate about the fairest forms of personal taxation to raise revenue has not advanced a great deal. During the election, Conservative candidates used well-worn scare stories, which fell flat. People know that there is a need for investment in public services. They knew that the sums produced by the Conservative party did not add up.
    We have demonstrated the importance of tackling the national debt. Getting more people into work is the foundation for funding public services. We were able to give the lie to the old Tory smears on Labour and tax, and the investment that is committed in the comprehensive spending review round is not dependent on tax and other increases.
    The time has come to initiate a debate that moves beyond talking about taxation as a swear word. Instead, we should discuss the place that personal taxation should have in the funding of public services. We must also consider the balance between direct and indirect taxation and how the taxation system can best embody the recognition that economic sufficiency and social justice can go hand in hand. We should discuss how our right to have decent public services carries the responsibility of identifying the fairest means for corporate institutions and individuals to fund such services.
    There is time for a grown-up debate on taxation that perhaps moves beyond previous strictures. Given the foundation of economic stability that we have laid, now is the time for us to lead that debate.
    7.13 pm
    Richard Younger-Ross: This is my maiden speech, and I understand the pride felt by the hon. Member for Rhondda (Mr. Bryant) and the honour felt by the hon. Member for Epsom and Ewell (Chris Grayling). I understand also the responsibility that lies on those elected to this place. I thank my hon. Friends and other hon. Members for giving me—I am sure that this applies to other new Members—a friendly and warm welcome. We are grateful for the advice that has been proffered on how we should set up constituency offices, for example.
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    Advice is one thing that we are not short of as new Members. My constituents have offered me quite a good deal of advice, especially on the issues that I should raise in this debate. The first suggestion made to me on 8 June was that we should discuss how to apply the "offside rule". My constituents showed a higher regard for the powers of the House than I felt we had.
    I am the second Member to represent the constituency of Teignbridge. The new constituency was formed in 1983 from the old Totnes and Tiverton constituencies. Teignbridge, contrary to what some removal companies might think, is not in the north-east but is in Devon. It lies between Torquay and Exeter and covers about 660 square miles of beautiful rolling Devon countryside. It extends from the granite tors on Dartmoor to the sandy beaches at Teignmouth and Dawlish.
    Many right hon. and hon. Members will have travelled through my constituency. They will have taken rail journeys to the far west from Exeter along the Exe estuary. The route turns south as one comes to Dawlish. It runs along the sea front following the sea wall, the sea being on the left; the cliffs, which are red weathered brescia, are on the right. The route continues to the Teign estuary. It is one of the most beautiful sections of railway in the world, and certainly within the United Kingdom.
    If people have not heard of the towns that I shall mention, they will probably know of at least one village in Teignbridge, which is Widecombe in the Moor. They will know also of at least one of its reputed residents, Uncle Tom Cobbleigh, and some will have seen the area on television. The hon. Member for Epsom and Ewell referred to the famous racecourse in his constituency, but Teignbridge can beast two racecourses—Newton Abbot and Exeter. I am sure that many a punter has sat on a Saturday afternoon waiting for his horse to come last at one of those courses.
    When my hon. Friend the Member for Torbay (Mr. Sanders) made his maiden speech about four or five years ago, he urged right hon and hon. Members to visit his constituency an I to take a holiday there. That was a good idea. To travel to Torbay, and to constituencies further west, most people have to travel through Teignbridge, where there is much to commend a stay. For those with an historical interest, it is the home of Hornblower—Lord Exmouth, who lived in Teignmouth. It is where Sir Arthur Conan Doyle created "The Hound of the Baskervilles". It is also famous for the man who they could never hang, John "Babbacombe" Lee, who lived in the village of Abbotskerswell.
    Right hon. and hon. Members may be interested to know that much of what we can do in this place is due to events in my constituency. After William Prince of Orange landed at Brixham, he quickly beat it out of the Totnes constituency and, I regret, through Torbay to camp his troops on Milber Down before sleeping the night at Forde house, which is now council offices. He entered Newton Abbot the following morning, where I am told that he was first pre claimed monarch. What followed was the glorious revolution.
    Teignbridge is a mixed constituency. The moorland areas on Dartmoor have suffered greatly over the past six months and are still suffering from the effects of foot and mouth disease. They suffered from the BSE crisis before that. They will continue to suffer unless the TB problem in cattle is resolved.

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    There is farming around the Teign valley, which forms a commuter belt to Exeter and contains some of the most beautiful Devon country lanes. There are picture postcard images of thatched cottages with white cob walls.
    The rolling hills south of Dartmoor are good beef-rearing country, but they are suffering too. I hope that in the coming months the Government will consider seriously the compensation packages given to farmers and the tourism industry, which is also suffering. I hope that they will ensure that people do not continue to suffer and do not go bankrupt for lack of Government action.
    Newton Abbot is at the heart of the constituency. It is a small town of some 20,000 residents, but it is also suffering because of the foot and mouth crisis. It had a weekly market, which is about to resume, but businesses and traders are suffering. As was said earlier, not only the obvious businesses suffer. For example, dry cleaners who do the cleaning for hotels are also affected. I hope that they will be compensated for their losses and that jobs lost in such businesses can be reinstated. I urge the Government to consider the recovery programme that Devon county council has proposed. Hon. Members from both sides of the House have backed that plan, and the Government should support it and the council's ambitions to ensure the economic recovery of the whole of Devon.
    Ball clay is one of my constituency's most important exports. At some time, most hon. Members will have sat on products made from ball clay. It is an important mineral resource, which continues to do well. Sadly, the headquarters of WBB, one of the major companies, is in the process of moving out of the constituency and going north. One of my hopes and aims as a Member of Parliament is to encourage businesses to locate their headquarters in the Teignbridge area and in south Devon.
    I referred to the two seaside resorts in the south of my constituency. Dawlish is a beautiful seaside town, which is famous for Dawlish Warren, which has a stunning bird sanctuary for any twitchers in the House. Teignmouth is a working seaside town. It has a pier and all the desired attributes of a place by the sea, but it also has a working port. There is therefore a genuine mix of tourism and industry in the same place, which makes it interesting.
    My hon. Friend the Member for Yeovil (Mr. Laws) referred in his maiden speech to the occasional difficulties of complimenting predecessors. He said:
    "When one has overturned somebody from another party ….that can be a testing process."—[Official Report, 20 June 2001; Vol. 370, c. 103.]
    My predecessor was Patrick Nicholls, but I have no difficulty in praising him and his achievements for the constituency. He was a conscientious constituency Member of Parliament, who held regular surgeries and attended to his constituency work diligently. We agreed about several issues. For example he was a keen campaigner for the reform of legislation on mobile homes. That issue is close to my heart, and I shall try to pursue it in the years ahead.
    Patrick Nicholls took up other issues on which we shared views and about which we sent a joint delegation to meet the Minister. That applied especially to shellfish and the way in which the Ministry of Agriculture, Fisheries and Food interpreted European legislation. We both perceived the insanity of Britain closing shellfish beds for 12 months after failing environmental tests, whereas France and the Netherlands would act after the
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    failure of one test and reopen the beds for exploitation when the mussels proved safe to eat. We allow people to eat rotten shellfish for three months, and close the beds for 12 months while healthy fish grow large at the bottom of the river. Patrick and I shared the view that something needed to be done.
    Sometimes, Patrick surprised me. During the general election campaign, we took part in joint meetings that the churches organised. We were asked about the term "bogus asylum seekers". Patrick roundly condemned the term "bogus", as I do. We had common cause on several other matters in the debates. I am sure that hon. Members from all parties would like to wish him and his wife well in the future.
    Teignbridge was unusual in the general election because we had a turnout of 69 per cent. That may sound good when compared with other constituencies, but it was poor because it was 5 per cent, down on the previous election and almost 12 per cent, down on the 1992 election. Villages with a greater population of elderly people had a higher turnout, and it is clear that places with a younger population and perhaps more working-class areas had a lower turnout. People may say that there is nothing new in that, but I am especially worried about young people. Several young people voted with a passionate opposition to the Government's policies, but more could not be bothered and did not vote—they did not see the point.
    What do we have to offer young people? That brings me back to the "offside rule". The "offside rule" comment dealt with people's passion for sport, which applies especially to young people. I am passionate about sport, and I am glad that the hon. Member for Tottenham (Mr. Lammy) is present because I enjoyed his speech on the opening day. However, I believe that Sol Campbell will not necessarily go to Barcelona; I hope that he will come to Arsenal. I am sure that the hon. Gentleman agrees that it is difficult to get referees to give away teams an offside decision at Old Trafford.
    Young people often have a passion for sport that is not reflected in government—local and national—provision for them. My hon. Friend the Member for Colchester (Bob Russell) has tabled an early-day motion in which he urges the Government to make physical recreation a curricular subject in schools. Physical activity is the best method of helping the health of the nation for the future. We must encourage that not only when young people are at school but after they leave. To do so, we must make sure that the funding is in place and that bureaucracy is cut away so that sports clubs are not messed around for months or years when trying to find premises.
    I shall refer to two local clubs in my constituency that experience difficulties. Newton Abbot has a water polo team, which has entered its equivalent of the premier league and will play against the Manchester Uniteds of water polo. Although based in Devon, it must play its home games at Millfield school in Somerset, a drive of an hour and a half. If the local authority is asked to provide a swimming pool of the right size and with the right facilities for water polo, it says that it will not consider the matter, that it may find the capital funding or lottery money, but that it will not do it because of the costs of maintaining and running the pool in future.
    The local authority faces difficulties because of the Government's funding constraints. If we are serious about sport and ensuring the provision of sports facilities,

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    perhaps the Government should consider ring fencing or providing additional funding so that we have centres of excellence for sport throughout the country.
    The River Teign is an estuary in Teignbridge, on which River Teign rowing club is based. It has more than 400 members, many of whom will row past here in the great river rowing race later this year. That club has a problem with bureaucracy and access to funding, which takes time. In the meantime, people are put off the sport. The longer it takes to find facilities, the greater the number of young people who walk the streets and get bored. We want to get people into sports clubs to enjoy the facilities, and fewer bored young people walking the streets at night.
    7.30 pm
    Mr. Colin Challen: I am grateful to the hon. Member for Teignbridge (Richard Younger-Ross) for that intimate portrait of his constituency. I have a previous connection with it, in that I was a member of a book club based in Newton Abbot. I do not know whether it still exists, but perhaps my reading of its books assisted me in my future career. I am sure that I shall follow the hon. Gentleman's parallel career with great interest.
    It is a great privilege for me to speak in this debate. In the previous century, hon. Members representing my party never had the opportunity to debate a legislative programme at the start of a full second term in government. The opportunity now afforded to us could shape the future of our country for a generation—a generation that I hope will never have to face the hardships that our parents and their parents had to endure.
    I am proud to follow in the footsteps of John Gunnell, who represented the people of Morley, Middleton and Rothwell for nine years. In the last year or so of his membership of the House, his health suffered a debilitating decline and I am sure that all hon. Members will join me in wishing him respite and a full recovery from his illness. Despite his often painful condition, John was still determined to come down to Westminster to perform his duties. He did not always complete the journey and, on a couple of occasions, had to be diverted to hospital.
    In that regard, John Gunnell showed the same devotion to duty as another predecessor of mine, Sir Alfred Broughton, whose vote—facilitated by a journey by ambulance—helped to keep an earlier Labour Government in power. Perhaps it was appropriate that John served diligently on the Select Committee on Health. He was not only a patient; he was also very impatient to see the regeneration of the national health service—a cause to which he remains totally committed.
    I also want to place on record my appreciation of an early and trusted mentor of my political career, Mary Redpath, who, sadly, died just a week after the general election. Much of what I learned about election campaigning I learned from Mary, and she will be missed by all those who knew her in the Labour party and outside it.
    As many hon. Members may know, the constituency known as Morley and Rothwell, which includes the major community of Middleton, straddles the southern boundary
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    of that great northern city, Leeds. The complexion of the constituency has changed considerably over the past 20 years. It was once dominated by mills and mines, and played a significant part in the industrial revolution. Part of its boundary is formed by the still-functioning Middleton railway, the first commercial railway in the world.
    The last mines closed in the 1980s, during that terrible decade of industrial decay. One former mining community is called Lofthouse, whose place name means an upper chamber. If we ever come to consider a new name for the other place once its reform is complete, perhaps we could call that upper Chamber the "Lofthouse of Lords", in memory of the ordinary people who really made this country great.
    Some traditional occupations survive, however, and I am pleased to report that from where I live in East Ardsley, I can still see fields full of rhubarb, because we sit on the edge of the great Yorkshire rhubarb-growing triangle. Rhubarb-growing was a flourishing trade in the 19th century, and I am told that today rhubarb is still considered a great delicacy and is served in the best London restaurants. Thankfully, the constituency does not rely entirely on the vagaries of the London restaurant scene to provide high employment, good education and improving health facilities.
    Since 1997, unemployment has dropped by 34 per cent., not by chance but by choice in the context of a stable, growing economy. Our primary school results have improved markedly, and we have four new primary schools planned, with building work starting imminently on one of them. One of our high schools, Rodillian school, has just been awarded arts college status. That will bring the extra resources needed to raise standards across the curriculum, which will focus on the performing, visual and media arts.
    Bricks and mortar are being laid for the biggest health facility the constituency has seen in 20 years, which is part-funded by Leeds city council and is to be managed by local people serving on the board of the new primary care trust, which I expect will be in place soon. We have approval for the Leeds supertram, which will serve a large part of the constituency and the wider area, with a park-and-ride terminal at Tingley. In Rothwell, where once we had a coil mine, we now have a brand new country park.
    Morley, Middleton and Rothwell is deservedly a popular area. That fact brings its fair share of problems, which I am sure will be familiar to many Members. Housing development has placed great pressure on the immediate countryside and the roads are increasingly congested. Even Morley, it seems, now has its own mini-rush hour. However, the problems of affluence sit cheek by jowl with the problems of deprivation. Part of the constituency is classified as being in the top quartile of the indices of multiple deprivation published by the former Department of the Environment, Transport and the Regions. There is still poor housing; there are still excessively high rites of heart disease; there are still youngsters who turn to drugs; and there is still a fear of crime which no politician inebriated with statistics will eradicate.
    In 1997, we were elected to tackle those problems and I think that people have given us credit for the start that we have made. However, to paraphrase one of Morley's

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    most famous sons, Herbert Asquith, we can no longer say "wait and see", because what we now want is delivery, delivery, and delivery. This has been a theme of the general election and of the debate on the Gracious Speech. It has been said that the low turnout occurred because voters could see no difference between those of us sitting on this side of the Chamber and those on the other. I must say that after only a few days sitting in the Chamber, the difference has been all too plain for me to see and hear.
    Perhaps the low turnout happened because electors felt powerless. They have witnessed violent demonstrations on the usually peaceful streets of Gothenburg and elsewhere. Perhaps, we are told, people feel powerless to affect the emerging shape of Europe, or to influence the most powerful nation on earth, where democracy produced an ambiguous result that is nevertheless being taken as a mandate to challenge hard fought-for international agreements on peace and sustainable development. Perhaps people feel powerless to tackle the mysterious forces of global competition, which, unhindered, pick up and deposit wealth wherever the markets choose. "Where", voters might ask, "is our say? Where is our voice to be heard in these markets?"
    However, these expressions of powerlessness are nothing compared with what people can experience in their own lives if we do not deliver what they expect. Real powerlessness is to be in pain, waiting too long for a hospital bed. Real powerlessness is hiding at home, fearful of going out or of facing the yobs who will make our lives a misery if we challenge them. Real powerlessness is sitting on a train or wilting on a platform wondering what time we might get home. Most importantly, real powerlessness is not being able to enjoy the basic human right to a decent standard of living, and being excluded both economically and socially from participating in society. We must tackle those basic issues if we are to be judged a success in this second term.
    I have referred to the mines that used to exist in my constituency. Most of them suffered from routine disasters that claimed the lives of many miners When reading the history of those often merciless workplaces, I am struck by the everyday acceptance, in days lot that long gone, of death and injury as a routine and unavoidable hazard. But I am also struck by the fact that not every employer of the age necessarily believed that inhumane conditions and appalling privations led to greater productivity.
    Increased productivity is indeed one. of the pillars of a competitive economy, but to another famous son of Morley, Sir Titus Salt, it was conceivable that workers and their families could be treated humanely, live in decent housing and have their lives to live and that that ideal could be supported by hard-edged commercial logic. In the Victorian age of laissez-faire markets, it was perhaps surprising that businesses could flourish and prosper with such enlightened owners
    To listen to the rhetoric of the global market, one might assume that, if any such businesses were established today, they would fail immediately, their bottom lines burdened with the cost of social cohesion. Is it not ironic that some companies can value good will in millions, but that the good will of the work force and their families rarely gets a mention until it is time to push through their redundancy packages? Therefore, I welcome the commitment in the Gracious Speech
    "for an early and comprehensive World Trade Round, which will benefit industrialised and developing countries alike."
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    We need to co-operate internationally to secure trade that benefits all people and all nations, not just those who have already gained lucrative markets for themselves and positions of dominance that hurt developing countries. We need a trade round that reflects people's aspirations for sustainable development, not the rapacious destruction of the world in which we live. We need a trade round that elevates stability and quality of work to the same rank as the freedom to invest.
    We also need international co-operation that functions openly and transparently and in which the democratic forces always lead and can be held accountable. As elected representatives, we face renewed pressure about strengthening our accountability, for that is one way to address the democratic deficit. Throughout the Gracious Speech, there are clear commitments to devolution, to opening up key public institutions and to continuing the reform of our constitutional structures. I welcome all those.
    The theme of the Gracious Speech is spelled out in "inclusivity". That word does not trip off the tongue easily, nor have I heard anyone use it in the pub or the supermarket. I am sure that more colourful words could be used to excite interest in the work on which we have embarked, but if we do not succeed, much more colourful language, and worse, will be used to chronicle our failure.
    Whether we use the word "inclusive" or not, let us show it in our actions and deliver it in practice. Then, in four or five years, it will be a case not of third term lucky, but third term well deserved.
    7.42 pm
    Mr. Elfyn Llwyd: First, I warmly and sincerely congratulate the hon. Member for Morley and Rothwell (Mr. Challen) on a fine maiden speech that was thoughtful and thought provoking. His confident contribution augers well for the future. I also congratulate the hon. Member for Teignbridge (Richard Younger-Ross) on his excellent speech. Those of us who are relative old lags have been fortunate to hear several good maiden speeches today. Perhaps there are more to come; we do not know.
    I want to deal with key areas of the Queen's Speech that show a lack of cohesion in the Government's overall economic thinking. The hon. Member for Birmingham, Northfield (Richard Burden) referred to the need for a firm regional policy, but before considering regional policy, one must examine the public spending allowable under current taxation rates. We as a party will challenge that centre-right thinking of low taxation linked to low public spending.
    Last year, for example, public spending was 38.3 per cent, of gross domestic product—the lowest since 1964. Like other parties, we call for a substantial increase in public spending. Otherwise, we will not be able to pay for efficient public services, decent schools and hospitals, safe and efficient public transport and investment in the future of the economy. Day after day over the past five or six weeks, we all heard about those matters from the electors. We need to make progress on them and to reverse current thinking about low tax, low spend. Obviously, we also need a fairer distribution of wealth, which was alluded to eloquently by the hon. Member for Morley and Rothwell.
    Over the past 20 years, there has been a substantial shift of resources from Wales to richer parts of the UK. In the first two years under the Government, Wales' GDP

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    unfortunately fell by 3 per cent., compared with the UK average. We want that trend to be reversed and Wales to have its share of general economic growth. Of course, having less inequality in various parts of the UK would benefit the whole economy.
    I shall refer briefly to the Barnett formula. We in Wales demand a fairer system to work out the sum of money from the Treasury in London to which Wales is entitled. The current allocation is worked out purely on the basis of population, whereas we need a system that takes into account Wales' greater needs, which are due to such factors as relative poverty and the higher proportion of older and other economically inactive people. In some cases, the sparsity factor plays a part.
    We want the Barnett formula to be replaced by a needs-based formula that considers the wider picture of public expenditure in Wales. It would have to include so-called non-identifiable expenditure, such as defence, which equates to £700 per capita in south-west England, but perhaps £100 per capita in Wales. Such expenditure should be described as non-identified, not non-identifiable, because, clearly, projects such as the Jubilee line extension and other large flagship projects are not reflected in any expenditure given to Wales.
    We must have a needs-based funding mechanism. Establishing such a formula would be complex, but it is essential and the task should be undertaken by an independent body similar to the Australian Commonwealth Grants Commission. A needs assessment should be carried out to analyse public expenditure requirements across the UK and it should consider the range of major public spending programmes case by case. For example, school expenditure might depend on the number of children of school age, rather than on the total population, and roads expenditure might depend on population density as well as population itself.
    The less private spending capacity there is in an area, the more public expenditure it should receive. In the Welsh valleys, there are numerous examples of high sickness rates, low employment and serious poverty. The valleys need more public investment to counteract those obvious and crippling disadvantages.
    Labour, and the Chancellor in particular, has made bold claims that there will be no return to boom and bust while it remains in power. Those claims ignore the fact that there has already been a form of boom and bust. For the first two years of Labour's first term, there was bust in the public sector, and its effects are becoming increasingly apparent in the failure to deliver quality public services.
    The comprehensive spending review seeks to reverse that trend by increasing public expenditure rapidly in real terms over the next three years. We all hope that there is delivery—I refer to the speech of the hon. Member for Morley and Rothwell—but this boom and bust is curious and such a stop-go approach is hardly conducive to effective and efficient management of the public sector.
    As we know, at the end of the three years covered by the CSR, the Government will face the choice of either cutting the rate of increase in public spending or having to increase taxation. That is one reason why Plaid Cymru, the Party of Wales, advocates increasing taxation for those earning more than £50,000 per annum.
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    There is another way in which Labour's claim to have abolished boom and bust rings hollow. I quote the Financial Times of 21 June, which encapsulates the point:
    "The minutes of the latest meeting of the Bank of England's Monetary Policy Comnittee … neatly summarise the difficulties. The MPC's is a tale of two economies.
    Consumers are feeling prosperous. House prices are rising … and retail spending is robust …
    But boom in the personal sector sits alongside bust in the tradable goods sector. The strength of sterling against the euro is crippling … Manufacturing output fell by 0.9 per cent, in April, and the sector is set to fall into recession. Reflecting this, the UK registered its largest ever trade deficit."
    Superficially, the Government have enjoyed a good run of economic management in their first term. As Napoleon asked of his generals, "Is he lucky?" We may envy the Chancellor's good fortune, but the Government's second term is likely to be much more difficult and will test their mettle.
    The United States is experiencing a major economic slowdown, and Germany is facing a recession. Stock markets around the world are in retreat, and in the United Kingdom the outlook for growth is deteriorating slightly. The Government's spending plans under the comprehensive spending review predicted growth of 2.25 per cent, a year, but even so the public finances will move into deficit in 2002–03. In the past, the Chancellor has relied on actual growth exceeding his projections to ensure that the public finances have a healthier outcome than planned. It is likely that that trick will no longer work, with actual growth being at or lower than planned. The Government will then face having to raise taxes, borrow more or cut public spending, and I hope that it is not cuts in public spending.
    Much has been said in the debate about the euro. I appreciate that the debate is not often of a high quality. As always, comments in today's debate have been emotive. I seriously and honestly hope that when the debate begins—it should begin fairly quickly—we all have an informed discussion. I am no expert, nor I suspect are other hon. Members, and we need to be guided by independent analysts, good political thought and economists who understand what it is all about. I hope that we have a mature debate, because it is an extremely important issue.
    The economy of many parts of the UK, and certainly of Wales, has suffered from the fact that we are now highly dependent on trade with the countries of the euro zone. Since the euro was introduced in January 1999, there has been a sharp drop in its value against sterling. That has placed a huge burden on manufacturing industry. It has become more difficult to export, and imports from the eurozone have fallen in price because of the rate of sterling. One of the most graphic examples of the impact of the strong pound has been Corus, although I have my doubts about the honesty of that company and whether we know the whole truth even now. The strong pound was cited as one of the problems.
    The Government must not procrastinate about entry into the euro, because that is placing at risk manufacturing jobs not just in Wales but throughout the UK. I believe that it will also deter overseas companies from investing in the UK. Major employers, such as Ford, have made it clear that they are continuing to invest in Wales only because they assume that the UK will adopt the euro within the next few years. The signals that have emanated

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    from the Government and from the Bank of England since the general election are not encouraging, and will do nothing for the confidence of manufacturing industry.
    The impact of the euro is not confined to manufacturing. Agriculture and tourism also suffer, and again Wales is particularly vulnerable
    In his Mansion House speech last week, the Chancellor claimed that he favoured a "stable and competitive" currency. At sterling's current level, that is an oxymoron. The Government face a dilemma. It is generally accepted that sterling is overvalued against the euro by approximately 15 per cent. That will need to be remedied before the UK adopts the euro, but if that is done, the drop in sterling's value will lead to additional inflationary pressures. If the Government continue to rely solely on monetary policy to control inflation, interest rates will have to be increased and that will tend to increase the value of sterling against the euro. There will be only two ways out of that dilemma. I shall not go into them now, but there are clearly some important decisions ahead. I am sure that all parties would appreciate an indication from the Government that they are taking the euro debate seriously.
    Another matter that has not been taken seriously in the Queen's Speech debate is the crisis in agriculture and in the rural economy. The hon. Member for Truro and St. Austell (Matthew Taylor) referred to agriculture, which is another vital part of the Welsh economy. Within the past five years, income for a typical 500-acre farm, often family run, has been cut by well over 70 per cent. Current average income from farming activity in the UK is £4,500. In the past two years, 40,000 jobs have been lost from UK farming, at a rate of 450 a week. In Wales alone, the number of workers on Welsh farms has fallen by 10 per cent, and jobs are being lost at a rate of 73 per week. Those figures were produced before the foot and mouth crisis.
    We call for a young entrants scheme to help young people into farming, and an early retirement scheme that is not linked to coupling farms to make them larger. The average age of a Welsh farmer is 58 years, and such a scheme would enable farmers to have a proper, respectable retirement on a reasonable income. We should go to the European Union, because it caters for such schemes. Given the early signals that we had a couple of weeks ago, even though there was no reference to this matter in the Queen's speech, I hope that the Government will take it up urgently.
    There is no mention in the Queen's Speech of any direct help for the agriculture sector specifically or the rural economy generally. The Government must realise that the sector is in great peril and deserves urgent and constructive action to avoid the utter devastation of rural communities, not just in farming but in all rural businesses and among rural dwellers who are beset by these awful crises. They will bring with them huge population moves, and will have a great impact on the lives of all rural dwellers, with additional hugely detrimental effects on the Welsh language and culture. Despite there being no reference in the Queen's Speech to that problem or to rural problems generally, I urge the Government to give the sector urgent and high priority over the coming months.
    7.57 pm
    Dr. Hywel Francis: In rising to make my first speech in the House as the new Member for Aberavon, I am struck by the significance of 7 June. That was the date on which this year the British people for the first time returned a Labour Government for a second term with a substantial majority. They are committed to a programme of social justice, abolishing unemployment, pensioner poverty and child poverty, and achieving an advancement of opportunity for all. The date of 7 June was also the day in 1984 when I was outside the House with tens of thousands of people from mining communities all over Britain, seeking that very same justice. For many Labour Members, there is a certain poetic justice about the date of 7 June.
    In paying tribute to my distinguished predecessor, Sir John Morris, who served our constituency for almost 42 years, I am reminded that I am only the fifth Member to represent Aberavon since the constituency was created in 1918. Sir John served Aberavon, Wales and the United Kingdom with great distinction. He had the vision to campaign successfully for greater investment in the steel industry, for better road and sea links through the M4 and our deep water harbour, and for the diversification of the local economy, culminating in the recent development of the Baglan energy park. The arrival of our new regional hospital is also a tribute to his diligent campaigning.
    Sir John will also be recognised more widely as both a Welsh and a British statesman. He was latterly the Attorney-General, and in the late 1970s he was the architect of the first attempt at devolution in Wales. It was Sir John who said of our defeat in 1979:
    "When you see an elephant on your doorstep, you know it's there."
    The Labour Government's achievement of what Sir John called
    "the repatriation of democracy to Wales"
    owed much to his pioneering work over many decades.
    Aberavon is a very special constituency. It has a remarkable history, and because of the talents of all its people it has a bright future. It is the birthplace of Die Penderyn, the first martyr of the Welsh working class. It is also the birthplace, at Cwmafan, of William Abraham—Mabon—the great champion of the Welsh miners, who was the first Welsh worker to be returned to the House. Aberavon was the constituency to have the distinction of returning the first Labour Prime Minister, Ramsay MacDonald, who remained steadfast to the Labour cause, at least while he was in Aberavon.
    The constituency has long been distinguished for its tolerance and for its radical, dissenting, co-operative, community, socialist and internationalist values, which we still proudly embrace today. On Friday, I attended a charity concert for the benefit of children of Chernobyl; on Saturday, in the Upper Afan valley there was a fund-raising event to protest against land mines. Those values are also clearly demonstrated by the success of co-operative enterprises at Glyncorrwg and Blaengwynfi, which deserve further support. Historically, the internationalist values are perhaps best expressed by the old Independent Labour party centre at Briton Ferry—visited frequently by such remarkable speakers as Emma Goldman, James Maxton and the Afro-Caribbean writer C. L. R. James, who, it is said, completed his masterpiece "Black Jacobins" in our locality.

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    Today the constituency faces great economic, landlordist, educational and environmental challenges. The steel industry at Port Talbot, as elsewhere, has lost many jobs in recent years, but the skills of its work force deserve a long future, and I will campaign for that alongside our local authority, the National Assembly for Wales and the steel unions. We have witnessed an ordered withdrawal of the petrochemical industry—a model of corporate social responsibility—and its replacement by the private-public partnership in the context of the new energy park and the planned urban and sports villages envisaged for Llandarcy.
    In my first speech to the House, I want to focus specifically on the citizenship rights of disabled people and their carers in relation to the economy and to the whole of society. Our new Labour Government should and will be measured by the extent to which we tackle, in partnership, the fundamental inequalities faced by disabled people and their carers.
    Already in my constituency good progress is being made through the local authority's special needs provision at Briton Ferry and Sandfields schools, the new special needs activity centre for very young children at Taibach, the work of the Shaw trust at Llandarcy—including its disability action centre, which is soon to be officially opened—and the thousands of volunteers often working with disability groups, and networked through the local council for voluntary service.
    Government, in Westminster and in the National Assembly for Wales, have demonstrated their serious commitment by setting up the Disability Rights Commission and the recently launched carers strategy in Wales. Three organisations—Mencap, the Down's Syndrome Association and the Carers National Association—recently held awareness-raising weeks. The House would do well to reflect on the vital matters that they raised in relation to employment and wider social issues, and I urge our new Labour Government to listen to their concerns in order to achieve a sense of full citizenship for disabled people and their carers in the new millennium.
    Disabled people are twice as likely as others to be out of work. Fewer than one in 10 people with a severe learning disability are in work, and more than I million people with disabilities want to work. There is a shortage of at least 40,000 supported employment places. The benefits system is a barrier for many people wanting to work, and most employers have no experience of employing people with a learning disability.
    We need an expansion of the access-to-work scheme, offering on-the-job support. We need new rules for the disabled persons tax credit, making work pay for part-time workers, and we need a Government strategy to promote employment of people with a learning disability. We need statutory provision to support carers in the workplace, and young—and not so young—carers who are in education. For all young adults with a learning disability, we need structured programme routes from school and college to the world of work, and we need to involve carers in decision-making bodies.
    We need proper and sensitive national consultation with the Benefits Agency, and a new development of the new deal to break down barriers and remove benefit traps for many people with a learning disability who are able to
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    work and wish to do so. We need a national awareness campaign for employers, aimed at breaking down the obsession with formal qualifications. We need to give priority to those who will never work again, and to their dependants. We need to increase the pace of the settlement of miners' compensation claims, and those of their widows, until it becomes a whirlwind.
    The aspirations of disabled people and their carers mirror those of the general population: a good standard of health, educational opportunities that lead to a meaningful occupation in adult life, sufficient income to afford a comfortable standard of living, a safe and secure home environment, a fulfilling family and social life and a valued place in the community. Those are, after all, universal rights, whether they apply to a disabled child in Soweto or to a disabled miner or steelworker in Skewen.
    We have a more benign and friendly elephant on our doorstep now—our great Labour majority. Let us use that power wisely and swiftly to achieve social justice—the power which we did not have on 7 June 1984, but which we now have following 7 June 2001.
    The Queen's Speech began by referring to our aspiration for a more prosperous and inclusive society. We can do no better than recognise the need to make that essential and courageous journey of hope from social inclusion to social justice, to build a truly inclusive society. The people of Aberavon and the people of Britain expect nothing less.
    It was the Chartist poet Ernest Jones who wrote of that fine sense of hope and courage:
    "The coming hope—the future day
    When wrong to right shall bow,
    And but a little courage, man!
    To make that future—now!">
    8.6 pm
    Mr. Michael Fallon: I declare again the interests recorded in the most recent Register of Members' Interests.
    It is a very pleasant duty to congratulate the hon. Member for Aberavon (Dr. Francis), on behalf of the House, on his maiden speech. He did all the right things: he paid proper and generous tribute to Sir John Morris, who was much liked on both sides of the House and, I am sure, carries the best wishes of all of us in his retirement—if, indeed, he is retiring; he never seemed to retire before.
    The hon. Gentleman also spoke eloquently about his constituency, as is right and proper, and spoke particularly eloquently of the interests of both the disabled and those who care for them. We look forward to hearing from him again on that subject, which stood out from a remarkably well thought out and eloquently delivered speech.
    The hon. Gentleman produced something of a first. I think that that was the first time I had heard a Labour Member speak highly of Ramsay MacDonald. Perhaps he has now been rehabilitated. Who knows? Perhaps he is becoming new Labour again. I suspect, however, that we may not hear of Ramsay MacDonald again quite so swiftly—although we certainly want to hear from the hon. Member for Aberavon again. I repeat my congratulations on behalf of the House, and, indeed, congratulate all who have delivered maiden speeches so far.

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    This was a good Queen's Speech. Before I am misquoted, I must add that it was a good Queen's Speech in terms of its intentions. It focused on public service reform and on the quality of life of all the people who send us here. In one sense, of course, that is an admission of failure. The one phrase that was missing from the Chancellor's speech this afternoon, long though it was, was "the last Government"—because he, of course, was Chancellor in the last Government. It was under his chancellorship that productivity stayed flat, that our position and competitiveness declined so markedly, that the poorest 10 per cent.—as he was sharply reminded by one of his own Back Benchers—were falling further and further behind. Above all, it was under this Government that the failure to deliver public services—now the mantra from both sides of the House and from every Tory leadership candidate—became most apparent.
    I remember canvassing in Archer way, Swanley, and meeting a lady whose husband had been referred for an important eye consultation. She showed me, in disbelief, a letter from the Dartford and Gravesham NHS trust, telling her that the current ophthalmological wait was 99 weeks. That is not something of which I would have been proud had I been a Minister speaking in today's debate.
    I encountered general practitioners—I had never found this in five previous parliamentary elections—who were seriously considering leaving the service altogether. I found schoolteachers who were overwhelmed with bureaucracy—that was the last Government's legacy. It is up to the Minister who is summing up the debate to answer that honestly and properly. Before I get into detail, perhaps I should welcome back to the Department of Trade and Industry, as an Under-Secretary, the hon. Member for Edinburgh, South (Nigel Griffiths)—I never understood why he was dropped in the first place; perhaps he did not. Anyway, it is good to have him back. I hope that he will concentrate all his energies on his responsibilities, which I think include the Small Business Service which does not so far seem to have had much impact.
    I want to speak on three points the enterprise culture that the Chancellor is now promoting, the hospital and school reforms that are at the heart of the Queen's Speech, and some of the difficulties that we have experienced in my constituency with law and order. On enterprise culture, I came here today to praise the Chancellor; I certainly give him five out of 10. At least he has shown in his speech last week and in some of his earlier measures that he understands the problem.
    We have had nine years of continuous growth—five under the Conservatives and four under Labour—but productivity has not been rising and we have only slowly become more entrepreneurial as a society. Some of the Chancellor's solutions are clearly right. I welcome the reform and lowering of capital gains tax—it helps to keep serial entrepreneurs in the United Kingdom investing in new businesses, and I applaud the Chancellor for that.
    I applaud measures to promote enterprise in schools. The Chancellor must be right to move education business partnerships forward from the old, rather shaky foundation of sponsorship and vouchers into real partnerships where businesses play a part in schools that serve the local community. That is important. I look forward to seeing those ideas fleshed out with some practical proposals to make a reality of those partnerships.
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    The Chancellor was right to widen the opportunity for share ownership. He has come at that in a rather zigzag fashion, but the extension of the enterprise management incentive scheme is good news. Where I differ from the Chancellor is that he still thinks that enterprise culture can all be done only by or through Government. I have my doubts. Over the past four years, we have seen how too much tax tinkering can frustrate enterprise. Complexity Brown has introduced many different rates of company car tax; he even introduced many different rates of capital gains tax before he started to reform his own reforms. There are new and rather complicated research and development credits. That seems to be getting in the way, rather than reducing the tax burden, simplifying the tax code book and lowering rates.
    Alongside much of that fidgeting, the Government have almost unhesitatingly accepted far too much of the Brussels agenda, piling rights upon rights, all of them defensible as individual measures—who could be against more maternity leave, more paternity leave and workers councils? Who could be against any individual part of that agenda? However, the cumulative burden on enterprise is taking this country in exactly the opposite direction to the economies of the United States and far east, which are leaping ahead in productivity and competitiveness.
    All those measures—we will see more of them, I suspect, in the next couple of years—distract management from its key job, which is raising productivity and improving competitiveness. They also act as something of a deterrent to small companies. It is the larger companies that have the human resources departments which can hire the lawyers and deal with all the new legislation. It is the small business that is not formed—the self-employed business man or business woman who does not start up—that cannot cope.
    Too much Government monopoly, or quasi-monopoly activity, is still getting in the way. Perhaps we did not see it clearly enough then, but it is easier to see now how, for example, British Telecom's dominance of internet access has frustrated new enterprise and new internet services. I support the reforms in competition that the Chancellor is promoting. The more one believes in markets, the more important it is that the regulatory framework for markets is robust and regularly renewed.
    On public service reforms, it is all about that magic word "delivery". No speech now is complete without it, but there is, as I said in my question to the Chancellor some four and a half hours ago, some confusion at the top. The Chancellor is still responsible, as I understand it and as he clarified today, for public service agreements negotiated between the Treasury and the spending Departments, but the Deputy Prime Minister in the Cabinet Office is responsible for overall public service delivery, and now we are told that the Office of Public Service Reform will report to the Prime Minister, there is a role for the performance and innovation unit and even a delivery unit—all those central bodies in Whitehall will be chasing each other around and no one Cabinet Minister will have clear responsibility for overall delivery of public services.
    It seems that the approach is still top down. There is a reference in the Queen's Speech to more freedom for head teachers, but the Government cannot give more freedom to head teachers if, at the same time, they are demanding from Whitehall more and more targets. They cannot talk about freedom in delivering primary care when they

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    are still overlaying from Whitehall efficiency targets throughout the NHS. They cannot talk about giving police more freedom locally when Whitehall initiatives are laid down by the Home Office. It is all still very top down.
    As for the budgets themselves, they have been increased over the past four years and I welcome that, but there is no point keeping on increasing them if they go on being top sliced for Whitehall initiatives and different schemes. That reduces the amount of money available in the front line and demoralises front-line staff. Every Government initiative requires co-ordinators, conferences and area managers and takes people out of the ward, the classroom, the police section. If we are serious about public service reform, we must believe in competition within the public sector—above all, competition in ideas. We must enfranchise police area commanders, head teachers and hospital managers, and set them free to develop their own ideas, rather than rely on ministerial targets and 10-year plans.
    We need to be much clearer about the role of the private sector. It seems to be an accepted nostrum among Labour Members—there were a couple of brave exceptions earlier today—that the private sector is good, but I have not yet seen any clear thinking from the Government as to exactly how the role of the private sector is to be developed. If it is to be involved in current expenditure as well as capital expenditure, in managing existing provision rather than establishing new provision, some more thinking is required. Too many of the contracts that are currently available are still controlled and managed by the public sector. Some Labour Members will want precisely that—they want the public sector always to be in control—but the private sector will not necessarily welcome that.
    The contracts will have to be longer term than some of the contracts so far and they will certainly have to involve longer leases than have so far been made available, if those same private sector companies are expected to make a considerable capital commitment. We may need to think again about the ability of staff to transfer between the public and private sectors. It is not a question simply of TUPE—the Transfer of Undertakings (Protection of Employment) Regulations 1981. The private sector lives with TUPE all the time: TUPE is a fact of life. However, sometimes, it wants to be able to offer new contracts that may indeed involve higher, if slightly different, conditions and may be framed in slightly different ways.
    We need to involve the private sector not simply in running public sector contracts, but much earlier in the design of those services, the design of the delivery and in the process of delivering public services. We need to get the best in innovation, in ideas, in management of design as well as in actual delivery.
    I should like, finally, to say a few words about law and order. As I have told the House before, we seem to be much better at law than we are at order. Every year, we have a new police Bill or criminal justice Bill, putting rafts of new regulation and new offences on to the statute book. Returning from our constituencies, however, all of us will recall our constituents' growing refrain about the quality of life that they have to endure—the petty vandalism, the aggressive behaviour in public places and the problems of late-night drinking and drug dealing.
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    We have to think again about how we can enfranchise local communities and give them more serious powers to deal with matters locally.
    I think that both the current Government and the previous one have gone in the other direction, away from local solutions. Smaller police stations, for example, are being closed. Indeed, when Sevenoaks police station is closed, I shall have no police station at all in my constituency. Moreover, our magistracy has been enfeebled and is unable to deliver the type of local sentencing and local policies that their communities might want. Furthermore our local councils have been emasculated.
    Communities need real powers to deal with those problems. I am not at all convinced that some of the solutions that we have offered so far are really working. Antisocial behaviour orders, for example, do not seem to be biting properly. We shall also have to see whether the penalty notices provided for in recent legislation can work properly. We have to look again to see what works, and we need Government to be a little more humble and work with local communities for local solutions.
    I tell Ministers to go a little easier on the 10-year plans, the great national schemes, the ministerial targets and the Office of Public Service Reform. Let them look again to local solutions and support different approaches. If Government have a role, it is to clear away some of the practical second and third-order barriers, many of which have been imposed by Parliament itself. Ministers should approach the problems with a little more humility. If they succeed, I shall certainly cheer them on. The past four years, however, are not really an encouragement.
    8.22 pm
    David Wright: In my first speech in the House I should like to touch on three themes. I should like, first, to comment on my predecessor in the House; secondly, to speak about the constituency of Telford and its unique position in the history, including economic history, of our nation; and, finally, to look a little to the future.
    It is not hard at all to be complimentary about Bruce Grocott, the previous Member for Telford. He served the town as Member for The Wrekin between 1987 and 1997, and then, from 1997 to 2001, after a boundary review, as the Member for Telford. Previously, in the 1970s, he was the Member for Lichfield and Tamworth. In those years he was an excellent parliamentarian, serving his constituents with efficiency, honesty and good humour. It is a testament to him that, whenever I have introduced myself as the new Member for Telford, people have not only commented on my height—indeed I am taller than Bruce—but mentioned their great fondness for him.
    Bruce Grocott served the Prime Minister with great loyalty as his Parliamentary Private Secretary. Previously he served Neil Kinnock, and before that the late John Smith. I know that, in the other place, he will continue to serve our country with enthusiasm and his infectious optimism. I am also sure that I speak for hon. Members on both sides of the House when I say that he richly deserves the honour that has been bestowed on him. Having campaigned with him for 15 years, I can say that he is enormously well-respected in Telford. It is very hard to find anyone with a bad word for him. In fact, he has sometimes complained that I have looked too hard for someone with a bad word for him. Nevertheless, I am glad to call him my friend.

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    As hon. Members know, the constituency of Telford sits in the county of Shropshire and contains most of Telford new town. Although it is a new town, it is largely a mix of older communities—the old districts of The Wrekin, each with its own rich industrial and social heritage. I feel very honoured to be the new Member for Telford because I have lived in the constituency all my life. I think that it is a particularly humbling and moving experience for any Member to be able to say that he represents his home town.
    Telford is a creation of the post-war new towns movement. In the post-war era, building on the principles of the garden city movement and the actions of some of the enlightened philanthropists—Titus Salt has already been mentioned today—the then Government sought to build new communities to relieve people of poor housing conditions in the conurbations and tackle the problems presented by the juxtaposition of industrial and living environments. In the late 1960s, Telford was designated as an expansion of the original Dawley new town project. The aim was to revitalise the older communities of Oakengates, St. George's, Dawley and Madeley, where older mining, foundry and engineering industry was falling into decline on the east Shropshire coalfield.
    Alongside those communities were created new areas of housing and industry as well as retail and leisure facilities. It has taken more than 30 years for those new communities to gel into the older areas and districts of The Wrekin. I think that I belong to the first generation of people from the area who would describe themselves as Telfordians.
    Perhaps the most well-known part of my constituency, however, is the Ironbridge gorge, including Coalbrookdale. It was there, in 1708–09, that Abraham Darby first used coke to smelt iron and signalled the commencement of mass iron production, which was the birth of the industrial revolution. It was people such as Darby and Wilkinson—"The Iron Masters", as they were known—who were the innovators behind the industrial processes of the modern world. In 1779, iron from the Coalbrookdale foundries was used to construct the world's first iron bridge. The area is now of course a world heritage site.
    It was, however, not those innovators alone who led the process of industrial change in our ration. That process was led also by ordinary working people who worked in often appalling conditions. It is their contribution to our society that I should like to celebrate today. Indeed, many summaries have been made of what Coalbrookdale looked like in that time of industrial change. It was a living hell, where people lived and died tied to large corporations and gave their lives to drive forward our nation. Far too often in our history, the achievements of ordinary working people are hidden behind the begin names. I pay respect today to those hidden heroes of our industrial past.
    For many years, the economy of Telford was dominated by big corporations such as the Lilleshall company, with its focus on foundry and engineering work. To be fair to the Lilleshall company, it was often fairly enlightened, building good quality homes for the work force and driving forward a process of change. That process was built upon the non-conformist traditions that Telford has enjoyed over the years. From this industrial landscape grew the co-ordinated organisation of labour in the trade
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    union movement, a legacy that, I am pleased to be able to say, has lasted beyond the life of some of the old companies that I have mentioned.
    Looking to the future, I believe that Telford can continue to be a beacon of innovation and economic growth in the west midlands. During the election campaign, I visited numerous companies that are leading the global field in electronics and computing, automotive component manufacture, plastics, engineering and the banking and service sector. What struck me most during those visits was that the goods and services being offered were often of the highest quality and that in order to compete in the global marketplace, quality is now the key. Being the best in the world is the most important factor for many of our companies.
    Large corporations will continue to be important in Telford; that goes largely without saying. However, the future will be increasingly dependent on the success of small businesses and the self-employed; the new innovators of our age. Central to the future also will be the continued creation of real partnerships between employers, employees and the union movement. The best organisations are encouraging this partnership approach, adopting team-focused working and the principles of quality management and allowing people to be innovators at all levels in organisations, not just in senior management positions.
    Companies such as Brinton's carpets or Aga Food Services Group in my constituency provide jobs for many of my constituents. They are embracing new working practices, dismantling the old structures and unlocking the potential of their employees in a way that was never done before. If that is done well, it can be done in partnership with the union movement and we can drive forward the productivity of those companies and of our nation.
    The products produced by Brinton's and Aga are world class and, importantly, they pay decent wages. For many years, Telford was known as a low-wage location. That is why the minimum wage and the working families tax credit have been so important in my constituency. Thousands of people have found their living standards improved during the last four years. The challenge now will be to provide more jobs in Telford.
    I wish to flag up one area of concern: the proliferation of agency work and temporary employment contracts in our economy in Britain today. In many circumstances, such contracts and arrangements are acceptable and give flexibility in the labour market. But too often they are used to circumvent giving people the employment rights that they deserve. We need to consider our approach in this area in much more detail.
    During the election campaign, I went to the local constituency jobcentre, where up to two thirds of the vacancies available were for agency-based working. This is a real problem across the country. We need to encourage employers to adopt better working practices and to pay the going rate for the job, while giving people better standards.
    The Government are providing the platform for continued economic growth in Telford, and the figures bear that out. Unemployment in the constituency has fallen by 22.6 per cent, since 1997. Youth unemployment has fallen dramatically—by more than 70 per cent.—in a similar period. Nearly 500 young people have benefited from the new deal programme.

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    I welcome the principle in the Queen's Speech that economic stability will continue to be the foundation on which increased spending on social infrastructure can be built. I believe that Telford and its people can continue to mirror the achievements of the industrial innovators and the working people of the past. As a local lad, I am proud to represent the constituency; a constituency with such an illustrious past and, I hope, a bright future.
    8.33 pm
    Iris Robinson: First, I congratulate the hon. Member for Telford (David Wright) on his maiden speech. Both in content and delivery, he has demonstrated a keen grasp of his subject and has set a high standard for the rest of the new Members to follow. As a fellow member of the new class of 2001, I will watch his progress with interest and, I suspect, envy.
    It is an enormous honour for me to become the second Member of Parliament for Strangford since it was created in 1983. Each of us—even the most humble—when first we walk into this House will experience a sense of accomplishment, satisfaction and even pride to be chosen to speak for our constituents.
    I feel especially fortunate to represent one of the most scenic and beautiful areas in the kingdom. If anyone doubts my word, I invite them to come and judge for themselves. They should visit the historic Scrabo tower, nestled beside the principle town of Newtownards; see Saintfield, Comber and Carryduff expanding and shaping their future; drive around the coast, stopping, of course, at the picturesque villages of Ballywalter and Ballyhalbert; and sail around Strangford lough, taking in the quaint settlements of Greyabbey, Portaferry and Kirkubbin. They should leave time to walk around the charming fishing village of Portavogie and try those world-famous Portavogie prawns, and if anyone has the energy, they should come to Dundonald leisure park. Almost 10 million people have made it one of the United Kingdom's most visited leisure attractions.
    Visitors should cast their eyes over the rolling County Down countryside, the lush green fields, the lough and the coastal views. This is an area untouched by much of the plastic commercialism of the age. It is nature at its best. It is God's own country.
    Most of all, visitors should take time to meet the people of Strangford. No friendlier citizens could be found anywhere, and I am delighted to report to this House that Her Majesty will find no more loyal subjects, wherever her writ may run, than the good people of Strangford.
    My predecessor, John Taylor, represented this constituency for 18 years. Those who know of the many fierce and bruising battles that we have had will be wondering how I will come to terms with the convention that a new Member, in a maiden speech, should make some complimentary remarks about their predecessor. I cannot deny that Lord Taylor and I have had major political differences. We directly fought two elections against one another in the constituency of Strangford—one for Westminster, the other for the Northern Ireland Assembly. The score is one all and, before he stood down, I had been looking forward to the decider at the recent election.
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    If there was ever a politician who could treat political triumph and disaster just the same, it was John Taylor. Despite our political differences, I appreciate the personal sacrifice that he made by being involved in politics in Northern Ireland over the last turbulent 30 years. Indeed, when in 1972, the official IRA shot my predecessor, he almost paid the ultimate price for his service to the community.
    From being a Minister in the Stormont Government before 1972 through to the present day, John Taylor has been elected to almost every body formed. He has been a district councillor, a Member of the Stormont Parliament, the Northern Ireland Forum, the Northern Ireland Constitutional Convention, three Assemblies, this House, the European Parliament, the Council of Europe and now the other place. I am sure that I have left something out but I am equally sure that he will remind me of it. I genuinely wish him well for the future.
    Much as I feel a sense of pride at having been elected to this House, I feel an enormous sense of responsibility to those who sent me here. On the doorsteps, it was clear that those who had never before voted for my party or for me were doing so because they felt that they had been betrayed and let down, not just by the Ulster Unionist party but by this Government.
    There was no greater sense of betrayal than that voiced by those who serve in the Royal Ulster Constabulary. It is difficult to put into words their feelings of hurt and anger at how they have been treated. For the past 30 years, they have been the last line of defence against terrorism for the entire community. It is impossible to estimate the countless lives saved by the gallantry of the RUC. Its officers can never switch off from the constant and continuing threat to their safety. We cannot calculate the endless hours of worry for the families of those officers during the darkest days of the troubles—the nights when wives watched their husbands leave for duty, fearing that they might never return.
    For more than 300 families, their loved ones never did return. Thousands of others returned with injuries from which they would never fully recover. I fear that it will not be so, but I contend that history should record that the officers of the Royal Ulster Constabulary have been the real heroes of the Ulster troubles.
    Imagine, then, the ignominy that they faced when they discovered that the so-called peace settlement contained an explicit remit for their destruction and specific rewards for the very terrorists from whom they had been protecting our society. Murderers were released from prison after as little as two years, and they saw terrorists elevated into government and even offered places on the very body that has authority over the police. At the same time, the police force to which they had dedicated their lives was being consigned to the history books on the altar of political expediency. Their name was removed, their uniform changed and even their proud insignia was taken from them. One cannot avoid the conclusion that the RUC has been disgracefully and shabbily treated.
    Even now, the Government are engaged in talks that are aimed at satisfying the latest demands of republicans on policing, which will further denigrate the service of the Royal Ulster Constabulary. However, this is not a question only of symbols or titles; it is about effectiveness in the job that the police have to do. Police cuts are taking

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    place and morale is at an all-time low. It is simply impossible for police in many areas to do their job properly.
    Even now, the RUC is still facing attack. Which one of us could possibly envy the job that it has to do, with conflict in areas such as north Belfast, where, night after night, it seeks to preserve life and property? It also faces serious difficulties from terrorists, many of whom have recently been released from prison and are terrorising their communities, creating Mafia-style ghettos, engaging in racketeering, extortion and gangsterism, and running their evil drug empires. This is not the creation of a bright new future; it is the unfolding of a terrifying nightmare.
    I have been sent to this House to deliver the message that the present political arrangements do not attract cross-community support. History should have taught us all that, unless both sections of our community support the institutions, the structures will fail. It is not feasible in a divided society such as that of Northern Ireland to govern without consent.
    The results of the elections have confirmed that about two thirds of the Unionist community oppose the present arrangements. That is not a matter for debate; it is a matter of record and fact. This reality cannot be spun out of existence or brushed away. It must be faced. The Belfast agreement has at its heart the principle that it can exist only with the support of a majority in both the Unionist and nationalist communities. Now that it has been established that Unionist support is absent, it is the duty of the Government to renegotiate the agreement and to seek support for a way forward that can gain and enjoy the support of both Unionists and nationalists.
    This House should be slow to turn its back on the democratically expressed will of the Unionist community. To tell a people that its votes will be ignored and that there is no political way of remedying its concerns is to drive it away from the democratic process, with all the obvious and attendant dangers.
    I have represented Strangford in the Northern Ireland Assembly since 1998 and before that in the Northern Ireland Forum. I have always sought to put the interests of my constituents first in all that I do. My door is open to any person of any background. I ask nothing more for the people of Strangford than any other hon. Member would ask for his or her constituents, and I will accept nothing less.
    My father came from this city of London, and although he died from war wounds while I was still a very small girl, he inspired me and passed to me his love of our British traditions and way of life. I am not a polished or professional politician. Much of what I have to do in politics does not come easily to me. I was an uncomplicated working-class girl who was driven by circumstances and lifted up by the people in spite of my limitations. I can only hope that down-to-earth loyalty, compassion, honesty and effort can substitute for all else that I lack. There can be few greater honours than to be elected to represent the interests of our constituents. I intend to make their cares my concern, and I am willing to be judged on that basis when the time comes for them to pass their verdict.
    8.45 pm
    Mr. David Miliband: I have listened carefully to the serious and interesting contributions in this debate. I extend my congratulations to hon. Members
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    who have made excellent maiden speeches. My hon. Friends the Members for Aberavon (Dr. Francis), for Morley and Rothwell (Mr. Challen) and for Telford (David Wright) made powerful and persuasive contributions. My hon. Friend the Member for Rhondda (Mr. Bryant) showed that, although he may have abandoned the cloth, he has not lost the gift of the preacher. I am grateful for the chance to join them and address the House for the first time.
    South Shields is a constituency where unemployment is three times the national average, where the rate of economic inactivity is one of the highest in Britain and where the collapse of the mining and shipbuilding industries has brought massive economic change and wrought real economic pain. It is therefore appropriate that I should make my maiden speech in a debate on economic policy as part of a Queen's Speech that is dedicated to defining and reforming the Government's role in a modern society, for I am here to represent a constituency and to stand up for an ideal—the power of our action together to create a more equal, more productive society.
    A maiden speech is a daunting occasion. One of my predecessors, Mr. Cecil Cochrane, waited 12 months before opening his account in the House. He then said:
    "I was commissioned … to render the Government every possible support during the War, and I am not certain … that I have not rendered that support better by keeping silent than I should have done by asking you … to notice me before."—[Official Report, 22 May 1917; Vol. 93, c. 2205–206.]
    I hope that I do not come to regret opening my mouth sooner than Mr. Cochrane, but my commission is to represent the people of South Shields and it is about them and their needs that I want to speak.
    First, I pay tribute to my immediate predecessor, David Clark. He spent 22 years working hard for the people of South Shields and had a distinguished ministerial and parliamentary career. He has a permanent memorial of his commitment to the constituency and his passion for the environment in the magnificent leas, now owned by the National Trust, along the South Shields coastline. I am sure that he will make a distinguished contribution to the other place.
    South Shields is a town of rich heritage and great diversity. It is known for its river, its mines and the sea. It is also a political town, steadfast in its values, rich in a tradition of radicalism and reform rooted in trade unionism and community organisation. The people of South Shields know the dignity of work, the difficulty of economic change and the difference that an active, enabling Government can make; they know how high quality public services can liberate them as individuals and lift up our entire society; and they know that although there has been progress in the past four years, the work to tackle inequality of life chances is nowhere near done.
    South Shields has real strengths. The Port of Tyne Authority has more than 1,000 employees; shipyard and engineering workers have skills and expertise second to none; and there are growing companies in the manufacturing, retail and finance sectors. After four years of fast progress, the performance of our primary schools now outstrips the national average. South Tyneside college is a world leader in marine and nautical studies. Crime in South Shields is falling and housing and social services are improving.

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    The town boasts more than 200 voluntary organisations, as well as Britain's oldest local daily newspaper, the Shields Gazette South Shields did not just provide the inspiration for Britain's most-read author, Catherine Cookson, but now has a vibrant artistic life centred on the old Customs house. Its coastline is magnificent, its neighbourhoods diverse, and its people warm and hard working.
    There is more. South Shields football club is only 12 divisions off the premiership, in the Albany Insurance northern league. For a nervous first-time candidate, the local team provides the perfect answer to the difficult choice between professing allegiance to Newcastle football club or Sunderland football club. In that, as in much else, South Shields has no trouble finding a third way.
    South Shields also has a long, proud, multicultural tradition. The town's roots go back to Roman legions and Danish settlers. Our Yemeni community, about 1,000 strong, dates back to the 1890s. The Bangladeshi community, of similar size, now into its third generation, is ready to challenge Birmingham as the curry capital of Britain. Both communities play a vital part in the life of South Shields.
    The River Tyne has sent whalers to the Arctic, shipped trains to the Punjab, refuelled Navy destroyers for the fight against fascism and sent the first lifeboats to sea to rescue those in trouble; in return have come goods, ideas, investment and people. Just as the river gives and the river takes, so South Shields depends on what we take from the world and what we can give back. I have special reason to know this.
    Over 50 years ago, my distinguished predecessor as Member for South Shields, J. Chuter Ede, was Home Secretary in the 1945 Government—probably the greatest reforming Government in our history. One of his hardest tasks was to make decisions on immigration applications from millions of refugees around Europe. There were many hard cases. One application came from a man who had spent the war here, separated from his wife and daughter who were in occupied Belgium, but with his son, who studied at school and then served in the Royal Navy.
    The man who lodged that application was my grandfather, Samuel Miliband. Despite long correspondence, the then Home Secretary felt compelled to deny his application. There could not, he wrote, be exceptions. My father had previously been given leave to stay, and later, I am pleased to say, my grandparents were allowed to join him.
    Inclusion and opportunity have been the great motors of progress throughout human history. For me, it is a sign of hope for South Shields, and hope for Britain, that the grandson of a man denied residence in Britain by the then Member for South Shields can, 50 years later, represent South Shields in the House; but my job will not be done until every person in South Shields is able to develop every part of his or her potential to the full.
    South Shields is a great town with great people, but they have so much more to give. It is the Government's job to help them all to shine. Unemployment has fallen by more than 1,000 since 1997, but in Rekendyke ward, it is more than 17 per cent.; in Tyne Dock, 11 per cent.;
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    in Beacon and Bents, 11 per cent. Those figures represent a toll of misery and waste. Some 60 per cent, of young people in South Shields fail to get five good GCSEs—more waste. Long-term illness, often associated with mining, affects one in five households—more pain.
    To those who say that economic policy is for middle England and social policy for the Labour heartlands, South Shields replies I that a strong economy and a strong society are inseparable and must be built together, with leadership from Government. In South Shields, icy North sea winds lead people to say "cold hands, but warm heart". Today, we need a Government with helping hands and a warm heart.
    I am glad to say that the priorities of the Queen's Speech are the priorities of South Shields. In my previous role, I was privileged to play an advisory part in developing the manifesto on which the Labour party was elected to serve a second full term, but I now feel much more privileged to be elected by the people of South Shields to ensure that they receive the full benefit of the policies in that manifesto.
    South Shields needs investment in skills, transport and business support to tackle unemployment. We need investment and reform to support our teachers in building up secondary education and to sustain all staff in building up the health service. We need modernisation of the tax and benefit system to tackle child and pensioner poverty. As well as innovative legislation for new ideas, we need effective administration of policies already announced, from expansion of services for under-fives to swift action for miners' compensation.
    South Shields has a unique political history. I am the only Member of the House who can say that, since the first Reform Act of 1832, his constituency has never elected a Conservative Member of Parliament. Until the first World War, the Liberal tradition was dominant, but for 70 years, South Shields has been a Labour town. Throughout that period, South Shields has benefited from flashes of Labour radicalism. The Housing (Financial Provisions) Act 1924—known as the Wheatley housing Act—brought council housing. The 1945 Government brought new health facilities. The 1964 Government brought development assistance. The 1974 Government brought child benefit. The 1997 Government enacted the new deal and the minimum wage. Through all that time, however, South Shields suffered because those flashes of radicalism were never consolidated by two consecutive terms of Labour government.
    For 70 years, South Shields has felt like a Labour town in a Conservative country. Following the general election, I am glad to say that South Shields feels like a Labour town in a Labour country, making common cause across divides of tradition and geography with people across Britain who share its values and its priorities: public services based on need, active government dedicated to spreading wealth and opportunity, communities built on tolerance and mutual responsibility.
    South Shields is bounded by the River Tyne and the North sea, but our town is outward looking. Our community is south Tyneside; our economy is Tyne and Wear and the wider north-east; our commitments and connections stretch across continents.
    I chose to stand in South Shields and now South Shields has chosen me. I believe in the potential of inclusion, the power of opportunity and our responsibility to extend it

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    to all. That is the hope for South Shields. That is the message of the Queen's Speech. That is the cause that I shall stand for every day that the people of South Shields choose to send me to this House.
    8.56 pm
    Michael Fabricant: It is a very great and genuine pleasure to follow the hon. Member for South Shields (Mr. Miliband), who gave a powerful, clever, articulate and moving speech. I have been having a bet with my colleagues on the Front Bench that he will be in government within the next two years. I hope that that is not a curse; it is not meant to be. It is meant to be a compliment on the quality of his speech.
    The hon. Gentleman's speech was particularly moving for me, because when I first became involved in politics the very first elected office I stood for was Parliament, and in South Shields in 1987.I like to think that the South Shields Gazette became known as a Tory rag at that time, because I frequently appeared in it. As a direct consequence, there was the biggest swing in 30 years—from Conservative to Labour. David Clark was elected on an even bigger majority than many in the north-east had expected.
    It was a joy to be reminded of all the places that I went to in 1987. The hon. Gentleman referred to the tradition of curry in South Shields. I hope that I will not be accused of being racist, but I recall that Ocean road is filled with curry houses and, with the best possible intentions, is known as Asian road. I still go there; the cuisine is excellent. More importantly, the relationship between all the people in South Shields is excellent too, and perhaps a lesson to those in other parts of northern England where there are so many difficulties at the moment. I truly wish the hon. Gentleman well in what I know will be a long career in the House of Commons.
    The Queen's Speech was interesting for its contents and for its omissions. We all expected two subjects to be included—one of which caused me to rebel ever so slightly in the previous Parliament. I was confidently expecting there to be a Bill to outlaw tobacco advertising, which would merely have been a continuation of the Conservative policy of banning it on radio and television. The Bill was not there. Is Bernie Ecclestone the real power behind the Labour throne? The other Bill that we all confidently expected was one to regulate cross-media ownership. That, too, was not included. One wonders what debt of honour the Labour Government owe Rupert Murdoch for ensuring that. Nevertheless, a number of matters were included in the Queen's Speech which I welcomed.
    The Prime Minister said during the election campaign—and he was right—that the people of this country are interested in health, education, transport and crime. Indeed, that was echoed by my right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo). It is a source of great mystery to me that we did not fight the election on those issues. Those are the issues on which I, however, chose to fight the election.
    Although 70 per cent, of the population hold strong views on the euro and the European Union, the issue is of secondary importance to many people. Although I found my university studies in abnormal psychology far more interesting than those in normal psychology, I remember that in normal psychology the great
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    psychologist Maslow determined what he described as a hierarchical ladder of needs. It is clear that people are more interested in health, education, transport and crime, and that only when those issues are rectified do they become interested in what they regard as the secondary issue of Europe.
    I fought on health: the issues that I fought on in Lichfield could have been fought on throughout the whole country. The Victoria hospital, Lichfield, with which you, Madam Deputy Speaker, are familiar, and the Hammerwich hospital in Burntwood both face closure. It is extraordinary that on 8 June—the day after the general election—South Staffordshire health authority issued its conclusions on the future of community hospitals in South Staffordshire, in which it announced those closures so as to save £1 million. You will know, Madam Deputy Speaker, that I raised that issue in the House month after month. When I raised it with the Prime Minister and the Secretary of State for Health, they said—perhaps understandably—that they could not comment on leaked documents that had not yet been published. Was it not cynical of the authority to issue the document the day after the election?
    Those are the very matters mentioned in the Queen's Speech. The Queen's Speech contained a commitment to improve health services in the United Kingdom. I urge Ministers to bear it in mind that health services in the United Kingdom encompass more than primary care and the great specialist centres, such as the traumatic injuries unit at the North Staffordshire hospital, Stoke-on-Trent; they also include the community hospitals that are found in all our constituencies.
    I also fought on the subject of education. People out there feel that there is no difference between Labour and the Conservatives—that both parties are heading in the same direction. Today, Alastair Campbell had to announce that there is no great fight between the people—[Interruption.] I do not know why the Government Whip is gesticulating at me, but I am sure that it is not very interesting.
    Education is tremendously important to most Members of Parliament and to our constituents. I am delighted that the Government are beginning to fund ever more centrally, direct from the Treasury. That is important, especially in areas such as mine. Staffordshire is second from the bottom of the table of shire counties in allocation of funding under the standard spending assessment mechanism. Such disparities put children in Staffordshire and other parts of the United Kingdom at a disadvantage. I praise the hon. Member for Stafford (Mr. Kidney), who is not present, for leading a group of 40 constituencies—located throughout the United Kingdom but especially in England and Wales—that feel that they are underfunded.
    Such underfunding is wrong and historical, but Labour owes a debt to the British people. In 1997, the party promised that the problem would be rectified within one year. The Prime Minister said that 2000 would be the year of delivery, but it was not. Perhaps this Parliament will witness the year of delivery. I hope that it will, for the sake of the people who use hospitals in my constituency and the children who go to school in my constituency.
    The other issue on which I fought the election was crime. Last year, violent crime in Staffordshire rose by 43 per cent; it rose by a further 23 per cent, this year. One of the main reasons for that rise was the lack of policing.

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    Two hundred and forty police officers have been withdrawn from the Staffordshire police force in the four years of the Government's stewardship of our police forces. That is wrong; there is a direct correlation between the number of police officers on the beat and crimes committed on our streets. I hope that the new Home Secretary will be given the financial wherewithal to ensure that something is done about that. Simply having new recruits is not enough; we need police officers with experience as well.
    May I suggest to the Treasury that one way of saving money is to keep police officers beyond the age of 55? If they have the skills and are fit, perhaps they should be retained by the police force. Showing my age, I well recall "Dixon of Dock Green". At one point, Jack Warner, who was crippled with arthritis, was being wheeled about behind the desk in Dock Green police station. However, there are many fit people of sixty and over who could be retained by the police force and do good police work. It is wrong that 240 police officers from Staffordshire have been withdrawn; as I said, that consequently led to a rise in crime in our area.
    There has been considerable mention of the debate on the euro. After all, our debate today is concentrating mainly on Treasury and Department of Trade and Industry matters. One reason why I fought the election on health, education, crime and transport, is that we have paid many taxes yet not seen delivery. If the stealth taxes that we have paid had been put on income tax, they would have raised it by the equivalent of 9.8p. That gives an idea of the huge increase in taxation that we have suffered, yet we have not enjoyed a concomitant growth in services.
    Will the euro be the great panacea? I think not; the Chancellor is right to show caution. While the euro will provide the advantage of fixed currency exchange rates between countries in the eurozone, it will also magnify any preponderance towards boom and bust. The Chancellor is as aware as I am that the economic cycle in continental Europe is nothing like that of the United Kingdom or the United States of America. There are huge structural reasons for that. We—not the Japanese—are the largest investors in the USA and vice versa, so there are huge fund flows linking us to the USA. In the United Kingdom, just as in the USA and Canada, people have long-term mortgages. However, people who own their own homes in continental Europe are a minority and tend to do so because they have inherited them. Most people rent their homes; they do not have long-term debt. Given the damping effect arising from that, and for many other different reasons, we are not in synchronisation with continental Europe.
    The Chancellor is therefore right to show caution: he knows as well as I do that if we were in the eurozone and there were a boom in continental Europe, but a bust in the UK, interest rates would rise in Europe, which would make our recession even deeper. Similarly, when Britain is doing well—as we are at the moment because the USA has been doing well, although other speakers have pointed out that we must show great caution about that country, which is already beginning to slow up—and Europe is doing badly, the last thing we want is lower interest rates, which would simply fuel inflation.
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    The Chancellor of the Exchequer is right to say time and again that if we reach synchronicity with continental Europe, that must be sustained. It—[Interruption.] I do not know whether the Economic Secretary to the Treasury is disagreeing. Is there a split already on the Government Front Bench? I am quoting what the Chancellor has said, and he is right. There is no point in having synchronicity for only a short time. Just as two roads approach each other and pass at crossroads, there will be great dangers to business in the united Kingdom, and to the United Kingdom at large, if we enter the euro and are not in sustained synchronicity.
    I can see there being sustained sychronicity only if we do not invest in the United States and it does not invest in us. That would be dangerous for employment. There will be dangers also if we decide that we shall not encourage people to own their homes. That would be wrong, too. One of the good things about the Government is that they have embraced what the Conservative party has long believed in, namely, the advantages of home ownership.
    I should like the Treasury to be more transparent. In the 1980s, I worked in broadcasting. I used to travel three or four times a year to the Soviet Union. I was there when Mikhail Gorbachev was in power, and he talked about glasnost, or openness. I wish there were more openness about the five tests on entering the euro and about our position on membership of the European Union.
    The Prime Minister has said repeatedly that it is right that we should stay in the EU, because it saves 3 million jobs. He may be right. Others have said, including the United States Government, that being in the EU is costing us 100,000 jobs and that if we were outside it we would, within four years, overtake Germany and become the third largest economy in the world. The US Government have produced a large document that they believe proves that fact. I do not know whether it is accurate. Perhaps the Americans are right or perhaps the Prime Minister is right.
    I do know, however, that the Treasury has not produced any such document. I am not advocating leaving the EU, but I advocate an open investigation into whether the EU is benefiting the United Kingdom. What are we frightened of? Are we frightened of knowledge? Is it that the Treasury fears—it is the Treasury that will have to do the work—that if we quantify the costs of our membership of the EU and quantify all the undoubted benefits of our membership, the costs will outweigh the benefits? It they do, that is worrying.
    If the Treasury is confident, as so many others are, that we are gaining from membership of the EU, it should produce the work to demonstrate that the benefits far outweigh the costs. We need some glasnost in this Parliament too.
    The debate will be summed up by the new Secretary of State for Trade and Industry. I welcome the right hon. Lady to her position; I am glad that she is listening to the debate. She will be aware that about £10 billion has been added to the costs of British business. That was the calculation of the British chambers of commerce and trade. She is aware also—she was in her place when I intervened on the Chancellor earlier—that over the past four years the UK has dropped from ninth to 19th place in the international competitiveness league. That is worrying. It has resulted in firms such as Corus axing jobs in Britain when it has not axed jobs elsewhere in the EU.

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    It has resulted in Motorola closing factories in Scotland when it has kept open factories in Germany, which have high wage costs. One must ask the question: four years ago, when we were ninth in the league, would the British factories have been closing and the German factories staying open? Whether we are in ninth or 19th place seems an academic discussion, but it affects jobs and people's lives.
    The Prime Minister said that 2000 would be the year of delivery. It was not. When he returned to 10 Downing street after the general election, he suggested on the doorstep that he knew only too well that it was the last chance for Labour to deliver. For the sake of the nation, I hope that the Labour party finally delivers.
    9.15 pm
    Ian Lucas: I am grateful for the opportunity to speak in the debate and to record my pleasure at the contents of the Gracious Speech. It is an especial pleasure to follow the hon. Member for Lichfield (Michael Fabricant). Lichfield is a beautiful cathedral city, which I know well and visit often to meet close personal friends.
    I am also pleased to follow my hon. Friend the Member for South Shields (Mr. Miliband) because I was born in Gateshead in south Tyneside. I owe a great deal to that town and community, which reminds me of the community that I am now proud to represent: Wrexham.
    Labour has delivered for Wrexham, which has progressed greatly in the past few years. In preparing my speech, I was interested to read the maiden speech that my predecessor, Dr. John Marek, made in 1983. He said that unemployment in Wrexham stood at 20 per cent. The town was in the middle of momentous change. The coal and iron industries—the rock on which the community was built—were about to be fatally undermined by a callous and short-sighted economic policy. In 1983, my predecessor remarked that the people of Wrexham wanted to work but that no work was to be found.
    Much anxiety has been expressed about the low turnout at the general election. It has been said that voters believed that Governments are all the same and that politics does not affect people's lives. I disagree. The people of Wrexham have now been given the chance to get on; previous Governments did not give them that chance. Governments change lives, for good or ill. Politicians must not hesitate to make that point and urge our electors to remember how things were and how they have changed through Government action.
    The events of the past four years show that when a Government build the right foundations, Wrexham people are ready to seize new opportunities and compete in a changing world. Unemployment was 20 per cent, in Wrexham in 1983; it was 3.3 per cent. in May 2001. That is testament to the people of the town, who have shown themselves ready and willing to adapt, learn and work in a transformed economy, and to a Government who have created a stable economy in which business and industry can thrive.
    As someone who has run a small business, I know the importance of stability, low interest rates and the ability to plan ahead. I also know, however, that the biggest asset of any business or town is its people. That is where Wrexham shows its mettle. The town has a strong civic
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    pride. It has the qualities of a Labour town: it is resilient welcoming and open. It demands fairness and it wants t chance to get on.
    My first constituency engagement after my election was a community litter pick, which was enjoyable, introduced me to an interesting lady who was well over 70. She spoke not with a Wrexham accent, but a southern African accent. While picking litter with her, we chatted about the length of time she had been in Wrexham. She said that she had been there for four months, and that s was there with her daughter and her granddaughter, who was four years old. She said that they had arrived Britain from Zimbabwe four months earlier with seven suitcases. Their farm there had been taken away from them. They had arrived back in Britain and come Wrexham because her late husband had fought in the battle of Britain and had had a friend who lived in the town.
    As a result of that connection, the British Legion in Wrexham welcomed this lady. The local authority found flat for her in the town and the British Legion decorated and furnished it. That is how Wrexham treated one asylum seeker. That shows what Wrexham is like to the outside world, and it shows the strength of its community.
    Wrexham knows, however, that, in the modern world it must continue to progress and to change. It knows that skills development and a willingness to learn hold the Key to more prosperity. Colleges in the town are now work with industry to develop the work force Wrexham to attract the best industries and build further prosperity because people there understand that prosperity is the Key to attacking the problems of poverty and drug-related crime that still exist in the community.
    I worked with teenage drug addicts, as a lawyer representing them. I remember one 14-year-old who I committed 23 house burglaries to feed a heroin habit also remember the face of his mother who always came with him to court. Crime has many victims in many different guises. I welcome the work carried out in towns such as Wrexham to help those victims, and I welcome the measures in the Queen's Speech to make those who profit from their misery pay proper penalties.
    The work of my predecessor, Dr. John Marek, has played an important part in dealing with constituency problems in Wrexham for the past 18 years. This was v evident to me as I knocked on doors in the town. I heard from many people about his diligence and about the work that he had carried out on their behalf. I can best pay tribute to him by striving to uphold the same standard.
    I would like to end on a personal note. I sought elect to this House because I believe that it can change country for the better. I hope that I have the skills contribute to bring about that change. If I have, it is because I have benefited from those who have taught and argued with me over the years. I thank them; they know who they are. But above all, I wish to thank parents, who have supported me and given me the chance to get on. For me, being a Labour Member of Parliament is about striving to give all people the chances that i have had.
    9.23 pm
    Mr. Edward Davey: It is a privilege to follow the hon. Member for Wrexham (Ian Lucas). His maiden speech, which was moving and

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    passionate, shows that he will make many good contributions to debates in the House. Many of us remember his predecessor, Dr. Marek, and I join the hon. Gentleman in paying tribute to John, who had many friends across the Floor.
    In the short time remaining to me, I would like to focus on the economy. I am concerned about some of the contributions that I have heard tonight, and about some of the ways in which the economy was debated during the election. There is too much complacency about the UK economy. People seem to forget that the problems in the international economy, particularly in the United States, but also in Japan and Germany—the world's three largest economies—will inevitably impact on the UK economy. The UK economy is not as well placed to meet those challenges as is often made out.
    There are huge imbalances in the UK economy between consumption and manufacturing output, between the service sector and the manufacturing sector and between different regions. A slowdown is already taking place in our economy. The monetary data, the manufacturing output data and the gross domestic product growth data show that. We have a weakening economy that is not well placed to meet the challenges, particularly in the light of the present uncompetitive exchange rate.
    I am concerned that, even in these early days, the new Government have made exactly the wrong decisions and the wrong noises to meet that challenge. In interventions made many hours ago, I questioned Labour Members about whether the remarks from Her Majesty's Treasury, talking up the pound when it was falling towards a more competitive level, were sensible: answer came there none.
    I am worried for those working in the manufacturing, agriculture and tourism sectors in particular. They face problems because of the uncompetitiveness of the pound, but the Government's first words, albeit sotto voce in briefings to the press, undermined the markets' reaction to the pound, which was easing the pressure on those industries.
    I hope that the Government will change their mind about the way in which they brief the press and realise that they must support the Monetary Policy Committee to achieve a rebalance in monetary policy. That is crucial for those sectors of our economy that are under pressure.
    I return to a matter that is not directly referred to in the Queen's Speech, but which was mentioned in briefings related to it and in speeches made today—the Chancellor's proposal that the economic theme for this Parliament will be competition and productivity. He made welcome announcements about how policy will change in the Department of Trade and Industry and the Treasury in order to promote competition and, thus, improve productivity.
    We welcome many measures in the package, but three omissions represent a real problem and the Government must focus on them if they are to reach their productivity goals. The first is education. Investment in education is the key to improving productivity and making our nation competitive, but it was not the centrepiece of the Chancellor's announcement. Secondly, the need to simplify regulation and the taxation system is also important, and the hon. Member for Sevenoaks
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    (Mr. Fallon) made the same comment in his excellent speech. In this Parliament, we need a major change in the Treasury's attitude to the taxation system.
    The third omission is a debate about Britain joining the euro. If there is one measure that would change the way in which British industry and the British economy had to face up to competitive pressures in the world and promote its own productivity, it is joining the euro.
    Countries in euroland are already achieving a massive improvement in their competitive position. Although that is yet to come through to the macro data, there is huge and unprecedented merger activity in euroland, which is sowing the seeds for a competitive rejuvenation of those countries that are members of the euro. The economic rationale is price transparency and the competitive pressures that that unleashes, but if Britain is on the sidelines we shall not receive the micro-economic benefits that are the foundations for macro-economic success. The Government are determined to make this Parliament the one in which British productivity picks up, but they are making serious errors on core aspects of the policy changes necessary to achieve that.
    I return to how the House debates and holds the Government to account on economic policy and shall introduce the debate on the euro in my remarks. Often, we are lectured by Eurosceptics in the House that joining the euro would undermine parliamentary sovereignty and that, somehow, monetary policy being decided by the European central bank would completely change the historical position of this place. That argument is nonsense on stilts, as any analysis of UK monetary policy over the decades would reveal.
    There has never been a vote in the House on interest rates or the exchange rate. As the minutes of the MPC show clearly, day-to-day setting of monetary policy is very technical, and the House is not equipped to hold the Government properly to account in such a way. Moreover, the international capital markets hold all Governments to account for their monetary policy and how it is implemented. The gnomes of Zurich and the red braces wearers in the City hold the Government to account on monetary policy, not the House. However, the House should hold the Government to account on fiscal policy, but it has failed to do so for decades.
    The last time the House voted against a spending request from the Executive was in 1919—it was for a second bathroom for the then Lord Chancellor. I referred to that anecdote several times in the previous Parliament, and I shall come back to it. If hon. Members are interested, they can read my booklet called "Making MPs Work for our Money". I am not trying to get commission, because it is available free on my website—www.edwarddavey.co.uk. It can be downloaded free of charge, and I recommend it to new Members. In that paper, I have tried to set out how the House could reform itself to ensure that it holds the Government properly to account for fiscal policy. That requires radical changes.
    In its various reports during the previous Parliament, the Select Committee on Liaison nudged the House in that direction. I ask new Members to read its report and join in the historical mission for this Parliament to reform the way in which we hold the Government to account for economic policy.
    9.31 pm
    Mr. David Heathcoat-Amory: I wish to declare the interest recorded in the House of Commons Register of Members' Interests, which may be appropriate to the debate.
    It is my great pleasure to congratulate hon. Members who have made maiden speeches this evening. They have been of a consistently high standard. I particularly congratulate my hon. Friend the Member for Epsom and Ewell (Chris Grayling). All hon. Members who made maiden speeches showed great knowledge of, and affection for, their constituencies, which is an important feature of our parliamentary system, with its single member constituencies. All of them will be a great credit to the House in the years ahead and in the debates that we shall have with them.
    I also congratulate the Secretary of State for Trade and Industry on her well-deserved promotion, and her ever-growing army of junior Ministers. There are eight now, which must almost be a record. They will not take up the Front Bench entirely, because two of them are from the upper House. Nevertheless, they are collectively a formidable team, and we look forward to debating contentious and other issues with them.
    A heavy responsibility lies with the Secretary of State for Trade and Industry and her colleagues. Her Department looks like taking on the role of balancing the expenditure ambitions of other Departments. It is perhaps no exaggeration to say that this Parliament will be dominated by public expenditure issues in respect of public services. That may be right and proper, but if public spending is to be the chief issue, it is important for the Department of Trade and Industry to ensure that that is balanced by an equal attention to the wealth-creating process. It is only from the taxes paid by businesses and their employees that we have any public services. Quite simply, without profits and tax there can be no welfare. All Governments must bear that eternal truth in mind.
    We shall support the right hon. Lady and the Department in so far as they act to promote the success and enterprise of the economy. However, the signs so far are mixed and not altogether encouraging. The Chancellor gave his own version of the Queen's Speech. There was a time when Her Majesty laid our the Government's programme, but now that task is shared with the Chancellor of the Exchequer. The Chancellor showed that he may have learned something from his mistakes, and we shall support elements of the enterprise and competitiveness package in so far as they do the trick; but in other respects there was more familiar meddling from the Chancellor and the Treasury.
    What was noticeable, I am afraid, was that the Department of Trade and Industry had again been reduced to playing second fiddle. It essentially had a walk-on part in the drawing up and promotion of that package. That was a persistent problem in the last Parliament. The DTI, under a succession of Secretaries of State, was unable or unwilling to stand up to the Treasury. That is why we had damaging and unnecessary taxes, such as the climate change levy, which is incredibly complex and utterly irrelevant to the task of combating global warming. It is why we had record fuel duties and why the whole British haulage industry was made uncompetitive. The DTI apparently did absolutely nothing to resist the Treasury's taxing ambitions in that respect. That is not to mention
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    IR35, the notorious tax change that has done, and continues to do, so much damage to the information technology sector.
    My friendly advice to the Secretary of State is that the DTI should have its own enterprise and growth package on its own terms, and that the Treasury should come in behind that. The package should include the opening issues on which mistakes were made in the last Parliament—and there is plenty of evidence of those mistakes. Today's debate has reminded us that since 1997 we have fallen from ninth to 19th place in the world competitiveness league, and that the productivity gap to which the Chancellor is fond of referring has, in fact, widened. That was not apparent from his speech, and it is certainly not apparent from any Treasury document; but a careful reading of the DTI annual report published in March reveals that, on the basis of both calculations of productivity—output per worker and output per hour—the gap has widened since 1997, in relation not just to the United States but to France and Germany.
    Every Budget that we had in the last Parliament referred to productivity and the productivity gap, but the gap has widened rather than narrowed. Why should we believe the Government's new emphasis on productivity, and why should we think that it will be any more successful than what happened last time—especially when many of the same mistakes are being repeated?
    For instance, within days of the general election the Government admitted that they had given in to the European Union over the information and consultation directive. It is precisely that sort of centralised, standardised, legalistic interference from firms and business that is so damaging, and has caused so many problems over the past four years. It has led to the persistent over-regulation described by my hon. Friend the Member for Sevenoaks (Mr. Fallon). I do not refer just to the individual items; this is a cumulative burden that adds to business costs and loses us competitiveness in world markets.
    Of course, the Government opposed that directive. The last Secretary of State for Trade and Industry said in the House on 18 January:
    "The Government remain opposed to the directive".—[Official Report, 18 January 2001; Vol. 361, c.498.]
    Another DTI Minister, the Minister for Employment and the Regions, who is present, was also against the directive. He said:
    "We want a dialogue based on trust and partnership, not legal obligations."
    I wonder whether the hon. Gentleman is still of that opinion. He certainly lost the argument in Europe.
    That is one more decision that would once have been made in the House of Commons by the Government. The hon. Member for Kingston and Surbiton (Mr. Davey) said that there was no democratic transfer in these matters. The decision on that proposal, which would have been made in the House by a Government, has now been transferred to the European Union and made on the basis of majority voting. Of course, that will increase: the Nice treaty extends majority voting. That has been spotted by the Irish. The Nice treaty is not primarily about enlargement. If it were, the budget and the common agricultural policy would have been tackled. The Irish spotted that it was about further centralisation. Therefore the warnings of my hon. Friend the Member for Rochford and Southend, East

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    (Sir T. Taylor) are valid. Even before the Nice treaty has come into effect, a consultation directive opposed by a Labour Government has been decided by the institutions of the European Union. That is why not just this country but the European Union as a whole is losing its way in global markets.
    Mr. Harry Barnes: Will the right hon. Gentleman give way?
    Mr. Heathcoat-Amory: I will not give way, if the hon. Gentleman will forgive me, because I wish to pick up on some other points from the debate.
    One of the puzzles about the whole debate is why it is that the Chancellor and other Ministers talk glowingly about the United States success in enterprise and venture capital, yet converge on a different economic model promoted by the European Union. It is true that the Government have picked out items from the American experience, such as the proposal to apply criminal sanctions against business people guilty of anti-competitive behaviour, but, if they want to pick out certain items such as that, why do they not buy the full American package and realise that American entrepreneurial success is built on low regulation and low business taxation?
    In short, the Government are in a muddle. That is dangerous when we consider how vulnerable the British economy is. We have a highly distorted economic backdrop. There is something approaching a boom in services, bank lending to the private sector is at near record levels, but the trading sector, particularly the manufacturing sector, is almost in recession. Competitiveness and productivity are down; we are running a record trade deficit; the savings ratio has collapsed; and our enormous public expenditure commitments go far beyond any anticipated growth in the economy. That is why we shall look critically at the enterprise Bill. We shall be constructive on bits of it that we approve of, but shall look critically at it to find out whether it will strengthen the sinews of the economy to see us through any economic downturn.
    Perhaps when the Secretary of State replies, she could kindly answer one or two additional questions. Is she serious about the need to remove excessive regulation, which is an unnecessary burden to growth? It was in that area that the biggest gap opened between words and deeds in the previous Parliament.
    On the euro, my hon. Friend the Member for Lichfield (Michael Fabricant) urged caution on the Government. In anticipating his words, the Government have already responded by telling others, "Cool it on the euro." If the Government are cooling it on the euro, should firms and businesses cool it on their conversion to the euro? In the previous Parliament, the Government urged businesses to use their own money to prepare to convert to the euro. If the Government are going cool on the whole project, is their message and instruction to firms to back pedal on the anticipated conversion costs? Can the Secretary of State confirm the £32 billion figure, which will be the cost to business on conversion? The Chancellor rubbished that figure from an authoritative source during the election. Have the Government a superior one?
    My last specific question is on energy policy. The Government and, indeed, Europe as a whole have a hypocritical policy towards the United States. They
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    criticise the American presidency for renouncing the Kyoto accord, but meanwhile Europe as a whole has no long-term or even medium-term strategy to counter the increase in carbon dioxide emissions. With the decommissioning of nuclear power stations in the medium term, it is not only an opinion or a possibility but a certainty that our carbon dioxide emissions will increase. Why is Europe lecturing the United States about global warming when Europe collectively has no answer to the problem after 2010? Will the Secretary of State confirm that there is to be a comprehensive review of energy policy that will get to the bottom of that issue?
    Opposition Members will enter into the debate on public services with gusto. We agree that, as a country, we must be far more creative—this applies right across the political spectrum—about how to mobilise the means to supply the health, education and other requirements of the population. We shall tackle that subject with the same vigour with which we tackled the industrial and economic problems of the 1980s and 1990s. [Interruption.] Let us not forget—[Interruption.]
    Mr. Speaker: Order. The hon. Member for Ochil (Mr. O'Neill) should not shout across the Chamber.
    Mr. Heathcoat-Amory: I am grateful to you, Mr. Speaker.
    I ask the House not to forget, and to balance those ambitions for public expenditure with the knowledge that all those plans depend on the health and success of the productive sector of the economy. It is that task that the Government must tackle more energetically in this Parliament than they did in the previous one. If they do so, they will have the support of Conservative Members. If they do not, the disillusionment shown by the scandalously low turnout in the general election will become terminal.
    9.46 pm
    The Secretary of State for Trade and Industry (Ms Patricia Hewitt): We have had a wide-ranging and constructive debate that has been particularly remarkable for the number and the quality of maiden speakers. I must apologise to right, hon. and hon. Members for the fact that my unavoidable commitments elsewhere prevented me from hearing so many of those speeches in person, but I look forward to reading them tomorrow with pleasure and with profit.
    All of the hon. Members who made their maiden speeches today paid eloquent tribute to their predecessors, many of whom served in the House for many years. All of them also gave the House vivid descriptions of their own constituencies. In a thoughtful and wide-ranging speech, my hon. Friend the Member for Rhondda (Mr. Bryant) reminded us that he is one of the very few hon. Members whose way into the House was paved by a special new Act of Parliament.
    The hon. Member for Epsom and Ewell (Chris Grayling) spoke about local problems and the local public services that have so dominated the recent general election.
    In a witty speech—we look forward to further speeches from him—the hon. Member for Teignbridge (Richard Younger-Ross) spoke particularly about the need for more

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    businesses to move into south Devon, which is a central preoccupation of the regional development agency in that area, as is the case elsewhere.
    In very well-informed and wide-ranging speeches, my hon. Friends the Members for Morley and Rothwell (Mr. Challen), for Aberavon (Dr. Francis) and for Telford (David Wright) all spoke about the impact of the extraordinary technological changes taking place in our economy on the industrial structure and on employment in their constituencies. They reminded us of the central importance of ensuring opportunities for every individual, regardless of background, to find and fulfil their potential not only for their own sake and that of their families and communities but for the sake of our wider economy. Opportunity for all as a route both to a dynamic economy and to a more inclusive and fair society is a central theme in the Queen's Speech.
    The hon. Member for Strangford (Iris Robinson) brings to the House her experience in the Northern Ireland Assembly. She paid generous tribute to her predecessor, against whom she reminded us she has stood in various elections.
    I particularly want to refer to the speech of my hon. Friend the Member for South Shields (Mr. Miliband), with whom I worked so many years ago on the Commission on Social Justice. He, too, stressed—and vividly illustrated with examples from his constituency—that in the modern world, a dynamic economy and a fair society are not enemies but partners.
    In a moving and personal speech, my hon. Friend the Member for Wrexham (Ian Lucas) also stressed the waste of so much talent in our community and, again, the importance of extending opportunities to every individual. All of those who spoke will make a distinctive and valuable contribution to this House and I look forward very much to hearing from them on future occasions.
    Before I turn in particular to the contribution of the right hon. Member for Kensington and Chelsea (Mr. Portillo), I must refer to the position of one of the United Kingdom's oldest companies, a matter that I know is of great concern to Members on both sides of the House. I am referring to one of Britain's oldest and most famous brands. Unfortunately, the company's product line is stuck in the 1980s, its consumers are ageing, its share price is falling, its boardroom is split and its chief executive has just resigned: the Conservatives plc now has to find itself a new leader.
    Does the party turn to the chairman of the divided board, an aristocratic but perhaps weary potential candidate? Or does the party put its hopes in a Spanish takeover bid? That is the choice that faces the Conservatives plc. Will it be the toffs, or will it be the tapas? We look forward with great anticipation to the decision that will resolve the brand identity of the modem Conservative party.
    I must thank the right hon. Member for Wells (Mr. Heathcoat-Amory) for his kind remarks about my appointment and those of my Front-Bench colleagues. I am delighted also that the right hon. Member for Kensington and Chelsea added a fresh conversion to the list: we have seen him turn from opposition to independence for the Bank of England to full support for it. We have also seen him turn from voting against the minimum wage to supporting it, if reluctantly.
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    This evening, the right hon. Gentleman has declared an astonishing conversion to support for the steps that I shall be supporting, as Minister for Women, to increase women's representation in this House. Even more astonishing, the right hon. Gentleman has brought with him the hon. Member for Buckingham (Mr. Bercow). The hon. Gentleman is not present for this part of the debate, but I now understand that he is a convert to feminism. If I can achieve so much in a mere two weeks as the new Minister for Women, I look forward to seeing hon. Gentlemen from the Conservative party supporting the Bill that we expect to propose to enable the Conservative party, as well as our own party, to take the necessary measures to continue to deal with the under-representation of women in this House. Converts are always welcome.
    I regret that Conservative Members have so little of value or strategic significance to say about how we build upon the economic stability secured over the last four years to promote enterprise and productivity. I regret that they have so little to say about how, in the modern economy, we move from an industrial base to a knowledge-driven economy, and so little to say about how we harness the talent of all our people in the service of both a more inclusive society and a more efficient and dynamic economy. I regret the fact that this evening we heard again the familiar talking down of the strengths of the British economy and the same old, and frankly tired, complaints about red tape.
    I shall remind the House of what independent and authoritative observers have to say about the state of the British economy. The Economist Intelligence Unit says:
    "The United Kingdom remains one of the world's most attractive business locations over the next five years … The strengths of the UK's business environment over the next five years will continue to be the government's generally pro-business policy orientation, the depth and sophistication of the financial markets, the comparative lightness of the tax regime and the flexibility of its labour market."
    That was written before my right hon. Friend the Chancellor announced last week his latest reform to capital gains tax, which will give us an even more favourable environment for entrepreneurs and investment—indeed, it will result in the provision of an even more favourable regime for capital gains taxation than in the United States.
    A. T. Kearney registered the fact that the United Kingdom rose to second place on the worldwide index as a destination of choice for foreign investors and confirmed its position as the single most favoured destination by far for foreign direct investment into the European Union. The vice-president of A. T. Kearney said:
    "strong economic growth in the first three quarters of 1999, as well as the continued pro-business stance of the Blair government may all underlie this favourable British market position."
    More recently, Arthur Andersen's world entrepreneurship survey rated us on a range of measures as No. 1 in the world as an environment for entrepreneurs. Those are fair measures of the success that we have already achieved in helping to create an effective environment for enterprise and investment.
    The right hon. Member for Wells asked specifically about regulation. I remind him that one of the flagship measures in this year's Queen's Speech is an enterprise Bill that will bring forward radical, pro-competition reforms, including a new power for the competition authorities to scrutinise regulations for possible anti-competitive effects. That will be the next stage in

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    a radical, far-reaching package of reforms to the frankly byzantine and out-of-date competition regime that we inherited from the Conservative Government.
    Furthermore, the Regulatory Reform Act 2001 will give the House the opportunity and power to sweep away unnecessary, out-of-date, entangled old regulations. Quite inexplicably, Conservative Members voted against that measure. In addition, my right hon. Friend the Chancellor last week announced a radical simplification of the VAT system, a measure that will be particularly helpful to hundreds of thousands of smaller companies.
    In contrast, the Conservative party has no strategic analysis of the way the modern economy is changing, or of the role of Government in a modern economy. The Government understand the changes that are taking place, which are driven by an extraordinary speed of technological change in the modern economy.
    In their first four years, the Government set out to achieve the right framework for economic stability and to bring more than 1 million more people into employment. Upon that foundation of economic stability, the Government can now move to improve productivity and spread enterprise throughout our community. Upon that foundation of economic stability, we can introduce reforms to the economy that mean we will be even better placed to adapt to the change and restructuring that are taking place in an increasingly competitive global economy.
    The stability that we have achieved means that we can move on to make the reforms that the country needs—to increase enterprise in every nation and every region of our country, to raise productivity and the skills of our work force to give us the most pro-competitive regime in the world, to support hard-working families and to enable opportunities to be extended to every individual.
    We can do all that because we have made our choice. We set out that choice clearly in the election—it was between stability and a return to boom and bust; it was between full employment and mass unemployment; it was between investment in our future prosperity and public services or cuts in essential public services. Those cuts would have been the inevitable consequence of the utterly irresponsible promises being made by Conservative Members. Tax cuts—initially for £4 billion, then £8 billion, then £20 billion—would be paid for by public spending cuts affecting teachers, doctors, nurses and police officers.
    We put a choice before the British people—
    It being Ten o'clock, the debate stood adjourned.
    Debate to be resumed tomorrow.

    EU Cod Recovery Programme
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. McNulty.]
    10 pm
    Mr. Archy Kirkwood: I am very pleased to have the opportunity to raise this subject. I hope that the Under-Secretary of State for Environment, Food and Rural Affairs will agree that, after the hiatus of the election, now is a very appropriate time for the House to return to the EU North sea cod recovery programme, which is especially important to our coastal communities. I am sure that I speak for many hon. Members who represent fishing interests in welcoming his reappointment to his important role as Fisheries Minister, which was greeted with relief. The prospect of a new and inexperienced Member being given such a technically difficult role at this especially sensitive time would have caused understandable concern. We are pleased to see him on the Front Bench this evening.
    The purpose of this debate is twofold. First, will the Under-Secretary give the House a progress report on the current state of the cod recovery plan and the negotiations that surround it? Secondly, we would all be grateful if he could try to provide a somewhat better understanding of what was meant by Commissioner Fischler when he recently declared that the European Union white fish effort would have to be reduced by some 40 to 50 per cent. That statement, which was reported in the general and fishing press, has caused a great deal of alarm in our coastal communities. Any reassurance and explanation of the context of the statement would be very welcome.
    Before I deal with some of the detailed aspects of the cod recovery programme, let me say that I am pretty certain that I am expressing the views of many hon. Members when I say that there is a palpable sense of anger and foreboding in our fishing ports—especially the small village-based industries around our coasts. Every week that passes and every new issue of Fishing News brings more frustration for the catching sector of the North sea fleet. For example, early in May, it was reported that the Republic of Ireland had been allocated through its national development plan for fisheries another £20 million for decommissioning and other purposes, including the development of shore-based facilities in ports.
    If the arithmetic of my local fishermen is correct, the EU funds available to the Irish fleet in the period 2000–06 total some £75 million. That contrasts with the £6 million for decommissioning that is going to the English fleet and the £25 million allocated to the Scots fleet for the same purpose. On decommissioning, will the Under-Secretary respond to concerns about the fact that the scheme that has been announced is unlikely to be available much before the end of the current financial year? It will not be available to under-10 m boats and it may also be of most financial benefit in practice to Anglo-Spanish boats sailing out of ports such as Ayr. Alternatively, and equally perversely, it may involve payouts to Peterhead skippers whose boats are registered in that port but who never land fish there.
    To make matters worse, we have heard the recent European Union announcements on the allocation of FIFG—financial instrument of fisheries grant—fisheries guidance funds for diversification out of the catching

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    sector. The announcements showed that Spain was getting more in one year—more than 1 million ecu—than the UK was getting in the entire six years of the programme—some 225,000 ecu. Our fishermen are aggrieved not just about the direct effects of the efforts to protect stocks, but about the apparent unfairness of the way in which their interests are being protected by European Union common fisheries policy regimes. If the Minister can reassure me about any of those perceptions of unfairness, which were repeated to me numerous times on the doorsteps of fishermen, skippers and crewmen during the election campaign, I shall pass that on to skippers in ports such as Eyemouth, who believe that their interests are not being protected relative to those of their opposite numbers in EU sister states.
    There is a clear feeling that greater involvement of skippers and crews should be taken into account when policy is formulated; that more regional control of fisheries management should be devolved back to local areas—parts of the North sea are a good example of that; and that the bankruptcy of fishermen and fishing catching sector enterprises should not be a deliberate tool of policy, which might, by default, be the case soon if left untouched.
    Mr. Menzies Campbell: I spent part of the day with representatives of fishing interests—in particular, with those who are concerned about the 10-metre-and-under sector—in Pittenweem in my constituency. My hon. Friend's comments about anxiety were reflected in what I heard this afternoon.
    Mr. Kirkwood: That does not surprise me. Places such as Anstruther and Pittenweem are coastal villages that form an important part of the industry. They are being affected directly and indirectly by some of the negotiations on the cod recovery plan.
    The first thing worth noting about the plan is that the notion of closing principal spawning grounds for cod was thought to be a good idea just after I was elected in 1983. That was promoted by skippers and others who were knowledgable about the industry on the Berwickshire coast. If that was the case 20 years ago, it cannot be argued that it is a great new idea that has just been dreamed up by scientists. At the time, the scientists said that it could not, or would not, help. That is another example of why skippers do not fully trust the scientific advice that they are given.
    As I understand it, the cod recovery plan contains three main elements, all of which try to protect cod stocks in the North sea. The first is quota cuts that affect cod and, in parenthesis, other species with a cod by-catch, which is important for the Scottish industry The second element is nursery closures in the North sea and the west of Scotland. The third relates to gear modifications.
    It is almost impossible to argue against cuts in the cod quota, which has not been fulfilled in recent years. However, significant cuts have been made in the haddock, whiting and nephrops quota as a result of the by-catch issue. Those cuts most affect the industry in Scotland, and give rise to various questions. What progress has been made to restore the 2001 nephrops quota? That is an important, although perhaps premature, question, and I should like to hear the Minister's response. In conjunction with that, will there be a similar cut in the nephrops quota this year? Is there any intelligence on that and what is the
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    Minister's feeling about it? Finally, what measures will the Government put in place to ensure that the fleet remains viable in the light of a round of expected severe quota cuts in December? Those important questions are at the forefront of local skippers' minds.
    Closures in the North sea and on the west coast of Scotland were based on areas of maximum catch during the spawning season. It was assumed that that would reduce the take of spawning female fish. How successful have those closures been? It should be possible to gain a preliminary idea of the scientific assessment of the data. Are scientific data available? If they are, will the Minister share them with us? If they are not, will he give us an idea of when they might become available? Will the closures be repeated, as expected, in 2002? If so, is it likely that those areas that were closed this year will be closed again?
    What measures will be put in place to stop boats diverting to other fishing grounds—for example, the juvenile haddock grounds in the North sea? That question is particularly important for the fishermen in Eyemouth, in my constituency, who now fish for nephrops and are deeply worried that fishing effort will be diverted from the closed cod grounds to the haddock and whiting grounds and that effort will be further diverted to nephrops. Although subject to a quota, the stock of nephrops has not been particularly challenged, but it might be if diverted effort continues uncontrolled.
    Finally, technical measures represent an important, third strand to the cod recovery plan negotiations. The debate about technical measures is continuing. The Commission's publicly stated position is that 120 mm mesh would be acceptable. However, I think that the Commission would be prepared to accept a 110 mm derogation for the first year. The French, because of their juvenile hake fishery, and the Scots, because of their whiting fishery, would prefer to advance no further than allowing a mesh size of 110 mm at present. However, as the Minister will know, I understand that the Norwegians, with whom key North sea stocks are shared, currently want a mesh size of nothing less than 135 mm.
    If no agreement is reached between the Commission and Norway, the Norwegians could institute a 135 mm mesh size unilaterally in their waters. So will the Minister say something about the outcome of the crucially important EU-Norway round of the discussions, as those bilateral negotiations are of essential importance to those of my constituents who fish.
    Do the Government envisage a substantial loss of whiting with the 120 mm net? If so, what will they do about any such loss? Finally, on technical measures, how will the problem of carrying two nets—one for EU waters and another for Norwegian waters—be addressed in future? Those are some of the issues that arise as a direct consequence of the continuing negotiations on the technical measures in the plan.
    The catching and onshore processing sectors in my constituency are very pessimistic about the future. The Commission's plans for next year are still not clear; nor is it clear how long the current exercise will continue, but what happens if the cod stocks do not recover? That is the key question. It is not too early to start thinking about that quintessentially important question now, because the consequences will be immense if we get into the position that the Canadians were in with their North Atlantic white fish fishery. As we know, those grounds are still not yet open.

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    No one who knows anything about this difficult problem thinks that its resolution will be easy. I do not envy the Minister's task; he has to reconcile all sorts of interests, but I know that he will do the best that he can. However, the House must understand that, if we are to provide any hope at all for those of our constituents who go down to the sea in ships and do business in great waters, the Minister needs to address himself urgently to some of those questions, and it would be of considerable assistance if he could answer some of them during this debate.
    10.14 pm
    The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on the way in which he has made his case. He raised a number of pertinent points about the cod recovery plan, which I understand are of concern to his fishermen, his constituents and other hon. Members who are present. I can update the hon. Gentleman on the cod recovery programme, as details have only just been agreed and are not yet widely known. I am happy to go through those points in this debate so that the hon. Gentleman is aware of the latest situation.
    I shall start by dealing with the subsidies announced by the Irish Government. It is of course for member states to decide how to apply FIFG—financial instrument of fisheries grant—money. I fear that the Irish proposals will result in a rerun of what happened in this country in the 1980s, when an awful lot of money was made available to the United Kingdom fleet for modernisation and building. That led to significantly increased capacity, and we then spent the 1990s using public money to decommission the fleet.
    Given the pressure on fish stocks and the fact that, as I understand it, one justification given by the Irish Government is the exploitation of deep-water species, about which the International Council for the Exploration of the Sea advice is not good, I have some concerns about just where the boats will go. However, that is a matter for the Irish Government. I would not wish to interfere in their policy, apart from saying that I do not believe that using public funds to increase catching power and capacity is a good use of such funds. There are other areas in the UK and European fishing fleets to which money should go.
    I understand the hon. Gentleman's point about decommissioning. I certainly hope that we can reach a conclusion on the matter before the end of the financial year. He will appreciate that we have to consult the industry on the shape of the decommissioning scheme, but I certainly hope that the proposals can be implemented as quickly as possible so that fishermen know exactly what is on offer and can make decisions accordingly.
    Agreement with Norway has been reached in the 2001 negotiations on the cod recovery programme. I shall run through what is in that agreement. Although the negotiations have been difficult generally speaking, there is a problem with cod stocks, as the hon. Gentleman emphasised fairly. No one disputes that, and we must take action on it. We in the UK have to explain to the Commission the problems of a mixed fishery. There is of course logic in going for a bigger mesh size in a cod fishery. Indeed, in the cod fisheries in Norwegian, Faroese
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    and Icelandic waters, a 135 mm mesh size is not unusual. However, that would be much more difficult to introduce in a mixed fishery in the North sea. We have had to emphasise that point to the Commission on a number of occasions, shall we say, but we have made some progress.
    The diamond mesh size is to be increased from 100 to 120 mm, with no square mesh panel required in the North sea. All species caught within that mesh size can be retained, subject to quota availability. The present 100 mm beam trawl fishery for plaice is to increase to 120 mm. For one year until 31 December 2002, the 110 mm diamond mesh fishing will be allowed in the European Community area of the North sea—our mixed fishery zone—with a 90 mm square mesh panel, as we have at the present time.
    The target fishery will be 50 per cent, of any mix of haddock, whiting, plaice, sole, lemon sole, skate, ray, anglerfish or monkfish, in which a 25 per cent, cod by-catch will be allowed. I am sure that the hon. Gentleman will be aware that the original proposal was for 15 per cent. We argued strongly that, by comparison with the normal by-catch in the fishery, that was not realistic for the UK. The last thing we wanted was increasing discards as a result of setting an unrealistic by-catch percentage. Although we understand that 25 per cent, is tough for the industry, it is certainly more manageable than the 15 per cent, originally suggested.
    The nephrops fishery mesh size becomes 80 mm, which is already applied in many cases. The 80 mm otter trawl fishery in the southern North sea remains. All 80 mm otter trawls must incorporate a square mesh panel and a 140 mm diamond mesh in the cover of the net, as is currently applied in the Irish sea.
    Sorting grids will be mandatory for the 32 mm pandalus shrimp fishery. The UK twine thickness standard of 8 mm single or 5 mm double has been adopted as part of the agreement. For static gear, the EC mesh size for cod increases from 120 mm to 140 mm; Norway will retain 148 mm in its own fishery.
    The House might be interested to learn that, in connection with the controversy about industrial fishing, Norway has agreed to close an area on the Bergen Bank to all industrial fishing for Norway pout, blue whiting and sand eel, because significant quantities of juvenile haddock and whiting have recently been taken in those catches. I am sure that that will be welcomed by our industry, which has frequently expressed concern about the impact of industrial fishing.
    After being a lone voice on the subject of industrial fishing, I am pleased to find other countries taking an interest. I emphasise that the Danish Government have been highly co-operative and have shared information and technical knowledge with the UK on those issues.
    Mr. Alex Salmond: The Minister's voice might have been a lone one in EU councils, but it certainly has not been in the House. I congratulate the hon. Gentleman on his reappointment as Fisheries Minister: he is the pole star in the changing world of the Government ranks. Will he address two points relating to the deal that has been struck? First, there is the issue of closed areas diverting effort into other fisheries; it is not only a question of mesh size. Again, I commend the strategy of a tie-up scheme. This year's

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    voluntary tie-up probably saved 10 million juvenile haddock, but I have strong doubts whether a voluntary tie-up will be available again.
    Secondly, will the Minister address the issue, which I know he understands, of slow-pulling highly selective fisheries, such as the seine-net fishery? Whatever mesh size is agreed in whichever area, some fishing boats that pursue the most select fishery might be disadvantaged. It would be an irony if such boats were pushed out of the equation, because they are surely the ones that we want in terms of selective fishery doing less damage to fish stocks. I should like to see some recognition that the Minister is fishing for the seine-net position within the overall deal.
    Mr. Morley: To deal with the latter point first, I have sympathy with the argument about the nature of fishing and its selectivity. I do not think that proper attention has yet been paid to the way in which different fishing techniques have differing impacts on fish stocks. I had a private discussion with Commissioner Franz Fischler on that very point. I emphasised that, in addressing the recovery plans, we should not adopt a one-club approach. The main strategy is to reduce effort and fleet size. That has a role, but we should take a more sophisticated approach to recovery plans and consider the range of fishing techniques and their different impacts. I have a lot of sympathy with the hon. Gentleman's point, but we have more work to do in terms of quantifying the argument and convincing the Commission to take it on board.
    The hon. Gentleman knows where I stand on the issue of tie-up grants. My mind is not closed to any approach, but I remain to be persuaded that the large sum of money that would be involved in a tie-up represents good value for money, or that the policy would have the effect we want. It might be regarded as a short-term solution to a long-term problem. There are several points on which we still need to be convinced.
    On the cod recovery plan, I must emphasise that the 110 mm fishery is important in relation to mixed fishery. I know that the industry is worried about how long it will be continued. The original proposal is that it would be for one year only—2002. However, we have agreed with the Norwegians that it will be reviewed at the end of that year—it will not be for one year, and then finished. The review will enable us to consider the impact of the 110 mm mixed fishery. We have also agreed that that review will include proper consideration of the fishery's socio-economic impact. That examination, carried out over the course of the year, will help negotiations on future cod recovery plans.
    There is no doubt that larger mesh sizes are the right approach, but we have to take the socio-economic impact into account and carry the fishing industry with us. The industry is willing to be co-operative. The hon. Member for Roxburgh and Berwickshire pointed out that cod recovery, closed areas and spawning were under discussion 20 years ago. However, we are now making progress because there has been a fundamental shift in attitude in the fishing industry. It recognises that there are severe problems with many fish stocks, including nearly all commercial stocks, and accepts that conservation action has to be taken. It has therefore participated in discussions.
    As a Minister, I have tried to ensure that the fishing industry has been involved in all discussions at every stage. Its input has been invaluable; its experience and
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    participation have been sensible and mature and have shaped the development of the cod recovery programme. It has certainly helped us to convince the Commission that its original proposals on technical measures were not workable; not only would they have a dramatic impact on fishermen, but they would not necessarily achieve the conservation outcomes that the Commission, the industry and we all want. We have therefore made a bit of progress and now have the opportunity to discuss with the industry the future stages of technical measures and the impact of the 110 mm and 120 mm mesh sizes; we can try to evaluate the application of the 120 mm mesh, how it works and its effects on the industry.
    Information has been collected on by-catch figures for the nephrops fishery in the North sea. From our figures, it appears that the white fish by-catch is low in that fishery, which will allow us to argue for the 10 per cent, reinstatement that was part of the agreement that we reached last year. We have also been waiting for the ICES advice on North sea stocks; it has just come out and is promising for nephrops stocks, which seem to be in pretty good shape in the North sea—we want to try to keep them that way. However, there is a problem. The main difficulty is the Commission's determination to restrict any fishery that may have a potential cod by-catch. The fact that we have been collecting figures to present our case will be helpful in the fishery negotiations that we will be having on nephrops stocks.
    The hon. Gentleman asked about the success of the closed areas on spawning. As he will appreciate, it is too early to say at this stage, as the hatched eggs are in planktonic form, so the success of spawning cannot be measured until the autumn of next year. However, when we have those figures, they will give us an indication of the success of the closed areas. Both the hon. Gentleman and the hon. Member for Banff and Buchan (Mr. Salmond) made a point about diversion to other grounds, which is an issue that we recognise. It is partly in the hands of the industry itself, which well knows the impact of diversion and concentration on particular areas, recognising that in this year's recovery programme. We shall discuss the matter with the industry and shall try to tackle it.
    Finally, the hon. Member for Roxburgh and Berwickshire spoke about the two-net rule, which will be applied as part of the outcome of the Norwegian talks. I do not think that it will be problem; carrying two nets is already allowed under Norwegian regulations, so there should not be a problem for vessels carrying two nets—one can be used in the Norwegian zone for directed cod fishery and one for mixed fishery in the North sea.
    In conclusion, the issues are complex and the negotiations difficult. We are facing serious problems with cod stocks in the North sea and a range of other white fish stocks. We are determined to deal with those problems and make progress, and we want to do that with the full involvement of fishermen and the full engagement of the industry; we want to involve them in discussions and take their views into account. We can make progress, improve the position and move towards a sustainable fishing industry, which is the objective of the industry, the Government and all those who represent fishing communities.
    Question put and agreed to.
    Adjourned accordingly at twenty-nine minutes past Ten o'clock.

DEFENCE

  Iraq
  Mr. Galloway
  To ask the Secretary of State for Defence what military actions HM forces conducted over northern Iraq on 19 June; and if he will make a statement. [386]

  Mr. Hoon
  On 19 June, coalition aircraft conducted routine patrols over the Northern No-Fly Zone over Iraq. During these patrols, aircrews came under multiple attack by Iraqi anti-aircraft artillery and surface-to-air missiles. On this occasion, no coalition ordnance was released in self-defence. In fact, all coalition aircraft involved in the patrols returned to base safely and all of their ordnance has been accounted for.

  Saddam Hussein's propaganda machine yet again has made completely false claims. The Iraqis have asserted that, during these patrols, coalition aircraft attacked civilian targets when in fact, the evidence suggests that his own air defence system was responsible. The US Defence Department has stated that it has good reason to believe that one of the missiles fired at coalition aircrew may have returned to earth in the area where the casualties are alleged to have occurred.

  British Forces Post Office, Mill Hill
  Mr. Dismore
  To ask the Secretary of State for Defence if he will make a statement on progress of the review of British Forces Post Office, Mill Hill. [56]

  Mr. Ingram
  The review of the BFPO at Mill Hill has now been completed, but no firm decision has yet been taken. I understand fully the need to bring this issue to closure as quickly as possible and I will write to my hon. Friend as soon as a decision is made.

PRIME MINISTER

  Correspondence
  Mr. Kaufman
  To ask the Prime Minister if he will seek an explanation from the Secretary of State for Health for not fulfilling his undertaking of 11 May to reply to letters to him from the right hon. Member for Manchester, Gorton, with regard to Mr. E. Graal and Mrs. E. Jones. [399]

  The Prime Minister
  I understand that my right hon. Friends the Secretary of State for Health and the Lord Chancellor have replied to my right hon. Friend's letters.

  Appointments Commission
  Mr. Gordon Prentice
  To ask the Prime Minister if he will make it his policy to refer all recommendations for a peerage to the House of Lords Appointments Commission; and if he will make a statement. [260]
  18W
  The Prime Minister
  It is my normal policy to do so. However, we have always made it clear that in relation to party political peers, the Appointments Commission was taking over the role formerly fulfilled by the Political Honours Scrutiny Committee. It was never the custom that appointments to the Lords to enable someone to take up ministerial office should be subject to scrutiny by that Committee. I have also decided, after consultation with the House of Lords Appointments Commission, that a limited number of holders of very high office may be recommended direct to the Queen by me.

  Performance and Innovation Unit
  Mr. Pound
  To ask the Prime Minister what additional projects are planned for the Performance and Innovation Unit; and if he will make a statement. [975]

  The Prime Minister
  I have asked the Performance and Innovation Unit to undertake a review of the strategic issues surrounding energy policy for Great Britain.

  The review will be set within the context of meeting the challenge of global warming, while ensuring secure, diverse and reliable energy supplies at a competitive price.

  The aim of the review will be to set out the objectives of energy policy and to develop a strategy that ensures current policy commitments are consistent with longer-term goals. The findings will also inform the Government's response to last year's report from the Royal Commission on Environmental Pollution "Energy—the changing climate".

  The work the PIU has already started, on resource productivity and renewable energy, will be an important input into this project. This review will work closely with the resource productivity team and the main Whitehall Departments, as well as business, international institutions, other Government and non-governmental organisations.

  The Minister for Industry and Energy will chair an advisory group for this project, which will report by the end of the year. Other Ministers on the advisory group include the Minister for the Environment and the Chief Secretary to the Treasury.

  Child Benefit
  Ms Bridget Prentice
  To ask the Prime Minister, in respect of the Government's intention to introduce a new tax credit for families with children, if he will make a statement on the future of the administrative arrangements for the Child Benefit Centre in Great Britain. [1062]

  The Prime Minister
  The new tax credit will build on the foundation of universal child benefit. I have decided that responsibility for child benefit in Great Britain will transfer to Inland Revenue so that when the new credit is introduced in 2003, Government support for children will be administered by one Department. Until the transfer takes place, child benefit will remain the responsibility of the Department for Work and Pensions.

  Iraq
  Mr. Galloway
  To ask the Prime Minister if he will make a statement on the bombing of a football game in Northern Iraq on 19 June. [387]
  19W
  The Prime Minister
  I refer my hon. Friend to the answer given to him by my right hon. Friend the Secretary of State for Defence today,Official Report, column 17W.

HOUSE OF COMMONS

  Select Committee (Lord Chancellor's Department)
  Gareth Thomas
  To ask the President of the Council if he will bring forward proposals to establish a departmental Select Committee to scrutinise the work of the Lord Chancellor's Department. [353]

  Mr. Robin Cook
  The Lord Chancellor's Department has been scrutinised by the Home Affairs Committee in the past, and this arrangement is likely to be appropriate in the future. The Lord Chancellor's Department's new responsibilities have largely been transferred from the Home Office.

  Videoconferencing Facilities
  Linda Gilroy
  To ask the hon. Member for Roxburgh and Berwickshire, representing the House of Commons Commission, what plans there are to improve the provision of, and access, to videoconferencing facilities for hon. Members. [833]

  Mr. Kirkwood
  This is a matter on which the Information Committee's advice would be sought. I hope that, together with other Select Committees, the Information Committee will soon be appointed.

TRANSPORT, LOCAL GOVERNMENT AND THE REGIONS

  Derelict Sites
  Vernon Coaker
  To ask the Secretary of State for Transport, Local Government and the Regions what powers are available to local authorities to compel private landowners to clear up derelict sites. [23]

  Ms Keeble
  Section 215 of the Town and Country Planning Act 1990 gives local planning authorities a discretionary power to require private landowners to clear up sites if they are adversely affecting the condition of land or amenity in their area.

  If owners do not comply with a notice served under s215, local planning authorities have the power under s219 to enter the land to carry out the specified work and recover the costs incurred from the landowner.

  The Department of Environment, Transport and the Regions last September published research on "Derelict Land and Section 215 Powers" which included a number of practical suggestions to facilitate its use.

  Environmental Impact Assessments
  Mr. Kidney
  To ask the Secretary of State for Transport, Local Government and the Regions in what circumstances he(a) requires and (b) expects an environmental impact assessment in support of an application for permission for development. [21]
  20W
  Ms Keeble
  The Town and Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 1999 give effect to the requirements of Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment. The regulations apply to categories of projects specified in schedules 1 and 2 of the regulations. For development listed in schedule 1 of the regulations, environmental impact assessment is always required before planning permission may be granted. For development listed in schedule 2, an assessment is required if the project is likely to have a significant effect on the environment by virtue of factors such as its nature, scale or location.

  Mobile Phone Masts
  Dr. Murrison
  To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on plans his Department has to tighten planning controls on mobile phone masts. [419]

  Ms Keeble
  We propose to bring forward shortly changes to the current planning rules and guidance for telecommunications mast development in order to:strengthen public consultation requirements on mast proposals of 15 metres and below
  increase the time for an authority to deal with prior approval applications to 56 days
  underline that school governors must be consulted on all proposals for new masts on or near a school or college; and
  increase fees to enable authorities to carry out full public consultation.

  High Hedges
  Miss McIntosh
  To ask the Secretary of State for Transport, Local Government and the Regions what measures he proposes to take to reduce the incidence of high hedges overshadowing or encroaching on people's property; and if he will make a statement. [37]

  Ms Keeble
  The Government are committed to introducing legislation that would give local authorities in England and Wales powers to deal with complaints about problem high hedges, as soon as there is space in the parliamentary timetable.

  Where these hedges encroach on people's property, they already have rights to cut overhanging branches back to the boundary—unless any trees in the hedge are protected by a tree preservation order or the people live in a conservation area. In such cases, people should check with their local council before carrying out any works on the hedge.

  Bob Russell
  To ask the Secretary of State for Transport, Local Government and the Regions when he expects legislation to be introduced to deal with high boundary hedges and trees in residential gardens; and if he will make a statement. [7]

  Ms Keeble
  The Government are committed to introducing legislation that would give local authorities in England and Wales powers to deal with complaints about problem high hedges, as soon as there is space in the parliamentary timetable.

  Millennium Dome
  Mr. Peter Ainsworth
  To ask the Secretary of State for Transport, Local Government and the Regions if he will set out the timetable for the sale of the dome. [108]

  Ms Keeble
  There is no firm deadline for the sale. We are, through the on-going market testing, exploring all avenues, and the aim is to secure a sale as quickly as possible. However, it is important that all diligence is done both in the market testing and the assessment of on-going process issues, in order that the process—and the continued regeneration of the Greenwich Peninsula—is not undermined. We will make an announcement as soon as possible, consistent with independent professional advice.

  Mr. Peter Ainsworth
  To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on the estimated market value of the dome site(a) with the dome in place and (b) with the dome removed. [111]

  Ms Keeble
  A pre-sale valuation of the dome site has been undertaken in the context of the process to secure a sustainable long-term use for the dome. This valuation and Government appraisals of the financial value of the site are commercially confidential while the process continues.

  Mr. Peter Ainsworth
  To ask the Secretary of State for Transport, Local Government and the Regions what proportion of the proceeds from the future sale of the dome will be returned to national lottery funds. [112]

  Ms Keeble
  The allocation of proceeds from the sale of the dome is set out in a legal agreement between English Partnerships and the New Millennium Experience Company. This was signed on 12 January 2001 and announced to Parliament on 17 January 2001,Official Report, column 258W.

  After deduction of competition, decommissioning and other costs from the sale proceeds, half will be paid to English Partnerships as owners of the land and half to the New Millennium Experience Company as builders, owners and operators of the dome structure. Once NMEC has been wound up, it is intended that any remaining share of the proceeds will pass to the Millennium Commission.

  Redhill Aerodrome Ventures Ltd.
  Mr. Peter Ainsworth
  To ask the Secretary of State for Transport, Local Government and the Regions if the submission by Redhill Aerodrome Ventures Ltd. to his Department's consultation on airport capacity in the south-east was confidential. [148]

  Mr. Jamieson
  We received a submission from Redhill Aerodrome Ltd. in response to "The Future of Aviation" consultation document. Redhill Aerodrome Ventures Ltd. asked that its response be kept confidential. We have not yet issued a consultation document on airport capacity in the south-east and east of England.

  Central Railway
  Mr. Lidington
  To ask the Secretary of State for Transport, Local Government and the Regions what target he has set the Strategic Rail Authority for completing its 22W
  feasibility study on the Central Railway proposal; when he expects to receive the SRA's report; and if he will make a statement. [379]

  Mr. Jamieson
  No target has been set. I understand that the Strategic Rail Authority has just received its consultants' high-level review of the Central Railways proposal and will be advising on its conclusion in due course.

  Chiltern Line
  Mr. Lidington
  To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on progress towards a final decision on the award of the rail franchise for the Chiltern Line. [380]

  Mr. Jamieson
  The Strategic Rail Authority signed heads of terms with M40 Trains Ltd. on 10 August 2000 and expects to sign a new franchise agreement in the autumn.

  Concessionary Bus Travel
  Lawrie Quinn
  To ask the Secretary of State for Transport, Local Government and the Regions what progress has been made by his Department in extending the concessionary bus travel scheme to men between the ages of 60 and 65 years. [451]

  Ms Keeble
  As announced in the Gracious Speech on 20 June 2001,Official Report, column 33, we intend to bring forward a Bill during the present Session to amend the relevant legislation.

EDUCATION AND SKILLS

  Class Sizes (Yorkshire)
  Miss McIntosh
  To ask the Secretary of State for Education and Skills what the class sizes for(a) primary and (b) secondary schools were in (i) North Yorkshire and (ii) the City of York local education authorities on 1 May 2001 and projected for 1 May 2002. [5]

  Mr. Timms
  The available data are shown in the table.

  Average class size—position in January each year

  North Yorkshire

  City of York

  England

  Primary schools

  20001

  25.8

  26.4

  27.1

  2001

  25.3

  25.9

  26.7

  Secondary schools

  20001

  21.1

  21.5

  22.0

  2001

  21.1

  21.1

  22.0

  1Provisional

  The size of average primary classes has fallen nationally from 27.7 in 1998 to 26.7 in 2001; by September 2001 we expect that no infant class will have more than 30 pupils. Secondary class sizes nationally rose from under 20 in 1989 to 21.7 in 1997. Since then the growth has slowed and has remained at 22 for two years.
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  In 2001–02 secondary headteachers will receive an average of £70,000 and primary headteachers £24,000 in direct grant to spend as they choose including on reducing class sizes if that is their priority.

  We do not have projections on average class sizes.

HEALTH

  NHS Pay Review
  Mr. Gardiner
  To ask the Secretary of State for Health what plans he has to include NHS scientific laboratory staff in the NHS pay review. [349]

  Mr. Hutton
  I refer my hon. Friend to the reply my predecessor gave to my hon. Friend the Member for Erith and Thamesmead (Mr. Austin) on 23 October 2000,Official Report, columns 80–81W.

  Residential and Nursing Care
  Mr. Burstow
  To ask the Secretary of State for Health how many individuals had to sell a property to finance their(a) residential and (b) nursing care, within local authorities prior to the local authority becoming responsible for funding their care; and if he will make a statement. [182]

  Jacqui Smith
  This information is not held centrally.

  Mr. Burstow
  To ask the Secretary of State for Health how many(a) residential and (b) nursing placements were being funded at the end of 2000–01. [181]

  Jacqui Smith
  The table shows the number of local authority supported residents in residential or nursing care at 31 March 2000, the latest year for which information is available.

  Rounded number

  England1

  Supported residents

  Residential care homes2

  193,100

  Nursing care homes3

  74,400

  Total number of residents

  267,500

  1As at 31 March 2000

  2Includes local authority staffed, voluntary and private homes and small or unstaffed homes

  3Independent general and mental nursing homes

  Source:

  SR1 form

  Social Services Assessments
  Mr. Burstow
  To ask the Secretary of State for Health what level of assessment is undertaken by social services when a client is vulnerable and self-funding but has no partner or advocate; and if he will make a statement. [183]

  Jacqui Smith
  Under Section 47 of the National Health Service and Community Care Act 1990 local authorities have a duty to give a community care assessment to anyone, who, in their view, might be in need of community care services. This duty applies irrespective of the person's means and whether or not the person has a partner or advocate. The content of the assessment is a matter for the local authority to decide.

  General Social Care Council
  Mr. Burstow
  To ask the Secretary of State for Health if he will require the General Social Care Council to develop an interim register that covers all unqualified social care workers employed by local authorities and in the independent sector. [185]

  Jacqui Smith
  The General Social Care Council (GSCC) will register social care workers who hold the appropriate level of qualification for the job that they do, and who satisfy the requirements as to conduct and competence. Registration will begin with social workers, most of whom ate qualified. Other early groups for registration will be residential child care workers and managers of care homes. The GSCC will set out the timescales for registering the remainder of the workforce.

  The GSCC will publish codes of practice for social care workers and other employers. All social care workers will be expected to abide by these codes, whether or not they are registered with the GSCC.

  Mr. Burstow
  To ask the Secretary of State for Health what role the General Social Care Council will play in regulating health support workers. [186]

  Jacqui Smith
  The General Social Care Council (GSCC) will be responsible for regulating social care workers. There are no plans for it to regulate health support workers. The social care workforce in England comprises over a million workers, and the GSCC will concentrate on introducing regulation in this new area.

  NHS Staff Numbers
  Mr. Frank Field
  To ask the Secretary of State for Health how many(a) consultants and (b) general practitioners were working for the NHS in July 2000. [390]

  Mr. Hutton
  The Department collects information about the number of consultants and general practitioners working for the National Health Service as at 30 September each year. Information is not available for July 2000.

  As at 30 September 2000 (headcount) there were 24,300 consultants and 28,590 general practitioners working for the NHS.

  Mr. Frank Field
  To ask the Secretary of State for Health how many nurses were working for the NHS in(a) July 2000 and (b) June 2001. [391]

  Mr. Hutton
  The Department of Health workforce censuses collect the number of nurses working in the National Health Service in England as at 30 September each year.

  On 30 September 1999 there were 329,640 (headcount) nurses employed in the NHS. On 30 September 2000 there were 335,950.

  Hospital Food
  Dr. Fox
  To as the Secretary of State for Health if he will specify the remuneration of each culinary adviser involved in the improvement of hospital food. [435]

  Mr. Hutton
  National Health Service dietitians, catering managers, nurses and patients, along with Mr. Loyd Grossman and his team of seven leading chefs, all contributed towards the development of the better
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  hospital food initiative, including the development of a new NHS recipe book and menu. Launched on 8 May, it includes new dishes which have been specially designed for modern tastes.

  Loyd Grossman and the chefs provided their services free of charge.

  Waiting Lists (Suspensions)
  Dr. Fox
  To ask the Secretary of State for Health how many NHS patients are suspended from waiting lists; and how many were suspended from waiting lists on 1 March. [428]

  Mr. Hutton
  Statistics for suspended patients are published by the Department of Health every quarter. At the end of March 2001 (the most recent data available) 76,734 patients have been suspended from the inpatient waiting list during the last quarter of 2000–01.

  The National Health Service data manual gives clear guidance that patients should only be suspended from the waiting list if they are medically unfit for the operation, or for other impelling reasons i.e. where a patient is unavailable for admission because of family commitments, holidays or other reasons.

  Departmental Responsibilities
  Dr. Fox
  To ask the Secretary of State for Health if he will list the areas of responsibility that have been transferred(a) from his Department to other Departments and (b) to his Department from other Departments since 8 June. [433]

  Ms Blears
  No areas of responsibility have been transferred either to or from my Department since 8 June.

  Overseas Nurses
  Dr. Fox
  To ask the Secretary of State for Health from which countries overseas nurses are employed by the NHS; and how many nurses are employed from each country. [431]

  Mr. Hutton
  This information is not held centrally. Information on applications from nurses outside the United Kingdom for registration to the United Kingdom Central Council for Nursing, Midwifery and Health Visiting (UKCC) can be found in the UKCC annual statistical analysis of the UKCC professional register. Information on the number of work permits issued to employers is available from work permits UK.

  Dr. Fox
  To ask the Secretary of State for Health what representations he has received from foreign Governments in connection with the employment of overseas nurses since May 2000. [423]

  Mr. Hutton
  Over the last year we have received representations from the Spanish Government about recruiting doctors and nurses from Spain to work in the National Health Service.

  An Inter-Governmental agreement was achieved with Spain in November 2000 to promote closer working between the two countries. As part of this agreement, the first 63 nurses arrived in the north-west of England from Spain on 19 January 2001 to work in four NHS trusts and have now been joined by another 57. Following this
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  successful recruitment, the initiative is being extended to medical staff through a pilot project also being led by north-west region.

  I am also aware that the Department has received representations over the last year from:

  Latvia

  Philippines

  Russia

  China

  Tunisia

  Caribbean

  South Africa

  Zimbabwe.

  Guidance was issued by the Department on international recruitment which emphasises that all NHS employers must ensure that they do not actively recruit from developing countries who are experiencing nursing shortages of their own.

  NHS Vacancies
  Dr. Fox
  To ask the Secretary of State for Health how many(a) consultant posts and (b) nursing posts are currently vacant; and how many posts in each category have been vacant for more than three months. [426]

  Mr. Hutton
  The Department of Health vacancy survey for 2000 collected only the number of vacancies which have lasted for three months or more as at 30 March. These figures are given in the table.

  Results from 2001 vacancy survey are not yet available.

  Department of Health Vacancies Survey three month vacancy figures1 for Consultants and Nursing staff as at 31 March 20002

  Number

  All consultants

  600

  General medicine group of specialities

  90

  Paediatrics

  40

  Accident and emergency

  30

  Surgical group of specialities

  60

  Obstetrics and gynaecology

  10

  Anaesthetics

  30

  Radiology group of specialities

  70

  Clinical oncology

  10

  Pathology group of specialities

  50

  Psychiatry group of specialities

  190

  Dental (hospital or public health)

  20

  All qualified nursing, midwifery and health visiting staff

  10,110

  Acute, elderly and general care

  6,390

  Paediatrics

  620

  Learning difficulties

  310

  Psychiatry

  1,440

  Midwives

  510

  District nurses

  150

  Health visitors

  190

  Other qualified nurses

  490

  1Posts that had been vacant for three months or more as at 31 March 2000.

  2Figures are different from those previously published due to the discovery of figures for four trusts, which had not given detailed breakdown of vacancies within staff groups, being excluded altogether from the results.

  Notes:

  1. Figures are whole time equivalents rounded to the nearest 10.

  2. Three month vacancies are classified as vacant for three months or more, but have actively been tried to be filled.

  3. Totals may not add up due to rounding.

  Source:

  Department of Health Vacancies Survey.

  Private Treatment (NHS Patients)
  Dr. Fox
  To ask the Secretary of State for Health how many NHS patients were treated by the private sector during the last quarter(a) in total and (b) broken down by specialty. [424]

  Mr. Hutton
  At present this information is not centrally recorded. We are currently exploring as part of the Concordat with the private sector what additional data collection may be necessary and desirable.

  Prescription Payments (Exemptions)
  Dr. Fox
  To ask the Secretary of State for Health if he will list the medical conditions which warrant exemption from prescription payments. [430]

  Ms Blears
  The medical conditions conferring exemption from prescription charges are:

  (1) permanent fistula (including caecostomy, colostomy, laryngostomy, or ileostomy) requiring continuous surgical dressing or an appliance;

  (2) the following disorders:
  forms of hypoadrenalism (including Addison's disease) for which specific substitution therapy is essential

  diabetes insipidus and other forms of hypopituitarism

  diabetes mellitus—except where treatment is by diet alone

  hypoparathyroidism

  myasthenia gravis

  myxoedema

  (3) epilepsy requiring continuous anti-convulsive therapy;

  (4) a continuing physical disability which prevents the patient from leaving his residence without the help of another person.

  Delayed Discharges
  Dr. Fox
  To ask the Secretary of State for Health how many delayed discharges there were of NHS patients on(a) 1 January, (b) 1 February, (c) 1 March, (d) 1 April and (e) 1 May; and how many NHS patients on each of those dates there were whose discharge had been delayed but who had fully funded social services packages arranged. [429]

  Mr. Hutton
  Information on delayed discharges of patients aged over 75 years in England is collected centrally on a quarterly basis. In December 2000 the number of over-75s whose discharge was delayed was 5,801 and in March 2001 this figure was 5,938. In December 2000, 35 per cent. of the people whose discharges were delayed were awaiting placement in a residential care or nursing home or awaiting arrangement of a package of care to allow them to return to their own home. In some cases patients will be exercising their right to await a place in a home of their choice. No information is collected on the funding arrangements for these packages. For March 2001 this figure was 37 per cent.

  Ms Shipley
  To ask the Secretary of State for Health if he will make a statement on the number of acute hospital beds which are unavailable to incoming patients as a result of their occupation by patients needing accommodation in a nursing home. [835]

  Jacqui Smith
  Information is not available centrally in the form requested. Information is collected for England on the number of people aged over 75 whose discharge is delayed awaiting a care home placement (residential 28W
  care homes and nursing homes are not separately distinguished). In the last quarter of 2000–01 (the latest figures available), there were 1,703 such people. Some of these people will be exercising their right to await a place in a home of their choice.

TRADE AND INDUSTRY

  Power Generation
  Mr. Pickthall
  To ask the Secretary of State for Trade and Industry what plans she has to assess the feasibility of setting up demonstration plants for cleaner coal power generation technology. [974]

  Mr. Wilson
  I can announce that a new review will commence this month and is expected to report its findings at the end of the year.

  Its Terms of Reference are:

  To assess the value of a cleaner coal demonstration plant from four key perspectives:
  1. It will specifically take account of the relative benefits and costs, in comparison to other sustainable energy technologies, arising from the use of cleaner coal plant for power generation in the UK to:
  Support the Government's climate changes policy objectives through the reduction of CO2 emissions in the longer term and assessing the potential for CO2 capture and sequestration.
  The contribution it would make to the overall energy policy objectives of the Government "to ensure secure, diverse and sustainable supplies of energy at competitive prices".
  2. It will complement other ongoing work looking at energy choices in the context of the need to make substantial reductions in greenhouse gas emissions over the longer term. Within the context of using coal for power generation, such choices should not only cover cleaner coal plant but also alternative means for extracting the energy from coal, e.g. underground coal gasification.
  3. It will consider the four main technical options currently available, each of these will be assessed in the review to determine which is the most appropriate both in terms of value for money and environmental impact. These are:
  Retrofitting cleaner coal technology components to existing combustion plants
  Retrofitting coal gasification plant to older combined cycle stations.
  New build of supercritical or coal gasification on a brown field site.
  Cleaner coal plant with CO2 capture and storage.
  4. It will determine the feasibility of a demonstration project/programme in terms of:
  Value for money in terms of promoting the wider use of cleaner coal generation plant including benefits to the UK economy and the potential for export sales.
  The various types of plant amenable to clean coal technology.
  The cost per tonne of carbon saved, compared to other sustainable technologies.
  The emerging evidence on the viability, security, environmental impact and acceptability of capture and storage technologies.

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  The impact which overseas support schemes have actually had for cleaner coal plant, particularly in the United States, EC and Japan.
  State aid issues.
  The appropriate use of economic instruments to recognise the environmental case for cleaner coal plant, alongside other technologies.
  The nature of the competition or procurement route to support the building of a demonstration project(s) should agreement be secured to develop it.

  Ultra-low Sulphur Petrol
  David Maclean
  To ask the Secretary of State for Trade and Industry how many outlets sell ultra-low sulphur petrol in(a) the UK and (b) England. [757]

  Mr. Wilson
  The latest estimates available are that, as of mid-June 2001, over 98 per cent. of the more than 13,000 retail sites in operation in the UK were selling ultra-low sulphur petrol, and virtually all deliveries of premium grade petrol for consumption in the UK are now ultra-low sulphur. There are no separate estimates available for England.

  EU Information and Consultation Directive
  Mr. Heathcoat-Amory
  To ask the Secretary of State for Trade and Industry if she will list the areas where consultation between workers and employers would be obligatory under implementation of the EU Information and Consultation Directive. [299]

  Ms Hewitt
  A political agreement was reached at the Employment and Social Policy Council on 11 June on a Presidency compromise text. The text gives employees in the undertakings covered a right to be informed about the undertaking's economic situation, informed and consulted about employment prospects, and to be consulted with a view to reaching agreement about decisions likely to lead to substantial changes in work organisation or contractual relations, including redundancies and transfers. Employers and employees may agree on different arrangements than those prescribed in the directive.

  Consignia
  Mr. Heathcoat-Amory
  To ask the Secretary of State for Trade and Industry if she will make a statement on future ownership arrangements for(a) Consignia and (b) its constituent parts. [297]

  Ms Hewitt
  The future ownership arrangements for Consignia and certain of its subsidiaries are governed by Part IV of the Postal Services Act 2000. In accordance with sections 65 of the Postal Services Act, no shares in the Post Office company (i.e. Consignia Holdings plc) may be issued or disposed of to anyone other than the Treasury or the Secretary of State (or their nominees) without authority from Parliament in accordance with section 67 of the Act. The Act also prohibits the issuing or disposal of shares in any "relevant subsidiary" of the Post Office company to anyone other than the Treasury or the Secretary of State (or their nominees) or the Post Office company or any other appropriate relevant subsidiary (or their nominees) without parliamentary authority in accordance with section 67. Consignia plc—30W
  the wholly-owned principal operating subsidiary of Consignia Holdings falls within the definition of a "relevant subsidiary".

  The future ownership of subsidiaries other than Consignia plc and other "relevant subsidiaries" is a commercial matter for Consignia Holdings plc (or the member of the group who owns the subsidiary), in accordance with the commercial freedom given the company under the Post Office reform package.

  Energy Markets (EU)
  Mr. Gibb
  To ask the Secretary of State for Trade and Industry what recent discussions her Department has had at EU level concerning liberalisation of energy markets; and if dates for completion of the single market in this area have been set. [755]

  Mr. Wilson
  In March 2001, the Commission proposed a new Directive to amend the existing rules on electricity and gas liberalisation. The Commission also proposed a Regulation on cross-border electricity trading. The new Directive includes the date of 2005 for full liberalisation of the EU electricity and gas markets. These proposals were discussed at the Stockholm European Summit. Discussions of the proposals are continuing in the Council Energy Working Group. UK officials are also actively engaged in a number of bilateral discussions with other member states and representatives from the Commission.

  Government Regulation
  Mr. Gibb
  To ask the Secretary of State for Trade and Industry if she will outline her plans for reducing the administrative burden on business; and what quantifiable targets she has for measuring progress. [740]

  Nigel Griffiths
  The DTI will continue to ensure that administrative burdens associated with necessary regulation to protect the interests of consumers and citizens and to provide decent minimum standards for workers are minimised. The regulatory impact appraisal (RIA) process was changed in 2000 to require that administrative and policy costs should be separately identified, enabling us to concentrate on minimising the cost of the administration associated with regulation. Where it is shown to us that administration is excessive, we will reduce it, as we did with the Working Time Regulations in 1999.

  The new Regulatory Reform Act will play a vital role in the Government's drive to reform outdated, overlapping and over-burdensome regulation. The Labour Party's Business Manifesto commits the Government to use the new Order-making power in the Act to bring forward a programme of regulatory reform initiatives involving all the key Government Departments. A list of 51 examples of reforms that could be achieved by this means is available from the Libraries of the House, and on the Cabinet Office website.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry what progress the Small Business Service has made in establishing an Index of Regulation; and if its operational target date has been met. [743]
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  Nigel Griffiths
  In line with the principles set out in "Think Small First" published in January the SBS remains committed to obtaining a detailed picture of the impact of regulation and is considering the best way to proceed on this important issue.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry what plans she has to introduce longer lead-in times and consultation periods for new regulations. [747]

  Nigel Griffiths
  The new Consultation Code requires that public consultations should last at least 12 weeks except in clearly defined circumstances, or where Ministers judge that the particular circumstances require a shorter consultation period. The new procedures for guidance for business on new regulations mean that where new regulations require action from business, guidance should be issued at least 12 weeks before the entry into force of the regulation.

  Mr. Gibb
  To ask the Secretary of State for Trade and Industry which regulations implemented since 1997 her Department is planning to review the working and impact of. [754]

  Nigel Griffiths
  We keep the regulatory framework under constant review, assessing the impact of regulations made before 1997 and since. We are also carrying out the following specific reviews.

  The Government have appointed the independent Low Pay Commission to monitor and review the impact of the National Minimum Wage Act 1998 and accompanying regulations. The LPC is to be established as a permanent body, continuing to advise on the national minimum wage and carrying out associated research.

  We are currently reviewing whether the Timeshare Regulations 1997 and Price Marking Order 1999 should be amended in the light of their operation.

  We will also comprehensively modernise company law, following the final report of the independent Company Law Review, to be published this summer.

  The forthcoming White Paper on the reform of the competition regime will address aspects of that regime dating from before May 1997, as well as those introduced since.

  EU Directives
  Mr. Gibb
  To ask the Secretary of State for Trade and Industry if she will make it her policy to conduct an audit of EU Directives transposed into UK law since 1997 to determine what use has been made of protective provisions for small businesses. [746]

  Nigel Griffiths
  The Government have consulted fully on the implementation of all EU Directives since 1997, taking account of the needs of small businesses. We have no current plans to conduct an audit.

  Foot and Mouth
  Mr. Peter Ainsworth
  To ask the Secretary of State for Trade and Industry how many tourism businesses have(a) applied for and (b) received loans under the Business Loan Guarantee Scheme in connection with the impact of foot and mouth disease. [134]
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  Nigel Griffiths
  No information is available on the number of businesses that have approached lenders.

  Of the new loans that have been guaranteed by the Small Business Service, where the application forms identify that the businesses have been affected by foot and mouth disease, four of them are considered to be tourism related.

  Women's Pay
  Ms Ward
  To ask the Secretary of State for Trade and Industry what plans she has to tackle the level of pay for women relative to men. [464]

  Ms Hewitt
  The Government have an extensive programme of action to reduce the pay gap between men and women. This gap has reduced from 37 per cent. when the Equal Pay Act was introduced in 1970, to 18 per cent. now. We are taking steps to make the legislation work better, by making equal pay claims quicker and easier. We are working with the Equal Opportunities Commission, employers and trade unions to develop voluntary equal pay reviews. The EOC has received an extra £100,000 to take this forward. The Government are committed to equal pay for its own staff. All Departments and Government agencies must undertake reviews and prepare equal pay action plans within two years. We are introducing Castle Awards to recognise employers' excellence in promoting equal opportunities and pay, and have appointed fair pay champions from a range of backgrounds to promote the issues. We also have a number of initiatives in place to address the underlying causes of the pay gap. These include tackling gender stereotyping in education, removing barriers to women's employment in traditionally male industries such as ICT and encouraging employers to take measures which allow parents to combine work and raising a family. In April of this year, the Government appointed Denise Kingsmill to lead an independent review into Women's Employment and Pay. This review will report in the autumn, and the Government will then consider what additional action is required to make further progress.

FOREIGN AND COMMONWEALTH AFFAIRS

  Iraq
  Mr. Galloway
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with his US counterpart on the bombing of a football game in northern Iraq on 19 June; and if he will make a statement. [385]

  Mr. Bradshaw
  None. Iraq's claim that a football match was bombed by allied aircraft is completely false. Although allied aircraft were patrolling the No-Fly Zones on 19 June and came under attack from Iraqi anti-aircraft and missile fire, they did not fire back.

WORK AND PENSIONS

  Pension Credit
  Mr. Gordon Marsden
  To ask the Secretary of State for Work and Pensions what consultations are planned with pensioner groups and groups representing
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  older people on claims procedures envisaged under the new pension credit. [460]

  Mr. McCartney
  Over 400 responses were received to the formal consultation exercise [Cm4900, November 2000], many welcoming our proposals. We will continue to consider views and work closely with groups representing older people to deliver a modernised and dedicated service to meet pensioner needs.

  Ms Oona King
  To ask the Secretary of State for Work and Pensions if he will make a statement on the introduction of the pension credit. [465]

  Mr. McCartney
  The pension credit forms a key part of the Government's overall strategy for tackling pension poverty, ensuring that no pensioner need live on less than £100 a week and no pensioner couple need live on less than £154 a week.

  Housing Benefit
  Mr. Grogan
  To ask the Secretary of State for Work and Pensions what plans he has to reform housing benefit. [463]

  Mr. Wicks
  Following years of neglect by the opposition, improving administration is the biggest challenge facing the Housing Benefit system.

  We published our strategy to achieve this in December and we are working with local authorities to drive up standards of service, tackle fraud and error and promote work incentives.

  Retirement Provision
  Mr. Viggers
  To ask the Secretary of State for Work and Pensions what action the Government propose to take to ensure that individuals are able to make appropriate provision for their retirement. [469]

  Mr. McCartney
  The Government are encouraging people to save for their retirement in a variety of ways. We have introduced stakeholder pensions, a new low cost safe, flexible pension option for moderate and high earners who do not have access to a good occupational scheme. We are also providing better information, through leaflets and in time combined pension forecasts, to help people make choices about the most appropriate provision for their retirement. And we continue to work closely with the pensions industry to seek ways of making the regulatory system simpler and easier to operate.

  Private Pension Plans
  Michael Fabricant
  To ask the Secretary of State for Work and Pensions if he will make a statement on the Government's policy on encouraging employees to contribute to private pension plans. [470]

  Mr. McCartney
  The Government attach great importance to providing better information to help people make informed decisions about saving for their retirement. We have already greatly improved the general pension information available by actively promoting our series of pension education guides. And we are working in partnership with employers and pension providers to introduce new pension forecasts giving both state and private pension details.

  Minimum Income Guarantee
  Miss McIntosh
  To ask the Secretary of State for Work and Pensions what representations he has received on the impact of means testing on applications for the Minimum Income Guarantee. [471]

  Mr. McCartney
  The link between the intrusive and complex nature of means testing and non take-up of the minimum income guarantee by some pensioners has been established. A key objective of the Pension Credit is to tackle pensioner poverty and by 2003 no pensioner will have to live on less than £100 per week and couples no less than £154. It will reduce complexity, by modernising processes and removing outdated rules and reduce intrusiveness by, for example, abolishing the weekly means test.

  Mr. Kirkwood
  To ask the Secretary of State for Work and Pensions what are the most recent estimates of increased take-up of the Minimum Income Guarantee as a result of the pensioner take-up advertising campaign. [474]

  Mr. McCartney
  Over 110,000 additional awards of the Minimum Income Guarantee had been made by the end of May 2001.

  David Taylor
  To ask the Secretary of State for Work and Pensions what estimate he has made of the number of pensioners in North-West Leicestershire who are entitled to the minimum income guarantee but who are not receiving it. [475]

  Mr. McCartney
  Estimates of the number of pensioners entitled but not claiming the minimum income guarantee are not available below national levels. Around two million of the poorest pensioners are now receiving MIG. While over 110,000 additional awards had been made by the end of May 2001, generated by the take-up campaign.

  Mr. Simon Thomas
  To ask the Secretary of State for Work and Pensions what proportion of pensioners in Wales have taken up the Minimum Income Guarantee. [476]

  Mr. McCartney
  Estimates of take-up and non take-up of MIG are not available below national levels. However, over 20,000 additional pensioners in Wales have been awarded MIG during the period of the take-up campaign.

  Social Security Offices (Ethnic Minorities)
  Mr. Dismore
  To ask the Secretary of State for Work and Pensions what recent assessment he has made of the service provided to ethnic minority communities by social security offices. [472]

  Mr. Wicks
  The Benefits Agency holds both an annual benefits forum and an annual ethnic minority forum. These present an opportunity for representatives of ethnic minority groups to address any problem areas. As a result of the last ethnic minority forum, held in February 2001, the Benefits Agency policy on provision of interpreting and translation services is being reviewed.

  The Benefits Agency is committed to providing a service, which is fair and accessible to all members of the community. Local managers are responsible for ensuring that the level of service is of an acceptable standard. This commitment is also stated in the Customer Charter, which was published in November 1999. The standards in the Customer Charter are measured annually by a range of

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  internal checks and customer satisfaction surveys. An analysis of the results informs service improvement action plans. All complaints received by the Agency are recorded and the data analysed centrally. The monthly reports produced are also used to inform service improvement plans.

  Pensioners Overseas
  Mr. Nigel Jones
  To ask the Secretary of State for Work and Pensions if he will make a statement on his policy towards UK pensioners living overseas. [473]

  Mr. McCartney
  UK pensions are paid to anyone who satisfies the qualifying conditions, wherever they live.

  Annuities
  Dr. Cable
  To ask the Secretary of State for Work and Pensions what plans he has to reform the regulations governing compulsory annuities for pensioners. [477]

  Mr. McCartney
  I refer the hon. Member to the oral answer given to the hon. Member for Arundel and South Downs (Mr. Flight) earlier today,Official Report, column 382.

  Pensioner Poverty
  Shona McIsaac
  To ask the Secretary of State for Work and Pensions what progress is being made in tackling pensioner poverty. [479]

  Mr. McCartney
  I refer the hon. Member to the oral answer I gave the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) earlier today,Official Report, column 373.

  Dr. Julian Lewis
  To ask the Secretary of State for Work and Pensions if he will make a statement on pensioner poverty. [459]

  Maria Eagle
  Tackling pensioner poverty is a priority for this Government and we have already made a significant impact on the lives of our poorest pensioners by ensuring that no pensioner has to live on less than £92.15 a week.

  Social Security Fraud
  Mr. Gray
  To ask the Secretary of State for Work and Pensions what the level was of social security fraud in 2000–01. [468]

  Mr. Wicks
  We are getting to grips with Social Security fraud, tightening up the system and making sure that from the very first claim, the right benefits are going to the right people.

  Between 1998 and 2000 we have already made a 6.7 per cent. reduction in the level of fraud and error in Income Support and Jobseeker's Allowance. We have conducted further exercises to measure the level of fraud and error, the results of which will be published later this year.

  Employment Assistance
  Mr. Win Griffiths
  To ask the Secretary of State for Work and Pensions if he will make a statement on the measures he proposes to take to assist people receiving benefits to find appropriate employment. [448]
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  Mr. Nicholas Brown
  Today, there are record numbers of people in work. Labour Market Statistics show that the number of unemployed people is below one million. But we must continue to help those who can work to move off benefit and into productive work.

  The creation of the new Department and the Jobcentre Plus, launched later this year, are significant immediate steps. But we are also introducing a Welfare Reform Bill which will extend the scope and flexibility of our welfare to work programmes.

  Stakeholder Pensions
  Mr. Kidney
  To ask the Secretary of State for Work and Pensions what assessment he has made of the take-up of stakeholder pensions. [449]

  Mr. McCartney
  There are now 47 registered providers offering stakeholder pensions. Early indications are that they are attracting considerable interest.

CULTURE, MEDIA AND SPORT

  Horse Racing
  Mr. Greenway
  To ask the Secretary of State for Culture, Media and Sport when(a) she and (b) the Minister for Sport last attended a horse race meeting in their official capacity. [187]

  Mr. Caborn
  Neither I nor my right hon. Friend have attended a horse race meeting since our recent appointment.

  Pub Licensing
  Mr. Greenway
  To ask the Secretary of State for Culture, Media and Sport when she expects to bring forward legislation for the deregulation of pub licensing. [188]

  Dr. Howells
  We remain fully committed to bringing forward legislation to reform the alcohol and public entertainment licensing laws as soon as parliamentary time permits.

  Foot and Mouth (Tourism)
  Mr. Greenway
  To ask the Secretary of State for Culture, Media and Sport what additional funding for marketing she expects to provide to the English Tourism Council and regional tourist boards in response to the foot and mouth disease crisis. [190]

  Dr. Howells
  The Government made £3.8 million available for PR and marketing at national and regional level. This timely action did much to kick start the domestic tourism season. I have no plans for further national marketing, but the Government have funded the Regional Development Agencies who are now providing further help to promote tourism. The launch of the Devon marketing plan last week was an example.

  Olympic Games
  Mr. Gareth R. Thomas
  To ask the Secretary of State for Culture, Media and Sport what action she will take to promote a London bid to host the Olympic Games. [782]
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  Mr. Caborn
  The decision on whether or not to launch a UK bid to host the Olympic Games is a matter for the British Olympic Association. The Government will take a view on what steps they might take to promote any bid in the event the BOA decides to make a bid.

  National Stadium
  Mr. Pickthall
  To ask the Secretary of State for Culture, Media and Sport what progress the Government have made in reviewing the options for a national stadium. [973]

  Tessa Jowell
  My right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) explained to the House on 2 May 2001,Official Report, column 852W, that the Government would review options for a National Stadium in the light of the Football Association's announcement on 1 May that it could not deliver its plans for a new National Football and Rugby League Stadium at Wembley. The Department for Culture, Media and Sport announced on 8 May that the Government had asked Patrick Carter, a non executive member of the Strategy Board for Correctional Services, to analyse the alternative ways forward for the project. This work was delayed because of the general election but is now under way. The terms of reference for Mr. Carter's work are:
  In the light of the FA's announcement on 1 May 2001 about the project to develop a new English National Stadium at Wembley for Football and Rugby League, to examine if the project can be funded and managed at Wembley, or if that proved impractical, at another location in England. The review should report to the Government within eight weeks.

  Mr. Carter will consult interested parties in reaching conclusions.

LORD CHANCELLOR'S DEPARTMENT

  Justices of the Peace
  Harry Cohen
  To ask the Parliamentary Secretary, Lord Chancellor's Department what progress has been made with the pilot project for sight-impaired people acting as Justices of the Peace. [928]

  Mr. Wills
  I am pleased to announce that the pilot project assessing the feasibility of sight-impaired people acting as magistrates has been completed. It has been a great success. Nine sight-impaired people were recruited as Justices of the Peace to the Commission areas of Leicestershire, Devon, North East London, Wiltshire, Humberside and Manchester. Each was appointed after having met the normal selection criteria and completed the training. The responses from those who have worked with the sight-impaired magistrates have shown that each one of them has made a positive and valuable contribution to the work of their Benches. My noble and learned Friend the Lord Chancellor is therefore removing, forthwith, the bar to appointment of sight-impaired applicants as Justices of the Peace.

  Magistrates Courts (Warrants)
  Mr. Fallon
  To ask the Parliamentary Secretary, Lord Chancellor's Department how many warrants have been issued by(a) Sevenoaks Magistrates Court and b Dartford
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  Magistrates Court in the last 12 months for which figures are available; and how many are outstanding in each case. [264]

  Mr. Wills
  Detailed information of this nature is not held centrally, and could be obtained locally only at disproportionate cost.

  Independent Appellate Authority
  Mr. Lidington
  To ask the Parliamentary Secretary, Lord Chancellor's Department how many(a) asylum cases and (b) other immigration cases are now awaiting consideration by the Independent Appellate Authority. [164]

  Ms Rosie Winterton
  At the end of May 2001, the Immigration Appellate Authority had 18,145 outstanding asylum cases and 3,230 outstanding other immigration cases awaiting final determination.

TREASURY

  2002 Spending Review
  Mrs. Lawrence
  To ask the Chancellor of the Exchequer what plans he has to repeat cross-departmental reviews as part of the 2002 Spending Review. [1063]

  Mr. Andrew Smith
  The 2002 Spending Review will roll forward existing spending plans and set budgets and outcome targets for Departments up to 2005–06. The aim of the Review will be to determine how best Departments' programmes can contribute to the Government's priorities of:

  delivery of high quality, efficient and responsive public services;

  raising productivity, in the public sector and outside, through improved skills, research and infrastructure;

  spreading opportunity and prosperity more widely, and tackling child poverty and social exclusion;

  improving the quality of life in both urban and rural areas; and

  securing a modern international role for Britain through co-operation with our European and international partners.

  The Review will conclude by the summer of 2002.

  The Review will take a thorough look at all programmes to ensure that the new plans fully reflect the Government's priorities and the scope for greater efficiency and effectiveness in service delivery.

  The Review will include a number of cross-departmental studies, to look systematically at issues that cut across departmental boundaries. The initial cross cutting reviews will cover:

  (a) children at risk: this review will establish the key outcome targets for children's services, including the effectiveness of the current interventions in reducing the risks of young people turning to crime, and identify the main obstacles to meeting those targets.

  (b) public sector labour market: a study of recruitment and retention across the public services. The review will focus on staff requirements in the light of overall labour market trends, the effectiveness of the initiatives already introduced and implications for future policy.

  (c) improving the public space: this review will build on the Prime Minister's work on "liveability", to improve local quality of life including safety, convenience and attractiveness of local streets and amenities.

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  (d) small business support: a review to assess Government services for small business, including information, advice, financial support, ease of access and delivery of service where small businesses need to interact with Government.

  (e) science and research: a review of funding of the UK science base and the effectiveness of Departments' own science and research programmes to ensure that they deliver maximum long-term benefits to the economy and quality of life.

  (f) health inequalities: this study will analyse the impact on health of poverty, employment, education, crime, transport, fuel poverty and related factors, and assess and improve the mechanisms for tackling these problems.

  (g) role of the voluntary sector in public service delivery: a review to analyse the current contribution of the voluntary sector in service delivery, the necessary instruments to improve this contribution, and possibilities for improving the range and quality of services offered by the voluntary sector.

  Further cross cutting work on other subjects will be carried out at a later stage in the Review.

  Climate Change Levy
  Mr. Heathcoat-Amory
  To ask the Chancellor of the Exchequer what plans he has to review the effects of the climate change levy on business. [293]

  Mr. Boateng
  As with all taxes, the climate change levy will be kept under review as part of the normal Budget process.

  Working Families Tax Credit
  Mrs. Anne Campbell
  To ask the Chancellor of the Exchequer what assessment he has made of the impact of Working Families Tax Credit on employment patterns in high cost areas. [466]

  Dawn Primarolo
  Inland Revenue has embarked on a comprehensive programme of evaluation of the impact of the Working Families Tax Credit and the Disabled Persons Tax Credit. The programme of work spans several years and comprises qualitative and quantitative research and analysis. It will be a number of years before the programme of work is completed and such an assessment can be made.

DEPUTY PRIME MINISTER

  Regulatory Impact Assessment
  Mr. Gibb
  To ask the Deputy Prime Minister what plans his Department has to ask the National Audit Office to evaluate the content and use of regulatory impact assessments, including public consultation. [744]

  Mr. Leslie
  I understand that the National Audit Office have already begun a study examining the regulatory impact assessment process. They expect to report later this year.

  Special Advisers
  Mr. Clappison
  To ask the Deputy Prime Minister how many special advisers(a) resigned and (b) remained in office following the announcement of the general election. [381]
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  Mr. Leslie
  Following the announcement of the general election 62 special advisers resigned and 14 remained in post.

  Mr. Clappison
  To ask the Deputy Prime Minister how much severance pay was paid to special advisers following the announcement of the general election; and how much is due to be repaid by special advisers following their reappointment. [382]

  Mr. Leslie
  The rules on severance payments for special advisers are the same as those that have applied under previous Administrations. Under the terms of the Model Contract for Special Advisers, any special adviser who receives severance following the announcement of an election but who is subsequently re-appointed is only entitled to retain severance pay of an amount equivalent to the pay that they would have received during the period of the gap between the two periods of employment.

  Ministers are currently in the process of appointing their special advisers, so it is not possible to determine the overall cost of severance until this process is completed.

HOME DEPARTMENT

  Crime Rates (Surrey)
  Mr. Peter Ainsworth
  To ask the Secretary of State for the Home Department if he will make a statement about levels of(a) violent and (b) other crime in Surrey. [147]

  Mr. Denham
  The table shows recorded violent crime (violence against the person, sexual offences and robbery) and other crime statistics in Surrey for the 12 months to September 2000.

  Offence

  Number

  Violence against the person

  6,594

  Sexual offences

  590

  Robbery

  342

  Burglary

  7,576

  Theft and handling

  22,045

  Fraud and forgery

  4,272

  Criminal damage

  10,189

  Drug offences

  1,727

  Other offences

  844

  Total

  54,179

  The recorded crime statistics for the 12 months to March 2000 show that Surrey had the second lowest number of crimes per 100,000 population in England and Wales. However, a boundary change involving Surrey and Metropolitan police forces took place on 1 April 2000, when Surrey took on some areas from the Metropolitan police. Figures for Surrey before and after that date are therefore not directly comparable. By excluding the boundary effect (i.e. by assuming these areas were policed by the Metropolitan police throughout the period), the increase in overall crime in Surrey in the 12 months to September 2000 compared with the 12 months to September 1999 is an estimated 3 per cent. The Government are committed to reducing all crime, including violent crime, and to tackling the causes of crime, ensuring proper punishment of those who break the law and providing the resources necessary to tackle crime.

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  Although there continues to be an increase in the number of violent crimes recorded by the police, the rate of increase is slowing down and crime overall has fallen under this Government. The British Crime Survey, which is widely accepted as the most authoritative source of information on the real rates of crime, indicates that violent crime has been falling since 1995, and reduced by 4 per cent. between 1997 and 1999, the latest date for which figures are available.

  National Economic Security
  Norman Baker
  To ask the Secretary of State for the Home Department what steps he takes to ensure that responsibility placed on MI5 to protect the economic well-being of the country is not discharged in such a way as to(a) benefit big business at the expense of small business and (b) undermine the rights of pressure groups and individuals to pursue peacefully their political ends. [215]

  Mr. Blunkett
  The Security Service carries out its functions in accordance with the relevant legislation. Section 1(3) of the Security Service Act 1989 requires the Service to safeguard the economic well-being of the United Kingdom against threats posed by the actions or intentions of persons outside the British Islands. Section 2 (2) (b) places a duty on the Director General to ensure that the Service does not take any action to further the interests of any political party.

  Anyone who is aggrieved by anything they believe the Service has done to them or their property may complain to the independent Tribunal (Regulation of Investigatory Powers Act 2000).

  European Public Prosecutor
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will make a statement about the plans for a European Public Prosecutor. [245]

  Mr. Bob Ainsworth
  I refer the hon. Member to the reply given by the previous Minister of State at the Home Office, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), to the hon. Member for West Suffolk (Mr. Spring) on 1 November 2000,Official Report, column 529W.

  Prisoner Costs
  Mr. Bercow
  To ask the Secretary of State for the Home Department what the average cost is of holding a prisoner in(a) male local prisons, (b) male remand centres, (c) open prisons, (d) closed training prisons, (e) open young offender institutions,(f) closed young offender institutions and (g) female establishments; and if he will make a statement. [243]

  Beverley Hughes
  During the financial year 2000–01 the average cost per prisoner place for each of the above categories are listed in the table.

  £

  Category

  Cost per place (cash)

  Category B

  21,674

  Category C

  17,765

  Dispersal

  33,804

  Female closed

  25,123

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  £

  Category

  Cost per place (cash)

  Female local

  30,412

  Female open

  17,399

  Male closed YOI

  23,063

  Young Offender Institution (YOI) Male juvenile

  44,668

  Male local

  25,733

  Male open

  14,733

  Male open YOI

  21,628

  Male remand centre

  35,174

  Total

  22,890

  Figures for cost per place reflect establishment costs only and do not include headquarters overheads. These figures are not comparable with the Prison Service cost per place Key Performance Indicator. The establishments that comprise these functions are categorised by their main role only. Establishments that have more than one role have been placed under the category that represents the primary or predominant function of the establishment. These data will shortly be published in the Prison Service Annual Report and Accounts.

  Marsham Street
  Mr. Bercow
  To ask the Secretary of State for the Home Department (1) if he will make a statement about the Government's plans for the former Department of the Environment buildings at Marsham street; [238]

  (2) what the proposed capacity is of the planned development on the site of the former Department of the Environment buildings at Marsham street. [237]

  Mr. Blunkett
  Proposals to proceed with the relocation of the Home Office, including the Prison Service, to a new development on the site of the former Department of the Environment offices at Marsham street, where outline planning consent exists for a mixed office, residential and commercial development, were announced in July last year. Contract negotiations for developing the Marsham street site as a public-private partnership project are currently in progress with Anne's Gate Property plc, the preferred bidder.

  The City of Westminster resolved in February to grant detailed planning consent subject to completion of a planning agreement. That has been successfully negotiated and the formal agreement was signed earlier this month. Provided detailed contract terms can be agreed between the Home Office and the preferred bidder, a start on demolishing the old Department of the Environment offices is planned for later this year. The new development is intended to house the majority of Home Office and Her Majesty's Prison Service staff currently based in central London.

  Secure Training Places
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will make a statement about his plans to provide additional secure training places; and when he estimates the places will become available for use. [151]

  Beverley Hughes
  The Youth Justice Board for England and Wales commissions and purchases secure accommodation for remanded and sentenced young
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  people. Over the next four years the Youth Justice Board plans to purchase an additional 400 independent sector Secure Training Centre (STC) places to replace Prison Service accommodation.

  Criminal Justice System Reserve
  Mr. Bercow
  To ask the Secretary of State for the Home Department how much of the Criminal Justice System Reserve has been(a) allocated and (b) spent to date; and if he will make a statement about his plans to allocate the reserve in (i) 2002–03 and (ii) 2003–04. [2441]

  Mr. Keith Bradley
  Of the £100 million Criminal Justice System Reserve in 2001–02, £85 million has been allocated to date. Further allocations will be made during the year. Information on spend to date on approved initiatives is not currently available as it is in the process of being collected from the three Criminal Justice System Departments. Future allocations from the Criminal Justice System Reserve require the joint agreement of the Home Secretary, Lord Chancellor and Attorney-General. The approval of the Chief Secretary to the Treasury is also required prior to the release of money from the Reserve. It is expected that bidding guidance for the Criminal Justice System Reserve for 2002–03 and 2003–04 will be issued to the three Criminal Justice System Departments in August 2001.

  Home Detention Curfew Scheme
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will introduce legislation to exclude from the home detention curfew scheme offenders convicted of violence against public servants; how many such offenders have been released on the scheme to date; and if he will make a statement. [242]

  Beverley Hughes
  No. Home Detention Curfew was not intended by Parliament to work in this way. It is a risk-based scheme. The statute lists several groups of prisoner who are ineligible for Home Detention Curfew. All of these are concerned with risk to the public or risk of breaching the curfew. In respect of all other offences, offenders can be released on Home Detention Curfew only if they have passed a rigorous individual risk assessment.

  Assault on a public servant is not a separate category of offence and separate figures are not available.

  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will introduce legislation to ensure that victims are informed when a prisoner is released on the home detention curfew scheme; and if he will make a statement. [226]

  Beverley Hughes
  Provisions in the Criminal Justice and Court Services Act 2000 introduced a statutory duty on local probation boards to consult and inform victims of offenders sentenced to 12 months or more for a sexual or violent offence about the conditions of release. These came into force on 1 April 2001. Prior to a prisoner's release, the victim may opt to make representations about whether the offender should be subject to any licence conditions and to receive information about any conditions which are imposed and are relevant to them.
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  I have no plans to legislate for other victims to be told when prisoners are released on Home Detention Curfew (HDC). All those who are eligible for release on HDC are subject to a thorough risk assessment before HDC is granted, and this includes the nature of their crime, the risk to victims, and the likelihood of re-offending.

  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will introduce legislation to require sentencers to state when passing sentence(a) the existence of and (b) the potential effect on the date of earliest release of the home detention curfew scheme; and if he will make a statement. [225]

  Mr. Keith Bradley
  The Government are committed to ensuring that the implications of sentencing are explained in open court. The then Lord Chief Justice issued a practice direction in January 1998 requiring a court imposing a custodial sentence to explain the practical effect of that sentence for the benefit of the defendant, any victim and members of the public. Although the practice direction was issued before home detention curfew became available, it makes clear that any future changes to early release arrangements should be reflected in the court's explanation. We will consider whether any legislative requirement is necessary in the context of proposals emerging from the review of the Sentencing Framework.

  Miss Widdecombe
  To ask the Secretary of State for the Home Department how many offenders he estimates will be released on the home detention curfew scheme over each of the next five years. [222]

  Beverley Hughes
  The number of prisoners released on Home Detention Curfew over the next five years will depend upon how many prisoners are eligible and of these how many pass the very rigorous risk assessment.

  Miss Widdecombe
  To ask the Secretary of State for the Home Department if he will make a statement on the home detention curfew scheme. [221]

  Beverley Hughes
  Home Office Research Study 222, "Electronic Monitoring of Released Prisoners: an evaluation of the Home Detention Curfew (HDC Scheme)", published March 2001, examined in detail the operation of the HDC scheme in its first 16 months of operation. It noted that the scheme was one of the largest electronic monitoring schemes in the world. Among its findings were that:The scheme had helped to provide prisoners with a managed transition between custody and living in the community.
  The risk assessment process had worked well, with only 9 per cent. of those released on HDC re-offending within six months of release, compared with 40 per cent. of those not granted HDC.
  HDC had generated large savings (£36.7 million in the first year) when compared with the cost of keeping curfewees in prison.

  The report concluded that,
  "the Home Detention Curfew scheme has established that a large-scale electronic monitoring programme involving several different agencies can be operated successfully and is consistent with an approach to release decisions which puts assessment of risk at the centre".
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  I am satisfied that HDC has been a success and has justified the support given to it by the Government and Opposition members of the Home Affairs Select Committee, when commenting on it in 1998 (Third Report: Alternatives to Prison Sentences, HC 486).

  Miss Widdecombe
  To ask the Secretary of State for the Home Department if he will list, for the period between the commencement of the home detention curfew scheme and 31 May inclusive(a) the number of prisoners released on the scheme, (b) the number of prisoners convicted of each offence who were released on the scheme, with a breakdown of the offences committed, including offences committed by prisoners normally classified under the categories (i) other homicide and attempted homicide, (ii) other violence against the person, (iii) drug offences, (iv) assaults and (v) other offences, including a breakdown of the prisoners normally classified in the sub-category of other offences called other offences, (c) the average sentence (A) received and (B) served, and the average period spent on the scheme, in respect of each offence, (d) the number of prisoners released on the scheme, with a breakdown of the offences committed, who (1) breached the conditions of the curfew, (2) disappeared and were recaptured, (3) disappeared and remain unlawfully at large and (4) had their licences revoked with reasons, (e) the specific offences committed by prisoners released on the scheme while on the scheme, including offences committed, by prisoners who committed more than one offence and (f) the specific offences committed by prisoners released on the scheme who committed a further offence while on the scheme that was similar in character to that for which they were originally convicted, including offences committed by prisoners who committed more than one offence; and if he will make a statement [223]

  Beverley Hughes
  I shall write to the right hon. Member and place a copy of the letter in the Library.

  Departmental Staff
  Mr. Bercow
  To ask the Secretary of State for the Home Department how many staff there are in his Department, broken down by directorate. [239]

  Mr. Blunkett
  The available information is set out as follows:

  These figures take account of staff changes arising from the recent changes in the machinery of government. Some minor adjustments to the staffing numbers may arise as a result of the final arrangements agreed between my Department and the other Departments involved. Figures for the non-Agency Home Office and the Forensic Science Service have been taken from the central personnel database. Figures for the United Kingdom Passport Agency and Prison Service have been provided by their personnel units.

  Home Office

  Staff1

  Non-Agency Home Office

  Communications Directorate

  144

  Constitutional and Community Policy Directorate

  185

  Corporate Development and Services Group

  795

  Criminal Policy Group

  372

  Immigration and Nationality Directorate

  9,651

  Legal Adviser's Branch

  59

  Ministerial Secretariat

  81

  Organised and International Crime Directorate

  175

  Planning Finance and Performance Group

  197

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  Home Office

  Staff1

  Policing and Crime Reduction

  1,125

  Research Development and Statistics

  314

  Staff on loans or secondments

  126

  Home Office Agencies

  —

  Forensic Science Service

  2,351

  United Kingdom Passport Agency2

  2,778

  Prison Service3

  43,897

  Total

  62,250

  1Permanent non-industrial staff, being paid as at 22 June 2001

  2Includes 100 staff at the Criminal Records Bureau

  3'Staff in post at 1 June 2001.

  EU Meetings (Ministerial Attendance)
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will list the dates of the European Union meetings attended by Ministers in his Department from 1 January onwards and the issues that were discussed at each meeting. [150]

  Mr. Blunkett
  There have been two formal Justice and Home Affairs (JHA) Councils and one informal JHA Council since 1 January. All three Council were attended by my right hon. Friend the Member for Blackburn (Mr. Straw), the then Home Secretary, and my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche).

  The informal JHA Council took place on 8–9 February 2001. The formal JHA Councils took place on 15–16 March and 28–29 May. I am placing the agendas of the formal council meetings in the Library. The Government reported the outcome of these meetings to the European Scrutiny Committee in accordance with the usual arrangements. The issues discussed at the informal Council were: a review of progress on implementing the Tampere European Council Conclusions; JHA aspects of EU enlargement; illegal immigration via the Western Balkans; EU Common Asylum policy; trafficking in human beings, including women and children; and mutual recognition of civil law decisions.

  In addition, my right hon. Friend the Member for Brent, South (Mr. Boateng) attended a Youth Council meeting on 28 May to discuss the proposal for a Commission White Paper on youth issues.

  Police Numbers (Kent)
  Mr. Fallon
  To ask the Secretary of State for the Home Department what the police establishment is for the West Kent and North Kent police areas; and how many officers are serving in these areas. [266]

  Mr. Denham
  The powers of the Home Secretary to set police establishment levels for each force were removed under the Police and Magistrates Courts Act 1994. It is for the chief officer to determine staffing levels within the overall resources available.

  I have been informed by the Chief Constable that the establishment level set by the force, and the actual numbers of officers serving in West Kent and North Kent police are as in the table.

  North Kent

  West Kent

  Force establishment

  352

  250

  Actual

  349

  254

  Proceeds of Crime Bill
  Mr. Hawkins
  To ask the Secretary of State for the Home Department if he will place in the Library the responses to his Department's consultation on the draft Proceeds of Crime Bill (Cm 5066). [194]

  Mr. Bob Ainsworth
  Yes, I shall do so shortly, except where respondents have asked for their comments to be treated in confidence.

  Victims Charter
  Mr. Hawkins
  To ask the Secretary of State for the Home Department if he will place in the Library the responses to his Department's consultation, 'A Review of the Victims Charter'. [191]

  Mr. Keith Bradley
  Yes. Copies of the responses will be placed in the Library as soon as possible, except where respondents have specifically requested that their contribution should be treated confidentially.

  Pitch Invasions
  Mr. Hawkins
  To ask the Secretary of State for the Home Department (1) how many persons have been(a) arrested and (b) charged by West Yorkshire police in connection with the pitch invasion at Headingley Cricket Ground on 17 June; and if he will make a statement; [762]

  (2) how many persons have been (a) arrested and(b)charged by Nottinghamshire police in connection with offences that took place at Trent Bridge Cricket Ground on 20 June; and if he will make a statement. [760]

  Mr. Denham
  West Yorkshire police arrested five people and charged two for public order offences and one for assault in connection with the match at Headingley. Inquiries are continuing in respect of the attack on a steward. Nottinghamshire police arrested six people and charged four for public order offences in connection with the match at Trent Bridge.

  Extradition
  Mr. Hawkins
  To ask the Secretary of State for the Home Department if he will place in the Library the responses to his Department's consultation, 'The Law on Extradition: A Review'. [195]

  Mr. Bob Ainsworth
  I intend to provide the House with the disclosable results of the consultation along with my Department's response later in the year.

  Corruption (Law Reform)
  Mr. Hawkins
  To ask the Secretary of State for the Home Department if he will place in the Library the responses to his Department's consultation on reform of the criminal law of corruption in England and Wales (Cm 4759). [196]

  Mr. Keith Bradley
  Full responses have been placed in the Library and will be held there for six months.

  Best Value
  Mr. Heald
  To ask the Secretary of State for the Home Department what representations he has received from 48W
  police forces about Best Value Performance Indicator 131; for what reason the indicator was retained for 2001–02; and if he will abolish it in 2002–03. [153]

  Mr. Denham
  Best Value Performance Indicator (BVPI) 131 measures the throughput and quality of files from the police to the Crown Prosecution Service (CPS).

  BVPI 131 was included in the suite for 2000–01 and 2001–02 to measure the police contribution to timely and effective processing of prosecution files.

  Initial consultation with partners on the BVPIs for 2002–03 has recently ended, and the Association of Police Authorities (APA) and the Association of Chief Police Officers of England, Wales and Northern Ireland (ACPO) have made various representations for amendments, deletions and additions to the present BVPI suite. No decision has yet been taken on any of the BVPI or 2002–03—these will be the subject of a consultation document which is likely to be issued shortly.

  Police Standards Unit
  Mr. Heald
  To ask the Secretary of State for the Home Department if he will make a statement about his proposal for a police standards unit; and what powers the unit will have to issue directions to police forces about operational matters. [154]

  Mr. Denham
  The Standards Unit will drive up performance and ensure that best practice is applied throughout England and Wales. It will draw on the work of Her Majesty's Inspectorate of Constabulary and engage directly with police at the local level. Plans for the Unit are being worked up as a priority. Operational matters will remain the responsibility of Chief Officers.

  Police Pensions
  Mr. Heald
  To ask the Secretary of State for the Home Department if he will make a statement about his plans for reform of police pension arrangements. [159]

  Mr. Denham
  I will be considering a range of issues relating to police pension arrangements in the coming months.

  Detective Expertise
  Mr. Heald
  To ask the Secretary of State for the Home Department if he will make a statement about his plans to allow specialist detective expertise to be built up using outside experts; what types of detective work this will apply to; and what types of outside experts will be employed. [219]

  Mr. Denham
  "Criminal Justice: The Way Ahead", presented to Parliament in February by my right hon. Friend the then Home Secretary, said that where there are gaps which cannot be filled by experience or potential within the service, then there should be opportunities to recruit people with relevant specialist skills in other fields whether from the private or public sector. We are discussing with the police service what the need is and how best to meet it.

  Criminal Justice and Police Act
  Mr. Heald
  To ask the Secretary of State for the Home Department if he will bring into force sections(a) 38,

  49W
  (b) 46 and 47 and (c) 71 and 72 of the Criminal Justice and Police Act 2001 with immediate effect; and if he will make a statement about his plans to bring into force those parts of the Act which have not yet been brought into force. [161]

  Mr. Denham
  We plan to bring section 46 into force on 1 September, and sections 38, 71 and 72 on 1 October. Prior to implementation we shall issue guidance to the police, courts and other agencies who will be involved in the implementation of those provisions. We will announce our plans for implementation of other parts of the Act in due course.

  Private Security Personnel
  Mr. Heald
  To ask the Secretary of State for the Home Department if he will make a statement on the accountability of private security personnel to(a) their employers and (b) the relevant chief officer of police, in relation to paragraph 3.159 of "Criminal Justice: The Way Ahead" (Cm 5074); and if he will make a statement. [160]

  Mr. Denham
  Private security personnel contributing to public safety remain accountable to their employers. They are not directly managed by, nor accountable to, the relevant chief police officer, although there is scope for their activities to be co-ordinated with police work.

  Police Working Conditions
  Mr. Heald
  To ask the Secretary of State for the Home Department if he will make a statement about his proposals for reform of police working conditions. [156]

  Mr. Denham
  The Government's strategy for reforming the criminal justice system is set out in "Criminal Justice: The Way Ahead", presented to Parliament in February by my right hon. Friend the then Home Secretary. This makes reference to possible changes to police working conditions.

  We are currently discussing with the police service how to tackle these and other issues.

  Press Officers
  Mr. Lidington
  To ask the Secretary of State for the Home Department how many persons are employed in his Department's press office; at what grades; and what the equivalent numbers were on 1 May 1997. [224]

  Mr. Blunkett
  There are currently 25 Press Officers in the Home Office Press Office—five Senior Information Officers, 18 Information Officers, two Assistant Information Officers. In addition there is one Chief Immigration Officer on secondment and support staff comprising one Higher Executive Officer, one Administrative Officer and one Administrative Assistant.

  On 1 May 1997 there were three Senior Information Officers, 10 Information Officers (two part-time), one Assistant Information Officer, a Higher Executive Officer on secondment, one Executive Officer, one Administrative Officer and two Administrative Assistants.

  The increase in the number of press office staff reflects the increase in the number of calls to the press office over recent years and a commitment to openness and
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  accessibility in providing accountability to the public for the work of the Home Office and to the provision of the services of the Department's press office.

  Miss Widdecombe
  To ask the Secretary of State for the Home Department what plans he has to reduce the size of his Department's press office; and if he will make a statement. [248]

  Mr. Blunkett
  There are no plans to reduce the size of the Home Office Press Office.

  While some responsibilities have transferred from the Home Office to a number of other Departments, the Home Office has taken on responsibility for work permits, driving forward the agenda on the United Kingdom Anti-drugs Co-ordinating Unit and for extending the work of citizenship and active communities.

  Asylum Seekers
  Mr. Lidington
  To ask the Secretary of State for the Home Department (1) when he expects the review of the voucher system of asylum support to be completed; and when he will report its conclusions to the House; [170]

  (2) if the hon. Member for Hornsey and Wood Green (Mrs. Roche), completed her review of the voucher system of asylum support prior to 8 June; and if he will make a statement about the progress of the review. [171]

  Angela Eagle
  My noble Friend Lord Rooker and I have taken over responsibility for the review of the operation of the voucher scheme. We are considering the evidence and will announce our conclusions in due course.

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many complaints have been received by NASS in respect of sub-standard accommodation provided for asylum seekers since April 2000; and if he will make a statement. [179]

  Angela Eagle
  The Housing Management Team of the National Asylum Support Service (NASS) has received 253 complaints regarding a range of issues in relation to both housing conditions and management. The complaints are from a range of sources including asylum seekers themselves or their legal representatives as well as voluntary and public sector organisations acting on their behalf.

  All complaints received by the Housing Management Team are registered, investigated and monitored. The team liaises as necessary with other agencies such as local authorities and refugee organisations in dealing with complaints.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what his policy is on the use of detention for asylum seekers whose appeals have been rejected. [165]

  Angela Eagle
  Failed asylum seekers whose appeals have been rejected may be detained under the Immigration Act 1971 pending their removal from the United Kingdom. The decision as to whether or not detention should be authorised in such circumstances will be based on the individual merits of the case concerned. Reasonable alternatives to detention will be considered before it is authorised.
  51W
  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will list for the period since 1 January(a) the number of asylum cases in which an appeal was lodged with the Home Office and (b) the number of asylum cases in which the Home Office passed appeal papers to the Independent Appellate Authority. [163]

  Angela Eagle
  The information is given in the table. This information is also published monthly on the Department's website at www.homeoffice.gov.uk/rds/immigration1.html.

  Appeals received by the Home Office 1,2

  Appeals sent to the IAA1

  2001

  January2

  8,590

  3,500

  February2

  10,405

  3,630

  March2

  10,925

  4,180

  April3

  47,700

  3,470

  May3

  48,000

  4,250

  1 Provisional figures rounded to the nearest five. Numbers might not add up due to rounding.

  2 Based on manual counts of data received in Appeals Support Section of the Home Office. Some cases are received elsewhere in the Home Office before being forwarded to ASS and so may be counted in a later month than when they arrived in the Home Office. These data also include a number of duplicates.

  3Based on electronic sources.

  4Estimate. Figures rounded to the nearest 100, and subject to later revision.

  Mr. Lidington
  To ask the Secretary of State for the Home Department how many unaccompanied minors who are classified as asylum seekers are under the protection of local authorities; and if he will make a statement. [177]

  Angela Eagle
  Figures for January 2001 show that the Home Office is reimbursing local authorities for the costs incurred in supporting 6,078 unaccompanied minors classified as asylum seekers.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what action has been taken by NASS in response to complaints about the quality of sub-contracted accommodation provided for asylum seekers in Liverpool; and if he will make a statement. [169]

  Angela Eagle
  The National Asylum Support Service (NASS) investigates all complaints about the quality of sub-standard accommodation. Where faults with the accommodation have been identified the accommodation provider has been required to rectify them.

  As a result of its inspection programme NASS has required providers in Liverpool to remove approximately 60 bedspaces from use due to failure to meet the requirements of the NASS contract specification.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what his target is for the removal of failed asylum applicants from the United Kingdom; and what measures he plans to implement to secure that objective. [166]

  Angela Eagle
  The target for the current financial year is to remove 30,000 failed asylum seekers including their dependants.
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  We are taking a range of measures, including a substantial increase in the number of caseworkers and Immigration Officers engaged on removal work, expansion of the detention estate, increased use of charter flights, creation of additional immigration arrest teams and development of a network of reporting centres, to support delivery of the target.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what estimate he has made of the number of failed asylum seekers at large in the United Kingdom; and if he will make a statement. [173]

  Angela Eagle
  It is not possible to give an official estimate of the number of failed asylum seekers remaining in the United Kingdom.

  Mr. Lidington
  To ask the Secretary of State for the Home Department what the procedure is governing the inspection of properties provided by private landlords to NASS for the accommodation of asylum seekers. [168]

  Angela Eagle
  The National Asylum Support Service (NASS) has adopted a twin track approach towards the inspection of property. The main reason for this is to ensure a focus on housing management and support in addition to technical housing conditions.

  Firstly, NASS has developed a Housing Management inspection function that aims to monitor the performance of accommodation providers and act upon any problems that inspections highlight in relation to management and support.

  In terms of the condition of accommodation and, in particular, health and safety issues, NASS has appointed Contract managers to work in tandem with the Housing Management function to ensure a comprehensive approach towards both housing conditions and management.

  Lord Birt
  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will make a statement about the role of Lord Birt as the Government's adviser on crime. [216]

  Mr. Blunkett
  Lord Birt's work has ranged widely over the criminal justice field. His advice, research and analysis are reflected in the Government's strategy document, "Criminal Justice: The Way Ahead" (Cm 5074).

  Immigration Officers (French Ports)
  Mr. Lidington
  To ask the Secretary of State for the Home Department what discussions he has had with the French authorities about the reduction in immigration officers at French ports; what representations he has made; and if he will make a statement. [174]

  Angela Eagle
  The withdrawal of immigration control authorities from small ports in the north of France was discussed at the United Kingdom-French summit at Cahors in February.

  At the summit French Ministers gave an assurance that they were not reducing immigration controls but simply rationalising the roles of the various border control agencies. Where the PAF (the French Border Police) are withdrawn from a port the Douane will undertake immigration functions.
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  United Kingdom officials are in regular contact with their French counterparts and are monitoring the situation closely.

  Immigration and Nationality Directorate
  Mr. Lidington
  To ask the Secretary of State for the Home Department if he will make a statement about the recent incident at the Immigration and Nationality Directorate when an asylum seeker was admitted to the directorate while in possession of a loaded firearm. [155]

  Angela Eagle
  A man has been charged with a number of offences relating to the possession of a firearm and ammunition and an immigration offence. He appeared at Croydon magistates court on 15 June and was remanded in custody until 25 June to appear at the Central Criminal Court. I cannot make any further comment for legal reasons.

  Custody-plus Sentences
  Mr. Lidington
  To ask the Secretary of State for the Home Department how many offenders would serve shorter terms in prison than at present under his proposals for custody-plus sentences; and if he will make a statement. [217]

  Mr. Keith Bradley
  I have received John Halliday's report of a review of the sentencing framework for England and Wales, which I intend to publish shortly. Once the report is published there will be a period of consultation and I will want to consider carefully which "Halliday" proposals should be taken forward.

  Drugs
  Mr. Lilley
  To ask the Secretary of State for the Home Department if he will publish a breakdown of expenditure on the Government drugs strategy between spending on(a) courts, (b) prisons, (c) police, (d) the NHS, (e) social services and (f) other departments. [737]

  Mr. Denham
  The Government have made available substantial resources for directly tackling the problem of drug misuse. These are planned to increase from £700 million in 2000–01 to over £1 billion in 2003–04. Information held centrally relates to the four main aims of the national anti-drugs strategy.

  Analyses by Department or function are difficult to calculate because drugs spending in many cases forms part of wider expenditure streams or functions. This is compounded by the increased use of pooled budgets, designed to maximise effective, flexible use of resources on the ground.

  Details of the planned expenditure for 2001–02 to 2003–04 are set out in the tables.
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  Key Expenditure Figures

  Spending Review 2000—Resources directly allocated for tackling drug abuse (by main aim of the national anti-drugs strategy)1

  £million

  2000–012

  2001–02

  2002–03

  2003–04

  Drug Treatment3

  234

  328

  377

  401

  Protecting Young People

  63

  90

  97

  120

  Safeguarding

  Communities

  45

  79

  81

  95

  Reducing Availability4

  353

  373

  376

  380

  Total

  695

  870

  931

  996

  1Excludes devolved spending

  2Estimates of baseline spend in Departmental Expenditure Limits

  3Comprises mainstream spending by Department of Health

  4United Kingdom spend for 2001–02 to 2003–04 based on projected anti-drugs allocation from anti-Organised Crime shared funding

  Spending Review 2000—New resources provided for related programmes1

  £million

  2001–02

  2002–03

  2003–04

  Criminal Justice System

  1,420

  2,290

  2,720

  Neighbourhood Renewal Fund

  200

  300

  400

  Children's Fund

  100

  150

  200

  Connexions2

  77

  177

  3—

  1Excludes devolved spending

  2This was added to existing provision for the careers service. Funding will go to the careers service in areas where connexions is not yet running

  3Provision for 2003–04 will be announced in due course

  Budget 2001—New resources for anti-drugs measures1

  £million

  2001–02

  2002–03

  2003–04

  Strengthening communities

  50

  70

  100

  Extending drug testing in the Criminal Justice System

  0

  20

  30

  Providing more help to find jobs

  5

  15

  20

  Strengthening Drug Action Teams

  5

  5

  5

  Expanding Positive Futures

  2

  3

  0

  1Excludes devolved spending

  Ports Policing
  Andrew Mackinlay
  To ask the Secretary of State for the Home Department what account will be taken of the results of the review of ports policing being conducted by the Department of Transport, Local Government and the Regions in preparation of the proposed Police Bill; and if he will make a statement. [421]

  Mr. Denham
  The review of ports policing presently being conducted by the Department of Transport, Local Government and the Regions is due to report its findings in October 2001. Until the recommendations of the Review are published I am unable to comment on whether they will impact on preparation of the proposed Police Bill.

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby.
Several Lords—Took the Oath or Affirmed.

Freedom of Information Act: Progress on Implementation
Lord McNallyasked Her Majesty's Government:
When they plan to introduce the provisions of the Freedom of Information Act 2000 into Whitehall departments and what training programme is in place to implement that timetable.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, the noble Lord's interest in freedom of information is well known. He proposed successful amendments to the Bill in key areas. Responsibility for this and other related constitutional areas passed on 8th June to my department from the Home Office, from which 15 officials covering this area are in the process of being integrated into my department. The Act received Royal Assent on 30th November 2000 and it must be fully implemented by 30th November 2005. As yet there is no timetable other than that outer date. I have a statutory duty to report to Parliament on progress towards implementation by 30th November 2001.
I welcome this opportunity to make an interim statement to your Lordships. Critical to the successful implementation of the Act is the Office of Information Commissioner, which was created on 30th January and subsumes within it the post of Data Protection Commissioner. The staff in her office, currently about 150, associated with data protection will have to expand over time by about another 150 to manage the Freedom of Information Act. Recruitment of the right people in these numbers with experience of how the public service operates and with the necessary investigative skills will take time. A programme of awareness training throughout central government began in April and will continue into the autumn. However, these are early days, and the noble Lord will recall that Rome was not built in a day.
Lord McNally: My Lords, I should have thought that this Government would steer clear of construction projects. Although the Act is only a few months old, the pledge is more than 20 years old. Does the Lord Chancellor not agree that that is a lamentable rate of progress? His is the third department in four years to take responsibility for freedom of information. The Home Office had it removed when it had a timetable agreed in Whitehall but that was vetoed in No. 10 Downing Street. Is not the problem, not the culture of secrecy in Whitehall, to which the committee of the
120
noble and learned Lord, Lord Archer, referred, but a culture of secrecy at the very heart of government? As the Lord Chancellor now has responsibility for freedom of information, will he give, as well as that interim report, a firm undertaking that he will make his stewardship not a damage limitation exercise but a real commitment to bring freedom of information to government?
The Lord Chancellor: My Lords, I have to say that the noble Lord has departed a little from his normal standards of fairness. The fact is that this Government have brought forward devolution legislation, which is now in place. They have also brought forward the Human Rights Act, which is bedding down with great success. Furthermore, the Government have brought forward legislation covering freedom of information. I can tell the noble Lord that the Government intend to implement the legislation, so far as is practicable, well within the statutory five years.
However, I shall draw a parallel with the two-year delay in the implementation of the Human Rights Act. Those two years were occupied with intensive preparation across Whitehall, as well as with training of the judiciary, extending to 30,500 lay magistrates. Opponents of the Act had predicted absurd decisions and chaos in the courts, but in fact the implementation of the Act has been a triumph and the prophets of doom have been comprehensively discredited. But now we must take even greater care, over a longer period, with the implementation of freedom of information legislation.
There are two basic reasons. First, the Act has the widest extension, covering 50,000-plus public bodies. We could have made the Act prospective, but we deliberately made it retrospective, covering past papers as well as future papers. Secondly, the commissioner will have to approve publication schemes for the 50,000-plus public authorities covered. A publication scheme is a statement of the type of information that the authority itself will publish proactively. These schemes are intended to he a driving force for openness. But all this will take time in order to succeed.
Baroness Goudie: My Lords—
Lord Campbell of Alloway: My Lords—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, perhaps I may suggest that we take the first question from this side of the House, followed by the noble Lord, Lord Campbell of Alloway.
Baroness Goudie: My Lords, is the noble and learned Lord aware that there is a difference of opinion regarding the implementation of the Act; namely, whether it should be with a "big bang" or area by area? Can he tell the House which approach is likely to be adopted?
The Lord Chancellor: My Lords, I am familiar with that debate. Those who are impatient for implementation instinctively will favour the "big bang" approach, while those who are in the box marked "more cautious"—where I place myself—favour the area-by-area approach. So many bodies are to be covered that I do not think that a "big bang" approach is practicable. However, I do think that approaching it area by area is practicable. In the Republic of Ireland, implementation has been staged by the type of public authority. One of the most immediate tasks facing the Information Commissioner is to provide guidance as regards her expectations for publication schemes and to make arrangements to pilot such schemes.
I can identify to noble Lords five public authorities which are likely to participate in the pilot schemes this year. I do not believe that they have yet been publicly identified. They are the Ministry of Defence, the Department for International Development, the Public Record Office, the Health and Safety Executive, and the Medicines Control Agency. However, others may well be added to the list.
Lord Campbell of Alloway: My Lords, I apologise to the noble Baroness. Perhaps I may ask the noble and learned Lord whether the Government are giving any consideration to freedom of information on the Internet.
The Lord Chancellor: My Lords, the Freedom of Information Act is concerned primarily with access to information held by public authorities. One of the great merits of the Act is that it is fully retrospective. For that reason, much of the information held will not be stored electronically. However, in Section 8 the Act provides that an application for information may be received by electronic means. Furthermore, Section 11 provides that an applicant may express a preference as regards how he or she will receive the information sought. The information may be sought in an electronic form and, if it is reasonable to do so, the public authority will provide the information in that form. The Information Commissioner will be able to adjudicate on issues of reasonableness in any case where there is a dispute between the public authority and an applicant.

General Practitioners: New Contract Negotiations
2.49 p.m.
Lord Campbell of Croyasked Her Majesty's Government:
What arrangements they are making to conclude new contracts with general practitioners working in the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, the NHS Plan commits us to introducing a new and modernised GP contract by 2004. The General
122
Practitioners Committee of the British Medical Association shares this aim and would prefer to achieve the change earlier. We are happy to work with the committee to try to secure this outcome.
Lord Campbell of Croy: My Lords, I thank the noble Lord for that reply. Is he aware that, in the recent ballot of GPs held by the BMA asking whether practitioners would resign if acceptable changes in their contracts were not made, some 56 per cent of all the GPs in Great Britain responded by saying "Yes"? An officer of the BMA has commented that this demonstrates the depth of GPs' disillusionment. Does the noble Lord agree that these doctors are under intense pressure? Will the Government seek urgently to improve their situation?
Lord Hunt of Kings Heath: My Lords, we are certainly prepared to meet with the BMA at an early stage to discuss the negotiations over a new contract. I agree that GPs are under considerable pressure. They are the front line of NHS services. Primary care is a major load. We must do everything we can to ensure that GPs and their staff are able to meet the growing pressures upon them. That is why the Government have increased the number of medical education places. We want more people working as general practitioners, and that is why we will invest a considerable amount of money in improving the facilities and premises of GPs and encourage GPs to look at ways of improving their working practices.
Lord Walton of Detchant: My Lords, does the Minister agree that worsening morale among general practitioners within the National Health Service has led to an unusually large number of them seeking early retirement from the NHS? In the light of those findings, does he accept that the matter of a new contract is—as the noble Lord, Lord Campbell of Croy, said—of great urgency? By the Government's own admission, 10,000 additional GPs are needed to provide a proper standard of primary care within the NHS. What action are the Government taking to retain doctors and to recruit new general practitioners?
Lord Hunt of Kings Heath: My Lords, I agree that we must do everything we can to recruit more GPs, for example, through the increase in the number of medical training places that we have established and through retaining GPs for as long as they wish to work within the National Health Service. The noble Lord will know that we have announced a number of incentive schemes designed to encourage GPs to not retire early but to stay with the NHS for as long as possible. Through a combination of measures—increasing the number of GPs, increasing the number of other primary care staff working with GPs and ensuring that the facilities in which they work are of a high quality—together with negotiations over the new contract, I am confident that we will increase the number of working GPs and increase their morale.
Lord Clement-Jones: My Lords, I congratulate the Minister on his return to the health hot seat, which

123
may become hotter over the next few years. As to the question raised by the noble Lord, Lord Walton of Detchant, on the issue of the recruitment of doctors to general practice, in the general election the Government promised an additional 2,000 general practitioners over the next four years. However, the BMA estimates the number required to be 10,000. There is a big disparity between those two figures. Will the Minister undertake to review, as a matter of urgency, the numbers required to enter general practice in order to ease the workload on general practitioners, which is one of the key problems?
Lord Hunt of Kings Heath: My Lords, I thank the noble Lord for the welcome he gave to my continuation in post. Perhaps I may reciprocate: I hope that he, too, retains his position in opposition on the Liberal Democrat Front Bench. I should make it clear that the 2,000 figure is a floor—in other words, it is the minimum we want to achieve. Of course we would like to have even more GPs working for the National Health Service. A primary care workforce review is in being at the moment. As a result, I hope that we will see many more people coming to work within the primary care field.
Lord Marsh: My Lords, does the noble Lord agree that if GPs retire in this way, almost certainly a high proportion of them will go into the private sector? Would it not be a good place to start a joint NHS/private sector experiment in the GP field?
Lord Hunt of Kings Heath: No, my Lords, I do not. G P services will always be a core National Health Service provision. That is what the public and the Government want. We are pursuing the right path by ensuring that the new contract rewards quality and outcome of treatment as much as quantity of treatment; by ensuring that we increase the number of GPs; by ensuring that their working conditions are improved; and, by increasing the numbers of other members of the primary care team, ensuring that we give GPs the confidence to remain with the National Health Service. The negotiations with the GPC are clearly crucial and we are committed to early meetings with the BMA on the issue.
Baroness Uddin: My Lords, can my noble friend tell the House whether these consultations will include patient representatives? Can he further say what is the timeframe for concluding the negotiations?
Lord Hunt of Kings Heath: My Lords, we have set no timeframe for concluding the consultations. Under the NHS Plan we wish to see implementation by 2004. So far as concerns the voices of patients' representatives, it is a consistent feature of this Government's approach to the NHS that we seek the views of patient groups and other organisations representing the public at both national and local level.
Baroness Gardner of Parkes: My Lords, can the Minister tell the House what effect NHS Direct has
124
had? We were told that it would take quite a burden off general practitioners. Has it done so, or has it added to their burden?
Lord Hunt of Kings Heath: My Lords, the interim reports that we have received from the evaluation of NHS Direct show that it has been associated with halting an upward trend in the demand for out-of-hours general practice. In a number of areas, local GPs have asked NHS Direct to act as the first point of contact for patients seeking, for instance, medical help out of hours. In addition, pilot schemes in one or two parts of the country have encouraged the public, when ringing NHS Direct, to go for advice to their local pharmacist where that is appropriate. Community pharmacists have an enormously enhanced role to play in giving advice to the public where appropriate. I am sure that that is one way in which we can relieve the load on general practitioners.

Haven Ports: Rail Links
2.57 p.m.
Lord Bridgesasked Her Majesty's Government:
What plans they have to improve rail communications with the Haven Ports following the announcement that Hutcheson Whampoa propose to increase capacity at Felixstowe and to create a new cargo facility at Harwich.
The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): My Lords, the amount of freight moved by rail has grown steadily over the period of this Government. Our 10-year plan for transport reinforces our commitment to ensure that that growth continues.
We have established the Strategic Rail Authority to implement detailed plans for rail freight. The authority published its first freight strategy in May. This includes plans for delivering a major programme of improvements to rail links to major ports, such as Felixstowe.
Lord Bridges: My Lords, I thank the noble and learned Lord for that reply. I welcome him to his new role. I hope that it will be less troublesome—and perhaps of a different shape—than his other principal responsibility.
As to the matter in hand, perhaps I may ask the noble and learned Lord to bear in mind two considerations. First, that the increase in the number of containers proposed in the Haven ports is considerable. At Felixstowe there is at present a capacity of 2.1 million units, which is to be increased to 3.5 million units—that is, an increase of 1.4 million units. At Harwich, on the other side of the river, there is no special container facility at present but one for 1.7 million units is to be established. Thus the throughput of the estuary will be increased by 3.1 million units—that is, from 2.1 mill ion units at

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present to 5.2 million units in the future—an enormous increase which the local transport network is quite unable to handle.
The second consideration is that the timetable for considering these matters is entirely different between the railways and the ports. Does the noble and learned Lord agree that, if we are to believe in an integrated transport policy, it is very important that the planning applications for the ports and the work needed on the railway network are considered at the same time and run in parallel? Otherwise we will not have an integrated transport policy in East Anglia. The only means of handling these extra units would be to move them by road. If the noble and learned Lord wants to promote a social revolution in East Anglia, this would be quite a good way of setting about it.
Lord Falconer of Thoroton: My Lords, I thank the noble Lord for his warm welcome. I should point out that I still retain my previous responsibility, which I am very proud to do.
The end of the noble Lord's supplementary question was lost in the widespread approbation for its quality and I did not hear it. However, let me make two points in relation to the question. First, I entirely agree with the noble Lord's proposition that there should be an integrated transport strategy. That is what the Government have produced. Secondly, I take note of the noble Lord's detailed point and I shall deal with it by writing to him.
Lord Berkeley: My Lords, I declare an interest as chairman of the Rail Freight Group. Is my noble and learned friend aware that, uniquely among the major ports in this country, Felixstowe Port charges an extra £40 for freight containers that go by rail? Does my noble and learned friend agree that that is not quite in line with the transport strategy that he has outlined? Will he suggest to Hutcheson Whampoa that it should come into line and charge the same for rail containers as it does for those that go by road? I am sure that that would lead to the growth in rail freight that everyone wants.
Lord Falconer of Thoroton: My Lords, I am aware of that; the noble Lord pointed it out to me approximately five minutes before I entered the Chamber. Hutcheson Whampoa is a private contractor and any charges are a matter for it to decide. The noble Lord will know the structures that are in place to deal with allegations of monopoly abuse. I am not saying that there is any abuse in this case, but those are the places to take up these particular points.
Lord Bradshaw: My Lords, in praising the Question, perhaps I may say that I shall remain a member of the Strategic Rail Authority until the end of this week, although this will continue to be a subject for debate. In reference to the use of monopoly powers, the provision of good rail facilities to East Anglia requires a new railway line across the country towards
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Birmingham and the West Coast Main Line. Have the Government given any consideration to how this can be obtained without a huge ransom being paid to Railtrack, which is in a monopoly position as regards the provision of such facilities?
Lord Falconer of Thoroton: My Lords, I agree with the proposition that it is important that there should be an upgrade in the Felixstowe-Nuneaton rail freight line in order to increase capacity. Work is already being undertaken in relation to that. A substantial feasibility and project definition work study has been completed. Railtrack expects to deliver project cost estimates by the autumn, and a project development group has been formed to direct progress. We expect a gauge upgrade to enable nine-foot six-inch containers to be ready by 2005, with additional capacity by 2008. I am sure that the processes by which this matter will be examined will seek to ensure that the Government and the nation receive value for money.
Lord Phillips of Sudbury: My Lords, the Minister has spoken of hopes with regard to planning in the East Anglian region, which is already snarled up. Will he undertake to ensure that there is no expansion of the port at Felixstowe until the facilities are in place to take the extra traffic?
Lord Falconer of Thoroton: My Lords, a number of special applications are being made in relation to Felixstowe. It would be wrong for me to comment at this stage on the detail of those applications. It is a matter for the planning process.

Energy Policy
3.2 p.m.
Lord Ezraasked Her Majesty's Government:
Whether they are considering carrying out a review of energy policy.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, an announcement about a review will be made this afternoon by the Prime Minister. I cannot say anything about that announcement until it has taken place.
Lord Ezra: My Lords, I am sure that the House would have been interested to share a little of what the announcement might contain. Nevertheless, we shall have to wait until it comes before us. Will the review take full account of the need for the Government to achieve their carbon emissions reduction targets by 2010 and in particular of the role to be played therein by renewables and combined heat and power? Secondly, in the period after 2010, when the reduction in carbon emissions will be made more difficult by the withdrawal of nuclear stations, what priorities will be established?
Lord Sainsbury of Turville: My Lords, we are currently meeting our energy objectives in terms of

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security, diversity and sustainability. However, we cannot be complacent. In the future we shall become increasingly dependent on imports of fuel and particularly natural gas, which could eventually become a dominant source of supply. In the longer term, we need to reduce carbon emissions further to meet the challenge of global warming. In these circumstances, if a review were to take place it would need to be open-minded and to consider the contribution that all sources of energy can realistically make to our objectives. That includes combined heat and power, renewables and also the impact of the fact the we shall witness a rapid decline in nuclear energy in the period up to 2010.
Lord Lawson of Blaby: My Lords, why does the Minister seek to give more work to the Government than is necessary when they have plenty on their plate already? We need a sound economic policy, a sound environmental policy and a sound competition policy. But why, if and when those needs are satisfied, do we need an energy policy?
Lord Sainsbury of Turville: My Lords, it is appropriate that the noble Lord should ask that question. The current situation is a direct result of the work that he undertook to reduce all aspects of energy policy and. to make it market-based. Important as the question of prices is, the objectives of an energy policy involve other issues. They involve the important question of security; namely, whether we are happy to be largely dependent on other parts of the world for our energy supplies. Diversity of supply is also important. Equally, our objectives in relation to global warming are extremely important. Such questions cannot be determined solely on the basis of market forces. They involve other issues, important though it is to have a clear focus on market forces.
Lord Palmer: My Lords, will the Minister accept that biofuels have an important and environmental aspect to play in any future energy policy?
Lord Sainsbury of Turville: My Lords, there is no question that they have an important role. It is one which any review would need to take into account.
Lord Berkeley: My Lords, in a week when the President of the United States—who has recently been dubbed "the toxic Texan"—is supposed to be visiting, will my noble friend confirm that the Government are still a hundred cent behind the important Kyoto initiative?
Lord Sainsbury of Turville: My Lords, there was universal dismay at the US rejection of the Kyoto agreement. The overwhelming majority of countries continue to support the agreement. It can come into force without the US, although clearly everyone would strongly prefer the US to be on board. We hope that the energy review that is currently being undertaken by the US will conclude that the US interest lies in working with the Kyoto agreement.
Earl Russell: My Lords, does the noble Lord, Lord Lawson, remind the Minister of those who made fun of Noah for building the Ark?
Lord Sainsbury of Turville: My Lords, that is an extremely good analogy.
Lord Moynihan: My Lords, regarding one of the Government's flagship energy policies, I understand that briefing received by Ministers from DTI officials casts doubt on the Government's ability to deliver 10 per cent of power generation by renewables by the year 2010. Is that true?
Lord Sainsbury of Turville: No, my Lords. So far as I am aware, the briefing received by DTI Ministers makes it clear that the task is challenging but that it is one to which we are committed; namely, to have 10 per cent of our energy supply in renewables.
Lord Stoddart of Swindon: My Lords, the noble Lord mentioned security of supply. Will he confirm that we have huge reserves of coal which would provide such security? Will the review therefore examine the possibility of redeveloping the coal industry, which can be a large and valuable source of energy for this country?
Lord Sainsbury of Turville: My Lords, if there is to be a review, the answers should not be prejudged; rather, certain questions should be put to the review. If such a review takes place, that will be done.
Lord Avebury: My Lords, have the Government had an opportunity of evaluating the evidence made public in the "Equinox" programme on Channel 4 last week, based on the research of Dr Santo Bains at the University of Oxford? It revealed that at two points in the world's history there have been catastrophic releases of methane hydrates from the ocean floors which came at a certain point in the warming of the oceans, raising the temperature of the Earth by some 8 degrees. Does the Minister take this seriously? If so, should there be a far more drastic programme for the reduction in carbon emissions than we have seen so far?
Lord Sainsbury of Turville: My Lords, I refer to the great value of not announcing a review, which is what I am doing at this point. If such a fictional review takes place, it will deal with all the matters that are relevant to the Question on the Order Paper.
Baroness O'Cathain: My Lords, I realise that it is difficult for the Minister to comment on a so-called "fictional" review. However, will the word "nuclear" appear in the review? Is it not about time that we all reconsidered the nuclear industry?
Lord Sainsbury of Turville: My Lords, I hope I have made clear that if a review takes place it will only be sensible for it to cover the contribution that all sources of energy can realistically make. As I said, it is wrong to prejudge the results of such a review before one has even been announced.

Address in Reply to Her Majesty's Most Gracious Speech
3.10 p.m.
Debate resumed on the Motion moved on Wednesday last by the Lord Archer of Sandwell—namely, That an humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament".
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, at the start of our first term in office we faced chronic under-investment in public services and a £27 billion deficit on the public finances. Our first task was to create a platform of stability and sustainable public finances, which we have done. As a result we now have inflation on target; the lowest long-term interest rates for 35 years, with business investment over the past two years of around 14 per cent of GDP; the lowest levels of unemployment since 1975, with more people in work than ever before and sound public finances.
We inherited an unsustainable level of debt. Between 1979 and 1997, 42p of every additional pound of public spending went on debt, unemployment and social security. By repaying debt (£34 billion last year), cutting unemployment (saving £4 billion last year) and safeguarding social security expenditure, this figure is now only 16p in the pound—42p in the pound in 1997, 16p in the pound now. This means that we have been able to free up resources. So we can now begin to plan with confidence for substantial increases in investment in priority areas.
A strong economy is the platform on which to build opportunity and prosperity for all. Fuller employment not only offers jobs and prosperity to people of working age but ensures that children grow up confident of their future and that people can save for a comfortable old age.
We have done much. Let me remind the House: in our previous term we introduced the New Deals. These have already helped to cut long-term youth unemployment by 75 per cent and long-term unemployment by over 60 per cent. The number claiming unemployment benefits is the lowest for 25 years and the New Deal is leading to real, sustainable jobs, meaning less spending on benefits for the unemployed and higher tax receipts.
In turn this has allowed us to make a start on transforming the tax and benefits system for families with children. We want a system that gives the most help at times when families need it most and which gives more help to the families who are most in need. We inherited a system which saw over 4 million
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children growing up in poverty and in which one in five children were growing up in homes where no one worked.
Our tax and benefit measures introduced since 1997 have meant that by autumn 2000 there were 300,000 fewer children living in families where no one was in work compared with spring 1997. By October this year all families with children will be better off in real terms by, on average, £1,000 a year compared with 1997. Child benefit for the first child has been increased by over a quarter since 1997 and we have provided extra support for the poorest children. A couple on income support with two children under 11 are now nearly £1,500 a year better off compared with 1997; or, to put it another way—I believe that this statistic is striking and I am sure that it will impress your Lordships—the benefit for a child under 11 in May 1997 whose parents were on income support was £16.90;. the benefit for that same child in October will be £32.95. That is a virtual doubling in cash terms, or an 80 per cent increase in real terms, in just over four years. That is what we mean by security for those who cannot work. That is what we mean when we say that we are delivering on child poverty.
We have also put in place a long-term strategy to ensure that all pensioners can share fairly in the nation's rising prosperity and to tackle pensioner poverty. Our first priority has been to help those on the lowest incomes. This year we are spending almost £4.5 billion a year more on pensioners in real terms than in 1997—£2 billion of this is going to the poorest pensioners. This will increase to over £5.5 billion next year—that is over £3 billion more than an earnings link would have given them.
However, this is not just about statistics; we have begun to make a real difference. Some 2 million of the poorest pensioner households are now at least £15 a week better off in real terms and all pensioner households are on average over £11 a week better off. So, much has been achieved in the past four years, particularly for children, pensioners and families of working age. But much more needs to be done if we are to achieve our ambition of an active welfare state.
What, therefore, do we still need to do? We now have the lowest levels of unemployment in a generation but almost 1 million people remain unemployed. Too many people are still denied the opportunity to work. That is unacceptable. So we are going to build on the New Deals to ensure that everyone who can work has the opportunity to do so. We shall introduce a new principle of "employment first" interviews for everyone coming on to benefit so that people know what their opportunities, obligations and responsibilities are and what they can expect in return. The New Deals for young people and older workers will focus on the hurdles of numeracy, literacy, IT skills and presentation, delivering help individually tailored to those who most need it.
Employment zones have already helped over 8,000 people into work in areas of persistently high unemployment. We are investing in action teams for jobs to unlock the employment potential in the most

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severely disadvantaged areas and groups. Early indications are that this innovative approach is already helping those who find it hardest to get work—6,000 people so far, one-third of those the teams have engaged with. These are people who not only have a long history of unemployment but also live in areas of persistently high unemployment. In this Parliament we are looking to build on the success of the employment zones and the action teams for jobs, extending them to new areas and to new claimant groups.
Our policies since 1997 are lifting over 1 million children out of poverty. But we must do more. So we have pledged to end child poverty within a generation, to halve it by 2010 and to reduce it by another million this Parliament. Further progress in this area needs major changes in the support we give to families. The children's tax credit has already cut income tax for families. It is worth £520 a year for 5 million families. Half a million families have been removed from paying tax altogether. From next year the credit will be raised further from £10 to £20 a week in the year of a child's birth.
We must also do more to tackle pensioner poverty and to help those on modest incomes who have worked hard and saved for their retirement. The pensioners' tax allowance already means that by next year seven out of 10 pensioners will no longer pay tax, or will pay tax at the 10p rate. We are pledged to extend the tax allowance further so that by 2003 no pensioner will pay tax until their income reaches £127 a week.
The basic state pension will increase by 2003 to £77 a week for a single pensioner and to £123 a week for a pensioner couple. The minimum income guarantee will ensure that no single pensioner will have an income below £100 a week and that no pensioner couple's income will fall below £154 a week.
However, before we can make further progress we need the right structure of government in place, one that will enable us to focus on the specific and diverse needs of our client groups. Your Lordships will be aware that after the election the Prime Minister made a number of such government changes which, taken together, will ensure a sharper focus on government priorities and a better ability to deliver public services.
The new Department for Work and Pensions brings together the former Department of Social Security with the Employment Service and the employment and disability responsibilities of the former Department for Education and Employment. The new department will continue our programme of welfare reform. It will mean a single, focused approach to the development of employment, equality and benefit policies for people of working age and pensioners needing advice and support. It will provide a joined-up, efficient, modern organisation responding to people's needs and the changing ways in which they wish to reach out to our services.
To underpin this continued reform of the welfare state we shall establish two new organisations: first, Jobcentre Plus to bring together in a single modern organisation the services currently provided to those of working age by the parallel services of the
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Employment Service and the Benefits Agency. We shall have 50 Jobcentre Plus offices up and running by the end of the year, providing a local, integrated employment and benefits service for the first time. Secondly, we shall establish the Pension Service, to provide a high quality service dedicated to pensioners.
Fundamental reform also, inevitably, means new legislation. The Bills announced in the Queen's Speech will enable us to take further steps to transform the help we offer people. The welfare reform Bill—the first of the three Bills coming from my department—will enable us to continue the work that we have already begun to reform welfare provision for people of working age, to ensure that everyone who can work has the opportunity to do so. Your Lordships will be aware that in our manifesto we announced a proposal for partners of benefit claimants, whether or not they have children, to attend work-focused interviews. The New Deal for Partners already offers help and assistance, on a voluntary basis, to enable partners of those receiving working-age benefits to get into work.
But we think it right to go further, bringing these arrangements into line with those for benefit claimants, particularly lone parents. This Bill will make receipt of benefit for partners conditional on participating in such an interview. Your Lordships will need no assurance from me that we are not proposing to force people to seek work where their family or other circumstances mean that that is not an option. The interviews will simply ensure that partners are aware of the support available through the New Deal and of the help available to them in work. I put it simply. Sometimes in a relationship the woman may have better employment opportunities than the man. It is not unreasonable that both partners should be aware of the choices available to them. We do not think that this is an onerous requirement. There will be safeguards to ensure that people do not lose benefit where the timing of the interview is not right or where the partner has no prospects of finding work.
We want people with disabilities to play a full part in the community. This means full civil rights, including equal access to education and other public services. We are also promoting the rights of disabled people in the workplace, working with the Disability Rights Commission. The chance to work is vital to ensure social inclusion for disabled people. The New Deal for Disabled People is already pioneering a range of these approaches. But we want to do more. Disabled people are still seven times more likely than people without disabilities to be jobless. Some 3.2 million people with disabilities are already in work. But 1 million more say that they would like to work but are not in work. It is unacceptable that many disabled people are written off when they could work, with the right support. This Bill will, therefore, extend the support offered to jobseekers through employment zones to sick and disabled people who are able to work. It will include proposals to help ensure that incapacity benefit claimants get the right support including help, where appropriate, to enable them to return to employment. Detailed proposals are still being developed and will be announced in due course.

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An active welfare state also means supporting people in work and giving them choices, particularly around the time of a child's birth, to balance work and life responsibilities. Your Lordships may recall that in last March's Budget, the Chancellor announced a range of measures designed to offer such support. This Bill will legislate to increase the standard rate of statutory maternity pay and maternity allowance from the current £62.20 a week to £100 a week in 2003; and the payment period will be extended from 18 weeks to 26 weeks. In other words, of the 360,000 women who receive these payments each year, most will get more than £1,200 in extra maternity pay.
I have already mentioned that we need to do more to relieve child poverty and to encourage people to move into work by making work pay. The new tax credits Bill, coming from both my department and the Treasury, will introduce the new generation of tax credits from 2003, as announced by the Chancellor in Budget 2000, enabling us to address both of those concerns. First, we shall draw together the various existing strands of support for families with children—including the child elements in income support, jobseekers' allowance, the working families' tax credit, the disabled person's tax credit and the children's tax credit—to create a seamless mechanism for channelling support to children. This new credit will provide a more transparent system of support and will be portable, spanning both welfare and work. It will build on the foundation of universal child benefit and will be paid to the main carer, in line with child benefit.
We shall support those in low-paid work through an employment tax credit, building on the adult elements of existing tax credits. The new credit will help to increase work incentives for low-paid workers and help to relieve in-work poverty in working households. We shall consult on the detailed proposals of both credits later this summer, with a view to introducing a Bill to Parliament later in this Session.
Since we took office we have been working towards a long-term strategy to make sure that everyone has a decent income in retirement, through a fair and proper balance of public and private provision. Since April, stakeholder pensions have offered a safe, flexible and value-for-money pension option for moderate and higher earners who do not have access to a good occupational scheme. As noble Lords will recall, this is a funded money purchase scheme for individuals without, for the most part, a second pension. From April 2002, we shall reform the state earnings-related pension scheme (SERPS) through and into the state second pension, benefiting 18 million of the lowest paid and certain carers and people with disabilities. Again, that is a huge increase in their future well-being.
The pension credit Bill—it is the third Bill to which I refer today—forms a key part of our strategy. We want to ensure that it pays to have saved. Pensioners will be rewarded—not penalised—for having worked hard to provide for themselves in retirement.
Through the pension credit, we shall also improve the way we deliver help to pensioners, significantly reducing the information they have to provide in
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support of their claim. This will enable them to get what they are entitled to more quickly and with much less intrusion. These reforms are long overdue, as I am sure your Lordships will agree.
People also have a right to expect that the right benefit is paid to the right people at the right time. Fraud and error undermines confidence in the welfare state and we are determined to tackle it. We have already saved £1 billion on fraud and error. The introduction of automated credit transfer will save a further £100 million a year. But there is much more to be done. We are committed to halving the rate of fraud and error by 2006—a major commitment. Fraud prevention will also be incorporated into the design of all new policies on benefits.
In this Parliament we shall also take forward further measures to support and ensure our long-term economic stability. My noble friend Lord McIntosh will say more about this in his winding-up speech. Briefly, we shall introduce a European Communities (Finance) Bill to enable the UK to adopt the Own Resources Decision (ORD) agreed at the 1999 Berlin European Council on the future financing of the European Community. The agreement reached at Berlin—it is a good one from the UK's point of view—will bring the UK's proportionate contribution (based on 1999 prices) to Europe's finances, after enlargement, down to the level of France and Italy.
We shall introduce a number of Bills to ensure that enterprise and competition can flourish. The Enterprise Bill will include measures designed to encourage enterprise, strengthen competition laws and promote safeguards for consumers. The export control and non-proliferation Bill will improve the transparency of export controls and establish their purpose. We shall publish a draft communications Bill to create a single regulator for the media and communications industries and to reform the broadcasting and telecommunications regulations.
In conclusion, a few weeks ago we offered the people of this country a programme based on three pillars: a sound economy, investment in public services, and a commitment to expanding opportunity and building social justice. I hope and believe that your Lordships will agree with me that in this Queen's Speech, and in particular in the Bills outlined today, we see that programme being delivered with your Lordships' help and that, as a result, our people in whom we are investing are truly our commonwealth.
Lord Barnett: My Lords, before my noble friend sits down, can she explain this? If the Government know how they will eliminate fraud by 2006, why cannot they do so now?
Baroness Hollis of Heigham: My Lords, if my noble friend had the advantage of hearing the frequent Questions in this House on fraud, he would be familiar with all the policies which the Government have brought into practice, including extended powers for the Benefit Fraud Unit, working with local authorities to check the fraud in housing benefit, clarifying benefit

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claim forms, introducing hotlines and trying to "fraud-proof- a range of the benefits we are now introducing. I am very happy to add to that at great length to persuade my noble friend that, though our target to halve the level of benefit fraud by 2006 is challenging, we shall strive to meet it—and we hope and expect to do so.
3.30 p.m.
Lord Saatchi: My Lords, it is an honour to open this debate on the gracious Speech on behalf of our Benches, particularly because it is clear from this afternoon's list of speakers that we are going to have an excellent debate.
Before I begin, I have one duty to perform. Your Lordships can imagine the pleasure that it gives me to congratulate the noble Baroness, Lady Hollis, on her party's spectacular election victory, which was a very fine achievement. Nothing could be more tedious for listeners to the debate nor more painful for the losers than to rehearse yet again all the arguments from the election campaign.
Most people say that Labour's great victory was based on the strong economy. That focus on economics above everything else led Labour on its heroic journey from four defeats to two great victories.
I shall concentrate on the two opening sentences of the gracious Speech, which concern the economy. My noble friend Lord Higgins will look more deeply into aspects of social security and industry.
As we have just heard, the Government like to wear their heart on their sleeve when it comes to their good intentions for the public services and looking after the poorest people in society. That is how they gained their caring reputation. They routinely condemn our Benches for ice-cold brutishness. I shall apply the Government's criteria to the plans described in the gracious Speech.
The first sentence of the Speech refers to investment in public services. During the election campaign, the Labour Party said that it would put schools and hospitals first, so let us start there. How will the Government help? I hope that it will not be done in the way suggested by a headline that appeared the day after the election, which said, "Labour abandons waiting list targets". Apparently, hospital waiting lists had been rising again, so, when in doubt, the Government's reflex was to change the target from length of waiting list to maximum waiting time—not even average waiting time. I am sure that they do not really intend their help for schools and hospitals to be only in image and not in reality, although that has been the story so far.
I have just discovered some statistics that I found dazzling. I found it amazing to discover that under this Government spending on public services has risen by 1.3 per cent a year, while under the last Conservative government it rose by 1.7 per cent each year. I found it even more amazing to discover that spending on health and education as a percentage of GDP has been less than under the previous Conservative government. Believe it or not, these are the official annual spending
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increase figures from the Treasury: on health, Labour plus 5.4 per cent, Conservative plus 5.5 per cent; on education, Labour plus 4.6 per cent, Conservative plus 5 per cent.
Does that not make you gasp? Have we all been hypnotised? The redoubtable Andrew Dilnot, head of the Institute for Fiscal Studies, says:
"One striking area of especially low growth is public investment, where the Government has failed to achieve its own plans, which were designed to correct what it identified as public under-investment. In government, the four years 1997–98 to 2000–01 have seen the lowest level of public sector net investment of any four-year period in recent decades, well below the average under the Conservatives. This is a real puzzle".
However, it is not as much of a puzzle as how the Government are going to do any better in their second term, when they have a second chance.
For example, to raise the UK's level of overall spending on health and education to German proportions, which I believe is a stated aim, public spending would have to jump by 4 per cent of GDP. That is an extra £40 billion a year. On present plans. even after the proclamations about good intentions., the share of health spending in GDP will rise by only 1 per cent between now and 2004. That would still leave us 3 per cent of GDP below Germany's level and 1.4 per cent below the EU average. That is puzzling.
Perhaps most astonishing of all is that the Government's figures show that after what will have been nine continuous years of Labour government, UK spending on health will be running at less than half of that in a country that the Government regularly deride for its heartlessness and cruelty—America, where health spending accounts for 13 per cent of GDP. That is more than double the 6 per cent offered by the romantic souls on the Government Front Bench. The truth is that after what will be nine continuous years of Labour government, public spending as a percentage of GDP will be lower than in all but three of the 18 years of Conservative government.
However, there are even more extraordinary statistics relating to the next phrase in the gracious Speech, which refers to,
"a more prosperous and inclusive society".
The noble Baroness referred to inclusion earlier. It is a word that affects the hearts of all who hear it. It is all part of the Government's drive against poverty among children and pensioners and is all very touching. How striking it is, then, that poor people—the lowest decile of income distribution—are now paying a record amount in tax. A Government who say that they want to extend their generous hand to the poor as well as to schools and hospitals now extract £3 billion a year from 8 million taxpayers with gross annual incomes below £10,000, which is much less than half the average income of £24,000 a year.
Even more astoundingly, the Government tax poorest people most. Those on the lowest decile of gross income, counting cash benefits as well as original income, now suffer an average tax burden of over 50 per cent—up from 44 per cent when this Government came to power. Households in that group

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without children now pay a staggering 63 per cent of their income in tax, up from 47 per cent when this Government came to power. So much for the knights in shining armour in the Government.
However, if the poorest bear the heaviest tax burden, perhaps the Government are paying out more to them in benefits. Not at all. The Government are no Robin Hoods here either. The poorest tenth receive barely 12 per cent of all benefit spending, while, incredibly, the top half of the income distribution receives 30 per cent of all benefit expenditure. Meanwhile, the hated means test goes marching inexorably on.
Lord Haskel: My Lords, do the figures that the noble Lord has just quoted include the tax benefit scheme?
Lord Saatchi: Yes, my Lords, they include all taxes paid and benefits received. I shall go into a little more detail about benefits.
According to the Government's Red Book figures on the effects of the means testing of benefits, after what will be nine years of Labour government, 38 per cent of the UK population will be on some kind of means test—a figure rising to 57 per cent for pensioners. Why? It is because the Government first tax people on low incomes, then they means test the income to satisfy themselves that the people are in need, then they offer benefits to restore the income back to where it was before the tax was paid, then they tax the benefits. The DSS family resources survey for 1999 reports that in that year, 24 per cent of benefit units—an Orwellian definition that apparently roughly equates to households—received at least one income-related benefit.
However, the House of Lords Library notes that:
"By 2003 the proportion of non-pensioner households on means-tested benefit could be around 29 per cent. The population of pensions households being means-tested could be around 57 per cent. These imply an average for all households of 38 per cent".
Therefore, means testing of the population will have increased from 24 to 38 per cent in five years, which is all very sensitive.
In the meantime, I believe that the noble Baroness said that the Government considered it to be important and placed great priority on people being able to receive their benefit. However, the gruesome fact is that the Government are hoarding billions of pounds which they should be paying out to eligible households. According to my co-author, Dr Peter Warburton, who has had a good look at the DSS social security statistics for the year 2000, between £2 billion and £4.3 billion of income-related benefits are not being paid to those who are entitled to them. That massive sum is being retained by the Government. When the Minister replies to the debate, perhaps he will tell us what will happen to that money.
Baroness Hollis of Heigham: My Lords, for information, will the noble Lord tell us to which benefits he is referring and to which claimant groups?
Lord Saatchi: My Lords, yes, I shall and, later, perhaps I may pass over the extract from this document. However, these are the Government's own figures relating to the take-up of all the different types of income-related benefit. In fact, they rather flatter the take-up figures. The figure for family credit is used rather than that for working families' tax credit, which replaced it. Most people believe that the take-up of the working families' tax credit is lower than that of the family credit. Therefore, it is a flattering picture.
Lord McIntosh of Haringey: My Lords, they are wrong. The argument is very simple: 800,000 people took up family credit; 1.2 million people take up the working families' tax credit.
Lord Saatchi: My Lords, that is fine. If the Minister would have a look at the relevant table and the figure of £2 billion to £4 billion and say what happened to it and whether that amount will be saved and given to those who are entitled to it or kept, that would be helpful.
Perhaps we could find more helpful territory for the Government by moving on to the second paragraph of the gracious Speech, which concerns the phrases "economic stability", "low inflation" and "sound public finance". Perhaps if we look at the economy from a broader perspective, we shall find more grounds for confidence. Of course, the Government's real claim to fame is strong public finances. The main proof of that is, as the noble Baroness said, the heroic repayment of £34 billion of government debt. A similar figure also appears in the Treasury press release. I believe that the noble Baroness referred to an amount of £34 billion over the past two years. We all consider that to be a first-class result.
However, after four years of what I hope I have just demonstrated was fairly miserly spending and the famously record taxing that the Government have carried out, is it not extraordinary that Britain is not, after all, being led to a massive US-style government surplus which we might use to repay debt, spend on public services or whatever else we may choose? Not at all. Believe it or not, the cupboard is bare. The Government are leading us into a massive deficit.
How will the Government fill that deficit? If they could, they would find some more invisible tax rises, but that game appears to be up. Therefore, they will fill it in the old-fashioned way—they will borrow it. The Government's spending will be paid for by borrowing. These are the amounts that the Government say they will borrow over the next four years: in year one, £1 billion; in year two, £10 billion; then £11 billion and £12 billion. Spookily enough, those figures add up to £34 billion over four years. Therefore, the Government are repaying debt of £34 billion, receiving the applause, and then promptly borrowing it again. I repeat: £34 billion over four years. The Government's own figures show that by the end of this Parliament they will be borrowing £12 billion a year.
However, that is simply the good news. The bad news comes from Europe, where, until recently, the ECB had been telling us that Europe and the euro-zone were immune from the US downturn. That now

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appears not to be the case and that is why people are becoming worried about the ECB. I want to ask what the Government have in mind for improving the effectiveness and, in particular, the transparency of the ECB.
The Bank of England, for example, publishes promptly the minutes and voting record from its rate-setting meetings. The Bank of England Act requires it to do so. The US federal reserve system's Open Market Committee publishes the minutes of each meeting within a few days of the next regularly scheduled meeting—that is, approximately four to six weeks after each meeting. However, with regard to the ECB, perhaps I may read your Lordships the following exchange. I should be grateful if the Government could tell us what steps they will take to improve the situation as one day soon the ECB may be looking after all our finances. I shall read a note from my researcher to her opposite number in Europe:
"Hi, Samantha. I hope you're OK. I have a really quick query. How long after the ECB meet to discuss euro-zone interest rates are the minutes of the meeting published? Many thanks, Alex".
The reply reads:
"Hi, Alex. Sorry I didn't get the chance to get back to you yesterday. Hope all is well. The ECB does not publish any minutes of meetings at all as they are "confidential". All you can get is a two-paragraph statement on the rates that appears on their internet site—www.ecb.int. Hopeless, isn't it?"
Therefore, given that so much of what will happen with regard to our public finances will be affected by Europe and by the activities of the ECB, will the Minister be able to say in his reply what plans exist to improve the effectiveness and transparency of that body?
I have also tried to demonstrate that there is a tangled web in the Government's economic policy. I shall close by saying that if we really want a bigger slice of the cake for schools and hospitals, the only way in which to achieve that is by making the cake bigger. As I believe the gracious Speech showed, this Government, like all Labour governments before them, do not know how to do that.
I have tried to give an alternative view of the Queen's Speech and I very much look forward to hearing other noble Lords' comments this afternoon.
Lord Barnett: My Lords, I listened with very great interest to the noble Lord's attack on the low level of increase in public expenditure on social services. Is he suggesting that the Government should spend more?
Lord Saatchi: My Lords, I am commenting only on the high hopes that people had of this Government when they were elected four years ago and the fact that the electorate have given the Government a second chance. I am sure that the Front Bench opposite knows very well that there will be no third chance.
3.47 p.m.
Earl Russell: My Lords, I begin by congratulating the Government on not changing places. I also warmly welcome back the Minister to her place. It is a great pleasure to me; it is very good news indeed for social
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security; and I hope that it is an equal pleasure for the Minister. She gives me vigorous exercise in debate. She does innumerable kindnesses, the latest as recently as last Friday, for which I am extremely grateful. I shall not say that she is always competent because no one on earth is that, but she comes as near to it as any Minister with whom it has been my pleasure to argue. I am very glad to see her here.
I also congratulate the noble and learned Lord, Lord Goldsmith, on keeping the office of Attorney-General in this House. The noble and learned Lord, Lord Williams of Mostyn, is a very hard act to follow. The Manchester Evening News has hurled at the Attorney-General perhaps the biggest hot potato that has greeted any new Minister at the beginning of his term of office. It may interest him that the very earliest known English laws are laws to restrict the right of private vengeance. It is the very purpose of the state to restrict private vengeance. That the state may have got it wrong is in a free country a view which must always be tenable. But the view that the right of vengeance should be taken out of the hands of the state is an assault on the very existence of the state itself. Therefore, the noble and learned Lord is in a very hot seat indeed and I have great confidence in him in it.
I also thank the Minister very much for her invitation to a meeting to discuss the reorganisation of the department. As that meeting is in the future and not in the past, my comments on the reorganisation are tentative. The case in favour is clear. For a long time it has been evident to us in our debates that having the welfare to work scheme and the New Deal as benefits in the same ministry makes a good deal of sense. On the other hand, some of the spin in that regard caused a certain amount of misgiving. The department responsible for social security is one of the most competent departments in Whitehall. It has a very good departmental culture and a long-standing concern with the alleviation of poverty.
As far back as I know, there has always been somebody who is concerned with the alleviation of poverty, whether that responsibility is in the hands of the state or the Church. In the development of the employment agency side of the new department, I hope that that tradition will not be lost sight of. It has always been an illusion that one could reduce poverty substantially by instilling in people a greater will to work. On every previous occasion on which that view has been held it has proved to be an illusion, and it could be so again.
I want to say a little about public services. I declare an interest—mercifully, I do so in this Session for the last time—as a serving university teacher. At Question Time today, the noble Lord, Lord Walton of Detchant, drew our attention to a major problem in the public services and the fact that increasingly people are developing a reluctance to work. Before the Government talk too much about reform, they should think about why such reluctance is becoming so strong. Most people who go into the public sere ices do so out of a sense of vocation; they certainly do not do so for the money. That sense of vocation and Treasury public service agreements sit rather uneasily together,

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especially when those agreements—which are back, somewhat to my regret, at the Treasury—are driven by the pursuit of efficiency, which is always concerned with getting people to do more rather than with how well the job is being done.
I remember extremely vividly a conversation with an intensive care nurse—probably the best nurse I have ever seen in action. After the patient had drifted off into a healing sleep, the nurse, observing that no one else was at that moment awake, paused a moment and said, "I am about to go back to speak to the sixth form at my old school and I am going to tell them, `Whatever you do, never go into nursing. There is more expected of you than you can possibly do. You are set up to fail and you can therefore choose only between demotivation and burn-out'". Every public servant to whom I have repeated that story and members of my profession recognised it instantly. In fact, as I see it, for the past 25 years all government pressure has been to make me do my job worse and worse each year. I have got very tired of that, and I am not alone in my view. Governments, after all, should recognise that their expertise in such matters is limited.
Mr Richard Caborn has given rise to a certain amount of merriment by not being able to answer questions in a sports quiz. I want to attack not Mr Caborn, but his critics, who did not recognise the difference between a Minister of Sport and a sportsman. It is like expecting the commander of a battleship to understand fiddly details about how to get better value for money from the ship's engines; that is not his department. I remember the late Baroness Macleod of Borve saying that when her husband was Minister of Health, he would never have had a doctor in the ministry; different jobs were involved. When governments talk about, for example, improvements in education, they are outside their element; they are not competent to recognise an improvement in education. Unless governments are prepared to let those who work in the public services have their own values, they might find that they have to pay market rates to attract such people, which would be very expensive.
We have had a lot of argument recently about the role of the public or private sectors in the delivery of public services. We on these Benches do not make an ideological issue in that regard. We have never gone in for the attitude that involves saying, "Four legs good, two legs bad". That attitude comes from the 20th century's politics of class conflict, against which we set our face at the beginning of that century; we are very glad that we did so. For us, that is more of a matter of horses for courses. The public and private sectors both have excellences. The question is: which excellence belongs to this particular job? The answer involves identifying the function that is required.
The great discipline of the private sector is competition. When there is no competition, the excellence of the private sector cannot be brought to bear. That applies especially when there is a single monopoly purchaser, against whom there can be no competition. Also, it is the nature of the market to
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have losers as well as winners; if it does not, it is not a market. One sees that in the supply of school places. After he had been at the ministry responsible for education for a few years, Lord Joseph realised that it was impossible to combine a market in school places with a universal supply of places. In that context, I was extremely pleased to read in The Times today that the Government are contemplating legislation to repeal the Greenwich judgment. If that report is correct, I warmly welcome such legislation.
We need to think about what we want to do. That has not been done nearly enough. When it happens, we might have a slightly more worthwhile debate. The bulk of what we have to deal with concerns the Minister's brief; namely, all of the various issues involving welfare reform. I say in passing that I agree with my noble friend Lady Williams of Crosby in her regret that the Government have adopted the slightly pejorative American use of the word "welfare" and do not continue to talk, as we always have, of social security. It is clear that all that we do in this context happens in a global market and that the playing field in that market is not level. Capital can move at a few seconds' notice across the world. Labour, even if there were no restrictions on its movement, is much less easily uprooted. That creates a big advantage to capital and tends to downgrade the price of labour. Too far in that direction and we could see a serious drop in the general level of world demand, which would not be good for the world's economy. When we discuss the cost of social security, we should bear in mind those questions along with narrower questions.
The relationship between the state and the market is a seesaw, and a seesaw should never become immobile. The Government have reached a seriously mistaken diagnosis of what they think is wrong with the social security system. The White Paper, Towards Full Employment, published earlier this year, states:
"Rather than being a solution to these problems, the welfare system had become part of the problem itself".
The Government have asserted that many times but it has not yet been proved or even seriously argued for. If the Minister can put me right in that regard I shall be grateful. The Government think—this illusion is centuries old—that the problem is having to make people want to work. It is not usually a problem to make people want to work; after all, work is to many people their only social life as well as their only means of earning money. When people do not want to work, that is usually a matter of physical or mental illness or it involves the thinking behind the old proverb that,
"hope deferred maketh the heart sick".
There are of course many categories of people—they are determined by geography, race, gender or disability—for whom work is difficult. The Minister and I know all about that. We have had exchanges on such matters many times. I shall not detain her now. But a great many of the people who do not get work have some disadvantage.
I raise in passing the question whether in some areas, like the ward next door to mine, there is a covert postcode discrimination by employers so that it is

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much more difficult to obtain work if one comes from those areas. If we could address that—I do not immediately see how—it would be nice.
Beyond that, a lot of the Government's policies on welfare reform have sprung out of the mind of Mr Michael Portillo and the Jobseekers Act. The key innovation in that legislation was not the "actively seeking work" requirement. That is not particularly controversial. What was crucial in that Act was the assumption that the state and its organs are the supreme judges of the work people should seek—for which jobs they should apply and which jobs they should not leave—and that the state's judgment takes priority over that of the people concerned.
Of course, the state is at a major disadvantage in relation to information. So there is at least a rebuttable presumption that the state might get some of these things wrong. If it has got them wrong and disqualification from benefit is inflicted as a result, that is a particularly severe penalty.
There is one case which particularly tickled me. It happened under the previous government but it could easily have happened under this Government. A man in Cardiff, a lifelong supporter of the Labour Party, was offered a job pulling pints at the Cardiff Conservative Club. He refused it and was told that he was voluntarily unemployed and could have no benefit. I believe that that discomposes me a great deal more than discomposes new Labour Ministers. I do not think that that should have happened. There is, after all, such a thing as an individual conscience. If you deny that, you will not get a conscientious workforce and the losses out of that may be more than are realised.
Another sphere where private judgment matters, because it has the information, is as regards parents. I heard what the Minister said about interviews for partners. It could be argued that that is the down-side of equality. The argument has substance. But the requirement of interviews and, even more, if they are to come in, the existence of targets can create a rebuttable presumption and the existence of targets backed by the power to disentitle benefits may be a very severe pressure indeed.
The Minister may remember the noble Lord, Lord Evans of Parkside, speaking in our debates on single parents in 1997. He described the occasion when he was six, when his father said goodbye after breakfast, went down the pit and never came back. He said that for a year afterwards, he and his younger sister would never let their mother out of their sight. He said it would have been absolutely useless to encourage her to seek work.
Where there is an inflexible bureaucratic rule, it is impossible to respond to a case like that and a government who cannot respond to such a case are not living in the real world. The Government should think about their targets for getting single parents into work because they involve a really serious intrusion into the sphere of private judgment. They should watch, too, how many of the people disentitled to benefit are removed from the claimant count. I accept the point
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made by the noble Baroness, Lady Blackstone, in her Written Answer to me of 8th May last that not all of them are removed from the claimant count. But when the Prime Minister, in the House of Commons on the 20th of this month, boasted of the reduction in the claimant count, he should have been able to say how much of that reduction was achieved simply by taking people off the count by disentitlement. "She left my employment", as Goldfinger put it. It is worrying.
There have been, since 1997, 701,000 people sanctioned under the Jobseekers Act. That is an awful lot of people. We do not know anything about what happened to them and we should do.
As regards housing benefit, the Minister knows my views. I ask her to stick to the commitment of the 1986 Act that income support is not meant to cover rent. Before she speaks, as the Government do, about work incentives, I ask her to look again at the DETF, and the DSS research on housing benefit. I know she knows it well. I should like to think that anything that the Government do will be compatible with that research. If it is not, it will take up a good deal of time in this Chamber.
Finally, we should not lose sight of the purpose of benefits. The purpose of benefits is not to cure poverty. That they have not done so is no reproach to the Government. The purpose of benefits is to alleviate poverty until something better can be done. That is a very necessary purpose.
I have a pupil at the moment who has just finished his exams. He is still in those intervening days between the end of the exams and the beginning of the right to social security, which is quite a long time on an empty stomach. He has absolutely nothing to live on. He spent his last penny ringing me up and ran out of money before he could tell me where he was and before I was able to do anything about it.
We talk about rights and responsibilities. They are interlocked. They are not necessarily contingent. If you do not believe in the death penalty, you do not believe that the right to life is contingent on good behaviour. I do not, in fact. But if we want people to exercise their responsibilities rather better—and I must confess that I do—then how we exercise our responsibilities to them is a matter to which we should not be indifferent. If we tell people, "We do not care whether you have anything to eat. You are nothing to do with us. Go away. We have forgotten about you", that is an abdication of responsibility which invites retaliation. I do not think it is wise.
4.7 p.m.
Lord Roll of Ipsden: My Lords, those who have spoken today have again done what it is usual to do in a new Parliament; that is, to combine the traditional initial reaction to the gracious Speech with some reflections on the record of the outgoing administration.
I remember only too well the last government coming into office in 1997. As Labour returned to power after 18 years in the wilderness and with an enormous and unprecedented majority, it was

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understandable that its followers greeted this as a new dawn. I had some very welcoming words to say about the new government, both about what they have already put in train and what they were intending to do fairly quickly. However, I said that it might be as well to wait to say,
"Bliss was it in that dawn to be alive".
before we actually joined in that jubilation.
What has happened since? I will not and I could not possibly follow the noble Baroness, Lady Hollis, in that avalanche and catalogue of all the good things that the Government have done, particularly in the field of social justice and ameliorating the condition of the less advantaged members of our society. I readily accept that much has been done for the family, for the young and for children through taxes and through other means. Of course, the gap between the rich and the poor continues and, indeed, has grown rather wider. That is a topic to which we may return on another occasion.
However, I should say that in so far as the gap has increased through improvements at the top end, I am made slightly uneasy by what appears to be the Prime Minister's somewhat undiscriminating approval of what he regards as the rewards of merit. Often the connection between "reward" and "merit" is not evident.
However, I join wholeheartedly in praising what has been achieved so far in relation to the broad economic and financial management of our society and our economy. Naturally, I welcome the independence of the Bank of England in respect of monetary policy. Three years earlier I had the pleasure of chairing an independent panel that made almost exactly the same recommendations as those that the Chancellor has implemented and which are now embodied in the Bank of England Act.
Much against the views of many followers of the Government, I agree with the decision to keep the tax and spending pattern of the previous administration for another two years. I believe that that was essential to prevent the avalanche of plagues that would almost certainly have appeared, given the fact that the Labour Party had been out of office for 18 years.
More generally, the financial management has been good. I agree with the noble Baroness that the reduction of the national debt and the consequent reduction and easing of the burden of interest payments are to be welcomed as pillars of our economic and financial stability and, provided they are used, they have created more room for manoeuvre for funding improvements in social services. We shall see whether that actually happens.
Inflation has been kept down; unemployment has been greatly reduced; employment has been increased; and a respectable growth rate has been maintained. The fact that those things have been achieved—to some extent with the aid of propitious external circumstances—cannot be denied, and immediately a question is raised about the future. The uncertainties of the American economy present a big question mark
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and there are disturbing signs on the Continent, particularly in Germany. With our relatively flourishing economy today, how long we shall be able to withstand what happens abroad remains to be seen.
Looking ahead to the future, in choosing the improvement and enlargement of public services as the centre of their programme, the Government have probably judged the public mood correctly. Perhaps the increasing success of the Liberal Democrats in elections, given their avowed readiness and eagerness to tax more in order to gain more funds for public services, also appears to be a sign that the public mood is moving in a somewhat unusual direction.
I do not believe that anybody could possibly disagree with the desire to improve public services. We hear a lot about having world-class, first-class public services, and who would deny them? As the Americans used to say a long time ago, that would be like denying the virtues of motherhood and sliced bread. But how are we to achieve such services?
Today, appropriately, the Institute for Public Policy Research has published a highly interesting report which throws considerable doubt on what has become something of a slogan "public-private partnership/private finance initiative". No doubt there will be continuing controversy on this point, but it is worth considering. I agree with the Government that such a matter should be approached without dogma. Today ideology is out of fashion and, paraphrasing Sir William Harcourt, we can say that we are all pragmatists now.
Nevertheless, if we are to look at this matter in a hard-nosed way, we should look upon it as a business proposition. Unfortunately, some of the examples of what has happened so far, particularly in private finance initiatives, are not encouraging. Under a PFI a first-class new school has been built, but why it appears to be impossible to build such a school under a different system of finance is a complete mystery to me. Surely the essential difference between the two lies in the eventual cost to the public purse.
I simply cannot understand why the difference in the rewards earned by a private consortium, which provides the initial capital outlay, and the public purse, which usually over a period of 30 years commits itself to repaying that, should be significantly different. After all, that represents a commitment by the state, so there should not be a significant difference in the cost of securing the finance, even if it comes from a private consortium. Yet there have been many examples that show that even the modest savings envisaged to the public purse, compared with the size of the total outlay, are often illusory and compared with the rewards earned by the private consortium are certainly inadequate. That requires careful consideration.
The zeal with which some Ministers—for example, the Deputy Prime Minister—advocate this new policy is reminiscent of the zeal with which the long-forgotten Clause 4 used to be defended. Zeal is not required, but careful, convincing argument.

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However, there is another aspect. Having spent 34 years in the City, I do not believe that anyone could accuse me of a prejudice against private enterprise. I am conscious of what it has done, what it is doing and what it can do and of the fact that a great part of the material advances of mankind are due to the inventiveness, the ingenuity and the readiness to take risks of private entrepreneurs.
It is quite unacceptable for people to say that one cannot acquire adequate management from the public sector alone. Not only is that a denigration and a slur on the body of devoted, loyal and generally extremely efficient public servants—of which I know something after 25 years in the public service—but it is also entirely unjustified in actual experience. The public service has shown a readiness to adapt itself to new tasks—even in terms of remuneration—that cannot be ignored.
In parenthesis, a C, a K and certainly a G are highly desirable and justifiably prized rewards, but your Lordships may well remember the celebrated statement in "Gentlemen Prefer Blondes" that a kiss on the hand makes you feel very good but a diamond and sapphire bracelet lasts for ever. Even a devoted civil servant cannot maintain the kind of status that conventionally he has to maintain without adequate remuneration.
When still in Whitehall I shocked my fellow permanent secretaries by arguing that there was no reason why we should all receive the same pay. Some of us were in direct competition with people outside who had much higher remuneration. Needless to say, at the time nothing happened, but the public service has adapted itself even in that regard.
Finally, I return to my King Charles's head, Europe. When the previous Labour Government took office I was pleased that they made some positive noises, certainly compared with the two preceding governments who were in power for 18 years. However, what followed was a period of considerable inactivity, the result of which has been that opponents of our entry to the euro-zone have had it all their own way. Now, judging by the opinion polls, a large majority appears to be against our entry. Perhaps significantly, a modest majority appears to believe that we shall enter anyway at some future date.
I believe that the situation is extremely difficult for the Government. Ministers seem wisely to have retreated below the parapet which the Chancellor so skilfully erected for them in his five economic tests. The political wisdom of that was shown by the result of one sortie: some statements made in the euphoria of the election victory about an eventual referendum within two years of the present Parliament created the impression among the media and the markets that early entry was very much on the cards. As a result, the pound plummeted. That had to be. The invention of the term "euro realism" and the statement that the issue is being approached by the Government with consideration and caution—incidentally, I thought that the Government applied that to everything they did—naturally brought the pound back up again.
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For the moment, the situation is in limbo and I do not know what will happen. For my part, perhaps I may give an example which is applied to more important human transactions; namely, the triumph of hope over experience. But I shall wait patiently and I still happen to think that, in spite of everything, the eventual emergence of the single European currency is inevitable.
4.21 p.m.
Lord Lea of Crondall: My Lords, I am particularly happy to follow the noble Lord, Lord Roll of Ipsden, because I share a great deal of his analysis and shall pick up his final point. In the light of the Chancellor's Mansion House speech, which coincided with the Queen's Speech here last Wednesday, this is an opportune moment to consider economic strategy not only for the next year or 18 months but for the next four or five years or longer. I emphasise that duality because, unfortunately, there are times when the short term, on which I accept that the record has been exemplary, as stated by the Minister, and the strategic may be in conflict. Despite new Labour's stated aim to be strategic, it is, on the main strategic issue facing the country—that is, the euro—currently allowing a succession of short-term arguments and economic indicators to dominate its decisions to the exclusion of the strategic.
The European project is now far wider than anything we have grappled with previously. The fact that we could leave the exchange rate mechanism—or be shown the door, if you prefer—shows how false that analogy is. It is precisely because we have to get the entry rate right and secure a smooth landing that the Governor of the Bank of England cannot be allowed to judge the issue as though this year's inflation figure, which is the lowest in Europe, is the only issue.
Therefore, when we now hear the argument that we cannot debate the issue because it might affect the exchange rate, the answer must be, "Of course it will affect the exchange rate. Entry will not happen at the present exchange rate". If we do not want to affect the exchange rate, we had better join the noble Baroness, Lady Thatcher, and say, "Never!".
We are talking about Britain's industrial position in Europe and in the world. There may be some in the City whose book is best served by us being an offshore island with no political say in the affairs of the Continent. "Down with the continental system", is a cry which has echoed throughout the centuries and has come from the same groups of people. We will of course be in Europe and a keen player in the world economy. For those who are committed in a positive way to the project—and after all the Government agree the principle—we must speak out on the means of getting from A to Z or in four years' time we shall be where we are today or further back in our programme of modernising Britain.
If we describe the policy in short as "prepare and decide", a phrase which has recurred in ministerial speeches since the Chancellor's benchmark speech in November 1997, there are unfortunately a whole

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plethora of ambiguities. For example, how are the issues being prepared—I use the word "prepared" advisedly—so that the people on the doorstep in middle England can understand them sufficiently to vote in a referendum? Can I be the only one here who has been reading with wonder in every newspaper every day since the election that we must close the gap between Parliament and the people? Yet are we not to apply that to the euro?
We all know that one does not win general elections solely on what one says in the last few weeks. Is there any good reason to believe that referendums are all that different? Are we really supposing that a few senior Ministers can do this on their own in a matter of weeks without the normal infrastructure of mass involvement, of democratic explanation within the political parties, on the doorsteps and in civil society generally? Surely the needs of democracy point directly in the opposite direction. If we do not speak now, when do we speak? Is it going to be when we decide not to have a referendum because we have not lifted a finger in good time to persuade the public of the reasons for saying, "Yes"?
Therefore, although it was a plausible enough soundbite in Sweden last week, it really will not do for Peter Hain to go around Europe stirring up apathy with his slogan "Cool it!". What else have we been doing for the past four years but cooling it? Our brains are getting so cool they can hardly function. We will soon be in a deep coma. And why allow our gladiator to have nets thrown over him by the gladiator on the other side? At the very minimum, what are the Government proposing to do to counter some of the more recurrent arguments against the euro in general and UK participation in particular?
Perhaps I may remind your Lordships that Sub-Committee A dealt with the main arguments a year ago in its report, How is the euro working? . As regards the fashionable objection that one interest rate cannot fit all parts of Europe, we pointed to the fallacy of that objection; namely that the difference between different degrees of capacity, utilisation and inflationary pressures, the issue on which the argument principally turns, is, for example, far greater between London and Cardiff than between London and Brussels—and we do not have different interest rates in London and Cardiff, do we? What is of great concern in South Wales is the issue of international investment and inward investment. And why should companies take two exchange rate risks in coming to Britain when they have to take only one risk on the Continent?
There is then the contention that the European Central Bank is undemocratic. Sub-committee A pointed out that the difference in procedure from the Bank of England on the publication of voting patterns is not too surprising given the multi-national nature of the ECB board and the fact that its decisions are unanimous. But in any event, is it really persuasive to stand on the touch-line saying that we know how to play the game so much better than the equally successful economies which are actually playing it?
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Furthermore, our friends on the Continent are beginning to ask why the Treasury, far from explaining the many positive features of the euro system, seems to say something about the subject only when it wants to say something negative? It cannot go on that like that. We now know that there will be a rather short time between the national economic assessment and the referendum, so it cannot be left until then to explain the case to the British people. If, as some eurosceptics would have us do, we wait until then there will not be a referendum because the essential political test, which everyone knows is the winnability of the referendum, will be impossible to meet. Surely, no member of the Government wishes to achieve that outcome by a policy of benign neglect.
Those of us who have invested a good deal of political capital in this project will not let the matter rest there. I respond to the challenge myself. What are the positive arguments? First, single market, yes; single money, yes. We challenge the logic of those who say that there should be a single market but not a single currency. The ultimate in market transparency is certainty in exchange, and the single currency achieves that for the greater part of our trade.
Secondly, to different degrees we are all uneasy about globalisation, but what is the answer to it? Surely, the answer is to have an economic area which is strong enough to set standards for workers and consumers as well as producers and is as large as that of the United States, if the UK is in.
Thirdly, it is in the employment and social area that Europe begins to connect with the people. I spent the election on doorsteps in Falmouth and Camborne. Obviously, the issues which came up were dominated by jobs, hospitals and schools, but when I talked to people at greater length I found that they were delighted with the four weeks' holiday paid up front. They had never had it but they do now, thanks to Europe; they were delighted to hear about pro rata rights for part-time workers; they had never had it but they do now, thanks to Europe; and they had never had maternity pay but they do now, thanks to Europe. The list is a long one. Apart from the TUC, no one ever told them that Europe had anything to do with it. Some new Labour politicians are often blind to their own long-term self-interest by failing to give any credit to Europe.
It is to our advantage that we introduce these reforms on a trans-European basis. There is, after all, a logical reason—namely, the facts of international competitiveness—why we need to deal with such matters as minimum labour standards on a joint European basis. Trade unions in the major industrial sectors which are in daily touch with the workplace say that this is a hot issue which is becoming hotter. Therefore, we cannot "cool it". The arguments need to be addressed now, which is a job for Mr Hain.
My question to the Front Bench is: what is wrong with the arguments which support the Government's avowed principles being presented now? How will we get out of the double bind of always waiting for something else to happen before we make the

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arguments, in the meantime allowing those arguments to go by default? If we wait until the notes and coin are introduced in January, will we then highlight something that has gone wrong with one or other aspect—no doubt the hijacking in Palermo of a security vehicle full of bank notes?
Those who now say "cool it" confuse two things: on the one hand, the contention that we anticipate the national economic assessment; on the other, the failure to address some of the principled arguments heard in the media every day of the week. The first half of this is at best to play semantics, but the second is more worrying. Do Ministers fear that they are not equipped to mount the arguments? I start by helping them out of one hole. Let us remove the ridiculous notion that it must be clear and unambiguous before we can enter. That is not what we do on other issues, is it? Moreover, was it clear and unambiguous when the founding fathers of the EU started the operation in 1950? Was it clear and unambiguous to us in the United Kingdom when we joined in 1973? Was it clear and unambiguous when Jacques Delors masterminded the Treaty of Maastricht and the timetable for economic and monetary union in 1990? In any case, how will we be judged by history if we simply wait and see which side is winning and then join it years later? Is that statesmanship? Is it not a recipe for being a second-class partner in the meantime? We shall not win unless we go out there and make the case. If we fail to do that the real winner of the election will prove to be Mr William Hague.
Lord McCarthy: My Lords, before my noble friend sits down, does he agree that the difference between this decision and all others on which we must be certain is that in this case we cannot go back?
Lord Lea of Crondall: My Lords, there are many decisions in which we have been involved—joining NATO and the EU—where it is really only one-way. No doubt this is the greatest decision that we shall make in this Parliament, and that is why we must have the great debate. My main advocacy is that that debate should be brought forward now and when we make the decision it cannot be without some degree of ambiguity. That is real life, not life according to an economic textbook.
Baroness Noakes: My Lords, the gracious Speech rightly prioritised public services, such as education and health. Those are areas in which the Government have conspicuously failed to deliver on their promises over the past four years. Businesses which listened to the gracious Speech may well have concluded that the Government cared little about them. There was a reference to the introduction of legislation to encourage enterprise, but business people know that governments cannot legislate for enterprise but that they can and do legislate to introduce regulatory burdens. One of the glaring omissions from the gracious Speech was a reference to the burdens on business which threaten the entrepreneurial flair of this country.
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The Treasury and the DTI have recently set out the Government's strategy for enterprise and productivity for this Parliament. Much of this was welcome, in particular the lower taxes on capital gains and the modest expansion of share option scheme reliefs, but there was very little in the published document that could be interpreted as relieving burdens on business. The whole issue of regulatory burdens was largely sidestepped and treated as a non-issue. But regulatory burdens are not a non-issue for British business. All of the organisations which speak for the business community say the same thing: the regulatory burden is large, getting larger, and should be reduced if business is to prosper.
The total sums involved are increasing at a frightening rate. The British Chambers of Commerce have recently estimated that in the past year alone the cost of new regulations since 1997 increased by 50 per cent, to over £15 billion. That figure does not include the direct cost of implementing the national minimum wage, which is over £2 billion. It does not include the expected new rules on environmental liability or, for example, the EU's proposed directive on waste electrical equipment. Businesses fear that both of them will have very large price tags attached. It is that increase in burdens which has caused business so many concerns.
The financial impact has been concealed by the relative prosperity of British business over the past few years, but the costs are real and are increasing. It came as little surprise to British business that the UK's competitive position has been eroded since this Government came to power. We used to be fourth in the World Economic Forum's league table of competitive countries, but over the past three years we have slipped down to ninth place. Other league tables have us in an even worse position. The reason for that is explained partly by stealth taxes and our rising tax burden, but a very big cause is the increased labour market regulation that has been imposed.
Regulation hits big and small businesses. However, its impact is often disproportionately great for small and medium-sized enterprises. Noble Lords do not need reminding that SMEs employing fewer than 250 people account for 99 per cent of businesses in this country. They employ 12 million people—well over half of the workforce. They account for 40 per cent of GDP.
A number of organisations have tried to estimate the cost to individual businesses of the regulatory burdens. One example is the Institute of Chartered Accountants, which produces an annual survey. Its last estimate calculated that for a medium-sized business the annual increased burden of implementing the new regulations introduced in 1998–99 was £10,500.
But it is not just a question of money. The real cost is the effort that is diverted away from business. The Small Business Research Trust calculated that small businesses spend about 25 hours per month coping with the regulatory burdens imposed by government. That is over three working days. If that time was spent

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on developing new products or services, training staff, developing staff, cultivating new customers or markets or on anything that is designed to make the business more profitable, we would see a major upsurge in productivity in this country.
For some time the Chancellor has been fretting about the productivity gap between the UK and the US. We even lag behind France and Germany. There is a simple answer—and it does not lie in more legislation for enterprise or in more reforms of the competition regime. It lies in liberating our own entrepreneurs, letting them run their businesses instead of filling in forms or acting as unpaid tax collectors or distributors of welfare benefits.
There are many things that the Government could do without legislation, and I hope that the Government will consider at least some of them. The Government could, as we have proposed, introduce regulatory budgets so that individual government departments have a limit on the amount of regulatory burden they can impose on business. Even if those budgets were set at a standstill, that could have a major impact because it would stop the rising tide of the regulatory burden.
Transparency could be improved. The regulatory impact assessments that are produced with all new legislation could be independently audited and kept up to date, mapping the increases in costs. They could highlight not only the direct costs but also the opportunity costs to businesses as time and effort is diverted away from the real task of running profitable businesses.
When new regulatory burdens are introduced, the Government could do more to minimise the impact on the unfortunate businesses on which the burdens will fall. Ministers could help to ensure that guidelines which significantly increase the compliance burden on small and medium-sized enterprises do not see the light of day. I refer, for example, to the 112-page national minimum wage guidelines. I emphasise that Ministers can do these things without a single clause in legislation; it takes only the political will to achieve them.
However, there are some matters that require legislation. I take the example of the working families' tax credit, soon to be joined by an employment tax credit and a childcare tax credit. The burden of these credits, both in terms of administration and cash flow, is felt especially by SMEs which do not have abundant staff resources or financial capacity. Those schemes could be adapted relatively easily to make the Inland Revenue a direct payer. At a stroke that would remove many of the burdens from SMEs. If that is a bridge too far, the Government could consider a fair recompense to be paid to businesses, especially SMEs, for administering their tax and credit systems.
When legislation is brought forward imposing new burdens on business, the Government should make it the rule rather than the exception that such measures provide for businesses, or at least all SMEs, to be recompensed for the cost of complying with the
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provisions. Some legislation carries a huge regulatory price tag. Of course the Government can, by virtue of their legislative muscle, impose any burdens on businesses and citizens. My plea is that there should be a general presumption that if they do so, they should at the same time devise an appropriate recompense mechanism.
If the Government are serious about reducing the burdens on business, they need to think about removing some existing burdens. Perhaps the Regulatory Reform Act passed in the last Session of Parliament will allow some burdens to be reduced, but I suspect that specific legislative cover will be needed if significant progress is to be made.
Small and medium-sized enterprises feel most keenly the impact of employment regulations, which are a major factor in our diminishing international competitiveness. Every piece of new legislation creating new rights for employees also creates a burden on business. Exempting smaller businesses from the burden of employment legislation, as has been done in the US, would be a good start. Saying "Enough is enough" of the EU's social policy agenda would be a good second move.
The regulatory burdens on businesses are not trivial matters. It is a source of regret that nothing was said about this issue in either the gracious Speech or in other policy announcements made by the Government since the recent general election. But all is not lost. There are some ways in which Ministers can reduce the burdens on British businesses. I look forward to the Minister's response later this afternoon.
4.47 p.m.
The Lord Bishop of Southwark: My Lords, I am pleased to make a short contribution from these Benches to this important debate on the gracious Speech. First, I add our congratulations to the noble Baroness, Lady Hollis, on continuing in her office where she demonstrates such great expertise.
Perhaps I may focus on two or three of the proposed Bills. Last Thursday a homelessness Bill was given its First Reading in the other place. We had hoped that the provisions of the Bill would be similar to those in the Homes Bill which failed for lack of time in the previous Session of Parliament. The provisions commanded wide support from those involved in housing and homelessness. As churches, through our housing associations, our hostels and our drop-in centres, we have a direct interest in these matters. On a first glance at the new Bill, I am rather anxious that many of these important provisions seem to have disappeared. We shall be watching the Bill with great care. I realise that perhaps there will be more discussion on that matter tomorrow.
I should like to add our welcome to the proposed Bill to reform adoption law. We believe that the existing law on adoption is insufficiently child-centred. We hope that the new legislation will bring the law more into line with the Children Act 1989 principle of ensuring that the welfare of the child is the paramount consideration in any decision. That includes seeking

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the wishes and feelings of the child to any proposed adoption and establishing parity status of children and young people in their own adoption proceedings.
I hope that the Bill includes the provision of more information to potential adopters so that they can make informed and responsible decisions about their adequacy for any particular child or children. There are stories of people, including clergy, who have sought to adopt children on the basis of inadequate information, only to discover that the care required was far different from that which they expected. Neither children nor adults gain from finding themselves in that position.
We know too from the experience of such agencies as the Children Society that there is a real need for a national adoption register and some standardisations of practices and allowances across authorities and local authorities. At the moment the uncertainties caused by such variations deters some adopters and limits the chances of some young people to be adopted. It is crucial to establish which local authority has professional and financial responsibility for a young person placed for adoption. It is by no means unknown for children and young people to be disadvantaged by not receiving services due to them while two local authorities argue over who has responsibility for them.
In this increasingly complex world, the uncertainties caused by variation in adoption practices across the country is as nothing compared to those introduced when adoption is attempted across national frontiers. We have had highly publicised cases of babies being sought and bought by British prospective parents in countries suffering the ravages of war, poverty or social breakdown. We have even seen adoptions being attempted via the internet.
It will not be easy to negotiate the domestic and international controls which will bring some order into this chaos, but the principle is surely quite straightforward. The need welfare of the child must be paramount. No adult has an abolute right to adoption just as a parent does not have absolute control or indeed even absolute responsibility for their own children. We believe that children are a gift from God, not just to the parents or the adoptive parents, but to the whole community which, therefore, has a stake in assuring that the welfare of the child is paramount.
On a slightly different note, I for one am pleased to see the commitment to allow political parties to make positive moves to increase the representation of women in public life. As noble Lords will know, the Church of England has been ordaining women priests since 1994 and those who have experienced their ministry almost universally speak highly of them. I have just appointed a new senior cleric in my own diocese giving it its first woman archdeacon. I have no doubt that women should play their part in the most responsible positions of every part of public life.
The place of women, just as the place of those from ethnic minority communities, as full members of our society and of our parliamentary democracy is just one way in which we can help build a fuller, richer society.
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However, integration is not without its impact on existing structures, positions and those 'who occupy them. Whether we are talking about politicians, priests or other work in the public or private sector, we need to ensure that there is a coherent relationship between public and private life throughout our society. Sometimes the provision of a creche is more significant than a high salary and family friendly working hours are sometimes more significant than high office. I gently say that a good place to start might be here in the Palace of Westminster.
The foundation of the raft of new legislation in these and other fields, however, as the Minister made clear, lies in a sound economy. From these Benches we would not wish to disagree with that, nor with the attempt to bring more people into the dignity of work. We agree that work is the best form of welfare, yet there must always be a partnership between social justice and economic prosperity. I for one get a little anxious when politicians from all sides seem to be singing from the same economic hymn sheet.
The Government are to be congratulated on their determination to target those in need, particularly children and pensioners. But I do not believe that we should be complacent when the gap between rich and poor continues to grow. Economic inequality, when it is too great, invitably brings with it civil inequality and unrest. The great Thomas Acquinas maintained that civil disorder is an evil, usually damaging the weak more than the powerful and that, therefore, strange though it may seem, some injustice in society should be tolerated for the sake of stability. But, he maintained, there is a limit to the injustice which can be tolerated before it should be condemned.
This Bench would simply not wish to forget that there is such a limit, that the gap between rich and poor continues to grow; nor that the validity of the trickle-down theory of economic prosperity has yet to be demonstrated. On these Benches we were dubious of that theory when it was claimed by the Conservative administration of the 1980s and we see no reason to change our minds when the same is claimed by a new Labour Administration in this new millennium. Ghettos of social exclusion still seem to be impervious to the trickle-down of wealth. We know; we are there with our clergy and congregations.
We would agree that obligations as well as rights should be demanded of individuals, but we would also suggest that the same thing applies for corporations. We agree that obligations as well as rights should be demanded of the poor, but we also suggest that they must also be demanded of the rich.
The final Book in the Bible, and perhaps its most fearsome— full of foreboding and judgment— was directed to the complacent and well-to-do and in that context those well-to-do people of Asia Minor. Your Lordships' House should not be surprised if we on these Benches keep that judgment and complacency in mind as we, with your Lordships, give detailed examination to the Government Bills in the months ahead.
4.57 p.m.
Lord Haskel: My Lords, despite the words of the noble Lord, Lord Saatchi, about the painful effects on noble Lords opposite, I would like to begin by referring to the election earlier this month. Lots of promises were made during the campaign, but one was made which I believe will be particularly difficult to keep. It is not the promise about tax or about the euro. It is not the promise about public services, although that is part of it. No. The most difficult promise to keep will be that of the Prime Minister to liberate the individual potential of every single person in this country.
What has inspired that promise is a belief in equal worth, which demands more than just recycling income from the haves to the have-nots to meet people's needs, temporary or permanent. The old idea of paying dole money certainly contributed to equality of outcome, but it did little to enhance people's life chances. Equal worth demands more than simply holding the ring and being a referee. It requires an active state which initiates counter-measures against inequality, which gets rid of the entrenched patterns of advantage and disadvantage and removes the deliberate favouring of one group over another.
It was this concept of equal worth which inspired the previous government to introduce a legal minimum wage, decent working conditions, tax and benefit reforms to abolish the poverty trap and make the return to work worthwhile, better pay for women, and a legal basis for fair trade unionism. As my noble friend Lady Hollis reminded us, there was also the system of family support. There is the recognition that free markets have losers as well as winners and that equal worth means that the losers have to have a second chance through training and life-long learning and indeed a second chance to benefit the economy.
Having done all that, how does the Prime Minister intend to keep his promise to liberate the individual potential of every person in this country? The answer lies in the opening statement of the gracious Speech quoted by the noble Lord, Lord Saatchi. It refers to empowering people with better public services and building an inclusive society through investing in social capital. It is the public services of health and education, security and justice, transport and regulation which will empower people to achieve their individual potential. That is why it was so important during the election campaign to win the argument for spending on public services over Tory tax cuts. We won that argument. And winning that argument was one of the most significant features of the election because winning that argument finally broke the ideological base of the Opposition.
During the election the argument revolved around how we were going to sustain the rise in public spending. Obviously, the public rejected the idea of simply putting up taxes. It would not be done by borrowing either, as was suggested by the noble Lord, Lord Saatchi. But we can increase the tax take by increasing the output per person. There is plenty of potential for that. We have to make the cake bigger.
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However one measures it, our output per worker is below that of our main competitors—France, Germany and the United States. Part of the Chancellor's answer to the problem of sustaining the rise of spending on public services while at the same time enabling people to become better off is to raise productivity.
Of course the Government cannot do this on their own. The noble Baroness, Lady Noakes, made that point. So the Chancellor is pinning his hopes and his reputation on a shared mission to raise productivity in the public and the private sector, in manufacturing and in services. How does he intend to play his part? The answer again lies in the gracious Speech when the Government say that they will introduce legislation to,
"encourage enterprise, strengthen competition laws, and promote safeguards for consumers".
That means creating a wider and deeper enterprise culture open to all to make us more productive.
The proposed enterprise Bill contains a number of practical steps to do that. Thankfully, it gets the politics out of competition policy and encourages the Office of Fair Trading to promote competition and not just regulate it. Making price fixing a criminal offence is a real deterrent. Previously the deterrent was a company fine which in effect was a business expense mainly punishing the shareholders. The further encouragement for small businesses and the more favourable tax regime making it easier to start a business make a real contribution towards our enterprise economy being open to everyone. I was surprised that the noble Baroness, Lady Noakes—I am sorry that she is not in her place—did not welcome the proposals to reduce regulation on VAT and accounting. She grudgingly managed to mention the Regulatory Reform Act but, sadly, made no mention of the task force led by my noble friend Lord Haskins.
The Government are right to get on with this task with a sense of urgency. It will not be easy; nor will it be quick. Millions of people are going to have to feel that things have got better through their own individual experience that public services have become more responsive, that staff have become more thoughtful, that things happen more quickly, and that quality has improved. That is what will count, not whether the service is delivered through the public or the private sector. It will in the end come down to people and their skills. And we are going to need an awful lot more of them—people and skills. There is a shortage of doctors, nurses and teachers.
At Question Time the noble Lord, Lord Walton of Detchant, suggested that there is a shortage of 10,000 GPs. There is a shortage of fitters and engineers to improve our transport system and make it safer. There are shortages in both the public and the private sector. To counter those shortages, we are trying to attract people from developing countries. The cost is that they will remain just that—developing countries. If we are to seek these skills and talents from economic migrants and asylum seekers, it will mean that many of us will have to change our attitude towards them. Will the Government find these extra people among the 2.3 million men of working age, identified by the

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Centre for Economic Performance of my noble friend Lord Layard, who are listed as economically inactive'? My noble friend Lady Hollis suggested that they may. If so, they will have to combat age discrimination and make the New Deal really effective for the over fifties.
Perhaps the most difficult task in this project is to bring back the pride, recognition and status associated with working in the public sector and delivering high quality public service. I agree with the noble Earl, Lord Russell. That means valuing people in public service and the work they do, rather than attacking them. As the noble Lord, Lord Roll, suggested, this means pay incentives and paying them what they would earn in the private sector. Quite simply, we are going to have to pay people more to fill the thousands of unfilled vacancies.
Extending the involvement of the private sector in delivering public services will not be simple for companies either. Those companies will have to change. They will have to adapt to the high level of exposure and to the scrutiny and openness which are essential in delivering public services. They will have to act in a socially responsive way that may not always be reflected in their share price. They will have to learn to ally social purpose to their corporate objectives—not an easy task. This kind of social change is a long-term business. For example, it will take 20 years before we see the benefit of Sure Start, by which time present Ministers will have departed their offices. But their legacy will be the social capital which this work is creating.
Some noble Lords opposite may feel that there is no such thing as society. Perhaps they will be more at home acknowledging that there is such a thing as social capital. The Prime Minister's promise to liberate the individual potential of every person in the country is part of building up the social capital of our country. It is a brave, bold and ambitious task which deserves the support of us all.
5.7 p.m.
Lord McCarthy: My Lords, I join the noble Earl, Lord Russell, the right reverend Prelate the Bishop of Southwark and other noble Lords in welcoming back the noble Baroness, Lady Hollis, to the Dispatch Box. It is better to have the noble Baroness looking after pensions than anyone else. I know that many in the pension organisations feel that way as well.
I welcome the noble Baroness's speech for two reasons. First, she told us that she has a good deal more welfare legislation in the box. Secondly, if I understood her correctly, it will be delivered in the traditional way, which contrasts with much of the rest of what is proposed for the social services, except that we do not know exactly what is proposed for the social services. That brings me to what I want to say. I want to ask the Government this question: what precisely are the implications of the changes they seem to be proposing in what, when I read economics many years ago, we used to call the public/private balance? Are they suggesting that we should significantly change the public/private balance by, in a curious way for this
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country, expanding public services by increasing the private sector's involvement in them? That would be an unusual thing to do.
If the Government want to do this, then my next comment would be: whatever you do, present a better argument than the one you have produced so far. The argument appears to be that, in the future, we shall have to avoid "ideology". But then, everyone says that. Everyone has always said it. When the Attlee government nationalised gas, electricity, the mines, the railways and so forth, they said that those actions had nothing to do with ideology. They trotted out a series of extremely distinguished Members of this House—Lord Reid, Lord Herbert, Lord Stanley and Lord Heyworth—all of whom had served on distinguished committees and said that something of this kind had to be done for those industries because they needed a great deal of money, they needed reorganisation and the government of the day naturally wanted a measure of parliamentary control.
At no point was it said that those nationalisations were undertaken for ideological reasons, because no one ever does say that. Indeed, when the Wilson government nationalised Rolls-Royce, British Leyland and Harland and Wolff, Mr Heath even agreed over the matter of Rolls-Royce. Wilson did not say that it was an "ideologically driven" policy. The government of the day pointed out that those organisations, though excellent, were on the point of collapse and were going bankrupt. An emergency flow of funds was to be put in place to help the companies get back on their feet. The move was to be an eminently practical one.
I suppose that the action taken then could have been described as what the Government now would call "pragmatic". But that is a terribly difficult word. I would prefer not to see it used. The word is a philosophical one with at least four different schools of opinion as to exactly what it means. The OED first defines pragmatism as "obstinacy and officiousness". Only its fourth definition suggests that it means "common sense", and we all know that that means absolutely nothing.
When Mrs Thatcher denationalised the buses, telecommunications and water, she insisted that it was not done for reasons of ideology. Even during the denationalisation of British Rail, I can recall Members of the previous administration telling us that, when they proposed to create over a hundred separate railway organisations alongside one monopoly in the form of Railtrack, it was not being done for ideological reasons. They were going to increase the efficiency of the railways. Indeed, they sat on those Benches and said that they would improve safety. It was supposed to be practical and sensible, but then everyone says that.
Thus, if something rather unusual is going to be done by this Government, for goodness sake, find a better justification than simply denying that it has nothing to do with ideology—"I have principles, you have half-baked ideas and they have ideologies". Ideology is a Janus-word. It conjures up images of

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what was done in Stalin's name, or Lenin, or Hitler, or Mussolini. For that reason, I ask the Government to think carefully about why they want to pursue this line and then to give us a sensible explanation. I do not ask for such an explanation today, although I hope that the Government will say something today. I ask Ministers to go away and think about this, and to read carefully the excellent IPPR report, which unfortunately was published only today, and consider whether it may be of some help to them.
I understand that then the Government want to introduce change in the public/private balance in three broad areas. I should like to say a few words about each of them and to explain what kind of tests could, in principle, be applied. First, I look at the injection of private money, although when one examines the matter closely, these projects do not always mean that much private money will be involved. A great deal of public money is usually required as well. Nevertheless, a public/private partnership is supposed to include an injection of at least some private money.
I should warn the Government that there is a deep scepticism on this subject felt by an enormous number of the general public. The problem is that members of the public cannot see how it can be cheaper, or from where the profits are going to come. They do not understand how it can be possible for the private sector to raise money more cheaply than the Government. Then again, over the weekend they will have read—and the IPPR has confirmed this—that the PPI does not work for the National Health Service or for schools.
Noble Lords knew of the problems when certain legislation went through this House. It was monstrous to suggest that a PPI would be the best way to deal with the London Underground; and it was even more ridiculous to suggest that air traffic control could be run in this manner. And, in the end, people noticed that it was not adopted for the Post Office.
If the public/private partnership is going to be pushed, I say again to the Government: present a better argument than the one you have presented so far. Face the fact that, as Mr Prescott admitted to Mr Humphrys a few days ago on Radio 4, it will often be more expensive, but the Treasury is not made of money. He said something along those lines. Given that, the Government should tell the people of this country how much more they would be prepared to pay if it were done privately. Would they pay 10 per cent more, 20 per cent more, or even 50 per cent? Could it ever become too expensive to have these things done in the private sector? These are the kinds of questions which I beg the Government to take away and think about.
I come now to the second way in which the private sector is going to help us. It will bring in private sector "entrepreneurial expertise". Sometimes I think that anyone who believes this has never employed a plumber. Has any noble Lord ever tried to hire a plumber from the Yellow Pages? If one wants to see private enterprise at work, the marketplace for plumbers is a perfect example: many buyers, many
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sellers and everyone knows what they want. However, it has always worked abominably. No one knows quite why that is; it is simply the way that marketplace works. Of course, some people are so elevated that they have butlers and so never have directly to seek to employ a plumber. They would not know about this kind of thing.
However, the rest of us also read the newspapers. We know all about the scandals that have occurred after private sector enterprise has been introduced into the public sector. We know all about what has happened to National Health Service cleaning services. Some 12 months ago my wife underwent an operation. She stayed on a public ward, where she took a liking to a lump of dust underneath her bed. Five days later it was still there. She became rather fond of that little piece of dust. That happened in a fine public sector hospital. So everyone knows what has happened to cleaning services in the National Health Service, as well as what has happened to NHS wages as a result of privatisation.
Also we can cite examples of the conditions in some private old people's homes. We know how bad some of them can be. Then again, unless one wanted a passport, everyone has laughed at the farce created by computerisation at the Passport Office. Many of us know all about the painstakingly recruited and extremely expensive "knicker salesmen"—as they are known in the health service—these are people who come into the health service as chief executives. They last for six months and then depart with a substantial severance payment. We all know of the scandals which can ensue when the wrong kind of labour is imported into the public sector. I urge the Government to be careful and to work out how they will ensure that the relevant people know exactly what they are doing. Health service executives and prison service executives need to have relevant experience in their fields.
Thirdly, I come to the silliest reason of all: under-utilised facilities. I do not wish to take up too much of the time of the House, so I shall cite the most ridiculous example, that of the National Health Service. People pay into BUPA and other private health schemes because there is over-capacity. They pay to jump the queue. They pay for better food and to have the dirt cleaned out from under their beds. It is for those reasons that they pay the premia for private care. People do not want to pay all that money in private healthcare fees and then go into a private hospital, only to find lying in the next bed a person being cared for under the NHS who has also jumped the queue. Their healthcare is not costing them a farthing. Why on earth should people sign up to private organisations unless they were able to get an edge?
If great efficiencies are introduced so that there is no spare capacity, then the private sector in the NHS will be killed off. That is because it is based on privilege. It also exists by poaching labour from the NHS for which it does not have to pay, because it does not train anyone. It is parasitic. It can continue indefinitely in such a parasitic state, but changes will destroy it.

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have a final comment that I wish to put to the Government. Over the past 18 years, since Mrs Thatcher shot Hugh Clegg in 1983, successive governments have systematically starved the public sector of funds. Starved of funds, not in terms of how much it got—I dare say the noble Lord over there can give me 1.8 per cent or 1.9 per cent increase per year—but in terms of what it was expected to do; what the public expected it to do; what medical science would have enabled it to do if it had had more money. In that sense it was starved of public funds. What it got in exchange was management consultants. It has been the most wonderful place for management consultants; they have expanded like wildfire. Many of them were in the public sector themselves and went out and made a lot of money—they are friends of mine; good luck to them—but the public sector has been starved of money and satiated with consultants and advisers.
Every conceivable gimmick has been put into the National Health Service. It has been restructured and restructured and restructured. But every time you introduce a. major restructuring, half the people apply for their own job and sit around wondering whether they will get it, while the other half apply for another job, a better job, and if they do not get it their morale sinks. Everyone who gets a new job in a major restructuring is immediately dissolved from past responsibilities, because all the job descriptions are different. It is not your fault if it all goes wrong next year; you have got a different job description. That is not you down there; that is someone else.
So there is a considerable downside in major restructuring and a considerable downside in all major change. At last we have got some money. I say to the Government: think very carefully; think big. Suppose that you just throw the money at the social services and leave them alone to spend it. Of course, that is too shocking, and so you are bound to invent some new procedures and change a bit of structure. But do not expect that to do much good. It is your money that will do the good, and thank God you are at last going to spend some.
5.22 p.m.
Lord Skidelsky: My Lords, I am intrigued by the revelation of the noble Lord, Lord McCarthy, of the Government's diabolical plot to destroy the private health sector. I am sure that we will be able to make use of that in our forthcoming debates.
This has been an interesting debate and I am very pleased to be taking part in it. An intervention so early?
Lord McCarthy: My Lords, if the noble Lord is going to misrepresent me, I should like to get it right. I never said it was a plot. I think it is naivety. The Government somehow believe that they can do it without damaging the sector. I think that is doubtful. But it is not a plot.
Lord Skidelsky: It was a joke, my Lords.
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I am very pleased to be taking part in the debate. The noble Baroness, Lady Hollis, opened it in the passionate and charming way that she has made uniquely her own; my noble friend has done the best that he could with the materials at his disposal; and the clarity of the noble Lord, Lord Roll, is always a joy to experience. My own speech will be partly a reply to the thought-provoking remarks of the noble Lord. Lord Haskel.
I wonder whether noble Lords have fully grasped the revolutionary philosophy which drives this Government's economic policy. The Government have one overriding economic objective: to improve the efficiency and the productivity of the economy. That, of course, is not revolutionary in itself; Chancellors have been trying to do that for the past 50 years. The revolutionary principle is the particular way in which this Government use fiscal policy to achieve their aim. I shall call that use, if I may, "supply-side socialism mark 2" in order to distinguish it from mark 1.
Much of mark 2 socialism is based, as the noble Lord, Lord Haskel, said, on the human capital theory of economic growth—I prefer to call it "human capital" rather than "social capital", but they come to much the same—that is, the proposition that investment in human capital is the key to faster economic growth. I shall say only three things about that today. First, that it is very dicey as a theory; secondly, that even if the theory is right—obviously there is a case to be made for it so far as concerns education—it will take a long time to have its effects; and, thirdly, that it gives the Chancellor almost virtual licence to call "investment" anything that he wants to spend money on.
Why do I call this a revolution in economic policy? First, because it abolishes the separation between economic and social policy. Traditionally in Britain—and you can trace this back to Beveridge—social policy was designed to meet social and not economic objectives. The aim of the Labour Party particularly was to capture a part of the fruit of economic growth for social goals—better educational opportunities, better healthcare, higher pensions, relief of poverty and so on. So improved social provision was seen as the result of economic growth not, importantly, as the means to it—certainly not as the direct means to it.
The Blair Government have reversed this paradigm: social policy is to be judged by its effects on economic performance. In economic jargon, the "trade-off" between efficiency and justice or equality has been liquidated; the contradiction has been resolved. No wonder this leaves old social democrats such as the noble Lord, Lord Hattersley, somewhat bewildered.
Secondly, the Government's approach marks a break from the fiscal philosophy of my noble friend Lord Lawson of Blaby. In the view of my noble friend, the main contribution that a government could make to economic growth was to provide a stable macroeconomic background—that is now common ground between all the parties—and, more importantly, to liberate private enterprise from public restraint by reducing taxes, simplifying the tax system and

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deregulating both product and labour markets. The Lawson strategy implied that as the economy grew, people would pay more for education, healthcare and pensions out of their own household budgets. That was supply-side Conservatism as it was practised in the 1980s and the 1990s.
This gives us a good vantage point from which to open a serious debate on what this Chancellor has tried, and is trying, to do. The first thing to say is that his human capital theory of fiscal policy implies a substantial increase in taxation. I do not see how this conclusion can be avoided. True enough, the Government hope to improve the quality and efficiency of public services through the use of public/ private partnerships. Good luck to them—though I share many of the doubts expressed by the noble Lords, Lord McCarthy and Lord Roll.
But PPP is no substitute for spending money, and the Government have not claimed otherwise. The total tax burden rose from 37.6 per cent of GDP in 1996–97 to 40.5 per cent in 2000–01—and that was in a period of tight public spending, as my noble friend pointed out. That is not the end of it. Total managed expenditure—the broadest measure of public spending—is set to rise in real terms at an average annual rate of almost 4 per cent between now and 2003–04, or one and a half times the trend rate of GDP growth.
The social security budget, too, is on a roll. The Government's minimum pension guarantee is a commitment with serious long-term public spending implications. Let us consider the pledges on the National Health Service. The Prime Minister said that it was his ambition to raise health spending to the European average by the end of this Parliament. We spend 6.7 per cent of GDP on healthcare; the European average is 8.3 per cent. Last year, £44 billion of our taxes went on health. To spend what the Europeans spend we would need an extra £28 billion a year, and that is not counting the backlog of investment needed to bring our hospitals up to scratch.
Even to spend an extra £28 billion a year means an extra 10p in the pound on the standard rate of income tax. I wonder how many of the people who would be happy to pay higher taxes to get better public services realise how much higher they would have to be. As Anthony Hilton, City editor of the Evening Standard, put it in a recent article,
"Tony Blair could bankrupt the Exchequer and still not convince voters he has kept his word".
The effect of these big discretionary increases in public spending will be to increase the net borrowing requirement. This is expected to be in the double billions for each of the three years beginning next year, causing gross public debt to increase by about 15 per cent. Unless the national growth rate goes up substantially—which is the premise of the fiscal strategy—increases in taxation are inevitable.
Next, let us consider the impact of the Chancellor's fiscal activism on the nature of the tax system—how he raises his money and distributes his benefits. An ideal tax system should not distort the spending and saving
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decisions of households. But this Chancellor wants to do exactly that: to channel people's money to what he wants to do rather than what they want to do. As a result, we have developed one of the most complicated and distortionary tax systems in Europe. As Jonathan Sayeed put it in another place earlier this year:
"Even before this Budget, a bewildering array of different rates, credits, tapers, allowances, rebates, reliefs, means tests and adjustments led us to the point at which even those with a fair degree of financial knowledge have not a clue about the true extent of their tax liabilities".—[Official Report, Commons, 7/3/01; col. 366.]
Many economists believe that the over-complicated and distortionary nature of the present system has damaged medium-term growth prospects. In other words, it has achieved the exact opposite of what the Chancellor wants. The fall in sterling against the dollar suggests that investors are starting to take that view. That is hardly surprising, as growth in productivity fell flat during Labour's first term in office. That is quite apart from the danger to the Chancellor's fiscal projections posed by the American recession.
What I believe is happening is this: improvements in the public and social services which should be the result of better economic performance are now planned and justified as an "investment" in economic growth. Once you treat the welfare state as an engine of economic growth, you have removed a decisive constraint on public spending. That puts the Chancellor's own fiscal rules in jeopardy. It is also a very neat way of pre-empting the debate on how the public and social services should be financed, as who can be against wise and prudent investment? The Conservatives fell into this trap in the last election. They were forced to compete on the rhetorical terrain captured by this most politically astute of Chancellors. Politically, it is brilliant, but does it make economic sense or even political sense in the longer run?
This is where we have to join the battle. The Chancellor believes that faster economic growth can be secured by heavy public investment in human capital and by using the tax system to alter behaviour. We believe in a simple tax system with tax rates set to represent a decreasing share of national income and, to coin a phrase, in a "bonfire of controls". We believe that this is the only way to raise the long-term trend rate of economic growth. We also believe that it is right that those who can afford it should make direct contributions to the cost of education and healthcare. That is the only way to raise revenue for, and increase efficiency in, these services consistent with fiscal balance and consumer choice.
Now, we have to make a detailed and persuasive case for our alternative approach, which is something that we lamentably failed to do in four years in opposition.
5.34 p.m.
Lord Borrie: My Lords, within hours of the new Government being formed, journalists commented that my right honourable friends the Chancellor of the Exchequer and the Secretary of State for Trade and Industry had hit the ground running, making key

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announcements of policy initiatives on matters relating to business, the economy and taxation. It was to a degree reminiscent of the announcement made soon after the 1997 election by Gordon Brown to the effect that monetary policy should be determined in future not by him, not by the Treasury, but by the Bank of England—a decision which earlier this afternoon was welcomed by the noble Lord, Lord Roll of Ipsden. Indeed, that announcement was similar to the one made a couple of weeks ago that decisions as to whether projected mergers between companies—a take-over of one company by another—should be allowed would in future be determined not by Ministers but by the competition authorities. That is reminiscent of the 1997 decision regarding the Bank of England because the projected new policy will involve a very significant removal of political power on a key matter. It represents a major devolution of political power.
When the Government introduce this proposal, presumably in the enterprise Bill—the change regarding company mergers will certainly require legislation—though there will be some exceptions. The Government will not wish to give up the final decision in mergers where, for example, national security is involved, The Government will no doubt also want to have some greater discretionary role in decisions in other cases. It may be proposed that the Secretary of State should have the final word. If the enterprise Bill contains such a provision, I imagine that it will receive considerable close parliamentary scrutiny, because the broader the discretion, the greater is the risk that future Secretaries of State will wish to interfere even if the present one does not.
The DTI "trailered" these proposals about mergers in consultation papers in 1999 and 2000. But, more remarkable, along with the other announcements a couple of weeks ago by the Chancellor of the Exchequer, was the proposal that the projected enterprise Bill will also contain provision for the imprisonment of company directors and other individuals who are involved in price fixing and cartel arrangements. Such powers exist in the United States of America; they have been used from time to time and company directors have served terms of imprisonment. As my noble friend Lord Haskel said, if such provision were to be introduced in this country it would provide a powerful deterrent to illegal anticompetitive activity.
It will no doubt be said that in Britain we have only recently revolutionised our laws with prohibitions imposed by the Competition Act 1998—a measure which my noble friend Lord Haskel steered effectively through this House together with my noble friend Lord Simon of Highbury. Industry was given until March last year to adjust and to introduce its compliance programmes. So this is a new piece of legislation, newly effected. It was intended to bring our law into line not with United States law but with EU law, with which many major British companies were already familiar because they had to comply with EU law when engaging in inter-state trade across continental Europe.
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But EU law relies entirely on monetary penalties. It has not followed in American footsteps with gaol as the ultimate sanction. I do not think that our membership of the EU requires us to have harmonised policies on penalties; however, the Government will need to explain why, unlike the rest of the EU, we need a change whereby terms of imprisonment are to be used as a sanction.
Moreover, I suggest that the apparently greater deterrence to illegal conduct may be weakened by the higher burden of proof that applies in criminal cases. Although the Consumers' Association has said that cartels are organised theft, I am not sure that courts, judges and juries can be relied upon to think in those terms. Therefore, as regards that matter and many others, the enterprise Bill will require a good deal of scrutiny in this House.
I rather like the word "enterprise". I am sorry that the Opposition do not seem to like it. I refer to the remarks of the noble Baroness, Lady Noakes. I believe that the enterprise Bill is intended to focus positively on the advantages to the public that come from competition and an enterprise culture. Risk taking is surely an essential part of that. As the DTI stated in its White Paper in February,
"An entrepreneurial economy needs to support responsible risk taking".
At present our insolvency laws are much too draconian because they hit not only the fraudulent and the irresponsible, who of course ought to be restricted and restrained in their business activities, but, I am afraid, they hit also the unlucky, who might perhaps do better second time round and engage in activities beneficial to the consumer. I am glad to know that the enterprise Bill will significantly relax our insolvency laws so that a failed businessman, marked with failure because of his insolvency, will none the less in many cases have a better chance of starting up again.
Last year many on my side of the House and elsewhere were disappointed that there was no consumer protection measure in the gracious Speech, despite the Government having published a comprehensive, 60-page White Paper in July 1999. Now, from what little has been trailed about the enterprise Bill to come before us, I think that we can expect something in that Bill.
Earlier this year the DTI introduced some useful regulations—I say to the noble Baroness, Lady Noakes, that sometimes regulations can be useful—enabling trading standards officers and others to obtain from the courts so-called "stop now" orders that is a neat phrase—to stop traders breaching various EU directives that have been transposed into United Kingdom law to deal with doorstop selling, misleading advertisements, consumer credit and certain other matters. It was not legally possible for those regulations to cover contraventions of UK consumer laws that are not derived from the EU. In other words, they could not cover those parts of UK consumer law which emanate from the common law and from statute but only those which emanate from EU directives. I trust that that gap will be filled by the

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new Bill and that it will attempt also to cover traders who persistently engage in oppressive or unfair conduct of all kinds against consumers.
This Government have sought to promote competition, particularly through the Competition Act 1998. I say to my noble friend Lord McCarthy that part of their ideology, or at least their firm policy, constitutes a competitive society made more competitive by rules and regulations that are better able to deal with anti-competitive conduct.
Although competition is vital to protect the consumer, it is not always enough. The consumer needs a certain amount of regulation or—if you can get it and if it is effective—self-regulation, to promote specifically such matters as public safety and the provision of accurate, meaningful information about products and to combat the behaviour of rogue traders. As my noble friend Lord McCarthy remarked in relation to plumbers and as I say in relation to the second-hand car trade, there is plenty of competition. However, that does not mean that the consumer is adequately protected against rogue traders or misleading information and other bad practices that we all know exist. I feel sure that I am knocking at an open door in saying these things to the Government today.
5.45 p.m.
Lord Hodgson of Astley Abbotts: My Lords, it is perhaps not surprising after so clear and decisive a general election victory that there should be a note of self-congratulation in the speeches from the Benches opposite. I listened with great care and interest to the opening speech of the Minister. However, I have to say that as I heard the veritable blizzard of self-congratulatory statements, the word "hubris" sprang unbidden in my mind.
There are two economies out there. There is the economy the Government like to talk about in which consumers are prosperous, house prices are still just about rising and retail spending is up. However, in the other economy, the manufacturing economy, things are very different. That is an economy in crisis. There is a range of reasons for this; for example, the strong pound and, as my noble friend Lady Noakes so ably pointed out, the regulatory burden imposed on manufacturing which has drained the confidence from that sector.
Last week I visited a company in the north of England of which I am a director. The company is a successful one. It is a world leader in its field. Some 65 or 75 per cent of our production on Tyneside is exported. However, the agenda contained an item to discuss moving more of our manufacturing outside the United Kingdom. We did not reach a conclusion on the matter but it has emerged with increasing frequency over the past year or two. If we eventually are forced to make such a move, it will be at the cost of some 800 jobs on Tyneside. It is not just anecdotal evidence of this kind that we should be concerned about. Manufacturing output fell in April by just
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under 1 per cent and the sector is close to recession. We are as a country now running the largest ever trade deficit in manufactured goods.
The future looks no better. Here I follow the remarks of the noble Lord, Lord Haskel. The key to our future in manufacturing is productivity. But, as the Treasury said of the previous government, average productivity growth over the past four years has not been strong. Those are Delphic Treasury words. The Government so far have fiddled about with this complex and difficult issue. Instead of focusing on it, as my noble friend Lord Skidelsky pointed out, they have fiddled about with complex tax breaks and eye-catching wheezes. If ever there was an area of spin not substance, that is it. I for one shall look to see whether the brave new tomorrow in this area is any different from the disappointing past.
I want to concentrate my remarks on the City and the financial services industry which were passed over lightly in the gracious Speech. The City is an undoubted success story but it is not a success story that can be taken for granted. There is no preordained reason why the City of London should be one of the three leading financial centres of the world. But sometimes I feel that the Government act as though it is and always will be.
Before I go any further I must declare an interest, or rather three interests. I am chairman of an investment bank based in the City. It is a shareholder in the London Stock Exchange. I am a past director of the Securities and Futures Authority, one of the current regulatory bodies; and I remain deputy chairman of its enforcement committee.
First, therefore, I wish to refer to the regulatory burden. There is always a balance to be struck between lack of regulation which undermines public confidence and drives business away and too much regulation which imposes too many costs on firms, drives them out of the market and drives away business. We have to address that delicate balance all the time. No one would argue that there should not be a proper degree and level of investor protection. However, we must always remember the cost.
The Financial Services Authority budget for the next year is about £170 million. But that does not include the cost to firms of complying with its regulations. My bank estimates that we spend at least £2 for every £1 of subscriptions that we have to pay to the FSA. Some firms argue that the ratio is much higher. However, assuming that it is 2:1 it means that every year, good times and bad, £500 million is being spent on City regulations. That is £0.5 billion. That money does not come out of thin air. It is not produced by the Government; it is paid for by the consumer. When difficulties occur in the regulatory system and there is, in this Chamber and elsewhere, the inevitable rush to judgment, we need to remember that year in, year out, good times and bad, consumers are paying £500 million additional costs. We need constantly to revisit the issue to see whether the right balance is being struck. I am by no means clear that the Government have hoisted it in.

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The Government could help to keep costs down by ensuring that new regulations are brought in with plenty of notice, giving regulated firms time to adjust their internal procedures, change their IT systems, train staff and so on. The present example is not encouraging. The Government have said that the Financial Services and Markets Act will come into force before the end of November 2001. In his courteous and full reply to a Question for Written Answer, the Minister stated that 80 statutory instruments had to be implemented in order to fill in the detail of this vast piece of legislation. When the noble Lord wrote to me on 5th April only 16 of those 80 had been made. By a process of elementary arithmetic, 64 are still to come.
We may have made some progress. But let us consider what it means for regulated firms. It is now the end of June, with five months to the end of November. One and a half months are the holiday season. Therefore there are three and a half months, 14 weeks or 98 days in which to bring in and comply with 64 statutory instruments. There is no run-in period for these measures. After N2 one either complies or one is breaking the law. The Government need to think carefully about the additional and unnecessary stress and cost of the failure by the Treasury to plan adequately in advance. It is neither the Treasury nor the Government who will pay the price. The FSA will pay the price in terms of a launch in an atmosphere of good will or resentment.
My second point relates to the Government's attitude towards the future structure: the arrangements of buying and selling shares and other securities. The position of the London Stock Exchange is under threat in several ways. First, I have to raise again the issue of stamp duty. The key issue in maintaining market supremacy is that of price formation: the ability to quote the keenest possible price. There is increasing evidence that the existence of stamp duty is affecting price formation in the London market. Once a market switch has taken place, it will be hard for London to reassert its hitherto dominant position. The Government need to think again urgently about stamp duty.
Secondly, and equally importantly, the pricing of shares for purchase and sale is only one of three elements in each individual transaction. The other two are settlement—the means whereby money is transferred from the seller to the buyer—and the transfer of title, the means whereby one ownership is given up and another is assumed. Those two, in particular the latter, require trans-European action if a pan-European capital market is to emerge. The Government should be backing the City by pushing for action in these areas.
Deutsche Bourse is now attempting to integrate trading and settlement systems by taking over Clearstream, based in Luxembourg. It will thus create a monolithic non-transparent system. This needs to be resisted. It is a possible non-tariff barrier which will hold back the growth of the European capital market; and that will harm London's prospects. European settlement costs are seven times greater than those in
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the United States. To reduce them, we need transparent non-discriminatory links between all systems. The Government should be taking a lead on this. I have seen no sign of action.
Thirdly, and finally, perhaps I may deal with the takeover directive. This issue was raised first 12 years ago in Brussels. Serious discussions took place six years ago. It was agreed originally that it offered no advantages to the United Kingdom given the record of the takeover code and the Takeover Panel. The United Kingdom opposed the directive until two years ago when the Government caved in. That was a mistake. Since then the only role has been to make the best of a bad job. At the last minute, 12 years into negotiations, in May the German Government threw all their toys out of the pram and insisted that the directive should contain within it provisions for poison pills, the ability of boards to frustrate takeover bids and thereby deprive shareholders of a value that is right fully theirs. The position has been partly rectified but Article 5 on the protection of minority shareholders and Article 9(b) on the obligations on the boards of offeree companies are still not satisfactory. They represent threats to investor interests. It is interesting to see the divergent attitude of the Government towards home regulation where we spend £500 million supporting the SFA and the more cavalier attitude adopted with regard to the takeover directive.
Further, as Section 3 of the Preamble makes clear, the directive provides only for minimum guidelines. The Takeover Panel is, and will remain, far in advance of what is available on the Continent. But the downside of the directive is the increased risk of litigation with all the consequent costs, delays and uncertainties that that implies.
The decisions of the Takeover Panel have always been subject to judicial review. But in its early days a company, Datafin, tried to resort to the courts. In his judgment, the noble and learned Lord, Lord Donaldson, made it clear that unless there were a clear miscarriage of justice the courts wanted nothing to do with such cases. Therefore, we have been able to keep statute law out of the system. Under the new directive the Takeover Panel becomes "the relevant authority". It ceases to be self regulatory and becomes statutory. That carries with it a clearly increased risk of litigation. I am far from clear what advantages the Government believe that the United Kingdom or the City have gained from this directive.
The Government seem extraordinarily cavalier about the success of the City. "Don't worry about the regulatory burden or the timetable for its introduction. Don't worry about stamp duty and its effect on price formation and the impact on the London Stock Exchange. Do not worry about attempts on the Continent to wrap up exchange and settlement systems. Do not worry about losing the speed and flexibility of the takeover code". Some of those the key historic and competitive advantages of the City of London are being lightly cast aside. I look forward to hearing the Minister's comments.
6 p.m.
Lord Tomlinson: My Lords, the first two sentences of the gracious Speech refer to economic stability, a prosperous and inclusive society and the need for the Government to secure low inflation and sound public finances. We can all take it as read that there is a general welcome for the economic basis on which the Government fought the election. The independence of the Bank of England, with the consequent success of policies to control inflation, is almost universally accepted. The success of combating inflation and creating new employment is equally welcome. The control of public expenditure and the repayment of debt are widely welcomed. Low interest rates have been sustained, giving certainty to corporate and private borrowers.
However, although the record is good, the economy sound and the Government deserving of congratulations, we need to look forward. The continuation of that economic success cannot be taken for granted. At the start of a new Parliament, some aspects of the economy merit our concern and it is right and proper that concern should be expressed in your Lordships' House today.
Despite the background of economic success, some clouds are beginning to gather—none more so than the problems reflected in the recently published trade figures. The quarter to April 2001 produced the biggest deficit for 11 years, widening from £4.8 billion in the previous quarter to £5.6 billion. That is the largest deficit since the third quarter of 1989. The United Kingdom is suffering from the slow-down in international trade on the one hand and from the strength of sterling on the other. We have managed a large deficit for some years, but the current trend is worse and the gap is getting bigger. The provisional deficit on trade in goods and services in the single month of April rose to £2.2 billion, compared with £2 billion in March and £1.6 billion the month before. In April, exports of goods fell by 1.5 per cent.
It is clear that the strength of sterling was a major cause of the widening of the gap, particularly between the United Kingdom and the rest of the European Union. The deficit for the quarter to April 2001, at £500 million, was five times greater than that for the previous quarter.
Lord Skidelsky: My Lords, does the noble Lord agree that if investors have confidence in an economy, it can sustain a substantial balance of payments deficit for a long time? Is not the United States an example of that? Why is he particularly worried about the fact that our payments are in deficit at the moment?
Lord Tomlinson: My Lords, I agree that a deficit can be sustained for some time. I said that we had managed a deficit for a long time. However, I am concerned about the direction of the deficit—the fact that it is widening substantially, particularly with the European Union. I am concerned about the trend.
My second cause for concern in this attempt to look forward was also addressed by the noble Lord, Lord Skidelsky, and by my noble friend Lord Haskel, who
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is no longer in his seat. It concerns the trend in productivity. The noble Lord, Lord Hodgson, referred to productivity problems, but in no sense can they be held to have started in 1997 or anywhere thereabout. We have had constant productivity problems over a long period. Even a superficial examination of the document entitled Productivity in the UK: Enterprise and the Productivity Challenge, recently produced by my right honourable friends Gordon Brown and Patricia Hewitt, begins to show us how serious some of our productivity problems are. Output has been boosted in recent times by higher employment, but further improvements in productivity are the imperative of the greater prosperity foreseen in the Queen's Speech. The Chancellor's accumulated surplus will disappear speedily with present spending plans without recourse either to the improvements in productivity that we need to match our major competitors or to the tax increases that the noble Lord, Lord Skidelsky, referred to in his interesting speech.
The statistics on productivity in Gordon Brown's recent paper show that output per worker is 40 per cent higher in the United States than in the United Kingdom and the gap is growing. It is also 10 per cent higher in Germany and nearly 30 per cent higher in France.
Other statistics are also relevant to productivity. In the United Kingdom, research and development spending has fallen from 1.5 per cent of GDP 20 years ago to barely 1.2 per cent of GDP today, whereas France, the United States and Japan are all on rising trends and invest substantially higher percentages of GDP than we do. Germany's trend is slightly downwards, but it, too, has had a consistently higher level of investment in research and development than the United Kingdom.
There are other manifestations of the result of higher productivity and higher investment to consider. On a pro rata basis by population, there are 30 per cent more patent applications in the United States, 40 per cent more in France and 200 per cent more in Germany.
The major reason for our relatively poor productivity is our relatively poor investment in physical capital. We have had a lot of debate and discussion about the benefits that might accrue from investment in human capital, but the poor performance of investment in physical capital is largely responsible for our poor productivity, despite the fact that we have highly developed capital markets in the United Kingdom and despite our great success in attracting inward capital investment from other countries. After those two facts, which should be to our benefit, have been taken into account, the United States now has 25 per cent more capital stock per hour worked, France has 40 per cent more and Germany has 60 per cent more. We have a substantial backlog to make up on fixed capital stock per worker.
There are other aspects of the problem relating to productivity. Every time in the past 40 years that we have reached full employment, the first thing that we have bemoaned is skill shortages in areas relevant to

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the needs of industry. We have got wrong almost every massive investment that we have made in trying to train our labour force. At times of full employment the first cry has been "skill shortages".
Therefore, we have serious problems which require the concern of government and which do not enable us to assume that economic prosperity will continue automatically. We have a problem both in relation to our trade situation and in relation to the productivity that will be necessary to enable us to maintain the type of investment in public services that are foreseen in the gracious Speech without resort to tax increases.
Finally, I want to say one or two things about the effect of the exchange rate on sterling and our international performance by returning inevitably to the question raised so clearly by my noble friend Lord Lea—that of our membership of the single currency.
First, in the short time available, I want to say clearly that I agree substantially with his arguments. I hope that the Government will begin to indicate their views on which, if any, of the five economic tests remain problematic to them. I hope that they will do so sooner rather than later.
In the meantime, I have expectations of the Government in which I hope not to find myself disappointed. If we are invited constantly to support the euro in principle, subject to the five-test assessment, or if we are told constantly that we are pragmatically pro-euro, I believe that we have a right to look to the Government to start spelling out clearly not merely to us but, through us, to the whole of the British people what they anticipate the benefits of the successful attainment of those tests to be. When we have completed those tests successfully, they anticipate a government view in favour of joining the euro. I look to the Government to start telling us what the benefits will be because they should be spelt out clearly now. They remain constant whether or not we attain success in those five rather subjective tests.
Not only do I understand but I share concerns that the incantation of those three words—"five economic tests"—is being used not as part of the debate on the euro but rather as a shroud to avoid debate. That cannot continue any longer. I believe that a number of Members on the government side of the House will be quite content to assist the Government in bringing forward that debate.
6.12 p.m.
Lord Layard: My Lords, there is probably only one proposition on which every Member of the House agrees—that the main economic issue for this Parliament is whether to join the euro. I very much agree with what has been said by a number of noble Lords: there must be a public debate on the matter. There is already half a public debate. The "no" campaign produces documents every day and the number of misconceptions increases every day. I want to spend a few minutes helping to do what the noble Lord, Lord Tomlinson, suggested was needed—that is, to make some of the key points on the other side.
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Quite simply, the matter concerns productivity. That has been talked about a great deal today. However, in a country such as ours probably the main issue which determines the level of productivity is its relations with the rest of the world. One grows rich by being part of a large market. If one takes any part of the United States, one sees that it is rich because it is part of the large US market.
We have also seen the impact on the prosperity of European countries of the formation of the European common market. We stayed out of it for a long time and that was the great period when our productivity growth fell way behind that of the rest of Europe. After we joined, we managed to keep up with the rest of Europe. Unfortunately, we have not been growing any faster than it, but at least for the past 20 years we have not been growing more slowly.
However, Europeans have recognised that they do not have a truly single market because they have not had a truly single currency. Exchange rate uncertainty has been a major deterrent to any real deep trade integration. That is why the nations have now joined together to adopt a common money, much as, if we can cast our minds back in a broad-minded sort of way to the period before the First World War, the whole world had a common money. It is not such an awful thing to have.
During that time, we saw one of the great periods of trade integration and its impact on the spread of prosperity between nations. Now that a single currency is coming to Europe, we are already seeing the restructuring of the European economy in response to that with production concentrated increasingly in least-cost locations to the great benefit of European consumers.
Some people say that if we had stayed out we would be maintaining the status quo. I believe that that is the first fallacy of which we should dispose. The old status quo in which we lived until the past few years was one in which production in every single European currency destined for a market in any other European country involved exchange rate risk. However, for continental producers who are producing for the continental market, that risk has now gone.
Therefore, if we keep our independent currency, we shall become more at risk than we were in the past when compared with our competitors. I do not need to quote the experience of BMW, Vauxhall, Corus and so on to underline the importance of that. It will become even more important as the years go by. Therefore, I believe that we should start by recognising that the decision to stay out is not the default position; it is as active a decision as if we decided to enter.
However, then critics say—this came out in the past week—that the European market is certainly not our only one, and they point out that it is growing more slowly, in some sense to be defined, than others. The "no" campaign recently published a paper by Roger Bootle putting forward those arguments. I believe that there are three widely-held fallacies.

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The first says that the importance to Britain of Europe has become exaggerated by "our side" because the argument has focused on the share of trade in goods and services that goes to Europe. Instead, it is argued that one should add in the flow of income from investments, which of course is much more related to the United States. However, that is wrong. We are interested in the problem of the set-up costs of penetrating a market. Those involve a much longer time horizon and lock in the fortunes of companies and workers to the vagaries of an exchange rate if it is floating, whereas most investments can be more rapidly reallocated between currencies.
The second argument put forward a great deal at present is that Europe is growing more slowly than the rest of the world. However, the funny thing is that people do not look at history. Of course, for a long time Europe has been growing more slowly than the overall world economy, yet the share of our trade with Europe has increased steadily over the past 30 years. That is because trade integration is so important when compared with anything else. I believe that one can say with almost complete certainty that we should not be looking only at the present share of trade with Europe. If we joined the euro-zone, our share of trade with Europe would increase because integration would be so rewarding in terms of gains in profits and productivity.
Finally, people love to point out that more of our goods exports are invoiced in dollars than in euros. Of course, the largest number are invoiced in sterling. But the currency in which one is invoiced is not the point. What matters is the relation between one's costs—in pounds in our case—in one's own currency and the prices of one's competitors when expressed in the same currency. If the invoicing is in a third currency, the prices can be adjusted to obtain whatever price one deems to be optimal in the market in which one is selling.
Exchange rate stability in Europe is the prize we would win; the cost of course is loss of control over our interest rates. If one is in principle in favour of joining, one has already judged that the gain from exchange rate stability outweighs the cost of losing control over one's interest rates. One could not have made one's decision in principle without having looked at that key central trade-off.
As the Government have presented the matter to us, the next issue is to decide when to join. The Government must of course make a careful assessment of the tests. One is bound to say that the basic convergence of economic cycles and thus of interest rates looks to be well within sight. The remaining problem is with the exchange rate. We could consider joining only at an appropriate rate, which would be substantially lower than that which currently prevails. However, the exchange rate is not an exogenous, external element that the Government are powerless to affect; they can influence it and ultimately it will have to be agreed with our European partners. If that involves a change in the exchange rate, there will be
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problems with demand management—a lower exchange rate would mean a higher level of demand for British production.
Lord Higgins: My Lords, would there also be a problem with inflation?
Lord Layard: My Lords, there could perhaps also be a problem with inflation, although one hopes that that would be a one-off issue. I entirely agree with the noble Lord. My point is that there are problems.
One cannot imagine a situation in which one joined but in which there was not some problem of demand management when one linked up with another monetary system. We again come back to the fact that if one is in principle in favour of joining, one must have accepted that one will have to overcome some challenge or other at the point at which one eventually joins. I do not want to prejudge the Treasury's evaluations but I cannot help recalling that the feeling in the 1950s was that we could wait and see about the common market. In fact, events moved on, as they always do, to a position in which for a time we did not even have the option of joining. I am not suggesting that there are similar events in our current situation but in that case, having decided to wait, we ended up waiting for 17 years. I devoutly hope that it will not be that long this time.
6.23 p.m.
Lord Blackwell: My Lords, it is typical of debates on the economy to start off with a recitation of statistics on the current state of the economy. I do not begrudge the Minister that pleasure because on many measures—not, as we have heard, all measures—the economy's current performance looks quite good. However, the danger of such confidence is that the Government start to believe their own rhetoric about the strength of the economy and the prudence of their policies and ignore the reality of leads and lags in the economy, which is a dangerous driver of economic activity. What we measure today is not necessarily a good measure of what is going on "underneath" the economy. As a result, I fear that the future may not be as rosy as the Government expect and their policies may not be as benign as they judge them to be when they look at the current state of the economy.
At this stage—just after an election—I do not want to make a narrow party-political point. However, the truth is that what one observes of any economy today is not the consequence of actions that are taken today; it is the cumulative effect of policies that have been followed for several years. The current conditions—low inflation and unemployment, almost 10 years of continuous growth and the fact that government finances are in surplus—are the consequence of a sustained period of monetary and fiscal restraint since at least 1992, when Britain left the ERM. I give the Government credit for not immediately destroying that legacy. However, they cannot claim single-handedly to have abolished boom and bust. When I look at the Government's current policies, I am not so certain that the future is assured.

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Continued stability in the economy depends on having an economy that can withstand external shocks. The Government's over-confidence is putting that stability at risk. We are moving, as several noble Lords have pointed out, from a situation in which public expenditure grew at a rate that is lower than GDP— it did so for many years—to one in which projections suggest that government expenditure will grow much faster than GDP. That involves turning surplus into deficit even under the assumed condition of benign economic growth. As my noble friend Lord Saatchi pointed out, the Red Book shows that as a result, over the next five years, the Government will borrow back all the money that they repaid during the previous five years. Moreover, as my noble friend Lord Skidelsky pointed out, such growth in economic expenditure is not sustainable under any conditions; indeed, it is risky because the imbalance that is created will be compounded by any economic weakness that there may be.
I therefore fear that, despite the Government's rhetoric, they are reverting to boom and bust, which has often been fuelled by runaway public spending. That is a real risk; we have all be lulled by the worldwide experience over the past five years. In that period only five OECD countries suffered a year of recession; however, in the preceding five years—the first five years of the 1990s—18 OECD countries, including, of course, the UK, suffered recession. We cannot go on assuming that such conditions will not recur.
There is therefore a risk in the game that the Government are playing. However, worse than that risk is the fact that their current policies are, in ways that are not yet fully observable, killing the golden goose of economic wealth creation, on which all of that future prosperity depends. As my noble friend Lady Noakes said, during the past four years the Government have imposed on business significant new burdens in terms of regulations and taxation. I accept that that has not all been one way—I congratulate the Government in particular on their plans to reduce capital gains tax, which is a welcome development. However, rhetoric on enterprise and deregulation is not the same as policies. Too many policies, particularly those in the labour market, have gone the other way. A trade body recently estimated that the cost of regulation over the past four years was £35 billion. I do not know whether that figure is right; the additional 27 hours a month that have been incurred by businesses and which were discussed by my noble friend Lady Noakes suggests that the real figure could be much higher. Ministers must recognise that rhetoric and deregulation are not what this is all about; for scores of businesses up and down the country the reality involves an expansion of regulation, which is decreasing our prospects for employment and wealth creation.
In addition to those microeconomic effects, and forgetting about leads and lags, the Government are ignoring another fundamental reality; namely, the reality of crowding out. With an economy that is close to full employment the truth is that every extra pound
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of public spending ultimately squeezes out close to a pound of GDP activity in the private sector. In other words, as the public sector gets larger, the private sector gets smaller than it would otherwise have been.
It is worse than that because we do not have a static economy, as that would suggest. We are not simply dividing up a static pie: it is the private sector on which we depend for wealth creation and growth. The more we squeeze the private sector to pay for public spending now, the more we limit future economic growth, the more we reduce our future national income and the more we reduce the amount that we have to spend on growth and private and public consumption in future.
The days are gone when economists believe that increasing public expenditure could promote growth and future wealth. It has exactly the opposite effect. The noble Lord, Lord Haskel, said that the objective should be a bigger cake. The result of the Government's plan, because of that inevitable effect of crowding out—crowding out the wealth-creating part of the economy—will be a smaller cake.
A prudent economic policy not only balances government budgets today but limits the share of national income that the Government claim today against the welfare of citizens tomorrow. A government who take too much of the national income today and spend it on non-productive areas will reduce national income and welfare for citizens tomorrow. Nothing is more misleading than to call that spending "investment" as a new form of double-speak.
So given the combined effects of new regulatory burdens on the supply side and the crowding out impact of public spending and reducing wealth creation, it is not surprising that aggregate productivity growth in the UK, as a number of noble Lords have mentioned, has slowed over the past four years from 2.3 per cent in the previous four years to 1.8 per cent. And as a result of more interference on the supply side, there is little to suggest that that will rise.
I am too old, perhaps, to place much reliance on simplistic regression models. But I do not think that it is complete chance that, if you look across the world's economies, there is a very clear relationship between public expenditure as a percentage of GDP and growth rates. The higher the ratio of public expenditure to GDP, on the whole, the lower the growth rate. I do not believe that that is an accident.
As the Government's spending plans show that the proportion of government spend to GDP will rise rapidly again, having been brought down during the period of rapid growth and productivity gains in the 1980s and early 1990s, I believe that we need a proper national debate on the sensible limits of that government spending ratio that takes account not only of the macro-economic effects that I have talked about but also the effect on efficiency and productivity and also—in some ways, a more important point—the threat to personal choice and liberty posed by a large state.

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One more factor that I should throw into this debate is the unrecognised under-funding of state pension liabilities. Based on figures released by the Government Actuary, I was able to estimate recently that the cost of under-funded pension liability is over £1 billion for the basic state pension alone. To that must be added the under-funded liabilities of public sector workers and others which are several hundred million pounds in addition.
We need to construct an economic policy, balancing what we take today versus growth and investment for the future, which allows those future liabilities to be funded so that we are not building up another time bomb for future generations.
I go back to my starting point—the leads and lags in the economy and the danger of looking at performance statistics today and ignoring the impact of what the Government are doing in relation to economic wealth creation for the future. While the Government bask in the current economic environment that has resulted from past policies, I believe that there are many trends beneath the surface which are caused by current policies, policies for which the Government are responsible and which threaten to undermine that economic success in years to come. I look to the Minister who is to reply to show that the Government have indeed moved beyond pre-election rhetoric and that they are aware of the dangers of the course on which they are now set.
6.34 p.m.
Lord Brooke of Alverthorpe: My Lords, first, I apologise to the House for my late arrival to the debate. That was caused by problems with Railtrack.
I am grateful for the opportunity to speak in this part of the debate on the gracious Speech. If the Prime Minister had not called a general election on the day that he did, I should have had the privilege, in the following day's Labour debate, to draw the House's attention to the beneficial effects of the Government's policies on the UK economy. It might not have been entirely to the taste of the noble Lord, Lord Blackwell, but I should certainly have been saying that we had built on what had been there before, and that we had built on it very substantially indeed.
I wanted to stress in particular the valuable impact of the Government's policies on helping to reduce the scourge of unemployment. We still have very substantial numbers of unemployed people in this country and that issue needs to be addressed. The Government have also helped to reduce social exclusion and have sought to reduce inequality—scars on our social fabric that had grown over the previous two decades. In my opinion, those are some of the principal defining features between the approach of Labour and the Conservatives over the past few years.
I hope that those will continue to be important objectives for the Labour Government in their second term. Particularly in the light of what the noble Lord,
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Lord Skidelsky said, I await with interest to see what will be the position of the new leadership within the Conservative Party when it has been determined.
Leaving aside the politics, I should have echoed much of what was said by my noble friend Lord Tomlinson; namely, that there are storm clouds ahead and that notwithstanding what we endeavoured to do in the first term of the government, much remained to be done, and that our success or otherwise would be dependent primarily not only on the Government's continuing successful economic management, a point raised by a number of noble Lords today, but also on the need to improve further, with a significant drive, the country's overall performance through higher productivity. In particular, I should have spoken in favour of the greater use of information technology.
The gracious Speech now gives me the opportunity to make a few brief observations on the latter points. IT and the Net can provide the platform for a substantial increase in our productivity in this country. The Government recognised that when they were elected in 1997 and they made an exceptionally good start, in my opinion, in seeking to identify and support the actions needed to keep the UK in the forefront of the global e-commerce race. The report they produced e-commerce@its.best.uk was generally welcomed and seen as an outstanding document, both here and abroad. There was some good follow-up and the Government have achieved much of which they should be proud since publication.
But, as I regret is so often the case in the UK, it seems that we are now starting to slip behind. In a sense, I fear that there is an admission of that in the Queen's Speech where it states:
"My Government will work with our partners to make sure that Europe has the most competitive knowledge-based economy in the world".
I have not drawn a great deal of comfort from the DTI/Treasury document to which my noble friend Lord Tomlinson referred, which was published last week, about productivity in the UK in so far as it says anything about IT and the Net and its implications and possibilities for productivity in the UK.
The phrase in the gracious Speech gave me the feeling that we are now shifting our focus from "making Britain the best place in the world for e-commerce", as the Prime Minister said previously, to working with partners to ensure that Europe has the most competitive knowledge-based economy in the world.
Perhaps that is a more honest and realistic assessment of what we can achieve than the somewhat over-hyped ambitions of the past. That is fair enough, but it disturbs me. Last year I spent seven months as chairman of Sub-Committee B of our European Union Select Committee looking at the way in which e-commerce is developing. I and other observers are concerned that our competitors within Europe are continually raising their game in this arena. So we need to keep up the pressure.

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Even more worrying, in the past two years we have made little progress on some key issues and I believe that the UK is lagging behind some of our competitors, not just on a worldwide basis but also within Europe. In a number of areas a step-change in the Government's efforts is required. Time does not permit me to go into all of them, but I shall mention two where the Government can act.
The first is in their own backyard. They have set targets for the whole of government to be online by 2005. Some other targets have been changed or abandoned since the election, but I seek some reassurance from the Minister that the Government are adhering to that target, although I sense an increasing scepticism about our ability to meet it. I suspect that the recent reorganisation of government departments, while justifiable, will in some respects have created further problems and possible delays for "e-government- planning.
In short, there is a pressing need to re-engineer government around the citizen/business user with new integrated online services, rather than simply taking existing services and putting them online. More investment will be needed for that as well as better assessment of cost-savings of property assets and staffing that would flow from a significant take-up of "e-services". A strong catalyst in that regard would be the opening up of government services to competition, perhaps from the voluntary sector and from the private sector. As I said earlier, these issues fall within the Government's area of control and action and such action is now required.
Finally, I want to speak about the pressing need to get on with building the infrastructure for the new economy and rolling out broadband, with its high speed and "always on" capabilities. The national economies that first achieve pervasive broadband use will gain significant competitive advantages, both through the transformation of existing industries and the creation of new ones. Yet currently the UK is 22nd in the OECD league table of broadband access and poor broadband connectivity in the UK is becoming a factor in mobile investment decisions. At long last BT is rolling out broadband capability and Oftel has improved competition in that area. Indeed, only a few weeks ago my noble friend gave us the programme for the roll-out from BT up to July. I would be grateful if in the future he can update the House on the continuing stages of that programme and whether there is a possibility of it moving at a faster pace.
I do not believe that the roll-out from BT alone will be sufficient to make broadband capability pervasive on the scale required. Investment costs are extremely high and even in a positive investment climate, which is far from the case for the telecom sector, it will not be easy to acquire money from other parts of the private sector. So I contend that if we are serious about productivity in this area there is a case for the Government to undertake an urgent review of where and whether it is possible to intervene to some degree, either directly or in partnership with the private sector, or to explore the prospects for the tax breaks to encourage greater growth of band width.
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Offering broadband connections to all SMEs could massively raise productivity. I would not include sole-traders who are not in as much need of it; nor would I include the bigger companies who, from the facts, are doing well and can cope on their own. But the vast bulk of firms that employ people in this country, the small to medium enterprises with from 10 to 500 staff, are desperately in need of access to broadband. Over 95 per cent of our private sector workforce would be covered by such a change and it would provide an unprecedented uplift in performance and productivity.
Perhaps the Minister can say whether it will be possible to hold a further review of the way forward in this area. I suspect the reply will be "No", which is a pity because, as we look around and see what some of our competitors, not on a worldwide basis but within Europe, are doing, we can see that step-changes are being effected in a number of European -countries. If noble Lords look at what is happening in Germany, they will see how that country is moving ahead quickly and leaving us far behind.
6.47 p.m.
Lord Northbrook: My Lords, first I declare an interest as an investment fund manager. In the main I shall speak about the key measures that affect business in the gracious Speech and in the Enterprise for All press statement. The Labour Government's first four years showed that they were able to take advantage of the inheritance of the sound economy that they took over in 1997. In their second term the Government want to show that they can improve the country's long-term economic performance.
For all the government business-friendly rhetoric of the first term, the Economist, as have many speakers, noted that British productivity still lags behind that of France, Germany and the US. Recently there has been an improvement in manufacturing performance, but rather than that being caused by government policy, it is more likely to be a result of companies having to make efficiencies to deal with an overvalued exchange rate.
Several measures announced last Monday in the Government's strategy paper on enterprise and productivity were welcomed. One of the most interesting moves will be to take politicians out of competition policy as well as to deny Ministers the right to make the final decision on mergers. The Government also propose to allow the Office of Fair Trading and the Competition Commission to be more proactive in starting investigations.
The proposals, which include a threat to jail directors involved in cartels, were welcomed by competition authorities and consumer groups, but were met with concern by industry bodies. Digby Jones, the Director-General of the CBI, warned that they would put UK companies at the disadvantage of competing in a market where Britain would be the only large EU country with such draconian legislation.
The planned reform of insolvency law is needed both in order to encourage people to take risks and to avoid unnecessary failures. The main insolvency

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professional body, R3, welcomed the proposal to abolish the preferential status of Crown creditors such as the Inland Revenue, but the British Bankers' Association stated that the plan to abolish receivership might make banks more reluctant to lend to companies. John Thirwell, a BBA director, said:
"There is a real danger that finance from banks will be less flexible, less available and more expensive".
Further measures include a review of the planning system, which also can place considerable constraints on business, and that is long overdue.
However, as the Financial Times stated on 19th June:
"Whilst parts of the Enterprise for All press statement make a lot of sense, the overall strategy is flawed. The Chancellor does not accept that he risks undermining the pursuit of efficiency through his habit of excessive interference".
How has that interference manifested itself? According to the British Chambers of Commerce publication Burdens Barometer, compiled for the first time in 2000, red-tape will have cost businesses £15 billion by 2002. Those figures are also based on the Government's own regulatory impact assessment.
Major elements of that figure are compliance with the working time directive (£7.65 billion), the data protection directive (£3.1 billion), the EU pollution directive (£1.6 billion), and IR 35 (£0.5 billion). Those are the most high profile of the new burdens but there are many others, including working families' tax credit, new rights on parental leave, the part-time workers directive and the implications of the Human Rights Act.
Lord Lea of Crondall: My Lords, I thank the noble Lord for giving way. Perhaps I may take an example in that great litany of burdens; the part-time workers directive. The noble Lord called it a burden but would it not be equally true to say that it enables employers to treat part-time workers as part of the labour force—and not before time?
Lord Northbrook: My Lords, I thank the noble Lord for his question. My point is whether or not the issue can be resolved on a more informal basis between employers and employees rather than having to be enshrined in legislation.
Moreover, further burdens are on the way, including waste electrical and electrical equipment directives and further reforms to parental leave. The cumulative cost of those regulations hit medium and small-sized businesses most, as confirmed by recent figures from the Institute of Chartered Accountants. The figures show that the costs to smaller businesses of complying with new legislation more than doubled between 1999 and 2000. As regards medium-sized businesses, the average cost of implementing new legislation rose from £1,700 in 1999 to £3,600 in 2000 and for smaller businesses from £4,700 to more than £8,000.
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There is a major effect of this red-tape burden. The first is lower productivity. As has been stated, one of the DTI's main departmental aims is to raise productivity, but most experts accept that red tape on the scale introduced under Labour reduced productivity and investment. OECD statistics show that productivity increased at two-thirds the rate of 1992–97 during the four years since Labour came to power. As many speakers have said, the deceleration in Britain stood in marked contrast with America, where productivity rose. Output per worker is more than two-fifths higher in the USA and in France it is one-fifth higher.
Another effect of the red-tape burden, as mentioned by several speakers, is wasted office time. The secretary of the Institute of Chartered Accountants' Enterprise Group, Clive Lewis, stated in a press release last October:
"Not only does the volume and complexity of regulation eat into the resources of a business but it absorbs time that could be spent more valuably on survival and expansion".
An additional effect of the red-tape burden has been a 30 per cent rise during 1999–2000 in individual complaints dealt with by ACAS. According to the magazine Personnel Today,
"the raft of legislative changes brought in under the Employers Relations Act is the chief factor behind the big rise in tribunal claims reported by ACAS".
Another consequence of the red-tape burden has been as a result of the working families' tax credit. The National Association of Citizens Advice Bureaux reported in a recent document that:
"Employers have sacked workers entitled to the pay boost or cut their hours because they want to avoid the red tape of paying through the wage packet".
More red tape is in prospect. The Government are speedily preparing the ground for the introduction of two new and potentially costly regulatory burdens on business; namely, the introduction of the EU Information and Consultation Directive and, secondly, the introduction of new rights for parental leave. The EU Information and Consultation Directive, in case anyone is not familiar with it, forces UK companies to consult their employees before taking major decisions such as those on redundancies and closures. Prior to the election the Government were supposedly strongly opposed to the directive, keen as they were to maintain business support. For example, the then Secretary of State for Trade and Industry, Stephen Byers, stated at DTI questions in January 2001:
"The Government remain opposed to the directive which we believe contains a number of weaknesses".—[Official Report, Commons, 18/1/01; col. 498.]
However, they allowed the directive to be passed four days after the election. Companies with 150 staff will have to adopt the regulations in three years' time and those with 50 or more staff must do so after seven years. The CBI stated that it was "deeply disappointed" by the EU Council of Ministers'

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decision, arguing that the legislation would be damaging because there is no single right approach to employee involvement.
Lord Haskel: My Lords, I thank the noble Lord for giving way. Did he have the opportunity of seeing the survey carried out by the CBI, which was published on 12th or 15th June, stating that a large number of firms are already carrying out these various directives?
Lord Northbrook: My Lords, I thank the noble Lord for his question. Again, my point is that if such a process is already happening can it not be done as a voluntary agreement rather than requiring legislation?
The Engineering Employers' Federation greeted the Council's decision with dismay. David Yeandle, its deputy director of employment policy, stated:
"There can have been no compromise that would have made this a less bitter pill to swallow for UK employers".
The second new and potentially costly burden is the introduction of new rights for parental leave. In the previous Parliament, the Government incorporated into UK law the European directive on parental leave, granting parents of children under five the right to three weeks off work to spend time with their children. That was implemented through the Employment Relations Act 1999, which included other changes to UK maternity entitlements. The key point about the Government's reforms in this area of family-friendly policy is that they are trying to legislate in an area where companies' employees and employers should be able to work out their own solution. The Government's approach will create extra red tape.
Reacting to the Labour Party's announcement of proposals to create a task force to consider how working parents can be given a legal right to request flexible hours, Davis Sears, deputy director of British Chambers of Commerce, said:
"There is still a danger that the approach being proposed will lead to an increase in the regulatory burden on small businesses, adding yet another hoop for employers to jump through. The announcement assumes that the need to regulate is a foregone conclusion. Business would rather the proposed task force were given a more open remit to meet the needs of employers' and employees' [for] flexibility in the workplace. We will be pressing for small business representation on the task force to take this issue forward".
Moving on to the Government's tax policies towards business, I welcome the Chancellor's cuts in corporation tax, capital gains tax on business assets and VAT since 1997. I urge him to follow the example of the Irish Government by continuing to reduce corporation tax. I note that the Financial Times states that the changes proposed to capital gains tax may at the margin encourage investment, but this positive outcome is outweighed by the disadvantages of having a constantly shilling and confusing tax regime.
A particularly damaging new tax on manufacturing business is the climate change levy. Evidence already shows the damage that it has caused. In May The Times reported:
"Labour's controversial climate change levy more than tripled the pace of cost increases in Britain's industries after its introduction last month, official estimates have revealed".
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The first evaluation of the effect of the climate change levy shows that it added more than 0.9 per cent to industry's costs in April, according to the Office for National Statistics. Without the extra charge on business energy use, firms' costs would have risen by just 0.4 per cent during the month. But the levy implied a total rise of 1.3 per cent—more than three times as much.
The Engineering Employers' Federation estimates that some 2,300 enterprises that employ more than 1.3 million people will not have access to negotiated energy agreements with the Government and, as a result, will face new net costs of almost £100 million, even after a reduction—
Earl Russell: My Lords, is it sensible to suggest that the cost of the climate change levy should be calculated against the possible cost to business of flooding which can also be considerable?
Lord Northbrook: My Lords, I note the noble Earl's comment. The 2,300 companies are open to international competition and will be required to pay the levy in full, with damaging consequences for profitability and their ability to invest in energy-efficient measures.
The UK Steel Association estimates that the additional cost of the climate change levy will be £10 million per year per producer. It also states that the penalties are very heavy even for marginal noncompliance. There are inconsistencies in the way that tax operates and who is eligible.
The Government claim that the levy will be revenue-neutral across the UK, but the 0.3 per cent cut in national insurance contributions will be insufficient to offset the increased energy cost imposed by the climate change levy. The levy effectively favours labour-intensive companies at the expense of technology-intensive manufacturing industries. Many companies in the automotive sector will be badly hit because narrow eligibility criteria prevent them entering a negotiated agreement with the Government.
The Aluminium Federation has stated that, while its sector has been able to negotiate a more affordable CCL tax bill, it is still overly-bureaucratic and will damage the competitiveness of the industry against both competing materials and competitors in other European countries.
In summary, while the Government should be praised for cutting corporation tax and reforming capital gains tax for business assets, this good work has been undone by unhelpful extra taxes, such as the climate change levy and the burden of extra regulation which hinders company productivity. As a final comment, there would be a huge benefit if government Ministers and civil servants spent more time on secondment to businesses, both manufacturing and service. They would see exactly the effect of the extra regulatory policies and that would encourage them to cut back rather than expand red tape.
7.5 p.m.
Lord Newby: My Lords, in the first economic debate of this Parliament I should begin by congratulating the noble Lord, Lord McIntosh, on retaining his position as the Government's spokesman in your Lordships' House on this and other matters. In the previous Parliament the noble Lord demonstrated his versatility in many ways. I believe that during the speech of the noble Lord, Lord Roll, the noble Lord, Lord McIntosh, was about to expand his repertoire by bursting into song. I hope that we shall have that pleasure during his wind-up speech.
I begin with the overall economic situation. I believe there is a consensus that the Government entered the election campaign with most of the economic indicators in a very positive state. To a certain extent, that was the result of their own doing; for example, the independence of the Bank of England helped. As the noble Lord, Lord Roll, said, it was also due partly to propitious external circumstances. The likelihood is that those external circumstances will be somewhat less propitious as one moves into this Parliament.
As we look around the world, we see that in Japan, for example, the prediction is that growth will be 1 per cent or less for a number of years to come. In the US, there are major uncertainties in a number of areas. Are we in for a "V", "U" or "W" in terms of growth over the coming months? Will the Bush tax cuts later in the year provide a stimulus to consumption or will over-borrowed consumers use them to rebalance their finances? How long can the US sustain a huge and growing balance of payments deficit, and what will be the consequences in the short term of the extremely high level of inventories which currently exist in US warehouses? There are many uncertainties. When we move to the euro-zone, we also see a fairly mixed picture, with sentiment in Germany looking particularly gloomy, with attendant consequences for the UK.
All these movements in the economic situation of the major trading countries and blocs are potentially damaging to the UK. While in many respects the economy is strong, as the noble Lord, Lord Hodgson, pointed out, at the moment there are major imbalances and, to a certain extent, we live in a two-economy economy. Over the past three years, the manufacturing sector has lost about 400,000 jobs, with a disproportionate effect in some of the more northern regions, yet in the service sector we see very significant skill shortages which begin to place increasing pressure on incomes and wages which, at their limit, appear to reach unsustainable levels. City firms now pay newly-qualified lawyers between £30,000 and £40,000 at the start of their careers. I do not believe that that kind of income is sustainable. To pick up a point made by the right reverend Prelate, I also believe that in the longer term the effect of such skill shortages and high wages in further increasing the already wide disparities in income will be potentially damaging to the coherence of our society.
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To sum up on the overall economic situation, I do not believe there is a need to panic, but perhaps there is need to feel a little uneasy. This macro-economic picture must inform debate on the major economic and political issues that face us during this Parliament, of which I suggest there are two: the first is the possibility, or not, of our joining the euro; the second relates to the funding of public services.
As to the euro, in the very short period since the election we have already seen the price to be paid for uncertainty. First, within days of the election there was speculation that the Government might be readying themselves to grasp the nettle of quick euro entry. The sterling trade-weighted index fell by about 2.5 per cent which, incidentally, only rectified the rise in the index in the previous month. Although there was a good deal of concern about it, in absolute terms that was not a huge or unprecedented shift in the currency. However, when sterling falls by 2.5 per cent what happens is that within days the Chancellor has put the dampeners on speculation about euro entry in his Mansion House speech, by the typical Gordon Brown technique of using positive words in public but briefing negatively to the media in private. At the same time the Prime Minister briefs that any suggestion of an early announcement on the economic tests would lead to unacceptable sterling volatility over the summer. The pound obligingly then rose somewhat.
Therefore, the situation on euro entry is that the Government are committed in the next two years to an assessment of the five tests. They accept, or appear to accept, that sterling should fall before we enter. But they shy away from the first signs of the possible consequences of this fall in terms of inflation and possible increases in interest rates.
With regard to the question of the level of sterling and its effect on interest rates, one does not have to want to join the euro to want the level of sterling to fall. If one wants the level of sterling to fall, the consequences flow, in terms of inflation and interest rates, whether or not one joins. Therefore, many people who seem to argue against joining the euro on the basis that it will lead to higher inflation rates, while at the same time arguing that we need to have a more competitive currency, are frankly living in Cloud-cuckoo-land.
I return to the Government. Against this background of vacillation, it is hardly surprising that Goldman Sachs, among many others, has concluded that the odds of a referendum on the euro being held in this Parliament are less than 50 per cent. I hope they are wrong. But I say this to the Government: if they believe that they can achieve exchange rate stability while giving unclear signals as to their real intentions on the euro, I fear they are in for an unpleasant surprise. Together with the noble Lords, Lord Lea and Lord Tomlinson, I, too, believe that we need a clear timetable for the assessment of the economic tests and for the referendum. Furthermore, on the assumption that the Government want to win the referendum, we need greater urgency in making the argument for British euro membership.

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If the Chancellor's real intentions on euro entry are opaque and potentially damaging to the economy, the election and its aftermath has left us little clearer about Labour's long-term view on funding the welfare state. We said repeatedly during the election campaign that there were three choices: first, one can pay less tax and have poorer public services; secondly, we argued that if one wants an improved quality of public services, one needs a targeted and fair additional tax income to fund it. The Government, having cut public services to the hone, propose a short-term boost to expenditure, but appear curiously unwilling to grapple with how quality public services in the longer term might be provided.
I agree with the noble Lord, Lord Haskel, that a large majority voted for improved public services. But a number of major uncertainties remain about the Government's intentions in this area. First, they have been unclear about expenditure plans for the second half of this Parliament. Secondly, they have been unclear about what they will do if the growth rate and tax income fail to reach predictions. The only matter about tax policy on which the Government are clear is that if they find that they must raise taxes, they have ruled out the fairest method of so doing; namely, income tax. I am surprised that those noble Lords who have argued that the tax burden was too high on the lowest decile have not argued also that if taxes needed to be raised in the future, the fair way is through income tax.
Both the Government and the Official Opposition during the election shied away from the fundamental choice that we face: do we want a US or an EU level of public provision; and, if so, how is it to be funded? We have no doubt that the British people want a strong welfare state closer to the EU than the US model. We believe that they agree with us that it must be paid for by fair forms of taxation.
During the course of this Parliament, the Government will face the crunch on public service funding levels. Frankly, they will not solve their problems simply by introducing private sector providers at every opportunity and only investing in schools, hospitals and the transport sector by using the PPP model. Today's IPPR report makes that abundantly clear. Indeed, in London we are likely to see a real crisis in terms of the future funding and management of the Tube before the end of the summer That has been brought about entirely by the Government's ideological "attachment"—if I may use that word—to a structure and funding mechanism which threatens to make Railtrack look like a model of efficiency and safety.
In arguing, as we do, for a first-class welfare system, we accept that one cannot have ever-increasing tax levels. That means if one wants to improve education and health to European levels, one needs to look at the productivity agenda. We need to look also at other areas of expenditure. That is one of the reasons we advocated strongly the introduction of compulsory second pensions to ensure that the state is not faced with unacceptable expectations among the growing proportion of the population of pensionable age.
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As an enthusiastic reader of the excellent book of the noble Lord, Lord Saatchi, I was slightly surprised by his speech. The noble Lord argued eloquently that what the state must do is bring forward—I think he called it—"independence day". That is the point at which one stops, in effect, paying taxes. He argued that if you pay a quarter of your income in tax, at present "independence day" is at the end of March. The noble Lord wants to bring that date to the middle of February or possibly to the beginning of February. That is an understandable claim to make. However, the noble Lord appeared to argue that the level of government expenditure is lower than it should be and suggested that in the previous Parliament the Government should have raised expenditure further. That seems completely to cut across what the noble Lord says in terms of reducing the level of taxation.
I agree with the noble Lord, Lord Skidelsky, that the Conservatives' argument surely must be that if the Government want to reduce taxation and the proportion of GDP in the longer term, they must come up with interesting proposals for private provision in terms of health and education. We would oppose it; but we would welcome that debate, not least because we believe that we could win it.
With regard to the legislative programme for the Session ahead, the major feature today has been the enterprise Bill. We welcome many of its individual proposals; for example, the depoliticising of competition decisions and the simplification of VAT for small businesses. However, we believe that a number of problems will remain in the Government's enterprise agenda. There has been much debate, for example, about the regulatory burden. We on these Benches agree that the regulatory burden should be reduced and that the tax system needs to be simplified radically.
The one area where I disagree with the noble Baroness, Lady Noakes, relates to a number of the regulations which already exist, not least some of the European employment regulations about which the noble Lord, Lord Lea, spoke. Furthermore, the electrical equipment directive, which seeks to introduce a degree of sustainability into the production and disposal of electrical white goods, seems to be a welcome additional piece of regulation. But the problem that we have in this country is the gold-plated way in which many regulations are introduced. The simplification of VAT—admittedly, VAT is a tax rather than a regulation, but it is the same principle—could have been done 25 years ago if we had followed the French model when VAT was introduced. Instead we have a gold-plated tax system in terms of small businesses. The same applies to many other directives and regulatory measures. I believe that a much lighter touch in terms of implementation would reduce a great deal of the excessive burden on business.
Another area where the Government's objectives appear to be working against each other is that although the Chancellor is very keen to set up a regional venture capital fund in each region to improve enterprise and productivity, the Government have

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created a huge bureaucratic model for the regions with the Cabinet Office now being responsible for the Government Offices; the Department for Transport, Local Government and the Regions being responsible for much of the implementation of that programme; and the DTI being responsible for the RDAs. That is not joined-up government but a dog's breakfast.
On the productivity comparisons with the US where, as noble Lords have said, we do particularly badly, there is widespread acceptance, as the noble Lord, Lord Layard, pointed out, that a major contribution to this good performance in the US is the fact that it has a large single market with a single currency. Sadly, that is not an argument for UK euro-entry that we ever hear from the Chancellor.
Finally, our approach to the media Bill will be somewhat more reserved. We want to look very carefully at its effects on the degree of competition in the media industry. The sight of a somewhat vulpine Mr Murdoch emerging from Downing Street within hours of the election makes us believe that we need to be particularly vigilant in that area.
There are some big challenges facing the Government in this Parliament. They will require boldness and self-confidence to resolve. But a mere two weeks after the election, boldness and self-confidence seem sadly lacking. The heady atmosphere which greeted the Government's election in 1997 is wholly absent. There is a clear and ongoing rift between the occupants of Nos 10 and 11 Downing Street. There is a worrying uncertainty about the direction in which the Government wish to take the major public services in the longer term. More generally, there is a disappointing timidity in the Government's ambitions for Britain.
7.21 p.m.
Lord Higgins: My Lords, I join with the noble Lord, Lord Newby, in welcoming the noble Lord, Lord McIntosh, to his previous place on the Government Front Bench. For a long while we have both admired his versatility. We look forward with interest in how he applies himself to the first reference by the noble Lord, Lord Newby, which if I understood it correctly, was that the Government's inheritance from the last parliament is rather less favourable than that which they had from the previous Conservative government.
I join also with all those who have welcomed the noble Baroness, Lady Hollis, to the Front Bench. We have always admired her great expertise in the area of social security. We welcome her back under an assumed title; namely, the Minister for Work and Pensions rather than social security. That is a pretty pointlss change. I am not at all clear why there is the reference to work rather than having the very traditional expression "employment" if we have to cover the fact that that is now a responsibility being taken over by the new department. As the noble Earl, Lord Russell, pointed out, the noble Baroness has
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kindly invited those who are interested to a meeting to discuss the structure of the new department, which is clearly going to involve a very considerable overlap, not least with the Department of Trade and Industry. But it is certainly a less inclusive title than the previous one because those who cannot work, such as some of the disabled or those on child support, are not covered by either part of the Government's new title. But it has probably done something to stimulate activity in the printing industry as regards letterheads.
I begin in a rather traditional way—which was also true of the right reverend Prelate the Bishop of Southwark—in commenting on what was not in the gracious Speech. That is normally the case. People say that there are various things which they would have liked included. I would have particularly liked to see included the limit on annuities being taken at the age of 75. That is a matter on which your Lordships have voted in favour on several occasions. Obviously, there should be protection as regards people not becoming dependent on social security benefits. Perhaps the Minister can confirm whether it will be possible to cover that by way of amendment, if necessary, in the welfare reform Bill.
I have a particular point for the noble Lord, Lord McIntosh. In the previous administration we had an interesting Bill on government resources and accountancy. We moved a number of amendments which the Government did not accept. They set up a committee under the noble Lord, Lord Sharman, who has produced an excellent report. The Treasury missed its chance because it waited many years to produce the Bill but it did not contain everything that was needed. I hope that such a Bill will meet with general approval, given that the noble Lord, Lord Sharman, has now recommended the amendments which we proposed and which the Government rejected. We hope that those amendments can be included at an early stage.
I had not anticipated as fully as perhaps I should have the extent to which this debate would be dominated by the question of the euro. I rather assumed that that would be a matter for Thursday's debate. No doubt my noble friend Lord Howe will cover a number of its aspects although it may well be that it should not be regarded as foreign affairs but part of economic policy.
Therefore, I make one or two comments of my own in anticipation of that debate. The issue was first raised by the noble Lord, Lord Roll. Like many younger economists I have always regarded him as something of a hero in terms of economic analysis. It was very good indeed to hear his views this evening. He concluded by saying, I believe, that he thought that eventually we would join the euro. That was clearly not sufficient for the noble Lord, Lord Lea of Crondall, who seemed dissatisfied with the speech of the Chancellor of the Exchequer to the bankers in the City of London a few days ago and urged more rapid action in that regard.

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I had a great deal of sympathy for the intervention of the noble Lord, Lord McCarthy, during that speech. He made the crucial point that joining the euro is irrevocable. We have to realise that we would be giving up for all time the major means of adjusting for the movements in costs and prices and that the larger the area becomes, the greater the increase in the strains on the system. No doubt this debate will continue although it has been fairly wide ranging this afternoon. One will need to take into account the extent to which the present euroland could take the strain of the addition of an economy of the size of the United Kingdom.
The noble Lord, Lord Layard, was clearly also an enthusiast in this area. I was a little unclear. I believe that he used the expression that "demand management" was going to solve all our problems. The reality is that many of those who have argued for our joining the euro—particularly Japanese companies which invest in this country which are anyway going to have to make adjustments between at least two exchange rates—are really saying that they want a more competitive sterling exchange rate rather than it being a question of joining the euro. The two issues have become quite significantly interlinked, which they are. No doubt we shall discover in subsequent debates how the noble Lord, Lord Layard, proposes that the sterling exchange rate should be adjusted. I bear in mind the statement made by the then Prime Minister, Mrs Thatcher, to Mr Lawson that one could not buck the market.
As regards the points made by the noble Lord, Lord Roll, about the Bank of England, we also have to consider that it does not have an exchange rate target although we may be reassured by the fact that in a recent speech Sir Edward George said that he was praying for the euro. By that I take him to mean that he prayed that it would increase in value. At all events, it has not been a tremendous success until now. It is a matter which will be returned to in the debate on Thursday, I hope that nothing I have said is inconsistent with what my noble friend may say. What worries me is that he was taught at Cambridge by Lord Kaldor, whereas I was taught by Sir Dennis Robertson. They did differ.
As regards the Opposition in this Parliament, we shall continue to scrutinise this Government's legislation with great care. I believe that we may reasonably claim as regards these subjects that in the previous parliament, with some connivance with the noble Baroness, Lady Hollis, we did a good job on the social security fraud legislation and child support. We look Forward to continuing that approach, not least because it appears that the other place will be programmed like mad and we shall have the job of sorting out the drafting problems in government legislation. We look forward to that task.
I made my next point on the last occasion on which I spoke during the debates on the gracious Speech. It is important that these issues are announced to Parliament. It was quite appalling that last Monday, only three days before the gracious Speech, the Chancellor of the Exchequer should have made what
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was obviously a major policy announcement. It may have been satisfying to him to find a prominent article in the Financial Times with a smiling picture of him and so on, but it is important that these matters should be first announced to Parliament and not with a degree of spin in other arenas.
Having said that, I do not totally object to some of the Chancellor's proposals; for example, those on capital gains tax and competition policy. Over the years, we on the Conservative Benches have been in favour of a more rigorous competition policy and have sought from time to time to improve it. The noble Lord, Lord Borrie, who has more expertise in this area than anyone else I can think of, drew attention to some serious problems. He made an important point about the distinction between civil and criminal actions and whether what is proposed is likely to be a more effective means of carrying out competition policy. The noble Lord made a number of other important points.
My noble friends Lady Noakes and. Lord Northbrook referred to the Labour Government's abysmal record on increasing competitiveness. The British Chambers of Commerce stated that the costs brought about by red tape have increased by around £15 billion. The noble Baroness, Lady Hollis, will know that in debate after debate on Bills in the social security field my noble friends and I have stressed—I refer in particular to my noble friend Lord Astor of Hever—the increased burden being placed on business. That has inevitably affected British competitiveness. According to the CBI, taxes on business increased by more than £26 billion. Since 1997 we have fallen from ninth to nineteenth place in the league table of international competitiveness or, as my noble friend Lady Noakes pointed out, using the analysis of the World Economic Forum, we have fallen from fourth place to ninth.
The overall effect of the measures taken by the Chancellor and the Government has been to reduce rather than to increase our competitiveness. The British Chambers of Commerce is now publishing a "burdens barometer". It sets out a number of the issues involved and the way in which IRS 35 and so on are reducing competitiveness rather than increasing it. Those are serious matters. The measures introduced by the Chancellor will not be sufficient to offset the changes which the Government have already made. The Chancellor has an appalling tendency to complicate matters. The proposed change in capital gains tax is an example. There has been an endless stream of tax credits; for example, the working families' tax credit.
I shall say a few words about the social security aspects of some of these matters. I turn first to the issue of pensions and in particular to corporate and company pensions. As always, I declare an interest as the chairman of a company pension fund. The Government's policies on company pensions have had a serious effect. I refer in particular to the notorious £5 billion change in advance corporation tax. It was not fully understood at the time but is

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certainly being understood by pension funds now, however well funded they may have been in the first place.
We should be proud of company pensions. The funding of company pensions in this country is greater than the funding of all company pensions in the rest of Europe. Yet, having constantly paid lip service to the importance of company pensions, the Government clobbered pension funds. However, as Mr David Smith pointed out in an important article in the Sunday Times on 22nd April, it was unnecessary. The Government's policy, oddly, has been to increase taxation and tax revenues massively without a corresponding increase in public expenditure. It is an extraordinary situation. The Government have massively repaid the national debt. Not surprisingly perhaps, that was not set out in their 1997 election manifesto. It would be even more surprising if it had appeared in their recent manifesto because that process will be reversed, as my noble friend Lord Saatchi pointed out in his opening remarks.
I shall say a few words about pensions more generally and refer in particular to stakeholder pensions. The noble Baroness, Lady Hollis, will recall that during our debates on stakeholder pensions the Government said that they would seek to arrange for a "decision tree" to be published so that people could understand whether they should invest in the stakeholder pension. What has been produced is unsatisfactory. It has not extended into alternative investments; for example, ISAs or AVCs. I hope that the position can be improved. The crucial point is whether the stakeholder pension is a sound investment given that the Government's proposal on the minimum income guarantee is that it should increase in line with earnings. As Mr Frank Field so memorably pointed out, it is possible that people may invest in a stakeholder pension and then find that they get nothing in return.
To give the Government credit, they have sought to cover that point by the Pension Credit Bill. The gracious Speech states that legislation will be introduced for a new tax credit scheme and that it will include a pension credit as well. I am not clear whether there will be two separate Bills. Perhaps the Minister will say whether the main Bill will subsume the Bill on pension credits.
Baroness Hollis of Heigham: No.
Lord Higgins: My Lords, I am grateful for that immediate intervention. There will be two separate Bills. We shall have a chance to debate the Pension Credit Bill in greater depth later on.
The crucial point is whether the proposal will be understood by the people it is designed to help. Part of the problem arises because around 750,000 people do not at present take up the minimum income guarantee to which they are entitled. It is even less likely that they will understand this issue. Indeed, I have to confess that I have had some difficulty in understanding it
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myself. It is also somewhat doubtful whether the Government's officials understand it. The briefing for today's debate states:
"The Pension Credit Bill is a key part of this Government's commitment to help pensioners by ensuring that those who have saved for their old age for the first time are rewarded for thrift".
That is a quite incorrect statement. Many people have gained from their thrift because they happen not to be below the income support level. The briefing goes on to state:
"The Bill will guarantee a level of income below which no pensioner should fall. The Bill would also ensure that saving is rewarded by ensuring an extra cash addition for pensioners with modest savings or occupational pensions".
My goodness, for real spin, the expression,
"an extra cash addition for pensioners",
is quite extraordinary. If I understand the position correctly, the Government are really saying that for every pound of income a pensioner has from outside they will not deduct another pound from his income support. That is then described as an extra cash addition. Thus, when the Government do not deduct something that was previously deducted to the full extent, that is said to be a cash addition.
This matter is extremely difficult to understand, but I think that I am right in saying that, so far as concerns the Government providing extra money, they will in fact provide more money for people below the income support level who do not have savings than they will for those who do. That seems to be a strange situation. If one looks at the outside commentary on this issue—I apologise for speaking a little longer because of our diversion on Europe—the position is clear. Age Concern has stated that:
"The very older people who feel penalised because their modest savings exclude them from income support may equally resent having to negotiate yet another means test".
I could quote from many sources. For example, Scottish Life has stated that,
"It's far from simple for people to understand. And it is not all that generous. It effectively means you are allowed to keep only 60 per cent of the pension which you scrimped and saved for during your working life".
The reaction of groups such as Age Concern and other interested bodies demonstrates that this proposal is open to considerable objection. I think that we shall be able to deal with it in greater detail when the Bill comes before the House.
What is crucial here is that it represents yet another increase in means testing which, as my noble friend Lord Saatchi pointed out, has been the hallmark of this Government. We believe that this is the wrong approach. The Government are creating, and these proposals will increase, the extent to which we have a dependency culture. That is not the way we on this side of the House believe that we should proceed.
7.42 p.m.
Lord McIntosh of Haringey: My Lords, this is a peculiarly difficult debate to wind up, partly because so many noble Lords have spoken on different subjects—and why not?—they are fully entitled to do so. However, it is also partly because the boundaries of

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today's part of the debate on the gracious Speech are not entirely clear. Because quite reasonably they wanted to discuss public services, many noble Lords have sought to talk about education and health. Clearly I cannot respond on those matters. Other Ministers will do that.
Similarly, many noble Lords have talked about the euro and, until I listened to the words of the noble Lord, Lord Higgins, I had assumed that this was a proper consideration for our debate today. I was confirmed in that view by the fact that the Opposition Treasury spokesman studiously avoided any reference to the euro. I thought that that was wise of him and I was surprised that the noble Lord, Lord Higgins, sought to leap in on the subject where he did not need to so. It is safe for the Back Benchers of any party to express their views, but I should have thought that, given the present state of Conservative Party thinking, it was particularly unsafe for those purporting to speak on behalf of the party to express any view, whether sensible or less sensible.
However, I think that we can begin with a degree, if not of consensus—that is evident—of agreement as to what has happened over the past four years. Over that period the Government made high and stable levels of growth and employment the priorities of economic policy. If I make points that noble Lords have heard before, they will understand. These are matters on which it is unwise for anyone to speculate or to seek what Sir Ernest Gowers would have called "elegant variation". The noble Lord, Lord Roll, reminded us of how, in interviews with Government Ministers in the period just before the election, if they departed even by a dot or a comma from the position on the euro, or appeared to depart or were interpreted as having departed, that led to a run on the pound. That has been commented on in our debate not only by the noble Lord, Lord. Roll, but also by the noble Lord, Lord Newby, and others. It is a particularly important lesson to me that I should continue to do what I have always done over the past four years—and say nothing new. If I find myself saying something new, I shall give noble Lords the same assurance that I have given before: I did not mean it and I was wrong to say anything new. That is because I am not going to do so.
In terms of the past four years, whether or not we believe that the inheritance from the previous Conservative government was benign, perhaps as we enter the second Parliament of a Labour Government we might now start to let that drop away. Would that be acceptable to noble Lords? All noble Lords would have to agree about the effects of the economic policy of the past four years. We have had a period of stability and steady growth. We have had low and stable inflation and employment has risen to record levels. We have long-term interest rates at their lowest levels for 35 years. We have seen investment reaching a record share of GDP. As I have said, we have seen unemployment drop down to its lowest level since the 1970s, whether by the claimant count or, more important, by the ILO count.
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The noble Lord, Lord Hodgson, warned of the danger of hubris and accused us of self-congratulation. I cite the contributions of my noble friends Lord Tomlinson, Lord Lea, Lord McCarthy and Lord Brooke. My noble friend Lord Tomlinson went so far in spreading doom and gloom that he was answered on behalf of the Government by the noble Lord, Lord Skidelsky, who rightly pointed out that an adverse balance of payments could be maintained for a considerable number of years. It is not self-congratulatory to point out these unavoidable facts. It is a fact that, because we have been prudent—some think that that word is funny, but I do not agree—we have been able to cut debt and unemployment and to meet our fiscal rules. We are now able to release substantial financial resources for priority public services.
Here again, I have some difficulty as regards definition and inclusion. I want to talk about public services and at the end of what I have to say I shall respond to the points put by the noble Lord, Lord Saatchi. However, I am always conscious of the dangers of treading on the toes of those Ministers who will speak over the subsequent days of this debate. However, surely the platform of stability now has to be taken as read and can be taken for granted. It is on that basis that we should look at the legislative programme announced in the gracious Speech. I shall now move on to talk about some of the items of legislation which were included in that speech.
I shall turn first to the new tax credits Bill, which was described so clearly by my noble friend Lady Hollis. One of the elements of that Bill is the introduction of a new tax credit for families and children, building on the foundations of universal child benefit—and not changing universal child benefit—but providing a secure stream of income to families with children, whether they are in or out of work. That provides an answer to the query put by the noble Lord, Lord Higgins, as to whether this comes within the remit of the Treasury. It is part of that remit. The department of my noble friend Lady Hollis is collaborating. It does not matter what that department is called because it is in good hands.
The right reverend Prelate the Bishop of Southwark made a very interesting series of points about the gap between rich and poor and saying that that gap continues to grow. I do not see the gap between the rich and the poor as being the critical concern here. Surely the right reverend Prelate would agree that our critical concern has to be to deal with poverty, and that we have gone a substantial way to dealing with it. It is more important to deal with the absolute level of the standard of life of the poor in our country. Whether thousands or even tens of thousands of traders in the markets and so forth make obscene amounts of money is of sociological interest, but it is not a proper objective of policy. I am sorry to see from the gestures of the right reverend Prelate that he appears to disagree with me. He quoted from St Thomas Aquinas and said that,
"Injustice is tolerated for the sake of stability".

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That is precisely what we do not say. We do not tolerate injustice for the sake of stability. We believe that it is our prime duty to relieve and remove injustice, and we will be able to do that through stability. I would love to engage with the right reverend Prelate in a more theological debate on the subject, but I sincerely and profoundly believe that, above all, it is our duty to raise the floor to remove poverty rather than to think about the gap between rich and poor.
We made many changes in the previous Parliament—the increases in child benefit, the real increases in income-related benefits for children, the 10p. starting point for income tax, the introduction of the working families' tax credit and children's tax credit. We have not made changes in housing benefit, and that almost stops me singing in response to the noble Lord, Lord Newby. The noble Lord, Lord Roll, referred to a kiss on the hand but, as the noble Lord, Lord Newby, will remember, that makes you feel good,
"but it don't pay the rental".
Housing benefit does, and that is how it fits in.
There was little reference to the welfare reform Bill—an enormously important Bill—and all I have to say in addition to the exposition from my noble friend Lady Hollis is in response to the noble Lord, Lord Higgins. It is not a pensions Bill. We have not seen the Long Title of the Bill but I very much doubt whether pension annuities will come into it. The noble Lord is very ingenious, and if he wants to introduce amendments to the Bill he will probably have to seek to amend the Long Title as well, and we shall certainly resist him on that.
Lord Higgins: My Lords, can the Minister say whether the Bill will include housing benefit?
Lord McIntosh of Haringey: My Lords, I do not think so. That is not the way it has been described. The Bill is about the New Deal, incapacity benefit, maternity pay and a number of detailed benefits, but, as far as I know, housing benefit is not part of it.
As to the pension credit Bill, I was surprised to hear a renewed attack on the windfall tax. When we have, as a result of the New Deal, which was paid for by that tax, 293,000 young people and 50,000 older people in work who might not otherwise have been, I would have thought that was of enormous benefit to society, both economically and socially.
I turn to the enterprise Bill, which deservedly gained a lot of attention. I agree with those who started with a word of caution. I do not go quite so far as to agree with the noble Lord, Lord Blackwell, who seems to think—as he has done for a number of years—that the economy is going to hell in a handcart. He has been proved wrong so far, and there is just a chance that he might be proved wrong now. It is certainly true that the economic stability we have achieved is enormously beneficial to business. Fundamentally, that is of a
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different order of magnitude from the complaints about burdens on business that we have heard from a number of noble Lords.
It is also true that we must not relax the monetary and fiscal disciplines and rules that we have set up in the past four years. We must continue our drive towards our long-term ambition to close the historic productivity gap between the UK and its major competitors. The noble Lords, Lord Haskel and Lord Hodgson, both quoted comparative figures, with the United States in particular and with France and Germany. Yes, the platform of economic stability is the first step in the strategy to close the gap, but we need more reform and that is what the enterprise Bill will seek to tackle.
Not all of this needs to be done by legislation. I am sure it is right that some of it can be done by the relaxation of legislation or even the abolition of legislation. However, I was interested that the Opposition, when they were talking about burdens on business, particularly on small business, did not remember the attitude which their party took towards the Regulatory Reform Bill. That Bill sought to make it easier for regulations on business to be removed. And what was the thrust of the Opposition's argument? That the Regulatory Reform Bill went too far and that we should not make it easier in the ways we proposed.
However, I should remind the House that the OECD says that we have the lowest level of product regulation among OECD countries; the CBI says that we have more flexible labour regulations; the Economist Intelligence Unit, after carrying out a survey of 60 major economies, says that we are second out of the 60 as the best economy in which to do business, and the first for policy for private enterprise and competition. So, yes, of course there are many ways in which we can improve matters—the enterprise Bill will seek to do so—but I do not think that some of the charges I have heard today stand up to serious argument.
The Bill will encourage enterprise, for example, through insolvency law reform, an issue referred to by the noble Lords, Lord Borrie and Lord Northbrook. I was glad for their support. We will encourage enterprise by removing some of the stigmas on faultless failure while reserving the toughest penalties for the dishonest. We will strengthen competition laws by reform of the competition regime and, as has been said, by the independence of the competition regime from the opinions of Ministers. We will promote safeguards for consumers by introducing new powers to deal with rogue traders and penalties for corporate wrongdoing, whether it be corporate manslaughter or cartels.
I was interested in what the noble Lord, Lord Skidelsky, said on these subjects. Again, I should like the opportunity for a longer debate than we have time for today. The noble Lord thought it was new that we should be pursuing social policies for economic ends. Social policy is, of course, pursued for its own sake and for the sake of a decent and just society, but surely that

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has economic ends and economic benefits as well. Surely it is proper for those ends and benefits to be taken into account in pursuing social policies.
It seems to me that the converse is not true. What the noble Lord described as the Lawson version of supply-side capitalism—which states that you leave to households everything that you can and leave to the state only other things—resulted in the impoverishment of the public services of this country over a period of many years. It will be very difficult indeed—and there is no guarantee of success—to pull up our public services again so that we can no longer be accused of private affluence and public squalor, which is the historical condemnation of the policy of supply-side capitalism.
I turn, very briefly, to the point made by the noble Lord, Lord Hodgson—he was the only one to refer to it—about the Financial Services and Markets Act. He gave a figure for the cost to what he described as "the consumer" of regulation. I suggest that he puts that figure—whether or not it is correct, I do not know—against the vast benefit to this country and to our reputation for probity and successful financial markets of having a regulatory authority that works and brings everything together. I suggest that the benefits to the financial community, let alone to the economy as a whole, far outweigh the costs of proper regulation.
We shall be the first major nation to adopt the one regulator, one body of law approach. We shall have one of the best standards of regulation in the world, and I am sure that other countries will copy us. Yes, there are a number of statutory instruments to be introduced before N2 in November, but we are on target to do that and we have no reason to suppose that business will be taken by surprise by them. If the noble Lord really wants to abolish stamp duty, he is going to have to tell us where the £4 billion that comes from duty, not on trade in this country but on UK shares, will come from. Perhaps the shadow Chancellor, whoever he may be, would like to think about that point. I note what the noble Lord says about the takeover direction, I can write to him on that point if he so wishes.
I wonder whether the House wants me to dwell on the issue of the tax burden, as it is called—or more politely, as we have begun to describe it, the "tax-to-GDP ratio''. I use the word "politely", but the description is correct. "Burden" is a pejorative term. The noble Lord, Lord Saatchi, should not smile. He wisely avoided talking about it. It is set to fall in each of the next three years. The direct tax burden on a single-earner family on average earnings is the lowest since 1972. It has fallen from 21.5 per cent to 18.1 per cent. Our tax burden is one of the lowest in the European Union. I am grateful for the support of the noble Lord, Lord Northbrook, in setting out the measures that we have taken to cut taxes for business. The noble Lord is correct. We have cut corporation tax to its lowest level in the history of the United Kingdom. We have cut the small companies' rate of tax by three percentage points, and we have carried out many tax changes. They may be complex, but if so they are particularly
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complex when they deal with "business assets". That is an important definition which ought not to be treated lightly. As I know to my cost, having sold my company before relief for "business assets" was introduced, it is an important complication in the corporation tax system of extreme importance to entrepreneurs and to small companies. I know that the noble Baroness, Lady Miller, will agree with that and will forgive the complication that it necessarily involves.
I turn briefly to the communications Bill. I can confirm to the noble Lord, Lord Brooke, that we shall stick to the 2005 goal for "government online". Our UK online publication in February this year set a target for the most extensive and competitive broadband market in the G7 by the year 2005 by wiring up schools, libraries, further and higher education establishments and so on. We are sticking to that and we take the issues raised by the noble Lord very seriously indeed.
What am I going to say about EMU? I quote:
"In principle the Government is in favour of UK membership of EMU. In practice the economic conditions must be right. The determining factor underpinning any government decision on membership of a single currency is the national economic interest and whether the economic case for joining is clear and unambiguous. If it is, there is no constitutional bar to joining.
Those were the words of the Chancellor of the Exchequer in October 1997. That may be an "incantation" as the noble Lord, Lord Tomlinson, called it, but I do not see how the noble Lord, Lord Newby, can describe that as giving "unclear signals". We have made the position entirely clear. Every attempt to tease out differences deserves to fail. The only change that we have made is that we have said that the Treasury will complete an assessment of the five tests within two years of the start of this Parliament. That is because we recognise—the noble Lord, Lord Layard, is entirely right—that other matters will not stay the same during any period during which we are not members of European Monetary Union.
The noble Lord, Lord Lea, took exception to the "clear and unambiguous case". It is a question of whether a clear and unambiguous case cart be made, a question of whether the economic case for joining is clear and unambiguous. That may be based on ambiguities or disagreements in the arguments but the position that has to be put, first to the Government, then to Parliament, then to the people of this country, must be clear and unambiguous. It would be grossly unfair to do anything else.
Lord Lea of Crondall: My Lords, perhaps I may help my noble friend the Minister. Why should explaining the reasons for the Government's avowed support for the principle of membership of the euro be taboo?
Lord McIntosh of Haringey: My Lords, 'what I have said is that the decision is whether it is in the national economic interest and whether the economic case for joining is clear and unambiguous and I have nothing to add to that. The evidence that we have of the disruption in exchange rate markets when people tried

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to do that in the past couple of months is clear. That is not allowing the arguments to go by default. We have taken very seriously the preparation side of "prepare and decide".
Lord Tomlinson: My Lords, I am grateful to my noble friend for giving way. We are agreed in principle, subject to five economic tests. Can he tell us the benefits of having agreed? That is what my noble friend Lord Lea is looking for. If we have agreed in principle, there must be a reason for agreeing in principle. Can we at least say what are the benefits?
Lord McIntosh of Haringey: My Lords, if and when the time comes when a recommendation is made by the Government to Parliament and to the people of this country, we shall be ready to act on that recommendation and on the decision of the people of this country.
There are two other issues which I do not think I need refer to. On the issue of a framework for informing and consulting with employees raised by the noble Lord, Lord Northbrook, a political agreement was reached at the Economic and Social Policy Council on 11th June, but it now has to be given a Second Reading by the European Parliament. Amendments to it can then be tabled. Whatever changes are made to it, information must be given and consultation has to take place at an appropriate time and at the relevant level of management. So there is no question of what the CBI, according to the noble Lord, describes as a "single approach". It says that there is no single right approach. I do not think that is what is proposed at all.
I turn finally to what is a properly pervading theme of this debate; namely, the issue of public services. I start from a very different theory from that advanced by the noble Lord, Lord Blackwell. He referred to "crowding out theory". I thought that he was going back to pre-Marshallian economics, but we had a debate on the Front Benches as to whether he was really going back to Ricardo or Nassar senior. The noble Lord does not seem to recognise that there is any investment element in public expenditure at all. It would be an equal fallacy to claim that all public expenditure is investment. Clearly, that is not the case. But the noble Lord has taken us back a considerable period, not only into the last century but into the previous one.
A number of speakers, including the noble Lord, Lord Roll, and the noble Earl, Lord Russell, have rightly said that the interaction between public and private is not ideological. The Prime Minister has always said—and this is not claimed as controversial—that there is no ideology here; he has always said that the criterion should be what works best. It is true that if we are to make genuine improvements in the public services we shall certainly have to reverse the starvation of funds which was the result of pre-Marshallian and other theories under Conservative governments. But it is also true that that is not enough. The questions raised by the noble Lord, Lord
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McCarthy, are very serious ones. The noble Lord quoted the IPPR report. I could quote back to him the report of my noble friend Lord Curry of Marylebone about Tube privatisation which puts a very different complexion on some of the things that he has said. But it is certainly true that when we come to consider the relationship between public and private, we have to consider whether there will genuinely be an injection of private money. We have to consider whether there will be entrepreneurial expertise. We have to consider whether there are under-utilised facilities. All of those are valid questions to which judgment will have to be applied in each case. But that, after all, is the point of not being ideological but pragmatic. However, that almost seems to have become a pejorative word.
Today we announced part of the 2002 spending review. We announced the themes on which we shall investigate initiatives which cover more than one department. Those will reflect the Government's priorities of delivering high quality, efficient and responsive public services; raising productivity in the public sector and outside; improving skills, research and infrastructure; spreading opportunity and prosperity more widely and tackling child poverty and social exclusion. Those are high priorities for this Government. I hope that they are high priorities for all of us.
I said that I would return to the points made by the noble Lord, Lord Saatchi. I shall devote one more minute to that. I was fascinated by his remarks. He made comparisons as regards spending on public services. He gave the impression that that consisted of spending on health, education and transport. But of course in reality spending on public services is net of the reduction in spending on unemployment. Under the Conservative government more was spent on interest on debt than on schools. Now we have taken £9 billion off debt and unemployment and allocated it to schools and hospitals. I am not in any way ashamed of that.
The lowest 10 per cent of the people we are discussing now include a million people who are in work. They are paying taxes, which is exactly what they should be doing; namely, paying taxes and not receiving benefits. The noble Lord talked about the take-up of means-tested benefits. However, I believe that I responded to the point that he made. He mentioned borrowing but steered clear of debate on the tax burden, in particular as regards his famous "independence day", which would cost £50 billion in tax forgone.
Lord Saatchi: My Lords, I am most grateful to the noble Lord for giving way. As regards the take-up of benefits, at the risk of luring the noble Lord onto the rocks of saying something new, will he tell us what the Government have done with the up to £4 billion worth of unclaimed benefits?
Lord McIntosh of Haringey: My Lords, I believe that the relevant table is table B11 of what is still called the Red Book, although it is no longer red. If I am wrong about the table number, I shall write to

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the noble Lord. He does not seem to realise that he refers to the figures of 1998–99. Further, non-take-up of means-tested benefits has been a feature of welfare and social security policy since the time of Beveridge and has always been represented in the national accounts.
I was amused to hear the noble Lord attack the European Central Bank rather than express an opinion on the euro. We all want the European Central Bank to be more transparent. However, let us return to the serious issues; namely, that we have an opportunity to improve the lives of the people of this country in the course of the next Parliament. It will not
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be easy as there are many obstacles to be overcome. We set the scene for that in our first term of office and we are determined to continue.
Baroness Farrington of Ribbleton: My Lords, on behalf of my noble and learned friend Lord Falconer of Thoroton, I beg to move that the debate be now adjourned until tomorrow.
Moved, That the debate be now adjourned until tomorrow.—(Baroness Farrington of Ribbleton.)
On Question, Motion agreed to, and debate adjourned accordingly until tomorrow.
House adjourned at fourteen minutes past eight o'clock.

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