Sitting of 9 May 2002

Preamble
The House met at half-past Eleven o'clock
PRAYERS
[MR. SPEAKER in the Chair]

PRIVATE BUSINESS
LONDON DEVELOPMENT AGENCY BILL (BY ORDER)
Order for Second Reading read.
To be read a Second time on Thursday 16 May.

Oral Answers to Questions
  TREASURY
  The Chancellor of the Exchequer was asked—
  TREASURY

    Budget
    Mr. Kevan Jones: What estimate he has made of the number of families in the north-east of England on middle and low incomes who will be affected by measures in his Budget aimed to support them. [53543]
    The Chancellor of the Exchequer (Mr. Gordon Brown): Some 300,000 families with children in the north-east and 800,000 families with children in the north-west—around 90 per cent. of families—will be eligible for the child tax credit from April 2003 which, together with child benefit for those earning £50,000 or less, will deliver a minimum of £26.50 and up to £54.25 a week in support of the first child. That compares with a minimum of £11 and a maximum of £27.70 a week in April 1997.
    From next April also, the national insurance rise will fund an expansion of the national health service to the benefit of all. After all the changes, a family on median earnings with two children will be £3.90 a week better off.
    Mr. Jones: I thank my right hon. Friend for that answer. Does he agree that the child benefit reforms will help to eradicate child poverty, and that the announcements of increased health spending will mean that it will amount to 9 per cent. of national income? Is not that good news for hard-working families in the north-east and for families everywhere who rely on a health service that is free at the point of delivery?
    Mr. Brown: The question is, "What will benefit families in all regions of the country?" There is no doubt that the combination of the changes in child benefit through the new child tax credit and the increased resources available to the NHS means that the quality of
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    life of all families is better. I am pleased that more than 90 per cent. of families will benefit from the child tax credit and that we will have been able to inject, by 2007–08, an additional £40 billion into the NHS. We will invest that money: other parties would make cuts.
    Mr. Edward Davey: Is the Chancellor aware that, for the north-west, the north-east and other regions of the country, new figures from the Office for National Statistics show that the poorest families pay a higher percentage of their income in tax than the richest families? The poorest 20 per cent of families pay 41.2 per cent. of their income in tax, compared with the 35.5 per cent. paid by the richest 20 per cent. of families. Does the right hon. Gentleman acknowledge that that is due primarily to the burden of council tax and indirect tax? When will he do something about that? When is he going to reform—indeed, abolish—council tax?
    Mr. Brown: This is another proposal from the Liberal Democrats that one suspects would cost some additional sums of money. If the hon. Gentleman wishes to abolish the council tax in its entirety, he will have to replace it with something else. As for lower-income families, those in the bottom 20 per cent. are £2,400 a year better off as a result of all the measures that we have taken. The hon. Gentleman should start to recognise that the working families tax credit means, for the first time in our history, that those families are subject to a negative tax rate. They are better off as a result. The measure helps people to get back into work. In addition, the child tax credit means that we are relieving people from poverty. Those are exactly the measures that I wish the Liberal party would support.
    Mr. Roy Beggs: Does the Chancellor agree that even his best efforts to improve the lot of those on lowest incomes cannot be delivered unless there is uptake of benefits? Has he any plans to increase promotion of uptake of the benefits that he has made available?
    Mr. Brown: I am grateful to the hon. Gentleman, and I enjoyed my visit to Northern Ireland last week, when his concerns were among the issues that were raised. The working families tax credit is, for 400,000 more people than was the case with family credit, a benefit for families with children that goes with working. Increased numbers of people therefore receive that benefit.
    As the hon. Gentleman rightly says, the advertising and publicity of the benefits are important. When the children's tax credit was introduced, the surrounding publicity meant that the uptake was far higher than when family credit was first introduced. Equally, when we introduce the child credit and the pension credit next year, we will be telling people of their rights so that they, too, can claim the benefit. Opposition parties opposed the minimum wage and now have to accept it. They opposed the working families tax credit and then—at the election, at least—accepted it. They opposed the children's tax credit and then had to accept it. In the same way, over time they will have to accept the pension credit, the child tax credit and the new employment credit.
    Mr. Michael Howard: Given his last three answers, is the Chancellor proud of the fact that the Budget was redistributive?
    Mr. Brown: Money went to families and to people in employment. Therefore, it was a progressive Budget. It put money in the hands of families, as it should do, and in the hands of people who work. Thank goodness that we have got away from the situation that existed under the Tories, when child poverty rose and there were 4 million children in poverty in this country. Child poverty trebled under the Conservatives. The right hon. and learned Gentleman in particular should be ashamed of his record as Secretary of State for Employment, when unemployment went up by 1 million.
    Mr. Howard: I remind the Chancellor once again that that was when we were in the exchange rate mechanism—a policy which he specifically supported. Why is the right hon. Gentleman so coy about using the word "redistributive"? Could it have something to do with the fact that on two separate occasions in answer to questions from Sir David Frost on 21 April, the Prime Minister specifically denied that the Budget was redistributive? Is not it utterly pathetic that there is such a chasm between the Prime Minister and the Chancellor that they cannot agree even on whether the Budget was redistributive?
    Mr. Brown: The one thing that our Budgets have not been is what the Conservative Budgets were—totally regressive. [Interruption.] Let me tell the right hon. and learned Gentleman, so that he can say what the Conservative party position is—[Interruption.]—that first—[Interruption.]
    Hon. Members: Order!
    Mr. Speaker: Order. Let us hear what the Chancellor is saying. I cannot hear him speak.
    Mr. Brown: First, a progressive Budget will transfer money to families. Does the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) agree with our policy of eradicating child poverty? Will he support the child tax credit that is doing more to take people out of poverty now than ever was done under the Conservatives?
    Mr. Speaker: Order. The Chancellor should not be asking questions, he should be answering them.
    Mr. Brown: This is a progressive Budget because it transfers money to families. I hope that the whole House will support the measures that give extra money to children and to families, and where more goes to those who need it most. Equally, the Budget transfers money so that people who are in work and on low incomes get extra income, and I hope that the whole House will support those measures too. This is a progressive Budget and, as the Conservatives have had to admit, it has the support of the people of this country.

    National Health Service Funding
    Mr. Henry Bellingham: What discussions he has had with Mr. Wanless since the 2002 Budget on the contents of the final version of the Wanless report. [53544]
    The Chancellor of the Exchequer (Mr. Gordon Brown): In response to recommendations in Mr. Wanless's report, the Budget announced a five-year settlement for NHS spending—more than £40 billion extra by 2007–08. Because resources must be matched by reform, in line with Mr. Wanless's recommendations, the White Paper "Delivering the NHS Plan", published by my right hon. Friend the Secretary of State for Health, announced further major reforms. I have not met Mr. Wanless since he completed his report.
    Mr. Bellingham: I thank the Chancellor for that extremely courteous reply. However, is he aware that in my constituency, the Queen Elizabeth hospital is facing serious shortages of radiologists, radiographers and nurses? Given that inflation in the NHS is running at 4.5 per cent., that 45 per cent of its budget goes on wages, that many employees who will be worse off as a result of the Budget will want inflation-busting pay increases, and that the NHS, as an employer, will have to pay out much more in national insurance contributions, what guarantee can the right hon. Gentleman give my local hospital that the much-needed resources will go to patient care? Surely it would have been better if Mr. Wanless had been asked to look at all aspects of health funding, as then we could have had a proper, constructive debate on the future.
    Mr. Brown: If the hon. Gentleman wants more money to go to the hospital in his area he should support the Budget, which puts an extra £7 billion a year into the national health service next year and £40 billion extra by 2007–08. Perhaps he should be telling the shadow Chancellor that the Conservative party should change its position on the Budget.
    Mr. James Plaskitt: I am sure that my right hon. Friend will recall the Wanless report concluding:
    "Success or failure will ultimately depend on how effectively the health service uses its resources."
    In the light of that conclusion, what mechanisms will my right hon. Friend put in place to ensure that patients get a real return on this record investment in the service?
    Mr. Brown: As my hon. Friend knows, side by side with the Budget were the proposed reforms of the national health service that were agreed by the Secretary of State for Health and announced by him the next day. One set of proposals covers statutory audit, statutory inspection, the statutory right of patients to make complaints and for them to be dealt with independently, an annual report that has to be published each year for Parliament by an independent regulator of the health service, as well as local reports and prospectuses that must be published by each health authority. Information, the power to scrutinise and to carry out proper audit of the use of money, is enshrined in the way in which the health service works for

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    the first time in its history. Equally, we have set national standards but are giving hospitals locally, through rewards for better performance, incentives to do better.
    I believe that the combination of those factors as well as dealing with the performance of failing hospitals means that we will secure value for money. I hope that we can restore in this country the consensus on the national health service that existed for 50 years but has unfortunately been broken by the Opposition.
    Matthew Taylor: The Liberal Democrats would have preferred an increase in income tax rather than national insurance. However, we welcome the money that is being put into the NHS and the fact that the Government have at last admitted the obvious—that saving the NHS needed investment, which needed tax rises.
    Did the Chancellor honestly have no idea that tax rises were necessary when he fought a general election campaign just a year ago? If he did know, why did he not have the courage to put that to the electorate so that they could choose the tax rise rather than have the Chancellor choose it after the election? Is that not an act of cowardice?
    Mr. BrownNot at all. We set up the Wanless inquiry in 2000; it worked through 2001 and made its interim report in December 2001. When we received its final report, we made a decision on what resources were needed. The more sensible way to go about things is to consider what resources are needed, to make a decision on what we need for the next five years, and then to make a decision on how to raise the money, but I know that that is not how the shadow Chancellor makes policy for the Liberal party.
    Mr. John McFall: Will my right hon. Friend keep in mind the views of business on Wanless? The Select Committee on the Treasury received a submission from the CBI stating that £10 billion was lost in workplace absences in 1999. Does my right hon. Friend agree, therefore, that the huge cash injection will be good for both employers and employees, getting more people back to work and giving us a healthy nation?
    Mr. Brown: I am grateful to the Chairman of the Treasury Committee for putting those views. We know that business loses about £10 billion a year as a result of people being unable to go to work due to ill health. We also know that in every major health care system in the world employers as well as employees make a contribution. The contribution of 1 per cent. from employers and employees is, in our view, the fairest way of going about funding the health service for the long term.
    I am pleased that almost all political parties in the House, including the Liberals, support a health service free at the point of need. The unfortunate thing is that the only party which no longer supports a health service free at the point of need is the Conservative party.
    Mr. David Ruffley: The Budget's fiddled assumptions can no longer conceal the £7 billion black hole in the Chancellor's NHS spending figure for
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    five years' time. Will he confirm to the House whether taxes will have to rise, borrowing will have to rise, or both will have to rise, if he is to fill that black hole?
    Mr. Brown: Once again, the hon. Gentleman, who is also a member of the Treasury Committee, does not conduct his research properly, despite the fact that he was a political adviser—[Interruption.]—probably because of the fact that he used to be a political adviser to the Conservative Government who failed to be re-elected. As was pointed out to him at the Select Committee, the costings for the NHS are given up to 2007–08. It is stated that, prior to the spending plans being set in the 2004 spending review, the fiscal projections assume departmental expenditure limit growth after 2005–06 of 2.5 per cent. in real terms, supplemented by an addition to allow for the five-year health settlement. That should answer the hon. Gentleman's question—as he should have known before he put it.
    Mr. Dennis Skinner: Does my right hon. Friend agree that when the Liberals open their mouths, we expect them to talk as their belly warms? On this occasion, they have already announced that they want to get rid of council tax at a cost of several billion pounds. They have been very revealing. Will my right hon. Friend comment on their policy? Would he adopt it? They have just announced that it would be a good idea to raise money for the national health service by increasing income tax. There are 11 million pensioners and about half of them probably pay income tax, so the Liberals are calling for a policy to tax pensioners.
    Mr. Brown: It is absolutely correct that the national insurance change means that pensioners do not have to pay the tax rise. People who have served the community all their lives and who need the national health service will not have to make the additional contribution that they would have to make if there were an income tax rise. The shadow Chancellor who lives in Truro, as opposed to the shadow Chancellor who lives in Folkestone, must face up to the fact that he spends all his time going around the country talking about local decision making, but he wants to abolish the local taxation available to local councils through council tax. It is time that the Liberals thought out their policy before announcing it.
    Mr. Christopher Chope: I am disappointed that the Chancellor has not met Mr. Wanless since the Budget. Was not Mr. Wanless appointed on the basis that his report would be the beginning of a debate on reform of the health service rather than the end of that debate? Is not it clear that Mr. Wanless is saying that unless there is reform in the health service, much of the extra investment will be wasted? Does the Chancellor recall that the Secretary of State for Health stated that public service agreements
    "set out the concrete improvements to be delivered in return for the extra investment we are making"?—[Official Report, 24 June 1999; Vol. 333, c. 458W.]

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    Those 1999 agreements did not deliver concrete improvements, unless the Chancellor thinks that the extraordinary record of more administrators than hospital beds is an improvement. When will we see improvements in return for the investment?
    Mr. Brown: The improvements are taking place and will continue to take place, and the reforms that we have made as a result of the Budget will ensure that the £7 billion extra a year and the £40 billion extra by 2007–08 secures the value for money that is necessary, but sooner or later hon. Members will have to face up to their responsibilities in this matter. If Conservative Members no longer believe in a health service free at the point of need, they must tell us which charges they would introduce, who would have to pay private health insurance and what they would charge to visit GPs and hospitals. They must face up to the fact that the health service has to be paid for in some way and, if that is not done through taxation, it has to be done through charges or private insurance, which is now their policy.

    Offshore Tax Havens
    Mr. Colin Challen: What steps are being taken to prevent the loss of tax revenues through the use of offshore tax havens. [53545]
    The Chancellor of the Exchequer (Mr. Gordon Brown): We are determined to tackle tax evasion and tax avoidance, including the use of tax havens, on as wide an international basis as possible. As we made clear at the European Council in June 2000, we believe that greater international co-operation—in particular, the exchange of tax information—is the key to tackling cross-border tax evasion and avoidance.
    Mr. Challen: I thank my right hon. Friend for that reply. I also applaud the Government for the measures they are proposing in the Finance Bill to deal with tax evaders abroad. There are principally two kinds of people who use offshore tax havens: terrorists, such as al-Qaeda, who seek to destroy government by violent means; and multinational corporations, such as News Corporation, which seek to undermine government by not paying for it. Is my right hon. Friend satisfied with the international co-operation that he has received on this matter? We need to do a lot more about both those groups.
    Mr. Brown: My hon. Friend is right. Progress is being made in international co-operation against tax evasion. The OECD issued its conclusions in June 2000 and asked all countries to agree to produce information where tax evasion was an issue. Since then, most countries, including all our dependent territories and our overseas territories, have agreed to produce that information. Seven countries remain unco-operative, and they were named in April this year. In addition, we want to ensure not just information on request, but the exchange of information as the basis of future tax policy. That is why we are making progress with the savings directive, among other things, in the European Union. We will continue, as we did in the Budget, to take further measures as necessary to tackle tax evasion.
    Mr.John Wilkinson: Will the Chancellor give an assurance that Her Majesty's
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    Government will maintain the fiscal autonomy of the Isle of Man and the Channel Islands—if need be, against the European Union? May I remind him that the Isle of Man balances its budget by law and has a rate of unemployment of less than 1 per cent.? Were it not to have fiscal autonomy, it would be a drain on the British taxpayer, rather than the contrary.
    Mr. Brown: I am surprised that the hon. Gentleman refers to the Isle of Man and the Channel Islands under a question that is about offshore tax havens, because the Isle of Man and the Channel Islands have brought themselves into line with the OECD recommendations. As for the savings directive. however, which requests the automatic exchange of information, I hope that all the dependent territories and all the overseas territories that are affected will agree to play their part in exchanging information on an automatic basis so that we can make progress on the directive. In case they do not, I have taken measures in the Budget announcements last month whereby we will take action if they remain unable to help us.
    Mr. Harry Barnes: How far has international co-operation extended since 11 September on offshore tax havens? Does that co-operation bring nearer the date when it will be possible to operate an international tax on currency speculation?
    Mr. Brown: Those are two separate issues. On tax havens, because of the events of 11 September, many countries are very keen to move forward with the exchange of information as the basis on which we can reach agreements about how we deal with tax evasion, as well as money laundering and tracking terrorists' finances. The United Kingdom has agreed that it would be the first country to be subject to international surveillance of the measures that we have taken in that area. I hope that other countries will agree that international surveillance of what they do is very much part of an international system of co-operation to deal with tax evasion. We are taking action on those matters.
    On the issue of tax on speculation, my hon. Friend knows well that the proposals put forward by Professor Tobin were in an era when there was not the liberalisation of currency markets that exists now. Most people would find that while it is worth looking again at whether Professor Tobin's proposals could have a beneficial effect, it is very difficult to implement them. The key question on international aid is whether we can raise the money that is necessary with or without a Tobin tax, so that we can deal with the problems of the third world, particularly education and health. The Government's proposals for a new deal in this matter, involving £50 billion extra in overseas aid, are the best way forward. At the end of the day, national Governments must make the decisions about what they are going to do.

    National Insurance Contributions
    Tim Loughton: What discussions he has had with the Department for

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    Health about how the increase in class 1 national insurance contributions announced on 17 April will affect costs in the medical profession. [53546]
    Dr. John Pugh: What estimate he has made of the impact of the proposed change in employers' national insurance contributions on services' company profitability for financial year 2003–04. [53548]
    Patrick Mercer: What discussions he has had with ministerial colleagues about how the increase in class 1 national insurance contributions announced on 17 April will affect workers in the public sector. [53555]
    The Chief Secretary to the Treasury (Mr. Andrew Smith): It is estimated that the changes to employer national insurance contributions announced in the Budget will add around 0.7 per cent. to pay costs on average next year. The cost to the public services will be just over £1 billion, which compares with a planned rise in spending on public services of nearly £20 billion. The changes will, of course, help to fund improvements in public services and a real-terms increase in spending on health over the next five years of over 40 per cent.
    Tim Loughton: Will the Chief Secretary confirm that, according to the House of Commons Library, within those figures —217 million of the increase in national insurance contributions relates to the national health service? On the public sector generally, does he expect that higher employers' national insurance bills in the public sector will be financed by Departments or passed on to public sector workers in the form of lower pay settlements? Can he explain to me specifically how hospices up and down the country will cope with the big increases in national insurance contributions, given that they are run by the voluntary sector and largely on voluntary contributions? They will not, therefore, be the beneficiaries of his supposed NHS largesse.
    Mr. Smith: If the Conservative party is suggesting that the public sector should somehow be exempt from national insurance contributions, that is an extraordinary proposition. When the Conservatives increased employees' contributions 10 times and employers' contributions five times, I do not remember them ever addressing the question of the impact on the public sector. The money will be found from within the additional resources that we are making available—departmental expenditure limits are increasing by £19·5 billion.
    The hon. Gentleman makes a fair point about hospices, which make an invaluable contribution across the country and in many of our constituencies. As part of the spending review, there will be a cross-cutting review of the role of the voluntary sector in the delivery, and in assisting the delivery, of public services. I shall ensure that that examines the position of hospices.
    Dr. Pugh: The service sector of industry employs a huge number of people. As the service sector is not made more profitable by an increase in employers' national insurance contributions, is it fair to say that this sector is
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    one of the major net losers? If not, which business sectors are the major financial losers, or is this the first Budget in history when absolutely everyone is a winner?
    Mr. Smith: As we have made clear on many occasions since the Budget, we believe that the national insurance increase is a fair way to fund the much-needed improvements in the national health service, which even the Conservatives claim they recognise are necessary. On the impact on the service sector, I remind the hon. Gentleman that for the average small business, the rise in national insurance contributions is substantially offset by cuts in corporation tax.
    Patrick Mercer: I wonder how the Chief Secretary would reply to public sector workers in my constituency to whom I have spoken recently. First, I spoke to two policemen in Newark who doubt that, with the increase in national insurance contributions, they will be able to continue serving in the police force. Secondly, I spoke to nurses in Tuxford—not surgeons or doctors but the lowest-paid of the national health service workers—one of whom said to me that the Chancellor's catchphrase should not have been "Enterprise and fairness" but "Physician heal thyself'.
    Mr. Smith: The nurses, doctors, police officers, firefighters and other public service workers to whom I have spoken recognise the crucial importance of the extra investment in the national health service. They recognise that that has to be paid for, and national insurance is a fair way of doing that.
    Mr. Jim Cousins: I represent one of the largest groups of NHS workers outside London. They all say, "Yes, we will pay more national insurance but, for goodness sake, get on and tackle the health inequalities that mean that people in the north-east of England live seven to 10 years less than people in the south-east of England." The direct and indirect costs of those health inequalities far outweigh the direct costs of 1 per cent. on national insurance. Is my right hon. Friend the Chief Secretary getting that message too?
    Mr. Smith: I certainly am. It is already a well-established commitment of the Government that health inequalities are a key priority. Indeed, analysing those factors featured large in the Wanless report. It is therefore crucial that resources go into prevention, community health and primary care, as they will do as a consequence of the extra £40 billion that we are making available over the next five years. In addition, we have the benefits of the working families tax credit, the child tax credit, the new deal and our other policies for sustaining high employment. As we all know, unemployment and poverty have long been a big factor in the health inequalities to which my hon. Friend refers. The Labour party is committed to tackling them while the Conservative party, which is unable to come here with any credible policies on health, would allow them to get worse, just as they allowed inequalities to worsen when they were in government.
    Roger Casale: My right hon. Friend will be aware that my constituency of Wimbledon has one of

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    the highest proportions of professional and managerial people in the work force. There is a high degree of support for the Budget measures, because people understand and support the fact that money will be spent on rebuilding the NHS. Is it not the case that, even with the increase in national insurance contributions, Britain is still in a much more competitive position than some of our major competitors such as France and Germany? Is it not also the case that we are taking a number of measures to boost productivity and competitiveness? Finally, is it not the case that when we see the changes that the investment in the NHS will bring, we will find even more support from people in the work force for these measures than we find today so soon after the Budget?
    Mr. Smith: My hon. Friend is right. The CBI pointed out that ill-health costs business in this country £10 billion a year. Even after this increase in national insurance contributions, business in this country will contribute on average £10 a week towards health care, compared with £60 a week in France and £30 a week in Germany. The contributions in this country are fair and, as my hon. Friend said, they will be welcomed by people in the business community. Anthony Stone of the British Chambers of Commerce said about the Budget:
    "Any of us in business know that we get what we pay for. If we want a world class health service in the UK we need to pay more."
    I believe that that message is well understood in business.
    Mr. Michael Howard: Does the Chief Secretary recall the words of Labour's 1997 election manifesto, which said:
    "How and what governments tax sends clear signals about the economic activities they believe should be encouraged or discouraged"?
    What economic activity do the Government think will be encouraged or discouraged by their tax on jobs?
    Mr. Smith: In our manifesto for the election in 2001, we made our position very clear. The manifesto said:
    "Tax policy will be governed by the health of the public finances, the requirement for public investment, and the needs of families, business and the environment."
    We also pledged that we would put schools and hospitals first and that we would put investment in our public services ahead of the cuts in taxation for which the right hon. and learned Gentleman and his colleagues were arguing. They cannot have any credibility in the House when they say that the national health service needs more resources but oppose our measures to raise them. We have introduced reforms to match those resources, but they say that they have no alternative. The right hon. and learned Gentleman and his colleagues are not advancing a politically or intellectually credible proposition.

    Exchange Rate
    Dr. Vincent Cable: What estimate his Department has made of the level of UK exports if the pound-euro exchange rate fell 10 per cent.; and if he will make a statement.[53547]
    The Economic Secretary to the Treasury (Ruth Kelly): The specific effects of exchange rate changes depend on the particular causes of each change. The Government appreciate the difficulties that the slowdown in the world economy and weakness of the euro have posed. However, as set out in the Budget forecast, stronger external demand and the anticipated pick-up in world trade should provide a significant boost to United Kingdom export growth, which is projected to increase markedly from the second half of this year and to rise by between 7.75 and 8.25 per cent. next year.
    Dr. Cable: Does the Minister acknowledge that the Treasury's model shows that a 10 per cent. change in the exchange rate is the equivalent of 50,000 or 60,000 jobs in tourism alone? Does she agree with the assessment of the president of the German Bundesbank, who was in London last week, that the pound is over-valued and will have to be devalued before Britain can join the European monetary union? Do the Government's five tests allow for an appropriate exchange rate, and if so, how?
    Ruth Kelly: I am surprised at the hon. Gentleman's question. He knows full well that the Government are committed to Britain's national economic interest and will take a decision on the euro only if it is in our national economic interest to do so. We have clearly set out our approach to the five economic tests, and it will be rigorous and thorough. We are certainly not about to embark on a running commentary on the progress that is being made.
    Mr. Peter Pike: Does my hon. Friend recognise that in a constituency such as Burnley, where 36 per cent. of jobs are in manufacturing industry, there are concerns about the value of the pound against the euro? Manufacturing industry has to fix the price of its goods—and sell them—in euros and believes that it is important to join the euro as soon as possible. That would reduce instability and provide security and jobs, although obviously we need to join at the right rate and meet the economic tests.
    Ruth Kelly: I am glad that my hon. Friend recognises the importance of the five economic tests and that any decision on the euro will be taken in the best interests of Britain's national economy. Of course we are concerned about businesses and, in particular, manufacturing in my hon. Friend's constituency, which is similar to my own in many respects. That is why we are the party that is taking action to support manufacturing; why we are cutting corporation tax; and why we have made permanent 40 per cent. first year capital allowances for plant and machinery for small and medium-sized enterprises. It is also why we have reformed capital gains tax to ensure that this country is the best in the world for entrepreneurship and enterprise. The Budget went further by implementing research and development investment tax credits, and it will provide a platform for growth on which businesses can thrive.
    Sir Peter Tapsell: May I point out to the hon. Lady that the five economic tests do not include an examination of the exchange rate, which is what the question is about? What is the reaction of her Treasury colleagues and her former colleagues in the Bank of England to the fact that economists at home and

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    abroad almost unanimously argue that before Britain can practically think of joining the single European currency, the pound sterling will have to be devalued by between 20 and 30 per cent?
    Ruth Kelly: I have already explained that the assessment of the five economic tests will be thorough and rigorous and will include all relevant economic considerations, including the durability and sustainability of economic convergence. The best way to achieve a stable and competitive exchange rate, to which we are, of course, committed, is to have a framework for monetary policy that removes the political control of setting interest rates and gives it to the Monetary Policy Committee at the Bank of England. It also needs a fiscal framework that keeps debt under control, something that the Conservatives manifestly failed to do during their years in power.
    Mr. Kelvin Hopkins: Does my hon. Friend accept that not just the pound but the dollar is overvalued? I am sure that she is aware of speculation in the past week that both the pound and dollar are not only over-valued but likely to depreciate significantly in the coming months and perhaps for the next year or two. Does she agree that that would put enormous pressure on an already deflated eurozone economy, probably force nations in the eurozone to break through the boundaries of the growth and stability pact, and force a fundamental rethink of economic policy in the eurozone?
    Ruth Kelly: I thank my hon. Friend for pointing out something that we recognise: some difficulties experienced by manufacturers are caused by the weakness of the euro. In fact, sterling has depreciated against the dollar since 1997. We are committed to a stable economic framework in this country and I have set out the policies that we have put in place to ensure that we have one. As a result, the number of people in employment has increased by 1.5 million since 1997, we have the lowest inflation rate since the 1960s, and the lowest interest rates since 1964. I am sure that my hon. Friend agrees that we have a platform for sustained economic growth.
    Adam Price: In addition to the president of the Bundesbank, two members of the Monetary Policy Committee, Christopher Allsopp and Sushil Wadhwani, have recently said that the pound is overvalued and that devaluation is necessary. They say that that could work and need not be as disruptive as the Treasury fears. If the Government are unprepared or unwilling to act, perhaps they will consider doing with the exchange rate what they did with interest rates by giving the policy to the Bank of England so that we can get the exchange rate that we need.
    Ruth Kelly: What we do not want to do is return to the days of artificially manipulated exchange rate depreciations. We saw what happened when that policy was attempted in the past, and saw the results of policies that led to boom and bust in the 1980s. We are determined to create a platform of macro-economic stability in this
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    country and have introduced policies to make that programme work. We are committed to maintaining a framework that does just that.
    Mr. Derek Foster: Does my hon. Friend accept that a fall in the value of the pound against the euro would give an enormous boost to manufacturers in the north-east, which is striving to achieve the Government's target of full employment in every region? Does she agree that a fall in the value of the pound is essential if we are ever to join the single currency?
    Ruth Kelly: I think that my right hon. Friend will agree that the best thing that we can do for manufacturers is to have economic stability in this country. Once we have a platform of economic stability we can build on it by promoting competition, productivity and enterprise. That is why the Budget set out measures to support manufacturing and introduced a generous volume-based research and development tax credit for large companies, building on work that has already been done to support small companies. That is also why the Budget included exemptions for capital gains on substantial shareholdings in trading companies; why we have increased funding for regional development agencies so that they can act as drivers for growth and productivity throughout the regions; and why we are determined to tackle gaps in the market for finance by setting up regional venture capital funds across the country. Those are the conditions that manufacturers need to thrive and grow but, most important of all, we must avoid a return to the days of boom and bust that manufacturers had to endure for a long time under the Conservatives.
    Sir Michael Spicer: In view of what the Minister has just said about manufacturing, why has the rate of productivity been falling ever since Labour took office?
    Ruth Kelly: Perhaps the hon. Gentleman would accept that in a period of rising employment—I have already pointed out to the House that the employment figure has risen by 1.5 million since 1997—there may be a cyclical variation in productivity growth. In the longer term, measures that we have put in place will increase productivity growth. I point out to him that the only year in which productivity fell in this country was when his party was in power.
    Mr. Ian Davidson: Does the Minister accept that an artificial devaluation of the pound would make imports more expensive and thus be inflationary? Does she accept that the real problem is the fact that the euro has collapsed in value, and that that is hardly a sign of success? Does she agree that if we wish to avoid returning to boom and bust, we cannot have any artificially manipulated devaluation?
    Ruth Kelly: I thank my hon. Friend for his comments. Economic stability must underpin all the action that we take on the economy. If we get the platform of stability right, we can take the measures essential to help enterprise and build a climate of competition and productivity growth in Britain. That is what we are doing.

    Manufacturing
    Mrs. Annette L. Brooke: What assessment he has made of trends in manufacturing output in the south-west since January 2001. [53549]
    The Financial Secretary to the Treasury (Mr. Paul Boateng): The Government's latest assessment of developments in the manufacturing sector, based on all relevant factors, was published on 17 April in Budget 2002. Manufacturing in the south-west, as in the rest of the United Kingdom, was clearly influenced by the synchronised global slowdown in the aftermath of 11 September. Manufacturing output fell back in March, but is expected to accelerate during the second half of 2002 and well into 2003 as stronger global demand feeds through.
    Mrs. Brooke: In light of the CBI's great pessimism for the south-west, how significantly will the Budget measures this year contribute to at least reversing the current trend in manufacturing, jobs and optimism? How will the measures redress the balance between the housing boom and the failing manufacturing sector?
    Mr. Boateng: The hon. Lady will appreciate that the cuts in corporation tax, the R and D tax credit, the simplified package of VAT for businesses, and the action that we have taken across the piece to create, through the regional development agencies, a climate of enterprise in the south-west and elsewhere will all contribute to the improvement in manufacturing in the south-west. She is wrong to suggest that the CBI is pessimistic about the south-west. Only today, Mr. Doug Godden of the CBI stated:
    "There are signs that the worst is over. Manufacturing is expecting to increase production in the months ahead."
    I do not call that pessimism.
    Mr. Adrian Sanders: The Government take great credit for the fact that unemployment has fallen month by month over the past 12 months, but in my constituency it has risen month by month in the past 12 months. More than 5,000 manufacturing jobs have gone in Opto Electronics. How does putting a tax on national insurance help in an area that suffers from high unemployment and wants more jobs, when a tax on income may well have helped my area?
    Mr. Boateng: Both business and the country as a whole are agreed that it is important that we invest in our public services. There is a direct feed-across between public health and business. Business gains when health is delivered in ways that reduce absenteeism, business gains when the health of the nation is improved, and business is prepared to make its contribution to what we are seeking to achieve in the national health service—a major contribution from that service to the health and well-being of the entire nation.
    Mr. James Gray: It is only three years since the Chancellor of the Exchequer came to my constituency with a great fanfare of new Labour trumpets to open the expanded Dyson bagless vacuum cleaner factory in Malmesbury, a town of 4,000 people.
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    Mr. Dyson announced recently that he would lay off 1,000 people, not as a result of what is described by the Minister as a synchronised global slowdown, whatever that may be, but because he cannot continue to manufacture vacuum cleaners in the United Kingdom. What is the Minister's explanation to the people of Malmesbury as to why his right hon. Friend's mate Mr. Dyson has laid off 1,000 people in my constituency?
    Mr. Boateng: The hon. Gentleman must get real and appreciate what is happening across the globe in manufacturing and the global economy. That is what is synchronised—it is happening in all continents post-11 September. He also needs to understand, in relation to his specific example, that Dyson's is upping its R and D investment in our economy. That is what we are seeking to achieve: high value and high skills. That is good for the economy and good for Britain, and it will be good for the hon. Gentleman's constituents.

    Local Authorities (Emergency Planning)
    Syd Rapson: How the Budget will affect the funds available to local authorities for emergency planning. [53551]
    The Financial Secretary to the Treasury (Mr. Paul Boateng): The Budget has had no effect on the amount specifically made available for emergency planning.
    Syd Rapson: I thank my right hon. Friend for that answer and welcome the previous increases on the low base that we inherited from the last Government. However, in evidence to the Select Committee on Defence, local authority representatives claimed that there was a 15 per cent. cut this year for English local authorities, and Portsmouth is receiving a reduction of 5 per cent., from £78,000 to £74,000. Will my right hon. Friend reconsider the means of funding for dealing with civil emergencies—perhaps the issue could be dealt with through the standard spending assessment—to enable the public to have more confidence following 11 September?
    Mr. Boateng: I know from my time as a Minister of State, Home Office that my hon. Friend takes a great and proper interest in civil defence and emergency planning in his constituency. That is very much to be welcomed. He will be glad to know that the total amount given to local authorities in civil defence grants increased by 36 per cent. in 2001–02, rising from £14 million in 2001 to £19 million in 2001–02. That is a substantial increase. Where there are specific issues in relation to the administration of the civil defence grant, that is a matter for my right hon. and hon. Friends in the Cabinet Office, but I shall certainly draw to their attention the concerns that my hon. Friend expressed.
    Mr. Mark Francois: A recent survey of county emergency planning officers found that 93 per cent. of the 30 officers questioned felt that emergency planning in local government was severely underresourced. Given the wake-up call that we received on

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    11 September, surely the Government can do more to find resources for the people who are so crucial in planning for our safety.
    Mr. Boateng: I share the hon. Gentleman's belief that we need to ensure that those who plan for our safety and who play such an important role in securing the welfare and safety of us all have proper recognition. That is why my right hon. and hon. Friends in the Cabinet Office and my right hon. Friend the Chief Secretary have given the matter the attention that it deserves, and why counter-terrorism is now specifically treated as a mainstream priority and is being handled through the spending review 2002. The points that the hon. Gentleman and my hon. Friend the Member for Portsmouth, North (Syd Rapson) have properly made will no doubt be taken into account in that review.
    Ms Joan Walley: May I also express my concern about the size of the emergency planning budget, especially in view of its failure to keep pace with increases in other spending? In Staffordshire, the fire service co-ordinates the emergency service for all the district councils, Staffordshire county council and Stoke-on-Trent city council, and we now have only seven full-time emergency planning officers. This year, the amount available was settled only in April, meaning that people are now employed on temporary contracts. May I urge my right hon. Friend to tell the Cabinet Office that we need certainty for local authority spending during the next five years so that we can rely on our fire service and its officers to provide the emergency service that we all know is needed after 11 September?
    Mr. Boateng: I am grateful to my hon. Friend, not least for the interest that she takes in this subject. She will know that no decisions on the other elements of local government funding have yet been made. They will be announced in the spending review in the summer. I am sure that my hon. Friend will join me in welcoming the
    additional
    £43 million that has been found for 2002–03 from the capital modernisation fund for the fire service, part of which will meet the very concerns that she has expressed.

    Tourism (South-West)
    Mr. Paul Tyler: What analysis his Department has undertaken on the impact of (a) the slowdown in the world economy and (b) the exchange rate with the euro on the tourist industry in the south-west of England. [53552]
    The Economic Secretary to the Treasury (Ruth Kelly): The Government fully appreciate the difficulties that last year's world economic slowdown, the tragic events of 11 September and the persistent weakness of the euro have posed for businesses dependent on tourism in the south-west and in the rest of the UK. However, the Budget forecast is for a considerable strengthening of the world economy during 2002 and into 2003 and, alongside a number of initiatives that the Government have introduced to promote British tourism, that should help the industry to recover.
    Mr. Tyler: May I ask the Minister to concentrate on the impact of the exchange rate on the tourism industry,
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    especially in the south-west? Does she recognise that irrespective of whether this country enters the euro, the euro has now entered this country, and is having a dramatic impact, not least on the holiday industry? Has she examined the study published in October 2001 by Caledonian Economics for the British Tourist Authority, and does she accept its conclusion that if we had a realistic exchange rate, the holiday industry could generate 51,000 more jobs and increase its earnings by £1.76 billion?
    Ruth Kelly: I point out to the hon. Gentleman that 80 per cent. of visitors to tourist attractions in the United Kingdom are domestic tourists, so the most important thing that we as a Government can do is to create the conditions in which domestic tourism will thrive. Of course we recognise the impact of the slowdown in the world economy, the weakness of the euro and the tragic events of 11 September. In fact, since 1997 the value of the pound has depreciated against the dollar, and American tourists, who are so vital to certain aspects of the tourist industry, should have been encouraged by the exchange rate effects that the hon. Gentleman mentioned.
    Mr. David Laws: Although the Minister's comments on euro policy were typically enlightening, does she agree that they were not as enlightening as those made earlier this week by a senior Minister at the Department of Trade and Industry, who is sitting not far away from her, and who said that within two years we would have joined the eurozone?
    Ruth Kelly: I have already explained to the House the Government's policy on the euro. That policy will be determined by Britain's national economic interests. We must carry out a rigorous and thorough assessment of the five economic tests. Then, if those tests are satisfied, we will have the triple lock of Cabinet, Parliament and the country through a referendum. That is the Government's policy, which remains unchanged.

    Public Service Investment (Scotland)
    Mr. Mark Lazarowicz: If he will make a statement on how his plans for investment in public services will affect Scotland. [53553]
    The Chief Secretary to the Treasury (Mr. Andrew Smith): The Government announced in the Budget substantial increases in provision for Scotland as a consequence of the increases in health spending in England. The increases in 2003–04 through to 2007–08 are £224 million, £858 million, £1·6 billion, £2·3 billion and £3·2 billion.
    Mr. Lazarowicz: The £8 billion increase in public expenditure that that amounts to is welcomed by my constituents and will, I am sure, be welcomed throughout Scotland. Does my right hon. Friend agree that Scotland can benefit from those increases only if the UK economy as a whole is soundly managed? Can he tell me what he considers would be the effects on future public expenditure trends in Scotland if it were to go along the

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    road of fiscal autonomy, which is the latest wheeze being dreamed up by certain people among the nationalists and others?
    Mr. Smith: My hon. Friend is right about the benefits to Scotland of good management of the United Kingdom economy as a whole. The stability that we have put in place, the 1.5 million extra jobs and the expansion in public investment that we can fund demonstrate how Scotland benefits both from being part of the United Kingdom and from devolution and the ability to control matters in the areas that are devolved to the Scottish Parliament and Executive. My hon. Friend is right that those who argue for independence would bring about an economic calamity for the people of Scotland.
    Mr. John Bercow: Given that health spending in Scotland over the past five years has risen by
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    28 per cent. in real terms, but that in precisely the same period the average waiting time in Scotland for an out-patient appointment has risen by 25 per cent., why cannot the right hon. Gentleman accept that simply spending more public money without fundamental reform of service delivery will not achieve the improvements that we all want?
    Mr. Smith: Not for the first time, the hon. Gentleman is wrong. Waiting times in Scotland are one month less than in England. He reveals that the Conservatives will look for any excuse to stand at the Dispatch Box and run down the national health service, deny the funding that we are providing and remind their constituents that their agenda is the privatisation of the NHS. People will ask. "How much will we have to pay for private insurance, operations or a visit to the doctor under the Tories?" They will never trust the Tories with the NHS again.

Regional Government White Paper
12.30 pm
The Deputy Prime Minister and First Secretary of State (Mr. John Prescott): With permission, Mr. Speaker, I should like to make a statement on the English regions.
Today, my right hon. Friend the Secretary of State for Transport, Local Government and the Regions and I are presenting our White Paper, "Your Region, Your Choice" for more democracy and less bureaucracy. Copies are available in the Vote Office.
Throughout the United Kingdom and Europe, there has been a growing recognition of the importance of regions as a focus for economic growth and social identity. The Government have challenged the notion that the only decisions worth making are those taken in Whitehall and Westminster.
We recognise that people in Birmingham or Bradford, Liverpool or Lowestoft, Falmouth or Faversham, Newcastle or Norwich deserve to have their voices heard, too. We believe that Britain as a whole cannot achieve its full potential unless all our regions share in success and, indeed, drive it.
When we offered devolution, we placed our trust in the people of Scotland and Wales. Today, I am announcing measures to bring decision making closer to the people of England by strengthening regional powers and giving them the choice of regional government.
We trust the people to make that choice and, if they wish, to choose to elect a regional assembly and give a new voice to their region. The White Paper gives effect to our manifesto commitment to provide for directly elected regional assemblies for those regions that want them.
My interest in regional policy goes back more than 30 years. In the early 1980s, Michael Foot asked me to draw up a new policy framework to secure agreement for devolution for Scotland, Wales and the English regions. Some hon. Members will remember that that caused some local difficulty as well as problems in the House. The result was the alternative regional strategy, published in 1982, which set out a framework for devolving power to Scotland and Wales, and decentralising power to the English regions.
In 1994, I appointed Bruce Millan, the former Secretary of State for Scotland and European Commissioner to chair the Labour party's regional policy commission. His report, "Renewing the Regions" said that,
"without strong regional policy rooted in the regions themselves, and without firm commitment to decentralisation we are unable to develop our national economy to its full potential".
Many of the ideas in the White Paper find their origins in the earlier reports. I would like to express my appreciation to those who worked on them. Some are Members of the House today.
The Government have always recognised the regions' potential. In 1997, we inherited one of the most centralised systems of government in the western world. We have changed that. In our first term, we devolved power to Scotland, Wales and Northern Ireland. The Opposition opposed that. In England in our first term, we restored to London democratic citywide government, which the Opposition had abolished.
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We have reformed local government; strengthened and broadened the Government offices for the regions; and set up nine regional development agencies, which, in their first two years, created or safeguarded more than 80,000 jobs. We also helped establish a network of regional chambers and assemblies, which have improved accountability and given the regions a new voice.
Today's White Paper takes that a step further. It sets out a range of options for people in the English regions. But, whatever they decide, the White Paper will strengthen regional policy across England. In all regions, we are giving extra resources and greater flexibility to the regional development agencies, and regional chambers will have greater responsibilities and a greater role in regional planning. In all regions, we will also give extra responsibilities to the Government offices to strengthen regional decision making and to ensure that government is joined-up in the regions. But for those regions that wish to proceed to directly elected regional assemblies, the White Paper sets out the process. Members are well aware of the different needs and aspirations of our English regions. There is a strong and growing demand in some regions to have a distinct democratic voice and a greater say over their own future. The people of the English regions should rightly have the same choice as we gave to the people of Scotland, Wales and London.
The White Paper is about striking the right balance, trusting the people, responding to the needs of a modern, diverse and more progressive society, and creating the conditions for greater prosperity and reducing disparity in and between our regions. The key, therefore, is flexibility. This will require a pragmatic approach and the consent of the people of the regions. Where there is a referendum in favour of them, we will establish elected regional assemblies, and I believe that where one or two regions lead, others will follow.
The White Paper sets out the powers, functions and financial arrangements for these new elected regional assemblies. They will have real power and funding to improve the quality of life of people in their region, particularly by improving regional economic performance. Indeed, raising growth by just 0.5 per cent. for the worst-performing regions would increase our national wealth by £20 billion in 10 years. As my right hon. Friend the Chancellor's pre-Budget report made clear, if all our regions raised their productivity to the national average, the average person in the United Kingdom would be £1,000 a year better off.
Regional assemblies will be responsible for developing joined-up regional strategies on issues such as sustainable development, economic development and regeneration, skills and employment, planning, transport, housing, health improvement, and culture. Assemblies will have a range of powers to help them to deliver those strategies. For example, they will allocate funding for economic development, housing, tourism, arts and sport. They will also be responsible for the regional development agencies, appointing the board and approving the regional economic strategy.
Regional assemblies will be funded primarily by central Government grant, and they will have complete freedom to spend that grant as they judge best. We will agree targets with them and provide a single pot for regional government. In addition, they will have the power to raise further funds through a precept on council tax and through borrowing. Naturally, budgets will vary depending on the

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population of each region. On current expenditure, the budget for the north-east would be about £350 million a year, and for the north-west about £730 million. On top of that, the assemblies will have a direct influence over large amounts of central Government public expenditure—some £500 million in the north-east and £1.3 billion in the north-west. That is over and above the £3 billion spent by local authorities in the north-east region at present.
Elected assemblies will need to be big enough properly to represent the interests of the different communities in the region, but not so big that they become unmanageable. We therefore propose that assemblies should have 25 to 35 members.
It is important that an assembly of that size should have broad political representation. In Scotland, Wales and London, we have used the additional member system of proportional representation to elect Members of the Parliament and the assemblies. On balance, we have decided to use the same system for English regional assemblies. The boundaries of each region will be the existing ones used by the Government offices for the regions and the regional development agencies.
In addition to elected regional assemblies, we would like to see greater involvement of groups such as the business community, trade unions, voluntary organisations and environmental groups. We want to encourage the regional assemblies to draw on the experience and skills of individuals in the region who may not be able to stand for election themselves. We want to build on the experience of the Scottish Civic Forum, the partnership arrangements in Wales, the London Civic Forum and the arrangements introduced in a number of English regional chambers. Different regions may want to use different models. We are asking for views on that. For example, there could be appointed assembly members who could play an active part in the role of the assemblies, but would not have the right to vote.
Regional assemblies represent a new tier of political accountability. They will work closely with their local authority partners. However, in areas that currently have county and district councils, an assembly would have a third tier of government. We believe that it would be simpler and more efficient if in those cases we moved to a fully unitary system of local government. So where it is decided to hold a referendum for an elected assembly—and only in those regions—there will first be an independent review of local government structures, conducted by the boundary commission for England. That review will examine the two-tier areas of the region, and make proposals for wholly unitary local government. Existing unitary authorities in the region will not be affected.
We believe that when a referendum is held voters should know the proposed structure of local government, and should be clear about who would do what in their area. I emphasise that the review takes place only in regions where a referendum will be held, and that any restructuring of local government will take place only if there is a "yes" vote in the referendum.
The White Paper sets out the process and timetable for establishing elected regional assemblies. Before we decide which region or regions should hold the first referendum,
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we will consult all the English regions on our proposals. The Secretary of State will decide whether a region should hold a referendum primarily by assessing the level of public interest in the region. In reaching his conclusion, he will seek the views of the regional chamber, local authorities and other key stakeholders.
We intend to introduce legislation to provide for referendums and local government reviews as soon as parliamentary time allows. We intend to allow a referendum to be held before the end of this Parliament. After a region has voted for an elected assembly, we intend to introduce further legislation enabling assemblies to be established. That would make it possible for the first regional assembly to be up and running early in the next Parliament—under a Labour Government, of course.
All English regions will benefit from our strong regional policy, and we will continue to develop the regional structures and agencies that we established in our first term. Furthermore, our White Paper offers the opportunity of a new constitutional settlement for the English regions, a choice that has been denied them for far too long.
The opponents of our proposals must answer this question: if devolution is good enough for the Scottish and the Welsh, why should they deny that choice to the people of England? Our proposals will give the regions of England new choices, new powers, and a new voice. By devolving power, we can elevate our democracy; by empowering our regions, we can engage people more effectively; by harnessing the energy of the regions, we can drive forward the nation's economic growth; by embracing diversity, we can strengthen the United Kingdom; and by liberating the potential of our regions, we will be helping Britain to prosper.
I commend the proposals to the House.
Mrs. Theresa May: I must say to the Deputy Prime Minister that it is the way he tells them; it really is.
I am grateful to the Deputy Prime Minister for his courtesy in giving me prior sight of the statement. His recognition of the courtesies of the House could well be a lesson to some of his colleagues. However, I also commiserate with the right hon. Gentleman. He said in his statement that he had long been an advocate of regional government, and we acknowledge his consistency in that regard. He has, we know, worked hard to battle for the White Paper. I am only sorry that, on the day of its introduction, he has been somewhat upstaged by the Secretary of State for Transport, Local Government and the Regions.
Mr. Eric Pickles: Sabotage.
Mrs. May: Sabotage indeed.
We are opposed to regional government because we believe that regional assemblies will take power away from local government, lead to the abolition of county councils, and take decision making further away from local communities. The Deputy Prime Minister claims that today's measures will bring decision making closer to the people of England, but far from devolving power, they will centralise it, taking it further away from local people. The Government are simply going in the wrong direction, pulling power up to remote bodies; we want to

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push power down to local people and to local communities. We want community government, not regional government.
The Deputy Prime Minister also says that it is a matter of choice, but it is some choice for those who do not vote for a regional assembly. We learn from his statement that the regional chambers, government offices and regional development agencies of even those regions that do not vote for an assembly will be given greater responsibilities and powers, greater opportunity to take decisions affecting people's lives, and greater opportunity to take decisions away from elected local government representatives.
The Deputy Prime Minister claims to have changed one of the most centralised systems of local government in the western world. Tell that to the local councils that now have 15 per cent. of their funding ring-fenced by this Government, and who can spend it only on what this Government say they can spend it on.
The Deputy Prime Minister also tells us that, as a result of the introduction of regional assemblies, a complete review of local government will need to be undertaken in the areas concerned. That sends one clear message: it will lead to the abolition of county councils. Counties count. They are historic areas, with which people identify clearly. I wonder how many people in the north-east realise that regional government will mark the end of Durham and Northumberland county councils. How many people in the south-west realise that it will mark the end of Devon, Cornwall, Dorset and Gloucestershire county councils?
Regional government will mean that decision making is taken away from local people and given to the regions, but we must recognise that there are differing needs. In the south-east, for example, the needs of the Kent coastal towns are quite different from those of the Thames valley. Will people in Falmouth really want decisions affecting their lives to be taken in Bristol? Will people in Sunderland want Newcastle to rule their lives?
We also learn from today's statement—[Interruption.]
Mr. Speaker: Order. There is far too much noise in the Chamber. The hon. Lady must be heard.
Mrs. May: Thank you, Mr. Speaker.
We also learn from today's statement that the new regional assemblies will, after all, have tax-raising powers such as the power to raise a precept on council tax. The Deputy Prime Minister presents that as a great advantage, but I doubt whether the people of London, on whom the Mayor and the Greater London Assembly have imposed a 30 per cent. precept, would regard granting such powers to regional assemblies as a good thing. We are talking about budgets of about £350 million a year, but county councils such as Essex and Kent have budgets of some £1 billion a year. Exactly what will regional assemblies be able to do?
The Deputy Prime Minister said at the beginning of his statement that this is about more democracy and less bureaucracy, but we now learn that regional assemblies will be responsible for developing joined-up regional strategies on issues such as sustainable development, economic development, transport, housing, health improvement and culture. Does that constitute less
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bureaucracy? What will happen to the existing quangos when regional assemblies are in place? How many quangos will be abolished?
In its 1997 manifesto, the Labour party pledged that regional assemblies would require
"confirmation by independent auditors that no additional public expenditure overall would be involved".
However, the reorganisation of local government is likely to cost up to £2 billion. Does the Deputy Prime Minister stand by Labour's manifesto pledge, and will he confirm that if additional public expenditure is involved, regional assemblies will not go ahead? Will the tax-raising powers for the regional assemblies be limited, as they are in Scotland, or will they be unlimited?
These regional assemblies will not provide greater opportunities for devolving power down to local people: they will raise power up from local government, destroy county councils and mean that local communities have less say in their lives and in decisions affecting them than they have today. These proposals for regional assemblies will mean less democracy, more talk and more tax. It is a centralising measure and we will oppose it.
The Deputy Prime Minister and First Secretary of State: I suppose that I could return the compliment and say that it is the way the hon. Lady tells them, but that would be flying in the face of history. I presume that the Tories are still responsible for what they did in government. Let me remind the House that they opposed Scottish devolution: they now accept it. They opposed Welsh devolution: they now accept it. They opposed the Greater London Authority: they now accept it. They opposed the Scottish regional development agency: they now accept it. They opposed the Welsh regional development agency: they now accept it. They also opposed the RDAs for the English regions, although God knows why they felt that England should not have economic agencies to deal with similar problems of jobs and investment. I shall have to treat the hon. Lady's comments with some contempt, because of the Tories' history. They oppose proposals and they shout a lot, but in the end they come to accept the new ideas. That is what will happen in this case.
The hon. Lady said that the proposals would mean more bureaucracy and less democracy, but decisions in the regions are made at present by Government offices. Who set up the Government offices? It was the previous Administration, but not all Departments were included. They are now, and that is an improvement. However, it is not sufficient for the regions to have civil servants making decisions—that is bureaucracy—when directly elected members could make the strategic decisions. If we are replacing civil servants, who are by definition the bureaucracy, with directly elected members, that will mean more democracy and less bureaucracy. Both civil servants and elected members have a part to play, but I cannot accept the hon. Lady's arguments on that point.
The hon. Lady mentioned precepts. When her party was in government, it abolished the Greater London council, but it did not consult the people of London on that. When the Conservatives came to finance its replacement, what did they use? They used a common form of precept, as the hon. Member for Brentwood and Ongar (Mr. Pickles) can tell the hon. Lady. Under all Governments, precepts have been seen as a proper mechanism for financing local

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authorities. They are used even today in the metropolitan authorities. The precept has been a proper form of financing—alongside grants, which I also mentioned—for local authorities.
We heard some hypocrisy from the hon. Lady, whose concern for quangos is touching. Most of the quangos grew up under the previous Administration, because they did not trust the elected members of the regions to make decisions. We totally reject that approach and we will provide the people with an alternative of regional elections, as proposed in the White Paper.
The hon. Lady said that the regional assemblies will take powers away from local authorities. I understand that she has not had the chance to read the White Paper, but when she does she will see how the local authorities will retain the powers that they have. The proposals involve decentralising from the Government down to the regions.
The hon. Lady mentioned counties. There are county structure plans, as the hon. Lady has mentioned in the past, but that sort of regional body is not enough. Some areas are larger than individual county councils and there can be several county councils in an area. They will now have a regional body. There is no need for a county structure plan if there is a regional planning body. That is precisely what we are proposing.
The hon. Lady spoke about county councils. We are giving people the choice to retain or reject a county council. They will be able to decide whether they want to keep the existing local government structure or move to an elected assembly. We trust the people, and we give them the choice. That is called a referendum. We are not imposing the structure.
That is why the White Paper is about choice. If people in the south-east want to retain the current structure, that is fine: let us give them the chance to decide whether they want to advance through the referendum process towards regional government. However, it is their choice. It is not for people in Newcastle to choose for people in the south-east. Each region will make its own choice about its local authority. That is called consultation and democracy. The White Paper is dedicated to that purpose.
Mr. A. J. Beith: Will the Deputy Prime Minister accept that the Liberal Democrats have been campaigning on this issue for years? We welcome the fact that the right hon. Gentleman has brought forward proposals today. We will examine them closely to see whether they will achieve what needs to be achieved—bringing the regional government that already exists in this country under proper democratic control, and bringing down to regional level decisions that are now taken in London and which should be taken much closer to the people whom they affect.
Does the right hon. Gentleman understand that we have some anxieties about the slowness of the process, which involves two stages of legislation? When they vote, will people know precisely what powers will be available to their regional assembly, or will that depend on a subsequent piece of legislation?
Is the Deputy Prime Minister aware that we do not approve at all of his involvement of local government reorganisation in this process? The White Paper is not supposed to be about local government. If there is a job
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to do reorganising local government, would not it be far better, rather than trying to organise it from London, to let the regional assembly do it once it has been elected?
Does the Deputy Prime Minister accept that the council tax is not a particularly fair tax? It is not a very good instrument, as it will also confuse the role of local government with that of regional government, which is something quite different. Also, there is no mechanism to deal with those regions where—unlike the north-east, Yorkshire, and the north-west—there is no clear consensus about the regional boundaries. Such a mechanism ought to be established.
I hope that the Deputy Prime Minister realises that, in regions such as the north-east, there will be a continuing demand for the levels of funding that Scotland has achieved through the Barnett formula. People in the regions affected will regard that as very much part of the process. The argument about establishing a version of the Barnett formula for the north-east or north-west will not go away simply because the regional assembly argument is moving forward.
Will the Deputy Prime Minister recognise that the Liberal Democrats want to make the process work, so that it delivers to people in the regions something for which they will vote? When the legislation comes forward, we will seek to improve the package. We will also aim to help to present it more effectively than the Government have managed so far. In that way, people in regions where there is already a recognised demand for democratic control of regional government will be able to vote for it, and thus achieve it.
The Deputy Prime Minister and First Secretary of State: I thank the right hon. Gentleman very much for his words of support. The most recent Liberal Democrat document on regional policy was produced a few weeks ago, and there is a clear difference between our approaches to the matter. However, we agree on the essential objective—that people should be able to make a decision about regional government.
I look forward to the debate about the balance between the powers of regional government and local authorities. The right hon. Gentleman will be able to see how they are spelled out in the White Paper. Any confusion about the use of precepts or council tax stems largely from the Liberal Democrats' belief that the regional body should have tax-raising powers. That is a fair position, and no doubt we will hear the debate. The same proposal arose in the debates about devolution, and different solutions were found for the Welsh Assembly and the Scottish Parliament.
The right hon. Gentleman asked whether people will know about the powers available to the regions and the counties. I assure him that they will be spelled out, and it will be made clear to people where the resources will come from and what functions the bodies will carry out. We think that that is important, but we believe that a two-tier structure—a unitary and regional structure—is appropriate for regional government. However, there are strong arguments about the counties, and that means that the case will have to be made. People will listen to the arguments and will decide whether they want a two-tier structure. Our judgment is that a two-tier structure is the best.
Local authority members would not necessarily all be

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happy if a new directly appointed regional assembly decided the local structure in their area. That is one of the reasons why the Tories imposed the unitary system in Scotland without asking the Scots about it—because it was highly controversial. The Banham inquiry did not complete the arguments for a unitary system because it ran into a lot of flak in different parts of the United Kingdom. We have now come to a political judgment that it would be better to have two tiers—a regional and a unitary system of government. We look forward to the debate and the contributions to be made by Opposition Members.
Andrew Bennett: Will my right hon. Friend resist being deflected by Conservative Members' crocodile tears about the counties, given that they got rid of the six metropolitan counties? Does he accept that there will be a major welcome for his statement on the Labour Benches, particularly in respect of transferring power from the centre to the regions? However, the balance must be that democratically elected regional assemblies are quickly put into place.
The Deputy Prime Minister and First Secretary of State: I very much agree with my hon. Friend on these matters. It is a question of balance, but at the end of the day it is about democratic accountability. The simple point is one that I have made before: decisions about the regions are currently made by local government officers and civil servants; we propose to change that so that people can choose to go for a directly elected assembly. That will provide the opportunity for directly elected members to make the decisions, rather than civil servants.
Mrs. Gillian Shephard: Does the Deputy Prime Minister agree that the principles of accountability and transparency are important for good government at local and, indeed, given what is to follow today, national level? If he does agree, will he explain how the proposals that he has outlined will enhance those principles, given that his explanation of the proposals indicates that they will result in a mish-mash of incomprehensible and remote local government arrangements across England?
The Deputy Prime Minister and First Secretary of State: I do not accept that. Of course, the right hon. Lady has not been able to read the White Paper. There is a fundamental difference between us, which is quite understandable, and I do not mean this as a criticism. We want to give the people the opportunity to decide what their local authority structure should be. To say that it must he a unitary structure within a directly elected region raises questions about the accountability of the present structure. However, the present democratic structures in the regions can remain as they are.
People in the regions have to demand change and go through a process and a justification; then there will be a referendum in which the people will decide. We have made it clear today that if we want directly elected assemblies, we must have the unitary local authority system. I should have thought that that would have a great deal of support from the Conservatives—after all, they imposed such a system on Scotland without consultation.
Mr. David Clelland: Some of us recognise what others will come to recognise in due
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course: that my right hon. Friend has done a great service to our nation and to democracy in the announcement that he has made today and the work that he has done on this issue over many years. His announcement will be widely welcomed in the north-east of England, although we would like to discuss certain aspects with him further. It gives the people of the region a choice that would apparently be denied to them by the Conservative party.
My right hon. Friend spoke of flexibility. Will the legislation that will introduce assemblies be flexible enough to allow for assemblies' powers and responsibilities to be widened, in consultation with the assemblies, without the need for further primary legislation?
The Deputy Prime Minister and First Secretary of State: First, I thank my hon. Friend for his kind remarks. It is generally recognised in the House that those in the north-east have been at the forefront of demanding an elected regional assembly. One can reasonably assume that they will be first at the gate.
My hon. Friend says that he will want to discuss some of the details with us. It is no secret that we will be meeting people in the north-east tonight and I shall hear their views. I am sure that it will not be total endorsement and that they will have criticisms to make. There are varying views in the north-east. Some want to see a complete parliament in the north-east, more or less, rather than an assembly. They want to keep all the powers. That is a school of thought in a number of regions, not least Cornwall. However, we must find a balance.
My hon. Friend asks whether we can go further even before we have drafted legislation or entered into consultation, and I have to say no to that at the moment. However, given what is happening in Scotland and Wales, where people are beginning to feel that they can express their views, I am not surprised that people ask for more rather than less.
Sir Patrick Cormack: As one who is proud of the historical identity of the county of my birth—Lincolnshire—and of the county of Staffordshire, an important part of which I have the privilege to represent, may I ask the right hon. Gentleman to ponder for a moment? He is bent on rewriting, redrawing and destroying the map of this country as people have come to know and love it, and on putting in jeopardy the very identity of England. He is driving people forward by putting in place regional structures that will almost oblige many to think that they must vote in that direction. He is an iconoclast and he ought to be ashamed of himself.
The Deputy Prime Minister and First Secretary of State: I must confess that I am not ashamed. I see by the smile playing on the lips of the hon. Gentleman that his rhetoric was more for the benefit of those outside this place than it was a serious contribution. There is a clear difference between us: Conservatives in opposition and in government have always imposed their solutions. We are prepared to give choice—that is what the White Paper is about—to people in his area or to people in the north-east or other areas who are interested in the election of a regional assembly. If they take that route, they must accept that the first tier will be unitary. That is the point

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that the hon. Gentleman made and I understand it, but we made a decision and there is choice and balance in the White Paper.
Mr. Austin Mitchell: I congratulate my right hon. Friend; this is a good day for Yorkshire and Humberside and a good day for him—the culmination of the long campaign that he has waged. He might like to know that, this morning, in a vox pop on Radio Humberside, he was named as a potential First Minister for the new Yorkshire and Humberside region. May I express the hope that, even if he is not prepared to enlarge the powers at present, he will consider the proposals as a basis on which to build? What Scotland has, Yorkshire and Humberside need. The regional assembly must have more powers if people are to be prepared to vote for it and support it. What part will the Government play in the referendum process for regional government? Will they support the principle as they did for Scotland?
The Deputy Prime Minister and First Secretary of State: I thank my hon. Friend for his comments and kind remarks. As to whether I would consider being the First Minister. I am already First Secretary of State in this House, and I am happy with that. I do not want to feed the idea that I might be facing retirement, because those guys up in the Press Gallery will be writing about it for weeks. They rarely write the truth, but given half a chance they will make that kind of comment.
On the point about powers and balance, there are many powers in the package and we have tried to achieve a proper balance. It is different from what we did in Scotland, Wales or London. We have considered the experiences in those areas so as to establish a proper balance. We are not establishing parliaments in the regions—that is a fundamentally different proposition—we are establishing directly elected assemblies. We think that the balance of resources and powers is right.
My hon. Friend asked about our support. Clearly, the matter is Government policy, but we want the decision to be that of the people.
Mr. David Curry: The Deputy Prime Minister has not deployed what might be the most persuasive argument in favour of regional assemblies: they would be a system of governance of England compatible with devolution to Scotland and Wales. Instead, he has chosen to base his argument on economics. Does he accept that regional disparities in England have increased, despite the creation of regional development agencies? Why does he think that a new political structure will make that any better? Does he intend to ensure that the distribution of public finance to the regions is made on a fairer basis—for example, so that it relates to the per capita income of those regions compared with Scotland? If the benchmark is Scotland and Wales, how on earth does the right hon. Gentleman think that representative democracy, or real accountability, is served by a handful of neither nowt nor summat representatives, representing several hundred thousand electors in tiny assemblies that have no proper link with their electorate?
The Deputy Prime Minister and First Secretary of State: I accept the argument that this is part of a constitutional settlement that I believe people in England recognise as having been central to my arguments for an awfully long time. As I mentioned before, those arguments were made in the documents that we were writing in the 1980s. What people in Scotland and Wales were asking for was absolutely right, and I supported them in that campaign at the time. I also made it clear that the same demand should be made for the English regions. Indeed, I seek their support for giving people in the English regions the same kind of direct accountability, so there is that political consideration.
The economic matters are quite important of course, and many people will consider the proposals in that light. But if people consider what happened when Scotland and Wales were given their development agencies by Labour Governments, they will see that there has been a tremendous improvement in the economy of those areas. The improvement is never enough for people in those areas, but if the comparison in made, there is no doubt that the regional development agencies helped to improve their proportion of gross domestic product. That is why the difference was reduced between Scotland and Wales and the English regions.
It is right and proper that the English regions should have those bodies. People in the north-east feel very strongly about that. They want the same tools and resources to get on with the job and to improve the quality of life for our people. They define that in economic terms, but it is about more than that; it is about the environment, housing and all manner of things that make up quality of life, and the White Paper points that out. So it is right to ask me whether there is a proper balance between a constitutional settlement and the economic requirements to get greater prosperity in our regions. Yes, there is a proper balance, but both those issues come together.
Mrs. Louise Ellman: May I thank my right hon. Friend for his long-term commitment to the English regions? I congratulate him on being so determined to secure action. I was privileged to be a member of the Millan commission, and it gives me great pleasure to see so many of its recommendations now being put into practice. The regional development agencies already make a difference, but it is certainly high time that the already existing regional tier of government is made democratically accountable and more focused.
I should like to ask my right hon. Friend whether he is satisfied that the powers now being offered, which undoubtedly open major opportunities, are sufficient to make a real difference, particularly in economic development and transport. Will he reassure us that the Government are ready to listen to the voice of elected regional assemblies? Is he ready to listen to the voice of the north-west, which will welcome this proposal, in the same way as he welcomes comments from the north-east?
The Deputy Prime Minister and First Secretary of State: I thank my hon. Friend for her kind remarks and for the part that she played in the Millan commission, many of whose recommendations are included in the White Paper. She was also the leader of Lancashire county council, which did a very good job in developing new innovations and ideas on economic development in a county council structure. That was good—one to be

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welcomed—although I now prefer that to come under the regional development agencies and, indeed, elected regional assemblies. If people in the north-west welcome the proposals and wish to pursue the route of an elected regional assembly, that opportunity is provided for them in the White Paper.
The Government will have to take into account the fact that the assemblies will have their own pot of money and will make their own decisions, which are now made by central Government. The assemblies may say that they want more resources or more things, and the Government constantly get into debates with councils at present. I have no doubt that elected regional assemblies will make the same arguments. The one thing that I would say for directly elected regional assemblies is that they will have more influence over central Government to ensure a better and fairer distribution of resources.
Mrs. Angela Browning: May I remind the Deputy Prime Minister that the civil servants currently working in the Government offices for the regions are not unaccountable bureaucrats, as he described them? They are civil servants, answerable to Ministers; and Ministers, in turn, are answerable to Members of Parliament.
I attended the consultations on defining the south-west region, and I have to tell the Deputy Prime Minister from first-hand experience that the conclusion was that Swindon, the Scilly Isles, Bournemouth, Poole and the coalfields of Gloucestershire had nothing in common that would not apply to any other region of the country. I want to put this to the Deputy Prime Minister: if, in the course of the consultation, the south-west puts a proposal to him to break into two regions—or even three regions, as Cornwall wants to go its own way—would he consider that and give it his blessing if that was what the people wanted?
The Deputy Prime Minister and First Secretary of State: It is a question of choice, which is precisely what we have put in the White Paper. I hear what the hon. Lady says about Government offices, and I want to correct the impression that I might have given on that. I am the Minister to whom the Government offices are responsible, and I think that they do an excellent job—so much so that we have broadened their representation, and more Departments are actively involved in them. Furthermore, they were an idea of the previous Administration, which I thought was excellent. My only disagreement is this: if they make recommendations to Ministers, who debate with Members of Parliament here, why cannot they have a say about the priorities of their areas? That can be achieved effectively only by an elected regional assembly—[Interruption.] I hear hon. Members' objections, but, although it might be possible to get a question or a little bit of space in a debate at Westminster, that is no longer satisfactory to people in the English regions. Even if they are satisfied, we leave it with them to make that choice. Those who are not satisfied, however, will have a directly elected assembly, which will be more democratic and less bureaucratic.
Mr. Martin Salter: Is the Deputy Prime Minister aware that the bleating of the hon. Member for Maidenhead (Mrs. May)—who is no longer in her place, so I presume she has gone to lick her
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wounds—about the continuation of county councils is nothing more than hypocrisy and cant. Why, in 1994, did Conservatives in Berkshire—the area now represented by the hon. Lady—propose the total abolition of Berkshire county council?
Mr. Speaker: Order. The hon. Gentleman should be putting questions to the Deputy Prime Minister not about the Conservative party but about the policies of the Government. I think that the Deputy Prime Minister has got the drift of the hon. Gentleman's case, and perhaps he can try to reply.
Hon. Members: He was not listening.
The Deputy Prime Minister and First Secretary of State: I heard my hon. Friend quite clearly. He was talking about more hypocrisy under the previous Administration. Indeed, he reminds us that they abolished Berkshire county council. Despite all the talk that I am hearing about keeping county councils, the Conservatives reduced the organisation in Scotland to unitary authorities and abolished the Greater London Council. All of that was without any consultation with the people in the areas concerned. The White Paper puts down a proposal and allows people to make a choice. That is the fundamental difference between the Government and the Opposition.
Andrew George: The White Paper talks about trusting people, flexibility and embracing diversity. In the light of that, does the Deputy Prime Minister accept that, if the Government merely attempt to replace an over-centralised state with a centralised solution, the whole project will become unpicked? Given the chance, voters will simply stay home in their droves. Although chapter 6 of the White Paper refers to the possibility of flexibility about those regions, does the Deputy Prime Minister accept that the whole project will fail if the Government become obsessed with their own regional boundaries?
The Deputy Prime Minister and First Secretary of State: I do not believe that a centralised solution is being imposed on people. The Government have made a judgment, which is embodied in the White Paper. I hope that the House will have an occasion to debate the details and the flexibilities in the White Paper in the not-too-distant future. We have decided on the best form to offer as a choice. I agree that we are not keeping the local authority structure as it is—we are saying to people, "If you want elected regional representation, you must accept a unitary structure." We therefore have a boundary commission to give us recommendations on that. That is a political choice, but it is up to the people to decide whether they keep what they have or take the structure that we are offering.
Mr. Patrick Hall: Does my right hon. Friend agree that the good case that can be made for democratic regional government will be all the more persuasive if the long-term and deliberate decline in the powers of local government that was brought about by the Conservative party were firmly reversed? Does he agree that the opportunity to do that and to increase the powers of local government will arise through the creation of the unitary authorities to which he has just referred?
The Deputy Prime Minister and First Secretary of State: I believe that the unitary authority system is the best form of local government, and I think that the previous Administration felt the same. After all, they imposed a great deal of it throughout the country, and that was right. Such authorities have considerable powers and important decisions to make about the services that they provide in their area. However, I return to the point that we shall have a two-tier system if an area chooses to have an elected regional assembly. That option is right, and it would not undermine in any way the influence, controls and resources that the unitary authorities have. We are decentralising from the top down to the regions, and not from the local authorities.
Mr.Peter Viggers: Does the Deputy Prime Minister recognise that devolution in Scotland and Wales created for the Government a problem in the north-east and the north-west, which now feel disadvantaged? However, that is absolutely no reason to impose regional government on areas of this country that have no desire for it whatever. They will view the current plans with anger and disbelief. Is he aware that there is a strong feeling of county in Hampshire, which is based on the historic capital of England, Winchester? The county has shown itself to be sensitive to the different social and economic needs within Hampshire. Can the right hon. Gentleman try to give us an assurance that, if any area rejects the proposals, it will not be economically disadvantaged?
The Deputy Prime Minister and First Secretary of State: That is precisely what I have been trying to say. It is all about choice. If the people in an area do not want a directly elected regional assembly, they will presumably not ask for it. If some in an area think that there should be such an assembly, the Secretary of State will come to a judgment as to whether there is sufficient demand in that area. The White Paper spells out just what he has to take into account and, in those circumstances, there either will or will not be a referendum. At the end of the day, the judgment will be whether the people in a region want an assembly.
I have heard much from Conservative Members that such assemblies are not wanted in the regions and we can all quote stories about whether they are or are not wanted. However, a BBC poll says that two thirds of the population are in favour of regional government. [HON. MEMBERS: "Not in the south-east."] I shall come to the south-east—hang on. The big differences in support were clearly reflected geographically. In northern areas, support for regional government was more than 63 per cent.—73 per cent. on average—and, by the way, the west midlands is included in that. In the south-east, an average of between 50 and 60 per cent. were for regional government. Therefore, the figures suggest that a substantial number of people are prepared to consider proposals for regional government.
Joyce Quin: In contrast to the carping from some Conservative Members, may I say that I think that my right hon. Friend's announcement is of huge significance for the English regions? For my region of the north-east, it represents a great opportunity for us to pioneer the process, and I hope that we will do that. I am still an
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owner of the alternative regional strategy that my right hon. Friend mentioned and I can recommend it as reading to the Conservatives, as they need common sense on the issue.
May I press my right hon. Friend on the consultation period that he has announced? Will he use it as an opportunity to say to the regions of England, including the north-east, that the proposed organisations will have real budgets and real powers? Will he also reaffirm his message about inclusivity, because everyone in the regions—business, organisations, voluntary groups and all our communities—can benefit from these proposals?
The Deputy Prime Minister and First Secretary of State: I thank my right hon. Friend for her remarks. I remind the House of the role that she played in bringing about the White Paper and greater powers for the regions. She rightly tells us that the north-east is a pioneer; clearly, it has been. I shall hear more about that in the north-east later today when I am accompanied by my right hon. Friend the Secretary of State for Transport, Local Government and the Regions.
I am grateful for the comments that my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin) made about the alternative regional strategy. I will make it available, and I can claim that, in contrast to the Opposition, the views I held 20 years ago are consistent with what I say today. The Opposition's views are hardly consistent from year to year or from election to election, but that is the nature of the current Opposition.
We are providing real budgetary powers, real finances, real powers to get on with the job and greater democratic accountability. That is shown in the White Paper. No doubt when we have the opportunity to study it, the House will debate its details and determine whether my points are justified.
Mr. John Maples: What the Secretary of State has not told us is what very had news elected regional assemblies would be for rural areas. Is it not inevitable that a regional assembly in the west midlands would be dominated by the interests, agenda and representatives of the Birmingham conurbation, and would suck in cash and powers from the rural areas? Whatever value county councils have, at least they provide some voice for rural areas in local government, which the right hon. Gentleman is proposing to abolish. Will this not inevitably be another advance in the interests of our great cities at the expense of our countryside and market towns?
The Deputy Prime Minister and First Secretary of State: It appears that this debate will continue as it started—by reflecting the hypocrisy of the Opposition. I will take no lectures from Tories on what happens in rural areas. The facts are clear to see from their 18 years in government. Since then, we have begun to make improvements. For the first time, we have produced a rural White Paper to consider precisely how we might improve the quality of services. At least we guarantee rural areas the advance in services that has occurred in urban areas.
All the issues, such as the economic provision of jobs, are important. The regional development agencies have been given a specific remit to get on with rural

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development, which rural areas have welcomed. Many of the things that we have done are starting to show improvements. Frankly, if areas decide to choose the path of an elected regional assembly, every rural and urban population in those areas will have a responsibility because that is how every region in the United Kingdom is made up.
Mr. Derek Foster: Is my right hon. Friend aware that for those of us who, like himself, campaigned for more than 25 years for regional government, the publication of the White Paper is a cause of huge celebration? It represents a great leap forward in establishing a vigorous authentic voice for the north-east. Is my right hon. Friend also aware that we know that the White Paper would not have been published without his tenacity over the past 20 years?
The Deputy Prime Minister and First Secretary of State: Of course I am grateful for my right hon. Friend's candid remarks. He has campaigned on this issue for a long time and, indeed, we have worked together on such campaigns. It is a special day for us because we belong to a Government who are introducing a White Paper on regional government. It is a great leap forward, as my right hon. Friend says. It will allow each region to develop a special voice, especially in the north-east. We have the opportunity to go out and sell the case and to show that there can be a more democratic way of working, which is what the White Paper does.
Mr. Andrew Turner: The right hon. Gentleman and his right hon. Friends have been generous to my constituency in the words they have used in the
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House in recognising its unique status in England. Can he confirm that no powers would be taken from the Isle of Wight county council to the mainland under his proposals and that it would be represented in the regional assembly by a unique individual?
The Deputy Prime Minister and First Secretary of State: I assure the hon. Gentleman that if the people do not choose to take the route of an elected regional assembly, the present local government structure will remain as it is. However, if the region that includes the Isle of Wight wishes to go for a directly elected assembly, the local authority structure will be considered by the boundary commission and included in the proposals for a referendum. It is a choice for the people in the Isle of Wight and the south-east region.
Jeff Ennis: I welcome today's announcement, particularly in view of the fact that I represent a constituency in the middle of an objective 1 area which has the lowest gross domestic product per capita in the United Kingdom. Does the Deputy Prime Minister agree that the future establishment of regional assemblies can only assist and enhance the future economic regeneration of neglected places such as Barnsley and Doncaster?
The Deputy Prime Minister and First Secretary of State: I have no doubt that that will help areas such as Barnsley, but we should also take into account Government measures before the White Paper, not least the £350 million coalfield community fund, which we introduced to help mining areas that had been destroyed, particularly by the vicious policy pursued by the previous Administration.

Martin Sixsmith
1.30 pm
The Secretary of State for Transport, Local Government and the Regions (Mr. Stephen Byers): With permission, Mr. Speaker, I would like to make a statement about Martin Sixsmith in response to—[Interruption.]
Mr. Speaker: Order. I understood that some hon. Members wanted to hear a statement from the Secretary of State; he will be heard.
Mr. Byers: With permission, Mr. Speaker, I would like to make a statement about Martin Sixsmith in response to questions and concerns of hon. Members.
On 26 February, I made a statement to the House concerning Martin Sixsmith. In that statement, I briefly described events that took place on 15 February. I said the terms of Martin Sixsmith's departure were continuing. Those discussions were conducted without ministerial involvement. A resolution has been arrived at under which Martinexplicitly that the details of the events of that day were set out in the public statement made by my permanent secretary on 25 February. Both statements made it clear that discussions aimed at resolving Sixsmith is compensated in accordance with his employment rights, and an agreed statement was published on Tuesday of this week.
Also on Tuesday, a copy of the agreed statement was placed in the Library and reported to the Select Committee on Public Administration, which had asked my Department to clarify the position of Martin Sixsmith as part of an inquiry that it was conducting. I want to take this opportunity to explain to the House how the settlement that was reached with Martin Sixsmith and the agreed statement published on Tuesday relate to my oral statement in the House on 26 February. In particular, I want to address the concern that paragraph 2 of the agreed statement is in conflict with my statement in the House on 26 February and, as some have said, shows that I misled the House. That is simply not the case, and I want to explain why to the House.
My permanent secretary's statement of 25 February describes in detail two conversations that he had with Martin Sixsmith on Friday 15 February, which led him to inform me that Martin Sixsmith had agreed to resign. His statement also outlined how the announcement was made before it was possible to agree the detailed terms of Martin Sixsmith's resignation, and described his further meeting with Martin Sixsmith on the evening of 15 February, in which Martin Sixsmith argued that he had not resigned.
It is to precisely that sequence of events that the agreed statement refers when it says that the Department, while acting in good faith, announced that Martin Sixsmith had resigned on what turned out to be an incorrect understanding of earlier discussions that day between Martin Sixsmith and the permanent secretary. There is therefore nothing new here, and indeed nothing that was not a matter of record at the time of my statement on 26 February, which explicitly referred back to my permanent secretary's account.
In my statement to the House I made clear the reason for my understanding, based on the information that I had been provided with, that Martin Sixsmith had agreed to
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resign. It was, of course, also abundantly clear from what Martin Sixsmith had said and from the statement of the permanent secretary that Mr. Sixsmith had said that the release of the announcement without his agreement changed everything. All this was apparent on 26 February when I made my statement to the House and indeed before, and was a matter of public record.
I also described the discussions that were taking place with Martin Sixsmith about an alternative civil service job or agreeing a settlement under his contract. As I said on 26 February,
"there have been a number of meetings and discussions involving Mr. Sixsmith in an attempt to resolve the detailed terms of his departure."—[Official Report, 26 February 2002:Vol.380,c.563.]
I made it clear that at the time of my statement they had not been concluded—that is, the terms of his departure had not yet been agreed. An agreement has now been reached, which gave rise to Tuesday's agreed statement.
Mr. Roger Gale: On a point of order, Mr. Speaker—
Mr. Speaker: I will take points of order after the ministerial statement.
Mr. Gale rose—
Mr. Speaker: Order. I expect better from the hon. Gentleman, who is a member of the Chairmen's Panel.
Mr. Byers: I have not misled the House, as some have alleged. All my statements to the House have been based on the information available to me. That is precisely why the agreed statement with Mr. Sixsmith explicitly says that any misunderstanding over his resignation was in good faith.
While these discussions about the employment status of an individual civil servant have been taking place, Ministers in my Department have not been diverted from the real tasks that face us and the people of our country. Those tasks are to rebuild communities—[Interruption.]
Mr. Speaker: Order. The Minister must be heard. There is no point in anyone shouting across the Chamber.
Mr. Byers: That task is to rebuild communities and give new hope to neighbourhoods. That is why, since my oral statement on 26 February, we have introduced new laws to get rid of abandoned cars; introduced measures to stop the scandal of children in bed-and-breakfast accommodation; set up nine projects to tackle low-demand and abandoned housing—[Interruption.]
Mr. Speaker: Order. I say to hon. Members that the Minister is in order. If it were otherwise, I would tell him. Now, let the Minister make his statement.
Mr. Byers: Since 26 February my ministerial team and I have introduced new laws to get rid of abandoned cars; we have tackled bed-and-breakfast accommodation for children—[Interruption.]
Mr. Speaker: Order. Mr. MacKay, you are very, very excited. I am chairing the proceedings, and I say that the Minister is in order. I am well aware of the title of the

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Minister's statement, but the Minister can make the statement. The content of the statement is his business, and he can put it to the House.
Mr. Byers: What we are witnessing is the fact that the Conservatives do not like issues to be addressed. These are the real issues that matter to the people of our country: tackling abandoned cars; stopping the scandal of children in bed-and-breakfast accommodation; tackling the Tory standard spending assessment for local government; projects to tackle low-demand housing; and since 26 February, a bid to take over Railtrack by a company that will put the travelling public first and remove a failed Tory privatisation. Those are the real issues that matter to real people in the real world. So for this Department and this Secretary of State there will be no distractions; we will be getting on with the job.
Hon. Members: Resign!
Mrs. Theresa May:rose—
Hon. Members: Resign!
Mr. Speaker: Order. The hon. Member for Maidenhead (Mrs. May) must also be heard.
Mrs. Theresa May: Thank you, Mr. Speaker. I should like to thank the Secretary of State for his courtesy in giving me prior sight of his statement.
Yet again, the Secretary of State has come to this House to explain our incorrect understanding of history—but he is at it again. He has just said that he is here today
"to address the concern that…the agreed statement is in conflict with my statement in the House on 26 February",
and that
"That is simply not the case."
On 26 February, the Secretary of State said:
"Martin Sixsmith offered his resignation, which was accepted, on 15 February."—[Official Report, 26 February 2002: Vol. 380, c. 574.]
The agreed statement issued by his Department this week states:
"The Department accept that Martin Sixsmith…did not resign on February 15th".
The Secretary of State said on 26 February:
"Mr. Sixsmith's resignation has been accepted".—[Official Report, 26 February 2002; Vol. 380, c. 571.]
However, the agreed statement says:
"The Department accept that Mr. Sixsmith has remained in their employment since his contract began on 19th November 2001."
The Secretary of State said on 26 February:
"I am clear that, given the way in which he conducted himself in the Department, Martin Sixsmith was not a suitable person to remain in government".—[Official Report, 26 February 2002; Vol. 380, c. 567.]
However, the agreed statement issued by his Department on Tuesday said that
"were it not for these unfortunate events, for which no blame is being apportioned, he would continue to be a successful Director of Communications in DTLR".
The House is always immensely forgiving of those who explain how they have made a mistake, but today we have heard no remorse, no regret and no glimmer of an
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apology. Last year, the Secretary of State told his electorate that he was "open and honest". Is it not clearly the case that he has not been remotely open and honest when he claimed today that what he said on 26 February is the same as what his Department said on Tuesday? If he had a single shred of decency left, would he not go—and go now?
Mr. Byers rose—
Hon. Members: Resign!
Mr. Speaker: Order.
Mr. Byers: What I will say to hon. Members is that they should look at my statement of 26 February, the statement made by my permanent secretary on 25 February, which refers explicitly to the events of 15 February, and the agreed statement made on Tuesday. When hon. Members, on reflection, look at what was said on 26 February and at my permanent secretary's statement on 25 February about the events of 15 February, they will in all honesty recognise, putting aside party political points, that this House has not been misled by this Secretary of State.
Mr. Don Foster: Given that the Secretary of State has developed a reputation for presiding over the burying of bad news, is it not a great shame that on the day of the publication of the vital White Paper on regional government, he now stands guilty of seeking to bury good news?
The important aspect of this statement is the question of when the Secretary of State is going to start taking responsibility for the chaos within his Department—not only the chaos that surrounds the alleged resignation of Martin Sixsmith, but the chaos on our buses, roads and railways. When will the Secretary of State start taking responsibility, and how many lives is he to have?
This is the Secretary of State who wishes to talk about the record of his Department under his leadership, but this is the Secretary of State who created confusion in the chain of events leading up to taking Railtrack into administration, and got away with it. This is the Secretary of State who created confusion over the value-for-money studies on the public-private partnership for the London tube, and got away with it. This is the Secretary of State who told us that no additional money was needed for National Air Traffic Services, then announced that it was going to get it, and got away with it. He told us that there would be no additional money for Railtrack shareholders, then reneged on that, and got away with it.
Particularly in relation to today's statement by his right hon. Friend the Deputy Prime Minister, this is the Secretary of State who on 29 January this year told this House that
"there is no agenda for the abolition of Cheshire county council, or any county council."—[Official Report, 29 January 2002; Vol. 379, c. 142.]
The right hon. Gentleman is going to get away with that as well.
No wonder we have reached the situation where a letter writer in one of today's newspapers says that even if the Secretary of State announced his resignation, we would

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not know whether to believe him. The Secretary of State talks about abandoned cars. He is the one who should be abandoned.
Mr. Byers: I agree with one aspect of the hon. Gentleman's comments—the publication today of the White Paper on the English regions is good news. I am personally delighted to have been able to author it jointly with the Deputy Prime Minister.
There is no hidden agenda to abolish Cheshire county council. The whole point of the White Paper is that we are giving people in the regions the choice, and I should have hoped that the hon. Gentleman would realise that.
The reality is that despite all the blather and froth coming from Conservative Members, this Department is delivering on the things that matter. We are making progress on buses, roads and the railways, and over time we will see real improvements in the areas that matter to the people of our country.
Mr. George Howarth: Does my right hon. Friend accept that most people recognise the difference between matters involving who said what to whom and when, and a genuine attempt to deceive? Does he also accept that people will view the Conservatives' synthetic indignation for what it is: cynical opportunism?
Mr. Byers: My hon. Friend is right. I ask commentators and hon. Members to consider the statement that was made on 26 February, that of my permanent secretary on 25 February and the agreed statement. People will then realise that the House has not been misled.
Sir Brian Mawhinney: Does the right hon. Gentleman acknowledge that in the memory of even the longest-serving Members, those who are privileged to act as Secretaries of State in the service of the House, have, irrespective of the normal partisan give and take, always sought to attain high standards of accuracy, truthfulness, and when appropriate, humility? Does he understand that he has demeaned those standards by his behaviour in the past three months? Does he also understand that he has treated the House with contempt and that he should not therefore be surprised if the House adopts a similar attitude to him?
Mr. Byers: I stress to the right hon. Gentleman and his colleagues that they should examine the record. They should look at my statement to the House on 26 February and my permanent secretary's statement on the public record on 25 February about events on 15 February. When they do that, they will know that I have not misled the House.
Tony Wright: My right hon. Friend has rightly come to the House today to correct an inaccuracy. I commend him on that because it is important that those matters be corrected. He mentioned that his permanent secretary had written to me, as Chairman of the Public Administration Committee, this week. He said:
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"Needless to say, nothing in this 'Agreed Statement' affects the evidence I gave to your Committee on 7 March or my Secretary of State's statement to Parliament on 26 February, which in turn referred to my public statement of 25 February."
That means that those who want to attack the Secretary of State must also attack the permanent secretary and the Cabinet Secretary. All gave the same account of events on the day that we are considering.
When the Committee discussed the matter with the Cabinet Secretary, he agreed that there was "chaos" in that section of the Department on the day in question. Is not the important issue to ensure that such chaos never happens again?
Mr. Byers: My hon. Friend makes an important point, and I am sure that hon. Members look forward to the recommendations of the Public Administration Committee when it concludes its report. There is no doubt that there were problems in the Department; they have been resolved. The agreed statement on Tuesday is part of the resolution of the difficulties, and drew a line in sand. I am pleased that that is the case.
Mr. Peter Lilley: Twelve thousand constituents who travel on the trains every day are primarily concerned that, following the Secretary of State's renationalisation of Railtrack, punctuality has deteriorated. That is more important than his prolific loss of spin doctors. They also note that he has disowned, dismissed or seen depart the chairman of the Strategic Rail Authority, the chairman of Railtrack, the Rail Regulator and another regulator. They were all appointed by him or his Government. If he cannot get on with those people and they do not trust him, how can my constituents trust him to run the railways properly? And if none of those people was required to be paid £200,000 to keep quiet, why is the taxpayer, and not the Labour party, required to pay that sum to Martin Sixsmith?
Mr. Byers: I have great respect for the Rail Regulator, who I believe is doing a very good job. On the issue of changes at the top of the Strategic Rail Authority and Railtrack, I have to say to the right hon. Gentleman that I do not think that those organisations were delivering to his 12,000 constituents coming in from St. Albans. There is a choice: we can either make big changes to have the opportunity of improving our railway system, or we can tinker around at the edges. I have chosen to make the big changes that are needed. The right hon. Gentleman may criticise me for doing so, but in the end, his 12,000 constituents who travel every day will be the judge. By the time of the next election, what will really matter to them will be not the debate that we are having here this afternoon but whether their trains are safer, more punctual and more reliable—and they will be.
Gillian Merron: The Opposition are baying for my right hon. Friend's blood. While the payment to Martin Sixsmith was legal, my right hon. Friend will be as appalled as I was to learn that, in the public interest report on Lincolnshire county council which found its Tory leader guilty of £750,000 of illegal payments—
Mr. Speaker: Order. This matter does not seem to have much to do with the statement.
Mrs. Jackie Lawrence: May I ask my right hon. Friend to cease wasting any more time

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on this issue and to get back to the fundamental responsibilities of his Department—not least transport? Is he aware that, in many instances, it took football supporters more than seven hours to get out of Wales and back to London after the cup final on Saturday? That is more important to the people of this country, and it is certainly more important to the businesses of Wales, whose livelihoods depend on those transport links.
Mr. Byers: My hon. Friend makes the point that really matters to the people of this country. We face huge challenges, and she has just given a good example of where the railway system is not delivering the quality that we all expect it to. Obviously, we need to take steps to ensure that it is improved. Those are the big issues. I have to say to my hon. Friend that, while there has been all this froth from the Opposition, we have not been diverted from delivering what really matters to the people of our country. When hon. Members look at my statement on 26 February, specifically referring to my permanent secretary's statement on 25 February, they will realise that I did not mislead the House.
Mr. Edward Garnier: What is the Secretary of State's definition of shameful ministerial conduct?
Mr. Byers: I will simply say to the hon. and learned Gentleman that he should look carefully at what I have said to the House, and at my permanent secretary's statement. He will then realise that there is no conduct for which I should apologise.
Mr. Peter Kilfoyle: Could the Secretary of State assure Labour Ministers that he will not be distracted by the pedantry of the most mendacious of Oppositions? Can he also assure us that he and his Ministers will get on with the really important business of ensuring that local councils such as my own—a Lib Dem council—are transparent, and that they properly engage with local communities in the essential business of regeneration, which affects them far more than whatever happens to Martin Sixsmith?
Mr. Byers: My hon. Friend makes an important point, and I am grateful to him. It is not always the case that, when a Secretary of State sees my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) rising to speak—
Mr. John Bercow: Terrified.
Mr. Byers: Yes, sometimes they are terrified, or at least slightly worried, because my hon. Friend speaks independently. He speaks his own mind on behalf of his constituents. What he has done today is to articulate the view of his constituents, and the constituents of all hon. Members, that there are far bigger issues that need to be addressed.
A Secretary of State needs to deliver on the policies and priorities of his Department. I intend to do that. He needs to be truthful to this House. I will do that as well.
Mr. Alex Salmond: I know that the Secretary of State wants to draw a line under this, but I honestly doubt that he has managed to do so today.
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Does the right hon. Gentleman accept that, whatever the substantial differences between him and Martin Sixsmith, the one thing they have in common is that they have both taken an inordinate amount of time to tender their resignations? If it subsequently emerges that the House has been misled about any of these matters, will the Secretary of State tender his resignation?
Mr. Byers: The ministerial code is absolutely clear: a Minister who knowingly misleads the House should tender his resignation. That is absolutely right. [Interruption.] Opposition Members who are shouting should look at my statement. I will say this again—[Interruption.] Right hon. and hon. Members may not want to hear, but if they look at my statement of 26 February and my permanent secretary's statement of 25 February they will realise that I have not misled the House.
Paul Farrelly: When the House debates the substantive issue of the railways, as a new Member I often shake my head in disbelief at the number of statements by Conservatives who are simply trying to reinvent history. Will my right hon. Friend please ask the amnesiac Conservative party to apologise—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman should put a question to the Minister; he should not concern himself with the Opposition.
Mr. Byers: The key issue is that we should be debating those big policy issues relating to our transport system, regeneration, planning, housing and local government. The Conservatives are running away from those big issues, for a simple reason: either they have no policy in those areas, or they know that many of them will be required to invest massively over a long period. As their party is committed to cutting investment, they want to run away from the debates and the arguments about those issues of substance.
Mr. Andrew Miller: The hon. Member for Bath (Mr. Foster) referred to Cheshire county council. I for one would like it to be abolished very quickly, and I am delighted about the White Paper that was announced today. While it still exists, however, will my right hon. Friend ignore the froth and nonsense that we are hearing and concentrate on some of the things that are going on in the council? There are appalling employment practices, and cuts in services that are affecting my constituents.
Mr. Byers: I know that my hon. Friend has raised his concerns about employment practices in Cheshire county council with my right hon. Friend the Minister for Local Government, and my right hon. Friend and the Department will examine them closely. There is a big job to be done, and we simply want to get on and do it.
Mr. John Gummer: The right hon. Gentleman will know that earlier in his period of office I suggested in the public print that we should give him the

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benefit of the doubt, and not cavil about a number of these smaller incidents. Does he accept that now—[Interruption.]
Mr. Speaker: Order. The right hon. Gentleman must be allowed to put his question.
Mr. Gummer: Does the Secretary of State accept that he told the House that Martin Sixsmith had resigned? He has now told the House that Martin Sixsmith had not resigned. Those are two different positions. Why did he not just come to the House and say "I am sorry"? The House would have accepted that. I will apologise to the House for misleading it by suggesting that the right hon. Gentleman was honest, if he will apologise to the House and admit that he was dishonest.
Mr. Byers: I say with all due respect to the right hon. Gentleman, who also thinks independently about such issues and does not jump on to bandwagons, that if he looks at my statement of 26 February, at the permanent secretary's statement of 25 February, and at the outline of the events of 15 February, he will recognise that my statements have not misled this House.
Mr. Michael Trend: I, too, serve on the Public Administration Committee. In his evidence to us, Sir Richard Mottram said—as paragraph 299 of the minutes of evidence makes clear—that he was "very reluctant" to make his personal statement, but that it was "put to" him that he should do so. Did the Secretary of State put that point to him? Did the Secretary of State instruct, ask or encourage Sir Richard to make his public statement, or suggest to him—either directly or indirectly—that he make it?
Mr. Byers: Sir Richard made the statement; he may have been reluctant to do so. [HON. MEMBERS: "Ah!"] I say that because I honestly do not know, but according to the hon. Gentleman that is the evidence that Sir Richard gave to the Select Committee. What I do know is that permanent secretaries are not instructed by their Secretaries of State to make public statements. That is the situation. In answer to the hon. Gentleman's question, there was no instruction by me to Sir Richard Mottram. That is not the way in which relationships between Secretaries of State and permanent secretaries operate.
Mr. Gerald Kaufman: Given what my right hon. Friend and the hon. Member for Maidenhead (Mrs. May) have said today, is he aware that, during the local election campaign in Gorton—in which the Conservative party was not simply trounced, but humiliated—no mention was made of the name of Martin Sixsmith? Nor, indeed, was mention made of the name of the hon. Member for Maidenhead—whatever it may be—or of 15, 25 or 26 February. What were discussed were the issues that my right hon. Friend has raised today, rather than those raised by the Conservatives. That is why, as long as the Conservatives carry on in their current direction, Manchester city council will continue to have an overwhelming Labour majority, and we in Manchester will continue to be represented solely by Labour MPs.
Mr. Byers: I look forward to Manchester being epresented by my right hon. Friend and my other hon. Friends for many years to come.
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As far as the Government were concerned, last Thursday's local government election results were pleasing to say the least. It is interesting to note that the Conservative Opposition are not mentioning those elections. Throughout the country, Labour held the day in most areas, and gained in many others, which people did not expect.
Mr. Andrew MacKay: Do not the many incorrect understandings of key issues during the past year, involving the Secretary of State and his Department, demonstrate carelessness on his part? We have now established that Martin Sixsmith was not lying. Do we believe that the chairman of BMW was lying during the Rover crisis? No. Do we believe that the chief executive of Railtrack was lying? No. The people of this country know what the answer is, and that is why the Secretary of State should resign.
Mr. Byers: When difficult and tough decisions are taken, there are people who disagree with their outcome. The right hon. Gentleman raises two specific issues, and as far as Railtrack is concerned—I have said this in the House before, and I shall say it again—I make no apology for bringing to an end what was a failed Tory privatisation. As far as BMW and Longbridge, in Birmingham, is concerned, I make no apology for saving 6,500 jobs. That was my action, which was not helped by the Conservatives who wanted to sell Birmingham out, to sell Longbridge out and to sell out those 6,500 workers. I make no apology for standing alongside those workers and defending their jobs. If people such as the right hon. Gentleman wish to complain about that, they can do so, but the public expect Ministers to take such decisions on their behalf.
Mr. Peter Pike: Do not the simple facts of my right hon. Friend's statement today confirm that the two events of Tuesday this week in no way conflict with his statement on 26 February or the statement the day before by his permanent secretary? It is amazing how the Tories are trying to distract my right hon. Friend from doing his job, but I hope that he gets on with completing the reorganisation of local government finance, which is seen as an important issue in many parts of the country.
Mr. Byers: My hon. Friend is right when he points out that hon. Members should consider the documents and the statements together to see the true picture. He is also right to point out the importance of the statement on the regions White Paper. Since 25 February, we have also announced another initiative to identify nine pathfinder projects for areas of low housing demand, including one in my hon. Friend's constituency of Burnley. Those projects will make a real difference for hard-working people who have been trapped in negative equity because the value of their properties has dropped. Those are the real issues that matter to the people of Burnley and to the people of this country and the issues that I as the Secretary of State will continue to pursue.
Mr. David Wilshire: The traditions of this House make it clear that all MPs are honourable people. However, honourable people do not blame everybody except themselves. Honourable people do not hide behind other people. Honourable people do not

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refuse to say sorry. So why does not the Secretary of State prove me wrong by living up to the best traditions of this House and doing at least one honourable thing—resigning?
Mr. Byers: I say once again to the hon. Gentleman that he should look at the agreed statement of Tuesday this week, my oral statement on 26 February and the statement by my permanent secretary that outlined the events of 15 February. When he has done that, even he will have to recognise that there is no reason why this Secretary of State should resign.
Mr. Gordon Prentice: May I follow the point raised by the hon. Member for Windsor (Mr. Trend), because I too am a member of the Public Administration Committee? It was the Cabinet Secretary who advised Sir Richard Mottram to make a statement, and not my right hon. Friend the Secretary of State. What my right hon. Friend has said from the Front Bench is true. I believe it, and the whole House should endorse the version of events that he has described.
Mr. Byers: I welcome that intervention from my hon. Friend, because it clearly shows the way in which Conservative Members are using the issue to make party political points. The fact that a member of the Select Committee partially quoted evidence given to the Committee, without revealing that other evidence had been given by the Cabinet Secretary that he had suggested to my permanent secretary that a statement should be made, reveals much about how the Conservative party is treating this issue.
Mr. Patrick McLoughlin: On 26 February, I asked:
"Will the Secretary of State say whether Mr. Martin Sixsmith was a civil servant in his Department on 22 February?"
The Secretary of State replied:
"As I said earlier, Martin Sixsmith offered his resignation, which was accepted, on 15 February."—[Official Report, 26 February 2002; Vol. 380, c. 574.]
If that is not misleading the House, what is?
Mr. Byers: The hon. Gentleman must look at what was said in the round on 26 February. I was referring—[Interruption.]
Mr. Speaker: Order. I expect better behaviour from the hon. Gentleman. He should apologise.
Mr. McLoughlin: I do apologise. I was trying to give the Secretary of State a copy of what he said.
Mr. Chris Mullin: This is very small beer, is it not? Many people outside this place will be wondering what all the fuss is about. It is not as though the Secretary of State has been found in a Paris hotel in the company of three Saudi arms dealers. It is not as though he has accepted money in brown envelopes from Mohammed A1 Fayed or been found guilty of committing serial perjury in the High Court. There has been a minor misunderstanding, it has been cleared up and we should move on.
Mr. Byers: It is helpful at times such as this to be reminded of what happened during the time when the
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right hon. Member for North-West Cambridgeshire (Sir Brian Mawhinney) was chairman of the Conservative party. He seemed to have very little to say about those issues. My hon. Friend is absolutely right. His constituents in Sunderland are concerned about abandoned housing and antisocial behaviour by tenants. Those are the sort of issues that matter to the public, and that is the agenda on which I intend to deliver as Secretary of State.
Norman Lamb: The Secretary of State repeatedly invites us to compare the statement he made in February with the statement he made today. There is a subtle but important difference. Today he says that he had been told that Mr. Sixsmith had agreed to resign. That is something that a person can do while continuing in employment and negotiating a termination package. However, on 14 occasions on 26 February, the Secretary of State stated that Mr. Sixsmith had resigned. That is an important and crucial difference. Is it not scandalous that the taxpayer is now being asked to pay Mr. Sixsmith's hush money in circumstances in which it is clear that the Secretary of State has misled the House?
Mr. Byers: Martin Sixsmith is being compensated in accordance with his employment rights, as is right and proper. I say once again that the hon. Gentleman should look at the statement I have made today, the statement I made on 26 February and the statement made by my permanent secretary on 25 February about the events of 15 February. He will then recognise that I have not misled the House.
Mr. Mike O'Brien: Everyone who has followed this issue has known for a long time that Martin Sixsmith disputed the issue of his resignation. That has been public knowledge for a long time. The issue needed to be clarified today, and now that my right hon. Friend has done so will he accept that many people in the west midlands will be appalled by the lynch-mob mentality that has pervaded the Martin Sixsmith issue. They want to know that the west coast main line and transport in the west midlands are the issues on which the Secretary of State is focusing. I am pleased to hear that he intends to do that and to ignore the attitude of the Conservatives.
Mr. Byers: My hon. Friend is right. The agreed statement on Tuesday was the resolution of that dispute, and I welcome that. As my hon. Friend says, we face many problems and challenges in addressing transport in the west midlands.
I was pleased a couple of weeks ago to visit the passenger transport executive in the west midlands and to look at the issues that it is facing. I believe that we will be able to make real improvements in the transport system in the west midlands, as well as in the rest of the country.
Mr. John Wilkinson: May I remind you, Mr. Speaker, that, during business questions on 26 February, which followed the Secretary of State's statement, I asked whether the record of the House was accurate? I also asked whether the integrity of the House of Commons was not at stake, as the Secretary of State's statement explicitly stated that Mr. Sixsmith had resigned. After the Secretary of State's statement, Mr. Sixsmith went on television to say that he had not resigned. Was

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not the Secretary of State deliberately using parliamentary privilege to impugn the professional competence of a civil servant who could not answer back? Instead of Mr. Sixsmith being asked to resign, should not the Secretary of State do so voluntarily?
Mr. Byers: The statement agreed between my Department and Mr. Sixsmith addresses some of the matters referred to by the hon. Gentleman. I repeat that hon. Members should read in full my statement on 26 February. They will then see that I have not misled the House.
Several hon. Members rose—
Mr. Speaker: Order. We must move on to the business statement.
Mr. Gale: On a point of order, Mr. Speaker.
Mr. Speaker: The hon. Gentleman should know that points of order are taken after statements. We are about to hear a statement from the Leader of the House.

Business of the House
2.21 pm
The President of the Council and Leader of the House of Commons (Mr. Robin Cook): The business of the House for next week will be as follows:
MONDAY 13 MAY—Second Reading of the National Insurance Contributions Bill.
Mr. John Bercow: Excellent.
Mr. Cook: I thank the hon. Gentleman. I am glad that I have the confidence of the House on that point. I hope that the hon. Gentleman will vote for the measure.
TUESDAY 14 MAY—Motion to approve the First Report from the Modernisation of the House of Commons Committee, on Select Committees.
Motions relating to the Ninth Report from the Standards and Privileges Committee, on a new code of conduct and guide to the rules.
WEDNESDAY 15 MAY—Opposition Day [13th Allotted Day]. Until 7 o'clock there will be a debate entitled "Post Office Closures and Royal Mail Delivery Services" followed by a debate on the environment. Exact title to be confirmed. Both debates will arise on a motion in the name of the Liberal Democrats.
THURSDAY 16 MAY—Progress on remaining stages of the Adoption and Children Bill.
FRIDAY 17 MAY—The House will not be sitting.
The provisional business for the week after will be:
MONDAY 20 MAY—Conclusion of remaining stages of the Adoption and Children Bill.
TUESDAY 21 MAY—Opposition Day [14th Allotted Day]. There will be a debate on an Opposition motion. Subject to be announced.
WEDNESDAY 22 MAY—Consideration of Lords Amendments to the National Health Service Reform and Health Care Professions Bill.
THURSDAY 23 MAY—Remaining stages of the State Pension Credits Bill [Lords].
FRIDAY 24 MAY—Motion on the Whitsun recess Adjournment.
The House will wish to know that on Tuesday 14 May 2002, there will be a debate relating to the pet travel scheme in European Standing Committee A.
[Tuesday 14 May 2002:
European Standing Committee A—Relevant European Union documents: 11596/00 and 12488/01; Rabies: restrictions on the non-commercial movement of pet animals. Relevant European Scrutiny Committee Reports: HC 23-xxviii (1999–2000); HC 28-iv (2000–01); HC 152-iii; HC 152-xxi; HC 152-xxiv and HC 152-xxvi (2001–02).]
Mr. Eric Forth: I am most grateful to the Leader of the House for giving us the business details. The right hon. Gentleman is rightly renowned for his respect for the House and for its conventions and proprieties. You will recall, Madam Deputy Speaker, that the right hon. Gentleman recently came to the House, willingly and quickly, to apologise

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after he had been grievously misled by a Government Department. He promptly came to apologise, and the House understood and respected what he did.
Has the Leader of the House recently had a word with the Secretary of State for Transport, Local Government and the Regions? If not, will he be kind enough to take the Secretary of State into a quiet corner and give him a lesson about the proper relationship between Ministers and the House of Commons, and about decency and honesty—in politics and in the House?
I ask that because I want the Leader of the House to tell us when he will allow time for a debate on the censure motion, in the name of Her Majesty's official Opposition and relating to the Secretary of State for Transport, Local Government and the Regions, that is due to appear on the Order Paper. Today, we heard a performance from the Secretary of State that was completely inadequate and almost contemptuous. It is self-evident that we need an opportunity to have a proper debate so that the matter can be much more thoroughly examined, and resolved. That certainly would be in the interests of the House, and perhaps of the Secretary of State.
I have described the attitude to the House of the Leader of the House, which I respect. When will he provide an early opportunity for the Opposition's censure motion to be debated, dealt with and resolved?
Mr. Cook: I am grateful to the right hon. Gentleman for reminding the House of the statement that I made to the House to correct the record. It may be relevant to consideration of the events about which we have just been hearing, but I should inform the House that the initial statement to the House on the matter about which I was subsequently obliged to correct the record was a line cleared by Mr. Martin Sixsmith. I used precisely the line that had been agreed by him and the Prime Minister's official spokesman. In view of the current unreliability of the line that Mr. Sixsmith approved, I have my own views about his reliability.
I have heard nothing in the past hour to suggest that my right hon. Friend the Secretary of State for Transport, Local Government and the Regions did anything other than to put to the House, honestly and fairly, what was put to him by his Department, specifically by his permanent secretary. The words that he used were identical.
I do not doubt the right hon. Gentleman's commitment to the House. He is a genuine parliamentarian—
Mr. Bercow: A great parliamentarian.
Mr. Cook: That is possibly going a little far, but he is a genuine parliamentarian. I have frequently said to the House that, if we want to establish public respect for the House and to get people to participate in elections to the House. we must demonstrate that we are less concerned with party political point scoring than with the real issues in people's lives. I do not think that the last hour will have gone any way to convincing the public of that. I heard absolutely nothing new. If I may say so, I believe that I could have written the speech by the Opposition spokesman on transport matters in five minutes over breakfast. Indeed, I rather suspect that I should have made a better job of it.
Mr. Paul Tyler: Liberal Democrat Members share the concern of Conservative Members,
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and do not consider that we have received straight answers to straight questions this afternoon. We will examine our Opposition day option next week and see whether it will provide an opportunity to give another airing to these matters.
In the meantime, will the Leader of the House look again at the statement that he made on Tuesday to the Wicks committee, the Committee on Standards in Public Life? He said:
"I can announce to you one change on an issue which you raise in paragraph 3.42 of your consultation paper. In the light of experience, the Government has resolved that the following addition should be made to the Ministerial Code.
'Ministers must also comply at all times with the requirements which Parliament has itself laid on them as Members, including in particular the codes of conduct for their respective Houses.'
I believe this explicit requirement will reinforce the status of the Members' Code of Conduct, and underline the Government's commitment to its observance."
In the light of the exchanges earlier this afternoon, and the very real concern among hon. Members of all parties about the behaviour of Ministers, will the Leader of the House give us an opportunity, in Government time, to discuss the changes to the ministerial code so that we can examine the code in the round?
Mr. Cook: I think that the hon. Gentleman's response to my announcement on Tuesday is a trifle churlish and below his high standards of generosity, as it was he who originally raised the matter at business questions. I had hoped that my response would bring at least half a welcome from the hon. Gentleman, for doing what he had asked of me.
The hon. Gentleman has raised the question of the ministerial code a number of times. I am sure that hon. Members will find opportunities to do so. The hon. Gentleman was right to point to where the opportunity lies in respect of the censure of a member of the Government. In past years, when I was a member of the shadow Cabinet, I spent many happy hours discussing which member of the Conservative Cabinet we would censure that week. The appropriate place for such a debate is in Opposition Supply day time. The hon. Gentleman has the distinction of being the last person to move such a motion in the House, when he moved for the censure of the Minister with responsibility for agriculture in the then Conservative Government. We found opportunities to criticise him on many occasions. However, I commend the hon. Gentleman on his speech on that occasion; it was about substance, policy and issues that affected constituents, not the flim-flam that we have been forced to listen to for the past hour and which, I am bound to say, would be an egregious waste of the House's time if we had to return to it again.
Finally, as the hon. Gentleman mentioned my openness to the Wicks committee, may I take the opportunity of repeating what, for me, was the central point of my observation to the committee? It is worth repeating since, characteristically, very few press reports picked it up the next day. Over the past six years, barely half of 1 per cent. of Members of the House of Commons have been censured for misconduct or misregistration. We were right to censure those Members for failing to meet our high

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standards, but we are entitled to point out to the press and the public that they were rare exceptions, not the generality of the conduct of the House of Commons.
Mrs. Gwyneth Dunwoody: Is my right hon. Friend aware that one way in which the House of Commons can reconnect with the public is to address the questions that concern them very deeply? I refer in particular to the London underground. My right hon. Friend will be aware that the contracts were signed yesterday for a public-private partnership which in my view is seriously flawed.
The real problem is that the Government have said that because we discussed this matter two years ago, we no longer need to discuss it. May I ask my right hon. Friend to reconsider that very urgently? It is no use the House of Commons lecturing others on the need for openness if we will not debate matters of importance on the Floor of the House.
Mr. Cook: My recollection of the past two years is rather different from that of my hon. Friend. I recollect our having exchanges on this matter several times. Indeed, it is only three months since there was a full statement to the House, at the time when the contracts were being let. The signing of the contracts is a natural and inevitable consequence of that statement. However, I am sure that the House will find ways of ventilating the issue and raising it again. For myself, I think that no local government contract in modern history has been more ventilated in the House of Commons.
Mr. Christopher Chope: Can the Leader of House organise an early debate on compensation arrangements for civil servants? The normal maximum that an ordinary mortal can receive from an industrial tribunal for unfair dismissal is £50,000, yet we now find out that £200,000 was paid to Mr. Martin Sixsmith. Surely that needs explanation. We, as the custodians of the public purse, should have a chance to probe the Executive on whether the difference between £50,000 and £200,000 was the price of Mr. Sixsmith's silence.
Mr. Cook: My right hon. Friend the Secretary of State for Transport, Local Government and the Regions dealt with this question perfectly adequately only half an hour ago. The settlement is within the terms of Mr. Sixsmith's terms and conditions. It was carried out by lawyers on both sides, without ministerial intervention.
Finally, so that the hon. Gentleman does not muddy the waters further, Mr. Martin Sixsmith has not, of course, been dismissed, whether fairly or unfairly. He has resigned—fairly, I presume.
Mr. Mike O'Brien: Can we have an early debate on motorway compensation so that I can raise the concerns of my constituents who live along the construction route of the M6 toll road and have found that compensation is to be delayed until 2005 or thereabouts? In the meantime, their houses are blighted and there is no compensation available for the disturbance. These issues need to be debated.
Mr. Cook: I cannot promise my hon. Friend a full day's debate on that topic in the near future, but there are
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a number of ways in which he can raise his constituents' concerns. I will happily undertake to ensure that his observations are passed to the Secretary of State for Transport, Local Government and the Regions.
Dr. Julian Lewis: May I express my surprise to the Leader of the House that he should have chosen, on this of all days, to impugn the reliability of Mr. Sixsmith when we have heard this morning that Mr. Sixsmith was telling the truth when he said that he had not resigned and that the Secretary of State was not doing so when he said that he had? May we have a debate in Government time on the use and abuse of privilege in the House? In that way, right hon. and hon. Members will have an opportunity to see what recompense there is for people—whether they be sacked spin doctors or permanent secretaries of Departments who get landed with the blame—when they are impugned under the protection of parliamentary privilege by Secretaries of State who ought to shoulder the responsibility themselves and resign because of misconduct, misdemeanours and misinformation from their Department?
Mr. Cook: I have a little difficulty unravelling from the hon. Gentleman's periphrasis exactly who he is talking about. If he is referring to the permanent secretary at the Department for Transport, Local Government and the Regions and looks at the permanent secretary's statement of 25 February, he will see that the permanent secretary uses precisely the same language as was subsequently used by the Secretary of State to the House. As the Secretary of State has said to the House, if we impugn his statement to the House we also, logically, impugn the statement of the permanent secretary. In that case, the hon. Gentleman will then have to accept that he is also attacking the permanent secretary.
Finally, on whether I impugned Mr. Sixsmith, I answered the question that I was asked. I pointed out that the reason why I had to retract my statement on that occasion was that I had acted on the advice of Mr. Sixsmith.
Ann Clwyd: May we have a further opportunity early next week to discuss the situation in the middle east? Many questions need to be answered: why was a United Kingdom-sponsored resolution to have a commission of inquiry into Jenin thwarted at the United Nations? What went wrong at the UN Security Council? Secondly, and most importantly, what will happen if there is a further Israeli military attack on Gaza? What will the world do if that takes place, and what role will the United Kingdom play to try and bring about a peace in that area?
Mr. Cook: My hon. Friend raises a serious issue of deep concern to many in the House and many of our constituents. I assure her that the British Foreign Office is fully engaged in trying to find ways of defusing the situation and find a way hack to the negotiating table. I congratulate all those who have been involved in finding a solution to the effective house arrest of Chairman Arafat in Ramallah and in the progress that is being made, slow and painful though it is, on relieving the siege of the Church of the Nativity in Bethlehem. It is very important that the outside world does all that it can to make sure that we continue to make progress.

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I think that everybody in the Chamber will deplore the act of terrorism that took place the other day and will greatly sympathise with the relatives of those who were killed in that bomb attack. I hope that everyone in Israel will also reflect that the event shows that the actions within the west bank are not eliminating suicide bombers. The only way in which we can fight and successfully defeat terrorism is to offer a just and peaceful way forward for all the Palestinian people, which will only be found at the negotiating table.
Mrs. Angela Browning: Could the Leader of the House arrange for an urgent statement by the Minister responsible for S.I. 843, Animal Health England? I served on the Committee stage of the Animal Health Bill, which currently lies in another place; it has been defeated in another place and is therefore unable to progress. However, this statutory instrument, some 221 pages long, was first made and laid before Parliament during the easter recess, coming into force on 19 April. It seeks to replicate many of the issues on which the Bill was defeated in another place.
I see this as legislation by stealth. The statutory instrument involves giving additional powers to Government to enter property and slaughter owners' animals without their consent. I believe that this is a contempt of the House, and we should have a full explanation of how it came into being.
Mr. Cook: I am glad that the hon. Lady has raised this question because it gives me an opportunity to put right some of the press reports concerning the regulations. The only powers for entry and slaughter contained in the regulations are those which already exist in statute. There is no extension of those powers. The only new matter in the regulations is the power to carry out wider testing to try to establish whether there have been transmissible forms of BSE. That form of testing does not involve the slaughter of live animals but the examination of dead carcases. There is no extension of the power to slaughter in the regulations.
Mrs. Alice Mahon: May I add my voice to that of my hon. Friend the Member for Cynon Valley (Ann Clwyd) in calling for an urgent debate on what is happening in the middle east? As we sit here, the Israeli army is massing tanks, troops, helicopter gunships and bulldozers on the borders of Gaza. It is clear that Ariel Sharon is going to inflict bloody revenge on civilians in Gaza, as he did in Jenin. We all condemn the latest suicide bombing—of course we do—but my right hon. Friend must realise that we cannot sit by and watch another Jenin. We should at least hold a debate.
Mr. Cook: I understand my hon. Friend's last point. In fairness to the Government, we are very aware of the concern in the House, as we have shown in the past by giving the House opportunities to hear statements and to explore these matters. Foreign Office Question Time will take place next Tuesday, but I shall continue to keep the situation under review, as, I am sure, will my right hon. Friend the Foreign Secretary.
I fully share my hon. Friend's concern that any massive military retaliation for the terrorist action of the other day is not likely to produce a lasting peace or a cessation of terrorist activity. We shall secure that only by returning
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to the peace table and by ensuring that we find a path forward that is based on security for the people of Israel and justice for the people of the Palestinian territories.
Mr. Roy Beggs: I welcome the announcement that there will be a debate next week on the new code of conduct and guide to the rules for Members of Parliament. However, does the Leader of the House agree that neither the current code of conduct nor the proposed new code would deal with any Member who is associated with an organisation involved in terrorism in this country or who assists such activity in another country? If Sinn Fein-IRA is proven to have been involved in the break-in at Castlereagh police station, in assisting FARC guerrillas in Colombia or in carrying out a recent murder in County Tyrone, what action does the Leader of the House propose or recommend should be taken against the four Members of the House who represent that organisation?
Mr. Cook: It is important to keep a clear distinction between the code of conduct, which governs our behaviour as Members of Parliament in the fulfilment of our parliamentary duties, and other matters where there is the same duty on Members of Parliament as on any citizen to obey the criminal law. There is nothing in the parliamentary code of conduct that seeks to subvert or replace the criminal code. If a Member of Parliament were to have criminal knowledge of a specific criminal or terrorist activity, they should be visited with the full majesty of the law. I support that. Next week, we shall be debating those measures that do not involve criminal activity but on which it is important to establish high standards for our conduct as Members of Parliament, to ensure that we have the clearest possible professional ethics.
Vernon Coaker: Will my right hon. Friend find time for a debate to celebrate women in sport? Yesterday evening, many of us had the opportunity of meeting the England women's rugby union team who are off to their world cup on Saturday. When another world cup is in the news, is it not important that we recognise the tremendous contribution that women make to sport, and that we wish the England women's rugby union team all the best in their world cup in Barcelona?
Mr. Cook: I am sure that my hon. Friend passed a very enjoyable evening and I am happy to join him in his congratulations to the team, and to wish them well. On behalf of all of us, I wish them success.
Michael Fabricant: May we have a debate entitled "new Labour, new standards in the House of Commons", when we can learn that questions of integrity and honesty are mere "flim-flam", as the Leader of the House just said, and that Ministers can come to the Dispatch Box and claim that misleading the House by saying something that is an untruth is allowed if it is taken in the round?
Mr. Cook: On the many occasions when I advise the House to rise above party political point scoring, I never imagine that the hon. Gentleman will pay any attention.
Mr. Alan Hurst: My right hon. Friend will be aware of the large sums of public money spent by

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both national and local government on maintaining bus services in rural areas and small towns. Nevertheless, the devil is this: private bus operators frequently withdraw a service only for it to be replaced by a subsidised service and, as a consequence, such bus operators run only profitable services and we—the public authorities—run only loss-making services. As a result, costs rise and services often diminish. Will my right hon. Friend find time for a debate on that important subject?
Mr. Cook: My hon. Friend raises a matter of which I have personal knowledge from my own constituency. The real problem is the difficulty of securing public transport and bus services in places where they may not be commercially profitable or, indeed, at times of the day when many of the vulnerable people in our community want to travel but when, because they are not peak times, services are not available. My hon. Friend is right to draw attention to the dilemma in which that leaves local authorities, and I shall certainly bear in mind his suggestion that there should be a debate on the subject. I am sure that an opportunity will arise for us to discuss these matters generally, although I cannot predict the date at present.
Mr. John Wilkinson: As we are not to have a debate on the middle east, will the Leader of the House at least ensure that the Foreign Secretary or the International Development Secretary comes to the House to explain why European Union funds go to finance members of the Palestinian Authority under Yasser Arafat at a time when it would seem that terrorism is being prosecuted by that very organisation? At the very least, should not the European Union stop such funding until violence stops, or is the United Kingdom powerless to prevent British taxpayers' money going to such purposes?
Mr. Cook: I wonder whether the hon. Gentleman has paid any attention whatever to what has been happening in the Palestinian territories during the past month or, indeed, during the past five years. Income in those territories has gone down by a third over the past five years. During the past month, large parts of the infrastructure have been smashed, with total damage from that destruction amounting to well over £200 million. People in the Palestinian territories are desperate. I do not believe that it would assist the peace process at all if the European Union were to stop providing humanitarian and reconstruction aid for those people. Furthermore, the hon. Gentleman should be careful not to spread false allegations that European funds support terrorism. The European Union has made it plain that it has carefully audited the trail of money and that, to its knowledge, none of it has ever been used for terrorist activities.
Mr. John Smith: Will my right hon. Friend join me in paying tribute to VARDA—the Victims of Air Related DVT Association—and the Aviation Health Institute for raising public awareness of the problem of deep-vein thrombosis in air travel? Is he aware that, this afternoon, in the precincts of the Palace, they are launching a report which shows that 43 per cent. of the people who have died from deep-vein thrombosis
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were aged between 20 and 40, which almost certainly shows that the problem is directly related to the unique conditions of flying? Given that the Government lead the world in calling for and supporting international research into the problem, does my right hon. Friend share my sheer disbelief that the Australian Government refuse to fund the World Health Organisation research? They are placing that research at risk, yet they stand to benefit most from it. Will my right hon. Friend use his good offices to try to persuade them to change their mind?
Mr. Cook: I am happy to congratulate those organisations on their work on drawing attention to the matter, although I do not think that anyone has done more than my hon. Friend to draw attention to the problem of deep-vein thrombosis. I fully agree about the importance of our carrying out research to ensure that the necessary steps are taken to minimise the risk of deep-vein thrombosis.
I do not want to get into the business of criticising a foreign Government about their attitude to that or many other matters. I am proud of the fact that Britain has taken the issue seriously and is providing leadership. I hope that, in time, other countries will follow that lead.
Miss Anne McIntosh: On 16 January, I put a question to the Secretary of State for Work and Pensions on the number of claimants for incapacity benefit in York and North Yorkshire. I received the figures in a written answer on 6 March. However, this week, I received a letter from a Minister in the Department stating that the figures were incorrect and that he had published revised figures. Will the Leader of the House confirm that, in such circumstances, it is customary for the Minister in question to apologise and explain why the figures were incorrect, whether they were higher or lower than the original figures, and why the revised version was necessary.
Mr. Cook: I did not hear anything in what the hon. Lady said that seemed in any way improper or in breach of ministerial duty. If the Minister discovered that the figures provided to him were in error, he was right to correct the record. There is a duty on him to do so. I am confident that the previous figures were provided in good faith. Given the many thousands of questions that have to be answered—some of which are highly statistical—it will occasionally be necessary to correct figures. I gently suggest that such situations were not unknown when the hon. Lady's party was in government.
Mr. Malcolm Savidge: Clearly, the whole House deplores the suicide bombings that took place a couple of days ago in Israel and Pakistan, but the stark contrast is surely between the expected responses. It is inconceivable that France would engage in reprisal killings or the wanton destruction of poor people's homes. May I endorse other hon. Members' requests that we should have an early debate on the middle east and its wider implications? If Sharon continues to exercise a licence to kill and to block the Jenin inquiry, that could surely undermine the United Nations in the way that the failure to act effectively over Japan/Manchuria and Italy/Abyssinia undermined the League of Nations in the last century, leading eventually to war.
Mr. Cook: Of course I hear the very strong feelings among a number of Members who have taken part in the

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exchanges on the situation in the middle east, and they are absolutely right to be deeply concerned about what may be the wider implications not only for the region—the current situation in the middle east is a major threat to stability of the wider region—but for the standing and status of the United Nations, which, initially in response to an Israeli view, offered an inquiry into Jenin only to have that inquiry refused by the Israeli Government. I hope that a way forward will be found to ensure that the UN can play a constructive and real role. I assure my hon. Friend that the British Government are doing everything that an outside power can possibly do to try to bring both sides to the negotiating table.
Mr. Michael Moore: The Leader of the House will be aware that today is Europe day and that the future of Europe is currently being considered in the convention chaired by the former President of France, Valéry Giscard d'Estaing. Twice in recent weeks, the Minister for Europe has made the Government's position on the future of Europe clear to members of that convention. Will the Leader of the House tell us when hon. Members will have an opportunity to debate the Government's proposals for the post-enlargement period from 2004? Will he also tell us what arrangements will be made to allow the parliamentary representatives from the House—the hon. Member for Birmingham, Edgbaston (Ms Stuart) and the right hon. Member for Wells (Mr. Heathcoat-Amory)—to report on their contributions to that convention?
Mr. Cook: I have told the House before that we are examining how we may provide an appropriate forum for the House's representatives to the convention—as well as the Minister for Europe, who represents the Government—to report to hon. Members. I hope soon to be able to announce those proposals.
John Cryer: Following on from the question asked by my hon. Friend the Member for Braintree (Mr. Hurst), my right hon. Friend may be aware that London bus workers lobbied Parliament yesterday. London is different from the rest of the country because an element of regulation was maintained after privatisation, but a route-based franchising system is used. That is a direct threat to the standard of services across Greater London because the system operates to bear down on costs, which screws down wages, pension rights, terms and conditions and even, in some cases, the condition of the buses that operate on those routes.
My constituency is more or less on the border between the regulated part of the bus network and the unregulated part which exists in Essex. I have been involved in several campaigns to save various bus services. So when we have a debate on bus services in Britain, could it extend to the regulated part in London, not just to the part outside that area?
Mr. Cook: My hon. Friend will of course be aware that pay for bus drivers and other staff is a matter for the companies and unions concerned, but the companies negotiating those wage settlements with their staff are, in part, subsidised by Transport for London. The Government's grant for Transport for London has rocketed in recent years. Indeed, it recently went up by 100 per cent. My hon. Friend may wish to ask Transport for London what
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has become of all the increased investment that we have made and why it has resulted in such a difficult situation for some of the staff who provide the service.
Mr. John Hayes: The Leader of the House will have read reports to the effect that political advisers are being asked to amend, or tamper with, Ministers' answers to parliamentary questions. I am sure that he will agree—as will you, Madam Deputy Speaker—that parliamentary questions are one of the crucial ways in which Members from both sides of the House can hold the Executive to account and gain information on behalf of their constituents. If there is no truth in those reports, I am sure that the Leader of the House will want to let the House know, and we will all be entirely happy and very satisfied. If there is any truth in those reports, perhaps he will arrange for a statement to be made to explain the full detail of that further imposition on the rights of parliamentarians by the Executive.
Mr. Cook: The right of Parliament is to receive full and accurate answers, which is set out in the ministerial code, and Ministers are accountable for those answers. I am all in favour of Parliament's being rigorous and vigorous in ensuring that Ministers are held to account for the answers that they give. In those circumstances, it is not unreasonable for Ministers to seek advice from those in their own offices.
Gillian Merron: May I tell my right hon. Friend that, last Thursday, Councillor Jim Speechley, the Tory leader of Lincolnshire county council, was in court facing eight criminal charges and that the very next day, he was found guilty in an independent public interest report of intimidation and being behind illegal payments totalling some £750,000? I am sure that my right hon. Friend will share my immense concern that, last night, the same councillor was re-elected as Tory leader of Lincolnshire county council. Will my right hon. Friend find time to debate standards in local government so that I can have the opportunity to raise the very real and pertinent concerns of my constituents, who, after all, rely on the political management of the authority to deliver essential services to them?
Mr. Cook: I heard what my hon. Friend said with interest. I am very pleased that the business statement has given her the opportunity to complete the intervention that she attempted earlier this afternoon. I certainly take a dim view of the conduct in local government that she describes, and I very much hope that the electors of Lincolnshire will find a happier and better outcome in future. [Interruption.] If the right hon. Member for Bromley and Chislehurst (Mr. Forth) wants to help to raise standards in local government, the best way for the Conservatives to do so would be to encourage Dame Shirley Porter to return to answer the very grave and serious charges that are still outstanding from the period when she was a senior Conservative leader in London and a close friend of the then Conservative Prime Minister.
Annabelle Ewing: The Leader of the House will be aware of the concerns that have been raised about the operation of removal centres for asylum seekers, such as Dungavel, but he may not be aware that a cross-party

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delegation is to visit Dungavel a week tomorrow. If concerns arise further to that visit, will he try to find time to ensure that those matters can be debated in the House?
Mr. Cook: I am advised that that delegation will be the third cross-party delegation to visit Dungavel in recent times, which shows the commitment of the authorities to transparency. I understand that there are deep concerns. Indeed, as a Scottish Member, I have seen them expressed in the Scottish press. Opportunities are open to the hon. Lady and her colleagues to raise that matter in the House if they wish to do so—it would seem to be an appropriate issue to pursue in Westminster Hall.
Fiona Mactaggart: The Leader of the House has been very patient with my frequent questions about the future of the reform of the second Chamber. I am concerned that there are still not very clear smoke signals about where the process is going. I wonder whether we might have a discussion shortly so that we can see the future shape of the Government's proposals and so that hon. Members can discuss them.
Mr. Cook: I am not sure that I can promise smoke signals. I do not really think that they would help us to shed light on the topic. My hon. Friend congratulates me on my patience. She must be patient for a little longer: her patience may not be exhausted.
Mr. Henry Bellingham: The Leader of the House may recall that I raised the issue of Powderject and the smallpox vaccine last week. Is he aware that there have been some new developments? First, it has been announced that the chief executive officer of Powderject, Paul Drayson, has given another £50,000 to the Labour party.
Secondly, we know that, having paid £32 million by Her Majesty's Government for the contract, Powderject subcontracted the work to Bavarian Nordic for the sum of 17.5 million euros—a profit of £22 million. Bavarian Nordic, however, went on to subcontract the work, as we now know, to IDT, the German company, for less than 10 million euros. In other words, there could have been a saving to the taxpayer of £28 million.
The Leader of the House said last week that it did not matter what Powderject did with the contract having won it. Surely, if we had had an open, competitive tender, we could have gone straight to the east German company and saved £28 million. The Labour party has gained £100,000 out of this and the taxpayer has lost £28 million.
Mr. Cook: Business questions would not be complete without the hon. Gentleman raising a question about Powderject. I anticipated that he might ask about it again today, and I am in danger of becoming a walking expert on the Powderject contract. First, it was known from the start that Bavarian Nordic would be the company that would receive the work and provide the vaccine. Indeed, right from the start, Bavarian Nordic made it plain that Powderject would be its chosen supplier through the United Kingdom. There is no evidence that the contract would have cost any less had we dealt directly with Bavarian Nordic, had Bavarian Nordic been willing to deal with us.
Secondly, I remind the House that five companies bid for this tender. Of the five, only the Powderject/Bavarian Nordic tender could provide us with the vaccine that we needed in time—by the end of the year. It was on that basis, and solely on that basis, that it won the contract.
Kevin Brennan: On Select Committee modernisation, which my right hon. Friend mentioned in his statement, will he join me, as a member of the now ubiquitous Public Administration Committee, in welcoming the Prime Minister's historic decision to appear before the Liaison Committee? Does he agree that the House, as much as the Prime Minister, will be under the spotlight when that happens? Does he agree that the Prime Minister appearing in front of a Committee of 34 members does not necessarily show the House in its most modernised light?
Mr. Cook: I appeared, at length, before the Liaison Committee yesterday, and we had a consensual and friendly exchange of views. One of my proposals had been to reduce marginally the size of the Liaison Committee, which I discovered was not welcome with the Liaison Committee, which then produced a report that said that the number of members should stay the same. Yesterday, I accepted its view that it should stay at the same number, and was much entertained that some members of the Liaison Committee immediately expressed disappointment that I had not rejected their recommendations.
This matter is in the hands of the Liaison Committee, and it must address it. I know from exchanges yesterday that it is also conscious that this will be a very high-profile occasion, and that it will also be under the spotlight. It is important that that exchange—which will be significant in improving the accountability of the Government to the House—should go forward with dignity, and there should be a robust but, nevertheless, civilised exchange on the policy issues, of which many Chairs of Select Committees and the Liaison Committee have a detailed knowledge and which they will want to explore in detail.

Points of Order
3.3 pm
Mr. Michael Trend: On a point of order, Madam Deputy Speaker. Can you advise me how to correct a false impression given to the House earlier by the hon. Member for Pendle (Mr. Prentice)? I have tried to contact him, but, regrettably, I have not been able to do so in time. The problem arises from an exchange with the Secretary of State for Transport, Local Government and the Regions, and it matters because it touches on the careers of senior public servants in this country who are not able to defend themselves in public and who often serve the country for a very long time and very loyally. They have been dragged into this matter, and the very least that we can do is to quote their words correctly.
I quoted precisely from the record in my question of the Secretary of State. From memory, the hon. Member for Pendle said that the Secretary of the Cabinet had told Sir Richard Mottram to make a personal statement. When I asked the Secretary of the Cabinet, Sir Richard Wilson, whether he had instructed or told Sir Richard Mottram to make a statement, he said:
"He was not acting on my instruction".
Clearly, the two men had discussed the matter because they were creating an important precedent for the civil service, but Sir Richard Mottram was not acting on instructions. The problem arises because the Secretary of State chose not to answer the question that I asked. Characteristically, he answered a different question, and that is his problem. We should not, however, drag civil servants into debate in the House in such a way unless we can be very precise. I would like to know if there is any way in which this can be put right.
Madam Deputy Speaker (Sylvia Heal): That is not a point of order for the Chair, but the hon. Gentleman's comments are now on the record.
Mr. Crispin Blunt: On a point of order, Madam Deputy Speaker. In the course of the Deputy Prime Minister's prepared statement, he made a reference to Conservative party policy on devolution of institutions in Northern Ireland that was wholly inaccurate. It is not a matter of debate but a matter of record that the Conservative party supported the Belfast agreement and continues to do so. It therefore continues to support the devolved institutions. Could you advise the House and the Deputy Prime Minister as to what would be the most appropriate way for him to come to the House to correct the record? I hope that that will be an opportunity for the Deputy Prime Minister to set an example to other Ministers.
Madam Deputy Speaker: Again, that is not a point of order but a point of debate. The hon. Gentleman's comments are on record.
Mrs. Angela Browning: On a point of order, Madam Deputy Speaker. In response to
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me just now, the Leader of the House indicated that he understood that S.I. 843 dealt only with the carcases of animals. That is not the case. Part 5 deals specifically with live animals. The statutory instrument extends the regulations on transmissible spongiform encephalopathies in a way not seen previously. Indeed, some sections deal with the Minister's right, after appeal, to withdraw the notice of intended slaughter. This statutory instrument, which has been put through the House in the most covert way, replicates a large portion of a Bill that lies in another place. The Government therefore felt that primary legislation was needed. I fail to understand why the Government, without proper consultation with the industry or veterinarians, and without proper scrutiny by the House, are now seeking to use the secondary legislation route when, only a few months ago, Ministers told us that they urgently needed to pass the measure through primary legislation. I urge that we have an opportunity to question the Minister responsible before it is too late, and it is past the date by which we have an opportunity to make representations.
Madam Deputy Speaker: I am in no position to adjudicate on what the hon. Lady or the Leader of the House has said. I suggest that she contacts the Legal Services Office to see if her interpretation is correct.
Mr. Eric Forth: On a point of order, Madam Deputy Speaker. Following these exchanges, could you ask Mr. Speaker whether consideration could be given to providing a routine extension to Question Time to allow time for correction of inaccurate statements by Ministers? It appears that serious inaccuracies are arising frequently in Ministers' statements, and it seems appropriate that they are given an earlier or an immediate opportunity to correct what they have said wrongly to the House. Perhaps Mr. Speaker could consider offering the House that opportunity so that there is not a long delay between the original inaccurate statement and the correction, if we ever get the correction at all.
Madam Deputy Speaker: I am sure that the right hon. Gentleman will appreciate that that is the whole purpose of being able to ask questions and raise points on statements.

Points of Order

  NATIONALITY, IMMIGRATION AND ASYLUM BILL (PROGRAMME) (No. 2)
  Motion made, and Question put forthwith, pursuant to Order [28 June],
  That the Order of 24th April (Nationality, Immigration and Asylum Bill (Programme)) be amended by the substitution in paragraph (3) (proceedings in Standing Committee) of the words `Tuesday 21st May' for the words 'Thursday 16th May'.—[Mr. Kemp.]
  Question agreed to.

Orders of the Day

  Finance Bill
  (Clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134, and Schedules Nos. 1, 5 and 38)
  Considered in Committee [Progress 8 May].

  Finance Bill
    Clause 89

      CONTROLLED FOREIGN COMPANIES AND TREATY NON-RESIDENT COMPANIES
      3.9 pm
      Mr. Howard Flight: I beg to move amendment No. 34, in page 63, line 33, at end insert—
      `(iii) has otherwise been resident outside the United Kingdom and not resident in the United Kingdom for a period of three years.'.,
      The clause would extend the regime for controlled foreign companies—CFCs—to parent companies that emigrate from the United Kingdom after March this year so as to protect the tax profits of their overseas subsidiaries in certain circumstances. Its objective is to prevent the abuses that could flow from the new substantial shareholders exemptions in other parts of the Finance Bill. Non-UK subsidiaries will have to demonstrate that they are not CFCs and will pay UK tax if they cannot meet the exemption requirements.
      Will the Economic Secretary tell us how practical the arrangements will be and how the Revenue intends to operate them? Let us suppose that a company that is UK resident or UK incorporated moves its central management to Holland or to Germany—both probably have more attractive taxation arrangements for multinationals—and let us suppose that it has a subsidiary in Hong Kong. That subsidiary might meet the requirements of the equivalent Dutch or German CFC rules, but not those of the UK. As a result, the Hong Kong company might be liable for tax in the UK. That is extraordinary, because a German-resident company could complete UK returns in respect of its Hong Kong subsidiary.
      The point should also be made that emigration does not always take place for tax-motivated reasons. In the global world in which we live, the UK obviously needs to be tax competitive to attract and retain the headquarters of multinational companies. The more European Union member states compete, the more that will become an issue, but companies' motivation is not necessarily fiscal.
      The clause will treat companies that emigrate as though they are UK tax resident for ever. There is prima facie legal argument that the provision should lapse after a certain period, and the amendment, on the suggestion of legal advice, proposes that the provision should lapse after three years.
      The Economic Secretary to the Treasury (Ruth Kelly): I thank the hon. Member for Arundel and South Downs (Mr. Flight) for the measured way in which he moved the amendment. I note that he made general points about the purpose and appropriateness of the clause, so I hope that, by explaining its purpose, I shall be able to reassure the Opposition about the detail and persuade them that the amendment is wholly inappropriate.
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      Clause 89 is part of the package of measures that provides for an exemption from tax for the gains and losses made by companies on the disposal of substantial shareholdings. That package is being introduced to enable UK-based companies and groups to restructure flexibly and rapidly in response to emerging global opportunities without facing the prospect of a large tax charge. The clause updates the existing protection against companies artificially leaving the UK and will maintain existing defences against abuse following the introduction of the widely welcomed substantial shareholdings exemption.
      The updated protection affects only one specific—and rare—type of company: one that is resident for tax purposes both in the UK and another country but, for the purposes of a tax treaty, is treated as resident outside the UK. In practice, the protection will bite only where the company is treaty non-resident for mainly fiscal rather than commercial reasons—in other words, in essentially contrived, inherently artificial situations in which companies are unlikely to find themselves by chance. When the protection applies, UK companies that have become treaty non-resident through such artificial contrivances will remain within the scope of the UK's CFC provisions in respect of their overseas subsidiaries.
      The clause reflects extensive consultation with business in the course of which there was a general agreement that a revenue protection measure was appropriate, although admittedly there was less consensus about the form that the revenue protection measure should take. The approach taken by the clause was adopted after careful examination of alternative options. Its effectiveness will be kept under close review. It will have no application to the vast majority of companies and, in practice, as I have already said, it will affect only the companies that seek to migrate from the UK for mainly fiscal rather than commercial reasons after 1 April 2002.
      3.15 pm
      The amendment would restrict the continued application of the UK's CFC rules to just the first three years following a migration—whether or not that migration was wholly artificial, and whether or not the substance of the company's operations remained in the UK. Although I understand the concerns that underlie the amendment, I do not think that it represents the right way to address them.
      Mr. Flight: If I understand the Economic Secretary correctly, what she says amounts to a three-year period. However, it will operate in the background and is not specified in the clause.
      Ruth Kelly: I shall explain precisely how the provision will work in practice.
      As I have said, the clause is all about protecting the Exchequer from those companies that would seek to use artificial means to avoid UK tax. I do not think those who have proposed this amendment would wish it to help such companies but, unfortunately, it would. It would enable such companies to indulge in artificial migration schemes at relatively little cost. They would be subject to the CFC rules for just three years after they had put the artificial structure in place and would be free to divert profits from the UK for ever after. The artificiality could, and in most cases no doubt would, remain for ever and, for that reason, I cannot accept the amendment.

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      That is not to say that I do not recognise that there is a legitimate concern over companies that migrate for genuine, non-tax-driven reasons. It is helpful that the Opposition have raised this issue as it has given me the opportunity to allay that concern. The clause is not aimed at companies who migrate for genuine, non-tax-driven reasons and will not, in practice, affect them because the CFC rules apply only to companies where one of the main reasons for their existence is to achieve a reduction in UK tax by a diversion of profits from the UK.
      I recognise that, although the clause will not affect such companies in practice, compliance with the administrative requirements of the CFC rules might be an unwelcome burden. The answer is not, however, to exclude all companies from the ambit of the clause after three years. The answer lies in finding sensible ways of minimising that burden. I think that we have done that with this Bill. The Inland Revenue already operates a well established CFC clearance system that, in certain circumstances, can amount to an across-the-board clearance for all a company's CFCs. The Revenue has already indicated to business representatives in the constructive consultation period leading up to this clause that it will extend this clearance system, where appropriate, to companies which have left the UK for genuine commercial rather than fiscal reasons.
      Indeed, the Revenue has confirmed that, although each clearance application will be dealt with quite properly on its merits, it would envisage such clearances, where appropriate, to be effective for between three and five years. It would also expect them to be automatically renewable thereafter so long as the relevant facts, circumstances and applicable law remain unchanged and the company has laid all its cards on the table. Of course, such clearances are legally binding on the Inland Revenue so long as the company has disclosed all the relevant facts. That should ensure that the clause will not, in practice, affect those companies which migrate for genuine commercial reasons and ensure that any residual compliance burdens for such companies are minimal. At the same time, the Exchequer will be protected against essentially contrived, artificial migrations.
      The hon. Member for Arundel and South Downs raised a specific point about how we can ensure that a company will not be subject to the CFC laws of more than one country. Each country has, of course, the right to apply its CFC rules at it sees fit within the constraints of international law. It has always been technically possible for a CFC to fall within the CFC rules of more than one country. The Inland Revenue, however, has published guidance on how the UK's CFC rules will be applied in such situations, and has confirmed that it has encountered no difficulties to date in the application of that guidance. I do not see any reason why this measure should make a significant difference. On those grounds, I urge the House to reject the amendment and to accept the clause unamended.
      Mr. Flight: I thank the Minister for her comments. I want to be clear on the matter, so I shall use simple language. One or two Finance Bills ago, Vodafone disagreed with the Government about certain tax proposals. Had it migrated, as it threatened, the immediate reason would have been fiscal. However, it could have been argued that it was also commercial. I cannot imagine that had Vodafone gone through the due legal process and
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      migrated to Germany, or wherever, it would have been practical for the United Kingdom Inland Revenue to pursue a CFC case across the world.
      We support and understand the need for the anti-avoidance objectives, but I am not clear about the practicality of the proposals as they relate to company mobility, especially of multinational headquarters. The Minister said that the CFC rules will end after three years. I repeat my request: does that serve to produce the same effect as our amendment, which advocates the same three-year limit?
      Ruth Kelly: I repeat that we want to ensure that companies do not migrate from the UK purely for fiscal reasons rather than for genuine commercial reasons. There will be a process of negotiation between the Inland Revenue and an individual company. As long as the facts are clear and the Inland Revenue is convinced that the migration is for purely commercial reasons, it will be approved.
      Mr. Michael Jack: So that we understand the Minister's point with even greater clarity, will she comment on the motive test that is used to determine the adjudication of the Inland Revenue as part of the process that she describes?
      Ruth Kelly: The purpose of the clause is to build on processes that are in place. The Inland Revenue informs me that two thirds of the applications that are made to it for migration on the basis of commercial reasons are approved. It has encountered no particular difficulties. The facts of the case are not often in dispute and it is usually apparent whether the move is for genuine commercial reasons or tax reasons. The Inland Revenue hopes to continue that practice.
      Mr. Jack: I did not ask for a description of how the Inland Revenue operates. I want the Minister to tell us a little more about the method of adjudicating the motive for companies that move, such as the example cited by my hon. Friend the Member for Arundel and South Downs (Mr. Flight). It is the motive test that interests me, not the fact that the Inland Revenue is performing its duties successfully.
      Ruth Kelly: I shall certainly write to the right hon. Gentleman on the detail, but the clause is not about judging motive. It relates to the facts on the table and making a decision about whether an arrangement is artificially contrived to avoid tax. If the board of a company gets on a plane every month and holds its meetings in a different country while retaining control within the UK, that would clearly be artificially contrived to avoid our tax legislation. The Inland Revenue would reasonably wish to recover tax in such circumstances, and the clause will allow it to do just that.
      Mr. Flight: Again, I thank the Minister for her comments. I believe that she is saying that if a company emigrates for genuine reasons and its management and control are clearly overseas, that is acceptable. However, if it gets up to wheezes such as holding board meetings abroad when most of its activities at headquarters are conducted here, that is avoidance. The clause appears to be capable of operating in that context.

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      I had in mind a company that has left the country properly, taking its control and management overseas, because of lower taxation in, for example, Germany. The Minister implied that that would be a commercial reason for migrating and not a false fiscal reason. I thank her for clarifying how the clause will work and I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 89 ordered to stand part of the Bill.

    Clause 90

      SUPPLEMENTARY CHARGE IN RESPECT OF RING FENCE TRADES
      Mr. Flight: I beg to move amendment No. 2, page 63, line 38, leave out "17th April 2002" and insert "1st April 2003".
      The Temporary Chairman (Mr. Joe Benton): With this it will be convenient to discuss the following amendments: No. 22, page 64, line 10, leave out "17th April 2002" and insert "1st April 2003".
      No. 33, page 65, line 17, at end add—
      "(11) This section shall come into force on such day as the Treasury may by order made by statutory instrument appoint, but no such order shall be made until an economic impact assessment has been made of the effect of the changes on activity and employment in the oil industry in the North Sea.".
      I have agreed to allow a separate vote on amendment No. 33.
      Mr. Flight: The issues raised by the amendments are some of the most important that we shall consider. The Committee and the Government will be aware that a broad cross-section of people in political parties—certainly Scottish MPs of all parties—and the oil industry think that the proposal is not wise. I hope that the Government will listen to the arguments and think about them before we reach the Bill's final stages.
      To make sense of the amendments, I shall run through the arguments. The clause imposes a 10 per cent. supplementary charge on top of the 30 per cent. corporation tax charge on oil companies. Clause 91 sets out the process for assessment and clause 92 sets out the transitional provisions. The amendments are designed, in different ways, to prune back or check what is provided and, in some cases, to delay implementation until proper further consideration is given.
      The central issue is that the Treasury argues that it will be commercially successful to levy significant extra tax on the oil industry. The Treasury knows that independent assessment estimates that, if oil prices remain reasonably stable, between now and 2010 that will generate about £6 billion in extra tax, some £2 billion of which will be realised in the coming fiscal year. The Government's case is that that would not materially damage investment, employment and operations in the North sea.
      The Financial Secretary to the Treasury (Mr. Paul Boateng): So much to learn.
      Mr. Flight: I beg to disagree with the Minister, and I shall run through why. If he is not aware of the industry's
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      concerns, he has not done his homework. The trade representative body for the industry has set out in detail the full reasons why the industry believes that the proposal will be extremely damaging.
      The Government have made the wrong judgment. On the central issue of the movement of oil prices, I suspect that they did their thinking earlier in the year when oil prices were higher. They did not expect oil prices to be in the order of $18 to $20 or take account of the increases in output from Russia over the next few years.
      Mr. Jack: Has my hon. Friend in his researches discovered any analysis to explain whether North sea oil production is undertaxed, which would justify the proposals dealt with by his amendments?
      3.30 pm
      Mr. Flight: I have found no such evidence; if anything, oil production is overtaxed, particularly in relation to the risks and nature of the businesses, as I shall explain. I have been trying to stress that the Treasury decision was made in the expectation of higher oil prices and was commercially wrong. That has nothing to do with whether it was morally right or wrong. The Treasury's analysis was grounded on excess profitability, but was based on far too short a period of profitability in recent times when oil prices have been higher. Independent analysis of profitability shows that between 1996 and 1999 profit margins have been as little as 1 to 8 per cent., based on an oil price of $15 to $20 a barrel. The United Kingdom needs to be fiscally attractive to meet the challenge of a mature industry that has an unfavourable risk reward profile compared with other parts of the world, particularly the Mexican basin, and whose operations are relatively expensive.
      Mr. Frank Doran: The hon. Gentleman's arguments would be a little stronger were it not for the fact that in 1993 the Conservative Chancellor raised oil taxes and took £600 million to £700 million from the North sea. Some commentators, encouraged by the then Chancellor, described that as a boost to the North sea oil industry. How is that consistent with the hon. Gentleman's position?
      Mr. Flight: First, the lesson was learned. I am not sure that the hon. Gentleman gave the correct date. He mentioned 1993, but I think that the lesson was learned in 1983 when the Conservative Government put up taxation on the back of rising oil prices. There was a reaction, which will be repeated if the present measures are accepted, but thereafter there was a settlement with the industry.
      Malcolm Bruce: The hon. Gentleman may recall—I was in the House then and remember it well—that we divided the House and voted against the Conservative Government. The then shadow Chancellor refused to join us on the grounds that he supported the then Government's tax.
      Mr. Flight: I thank the hon. Gentleman, who has beaten me to it. I was about to say that we learned our lesson in 1983 and a stable tax regime for the oil industry has been a necessary and effective platform for success ever since.
      Mr. Alex Salmond: It is true that there was a tax change in 1983, which the then

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      Government described as a boost for the industry. Over the past few days, the hon. Member for Aberdeen, Central (Mr. Doran) has been describing the current proposed tax change as a boost for the industry. It appears that he has been learning lessons from the Conservative Government.
      Mr. Flight: Things never change.
      Before the proposed income tax increases, in a comparison of the profitability attractiveness of 57 countries, the UK was ranked 31st for the North sea basin and 40th for the southern basin. The UK fields are smaller, the costs are higher and the risk reward is considerably less attractive than in most other parts of the world. Extraction costs are about $8 a barrel, which are among the highest—58th out of 59—anywhere in the world. Those figures, as I am sure the Minister is aware, were produced by Wood Mackenzie investment bank.
      Investment decisions by the industry are not based solely on rate of return computations, but are made in the context of fiscal considerations, cash flow and risk reward in relation to the size of the investment programme. They are also—this is very much what we have just been talking about—a factor in the stability of the tax regime in which they are made. Many people inside and outside the industry view the Government's proposals as a breach of faith, given their pilot scheme, which has been extremely successful in recent years in encouraging a significant increase in North sea investment. In 2001, 21 new fields went into operation at an investment cost of £8,23 billion—double the 2000 level—so, not surprisingly, it is felt that the significant tax increase will have a retroactive impact on investment decisions, which the Government have encouraged people to take on the basis of a stable tax regime. People are zapped with significantly higher tax on investments to which they have committed themselves.
      If there is a breach of faith, previous experience shows that there is a serious risk that the multinationals, which are the main participants, will look at other areas of the world, particularly the Gulf of Mexico, as they offer much more attractive fiscal arrangements, risk rewards and field sizes.
      Roger Casale: The hon. Gentleman did well to remind the Committee that the previous Administration extracted a substantial revenue stream from North sea oil throughout their period in office, as they did from the privatisation of many national industries. However, the Committee will not need reminding that the Conservatives did very little with those resources. In fact, at the same time as drawing that income stream from the taxation of North sea oil, it piled up more and more national debt. Just when we are at the point of using those resources to invest in public services, the hon. Gentleman opposes the tax from which his party profited throughout its period in office, although the nation gained precious little.
      Mr. Flight: That is a pretty feeble and irrelevant comment by the hon. Gentleman. The issue is simply whether additional taxation of the industry will have a major impact on investment, employment and the health of the industry. Self-evidently, as I have said, the Treasury has decided upfront that the proposal will not lead to that. However, as I am endeavouring to explain to the
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      Committee, the industry and most outside commentators believe that that is not the case; the change is unwise because it will seriously damage employment, investment, operations and the amount of oil that we produce; we are now virtually self-sufficient. All Governments, going back to the Labour Government of the 1960s, have taken tax revenue from North sea oil.
      The net effect of the measures will be to take £6 billion of cash flow out of the industry over the next eight years and to produce an annual fall of about £2 billion in retained earnings, which will clearly have an impact on the cost of raising capital for oil companies through their share prices and gearing.
      Historically, independent analysis has shown, for better or for worse, that tax more than the price of oil has driven North sea development and North sea investment. The measure will make the UK uncompetitive and unattractive. It will increase the UK marginal tax rate from 69.4 per cent. to 73.7 per cent. at a time when the industry has been doing extremely well in a mature environment. I congratulate the Department of Trade and Industry on the success of its pilot scheme. We are producing 85 per cent. of our primary needs.
      The measure will put the future of the industry at risk, and many companies have indicated that they will rebalance their world activities. I shall deal later with the depressing figures that indicate that the proportional interest in investments offered since the Budget show an immediate downwards reaction.
      Finally, the tax will apply to the 41 per cent. of production that constitutes gas. In the past three years, gas prices have been falling, not rising.
      Let me deal with specific issues arising from the tax proposals. Not only are financing charges, as provided, not allowable against expenses, but as the charge is a special supplementary charge, it is unclear whether brought-forward losses could be offset against it. It is not a standard corporation tax charge. More fundamentally—I raised the issue on Second Reading—will the tax paid with the supplementary charge be creditable by non-UK parent companies receiving dividends from their UK subsidiaries under double taxation treaties against their tax liabilities elsewhere? If not, there is a significant risk that double taxation will be paid, particularly by US companies. If that is the case and if it is not changed, the UK will be saying goodbye to the very favourable double taxation treaty that we negotiated with the United States last year but for which, for reasons not explained, the Government have not yet put through the necessary legislation. Although that is a different issue, it would be interesting to know why.
      On royalties, the Government have argued that a combination of the offer to negotiate and get rid of royalties, and capital allowances, would go quite a long way to offset the proposed increase in taxation. That is not the view of the industry. Indeed, many in the industry would argue that the abolition of royalties is not a particularly good idea as it does not encourage new developments, which have been exempt since 1982, and could give rise to windfall profits on old fields.
      However, the Government have not given a commitment to abolish royalties—there is nothing in the Red Book to that end. Current royalty receipts are of the order of £500 million per annum. They are not allowable against petroleum revenue tax and corporation tax

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      computations, and the independent assessment of the future saving up to 2005 is £120 million to £150 million per annum.
      The Chief Secretary argued on Second Reading that the additional taxation would be entirely offset by first year allowances. The Wood Mackenzie figures that I quoted suggested that that is nonsense. They show an impact of £8 billion on profits, assuming stable oil prices between now and 2010, versus a deterioration of £6 billion in the cash flow position. That suggests that the Chief Secretary's claim is not correct.
      3.45 pm
      Given that 6 per cent. of Scottish employment is in the industry, no wonder most, if not all, Scottish Members of Parliament are worried. Given the way in which the Chancellor usually protects his back-garden Scottish interests, I wonder whether he is fully aware of the likely impact. As the House may be aware, in the past 10 years the only two economies to introduce tax increases of comparable size have been Argentina and Venezuela.
      In view of all the Government's claims about consultation before imposing major measures, the industry is rightly offended that there was no consultation on these proposals. They are ill-conceived and, as precedent shows, it is dangerous to think that Governments can merrily dip into profits every time oil prices rise. When oil prices fall, that is followed by a major decline in new investment. The long-term confidence and trust that has been built up over the past 20 years has been severely knocked. Because of its mature nature, the UK industry cannot afford to take risks with its outlook.
      Amendments Nos. 2 and 22 propose a year's delay in the introduction of the charge. Other amendments deal with the rate of the charge and the treatment of financing costs. Amendments Nos. 2 and 22 seek to ameliorate the impact of measures which we believe are unwise and not in the national interest, and which will do more damage to an important industry and employer than they will bring benefit in terms of additional tax revenues.
      Mr. Salmond: This subject was vigorously debated in the Scottish Grand Committee yesterday, and I do not intend to repeat the contributions that some of us made there. None the less, the issue is vital and current enough for at least some of those arguments to be brought to the Committee of the whole House.
      I want to try and sweep away some of the nonsense in the debate. It is not the case that Governments do not have the right to change oil taxes. For example—never mind 1993—one of the initial acts of the Thatcher Government in the early 1980s was dramatically to increase the tax regime for North sea oil. The previous Secretary of State for Energy was Tony Benn. Margaret Thatcher decided that a more vigorous taxation regime was necessary than had been decided by Anthony Wedgwood Benn. It was extraordinary. The Government's argument was that oil prices were high and they wanted to get some of that endowment into the Treasury. Similar arguments had been used for previous oil tax changes.
      So oil tax changes do take place. What is significant and different about this oil tax change is that the industry and others were led to believe, after a consultation
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      exercise following the 1997 election, that there would be a stable tax regime. It is true that the Government can argue that the Chancellor always reserved the right to change taxation. I have no doubt, because I have been through the record, that we will not be able to cite a ministerial statement, although there were plenty of Back-Bench statements, not from the hon. Member for Aberdeen, Central (Mr. Doran), but from his hon. Friend the Member for Aberdeen, South (Miss Begg), who triumphantly told us that lobbying by her and her colleagues—presumably, she included the hon. Member for Aberdeen, Central by implication—had succeeded in producing a stable tax regime in the North sea. So only last year, those hon. Members were claiming the credit for producing a stable tax regime. The same Members—and certainly the hon. Member for Aberdeen, Central—now welcome the massive change to that tax regime that is proposed.
      After the Budget announcement, I know that Labour Members feel that they must loyally dragoon themselves behind the Chancellor. His power over Labour Members in Scotland means that they will not enhance their career prospects by trying to gainsay him. None the less, hon. Members representing areas in north-eastern Scotland and more widely have a clear constituency interest in terms of employment. They should at least want to know about the impact on jobs and investment before they unthinkingly line themselves up behind the Chancellor and vote at their party's call without thinking of voting for themselves. It would be unreasonable of constituents in the north-east of Scotland to have to expect anything else.
      The second bit of nonsense in this debate is the Government's argument about the impact on jobs. I used to deal with field financing, so I recognise what can be done with the figures. The Government cannot take £1 billion in a full year out of the North sea industry and claim that it will benefit investment in the sector. I remember a debate for the Republican nomination that occurred a long time ago between George Bush senior and Ronald Reagan, in which Ronald Reagan advanced a similar argument, although it was on a different matter, and George Bush called it levitation economics. That is what the Government are engaged in. According to them, we can take £1 billion out of the industry not only without damaging it, but benefiting it. They are saying, "We are going to take £1 billion out for your benefit; we're from the Treasury and we're here to help you"—one of the great creative lies in life.
      The measure will damage the industry; the only thing to be estimated is how much damage will be caused. The demeanour and body language of the Secretary of State for Scotland was yesterday even more vigorous than usual. I would say that it was defensive, and I am pretty certain from that alone that she found out about the proposed change in Cabinet on the day of the Budget announcement. She did not confirm that in the debate, but I detected that the measure was probably as much of a surprise to her as to the industry and the rest of us.
      In the Scottish Grand Committee yesterday, the Secretary of State said that she thought that the measure would minimise the impact on jobs. That is an interesting phrase, because it concedes that there will be an impact on jobs. Will the Economic Secretary tell us how minimal

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      that "minimal" is? Are we talking about 5,000 or 10,000 jobs? Or will 500 jobs be lost? The Secretary of State said that
      "we should minimise impact on our jobs".—[Official Report, Scottish Grand Committee, 8 May 2002; c. 21.]
      In order to make that statement, she must have had some sort of figure or quantity in mind. Surely the Economic Secretary will tell us that, before the Government undertook to make such a substantial change in oil taxation, they had at least taken into account the probable impact on jobs. If they had taken that impact into account and conducted an analysis, as was suggested to me by the Paymaster General, they must have arrived at some sort of projection.
      Whatever else the Economic Secretary says, she must tell us what the figure is. How minimal is it? Is it 500, 5,000, 10,000 or more? If the Treasury cannot provide such a figure, it will, by introducing a short-term and unexpected tax change that is a reversal of what was expected only last year, stand accused of putting at risk a substantial number of jobs. I take that ill. Successive Chancellors have done well out of the North sea. Some £160 billion—£32,000 a head for every man, woman and child in Scotland—has come from the North sea in the past 20 years or so and gone straight into Treasury coffers. The percentage allocated directly to Scotland was zero.
      So there was a huge windfall, and it continues; the hon. Member for Arundel and South Downs (Mr. Flight) was right to say that many positive things were happening in the North sea. Indeed, I listed a number of them at yesterday's sitting of the Scottish Grand Committee. They are reflected in the estimates of the Chancellor, who says that he is expecting another £32 billion out of the North sea in the next six years, which is £5,000 for every man, woman and child in Scotland. When the hon. Member for Arundel and South Downs speaks about the Chancellor feather-bedding Scotland—that was the implication of his remarks as I understood them—he should reflect on such figures and on how successive Chancellors have themselves been feather-bedded by that flow of revenue from the Scottish sector of the North sea. The expected £32 billion is double the amount produced in the past six years. As the Chancellor is receiving such substantial largesse from the North sea, I think that we are entitled to ask what analysis was conducted on the jobs and investment impact of the substantial tax change in question; and to ask how specific it was and why it was not published.
      Many good things are happening in the North sea, including 21 new field developments last year and the discovery in the Buzzard field of the biggest accumulation of oil found for a generation—a huge development that might generate 400 million barrels. Unfortunately, it has been confirmed that some of the DTI management for that project will be based in London, not Aberdeen, although it would have been reasonable to assume that management for a field that is located to the north-east of Aberdeen would he based there. None the less, that is a huge accumulation of oil and there are many successful developments in the North sea.
      There are, however, worrying signs for the future. As I pointed out to the Scottish Grand Committee, the number of wells currently being drilled is sharply down on the number only a few years ago. In 1996, 112 exploration and appraisal wells were drilled in the waters around Scotland. Last year, 51 were drilled—a decline of more than half in the past few years.
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      I had a discussion yesterday with the Minister for Industry and Energy about licensing. I pointed out that for the first time ever, as far as I can remember, the DTI did not issue a press release to announce take-up of this year's levy. I speculated that the reason for that might be that out of the 289 blocks offered, only 36—12 per cent.—were applied for. I had to gain that information from the trade press, as there has been no official DTI press release. The Minister said that I was being alarmist and scaremongering, and he told the Committee—the hon. Member for Aberdeen, Central will remember this—that we should not worry too much, because in last year's round the take-up was only 10 per cent. I have since looked at the figures for the 2000–01 round, which was the 19th. There were 44 blocks in all, but 12 were applied for; my arithmetic produces a take-up rate of 27 per cent.
      I know that it is becoming commonplace for Labour Ministers to manage to muddle, mislead and misunderstand, but never to take responsibility for doing so. I shall derive some entertainment in the next few days from gaining from the Minister for Industry and Energy information on how the 10 per cent. mentioned yesterday in the Committee can become 27 per cent. when one looks at the figures. Even if the level was 10 per cent., it would still be a matter of huge concern to me and anybody else who is interested in the future of the industry that only 36 blocks out of 289 were taken up in the latest licensing round. That is not an issue for prolonged exchanges and parliamentary debate, but it is a matter of concern, as it tells us what will happen in the industry not in the next five or 10 years, but in next 15, 20 and 25 years. The tragedy is that all available evidence suggests that if the blocks were drilled, they would have a substantial success rate.
      Perhaps the hon. Member for Aberdeen, Central will anticipate my next remarks. I seem to remember him saying yesterday that the success rate in the North sea was pretty low. I have also looked at that rate in the past five years. The success rate in drilling was 17 per cent. in 1996, but in 2001, the rate was 25 per cent. in terms of the finding costs and the success rates of drilling and appraisal in the North sea.
      Mr. Doran: The figures that I quoted in yesterday's Scottish Grand Committee debate, which were published by Professor Alec Kemp three or four years ago, show a one in 14 success rate. I accept the hon. Gentleman's point that exploration has reduced. That is partly because the industry has become much more focused. It is not prepared to take the risks that it took in the early 1990s.
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      Mr. Salmond: I hardly think that that supports the argument that the hon. Gentleman has been pursuing in the press in the north-east of Scotland, which is that the measure is somehow a boost to the industry. If he believes, as he seems to, that the discovery rate is very poor, surely that would be a reason for him to argue against his Front Benchers. In fact, the discovery rate is high. I got these figures from Professor Alec Kemp on Monday, which postdates the hon. Gentleman's information. I shall make a copy available to him. The success rates since 1996 have been 17 per cent., 18 per cent., 17 per cent., 38 per cent., 23 per cent. and, for last year, 25 per cent. Those are good success rates.

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      Obviously, they are not the same as they were 20 years ago—one would not expect that—but for a mature province they are excellent.
      We know from the figures that the number of exploration and appraisal wells is down—there has been a sharp reduction. We know—even the Government will concede this, whatever they say about individual field projections in economics—that such aspects of oilfield financing are financed out of cashflow. Unless there is an offsetting measure in the taxation regime, the measure will result in a further decline in exploration and appraisal drilling, and hence a further decline in employment in the North sea.
      The purpose of amendment No. 33—
      Mr. Doran: Before the hon. Gentleman moves off the subject, I have the same figures from Professor Kemp. I want to make two points. First, I have never once said publicly that the tax change will be a boost to the North sea, so I hope that he will not continue to say that.
      Secondly, the point that I was trying to make earlier, which is made forcefully by Professor Kemp in his presentation and analysis of the figures, is that the oil industry has become much more risk-averse. That has nothing to do with this tax change: it is a direct consequence of the tax changes made in 1993, which Conservative Front-Bench Members seem to have forgotten. Nowadays, most drilling is satellite drilling around existing fields, rather than the wider exploration that used to take place in the early years of the oil industry. That change has nothing at all to do with, and is unlikely to be affected by, this tax change.
      Mr. Salmond: On the hon. Gentleman's first point, I saw a quote from him in The Press and Journal, a notable paper in north-east Scotland, which seemed to suggest that he regarded this—[Interruption.] I shall do this for the hon. Gentleman. I dare say that he intends to speak in the debate, and I shall arrange to have the quote available by the time he does so. We can then test whether he has been misrepresented by The Press and Journal. I doubt that.
      At the very least, the hon. Gentleman has given the impression that these tax changes are nothing much to worry about. Perhaps he will concede that point. He is not responding. Perhaps we are making progress, and the force of our arguments over the past few days are finally convincing him that some of his constituents may have something substantial to worry about owing to the changes made in the Budget. That may be belated, but better that one sinner repenteth by recognising that the Budget might damage employment prospects in his and my constituencies, and in those of many other hon. Members. If the hon. Gentleman accepts the force of that argument, I hope that his vote will follow his conscience. Hon. Members may think that unlikely, but it happens occasionally, although it is almost as rare as catching a Minister telling the truth. Such things may not happen often these days but are none the less welcome when they do.
      I have never argued that it is not the Government's right to make a tax change or that it is impossible to make such a change and not damage activity. There is an argument that producing fields in which the capital outlay
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      took place a considerable time ago are making substantial and healthy profits. However, if the Government are to make such a tax change, it should be accompanied by three things. First, there should be proper consultation and proper notice, as the Government have promised us in relation to other tax changes over the past few years. Secondly, we should have an analysis to show the impact on jobs and investment, so that we can all identify how many of our constituents will be at risk and whether the "minimal" figure is 500 or 5,000.
      The third factor is the most crucial, and I want to put to the Minister some of the points that I put to Ministers in the Grand Committee yesterday. Even within the framework of this tax change, it is possible to introduce other changes that would boost investment—for example, through a further uplift for exploration and appraisal drilling. That used to be done through petroleum revenue tax. That was a very high tax, but it did not damage activity because there was an encouraging and substantial uplift to allow for exploration and appraisal drilling. Many companies, even when they were facing a high tax regime, decided to keep on drilling because it was tax efficient. It would be helpful to have an uplift for exploration and appraisal drilling.
      Jim Sheridan: The hon. Gentleman suggests that before introducing tax increases we should have analysis and consultation. Perhaps that should start within his own party, because, as he will know, the fundamentalist wing of the Scottish National party argues consistently for increased taxes on oil in an independent Scotland. How does he square that circle?
      Mr. Salmond: SNP policy is clear. I have articulated it many times, as has the oil spokesperson. In a past life, the hon. Gentleman was councillor in a robust local authority in Scotland, and perhaps he carries some of those battles with him into the House of Commons. SNP policy is clearly spelled out in documents, and if he cares to look at them and restate his argument, I will respond to it. Other than that, I shall leave him to his historic battles in council chambers around Scotland.
      It is possible to introduce other substantial changes to try to boost investment. I mentioned exploration and appraisal drilling and a further uplift. It might be possible to do something about field financing. Because the change will affect cash flow, in future more fields will be financed by specific field financing from financial institutions. The Liberals have tabled an amendment, which they may or may not wish to press to a vote, although I am not sure whether it would achieve what they want it to achieve. There is potential to relieve interest payments on field financing that will encourage the financing of field economics.
      Conservative Members talked about the abolition of royalties. It would make a great deal more sense to abolish royalties for companies that are pursuing incremental investment in these fields. In other words, instead of people getting something for nothing, they should get something for something.
      This is a substantial tax change. It is impossible to take £1 billion out of an industry without having a major impact on jobs and investment. If the Treasury gave more thought to the matter, it would be possible to make consequent changes that would encourage investment,

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      drilling and exploration in field development, thereby sustaining jobs in the North sea. In the long term, that would be a good deal for the Treasury. The oil revenue outlook is bright for the next six years, but I understand that the Chancellor believes that he will be in power for generations to come. In generations to come, the amount of oil revenue that comes from the North sea will be decided by the exploration and appraisal drilling that takes place now. So even in the Chancellor's self-interest, there is a substantial argument for making those changes and ensuring that we keep the show on the road.
      Above all, the people of Scotland, having seen so much flow for so long from the Scottish sector of the North sea to the London Treasury, are entitled to ask Treasury Ministers to produce an analysis of the impact on jobs and investment of this tax change. If that is not produced, and no further changes are made to boost exploration, appraisal and field development, Treasury Ministers, led by a Chancellor who represents a Scottish constituency, will stand accused of sacrificing Scottish jobs for a smash-and-grab raid to fill Treasury coffers.
      Mr. Doran: As the hon. Member for Banff and Buchan (Mr. Salmond) made clear, we had a vigorous debate yesterday in the Scottish Grand Committee, and I do not intend to repeat the points made there. He has made some substantial points, and I shall try to deal with some of them.
      It is important to examine the amendments tabled by the Conservatives and the SNP. They would delay the tax for a year, and I understand the reasons for that. However, I was not clear from the speech of the hon. Member for Arundel and South Downs (Mr. Flight) whether the amendment was a probing amendment or a serious attempt to delay the tax. The latter entails serious dangers.
      It is important to focus on a point that several hon. Members will raise today and that was made yesterday in the Scottish Grand Committee—the lack of warning that the oil industry received. I deliberately raised the 1993 Budget with the hon. Member for Arundel and South Downs because there was no warning of the tax changes that the then Chancellor announced. The industry suspected that some of the larger, more substantial companies had an inkling of the changes. It was even suggested that they had actively promoted them. However, one of their effects was removing petroleum revenue tax. That had direct consequences for the reliefs that were available to the industry for exploration and appraisal. The hon. Member for Banff and Buchan made that point. It is important, because that is when the difficulties in exploration and appraisal started. The industry has been contracting its efforts on that ever since.
      In 1993, it was clear that substantial parts of the oil industry had no inkling of what was about to happen. I would argue strongly that the position has changed dramatically. In 1997, the new Chancellor announced that he would review oil taxation and he set out the terms for the review. As the hon. Member for Banff and Buchan made clear, I perceive the oil industry as extremely important in my constituency. It accounts for 6 per cent. of Scottish employment, but a much higher proportion in the north-east of Scotland where most of it is based. It is an important employer in my constituency.
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      The industry was well warned about the review. Like many other hon. Members, I lobbied strongly against it and any change in the taxation regime. I believed that that was important for one specific reason: to have a sustained period of low oil prices. There was a major problem, and I therefore believed that it was inappropriate to review the taxation at that time.
      Sir Robert Smith: There is a fatal flaw in the logic of that argument. It implies that the hon. Gentleman has a crystal ball that tells him that we will have a sustained period of high oil prices. We are not considering a price-sensitive profit tax.
      Mr. Doran: I do not accept that. The industry was going through severe difficulties; many jobs had been shed, and it was unable to cope with the changes in the review. With many colleagues from all parties, I argued and lobbied strongly. I am clear about the reason why the Chancellor dropped the review in 1998 and decided not to press ahead. I am clear about it not only because of private discussions with the Ministers who undertook the review but because of the public statements that were made at the time. A sustained period of low oil prices was an inappropriate time to introduce any substantial tax changes to North sea oil.
      I shall not bore the House with figures; the Secretary of State for Scotland read them out in the Scottish Grand Committee yesterday, but the past three years have been a period of sustained high oil prices. The industry can therefore cope with changes.
      Mr. Salmond: To refresh the hon. Gentleman's memory, in 1997 the Chancellor announced that he would review oil taxation. I have a copy of the press notice, which stated that a consultative document would be issued and that people would have plenty of time to comment on it. If, after consultation in 1997, it was decided not to alter the taxation, why was no consultation document issued this time to allow the hon. Gentleman's amazing lobbying powers to come back into play? Where was the consultation?
      4.15 pm
      Mr. Doran: The hon. Gentleman should hear me out. The brand new Government issued a consultation document; it was a different time in the industry. I am trying to make the point that the change this year should not have come as a surprise to the oil industry. It employs some of the most sophisticated lobbying techniques of any industry in this country. All of us who have an interest in the oil industry have been subjected to that lobbying. Its lobbying of Ministers is even more intense; we know its effectiveness. The signals were there for those who chose to look. Not least were the Chancellor's declared intention in 1997, the new circumstances that have pertained for three years, and a position whereby the returns on capital in the North sea were as high as 34 per cent. That is higher than in almost any other United Kingdom industry. The change should not therefore have surprised the oil industry.
      Ann McKechin: Andersen, which was part of the big six but is perhaps now part of the big five and a half, issued a post-Budget bulletin. It boasts:
      "A detailed report by Andersen Petroleum Services"—
      which is issued to major players in the industry—
      "in September 2001 anticipated and analysed the impact of 10 per cent. SCT for North Sea oil."
      That suggests that the oil industry was well aware that the change was likely to happen in the current financial year.
      Mr. Doran: Absolutely.
      Sir Robert Smith: If the industry has such a sophisticated and effective lobbying operation, and it knew about the change before the Budget, why did it not lobby about it before the Budget?
      Mr. Doran: The hon. Gentleman might well ask that question of the oil industry. It is clear to me that it should have been more awake; it fell asleep.
      Mr. Salmond: Will the hon. Gentleman give way?
      Mr. Doran: No, I have given way. Let me make a little progress.
      Sir Robert Smith: Does the hon. Gentleman admit that we have a point?
      Mr. Doran: I am not sure whether we should have this dialogue.
      The Temporary Chairman: Order.
      Mr. Doran: The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) asked from a sedentary position whether I admitted that the change was a surprise. Of course I admit that because, as I said earlier, I believe that the oil industry fell asleep. The people who should have been in contact should have known about the change and the industry should have been prepared.
      My hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) made an important point. The oil analysts do not necessarily mirror the views that have been expressed by some of the oil companies. It is no surprise that the industry opposes an increase in taxation. I would not have expected any less than its campaign. However, all the focus is on the 10 per cent. increase; the Opposition happily ignore the other side of the equation.
      There has been a shift in taxation focus to profits. That will be effected when royalties are abolished, which I hope will happen soon. The 100 per cent. capital relief will change significantly the way in which work is done in the North sea. It will allow companies to get a return on their invested capital much more quickly.
      The hon. Member for Banff and Buchan made a point about exploration and appraisal. We are not a million miles apart on that; perhaps our interpretation of the current position differs. There is a strong argument that the oil industry is being encouraged to focus on marginal drilling and enhancing existing fields. There is not a huge amount of activity. Buzzard field is an exception; much
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      of the industry is concentrating its resources on the assets that it already has and on using existing infrastructure to develop.
      In addition, we have seen a number of new companies coming into the field—the Talismans of this world, and companies such as Kerr McGee. Kerr McGee has been there for a long time, but it is one of the companies now operating in the older fields and building up a portfolio of assets in the smaller fields—the fields that the larger companies, such as the BPs and Shells of this world, will not touch because the returns on investment are not adequate.
      The profile of the North sea is changing, and this Budget will accelerate that. Smaller companies such as Talisman are welcoming it, now that they have had a chance to look at it. They are welcoming the change in focus.
      Mr. Jack: Can the hon. Gentleman tell the House whether all the newer fields will be profitable in the first year?
      Mr. Doran: No, I cannot, because every field has its own individual profile. I, and some of the analysts I have spoken to, expect to see a change in the way money is spent in the North sea. There will be a much longer lead-in time before construction starts and money is spent on the kit that is necessary. Expenditure on that kit will be concentrated in a 12-month period so that returns can be made much more quickly.
      Mr. Jack indicated dissent.
      Mr. Doran: That is what the analysts tell me. They believe that one of the consequences of the Budget will be a change in the investment profile of the North sea. That is good news for the North sea, and it is certainly good news for employment.
      When the 1993 Budget came into effect, there were about 19,000 people working in the offshore oil and gas industry, on the drilling rigs, the stand-by vessels, and so on. The number fell to 17,000, which is where some people expected it to remain. The figure today is nearly 25,000, which is a sign of the change in the industry.
      We all cried doom about the tax changes in 1993, but many other factors are at play in North sea investment. Tax clearly plays a part. Despite all the doom and gloom merchants, the fact remains that the North sea will still be the lowest-taxed area of any oil province anywhere in the world.
      Mr. Salmond: I am finding it quite difficult to understand the hon. Gentleman's position. Earlier, I suggested that he had said in the papers that this was a boost for the industry. My recollection is that the hon. Gentleman denied that. I have now found the quotation that I was looking for. The Aberdeen Evening Express of 18 April stated that
      "city Labour MP Frank Doran was predicting a boost for the industry.
      `It should encourage development of smaller fields, especially by smaller companies,' he forecast."

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      Is he saying that, on balance, this provision is a boost for the industry? Is he—like the Secretary of State for Scotland—saying that it will have minimal impact, or, like us, that it will have a substantial impact? Which of those three positions, on balance, does he adopt?
      Mr. Doran: I may have to accuse the hon. Gentleman of ignoring the second part of the Budget, which provides 100 per cent. capital relief. The quote that gave relates to that relief. It is a direct quote and I accept it. I am proud to repeat it here today. That capital relief will be a boost. The overall picture for many companies in the North sea will show an improved financial position. Yes, there will be losers, and they will, generally, be those with existing installations. The effect will be spread across a fairly wide field and, on the basis of all the companies' returns over the past three years, I believe that they can well afford to pay the tax, so I make no apologies for the comments that I made.
      Sir Robert Smith: Will the hon. Gentleman give way?
      Mr. Doran: No, I have given way quite a lot, and other Members want to speak.
      In summary, the amendments are simply a spoiling tactic. It was necessary to change the taxation position. The Chancellor delayed the changes from 1997, and, in my view, the industry should have been aware that they were coming. It was not difficult to see them coming, and it should not have been difficult to plan for them. The North sea has a very adaptable and innovative industry, and it will adapt to this situation. I accept that it would have preferred the tax changes not to be made, but many companies will benefit.
      The long-term future of the North sea will not be damaged by the changes; indeed, I believe that we will see increased investment, particularly in the enhanced recovery techniques in existing fields because of the full capital reliefs, and in new projects. There is every incentive to make those investments, and there is nothing to stop oil companies investing in the North sea as opposed to in any other oil regime in the world.
      I want to raise with my hon. Friend the Minister an issue arising from the proposed tax changes. I have received a letter from Kerr McGee North Sea, a company based in Aberdeen. It raises an issue that no other company has raised, and I would appreciate hearing my hon. Friend's views on it. Kerr McGee suggests that one of the consequences of the tax changes will be that the supplementary charge will not be creditable against US taxes. Kerr McGee is an American company, and it is concerned about double taxation. That would be a worry, and I hope that my hon. Friend will be able to reassure me that that would not be the position.
      Chris Grayling: It is not often that I find myself putting my name alongside that of the leader of the Scottish nationalists on an early-day motion. Early-day motion 1237 states:
      [That this House notes that the North Sea oil and gas industry supports six per cent. of the Scottish workforce and as such is vital to the Scottish economy; recognises that Scotland is competing against other potential investments around the world, acknowledges a marked 55 per cent. decline in exploration and appraisal
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      since 1996; expresses its concern that the Chancellor announced a 10 per cent. supplementary charge on North Sea profits without any public economic impact assessment or formal industry consultation further notes that it contradicts the Chancellor's own policy of consultation for the Government to usher in changes to policies without public consultation; and calls on the Government to delay any changes to the fiscal regime until a full economic impact assessment can be conducted which looks at the current and future likely effects of a tax increase on employment, exploration and appraisal, and utilisation of UK pipeline infrastructure related to the North Sea.]
      The motion was signed by Scottish nationalists, by Conservatives north and south of the border, and by representatives of Wales and Northern Ireland. It emphasises our concern about the impact of this measure on the oil industry in Scotland. This is not, however, an issue only about the oil industry in Scotland, or industry in Scotland. It is an issue for the entire United Kingdom. This is a fundamental, strategic industry for the whole United Kingdom, and if it suffers as a result of an ill-thought-out tax change, we will all suffer.
      This measure is just another example of a lack of understanding in the Budget of the financial impact of tax increases on business. We have talked a great deal about the impact of the increase in employers' national insurance contributions. This is another example of money being taken out of business. There is no way credibly to argue that removing hundreds of millions of pounds from an industry will benefit it. That does not add up. If we take money away from somebody, they will have less money, not more.
      Scotland can ill afford a drop in manufacturing investment or a drop in support for manufacturing industry at this time. At Scottish questions last week, we heard that employment in manufacturing industry in Scotland was at a low level of 281,000. There is no way in which taking this money out of Scottish manufacturing will increase that figure rather than reduce it. The Treasury Minister, who is not in his seat at the moment, argued earlier that the industry was positive about the steps being taken. I pinched myself when I heard that.
      I have picked up some of the feedback that the industry has given since these measures were announced in the Budget. Let us start with the UK Offshore Operators Association, the trade association of the offshore oil and gas industry:
      "UKOOA is surprised and concerned at the decision to introduce a 10 per cent. supplementary charge on North Sea profits."
      The association
      "fears that this could undermine investor confidence in the long-term viability of the North Sea, the very thing that the Industry has been working with Government, through PILOT, to achieve."
      I could be wrong, but that does not sound to me like a ringing endorsement of the Budget's tax changes.
      Lord Browne, chief executive of BP, said:
      "Taken together, those steps are likely to reduce investment and to hasten the decline of production. Their direct impact will be compounded by the fact that a change made in this way reduces confidence in the stability of the regime going forward and imposes an added element of risk on all future decisions."
      That does not sound like a ringing endorsement of the tax changes from the industry, either. These measures are bound to have a practical and direct consequence on

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      business decisions taken in the North sea, in the Scottish economy and in the economy throughout the United Kingdom.
      On investment, Wood Mackenzie, the acknowledged industry leaders in the financial services sector, said:
      "Overall, Brown's adjustments will be a blow to new UKCS entrants who have been acquiring assets unattractive to the major companies, thereby breathing new life into the North Sea. With some more marginal fields failing to be economic when taxed at 40%, several of which would have been developed, or had their life extended, could now be mothballed."
      How is that a reflection of increased investment in the North sea?
      4.30 pm
      There will also be an impact on suppliers—the manufacturing businesses in Scotland that produce equipment to support the oil industry. How can the removal of hundreds of millions of pounds from the industry make it more likely that those businesses will expand rather than contract? How can it make it more likely that oil companies will buy additional equipment, rather than making cuts when it comes to investment decisions?
      Sir Robert Smith: May I reinforce a point that the hon. Gentleman made earlier? We should bear in mind that this change will affect not just manufacturing industry in Scotland but constituencies throughout the United Kingdom. There are businesses well away from the North sea that start the supply chain. It is the money invested in the North sea that pulls in their products. Many Members who do not think the oil industry is important to them will find that it is.
      Chris Grayling: I share the hon. Gentleman's concern. My constituency, Epsom and Ewell, is quite a long way from Scotland, but I view this as very much a United Kingdom issue. As the hon. Gentleman says, there are firms throughout the country—consultancies, design companies, technology companies and manufacturing organisations—whose business will inevitably decline because the industry has less money to spend, because the Treasury has taken it. There is no other way of looking at this tax change.
      Mr. Tom Harris: IHS Energy Group Consultants has produced a table showing the tax take from oil in different countries, based on certain criteria. It is 88 per cent. in Norway, 70 per cent. in Canada, 75 per cent. in Australia, 80 per cent. in Angola, 65 per cent. in Brazil and 66 per cent. in the United States. The British figure has risen from 35 per cent. to 40 per cent.
      Chris Grayling: The hon. Gentleman can quote all the figures he likes, but the fact remains that if £600 million is taken from an industry it has less to spend. That is basic 2 plus 2 arithmetic. Inevitably, companies operating in the North sea will have less money to spend on people, equipment, new designs, new investment and new
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      exploration. It stands to reason. There is no escaping that reality. Moreover, our balance of payments will be affected.
      Mr. Flight: The crucial point is that the marginal tax rate, which relates to new investment, will rise to about 75 per cent. The overall impact on the industry depends on that marginal rate.
      Chris Grayling: That point speaks for itself.
      Exports are bound to be affected. One of the problems experienced by many of our manufacturing firms results from the weakness of the euro in particular, which has led to a substantial imbalance in the currency markets and has put our manufacturers at a significant disadvantage. Every additional step taken by Government that worsens the financial position of domestic manufacturers is likely to result in equipment being bought from overseas. The firms that are investing will decide that they can save money by going to other countries—and they will have to save money, because they will have less disposable cash following the tax increase.
      The consequence of all that is inescapable: there will be a cost to jobs. There is no way in which it will not feed through to the jobs market. The chief executive of the Aberdeen and Grampian chamber of commerce, in the constituency of the hon. Member for Aberdeen, Central (Mr. Doran), has said:
      "There is no doubt that there will be a knock on effect on jobs. These changes will not just affect the oil majors but the countless small businesses operating in the supply chain."
      That is what the chief executive said. Members should not take that from me; they should take it from her.
      The measure will affect jobs and the industry, and damage the Scottish economy. It is badly thought out and badly timed, and it deserves to be opposed.
      Malcolm Bruce: During my 19 years as a Member of Parliament, I have been around this course rather more often than I would wish.
      Let me, like others, recall what happened in 1993, when tax changes were introduced without consultation. Whatever the longer-term implications, the short-term consequences were immediate and dire. Rigs were stacked, people were laid off, and there was a serious downturn in activity. Wildcat exploration has never recovered from the tax change—and that certainly has long-term implications.
      As I said earlier in an intervention on the hon. Member for Arundel and South Downs (Mr. Flight), we should also remember what happened in the House when those changes were proposed. My party opposed them. It was the only party to do so, although I think the Scottish nationalists supported us when we forced a Division. In the Division Lobby, the then shadow Chancellor—the current Chancellor—rushed across to ask why I was forcing a Division. I said I was standing up for jobs and investment in the Scottish oil and gas industry. I accept that it is in fact the United Kingdom oil and gas industry. but it is heavily concentrated in the north-east. The right hon. Gentleman's response was "But when I am Chancellor, I will need that money. I am not going to support you."
      I must tell the hon. Member for Aberdeen, Central (Mr. Doran) that two wrongs do not make a right. The hon. Member for Arundel and South Downs, on his own

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      behalf if not on that of his party, suggested that the Conservatives might have learned something from that approach. Unfortunately, so have the Labour Government, to the detriment of the industry.
      I am not surprised that the Chancellor has done this. He has been yearning to do it since the day he walked into No. 10—[Laughter.) The right hon. Gentleman does, in fact, live at No. 10 Downing street. I meant the day he walked into the Treasury, although of course he is longing to walk into No. 10 through the front door.
      The point is that the Chancellor has always seen the industry as a milch cow to fund whatever programmes he has in mind. He has never seen it as an industry. It is surprising and disappointing that he has not, given that he is a Scottish Member.
      I am fairly certain that when the Chancellor instituted the review he intended to review the tax and increase it. Thanks to effective lobbying by the industry, and indeed by the hon. Member for Aberdeen, Central and others—and, I accept, the background of a low oil price—he was persuaded that there was no justification for such an increase, and he did not proceed.
      I think those in the industry, having initially feared the worst, emerged feeling that they had engaged in worthwhile consultation, and had had a real opportunity to explain to the Chancellor the complexities of the industry and the dynamics of taxation. They felt that an understanding had been reached—that the Chancellor would not change the tax regime in future without consultation. It is pretty clear, however, that the Chancellor was shedding crocodile tears, or donning a disguise. His initial instincts remained unchanged, and in this Budget he did what he would have liked to do in his first: he grabbed the money.
      It is interesting to hear Labour Members who I suspect know in their heart of hearts that what we are saying is true trying to justify the position that they have acquired. It is all very well for the hon. Member for Aberdeen, Central to say that the capital uplift will in itself enable investments to go ahead. Of course we welcome the uplift, but for investment to take place companies must have the money. If that money has been creamed off in tax, there is less to invest, and there will be a consequent impact on the number of investments that take place with or without the uplift. I think the industry is conceding that across the board.
      The most damaging effect, however, is the shattering of confidence. The industry felt that it had an understanding with the Government—that the Government recognised that it operated against a background of long-term horizons. It has to make calculations above oil prices that fluctuate a great deal. One thing it looks for from the Government is a degree of stability in the tax regime. I agree with the hon. Member for Banff and Buchan (Mr. Salmond) that that does not mean never changing the regime. None of us is suggesting that. I have certainly not opposed every tax change proposed for the North sea; but I have vigorously opposed changes that have been applied without consultation and full assessment, and which have been damaging. There have been a number of such changes, and this change is in that category.
      Yesterday, the Financial Secretary put on a fairly typical bravura performance when he appeared before the Scottish Grand Committee. Nevertheless, he let slip some
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      pretty serious errors. He compared the performance of the Scottish economy to that of the Japanese economy, which was a particularly unfortunate comparison. He also accused those of us who expressed genuine concerns on behalf of the industry, businesses and our constituents of special pleading on behalf of one sector of the economy. That one sector of the economy accounts for about 20 per cent. of all fixed investment in the United Kingdom. Collectively, it spends £8 billion a year. It is a pretty important sector that spawns Britain's biggest company. We heard one or two full-blooded red socialist speeches from Labour Back Benchers—perhaps we will hear some more—about how we should squeeze these big capitalist corporations until the pips squeak. Doing so might warm the red blood in their veins, but they should recognise that, if we squeeze those corporations too hard, the investment will not flow, jobs will dry up and we will undermine the industry's long-term future. We need a clear strategy in terms of what we want out of the North sea in the next 10, 15 or 20 years. Those short-term changes would completely destroy the credibility of such a strategy.
      Jim Sheridan: The hon. Gentleman's party is well known for arguing that revenue raised from taxes should be invested in public services. He opposes these proposals, but how else does he suggest that tax revenue be raised to fund the public services that his party is glad to tell everybody they support?
      Malcolm Bruce: That is a perfectly fair intervention, but I should point out that we are debating the Government's proposals. We had our own alternative Budget, and we set out our platform for how to raise the money. We were particularly in favour of increasing tax on very high earners—a proposal that old Labour also used to be keen on. We would have imposed a 50 per cent. tax on earnings over £100,000, which would have yielded substantially more than changes in oil tax.
      The best way to raise taxes is a matter of judgment, and in our view this tax change is damaging to jobs, to investment, and to the long-term health of the economy. We are entitled to argue that as a perfectly reasonable debating point.
      Mr. Bercow: The hon. Gentleman is making a characteristically sensible speech. Given the naive anti-capitalist prejudices that still permeate the thinking of all too many Labour Members, would the hon. Gentleman care to comment on the enormous capital requirements of UK continental shelf projects, and the very long time scales over which returns on capital are achieved?
      Malcolm Bruce: The hon. Gentleman knows perfectly well—this is the point of his question—that we are talking about field lives of 20 or 30 years, and sudden fluctuations that have to be averaged out over time. The industry has to make very fine judgments on whether to invest at all. In introducing further uncertainty into a business that is already uncertain, the danger is that financial planners, in particular, might conclude that is better to invest where the uncertainties are less. It is all very well talking about taxation regimes in, say, Angola, but what concerns the industry is cash flow, the likelihood of finding a field, and the cost and scale of production. When it considers those

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      factors as a package, there are many more attractive prospects than the North sea. We must woo the industry and keep it here.
      The issue is one of great concern. Although the hon. Member for Aberdeen, Central and I are in broad agreement, he is missing one point. It is fine to promote enhanced recovery, and to encourage companies to squeeze as much as possible out of the existing infrastructure, and I accept—with the qualifications that I have already identified—that the capital uplift makes a contribution in that regard. However, it is also important that the industry be encouraged to make wildcat wells in the interests of serendipity. Such exploration has declined to an alarming extent.
      We support the amendment tabled by Conservative Members, and happily support the amendment in the name of the hon. Member for Banff and Buchan. It is not a wrecking amendment but a cooling-off amendment. It points out that the Government have introduced changes that have not been fully evaluated, and which could prove deeply damaging. It invites them to delay those changes, and to discuss with the industry not necessarily abandoning them, but whether other measures could be introduced on a case-by-case basis to ensure that the damage that we fear can be avoided. Such measures might involve a combination of capital uplifts to encourage more wildcat exploration wells, or even "serendipity" appraisal wells. People forget that many holes are drilled that prove dry. Looking for and producing oil is a very uncertain science. Such measures could also include additional help, in the form of innovative techniques, for companies that want to develop technology.
      4.45 pm
      We do not expect the Government to abandon their proposals, although we can vote on that issue as well. The amendments invite the Government to wait for a year, consult in the light of their proposals, and before implementing them, establish on a field-by-field basis whether offsets can be found to minimise, reduce or preferably eliminate the potentially damaging effects. That seems to us a constructive engagement. I suggest to the Economic Secretary that that would also genuinely restore some of the confidence that has been lost. When I made that point before, she shook her head, but the Treasury needs to recognise that it has seriously damaged a relationship built over many years, in which the industry and the Government had a degree of confidence that they understood each other. The industry now feels that the Government do not understand, and that they are not prepared to accept what the industry regards not as special pleading, but as a genuine argument about how best to retain enough money to maintain investment, thereby maintaining the long-term future in the North sea that we want.
      Professor Alec Kemp has said that, if these tax changes are implemented, the Government would yield an extra £3.7 billion from the North sea, even if the oil price fell to $15. In fact, I think he is wrong, because he is working on a flat-line presumption. Most people in the industry say that, if the oil price fell to $15 under such a regime, activity would drop, and so would revenue.
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      That brings me back to another somewhat ill-judged intervention by the Financial Secretary during yesterday's Scottish Grand Committee. He alluded to the whisky industry, and boasted that, for the fifth Budget in a row, there has been no increase in spirit duty. He suggested that that is a fine achievement, and given that I have several distilleries in my constituency, I have some sympathy for that view. However, what the Financial Secretary did not say was that the last time a Chancellor—the right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke)—increased such duty, he got less revenue the following year, because the increase had a negative impact.
      We need an impact study, and the hon. Member for Banff and Buchan might also want such an assessment to point out the possible range of revenue implications for the Treasury. The forecast returns might be rather less than anticipated, because of the downward effect on activity.
      Although the Economic Secretary is perfectly capable of making a robust defence of the Government's position, without qualification, I urge her not to do so. Instead, I urge her to accept the genuine worries that the tax could have on long-term planning, development and investment in the North sea. I urge her to listen to those of us who have monitored the industry for many years—in my case, I have been close to the industry for 30 years. On every occasion that I have specifically lobbied against changes that I perceive to be damaging, I have been proved right and the Government of the day have been proved wrong. Therefore, the Government might have to act the wrong way round: to take a decision and then consult is sometimes better than taking a decision and then ignoring the evidence.
      Ann McKechin: In today's debate, it is essential that we have regard to the context of the current state of the oil and gas industry, both nationally and internationally. It has not been a focus of the debate, but oil and gas are finite and valuable resources and they should be viewed as national resources for the benefit of a nation's citizens rather than just an industrial commodity. The UK is no different in seeking to maximise the benefit of those resources while at the same time encouraging investment and growth.
      As my hon. Friend the Member for Glasgow, Cathcart (Mr. Harris) pointed out, the UK tax regime is favourable for the industry. For example, Norway, which operates adjoining fields in the North sea, has a tax take-up return of 88 per cent., so the increase to 40 per cent in the UK is more than reasonable. It should also be borne in mind that oil and gas producers have benefited in the Government's recent Budgets from a reduction in corporation tax, low interest rates and the introduction two years ago of roll-over relief. We must view this proposal in the general context of taxation in the past few years.
      Much of our oil exploitation is carried out by some of the largest multinational companies in the world. BP alone produces 20 per cent. of our oil and gas. Given the huge wealth of those multinationals—bigger than the gross domestic product of many nations—it is perfectly fair and equitable for their tax burden to include a contribution to the health of the citizens whose natural resources they exploit to considerable profit.
      Sir Robert Smith: Does the hon. Lady realise that less than 15 per cent. of BP's profits come from the North sea

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      and that this tax will only apply to that area? As she said, it is a major international company that can choose to invest elsewhere if it does not wish to pay the tax.
      Ann McKechin: The hon. Gentleman shows precisely why the tax increase will not have a substantial impact on BP's profitability or investment policy, as has been argued this afternoon. BP's decisions will have more to do with the return that it gets from its investments, the existing investments in the field and the security of supply, which contrasts with some other parts of the globe—as the hon. Gentleman is well aware.
      As I have said, it is reasonable for tax policy to require oil and gas companies to contribute to the health of citizens. Let us not forget that with the worldwide increase in oil prices in recent years the profit levels from North sea exploitation have remained very high. Currently the UK continental shelf makes significantly higher profits than the rest of UK industry, with a pre-tax rate of return of 34.3 per cent. last year against a UK average of 12.2 per cent. Perhaps that is one of the reasons why in the last year BP has sought to justify an increase in the basic salary of its chief executive, Lord Browne, of 58 per cent., taking his salary to a staggering £3 million a year. Added to that, he has been awarded further benefits that bring his package up to £6.2 million. No sooner had Lord Browne secured his increase than the new executive chairman of Shell won an 82 per cent. pay rise, although that only took his salary to a very modest £1.59 million.
      Mr. Bob Blizzard: In view of my hon. Friend's argument, does she agree that it might be a better idea to tax Lord Browne, rather than an industry in a way that might cause problems with jobs?
      Ann McKechin: I am sure that Lord Browne's national insurance contributions will rise, because he is paid above the threshold.
      The reaction of the oil companies is all too predictable. Their financial advisers were preparing detailed reports last autumn about the effect of this tax, so it is naive to say that they did not predict it. They were aware as far back as 1998 that the Government's review of the North sea fiscal scheme concluded that aspects were unsatisfactory and that one of the two main reforms identified was a supplementary charge on North sea profits. Given the rapid increase in profits in the past three years, the use of such an option should not have come as a total shock. The oil industry is cyclical in nature and is currently enjoying a boom time that gives support to the argument for higher taxation—indeed, one which was advanced by the hon. Member for Banff and Buchan (Mr. Salmond) in earlier years. For the major companies such as BP and Shell, the UK only accounts for a small amount of their global trade—as the hon. Member for Gordon (Malcolm Bruce) pointed out—and the lack of reaction in the stock market to the Budget announcements is, I believe, a good signal of how little the changes will affect those companies' profitability.
      At the same time the Government are well aware of the need to preserve investment and employment. The PILOT initiative has been working successfully to maximise the potential of what are now mature fields in the industry—especially in fallow fields—and to retain our skills base. More than 70 licence holders are currently active on the UK continental shelf, which—according to the industry's
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      own economic report in 2001—is a strong indication that despite its maturity it still contains a wide range of oil and gas companies. In fact, in today's edition of the Daily Record, the Shell company is advertising for yet more technicians in the North sea oil industry. The tax changes do not seem to be affecting that company's continued investment in the sector.
      Encouraging new companies is likely to be the way forward in the new market emerging in the mature fields. That is why I welcome the Government's decision to provide a 100 per cent. first-year allowance for capital expenditure.
      The new tax regime will certainly have both winners and losers. New investors will benefit the most, and in some cases their tax burden will be less. The relative newcomer Venture Productions was quoted in The Scotsman of 18 April as welcoming the proposal, and said that it would provide short-term tax relief that would help development.
      Oil taxation specialist Martin Kirkham is a KPMG senior manager. He has stated:
      "The new companies are going to be the winners because they will get a higher rate of relief than they would have previously. People who are sitting on their assets and who are producing and not exploring or developing are likely to be the losers."
      That is exactly the investment structure that should be followed in the industry.
      The Government's proposals are sensible and well balanced. They will give us the necessary income to invest in our public services. At the same time, they will encourage investment in this important industrial sector.
      Mr. Jack: I am pleased to be called to speak in the debate. I want to analyse the Government's proposal, and to speak specifically to the amendments. I have some sympathy with them, as they offer the opportunity to pause to reflect on the matter.
      I have been interested by the Economic Secretary's body language in the debate. From time to time she has smiled, or shown that she does not agree with what is being said, but I do not sense that she feels an obligation to the Committee to justify and explain the Government's policy. I know how these things are done, and I suspect that the Oil Taxation Office will have provided a raft of arguments for her to use to justify her position. I do not expect her to admit that there may be merit in the argument of those who oppose the proposal.
      However, it is time for a more forensic examination of the Government's use of language. The Red Book states that the changes will ensure
      "a regime that raises a fair share of revenue and encourages long-term investment".
      Will the Economic Secretary say what the word "fair" means? Will she say, in some detail, why the present regime is unfair, and why there is a need to raise more revenue from a sector that the Government believe has been successful? Will other industries in effect be hit by the windfall tax that the supplementary charge could be interpreted to be? That is the wider question, and it is why the amendments would either reduce or remove the supplementary charge. Others will be waiting in the wings to know the Government's exact intentions.
      I am intrigued too by what the Red Book reveals about the research and development tax credit. The Government are putting forward the thesis that much economic activity

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      can be stimulated by an expenditure of £400 million, but the Red Book seems to claim that removing £450 million in year two of the proposed regime will have no effect at all. The two arguments cannot be right.
      We need to look carefully at the justification sustaining those Labour Members who have spoken against the amendments. A few years ago, the Government were willing not to alter the current North sea fiscal regime, but the Red Book now says that that regime
      "fails to strike the right balance between promoting investment and taking a fair share of revenue".
      On Second Reading I asked the Chief Secretary to the Treasury if he would be kind enough to provide an economic justification for the Government's position. I asked him if he would place in the Library of the House some form of business model that would provide a justification for the phrase "fair share". In its own way, the evidence that the hon. Member for Arundel and South Downs (Mr. Flight) kindly provided makes a case for the amendments. The covering letter talks about the need for the North sea fiscal regime to strike the right balance between stimulating investment and getting a fair return. I would like to know what "fair" means in this context. Let us look at the example. The word that shines forth from the Treasury's analysis is "hypothetical".
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      The Chief Secretary did not respond in the way that I had hoped. I thought that he would produce an analysis showing the overall investment position, the factors that would be taken into account by the oil industry in determining its investment and a review of the taxation regime. I thought that there would be some attempt to provide us with a business model of the North sea gas and oilfields to show that the amount that the Government want to take out by these tax measures would not have any impact on investment intentions.
      In that context, I was intrigued by the remarks of the hon. Member for Glasgow, Maryhill (Ann McKechin), most of which were predicated on an analysis built on the attitudes of BP and Shell. However, many of the representations that have been made to me have been from smaller oil companies. Many of them finance their investment opportunities in places such as the North sea oilfield and off the west coast of the United Kingdom, where my interest lies, by debt financing. They operate a very different financial regime; they are not the big oil barons of this world and this measure will have an impact on them because of the way in which they conduct their business.
      Coming back to the Chief Secretary's example, the Government's justification, as published to date, is one hypothetical, arithmetical net present value calculation on one field using one set of assumptions. The real world of oil finance varies considerably. I want the Economic Secretary to describe in detail what the real world impact is rather than giving a hypothetical project justification. Although the Treasury may draw some comfort from the fact that it shows in net present value terms that under its proposed regime for that field, which invests £100 million, there is a gain in return, no sensitivity analysis has been made by making a marginal change to some of the variables. No analysis has been made of existing fields.
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      One of the problems with the measure is that it will be introduced at a given moment in time. We have no information from the Treasury about the rates of return for fields that are currently in production but which will, under clause 90, be affected on their present earnings by the arrival of the supplement. The amendment to reduce or postpone its introduction would enable us to look at that aspect.
      Malcolm Bruce: The right hon. Gentleman is making an important point. Does he acknowledge that some companies made investments a few years ago for which they did not get an uplift because the forecast oil price was not met because the price collapsed? Only now are they getting the returns that they anticipated, just to find that their payback has been further cut by these proposed changes.
      Mr. Jack: The hon. Gentleman makes the point that this is a variable business. I am aware that when any business is threatened by an increase in tax, it cries foul. Businesses can sometimes bear additional tax charges just as the citizen has to make provision for additional tax charges because nobody can predict what the Treasury's demands will be year on year. The oil business deals with long-term investments, and as Members on both sides of the Committee have said, people in the oil industry wanted a degree of stability in planning their forward investment strategy. However, they have now been hit by an element of instability.
      I received a copy of a letter, which was sent to the Chancellor by the Non-Operators Forum on 24 April. It states:
      "The taxation changes announced on 17th April give us a great deal of concern, particularly since we had been working extremely hard with officials and ministers in the Department of Trade and Industry towards improving the commercial environment in the North Sea to encourage further investment."
      The letter also mentioned the PILOT forum—as have other Members who have spoken in the debate—which is also designed to improve extraction rates and new exploration in the North sea. The 17 companies in the Non-Operators Forum are at the lower end of the scale and they stressed the impact of the proposal, especially as it came on 17 April. The companies made a second, and important, proposal on which I should like the Economic Secretary to reflect.
      The Government justify their position by arguing that new investment can be funded from cash flow, but there are two flaws in that argument. The first is that not all new investment will be so profitable in year one that all the 100 per cent. allowance can be used up. The Treasury's example assumed that a field is fully profitable in year one, but that might not be the case, so as profits build up in years two, three and four, that must adversely affect the net present value calculation. There is a flaw in the Treasury's argument.
      There is also a problem for fields that are funded by borrowings. Currently, the clause would not permit the costs of extra borrowing to be offset against the new 10 per cent. charge. That is another failure in the argument. Faced with those problems the smaller oil companies — those with existing fields—would be harshly penalised. It might be true —as the hon. Member for Glasgow, Maryhill said—that a large, multinational company could, in theory, absorb the effects of the

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      charges on some of their activities. However, as has been pointed out, they do not currently exploit the North sea and the offshore continental shelf for the very reasons given by the hon. Member for Aberdeen, Central (Mr. Doran).
      The debate has been strongly focused on oil, but I should also like to hear the Economic Secretary's justification for the proposals as regards gas. Gas prices are considerably lower than they have been for some time, and it is likely that there will be significant effects on gas exploration.
      We need to reiterate the questions about the costs of the proposals. The amendments correctly call for the reappraisal, justification or reduction of the costs. Professor Kemp's work has been much quoted, so I feel justified in referring to it. He has carried out some sensitivity analysis of the effects of the measure. Even assuming an oil price of $15 a barrel, he shows that, cumulatively, until 2010, there would be a yield of £3.7 billion from the North sea. A price of $25—perhaps rather high on the scale—would mean that the yield was £9.6 billion. A price of $20 would give an amount of £6.5 billion. Those are serious amounts.
      The Chancellor's analysis in the Red Book covers only the next three financial years. It seems to me that the Treasury must have decided that the measure would not bite this year and would have only a small effect next year. However, given that it will really start to bite only in year three and that the oil industry looks to the long term, we have completely dodged an analysis of the full-scale effect of the proposal on the long-term investment opportunities of the industry—[Interruption.] The Economic Secretary shakes her head. I hope that she can offer a justifiable argument that such considerations would not have an impact, given the fact that oil fields are developed over 10, 15 or 20 years.
      Mr. Salmond: May I draw the right hon. Gentleman's attention away from the Economic Secretary's body language for a second? Is he aware that the Wood Mackenzie analysis shows that, after the fifth year, the full-year effect, once it has worked through at the current oil price, will be more than £1 billion a year?
      Mr. Jack: The hon. Gentleman, who speaks with great authority and knowledge on this subject, makes a very important additional point.
      One very interesting thing is the number of different measures that can be used to determine rates of return. I should like to ask the Economic Secretary why the Chief Secretary used a net present value calculation based on a 10 per cent. discount rate when he wrote to me and other hon. Members, whereas the Paymaster General chose an altogether different calculation based on an IHS Energy Group analysis using a 12.5 per cent discount rate to justify her position on Second Reading.
      Interestingly, in justifying taxation regimes for different oilfields, the Inland Revenue uses the very same analysis as that used by the Paymaster General on Second Reading. However, if I understand the analysis correctly, the Inland Revenue advised the United Kingdom Offshore Operators Association that the marginal tax rate in the United Kingdom would be 73.75 per cent. under the current proposals, but that, in fact, for places such as the Gulf of Mexico and Angola deep-water fields the respective rate
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      would be at 60 per cent. and 71 per cent. Those figures are relevant because they illustrate the fact that we are talking about an international and dynamic oil investment regime, which the proposals could well disrupt in the long term.
      I also support the amendments that argue that this measure be postponed because of certain accounting impacts. Again, I should be grateful to the Economic Secretary if she would comment on those effects. Obviously, the first amount of the current tax charge would affect profitability, as has been said, on the 10 per cent. supplementary rate, but I am interested to know whether the Treasury has taken into account the balance sheet effect of the fact that deferred taxes will have to be revalued. That will obviously affect the profitability and future position of many companies.
      I should be interested to know whether the Economic Secretary thinks that those accounting implications will affect the ability of those companies to raise funds for their future investment plans. The Government do not seem to have fully considered the effect of those implications. It is easy to cry foul when any extra increase is imposed, but, in the light of the arguments adduced so far, it is up to the Treasury meticulously to argue a case for imposing extra taxation on the industry against the background of the critical appraisal that has been made so far in the debate.
      Mr. Blizzard: There can be no doubt that the key issue is what effect these oil and gas tax changes, especially the one proposed in clause 90, will have on investment. Investment is all about the future; we cannot have such a good future if we invest less. I, too, should like to know what assessment of the tax changes' impact on investment leads the Treasury to conclude that the changes represent the right balance between the nation's taking the proper share of its asset, which we would want to do, and securing and stimulating investment for the future.
      What assumptions has the Treasury made about the impact on investment in the figures that it has produced so far? For example, we have all seen the Red Book figures for the net tax take from the industry to the public purse in the forthcoming years. Do those figures assume the same level of investment as that assumed before the tax changes were proposed, or do they assume a reduced level of investment? Has the Treasury discounted the figures in the light of that? That important issue needs to be clarified.
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      Many hon. Members have referred to the work carried out by Professor Kemp. The interesting aspect of Professor Kemp's work is that, while the Red Book looks only at the years up to 2006, Professor Kemp looks beyond that. He comes out with some staggering figures of up to £1 billion a year. Altogether, between now and 2010, Professor Kemp says that the net tax take from the industry will be £6 billion. Does the Treasury really believe that we can take £6 billion out of the industry and avoid having an adverse effect on it? I find that difficult to believe, as there will be less money available to invest. That must have an impact on where multinational companies direct their investments around the world.

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      Whatever we think of oil companies, they do direct money around the world, and we must face that real-world situation and act accordingly.
      Mr. Doran: All the assumptions made by the Opposition, which my hon. Friend may also be making, are that, somehow, North sea money is ring-fenced. In fact, profits from the North sea do not stay in the North sea—they go to Dallas, Houston, San Francisco or wherever the company's headquarters are. Exactly the same factor applies to investment decisions: they are made on the basis of the attractiveness of the regime and the likely return. We must not operate on the basis that £6 billion is coming out of the industry, because it is not. There will be an impact on the attractiveness of the area, but not to the degree suggested by my hon. Friend.
      Mr. Blizzard: I thank my hon. Friend. I was not making that assumption—quite the reverse. I was saying that a managing director of the part of an international company that resides in this country must argue, whether in Houston or elsewhere in the world, as to what slice of the global investment will come to this country each year. I have a letter from a managing director of an international company with a portfolio here—I shall not name the individual— who says, when making that case at the company's worldwide headquarters, that
      "It will be harder for us to attract capital investment into the UK".
      The fact that the money is not ring-fenced is part of the difficulty.
      Another point is the signal that is sent out. As the oil price cannot be predicted, it is necessary for as many of the other factors as possible to be stable. If we have a tax regime that can change around rapidly, that will be taken into account by an industry with very long-term investment.
      Mr. Salmond: It is not possible to ring-fence investment in an international market, but investment can be locked in if consequential tax changes are made. So far in this debate, exploration, appraisal and additional uplift, financing charges for field development, more tax relief and more uplift for incremental development have all been mentioned. All those measures should be included in the Treasury's analysis—which we do not have—of the impact of possible changes. Those suggestions do not even seem to have been considered.
      Mr. Blizzard: I agree in the sense that the key to the future is the amount of exploration and development that can be stimulated at any one time. If that dries up, the future looks bleak. It is therefore important to send out the signals that will encourage more of that activity, not less.
      To return to the Red Book figures, they are lower than those that Professor Kemp predicts for the immediate years up to 2006. I therefore wonder, again, whether the Treasury has done some discounting. Has it estimated what can safely be taken out of the industry without damaging investment? If so, as we reach those years, if the tax revenue is greater than the Red Book predicts, will it be prepared to adjust that tax, for example, by reconsidering whether financing charges should be made
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      deductible on a 10 per cent. basis? At the moment, the proposal is that they should not. I would like an answer to that.
      Other impact assessments should be considered. What will be the impact on the 20th licensing round? What will be the impact on the PILOT targets? Those targets are Government policy, because they have been agreed between the Government and the industry. However, I have seen nothing about them. What will be the impact on the PILOT organisation itself? I have a letter from someone who writes:
      "I have expended a great deal of time and effort in developing measures to stimulate greater exploration activity on the UKCS … under PILOT. I, like others, now find it very difficult to see where this initiative goes next."
      That will be the reaction of a number of people.
      What will be the impact on the amount of indigenous energy resources that are recovered in future years? Are we accelerating to the point at which we shall have to start importing oil and gas? Have we considered the effect on the balance of payments if that day is hastened forward?
      I wish to make a point that is relevant to amendments Nos. 2 and 22. One of the perceived unfairnesses with the changes relates to people who have made recent investments as a result of the collaborative PILOT atmosphere in which the Government encouraged people to invest in fields in which they might not otherwise have invested. Those people will not now receive the benefit of the 100 per cent. capital allowances, but they will pay the tax from 17 April. They did what we asked them to do and put their toe into the water. I am afraid that their toe is probably feeling a bit hot at the moment. Will the Treasury consider some form of transitional arrangements for companies that have done what we asked them to do? We could either give them exemption for a period or apply some of the 100 per cent. allowances retrospectively. That would be playing fair with people who have done the right thing.
      I also feel for those companies that have shown commitment to the UK by having a large percentage of their portfolios here. They will be hit much harder than the companies that my hon. Friend the Member for Aberdeen, Central (Mr. Doran) mentioned, which have large portfolios around the world. We must be careful that we do not punish those who have shown the greatest commitment to the country by investing in the UK continental shelf.
      Mr. Bill Tynan: Does my hon. Friend believe that a pre-tax profit of 34.3 per cent. in 2001 was an inadequate return on the investment that companies made in the North sea? If you do not, what level do you believe would be an adequate return?
      The Temporary Chairman (Mr. Roger Gale): Order. The hon. Gentleman should address other Members through the Chair.
      Mr. Blizzard: I accept what my hon. Friend says. That is a generous return. However, when the oil price is $10 a barrel, the return is nowhere near that figure. It is difficult to link the tax to the oil price, because one cannot predict the oil price. I am arguing that we should ensure that we get the full investment. The longer we keep the industry going, the longer we shall receive the benefits.

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      I want to say a little about royalties. A tax change in terms of the supplementary charge will come in straight away and the Government have made it clear that they want to abolish the royalty. However, there will be a consultation period and the worry is that there could be up to a year's gap between the two things taking place. The industry has told me that it believes that the consultation could be carried out in one month, so when does the Treasury intend to begin the consultation? Will it commit to a short consultation period and can we have a firm date as soon as possible for the abolition of the royalty? Will the Treasury consider whether it is possible to carry out the consultation in one month, because it is important, if we are to attract new investment, that people know soon when the royalty will be abolished? It strikes me that no one will invest until they know when the royalty is to be abolished. If we are trying to attract investment, we do not want to wait too long, so it is important to have those commitments on royalty.
      Hon. Members have made international comparisons and highlighted different tax regimes around the world, but tax rates cannot be considered in isolation. What matters to investors is the overall expected return, which takes into account the cost of finding oil and gas and the chances of finding them. That cost varies around the world. A fair assessment of how attractive we are in the international investment game takes into account development cost and the field size, which gives an idea of how many years and how many millions of barrels will be produced for the initial investment. That is related to the field's maturity. When we add up those considerations, it is clear that the North sea is not especially attractive in an international context. We must be careful that we do not make it more unattractive.
      We must also ensure that we compare like with like. Some of the figures that have been bandied around are for standard developments. We can only compare deep-water developments with deep-water developments. Perhaps the easiest comparison to make is with Norway, because we are both dipping in the same area. Norway has similar unit costs of $8 or so a barrel and a similar tax regime: Norway's is 78 per cent.; ours is increasing to a marginal rate of about 74 per cent. The difference is that the fields in the Norwegian sector are 100 million-barrel fields, whereas the fields that we are developing are 25 million to 30 million-barrel fields. It is clearly less attractive to invest in smaller fields.
      Although Norway will face the same challenge as us, its fields are not in the same state of maturity and it is doing fine out of larger fields. When those start to run out and it is considering developing smaller fields, it will face the same problems as us.
      Sir Robert Smith: Like the hon. Member for Banff and Buchan (Mr. Salmond), many of my arguments and concerns were voiced on Second Reading, in the Budget debate and in the Scottish Grand Committee—[Interruption.] The problem is that the Financial Secretary made his statement in the Grand Committee and then left. If he left this debate before the hon. Member for Banff and Buchan finished his speech, he will have missed the important point that came out of yesterday's Grand Committee, in which one member of the Cabinet recognised that there will be an impact on jobs. Given Cabinet collective responsibility, one would assume that
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      the Government hold the same general analysis. If there is to be an impact on jobs, it behoves the Government to say what that might be.
      Mr. Tom Harris: In defence of my right hon. Friend the Secretary of State for Scotland, she did not say whether the measure would have a negative or positive impact on jobs.
      Sir Robert Smith: The right hon. Lady did not have to. She said:
      "My assessment of the jobs impact is that if we link the supplemental tax on profits to the first-year allowances and the abolition of royalties, we should minimise impact on our jobs." — [Official Report, Scottish Grand Committee, 8 May 2002; c. 21.]
      I suppose that, arguably, she might have been saying that the abolition of royalties and the first-year allowances are designed to make more job losses, which would support the hon. Gentleman's way of looking at the issue. Clearly, however, she recognised that the tax on its own will have a major impact on jobs and that the Government hope to limit the damage by introducing other measures.
      Mr. Salmond: The hon. Member for Glasgow, Cathcart (Mr. Harris) seems to be suggesting that the Secretary of State for Scotland is trying to minimise a job boost in Scotland, which makes what the Government have been playing at over the past year in general manufacturing industry altogether clearer.
      5.30 pm
      Sir Robert Smith: The Secretary of State was clearly saying that there will be a negative impact as a result of the measures. The question is the scale of that impact; she tried to play it down, but some of us are worried that it could be significant.
      Mr. Tom Harris: You hope so.
      Sir Robert Smith: No, we do not.
      Mr. Harris: Doom merchants.
      Sir Robert Smith: We are not; we are reflecting our constituents' concerns. Some of them have already experienced such an impact, when the tax changes alluded to by my hon. Friend the Member for Gordon (Malcolm Bruce) were introduced. One of them came to my surgery in 1997, after the Chancellor threatened to do something similar, and said that he did not want what happened to him, his business and all the people he employed the first time round to be repeated under the present Government. Some of us have been concerned ever since; our constituents who have worked in the industry for a long time, understand how it works and know what has happened, want us to impress their anxieties on the Committee. We are doing so not because we are doom merchants but because we are success merchants—we want to promote the wider benefits of the industry.
      When the Financial Secretary dismissed the industry as just one sector—[Interruption.] The Financial Secretary may care to remember what he said.
      Mr. Boateng: I did not dismiss the industry, but I did dismiss the hon. Gentleman's arguments.
      Sir Robert Smith: The Financial Secretary dismissed those of us who expressed concern about the oil industry

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      for promoting just one sector of industry. However, the oil industry is not only a major sector for employment and investment but is of strategic importance, as it gives this country the luxury of our own energy supply on our doorstep. The Minister for Industry and Energy is worried that we will lose that supply in the long run—hence the report by the performance and innovation unit on energy supplies.
      The Treasury and the Department of Trade and Industry need to be more joined up, which was the point of the PILOT initiative and the taskforce. Those who accuse us of being doom merchants may not have heard the praise that we have heaped on the Government in the past few years for the taskforce's achievements. The Financial Secretary did not attend previous sittings of the Scottish Grand Committees and did not hear that praise—[Interruption.] No, there were benefits, as we have seen, in signing up to the commitments in PILOT; the taskforce had a positive outcome in bringing together the Treasury, the DTI and the industry. Unfortunately, the Treasury has chosen not to learn the lessons of that, and we are now facing a surprise consequence for the industry.
      The hon. Member for Waveney (Mr. Blizzard) made an extremely important point that comparisons must not be hypothetical. The right hon. Member for Fylde (Mr. Jack) made an equally important point that Treasury analysis has been based on hypothetical analysis. People who make investment decisions base them not on hypotheses but on real possibilities. Comparisons between fields must take account of the fact that our fields are smaller now, and we need a regime that recognises that. There are larger fields elsewhere, where returns and the risk-reward ratio are better, so the country must maintain attractiveness for the sake of the tax regime.
      The amendments on the timing of the tax are useful because they make the point, as others have said, that the Government's proposals are out of phase. The royalties are supposed to be the upside of the change, but we do not know when they will be sorted out. It would be far better to postpone the tax. Indeed, if analysis proves that it will have a negative impact, the Government should not merely postpone it; they should withdraw it. There should be a chance to sort out royalties and introduce proposals on them as soon as possible. An impact assessment should be made; we need far more substantial Treasury data in the Library than the two sides of A4 produced so far.
      The Government are committed to consultation. The hon. Member for Aberdeen, Central (Mr. Doran) said that the industry was asleep, but communication is a two-way process. If the Government wanted genuine consultation, they should have woken the industry up first, thus negating the element of surprise that causes long-term damage. No one knows what the Government's intentions are, whether the Chancellor is just trying it on this year, and what the tax regime will be in the future.
      I repeat what was said in the Grand Committee, as it is relevant to the assessment of the impact of the tax. Labour Members, trying to straddle a compromise between recognising the concerns that will be evident in their constituencies, and their desire not to upset their colleagues on the Front Bench too much—because the Chancellor has made his statement and as Back Benchers
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      they do not want to cross him—come up with the strange argument that the price is high at the moment, so it is okay to impose the tax now.
      However, there is no undertaking that the tax will go away if the price drops. The tax, according to the Chancellor, is there to stay. It is in his Red Book for several years to come. Some in the industry have been privately getting the message that when the price falls, they can lobby the Government for a lower tax regime. That is no way to make a planning horizon for investment. It provides no sense of stability to tell the industry, "Come back and lobby us for a tax cut and we might see what we can do." In order to have the confidence to invest, people need to know in advance what the tax regime will be.
      We need a return to such stability. The amendments provide the chance for a breathing space.
      Malcolm Bruce: Is not the problem the fact that, in every other sector of the economy, the Chancellor has been telling us how important it is to provide a good business tax regime and why he has cut corporation tax? If that is the right way to promote investment in the economy, why is one sector singled out and told that it is to be boosted by being taxed harder than any other? The logic is contradictory, to say the least.
      Sir Robert Smith: That is a worrying sign for other businesses, and there is a knock-on effect for other business decisions. If this is the way that the Government treat the successful oil industry, how will they treat the others?
      Mr. Robert Key: Is the hon. Gentleman aware that yesterday, a Standing Committee on statutory instruments passed the Offshore Chemicals Regulations 2002, which will add a burden of a further £1 million a year for the oil industry simply to apply for permits under the new regulations?
      Sir Robert Smith: I thank the hon. Gentleman for bringing that to the attention of the House. It is not only such burdens of regulation, but the relationship with the regulator, the access charges into the network and other charges that make the UK an expensive place to operate. There is also the worry about gas balance, and so on. It is a dangerous time for the Treasury to change the tax system, when other regulatory impacts put additional concerns on to the industry.
      It is important to emphasise the long-term nature of the industry. Yes, in one year there may be a higher rate of return, but in another year it may make a loss. The price of oil goes up and down. In the early 1980s, the price of oil was about $70 a barrel at present-day values. It is way down on that now, in real terms, and it could go down again. It is up to the Government in Saudi Arabia what price the world pays for oil.
      Mr. Tom Harris: The hon. Gentleman is surely off on a tangent. The tax is profit-related, so if profits go down, the tax goes down. That answers exactly the point that he is making.
      Sir Robert Smith: But the tax still takes more money out than before it was put on, so it makes the UK less

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      attractive to investors. At least there is agreement on both sides of the House that taking more money out of the industry means that that makes it less attractive.
      I am explaining to those who pick out of thin air one statistic to justify the tax, that the industry looks at the return on its investment over the lifetime of the field. The bad years are paid for by the good years. If the tax comes on by surprise in the good years, investors will not take the risk of doing anything for the bad years. That damages the long-term profitability and attractiveness of the North sea and the rate of return for future generations. It fails to get every last drop of gas and oil out of the North sea, which would maximise our security of supply, the Treasury's take in the long term, and the benefits for future generations from an asset on our own doorstep.
      Ruth Kelly: I have detected scepticism in some parts of the Committee, on the Opposition Benches and the Lib Dem Benches, from the Scottish National party spokesman and even on my own side, about the change in the tax regime for North sea oil. I have also heard genuine concerns about the effect on jobs and investment in the North sea. I shall deal with those concerns head on and in some detail.
      The reform before us is a good reform. It is a principled reform. It is a reform for the long term which promotes investment in marginal fields and, in doing so, raises substantial revenue for the Exchequer—revenue that will help put the NHS back on a sustainable long-term financial footing, as a service that will remain free at the point of need. The Opposition refuse to commit themselves to our tax proposals and to a comprehensive national health service that is free at the point of use. In doing so, they are breaking a consensus that has existed for the past 50 years. I note that they are arguing that we should delay the introduction of the 10 per cent. supplementary charge on profits, but not implementation of the other important and very generous part of the package: full and immediate relief for North sea capital spending as it is incurred and the abolition of royalties, subject to consultation on timing.
      Mr. Tom Harris: My hon. Friend will be aware that the Liberals tabled an amendment—it was discussed yesterday—that would have increased income tax rates from 22 per cent. to 23 per cent, but are asking today for a reduction in tax on big business. Three years ago, the Scottish National party was also calling for a 1 p tax increase, but today it is calling for a cut in tax on big business. Will she comment on what that suggests about the priorities of those two parties?
      The Temporary Chairman (Mr. Roger Gale): Order. I would prefer it if the Minister were not tempted down that road.
      Ruth Kelly: Thank you, Mr. Gale. I shall not pursue the issue, but my hon. Friend makes a pertinent point: the Opposition want to cut taxes and slash investment, while we are committed to putting the needs of our people first.
      The oil and gas industry has suggested that the measures will have a damaging impact on investment. Perhaps that is not so surprising—no industry likes paying more tax— but it is clear that oil companies are generating
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      excess profits, and ours is the only major oil-exporting economy that does not have a special regime to reflect that.
      Mr. Jack: Will the Economic Secretary please define what she means by excess profit?
      Ruth Kelly: I am very pleased that the right hon. Gentleman brings me to the point of defining an excess profit. Since the tax changes made by the Conservative Government in 1993 and the abolition of petroleum revenue tax, the rate of return in the oil industry has risen from 10.5 per cent. to 34 per cent. last year. By comparison, other non-financial industries made an average rate of return of 11 per cent. last year. That difference is not due only to temporarily high oil prices. In fact, the North sea's rate of return was higher than that of other industries in every one of the past nine years. That was the case even in 1998, when oil prices fell sharply.
      Back in 1993, we warned of a genuine risk that the oil taxation regime would fail in its objectives if North sea production held up better than was expected or oil prices rose. Our warnings have been borne out. We have been closely monitoring the position since 1998. It is abundantly clear that the regime is not securing a fair deal for the nation from this national resource, and the changes introduced in the Bill will remedy that for the future. At the same time, we fully recognise that the UK tax regime needs to be competitive. We have listened to industry, and the package that we are introducing, including the generous 100 per cent. relief for capital expenditure, focuses on investment. Companies that invest in the North sea will receive full and immediate relief against any tax liability, while those which do not do so will rightly pay a higher share of corporation tax, together with a supplementary charge.
      In future, therefore, the Government will take a much greater share of the risk of investing in the future of the North sea. It is right that, as a consequence, the nation should also take a higher share of the profits of that investment.
      Mr. Salmond: Would I be right in thinking that, under the tax changes, somebody using an existing and long-standing gas infrastructure such as the FLAGS—far-north liquids and associated gas system—line to St. Fergus will be charged tax at 70 per cent. of tariff income, somebody building a new pipeline to Bacton will be taxed at 40 per cent. in corporation tax plus the additional 10 per cent., but somebody taking a gas line from the same fields to Zeebrugge and transporting through the interconnector to Bacton will be taxed at 30 per cent.? Why is the Economic Secretary trying to encourage people with regard to Zeebrugge and Bacton, but not St. Fergus?
      Ruth Kelly: I shall deal in detail with our analysis of the situation in due course. The typical Government tax take as a proportion of pre-tax net present value for fields that have been developed after 1993 is currently only 35 per cent., but will rise to 40 per cent. after the changes have been made. That is much lower than in most other countries, and the UK tax regime will therefore remain highly competitive. I shall turn to the detail of our analysis

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      in due course, as I promised. On that basis, and on that of the industry's own figures, the UK regime is more favourable than that of Canada or the Gulf of Mexico.
      5.45 pm
      The oil industry sometimes emphasises the attractiveness of other international locations for investments, and it is absolutely right that it should try to convince the Government of the merits of as low as possible a taxation regime in this country. However, in a recent article in the Financial Times, Lee Raymond, chairman and chief executive of Exxon Mobil, said:
      "I have often said that the best thing that Exxon Mobil could have done after it drilled its first well in the Gulf was to never drill another again."
      He was talking about Mexico. The tax regime is one, but only one, factor in decision making. Other important elements are political stability, proximity to markets and the Government's overall approach.
      The hon. Member for Banff and Buchan (Mr. Salmond), among others, questioned how the changes can raise significant sums from the oil industry, yet have no impact on investment and jobs. I intend to deal with that point in some detail. The changes have been carefully designed. They have two elements—the supplementary charge and the 100 per cent. investment allowance. The investment allowance means, even with the supplementary charge, that companies investing in new projects will have higher post-tax rates of return than under previous rules. In net present value terms, the benefit of the 100 per cent. allowance outweighs the additional tax for marginal projects. It is the effect on marginal projects that determines the effect on investment, and they will be encouraged by the change. Of course, the increased tax reduces the net present value of more profitable fields, as it should, but those are the fields that are likely to go ahead in any case. Overall, the impact on investment and jobs should be positive rather than, as the hon. Member for Banff and Buchan suggested, negative.
      Mr. Salmond: In that case, can the Economic Secretary tell us why the Secretary of State for Scotland tried to minimise the impact in the Scottish Grand Committee yesterday? Why was the effect minimal and negative yesterday, according to a Cabinet Minister, but positive, according to the Economic Secretary, today?
      Ruth Kelly: I have been explaining how carefully these tax measures have been designed to promote investment in North sea oil. I want to quote some slightly more objective analysts who have considered the question. Tony Wood, the Royal Bank of Scotland's senior economist, says:
      "Although significant, these changes are unlikely to adversely affect the operating environment for companies within the UK. Our view is that there is quite a strong demand to acquire assets in the UK, so we don't think it will hit activity because it will not hit costs but be sliced off profits."
      Mr. Jack: Over what time frame did he make that assessment?
      Ruth Kelly: I understand that he was looking at the overall long-term effect of our tax changes. If the right hon. Gentleman wants to write to me to make a specific point, I will of course consider it.
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      Indeva Energy Consultants, which has been working on designing fiscal regimes for oil taxation in other jurisdictions, states that
      "the UK fiscal regime remains attractive in global terms".
      Mr. Blizzard: My hon. Friend has covered the supplementary charge and the 100 per cent. capital allowances. On royalty, can I press her to give a commitment to undertake the consultation on royalty abolition straight away and over a short period, so that it is possible to secure the abolition of royalty during the passage of the Bill rather than having to wait for a future Finance Bill?
      Ruth Kelly: I understand my hon. Friend's anxiety for prompt consultation, but I do not want to speculate about its results or the timing of the royalty's abolition. However, we are committed to prompt progress, and the Department of Trade and Industry has said that it will effect that. We want to get the changes and their timing right.
      I want to consider the analysis that the Treasury has undertaken in making the tax changes. I want to put on record the analysis and the criteria that we have used in designing them. A full analysis was made of reform's effect on investment. We examined the impact on all investment, exploration and appraisal, development projects that had already commenced, probable and possible developments on new fields that had already been discovered, and incremental developments of fields already in production. Let me consider each in turn.
      On exploration and appraisal, companies are known to use the expected monetary value approach to exploration investment decisions. That is sound economic rationale. Using that method, we found that the rate of return on future exploration is likely to be improved by the tax change. That is because, in most cases, saving exploration and appraisal costs that arise from the higher rate of relief outweighs the loss of the expected development net present value from subsequent finds, thanks to the new 100 per cent. relief.
      Our research on development projects that have already commenced, with the costs already sunk, suggests that it is unlikely that any project will become uneconomic, and we do not expect any loss of investment.
      Mr. Blizzard: I am pleased that the Treasury has carried out some analysis based on expected monetary values. Will my hon. Friend please publish it and place it in the Library?
      Ruth Kelly: I thought that I would place on the record our exact conduct of the analysis and the criteria that we used. I hope that my hon. Friend will be satisfied by what I am about to say.
      Mr. Jack: Will the Economic Secretary give way?
      Ruth Kelly: I must make some progress on setting out the analysis. If, at the end of my comments, the right hon. Gentleman still wishes to make a point, I shall take his intervention.
      We conducted an analytical exercise on new fields, using empirical data. We used companies' projections of output capital and operating expenditure. Of course,

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      we use the data on real fields. We examined 108 new fields that will potentially commence development in the next five years. That information is commercially sensitive and we cannot put it in the public domain. Clearly, we have the advantage of being able to use the data.
      We applied all the various investment criteria that companies use to establish whether projects will proceed. We used the long-term oil and gas prices that companies typically use: $17 to $20 per barrel of oil. We did not use recent oil prices. We also worked on the basis of 18p per therm for gas. We applied a safety check to ascertain that a lower hurdle rate of return would be achieved if oil prices were low.
      We cross-checked that the quantity of new field investment that the industry planned according to its estimates was consistent with the required thresholds that we used. For projects to proceed, all the test thresholds had to be met. As an additional safeguard, we modelled more and less stringent tests and took the average effect on investment that the different assumptions produced.
      We also considered incremental investment. It is generally expected that the spread of internal rate of return and net present value of incremental projects are broadly similar to those of new fields. We were therefore able to interpolate from the new field data.
      The work concluded that the overall impact on North sea investment and jobs was likely to be positive. I hope that hon. Members will accept that we undertook the work thoroughly and responsibly, using real data and projects to which commentators have not been privy.
      Mr. Jack rose—
      Mr. Salmond rose—
      Ruth Kelly: I must make progress; I have been very generous. However, I promised the right hon. Member for Fylde (Mr. Jack) that I would give way to him.
      Mr. Jack: I thank the Economic Secretary for her kindness. Given all her work, which is genuinely interesting and impressive, why cannot the data and the methodology be put into the public domain on an anonymised basis? She prayed in aid her summary of it, and we should therefore be able to examine the calculations on an anonymised basis.
      Ruth Kelly: I have been advised that that is not possible for reasons of commercial confidentiality. I have set out in the fullest possible way the analysis that we have conducted.
      I want to turn to some of the other points raised in today's debate.
      Mr. Salmond rose—
      Ruth Kelly: Given the time, I must make some progress. I have been very generous in giving way so far.
      The hon. Member for Arundel and South Downs (Mr. Flight) asked why the measure applied to gas as well as to oil. Gas, like oil, is a scarce national resource that often generates high rates of return. The special tax
      364
      regime applied to the North sea has always applied to gas production as well as to oil production, and there is no reason to change that.
      Hon. Members have pointed out that gas prices currently appear to be low. I would respond that there is a wide variety of gas prices, depending on when and where the gas is delivered. The profits to be made from gas will obviously depend on the average price over the year. The current market price for a year's supply of gas is 20p per therm. In April 1999, it was 11p per therm, so I do not accept the suggestion that gas prices are particularly low at the moment.
      The hon. Member for Arundel and South Downs argued that the changes amounted, in some respects, to retrospective taxation. I do not accept that. No profits arising before 17 April will be subject to the supplementary charge. Any change to business or personal tax rules will inevitably affect people who have made decisions prior to the change, but that does not amount to retrospection. The Government are making these changes because they are right, and we cannot be diverted from doing what is right just because some companies may be adversely affected.
      My hon. Friend the Member for Waveney (Mr. Blizzard) said, in his interesting and thoughtful contribution, that the Government had compared tax takes with those of other countries without taking it into account that field sizes are much smaller and costs much higher in the United Kingdom than elsewhere. I would like to put on record our response to that point. To take an example, let us suppose that, instead of comparing similar-sized fields, we consider a smaller field—say, a 25 million-barrel oilfield in the United Kingdom, with unit costs 50 per cent. higher than average. In such a field, the tax take will not rise under the proposed changes; it will fall from 45 per cent. to 40 per cent. in present value terms. Helping projects in a weaker economic position such as those—there are many in the United Kingdom—is the precise point of the package that we are putting forward today.
      My hon. Friend the Member for Aberdeen, Central (Mr. Doran) raised the concern that had been pointed out to him about whether the supplementary charge would be creditable under double taxation treaties. We believe that the supplementary charge is substantially similar to corporation tax, and that it should be creditable under most double taxation agreements. Ultimately, of course, that will be a matter for our treaty partners. I would be interested to hear from the industry if this matter is of particular concern. We shall certainly be able to take the issue up with the United States authorities if that proves necessary.
      The hon. Member for Arundel and South Downs asked whether losses could be offset. The supplementary charge applies from 17 April 2002, and it is based on adjusted ring-fence profits. If a company's adjusted ring-fence profits are negative in future years—in other words, if it makes a loss—it will be able to carry that loss forward for that year and subsequent years. Companies will also be able to carry forward losses arising from previous years, except losses arising from financing costs. We shall come to that matter in the course of our discussions on further amendments.
      The right hon. Member for Fylde made a point about new North sea entrants having no corporation tax against which to use the new allowance. The first-year allowances

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      are a tax relief, and a feature of any relief is that it can be used to offset tax only when there is a taxable capacity. These allowances, as I have just explained, will not be lost if a company has insufficient taxable profit to use the allowance against; they can be carried forward and used against taxable profits made in later years.
      The right hon. Gentleman also mentioned the impact on companies' balance sheets and the impact of the deferred tax reserve. I accept that there will be some impact on companies' balance sheets, but because these are one-off provisions, they should be interpreted as such by the stock market. In fact, we have seen only a modest effect on share prices, and I would suggest that this is not going to be a substantial problem.
      The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), among others, questioned whether the Government had considered future energy supply issues. Of course, our objective is to ensure that the full economic potential of the North sea is derived for the nation. The investment incentives provided by the new first-year allowance will ensure that. These measures are also particularly helpful in promoting the continuing life of mature fields.
      6 pm
      For example, a typical investment project to extend production in an older field that is paying petroleum revenue tax yielding a pre-tax rate of return of 20 per cent. has until now offered the investor a rate of only about 15 per cent. after tax. In future, thanks to the first-year tax allowance, the rate of return will be 20 per cent. after tax, the same as the pre-tax rate. If in future we decide to abolish royalty, that will have an additional impact on investment. We are committed to abolition, subject to consultation on the timing.
      Members on both sides of the Committee mentioned the important and constructive work done by PILOT with the industry. That work is indeed very helpful. Much of it has focused on encouraging investment, and it has informed our approach to tax reform. We share the industry's desire to maximise the economic benefit to the United Kingdom of its oil and gas reserves, and provide incentives for the industry. We have learned from the work with PILOT that none of the tax changes will undermine that co-operation. We look forward to the furthering of PILOT's valuable Government-industry initiatives.
      Members on both sides of the Committee also mentioned consultation. In 1998, during the last Parliament, the Government proposed to consult on the choice between two options for tax reform—the extension of petroleum revenue tax and a supplementary charge on profits. That made sense at the time, but in due course, in an environment of low oil prices, it no longer made sense to proceed with any change. Four years on, the proposal to reintroduce PRT is unrealistic. It would require companies to rebuild records on income and expenditure in all fields that had come onstream since 1993. Given that oil companies may have changed hands, that would be administratively very difficult—a bureaucratic nightmare.
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      As far as I know, no one in the industry has called for the reintroduction of PRT. We have opted for a simple, streamlined tax reform that promotes investment over the long term. We will of course continue to work with and listen to the industry as we implement the changes, and, as I have said, we are consulting on the timing of the abolition of royalty.
      No speaker so far has given a single example of an economic project that would be prevented from proceeding as a result of these changes. As I explained, that is because the upfront costs of projects to investors will be significantly reduced by the new tax relief, and marginal projects will be encouraged.
      The new tax regime is right. It is firmly based on sound analysis. There is no point in delaying its introduction. I urge the Committee to reject the amendments.
      Mr. Flight: I shall not detain the Committee for long. We have had an excellent debate, in which Members on both sides—particularly those who know the industry—have presented their arguments extremely well.
      I congratulate the Economic Secretary on responding to a number of points in some detail, although I do not think she fully answered the basic question about why the tax measures proposed in their net form would, allegedly, encourage investment rather than—as the industry claims—reducing it. It is ridiculous to argue that an extra £6 billion in tax will be good for, and welcomed by, an industry, and will enable it to increase its activities.
      As for the fundamental issue of consultation, if the Government have such a good case to sell—unfortunately the Economic Secretary could not make it available to Members, for various reasons—there is all the more justification for our amendment. The Government should sit down with the industry, and persuade it that what is being done is reasonable and will not damage it.
      The point about PILOT sums it up. I think the Economic Secretary deliberately misunderstood what I said. People were enticed by PILOT into committing themselves to new fields—twice as many as in the previous year—on the understanding that the tax regime would remain stable. However, no sooner have they committed than a third increase in tax is imposed on the fruits of those investments. Of course they feel that the provision is retroactive; they feel that the Government have deliberately set them up. It is not surprising, therefore, that a strong feeling of ill will exists.
      The amendment would ensure the future of the industry and we want to press it to a vote. If the Government's case is correct, it is right that the industry should be able to consult properly.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 163, Noes 281.

      Division No. 229]

      [6.5 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Beggs Roy

      Ancram, Rt Hon Michael

      Bellingham, Henry

      Atkinson, David (Bour'mth E)

      Bercow, John

      Atkinson, Peter (Hexham)

      Beresford, Sir Paul

      Bacon, Richard

      Blunt, Crispin

      Baldry, Tony

      Boswell, Tim

      Barker, Gregory

      Brady, Graham

      Baron, John

      Brake, Tom

      Barrett, John

      Brazier, Julian

      367

      Brooke, Mrs Annette L

      McIntosh, Miss Anne

      Browning, Mrs Angela

      MacKay, Rt Hon Andrew

      Bruce, Malcolm

      Maclean, Rt Hon David

      Burns, Simon

      McLoughlin, Patrick

      Burnside, David

      Malins, Humfrey

      Butterfill, John

      Maple, John

      Calton, Mrs Patsy

      Marsden, Paul (Shrewsbury)

      Cameron, David

      Mates, Michael

      Carmichael, Alistair

      Mawhinney, Rt Hon Sir Brian

      Cash, William

      May, Mrs Theresa

      Chapman, Sir Sydney

      Mercer, Patrick

      (Chipping Barnet)

      Mitchell, Andrew (Sutton Coldfield)

      Chidgey, David

      Moore, Michael

      Chope, Christopher

      Moss, Malcolm

      Clappison, James

      Murrison, Dr Andrew

      Clifton-Brown, Geoffrey

      Öpik, Lembit

      Cormack, Sir Patrick

      Page, Richard

      Curry, Rt Hon David

      Paice, James

      Davey, Edward (Kingston)

      Paterson, Owen

      Djanogly, Jonathan

      Price, Adam

      Dodds, Nigel

      Prisk, Mark

      Doughty, Sue

      Pugh, Dr John

      Duncan, Peter (Galloway)

      Randall, John

      Ewing, Annabelle

      Reid, Alan (Argyll & Bute)

      Fabricant, Michael

      Robathan, Andrew

      Fallon, Michael

      Robertson, Angus (Moray)

      Field, Mark (Cities of London)

      Robertson, Hugh (Faversham)

      Flight, Howard

      Robinson, Peter (Belfast E)

      Flook, Adrian

      Rosindell, Andrew

      Forth, Rt Hon Eric

      Ruffley, David

      Foster, Don (Bath)

      Russell, Bob (Colchester)

      Fox, Dr Liam

      Salmond, Alex

      Francois, Mark

      Sanders, Adrian

      Gibb, Nick

      Sayeed, Jonathan

      Gillan, Mrs Cheryl

      Selous, Andrew

      Gray, James

      Shephard, Rt Hon Mrs Gillian

      Grayling, Chris

      Simmonds, Mark

      Green, Damian (Ashford)

      Simpson, Keith (Mid-Norfolk)

      Green, Matthew (Ludlow)

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

      Grieve, Dominic

      Soames, Nicholas

      Hague, Rt Hon William

      Spicer, Sir Michael

      Hammond, Philip

      Spink, Bob

      Harris, Dr Evan (Oxford w)

      Stanley, Rt Hon Sir John

      Hawkins, Nick

      Streeter, Gary

      Hayes, John

      Stunell, Andrew

      Heald, Oliver

      Swayne, Desmond

      Heath, David

      Swire, Hugo

      Heathcoat-Amory, Rt Hon David

      Syms, Robert

      Hendry, Charles

      Tapsell, Sir Peter

      Hoban, Mark

      Taylor, John (Solihull)

      Holmes, Paul

      Thomas, Simon (Ceredigion)

      Horam, John

      Trend, Michael

      Howard, Rt Hon Michael

      Turner, Andrew (Isle of Wight)

      Howarth, Gerald (Aldershot)

      Tyrie, Andrew

      Hughes, Simon (Southwark N)

      Viggers, Peter

      Hunter, Andrew

      Walter, Robert

      Jack, Rt Hon Michael

      Waterson, Nigel

      Jenkin, Bernard

      Watkinson, Angela

      Johnson, Boris (Henley)

      Weir, Michael

      Keetch, Paul

      Whittingdale, John

      Key, Robert

      Wiggin, Bill

      Kirkbride, Miss Julie

      Wilkinson, John

      Laing, Mrs Eleanor

      Willetts, David

      Lamb, Norman

      Williams, Hywel (Caernarfon)

      Lansley, Andrew

      Willis, Phil

      Laws, David

      Wilshire, David

      Leigh, Edward

      Winterton, Mrs Ann (Congleton)

      Letwin, Oliver

      Wishart, Pete

      Lewis, Dr Julian (New Forest E)

      Yeo, Tim

      Liddell-Grainger, Ian

      Young, Rt Hon Sir George

      Lidington, David

      Younger-Ross, Richard

      Lilley, Rt Hon Peter

      Llwyd, Elfyn

      Tellers For the Ayes:

      Loughton, Tim

      Mr. Stephen O'Brien and

      Luff, Peter

      Mr. Laurence Robertson.

      368

      NOES

      Ainger, Nick

      Dean, Mrs Janet

      Ainsworth, Bob (Cov'try NE)

      Dhanda, Parmjit

      Alexander, Douglas

      Dismore, Andrew

      Allen, Graham

      Dobbin, Jim

      Anderson, Rt Hon Donald

      Donohoe, Brian H

      (Swansea E)

      Doran, Frank

      Armstrong, Rt Hon Ms Hilary

      Dowd, Jim

      Atkins, Charlotte

      Drew, David

      Austin, John

      Drown, Ms Julia

      Bailey, Adrian

      Eagle, Angela (Wallasey)

      Baird, Vera

      Eagle, Maria (L'pool Garston)

      Banks, Tony

      Edwards, Huw

      Barnes, Harry

      Efford, Clive

      Barron, Kevin

      Ellman, Mrs Louise

      Beard, Nigel

      Ennis, Jeff

      Beckett, Rt Hon Margaret

      Farrelly, Paul

      Bell, Stuart

      Field, Rt Hon Frank (Birkenhead)

      Bennett, Andrew

      Fisher, Mark

      Berry, Roger

      Fitzpatrick, Jim

      Betts, Clive

      Fitzsimons, Mrs Lorna

      Blackman, Liz

      Flint, Caroline

      Blizzard, Bob

      Flynn, Paul

      Boateng, Rt Hon Paul

      Follett, Barbara

      Borrow, David

      Foster, Michael (Worcester)

      Bradley, Rt Hon Keith (Withington)

      Foster, Michael Jabez (Hastings)

      Bradshaw, Ben

      Foulkes, George

      Brennan, Kevin

      Gapes, Mike

      Brown, Rt Hon Nicholas

      Gardiner, Barry

      (Newcastle E & Wallsend)

      Gerrard, Neil

      Bryant, Chris

      Gilroy, Linda

      Buck, Ms Karen

      Goggins, Paul

      Burden, Richard

      Griffiths, Jane (Reading E)

      Burgon, Colin

      Griffiths, Nigel (Edinburgh S)

      Burnham, Andy

      Grogan, John

      Caborn, Rt Hon Richard

      Hain, Rt Hon Peter

      Cairns, David

      Hall Mike (Weaver Vale)

      Campbell, Alan (Tynemouth)

      Hanson, David

      Caplin, Ivor

      Harris, Tom (Glasgow Cathcart)

      Casale, Roger

      Havard, Dai

      Challen, Colin

      Henderson, Doug (Newcaste N)

      Clapham, Michael

      Henderson, Ivan (Harwich)

      Clark, Mrs Helen (Peterborough)

      Hendrick, Mark

      Clark, Paul (Gillingham)

      Hepburn, Stephen

      Clarke, Rt Hon Tom (Coatbridge)

      Heyes, David

      Clarke, Tony (Northampton S)

      Hill, Keith

      Clwyd, Ann

      Hinchliffe, David

      Coaker, Vernon

      Hoey, Kate

      Coffey, Ms Ann

      Hood Jimmy

      Cohen, Harry

      Hoon, Rt Hon Geoffrey

      Coleman, Iain

      Hope, Phil

      Connarty, Michael

      Hopkins, Kelvin

      Cook, Rt Hon Robin (Livingston)

      Howarth, Rt Hon Alan (Newport E)

      Cooper, Yvette

      Howarth, George (Knowsley N)

      Corbyn, Jeremy

      Hoyle, Lindsay

      Corston, Jean

      Hughes, Kevin (Doncaster N)

      Cousins, Jim

      Hurst, Alan

      Cranston, Ross

      Hutton, Rt Hon John

      Crausby, David

      Iddon, Dr Brian

      Cruddas, Jon

      Illsley, Eric

      Cryer, John (Hornchurch)

      Irranca-Davies, Huw

      Cunningham, Jim (Cov'try S)

      Jackson, Helen (Hillsborough)

      Curtis-Thomas, Mrs Claire

      Jamieson, David

      Dalyell, Tam

      Jenkins, Brian

      Darling, Rt Hon Alistair

      Johnson, Alan (Hull W & Hessle)

      Davey, Valerie (Bristol W)

      Jones, Helen (Warrington N)

      David, Wayne

      Jones, Jon Owen (Cardiff C)

      Davidson, Ian

      Jones, Kevan (N Durham)

      Davies, Rt Hon Denzil (Llanelli)

      Jones, Lynne (Selly Oak)

      Davies, Geraint (Croydon C)

      Joyce, Eric

      Davis, Rt Hon Terry

      Kaufman, Rt Hon Gerald

      (B'ham Hodge H)

      Keeble, Ms sally

      Kelly, Ruth

      Kemp, Fraser

      Khabra, Piara S

      Kidney, David

      369

      King, Ms Oona (Bethnal Green)

      Quinn, Lawrie

      Knight, Jim (S Dorset)

      Rammell, Bill

      Kumar, Dr Ashok

      Rapson, Syd

      Ladyman, Dr Stephen

      Reed, Andy (Loughborough)

      Lammy, David

      Reid, Rt Hon Dr John (Hamilton N)

      Lawrence, Mrs Jackie

      Robertson, John

      Laxton, Bob

      (Glasgow Anniesland)

      Lazarowicz, Mark

      Roche, Mrs Barbara

      Lepper, David

      Rooney, Terry

      Leslie, Christopher

      Ross, Ernie

      Levitt, Tom

      Roy, Frank

      Lewis, Terry (Worsley)

      Ruddock, Joan

      Linton, Martin

      Russell, Ms Christine (Chester)

      Lloyd, Tony

      Ryan, Joan

      Love, Andrew

      Salter, Martin

      Lucas, Ian

      Sawford, Phil

      McAvoy, Thomas

      Sedgemore, Brian

      McCabe, Stephen

      Sheridan, Jim

      McDonagh, Siobhain

      Simpson, Alan (Nottingham S)

      MacDonald, Calum

      Singh, Marsha

      McDonnell, John

      Skinner, Dennis

      MacDougall, John

      Smith, Rt Hon Andrew (Oxford E)

      McFall, John

      Smith, Angela (Basildon)

      McGuire, Mrs Anne

      Smith, Rt Hon Chris (Islington S)

      McIsaac, Shona

      Smith, Jacqui (Redditch)

      McKechin, Ann

      Smith, John (Glamorgan)

      Mackinlay, Andrew

      Smith, Llew (Blaenau Gwent)

      McNamara, Kevin

      Soley, Clive

      Mactaggart, Fiona

      Southworth, Helen

      McWalter, Tony

      Squire, Rachel

      McWilliam, John

      Steinberg, Gerry

      Mahon, Mrs Alice

      Stevenson, George

      Mallaber, Judy

      Stinchcombe, Paul

      Mandelson, Rt Hon Peter

      Stoate, Dr Howard

      Marsden, Gordon (Blackpool S)

      Strang, Rt Hon Dr Gavin

      Marshall, David (Shettleston)

      Stringer, Graham

      Marshall, Jim (Leicester S)

      Sutcliffe, Gerry

      Marshall-Andrews, Robert

      Taylor, Rt Hon Ann (Dewsbury)

      Martlew, Eric

      Meale, Alan

      Taylor, Ms Dari (Stockton S)

      Merron, Gillian

      Taylor, David (NW Leics)

      Michael, Rt Hon Alun

      Thomas, Gareth (Clwyd W)

      Miliband, David

      Thomas, Gareth R (Harrow W)

      Miller, Andrew

      Timms, Stephen

      Mitchell, Austin (Gt Grimsby)

      Todd, Mark

      Moffatt, Laura

      Touhig, Don

      Mole, Chris

      Trickett, Jon

      Moran, Margaret

      Turner, Dennis (Wolverh'ton SE)

      Morris, Rt Hon Estelle

      Turner, Dr Desmond (Kemptown)

      Mountford, Kali

      Turner, Neil (Wigan)

      Mullin, Chris

      Twigg, Derek (Halton)

      Murphy, Jim (Eastwood)

      Twigg, Stephen (Enfield)

      Norris, Dan

      Tynan, Bill

      O'Brien, Bill (Normanton)

      Vis, Dr Rudi

      O'Brien, Mike (N Warks)

      Walley, Ms Joan

      O'Hara, Edward

      Ward, Ms Claire

      Olner, Bill

      Watson, Tom

      O'Neill, Martin

      White, Brian

      Palmer, Dr Nick

      Wills, Michael

      Pearson, Ian

      Wilson, Brian

      Picking, Anne

      Winnick, David

      Pickthall, Colin

      Winterton, Ms Rosie (Doncaster C)

      Pike, Peter

      Woodward, Shaun

      Plaskitt, James

      Woolas, Phil

      Pond, Chris

      Wray, James

      Pound, Stephen

      Wright, Anthony D (Gt Yarmouth)

      Prentice, Ms Bridget (Lewisham E)

      Wright, David (Telford)

      Prentice, Gordon (Pendle)

      Wright, Tony (Cannock)

      Prosser, Gwyn

      Wyatt, Derek

      Purchase, Ken

      Tellers for the Noes:

      Purnell, James

      Mr. Tony McNulty and

      Mr. John Heppell.

      Question Accordingly negatived
      6.15 pm
      Mr. Flight: The next amendment due for discussion, Mr. Gale, was to be amendment No. 3. However, given the amount of time that the Committee spent on the previous group of amendments, we do not want to put amendment No. 3 to the vote. It was designed as an alternative to the previous amendment, and would have halved the rate of the tax. It would have provided an opportunity to establish the correctness of the Opposition's argument that there is a risk to investment, especially given the outlook for oil prices and the nature of the UK industry. As we will have a chance to vote on other amendments, and on whether the clause should stand part of the Bill, I shall not move amendment No. 3.
      Malcolm Bruce: I beg to move amendment No. 29, in page 64, line 2, leave out from "which" to "would" in line 3.
      The Temporary Chairman: With this, it will be convenient to discuss amendment No. 28, in page 64, line 2, leave out from beginning to end of line 17 on page 65.
      Malcolm Bruce: The problem dealt with by the amendment was alluded to earlier in the debate.
      The first matter on which we wish to probe the Economic Secretary is why the Government argue that the costs of financing developments should be excluded from the calculation. I am sure that the Minister is aware that the presumption that all oilfield developments are financed as equity is a long way from the truth. Many companies, especially smaller ones, finance their development by borrowing. That is a legitimate part of the cost of developing the fields, and if it is not allowed it will substantially alter the profile, the rate of return and even the viability of the developments. The Economic Secretary must explain why that should be the case.
      Let me anticipate a possible answer. The hon. Lady may say that, using such pieces of information, companies could present a case that amounts to a spurious tax relief. The counter argument is that there is also a real cost. The relationship between the oil and gas industry and the Government is quite intimate. Despite the problems that have been alluded to in recent debates and the breakdown of confidence and trust, the reality is that relatively small companies deal daily with the Treasury and the Department of Trade and Industry. It seems perfectly within the ability and capacity of the Government and the industry to work out a formula that achieves a fair and proper balance. Indeed, the Economic Secretary has been keen to address the question of fairness.
      When the corporation tax rate is running at 30 per cent., financing charges are deductible —but not, apparently, against the extra 10 per cent. of a windfall tax. It has been put to us that in some cases the debt finance could amount to 70 per cent. of the project cost. Clearly, it is a significant factor, and simply to discount it could lead to considerable difficulties and destroy the viability of some projects.
      It has been suggested that some of the smaller companies are having difficulties highlighting the problem that the Government's proposals present, because if they make a public indication of the difficulties imposed it could have an adverse effect on their share price or,

      371
      if they are not floated, on the financing that they wish to secure. Therefore, to some extent, they feel unable to speak out as forcefully as they might wish.
      The point about United States companies has already been made. If this is not allowable, they could effectively be caught twice as it may not be a legitimate charge or tax. However, the Economic Secretary has indicated that the Government intend to address that issue.
      The reality is that for the very companies and projects that the Government claim they wish to encourage, the costs are real and are financed from external sources. I suggest that if the Government feel uncomfortable about opening up total allowance, they could agree on a notional allowance. They could accept that borrowing and debt finance are legitimate and negotiate a deal on which both parties could agree. The Minister will acknowledge that that is not abnormal practice; it has been done in many other sectors.
      I hope that the Minister will accept that the amendment, which may not be perfectly phrased, is designed to address what is perceived by companies in the industry as a real problem. If it is not addressed, it will seriously undermine the very objective that the Government claim to be pursuing—namely, to encourage small companies to develop some of the more innovative fields that they do not have the equity finance internally to develop but can develop in partnership with financial companies. I hope that the Economic Secretary will accept that this is a serious and real issue to which the industry needs answers.
      Mr. Blizzard: I want to emphasise the point made by the hon. Member for Gordon (Malcolm Bruce). The presence of small companies working in the North sea province is most important; they are the key to making the most of the mature stage of its development.
      As we know, finance charges form a major part of the exposure of small companies. My hon. Friend the Economic Secretary made it clear that much study has been devoted to examining individual fields. I hope that we can identify the companies and modify the measure to address their problems. We do not want to put off such companies; we want to attract them.
      We heard earlier that smaller, new entrant companies would not necessarily be able to benefit fully from the 100 per cent. capital allowances, as they have no tax against which to offset them. We should consider the matter seriously and try to find a way of allowing financing costs to be offset against the supplementary charge for the smaller companies, which hold the key to the future investment and success in the North sea that we all want.
      Mr. Salmond: Several ideas were put to the Economic Secretary earlier. She did not deal with them at the time, but the debate on these amendments will give her the opportunity to do so.
      It was argued that some relief for financing purposes would encourage development. The Economic Secretary has already heard the figures for exploration and appraisal drilling in the North sea, which are a matter of huge concern. The figures went down by more than 50 per cent. over the past five years, despite the fact that the success rate—25 per cent.—is good. That must be a substantial argument for some additional uplift for exploration and appraisal drilling. I am sure that the hon. Lady will agree
      372
      that the future of the province in 10 to 20 years will depend on the exploration or appraisal drilling that is being carried out—or not—at present.
      It was also argued that there should be some additional benefit for incremental investments. Those are positive ideas to modify the impact of the tax changes.
      The hon. Lady told us that the tax changes would have a positive impact. I am sure that she wants to listen to these points, as she will soon be replying to them. She cited a mysterious analysis, which has been produced but cannot be published. In fact, it is so secret that it was not available to the Secretary of State for Scotland when she spoke yesterday about minimising the impact of the changes—she thought that they would have a negative effect.
      Why is the analysis so secret that it remains in the Treasury? Have its benefits been shared with other Ministers? If so, would not the correct way forward be to publish the analysis, hold genuine consultations and debate, and then decide what to do about the taxation regime? The Government say that they have taken that course in respect of other taxation changes, so as this matter is of such importance they should adopt it in this case.
      If the Economic Secretary is correct and the tax changes are so positive, the Government would attract massive support for their position during that debate. However, if we are correct in suspecting that £1 billion a year cannot be taken from the North sea industry to any beneficial effect, the hon. Lady will have a great deal to worry about in that debate.
      I have a question for the hon. Lady about the financing costs. Am I right to believe that, under current taxation proposals, if an oil company chooses to transport gas through the FLAGS system to St. Fergus, it will be taxed at 70 per cent.; if it goes to Bacton, it will be taxed at 40 per cent.; and if it goes to Zeebrugge—which, as she knows, is in the Netherlands —it will be taxed at 30 per cent? Is that the current situation? If so, can she justify it? How will it benefit the Scottish economy, the English economy and the economy of the Netherlands?
      Are the Government trying to encourage companies to bypass Scotland—even to bypass Bacton—to go to Zeebrugge and then transport their gas through the interconnector? It is a simple point; the hon. Lady can either confirm or refute it. If she confirms it, no doubt she will be able to give us an explanation.
      We have had an interesting debate on a matter of enormous importance to many of our constituents. The Economic Secretary will forgive me when I say that I was not persuaded by a secret analysis that cannot be published or discussed, but that somehow shows that the industry will benefit from taking so much money out of it.
      6.30 pm
      If it is true that the tax changes will have a positive impact, why were they withdrawn when the oil price was low? Surely if the changes were positive, the Economic Secretary should have introduced them when the oil price was low in order to boost the industry. The oil industry knows and workers in the industry know that she is engaged in levitation economics. It is simply impossible

      373
      to take out so much without people suffering as a result, and we should have a debate and consultation to find out how many jobs will be lost.
      Sir Robert Smith: The hon. Member for Banff and Buchan (Mr. Salmond) makes the valid point that the two sides of A4 placed in the Library do not provide hon. Members with a substantial reassurance of the foundation of the Treasury's analysis. There must be some greater analysis that can be placed in the Library without breaching confidentiality.
      The analysis presented in the table that we have betrays an assumption based on equity financing. Has any analysis been conducted based on debt financing? We understand that that there can be up to 70 per cent. debt financing, especially for smaller companies.
      On ensuring that the right debts are attributed to the right income so that the Treasury gets its share, the briefing that we have all received from the industry suggests that the Oil Taxation Office already has sufficient powers to audit allowable charges and various methods to protect against excessive debt, which are outlined in the OTO ring-fence corporation tax manual. Consequently, the industry does not believe that there is any reason to disallow this measure.
      A point was made earlier about Kerr McGee, which has also written to me, and I have dealt with the company before. The argument seems to be that, because of the specific measure that we seek to delete under the amendment, the United States authorities do not recognise this tax as being allowable for double taxation relief. Although the Economic Secretary will approach the Americans, I am sure that the United States will not necessarily change its tax regime, so it might be more sensible to try to accommodate financing costs in handling and assessing this tax. I understand that France may similarly treat the tax as not being allowable for double taxation relief because of the financing charges.
      I should like the Economic Secretary to address those points, especially the concern that we all feel about the need for far greater openness and clarity so that the Treasury's analysis is put in the public domain to reassure our constituents, because we are concerned about their jobs and future investment.
      Ruth Kelly: I do not think that, in response to some of these debates, I could have been more open and transparent than I have been this evening. I should like to concentrate on the amendments on financing costs, which we have not had an opportunity to discuss so far tonight, rather than to reopen previous debates, which I covered in substantial detail earlier this evening. However, perhaps I should start by answering the point about pipelines made by the hon. Member for Banff and Buchan (Mr. Salmond), who speaks for the Scottish National party.
      I freely admit that different pipelines have different tax treatments. That is due to changes made by the previous Conservative Government. I admit that the FLAGS pipeline is taxed at a higher rate, but full tax relief is
      374
      available on the cost of its construction—also at a higher rate. The comparisons are not simple; these are complicated reforms.
      Mr. Salmond rose—
      Sir Robert Smith rose—
      Ruth Kelly: I do not want to reopen previous debates; I have clearly made the case for the changes before us tonight. I should like to turn to the amendment on financing costs and consider whether such costs should be taken into account in calculating the profits base for the supplementary charge. If we were to take account of those costs, it would allow companies to manipulate their borrowing to minimise the effect of the charge. [Interruption.] There is some scepticism among those on the Liberal Democrat Front Bench, but I put it to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) and other hon. Members that oil companies have access to sophisticated tax planning advice.
      One need not be a tax planner to realise that financing costs have to be disallowed if the supplementary charge is to work effectively; otherwise it would clearly be in companies' interests to arrange their affairs so that all their North sea activities were funded by borrowing, for which they could claim relief against a 40 per cent. tax rate, while their other activities—taxed at 30 per cent.—were funded by capital. I shall expand on those comments as I progress.
      If we allowed financing costs to reduce the profits subject to the supplementary charge we would have to increase the rate of the charge to ensure that the nation received a fair share of the economic rent derived from the North sea. I cannot say what that increased rate might be; it would depend on how far individual companies were able or chose to arrange their affairs to reduce the impact of a 10 per cent. rate. Clearly, however, raising the rate would penalise those companies without the scope to manipulate their borrowings. A complete disallowance of financing costs for the supplementary charge is much fairer.
      I understand the points made by the hon. Member for Gordon (Malcolm Bruce), my hon. Friend the Member for Waveney (Mr. Blizzard) and the hon. Member for Banff and Buchan that debt relief for financing costs might be more of a burden for some smaller companies. An effective measure is needed, however, to prevent erosion of the tax base. It would not be feasible for us to try to differentiate one type of company from another. We are trying to simplify the oil taxation regime.
      Sir Robert Smith rose—
      Ruth Kelly: I shall continue my argument for a moment.
      Companies will still be able to offset 75 per cent. of their North sea borrowing against tax, and with the 100 per cent. tax relief for capital expenditure, the package should still encourage investment by small and large companies.
      Some people who are concerned about this issue have suggested alternatives. One is to try to apportion all the financing costs of a group between North sea and non-North sea activities rather than deny costs altogether.

      375
      There would not be a case, however, to apportion those costs purely for the supplementary charge and not for corporation tax generally. It has not been suggested to me or my colleagues that companies would want such a rule to apportion financing costs.
      Mr.Flight: One aspect that I raised was that, in order for the supplementary charge, should it go ahead, to count for double taxation relief, it would be necessary to allow financing costs. It would be a disaster if it were not allowable, particularly for United States companies. As a practical matter, therefore, the Government may be forced to use a regime that permits financing costs to be deductible in some way.
      Ruth Kelly: I said earlier in the debate that we listened to the industry and whether it had concerns about the double taxation treaty and the interpretation of it by our treaty partners. We remain committed to listening to those concerns. If there are real issues, we shall take them up with the United States authorities, or, if more general concerns are expressed, we shall deal with it in other ways. I would not want to rule that out altogether. We have opted, however, for simplicity and for a measure that will avoid tax evasion. What we have done is fair and simple. I have not yet heard a real call from the industry for an alternative. If I do, however, I shall listen to it. We must introduce an effective and simple regime for the future, which will generate investment, have a positive impact on jobs and raise a fair share of revenue for the future.
      Sir Robert Smith: Will the Economic Secretary make sure that her colleagues who are no longer in the Chamber, but who were earlier praying in aid the fact that the changes would benefit smaller companies the most, read what she has said? As financing charges are being excluded, the smaller companies, which rely on borrowing, will suffer more under this part of the clause.
      Ruth Kelly: I do not accept that. Although I accept that small companies may have a particular issue with financing costs, I do not accept that the Budget is in any way less good for small companies than it is for larger companies. The hon. Gentleman must also take into account all the other changes for small companies that we have introduced in the Budget, including the reduction in the corporation tax rate.
      Overall, small companies will not be particularly disadvantaged by the change. However, I have been open with the Committee and said that there may be issues involved. If the industry has concerns, we will listen to them. We are committed to working with the industry to get the supplementary charge recognised under double taxation treaties. If there are concerns, we will act on them if possible.
      Mr.Salmond: I think that the Economic Secretary has now conceded the point on differential taxation for pipelines. She may blame the Tories for the outrageous 70 per cent. tax on FLAGS at St. Fergus, but the differential between Bacton and Zeebrugge is created by this Budget. Now that it has been drawn to her attention, will she, in the interests of fairness and creating a level
      376
      playing field, undertake to do something about not just the Bacton-Zeebrugge differential but the tax on tariff income going through the FLAGS line at St. Fergus?
      Ruth Kelly: I have dealt in detail with the specific point that the hon. Gentleman raises. If he wishes to raise other issues with me, I can deal with them in writing.
      I think that I have made the point fairly. We need to raise a fair share of revenue from North sea oil and introduce a system of taxation that is simple, transparent and will promote investment and jobs over the longer term.
      Malcolm Bruce: I am grateful that the Economic Secretary has acknowledged that there is a problem that she is willing to address. However, I am disappointed by the way in which she dismisses a real and serious concern that will materially affect small companies.
      I make no apology for using the UKOOA brief in this context, but we are told that 70 per cent. of a project's development funding could come from debt finance. To make no allowance for that would clearly have a devastating effect on some projects. Indeed, it would make them completely non-viable or, at least, non-viable for those companies that have to finance the projects in that way. In those circumstances, it is strange that the Economic Secretary regards her proposals as fair. They are fair for the large companies that can finance the projects from equity finance.
      I accept the Economic Secretary's remarks that there is a worry that companies will change their method of financing to qualify for the tax relief. However, if the Oil Taxation Office has the power—on the basis of the detailed analysis that she gave in the previous debate, the Treasury claims to understand how oilfield financing operates—it should be possible to reach a conclusion that would allow at least some of the costs to be calculated.
      Although I welcome the fact that the Economic Secretary has acknowledged that there might be a problem and that, if the industry can persuade her, the Government might adjust the scheme, the fact that she is not minded to do so means that the amendment is necessary. I ask the Committee to support it.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 160, Noes 276.

      Division No. 230]

      [6.43 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Burnside, David

      Ancram, Rt Hon Michael

      Burt, Alistair

      Atkinson, David (Bour'mth E)

      Butterfill, John

      Atkinson, Peter (Hexham)

      Calton, Mrs Patsy

      Bacon, Richard

      Cameron, David

      Baldry, Tony

      Cash, William

      Barker, Gregory

      Chapman, Sir Sydney

      Baron, John

      (Chipping Barnet)

      Barrett, John

      Chidgey, David

      Beggs, Roy

      Chope, Christopher

      Bellingham, Henry

      Clifton-Brown, Geoffrey

      Bercow, John

      Cormack, Sir Patrick

      Blunt, Crispin

      Curry, Rt Hon David

      Boswell, Tim

      Davey, Edward (Kingston)

      Brady, Graham

      Davies, Quentin (Grantham)

      Brazier, Julian

      Djanogly, Jonathan

      Breed, Colin

      Dodds, Nigel

      Browning, Mrs Angela

      Doughty, Sue

      Bruce, Malcolm

      Duncan, Peter (Galloway)

      Burns, Simon

      Ewing, Annabelle

      377

      Fabricant, Michael

      Murrison, Dr Andrew

      Fallon, Michael

      O'Brien, Stephen (Eddisbury)

      Field, Mark (Cities of London)

      Öpik, Lembit

      Flight, Howard

      Osborne, George (Tatton)

      Flook, Adrian

      Page, Richard

      Forth, Rt Hon Eric

      Paice, James

      Foster, Don (Bath)

      Paterson, Owen

      Fox, Dr Liam

      Price, Adam

      Francois, Mark

      Prisk, Mark

      Gibb, Nick

      Pugh, Dr John

      Gillan, Mrs Cheryl

      Randall, John

      Gray, James

      Reid, Alan (Argyll & Bute)

      Grayling, Chris

      Robathan, Andrew

      Green, Damian (Ashford)

      Robertson, Angus (Moray)

      Green, Matthew (Ludlow)

      Robertson, Hugh (Faversham)

      Grieve, Dominic

      Robertson, Laurence (Tewk'b'ry)

      Hague, Rt Hon William

      Robinson, Peter (Belfast E)

      Hammond, Philip

      Rosindell, Andrew

      Harris, Dr Evan (Oxford W)

      Ruffley, David

      Hawkins, Nick

      Russell, Bob (Colchester)

      Hayes, John

      Salmond, Alex

      Heald, Oliver

      Sayeed, Jonathan

      Heath, David

      Shephard, Rt Hon Mrs Gillian

      Heathcoat-Amory, Rt Hon David

      Simmonds, Mark

      Hendry, Charles

      Simpson, Keith (Mid-Norfolk)

      Hoban, Mark

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

      Holmes, Paul

      Soames, Nicholas

      Horam, John

      Spicer, Sir Michael

      Howard, Rt Hon Michael

      Spink, Bob

      Howarth, Gerald (Aldershot)

      Stanley, Rt Hon Sir John

      Hughes, Simon (Southwark N)

      Streeter, Gary

      Hunter, Andrew

      Stunell, Andrew

      Jack, Rt Hon Michael

      Sawyne, Desmond

      Jenkin, Bernard

      Swire, Hugo

      Johnson, Boris (Henley)

      Syms, Robert

      Keetch, Paul

      Tapsell, Sir Peter

      Key, Robert

      Taylor, John (Solihull)

      Laing, Mrs Eleanor

      Taylor, Matthew (Truro)

      Lamb, Norman

      Thomas, Simon (Ceredigion)

      Lansley, Andrew

      Trend, Michael

      Laws, David

      Turner, Andrew (Isle of Wight)

      Leigh, Edward

      Tyrie, Andrew

      Letwin, Oliver

      Viggers, Peter

      Lewis, Dr Julian (New Forest E)

      Walter, Robert

      Liddell-Grainger, Ian

      Waterson, Nigel

      Lilley, Rt Hon Peter

      Watkinson, Angela

      Llwyd, Elfyn

      Weir, Michael

      Loughton, Tim

      Whittingdale, John

      Luff, Peter

      Wiggin, Bill

      McIntosh, Miss Anne

      Wilkinson, John

      Willetts, David

      MacKay, Rt Hon Andrew

      Willetts, Hywel (Caernarfon)

      McLoughlin, Patrick

      Willis, Phil

      Malins, Humfrey

      Wilshire, David

      Maples, John

      Winterton, Mrs Ann (Congleton)

      Marsden, Paul (Shrewsbury)

      Wishart, Pete

      Mates, Michael

      Yeo, Tim

      Mawhinney, Rt Hon Sir Brian

      Young, Rt Hon Sir George

      May, Mrs Theresa

      Younger-Ross, Richard

      Mercer, Patrick

      Mitchell, Andrew (Sutton Coldfield)

      Tellers for the Ayes:

      Moore, Michael

      Mr. Adrian Sanders and

      Moss, Malcolm

      Mrs. Annette L. Brooke.

      NOES

      Ainger, Nick

      Barnes, Harry

      Ainsworth, Bob (Cov'try NE)

      Barron, Kevin

      Alexander, Douglas

      Beard, Nigel

      Allen, Graham

      Bell, Stuart

      Anderson, Rt Hon Donald

      Bennett, Andrew

      (Swansea E)

      Berry, Roger

      Armstrong, Rt Hon Ms Hilary

      Best, Harold

      Atkins, Charlotte

      Betts, Clive

      Austin, John

      Blackman, Liz

      Bailey, Adrian

      Blizzard, Bob

      Banks, Tony

      Boateng, Rt Hon Paul

      378

      Borrow, David

      Goggins, Paul

      Bradley, Rt Hon Keith (Withington)

      Griffiths, Jane (Reading E)

      Bradshaw, Ben

      Griffiths, Nigel (Edinburgh S)

      Brennan, Kevin

      Grogan, John

      Brown, Rt Hon Nicholas

      Hain, Rt Hon Peter

      (Newcastle E & Wallsend)

      Hall, Mike (Weaver Vale)

      Bryant, Chris

      Hanson, David

      Buck, Ms Karen

      Harris, Tom (Glasgow Cathcart)

      Burden, Richard

      Havard, Dai

      Burgon, Colin

      Henderson, Doug (Newcastle N)

      Burnham, Andy

      Henderson, Ivan (Harwich)

      Caborn, Rt Hon Richard

      Hendrick, Mark

      Cairns, David

      Hepburn, Stephen

      Campbell, Alan (Tynemouth)

      Hewitt, Rt Hon Ms Patricia

      Campbell, Mrs Anne (C'bridge)

      Heyes, David

      Caplin, Ivor

      Hill, Keith

      Casale, Roger

      Hinchliffe, David

      Challen, Colin

      Hoey, Kate

      Clapham, Michael

      Hood, Jimmy

      Clark, Mrs Helen (Peterborough)

      Hoon, Rt Hon Geoffrey

      Clark, Paul (Gillingham)

      Hope, Phil

      Clarke, Rt Hon Tom (Coatbridge)

      Hopkins, Kelvin

      Clarke, Tony (Northampton S)

      Howarth, Rt Hon Alan (Newport E)

      Clwyd, Ann

      Howarth, George (Knowsley N)

      Coaker, Vernon

      Hoyle, Lindsay

      Coffey, Ms Ann

      Hughes, Kevin (Doncaster N)

      Coleman, Iain

      Hurst, Alan

      Connarty, Michael

      Hutton, Rt Hon John

      Cook, Rt Hon Robin (Livingston)

      Iddon, Dr Brian

      Cooper, Yvette

      Illsley, Eric

      Corbyn, Jeremy

      Irranca-Davies, Huw

      Corston, Jean

      Jackson, Helen (Hillsborough)

      Cousins, Jim

      Jamieson, David

      Cranston, Ross

      Jenkins, Brian

      Crausby, David

      Jones, Helen (Warrington N)

      Cruddas, Jon

      Jones, Jon Owen (Cardiff C)

      Cryer, John (Hornchurch)

      Jones, Kevan (N Durham)

      Cunningham, Jim (Cov'try S)

      Jones, Lynne (Selly Oak)

      Curtis-Thomas, Mrs Claire

      Joyce Eric

      Dalyell, Tam

      Kaufman, Rt Hon Gerald

      Darling, Rt Hon Alistair

      Keeble, Ms Sally

      Davey, Valerie (Bristol W)

      Kelly, Ruth

      David, Wayne

      Kemp, Fraser

      Davidson, Ian

      Khabra, Piara S

      Davies, Rt Hon Denzil (Llanelli)

      Kidney, David

      Davies, Geraint (Croydon C)

      King, Ms Oona (Bethnal Green)

      Davis, Rt Hon Terry

      Knight, Jim (S Dorset)

      (B'ham Hodge H)

      Kumar, Dr Ashok

      Dean, Mrs Janet

      Ladyman, Dr Stephen

      Dhanda, Parmjit

      Lammy, David

      Dismore, Andrew

      Lawrence, Mrs Jackie

      Dobbin, Jim

      Laxton, Bob

      Donohoe, Brian H

      Lazorowicz, Mark

      Dowd, Jim

      Lepper, David

      Drew, David

      Leslie, Christopher

      Drown, Ms Julia

      Levitt, Tom

      Eagle, Angela (Wallasey)

      Linton, Martin

      Eagle, Maria (L'pool Garston)

      Lloyd, Tony

      Edwards, Huw

      Love, Andrew

      Efford, Clive

      McAvoy, Thomas

      Ellman, Mrs Louise

      McCabe, Stephen

      Ennis, Jeff

      McDonagh, Siobhain

      Farrelly, Paul

      MacDonald, Calum

      Field, Rt Hon Frank (Birkenhead)

      McDonnell, John

      Fisher, Mark

      MacDougall, John

      Fitzpatrick, Jim

      McFall, John

      Fitzsimons, Mrs Lorna

      McGuire, Mrs Anne

      Flint, Caroline

      McIsaac, Shona

      Flynn, Paul

      McKechin, Ann

      Follett, Barbara

      MacKinlay, Andrew

      Foster, Michael (Worcester)

      McNamara, Kevin

      Foster, Michael Jabez (Hastings)

      Mactaggart, Fiona

      Foulkes, George

      McWalter, Tony

      Gapes, Mike

      McWilliam, John

      Gerrard, Neil

      Mahon, Mrs Alice

      Gilroy, Linda

      Mallaber, Judy

      379

      Mandelson, Rt Hon Peter

      Simpson, Alan (Nottingham S)

      Marsden, Gordon (Blackpool S)

      Singh, Marsha

      Marshall, David (Shettleston)

      Skinner, Dennis

      Marshall, Jim (Leicester S)

      Smith, Rt Hon Andrew (Oxford E)

      Marshall-Andrews, Robert

      Smith, Angela (Basildon)

      Martlew, Eric

      Smith, Rt Hon Chris (Islington S)

      Meale, Alan

      Smith, Jacqui (Redditch)

      Merron, Gillian

      Smith, John (Glamorgan)

      Michael, Rt Hon Alun

      Smith, Llew (Blaenau Gwent)

      Miliband, David

      Soley, Clive

      Miller, Andrew

      Southworth, Helen

      Mitchell, Austin (Gt Grimsby)

      Spellar, Rt Hon John

      Moffatt, Laura

      Squire, Rachel

      Mole, Chris

      Steinberg, Gerry

      Moonie, Dr Lewis

      Stevenson, George

      Moran, Margaret

      Stinchcombe, Paul

      Mountford, Kali

      Stoate, Dr Howard

      Mullin, Chris

      Strang, Rt Hon Dr Gavin

      Murphy, Jim (Eastwood)

      Stringer, Graham

      Norris, Dan

      Sutcliffe, Gerry

      O'Brien, Bill (Normanton)

      Taylor, Rt Hon Ann (Dewsbury)

      O'Brien, Mike (N Warks)

      Taylor, Ms Dari (Stockton S)

      O'Hara, Edward

      Taylor, David (NW Leics)

      Olner, Bill

      Thomas, Gareth R (Harrow W)

      O'Neill, Martin

      Timms, Stephen

      Palmer, Dr Nick

      Todd, Mark

      Pearson, Ian

      Touhig, Don

      Picking, Anne

      Trickett, Jon

      Pickthall, Colin

      Turner, Dennis (Wolverh'ton SE)

      Pike, Peter

      Turner, Dr Desmond (Kemptown)

      Plaskitt, James

      Turner, Neil (Wigan)

      Pond, Chris

      Twigg, Derek (Halton)

      Pound, Stephen

      Twigg, Stephen (Enfield)

      Prentice, Ms Bridget (Lewisham E)

      Tynan, Bill

      Prentice, Gordon (Pendle)

      Vis, Dr Rudi

      Prosser, Gwyn

      Walley, Ms Joan

      Purchase, Ken

      Ward, Ms Claire

      Purnell, James

      Watson, Tom

      Quinn, Lawrie

      White, Brian

      Rammell, Bill

      Whitehead, Dr Alan

      Rapson, Syd

      Wills, Michael

      Reed, Andy (Loughborough)

      Wilson, Brian

      Reid, Rt Hon Dr John (Hamilton N)

      Winnick, David

      Robertson, John

      Winterton, Ms Rosie (Doncaster C)

      (Glasgow Anniesland)

      Woodward, Shaun

      Roche, Mrs Barbara

      Woolas, Phil

      Rooney, Terry

      Wray, James

      Ross, Ernie

      Wright, Anthony D (Gt Yarmouth)

      Roy, Frank

      Wright, David (Telford)

      Russell, Ms Christine (Chester)

      Wright, Tony (Cannock)

      Ryan, Joan

      Wyatt, Derek

      Salter, Martin

      Sawford, Phil

      Tellers for the Noes:

      Sedgemore, Brian

      Mr. Tony McNulty and

      Sheridan, Jim

      Mr. John Heppell.

      Question accordingly negatived.
      Amendment proposed: No. 33, page 65, line 17, at end add—
      '(11) This section shall come into force on such day as the Treasury may by order made by statutory instrument appoint, but no such order shall be made until an economic impact assessment has been made of the effect of the changes on activity and employment in the oil industry in the North Sea.'.—[Mr. Salmond.]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 155, Noes 272.

      Division No. 231]

      [6.55 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Baldry, Tony

      Atkinson, David (Bour'mth E)

      Barker, Gregory

      Atkinson, Peter (Hexham)

      Baron, John

      Bacon, Richard

      Barrett, John

      380

      Beggs, Roy

      Lilley, Rt Hon Peter

      Bellingham, Henry

      Llwyd, Elfyn

      Bercow, John

      Loughton, Tim

      Blunt, Crispin

      Luff, Peter

      Boswell, Tim

      McIntosh, Miss Anne

      Brady, Graham

      MacKay, Rt Hon Andrew

      Brazier, Julian

      McLoughlin, Patrick

      Breed, Colin

      Malins, Humfrey

      Brooke, Mrs Annette L

      Maples, John

      Browning, Mrs Angela

      Marsden, Paul (Shrewsbury)

      Bruce, Malcolm

      Mawhinney, Rt Hon Sir Brian

      Burns, Simon

      May, Mrs Theresa

      Burnside, David

      Mercer, Patrick

      Burt, Alistair

      Mitchell, Andrew (Sutton Coldfield)

      Butterfill, John

      Moore, Michael

      Calton, Mrs Patsy

      Moss, Malcolm

      Cameron, David

      Murrison, Dr Andrew

      Cash, William

      Norman, Archie

      Chapman, Sir Sydney

      O'Biren, Stephen (Eddisbury)

      (Chipping Barnet)

      Osborne, George, (Tatton)

      Chidgey, David

      Page, Richard

      Chope, Christopher

      Paice, James

      Clifton-Brown, Geoffrey

      Paterson, Owen

      Cormack, Sir Patrick

      Price, Adam

      Curry, Rt Hon David

      Prisk, Mark

      Davey, Edward (Kingston)

      Pugh, Dr John

      Davies, Quentin (Grantham)

      Randall, John

      Djanogly, Jonathan

      Reid, Alan (Argyll & Bute)

      Dodds, Nigel

      Robathan, Andrew

      Doughty, Sue

      Robertson, Angus (Moray)

      Duncan, Peter (Galloway)

      Robertson, Angus (Moray)

      Ewing, Annabelle

      Robertson, Laurence (Tewk'b'ry)

      Fabricant, Michael

      Robinson, Peter (Belfast E)

      Fallon, Michael

      Rosindell, Andrew

      Field, Mark (Cities of London)

      Ruffley, David

      Flight, Howard

      Russell, Bob (Colchester)

      Flook, Adrian

      Salmond, Alex

      Forth, Rt Hon Eric

      Sanders, Adrian

      Foster, Don (Bath)

      Sayeed, Jonathan

      Fox, Dr Liam

      Shephard, Rt Hon Mrs Gillian

      Francois, Mark

      Simmonds, Mark

      Gibb, Nick

      Simpson, Keith (Mid-Norfolk)

      Gillan, Mrs Cheryl

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

      Gray, James

      Soames, Nicholas

      Grayling, Chris

      Spicer, Sir Michael

      Green, Damian (Ashford)

      Spink, Bob

      Green, Matthew (Ludlow)

      Stanley, Rt Hon Sir John

      Grieve, Dominic

      Streeter, Gray

      Hammond, Philip

      Stunell, Andrew

      Harris, Dr Evan (Oxford W)

      Swayne, Desmond

      Hawkins, Nick

      Swire, Hugo

      Hayes, John

      Syms, Robert

      Heald, Oliver

      Tapsell, Sir Peter

      Heath, David

      Taylor, John (Solihull)

      Hendry, Charles

      Taylor, Matthew (Truro)

      Hoban, Mark

      Trend, Michael

      Holmes, Paul

      Turner, Andrew (Isle of Wight)

      Horam, John

      Tyrie, Andrew

      Howard, Rt Hon Michael

      Viggers, Peter

      Howarth, Gerald (Aldershot)

      Walter, Robert

      Hughes, Simon (Southwark N)

      Waterson, Nigel

      Hunter, Andrew

      Watkinson, Angela

      Jack, Rt Hon Michael

      Weir, Michael

      Jenkin, Bernard

      Whittingdale, John

      Johnson, Boris (Henley)

      Wiggin, Bill

      Keetch, Paul

      Wilkinson, John

      Key, Robert

      Willetts, David

      Laing, Mrs Eleanor

      Williams, Hywel (Caernarfon)

      Lamb, Norman

      Winterton, Mrs Ann (Congleton)

      Lansley, Andrew

      Yeo, Tim

      Laws, David

      Young, Rt Hon Sir George

      Leigh, Edward

      Younger-Ross, Richard

      Letwin, Oliver

      Lewis, Dr Julian (New Forest E)

      Tellers for the Ayes:

      Liddell-Grainger, Ian

      Mr. Simon Thomas and

      Lidington, David

      Pete Wishart.

      381

      NOES

      Ainger, Nick

      Eagle, Maria (L'Pool Garston)

      Ainsworth, Bob (Cov'try NE)

      Edwards, Huw

      Alexander, Douglas

      Efford, Clive

      Allen, Graham

      Ellman, Mrs Louise

      Anderson, Rt Hon Donald

      Ennis, Jeff

      (Swansea E)

      Farrelly, Paul

      Armstrong, Rt Hon Ms Hilary

      Field, Rt Hon Frank (Birkenhead)

      Atkins, Charlotte

      Fisher, Mark

      Bailey, Adrian

      Fitzpatrick, Jim

      Baird, Vera

      Fitzsimons, Mrs Lorna

      Banks, Tony

      Flint, Caroline

      Barnes, Harry

      Flynn, Paul

      Barron, Kevin

      Follett, Barbara

      Beard, Nigel

      Foster, Michael (Worcester)

      Bell, Stuart

      Foster, Michael Jabez (Hastings)

      Bennett, Andrew

      Foulkes, George

      Berry, Roger

      Gapes, Mike

      Best, Harold

      Gerrard, Neil

      Betts, Clive

      Gilroy, Linda

      Blackman, Liz

      Goggins, Paul

      Blizzard, Bob

      Griffiths, Jane (Reading E)

      Boateng, Rt Hon Paul

      Griffiths, Nigel (Edinburgh S)

      Borrow, David

      Gorgan, John

      Bradley, Rt Hon Keith (Withington)

      Hain, Rt Hon Peter

      Brennan, Kevin

      Hall, Mike (Weaver Vale)

      Bryant, Chris

      Hanson, David

      Buck, Ms Karen

      Harris, Tom (Glasgow Cathcart)

      Burden, Richard

      Havard, Dai

      Burgon, Colin

      Henderson, Doug (Newcastle N)

      Burnham, Andy

      Henderson, Ivan, (Harwich)

      Caborn, Rt Hon Richard

      Hendrick, Mark

      Cairns, David

      Hepburn, Stephen

      Campbell, Alan (Tynemouth)

      Hewitt, Rt Hon Ms Patricia

      Campbell, Mrs Anne (C'bridge)

      Heyes, David

      Caplin, Ivor

      Hill, Keith

      Casale, Roger

      Hinchliffe, David

      Challen, Colin

      Hood, Jimmy

      Clapham, Michael

      Hoon, Rt Hon Geoffrey

      Clark, Mrs Helen (Peterborough)

      Hope, Phil

      Clark, Paul (Gillingham)

      Hopkins, Kelvin

      Clarke, Rt Hon Tom (Coatbridge)

      Howarth, Rt Hon Alan (Newport E)

      Clarke, Tony (Northampton S)

      Howarth, George (Knowsley N)

      Clwyd, Ann

      Hoyle, Lindsay

      Coaker, Vernon

      Hughes, Kevin (Doncaster N)

      Coffey, Ms Ann

      Hurst, Alan

      Coleman, Iain

      Hutton, Rt Hon John

      Connarty, Michael

      Iddon, Dr Brian

      Cook, Rt Hon Robin (Livingston)

      Illsley, Eric

      Cooper, Yvette

      Irranca-Davies, Huw

      Corbyn, Jeremy

      Jackson, Helen (Hillsborough)

      Corston, Jean

      Jamieson, David

      Cousins, Jim

      Jenkins, Brian

      Cranston, Ross

      Jones, Helen (Warrington N)

      Crausby, David

      Jones, Jon Owen (Cardiff C)

      Cruddas, Jon

      Jones, Kevan (N Durham)

      Cryer, John (Hornchurch)

      Jones, Lynne (Selly Oak)

      Cunningham, Jim (Cov'try S)

      Joyce, Eric

      Curtis-Thomas, Mrs Claire

      Kaufman, Rt Hon Gerald

      Darling, Rt Hon Alistair

      Keeble, Ms Sally

      Davey, Valerie (Bristol W)

      Kelly, Ruth

      David, Wayne

      Kemp, Fraser

      Davidson, Ian

      Khabra, Piara S

      Davies, Rt Hon Denzil (Llanelli)

      Kidney David

      Davies, Geraint (Croydon C)

      King, Ms Oona (Bethnal Green)

      Davis, Rt Hon Terry

      Knight, Jim (S Dorset)

      (B'ham Hodge H)

      Kumar, Dr Ashok

      Dean, Mrs Janet

      Ladyman, Dr Stephen

      Dhanda, Parmjit

      Lammy, David

      Dismore, Andrew

      Lawrence, Mrs Jackie

      Dobbin, Jim

      Laxton, Bob

      Donohoe, Brian H

      Lazarowicz, Mark

      Dowd, Jim

      Lepper, David

      Drew, David

      Leslie, Christopher

      Drown, Ms Julia

      Levitt, Tom

      Eagle, Angela (Wallasey)

      Linton, Martin

      382

      Lloyd, Tony

      Ross, Ernie

      Love, Andrew

      Roy Frank

      McAvoy, Thomas

      Ruddock, Joan

      McCabe, Stephen

      Russell, Ms Christine (Chester)

      McDonagh, Siobhain

      Ryan, Joan

      MacDonald, Calum

      Salter, Martin

      McDonnell, John

      Sawford, Phil

      MacDougall, John

      Sedgemore, Brian

      McFall, John

      Sheridan, Jim

      McGuire, Mrs Anne

      Simpson, Alan (Nottingham S)

      McIsaac, Shona

      Singh, Marsha

      McKechin, Ann

      Skinner, Dennis

      Mackinlay, Andrew

      Smith, Rt Hon Andrew (Oxford E)

      Mactaggart, Fiona

      Smith, Angela (Basildon)

      McWalter, Tony

      Smith, Rt Hon Chris (Islington S)

      McWilliam, John

      Smith, Jacqui (Redditch)

      Mahon, Mrs Alice

      Smith, John (Glamorgan)

      Mallaber, Judy

      Smith, Llew (Blaenau Gwent)

      Mandelson, Rt Hon Peter

      Soley, Clive

      Marsden, Gordon (Blackpool S)

      Southworth, Helen

      Marshall, David (Shettleston)

      Spellar, Rt Hon John

      Marshall, Jim (Leicester S)

      Squire, Rachel

      Marshall-Andrews, Robert

      Steinberg, Gerry

      Martlew, Eric

      Stevenson, George

      Meale, Alan

      Stinchcombe, Paul

      Merron, Gillian

      Stoate, Dr Howard

      Michael, Rt Hon Alun

      Strang, Rt Hon Dr Gavin

      Miliband, David

      Stringer, Graham

      Miller, Andrew

      Sutcliffe, Gerry

      Mitchell, Austin (Gt Grimsby)

      Taylor, Rt Hon Ann (Dewsbury)

      Moffatt, Laura

      Taylor, Ms Dari (Stockton S)

      Mole, Chris

      Taylor, David (NW Leics)

      Moonie, Dr Lewis

      Thomas, Gareth R (Harrow W)

      Moran, Margaret

      Timms, Stephen

      Mountford, Kali

      Todd, Mark

      Mullin, Chris

      Touhig, Don

      Murphy, Jim (Eastwood)

      Trickett, Jon

      Norris, Dan

      Turner, Dennis (Wolverh'ton SE)

      O'Brien, Bill (Normanton)

      Turner, Dr Desmond (Kemptown)

      O'Brien, Mike (N Warks)

      Turner, Neil (Wigan)

      O'Hara, Edward

      Twigg, Derek (Halton)

      Olner, Bill

      Twigg, Stephen (Enfield)

      Palmer, Dr Nick

      Tynan, Bill

      Pearson, Ian

      Vis, Dr Rudi

      Picking, Anne

      Walley, Ms Joan

      Pickthall, Colin

      Ward, Ms Claire

      Pike, Peter

      Watson, Tom

      Plaskitt, James

      White, Brian

      Pond, Chris

      Whitehead, Dr Alan

      Pound, Stephen

      Wills, Michael

      Prentice, Ms Bridget (Lewisham E)

      Wilson, Brian

      Prentice, Gordon (Pendle)

      Winnick, David

      Prosser, Gwyn

      Winterton, Ms Rosie (Doncaster C)

      Purchase, Ken

      Woodward, Shaun

      Purnell, James

      Woolas, Phil

      Quinn, Lawrie

      Wray, James

      Rammell, Bill

      Wright, Anthony D (Gt Yarmouth)

      Rapson, Syd

      Wright, David (Telford)

      Reed, Andy (Loughborough)

      Wright, Tony (Cannock)

      Reid, Rt Hon Dr John (Hamilton N)

      Wyatt, Derek

      Robertson, John

      (Glasgow Anniesland)

      Tellers for the Noes:

      Roche, Mrs Barbara

      Mr. Tony McNulty and

      Rooney, Terry

      Mr. John Heppell.

      Question accordingly negatived.
      THE TEMPORARY CHAIRMAN, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Order No. 68, That the clause stand part of the Bill:—
      The Committee divided: Ayes 265, Noes 154.

      Division No. 232]

      [7.7 pm

      AYES

      Ainger, Nick

      Drown, Ms Julia

      Ainsworth, Bob (Cov'try NE)

      Eagle, Angela (Wallasey)

      Alexander, Douglas

      Eagle, Maria (L'pool Garston)

      Allen, Graham

      Edwards, Huw

      Anderson, Rt Hon Donald

      Efford, Clive

      (Swansea E)

      Ellman, Mrs Louise

      Armstrong, Rt Hon Ms Hilary

      Ennis, Jeff

      Atkins, Charlotte

      Farrelly, Paul

      Austin, John

      Field, Rt Hon Frank (Birkenhead)

      Bailey, Adrian

      Fisher, Mark

      Baird, Vera

      Fitzpatrick, Jim

      Banks, Tony

      Flint, Caroline

      Barnes, Harry

      Flynn, Paul

      Barron, Kevin

      Follett, Barbara

      Beard, Nigel

      Foster, Michael (Worcester)

      Beckett, Rt Hon Margaret

      Foster, Michael Jabez (Hastings)

      Bell, Stuart

      Foulkes, George

      Berry, Roger

      Gapes, Mike

      Best, Harold

      Gerrard, Neil

      Betts, Clive

      Gilroy, Linda

      Blackman, Liz

      Goggins, Paul

      Blizzard, Bob

      Griffiths, Jane (Reading E)

      Boateng, Rt Hon Paul

      Griffiths, Nigel (Edinburgh S)

      Borrow, David

      Grogan, John

      Bradley, Rt Hon Keith (Withington)

      Hain, Rt Hon Peter

      Brennan, Kevin

      Hall, Mike (Weaver Vale)

      Bryant, Chris

      Hanson, David

      Buck, Ms Karen

      Harris, Tom (Glasgow Cathcart)

      Burden, Richard

      Havard, Dai

      Burgon, Colin

      Henderson, Doug (Newcastle N

      Burnham, Andy

      Henderson, Ivan (Harwich)

      Caborn, Rt Hon Richard

      Hendrick, Mark

      Cairns, David

      Hepburn, Stephen

      Campbell, Alan (Tynemouth)

      Hewitt, Rt Hon Ms Patricia

      Campbell, Mrs Anne (C'bridge)

      Heyes, David

      Caplin, Ivor

      Hill, Keith

      Casale, Roger

      Hinchliffe, David

      Challen, Colin

      Hoon, Rt Hon Geoffrey

      Clapham, Michael

      Hope, Phil

      Clark, Mrs Helen (Peterborough)

      Hopkins, Kelvin

      Clark, Paul (Gillingham)

      Howarth, Rt Hon Alan (Newport E)

      Clarke, Rt Hon Tom (Coatbridge)

      Howarth, George (Knowsley N)

      Clarke, Tony (Northampton S)

      Hoyle, Lindsay

      Clwyd, Ann

      Hughes, Kevin (Doncaster N)

      Coaker, Vernon

      Hurst, Alan

      Coffey, Ms Ann

      Hutton, Rt Hon John

      Coleman, Iain

      Iddon Dr Brian

      Connarty, Michael

      Illsley, Eric

      Cook, Rt Hon Robin (Livingston)

      Irranca-Davies, Huw

      Cooper, Yvette

      Jackson, Helen (Hillsborough)

      Corbyn, Jeremy

      Jamieson, David

      Corston, Jean

      Jenkins, Brian

      Cousins, Jim

      Jones, Helen (Warrington N)

      Cranston, Ross

      Jones, Jon Owen (Cardiff C)

      Crausby, David

      Jones, Kevan (N Durham)

      Cruddas, Jon

      Jones, Lynne (Selly Oak)

      Cryer, John (Hornchurch)

      Joyce, Eric

      Cunningham, Jim (Cov'try S)

      Kaufman, Rt Hon Gerald

      Curtis-Thomas, Mrs Claire

      Keeble, Ms Sally

      Darling, Rt Hon Alistair

      Kelly, Ruth

      Davey, Valerie (Bristol W)

      Kemp, Fraser

      David, Wayne

      Khabra, Piara S

      Davidson, Ian

      Kidney, David

      Davies, Rt Hon Denzil (Llanelli)

      King, Ms Oona (Bethnal Green)

      Davis, Rt Hon Terry

      Knight, Jim (S Dorset)

      (B'ham Hodge H)

      Ladyman, Dr Stephen

      Dean, Mrs Janet

      Lammy, David

      Dhanda, Parmjit

      Lawrence, Mrs Jackie

      Dismore, Andrew

      Laxton, Bob

      Dobbin, Jim

      Lazarowicz, Mark

      Donohoe, Brian H

      Lepper, David

      Dowd, Jim

      Leslie, Christopher

      Drew, David

      Levitt, Tom

      384

      Linton, Martin

      Rooney, Terry

      Lloyd, Tony

      Ross, Ernie

      Love, Andrew

      Roy, Frank

      McAvoy, Thomas

      Ruddock, Joan

      McCabe, Stephen

      Russell, Ms Christine (Chester)

      McDonagh, Siobhain

      Ryan, Joan

      MacDonald, Calum

      Salter, Martin

      McDonnell, John

      Sawford, Phil

      MacDougall, John

      Sedgemore, Brian

      McFall, John

      Sheridian, Jim

      McGuire, Mrs Anne

      Simpson, Alan (Nottingham S)

      McIsaac, Shona

      Singh, Marsha

      McKechin, Ann

      Skinner, Dennis

      Mackinlay, Andrew

      Smith, Rt Hon Andrew (Oxford E)

      Mactaggart, Fiona

      Smith, Angela (Basildon)

      McWalter, Tony

      Smith, Rt Hon Chris (Islington S)

      McWilliam, John

      Smith, Jacqui (Redditch)

      Mahon, Mrs Alice

      Smith, John, Glamorgan)

      Mallaber, Judy

      Smith, Llew (Blaenau Gwent)

      Mendelson, Rt Hon Peter

      Soley, Clive

      Marshall, David (Shettleston)

      Southworth, Helen

      Marshall, Jim (Leicester S)

      Spellar, Rt Hon John

      Marshall-Andrews, Robert

      Squire, Rachel

      Martlew, Eric

      Steinberg, Gerry

      Meale, Alan

      Stevenson, George

      Merron, Gillian

      Stinchcombe, Paul

      Michael, Rt Hon Alun

      Stoate, Dr Howard

      Miliband, David

      Stringer, Graham

      Miller, Andrew

      Sutcliffe, Gerry

      Mitchell, Austin (Gt Grimsby)

      Taylor, Rt Hon Ann (Dewsbury)

      Moffatt, Laura

      Taylor, Ms Dari (Stockton S)

      Mole, Chris

      Taylor, David (NW Leics)

      Moonie, Dr Lewis

      Thomas, Gareth R (Harrow W)

      Moran, Margaret

      Timms, Stephen

      Mountford, Kali

      Todd, Mark

      Mullin, Chris

      Touhig, Don

      Murphy, Jim (Eastwood)

      Trickett, Jon

      Norris, Dan

      Turner, Dennis (Wolverh'ton SE)

      O'Brien, Bill (Nomranton)

      Turner, Dr Desmond (Kemptown)

      O'Brien, Mike (N Warks)

      Turner Neil (Wigan)

      O'Hara, Edward

      Twigg, Derek (Halton)

      Olner, Bill

      Twigg, Stephen (Enfield)

      Palmer, Dr Nick

      Tynan, Bill

      Pearson, Ian

      Vis, Dr Rudi

      Picking, Anne

      Walley, Ms Joan

      Pickthall, Colin

      Ward, Ms Claire

      Pike, Peter

      Watson, Tom

      Plaskitt, James

      White, Brian

      Pond, Chris

      Whitehead, Dr Alan

      Pound, Stephen

      Wills, Michael

      Prentice, Ms Bridget (Lewisham E)

      Wilson, Brian

      Prentice, Gordon (Pendle)

      Winnick, David

      Prosser, Gwyn

      Winterton, Ms Rosie (Doncaster C)

      Purchase, Ken

      Woodward, Shaun

      Purnell, James

      Woolas, Phil

      Quinn, Lawrie

      Wright, Anthony D (Gt Yarmouth)

      Rammell, Bill

      Wright, David (Telford)

      Rapson, Syd

      Wright, Tony (Cannock)

      Reed, Andy (Loughborough)

      Wyatt, Derek

      Reid, Rt Hon Dr John (Hamilton N)

      Robertson, John

      Tellers for the Ayes:

      (Glasgow Anniesland)

      Mr. Tony McNulty and

      Roche, Mrs Barbara

      Mr. John Heppell.

      NOES

      Ainsworth, Peter (E Surrey)

      Blunt, Crispin

      Atkinson, David (Bour'mth E)

      Boswell, Tim

      Atkinson, Peter (Hexham)

      Brady, Graham

      Bacon, Richard

      Brazier, Julian

      Baldry, Tony

      Breed, Colin

      Barker, Gregory

      Brooke Mrs Annette L

      Baron, John

      Browning, Mrs Angela

      Barrett, John

      Bruce, Malcolm

      Beggs, Roy

      Burns, Simon

      Bellingham, Henry

      Burnside, David

      Bercow, John

      Burt, Alistair

      385

      Butterfill, John

      McLoughlin, Patrick

      Calton, Mrs Patsy

      Malins, Humfrey

      Cameron, David

      Maples, John

      Cash, William

      Marsden, Paul (Shrewsbury)

      Chapman, Sir Sydney

      Mawhinney, Rt Hon Sir Brian

      (Chipping Barnet)

      May, Mrs Theresa

      Chidgey, David

      Mercer, Patrick

      Chope, Christopher

      Mitchell, Andrew (Sutton Coldfield)

      Clappison, James

      Moss, Malcolm

      Clifton-Brown, Geoffrey

      Murrison, Dr Andrew

      Curry, Rt Hon David

      Norman, Archie

      Davey, Edward (Kingston)

      Osborne, George (Tatton)

      Davies, Quentin (Grantham)

      Page, Richard

      Djanogly, Jonathan

      Paice, James

      Dodds, Nigel

      Patterson, Owen

      Doughty, Sue

      Price, Adam

      Duncan, Peter (Galloway)

      Prisk, Mark

      Ewing, Annabelle

      Pugh, Dr John

      Fabricant, Michael

      Randall, John

      Fallon, Michael

      Reid, Alan (Argyll & Bute)

      Field, Mark (Cities of London)

      Robathan, Andrew

      Flight, Howard

      Robertson, Hugh (Faversham)

      Flook, Adrian

      Robertson, Peter (Belfast E)

      Forth, Rt Hon Eric

      Robinson, Peter (Belfast E)

      Foster, Don (Bath)

      Rosindell, Andrew

      Fox, Dr Liam

      Ruffley, David

      Francois, Mark

      Russell, Bob (Colchester)

      Gibb, Nick

      Salmond, Alex

      Gillan, Mrs Cheryl

      Sanders, Adrian

      Gray, James

      Sayeed, Jonathan

      Grayling, Chris

      Shephard, Rt Hon Mrs Gillian

      Green, Damian (Ashford)

      Simmonds, Mark

      Green, Matthew (Ludlow)

      Simpson, Keith (Mid-Norfolk)

      Grieve, Dominic

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

      Hammond, Philip

      Soames, Nicholas

      Harris, Dr Evan (Oxford W)

      Spicer, Sir Michael

      Hawkins, Nick

      Spink, Bob

      Hayes, John

      Stanley, Rt Hon Sir John

      Heald, Oliver

      Streeter, Gary

      Heath, David

      Stunell, Andrew

      Hendry, Charles

      Swayne, Desmond

      Hoban, Mark

      Swire, Hugo

      Holmes, Paul

      Syms, Robert

      Horam, John

      Tapsell, Sir Peter

      Howard, Rt Hon Michael

      Taylor, John (Solihull)

      Howarth, Gerald (Aldershot)

      Taylor, Matthew (Truro)

      Hughes, Simon (Southwark N)

      Thomas, Simon (Ceredigion)

      Hunter, Andrew

      Trend, Michael

      Jack, Rt Hon Michael

      Turner, Andrew, (Isle of Wight)

      Jenkin, Bernard

      Tyrie, Andrew

      Johnson, Boris (Henley)

      Viggers, Peter

      Keetch, Paul

      Walter, Robert

      Key, Robert

      Watkinson, Angela

      Laing, Mrs Eleanor

      Weir, Michael

      Lamb, Norman

      Whittingdale, John

      Lansley, Andrew

      Wiggin, Bill

      Laws, David

      Wilkinson, John

      Leigh, Edward

      Willetts, David

      Letwin, Oliver

      Williams, Hywel (Caernarfon)

      Lewis, Dr Julian (New Forest E)

      Willis, Phil

      Liddell-Grainger, Ian

      Winterton, Mrs Ann (Congleton)

      Lidington, David

      Yeo, Tim

      Lilley, Rt Hon Peter

      Young, Rt Hon Sir George

      Llwyd, Elfyn

      Younger-Ross, Richard

      Loughton, Tim

      Luff, Peter

      Tellers for the Noes:

      McIntosh, Miss Anne

      Mr. Stephen O'Brien and

      MacKay, Rt Hon Andrew

      Mr. Laurence Robertson.

      Question accordingly agreed to.
      Clause 90 ordered to stand part of the Bill.
      Clauses 91 and 92 ordered to stand part of the Bill.
      Clause 131 ordered to stand part of the Bill.

    Schedule 38

      RECOVERY OF TAXES ETC DUE IN OTHER MEMBER STATES
      Mr. Flight: I beg to move amendment No. 23, in page 475, line 11, after "his", insert "alleged".
      The Second Deputy Chairman of Ways and Means (Sir Michael Lord): With this it will be convenient to discuss the following amendments: No. 35, in page 475, line 27, at end insert—
      '6A Nothing in this Schedule shall contravene the presumptions in law against retrospection whether statutory or otherwise.'.
      No. 24, in page 475, line 28, leave out paragraph 6.
      Mr. Flight: The notes accompanying the Bill provide an innocuous description of clause 131 and schedule 38, saying that they
      "improve existing arrangements for cross-border assistance between EU Member States in recovering indirect taxes, duties and penalties, and extend recovery procedures to cover direct taxes (income tax, corporation tax, capital gains tax"
      and certain insurance premium taxes.
      What the clause and schedule actually do is implement Council Directive 2001/44/EC, and provide a mechanism for its operation. They provide an automatic enforcement in the United Kingdom of any tax claimed in another EU member state against a UK party, without that UK party's being able to dispute the claim in the United Kingdom. The goods can be seized—it has to go through the standard channel—but the company or individual cannot question the amount or the circumstances of the claim.
      Schedule 38 provides for the proceedings by the relevant UK authority to enforce the foreign claim by way of legal proceedings, through distress or otherwise, as for a corresponding UK claim. Unlike a claim by Customs and Excise or the Inland Revenue, however, such a claim will not involve any ability to question the claim: that is ruled out by paragraph 6(b). Similarly, paragraph 4(1) refers to "his liability", not to a claimed or alleged liability. An assumption of guilt is being introduced into the system of enforcement in the UK.
      We consider that unacceptable. For one thing, there are major differences between the UK's tax law and that of other EU states, and between the tax laws of other EU states. Britain has what I would call the Magna Carta tradition. We may complain about the length of Finance Bills, but the law in the UK and the United States goes to great lengths to distinguish what is within the law and what is without, what is legal and what is illegal, what is avoidance and what is evasion.
      In most EU states, there is no difference between those pairs of concepts. In other words, tax law is not clear. It is often ultimately political, and can be extremely arbitrary. For example, if the tax authority of another EU country—Greece, let us say—produced a trumped-up tax charge against a British company or citizen because it, or he, had a business or a property there, it would simply have to put the claim through its system, which does not involve the same abilities to dispute as ours, and then present it to the British tax authorities, saying, "Go get that money." The British company or citizen would be banned from disputing the claim in the British courts or with the commissioners for taxes. As I have said, an assumption of guilt is written into the Bill. That is why

      387
      amendment No. 23 would insert the word "alleged" before the word "liability". Amendment No. 24 would remove paragraph 6—the key paragraph—which prevents the UK party from challenging the otherwise automatic enforcement of the tax claim by the UK authorities.
      Amendment No. 35 deals with the fact that the UK has a six-year back period for revenue claims, a three-year back period for customs claims, and a 20-year back period for revenue claims involving fraud. The provisions in schedule 38 include no such parallel time limits, yet circumstances could arise in which a claim was automatically enforced in the UK that related to an alleged tax claim from, say, 30 years ago. Under the provisions, the date will depend on the rules of the other member state. Of course, application for UK enforcement cannot not be made until the Bill is enacted. Once enacted, the proceedings in the other member state must apply within five years of coming to the UK to enforce the claim. That is what the five-year limit means. However, such proceedings could relate to a time period and a claim that go back substantially further than that, depending on the prevailing rules and customs of the country in question.
      British citizens enjoy the law and rules relating to back claims as they obtain in this country, but under the Bill back claims arising in an EU member state could be enforced, and property seized, without any right to dispute. Moreover, such claims could relate to a period some 30 years ago. That seems somewhat objectionable. That rather contravenes the principles of UK statute and case law, concerning the extent to which claims can be made and enforced retrospectively.
      I do not want to single out poor old Greece yet again, but the extraordinary recent plane spotters case highlights the fact that the legal arrangements in some other states are rather more arbitrary and political than in this country. In mentioning Greece, I am mindful of the famous Don Pacifico incident. Lord Palmerston would turn in his grave if he realised what the Bill proposes to write into our laws.
      What is hidden away in schedule 38 is objectionable and authoritarian, and contrary to the traditions of British civil liberty. It is wholly wrong to allow a tax claim by a foreign country to be enforced in Britain without giving the person claimed against the legal ability to dispute. Moreover, the potential exists to go back much further than in the case of a UK claim. In terms of the EU directive that the schedule will incorporate in law, I should point out to the Economic Secretary that the schedule in part involves an element of gold plating. I also understand that the parliamentary draftsmen had believed that the word "claim", and the five-year arrangements, referred to the year in which the UK claim was alleged to have been made, effectively limiting retrospection to five years, but that is not reflected in the directive. The directive is also fairly woolly and unclear, but it has been put into effect in the schedule in the way that I have described.
      Given the time of day, we do not seek to divide the Committee on all three amendments, but I give notice that we shall seek to do so on amendment No. 24.
      7.30 pm
      Mr. Edward Davey: The thrust of the schedule is probably right, in the sense that the mutual assistance recovery directive is important for the British taxpayer. We need to ensure that citizens from
      388
      other EU member states who owe the UK Exchequer money are not able to avoid that debt to the British people by moving to other EU member states. Indeed, such a debt might have been accrued by a UK citizen, but we do not want people to be able to avoid their due tax liabilities to the UK Exchequer by moving to other member states of the EU. To that extent, the directive is correct and the legislation appropriate.
      In order for the Committee to be assured that the Exchequer will be protected, we need to know from the Minister how many other EU member states have enacted the directive. If she cannot tell us that all the other member states have enacted it, we need to know when she expects that to happen. We do not want to be the only member state to comply with the directive and our partner states to catch up with us in 10 or 15 years' time. That would mean that the legislation would give the UK Exchequer no advantage, and in fact would put it at a potential disadvantage.
      Mr. BercowWe are hearing an extraordinarily unbalanced speech by the hon. Gentleman.
      Mr. Davey: I have not finished yet.
      Mr. Bercow: I hope that we will hear more and that it will be better than what we have already heard. The hon. Gentleman, as a member of the Liberal Democrat party, which professes a belief in individual rights, is preoccupying himself with the protection of the Exchequer. Is he not concerned about schedule 38(6)(b) and the denial of individual rights that it entails?
      Mr. Davey: The hon. Gentleman should stay in his place and let other hon. Members finish their speeches. There are two aspects to the schedule, one of which is the protection of the UK Exchequer. That is the one that I was addressing because I wished to seek assurances from the Minister that other EU member states are enacting the directive so that the UK Exchequer is protected. That is an important point. Indeed, I was surprised that the hon. Member for Arundel and South Downs (Mr. Flight) failed to make that point. We need to ensure that the UK taxpayer is protected and I am surprised that the hon. Member for Buckingham (Mr. Bercow) is so concerned that I am concerned about that. That makes the Tory attitude to financial improvements evident to everybody.
      Mr. Flight rose—
      Mr. Davey: If the hon. Gentleman will stay in his place, I am about to come to the issue of the rights of the individual. He is right to say that schedule 38(6)(b) is a matter for concern. We want to know what protection UK citizens will have if the tax authority of another EU member state makes a false claim. The directive, and the way in which it is being put into our law, does not give adequate protection. I hope that the Minister will make it clear to the Committee that she has been reassured that it will not be possible for a UK citizen to be pursued by another EU member state's tax authority on no grounds. We need to hear from the Minister what rights of appeal UK citizens would have. For example, if they believed that the highest court of another EU member state had not given justice, would they be able to go to the European Court of Justice to override the decision?

      389
      I hope that the Minister can reassure the House that important individual rights are not being overridden.
      Ruth Kelly: I am quite surprised to hear the hon. Member for Arundel and South Downs (Mr. Flight) calling this provision objectionable and authoritarian. I completely agree with the hon. Member for Kingston and Surbiton (Mr. Davey) that people who have failed to pay tax that is legally due should not be able to escape payment simply by moving to another member state. It would not be right to provide a tax amnesty to people when the means to collect tax that is legally due already exists.
      The system will build on the existing inter-state debt recovery service that has operated successfully for indirect tax for many years. A joint Customs and Excise and Inland Revenue mutual assistance unit is being set up with staff from both departments working together to co-ordinate and send requests to other member states, and to deal with requests from other member states that relate to UK taxpayers.
      The hon. Member for Arundel and South Downs has unfortunately misinterpreted some aspects of the provision. His amendment suggests that the liability on which recovery is sought in UK proceedings should be an alleged liability. That is not the case. Recovery in the UK depends on the existence of liability in the member state making the request. Indeed, the applicant authority may not normally request recovery unless the claim, and the instrument permitting enforcement, are not contested in the member state in which it is situated.
      It has been suggested that the provision involves some presumption of guilt. I dispute that charge. As soon as the UK is informed of a contested claim, either by the applicant authority or the interested party, the measure allows for the enforcement procedure to be suspended, unless the applicant authority requests that it continue, and the law, regulations and administrative practice in the UK allow for such action.
      Chris Grayling: Will the Minister explain what the word "normally" means in that context?
      Ruth Kelly: I think that most hon. Members understand what the word "normally" means. I do not think that this is the place to try to define such words.
      I point out that provision to continue such actions exists already in UK law. For example, the requirement to pay Customs duty, even where an appeal against a decision of a Customs authority is pending under article 244 of the Customs code.
      A key element of the measures is the provision that, once an instrument permitting enforcement of a claim has been received by the member state requested to pursue that claim, it must be recognised and acted on. That is the only practical way to handle such claims. The alternative would require the UK to review the procedures of other member states to ensure that their tax laws have been correctly followed in respect of each and every request for recovery.
      The taxpayer's right to contest liability exists in the domestic legislation of each member state. That legislation must apply to each debt notified under the
      390
      provisions. That avoids foreign courts having to familiarise themselves with the domestic tax legislation of each other member state. It also prevents the taxpayer from being able to delay recovery unduly through obstructive legal action.
      Where a taxpayer can demonstrate that proceedings appealing against liability have been, or are about to be, instituted in another member state where the debt has been established, the member state attempting recovery is required to suspend its action, pending the outcome of the appeal.
      It is worth pointing out to the Committee again that these provisions mirror provisions existing for indirect taxes since 1977. To date, those rules have caused no problems.
      It has been suggested that it might be simpler if UK citizens were able to defend themselves in English in UK courts, but that would open up a new set of problems. We strongly support the principle of national competence in tax matters. The taxpayer's right to contest a liability will continue to exist, as I have said, within each member state's domestic legislation. To allow taxpayers to challenge the appeal system of other member states through their own national courts would be to subvert national competence for tax matters.
      Mr. Bercow: I am extremely grateful to the Minister for giving way; she will recognise that these important matters must be debated thoroughly. Subsections (4) and (5) of paragraph 3 of the schedule and subsection (1) of paragraph 4 refer to regulations. Can the hon. Lady tell the Committee whether those regulations will be subject to the negative or the affirmative procedure?
      Ruth Kelly: I will write to the hon. Gentleman with those details.
      I confirm that if appeals against the application of the directive are received, as the hon. Member for Kingston and Surbiton has requested, there is an appeal mechanism through the European Court of Justice. I hope that the hon. Gentleman will be satisfied on that matter. I will write to him about the number of states that have already implemented the directive; I am sure that he will understand if I do not have that information to hand.
      As I understand it, the implementation of the directive imposes no new liabilities on the taxpayer. It will not change the rights of the taxpayer or impose any tax liability that did not previously exist. Instead, it introduces procedures for recovering debts where the taxpayer has assets in another member state and allows arrangements for co-operation in collecting indirect taxes such as excise duties and VAT that have existed for many years to be extended to direct taxes as well. The only people who need worry about this measure are those who fail to pay the tax that they owe. I am sure that Members will agree that taxpayers should not be able to escape paying what they owe simply by moving to another member state. I urge the Committee to reject the amendment.
      Mr. Flight: There is a huge difference between this matter and excise and VAT, which are administered on a fairly common basis throughout the EU. They are not personal taxes and not part of the EU territories, where much taxation can he arbitrary. The clause and schedule

      391
      are doing something new and different; they are following the same path but addressing tax areas that in the EU can be extremely arbitrary.
      I understand the practical point that it would be a lot of hassle to permit Greek or Spanish tax law, to the extent that it exists, to be disputed in an English court, but not to do so still seems authoritarian to me. A claim could be submitted against a British company or individual in Spain which they may not even know about because the authority may not be able to advise of such proceedings in the UK. That claim could be nodded through, resulting in the sums claimed being enforced without any right of dispute or defence.
      Mr. David Heath: I understand the hon. Gentleman's point. However, this is a reciprocal arrangement and were the amendment to succeed, it would mean that Greek and Spanish courts, about which he seems so concerned, would have extra-territorial jurisdiction over British taxpayers about British taxation in this country. The interpretation of a Greek or Spanish court as to whether a British taxpayer was liable to pay British tax would supersede our own territorial jurisdiction. Is the hon. Gentleman not concerned about that?
      Mr. Flight: Before I come to what other EU states are doing, let me make it clear that I believe that justice for British citizens is ultimately more important than the greater ease of UK tax authorities in collecting tax or instructing European authorities to seize goods on tax liabilities claimed here.
      Furthermore, although the directive has not yet come into force in more than one EU member state, I am sure that the processes will be nowhere as diligent and efficient as in this country. The mere fact that the directive may have been incorporated in the tax law of all EU member states does not ensure that a claim advised by the UK authorities would be pursued and settled with the same efficiency as it would be in this country.
      The self-interest tax-gathering point is not answered merely by asking whether the directive has been put into effect. My understanding is that the whole controversial issue of denying the right to challenge the claim is a relatively grey area in the EU directive. The UK authorities might have slightly gold-plated the requirements in the practical interests to which the Minister referred.
      The arrangements that have operated for VAT and Customs have not presented such problems because the claims are not arbitrary. However, the proposal introduces a great deal of arbitrariness in claims for income tax and claims against property. It will permit an injustice against UK citizens, which the British authorities would be obliged to implement, denying British companies or citizens the right to dispute the claim. That is utterly wrong and objectionable and we would never have considered that such a measure could have been adopted in UK law in the past.
      7.45 pm
      Mr. Edward Davey: The hon. Member for Arundel and South Downs (Mr. Flight) has failed to acknowledge the fact that the measure is about reciprocal arrangements and that there could be an appeal to the European Court of Justice. The Conservatives are in danger of becoming the friends of the international tax avoider and the friends of the residents of the Costa del Crime.
      Several hon. Members rose—
      The Second Deputy Chairman: Order. Does the hon. Member for Arundel and South Downs (Mr. Flight) want to press amendment No. 23 to a Division?
      Mr. Flight: No, Sir Michael. As I said earlier, I do not want to press the amendment—[Interruption.]
      The Second Deputy Chairman: Order. Does the hon. Gentleman wish to withdraw the amendment?
      Mr. Flight: Yes, Sir Michael, I beg to ask leave to withdraw that amendment.
      Amendment, by leave, withdrawn.
      The Second Deputy Chairman: I understand that the hon. Gentleman wants to press amendment No. 24 to a Division. Is that correct?
      Mr. Flight: Yes, Sir Michael.
      Amendment proposed: No. 24, in schedule 38, page 475, line 28, leave out paragraph 6.—[Mr. Flight].
      Question put, That the amendment be made:—
      The Committee divided: Ayes 85, Noes 249.

      Division No. 233]

      [7.48 pm

      AYES

      Atkinson, David (Bour'mth E)

      Lansley, Andrew

      Atkinson, Peter (Hexham)

      Letwin, Oliver

      Bacon, Richard

      Lewis, Dr Julian (New Forest E)

      Barker, Gregory

      Liddell-Grainger, Ian

      Baron, John

      Lidington, David

      Beggs, Roy

      Lilley, Rt Hon Peter

      Bellingham, Henry

      Loughton, Tim

      Bercow, John

      Luff, Peter

      Boswell, Tim

      McIntosh, Miss Anne

      Brazier, Julian

      MacKay, Rt Hon Andrew

      Burns, Simon

      McLoughlin, Patrick

      Burnside, David

      Malins, Humfrey

      Burt, Alistair

      Mawhinney, Rt Hon Sir Brian

      Butterfill, John

      May, Mrs Theresa

      Chope, Christopher

      Mercer, Patrick

      Clifton-Brown, Geoffrey

      Murrison, Dr Andrew

      Collins, Tim

      Norman, Archie

      Davies, Quentin (Grantham)

      Osborne, George (Tatton)

      Dodds, Nigel

      Paice, James

      Duncan, Peter (Galloway)

      Paterson, Owen

      Fabricant, Michael

      Prisk, Mark

      Fallon, Michael

      Randall, John

      Field, Mark (Cities of London)

      Robertson, Hugh (Faversham)

      Flight, Howard

      Robinson, Peter (Belfast E)

      Flook, Adrian

      Rosindell, Andrew

      Forth, Rt Hon Eric

      Ruffley, David

      Francois, Mark

      Sayeed, Jonathan

      Gibb, Nick

      Simmonds, Mark

      Gray, James

      Spink, Bob

      Grayling, Chris

      Stanley, Rt Hon Sir John

      Green, Damian (Ashford)

      Swayne, Desmond

      Grieve, Dominic

      Syms, Robert

      Hammond, Philip

      Taylor, John (Solihull)

      Hawkins, Nick

      Turner, Andrew (Isle of Wight)

      Hayes, John

      Tyrie, Andrew

      Heald, Oliver

      Viggers, Peter

      Hoban, Mark

      Walter, Robert

      Howarth, Gerald (Aldershot)

      Watkinson, Angela

      Hunter, Andrew

      Whittingdale, John

      Jack, Rt Hon Michael

      Wiggin, Bill

      Johnson, Boris (Henley)

      Wilkinson, John

      393

      Willetts, David

      Tellers for the Ayes:

      Winterton, Mrs Ann (Congleton)

      Mr. Stephen O'Brien and

      Yeo, Tim

      Mr. Laurence Robertson.

      NOES

      Abbott, Ms Diane

      Eagle, Maria (L'pool Garston)

      Ainsworth, Bob (Cov'try NE)

      Edwards, Huw

      Alexander, Douglas

      Efford, Clive

      Allen, Graham

      Ellman, Mrs Louise

      Anderson, Rt Hon Donald

      Ennis, Jeff

      (Swansea E)

      Ewing, Annabelle

      Armstrong, Rt Hon Ms Hilary

      Farrelly, Paul

      Atkins, Charlotte

      Field, Rt Hon Frank (Birkenhead)

      Austin, John

      Fisher, Mark

      Bailey, Adrian

      Fitzpatrick, Jim

      Barnes, Harry

      Flint, Caroline

      Barron, Kevin

      Flynn, Paul

      Beard, Nigel

      Follett, Barbara

      Beckett, Rt Hon Margaret

      Foster, Don (Bath)

      Bell, Stuart

      Foster, Michael (Worcester)

      Berry, Roger

      Foster, Michael Jabez (Hastings)

      Best, Harold

      Foulkes, George

      Betts, Clive

      Gapes, Mike

      Blackman, Liz

      Gerrard, Neil

      Blizzard, Bob

      Gilroy, Linda

      Boateng, Rt Hon Paul

      Green, Matthew (Ludlow)

      Borrow, David

      Griffiths, Jane (Reading E)

      Bradley, Rt Hon Keith (Withington)

      Grogan, John

      Brennan, Kevin

      Hain, Rt Hon Peter

      Bruce, Malcolm

      Harris, Dr Evan (Oxford W)

      Bryant, Chris

      Harris, Tom (Glasgow Cathcart)

      Buck, Ms Karen

      Havard, Dai

      Burden, Richard

      Heath, David

      Burgon, Colin

      Henderson, Ivan (Harwich)

      Caborn, Rt Hon Richard

      Hendrick, Mark

      Cairns, David

      Heppell, John

      Campbell, Mrs Anne (C'bridge)

      Heyes, David

      Caplin, Ivor

      Hill, Keith

      Casale, Roger

      Hinchliffe, David

      Challen, Colin

      Holmes, Paul

      Clapham, Michael

      Hope, Phil

      Clark, Mrs Helen (Peterborough)

      Hopkins, Kelvin

      Clark, Paul (Gillingham)

      Howarth, Rt Hon Alan (Newport E)

      Clarke, Rt Hon Tom (Coatbridge)

      Hughes, Kevin (Doncaster N)

      Clarke, Tony (Northampton S)

      Hughes, Simon (Southwark N)

      Clwyd, Ann

      Hurst, Alan

      Coaker, Vernon

      Hutton, Rt Hon John

      Coffey, Ms Ann

      Iddon, Dr Brian

      Cohen, Harry

      Illsley, Eric

      Coleman, Iain

      Irranca-Davies, Huw

      Connarty, Michael

      Jackson, Helen (Hillsborough)

      Cook, Rt Hon Robin (Livingston)

      Jenkins, Brian

      Corbyn, Jeremy

      Jones, Kevan (N Durham)

      Corston, Jean

      Jones, Lynne (Selly Oak)

      Cousins, Jim

      Joyce, Eric

      Cranston, Ross

      Kaufman, Rt Hon Gerald

      Cruddas, Jon

      Keeble, Ms Sally

      Cryer, John (Hornchurch)

      Keetch, Paul

      Cunningham, Jim (Cov'try S)

      Kelly, Ruth

      Davey, Edward (Kingston)

      Kemp, Fraser

      Davey, Valerie (Bristol W)

      Khabra, Piara S

      David, Wayne

      Kidney, David

      Davidson, Ian

      King, Ms Oona (Bethnal Green)

      Davies, Rt Hon Denzil (Llanelli)

      Knight, Jim (S Dorset)

      Davis, Rt Hon Terry

      Ladyman, Dr Stephen

      (B'ham Hodge H)

      Lamb, Norman

      Dean, Mrs Janet

      Lammy, David

      Dhanda, Parmjit

      Lawrence, Mrs Jackie

      Dismore, Andrew

      Laws, David

      Donohoe, Brian H

      Laxton, Bob

      Doughty, Sue

      Lazarowicz, Mark

      Dowd, Jim

      Lepper, David

      Drew, David

      Leslie, Christopher

      Drown, Ms Julia

      Levitt, Tom

      Eagle, Angela (Wallasey)

      Linton, Martin

      394

      Lloyd, Tony

      Rooney, Terry

      Love, Andrew

      Ross, Ernie

      McAvoy, Thomas

      Roy, Frank

      McCabe, Stephen

      Russell, Bob (Colchester)

      McDonagh, Siobhain

      Ryan, Joan

      MacDonald, Calum

      Salmond, Alex

      McFall, John

      Salter, Martin

      McGuire, Mrs Anne

      Sawford, Phil

      McIsaac, Shona

      Simpson, Alan (Nottingham S)

      McKechin, Ann

      Singh, Marsha

      Mackinlay, Andrew

      Skinner, Dennis

      McNulty, Tony

      Smith, Angela (Basildon)

      Mactaggart, Fiona

      Smith, Rt Hon Chris (Islington S)

      McWalter, Tony

      Smith Jacqui (Redditch)

      McWilliam, John

      Smith, John (Glamorgan)

      Mahon, Mrs Alice

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

      Mallaber, Judy

      Soley, Clive

      Mandelson, Rt Hon Peter

      Southworth, Helen

      Marshall, David (Shettleston)

      Squire, Rachel

      Marshall, Jim (Leicester S)

      Stevenson, George

      Marshall-Andrews, Robert

      Stinchcombe, Paul

      Martlew, Eric

      Stoate, Dr Howard

      Meale, Alan

      Stringer, Graham

      Merron, Gillian

      Stunell, Andrew

      Michael, Rt Hon Alun

      Sutcliffe, Gerry

      Miliband, David

      Taylor, David (NW Leics)

      Moffatt, Laura

      Thomas, Gareth R (Harrow W)

      Mole, Chris

      Thomas, Simon (Ceredigion)

      Moonie, Dr Lewis

      Timms, Stephen

      Moran, Margaret

      Todd, Mark

      Mountford, Kali

      Touhig, Don

      Murphy, Jim (Eastwood)

      Trickett, Jon

      O'Brien, Bill (Normanton)

      Turner, Dennis (Wolverh'ton SE)

      O'Brien, Mike (N Warks)

      Turner, Dr Desmond (Kemptown)

      O'Hara, Edward

      Turner, Neil (Wigan)

      Olner, Bill

      Twigg, Stephen (Enfield)

      Palmer, Dr Nick

      Tynan, Bill

      Pearson, Ian

      Vis, Dr Rudi

      Pike, Peter

      Watson, Tom

      Plaskitt, James

      Weir, Michael

      Pond, Chris

      White, Brian

      Pound, Stephen

      Whitehead, Dr Alan

      Prentice, Ms Bridget (Lewisham E)

      Williams, Hywel (Caernarfon)

      Prentice, Gordon (Pendle)

      Willis, Phil

      Price, Adam

      Willis, Michael

      Prosser, Gwyn

      Winnick, David

      Purchase, Ken

      Winterton, Ms Rosie (Doncaster C)

      Purnell, James

      Wishart, Pete

      Quinn, Lawrie

      Woodward, Shaun

      Rammell, Bill

      Woolas, Phil

      Rapson, Syd

      Wright, David (Telford)

      Reed, Andy (Loughborough)

      Wright, Tony (Cannock)

      Reid, Alan (Argyll & Bute)

      Wyatt, Derek

      Reid, Rt Hon Dr John (Hamilton N)

      Younger-Ross, Richard

      Robertson, Angus (Moray)

      Robertson, John

      Tellers for the Noes:

      (Glasgow Anniesland)

      Dan Norris and

      Roche, Mrs Barbara

      Mr. Nick Ainger.

      Question accordingly negatived.
      Schedule 38 agreed to.

    Clause 134

      LORRY ROAD-USER CHARGE
      8 pm
      Mr. Christopher Chope: I beg to move amendment No. 32, in page 106, line 35, at end insert—
      'provided that the charge shall be payable in respect of every lorry using a public road in the United Kingdom irrespective of the country in which such lorry is registered.'.
      The Second Deputy Chairman: I gather that it will be for the convenience of the Committee if we discuss the following amendments together: No. 30, in page 106, line 35, at end inserts—
      '(2A) The rates at which lorry road-user charge shall be payable shall be determined so that the total of road user charge, vehicle excise duty applicable to lorries and fuel duty raised from lorries shall not exceed the total of vehicle excise duty and fuel duty raised from lorries in the year 2002–03 subject to indexation up to the year of introduction.'.
      No. 31, in page 106, line 35, at end insert—
      '(2B) Lorry road user charge shall be brought into effect no later than the commencement of the financial year 2006–07.'.
      Mr. Chope: I am sure that it will be for the convenience of the Committee to consider the amendments together. They have been drafted to give the Government an opportunity to expand on the rather bland statement that the Chancellor made in his Budget statement. He said:
      "Hauliers from overseas should pay their fair share towards the cost of using our roads".
      So say all of us.
      The Government rejected our proposals for a Brit disc, but they are now coming forward with their own proposals. However, clause 134 contains no reference to hauliers from overseas, to foreign lorries or to anything like that. [Interruption.] The Financial Secretary says that there is a good reason for that, and we shall have the opportunity to hear the explanation shortly. That is what amendment No. 32 is all about.
      We welcome the fact that the Government have accepted the principle of a Brit disc that was outlined in our manifesto at the last general election. We recognise that, under European law, the maximum penalty on foreign hauliers is only about £750, whereas the tax differential between a French lorry and a UK-operated lorry is about £12,000. What the Government have in mind in the clause could do much more to bridge the gap than could be done merely by the introduction of a Euro vignette.
      I hope that the Financial Secretary will also be able to address the concerns that prompted amendment No. 30. It is a reflection of the fact that the Chancellor also said in the Budget statement that there would be
      "a road user charge for lorries that is distance-based, with offsetting tax cuts for the UK haulage industry."—[Official Report, 17 April 2002; Vol. 382, c. 583–4.]
      Amendment No. 30 would put that proposal into the Bill.
      It is not just today's proceedings that have caused Conservative Members to be rather suspicious about the Government's assertions and promises and about the words of some Ministers. We have cause to reflect on what happened with the climate change levy. The Government promised an offsetting reduction in national insurance for employers but, in the Budget, they have more than totally negated that reduction by their proposals for national insurance. Similarly, on the proposals for the aggregates tax, the goalposts were moved during the consultation with the industry.
      Given that the discussion on this issue is likely to go on for some years, we want a guaranteed assurance from the Economic Secretary that the haulage industry in this country will not face additional costs. The only sure way of doing that is by putting such guarantees in the Bill.
      396
      Amendment No. 31 deals with the issue of when the proposals will come into effect. I understand that, at the consultation meeting that was held between the haulage industry and Ministers and Treasury officials, there was talk of the measure being introduced no later than spring 2006. However, the Government have tended to fail to deliver on their targets for the completion of such legislation. Because it is vital that our road haulage industry is allowed to compete on level terms with foreign hauliers, the Bill should contain the provision that the measure will be brought in no later than spring 2006. Some would say that that is far too late, but I understand that it would be complicated to introduce.
      I hope that the Financial Secretary can explain how he will ensure that there is interoperability between foreign and British hauliers and the system that he has in mind for taxing lorries under the new regime. I also hope he will assure us that the commitment in the pre-Budget statement that there will be no net increase in taxation on truck operators in the UK will hold true. If he can explain how the proposal will be consistent with the Government's agenda for reducing and managing congestion on our roads when only one vehicle in 50 is a lorry, that would be a bonus. However, I fear that he will not want to explain why the Government think it right to have a charge for lorries that is based on their use of the road, but not to have a similar charge for motorists.
      I hope that the amendments give the Committee the opportunity to discuss those important issues. Come 2006, there will be a complete transformation of the way in which the heavy goods vehicles on our roads are taxed. That will be to the benefit of the road haulage industry, but it needs some reassurances, which I hope the Financial Secretary will provide.
      Mr. Edward Davey: I want the Financial Secretary to assure us that the clause is necessary simply to allow the Government to spend the money that is needed to have a viable operational scheme for lorry road-user charges. Once that is determined, I expect the Government to include the details of tax legislation in a future Finance Bill for the House to scrutinise. If the right hon. Gentleman can give hon. Members those two reassurances, we can proceed, hopefully to the Adjournment.
      Chris Grayling: I want to put a different slant on the hon. Gentleman's comments. The issue is far greater than taxation. It represents a major change for the UK. For the first time, long-distance road pricing is coming into effect alongside the various plans that exist for congestion charging. It involves significant technology changes for our road industry and has significant implications for the Government's transport strategy. I hope that the Financial Secretary can reassure us that this is a piece of enabling legislation that will not preclude a full and substantive debate about the transport industry and the place of road haulage in that. I think that the right hon. Gentleman is nodding, and I am happy to receive that assurance.
      I also hope the right hon. Gentleman can reassure us that the Government intend the measure to be revenue neutral. It must not be a way of introducing stealth taxes on the haulage industry. I am happy to give way if the Minister wants to intervene. I can see that he is keen to wind up the debate, but this is an important issue and it should not be nodded through because it is late on a Thursday evening.

      397
      Fundamental issues are at stake. The Government's proposals have implications for rail freight and for the roads that are not encompassed by the scheme and the traffic that uses them. They come at a time when the Commission for Integrated Transport has recommended a more wide-ranging and all-encompassing scheme. I want the right hon. Gentleman to assure me that the Government will not attempt to use the legislation to railroad through a measure that is taken in isolation from the rest of their transport policy.
      Mr. Boateng: Clause 134 fulfils our manifesto commitment to make sure that lorry operators contribute to costs when using United Kingdom roads, regardless of their nationality. It has been widely consulted on and has been warmly welcomed by the industry. I have listened to the arguments behind the Opposition amendments, which are unconvincing and wholly misconceived. However, I shall briefly address their aims.
      It would be wrong to commit ourselves to a fixed date by which the proposals are to be implemented, as the hon. Member for Christchurch (Mr. Chope) suggested, partly for the reasons given by the Liberal Democrat spokesman. We need to be sure that we tackle complicated issues of compatibility in a way favourable to Britain's competitive interests and the interests of the haulage industry. We have therefore chosen to proceed with enabling legislation, which, in all probability, will become law in future Finance Bills. We shall bring those matters before Parliament again when they have received the technical and other consideration that they deserve and when we have developed a successful scheme; the Committee should unite on that outcome.
      We shall introduce a distance-based lorry road-user charge that will apply to lorry operators working in the UK regardless of their nationality. We have made it clear that the introduction of the new charge will not increase taxes for the UK haulage industry in recognition of the fact that it already contributes towards costs that it imposes on the UK. The Government will therefore introduce offsetting tax reductions when the new charge is introduced.
      It would be grossly irresponsible of the Committee to seek to bind the Chancellor in future Budgets, as amendment No. 30 seeks to do. We recognise the fact that the UK haulage industry already contributes towards the costs that it imposes on the UK, and will introduce offsetting tax reductions when the new charge is introduced. That is a clear and unequivocal commitment, which the road haulage industry well understands. In amendment No. 32, the Opposition have misunderstood the nature of our proposals and the complexity of the task in hand. It is not desirable to seek to commit the Government to charge every lorry using every public road. We shall ensure that the industry and key stakeholders are all involved before making a final decision. There is a strong case for charging every lorry using every public road, but a decision should be made only after consultation with the industry and stakeholders.
      398
      I hope that, as a result of my assurances, the Committee, having considered the matter fully, will give the clause a fair wind.
      Chris Grayling rose—
      Mr. Boateng: I fear that more wind is blowing in our direction.
      Chris Grayling: The Minister said that the road haulage industry welcomed the proposals. However, it has said that it is extremely anxious about the time that it may take to introduce such as scheme. In the absence of a scheme, it faces several years of continuing competitive disadvantage. Can he provide reassurance on that point?
      Mr. Boateng: The industry has said no such thing; it says that it is important to get the scheme right because we must ensure that it maintains its competitiveness. It welcomes the close working relationship that it has enjoyed with the Government since 1997. We would drive a coach and horses through that if we accepted any of the Opposition's amendments. I do not intend to do so, and I urge the Committee to reject the amendments, should the Opposition be foolish enough to put them to a vote.
      Mr. Chope: The Financial Secretary blusters too much. His explanation implied that some foreign lorries may not be subject to the charge. Why should that happen? It could happen if there were no reciprocal arrangement and no requirements for interoperability. Some foreign lorries that do not have the necessary technological equipment on board and which could not be made subject to the charge would be able to continue to use our roads, in competition with our own hauliers, without having to pay towards the cost of those roads.
      8.15 pm
      The fact that the Minister is not prepared to accept amendment No. 32 must ring alarm bells in the British haulage industry. It will lead hauliers to believe that although the Chancellor says that hauliers from overseas should pay their fair share, the Financial Secretary is not prepared to commit himself to ensuring that all foreign lorries will be subject to such a charge. I find his response on that extremely unsatisfactory and probably rather revealing.
      The Financial Secretary says that there will be offsetting tax reductions—a suitably vague expression. It is very hard to hold somebody to account for breaking a commitment to providing offsetting tax reductions. The Whip on the Treasury Bench smiles knowingly, but such language is so much part of new Labour. The Government say something that is designed to give the impression that the road haulage industry will not suffer any additional tax as a result of the measure, but they are using words that will enable them to wriggle later and use the measure to impose those very taxes.
      When we see the Government's record, is it any surprise that we are suspicious? That is why we drafted an amendment that sets out precisely in legal terms what the Financial Secretary said to the hauliers at his meeting with them in January this year: that there would not be any additional costs for them, compared with the existing duty regime. The Financial Secretary shakes his head, but I am told that that is what was said at that meeting.

      399
      Amendment No. 30 gives the Financial Secretary the opportunity to put on the record and in legislation the terms of his commitment. He is right—it would bind his successors. However, if a commitment is made to a major reform such as this, which necessitates the co-operation of the road haulage industry, it is important that that should be carried forward on the basis of mutual trust. What the right hon. Gentleman said in response to the arguments in support of amendment No. 30 will not have enhanced that trust and will make the haulage industry much more suspicious.
      I hope the Financial Secretary will recognise that what he said tonight will not have increased the trust between the road haulage industry and the Government. I hope that he will subsequently be able to put that right.
      Mr. Boateng: Everything that we have said tonight is consistent with what we have shared with the road haulage industry over many, many months. Our commitment is to its competitiveness and to ensuring that we get a scheme that delivers to the industry what it seeks—equal, fair treatment with foreign road hauliers. That was our manifesto commitment, and our proposal will deliver it practically and in a way that enhances and strengthens the competitiveness of the road haulage industry, which does a great job for the country and which has widely welcomed the proposal. With his contribution tonight, the hon. Member for Christchurch (Mr. Chope) has done nothing to enhance his own credibility and that of his party with the industry.
      Mr. Chope: Why are we having a war of words about a matter that should be non-controversial? [Interruption.] My hon. Friends say that we may have to press the matter to a Division. When is the measure to be introduced? The Financial Secretary told the road haulage industry that it will be brought in by March 2006, yet he is not prepared to sign up to an amendment which states that that is the date by which it should be brought in.
      Mr. Boateng: The measure could be brought in in 2005—as quickly as possible—[Interruption]
      The Second Deputy Chairman: Order.
      Mr. Chope: If that is the Financial Secretary's commitment, there is no reason why he should not accept amendment No. 31, which states that the measure should be
      "brought into effect no later than the commencement of the financial year 2006–07."
      If he introduces the measure in the spring of 2005, so much the better.
      It is symptomatic of the arrogance of this Government that they are not prepared to agree to these modest amendments. if it is not the will of the Committee to vote on them now, hon. Members may well wish to return to them at another stage. The Financial Secretary will then have a chance to reflect with the road haulage industry on the words that he has uttered tonight. When the industry has had a chance to work out what those words amount to, it may insist that we put the issue to the vote on Report, so that it can have the assurances that it seeks. Meanwhile I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 134 ordered to stand part of the Bill.
      Bill (Clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and Schedules Nos. 1, 5 and 38) reported, without amendment; to lie upon the Table.

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

    DELEGATED LEGISLATION
      ENVIRONMENTAL PROTECTION
      That the draft Offshore Chemicals Regulations 2002, which were laid before this House on 26th March, be approved.
      SOCIAL SECURITY
      That the draft Social Security and Child Support (Decisions and Appeals) (Miscellaneous Amendments) Regulations 2002, which were laid before this House on 10th April, be approved.
      SOCIAL SECURITY (NORTHERN IRELAND)
      That the draft Tax Credits (Decisions and Appeals) (Northern Ireland) (Amendment) Regulations 2002, which were laid before this House on 10th April, be approved.

      DENTISTS
      That the draft Dental Auxiliaries (Amendment) Regulations 2002, which were laid before this House on 25th April, be approved.
      That the draft Dentists Act 1984 (Dental Auxiliaries) Order 2002, which was laid before this House on 30th April, be approved.—[Mr. Woolas.]
      Question agreed to.

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

      RAILWAYS
      That this House takes note of European Union documents Nos. 5721/02 Commission Communication 'Towards an integrated European railway area', No. 5744/02 draft Directive on the safety of the Community's railways, No. 5723/01 Draft Directive amending Council Directive 96/48/EC and Directive 2001/16/EC on the interoperability of the trans-European rail system, No. 5724/02 draft Regulation establishing a European Railway Agency, No. 5726/02, Recommendation for a Council Decision authorising the Commission to negotiate the conditions for Community accession to the Convention concerning International Carriage by Rail (COTIF), and No. 5727/02, draft Directive amending Council Directive 91/440/EEC on the development of the Community's railways; and endorses the Government's approach to negotiations on these proposals in the Council. —[Mr. Woolas.]
      Question agreed to.

    STATUTORY INSTRUMENTS (JOINT COMMITTEE)
    Ordered,
    That Mr. Harold Best and Mr. Ivan Henderson be discharged from the Select Committee appointed to join with a Committee of the Lords as the Joint Committee on Statutory Instruments and Huw Irranca-Davies and Chris Mole be added to the Committee.—[Mr. Woolas.]

    TRAVEL BY HONOURABLE MEMBERS TO NATIONAL PARLIAMENTS AND EUROPEAN UNION INSTITUTIONS
    Resolved,
    That the Resolution of 26th May 1999 relating to travel by honourable Members to national parliaments and European Union institutions be rescinded and the following provision be made in its place:
    (1) That, in the opinion of this House, provision should be made as from 1st April 2002 for reimbursing honourable Members in respect of the cost of travelling on parliamentary duties between the United Kingdom and any European Union institution in Brussels, Luxembourg or Strasbourg and to the national parliament of an EU state or a candidate country and any additional expenses necessarily incurred in such travelling, subject to the conditions that

    (a) the amount payable to an honourable Member in any year, beginning with 1st April, shall not exceed the aggregate of the cost of three return business class airfares for the journey on the assumption that the journey begins and ends at a London airport and that the destination is any of the three cities mentioned above or the location of the national parliament of an EU state or a candidate country; and

    (b) subsistence for each journey made under this Resolution shall be restricted to two nights at the Civil Service class A standard subsistence rate for the time being in operation;

    (c) an honourable Member must submit in advance to the Fees Office, Department of Finance and Administration a statement of the visit's purpose, location and duration and the persons or organisations to be met; and

    (d) expenditure in pursuance of this Resolution within financial year 2002–03 shall not exceed the total currently planned for expenditure on travel by honourable Members to European Union institutions or European national parliaments within that year.

    (2) Expenditure under this Budget should form part of the General Services Budget and, if so advised by the Speaker's Advisory Panel, the Speaker and the Leader of the House shall have the power to vary the provisions of this Resolution in future financial years. —[Mr. Woolas.]

  PETITION

    Knutsford Crown Court
    8.23 pm
    Mr. George Osborne: I wish to present to the House a petition to save local justice in my county, organised by the Knutsford Guardian and many local shops, restaurants and businesses and signed by 2,603 local people in just a couple of weeks. The petition states:
    The petition of the residents of Knutsford and the surrounding area declares that they wholly reject the plans to close Knutsford Crown Court and believe closure of the historic building will make the criminal justice system more remote from local people.
    The petitioners therefore request that the House of Commons urge the Lord Chancellor to intervene on the petitioners' behalf and block the planned closure of Knutsford Crown Court.
    And the petitioners remain, etc.
    To lie upon the Table.

  Paul Edwards
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Woolas.]
  8.24 pm
  Mr. Andrew Hunter: On 23 April, the Minister for Sport replied to my parliamentary questions about UK Sport, a publicly funded body, and about the case of my constituent Mr. Paul Edwards. That followed an exchange of correspondence between the Minister and me in January and February, and a meeting in March between Sir Rodney Walker, chairman of UK Sport, Michelle Verroken, director of anti-doping, Paul Edwards, his advisers and me.
  In one of my questions, I asked the Government to
  "take measures to ensure that UK Sport has sufficient powers to conduct inquiries into previous rulings on the alleged use of performance-enhancing substances."
  I asked that because of the manifest reluctance of UK Sport, UK Athletics and the testing laboratory to reopen an issue that is convenient for them to keep closed.
  The Minister's answer referred to future, not past cases. He replied:
  "UK Sport is the lead agency for the Government's anti-doping programme. The National Anti-Doping Policy, recently launched by UK Sport, sets out standardised procedures to ensure that governing bodies of sport have consistent, transparent and accountable anti-doping procedures. The National Anti-Doping Policy has clearly defined independent review, disciplinary and appeal processes built into it."
  I sincerely hope that the Minister's faith in UK Sport's ability to preside over
  "consistent, transparent and accountable anti-doping procedures"
  is well founded. My experiences in the past six months suggest that that may not be the case.
  In those six months, UK Sport appears to have taken no effective action about Mr. Paul Edwards, and UK Athletics has refused to take any. The way forward that has been offered is, as I understand it, a recipe for even more delay. That does not inspire confidence in anti-doping procedures of the future.
  In a reply to another question, the Minister stated:
  "It would not be appropriate for Ministers to intervene in individual doping cases."—[Official Report, 23 April 2002: Vol. 384, c. 153W.]
  I agree that that would be so in an ideal world. However, in the case of my constituent, UK Sport and UK Athletics appear so far to be institutionally incapable of tackling what has become an issue of morality and justice. We have encountered stonewalling, delaying tactics, wilful prevarication and appalling obfuscation.
  There is no need for me to remind the Minister that UK Sport is wholly funded by taxpayers' and lottery money. Ultimate accountability for the use of that money rests with the Minister as a custodian of the public purse. In the case that we are considering, public money is working against individual justice.
  Incredible to relate, the testing process in the case of Paul Edwards clearly infringed the code of the International Olympic Committee. UK Sport's requirements and those of the International Amateur Athletics Federation. The tests were therefore invalid and the case against Edwards collapses. UK Sport and UK Athletics have known that for many months.

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  In testing the samples, the British Athletic Federation infringed the IOC code of testing. Appendix C of article 5:6 demands that, to maintain the integrity of analysis, the two samples must be tested by entirely different personnel. If that is not possible, the B sample must be tested at a different laboratory. That did not happen with my constituent. The same person tested both samples in the same laboratory. The tests were therefore invalid.
  The IOC medical code was also infringed. It requires the production of a chain of custody. A form, which accompanies the samples, must be signed by every custodian. In Edwards' case, it was never produced. When the deficiency was discovered, UK Sport tried to recreate one, but it did not account for the first 24 hours of the samples' transit. It is simply not possible to establish that the samples were kept free from contamination.
  UK Sport's requirements were not observed. According to its newsletter in December 1996, the pH level of the sample had to be recorded by the sampling officer at the time of collection. In the case of Paul Edwards, the sampling officer did not do that. He thereby failed to follow the procedures required by UK Sport. By its own standards, the tests were invalid.
  More than that, IAAF requirements were not observed. It has been accepted that poor storage leading to sample deterioration can distort epitestosterone-to-testosterone ratios. At the time, the IAAF required both pH and specific gravity data to be taken. In Edwards' case, they were not, so the tests also failed to conform to IAAF standards.
  The IAAF would have required a second sample to be collected if the first sample had had a pH level in excess of 7—the acceptable range being between 5 and 7. Even if the pH had been measured and accepted at 7, however, the laboratory reading of 7.3 would indicate deterioration in the sample between collection and testing, owing to poor storage after collection and before testing. Moreover, a pH reading of 7.3 exceeds accountability guidelines for the processing of samples. I understand that it was this point that eventually cleared Diane Modahl. In Edwards' case, it has been ignored.
  The infringement of IOC, IAAF and UK Sport requirements is not the end of the story, however: it is nothing like it. Just as extraordinary is the fact that the laboratory never produced the calibration data without which the soundness of the testing process cannot be established. It cannot, therefore, be established that the tests were sound. The disciplinary committee chairman confirmed:
  "We observe that it is not possible to make a quantitative assessment of the epitestosterone to testosterone ratios because no calibration data have been provided. We consider that in the future it should be."
  Amazingly, having admitted this deficiency, the chairman went on to base his ruling on what was an unproven and entirely assumed epitestosterone—testosterone ratio. It beggars belief that an athlete's career has been destroyed on this basis. Moreover, I am told that it was this precise point—the absence of calibration data—which led to the lifting of the ban on Mark Hylton on appeal. What happened with Hylton should have happened with Edwards.
  In Edwards' case, credulity is stretched even further. His tests are recorded as having been completed in three minutes. Other sampling officers are prepared to stake
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  their integrity on the assertion that accurate testing cannot possibly take place so quickly. On this, UK Sport's reaction is extraordinary. It hides behind its own regulations and refuses to comment. It has stated:
  "As it is the policy of UK Sport that its sampling officers may not discuss individual cases or comment on procedures followed, comments by sampling officers are not recognised as fact".
  In other words, UK Sport is prepared to ignore what a sampling officer says if his comments are inconvenient or embarrassing.
  This is still not the end of the saga. For five years, my constituent has protested that information essential to his defence was withheld from him. The testing laboratory, UK Athletics and UK Sport denied this, time and again, until 5 February this year, when UK Athletics wrote to him:
  "UKA accepts that certain information requested by you was not provided prior to the hearings"
  As Edwards has always argued, this meant that he could not expose the defects of the testing process during the hearings. Even his many requests for data protection were refused.
  The saga continues. The samples provided by Edwards were stored in Versapak containers. Even at the time, it was acknowledged that these were unreliable. In UK Sport's own words,
  "we could not guarantee that it"—
  the Versapak closure system—
  "reached the standard UK Sport wanted to achieve for the security of its sample collection system",
  but
  "no reasonable alternative was on the market at that time."
  In other words, there was no reliable container system at the time. Incredibly, UK Sport and UK Athletics persist in saying that this has no bearing on the case. In fact, this confirms absolutely the unreliability of the testing process in Edwards' case.
  It would be hard to compose a saga of greater incompetence than that involved in the circumstances of the testing process and hearings that led to the imposition of Paul Edwards' life ban. There were appalling irregularities and glaring inconsistencies: it was a total shambles. UK Athletics insists that the panels hearing Edwards' case were independent, yet all three were wholly appointed by UK Athletics. Moreover, at one of the hearings there was no one competent or qualified to receive scientific evidence.
  Mr. David Moorcroft of UK Athletics is on record as saying that the standard of evidence required in dope-testing cases must be at least as high as the standard required in a criminal court. If only that were true. In a criminal court, the so-called evidence against Paul Edwards would have been thrown out years ago on the basis that it was fundamentally flawed.
  The Minister is a fair and reasonable man. He will know, even if is not politic for him to acknowledge it publicly this evening, that any one of the irregularities I have listed would be sufficient for the charges to be dismissed in a criminal court of law. An appalling injustice has been inflicted on my constituent, and I am dismayed that UK Sport and UK Athletics have so far failed to deliver justice.

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  What confidence can anyone have that UK Sport can be an effective lead agency, and UK Athletics a led agency, in a national anti-doping policy that is consistent, transparent and accountable, when they cannot put right the monstrous injustice to my constituent that is being perpetrated? The time is long overdue for my constituent's life ban to be lifted. That is only right, and I appeal to the Minister.
  8.37 pm
  The Minister for Sport (Mr. Richard Caborn): I congratulate the hon. Member for Basingstoke (Mr. Hunter) on securing the debate. I know that he supports his constituent passionately, as is absolutely right.
  In recent months—indeed, years—this subject has risen on the political agenda. Most people now recognise that the use of drugs in sport constitutes cheating, and undermines the integrity of sport. Indeed, it probably tarnishes sport more than any other problem it encounters. The Government and I are committed to the battle against doping in sport, and I welcome the opportunity to debate it this evening.
  In the United Kingdom, we are committed to achieving a partnership between sport and Government to tackle these problems. The Government fund UK Sport to undertake, among other things, the Government's programme of action to combat the use of drugs in sport. UK Sport's anti-drugs programme includes in-competition and out-of-competition testing of athletes, the development of a national policy framework, and the provision of education and information services for athletes and sports governing bodies. The cornerstone of the programme has been the introduction of the anti-doping policy.
  Over the last two years UK Sport, in co-operation with sports governing bodies, has made considerable efforts to develop minimum standards for anti-doping procedures in the UK, and has consulted extensively on the proposals. I was pleased and honoured to attend the launch of the national anti-doping policy in January.
  The need to respond to major changes in sport, such as the increased availability of supplements, the use of blood testing and concerns about the adequacy and consistency of disciplinary procedures, added a fresh urgency to the need for a strong national policy. That policy provides the framework for a coherent, rigorous and accountable anti-doping system that is based on four key elements. First, it promotes greater consistency in procedures and decision making across governing bodies and sports federations. Secondly, transparency and accountability enable the setting of clear minimum standards that need to be achieved, of clear lines of responsibility for all involved in the process, and the establishment of open accountability in the management of results. Thirdly, an independent review and disciplinary and appeals process sets out a clearly defined timetable for the initiation of each stage of the process. It also establishes standards and procedures for independent decision makers, and clear reinstatement conditions. Fourthly, accountability of funding provides a consistent framework for the investment of public funding in sport, and for the suspension of lottery funding for those who commit doping offences.
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  The purpose of the national anti-doping policy is to set out clear guidelines and lines of responsibility for all involved in the anti-doping procedures, not just governing bodies. The policy also requires ongoing compliance, so that all concerned are closely monitored to take into account developments in programmes and procedures. Through the development of the national anti-doping policy, the UK has established a rigorous and effective anti-doping programme that is rightly regarded as probably one of the best in the world.
  UK Sport has also taken account of significant international developments in anti-doping. The welcome step of setting up the World Anti-Doping Agency in 1999 moved international co-operation against doping to a new level, and gave an added impetus to the development of the national anti-doping policy. WADA's ability to take effective action against doping relies on the existence of national standards that are in line with international agreements. The UK's national anti-doping policy has been developed in accordance with the international standards and procedures that WADA has endorsed and adopted.
  We are one of the first countries to produce a national policy that complies fully with the international standard; in doing so, we are helping to maintain our leadership role on the international stage in the fight against doping. We are hopeful that the International Federation for Sport will adopt the standards promoted by WADA to ensure complete consistency worldwide.
  UK Sport is subject to scrutiny by bodies such as the British Standards Institution. WADA and the international standards organisation. As we know, they are powerful, transparent and well-respected bodies, and we are scrutinised by them. Achieving certification by those bodies provides an independent assessment of the validity and effectiveness of their anti-doping programme and procedures. In addition, the National Audit Office—another well-respected organisation that does much work for this House, and which applies its principles rigorously—audits UK Sport's anti-doping procedures.
  In short, the new policy provides a consistent and transparent system that benefits athletes, governing bodies and sports fans alike. Those key features should reassure the hon. Gentleman that our anti-doping programme has adequate levels of independent scrutiny, and meets the relevant standards currently in place nationally and internationally. I want to put on the record the fact that the staff of UK Sport carry out their work very professionally. The other day, I had a pleasant discussion on anti-doping with the president of the International Olympic Committee, who mentioned the role that UK Sport and the British institutions have played in developing international standards. Indeed, the treasurer of WADA is one of the officers of the British Olympic Association.
  The hon. Gentleman expressed a number of concerns about the individual case of an athlete in the UK—Paul Edwards—and it is important to respond to those concerns. It would be helpful to clarify the roles and responsibilities of the different bodies involved in any doping case. As Minister for Sport, my role is to ensure that the UK has in place appropriate policies and procedures to achieve a drug-free environment in sport. To that end, we have put in place an anti-doping agency, UK Sport, to undertake the Government's programme of action.

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  UK Sport is responsible to the Government and its role is twofold. First, it is responsible for managing the UK's anti-doping testing programme. Secondly, it is responsible for ensuring that the national governing bodies of sport comply with the national anti-doping policy.
  Following a positive test, it is the governing body's responsibility to decide what action to take and to ensure that an athlete receives full access to appropriate independent review and appeal procedures to establish the final outcome. That would include an independent review of the evidence in the case; a disciplinary hearing; and an appeal hearing, if requested. It should be made clear that Government have no direct responsibility for the actions taken by governing bodies here. Contravening anti-doping regulations is a matter of professional misconduct in sport, and the decision to ban an athlete as a result of a positive drug test is a matter for the national governing body of any sport and that sport's international federation.
  In the Edwards case, the procedures operated by the relevant sports governing body at the time conformed to the national anti-doping policy by including an independent review of the evidence, a disciplinary hearing and an appeal hearing, all of which were conducted before a Queen's Counsel. The procedures and the appeal complied fully with the policy. However, Mr. Edwards has continued to query a number of issues relating to his case, so UK Sport has offered to look into his concerns. If a doping case has been through all the relevant independent review and appeal procedures, UK Sport is not required to do that. It has agreed to do so in Mr. Edwards' case because of his assertion that new evidence has come to light.
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  UK Sport's investigations will seek responses from the various parties responsible for the stages of the procedures being questioned and will confirm whether the procedures have been appropriately followed or whether new information or evidence is being presented that should be reviewed. UK Sport's investigation is still ongoing and it would not be appropriate for me to comment at this stage.
  Apart from the investigation by UK Sport, Mr. Edwards could ask for his case to be referred to an independent sports tribunal such as the sports dispute resolution panel or the court of arbitration for sport. All the relevant parties involved in the case would have to agree to that course of action. If Mr. Edwards has concerns specifically about the role of UK Sport, it would be possible, within the constraints of the Parliamentary Commissioner Act 1967, for the hon. Gentleman, on behalf of his constituent, to ask the Parliamentary Commissioner for Administration, the ombudsman, to look into its actions.
  I would, therefore, like to reassure the hon. Gentleman that the Government are committed to ensuring that the UK has in place strong, robust procedures for tackling the problem of doping in sport. An essential component of such procedures must, of course, be the facility for athletes to have the opportunity to clear their names. As I have explained, there are clear and well-defined avenues to address complaints that arise from cases such as this one. As a result, I can also assure the hon. Gentleman that he can have confidence in UK Sport as the lead agency for anti-doping in the UK and in the national anti-doping policy as an effective instrument to combat the problem of doping in sport. That is the right way forward.
  Question put and agreed to.
  Adjourned accordingly at eleven minutes to Nine o'clock.

Preamble
[SIR MICHAEL LORD in the Chair]

End of Life Vehicles Directive
[Relevant documents: First Report from the Trade and Industry Committee Session 2001-02 HC 299 and Second Special Report (Government Reply).]
Motion made, and Question proposed, That the sitting be now adjourned.—[ Mr.Heppe11.]
2.30 pm
Mr. Martin O'Neill: I am pleased to obtain this debate because the end of life vehicles directive is important. It was the subject of the first inquiry on which the Select Committee on Trade and Industry embarked after the general election. That inquiry resulted in a report that was published at the end of November last year. The Government responded towards the end of February. Their response was in the public domain in March. The directive took effect on 21 April 2002.
The purpose of the directive is to ensure harmonisation of the different schemes for dealing with cars that have reached the end of their useful lives. On average, that occurs after 16.3 years. However, as with all averages, it is probably misleading because some cars have engines that continue to operate much longer and some have bodywork that will not stand up to the engine—rather like human beings.
The intention of the directive is to provide a Community-wide framework to deal with 8 million to 9 million tonnes of waste throughout the European Union. Its aim is to reduce that amount of waste by encouraging and facilitating the recycling of some of the materials used in the assembly of motor cars. The directive has a preference for reuse and recycling.
The directive requires member states to ensure that systems are in place for the collection, treatment and recovery of end of life vehicles. The last holder or owner of a car is required to deliver it to an authorised treatment facility without cost, even when the vehicle has no value or even negative value. Member states are required to ensure that producers meet all, or a significant part, of the costs. The directive covers end of life vehicles, components and materials, as well as spares and replacements, without prejudice to safety standards, air emissions and noise controls. There is an exemption for vintage vehicles.
It must be emphasised that, from conception of a vehicle, preventive measures should be implemented to avoid waste and heavy metals being integrated into design and production, with quantified targets for those objectives. The directive is both retrospective and prospective: it covers cars that have already been produced and that, after 2007 vehicles, will be constructed in a way that allows recycling and a reduction in heavy metals. Obviously, it is desirable to have a smaller amount of unacceptable materials included in the construction of cars. Their construction
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and design, and the components from which they are assembled, should effectively and economically facilitate recycling.
The directive is nothing if not prescriptive, and the areas to be covered are clear. The motivation behind it is to protect the environment, end the abandonment of ELVs and recycle dismantled parts, but the Select Committee's main concern was its impact on the car industry and on the infrastructure for dismantling and treating the materials that remain. Ensuring that due attention is paid to the environment is not the direct remit of the Department of Trade and Industry, although it is part of it. The Committee was, therefore, preoccupied with the protection of the British manufacturing base, particularly the car industry.
There are different areas of concern within the car industry's manufacturing and assembly base. Of the old, established firms, which are responsible for a substantial part of car production, Rover, General Motors and Ford have the biggest car part—they are responsible for the largest number of cars in production—in the earliest period considered in the directive. New entrants such as Toyota, Peugeot, Honda and Nissan have different difficulties, which I shall consider in a moment.
Rover, GM and Ford have, however, all seen their market share diminish, which has left them with a smaller resource base to fund their obligations under the directive. It could be argued that multinationals such as Ford and GM are major international players, which could be expected to shoulder their burden and to spread it over a broader cost base. They are, however, still vulnerable to the cut-throat competition on the world market. If the Department of Trade and Industry and the other ministries responsible for this issue make the wrong decision, it could have implications for investment into Britain. Areas such as new plant and new models could be subjected to a shift of priority from one country to another, which would have consequences for British manufacturing.
MG Rover is not a multinational, but a British company. It is emerging with some success from a difficult period, but will face the consequences of a marked decline in market share. As a result, its existing base will be extremely limited and vulnerable. Proper consideration must be given to its problems with meeting its responsibilities under the directive. Although it is making a good fist of the targets that it has set itself, it has yet to reach even medium-term self-sustaining growth. It has done well in the short term, but there is a long way to go. It would be tragic if this British manufacturer, which could be great again, was encumbered with responsibilities that it could not reasonably be expected to meet.
The plight of the newer players is different, but none the less parlous. Companies based in the UK are already wrestling with the eurozone and the prospect of further price cuts in the UK following the, I hope, dramatic changes in the block exemption, which we hope will come before too long. The financial position of those firms is not too robust. Were a company to introduce a model in 2003 with a lifespan of four or five years at most, by 2007, there would be a requirement for production by that manufacturer, whether of the old or new generation, to comply with the directive and to be recycle-friendly. Unless proper guidance is given very quickly, lines that are being designed and built might

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have to change in the middle of the production cycle, resulting in considerable cost to the company. Companies should know from the outset what the requirements will be and how they will be incorporated in production runs, if there is a case for the production line to be changed in mid-life.
Both the old hands and the new players fear that the cost apportionment of current versus historic market share could result in some companies paying considerably more than they should. Companies with ambitions to increase their share—some new players have recently experienced a dramatic increase in their share of the market—may become responsible for a contribution based on market share at a time that does not relate to the number of motor cars that fall into the ELV category. Therefore, they would pay more of their share than companies such as Ford and GM, which can better shoulder the burden, even if they experience a decline in market share.
No part of the car assembly manufacturing industry would remain unaffected by a clumsy and maladroit application of the directive by the DTI. I am not saying that such a clumsy application will necessarily happen, but flagging up a concern. There is a great responsibility on the Government and officials to take proper account of important concerns such as the impact of declining market share and how to evaluate the size of responsibility, based on an arbitrary application of market share rules.
Mr. John Taylor: The hon. Gentleman referred to the big players among motor manufacturers. Will he concede, for the sake of the record, that Ford in United Kingdom terms means not only Ford but Jaguar and Land Rover?
Mr. O'Neill: I take the hon. Gentleman's point and do not want to dispute with him, but my main interest is in volume production cars. That is the area of greatest concern to me. A German Member of the Bundestag might ask about Mercedes, but Jaguars, Land Rovers and Mercedes fall into a different category from volume production cars. Cars such as Mercedes and Jaguars are made to a higher specification and have a longer potential life, so the ELV question is not quite of the same order.
Also, when luxury cars reach the end of their life in the United Kingdom, they can become attractive elsewhere in the world, in places where such marques are too expensive earlier in their life. The second-hand market is of a different order. I take the point made by the hon. Gentleman but it is not so important compared with the worries of the volume car producers—new entrants to the UK market—which see themselves producing even greater volumes in the not too distant future.
One theme that was raised several times in our report—it will probably be repeated today—is that the Government must make up their mind early in the day, in order to give companies the opportunity to plan and to make proper provision.
Mr. Philip Hammond: I tend to agree with the hon. Gentleman, but
does he
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concede that one month after the directive was supposed to be transposed into international law could scarcely be described as early in the day?
Mr. O'Neill: The hon. Gentleman confuses the requirement to transpose the directive into international law and the requirement to put it into effect. There is a time delay, and the clock is running perhaps more quickly than the Government would like. He used a cheap debating shot in asking that question. He would have done better to save it for his summing up. He may yet choose to do so, but it is not a good shot. There are good ones, but that is not one of them.
It can be explained simply. There are about 12 months between the directive entering the corpus of legislation and its beginning to bite. We have to take decisions by 2007, but we must remember that those who design and assemble new cars in the UK will want their production runs to be on all fours with the objectives of the directive, and they need an indication of the decision as soon as possible. Before we get to that stage, however, we must take account of the concerns of those responsible for dismantling, recycling and shredding vehicles. They will need to know what will be required of them and how it is to be funded. As important, of course, motorists will want to know how much they will be expected to contribute.
Underlying it all, the system for ELVs needs to be effective and enforceable, not only to ensure the collection and dismantling of vehicles, but to resolve disputes. The matter of dispute resolution is central when it comes to the apportionment of cost. How valuable is a car? Has it a negative value, or is it worthless? As a consequence of the Finance Bill, changes will be made in the requirement to inform the authorities, so the abandonment issue is beginning to be addressed, but at somewhat glacial speed. The press notice from the Departments for Environment, Food and Rural Affairs and for Transport, Local Government and the Regions of 10 April goes some way to meeting concerns about abandonment, but apart from issuing platitudes about the Enterprise Bill, the Minister will need to tell us what is being done about the processing of ELVs, and particularly what will happen to cowboy shredders.
Will the Environment Agency have the necessary resources to play its part? Will it have the finance and the people to police things? We are talking about a sizeable number of small enterprises, which will come and go and which will probably be barely registered for value added tax and the like. The other irony is that if the Environment Agency gets the resources, has the people and is able to police the measures, and there is a consequent diminution in the significance of the cowboy, a greater burden will be placed on legitimate operators in this area. They will have to carry out far more work, probably to more environmentally demanding standards than ever before.
Those operators will have to be carried along, and their trade association is correct to express anxieties about the issue. It does not know how much will be demanded of them. It is not necessarily confident that those who are interested in participating in this activity will be in a position to do so if they are not sure how profitable it will be in future. It is all very well hiding

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behind the froth of the Enterprise Bill, but we need rather more than that, and I hope that the Minister will address the matter this afternoon.
The question of the permitting of authorised treatment facilities is simple. As I understand it, no proper assessment has yet been made of the costs of getting such facilities. People will want to work out what their investment responsibilities will be if they continue in that area. That is dealt with in a rather intriguing part of our report. Anyone coming to it without having read the rest of the report—I know that the Minister will have read all of it very assiduously—might think that the term "certificates of destruction" suggests more a heavy metal band than a certificate that shows that vehicles should have been destroyed.
My only worry about that is that the Driver and Vehicle Licensing Agency will have a central role in the certificate of destruction process. It would stretch the truth to say that, in the world of public administration, the DVLA is among the sharpest tools in the box. Many of us, when dealing with the agency on behalf of constituents, have found that it is one of those arm's-length Executive agencies with which one must, to say the least, be patient and tolerant. Its flexibility on occasions has not been as evident as one would like. We hope that it will be able to raise its game sufficiently to meet the challenge. The Minister is doubtless giving a sigh of relief that the DVLA is not the responsibility of his Department. However, he might nod in its direction and give us some reassurance. I would like to think that he could consider that area.
There is still a yawning gap as regards finance. We have considered various options, but the question of the trade-sponsored option 4 still has to be dealt with. We would like to know how the dialogue is progressing between vehicle manufacturers and shredders and the Government on that option. When can we expect a Government response? The reply that we received is peppered with phrases such as, "You can expect a response before too long." If the Government do not have a clue, they do not even put a time qualification on it. However, option 4 is of such significance that I would like to be given some guidance today on what is happening. The issue is not of earth-shattering significance, but many businesses, involving many jobs, are looking to this debate for some indication of progress and development in Government thinking.
Chris Grayling: I refer hon. Members to my entry in the Register of Members' Interests. I am not sure that I agree that the issue is not one of earth-shattering importance. The industry has changed dramatically during a 20 or 30-year period. There are different manufacturers in the marketplace. If the Government get the decision wrong, the impact on the industry—old or new—could be severe. Therefore, it is important that when the Government take a decision, which I hope they will do sooner rather than later, they recognise the realities of the motor industry and do not damage employment in the industry.
Mr. O'Neill: Had the hon. Member been present for the opening part of my speech, he would have heard me say that. In the great scheme of things, it is not the biggest issue, but it is important to many who want to make important management decisions that require
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some indication of what the financial basis for their future actions is to be. It might be the man in the yard who realises that he must get his act together in order to keep dismantling, shredding and doing that kind of work, or the company that wants to know whether it should have another model in the UK, or whether the uncertainty will make it prohibitively expensive to get a line here. The issue affects a broad range of people, and will become important only if things that should happen do not—then it will be too late. That is the point that we are probably both groping towards.
I should like to think that we could get some guidance today on the matter of funding. Where will it come from, to whom will it go and in what order will it go? In such areas of dispute, what kind of arbitration procedure is likely to emerge with the negative value adjudication scheme?
I have barely mentioned the car owners. I was going to say "poor car owners", and could do so in the sense that I am sorry for them. Many of the people we are considering have bought cars towards the ends of their lives. They are among the poorest drivers in the country and have the lowest incomes. They have cars not for joy riding but because they need them for their employment. They can buy only the cheapest cars available. The responsibilities of such individuals must be made clear to the rest of the motoring public. We need an indication of the Government's thinking about whether there should be a levy on car insurance, an increase in vehicle excise duty or some formal contribution. If sizeable sums are to be spent in the short term, one would imagine that the funds raised in any year would be insufficient to meet the challenges. It could be the subject of a medium to longer-term taper.
We are conscious that this measure is necessary. It is, in some respects, desirable. It would be helpful if our motor cars were easy to dismantle and assembled from environmentally friendly components, and if we could avoid the disfigurement of our towns and villages by abandoned cars. It is little consolation, when one drives past an abandoned car, that after the third day there is a sticker on it from the police saying, basically, "We know that the car has been abandoned, we do not think that it is criminal, but we do not think that it is very important either; we have far more important things to do." Before long, kids start taking the wheels off, somebody sets fire to it and it becomes a hazard. We can do without that. That is one of the elements that is most evident to the public. We need clear guidance.
I recognise that my hon. Friend the Minister is not responsible for those matters, but we are talking not just to the DTI; we are talking to Government. The message will, perhaps, trickle down to other parts of the broader Government machine, which we would like to think could handle these matters. However, I am sure that my colleagues on the Select Committee, as well as other hon. Members who are assembled here today, would like an assurance that the DTI will not only continue to promote the measures that are required by the directive, but monitor their implementation to minimise the dangers of confusion and disruption, and that the Government will make the appropriate information available to the players as early as possible.
In the report that we produced at the end of November, which was published at the end of December, we requested that there should be some form

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of information programme early in the new year. When I looked at the DTI website today, I did not see much evidence of proaction. Apart from the froth relating to the Enterprise Bill, it included little from the DTLR or other Departments responsible. Having said that, I do not wish to suggest that we are running out of time yet—we are not. We still have some months in one or two areas and a little longer in others, but that is no grounds for complacency or for hand-wringing and saying, "It may be difficult, but we will get round to it eventually." Many clever people are employed at considerable expense to take on responsibility for solving such problems.
Miss Julie Kirkbride: Will the hon. Gentleman give way?
Mr. O'Neill: I am just about to finish.
There are many people who, when presented with a European directive, are energised into providing a form of words that is so all-encompassing and watertight that no one can ever get around it, but there is a more pragmatic, flexible approach abroad. When one asks British civil servants why they took a certain line, they say, "Because we do not want to be challenged in the courts." There is paranoia, especially manifest in the DTI headquarters at Victoria street, that European directives must be perfect, and that nothing can be done unless that perfection is matched in their implementation, and then we find that there are contradictions, problems and difficulties.
I would like to think that, in this instance, we could show some pragmatism and realism. The best need not necessarily be the enemy of the good. Many jobs and important work in this country depend on the successful and appropriate implementation of the directive. I would like to think that this debate could reassure those outside, who will be looking to the Minister for guidance and leadership, that the directive can be successfully implemented, and not at the expense of British manufacturing, jobs or motorists.
3.3 pm
Mr. John Taylor: I wish to make a brief contribution to the debate. I have a west midlands motor-manufacturing constituency, although I carry no one's brief into the discussion. I have other duties elsewhere in the Palace of Westminster later this afternoon, so if I do not stay to the end of the debate, no discourtesy is intended to you, Mr. Deputy Speaker, to the Minister or to the Chairman of the Select Committee.
The Select Committee has done a good job in providing a report on a subject that is probably far more urgent and important than has so far been suggested. That is not a criticism. I am anxious, because the largest component of the economy in my constituency is an organisation that everyone will have heard of, Land Rover. The company employs 9,000 people in my constituency, and it is said that for every job on the plant, there are eight or nine off it. Land Rover is a serious employer in the midlands, although the hon. Member for Ochil (Mr. O'Neill) and I have already
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realised that Land Rover is not central to the focus of the directive. In every general election, I have a Land Rover for a campaign vehicle. On one occasion I said the Land Rover that I was driving was 17 years old. I then received a furious telephone call from its owner, who had lent it to me, telling me that I had no business saying that as it was 27 years old. Land Rovers that were made immediately after world war 2 are still operating.
My constituency is not in the eye of the storm or likely to be heavily affected. The hon. Member for Birmingham, Northfield (Richard Burden) might feel that the storm is closer to him, likewise my hon. Friend the Member for Bromsgrove (Miss Kirkbride). I come to the issue from a rather unusual angle, which might be seen as uncomfortable or unexpected. However, hon. Members will be relieved to hear that my speech will be brief as it will not take me long to deliver my message.
In the normal course of commerce, someone manufactures a commodity and sells it either directly or through an agent or distributor, as is common in the motor industry. The moment of sale—the point at which money and goods are handed over—is sometimes the end of the matter, but not always. There are continuing rights and obligations after sale: for example, if goods are dangerous, criminal law may have something to say about their sale; the law of tort will have something to say about goods being fit for purpose and of merchantable quality; the law of contract may partially override those common-law concepts in the form of warranties and guarantees. When I was a practising lawyer, I used to advise my clients to be wary of signing warranties and guarantees, because they generally take away more rights than they give. The common law is a good protector of the buyer, and it is usually superior to the warranty.
Part of the story of the 20th century is concerned with hire purchase, finance agreements, credit sale and the like—arrangements in which the buyer might complete paying the price over a period of time. For various reasons, business between the seller and buyer may not be concluded at the moment of sale. We are used to the fact that the sale of merchandise is not a cut-off point. In this debate, however, we are dealing with something new: we are imposing on the manufacturer an obligation that lives long after the sale, possibly onward to the sixth or seventh owner of the motor vehicle, who is unknown to the manufacturer at the time of manufacture. I am concerned about creating that new obligation on manufacturers.
I unashamedly come to the matter from the position of the manufacturer. We all know that the motor industry is extremely competitive, and that there is huge overcapacity in the world. That is why the Ford Motor Company has changed its original philosophy from one of great quantity and small margin to one of small quantity and high margin. Range Rovers—vehicles of which everybody will have heard—are made in my constituency under the ultimate patronage of the Ford Motor Company. One can pay £65,000 for one of them, and the profit margin will be far greater than on the humble Escort. I am not demeaning the Escort, which is a fine piece of engineering. Like most Ford products, it is subject to the highest degree of research and development and it is a fine car, but nobody should imagine that the profit margin for those involved in its

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manufacture and sale is the same as that derived from a Range Rover, which is why Ford is moving to a different part of the market.
Given the overcapacity in the world automobile industry, we must try to minimise the disadvantage to manufacturers in the United Kingdom. That is not protectionism; it is common sense. The directive is a new obligation that will ultimately fall on the manufacturer, and I am concerned about it. Why are we doing that to motor cars and not to anything else? As the old Greek geometers used to do, let me reduce the matter to absurdity by asking why do we not apply the directive to pairs of shoes, or even newspapers? The pragmatic answer is that it is easy to throw a newspaper in a wastepaper bin or to throw a pair of spent shoes into a dustbin.
Perhaps the key to the matter is size or chemical content. It is true that motor cars contain metal chemistry that could be dangerous. I shall not pursue that line of argument unduly, save to say that the directive is unusual, special and targeted, and it must carry a cost.
Dr. Vincent Cable: Does the hon. Gentleman not recognise that precisely the same logic has been applied—with disastrous consequences—to refrigerators and will be applied in due course to televisions? The directive is far from unique and there are lessons to be learned.
Mr. Taylor: I am extremely grateful to the hon. Gentleman for his intervention, which has widened the horizon. I am glad that he spoke along those lines. If we want to live in a free society we have to live in a responsible society. That means that responsibility rests above all with the owner of a product that is coming to the end of its life. We cannot live in a nanny state in which a European directive will magically come along and save us. To borrow the hon. Gentleman's example, if a television set or refrigerator has come to the end of its life, my proposition, which is at least worth examining, is that the person responsible for its disposal is its owner. The owner should make proper inquiries with whatever disposal agencies there are in the area to discover how to get rid of that television set. In my borough of Solihull in the west midlands, the waste disposal authority will answer that question and will often provide assistance.
The hon. Gentleman might have persuaded me that the directive is not unique; however, it is relatively narrow. My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) will say in due course that there will be no end to it because it will expand and extend. The old adage used to be caveat emptor—let the buyer beware. Adages that should not be lost in this debate are let the owner take care, let the owner make inquiries and let the owner dispose. Please do not add a further burden to our industries in a very competitive area of overcapacity.
Dr. Ashok Kumar: The hon. Gentleman mentioned constituents who ask how to dispose of certain
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products. Surely something needs to be done about individuals who do not ask that question. That is why the directive is necessary.
Mr. Taylor: I am grateful to the hon. Gentleman. I am talking about a responsible society, and I am not sure that the directive moves us further in the direction of a responsible society; if anything, it moves us further away from one. The person who wants to dispose of an item should make such an inquiry. Later in the debate, the hon. Gentleman might suggest what sanction he has in mind for the person who is relatively reckless, but I do not design my society around reckless people. I conceive my society around responsible people. [Interruption.] The hon. Member for Ochil makes a comment to which I would be happy to respond, but I did not hear it.
Mr. O'Neill: I was being facetious, but I thought that in his previous incarnation the hon. Gentleman was a criminal lawyer.
Mr. Taylor: I accept that point, but I have to say that I am still in the same incarnation as I was then. If I do come back, it will certainly be to this place, if that is possible, and as a Conservative. My useful remarks have reached their conclusion. I thank hon. Members for their courtesy in listening to me.
3.15 pm
Richard Burden: I must try to work out how to follow that last comment—something about there being life after death in the Conservative party springs to mind.
I am pleased to follow the hon. Member for Solihull (Mr. Taylor), whom I know well. I am speculating on the concept of a Land Rover ever reaching the end of its life. That is a condition not often applied to Land Rovers; they tend not to do that. I welcome the debate, and compliment my hon. Friend the Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee, on the comprehensive way in which he has introduced it.
In this place, we have quick Corridor discussions in which as well as saying, "Hello, how are you doing?" people ask, "What are you up to at the moment?" or "What are you working on?" There was a period during the Select Committee's inquiry when I was getting approaches from the motor industry, dismantlers and others, and the end of life vehicles directive was occupying a great deal of my time. At that time, when asked those questions, I would turn and answer, "Well, actually, I'm doing quite a lot on the end of life vehicles directive," which would prompt a rather pitying look in people's eyes. That look became even more pitying when I shook them and said, "I know it sounds boring and tedious, but it really is very important." I almost got the impression that while trainspotters have a—perhaps unwarranted—bad name, end of life vehicle spotters have an even worse one.
However, we have to deal with this important matter. The hon. Member for Solihull took a philosophical view of whether such a directive should exist. I might take issue with some of his arguments, but his view does not acknowledge the position that we are in. The directive does exist, and we must deal with it and work out the best way to apply it. That presents us with various

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problems in different areas. We must apply it in such a way that, so far as possible, the directive helps to address the real problem of abandoned vehicles and does not exacerbate it.
Competitiveness, including the competitiveness of the manufacturing industry, is important. The hon. Gentleman and my hon. Friend the Member for Ochil rightly stressed the fact that vehicle manufacturing is a highly competitive and ruthless industry in which price means a great deal and the margins for particular manufacturers can be very slim. We are also dealing with issues of competitiveness in another industry—the disposal, shredding and dismantling industry, which can also accurately describe itself as a cut-throat industry where competition causes real problems.
We need to get our policy right and do so in a way that takes account of not only those two legitimate interests, but the interests of those whom my hon. Friend the Member for Ochil referred to as the "poor car owners", who must not be forgotten. He is absolutely right to point out that the car owners most affected in practice by the directive will often be those who are least able to pay. It is a difficult problem, and one on which the clock is ticking. We must get it sorted out, but we also have to get it right.
I will concentrate on three issues, although the directive covers many different ones. First, there is the question of accrual to which my hon. Friend referred. How should producer responsibility be calculated within the vehicle manufacturing industry? Accrual involves the question of historic car parc versus current market share. Secondly, we should explore the relationship between what we do in the United Kingdom and the way in which the directive may be applied in other parts of the European Union. Thirdly, what is the fairest way of implementing the directive, which states that from 2007 producers have to meet all or a significant part of the cost of take-back and treatment? I would like to explore the relationship between the directive and questions of fairness, efficiency and competitiveness in the vehicle manufacturing sector and the dismantling and disposal sector.
If there is to be a liability in the vehicle manufacturing industry, how is that to be spread? How can the problem of historic car parc and accrual be taken into account? Even though Ford Escorts are no longer manufactured, it is clear which company manufactured them: the company was and still is called the Ford Motor Company. Even if we went back further and considered a much older model, the Ford Popular, it is pretty clear which company manufactured it. It is still Ford.
Mr. John Taylor: What would be the position regarding an end of life car that was originally made in Japan?
Richard Burden: If the hon. Gentleman can contain himself, I am coming to precisely that point, but before we consider cars that are made in Japan, I would like to mention other historic names that are not around any more. What if one owns a Standard Vanguard, a Triumph Toledo or a Wolsley Hornet? Which
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companies produced those cars, and who has responsibility for them now? The names are quite well known in the industry.
Miss Kirkbride: The hon. Gentleman raises an important and interesting question. My fear is that our joint car company actually owns those makes now, even though they are not being made. Will he clarify whether the responsibility, under what he thinks that the law might be, would rest with Rover?
Richard Burden: The hon. Lady has got two out of three. I mentioned the Standard Vanguard, Triumph Toledo and Wolsley Hornet. In fact, they all transmogrified into the British Motor Corporation, then British Leyland, which was taken over by BMW, and two are now owned by a company called MG Rover. However, Triumph is still part of BMW. That was an issue in 2000, but I will not go down that road.
The assumption behind the directive, and an assumption often made about the motor industry generally, is that smaller players are gobbled up over time by bigger and bigger corporations. That is what happens in most cases, most of the time, but it does not happen in all cases, and that is why the hon. Lady is right. She is particularly right about MG Rover. Those little companies did go into the British Motor Corporation, then British Leyland, and eventually they became part of BMW. When BMW pulled out in 2000, MG Rover was created, which is clearly a small to medium-sized car producer.
I have to declare a constituency interest. MG Rover's manufacturing plant is in Longbridge in my constituency. The engine plant is in the hon. Lady's constituency across the road. The company has achieved great things since it became MG Rover in 2000—in fact, it has achieved things that at the time most of the industry analysts said were impossible. However, it is still a small company operating in a very competitive market. If the directive is implemented in the wrong way, the consequences for the company could be severe.
As my hon. Friend the Member for Ochil said, there is no easy answer to how to spread the cost within the industry. MG Rover has about 4 per cent. market share. It is struggling, but it is doing very well and shows every likelihood of making it. If one hits such a company with a liability to pick up the tab for about 10 per cent. of the historic car pare, which is the proportion accounted for by the historic names, one places on it a potential burden—I always find it difficult to use that word—that could have serious consequences for its future. We need to work that through.
If we say that that is not a fair way to do it, what is the alternative? A suggestion often made is to base liability on market share. The hon. Member for Solihull mentioned the number of companies that are in Japanese ownership. They now have a substantial market share—rightly so, because they make quality cars—but they arrived relatively recently in the British vehicle market. Is it fair that they should pick up the tab for vehicles for which they have no responsibility? It is not an easy question. It is a question of balance, and it is important that we get the balance right. We must think it through.

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The Select Committee report and the Government consultation papers mention that the average age of an ELV is around 10 to 12 years. Therefore, sometimes the assumption is made—I believe that we made it in thereport—that no manufacturer would be unduly penalised if historic car parc liability were adopted. I thought that through, and I am not sure that that assumption is correct. I am sure that over time market share and historic car parc will come together, but when the directive is first implemented, there will be a very large number of very old cars, and the bulk of them will carry the traditional UK names of Ford, Vauxhall, MG Rover and some others. That great and disproportionate weight, falling particularly in the early years, is something that we must address.
Market share is a problem, but if a choice has to be made—I am not convinced that it does—between historic car parc and market share, market share appeals more to me than historic car parc, at least on the basis of ability to pay. I would say that, wouldn't I, because of my constituency interests; but judged on the evidence and on questions of fairness, that approach has more to commend it.
The industry rightly asked us to consider another issue. When considering implementation of the directive, one must also deal with the question of balance sheets and book value of companies. One can put a figure on how many ELVs there are now and how many there will be in the future. If the directive is implemented in such a way that motor manufacturers have to put in their books a reserve specifically to cover the cost, the solvency of companies of any size, whether Ford, Toyota, MG Rover, would be affected in theory, and in the case of smaller companies such as MG Rover, the impact might not be theoretical, but real. It is therefore vital that the directive is implemented in a way that assesses liability for ELVs on the basis of contingent liabilities rather than specific reserves in companies' accounts. There is a way to do that which could make a big difference.
Secondly, there is the issue of how we in the UK deal with the directive compared with other parts of Europe. I am pleased that the Government have said in their evidence to the Select Committee, and in their consultation document and response. that they want a broadly level playing field for the implementation of the directive. It is right that we implement the directive properly and thoroughly, but in a climate as competitive as that of the motor industry, it makes no sense at all—indeed, it would damage competitiveness—to implement it overzealously or in a way that brought forward UK time scales. I have reason to believe that that will not happen. I hope that all Government signals will indicate that it will not happen. I commend staying on that course to them.
Thirdly, we have the question of who ultimately pays, and the relative responsibilities of the final user, car owners in general, vehicle manufacturers and the disposal and dismantling industries. The worst thing about the discussions is that there has been no consensus on how policies should be implemented or on the relative responsibilities of different players. We expect different industries to argue their corner and act in their own interests, but every industry involved in this issue has been blatant about doing so, and the end result has been that it is virtually impossible to get an agreement on how to go forward.
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The British Metal Recycling Association has rightly and understandably argued that if dismantlers and shredders are to pick up the tab and they are expected to make the investment necessary for the disposal and de-pollution of vehicles, it could have a big impact on their profitability, especially if dismantlers pick up the more profitable ELVs before they reach the shredders. The association also rightly draws attention to the fact that the value of scrap materials such as metal and glass has decreased. It urges us to consider the establishment of a central fund, perhaps financed by the vehicle manufacturing industry, but more likely—according to its evidence—financed by an addition to road tax or some other fee paid by car owners. It says that that would offset the extra costs that the disposal industry will have to bear.
Those are serious comments, which we should take seriously. However, we must also consider the small print of the disposal industry's comments. In the brief provided to Members of Parliament, the association says:
"The BMRA therefore believes funding of de-pollution for all vehicles (including positive-value vehicles) needs to be derived from a centrally administered scheme, whether it be via a small increase in road fund licence, insurance premium or an identifiable impost on new vehicle purchases."
It is fine to say that a measure that will stop industries going down the pan needs to be established, but we must question the BMRA more closely if it is suggesting that a fund is needed to finance activities, including those involving positive-value ELVs, that would be profitable in any event. That is what the BMRA seems to be saying. If a fund can be made available to the disposal industry and it can name the price for the disposal of ELVs, where is the incentive for efficiency? The industry must answer that question.
I have had some harsh words for the disposal industry, and I now turn to manufacturers. In option 4, they put forward their own plan. It is no surprise that in their evidence the vehicle manufacturers pointed out many of the weaknesses in the disposal industry's arguments. They stressed that, instead of simply giving the disposal industry money to remain inefficient, it must be given an incentive to become more efficient and competitive. The vehicle manufacturers urge on us what they describe as a "market solution". Vehicle manufacturers' option 4 has some features to commend it, but there is a problem: some important questions remain unanswered.
First, option 4 contains no clear mechanism for distinguishing between a positive-value ELV and a negative-value ELV. My hon. Friend the Member for Ochil is right to say that that is a key question. Who decides? Also, when considering the extra costs that the disposal industry will face, the manufacturers say that there could be a subsidy if losses were demonstrated across the industry. That sounds all right, but there is no mention of what will happen to individual companies in individual places and individual sites. Therefore, while option 4 has something to commend it, as does the disposal industry's option, it leaves some important questions unanswered. Both sides have produced figures to back up their arguments that could almost be drawn from a parallel universe.
After the Select Committee report was published, discussions sponsored by the DTI were intended to take place between the various industries involved. I

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understand that those discussions have started, but no agreement has been reached. While we as Members of Parliament must put pressure on the Government to ensure that those discussions take place and answers are found, there is also an obligation on the industries to try to find common ground, reach agreement, and produce something workable. If different lobbies simply line up on different sides of the argument without meeting in the middle, the directive will not be implemented sensibly and everybody will suffer, including the poor old motorist.
The matter must be sorted out. Something like a central fund will probably be necessary, but I caution against going back to the days of taxes on new cars. Some years ago there was a new car sales tax that got itself into a great deal of difficulty and was eventually removed. Nevertheless, it might be useful to add something to the road fund licence or elsewhere, which could spread costs across vehicle users over a period of time, as is done in parts of Europe, rather than load it on at the point of sale or at the end. That needs to be thought through, but I do not reject the idea of funding in that way. There must also be funding from the vehicle manufacturing industry. Producer responsibility is in the directive, and we cannot ignore it. To the disposal industry I say that even though it will face extra costs, it is possible that extra business will be created. Therefore, there must also be something in the equation for the disposal industry.
The Government have a difficult job to bring those disparate interests and conflicting pressures together, but it is an important job. The danger in getting it wrong is that the problem of abandoned cars will be exacerbated, not alleviated, by the directive. If the accruals issue is handled wrongly, the theoretical book value of certain motor manufacturers could be adversely affected and the health of certain manufacturers seriously jeopardised. If the accruals issue is handled wrongly in another way, while none of us wishes the cowboys to be in the disposal industry for longer than is necessary, it would be crazy if the directive were implemented in such a way that the legitimate disposal industry's extra costs were not dealt with and the industry was destroyed. 1:f we are to achieve our objectives, different parts of industry and the Government must work together. On the evidence put to us, they are not working together yet. They must start to do so.
3.39 pm
Miss Julie Kirkbride: It is a great pleasure to follow my parliamentary neighbour, the hon. Member for Birmingham, Northfield (Richard Burden), who gave a lucid exposition of the problems that UK plc and especially the motor industry face over the end of life vehicle directive. Having listened to him with great interest, I am not surprised that many of his friends and colleagues did not want him to explain how serious the matter was. It is enormously complicated and, as he rightly said, enormously serious, particularly for our constituencies of Bromsgrove and Birmingham, Northfield. Many workers at the MG Rover plant live in our patch and the directive will have serious repercussions for them, as the hon. Gentleman spelled
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out and as I hope to do as part of our lobbying of the Minister who is obliged to sit here and listen to us for a little while.
I pay tribute to the Select Committee Chairman, the hon. Member for Ochil (Mr. O'Neill), for an honest and detailed report which bears examination and for going through it in detail for those of us who are not as expert in the subject as he and his colleagues. I was a little disappointed that he did not allow me to intervene because I wanted him to explain further how the issues are being dealt with in Europe. He spoke a little, as did the hon. Member for Birmingham, Northfield, about the way in which Europe is dealing with the directive and I hope that my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) will be able to help. It seems that other European countries have a lighter touch in the implementation of directives and, having gone further in implementing this directive, they may have relevant examples for the Government to take on board. The Minister was nodding his head just now and perhaps he will be able to help us.
Mr. O'Neill: I did not intend to be discourteous. I was coming to the end of my comments and thought I had probably taken too long. It may not be valuable to attach too much weight to international comparisons. It is very difficult to find similar markets, similar climates and so on. In New Zealand. for example, cars may last 25 years because of its climate, but in countries with freezing, salty roads, problems of rust and so on arise. We should not place too much emphasis on international comparisons because various factors may result in cars having shorter lives, so a different format is required for recycling.
Miss Kirkbride: I thank the Select Committee Chairman. He spoke as a true Scot. I suppose that the weather in Scotland is a problem for the life cycle of vehicles.
It is disappointing that we are saddled with the end of life vehicles directive, but saddled we are, so we must do something about it. Recycling in general is good and there is scope for legislation. Perhaps one of the benefits of the European Union being more interested in such matters is that it will push the manufacturing industry as a whole into thinking more about its responsibilities to the environment. The more we can do to recycle cars and stop dumping into landfill sites by having a more viable recycling industry, the better. I suspect that the only way to persuade manufacturers to proceed with this important matter is through legislation, which must have a long lead time so as not to affect investment plans and profitability.
I have some sympathy with the comments made by my hon. Friend the Member for Solihull (Mr. Taylor) about the liabilities that are being imposed on manufacturers and how that affects competitiveness among manufacturing companies. Some European manufacturers are more heavily based in the European market and are bound to be adversely affected by the directive, however it is implemented. That will affect the global market and the global competitiveness of those industries. It is a shame that when Europe considers directives, it does not consider the effect on Europe plc, the European car market and the profitability of our car manufacturers. Many are already diversifying into

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other markets where profitability may be more easily maintained than in Europe if we continue to impose more liabilities when profitability is under such severe pressure. I recognise that the Minister will have difficulty in sharing the burden, given that he is saddled with the need to do so.
I simply want to add to the comments of the hon. Member for Birmingham, Northfield about the special position of MG Rover. It is not merely a small to medium-sized company but a stand-alone company. The company has no plants in the United Kingdom other than in the midlands, and no plants abroad, so it is a special and unique case. It faces a worrying future with the prospect of the roll-out of the directive.
As the Minister will know, there are signs of optimism at the plant because we are hoping for a long-term deal with China Brilliance. He will also be aware that the models being made at the plant are reaching the end of their life cycle and that a new range of cars must be produced. If contracts are to be signed to create a successor to the smaller Rover car, China Brilliance and MG Rover will need some certainty about the market in which they are investing and the potential liabilities.
Time really is of the essence, because until MG Rover knows its position, it cannot reach a conclusion in its negotiations with China Brilliance or create an agenda for investment in the old Austin Rover works, which are 100 years old. We have significant liabilities in our car parc, which the present company could clearly not sustain. It would be not a severe problem so much as a knockout blow, if the company had to pick up the liabilities as the directive seems to suggest. That would be a bitter blow for those who work there and who have done a magnificent job in the past couple of years pulling up the plant by its bootstraps and giving it a future.
I recognise that the Minister has difficult decisions to make and look forward to what he has to say. Sadly, a decision must be taken, and the sooner it is taken, the better for the people of the west midlands, who need to know what future there is for the plant.
3.47 pm
Dr. Ashok Kumar: First, I congratulate my hon. Friend the Member for Ochil (Mr. O'Neill), the Chairman of the Select Committee, on steering us through a complex subject with a great deal of spirit. He did not suffocate the discussion, but kept us focused on the matter in hand.
I also congratulate my hon. Friend the Member for Birmingham, Northfield (Richard Burden) on articulating the subject with great passion. Only he could have done real justice to the subject, because it was his idea that we should carry out the inquiry. I am not giving away any secrets by telling the Chamber that. It is to his great credit that the Committee was persuaded to hold the inquiry, and it is no wonder that he speaks so passionately and eloquently.
I do not want to speak for as long as he did, however, as I am aware that time is pressing. I want to focus holistically on the Committee's findings and draw attention to some facts and figures that elucidate the tensions that some hon. Members have mentioned. I
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refer to the tensions between the operation of a free market and the need to maximise our nation's potential to meet the end of life vehicles directive.
During the Committee's discussions, we were all conscious of the need to ensure that the British industry remains highly competitive and can adapt to change, while accepting our responsibility for the environmental issues that we have focused on today. We all realise that the growth in the number of motor cars will cause great environmental problems. There are 26 million cars on the road and about 2 million of them are scrapped every year. The growing number of new vehicles means that unless there is a big sea change in the industry's practice, we will have big disposal problems.
The end of life vehicles directive gives us a tough target, which is that 85 per cent. of parts and materials from cars must be reused or recovered by 2007. That is only four years away and it will definitely hit us during the next Parliament. The next target is for 95 per cent. by 2015. That is not far away either. We also have to meet new standards in our recycling facilities, with an associated need to de-pollute cars to aid recycling. Given that we have a largely untraceable scrapping infrastructure in this country, that is a key factor.
Paragraph 13 of the report highlights the present structure, adding that between 700 and 800 scrap merchants are probably acting outside the law and outside the planning regime. Those scrap merchants may be a blot on the landscape to many people, but we must concede that, in their own particular way, they are very good at recycling. At present, the Environment Agency indicates that we have collectively recycled or reused about 75 to 80 per cent. of end of life vehicles, and we adduce in paragraph 12 that that figure was reached without the Government applying significant pressure.
The directive sets the parameters for the first test, and I have no doubt that by 2006 we shall have to increase the level of recycling by some 5 to 10 per cent. In my former life, I was an engineer and worked in industry, so I think that those targets are achievable, although recycling, by its very nature, means that the extra proportion will be more difficult to release into a market environment. We highlighted some of the difficulties in paragraph 15, including the particular problems of disposing of fluids and tyres. However, I believe that, if thought is given to the design and material composition of new cars, we can produce vehicles more suited to being recycled once their days on the road are over.
If investment is based on the assurance that recovery and recycling facilities are to be properly accredited, we can begin to open more end of vehicle life centres, which will be properly managed and controlled. The financial architecture under which the new recycling regime will operate is at the heart of the Committee's report, and we conclude in paragraph 48 that the questions of who pays and how much is important to the implementation of the directive.
Processing end of life vehicles in the fashion proposed is not a revenue-neutral affair. The cost will have to be met by car manufacturers or the last owners of vehicles, through public spending or a combination of those methods. As the last owner of the car is unlikely to pay to have the car taken away, even if a tough certification system is introduced, it appears that a combination of public spending and cash contributions from the

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manufacturers is the most likely result. We have to accept that that will affect the price of new cars, and in paragraph 50 we conclude that manufacturers will have to make specific provision to cover the costs of disposal of end of life vehicles, and that new car prices are likely to rise to finance that. We add that the cost of take-back to producers will ultimately be passed on to original purchasers.
As my hon. Friend the Member for Birmingham, Northfield said, we must get our approach right in the coming year, particularly if we are to start planning a new generation of accredited disposal facilities for 2006. In the first instance, we must consider introducing a small financial incentive to bring a car to a facility. There must be a Government guarantee that such facilities will, at the very least, remain committed to free take-back.
We must also examine what market mechanisms exist or are needed to deal with recycled or reused components. Pilkington Glass, the UK's biggest producer of car windscreens and windows, gave evidence that graphically demonstrated the problem, and appendix 8 contains a chart and a detailed explanation. The firm noted that there were immense production quality problems with recycled glass. To put it bluntly, that is not something that companies such as Pilkington would want to contemplate in an ideal world, let alone in the present financial climate.
The same issues arise with waste tyres and plastics, and we must overcome particular problems as regards proper recycling. Granulated tyres can be used for athletic tracks, carpet underlay, and playground and road surfacing. Tyres and plastics can also act as fuel in waste-to-energy plants, although that is definitely an unpopular option for many people.
The simple lesson is that we can implement proper recycling, but that we need a stable financial regime first. Such a regime would allow a recycling operator to invest safely, in the knowledge that he was immune to the swings and variations in the economic cycle of the product that he was handling. The Government can play an important part in that, perhaps by considering some form of tax credit. After all, tax credit schemes are on the agenda thanks to the Chancellor of the Exchequer, who is very good at developing them. Many economists might argue that that would introduce a distortion into the market, but we shall have to deal with the problem in some way. We should tell the European Commission that we can meet the end of life directive, but the competition directorate will have to accept that some form of change is necessary, and we shall initiate an amendment to the financial structures that underpin the markets for the new goods and commodities that will flow from recycling facilities.
I recognise that most of the report is very technical and that it is not the kind of riveting reading for everyone's bookshelves. However, it seriously tackles the issue and recognises the demands of a lightly regulated market and the social need to put the recycling of materials on an important footing. That is important.
The Government can play an important part by setting the agenda and the direction. The Committee examined the issue in great detail because we recognised
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its importance. As my hon. Friend the Member for Birmingham, Northfield said, it is crucial that discussions have started between the environment lobby, the waste disposal industry and everyone else who is involved. If we are to make the progress that needs to be made, it is important that the Government give a lead in the spirit in which we tackled the report, and that we get this thing right once and for all.
3.59 pm
Dr. Vincent Cable: It is a pleasure to be able to take part in this debate on behalf of the Liberal Democrats. This is a tricky and complicated subject and we are grateful to the Chairman of the Select Committee, the hon. Member for Ochil (Mr. O'Neill), and to others, particularly the hon. Member for Birmingham, Northfield ( Richard Burden), who explained the issues in lucid terms. I took this 110-page document home as homework yesterday, along with the complicated briefs on insolvency law from the Enterprise Bill. Although I did not believe it possible, by the end of the night the stuff on insolvency seemed rather simpler than the material in the report.
I am not sure that as politicians we can greatly advance the detailed arguments that have already been made, so I will content myself with some general remarks about the principles that should apply. I particularly want to tease out an indication from the Minister, who said in early March that he was close to coming to conclusions on the apportioning of costs, of his preliminary conclusions on the principles involved. I hope that we will, at the very least, get that from this discussion.
I want to touch on three basic issues. Lest we lose sight of it, one issue is the principle of the directive. The second is that of the perverse economic consequences of directive-driven recycling, some of which are already upon us. The third concerns abandoned cars—not that this debate is about such cars, but the issue gives us a pointer to the social costs of not having a properly funded arrangement.
The key point is that the "polluter pays" principle must apply. The industry provides an important and valued commodity that generates pollution, not just through the use of fuel but through waste. Somebody has to pay for it. Clearly, we have moved on in the past half-century. During my formative years in the 1950s and early 1960s, books such as "The Hidden Persuaders" and Galbraith's "The Affluent Society" were published. Those books were all about built-in obsolescence in the car industry—mass production based on short life, rapid rusting and volume production.
The industry has moved on a great deal from there. Not all cars have a 27-year life like those Land Rovers, but there has been a lot of technological advance. When I was in the oil industry before coming to the House, we talked about supercars built using light materials, with long life and high fuel efficiency. In time and with prodding, the industry is gradually and slowly moving to technologically satisfactory solutions to environmental problems. None the less, we are left with a big waste disposal problem that has to be faced.
I spoke recently to my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael), who explained to me that among the biggest problems faced by

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Shetland is that of a mounting stock of cars, accumulated over a generation or so. The geology of the island does not permit landfill, they cannot incinerate and the economics of a small island do not permit recycling, so they have an ever-expanding mortuary of used cars. Although that is only a microcosm, it illustrates the nature of the environmental problem that must be addressed and ultimately drives the directive. The European Union is applying its environmental standards to a genuine problem that has to be accommodated.
However, we are beginning to realise that setting environmental quotas and targets for recycling can have all kinds of perverse consequences unless they are properly thought through. We have had many examples of that. We have begun to see the impact on the fridge industry and there will be consequences in other durable goods industries as they are brought within recycling directives. Several impacts are already being felt.
First, there is a big impact on the markets for the products that emerge from the recycling process. That has been happening for years with paper. The same is true in the car industry, with recycling having an impact on the market for scrap metal, tyres and glass. Although the response from industry in this debate has largely come from the car makers, the adoption of tough recycling standards has widespread implications for industry, some of them negative. Somebody is paying, and in practice it is those other industries.
The second economic consequence is the creation of a new type of commodity that we have not seen before, a commodity that has a negative value. If a product has to be disposed of at some cost, it is of negative value to the last user when it reaches the end of its life. We shall see more and more such commodities. Unless, as a society, we produce an answer to the problem of negative value, we shall experience more and more dumping—that is a natural human response to holding something that has negative worth.
The third economic consequence is the impact on the economics of the recycling industry. It is clear from the disastrous experiences with refrigerators that, unless the recycling industry is profitable, recycling cannot happen. What emerges clearly to me from the report, as a lay person, is that unless each stage of the recycling of vehicles—dismantling, scrap wholesaling and then shredding—exists and is profitable, there is no mechanism to enable the targets to be met.
As the report indicates, much of the current activity is illegal. It is operating outside proper health and safety standards. If those standards are to be raised, not only must the industries be profitable. but they must operate at a higher cost base as well. Much more money must flow into the recycling industry to make it work. There are serious economic consequences to consider.
My third and general point concerns the abandoned car problem. This is not a debate about abandoned cars, but they are very topical. I noticed that, in his statement earlier this afternoon, the Secretary of State for Transport, Local Government and the Regions was grasping at the issue of abandoned cars in his wider embarrassment, so it is topical. It is important because of the staggering costs involved. It is not trivial—we have all seen the problem in our constituencies and the economic costs are piling up considerably. There are
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probably about 2 million end of life vehicles a year. Some 350,000 of those, about 20 per cent., are abandoned at the end of their lives, not because of the directive but because of MOT certification and so on; they are simply left. It costs from £65 to £150 to dispose of each of them.
The worst problem—this is where the massive social cost creeps in—is torching. We all see the growing number of cars that are bombed out by kids. The police and fire authorities estimate that each burned-out car costs them between £5,000 and £10,000. With a bit of mental arithmetic, we can tell that if 20 per cent. of the abandoned car population is being torched at that cost, and with projections that the number of abandoned cars will double, it will cost around £1 billion a year to dispose of the problem. That is a staggering cost—it needs to be set beside all the costs to be borne by the recycling industry, the manufacturers and the car consumers. It must be taken into account in the equation; it is a very big sum.
Although the Government are, creditably, responding—and we support the measures that they have introduced in the Budget and elsewhere—what tends to be forgotten is that such measures reshuffle the cost among different Government agencies. I am not a Birmingham MP, but I understand that the Birmingham scheme is largely led by the police. They have been proactive and are getting rid of abandoned cars. That is good for the council and, to an extent, the fire brigade, but the police pick up the cost. The Maidstone scheme, which was encouraged by the Government as a pilot, is another good and successful scheme. That is led by the council, which is helping the DVLA to save a lot of money. That may help the police and the fire services, but the council is footing the bill, and it is a large one.
There is a large social cost to consider, and I argue strongly that any financing solution that leaves the costs in the hands of public authorities is not acceptable. That is why we should not favour the option 4 solution, which has been proposed by the industry. Anything that leaves cars in the hands of their last owners as commodities with negative value will lead to a massive proliferation of the abandoned car problem, with enormous costs to society, so we should not be contemplating that option. The question then arises of what other possible options there are for handling that set of problems. The hon. Member for Birmingham, Northfield has talked us through the various options in a fair-minded way, and I cannot add much to what he said. There are essentially three options that we should be considering.
The first is the simple idea of a deposit scheme for new cars, whereby a person buying a new car pays a deposit, possibly including an element of bounty, which is passed down through successive owners to the last, who can then use the value of the deposit to pay for disposal and perhaps receive a cash bounty on top. Many of us had experience of that sort of scheme as kids who took bottles back to the local grocer. It provides a small cash incentive to be environmentally prudent. Such a scheme would deal with the abandoned car problem and has been tried in many different contexts. Its drawback is that it would not really help us until 2012 or 2015, so there would be a big transitional financing problem. How would we finance the transition until a sensible deposit scheme was introduced? There are two ways of doing that. One is simply to levy the industry, including

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importers. That would have to be done on a market share basis. There are obvious problems and inequities with such a scheme, but it would, at least, bring in cash which could be used later to finance the purchase from the last user by the recycling industry. A levy scheme would have some attractions, but for reasons that have already been described, it would be perceived as very unfair by those car companies that are relatively new to the market.
The second scheme, with which I have some sympathy, would be to set aside a segment of vehicle excise duty for purchasing cars from the end user and prevent them from being abandoned. The problem with that scheme is that, in a general environmental sense, the Government are trying—there is a broad consensus on this—to move away from taxing car ownership through vehicle excise duty towards taxing car use, so that option would cut across public policy, although the Government should consider it.
In conclusion, I hope that whatever financing mechanism the Minister comes up with will not leave responsibility in the hands of the last user, because that is the road to disaster and to the massive proliferation of the highly antisocial abandoned car problem. I hope that the Minister will give us some indication of his thoughts on that.
4.12 pm
Mr. Philip Hammond: Not for the first time, I find myself agreeing wholeheartedly with the principal conclusion of the hon. Member for Twickenham (Dr. Cable). I, too, want to say something about the problem of leaving responsibility with the last user of a vehicle.
Although I am now privileged to be a member of the Trade and Industry Committee, I was not a member when the Committee prepared the report, so I came to it in the same way as the hon. Member for Twickenham did, taking it home and reading through it as a layman. I am somewhat disappointed that I was not a member of the Committee at that time, because it is an excellent report. I congratulate my colleagues on the Committee on its quality and the hon. Member for Ochil (Mr. O'Neill) in particular on his presentation of the report to the Chamber this afternoon.
I know that my hon. Friends the Members for Huntingdon (Mr. Djanogly) and for South Cambridgeshire (Mr. Lansley), both of whom are members of the Select Committee, would have very much liked to be here this afternoon but are unfortunately detained in the Standing Committee considering the Enterprise Bill. I am sure that they would want to associate themselves with my compliment to the Chairman of the Select Committee.
We all recognise the problem that the EU directive attempts to address, and we all want to ensure a system that delivers environmental benefits and works in practice. The EU directive was not conceived to deal primarily with the problem of abandoned vehicles, but in the UK context the impact on abandoned vehicles will be an important factor, and I shall return to that in a moment. I believe that the watchwords, in seeking to implement the EU directive in the UK, must be
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"proportionality"—between the costs imposed on industry and consumers and the benefits that will accrue to the environment—and "practicality" in devising a scheme that is simple, non-bureaucratic and self-regulating, so that it will be easy to implement and easy to ensure that it will meet its objectives. It is not clear to me that the underlying principles of the EU directive are either proportional or practical. I hope that in transposing them into UK law the British Government can do a better job than the EU did in the original directive.
The directive has two primary thrusts. First, it is about ensuring that vehicles are manufactured in the future in a way that makes them more friendly to recycling and that excludes materials damaging to the environment. Secondly, it deals with end of life vehicles and their recycling, take-back and reuse. This afternoon's debate, like the Select Committee's report, has focused very much on the second of those thrusts. Before I join in that general trend, I should like to ask the Minister to address the first issue when he replies—the banning of the use of heavy metals in car manufacture and the targets for changing the nature of motor car production and the materials used in that.
Is the Minister quite satisfied that the objectives are sensible from an environmental point of view and that eliminating materials obviously harmful to the environment will not result in solutions that might, in totality—looking at energy use, greenhouse gas emissions and so on—be more costly to the environment than the problems that they are intended to solve? Is he also satisfied that, on an objective cost-benefit analysis, the elimination of all heavy metals from motor car manufacture is a sensible aim to pursue? I want to ensure that we are not jumping out of the frying pan into the fire.
Returning to the principal issue of the take-back and reprocessing of end of life vehicles, there is a problem of considerable scale, which the hon. Member for Twickenham identified. Using the brief that the Automobile Association has kindly circulated to Members, I can illustrate chat by looking at the 1989 cohort of vehicles. In 1989. 2.296 million vehicles were registered in the United Kingdom, of which just over 1.5 million were re-taxed in 2000. That leaves 787,000 vehicles untaxed, of which 145,000 were declared scrapped and 18,000 were officially off the road. That means that some 600,000 1989 vehicles are unaccounted for. They are either driving around the roads untaxed, or have been scrapped without being officially declared scrapped and deregistered, or have been abandoned somewhere.
The Minister for Industry and Energy (Mr. Brian Wilson): Or they are in Shetland.
Mr. Hammond: Or, as the Minister says, they are piled up in Shetland, competing for space with the mountain of fridges following close behind them.
Mr. O'Neill: I do not think that the hon. Gentleman has given proper weight to the possibility that a number of those cars have been exported to other countries.

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When they are traded in, many cars are now exported in bulk to eastern and central Europe, where there is a market that did not really exist in 1989.
Mr. Hammond: The hon. Gentleman is absolutely right. I am glad that he has raised that point, which came out of the earlier contribution of my hon. Friend the Member for Solihull (Mr. Taylor). Some vehicles, especially those of higher value, are exported. I am not an expert in the matter, but I assume that the proper procedure when exporting a vehicle is to notify the DVLA and for it to be recorded in the same way as a vehicle scrapped. I also assume that the AA would have taken account of that in its figures.
The hon. Member for Ochil raises another interesting issue, which is that we will have to address the question of exporting our problems to third world countries. That issue often arises when we talk about tightening regulations in the European Union. What will we do about vehicles that are exported, either to avoid tough regulations and tough regimes here or for genuine economic reasons because they have a value, and are subsequently scrapped in an environmentally unsatisfactory way outside the European Union? I am sure that in addressing the requirements of the directive, the Government would want to ensure that we do not inadvertently create incentives to export vehicles that are then scrapped outside the United Kingdom.
Currently, the industry is recovering and recycling about 75 per cent. by weight of all end of life vehicles, and has set a voluntary target to increase that figure to 95 per cent. by 2015. Those figures have been quoted before, and it is very interesting that 75 per cent. recycling is being achieved entirely by the marketplace. We have to consider that against a backdrop of scrap metal values that are radically lower than just a few years ago. The figure was about £35 a tonne for scrap ferrous metal in 1998, but is now down to about £10 a tonne. That is a fundamental problem of any market-based recycling scheme. Supply and demand in the marketplace may be affected by such schemes and depress the values of the products produced by the recycling process.
The end of life vehicles directive introduces three issues that are new for the UK vehicle reprocessing or end of life vehicle handling system. The first is the concept of free take-back, and I shall say something about that in a moment. The second is the concept of de-pollution as part of the processing system. At the moment, most vehicles are simply stripped of any useful parts and then crushed with their polluting contents left inside. The third is the concept of authorised treatment facilities: registered plants that would deal in a compliant way with vehicles turned in for end of life processing. The Government's own estimate of the administrative cost of running an authorised treatment facility is about £12 per vehicle processed. That is not an inconsiderable sum just for dealing with the administrative issues involved in the operation of an authorised facility.
To establish authorised facilities will require major investment. We do not have them in the UK at the moment. We have had one or two fairly graphic illustrations of how the vehicle dismantling business operates in the UK. I know that in some European countries it is a very different, much more capital
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intensive industry, which is conducted in closed plants, not under railway arches or in odd yards at the side of railway lines. Clearly, a large investment will be required in the UK dismantling and shredding industry to deal with those issues.
The hon. Member for Twickenham made what I think is the key point that we have to focus on in this debate. In the absence of anything that addresses the problem, negative-value end of life products will lead to more dumping. That is especially true in the case of cars, when the last owners are typically marginal owners, as the hon. Member for Ochil explained earlier. They are people who cannot afford newer vehicles and use vehicles on the margin of serviceability. It is a sad fact that many of those vehicles will be operated on the margins of legality—without MOT certificates, road tax and possibly without insurance. A significant number of vehicles on our roads are without insurance. I suggest to the Minister that anything that attempts to apply the stick to the final owner of a vehicle to get them to behave responsibly is likely to be a misguided approach that is bound to fail.
Although there will certainly be responsible last owners of vehicles, it is a fact that many last owners will not be able or willing to behave responsibly if it costs them to do so. We can have any regime that the Minister cares to propose. We could charge people £1,000 if they do not scrap their vehicles through an authorised treatment facility, but the general lesson from collecting fines and penalties in the courts is that one cannot squeeze from a stone what is not there. It is no good talking about a group of people who, almost by definition, are among the poorest in our society and saying that we will make them behave properly by threatening to fine them £1,000.
We have to address the problem through economics. Consider a situation in which the value of an end of life vehicle were high enough to support the de-polluting, dismantling and shredding process. If the value of the products coming out of such a vehicle exceeded the cost of the dismantling, shredding and de-polluting process, it would not have a negative value. Indeed, it might even have a positive value, which would start to address the problem of incentives for last owners. I submit that if the system is going to work, we must support an economic value in end of life vehicles that is sufficiently high both to pay for the dismantling, de-polluting and shredding process and to provide a value to the last owner for turning a car in. Instead of using sticks, we should use carrots. That would lead to a situation in which the end user would almost always turn in the car in practice because it had a cash value. If they dumped it, as with the deposit bottle example, someone else would pick it up and turn it in because a cash value was attached to it.
If we go down the route of looking at market-driven solutions, we will be able to avoid the bureaucracy and complexity of some of the other proposed solutions. A market-driven solution clearly involves attaching additional value to end of life vehicles, and there are a number of ways in which that might be done. It is also worth noting at this point that anything that can be done to support the marketplace in dealing appropriately with end of life vehicles will avoid one big problem that other Members have identified during the debate—the historic car parc. For reasons that are probably known to those who have been involved with the issue for a long

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time, but are not known to me, in this context the historic car parc is spelled with a "c". I do not know whether that is a gesture to the debate's European origin, and perhaps the Minister can enlighten me during his winding-up speech on why it is a car parc.
Mr. Wilson: Only if someone enlightens the Minister.
Mr. Hammond: The Minister probably has more resources of enlightenment available to him in the Chamber than I do.
I should like to see a solution that works by attaching a positive value to all end of life vehicles. That leads me to raise another important question about the motivation behind the European directive and its wording. I acknowledge, as other hon. Members have, that vehicles scrapped to landfill are, on the face of it, a significant source of waste, but in the United Kingdom they represent only 0.3 per cent. of controlled landfill. Why have end of life vehicles been targeted by the European Union in its first attempt to deal with sources of waste by addressing the problem at the producer stage?
I am curious to know why the directive specifies that producers must meet
"all, or a significant part of, the costs".
If the directive is intended to deal with the environmental issue, surely its proposers should be neutral as to how the cost is borne. I wonder whether the directive arose from green hostility to the motor car industry. The motor car represents the preferred target for the green lobby, which is a powerful force in the European Union.
The directive will impose a significant cost—I believe about £300 million a year—in the United Kingdom and, if I read the Department's analysis correctly, will deliver about £1 million of measurable benefits. Any proposal to impose a £300 million cost to deliver a £1 million measurable benefit deserves serious scrutiny, and that was what the Select Committee sought to do in its inquiry.
As I understand it—the Minister will no doubt correct me if I am wrong—if an end of life vehicle has positive value at the point of scrapping, whatever process we use to ensure that positive economic value attaches to it, the part of the directive that says producers must
"meet all, or a significant part of, the costs"
will not apply, because there will be no cost at the point at which the vehicle is scrapped: the vehicle will have a positive economic value. An economic mechanism will have to be found to attach that value to the vehicle. There is no reason why that could not still be funded partly by the producers, if that were considered appropriate, but that would be a domestic issue that the Government could debate with the various economic players and with representatives of consumers and motorists, without being driven by the constraint in the directive that the producers must
"meet all, or a significant part of, the costs".
In an ideal world, the value of the extracted salvage materials and components, driven up by increasing demand supported by regulation for use of recycle
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materials in production, would ensure that the end of life vehicle had a positive value. It is conceivable that on the distant horizon, when recycling has become part of our culture as a result of legislation, the market will naturally deliver a positive value to end of life vehicles, but we all recognise that that will not happen in the short term. In the short term we will have to find a way to attach a bounty to the end of life vehicle, to ensure that its positive value in the hands of the last owner is a sufficient incentive to him to turn it in and pay for the proper destruction process. That could be done by a premium on new vehicles, as has been suggested. I can see no reason why a premium on new vehicles, on a pay-as-you-go basis, could not fund the system from the outset. It could be achieved by a levy on the road fund licence, a small charge per annum, so that each owner throughout the life of the vehicle contributed to a fund attaching to the vehicle. The hon. Member for Twickenham said that that would cut across other thrusts of public policy, which are moving away from the vehicle excise licence towards taxation that reflects usage. If that is the case, we could consider a levy on vehicle insurance that attaches to the annual use of the vehicle. Or, disposal could be funded by producers on an historic basis as vehicles are scrapped, which would raise some of the problems to which other hon. Members have alluded.
Are the Government willing to sidestep the intention of the directive, which appears to be that producers should pay? Does the Minister agree that a methodology that avoids placing the burden on producers should be considered? Does he agree that by using a market-supported mechanism to ensure that end of life vehicles have a positive value, we can sidestep the directive's requirements on producers? As the Government know, the alternatives could threaten the UK motor industry's competitiveness with additional annual costs of £300 million to £500 million, which are the figures that I have seen. and may place an intolerable strain on the balance sheets of individual companies. The hon. Member for Birmingham, Northfield (Richard Burden) alluded to that.
I am not an accountant, and I know that the Government have taken specialist advice on how such contingent liabilities would be treated in the balance sheets of motor car companies. However, accounting standards evolve. I would be very concerned about UK manufacturers having those contingent liabilities hanging over them. Even if there were a way to keep them off their balance sheets under current accounting standards, there is no guarantee that they would not have to take them on to balance sheets in the future, with all sorts of ramifications, such as breaches of banking covenants and so on. That might have serious consequences for UK competitiveness, for the survival of UK companies and, consequently, for employment in the UK.
Having considered all the briefings that I have been sent and having read the Select Committee's report, I am tempted to think that some kind of levy on the vehicle as it goes through its life, to which each successive owner contributes, would be a sensible approach to the problem. It would lock in a fund of value that travels with the vehicle to its grave, not wishing to sound too rhetorical.

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To many people, it would be superficially attractive to talk about making the producer pay, but we all know that the producer never really pays. It is the consumer who pays. We are simply discussing the mechanism by which we impose an additional burden on consumers, whether as a charge on producers that would be passed back through higher car prices or as a levy on annual car use through a surcharge on the vehicle excise licence.
My hon. Friend the Member for Solihull raised some fundamental questions about the direction in which the EU directive takes us. As the hon. Member for Twickenham pointed out, it is not the only one, although I think that it was the first off the block. Like it or not, we are moving into an environment in which manufacturers will not be able to kiss goodbye to their products at the counter or showroom door and disregard questions of ultimate disposal.
I share some of my hon. Friend's concerns about travelling in such a direction, but we have to face the fact here and now that the directive is in place and the United Kingdom is required to transpose it by April 2002. Notwithstanding my chastisement by the hon. Member for Ochil, that date has already passed. I was interested to read in The Guardian on 20 March 2002 an article about the fact that the date would soon have passed. It said:
"The next deadline, this time for cars, is April 21. This is a new regime for disposing of scrap cars without spilling oil and other nastier. The problem this time is not lack of machinery, but who is to pay … since scrap metal merchants say they do not make enough from recycling to pay the cost. They would, they declare, simply refuse to take old cars. The prospect of adding another million or so dumped cars…to the piles of fridges terrified the Government. But Meacher"—
that is to say, the Minister for the Environment—
"said the Government had come up with a simple solution: "We won't do it." A delightfully honest man, he explained that the EU does not prosecute for non-compliance of directives for six months or so. That gives the Government breathing space".
Opposition Members would welcome any sign that the Government have decided to be less assiduous in implementing EU directives. Many in industry have always suspected that we are a little too enthusiastic in implementing EU directives compared with our European neighbours. If the Minister for the Environment is now espousing as Government policy the proposition that, because the EU does not prosecute for six months or so, we will in future not implement directives until they are at least six months over their due date, that might be generally welcomed by industry.
We shall have to implement this particular directive. Opposition Members want to ensure that, in implementing it, the Government impose the minimum possible cost burden on industry and extract the maximum environmental benefit from the costs that are borne. I urge the Minister to commit himself to making a proper cost-benefit analysis, on an item-by-item basis, where environmental benefit is being claimed, to ensure that what we are doing in the spending of money to achieve environmental benefits makes common sense. I urge him to ensure that the directive is implemented in a way that supports and enhances—certainly that does not degrade—the competitive position of British industry and, crucially, that is not bureaucratic. That is why I suggest that the Government should look at market-led solutions that support the market and the
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end of life vehicle value, rather than complex schemes paying rebates against documentary evidence, which will involve the Government in a complex stream of documentation.
A market-led solution, however the value is attached to the end of life vehicle, will require a competitive shredding and dismantling industry to support it. The Select Committee report clearly signalled that. That will require investment. We do not currently have, in the UK, the capacity to implement the directive. I am not trying to score cheap points by keeping on mentioning fridges, but everyone will want to ensure that we do not end up with the fridge problem or the Shetland car problem. We do not want piles of cars heaped up, waiting for the appropriate facilities to be built in order to process them. Investment requires certainty, and certainty, in this case, requires an urgent response from the Government, clearly setting out the mechanism that they will adopt and the funding process to underlie that.
I raise a general issue of importance on cowboy dismantlers. There are all sorts of good reasons to regulate sometimes the way in which business operates, but every time we increase the amount of regulation that surrounds legitimate business, we also increase the competitive advantage of the illegal, illegitimate cowboy business. We make it more and more difficult for marginal businesses operating in the legitimate economy to compete.
The Government must urgently set out the regime that they will adopt and stop telling us that they want to focus on the mechanics rather than the incidence of cost. Those two issues cannot be clearly separated; they are part and parcel of the same problem.
Most vehicles have approximately zero value at the end of their life and, broadly speaking, the dismantling industry is "paying its way"—to quote from evidence given to the Select Committee. It does not make huge excess profits or large investments. The large additional cost that will arise from processing vehicles in accordance with the directive, and the fact that there will be no significant rise in the value of what is being extracted from vehicles, will require additional funding. Hon. Members have rightly drawn attention to the problem of the historic car pare, and to the pitfalls of some of the methods of funding that have been suggested.
We should not go via manufacturers to get to consumers or drivers, which is where the ultimate incidence will lie. We should consider a solution that addresses the problem, that supports the market value of ELVs directly and transparently, and that recognises that the consumer always pays. The interests of consumers, the industry and the environment will be best served by a solution that is market-led.
I ask the Minister for a commitment today that the Government will not bring forward any deadline set out in the directive, as that would risk putting the industry at a competitive disadvantage to its European competition. I ask him not to impose burdens on UK industry that will create an unlevel playing field, which will mean keeping a close eye on the way in which other European countries implement the directive. Most importantly, I ask him to be realistic about last owners of ELVs; they will respond to carrots, not sticks. We must have a regime that not only puts enough value into

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the ELV to allow it to be economically dismantled and shredded, but leaves enough residual value as a worthwhile incentive for people who may be marginal users of the vehicle to take the time and trouble to deliver it to an authorised facility rather than dump it at the side of the road or in a public open space.
4.47 pm
The Minister for Industry and Energy (Mr. Brian Wilson): We have had an interesting and important debate, to which I am pleased to reply. The debate has reflected the significance of the issue and the complexity of the directive. I have some sympathy for the hon. Member for Twickenham (Dr. Cable) going home with the literature on the ELV directive and the Enterprise Bill—I hope that he managed to fit in time for Manchester United and Arsenal.
The directive is detailed, complex and important. A Bill on ELVs may not be the biggest headline grabber, but we are all aware that unless things are done properly, somewhere down the track they may jump up and bite us. Nobody has a monopoly on wisdom, and I assure all hon. Members who have contributed that their views, which have been knowledgeable in many cases, will be taken fully into account. This will be a holding statement, as well as a response to the report, because the issue is work in progress, for obvious reasons.
The hon. Member for Runnymede and Weybridge (Mr. Hammond) referred to the fact that we missed the 21 April transposition date for the directive. We regret that, because the Government supported the directive, and welcomed its adoption. We support it because we think that it will bring environmental benefits by reducing the waste arising from end of life vehicles, and it will raise the environmental standards of the businesses that treat those vehicles. We want an established network of professional dismantlers, and scrap yards that have carried out sterling work over the years, to benefit from the restrictions that will be placed on those not willing to be properly registered and permitted. We are also committed to increasing UK recycling rates. The achievement of the demanding targets contained in the directive will help us to meet that commitment. For those reasons, we support the directive and we regret the missing of the transposition date.
The other side of that coin, however, is that we are so keen to move ahead with the implementation of the directive and get it right that we think that any delay is justified. It is more import ant to get it right than to rush through legislation that turns out to be ill-judged. That is exactly what my hon. Friend the Member for Ochil (Mr. O'Neill) was saying. It is a complex and significant directive, which has implications for many businesses and organisations, and for motorists. I have been particularly struck by some of what has been said about the implications for the car industry and the lead times that they require. All that has been carefully noted. From that perspective, it is crucial that we get the implementation right. Our discussions with the industry and others are continuing, we are making good progress, and we need to ensure that all the practical implications of the directive are understood.
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The other point to make about the 21 April deadline is that all member states are in the same boat. None of them will have completely transposed the ELV directive in time. That is not surprising, because the directive, as adopted, is incomplete. Only in the past fortnight have we seen the Commission's final proposals for restricting the use of certain heavy metals in cars. The Commission has yet to give member states its proposals concerning the detailed rules through which they will be able to demonstrate achievement of the recycling targets in the directive. Transposition by the due date will only have been partial, and further legislation will be required once agreement is reached on the missing elements. Therefore, missing the date is not as grievous an offence as it may have first sounded.
The Select Committee's report was very helpful and constructive. The Government's response to it highlighted several key considerations that we are determined to reflect in implementing the directive. We have always said that we would implement it with a light regulatory touch at first—it is important to re-emphasise that—with the minimum disruption to current market systems and, to address the last point of the hon. Member for Runnymede and Weybridge, without putting UK business at a competitive disadvantage to its EU counterparts. That is one of the three golden rules, and our position has not changed. We also want to ensure that we secure the important environmental benefits of a directive at least cost to the United Kingdom. I agree with the hon. Gentleman's remarks, and that is the balance we want. We want the maximum environmental benefits, but we want to minimise the cost.
We have a very important objective relating to those outcomes, which is to reduce the number of illegal dismantlers and scrap yards that undermine the legitimate sector. There is a list of virtuous objectives, and the debate is about how exactly we will achieve them. Fridges have inevitably turned up—as they tend to do in many places these days. We have heard frequent references to fridges, which is a warning of why we should take our time and ensure that our discussions with industry are complete. We shall also have to ensure that treatment facilities have sufficient time to invest in the right equipment, so that cars can continue to be scrapped. That is what has gone wrong with fridges—the industry is not there to deal with them.
Let me review the main areas covered by the Government's response to the Select Committee's report and update hon. Members on the progress that has been made since that response was presented to my hon. Friend the Member for Ochil. Abandoned vehicles have featured very largely in the debate. They are a legitimate concern, which has been echoed by all hon. Members who have spoken. In our response, we emphasised that we are very conscious of the impact that abandoned vehicles can have on local communities and the cost implications for local authorities, and we have all seen evidence of that in our constituencies.
The announcement on 10 April by the Secretary of State for Transport, Local Government and the Regions and the Minister for the Environment on measures to enable local authorities to deal more quickly with abandoned vehicles—24 hours rather than seven days—and to improve access to DVLA vehicle records will have been welcomed by everyone. The

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measures are major steps forward on that front. My right hon. Friends' long-term proposals for tightening the vehicle register will make it more difficult for vehicles to be abandoned with impunity. The measures are virtuous in their own right, but they are also relevant to the implementation of the directive.
Mr. Hammond: Does the Minister agree that those measures will be costly and are no substitute for attempting to create a situation in which end of life vehicles are voluntarily delivered by their owners because of an economic imperative, rather than attempting to use a stick?
Mr. Wilson: I am about to say something about cost, which is obviously one of the big issues. We are looking at all options, none of which has been closed down. Equally, none is easy and each has its difficulties. If, as a consequence of our implementation of the directive, additional costs fall on local authorities, under the new burdens arrangement it is likely that they will be picked up by the Department of Trade and Industry. There is no doubt that treating all end of life vehicles, including abandoned vehicles, to the new standards required by the directive on the drainage and storage of fluids, which are not currently removed from old vehicles, will involve extra costs.
The potential impact on the number of abandoned vehicles will be among the factors that the Government will take into account when we decide the best option for implementation during the period up to 2007, which is, of course, the latest date allowed under the directive for introducing producer responsibility and free take-back for end of life vehicles. We hope to make an announcement on that in the coming weeks. I had intended to make such an announcement today, and we are close to being able to make it, but we are unfortunately awaiting final agreement from one of the devolved Administrations, which precludes me from giving an answer in debate. We will make a statement soon on the situation up to 2007.
The Select Committee expressed a hope that the present number of illegal dismantlers—cowboy shredders is the colourful term by which they have be described —would be reduced by implementation of the directive. It also expressed concern about the adequacy of the network of authorised treatment facilities—ATFs—that will be able to treat vehicles to the new standards. The directive provides an opportunity to close those illegal operators. who have been able to undercut legitimate dismantling and scrapping businesses over the years.
Operators in the illegal sector will need to obtain a permit under the ATF permitting system, which will be operated by the Environment Agency, and permission from the DVLA to issue electronic certificates of destruction to trigger the removal of an ELV from the vehicle register. Licensed or registered dismantlers and scrap yards, which have been legitimately processing ELVs to current standards, or new businesses wishing to enter the sector, will be given a realistic time in which to comply with the new site and treatment standards. As I said earlier, I want to build on the excellent work that the legitimate sector has been doing, and we are confident that legitimate businesses will recognise the unique opportunity that the directive presents.
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The directive requires certain processes to be carried out on end of life vehicles. The dismantlers and the scrap yards have the knowledge and experience to carry out those processes. A captive audience of around 2 million ELVs a year is waiting to be de-polluted and dismantled prior to crushing and recycling. The requirements of the directive will be in place next year and subsequently, so there is a long-term market. It will not go away and dismantlers, scrap yards and others who carry out de-pollution will have the certainty of knowing that their services will continue to be required.
Mr. O'Neill: My hon. Friend has not yet addressed the problem of removing the cowboys, which will impose a greater demand for the services of legitimate dismantlers. If they are working to well nigh full capacity now, there will be an increased delay in legitimate treatment because there will not be enough firms to do the work. There may then be a second phase of cowboys who take cars off people's hands. Is the Department considering the possibility of helping businesses that may want to expand? A legitimate ATF may seek planning permission to expand its business but the application may become clogged up in the local authority system and the business opportunity may be lost for months.
Mr. Wilson: My hon. Friend makes a fair point that goes back to the issues surrounding fridges. If the directive is to work, it is in our interests to ensure that legitimate businesses are in place before demand increases. I am happy to consider with other Departments any measures to stimulate legitimate business and ease the transition. Officials have made good progress in developing site and operating standards and my right hon. Friend the Minister for the Environment intends to consult on draft regulations before the summer recess.
The Select Committee asked the DTI to set out clearly how the issuing of certificates of destruction would work. Our response was that we would do so and work continues towards that end. The DVLA's pilot project continues to run and officials have encouraged greater participation by dismantlers. The number is increasing and now stands at 38, with a further 38 at different stages of joining. However, we want more to participate because the more businesses that are familiar with the electronic exchange of information with the DVLA, the smoother will be the introduction of the system when the directive is implemented. I am pleased to report that the DVLA is now targeting a further 400 salvage businesses with a view to stimulating their participation in the pilot project. Notwithstanding the comments about the DVLA, we look forward to rapid progress with that project.
The Select Committee registered doubts about the practicality of option 4, but it was suggested by the Society of Motor Manufacturers and Traders to encourage dialogue between car makers and ELV shredders. We have responded to that. The DTI's consultation group was formed to help us to identify the strongest option for implementation and to develop an alternative by bringing together the key stakeholders. Car makers and shredders, with representatives of the dismantling and salvage industries, have discussed a

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number of possibilities for distinguishing between positive and negative value ELVs, including the system proposed in option 4.
Option 4 remains under consideration as part of the process, along with the three options set out in our public consultation document. They received varying degrees of support and others have been identified since. All the options remain under consideration and have their pros and cons. One may favour a particular segment of the ELV chain and another may disadvantage a newer car maker to the benefit of longer-established manufacturers. Where the cost falls is at the centre of every business's thinking. The Select Committee's report states in several places and the view has been expressed today that the DTI's consultation paper last year was remiss in not addressing the issue of funding. Our view then and now is that it was better to consult on the mechanics of implementation before deciding where the cost should fall. We wanted consultees' views on the operational practicalities rather than on the perhaps more divisive issue of who should pay. Our consideration of the matter continues and the views that have been expressed today are timely and highly relevant. They will feed into the continuing debate.
The Select Committee noted that if the introduction of producer responsibility were delayed until 2007, it would not expect any particular category of car maker to be excessively penalised. I alluded earlier to the implications of different implementation options in that regard. We are alive to the accounting implications of the various options for deciding exactly where responsibility for the historic car parc—I still have no information on the spelling conundrum—should lie. As we have said repeatedly during the past year, we shall seek to ensure that the UK's approach to implementing the directive does not disadvantage UK business compared with competition in other member states.
I turn to some of the specific points made in the debate, starting with those of my hon. Friend the Member for Ochil, the Chairman of the Select Committee. He mentioned an information programme and, in particular, the use of the DTI website. I accept entirely that we shall have to have such a communication programme and that clear messages will have to be given. The problem at the moment, as hon. Members have probably gathered from my remarks, is that the messages are not all that clear. The information programme must await the key decisions on implementation that we shall have to take in the near future. Those messages will then be promulgated via the DTI website and other channels to heighten public awareness, on which so much of the scheme depends.
My hon. Friend the Member for Birmingham, Northfield (Richard Burden) mentioned orphan vehicles. No matter which system is adopted, orphan vehicles will be a problem. To put that in proportion, they represent about 1 per cent. of the total car parc, and will need to be accommodated under whatever approach we decide to take. On manufacturers that own orphan names, responsibility will depend on the terms of acquisition, but it is unlikely that those terms would include responsibility for obligations that did not exist
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at the time. As I said, whatever solution or approach we come up with, responsibility for orphan vehicles will somehow have to be shared around those involved.
Richard Burden: The issue of orphan vehicles is a specific one. I am reassured by what my hon. Friend the Minister has said, but I also raised the question of brands that are, so far as I know, not technically orphan brands. It is clear that those brands can be owned by a company, for example, in the case of MG Rover, that is much smaller than the companies that were in existence when those brands were producing cars. My issue was not only about orphan vehicles, but about existing car companies owning brands, which gives them a liability to the historic car parc that is rather out of proportion to their size today.
Mr. Wilson: The case of MG Rover has been well made. Obviously, there is a danger that a solution that is right in general could create an anomaly in the particular case of MG Rover because of the evolution of that company and its contraction since the heyday of manufacturing. If my hon. Friend and the hon. Member for Bromsgrove (Miss Kirkbride) can leave that well-made point with me, I can assure them that it has been noted.
The hon. Member for Bromsgrove asked about what is going on elsewhere. No other member state has yet transposed. We understand that France and Germany are delaying producer responsibility until 2007. Denmark has a fee on car insurance that can be recovered when the ELV is disposed of. The Netherlands has a fee on the sale of a new car that goes towards disposal costs. The whole gamut of options is in operation somewhere or other, and that is the range of options that we are looking at. I have a briefing on what is going on elsewhere in the EU, which I am more than willing to share with the hon. Lady and anyone else who would like to see it, without reading the whole thing out now.
The hon. Member for Twickenham mentioned torching. It is important to repeat that local authorities will have new powers to remove abandoned vehicles in 24 hours rather than seven days. That will reduce the incidence of torching, as vehicles usually lie around for a few days before somebody gets round to setting them ablaze. As I have said, the DTI accepts responsibility for picking up additional local authority costs.
My hon. Friend the Member for Middlesbrough, South and Cleveland, East (Mr. Kumar) said that he believed that the 85 per cent. recovery target was achievable. I agree with him. The Automotive Consortium on Recycling and Disposal, an industry group, has reported that around 80 per cent. of the weight of ELV scrap was recovered in 2000, so it is not as if we are starting from a low base. The problem exists at the margins. Industry and DTI research into new uses for recycled materials should help to achieve the increase and take it beyond 80 per cent.
The hon. Member for Runnymede and Weybridge asked about the heavy metal restriction. The directive has been adopted and contains restrictions on the use of heavy metals. What is being negotiated now is a list of derogations—time-limited exemptions and so on. We are seeking to ensure that the derogations are based on

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sound environmental and economic analysis. Most car manufacturers are already voluntarily moving away from using heavy metals. I recognise that we cannot suddenly lower the drawbridge without looking at the consequences, so we are taking the approach that I have described, including the possibility of derogations where appropriate.
The question of the export of vehicles arose in an exchange between the hon. Gentleman and my hon. Friend the Member for Ochil. Not much exporting takes place from the United Kingdom, for the fairly obvious reason that not many people anywhere else in the European Union want to buy right hand-drive cars—I do not know whether they do in Gibraltar—whereas many other member states export up to 50 per cent. of their cars as second hand.
The origins of the directive lie in a series of priority waste streams identified collectively by member states as worthy of attention. Producer responsibility was adopted because the sensible view was taken that producers can best design out environmentally harmful materials and design in recyclability.
Mr. Hammond: The Minister raises an important point. If the purpose of identifying producers as the people who have to pay is to give them an incentive to design out environmentally damaging materials, that implies that the system must be producer and product specific and there must not be an overall industry pool approach. Is he saying that if he charges producers for the cost of end of life vehicle disposal, he will make his scheme producer specific, so that the amount charged will relate to the recyclability and environmental friendliness of the individual vehicle?
Mr. Wilson: I am sure that the hon. Gentleman appreciates that I shall not give an answer to that question today, as it is inherent in the wider questions that we are considering. It is an explanation of why producer responsibility is correct. There is no point in introducing a system that does not place an onus on the producer to make the end product better. With producer responsibility. there is a strong onus on the producer to
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change the design in ways that are compatible with the directive's objectives. Again, I am happy to come back to the hon. Gentleman on that point.
Producer responsibility is not an optional element, but is clearly stated in the directive, so it must be reflected in our transposing regulation to the extent that it is in respect of complete end of life vehicles with negative or no value.
Mr. Hammond: Does the Minister accept that if end of life vehicles have a positive value, by whatever mechanism that is achieved, there will no longer be an obligation to place the ultimate cost burden on producers, as the EU directive is framed?
Mr. Wilson: That is inherent in what I said. The directive does not place an onus on producers for vehicles that have a positive end of life value. The distinction is made in the directive, so there would be a logic in transposing it into our own regulations.
The hon. Gentleman seemed to favour a levy on each owner of the car. That is one of the options that we are considering, but I just put down the marker that it has not been proposed in other EU states, and it is a complex way of doing it because it is a long-term as opposed to a one-off process. I am not shutting doors but simply saying that, like all of the options, it has an upside and a downside.
The hon. Gentleman asked when producer responsibility had been introduced. Fortunately, he did not ask who introduced it. The policy of producer responsibility was introduced by a previous Administration in 1993, and it has been applied not only to vehicles but to electrical and electronic equipment, newspapers, packaging, tyres and batteries. Perhaps a good point to finish on is that the issue is not party political. Everyone has signed up to the principles; we are discussing how to get the implementation right. The debate has contributed to my understanding and, I hope, to the understanding of others about how we should approach such issues.
Question put and agreed to.
Adjourned accordingly at sixteen minutes past Five o'clock.

ENVIRONMENT, FOOD AND RURAL AFFAIRS

  Correspondence
  Mr. Evans
  To ask the Secretary of State for Environment, Food and Rural Affairs what the average response time was for responding to departmental correspondence; what percentage of letters took longer than one month for a response; and what percentage took longer than three months for a response in each of the last five years. [37442]

  Mr. Morley
  Our Minister's correspondence database does not record details of response times and percentages of response times for the last five years. We can only provide this information for letters answered for the period since the formation of DEFRA on 8 June 2001 to 31 March 2002.

  The DEFRA service target is 15 working days.

  Letters answered from 8 June 2001 to 31 March 2002
  Mean response time was 48.14 working days
  Percentage of letters that took longer than one month for a response: 64.58
  Percentage of letters that took longer than three months for a response: 24.18.

  The Department suffered severe disruption last year due to allocating top priority to defeating the foot and mouth epidemic. Furthermore the sheer volume of correspondence received following the creation of DEFRA had a major impact on the Department's performance, resulting in a large backlog of letters. We have devoted more resources to clearing the backlog and we are making progress in improving response times.

  Rio Earth Summit (Implementation)
  Malcolm Bruce
  To ask the Secretary of State for Environment, Food and Rural Affairs which members of(a) her Department and (b) the Government are planning to attend the Rio†10 Summit in Johannesburg in 2002; and on what dates these individuals are expected to be in attendance. [44358]

  Mr. Meacher
  The final decision on the make-up of the delegation to the summit will rest with the Prime Minister nearer the time. However, both the Prime Minister and my right hon. Friend the Secretary of State will attend the summit. We are keen to ensure that all three pillars of sustainable development are represented in the ministerial element of the delegation.

  Malcolm Bruce
  To ask the Secretary of State for Environment, Food and Rural Affairs what steps have been taken by the Government since the Rio Earth Summit in 1992 to(a) set goals on environmental protection and (b) improve eco-efficiency and resource productivity relating to mountain issues; and what these (i) goals and (ii) improvements have been. [44343]
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  Mr. Meacher
  The majority of the montane area in the UK occurs in Scotland. Although montane habitats are very scarce in England there are 33 Sites of Special Scientific Interest (SSSIs) with an estimated 26,000 ha of land above 600 m. Several of these are also Natura 2000 sites designated in accordance with the EC wild birds and habitats directives.

  In addition to protection measures afforded by notification as special sites (SSSIs, Special Areas of Conservation and Special Protection Areas), actions in hand include the establishment of six upland habitat action plans under the UK biodiversity action plan.

  In England the hill farm allowance (HFA) was introduced in 2001 to provide support to beef and sheep producers in the less favoured areas in recognition of the difficulties they face and the vital role they play in maintaining the landscape and rural communities of the hills. Similar schemes operate in the devolved Administrations. HFA is linked to sustainable farming practices, forms part of the wider rural development programme and is WTO compatible.

  Sellafield
  Mr. Carmichael
  To ask the Secretary of State for Environment, Food and Rural Affairs how much technetium has been discharged from Sellafield in each year since 1992.[53650]

  Margaret Beckett
  Annual discharges of technetium-99 to sea from BNFL Sellafield since 1992 were as follows:

  Year

  Discharge in terabecquerels (TBq)

  1992

  3·2

  1993

  6·1

  1994

  75

  1995

  190

  1996

  150

  1997

  84

  1998

  53

  1999

  69

  2000

  44

  2001

  79

  Meat Imports
  Mr. Ruffley
  To ask the Secretary of State for Environment, Food and Rural Affairs what percentage of meat imports were subject to random checks in the last 12 months. [53702]

  Mr. Morley
  All commercial consignments of meat from third countries are required to be presented to border inspection posts where they undergo 100 per cent. documentary and identity checks. Physical checks are undertaken on a minimum of 50 per cent. of consignments of poultry and game meat, with a minimum level of 20 per cent. on other meats.

  In addition HM Customs and Excise have also participated with local and port health authorities in targeted exercises on air passengers and deal with meat found in baggage in contravention of our imports rules as part of their normal controls. In cargo, meat found in

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  Customs examinations which was not declared in freight would be drawn to the attention of the local and port health authorities.

  Chernobyl
  Llew Smith
  To ask the Secretary of State for Environment, Food and Rural Affairs what research projects are continuing on the environmental impact of Chernobyl on the United Kingdom. [54171]

  Mr. Meacher
  There are no current research projects on the environmental impact of Chernobyl on the United Kingdom. A great deal of work has been done in the past to understand and ameliorate the effects of radiocaesium on the environment and the food chain. The Food Standards Agency and the Department for Environment, Food and Rural Affairs continue to monitor the effects of the radioactive fallout from Chernobyl in sheep and fresh water fish. Details of the latest monitoring results can be obtained from the Food Standards Agency's annual report "Radioactivity in Food and the Environment".

  Egg Labelling Directive
  Gareth Thomas
  To ask the Secretary of State for Environment, Food and Rural Affairs what representations she has received from small producers on the implementation of the European Directive on the Compulsory Labelling of Eggs. [54161]

  Mr. Morley
  Comments were received from the main representative bodies and two producers during the negotiations on the proposal to amend Council Regulation (EEC) No 1274/91.

  Rural Awareness
  Mr. Andrew Turner
  To ask the Secretary of State for Environment, Food and Rural Affairs (1) when her Department will have rural proofing embedded in policy-making procedures as set out in the Countryside Agency's report, Rural Proofing in 2001–02; [54429]

  (2) when her Department will implement proofing and checklist measures as part of overall rural proofing measures set out in the Countryside Agency's report, Rural Proofing in 2001–02. [54434]

  Alun Michael
  The Government have made a firm commitment to rural proof all relevant policies and for performance to be monitored independently by the Countryside Agency. This innovative approach—described as "courageous" by the agency's chairman Ewen Cameron, when his first report was published on 11 April this year—applies across Government and to agencies and other Government bodies.

  The first report concludes that a great deal has been achieved since this approach was proposed in the Rural White Paper in November 2000, but that much more needs to be done to make rural proofing fully effective. The report sets out details of the checklist devised by the Countryside Agency as an appendix.

  Following the decision to implement the strong rural agenda set out in the White Paper, a number of other changes have taken place. In June 2001, the new Department for Environment, Food and Rural Affairs came into being. For the first time, there is a Minister of
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  State for Rural Affairs and a director general within DEFRA backed by a team with a clear focus on rural social and economic issues and on implementation of the Rural White Paper. A Cabinet sub-committee, chaired by the Secretary of State for Environment, Food and Rural Affairs, has a specific focus on rural affairs. The Minister of State for Rural Affairs has met Ministerial colleagues across Government to discuss the challenges of delivering services in rural areas.

  The implementation of rural proofing is a process across Government. Responsibility lies with each individual Department but DEFRA and the Countryside Agency are working together to develop rural-proofing strategies and to rural proof individual policies.

  Mr. Andrew Turner
  To ask the Secretary of State for Environment, Food and Rural Affairs when her Department will introduce measures to raise rural awareness through staff(a) training, (b) development and (c) secondments as part of overall rural proofing measures as set out in the Countryside Agency's report, Rural Proofing in 2001–02. [54417]

  Alun Michael
  The Government have made a firm commitment to rural proof all relevant policies and for performance to be monitored independently by the Countryside Agency. This innovative approach—described as "courageous" by the agency's chairman, Ewen Cameron when his first report was published on 11 April this year—applies across Government and to agencies and other Government bodies.

  The first report concludes that a great deal has been achieved since this approach was proposed in the Rural White Paper in November 2000. but that much more needs to be done to make rural proofing fully effective. The report sets out details of the checklist devised by the Countryside Agency as an appendix.

  Following the decision to implement the strong rural agenda set out in the White Paper, a number of other changes have taken place. In June 2001, the new Department for Environment, Food and Rural Affairs came into being. For the first time, there is a Minister of State for Rural Affairs and a director general within DEFRA backed by a team with a clear focus on rural social and economic issues and on implementation of the Rural White Paper. A Cabinet sub-committee, chaired by the Secretary of State for Environment, Food and Rural Affairs, has a specific focus on rural affairs. The Minister of State for Rural Affairs has met ministerial colleagues across Government to discuss the challenges of delivering services in rural areas.

  Each Government Department has put in place arrangements to respond to the requirements of rural proofing and the Treasury, for instance, has a secondee from the Countryside Agency working with their officials on rural proofing work. Rural proofing is also one of the forms of policy assessment that the Centre for Management and Policy Studies in the Cabinet Office introduces as appropriate during its training for civil servants on policy making.

  Mr. Andrew Turner
  To ask the Secretary of State for Environment, Food and Rural Affairs when her Department will establish rural targets and monitoring as
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  part of overall rural proofing measures as set out in the Countryside Agency's report "Rural Proofing in 2001–02". [54424]

  Alun Michael
  The Government have made a firm commitment to rural proof all relevant policies and for performance to be monitored independently by the Countryside Agency. This innovative approach—described as "courageous" by the agency's chairman, Ewen Cameron, when his first report was published on 11 April this year—applies across Government and to agencies and other Government bodies.

  The first report concludes that a great deal has been achieved since this approach was proposed in the Rural White Paper in November 2000, but that much more needs to be done to make rural proofing fully effective. The report sets out details of the checklist devised by the Countryside Agency as an appendix.

  Following the decision to implement the strong rural agenda set out in the White Paper, a number of other changes have taken place. In June 2001, the new Department for Environment, Food and Rural Affairs came into being. For the first time there is a Minister of State for Rural Affairs and a Director General within DEFRA backed by a team with a clear focus on rural social and economic issues and on implementation of the Rural White Paper. A Cabinet Sub-Committee, chaired by the Secretary of State for Environment, Food and Rural Affairs, has a specific focus on rural affairs. The Minister of Stare for Rural Affairs has met Ministerial colleagues across Government to discuss the challenges of delivering services in rural areas.

  The Rural Services Standard, as set out in the Rural White Paper (Our Countryside: the future (Cm4909)) sets targets for the individual services delivered by Government. It is monitored for DEFRA by the Countryside Agency, and its content is currently being reviewed. Some individual Departments also have their own rural targets within their public service or service delivery agreements. Proposed public service agreement targets for 2003–04 and beyond are under discussion as part of the current Spending Review.

  As the agency's annual report recommends, the Cabinet Sub-Committee on Rural Renewal will review progress in the autumn, and take a close and continuing interest in the subject generally. The Countryside Agency will report again next year on progress with rural proofing, so there is a regular external monitoring and evaluation process.

  Waste Composting
  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs what recent research her Department has(a) commissioned and (b) evaluated into the various potential uses of compost produced from household waste. [54588]

  Mr. Meacher
  The Government have set up and are funding the Waste and Resources Action Programme (WRAP) to promote sustainable waste management by working to create stable and efficient markets for recycled materials and products and removing barriers to waste minimisation, re-use and recycling. Part of this work is to tackle issues relating to composting waste. Currently WRAP is working with the Composting Association to develop the existing industry standard for compost, to 276W
  achieve British Standards Institute (BSI) accreditation. The delivery of these industry standards for compost will help to create markets for organic waste derived products.

  Pets
  Mrs. Helen Clark
  To ask the Secretary of State for Environment, Food and Rural Affairs what assessment she has made of the cost to local authorities of dealing with stray dogs in the last 12 months. [54693]

  Mr. Meacher
  This information is not collected centrally. The most recent information on the cost to local authorities of dealing with stray dogs dates from a 1997 MORI poll. The assessment of cost to local authorities then was £11.3 million per year.

  Foot and Mouth
  Mr. Drew
  To ask the Secretary of State for Environment, Food and Rural Affairs how many people have been taken on by the State Veterinary Service since the end of the foot and mouth outbreak; and how this has affected the establishment figure. [54519]

  Mr. Morley
  [holding answer 7 May 2002]: FMD related work still continues, however, for the purpose of my response, figures have been calculated from 22 January 2002. This is when FMD status (without vaccination), for the purpose of international trade was restored by the OIE.

  At the start of the outbreak a total figure of 1,064.4 veterinary, technical and support staff were employed by the field service element of the State Veterinary Service (SVS), compared with 1,247.66 at the end of January 2002. This indicates an increase of 183.26.

  A high proportion of this increase relates to the creation of an enhanced personnel and IT unit, the creation of the National Scrapie Administration Centre at Worcester along with recruitment of fixed term veterinary appointees and other staff at most levels.

  WEEE Directive
  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs what steps her Department is taking to encourage the development of a market for recovered waste electrical and electronic equipment. [54553]

  Mr. Wilson
  I have been asked to reply.

  Markets already exist for a range of waste electrical equipment such as mobile telephones and large household appliances where there is a high metal or precious metal content. The Government are encouraging the development of new recyclate markets through the not-for-profit company the Waste and Resources Action Programme (WRAP). WRAP is jointly funded by the DEFRA, DTI and the devolved Administrations. The budget for the three years commencing 1 April 2001 is £40 million.

  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs if she will list the statistics for waste recovery in the United Kingdom for the categories of WEEE as outlined in Annexe I of the common position on WEEE (2000/0158(COD), Doc 11304/1/01 † ADD1). [54554]

  Mr. Wilson
  I have been asked to reply.
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  In the UK, waste electrical equipment is not currently separated into the categories defined in the draft WEEE Directive. These statistics are not therefore available. To establish current recovery rates for a selection of individual products DTI has commissioned work from PriceWaterhouseCoopers. This can be viewed on the departmental website.

  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs what consultations she has had with producer and sectoral groups about the practical implications and likely cost of compliance with the EU WEEE directive; and if she will make a statement. [54558]

  Mr. Wilson
  I have been asked to reply.

  DTI carried out a formal consultation on the Commission's proposal in autumn 2000. There were 70 responses representing over 340,000 organisations. A summary of the results was published on the website. There has been a regular on-going dialogue with stakeholders from all sectors. A new partial regulatory impact assessment that considers costs in detail was placed on to the DTI website in April 2002. Over 700 organisations, including major trade associations and local authorities were alerted to this by letter this month. A small business consultation group and informal retailer group have also been established.

  A series of over 20 information seminars are planned across the UK over the next four to five months.

  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs if her Department intends to make use of the optional five-year exemption for SMEs from the provisions of the EU WEEE directive relating to producer responsibility. [54556]

  Mr. Wilson
  I have been asked to reply.

  The Common Position text allows member states the option of exempting SME manufacturers from the financing requirements of Articles 7 and 8 for a period of up to 30 months after the commencement of this obligation for other producers. The Government support this flexibility and will wish to take up this opportunity to exempt SME manufacturers if this is permitted under the directive finally adopted and if practicable within the implementing legislation developed.

  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the derogations granted to Greece and Ireland in Article 15.4(a) of the Common Position on WEEE (2000/0158(COD), Doc 11304/1/01† ADD1). [54560]

  Mr. Wilson
  I have been asked to reply.

  The Common Position text would allow Greece or Ireland up to a further 24 months in which to reach the recovery and recycling targets set out in Article 6 and the collection target specified in Article 4. They are required to notify the Commission of their intention to use these derogations by the time required for completion of the transposition process.

  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs what strategies her Department intends to adopt to communicate to the public the need to sort and recover WEEE. [54555]
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  Mr. Wilson
  I have been asked to reply.

  These will be considered alongside the development of implementing legislation and are a requirement of the draft directive.

  Affordable Housing
  Mr. Breed
  To ask the Secretary of State for Environment, Food and Rural Affairs what plans she has to increase the uptake of affordable housing in rural areas by key sector workers; and if she will make a statement. [54816]

  Ms Keeble
  Our overall strategy is: to ensure that the housing needs of people in rural area, including key workers, are properly identified; to increase investment in new social housing; to maximise delivery of affordable housing through the planning system; and to make the best use of existing property. We expect to deliver around 9,000 affordable homes annually in rural areas by 2003–04 through these measures as announced in the Rural White Paper. This should provide greater opportunities for key workers in rural areas where local authorities have identified affordable key worker housing as a priority need.

  Our Starter Home Initiative (SHI) is specifically helping key workers in England to buy a home in urban and rural areas where the high cost of housing is undermining recruitment and retention. £230 million SHI funding was allocated to local scheme providers in September 2001, including some £8.7 million to help around 360 key workers to buy homes in rural settlements with a population of 3,000 or less. We expect to announce the allocation of a further £20 million SHI funding to successful bidders later this month.

  Energy Conservation
  Sue Doughty
  To ask the Secretary of State for Environment, Food and Rural Affairs (1) what assessment she has made of the impact on carbon dioxide emissions of the exemption from the climate change levy of electricity from combined heat and power plants sold through licensed electricity suppliers; [53734]

  (2) what assessment she has made of the impact on the total level of generation from combined heat and power sold through licensed electricity suppliers of its exemption from the climate change levy. [53733]

  Mr. Boateng
  I have been asked to reply.

  Granting Good Quality Combined Heat and Power (GQCHP) a full exemption from the Climate Change Levy (CCL) will encourage the use of this energy-efficient technology, and support the achievement of the Government's target of at least 10 gigawatts (GWe) of GQCHP by 2010. GQCHP achieves a 25 to 35 per cent. reduction in primary energy use relative to traditional forms of electricity generation, and therefore produces less carbon emissions per GWe. The amount of carbon saved depends on which technologies and fuels are displaced by GQCHP.

  The DTI and DEFRA are assessing the economic and environmental potential of GQCHP under various energy price and policy scenarios, including the full exemption from CCL. This work will be published shortly, alongside the Government's CHP Strategy.

TRADE AND INDUSTRY

  Energy Efficiency
  Mr. Stunell
  To ask the Secretary of State for Trade and Industry what measures her Department has taken since 1997 to encourage energy efficiency in(a) the domestic sector, (b) the commercial sector, (c) the industrial sector and (d) the public sector; and how much Government financial support has been made available. [50435]

  Mr. Wilson
  I refer the hon. Member to the answer given to him by my right hon. Friend the Minister for the Environment on 8 May 2002,Official Report, column 155W.

  Business Links
  Mr. Bercow
  To ask the Secretary of State for Trade and Industry what estimate she has made of the productivity and profitability of(a) businesses assisted by business links (i) in the Milton Keynes, Oxford and Buckinghamshire area and (ii) nationally and (b) businesses not assisted by business links in the latest year for which figures are available. [51391]

  Nigel Griffiths
  Business link operators are required to submit data on those clients receiving the most intensive level of support in order to track changes in their growth and performance.

  (a) (i) 7,000 individual business have been assisted by business link Milton Keynes, Oxford and Buckinghamshire, helping on average almost 700 people per quarter interested in or thinking about starting a business in 2001–02.

  (a) (ii) Among small businesses with between 10 and 49 employees assisted by business link nationally the average productivity increase was 19 per cent.

  (b) Among small businesses not assisted by BL, but which were otherwise similar, the average productivity increase was 15 per cent.

  Electricity Industry
  Mr. Peter Duncan
  To ask the Secretary of State for Trade and Industry what representations have been(a) sought and (b) received from the Scottish Executive on new UK-wide electricity trading arrangements. [52903]

  Mr. Wilson
  I have been in close contact with colleagues in the Scottish Executive and they fully support moves to create a British electricity trading and transmission market. The project is being taken forward with the full involvement of the Scottish Executive who are represented at my regular meetings with the industry in this issue. Scottish Executive officials also attend the monthly steering group.

  Energy Industry
  Sue Doughty
  To ask the Secretary of State for Trade and Industry what assessment she has made of the impact on the total level of generation of electricity from coal mine methane sold via licensed electricity suppliers of its exemption from the climate change levy. [53731]

  Mr. Wilson
  The Government do not have their own estimate for the extra sites which would be developed as a result of the CCL exemption, but the Association of Coal Mine Methane Operators has estimated that around 30 new sites could be made viable as a result. It is for the 280W
  operators to respond to the incentive that has been provided, but if all the association projects went ahead this would add something in the region of 175 MW of electricity generating capacity with the electricity produced per annum totalling about 1.4 terawatt hours.

  Sue Doughty
  To ask the Secretary of State for Trade and Industry what assessment she has made of the impact on carbon dioxide emissions of the exemption from the climate change levy of electricity from electricity from coal mine methane sold via licensed electricity suppliers.[53732]

  Mr. Wilson
  Using methane from abandoned mines will reduce greenhouse gas emissions to the atmosphere and therefore has a significant environmental benefit. The scale of the environmental benefit cannot be precisely quantified at present, because the effect of pumping the gas leads to some acceleration in the extraction rate beyond the level of natural leakage from abandoned mines. Work is in hand to inform these estimates.

  Small Businesses
  Mr. Wray
  To ask the Secretary of State for Trade and Industry what assistance the Government have provided since 1997 to small businesses starting up. [54193]

  Nigel Griffiths
  Creating new businesses is important to achieving a vibrant economy. The Government are committed to creating an environment that encourages more people to think about setting up a business, and to provide them with easy access to the information and support available that will help them to be successful and grow. Since 1997 the Government have introduced through the Small Business Service (SBS) a range of measures to assist small businesses to start up including:At the heart of the SBS is the Information and Advisory Service, which provides start-ups and other small businesses with access to information and advice on a wide range of business topics. This is focused at a local level through the SBS's business link operators (BLOs), which provide tailored high quality business support to meet the needs of all small businesses in their areas. Each BLO is required to provide a local service for pre start-ups and start-ups brokering specific help when appropriate from local partners;
  People thinking of starting in business or who are already trading have easy access to information about all aspects of starting and running a business from the business link website (www.businesslink.org) and National Contact Centre (0845 600 9006).
  The Business Volunteer Mentoring (BVMA initiative) provides mentoring advice to pre and early start-up businesses from a core of volunteers (retired or otherwise) drawn from all sections of the business community. With support from the SBS, the National Federation of Enterprise Agencies, is overseeing the co-ordination of the initiative for delivery at local level through local enterprise agencies and other business link local partners. There are currently approximately 900 volunteers operating within the BVMA initiative.
  High Growth Start-up (HGSUs)—a high-quality advice service to pre-start and start-up businesses in England who are identified as having high growth potential. The service is part of the start-ups services delivered locally via business link operators in England. Support is being provided, across a variety of business sectors, to people who are traditionally considered to face barriers in starting

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  and growing a business including women, ethnic minorities and young entrepreneurs. Around 7,000 pre and early start businesses have been assisted since October 1999.
  The £75 million SBS Business Incubation Fund opened for business on 1 October 2001; the fund is providing loans to developers of business incubators to help those starting up in business and early stage SMEs to survive and grow.
  96 projects supported by £30 million from the Development Fund element of the Phoenix Fund, bringing enterprise projects to disadvantaged areas and groups.

  However the Government are committed to continue finding ways of increasing the numbers of new businesses, and of helping them to be successful and grow. In response to the joint Treasury/DTI paper "Productivity in the UK", which was published on 16 June 2001, the SBS is currently consulting on developing a comprehensive strategy for supporting business start-ups. A consultation document was published on 6 May 2002, setting out some concrete proposals and recommendations for areas where further work is considered necessary. The consultation period will run until 31 July 2002.

  Coal Health Claims
  Rachel Squire
  To ask the Secretary of State for Trade and Industry how much has been paid by her Department in coal health claims for(a) occupational respiratory disease and (b) vibration white finger in fees and other charges to (i) her Department's legal advisers and counsel, (ii) her Department's claim handlers, (iii) the medical service providers (A) Healthcall Ltd. and (B) SEMA, (iv) external and seconded consultants, (v) other contractors and (vi) claimants' solicitors, in the period up to 31 December 1997 and in each subsequent year. [54839]

  Mr. Wilson
  The Department is unable to provide figures relating to contractors' fees, as the details of these payments remain commercially confidential.

  Figures for the period prior to 1 April 1999 are not available in time allowed. However, from 1 April 1999 to 31 December 2001 the Department has paid out the following on administrative costs (medical, records collection, defendant legal and claims handling costs) broken down by financial year and scheme:

  £ million

  Financial Year

  Respiratory disease

  Vibration white finger

  1999–2000

  4.6

  1.1

  2000–01

  19

  8.4

  April to December 2001

  43.8

  5.6

  Total from April 1999 to December 2001

  67.4

  15.1

  The cost of administrative expenses for the Department on this work cannot be separately identified.

  Export Credits Guarantee Department
  Mr. Simon Thomas
  To ask the Secretary of State for Trade and Industry when she will make her decision regarding ECGD support for United Kingdom commercial interests in the proposed Bo NoK power plant in Thailand; and which companies have expressed an interest to her Department. [55058]
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  Ms Hewitt
  ECGD has not received a formal application in respect of Bo Nok power project. However, an initial inquiry was received over a year ago. The identity of the UK company involved is commercially confidential and, in line with ECGD's normal policy relating to discussions prior to issue of guarantees, cannot be disclosed.

  Mr. Simon Thomas
  To ask the Secretary of State for Trade and Industry which UK companies the ECGD is supporting in connection with(a) the Sual coal plant in the Philippines and (b) its associated transmission networks. [55061]

  Ms Hewitt
  ECGD supported Alstom Power Plants Ltd. (then GEC ALSTHOM Power Plants Ltd.) and Alstom Power Plants Services Ltd. (then GEC ALSTHOM Turbine Generators Ltd.) in relation to the Sual coal plant. ECGD did not provide any support for the associated transmission networks.

DEFENCE

  Defence Estates Agency
  Dr. Palmer
  To ask the Secretary of State for Defence what key targets have been set for the Defence Estates Agency for financial year 2002–03. [55841]

  Dr. Moonie
  As detailed in the Defence Estates Corporate Plan 2002–07, the following key targets have been set for the agency.

  Key Target 1:
  Disposal Receipts—to accrue gross disposal receipts of at least £185 million.

  Key Target 2:
  Prime Contracting—to award the initial Regional Prime Contract, for Scotland.

  Key Target 3:
  Project SLAM—to award the contract by 30 September 2002.

  Key Target 4:
  Project Aquatrine—to award the contract for Package A.

  Key Target 5:
  Estate Strategy Core Sites process—to have a proposed set of categorised core sites ready for publication to TLBs by 31 December 2002.

  Copies of the new Defence Estates Corporate Plan will be placed in the Library of the House.

  Retirement Ages
  Mr. Donaldson
  To ask the Secretary of State for Defence when his Department introduced a normal retirement age of 60 years for senior and professional technology officers; whether his Department has completed its review of its age retirement policy; and if he will make a statement. [55023]

  Dr. Moonie
  The normal retirement age for senior professional and technology officers, and a number of other grades, was changed from 65 to 60 in 1992 as one of the measures needed to manage the "Options for Change" reduction in the size of the Ministry of Defence's civilian work force which became possible following the end of the cold war.
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  The MOD has completed its further review of age retirement policy. The conclusions are being considered and we shall make an announcement about them as soon as we can.

  West Freugh
  Angus Robertson
  To ask the Secretary of State for Defence how many military aircraft movements have taken place at the West Freugh new DEFRA facility in Wigtownshire in each of the last 10 years; and if he will make a statement. [55106]

  Dr. Moonie
  I have taken the question to refer to the Defence Evaluation Research Agency at West Freugh. DERA was, as previously announced, subsumed in QinetiQ and the Defence Science and Technology Laboratory in July 2001. The number of military aircraft movements that took place at West Freugh in each of the last 10 years, is listed. These figures do not include overflights or range runs.

  Number

  1992

  1—

  1993

  3,868

  1994

  1,666

  1995

  5,253

  1996

  4,501

  1997

  5,946

  1998

  4,636

  1999

  7,236

  2000

  5,976

  2001

  3,861

  1 Not available

  Our records are not in a form that readily enables provision of the figures as far back as 1992. I will write to the hon. Member following further analysis of the available data to see what information can be provided and a copy of my letter will be placed in the Library of the House.

INTERNATIONAL DEVELOPMENT

  Debt
  Mrs. Spelman
  To ask the Secretary of State for International Development if she will make a statement on the lending policies of(a) the World Bank, (b) the IDA, (c) the Asian Development Bank and (d) the EBRD. [53623]

  Clare Short
  The multilateral development banks make a unique contribution to international development and poverty reduction. Each of these institutions have different, complementary lending policies. Further details of these are publicly available through the following websites: www.worldbank.org (for World Bank and IDA); ww.adb.org; and www.ebrd.com.

  My Department has published institutional strategy papers for the multilateral development banks which set out how the UK Government can work in partnership with each of these institutions to maximise the effectiveness of our combined development efforts (available www.dfid.gov.uk or through our public inquiry point, tel. 01355 843132). These papers outline our views on the
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  effectiveness of these institutions and how we intend to ensure that their lending contributes to poverty elimination.

  Tanzania
  Mrs. Spelman
  To ask the Secretary of State for International Development when her Department last discussed the political situation in Tanzania with(a) the Foreign and Commonwealth Office, (b) the Department for Trade and Industry and (c) the Ministry of Defence; and what was discussed. [54262]

  Clare Short
  DFID maintains a regular dialogue with other Government Departments on all aspects of our work.

  Mrs. Spelman
  To ask the Secretary of State for International Development what discussions she has had with the Government of Tanzania regarding the purposes of the air defence system recently purchased by the Tanzanian Government. [54255]

  Clare Short
  We have had various discussions with the Government of Tanzania regarding the proposed air traffic control system. The International Civil Aviation Organisation (ICAO) is currently undertaking a review of Tanzania's civil aviation requirements and will report to the World Bank and Government of Tanzania.

  Mrs. Spelman
  To ask the Secretary of State for International Development what steps her Department is taking to promote good governance in Tanzania. [54261]

  Clare Short
  Governance is a core element of the DFID programme in Tanzania, which supports the Government of Tanzania's Poverty Reduction Strategy. DFID supports several programmes aimed at improving governance. Some of these are with the Government of Tanzania and include financial management reform and financial accountability, decentralisation through local government reform, public service reform and civic education. We are also working with civil society at local and national levels, disseminating information and supporting networks for advocacy and lobbying.

  Mrs. Spelman
  To ask the Secretary of State for International Development what assessment she has made of the impact of her decision to withhold aid from Tanzania; and when she expects aid to resume. [54254]

  Clare Short
  In October 2001 DFID provided £35 million budget support to Tanzania. We have delayed disbursement of the next tranche of £10 million budget support pending the Government of Tanzania's response to the review of the country's civil aviation requirements. The International Civil Aviation Organisation (ICAO) has been in Tanzania to undertake this review and will report to the World Bank and Government of Tanzania.

  Mrs. Spelman
  To ask the Secretary of State for International Development what recent discussions she has had with the Government of Tanzania regarding the peace process in the DRC. [54256]

  Clare Short
  I have not had discussions recently with the Tanzanian Government regarding the peace process in the DRC, but my Department and the FCO maintain a regular dialogue with the Tanzanian Government on all regional issues including the Great Lakes. We have encouraged them in their attempts to bring the Burundian
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  rebels to agree a ceasefire and join the political process under the Arusha Peace Accords, and have offered to help with the costs of these meetings. We have encouraged them to continue to link their efforts in this regard to those of the Burundian peace facilitation team under Vice-President Zuma of South Africa and President Bongo of Gabon, to whose team we are giving technical support. We are also in close touch with the Governments of Tanzania and Burundi, and with UNHCR, on resolving the question of the large number of Burundian refugees still in refugee camps in Tanzania.

  Lynne Jones
  To ask the Secretary of State for International Development, pursuant to her answer of 24 January 2002,Official Report, column 1002, on Tanzania, what further information she has collated on the impact of the purchase of an air traffic control system on the sustainability of Tanzania's debt servicing obligations and the achievement of anti-poverty targets. [54842]

  Clare Short
  The Government of Tanzania agreed with the World Bank to review its civil aviation requirements in consultation with the International Civil Aviation Organisation. The ICAO has been in Tanzania to undertake this review and will report to the World Bank and Government of Tanzania. It is not possible to determine the impact of the purchase of an air traffic control system until the ICAO report is issued and the Government of Tanzania and the World Bank have considered it.

  Zimbabwe
  Mrs. Spelman
  To ask the Secretary of State for International Development what recent discussions she has had with the Government of Tanzania regarding good government in Zimbabwe. [54258]
  Clare Short: Neither my Department nor I have had discussions with the Government of Tanzania regarding good government in Zimbabwe.

  Mrs. Spelman
  To ask the Secretary of State for International Development what assessment she has made of business links between Tanzania and Zimbabwe and their impact on(a) political stability and (b) international development. [54253]

  Clare Short
  I have made no recent assessment of the business links between Tanzania and Zimbabwe but the Zimbabwe crisis is impacting on the region.

  United Nations Population Fund
  Mr. Swayne
  To ask the Secretary of State for International Development how much was given by the EU to the UN population fund in each of the last 10 years. [54481]

  Clare Short
  This information is not readily available and to obtain it would involve disproportionate cost.

  Mr. Swayne
  To ask the Secretary of State for International Development if she will make a statement on the policy of the UN population fund with respect to the Chinese one child policy. [54482]

  Clare Short
  Like the Government, the United Nations Population Fund (UNFPA) does not support China's one child policy. The objective of UNFPA's programme in China is to demonstrate that a voluntary, non-coercive 286W
  approach to family planning can be effective in promoting sustainable population growth. UNFPA report that birth quotas and targets have been abolished, and abortion rates have fallen in the areas of China where UNFPA is working.

  Mr. Swayne
  To ask the Secretary of State for International Development what oversight and scrutiny her officials have over the funding of the UN population fund; and if she will make a statement. [54485]

  Clare Short
  My Department's level of funding for the United Nations Population Fund (UNFPA) is based on an assessment of its performance in contributing to the achievement of the Millennium Development Goals—particularly those relating to HIV/AIDS, maternal and child health—and other international development targets. Our assessment of UNFPA's performance is based on regular feedback from DFID's offices in developing countries, and on studies by external evaluation experts. In addition, the UK (DFID) is a member of UNFPA's executive board which carefully scrutinises the fund's activities and performance.

  Mr. Swayne
  To ask the Secretary of State for International Development if she will make a statement on the level of funding made available to the United Nations population fund in(a) 1980, (b) 1984, (c) 1988, (d) 1992 and (e) 2000. [54480]

  Clare Short
  The UK's contributions to the United Nations population fund (UNFPA) in the years referred to were:

  (a) £2 million

  (b) £3 million

  (c) £2.625 million

  (d) £9 million

  (e) £15.05 million.

  Mr. Swayne
  To ask the Secretary of State for International Development what funds are being made available by(a) the United Nations Fund for Population Activities and (b) the International Parenthood Federation to fund population control in Peru. [54483]

  Clare Short
  Neither the United Nations population fund (UNFPA) or the International Planned Parenthood Federation (IPPF) support population control programmes in Peru or elsewhere.

  In 2002, UNFPA's US$1.4 million programme in Peru is supporting action to reduce maternal mortality and to improve access to reproductive health information and care for young people. IPPF's US$246,716 programme in 2002 is supporting the promotion of a range of quality and affordable sexual and reproductive health services and information for poor people, including improving access to modern methods of contraception and support to combat gender-based violence.

  Great Lakes Region
  Mrs. Spelman
  To ask the Secretary of State for International Development when she last discussed political security in the Great Lakes region of Africa with the UN. [54257]

  Clare Short
  I am in frequent contact with the UN about the security problems of the Great Lakes region and the means of ending the conflict there. I spoke to the
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  Secretary General again this last weekend when we usefully were able to talk through a broad range of current issues on the Great Lakes.

  Democratic Republic of Congo
  Mrs. Spelman
  To ask the Secretary of State for International Development if she will make a statement on the peace process in the Democratic Republic of the Congo with respect to(a) Tanzania and (b) Zimbabwe. [54259]

  Clare Short
  The peace process in the DRC falls within the framework of the 1999 Lusaka Peace Agreement to which Tanzania was not a signatory. However Tanzania is clearly interested in the stability of the Great Lakes region as a whole, particularly in relation to Burundi because of the large number of Burundian refugees currently in camps in Tanzania. The Tanzanian Government are active in seeking to persuade the Burundian rebel groups to agree a ceasefire with the Burundian Government. We continue to press for a full and inclusive settlement to the DRC conflict within the framework of the Lusaka Agreement, which inter alia provides for the withdrawal of all foreign forces in the DRC including those of Zimbabwe.

  Pacific Regional Programme
  Mr. David Marshall
  To ask the Secretary of State for International Development what the total value was of aid and assistance given to her Department's regional programme in the Pacific in each of the last five years. [54465]

  Clare Short
  Funding to the Pacific provided through DFID's bilateral programme and through multilateral agencies, especially the EU, World Bank, Asian Development Bank and the UN is as follows:

  DFID bilateral programme

  Financial year

  £ million

  1996–97

  8.552

  1997–98

  5.765

  1998–99

  4.941

  1999–2000

  4.193

  2000–01

  3.831

  £ million

  Calendar year

  EC

  World bank

  UN

  Others

  1996

  3.8

  0.1

  0.7

  1.1

  1997

  6.0

  0.1

  0.7

  1.4

  1998

  6.1

  0.1

  0.6

  3.2

  1999

  0.9

  0

  0.7

  0

  2000

  7.0

  0.1

  1.0

  2.0

  Note:

  Multilateral agencies (these are UK multilateral shares—'Others' includes the Asian Development Bank for which separate figures are not available)

  Malawi
  Mrs. Spelman
  To ask the Secretary of State for International Development how much food aid(a) her Department and (b) the EU has provided to Malawi in the last six months. [54252]
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  Clare Short
  Since January, my Department has spent £4.6 million on direct food relief in Malawi. In addition, DFID approved £1.2 million on 26 April to help raise domestic food production over the winter season. The latter is expected to yield 75,000 metric tonnes of maize by September.

  The EC has provided £0.3 million in direct food relief.

  Rev. Martin Smyth
  To ask the Secretary of State for International Development what further help she will give to Malawi to alleviate its famine. [55001]

  Clare Short
  Since January, we have spent £4.6 million on direct food relief in Malawi. At the end of April we released a further £1.2 million to help raise domestic food production over the winter season (expected to yield 75,000 metric tonnes of maize by September). A much larger programme to boost domestic food production, and timed to coincide with November rains, is in preparation.

  We have also worked hard with other donors to help the Government of Malawi to develop a long-term national food security strategy. A working group made up of donors, government, civil society and the private sector is urgently considering how to improve food production, storage and marketing, all with the aims of preventing a recurrence of the current crisis.

  Women's Organisations
  Sandra Gidley
  To ask the Secretary of State for International Development if she will list the women's organisations which have been consulted over the proposed legislation by her Department during the(a) 2000–01 and (b) 2001–02 Sessions; and if their responses have been published. [54831]

  Clare Short
  The Department for International Development has undertaken no public consultation over proposed legislation.

  Equal Treatment
  Sandra Gidley
  To ask the Secretary of State for International Development if she has established a baseline for policy appraisal against which to measure progress on equal treatment; and what progress has been made. [54829]

  Clare Short
  DFID is committed to a policy of equal treatment. In relation to DFID's role as an employer, we have adopted a Diversity Action Plan, put in place staff consultative groups to assist in promoting diversity in the Department, undertaken equality-proofing of our pay and appraisal systems, implemented positive action measures in the form of a bursary scheme for staff from ethnic minority backgrounds, and have published targets for improving representativeness of our staffing in respect of race, gender and disability. We are implementing diversity training as part of our management development programmes, have adopted a requirement for all senior staff to have a diversity component in their personal objectives, and have continued to insist on the application of an equal opportunities policy in respect of a wide range of other criteria (including age and sexual orientation) in all aspects of our employment policies.
  289W
  These initiatives, which represent only the key measures in a wide range of on-going actions on equal treatment, will be monitored and reported on in our 2002 departmental report and other systems including the Department's Service Delivery Agreement. It is not easily possible to summarise progress to date in terms of the impact of these initiatives. But the policy is one of continuous improvement and in October (in advance of the operative date of the EU equal treatment directive) the Department expects to implement a new personnel database system which will provide important baseline data against which overall progress can be measured in more quantitative terms thereafter.

  In terms of our work to eliminate poverty, we work through our programmes and at the international level to address discrimination in legislation, policies and society so that excluded people have more control over their lives. Our work in this regard is set out in our strategy papers: "Realising Human Rights for poor people" and "Poverty elimination and the empowerment of women". These are available at www.dfid.gov.uk or through our public inquiry point, tel. 01355 843132. The empowerment of women is an essential precondition for the elimination of world poverty. This goal is recognised in the internationally agreed set of development targets which provide the core framework for DFID' s programme. Related to these, we have a number of gender equity targets in our Public Service Agreement. Progress against these is set out in our 2002 departmental report.

  Sandra Gidley
  To ask the Secretary of State for International Development what new data series separated by gender, race, disability and age have been commissioned by her Department since August 1997. [54830]

  Clare Short
  DFID does not maintain any central record of data series in respect of its programme activities. As an employer, DFID maintains and analyses for internal purposes a range of human resources data on its staff, including gender, ethnic origin, disability and age. Since August 1997 this has been expanded to include analysis of our staff appraisal and promotion systems by, among other things, gender, ethnic origin, disability and age. The principal indicators, such as staff in post, are contained in DFID' s departmental report 2002, a copy of which can be found in the House of Commons Library.

  Implementation Group
  Joan Ruddock
  To ask the Secretary of State for International Development if she will make a statement on the Implementation Group meeting in Kabul on 10 and 11 April. [54597]

  Clare Short
  The first meeting of the Implementation Group for Afghanistan's Reconstruction took place in Kabul on 10 and 11 April, hosted by the Afghan Interim Administration (AIA). The Afghan Finance Minister chaired the meeting, and discussions centred on presentations of the recurrent budget of the AIA, the draft National Development Framework, and the establishment of practical aid co-ordination mechanisms between donors and the AIA. My Department was represented by senior officials.

  Humanitarian Assistance (Middle East)
  Angus Robertson
  To ask the Secretary of State for International Development (1) what plans her Department 290W
  has for providing (a) water, (b) food and (c) medication to the Palestinian civilian population once access to the whole of the West Bank can be secured; and if she will make a statement; [55159]

  (2) what medical supplies her Department has (a) pledged and (b) delivered to the Palestinian Red Crescent Society since 1 April; and if she will make a statement; [55161]

  (3) how much money her Department has (a) pledged and (b) given to the Palestinian Red Crescent Society for the purchase of ambulances and medical supplies since 1 April; and if she will make a statement; [55163]

  (4) what assistance her Department has provided the Palestinian Red Crescent Society since 1 April; and if she will make a statement. [55162]

  Clare Short
  We are working closely with our development partners to try to determine the full extent of the damage and the humanitarian consequences and priority needs arising from the current conflict. It is important that assistance is fully co-ordinated.

  Our bilateral assistance programme is planned at £12 million this year. This includes support, through local NGOs for a number of emergency programmes in health, trauma counselling and special education needs which have been able to respond to the intensified crisis. We have also disbursed £12 million of our annual contribution to the United Nations Relief and Works Agency for Palestinian Refugees' General Fund, and made a £5 million contribution to UNRWA' s 2002 Emergency Appeal. We are providing direct assistance to help set up a Humanitarian Information Centre and have provided £500,000 to the World Food Programme for emergency needs. We are discussing with UNRWA further support to help clear and rebuild Jenin refugee camp. In addition we contribute substantially through our share of EC and World bank activities. We have not provided any direct support to the Palestinian Red Crescent Society since 1 April.

  We are monitoring the situation closely and aim to continue to respond appropriately.

  Angus Robertson
  To ask the Secretary of State for International Development what reports she has received on the status of the Save the Children Fund water and sanitation projects in(a) Dura, (b) Anabta, (c) Jabalia and (d) Rafah; what the impact of the current campaign of the Israeli Defence Force has been (i) on the operation of the projects and (ii) on the piped water supplies, sewerage pipes and drains associated with them; and if she will make a statement. [55160]

  Clare Short
  Save the Children Fund reports continued steady progress and expects to meet the overall objectives on time. The projects are leading to improvements in both the quality and quantity of water for household consumption, and better sanitary standards as the majority of homes are connected to new sewage networks. The continued conflict and closures has inevitably had an impact on the project communities where homes and infrastructure have been damaged and destroyed. Project equipment has also been embargoed by the Israeli authorities, but it has often been possible to circumvent this by creative means.

  Ministerial Accommodation
  Mr. Evans
  To ask the Secretary of State for International Development what publicly owned accommodation is made available to her in her official role; how many nights she has been in residence at each of these properties in the last 12 months; and what the total cost is of maintaining each of these properties. [55096]

  Clare Short
  There is no publicly owned accommodation available to me in my post except when I stay at ambassadors' residences when travelling abroad.

EDUCATION AND SKILLS

  Amy Gehring
  Chris Grayling
  To ask the Secretary of State for Education and Skills if she will make a statement on actions taken by her Department as a result of the Amy Gehring case. [52542]

  Mr. Timms
  My Department reviewed its procedures following this case. That review shows that our procedures were not at fault. However, in order to improve safeguards for children we have laid amendments to the Education Bill in the Lords, which will strengthen still further requirements to report instances of misconduct to the Department. These will extend the existing responsibility on employers, including agencies, to schools and other education institutions using a person's services. In addition, my right hon. Friend the Secretary of State for Trade and Industry, whose Department regulates agencies under the Employment Agencies Act 1973, is reviewing the Conduct regulations under that Act. My Department is engaged in that process.

  Teaching Assistants
  Mr. McNamara
  To ask the Secretary of State for Education and Skills what measures she has introduced to encourage schools to employ teaching assistants on all-year-round contracts. [54097]

  Mr. Timms
  [holding answer 7 May 2002]: I refer my hon. Friend to the reply I gave to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on 8 March 2002, Official Report, column 626W.

  London Weighting
  Dr. Tonge
  To ask the Secretary of State for Education and Skills what plans she has to ensure that the central London weighting allowance applies to teachers living in outer London boroughs. [54596]

  Mr. Timms
  Decisions on London allowances for teachers in 2002–03 have now been taken in the light of advice from the independent School Teachers Review Body and consultation. The levels of the allowances were increased by 3.5 per cent. from 1 April, further to the 30 per cent. increases in 2001, and the structure of the allowances was unchanged. The level for inner London is £3,105 and the level for outer London is £2,043. London allowances will be kept under review for future years. Schools are free to make use of recruitment and retention allowances as circumstances demand.

  Early Retirement (Teachers)
  Mr. Steinberg
  To ask the Secretary of State for Education and Skills how many teachers(a) applied for and (b) were refused early retirement on the grounds of ill health in (i) 1992–93, (ii) 1993–94 and (iii) 1995–96. [54613]

  Mr. Timms
  The numbers of members of the Teachers' Pension Scheme who retired on the grounds of ill health in each of the years in question were:

  Number

  1992–93

  4,867

  1993–94

  5,565

  1994–95

  6,075

  1995–96

  5,980

  Information about the number of applications that were rejected is available only from 1996 when an electronic handling system was introduced.

  Teachers' Pension Scheme
  Mr. Swayne
  To ask the Secretary of State for Education and Skills if she will make a statement about the accountability to her Department of Capita Business Services Ltd. regarding the administration of the teachers' pension scheme. [54805]

  Mr. Timms
  The responsibilities of Capita Business Services Ltd. for the administration of the teachers' pension scheme are set out in a detailed contract and statement of service requirements. Performance against service standards, together with compliance with legislative and other requirements, is actively managed by the Department's finance, contract and internal audit teams. The teachers' pension scheme accounts and administration are also subject to annual scrutiny by the National Audit Office.

  Individual Learning Accounts
  Alistair Burt
  To ask the Secretary of State for Education and Skills if she will compensate bona fide learning providers who can demonstrate that they have been financially disadvantaged by the accelerated date of closure of the individual learning accounts scheme. [55054]

  John Healey
  There are no plans to pay compensation to ILA registered learning providers. The Education and Skills Select Committee report about ILAs contains no new arguments or evidence on the case for compensation; the Department's position therefore remains unchanged.

  Local Education Authority Finance
  Mr. Evans
  To ask the Secretary of State for Education and Skills what the spending is(a) per head of population and (b) per pupil in each local education authority in England for 2001–02. [55107]

  Mr. Timms
  The information requested is not yet available. The Department is due to collect data relating to the 2001–02 financial year from this September. I shall write to the hon. Member when the information for 2001–02 is to hand.

  Broadband
  Mr. Evans
  To ask the Secretary of State for Education and Skills what proportion of schools have access to broadband internet access in(a) Lancashire, (b) the northwest of England and (c) England. [55112]

  John Healey
  Broadband internet access (2mbs or better) is provided through regional broadband consortia (RBCs). The target for August 2002 is for 20 per cent. of all schools (including 100 per cent. of secondaries) to have broadband connections. From the latest consortia returns (28 February 2002):13 per cent. of schools in Lancashire LEA already have broadband connections and this is expected to rise to 26 per cent. by August 2002;
  23 per cent. of schools within the, north-west of England (covered by two RBCs) already have a broadband connection and this is expected to rise to 41 per cent. by August 2002:
  Nationally, approximately 14 per cent. of schools across England already have a broadband connection and this is expected to rise to 32 per cent. by August 2002, exceeding the current target.

  Youth Projects
  Mr. Willis
  To ask the Secretary of State for Education and Skills what plans she has for the future funding of the work done by Neighbourhood Support Fund youth projects. [55019]

  Mr. Ivan Lewis
  A total of £60 million was made available to the Neighbourhood Support Fund spread over three years. The current programme comes to an end in September 2003 and it has been successful in reaching out to some of the most disadvantaged young people in our communities. I will review the programme in the light of the departmental spending review.

  Truancy
  Mr. Evans
  To ask the Secretary of State for Education and Skills if she will estimate the number of school days lost to truancy each year in(a) the Lancashire education authority area and (b) England. [55109]

  Mr. Ivan Lewis
  The number of days missed due to unauthorised absence in the last three years are presented in the table. Data are based on the annual pupil absence survey that is conducted at the end of May and is based on the first five half-terms of the school year. We can not estimate the figures for the final half-term of the year as year 11 students attend irregularly while they take their GCSE examinations.

  Number of school sessions (half-days) missed due to unauthorised absences in maintained schools in Lancashire and England

  Lancashire

  England

  2000–01

  Day pupils of compulsory school age

  160,768

  6,698,285

  Total possible pupil sessions1,2

  49,196,000

  1,987,849,000

  Total sessions missed

  271,216

  14,833,790

  Total number of days missed

  135,608

  7,416,895

  1999–2000

  Day pupils of compulsory school age

  162,979

  6,636,828

  Total possible pupil sessions1,2

  50,834,000

  1,990,299,000

  Total sessions missed

  281,090

  14,479,457

  Total number of days missed

  140,545

  7,239,729

  1998–99

  Day pupils of compulsory school age

  162,583

  6,607,438

  Total possible pupil sessions1,2

  51,067,000

  2,005,657,000

  294W

  Number of school sessions (half-days) missed due to unauthorised absences in maintained schools in Lancashire and England

  Lancashire

  England

  Total sessions missed

  301,308

  15,053,051

  Total number of days missed

  150,654

  7,526,526

  1Rounded to nearest 1,000

  2 Total pupil sessions are calculated as (total number of pupils) x (total possible school sessions between September and May census date)

SOLICITOR-GENERAL

  Street Crime Initiative
  Vera Baird
  To ask the Solicitor-General whether she will make a statement on the role of the Crown Prosecution Service within the Government's Street Crime Initiative. [55975]

  The Solicitor-General
  As part of the cross-Government strategy to reduce street crime, a premium service will target likely offenders and crime areas and will ensure that offenders are investigated and prosecuted with skill and determination. Victims and witnesses will be given extra support. Experienced lawyers and detectives will handle cases and they will work closely together. An extra £6 million is being allocated to the Crown Prosecution Service to free up experienced lawyers to concentrate on this work.

  Sentence Referrals
  Mr. Andrew Turner
  To ask the Solicitor-General when she last considered extending the 28-day period for references back to the Crown Prosecution Service of unduly lenient sentences: and what her conclusions were. [55081]

  The Solicitor-General
  The Criminal Justice Act 1988 (schedule 3) prescribes that notice of an application for leave to refer a case to the Court of Appeal, under section 36 of the same Act. shall be given within 28 days from the day on which the sentence was passed. Legislation would he required to amend this time limit.

  Mr. Gordon Marsden
  To ask the Solicitor-General how many sentence referrals to the Court of Appeal on the grounds of undue lenience have resulted in sentences being increased in each of the last five years for which figures are available. [53399]

  The Solicitor-General
  [holding answer 2 May 2002]: The following figures are available. These figures represent the number of offenders whose cases were referred to the Court of Appeal:

  Number of:

  Year1

  References to Court of Appeal

  Sentences increased

  1997

  70

  47

  1998

  96

  69

  1999

  88

  51

  2000

  93

  264

  2001

  154

  271

  1 January to 31 December

  2 There are still cases from 2000 and 2001, which are yet to be heard by the Court of Appeal

  Consultants
  Mr. Gray
  To ask the Solicitor-General how many contracts the Law Officers Department has with consultants; what level of professional indemnity insurance is standard in contracts with small consultants; whether she can make exceptions to the level of professional indemnity insurance; and what recent discussions she has had with other Government Departments about the level of professional indemnity insurance. [50841]

  The Solicitor-General
  [holding answer 18 April 2002]: My own Department, the Legal Secretariat to the Law Officers, has no current contracts with consultants.

  The Crown Prosecution Service in common with other Government Departments employs the services of consultants from time to time. However, the information requested as to the number of such contracts is not recorded centrally and could be obtained only at disproportionate cost.

  The Department's standard terms and conditions of contract for consultancy work only necessitate consultants to hold professional indemnity insurance where this is required by law. The level of indemnity insurance is not specified and where required would be subject to negotiation and agreement prior to the award of any contract.

  The Treasury Solicitor's Department has 28 current contracts with consultants who are assisting it on a range of issues. The level of professional indemnity insurance required is related to the nature of the work required and the assessment of risk attached to it.

  At the present time the Serious Fraud Office has nine contracts with small or sole trader consultants covering a range of issues, including information technology and security. In addition there are other specific contracts for expert advice related to operational cases.

  Professional indemnity insurance levels are not standardised and are set at a level appropriate to the size of the contract and the risk involved.

  HM Crown Prosecution Service Inspectorate has one current contract. The contract does not provide for professional indemnity insurance.

  It is not the Government's practice to provide details of discussions which form part of the process of policy development and analysis, therefore I am unable to answer your final question.

TRANSPORT, LOCAL GOVERNMENT AND THE REGIONS

  Best Value
  Mr. Chaytor
  To ask the Secretary of State for Transport, Local Government and the Regions what discussions he has had with the Audit Commission in respect of the guidance contained in its publication Competitive Procurement relating to the operation of best value to the categorisation of the overall performance of local authorities; and if he will make a statement. [53918]
  296W
  Dr. Whitehead
  My Department has had no formal discussions with the Audit Commission about its publication Competitive Procurement. The Audit Commission acts independently of Government, and the views expressed in its publications are its own. Having said this the Government welcome the Audit Commission's report, which is based on the evidence of audit and inspection, and recognises it as a valuable contribution to our drive to improving public services. I expect local authorities will find it useful.

  Railways
  Rachel Squire
  To ask the Secretary of State for Transport, Local Government and the Regions if he will make a statement on recruitment levels and recruitment processes for railway maintenance workers in the nations and regions of the United Kingdom. [54854]

  Mr. Jamieson
  Recruitment levels and processes are matters for those in the rail industry.

  Road Links (Newcastle to Edinburgh)
  Mrs. May
  To ask the Secretary of State for Transport, Local Government and the Regions (1) what work is planned on the Al between Newcastle and Edinburgh; [54606]

  (2) what major infrastructure work has been carried out on the Al between Newcastle and Edinburgh in the last 15 years; and in each case (a) what the aim and nature of the works were, (b) which Government body was responsible, (c) how long the works took and (d) how much the works cost; [54605]

  (3) what recent analysis has been carried out into alternative routes for traffic using the Al between Newcastle and Edinburgh. [54608]

  Mr. Byers
  I have asked the chief executive of the Highways Agency, Tim Matthews to write to the hon. Member.

  Letter from David York to Mrs. Theresa May, dated 9 May 2002:
  Tim Matthews has been asked by the Secretary of State for Transport, Local Government and the Regions, to reply to your recent Parliamentary Questions about the A1 between Newcastle and Edinburgh. I am replying since Tim is currently away on Highways Agency business.
  The Highways Agency has responsibility for this route between Newcastle and the Scottish Border.
  Works currently planned by us for that length of the road include improvements to the A1 Stannington Grade Separated Junction and widening the Newcastle Western Bypass to take account of planning conditions imposed on development at Newcastle Great Park. The latter scheme is funded wholly by the developer.
  In addition, we will be carrying out maintenance work including resurfacing north of Morpeth, improving the Seven Mile Bridge north of Seaton Burn and repainting Clifton Bridge at the south end of Morpeth Bypass.
  The Government Office led Al Multi-Modal study is looking at alternatives to the Al. The study is expected to report very shortly.

  297W
  A number of works have been carried out on this length of road over the last 15 years. Prior to 1994 schemes were handled by the Department of Transport. Since 1994 the Highways Agency has been responsible. A list of those works is attached.

  Aim and nature of scheme

  Duration (if known)

  Cost (if known) (£)

  A1 Stannington Diversion (Clifton to Stannington Bridge)—dual carriageway bypass of Stannington Village

  2 years

  6·4 million

  A1 South of Alnwick—upgrading to dual carriageway

  7 months

  0·8 million

  A1 Newcastle Western Bypass—6.9 miles of dual carriageway with grade separated junctions

  4 years

  116·3 million

  A1 Marshall Meadows Improvement—1.7 miles upgrade to dual carriageway

  15 months

  4·1 million

  A1 Brownieside Improvement—dual carriageway bypass

  17 months

  5·5 million

  A1 Blagdon Bridge—new overbridge and grade separated junction

  10 months

  1·4 million

  A1 Hitchcroft to Cawledge—upgrade to dual carriageway

  15 months

  2·8 million

  A1 Felton to Lanehead—upgrade to dual carriageway

  9 months

  2·3 million

  A1 Willowburn to Denwick—upgrade to dual carriageways (currently on site)

  Under construction

  8 million

  A1 Newcastle Great Park—Brunton Interchange improvements1

  9 months

  800,000

  1The scheme at Newcastle Great Park is being funded by a private developer. All other schemes have been funded by central Government.

  Mrs. May
  To ask the Secretary of State for Transport, Local Government and the Regions what estimate he has made of the increase in traffic on the Al between Newcastle and Edinburgh over the lifetime of the 10-year plan. [54609]

  Mr. Byers
  The 10-year plan applies to England. As part of the work carried out in connection with the A1 multi-modal study, consultants have assessed potential traffic growth on the A1 between Newcastle and the Scottish border just north of Berwick on Tweed.

  Flows on the Al are currently:

  New Morpeth—16,200 vehicles per day

  Alnwick to Berwick on Tweed—8,600 vehicles per day.

  Estimates show that in 2011 flows on the A1 are expected to be in the region of:

  New Morpeth—19,100 vehicles per day

  Alnwick to Berwick on Tweed—10,100 vehicles per day.

  Fire Service College
  Phil Hope
  To ask the Secretary of State for Transport, Local Government and the Regions what targets he intends setting to assess the performance of the fire service college during 2002–03. [55627]

  Dr. Whitehead
  The work of the fire service college contributes directly to the Department's aim of safe communities and its objectives of improving health and safety by reducing risks from work activity, buildings and fire. Its role is to deliver modern vocational training to the fire service of a type and to a standard that fully meets brigades' needs. The college should operate cost-effectively and should enthusiastically meet the diversity requirements of its customers and employees. In this context, I have agreed the following six targets for the fire service college in 2002–03.1. To maximise the fire service college's contribution to the Government's programme to improve health, education and transport and reduce crime by:
  298W
  If you require any further information, David Harvey in our Leeds office will be happy to assist you. He can be contacted at the Highways Agency, City House, New Station Street, Leeds, LS1 4UR or by telephone on 0113 283 5814.
  equipping 100 per cent. of the trainers the fire service college trains to disseminate best practice and verify that by post-course assessment;
  maintaining the quality of the fire service college's education, training and service delivery as externally assessed to the same or a better level of conformance achieved in the previous year, in every case; and
  ensuring that the wider relevance to the community of fire prevention and fire safety is embedded in the fire service college curriculum to the extent that it features in 100 per cent. of appropriate courses.
  2. To accommodate 100 per cent. of bids from UK fire brigades for courses published in the fire service college prospectus.
  3. To develop within a year a capability for delivering to customer satisfaction risk management training and e-learning programmes for retained officers and for responding to any centrally determined need for decontamination training.
  4. To have a series of Integrated Personal Development System compliant modules linked to five roles ready for delivery by April 2003, having obtained full stakeholder endorsement.
  5. By April 2003 to further improve the agency's financial performance by:
  increasing surplus by at least 2 per cent. in real terms;
  achieving 6.5 per cent. return on capital employed; and
  maintaining wider market business in support of UK fire brigade business by contributing 20 per cent. to overall business and creating a net contribution to fixed costs of at least £1.3 million.
  6. To obtain a favourable assessment in year from Quality South West for progress towards recovering Investor in People status in 2003–04 and to make progress on diversity issues by:
  increasing the percentage of women at middle and senior level in the fire service college; carrying out an equalities audit of the fire service college climate, facilities and products; and equality proofing the pay system.

  New Dimension Group
  Mr. Donaldson
  To ask the Secretary of State for Transport, Local Government and the Regions what levels of additional funding have been allocated to fire services to meet the needs identified by the New Dimension Group arising from the increased level of threat from terrorism since 11 September. [55022]

  Dr. Whitehead
  In answer to a question from my hon. Friend the Member for South Ribble (Mr. Borrow), 27 February 2002,Official Report, column 1373, I said that we were providing £53 million funding for the fire service to give further protection to the public and

  299W
  emergency services in the event of a major chemical, biological or radiological attack. We are continuing to consider the case for additional resources in the light of the information provided by the New Dimension Group.

  Mr. Donaldson
  To ask the Secretary of State for Transport, Local Government and the Regions whether membership of New Dimension Group includes representatives of the Chief Fire Officers Association from(a) England, (b) Wales, (c) Scotland and (d) Northern Ireland; and whether the Fire Brigades Union is represented on the group. [55021]

  Dr. Whitehead
  Yes. The chief and assistant chief fire officers associations from Scotland, Northern Ireland, England and Wales are represented on the New Dimension Group, as is the Fire Brigades Union.

  Housing
  Mrs. May
  To ask the Secretary of State for Transport, Local Government and the Regions what assessment was made of congestion levels in each region when determining the level of provision made for new additional housing; and what influence this had on the final level of provision made for new additional housing outlined in regional planning guidance. [54911]

  Mr. Byers
  Annual rates of housing provision are established through regional planning guidance and the spatial strategy it sets out. The strategy is prepared having regard to a number of matters including the capacity of urban areas to accommodate more housing, the physical and social infrastructure needed to support additional housing and the environmental implications of doing so.

  Mrs. May
  To ask the Secretary of State for Transport, Local Government and the Regions what the estimated environmental costs is to each local authority arising from the level of provision made for new additional housing; and what influence this had on the final level of provision made for new additional housing as outlined in regional planning guidance. [54912]

  Mr. Byers
  Annual rates of housing provision are established through regional planning guidance and the spatial strategy it sets out. The draft strategy is subjected to a sustainability appraisal in accordance with good practice guidance issued by my Department. A report outlining the findings of this appraisal is published prior to the public examination of the draft strategy. This report is an important consideration for the panel that holds the public examination and for me in considering what changes, if any, to make to the draft strategy following receipt of their report.

  Mr. Breed
  To ask the Secretary of State for Transport, Local Government and the Regions, pursuant to the answer of 10 January 2002,Official Report, column 976W, on affordable housing, what the proportion of affordable homes in rural areas was to the total number of affordable homes for each year since 1990. [54853]

  Ms Keeble
  The table shows the number and proportion of affordable homes in rural areas (with a population of 3,000 or fewer) funding through the Housing Corporation's Approved Development Programme and by local authorities compared with the total number of affordable homes funded by the same means in England in each year since 1990.300W

  Year

  Rural

  All (England)

  % of completions that are rural

  1991–92

  803

  31,504

  2.6

  1992–93

  2,268

  50,045

  4.5

  1993–94

  1,567

  64,834

  2.4

  1994–95

  1,341

  70,781

  1.9

  1995–96

  1,811

  68,790

  2.6

  1996–97

  1,678

  51,412

  3.3

  1997–98

  2,020

  45,765

  4.4

  1998–99

  1,792

  42,011

  4.3

  1999–2000

  1,533

  33,808

  4.5

  2000–01

  1,278

  30,931

  4.1

  2001–02

  1,371

  29,846

  4.6

  Mr. Breed
  To ask the Secretary of State for Transport, Local Government and the Regions, pursuant to the answer of 10 January 2002,Official Report, column 976W, on affordable housing, how many affordable homes in rural settlements in England with a population of 3,000 or less were completed and funded by 31 March. [54852]

  Ms Keeble
  1,371 affordable homes in small settlements with a population of 3,000 or fewer were completed and funded through the Housing Corporation's Approved Development Programme and by local authorities from 1 April 2001 to 31 March 2002.

  Mr. Breed
  To ask the Secretary of State for Transport, Local Government and the Regions, pursuant to the answer of 31 January 2002,Official Report, column 448W, on affordable housing, what the Housing Corporation's budget was in each of the last 10 years; and what amount was allocated to its (a) revenue and (b) capital programmes. [54910]

  Ms Keeble
  The table shows the Housing Corporation's capital and revenue expenditure for the years 1993–94 to 2001–02. The figures for 2002–03 are the budget figures for the current year.

  Housing Corporation expenditure

  Outturn £ million

  Capital

  Revenue

  Total

  1993–94

  1,796.4

  136.0

  1,932.4

  1994–95

  1,483.5

  146.1

  1,629.6

  1995–96

  1,142.2

  199.9

  1,342.1

  1996–97

  1,044.4

  198.8

  1,243.2

  1997–98

  683.8

  217.3

  901.1

  1998–99

  606.5

  207.6

  814.1

  1999–2000

  637.8

  149.3

  787.1

  2000–01

  717.0

  154.0

  871.0

  2001–02

  774.6

  143.0

  917.6

  2002–03

  917.6

  184.3

  1,101.9

  Notes:

  1. Capital outturn is for ADP funding only.

  2. Revenue funding includes Supported Housing Management Grant, Innovation and Good Practice Grants, Supplementary Management Grant, Tax Relief Grant, Hostel Deficit Grant, Revenue Deficit Grant, Rough Sleepers Initiative and Estate Renewal Challenge Fund Grant.

  3. This table does not include local authority social housing grant funding.

  Martin Sixsmith
  Mr. Andrew Turner
  To ask the Secretary of State for Transport, Local Government and the Regions, pursuant to his oral statement of 26 February 2002,Official Report,

  301W
  column 563, if he will make a statement on Mr. Sixsmith's agreement to resign; and when he was told, and by whom, that Mr. Sixsmith had resigned. [55622]

  Mr. Byers
  I refer the hon. Gentleman to the oral statement I have made in the House today.

  Fraud
  Mr. Frank Field
  To ask the Secretary of State for Transport, Local Government and the Regions what the estimated level of losses to fraud and corruption was in(a) his Department's Vote 1 budget and (b) his Department's Vote 2 budget for (i) 1999–2000 and (ii) 2000–01. [54708]

  Mr. Byers
  The only proven loss due to fraud or corruption for which my Department is accountable is a theft of £20 from a cash box. This was accounted for in the Class III Vote 1 Appropriation Account for 1999–2000.

  This does not include any loss suffered by any non-departmental public body funded from either vote where their accounts are prepared separately and laid before Parliament and published separately.

  Nor does it include any losses due to fraud in rent rebates. Rent rebates granted to local authority tenants are reimbursed through Housing Revenue Account Subsidy, for which this Department has overall responsibility. Rent rebates are analogous to rent allowances paid in respect of tenants of private landlords, and together they comprise housing benefit.

  Responsibility for housing benefit policy, including policy on fraud, lies with DWP. A full note on the implications of housing benefit fraud for HRA subsidy is appended to the Appropriation Account for Vote 1 for each of the years concerned.

  Mobile Phone Masts
  Mrs. May
  To ask the Secretary of State for Transport, Local Government and the Regions what recent discussions he has had with his counterparts in(a) other member states of the European Union, (b) Australia and (c) New Zealand on the safe levels of radiation from mobile phone masts. [54440]

  Yvette Cooper
  [holding answer 7 May 2002]: I have been asked to reply.

  Ministers have not had recent discussions with their respective counterparts. However departmental officials and the National Radiological Protection Board are supporting international electromagnetic field standardisation activities in terms of reviewing the fundamental science, providing advice on guidelines to protect people from adverse health effects and assisting in the development of technical standards.

  The United Kingdom contributes to the development of European and international technical standards concerning the safety of mobile telephony through the European Committee on Electrotechnical Standardisation (CENELEC) and the International Electrotechnical Commission (IEC).

  United Kingdom delegates are members of the CENELEC mobile telephone project team that have developed standards for mobile phones and produced draft
  302W
  documents on mobile phone base stations (phone masts). The documents provide standardised methods by which compliance with health-based guidelines can be assessed.

CULTURE, MEDIA AND SPORT

  Golden Jubilee
  Mr. Clifton-Brown
  To ask the Secretary of State for Culture, Media and Sport what rent is being paid for the Golden Jubilee Office in 85 Buckingham Gate; what the prevailing average rent per square foot in the building was prior to this rent being negotiated; and which firm advised on the negotiations. [53956]

  Mr. Caborn
  The office at 85 Buckingham Gate was taken over from the Home Office at an annual rental of £165,000 net, as a result of the Machinery of Government changes. The DCMS were not a party to any negotiations on rent. The prevailing average rent for that particular building prior to this rent being agreed is not known, as this figure is a matter between the landlord and the former tenants. However, the rental figure was in line with the average market rent for the properties in that area. Lambert Smith Hampton, Property Management, acted for the Home Office in the lease negotiations.

  Portable Antiquities Scheme
  Mr. Swayne
  To ask the Secretary of State for Culture, Media and Sport if she will make a statement about the future funding of the Portable Antiquities Scheme. [54806]

  Dr. Howells
  The Heritage lottery fund trustees met on 23 April to consider a bid for the three-year funding of a full network of finds liaison officers to cover the whole of England and Wales. The fund has now informed the scheme officials of the outcome, and will announce the details of its decision later this week.

  Mr. Swayne
  To ask the Secretary of State for Culture, Media and Sport what recent representations she has received regarding the future of the Portable Antiquities Scheme. [54807]

  Dr. Howells
  My right hon. Friend the Secretary of State and my right hon. and noble Friend the Minister for the Arts have received 19 letters commenting on the success of the Portable Antiquities Scheme, and calling for its long-term funding to be secured. Most of these representations have been submitted by metal detectorists.

  National Lottery
  Sue Doughty
  To ask the Secretary of State for Culture, Media and Sport if she will make a statement on the distribution of the reserve funds for National Lottery good causes in the last two years; and if she will make a statement. [55015]

  Mr. Caborn
  Funds generated by the National Lottery for good causes are held in the National Lottery Distribution Fund (NLDF), until distributing bodies need to draw them down to meet expenditure incurred by grant recipients. Under Government accounting rules, and under their financial directions, distributing bodies may not draw down moneys from the NLDF in advance of need. Any interest earned on money held in the NLDF is added to the amount available for distribution to good causes.
  303W
  Commitments by distributing bodies collectively at 31 March 2002 totalled £4.12 billion, some £568 million more than was in the overall NLDF balance (£3.55 billion). This compares with commitments of £3.66 billion at 31 March 2001; £212 million more than the total NLDF balance at the same date (£3.45 billion).

  Royal Parks Agency
  Mr. Mark Field
  To ask the Secretary of State for Culture, Media and Sport (1) if she will reserve a place for a representative of the Friends of Hyde Park and Kensington Gardens on the board of trustees of the new non-departmental public body which is to replace the Royal Parks Agency; [54994]

  (2) what her policy is on the representation of the interests of public users of the Hyde Park and Kensington Gardens on the new non-departmental public body which is to replace the Royal Parks Agency. [54997]

  Dr. Howells
  The board of trustees will comprise a number of trustees with different skills and experience. There will not be a specific trustee position on the board for a representative of the Friends of Hyde Park and Kensington Gardens. To reflect the parks' links with a variety of organisations, not just the Friends, a trustee post will be created titled 'Community Relations' which will be responsible for developing links with the whole community.

  Ministerial Accommodation
  Mr. Evans
  To ask the Secretary of State for Culture, Media and Sport what publicly owned accommodation is made available to her in her official role; how many nights she has been in residence at each of these properties in the last 12 months; and what the total cost was of maintaining each of these properties in the last 12 months. [55105]

  Mr. Caborn
  None.

NORTHERN IRELAND

  Data Protection Act
  Matthew Taylor
  To ask the Secretary of State for Northern Ireland if he will place in the Library copies of each version of the internal guidance which have been drawn up by his Department since 1 January 1999 to assist staff in his Department to answer subject access requests under the Data Protection Act 1998. [53379]

  Jane Kennedy
  I refer the hon. Gentleman to the answer my hon. Friend the Member for North Swindon (Mr. Wills) gave to a question from my hon. Friend the Member for Birmingham, Hall Green (Mr. McCabe) on 25 April 2002,Official Report, column 446W.

FOREIGN AND COMMONWEALTH AFFAIRS

  EU-Israel Association Agreement
  Lynne Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 21 January 2002,Official Report, column 583W, on the EU-Israel Association Agreement, What progress has been
  304W
  made in resolving the rules of origin issue under the EU-Israel Association; and whether the EU is reviewing its position on the continuance of the agreement. [45203]

  Peter Hain
  There have been further contacts between the EU and Israel with a view to resolving the rules of origin issue. These have not yet led to any significant progress. The EU has not changed its position on the continuation of the EU-Israel Agreement.

  Chemical Weapons
  Lynne Jones
  To ask the Secretary of State for Foreign and Commonwealth Affairs which countries are the main contributors to the funding of the Organisation for the Prohibition of Chemical Weapons; which of them are in arrears with their contributions; and by how much. [53458]

  Mr. Bradshaw
  The major contributors to the funding of the Organisation for the Prohibition of Chemical Weapons (OPCW) amounting to approximately 70 per cent. of the OPCW' s budget are: the United States (22 per cent.), Japan (20 per cent.), Germany (10 per cent.), France (7 per cent.), UK (6 per cent.) and Italy (5 per cent.). The UK, France and Italy have paid their contributions for 2002 in full. The United States and Germany usually make staged payments and have so far paid approximately 50 per cent. of their 2002 contributions. Japan is expected to pay the entire amount of its 2002 contribution around the middle of this year.

  Cambodia
  Mr. Kidney
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met representatives of the Cambodian Government; and if he will make a statement on UK-Cambodian relations. [53392]

  Mr. Bradshaw
  Opportunities for British Ministers to meet representatives of the Cambodian Government are limited. Cambodia does not have an embassy in London and plays only a limited role internationally. The last Foreign Office Minister to meet representatives of the Cambodian Government was the late Derek Fatchett in May 1998 during a visit to Cambodia. But British officials are in regular contact with the Cambodian Government through our embassy in Phnom Penh. We are keen to enhance UK/Cambodian relations and the Foreign Secretary wrote to his Cambodian counterpart in November 2001 encouraging the Cambodian Government to re-establish an embassy in London.

  International Terrorism
  Ian Lucas
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 16 April 2002,Official Report, column 828–29W, on international terrorism, if he will list the UN member states which have not fulfilled the obligation to submit a report to the Counter-Terrorism Committee on terrorist financing and providing safe havens for terrorists. [53605]
  305W
  Mr. MacShane
  As of 30 April 2002, 142 of the UN's 189 member states had submitted a report to the Counter-Terrorism Committee. The following 47 states had not:

  Afghanistan

  Antigua and Barbuda

  Brunei

  Central African Republic

  Chad

  Comoros

  Republic of Congo

  Dominica

  Equatorial Guinea

  Eritrea

  Fiji

  Gambia

  Ghana

  Guinea-Bissau

  Guyana

  Haiti

  Kenya

  Kiribati

  Lesotho

  Liberia

  Mali

  Marshall Islands

  Mauritania

  Micronesia

  Nauru

  Nicaragua

  Palau

  Papua New Guinea

  Rwanda

  St. Kitts and Nevis

  St. Lucia

  St. Vincent

  Sao Tome and Principe

  Seychelles

  Sierra Leone

  Solomon Islands

  Surinam

  Swaziland

  Togo

  Tonga

  Turkmenistan

  306W

  Tuvalu

  Uganda

  Tanzania

  Vanuatu

  Zambia

  Zimbabwe.

  Information on which states have submitted reports can be obtained from the Counter-Terrorism Committee's website: http://www.un.org/docs/sc/committees/1373.

  Government Information (Access)
  Matthew Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs what his Department's target time is for completing internal reviews under the Code of Practice on Access to Government Information; when this target time was established; if he is aiming to improve this target time; and if he will make a statement. [53357]

  Mr. MacShane
  The FCO's target time for completing internal reviews under the Code of Practice on Access to Government Information is 20 working days. This target was established in 1997 and is in line with practice in other Government Departments. I have no present plans to deploy extra FCO staff and resources which are needed elsewhere to reduce this target time which I consider reasonable. Information on the FCO's response to requests and reviews under the code of practice is given in the monitoring report published by the Lord Chancellor's Department (LCD) in September 2001, available on their website or from them direct.

  National Missile Defence
  Dr. Tonge
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions his Department has had with UK firms bidding for work on the US-initiated programme of national missile Defence; and if he will make a statement. [53597]

  Mr. Bradshaw
  The Foreign and Commonwealth Office has not had any direct discussions with UK firms in relation to specific bids related to current US proposals for missile defence. Staff at the British embassy in Washington regularly give general advice to UK firms wishing to do business with the US Department of Defense (including the Missile Defense Agency) but have not had any discussions on specific bids on the US missile defence programme.

  Taiwan
  Mr. Wray
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions have taken place in the European Parliament about granting Taiwan observer status at the annual World Health Assembly. [53634]

  Mr. MacShane
  We understand that the European Parliament has recently passed a resolution calling upon the World Health Organisation to grant observer status at the World Health Assembly to Taiwan.

  Mr. Wray
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent representations have been made to the World Health Organisation to re-admit Taiwan to the organisation. [53633]
  307W
  Mr. MacShane
  The United Kingdom has not been involved in any direct representations to the World Health Organisation on this issue and will continue to work with other EU partners on a common position.

  Gibraltar
  Bob Spink
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the risk to the security of Gibraltar from Spain. [53881]

  Peter Hain
  As I said in the House on 31 January 2002,Official Report, column 137WH, the aim of talks under the Brussels Process is to ensure a stable, prosperous and secure future for Gibraltar. And as my right hon. Friend the Foreign Secretary said in the House on 5 February 2002, Official Report, column 735, we are convinced that this dialogue represents the best way forward for the people of Gibraltar.

  Liaison Officers
  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 26 March 2002,Official Report, column 815W, if he will provide a breakdown of the former occupations of the liaison officers indicating (a) how they are recruited, (b) their level of remuneration and (c) the restrictions on them taking up other appointments. [54100]

  Mr. MacShane
  In accordance with good employer practice and under exemptions 8a and 12 of the Code of Practice on Access to Government Information, it is not appropriate to release such information into the public domain.

  World Service
  Mr. Barker
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met representatives from the World Service to discuss its plans for the future. [54428]

  Mr. MacShane
  FCO Ministers meet the director of the BBC World Service formally every year to discuss World Service plans. The next such meeting will be in June. My right hon. Friend the Foreign Secretary last met Mr. Byford on 11 October 2001. I last met Mr. Byford on 3 October 2001. The last meeting between an FCO Minister and the World Service was on 10 January 2002, when my noble Friend Baroness Symons met Mr. Byford on 10 January 2002. I am scheduled to meet with him on 13 May 2002 in a formal meeting but there are other occasions for informal meetings with Mr. Byford at which we discuss the excellent work of the World Service.

  Iraq
  Chris Grayling
  To ask the Secretary of State for Foreign and Commonwealth Affairs what his policy is on involving the United Nations in a decision to take military action against Iraq. [54291]

  Mr. Bradshaw
  Iraq's obligations are unambiguously set out in the relevant UN Security Council Resolutions. No decision has been taken on military action against Iraq.

  Israel
  Dr. Kumar
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether advice to UK citizens intending to travel to the middle east has been amended as a result of the wounding of Kate Edwards in Israel. [54211]

  Mr. Bradshaw
  Kate Edwards is an Australian national who was injured in Bethlehem. Our travel advice continues to strongly advise against travel to this area because of the continuing clashes between Israelis and Palestinians throughout the West Bank and Gaza.

  Mr. Lloyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his policy towards export control licences for arms sales to Israel. [55025]

  Mr. Bradshaw
  I refer my hon. Friend to the answer given to the right hon. and learned Member for North-East Fife (Mr. Campbell) on 15 April 2002,Official Report, column 722–23W.

  Saudi Arabia
  Mr. Lyons
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations have been made to Saudi Arabia over the case of Mr. Alexander Mitchell. [54126]

  Mr. Bradshaw
  FCO Ministers and officials have made repeated representations about Mr. Mitchell's case from the outset, including at the highest levels. My right hon. Friend the Prime Minister has made representations on numerous occasions directly with the Saudis. We will continue to do all we can for Mr. Mitchell and the other detained British nationals accused of involvement in bombings in Saudi Arabia.

  Greece
  Mr. Spring
  To ask the Secretary of State for Foreign and Commonwealth Affairs what help the Government have given to the British planespotters in Greece(a) in assisting with providing expert witnesses for their case, (b) in helping them to meet their legal costs and (c) in ensuring that all relevant parties were aware of cultural differences that might be relevant to the case; and if he will make a statement. [54218]

  Mr. Bradshaw
  The case referred to by the hon. Member is a legal matter. The group since conviction have lodged an appeal. It would not be appropriate, therefore, for me to comment on the details of the case. The group are fully aware that the British Government do not pay legal costs for British nationals overseas, whether detained, convicted or acquitted. Through FCO travel advice we endeavour to inform the general public as best we can about potential risks when travelling overseas. We continue to offer full consular assistance to the group.

  China
  Mr. Swayne
  To ask the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with his EU counterparts regarding the Chinese one child policy; and if he will make a statement. [54484]
  309W
  Mr. MacShane
  We have not discussed this subject with EU partners recently. We have expressed our concerns to the Chinese authorities, including through the UK-China human rights dialogue, over abuses associated with the one child policy. We believe that coercion has no place in family planning programmes.

  Mr. Swayne
  To ask the Secretary of State for Foreign and Commonwealth Affairs what discussions have taken place within the UN during the last two years about the Chinese one child policy. [54506]

  Mr. MacShane
  We are not aware of any recent discussion of China's one child policy at the executive board of the UN Population Fund (UNFPA) or any other UN body. However monitoring of UNFPA's engagement with the Chinese Government on policy issues has taken place through at least two visits to China in the last two years by members of UNFPA's executive board.

  Visa Appeals
  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many people exercised their right of appeal in visitor visa cases in 2001. [54502]

  Mr. Bradshaw
  11,847 applicants appealed during 2001 (this figure is made up of 5,203 family visit appeals and 6,644 other non-settlement appeals).

  Statistical information on the number of applicants who exercised their right of appeal in visitor visa cases is only available from those entry clearance posts that provide monthly statistical information (110 posts in 2001).

  The remaining entry clearance posts submit information on an annual basis. To answer this question for all 166 posts the additional posts would have to extract the information requested manually, which could be done only at disproportionate cost.

  Entry Clearance Decisions
  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many decisions by entry clearance officers he has overturned since 7 June. [54501]

  Mr. Bradshaw
  My right hon. Friend the Foreign Secretary has not overturned any entry clearance decisions. As Minister responsible for entry clearance, I have overturned nine decisions since 7 June 2001.

  Indonesia
  Mr. Wray
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met representatives from Indonesia; and what was discussed. [54248]

  Mr. Bradshaw
  My right hon. Friend the Foreign Secretary met Hasan Wirajuda, the Indonesian Foreign Minister, in the margins of the UN General Assembly in New York in November 2001. They discussed a wide range of issues affecting the UK's bilateral relationship with Indonesia, including the coalition against terrorism and the need for economic and political reform in Indonesia.

  East Timor
  Mr. Wray
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on(a) the activities of the UN force in East Timor and (b) the elections there. [54249]

  Mr. Bradshaw
  UN Security Council Resolution 1272 of 25 October 1999 established the UN Transitional Administration for East Timor (UNTAET), with a military component of up to 8,950 troops. These troops have carried out the full range of peacekeeping duties and contributed to a large number of reconstruction projects in East Timor. The successor mission to UNTAET, the UN Mission to East Timor (UNMISET) will come into effect on 20 May 2002 when the UN will hand over sovereignty to the democratically elected Government of East Timor. The downsizing of the UNMISET military component (from 5,000 troops) will take place gradually over two years.

  More than 90 per cent. of eligible voters turned out for the 30 August 2001 elections for the constituent assembly and more than 80 per cent of eligible voters turned out for the Presidential election held on 14 April 2002. The campaigns were well run, the elections free and fair and the high turn outs demonstrated a determination to participate fully in the democratic process.

  Mr. Wray
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will initiate a further inquiry into the deaths of Malcolm Rennie and Brian Peters in East Timor in 1975; and if he will make a statement. [54247]

  Mr. Bradshaw
  Following the arrival of the UN Transitional Administration in East Timor (UNTAET), a number of people volunteered fresh information about the events in Balibo in 1975. In the light of this, in August 2000, the UN Prosecutor General took the decision to open an investigation into the deaths. The investigation continues. We will continue to monitor developments closely.

  Tanzania
  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 30 April 2002,Official Report, column 649W, on Tanzania, for how long it has been the practice of the Department not to disclose details of individual entry clearance cases in a public forum. [54866]

  Mr. Bradshaw
  I refer my hon. Friend to my answer of 29 November 2001,Official Report, column 1080W, when he asked the same question.

  Zimbabwe
  Bob Russell
  To ask the Secretary of State for Foreign and Commonwealth Affairs what contingency arrangements he has made for the possible arrival in the UK of British passport holders currently living in Zimbabwe; and if he will make a statement. [54098]

  Maria Eagle
  I have been asked to reply.

  There are no specific contingency plans in place for the possible arrival in the United Kingdom of UK passport holders currently living in Zimbabwe.
  311
  The Home Office Immigration and Nationality Directorate, regularly liaise with other Government Departments, non-government organisations and the voluntary sector, in updating contingency plans which may be implemented in an emergency in the event of an influx of persons arriving in the United Kingdom.

WORK AND PENSIONS

  Minimum Income Guarantee
  Mr. Wilshire
  To ask the Secretary of State for Work and Pensions how many pensioners in Spelthorne claim the minimum income guarantee.[55037]

  Mr. McCartney
  As at November 2001 there were 1,800 pensioners claiming the MIG in the parliamentary constituency of Spelthorne.

  Source:

  Income Support Statistics Quarterly Inquiries, November 2001.

  Catering Services
  Mr. Bercow
  To ask the Secretary of State for Work and Pensions what the cost was of(a) in-house canteen and (b) other catering services provided by his Department in each of the last four years. [38916]

  Maria Eagle
  Subsidies of various sizes for canteen facilities are provided in around 150 of our offices at a cost in 2001–02 of £3.5 million.

  Winter Fuel Payment
  Mr. Willetts
  To ask the Secretary of State for Work and Pensions how many people(a) have been eligible for a winter fuel payment and (b) have received a winter fuel payment, including those eligible for backdated payments, in each year since 1997. [46463]

  Maria Eagle
  Winter fuel payments were issued automatically to around 10 million people receiving certain social security benefits for each of the winters 1997–98, 1998–99 and 1999–2000. Following the extension of the entitlement conditions to most people aged 60 and over, regardless of whether they were receiving a social security benefit, around 1.1 million further payments covering one, two or all three of these years have been issued following successful claims. It is not possible to relate these payments to specific years.

  In excess of 11.1 million payments were issued for winter 2000–01. Figures for winter 2001–02 are not yet available but are expected to he similar.

  The vast majority of those eligible in each year since 1997 have received payment.

  Television Licences
  Mr. Yeo
  To ask the Secretary of State for Work and Pensions if he will list the(a) number and (b) total cost of television licences paid for by his Department. [48354]

  Maria Eagle
  [holding answer 10 April 2002]: The BBC has confirmed that the number of free licences issued was 3.1 million in 2000–01, and 3.8 million in 2001–02, (the latter figure remains subject to audit).
  312W
  For the costs to the Department, I refer the hon. Member to my reply to the hon. Member for Northavon (Mr. Webb) on 14 March 2002, Official Report, column 1237W.

  Pension Trustees
  Mr. Boswell
  To ask the Secretary of State for Work and Pensions what obligations on pension trustees are imposed by the Occupational Pensions Regulatory Authority to notify changes in status of schemes; and how many such changes(a) overall and (b) involving closure have been so notified in each of the last three years. [47657]

  Mr. McCartney
  In almost all cases it is a legal requirement for pension scheme trustees to register details of their schemes with the Pension Schemes Registry which is run by the Occupational Pensions Regulatory Authority (Opra). On registration, trustees are required to tell the Registry for example: whether the scheme is an open, closed or frozen scheme; and whether the scheme provides money purchase benefits, benefits other than money purchase benefits, or a combination of both. Trustees must, by law, notify the Registry of any change to this information within 12 months of the occurrence of that change. If trustees, without reasonable cause, fail to comply with this requirement Opra can fine them.

  The numbers of schemes reporting (a) any status change and (b) closure, in each of the last three years, are shown in the table.

  Pension schemes that have reported (a) any change of status and (b) closure in each of the last three years

  (a) Total number of schemes reporting any changes in status during the year

  (b) Numbers of schemes closed during the year

  1999–2000

  3,233

  308

  2000–01

  2,080

  336

  2001–02

  1,703

  245

  Notes:

  1. The information is based on data held by the Pension Schemes Registry (PSR). It covers all schemes including those offering salary-related benefits, money-purchase benefits and mixed benefits as well as schemes where the benefit type is not recorded in the PSR system.

  2. A scheme's status will be one of the following. Open schemes admit new members. Closed schemes do not admit new active members, but allow existing members to continue to accrue benefits. Frozen schemes do not allow any future accruals. Schemes starting to wind up are also frozen. Schemes that have completed wind up have no members—all assets are realised and all liabilities are discharged. Column (a) shows all changes in status with an effective date during the specified year.

  3. The PSR system holds information on the most recent change in scheme status and the effective date of the change. Because of the way the data are held a later change will overwrite an earlier change, so data for earlier years become increasingly inaccurate. Trustees are required to report changes within 12 months so there is likely to be a lag before the data reflects what is happening currently.

  Long-stay Patient Benefit
  Mr. Laxton
  To ask the Secretary of State for Work and Pensions what plans he has to raise the level of benefit given to long-stay patients. [51545]

  Mr. McCartney
  There are no plans to change the level to which benefits are reduced for hospital in-patients who have been in hospital for more than 52 weeks.
  313W
  The hospital downrating rules prevent double provision from public funds as the publicly funded NHS maintains people while they stay in hospital as well as providing free treatment. Social security maintenance benefits are also paid from state funds.

  The double provision principle is a key cornerstone of the system of national insurance introduced over 50 years ago.

  Mr. Laxton
  To ask the Secretary of State for Work and Pensions how many people in the United Kingdom are in receipt of long-stay patient benefit because they suffer from mental illness. [51542]

  Mr. McCartney
  The information requested is not available.

  Hospitalisation (Benefit Downrating)
  Mr. Berry
  To ask the Secretary of State for Work and Pensions how many disabled adults have their disability living allowance withdrawn because they have been in hospital for four weeks or longer. [51575]

  Maria Eagle
  When disability living allowance recipients aged 16 or over have been in hospital for 28 days, payments are suspended pending their discharge. This is because DLA is paid as a contribution towards the extra costs faced by severely disabled people as a result of their disabilities. In hospital, the disability related needs giving rise to those costs are met free of charge, and to continue payment of DLA in these circumstances would amount to duplicate provision from public funds. Information is not available on the annual number of suspensions resulting from these circumstances. The latest available information is that, at 30 November 2001, about 11,700 claims were at that time recorded as suspended as a result of a stay in hospital.

  This figure is based on 5 per cent. data and rounded to the nearest hundred.

  Employment Statistics
  Mr. Burstow
  To ask the Secretary of State for Work and Pensions if he will make a statement on the participation of workers aged over 65 years in paid employment for OECD countries, by occupation type and average earnings. [53764]

  Maria Eagle
  The information is not readily available. Such information as is available is in the table.

  Employment rate of those aged 65 years and over for OECD countries, 2000

  Percentage

  OECD data

  Eurostat data

  Australia

  5.9

  —

  Austria

  —

  2.9

  Belgium

  1.6

  1.6

  Canada

  5.9

  —

  Czech Republic

  3.9

  —

  Denmark

  2.5

  2.5

  Finland

  3.9

  2.3

  France

  1.3

  1.1

  Germany

  2.8

  2.6

  Greece

  5.3

  5.3

  Hungary

  2.7

  —

  Iceland

  31.6

  35.3

  Ireland

  —

  8.0

  314W

  Employment rate of those aged 65 years and over for OECD countries, 2000

  Percentage

  OECD data

  Eurostat data

  Italy

  3.2

  3.1

  Japan

  22.1

  —

  Korea

  29.0

  —

  Luxembourg

  1.7

  1.6

  Mexico

  31.3

  —

  Netherlands

  3.2

  2.6

  New Zealand

  7.6

  —

  Norway

  10.8

  10.5

  Poland

  7.6

  —

  Portugal

  18.4

  18.4

  Slovak Republic

  0.7

  —

  Spain

  1.6

  1.6

  Sweden

  10.2

  4.9

  Switzerland

  10.3

  9.4

  Turkey

  20.2

  —

  UK

  5.2

  5.2

  US

  12.4

  —

  Notes:

  1. The employment rate is the proportion of all those aged 65 and over who are in employment. Persons in employment are defined as those who, during the reference week, did any work for pay or profit, or were not working but had jobs from which they were temporarily absent. Family workers are included.

  2. As OECD data are not available for all OECD countries, Eurostat data have also been provided to give a more comprehensive picture.

  3. Figures are rounded to one decimal place.

  4. OECD data for Hungary and Iceland show employment rates for those aged 65 to 74 only and not for all those aged 65 and over.

  Source:

  OECD data are calculated from OECD Labour Market Statistics; Eurostat data are from European Social Statistics—Labour Force Survey Result 2000, Table 4, European Communities, 2001.

  Housing Benefit
  Mr. Kirkwood
  To ask the Secretary of State for Work and Pensions, pursuant to the answer of 18 April 2002,Official Report, column 1120W, on housing benefit, in what format information is available. [53046]

  Malcolm Wicks
  [holding answer 7 May 2002]: Under Best Value, the time taken by local authorities to process housing benefit claims is collected as an average number of calendar days. There is no measure of the proportion of claims processed within a set period from date of receipt to date of determination.

LORD CHANCELLOR'S DEPARTMENT

  Libra Project
  Mr. Todd
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will place copies of OGC Gateway reviews of the Libra project in the Library. [53459]

  Mr. Wills
  I am unable to place copies of these OGC reviews in the Library given the commercial sensitivity involved. Compliance with my hon. Friend's request would impair the value added by the Gateway Review process. This relies on the provision of an in-depth, commercially confidential, report for the sole use of the senior responsible officer for the project under review.
  315W
  The Government remain determined to provide magistrates courts with modern computer equipment and the standardised IT systems that they need and we believe the outcome of discussions currently under way with Fujitsu Services (formerly ICL) will ensure their earliest delivery and provide value for money to the tax payer. These will be concluded shortly, and the House will be informed of the outcome.

  Data Protection Act
  Matthew Taylor
  To ask the Parliamentary Secretary, Lord Chancellor's Department, pursuant to his answer of 19 March 2002,Official Report, column 188W, regarding the Data Protection Act 1998, since when his Department has conducted a review of the operation of the Data Protection Act 1998; and if he will place copies of the results of these reviews in the Library. [53426]

  Mr. Wills
  The Government started an appraisal of the Data Protection Act 1998 in September 2000 with a public consultation exercise. The timing was geared to the European Commission's first report on the implementation of the EC Data Protection Directive which was due in October 2001. That report has been delayed, and the Government have deferred completion of the appraisal of the 1998 Act until its timing is clearer. In December 2001 the Government published a summary of the responses to the September 2000 consultation. I am placing a copy in the Library.

  Building Projects
  Jane Griffiths
  To ask the Parliamentary Secretary, Lord Chancellor's Department if he will list the building projects under construction; and what coolant will be used for the building services water chilling system for such projects. [52046]

  Mr. Wills
  While there are no building projects currently in construction, there are a number in the planning and development stages, including private finance initiative and private developer schemes. We have excluded any magistrates court schemes, as local authorities are responsible for these.

  The Department's Environmental Policy for Building Requirements applies to all major construction projects. The Department's policy is for natural ventilation for buildings whenever possible and only to install cooling systems where absolutely necessary. Where cooling cannot be avoided, designers are required to investigate systems which minimise environmental impact in terms of ozone depletion and global warming, using refrigerants with a zero ozone depletion potential (ODP) such as R134a and R66. Where, for technical or other reasons, it is necessary to utilise refrigerants with an ODP greater than zero, designers are required to check that the plant can be easily and cheaply retrofitted with a zero ODP refrigerant in the future.

  Additionally, all major schemes are certified under the requirements of BREEAM (Building Research Establishment Environmental Assessment Method). BREEAM is a system for assessing the environmental performance of buildings. I am placing further information in the Libraries of both Houses.

  Housing Benefit Departments (Summonses)
  Mr. Kirkwood
  To ask the Parliamentary Secretary, Lord Chancellor's Department how many summonses using Civil Procedure Rules in possession cases have been issued to local authority housing benefit departments in each year since 1997. [53045]

  Mr. Wills
  Figures showing the number of mortgage and rent possession actions entered in the county courts of England and Wales involving local authorities are provided in the table. However it should be noted that social landlord rent possession action statistics are collected only as combined figures involving local authorities and housing associations and no figures are held centrally exclusively for local authorities.

  Local authority mortgage and social landlord1 rent possession actions entered

  Year

  Number

  1997

  109,932

  1998

  141,224

  1999

  147,485

  2000

  151,709

  2001

  151,841

  1Figures include both local authorities and housing associations

  Census Online
  Mr. Brady
  To ask the Parliamentary Secretary, Lord Chancellor's Department what steps have been taken to ensure that 1901 Census Online will, when re-launched, be able to accommodate peaks of demand. [52920]

  Ms Rosie Winterton
  The new system will incorporate a "cookie counter", by which users will be referred to a simple page with a "site busy" message at peak times. This will enable peaks of demand to be managed successfully.

  Press Office
  Mr. Bercow
  To ask the Parliamentary Secretary, Lord Chancellor's Department how many staff in his Department's press office have received(a) termination and (b) redundancy payments in each of the last four years. [4}]

  Mr. Wills
  One member of LCD press office staff received a termination payment (in 1998–99) on resignation from the civil service. There have been no redundancy payments.

WALES

  Public Appointments
  Llew Smith
  To ask the Secretary of State for Wales if he will list the(a) non-departmental public bodies and (b) task forces to which he has appointed members since the establishment of the National Assembly for Wales. [46144]

  Mr. Paul Murphy
  Information about the number of ministerial appointments to non-departmental public bodies is included in the Cabinet Office's annual report
  317W
  "Public Bodies". Copies are placed in the Library of the House and the report is published on the Cabinet Office website.

  Copies of the annual report on task forces and similar bodies have also been placed in the Library of the House and it is being made available on the Cabinet Office website.

  I have appointed one member to the Parliamentary Boundary Commission for Wales since the establishment of the National Assembly.

  Welshpool Airport
  Mr. Evans
  To ask the Secretary of State for Wales what recent discussions he has had about the future capacity of Welshpool airport. [53104]

  Mr. Paul Murphy
  I have regular discussions with Assembly and UK Government ministerial colleagues on a wide range of transport matters, including regional airports in Wales.

  Aviation is a matter reserved to the UK Government. However Assembly officials have had close contact with DTLR colleagues over the Wales Air Services study, the on-going UK Regional Air Services Co-ordination study and the Wales Air Services consultation documents which are to be published shortly. These consultation documents will form the basis of a major public consultation exercise informing preparation of an Air Transport White Paper and will:
  look at a range of policy scenarios;
  set out options for development of capacity at regional airports such as Welshpool and associated surface access improvements in light of these scenarios;
  report key findings of the economic, environmental, social and airspace appraisal of these options which have been undertaken; and highlight interactions between different regional airports, and the various possible roles each might play.

  Correspondence
  Mr. Evans
  To ask the Secretary of State for Wales how many and what proportion of letters received by the Department in each of the last six months, were replied to in(a) under 15, (b) under 20, (c) under 30, (d) under 40 and (e) over 40 working days. [53100]

  Mr. Paul Murphy
  The information is contained in the following table:

  Month

  (1) 15 days

  (2) 1 month

  (3) 2 months

  (4) 3 months

  (5) 3+

  Total

  October

  39

  1

  0

  0

  0

  40

  November

  37

  5

  3

  0

  0

  45

  December

  8

  4

  1

  0

  0

  13

  January

  26

  4

  1

  0

  0

  31

  February

  34

  3

  0

  0

  0

  37

  March

  23

  2

  0

  0

  0

  25

  Note:

  Columns 1 and 2 above are consistent with the requirements of the question but columns 3, 4 and 5 vary from it as the Wales Office collates its correspondence statistics slightly differently.

  Ministerial Accommodation
  Mr. Evans
  To ask the Secretary of State for Wales what publicly owned accommodation is made available to him in his official role; how many nights he has been in residence at each of these properties in the last 12 months; and what the total cost is of maintaining each of these properties. [55089]

  Mr. Paul Murphy
  None.

DEPUTY PRIME MINISTER

  Ministerial Accommodation
  Mr. Evans
  To ask the Deputy Prime Minister what publicly owned accommodation is made available to him in his official role; how many nights he has been in residence at each of these properties in the last 12 months; and what the total cost was of maintaining each of these properties in the last 12 months. [55091]

  The Deputy Prime Minister and First Secretary of State
  I refer the hon. Member to the answer that my right hon. Friend the Prime Minister gave to the hon. Member for Lewes (Norman Baker) on 28 February 2002,Official Report, column 1443W, and the answer I gave to the hon. Member for Westmorland and Lonsdale (Mr. Collins) on 21 January 2002, Official Report, column 599 and 28 January 2002, Official Report, column 91W.

PRESIDENT OF THE COUNCIL

  Ministerial Accommodation
  Mr. Evans
  To ask the President of the Council what publicly owned accommodation is made available to him in his official role; how many nights he has been in residence at each of these properties in the last 12 months; and what the total cost was of maintaining each of these properties in the last 12 months. [55092]

  Mr. Robin Cook
  I refer the hon. Member to the answers given by my right hon. Friend the Prime Minister to the hon. Member for Lewes (Norman Baker), 28 February 2002,Official Report, column 1443W and by my right hon. Friend the Deputy Prime Minister to the hon. Member for Westmorland and Lonsdale (Mr. Collins), 21 January 2002, Official Report, column 599 and on 28 January 2002, Official Report, column 91W.

  To date, my Department has met no expenses on No. 1 Carlton Gardens since I became Leader of the House of Commons, although we await a transfer of costs from the Foreign Office.

HOME DEPARTMENT

  Illegal Immigrants
  Mr. Cox
  To ask the Secretary of State for the Home Department how many known illegal immigrants have reached the UK after travelling through the channel tunnel on freight trains in 2002. [50878]
  319W
  Angela Eagle
  It is not possible to establish precisely how many illegal entrants have reached the United Kingdom after travelling through the channel tunnel on freight trains. Some are detected inland and cannot be attributed to a particular port of entry and some claim to use the channel tunnel but have in fact entered by a different route.

  Information on the known number of illegal entrants who have arrived in the United Kingdom in 2002 is not yet available.

  Provisional management information for 2001 indicates that a total of 1,552 illegal entrants, who had been concealed on board freight trains, were detected on arrival at Dollands Moor freight yard.

  The locally collated figures show this total is broken down over the calendar year as follows: 504 (January-March), 240 (April-June), 183 (July-September) and 625 (October-December).

  Complaints
  Mr. Breed
  To ask the Secretary of State for the Home Department how many complaints were registered against his Department in(a) 1990 to 1996 and (b) 1997 to 2002; how many are current; and what proportion were (i) taken up and (ii) upheld by the Parliamentary Commissioner for Administration in those periods. [51221]

  Angela Eagle
  [holding answer 19 April 2002]: Complaints are handled initially by the area of the Home Office or by the agency against which the complaint has been made, many of which have their own complaints procedures. Information about the main complaints procedures operating in the Home Office and its agencies is publicised on the internet, including the Home Office main website at www.homeoffice.gov.uk

  Information on the outcome of statutory investigations is set out in the Parliamentary Ombudsman's annual reports, copies of which are available in the Library, and for annual reports from 1997–98 to 2001–02, on the Parliamentary Ombudsman's website at www.ombudsman.org.uk/pca/document/par01/index.htm.

  Mrs. L. Odedra
  Mr. Vaz
  To ask the Secretary of State for the Home Department when the appeal papers in respect of Mrs. L. Odedra, a constituent, were received by the Appeals Registry at the Home Office; and when they were despatched to the Immigration Appeals Office Authority tribunal ref: ECR/419/00 104792. [51522]

  Angela Eagle
  I understand that my hon. Friend the Parliamentary Under-Secretary of State for the Foreign and Commonwealth Office (Mr. Bradshaw) will be writing to my hon. Friend about this matter shortly.

  Dungavel
  Annabelle Ewing
  To ask the Secretary of State for the Home Department how the Committee of Visiting at Dungavel was arranged; who was appointed to sit upon the Committee; what criteria are used in deciding who can act as a visitor; and what the total cost was for the conversion of Dungavel from a prison to a detention centre. [53217]
  320W
  Angela Eagle
  Applications to be considered for appointment to the Dungavel House Visiting Committee were invited in an advert placed in the local press on 10 August 2001. Eleven individuals were appointed to the committee on 27 March 2002. Successful candidates were selected on the basis of the experience and abilities they could bring to the committee and to ensure a reasonably balanced membership. It is not the practice to publish the names of visiting committee members and we have no plans to change this policy.

  The total cost of converting Dungavel House to an immigration removal centre is expected to be in the region of £3.5 million.

  Teachers
  Tony Baldry
  To ask the Secretary of State for the Home Department how many(a) teachers and (b) teaching professionals were awarded work permits for UK recruitment during (a) 2001, (b) 2000 and (c) 1999. [52972]

  Angela Eagle
  Work Permits (UK) do not differentiate between teachers and teaching professionals.

  The numbers of work permits issued for teachers and teaching professionals are:

  Number

  1999

  696

  2000

  1,444

  2001

  5,888

  Mr. Sheerman
  To ask the Secretary of State for the Home Department how the Work Permit Initiative will ensure that agencies observe the requirement to secure contracts of employment for work permit applicants; what checks Work Permits UK will have in place to ensure that a contract of employment exists; and for what reason(a) overseas teachers will require a contract of employment and (b) other agency staff are supplied on a contract-for-services basis. [53522]

  Angela Eagle
  Work Permits(UK) require any employer or agency acting as the employer to sign the "Employer's Declaration" on the work permit application form, which binds them to the criteria of the work permit arrangements. In this way, teacher agencies are treated in the same way as any other United Kingdom employer in ensuring that a contract of employment for the individual is in place.

  Details of employment contracts between an individual and their employer can be requested and checked upon if abuse of the work permit arrangements are suspected.

  A contract of employment is required as an overseas teacher should be afforded the same terms and conditions of employment as those of a resident teacher. Anyone working on a contract-for-services basis is not regarded as being "employed" under the work permit arrangements, rather they are regarded as being "self-employed". For this reason, an agency recruiting an individual who is working solely on a contract-for-services basis would not be granted a work permit.

  Immigration
  Mr. Bill O'Brien
  To ask the Secretary of State for the Home Department what the longest time taken has been in the last five years to process an application of a person to remain in the UK indefinitely; and how many cases were outstanding at 22 April 2001. [53213]

  Angela Eagle
  I regret this information is not currently available. We are introducing a Casework Information database which, when fully operational, will enable us to monitor our performance on general immigration casework more effectively.

  Mr. Bill O'Brien
  To ask the Secretary of State for the Home Department if he will list those countries where there are difficulties in obtaining information on internal checks for people applying for indefinite leave to remain in the UK; and if he will make a statement. [53211]

  Angela Eagle
  Checks made on people applying for indefinite leave to remain will depend on the circumstances of the particular case. While the Immigration and Nationality Directorate aims to deal with 70 per cent. of non-asylum applications within three weeks, the need to make further inquiries, including security checks, may affect this. Within that overall target, there are no specific targets for applications which may require security checks, and on security and international relations grounds it would be inappropriate for me to list countries where there are particular difficulties.

  Digital Equipment
  Mr. Yeo
  To ask the Secretary of State for the Home Department how many digital radios are owned by his Department for use in departmental buildings from which Ministers work; and what the(a) cost and (b) date of purchase of each radio was. [52858]

  Angela Eagle
  [holding answer 26 April 2002]: The Home Office has not purchased any digital radios in departmental buildings from which Ministers work.

  National Criminal Intelligence Service
  Mr. Grieve
  To ask the Secretary of State for the Home Department how many and what percentage of reports made by accountants, solicitors and financial advisers to NCIS were(a)investigated and (b) led to confiscation, for the most recent convenient period. [53610]

  Mr. Bob Ainsworth
  The National Criminal Intelligence Service (NCIS) does not hold statistical information in the format requested. However, it does monitor whether financial disclosures it receives and forwards to law enforcement agencies are of value to those agencies. For the calendar year 2000, NCIS received 18,048 disclosures (in total). Which were all forwarded to law enforcement for action as necessary. (Only 0.42 per cent. and 1.35 per cent. were received in that year from accountants and solicitors respectively). To date NCIS has received feedback in 11,047 cases and in 9,082 (82 per cent.) of these replies the police force or law enforcement agency recorded that the reports had assisted law enforcement efforts.

  Suspicious transaction reports may only form part of a wider investigation that ultimately leads to the arrest and conviction of individuals and the confiscation of assets. Such reports can provide new information and intelligence
  322W
  that may substantially move an investigation forward as well as providing an invaluable insight into the presence or whereabouts of assets for later confiscation. On occasions they may also simply provide confirmation of information already known to the investigators.

  PFI/PPPs
  Mr. Bercow
  To ask the Secretary of State for the Home Department if he will list the(a) private finance initiative and (b) public-private partnership projects which have been delayed. [44872]

  Angela Eagle
  From the best information available of the private finance initiative (PFI) and public-private partnership (PPP) projects entered into by the Home Office, the following projects have experienced delays:

  Project

  PFI/PPP

  Signed or expected

  Prisons Energy Tranche 2

  PFI

  Signed

  Her Majesty's Prison Dovegate

  PFI

  Signed

  Quantum (Prison Service)

  PFI

  Signed

  Medway Secure Training Centre (STC)

  PFI

  Signed

  Rainsbrook STC

  PFI

  Signed

  Hassockfield STC

  PFI

  Signed

  Passport Data Capture

  PFI

  Signed

  Passport Supply

  PFI

  Signed

  Airwave (PSRCP)

  PFI

  Signed

  IT2000 (Sirius programme)

  PFI

  Signed

  Criminal Records Bureau

  PPP

  Signed

  Home Office Central London

  Accommodation Strategy (HOCLAS)

  PFI

  Signed

  The length of delays for each project varies between six weeks and 24 months. The reasons for the delays are varied. For example, Her Majesty's Prison Dovegate was delayed due to the possibility of a judicial review by a local action group: Hassockfield STC due to planning appeals; changes of strategy from refurbishment of existing buildings to new build in the case of HOCLAS; and problems concluding preferred bidder stage necessitating further negotiation and an invitation to tender for best and final offers on the IT2000 project.

  Human Rights Act
  Mr. Bercow
  To ask the Secretary of State for the Home Department how many cases have been brought against his Department under the Human Rights Act 1998; and what has been the cost in(a) legal fees to defend cases and (b) compensation payments. [45063]

  Angela Eagle
  We do not collect central records of all cases in which the Human Rights Act 1998 is relied on. Human rights are now integrated in the general law and are rarely the sole basis for a challenge. We will not always know whether a case has been brought against the Home Office, because the Courts are under no obligation to inform us. It would take a disproportionate amount of time and expense to try to compile such a record, even if cases could always be categorised as "being brought … under the Human Rights Act 1998".

  We do not collect separate information centrally about the costs to public funds, legal fees or compensation payments which include a human rights issue. In most cases it will be difficult to single out associated costs relating to the human rights element.

  Airwave System
  Mr. Paice
  To ask the Secretary of State for the Home Department when he expects the roll-out of the Airwave system to be completed; what dates were originally given to police forces; what compensation he is seeking from 02 for the delays in roll-out; and what proportion of masts necessary for complete roll-out are(a) completed, (b) being built and (c) awaiting planning consent. [47606]

  Mr. Denham
  The contract for the provision of the Airwave service specifies completion of the roll-out in England and Wales by June 2004, and in Scotland by 2005.

  The delivery dates agreed with individual police forces, known as 'Ready For Service' (RFS dates, commenced in 2001, and are being rolled-out in England, Wales and Scotland as indicated above.

  As with any large project using leading-edge technology there has been a number of complex technical issues that have had to be resolved as the project has rolled-out. Delays have also been caused by such factors as the foot and mouth epidemic, and obtaining planning permissions for mast sites. MMO2 has responded to this by instigating a fundamental review of RFS dates which began in November 2001. This review is still on-going and a full assessment of the position will not be possible until the main results of the review become available.

  The Police Information Technology Organisation (PITO) is currently developing the approach that should be taken to seek appropriate remedies from MMO2, and will begin consultations with police forces shortly.

  The current situation is that 15 per cent. of radio masts have been built, 24 per cent. of sites are awaiting planning permission, 20 per cent. have been identified but not yet submitted for planning permission, and 41 per cent. had yet

  1997

  1998

  1999

  20001

  20011

  Romania

  Applications received2

  605

  1,015

  1,985

  2,160

  1,425

  Total initial decisions3

  645

  1,160

  440

  2,800

  2,125

  Cases considered under normal procedures4:

  Number of cases

  645

  1,160

  350

  2,725

  2,125

  Granted asylum (percentage)

  0

  0

  1

  1

  0

  Granted ELR (percentage)

  1

  0

  0

  1

  3

  Refused (percentage)

  98

  100

  99

  99

  97

  Backlog clearance exercise5:

  Number of cases

  —

  —

  95

  75

  —

  Granted asylum or ELR under background criteria (percentage)

  0

  0

  50

  63

  0

  Refused under backlog criteria (percentage)

  0

  0

  50

  37

  0

  Czech Republic

  Applications received2

  240

  515

  1,790

  1,200

  930

  Total initial decisions3

  210

  180

  275

  1,800

  855

  Cases considered under normal procedures4:

  Number of cases

  210

  180

  275

  1,800

  855

  Granted asylum (percentage)

  0

  0

  0

  1

  0

  Granted ELR (percentage)

  0

  0

  0

  1

  0

  Refused (percentage)

  100

  100

  100

  99

  100

  Backlog clearance exercise5:

  Number of cases

  —

  —

  6—

  6—

  —

  Granted asylum or ELR under background criteria (percentage)

  0

  0

  100

  100

  0

  Refused under backlog criteria (per cent.)

  0

  0

  0

  0

  0

  324W
  to be acquired. The number of sites needed to complete the roll-out will depend upon exact police service requirements, topology and local planning considerations.

  Asylum Seekers
  Mr. Willis
  To ask the Secretary of State for the Home Department which languages he plans will be used to educate children detained within asylum centres. [53688]

  Angela Eagle
  I assume that the hon. Member's question relates to educational provision in accommodation centres. The language needs of the children will be taken into account in the way that their education is provided including, where necessary, through the provision of interpreter support.

  Asylum seekers will not be detained in accommodation centres.

  Paul Flynn
  To ask the Secretary of State for the Home Department (1) what his estimate is of the numbers of asylum seekers from Slovakia who have entered the UK in each of the past five years; and what percentage of them were subsequently found to have valid reasons for seeking asylum; [54013]

  (2) how many asylum seekers from (a) Romania and (b) the Czech Republic have entered the UK in each of the past five years; and what percentage of them were subsequently found to have valid reasons for seeking asylum. [54019]

  Angela Eagle
  I regret that reliable information on the entry routes of asylum seekers, including when asylum seekers first enter the United Kingdom is not available. However the number of asylum applications received between 1997 and 2001 from nationals of Romania, the Czech Republic and Slovakia is given in the tables.

  Information on the initial decisions made in this period is also given, though these initial decisions do not all relate to applications made in the same period.
  325W

  1997

  1998

  1999

  20001

  20011

  Slovakia7

  Applications received2

  290

  835

  70

  55

  60

  Total initial decisions3

  375

  335

  160

  220

  85

  Cases considered under normal procedures4:

  Number of cases

  375

  335

  160

  220

  85

  Granted asylum (percentage)

  0

  0

  5

  5

  1

  Granted ELR (percentage)

  0

  0

  1

  1

  1

  Refused (percentage)

  100

  100

  93

  93

  98

  Backlog clearance exercise5:

  Number of cases

  —

  —

  6—

  6—

  —

  Granted asylum or ELR under background criteria (percentage)

  0

  0

  100

  100

  0

  Refused under backlog criteria (percentage)

  0

  0

  0

  0

  0

  1 Figures for 2000 and 2001 are provisional and subject to change.

  2May exclude some cases lodged at local enforcement offices between January 1999 and March 2000.

  3 Information is of initial decision, excluding the outcome of appeals or other subsequent decisions.

  4Cases considered under normal procedures may include some cases decided under the backlog criteria.

  5Cases decided under measures aimed at reducing the pre-1996 asylum application backlog.

  6 1 or 2 cases.

  7Data prior to 1999 for Slovakia refer to the Slovak Republic.

  Notes:

  1. Figures rounded to the nearest 5.

  2. Decision figures do not necessarily relate to applications received in the same period.

  3. Percentages for cases considered under normal procedures and those within the backlog clearance exercise are calculated separately.

  4. Includes some cases where the application has been refused on substantive grounds.

  Information on applications and initial decisions is published quarterly. The next publication will cover the period up to March 2002, and will be available from 30 May 2002 on the Home Office research development and statistics directorate website at http://www.homeoffice.gov.ulards/ immigrationl.html.

  Mr. Malins
  To ask the Secretary of State for the Home Department how many asylum seekers he estimates will pass through asylum induction centres in each year; what estimate he has made of the costs of introducing the centres; and if he will make a statement. [53905]

  Angela Eagle
  [holding answer 2 May 2002]: Eventually all asylum seekers will pass through induction centres. Those seeking National Asylum Support Service accommodation will remain in the induction centre for approximately seven days; whereas those seeking NASS financial support only or no NASS support at all, will remain in the centre for approximately one day—this may, in some cases, involve an overnight stay.

  It is envisaged those asylum seekers who are to be housed in accommodation centres in the future, will remain in the induction centre for around two days, while appropriate arrangements are made for their transfer.

  The cost of introducing induction centres has been kept to a minimum. The Dover induction centre required additional funding for a small number of staff, (and related resources, such as information technology), within migrant helpline to deliver the more comprehensive detailed briefing. In addition a local team of staff has been created, by means of local recruitment and the introduction of a NASS office in the area, (the site of which is yet to be finalised). The introduction of induction centres will negate the need to use expensive bed and breakfast type housing on an emergency basis.

  The establishment of the induction centre in Dover has assisted in a faster dispersal of asylum-seekers to NASS accommodation throughout the country, despite the fluctuating numbers arriving there; and the streamlining
  326W
  of Immigration Nationality Directorate processes. This has assisted in delivering a more cost effective front-end process.

  Further induction centres in outer London, such as the Heathrow and Gatwick areas will follow. These centres will, of course, replace a significant amount of emergency accommodation currently used to house NASS applicants in inner London. In addition, a number of smaller centres within the regions will be established. Again the opening of such centres will be closely linked to the present use of emergency accommodation in related areas and the possibility of regionalising some of the work carried out by NASS staff.

  Mr. Andrew Turner
  To ask the Secretary of State for the Home Department what right asylum seekers have to nominate their own(a) psychiatrist and (b) psychologist for the production of reports on their suitability for deportation; how many have done so in the last 12 months; and in how many cases people have been found to be psychologically unsuitable for deportation. [53960]

  Angela Eagle
  [holding answer 2 May 2002]: It is open to anyone facing removal from the United Kingdom under the Immigration Acts to make representations against that decision, and they may submit whatever evidence, including medical evidence, they consider necessary in support of those representations. Where medical evidence is submitted, the Immigration and Nationality Directorate may seek a second opinion.

  Information about numbers of cases where psychiatric or psychological reports have been submitted and the outcomes of such cases is not collected centrally.

  Dr. Tonge
  To ask the Secretary of State for the Home Department what plans he has to provide financial assistance to students waiting for their asylum applications to be processed towards their monthly train fare to Gatwick to report to the authorities. [54157]
  327W
  Angela Eagle
  The current immigration legislation does not provide a power to enable the Home Office to reimburse the costs of travel for those required to report to a police or immigration officer. The Nationality Immigration and Asylum Bill provides a power which, if introduced, will mean that the Secretary of State may meet the reasonable travelling costs of those required to report.

  Mr. Malins
  To ask the Secretary of State for the Home Department how many asylum seekers are being held in Prison Service accommodation; and if he will make a statement. [53906]

  Angela Eagle
  [holding answer 2 May 2002]: I refer the hon. Member for Woking to the answer I gave him on 30 March 2002, Official Report, column 410W. Information on Immigration Act detainees as at 30 March 2002 will be published on 30 May 2002 on the Home Office Research, Development and Statistics Directorate website at http://www.homeoffice.gov.uk/rds/immigrationl.html.

  Mr. Soames
  To ask the Secretary of State for the Home Department how many asylum applicants have been refused(a) asylum and (b) exceptional leave to remain in each of the last two years; and what proportion of them subsequently appealed. [52760]

  Angela Eagle
  [holding answer 30 April 2002]: Information on the outcome of initial decisions made on asylum applications in the United Kingdom during the last two years is given in the table.

  Initial decisions made on applications for asylum in the UK, 2000 and 20011, principal applicants only

  2000

  2001

  Total initial decisions

  109,205

  118,195

  Cases considered under normal procedures2:

  Granted asylum

  10,375

  10,960

  Granted ELR3

  11,495

  19,510

  Refused asylum or ELR3

  75,680

  87,825

  Backlog clearance exercise4:

  Granted asylum or ELR under backlog criteria

  10,325

  —

  Refused under backlog criteria5

  1,335

  —

  1Provisional figures are rounded to the nearest 5, and exlude dependants.

  2Cases considered under normal procedures may include some cases decided under the backlog criteria.

  3ELR = Exceptional Leave to Remain.

  4Cases decided under measures aimed at reducing the pre-1996 asylum applications backlog.

  5Includes some cases where the application has been refused on substantive grounds.

  Our latest estimate is that 50–60 per cent. of those principal applicants who were refused asylum and exceptional leave to remain in 2000 subsequently lodged an appeal. An estimate for 2001 will be published in the forthcoming annual Home Office bulletin 'Asylum Statistics 2001'.

  Information on initial decisions and appeals is also published quarterly. The next publication will cover the period up to March 2002, and will be available from 30 May 2002 on the Home Office Research Development and Statistics Directorate website at http://www.homeoffice.gov.uk/rds/immigrationl.html.
  328W
  Lynne Jones
  To ask the Secretary of State for the Home Department whether accommodation centres for asylum seekers will be located in cluster areas where they are currently being accommodated through the NASS. [53740]

  Angela Eagle
  I refer my hon. Friend to the reply I gave to the hon. Member for Mid-Worcestershire (Mr. Luff) on 11 February 2002,Official Report, column 57W.

  Magistrates
  Caroline Flint
  To ask the Secretary of State for the Home Department if he will make a statement on proposals to extend sentencing powers of magistrates. [51317]

  Mr. Llwyd
  To ask the Secretary of State for the Home Department what representations he has received on the proposal to increase the sentencing power of magistrates courts; and if he will make a statement. [51326]

  Mr. Keith Bradley
  [holding answers 30 April 2002]: In the course of consultation on the Auld report on the criminal courts, many organisations and individuals who commented on the proposed intermediate tier and abolition of the right to elect suggested that an increase in magistrates sentencing powers might serve as an alternative means of reducing the burden on the Crown court. Similar views were expressed during consultation following the Halliday report on sentencing, particularly in response to the proposed sentence of custody plus, as when imposed in full this sentence would be outside magistrates current powers.

  National Asylum Support Service
  Lynne Jones
  To ask the Secretary of State for the Home Department, pursuant to his answer of 23 January 2002,Official Report, column 938W, what was the total value of payments from the National Asylum Support Service to the reception assistant agencies in respect of the provision of one-stop shop advice services in (a) 2000–01 and (b) 2001–02; and what is the planned value of such payments in 2002–03. [54106]

  Angela Eagle
  The total value of payments made by the National Asylum Support Service (NASS) to voluntary sector organisations in respect of reception assistants and one stop services is as follows for the following years(a) 2000–01 was £18.3 million and (b) 2001–02 £19.2 million. The planned value of payments for 2002–03 is £18 million. All figures are rounded to the nearest £0.1 million.

  Lynne Jones
  To ask the Secretary of State for the Home Department, pursuant to his answer of 23 January 2002,Official Report, column 938W, what was the total value of payments from the National Asylum Support Service to the reception assistant agencies in respect of the provision of emergency accommodation in (a) 2000–01 and (b) 2001–02; and what is the planned value of such payments in 2002–03. [54105]

  Angela Eagle
  The total value of payments made by the National Asylum Support Service (NASS) to reception assistants for(a) 2000–01 was £27.5 million and (b) 2001£02 £70 million. The planned value of payments for 2002–03 is £50 million. All figures are rounded to the nearest £0.1 million.
  329W
  Lynne Jones
  To ask the Secretary of State for the Home Department if he will make it the practice of the National Asylum Support Service to issue an acknowledgement of correspondence received from(a) supported asylum seekers and (b) representatives of supported asylum seekers. [54104]

  Angela Eagle
  The time within which the National Asylum Support Service responds to requests from(a) supported asylum seekers and (b) representatives of supported persons is considered to be sufficiently fast not to warrant introducing a system of routine acknowledgements of correspondence received.

  Asylum Accommodation Centres
  Mr. Luff
  To ask the Secretary of State for the Home Department who determined the criteria for the selection of proposed sites for asylum accommodation centres. [54099]

  Angela Eagle
  The criteria for proposed site selection was determined by the Home Office and was outlined in the reply I gave to the hon. Member on 7 February 2002,Official Report, column 1134W.

  Mr. Luff
  To ask the Secretary of State for the Home Department when his Department will send written details to(a) Wychavon district council and (b) Worcestershire county council on the proposed asylum accommodation centre at Throckmorton. [42803]

  Angela Eagle
  [holding answer 12 March 2002]: I apologise for the delay in answering this question, caused by an administrative oversight in my Department. We will make an announcement in the proposed use of the site shortly.

  Mr. Luff
  To ask the Secretary of State for the Home Department what assessment he has made of the merits of locating asylum accommodation centres in(a) rural, (b) suburban and (c) urban sites; what discussions he has had with EU counterparts on the location of asylum accommodation centres; and if he will make a statement. [54035]

  Angela Eagle
  Our policy is to site accommodation centres in non-urban areas in order to reduce the overall burden placed upon local services in urban areas. Each potential accommodation centre site will be assessed on its merits. We have not discussed the location of United Kingdom asylum accommodation centres with our European Union counterparts, but we are drawing on the European experience as we develop our plans.

  Mr. Luff
  To ask the Secretary of State for the Home Department how asylum seekers who have resided at asylum accommodation centres and are accepted for permanent settlement will be allocated permanent addresses in the United Kingdom; and if he will make a statement. [54036]

  Angela Eagle
  Any asylum seeker who is granted refugee status has the freedom to live wherever he or she wishes in the United Kingdom, in the same way as somebody already resident here. The Government will explore with local authorities and others options for those leaving accommodation centres with positive decisions and subsequent integration into United Kingdom society.
  330W
  Mr. Luff
  To ask the Secretary of State for the Home Department what his most recent assessment is of the implications for local emergency services of the establishment of asylum accommodation centres in their service areas; and if he will make a statement. [54101]

  Angela Eagle
  I refer the hon. Member to my reply of 5 February 2002,Official Report, column 880W.

  Deportations (Zimbabwe)
  Mr. Mullin
  To ask the Secretary of State for the Home Department what his policy is on the deportation of failed asylum seekers to Zimbabwe; and if he will make a statement. [53929]

  Angela Eagle
  On 15 January 2002, we announced a temporary suspension of returns of unsuccessful asylum applicants to Zimbabwe. We will resume returns only when we are satisfied that it is safe to do so, and not before. We are monitoring events in the aftermath of the Zimbabwe presidential election in close liaison with the Foreign and Commonwealth Office (FCO). There is no set time scale, but it would be unrealistic to be able to make any decision on a resumption of removals until the immediate post-election situation has calmed down and we have had time to assess properly the risks to returnees and gather and consider the views of FCO and others.

  Correspondence
  Mr. Salmond
  To ask the Secretary of State for the Home Department when he will reply to the letter dated 12 March from the hon. Member for Banff and Buchan, regarding his constituent Mr. J Morrison of Rosehearty. [53775]

  Angela Eagle
  The correspondence was transferred to the Foreign and Commonwealth Office and a reply to the hon. Member was despatched from the Joint Entry Clearance Unit on 25 April 2002.

  Mr. Andrew Turner
  To ask the Secretary of State for the Home Department when he will reply to the question from the hon. Member for Isle of Wight of March, Ref 39915. [55430]

  Angela Eagle
  I have replied to the hon. Member's question today. I apologise for the delay in responding.

  Child Asylum Seekers
  Mr. McNamara
  To ask the Secretary of State for the Home Department what percentage of child asylum seekers, broken down by(a) those seeking asylum with an adult and (b) those unaccompanied were from each country in each year since 1995. [54111]

  Angela Eagle
  [holding answer 7 May 2002]: The table shows the number of unaccompanied children who have made an asylum application in the period January 1995 to August 2001, inclusive.

  I regret that reliable information on the number of children who have applied for asylum in the United Kingdom, accompanied by an adult, is not readily available and could be obtained only by examination of individual case records and is, therefore, available only at disproportionate cost.
  331W
  Information on unaccompanied minors is published annually in the statistical bulletin "Asylum Statistics United Kingdom", a copy of which is available in the Library, and

  Unaccompanied1,2,3 children, aged 17 or under, applying for asylum in the United Kingdom, by nationality, 1995 to 2001

  Number of principal applicants

  Nationality

  1995

  1996

  1997

  1998

  1999

  20004

  20014,5

  Europe

  Albania

  6

  14

  39

  49

  126

  94

  46

  Czech Republic

  —

  —

  2

  6

  29

  18

  22

  FRY

  —

  —

  119

  1,529

  1,522

  666

  312

  Poland

  5

  15

  18

  44

  47

  13

  20

  Romania

  9

  13

  32

  68

  86

  40

  33

  Russia

  —

  —

  2

  2

  3

  2

  2

  Turkey

  41

  71

  48

  107

  116

  153

  75

  Ukraine

  —

  —

  —

  2

  1

  4

  1

  Other former USSR

  8

  2

  10

  36

  26

  24

  22

  Other former Yugoslavia

  14

  50

  107

  24

  32

  36

  100

  Other

  5

  12

  30

  9

  8

  3

  —

  Total

  88

  177

  407

  1,876

  1,996

  1,053

  633

  Americas

  Colombia

  6

  14

  26

  9

  18

  5

  4

  Ecuador

  2

  5

  4

  5

  13

  7

  —

  Other

  1

  1

  1

  6

  9

  4

  6

  Total

  9

  20

  31

  20

  40

  16

  10

  Africa

  Algeria

  —

  2

  21

  50

  12

  23

  12

  Angola

  17

  10

  12

  10

  42

  102

  101

  Dem Republic Congo

  21

  15

  27

  19

  33

  47

  43

  Ethiopia

  52

  21

  23

  66

  54

  62

  79

  Gambia

  20

  —

  —

  —

  —

  —

  1

  Ghana

  8

  7

  1

  2

  1

  10

  2

  Kenya

  19

  31

  9

  23

  12

  8

  8

  Nigeria

  24

  15

  18

  53

  45

  24

  26

  Rwanda

  2

  1

  7

  13

  35

  49

  20

  Sierra Leone

  6

  3

  14

  23

  65

  74

  88

  Somalia

  71

  68

  158

  153

  189

  177

  132

  Sudan

  1

  —

  3

  4

  6

  9

  5

  Tanzania

  48

  10

  1

  3

  1

  3

  1

  Uganda

  10

  6

  5

  9

  10

  26

  22

  Zimbabwe

  2

  —

  —

  —

  6

  34

  21

  Other

  34

  41

  65

  107

  121

  151

  453

  Total

  335

  230

  364

  535

  632

  799

  677

  Middle East

  Iran

  3

  2

  7

  8

  14

  65

  20

  Iraq

  12

  16

  20

  30

  58

  112

  125

  Other

  1

  5

  5

  7

  16

  14

  16

  Total

  16

  23

  32

  45

  88

  191

  161

  Asia

  Afghanistan

  50

  48

  109

  124

  213

  300

  563

  Bangladesh

  5

  3

  3

  2

  4

  4

  8

  China

  26

  56

  78

  301

  166

  117

  72

  India

  8

  14

  6

  9

  13

  14

  12

  Pakistan

  3

  7

  4

  12

  19

  25

  17

  Sri Lanka

  53

  40

  40

  91

  127

  170

  116

  Other

  —

  2

  6

  10

  10

  25

  51

  Total

  145

  170

  246

  549

  552

  655

  839

  Other, and nationality not known

  4

  11

  22

  12

  41

  19

  23

  Grand total

  597

  631

  1,102

  3,037

  3,349

  2,733

  2,343

  1 Unaccompanied at the point of their arrival, and not known to be joining a close relative in the United Kingdom.

  2May exclude some cases lodged at Local Enforcement Offices between January 1999 and March 2000.

  3Figures exclude disputed age cases.

  4Provisional figures.

  52001 figures include January to August only. August is the latest month for which data are available.

  332W
  from the research development and statistics website:http://www.homeoffice.gov.uk/rds/immigrationl.html.

  United Nations Convention on Rights of the Child
  Mr. McNamara
  To ask the Secretary of State for the Home Department, pursuant to his answer of 18 April 2002,Official Report, column 1155W, on the UN Convention on Rights of the Child, what measures are in place to inform (a) adult asylum seekers with children and (b) unaccompanied child asylum seekers about the United Nations Convention on Rights of the Child. [54110]

  Angela Eagle
  [holding answer 7 May 2002]: Asylum seekers are able to access legal advice to assist them with their applications and this should include information about their rights under international conventions. All unaccompanied minors who apply for asylum are referred to the Refugee Council's Panel of Advisers, a non-statutory body which acts as adviser to the child in his or her dealings with the Home Office and other agencies for the duration of the asylum claim.

  Criminal Case Review Commission
  Mr. McNamara
  To ask the Secretary of State for the Home Department what fees and expenses are available for full and part-time members of the Criminal Case Review Commission panellists; and what the median annual income from public funds of Criminal Case Review Commission full and part-time panellists is. [53754]

  Mr. Keith Bradley
  Details of salary and emoluments of all commission members are published in the commission's annual report, a copy of which is lodged in the Library.

  Mr. McNamara
  To ask the Secretary of State for the Home Department what consideration was given by the Criminal Case Review Commission to the prioritisation of the allegation of miscarriage of justice brought by Mr. Robert Brown; on what date the case papers of Mr. Brown were received by the Criminal Case Review Commission; on what date a caseworker was allocated to his case; on what date the caseworker's report was completed; on what date Mr. Brown was informed of a pending hearing before a three-person panel of the Criminal Case Review Commission; what date is planned for a panel hearing; on what date the Criminal Case Review Commission were informed of the health of Mr. Brown's mother; if compassionate grounds constitute a factor to be taken into account by the Criminal Case Review Commission in progressing a case; and how many of the proposed panel members are retained on a part-time basis by the Criminal Case Review Commission. [53753]

  Mr. Keith Bradley
  Mr. Brown's application was received by the Criminal Case Review Commission on 2 October 1997. It was routinely allocated to a case review manager on 21 October 1999. It remains under review. The progress of cases is as expeditious as possible taking into account the factors of individual cases. The Commission does not publicly release details of its cases or their applicants.

  Asylum Induction Centre (Dover)
  Mr. Malins
  To ask the Secretary of State for the Home Department when the asylum induction centre in Dover will be fully operational; and if he will make a statement. [53907]
  334W
  Angela Eagle
  [holding answer 2 May 2002]: Applicants are housed on a full-board basis. Migrant Helpline and the National Asylum Support Service (NASS) provide support services daily leading to dispersal within seven days of arrival. Those who do not seek NASS support are fully briefed about the asylum process in the United Kingdom and an interview is arranged on their behalf.

  Presently health screening is provided through the East Kent health authority, and is funded by the Immigration and Nationality Directorate for a six-month pilot period, at the end of which the process will be evaluated before decisions are taken on the delivery of health screening within induction centres throughout the United Kingdom.

  Oakington Detention Centre
  Mr. Malins
  To ask the Secretary of State for the Home Department if he will make a statement on the future of the Oakington Detention Centre site. [53904]

  Angela Eagle
  [holding answer 2 May 2002]: The fast track asylum facility operated at the Oakington Reception Centre is a key element within the Government's overall strategy for processing asylum applicants as speedily as possible. Subject to the outcome of the appeal to the House of Lords, we intend that the fast track process will continue to operate as at present. We fully expect to have the use of the Oakington facility until October 2004 but, in view of the outstanding judicial proceedings, it would be inappropriate to comment further at this stage.

  Arranged Marriages
  Mr. Vaz
  To ask the Secretary of State for the Home Department if he will make a statement on the Government's policy towards arranged marriages, with special reference to immigration.[54497]

  Angela Eagle
  There is no policy relating to arranged marriages.

  Abu Hamza
  Mr. Dismore
  To ask the Secretary of State for the Home Department if he will make a statement on the suspension of Abu Hamza by the Charity Commission from his position with the charity, the North London Centre Mosque, with special reference to the basis for the Charity Commissioner's action. [54202]

  Angela Eagle
  The decision to suspend Abu Hamza is a matter for the Charity Commission as the Government Department responsible for charities in England and Wales. The Director of Operations at the Charity Commission will write to my hon. Friend and a copy of his reply will be placed in the Library.

  Parliamentary Questions
  Chris Grayling
  To ask the Secretary of State for the Home Department when he will reply to the question from the hon. Member for Epsom and Ewell (Chris Grayling) on the special voucher scheme (ref: 46319). [53886]

  Angela Eagle
  [holding answer 2 May 2002]: I replied to the hon. Member's question yesterday, Official Report, column 233W. I apologise for the delay in responding.

  Press and Public Relations
  Mr. Andrew Turner
  To ask the Secretary of State for the Home Department what the annual budget for communications activities, including press, public

  Communications budgets 1997 to 2002

  1997–98

  1998–99

  1999–2000

  2000–01

  2001–02

  Press office running costs

  —

  1,095,000

  1,213,200

  1,606,100

  1,505,100

  Press office programme costs

  —

  —

  —

  —

  —

  Total

  —

  1,095,000

  1,213,200

  1,606,100

  1,505,100,00

  Prison press media running costs

  —

  —

  —

  578,100

  467,500

  Prison press media programme costs

  —

  —

  —

  —

  —

  Total

  —

  —

  —

  578,100

  467,500

  Marketing running costs

  —

  950,950

  986,200

  758,300

  815,000

  Marketing programme costs

  4,121,000

  7,459,050

  11,050,000

  32,874,000

  25,115,000

  Total

  14,121,000,00

  8,410,000

  12,036,200

  33,632,300

  25,930,000

  Internal communications unit running costs

  —

  —

  —

  692,600

  814,500

  Internal communications unit programme costs

  —

  —

  —

  —

  —

  Internal communications ('Inside Track' staff magazine)

  —

  —

  —

  125,000

  130,000

  Total

  —

  —

  —

  125,000

  130,000

  Internal advisers running costs

  —

  —

  —

  373,200

  480,500

  Internal advisers programme costs

  —

  —

  —

  —

  —

  Total

  —

  —

  —

  373,200

  480,500

  Grand total

  4,121,000

  9,505,000

  13,249,400

  36,429,200

  28,860,100

  1The figure for 1997–98 is given as a single total. This was the first year that publicity budgets were devolved to directorates, also at that time all expenditure including running costs were entered under one cost code; therefore a more detailed breakdown is not available.

  As my right hon. Friend the Home Secretary and my right hon. Friend his predecessor (Mr. Straw) have said on a number of occasions, increases in spending on communications activities have largely come about for two reasons. Firstly, the expansion of the Home Office Press Office, which took effect in late 2000. was to cope with the widened responsibilities—particularly relating to the Government's reform programme and a significant increase in demand from the media. The second expansion has been on marketing and advertising where a number of substantial and important public information campaigns were mounted—including fire safety, electoral registration, and vehicle crime reduction and, more recently, the continuing highly effective police recruitment campaign which has contributed greatly to the achievement of the highest level of police officers.

TREASURY

  Budget
  Mr. Pike
  To ask the Chancellor of the Exchequer what estimate he has made of the effect on a family with two children on an average income for the north-west as a result of the Budget changes. [53550]

  Mr. Gordon Brown
  There are 325.000 families with children in the north-east and 880,000 in the north-west. Around 90 per cent. of these families will be eligible for the child tax credit from April 2003, which together with
  336W
  relations, marketing and internal communications, was for his Department for each financial year from 1997–98 to 2001–02. [39915]

  Angela Eagle
  The information for the Home Office is as follows:

  child benefit will deliver up to £54.25 a week in support for the first child, compared with £27.70 a week in April 1997.

  A single-earner family on median earnings of £21,400 and with two children will gain by £3.90 a week as a result of the personal tax and benefit measures announced in the Budget.

  Mrs. Ellman
  To ask the Chancellor of the Exchequer how much additional support the Budget will provide to families with children in financial year 2002–03. [53567]

  Dawn Primarolo
  An additional £500 million of support will be available for families with children in 2002–03. This includes the costs of a £2.50 per week above-inflation increase in working families' tax credit rates from June 2002 and a £3.50 per week above-inflation increase in the child allowances in income support and jobseeker's allowance from October 2002.

  Andrew Mackinlay
  To ask the Chancellor of the Exchequer what estimate he has made of the number of people in Thurrock who will be affected by his Budget proposals aimed at relieving poverty. [53556]

  Mr. Boateng
  There are 14,000 families with children in Thurrock. Nationally, around 90 per cent. of families will be eligible for the child tax credit, which together with child benefit will deliver up to £54.25 a week in support for the first child from April 2003.
  337W
  There are 17,000 people in Thurrock benefiting from the increase in the winter fuel payment to £200 and 15,000 will benefit from the guaranteed increases in the basic state pension. Nationally, up to half of all pensioner households will be eligible for the pension credit from October 2003.

  National Insurance Contributions
  Mr. Clappison
  To ask the Chancellor of the Exchequer what recent representations he has received about the burden of national insurance contributions on business. [53554]

  Mr. Andrew Smith
  In the run up to the Budget statement the Government received a number of representations from business organisations.

  Mr. Steen
  To ask the Chancellor of the Exchequer what cost compliance estimate was made of the effects on business of changes in national insurance contributions announced in the Budget. [53562]

  Mr. Andrew Smith
  I refer the hon. Member to the Inland Revenue's Regulatory Impact Assessment for the National Insurance Contributions Bill. A copy was placed in the Library on 1 May.

  Mr. Baron
  To ask the Chancellor of the Exchequer what recent discussions he has had with the Federation of Small Businesses regarding the increase in employers' national insurance contributions announced in the 2002 Budget. [53566]

  Dawn Primarolo
  Ministers and civil servants have meetings with a wide range of organisations and individuals as part of the process of policy development and analysis. As with previous Administrations it is not this Government's practice to provide details of all such meetings. All such contacts are conducted in accordance with the Ministerial Code, the Civil Service Code and Guidance for Civil Servants: Contacts with Lobbyists.

  Mr. Peter Duncan
  To ask the Chancellor of the Exchequer what estimate he has made of the cash-flow implications to businesses of the increase in employers' national insurance contributions announced in the 2002 Budget. [53569]

  Mr. Andrew Smith
  Most businesses in the UK are small, and the average small business employs around five employees. For a typical employer of this size, the increase in employers' NICs is around £835 a year.

  34. Matthew Green
  To ask the Chancellor of the Exchequer what estimate he has made of the impact of the proposed change in employers' national insurance contributions on manufacturing company profitability for financial year 2003–04. [53576]

  Mr. Andrew Smith
  It is estimated that the changes to employers' national insurance contributions announced in the Budget will increase pay costs on average across the economy by 0.7 per cent. next year. Employers will benefit from the impact of the investment in the health service on the health of their employees.

  Mr. John Taylor
  To ask the Chancellor of the Exchequer if he will make a statement on the cost to the public sector of the change in employers' national insurance contributions announced in the Budget in 2003–04. [53580]
  338W
  Mr. Hendry
  To ask the Chancellor of the Exchequer if he will make a statement on the cost to the public sector of the change in employers' national insurance contributions announced in the Budget in 2003–04. [53581]

  Mr. Andrew Smith
  The cost to the public services will be just over £1 billion which compares with a planned rise in spending on public services of nearly £20 billion. The changes will help to fund improvements to public services and a real terms increase in spending on health over the next five years of over 40 per cent.

  Road Haulage Industry
  Mr. Bill O'Brien
  To ask the Chancellor of the Exchequer what representations he has received from the Road Haulage Association on the impact of Budget measures on the road haulage industry; and if he will make a statement. [53558]

  Mr. Boateng
  Since the Budget, I have chaired a meeting in the Treasury to outline further details about how the Government intend to implement their manifesto commitment to "ensure that hauliers from overseas pay their fair share towards the costs of our roads".

  The Road Haulage Association has welcomed the Budget and the Government's proposals to modernise the taxation of the haulage industry, describing them positively as a revolution gathering momentum. The Road Haulage Association's chief executive, a former Member of the House for the party opposite, has even said that this policy could make 2002 the most important year since denationalisation—and perhaps ever.

  Wanless Report
  Mr. Gray
  To ask the Chancellor of the Exchequer when he will next meet Mr. Wanless to discuss the contents of the final Wanless report. [53559]

  Mr. Andrew Smith
  Derek Wanless formally submitted his final report to the Chancellor on 15 April. No further meetings between Mr. Wanless and the Chancellor are currently planned.

  Pensioner Income
  Helen Jackson
  To ask the Chancellor of the Exchequer what assessment he has made of the impact of the Budget on pensioner income. [53560]

  Ruth Kelly
  The average pensioner household will be £7.75 per week, or around £400 per year, better off due to the Government's personal tax and benefit changes announced in the latest Budget round.

  John Robertson
  To ask the Chancellor of the Exchequer if he will make a statement on measures to raise the standard of living of the poorest pensioners. [53561]

  Ruth Kelly
  The Government are committed to tackling pensioner poverty; helping those in greatest need. The Government introduced the minimum income guarantee and is committed to raising it in line with earnings throughout this Parliament. From 2003, the pension credit will enable those with a modest amount of second pension or savings to gain on average just over £400 a year.

  Pensions
  Mr. Todd
  To ask the Chancellor of the Exchequer if he will make a statement on recent fiscal measures he has taken to encourage pension provision. [53563]

  Dawn Primarolo
  The Government are introducing pension credit from 2003, at a cost of £2 billion in the first full year. The pension credit will reward those pensioners who have modest incomes from second pensions or savings. In addition from 2003–04 the age-related personal tax allowances will be increased to ensure that no pensioner aged 65 or over will pay tax on income of less than £127 a week.

  Debt Relief
  Dr. Naysmith
  To ask the Chancellor of the Exchequer what progress he has made in persuading other countries to follow his December 2000 pledge on debt cancellations. [53557]

  Mr. Boateng
  The UK Government continue to press other countries to follow the UK's example and to hold in trust any debt payment received from HIPC countries prior to decision point. However, among other considerations, legal constraints make this difficult for many countries. To date only Canada has introduced a similar policy.

  Ms Drown
  To ask the Chancellor of the Exchequer how he will ensure that debt relief for developing countries(a) inside and (b) outside the HIPC initiative is accelerated to levels required to meet international development targets. [53564]

  Mr. Boateng
  The Government continue to press for rapid implementation of the HIPC debt relief initiative. At the IMF/World bank spring meetings we secured agreement that there needed to be a full review of HIPC for consideration at the annual meetings in October. This review will ensure that all countries in the HIPC initiative achieve sustainable levels of debt. Already countries are receiving debt relief worth $1.7 billion in 2001–02 which is being used to increase spending on education, health and other key poverty reducing areas.

  The benefits of the HIPC initiative remain open to all poor countries that are heavily indebted. However it is clear that many poor countries that have only moderate levels of indebtedness none the less need additional finance if they are to achieve the millennium development goals. For this reason the Government have welcomed the recent commitments by the US and the EU to increase their aid effort by $12 billion per annum.

  Alan Simpson
  To ask the Chancellor of the Exchequer what the average number of conditionality terms attached to agreements in the Debt Relief programme undertaken by the World Bank and IMF has been to date, broken down by country. [53575]

  Mr. Boateng
  Under the HIPC framework countries must demonstrate their commitment towards poverty reduction prior to qualifying for debt relief. They do this by developing a national poverty reduction strategy and following sound macroeconomic policy. Upon reaching decision point, countries start receiving interim relief and continue to develop their full poverty reduction strategy. Most countries will have implemented their poverty reduction strategy for a year prior to exiting the HIPC 340W
  framework. The average number of conditions is 12 where 60 per cent. of the conditions are attached to poverty, including health and education, while 24 per cent. are on governance and financial transparency.

  World Poverty
  Tony Cunningham
  To ask the Chancellor of the Exchequer if he will make a statement on progress in international efforts to relieve world poverty. [53565]

  Mr. Boateng
  There has been positive progress made recently. In March, the United Nations conference on financing for development held in Monterrey helped to mobilise substantial increased aid commitments

  In March EU member states agreed to increase their aid volumes in the next four years so that collectively an EU average of 0.39 per cent. of national income is reached by 2006–a seven billion dollar a year increase in aid from 2006, and potentially cumulatively 20 billion dollars before then.

  Furthermore, the United States has committed to increasing its aid by five billion dollars a year from 2006–a 50 per cent. increase in the US aid budget.

  The Monterrey Consensus—which sets out a balanced agenda of partnership and mutual accountability—was formally adopted by UN members; particularly welcome are the emphasis to good governance and the rule of law.

  The recent spring meetings on the IMF and World bank discussed progress made at Monterrey, and both institutions have given their full support. Aid increases and a global agreed agenda set out in the Monterrey consensus, will help provide a stronger international foundation on which to relieve world poverty.

  Combating Crime
  Dr. Palmer
  To ask the Chancellor of the Exchequer if he will ensure that sufficient funds in the comprehensive spending review are allocated for combating the causes of crime. [53568]

  Mr. Andrew Smith
  Announcements about budgets for all Departments will be made at the conclusion of the 2002 spending review.

  Health Inequalities
  Derek Twigg
  To ask the Chancellor of the Exchequer what estimate he has made of the impact the Budget will have on reducing health inequalities over the next five to 10 years.[53570]

  Mr. Andrew Smith
  Key measures in Budget 2002 that will contribute to meeting the Government's targets on health inequalities are:new child tax credit (CTC), which is a single, seamless system of support for families with children. From April 2003 CTC will combine with child benefit to deliver up to £54.25 a week in support for the first child, compared to support of £27.70 a week in April.

  341W
  specific help for people with disabilities (including long-standing illnesses) looking for work: the new deal for disabled people has now been extended nationally, and the rates and thresholds of the working tax credit will, from April 2003, improve the in-work financial support available specifically for disabled people.
  extra resources announced in Budget 2002 for the NHS—average growth in NHS spending of 7.4 per cent. after inflation over the five years from 2003–04 to 2007–08—will enable the NHS to play its full role in meeting the existing national targets for tackling health inequalities.

  Renewable Energy
  Ian Lucas
  To ask the Chancellor of the Exchequer what assessment he made of the needs of manufacturers of renewable energy equipment when preparing his Budget. [53571]

  Mr. Boateng
  The Chancellor considers a wide range of representations when preparing his Budget. The Budget announced that solar water heating systems will be eligible for enhanced capital allowances, while most forms of renewable energy are exempt from the climate change levy. The Government are also providing direct support for renewable energy worth over £260 million between 2001 and 2004, and renewable energy is also supported through the renewables obligation, which requires all electricity suppliers to source a minimum percentage of their electricity from renewable sources.

  Aggregates Levy
  Mr. Carmichael
  To ask the Chancellor of the Exchequer if he will make a statement on the operation of the aggregates levy. [53572]

  Mr. Boateng
  The levy came into effect on 1 April 2002.

  488 businesses have registered for and are operating the levy.

  Stamp Duty
  Hugh Robertson
  To ask the Chancellor of the Exchequer if he will make a statement on the level of stamp duty on commercial property transactions. [53573]

  Ruth Kelly
  Stamp duty on property currently raises around £4 billion per annum, about 40 per cent. of which derives from commercial transactions. We regularly review the impact of stamp duty on all aspects of the commercial market.

  My right hon. Friend the Chancellor confirmed in the Budget his intention to lift the cap on stamp duty relief for non-residential property transactions in disadvantaged areas, subject to state aids approval, giving a boost to commercial development in these areas.

  Halifax (Ombudsman's Ruling)
  Mr. Gardiner
  To ask the Chancellor of the Exchequer if he will ask the Financial Services Authority to issue a formal statement on(a) how the Halifax has handled the dual variable rate mortgage issue since the Ombudsman made his ruling and (b) what steps consumers should take to claim compensation. [53574]
  342W
  Ruth Kelly
  It is for the FSA to take any action it deems appropriate as part of its on-going supervision of banks. The FSA has already published a guide to making a complaint and this is available free from its help desk (0845 606 1234).

  Tax Credits
  Lynne Jones
  To ask the Chancellor of the Exchequer what the take-up rate is of each of the tax credits. [53577]

  Dawn Primarolo
  I refer my hon. Friend to my answer to my hon. Friend the Member for Newcastle upon Tyne Central (Mr. Cousins) on 24 April 2002,Official Report, column 336W.

  Community Investment Tax Credit
  Ms Walley
  To ask the Chancellor of the Exchequer if he will make a statement on his timetable in respect of the introduction of the community investment tax credit. [53578]

  Mr. Boateng
  We will bring forward legislation for the community investment tax credit in the Finance Bill. Organisations will then be able to apply for tax credit status during 2002–03, subject to State Aids approval for the measure.

  Film Tax Relief
  John Barrett
  To ask the Chancellor of the Exchequer what estimate he has made of the cost of film tax relief in 2004–05 after the Budget 2002 measures have been implemented.[53579]

  Mr. Andrew Smith
  It is estimated that the gross amount of relief given under section 48 Finance (No.2) Act 1997 given in 2004–05 will be £320 million. When compared with tax relief that would be available in the absence of section 48 reliefs the net tax cost is £70 million. The net tax cost of other film tax reliefs in that year is estimated at a further £70 million. The decision in Budget 2002 to restrict eligibility to British feature films intended for cinema release will reduce the amount of relief in 2004–05 by £295 million.

  Family Income (South-west)
  Jim Knight
  To ask the Chancellor of the Exchequer what estimate he has made of the number of people in the south-west who will be affected by his measures to support lower and middle income families. [53582]

  Dawn Primarolo
  There are 575,000 families with children in the south-west. Around 90 per cent. of these families will be eligible for the child tax credit, which together with child benefit will deliver up to £54.25 in support for the first child from April 2003. There are currently 105,000 families with children in the south-west benefiting from the working families' tax credit.

  Landfill Tax
  Sue Doughty
  To ask the Chancellor of the Exchequer what the total cost to the Treasury will be(a) at the outset of its introduction and (b) projected in the next three years of the landfill tax. [53720]
  343W
  Mr. Boateng
  The landfill tax was introduced on 1 October 1996 and raised £0.4 billion in its first full year. The projected revenue from the landfill tax was published on 17 April in the Financial Statement and Budget Report 2002. The administrative cost of collecting the landfill tax is less than £2 million per annum.

  Smuggling
  Paul Flynn
  To ask the Chancellor of the Exchequer what his estimate is of the percentage of(a) alcohol, (b) tobacco and (c) pornographic material that escaped detection and was imported illegally into the United Kingdom in each of the past three years.[54817]

  Mr. Boateng
  Customs latest figures for the revenue value of detected alcohol and tobacco fraud and smuggling are for 2000–01 and are contained in Customs annual report for that year.

  Customs latest estimates for the revenue loss and illicit market shares arising from all forms of alcohol and tobacco fraud were published in the documents "Tackling Indirect Tax Fraud" and "Measuring Indirect Tax Fraud" at the time of the pre-Budget report in November 2001. They also contain the most recently published figures for Customs cigarette seizures.

  Customs have no estimates of the total amount of pornographic material illegally imported into the UK.

  Limited Companies
  Mr. Flight
  To ask the Chancellor of the Exchequer if it is his policy to encourage small firms to become limited companies; and if he will make a statement. [55084]

  Mr. Boateng
  Government policy is to stimulate enterprise and entrepreneurship in its various forms, and not to support one group of businesses over another. Both incorporation and non-incorporation offer a range of benefits to small businesses. The choice as to whether to incorporate or not is influenced by multiple factors, many of which are firm-specific. for example the personal circumstances of the owner(s). The Government take the view that businesses themselves are best placed to assess the relative benefits of different legal structures, and to decide which is most appropriate for them.

  Development Taxation
  Ms Shipley
  To ask the Chancellor of the Exchequer what plans he has to equalise taxes levied on brownfield sites with those levied on greenfield sites. [55179]

  Mr. Boateng
  The Government introduced a 150 per cent. accelerated payable tax credit in Budget 2001 for owners and investors for the costs they incur in cleaning up contaminated sites. This measure will make the development of these sites more viable. There are no other differences in the tax treatment of brownfield and greenfield sites.

  Statutory Instruments
  Barbara Follett
  To ask the Chancellor of the Exchequer when proposed drafts of the statutory instruments regarding the working tax credit and the child tax credit will be made available.[55840]
  344w
  Dawn Primarolo
  As part of the on-going consultation about the proposed new child tax credit and working tax credit and to inform debate on the Tax Credits Bill, copies of a number of draft statutory instruments have today been placed in the Libraries of both Houses. A memorandum has been prepared by the Inland Revenue and the Department for Work and Pensions to accompany these drafts, copies of which have also been placed in the Libraries.

  The draft statutory instruments have been prepared by the Inland Revenue and the Department for Work and Pensions. Together they contain proposals for the definition of income for the purposes of the new tax credits, detailed rules about entitlement to those credits and their proposed structure, and the arrangements for paying the credits to claimants. They also set out proposed changes to social security legislation in consequence of the introduction of the new credits.

  Drafts of further statutory instruments will be made available in due course.

  Correspondence
  Mr. Salmond
  To ask the Chancellor of the Exchequer when he will reply to the letter dated 1 April from the hon. Member for Banff and Buchan regarding the Royal Scottish Geographical Society. [55165]

  Mr. Boateng
  I did so on 30 April and am sending a copy of my letter to the hon. Member.

HEALTH

  "Information for Health"
  Dr. Evan Harris
  To ask the Secretary of State for Health, pursuant to his answer to the hon. Member for South Derbyshire (Mr. Todd) on 11 March 2002,Official Report, column 806W, if he will publish the report commissioned from Professor Protti by the Information Policy Unit and the NHS Information Authority on issues of implementing "Information for Health".[44054]

  Mr. Hutton
  The report from Professor Protti is still under consideration. It is informing the preparation of the delivery plan for information and information technology that the Department is preparing as part of taking forward "Delivering the NHS Plan", published in April 2002. Professor Protti's report will be published later in the year.

  Emergency Care
  Mr. Cummings
  To ask the Secretary of State for Health what cash allocations have been made under the reforming emergency care accident and emergency nurse allocation for 2002–03 to each acute NHS trust in the northern region; upon what basis the allocations have been made; and which trusts are involved in PFI programmes. [47430]

  Mr. Hutton
  I refer my hon. Friend to the reply I gave him on 29 April 2002,Official Report, column 622W.

  Performance Assessment Framework
  Dr. Fox
  To ask the Secretary of State for Health how the Performance Assessment Framework assimilates patients' views on(a) food and (b) other issues. [47005]

  Jacqui Smith
  The Performance Assessment Framework is based on a balanced scorecard, which allows organisations to get a rounded view of performance. The framework highlights a number of areas of performance, including patient/carer experience.

  The framework is supported by a set of national NHS performance indicators. The indicators published in February 2002 included a number of measures of patient/carer experience, including an indicator of hospital cleanliness and information on the handling of complaints. We are currently developing indicators to reflect patients' views, based on comprehensive surveys, initially of acute in-patients, on food and other issues that are of importance to them.

  Primary Care
  Dr. Fox
  To ask the Secretary of State for Health how much investment in primary care facilities there has been since the publication of the NHS National Plan. [47018]

  Mr. Hutton
  Audited health authority finance returns for the years 1999 to 2001 show that a total of £661 million was spent on general medical services primary care premises in that period. Spend on premises used by personal medical services pilot providers is not identified in these returns.

  Private Finance Initiative
  Mr. Bercow
  To ask the Secretary of State for Health what estimate he has made of the total savings to public funds of the Private Finance Initiative contract for the Fulbourn School of Nursing by comparison with a non-Private Finance Initiative alternative. [49545]

  Mr. Hutton
  The business case justifying the individual schemes estimating the net savings in present value terms (ie all future costs and benefits discounted to their present values) compared with publicly funding the scheme is shown in the table.

  Net present costs of PSC v. PFI option

  Trusts

  Eastern regional office/Fulbourn

  PFI (£000)

  14,449

  Public (£000)

  20,254

  Savings in net present value terms (£000)

  5,805

  Difference %

  29

  Department of Health Vacancies Survey, March 2001—vacancies in NHS trusts by region and health authority areas1, occupational therapists

  Three month vacancy:

  Staff in post:

  Rates (percentage)

  Numbers

  (Wte)

  (hc)

  England

  4·1

  480

  11,180

  13,130

  Northern and Yorkshire

  4·6

  70

  1,430

  1,640

  Bradford HA

  7·5

  10

  120

  140

  County Durham and Darlington HA

  3·6

  0

  80

  90

  East Riding and Hull HA

  6·7

  10

  100

  110

  Gateshead and South Tyneside HA

  5·7

  10

  80

  90

  Generic Drugs
  Adam Price
  To ask the Secretary of State for Health (1) what representations his Department has received from(a) Generics UK, (b) Kent Pharmaceuticals, (c) Regent-GM Laboratories, (d) Goldshield Group, (e) Norton Healthcare and (f) Ranbaxy UK regarding generic drugs in the past five years; [50705]

  (2) what meetings his Department has had with (a) Generics UK, (b) Kent Pharmaceuticals, (c) Regent-GM Laboratories, (d) Goldshield Group, (e) Norton Healthcare and (f) Ranbaxy UK to discuss generic drugs in the past five years. [50706]

  Mr. Hutton
  As part of routine business the Department meets with pharmaceutical industry trade associations and individual pharmaceutical companies including Generics UK Ltd.. Kent Pharmaceuticals Ltd., Regent-GM Laboratories Ltd., Goldshield Group Plc, Norton Healthcare Ltd. (a subsidiary of Ivax Corporation) and Ranbaxy (UK) Ltd. (a subsidiary of Ranbaxy Laboratories Ltd.) on a regular basis to discuss a range of issues including those relating to licence applications; product safety issues; leaflets and labelling and intellectual property.

  In April 2000 the Government introduced a maximum price scheme for controlling the price of specified generic medicines. This was rolled forward in October 2001 and has resulted in annual savings in expenditure of generic medicines in the order of £330 million. In addition, in July 2001 the Department issued a consultation paper on proposals for NHS controls over the future supply and pricing of NHS generic medicines. In compliance with best practice these initiatives required that information and opinions be sought from those companies and organisations affected by the Department's initiatives. Accordingly officials met with and received representations from many interested parties, including Generics UK, Kent Pharmaceuticals, Regent-GM Laboratories, Norton Healthcare/Ivax and Ranbaxy UK.

  Occupational Therapists
  Lembit Öpik
  To ask the Secretary of State for Health how many unfilled vacancies for occupational therapists there are in each health authority in England and Wales; and if he will make a statement. [52874]

  Mr. Hutton
  The number of occupational therapists employed in the NHS increased by 2,390 (20 per cent.) between 1997 and 2001.

  The information requested is shown in the table.
  347W

  Department of Health Vacancies Survey, March 2001—vacancies in NHS trusts by region and health authority areas1, occupational therapists

  Three month vacancy:

  Staff in post:

  Rates(percentage)

  Numbers

  (wte)

  (hc)

  Leeds HA

  5.0

  10

  170

  200

  Newcastle and North Tyneside HA

  2.2

  0

  110

  120

  North Cumbria HA

  6.3

  0

  60

  70

  Northumberland HA

  6.9

  10

  90

  110

  Sunderland HA

  0.0

  0

  40

  40

  Tees HA

  4.2

  10

  140

  150

  Wakefield HA

  7.5

  10

  120

  130

  North Yorkshire HA

  1.2

  0

  160

  210

  Calderdale and Kirklees HA

  2.5

  0

  150

  170

  Trent

  3.0

  40

  1,230

  1,420

  Barnsley HA

  6.2

  0

  50

  50

  North Derbyshire HA

  4.0

  0

  100

  120

  Southern Derbyshire HA

  0.7

  0

  140

  170

  Doncaster HA

  8.3

  10

  90

  110

  Leicestershire HA

  0.0

  0

  210

  240

  Lincolnshire HA

  4.6

  0

  80

  100

  North Nottinghamshire HA

  2.5

  0

  80

  90

  Nottingham HA

  2.1

  0

  210

  240

  Rotherham HA

  6.6

  10

  110

  120

  Sheffield HA

  0.0

  0

  150

  170

  South Humber HA

  13.0

  0

  20

  20

  West Midlands

  4.1

  50

  1,090

  1,260

  Birmingham HA

  2.7

  10

  240

  270

  Coventry HA

  5.3

  0

  60

  70

  Dudley HA

  4.4

  0

  70

  80

  Herefordshire HA

  0.7

  0

  40

  50

  Sandwell HA

  4.1

  0

  50

  50

  Shropshire HA

  3.0

  0

  100

  120

  Solihull HA

  2—

  2—

  2—

  2—

  North Staffordshire HA

  5.5

  10

  130

  150

  South Staffordshire HA

  5.1

  10

  90

  110

  Walsall HA

  15.0

  10

  40

  40

  Warwickshire HA

  5.5

  0

  80

  100

  Wolverhampton HA

  4.8

  0

  70

  80

  Worcestershire HA

  0.7

  0

  120

  150

  North West

  4.8

  80

  1,470

  1,710

  South Lancashire HA

  2.5

  0

  70

  100

  Liverpool HA

  0.0

  0

  70

  80

  Manchester HA

  2.7

  10

  130

  150

  Morecambe Bay HA

  0.0

  0

  70

  90

  St. Helens and Knowsley HA

  2.8

  0

  50

  50

  Salford and Trafford HA

  0.7

  0

  140

  160

  Sefton HA

  4.4

  0

  70

  70

  Stockport HA

  0.0

  0

  50

  70

  West Pennine HA

  3—

  3—

  3—

  3—

  Bury and Rochdale HA

  5.4

  0

  50

  60

  North Cheshire HA

  2.7

  0

  90

  100

  South Cheshire HA

  1.0

  0

  90

  130

  East Lancashire HA

  4.8

  10

  100

  120

  North West Lancashire HA

  4.8

  10

  150

  180

  Wigan and Bolton HA

  3.7

  10

  130

  150

  Wirral HA

  1.0

  0

  100

  120

  Eastern

  2.9

  30

  1,050

  1,270

  Bedfordshire HA

  1.0

  0

  100

  130

  North Essex HA

  1.4

  0

  210

  250

  South Essex HA

  2.2

  0

  130

  150

  Suffolk HA

  0.0

  0

  130

  160

  East and North Hertfordshire HA

  4.2

  0

  50

  60

  West Hertfordshire HA

  4.1

  0

  60

  80

  Cambridgeshire HA

  5.6

  10

  170

  200

  Norfolk HA

  4.3

  10

  210

  250

  348W 349W

  Department of Health Vacancies Survey, March 2001—vacancies in NHS trusts by region and health authority areas1, occupational therapists

  Three month vacancy:

  Staff in post:

  Rates(percentage)

  Numbers

  (wte)

  (hc)

  London

  7.0

  130

  1,730

  1,940

  Hillingdon HA

  8.7

  0

  30

  30

  Kensington, Chelsea and Westminster HA

  2.8

  0

  140

  150

  Enfield and Haringey HA

  0.0

  0

  120

  140

  Redbridge and Waltham Forest HA

  7.7

  10

  100

  110

  Bexley and Greenwich HA

  10.7

  10

  80

  100

  Bromley HA

  9.2

  0

  20

  30

  Croydon HA

  10.2

  0

  40

  40

  Kingston and Richmond HA

  0.0

  0

  60

  80

  Lambeth, Southwark and Lewisham HA

  10.3

  30

  230

  250

  Merton, Sutton and Wandsworth HA

  4.9

  10

  200

  240

  Barking and Havering HA

  10.0

  10

  110

  120

  Barnet HA

  2—

  2—

  2—

  2—

  Brent and Harrow HA

  12.9

  10

  70

  80

  Camden and Islington HA

  6.2

  10

  150

  170

  Ealing, Hammersmith and Hounslow HA

  6.6

  10

  190

  220

  East London and The City HA

  8.2

  20

  140

  150

  South East

  3.9

  70

  1,790

  2,190

  Berkshire HA

  2.5

  0

  120

  150

  Buckinghamshire HA

  3.4

  10

  170

  230

  East Kent HA

  1.1

  0

  170

  200

  West Kent HA

  9.2

  20

  160

  200

  East Surrey HA

  2.4

  0

  120

  140

  West Surrey HA

  7.2

  10

  170

  210

  East Sussex, Brighton and Hove HA

  3.1

  10

  170

  200

  West Sussex HA

  5.3

  10

  170

  210

  Northamptonshire HA

  0.5

  0

  100

  130

  Oxfordshire HA

  5.2

  10

  150

  180

  North and Mid Hampshire HA

  0.9

  0

  70

  90

  Portsmouth and South East Hampshire HA

  2.8

  0

  90

  110

  Southampton and South West Hampshire HA

  0.8

  0

  120

  150

  Isle of Wight HA

  16.4

  0

  20

  20

  South West

  1.2

  20

  1,290

  1,590

  Somerset HA

  0.6

  0

  100

  130

  South and West Devon HA

  1.9

  0

  160

  180

  Wiltshire HA

  2.2

  0

  130

  160

  Avon HA

  2.6

  10

  280

  360

  Cornwall and Isles of Scilly HA

  0.0

  0

  90

  110

  Dorset HA

  0.2

  0

  220

  270

  North East and Devon HA

  0.6

  0

  160

  200

  Gloucestershire HA

  0.0

  0

  150

  180

  Special HAs

  3.4

  0

  100

  100

  1Vacancy and staff in post numbers are rounded to the nearest 10.

  2 Figures where sum of staff in post and vacancies is less than 10.

  3Figures where previously published, where the trusts have advised that the figures supplied were incorrect.

  Notes:

  1. Three month vacancies are vacancies as at 31 March 2001 which trusts are actively trying to fill, which had lasted for three months or more (whole time equivalents).

  2. Three month vacancy rates are three month vacancies expressed as a percentage of three month vacancies plus staff in post from the September 2000 medical and dental and non-medical work force censuses (whole time equivalent).

  3. Percentages are rounded to one decimal place.

  4. Totals may not equal sum of component parts due to rounding.

  5. HA figures are based on trusts, and do not necessarily reflect the geographical provision of health care.

  6. Due to the way vacancy data have been collected it has sometimes been necessary to provide combined vacancy data information for certain trusts.

  7. Due to combined vacancy data being used and rounding calculating the vacancy rates using the above data may not equal the actual vacancy rates.

  8. Figures may not match previously published data due to a different method of rounding used on the staff in post data.

  NHS Wages
  Ross Cranston
  To ask the Secretary of State for Health what the average annual increase in NHS wages and salaries has been for(a) doctors, (b) nurses and (c) ancillary staff in each of the last 10 years. [52998]
  350W
  Mr. Hutton
  The table sets out the general pay increase for hospital doctors, nurses and ancillary staff in each of the last 10 years. Additional amounts may have been awarded for particular grades or sub-groups of staff in particular years. The figures for nurses and ancillary staff for 1995–96 and 1996–97 are estimates as these included an element of local pay.
  351W

  Percentage

  Hospital doctors

  Nurses

  Ancillary staff

  1993–94

  1.5

  1.5

  1.5

  1994–95

  3.0

  3.0

  239

  1995–96

  2.5

  3.0

  3.0

  1996–97

  3.8

  2.8

  2.8

  1997–98

  3.4

  3.3

  3.3

  1998–99

  4.2

  3.8

  3.8

  1999–2000

  3.5

  4.7

  3.0

  2000–01

  3.3

  3.4

  3.25

  2001–02

  3.9

  3.7

  3.7

  2002–03

  3.6

  3.6

  3.6

  Cancer
  Dr. Fox
  To ask the Secretary of State for Health what the estimated cost was of treating sun-induced skin cancers in the last year. [53012]

  Yvette Cooper
  The Department does not collect figures on the cost of NHS services in a way that enables an accurate figure to be calculated for the cost of a particular disease.

  Mr. Paul Marsden
  To ask the Secretary of State for Health if he will ask NICE to review its decision on the use of irinotecan and oxaliplatin in treating bowel cancer patients. [52971]

  Mr. Hutton
  I understand that National Institute of Clinical Excellence (NICE) has recommended that irinotecan and oxaliplatin should be used in specific clinical circumstances. We set up NICE to give authoritative guidance on when it is clinically and cost effective to use drugs and other treatments. NICE has undertaken a full appraisal of irinotecan, oxaliplatin and raltitrexed and has also considered an appeal against its initial decision. In the light of this, I do not expect NICE to review its decision except as part of its usual processes. The review will take place in April 2005, or earlier if significant new evidence becomes available.

  Missed Appointments
  Dr. Evan Harris
  To ask the Secretary of State for Health what percentage of(a) in-patient and (b) outpatient appointments were missed in each of the last six years.[53369]

  Mr. Hutton
  The number of patients who did not attend consultant out-patient appointments from 1995–96 to 2000–01 are shown in the table. Information up to quarter 2 of 2001–02 is available on the Department's website www.doh.gov.uk/hospitalactivity.

  Total out-patient appointments

  Total attendances

  Total DNAs

  Percentage DNAs

  1995–96

  45,578,990

  40,117,691

  5,461,299

  12.0

  1996–97

  46,380,294

  40,872,769

  5,507,525

  11.9

  1997–98

  47,264,698

  41,635,269

  5,629,429

  11.9

  1998–99

  47,803,368

  42,154,397

  5,648,971

  11.8

  1999–2000

  48,923,209

  43,040,699

  5,882,510

  12.0

  2000–01

  49,524,159

  43,569,340

  5,954,819

  12.0

  Note:

  Did Not Attends (DNAs) are counted for those patients who gave no advance warning for their non attendance.

  Source:

  Department of Health form KH09
  352W
  As part of the NHS plan all out-patient appointments will be pre-booked by the end of 2005. Patients will be able to choose a date and time for their appointment that is convenient for them. Booking systems, where introduced, have proven to significantly reduce numbers of patients failing to turn up for appointments.

  The number of patients who did not attend consultant in-patient appointments from 1995–96 to 2000–01 is shown in the table.

  Patients admitted

  Patients failed to attend

  Failed to attend rate (percentage)

  1995–96

  3,500,353

  207,515

  5.60

  1996–97

  3,549,073

  223,255

  5.82

  1998–99

  3,826,507

  171,382

  4.30

  1999–2000

  3,682,180

  146,599

  3.83

  2000–01

  3,467,338

  125,860

  3.50

  Note:

  Data for 1997–98 is not available

  Source:

  Department for Health form KHO6

  Consultants' Remuneration
  Paul Flynn
  To ask the Secretary of State for Health what were the percentage changes in(a) consultants' NHS remuneration and (b) total consultants' remuneration in each of the past five years. [54016]

  Mr. Hutton
  Table 1 sets out the general pay increase for consultants in each of the last five years.

  The majority of consultants earn additional money from the national health service for extra duties. The size of this additional income varies by speciality, by age and geographic location. Table 2 shows the increase in total NHS earnings August 1998 and August 2000.

  The Department does not collect or hold detailed information about private practice.

  Table 1

  Hospital doctors(percentage)

  Bottom of consultant scale(£)

  Top of consultant scale (£)

  1998–99

  4.2

  44,780

  57,800

  1999–2000

  3.5

  47,345

  61,605

  2000–01

  3.3

  48,905

  63,640

  2001–02

  3.9

  50,810

  66,120

  2002–03

  3.6

  52.640

  68,505

  Note:
  A DDRB recommendation in 1999–2000 recommended a further £50 million be allocated annually to consultants to recognise work load, intensity and contribution to the NHS.

  Table 2

  1998

  1999

  2000

  Earnings per contract (£)

  59,300

  63,200

  65,400

  Increase over previous year(percentage)

  —

  6.7

  3.4

  Earnings per wte (£)

  65,100

  69,300

  72,100

  Increase over previous year(percentage)

  —

  6.4

  4.1

  Note:

  The data in Table 2 are taken from the NHS Earnings survey (sample based).

  Smallpox Vaccine
  Mr. Kevan Jones
  To ask the Secretary of State for Health if the specification for the smallpox vaccine stated that the vaccine to be provided had to be the Lister strain. [53931]

  Mr. Hutton
  The Lister strain was specified as the vaccine strain required and all the companies with which the Department had discussions were made fully aware of this.

  Ministerial Accommodation
  Mr. Evans
  To ask the Secretary of State for Health what publicly owned accommodation is made available to him in his official role; how many nights he has been in residence at each of these properties in the last 12 months; and what the total cost was of maintaining each of these properties in the last 12 months. [55102]

  Ms Blears
  None.

  Ashford and St. Peter's Hospital NHS Trust
  Mr. Wilshire
  To ask the Secretary of State for Health if he will make a statement on his plans to franchise the post of chief executive at the Ashford and St. Peter's Hospital NHS Trust. [55042]

  Ms Blears
  My right hon. Friend the Secretary of State for Health announced on 8 May 2002 that the franchise for Ashford and St. Peter's Hospitals NHS trust had been awarded to Mr. Andrew Morris, with Mr. Glen Douglas the chief executive designate.

  Patient Transport Facilities
  Mr. Breed
  To ask the Secretary of State for Health what proportion of patients travelled by(a) bus, (b) train, (c) private transport and (d) other forms of transport to their (i) GP, (ii) dental and (iii) hospital appointment in (A) 1991, (B) 2000 and (C) 2001. [46455]

  Ms Blears
  [holding answer 15 April 2002]: This information is not held centrally.

  International Recruitment
  Mr. Burstow
  To ask the Secretary of State for Health, pursuant to his answer of 8 March 2002, Official Report, column 163W, on international recruitment, which agencies have not adhered to the code of practice for(a) internationally qualified medical staff and (b) other healthcare professionals. [50077]

  Mr. Hutton
  [holding answer 17 April 2002]: There are no plans to publish the names of the international recruitment agencies dealing with internationally qualified medical staff and other healtcare professional agencies who have failed to adhere to the code of practice. Trusts will be advised to refer to a list, due to be published shortly, of those agencies that are compliant with the code of practice before beginning the process of setting up new recruitment contracts.

  NHS Plan
  Sandra Gidley
  To ask the Secretary of State for Health what the total(a) cost and (b) distribution figure was of the NHS Plan-A Progress report 2000–01. [50806]

  Tim Loughton
  To ask the Secretary of State for Health what duties matrons are expected to undertake. [53301]
  354W
  Mr. Hutton
  [holding answer 18 April 2002]: The NHS Plan—A Progress Report 2000–01 was the first report of the Modernisation Board. It is a requirement of the Board's Terms of Reference that an annual report should be produced.

  The total cost of producing and distributing this document was £82,480. 22,000 copies of the report have been distributed.

  Matrons
  Mr. Hutton
  [holding answer 29 April 2002]: It is for employing organisations to specify the duties of matrons in job descriptions. Guidance was issued to the National Health Service in April 2001 as Health Service Circular 2001/010, 'Implementing the NHS Plan—Modem Matrons'.

  Medical Precautions
  Dr. Gibson
  To ask the Secretary of State for Health what precautions the Government plans to take in the event of(a) plague and (b) Ebola attack. [53898]

  Mr. Hutton
  [holding answer 2 May 2002]: My Department issued guidance to all health authorities and regional directors of public health on the procedures to be followed in the event of a deliberate release of plague and other biological agents, on 17 October. At the same time, guidance for medical and laboratory staff was issued by the public health laboratory service (PHLS) concerning the precautions to be adopted in the event of an outbreak of plague and other biological agents. This advice is available on the PHLS website:

  http://www.phls.co.uk/advice/smallpox guidelines.pdf

  Plague can be treated with antibiotics and the Department has a substantial stockpile of appropriate antibiotics that could be deployed in the event of an outbreak of plague following a terrorist attack.

  For Ebola, which is one of the viral haemorrhagic fevers. (VHF), guidance on the management and control of VHFs has already been produced by the advisory committee on dangerous pathogens. Further guidance on the action to be taken in the event of a deliberate release of a VHF has been drawn up by the PHLS and is being revised following review by the Viral Haemorrhagic Fever Working Group of the Advisory Committee on Dangerous Pathogens. There is no treatment for Ebola virus infection and patients are normally cared for in isolation facilities.

  The Chief Medical Officer has also written to general practitioners, and participated in a symposium at the Royal College of Physicians, for the medical profession.

  Correspondence
  Mr. Lloyd
  To ask the Secretary of State for Health when he will reply to the letter of 17 January from the hon. Member for Manchester, Central in relation to Mr. B. R., reference P0002718. [53933]

  Mr. Hutton
  [holding answer 2 May 2002]: A reply was sent on 9 May.

  Warrington PCT
  Helen Jones
  To ask the Secretary of State for Health, pursuant to the answer of 23 April 2002,Official Report, column 120W, how many applications were received for non-executive appointments to the board of Warrington PCT from each ward in Warrington; what percentage of applicants from each ward were interviewed; and what percentage of applicants from each ward were appointed. [54219]

  Jacqui Smith
  [holding answer 7 May 2002]: Information on the number candidates who applied, those interviewed and those appointed from each ward has been placed in the Library.

  Medicines Control Agency
  Mr. Bailey
  To ask the Secretary of State for Health if he will publish the high level targets for the Medicines Control Agency for 2002–03. [55480]

  Ms Blears
  The high level targets for the Medicines Control Agency are included in its Annual Business Plan, copies of which have been placed in the Library.

  NHS Staff
  Mr. Laurence Robertson
  To ask the Secretary of State for Health how many staff were employed by the NHS in(a) Gloucestershire and (b) England in each of the last five years for which figures are available. [54665]

  Mr. Hutton
  [holding answer 8 May 2002]: The number of staff working for the national health service in England and Gloucestershire for the last five years is as follows.

  An increase of 8.2 per cent. in Gloucestershire compared with an increase of 10 per cent. in England.
  356W

  NHS hospital and community health services (HCHS) and practice staff: All NHS staff employed within Gloucestershire HA and England as at 30 September each year

  England

  Gloucestershire HA

  Whole-time equivalents

  Headcount

  Whole-time equivalents

  Headcount

  1997

  849,450

  1,053,580

  8,750

  11,520

  1998

  858.520

  1,066,340

  8,980

  11,670

  1999

  876,880

  1,092,030

  9,150

  11,800

  2000

  896,200

  1,112,030

  9,500

  12,210

  2001

  935,060

  1,159,960

  9,820

  12,470

  Notes:

  1. Figures are rounded to the nearest 10.

  2. All practitioners included in the totals exclude GP retainers.

  3. All practice staff included in the total includes practice nurses, direct patient care, administration and clerical and other.

  4. All practitioners and GP practice staff are not directly employed by the NHS but work to contracts for the NHS.

  Sources:

  1. Department of Health Non-Medical Workforce Census.

  2. Department of Health Medical and Dental Workforce Census.

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

  Mr. Laurence Robertson
  To ask the Secretary of State for Health how many staff have been dismissed in the NHS in(a) Gloucestershire and (b) England in each of the last five years for which figures are available, broken down by (i) reasons for the dismissals and (ii) categories of employees; and if he will make a statement. [54664]

  Mr. Hutton
  [holding answer 8 May 2002]: The information requested is not collected centrally.

  David Davis
  To ask the Secretary of State for Health how many resignations, broken down by job description, there have been from NHS employment in Hull and the East Riding since 1 January 2001. [50612]

  Mr. Hutton
  The information requested is not collected centrally.

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Guildford.

Government Functions: Dispersal
Lord Brooke of Alverthorpeasked Her Majesty's Government:
What plans they have to transfer more government work from London and the South East to other parts of the United Kingdom with lower employment opportunities.
Lord Bassam of Brighton: My Lords, individual departments and agencies are free to make their own decisions about location and facilities on the basis of operational requirements and value for money. However, the existing dispersal of many Civil Service functions across the UK has worked well, and the Government believe that the administration of public service benefits from that national and regional diversity. The Government will continue to keep the matter under serious consideration and review.
Lord Brooke of Alverthorpe: My Lords, I thank my noble friend for that reply. In the past, governments faced with problems of recruitment and retention and housing shortages for civil servants have been prepared to undertake major reviews to identify blocks of work that could be shifted to the provinces to ease those problems. Have the Government considered doing that? If not, why not.
Lord Bassam of Brighton: My Lords, the noble Lord is right to say that, in the past, there were fundamental reviews. There has been a marked shift away from Civil Service employment in London and the South East region since 1976. The Government take such matters seriously, and I have no doubt that the noble Lord will be encouraged by some of the comments contained in today's White Paper on the development of our regions. We keep the matter under careful review all the time.
Lord Elliott of Morpeth: My Lords, does the Minister agree that modern communications technology has substantially removed the old distance problem? Does he also agree—I am sure that he will—that the North East benefited enormously from the movement by government and business to that region during a period of severe industrial change.
Lord Bassam of Brighton: My Lords, the noble Lord has anticipated my reply: we recognise those benefits. Modern communications make it much easier for outposts and departments located in other parts of the country to connect with headquarters departments
1258
located at the centre. There are economic benefits to be had from a policy of dispersal; those benefits have been widely appreciated over the past 25 years.
Lord Carlile of Berriew: My Lords, does the Minister agree that the slowness of British Telecom in taking broadband technology to rural parts of England and Wales is a serious inhibition to the transfer of high-value employment to those regions? Will the Government take steps to kick BT into spreading broadband technology at a faster rate.
Lord Bassam of Brighton: My Lords, the noble Lord has made an interesting contribution to the debate, even if he went a little wider than the Question. I am sure that what he said is relevant, and we take careful account of such matters.
Lord Campbell-Savours: My Lords, there was a row over the establishment of the national cattle traceability centre in Cumberland in 1998, when civil servants opposed the move. The noble Lord, Lord Rooker—then an agriculture Minister—overturned the recommendation made by the civil servants and moved the centre to Cumbria. Does not that show that, sometimes, civil servants' objections must simply be overruled.
Lord Bassam of Brighton: My Lords, the wisdom of the noble Lord, Lord Rooker, is widely appreciated in the House. I am sure that he was entirely right in what he did. Of course, operational considerations must be assessed in making such important decisions.
Lord Newby: My Lords, does the Minister agree that the state of the regional economies varies considerably? There is overheating in the South East and spare capacity in other regions. Although the RDAs and the proposals for regional government may be welcome for many reasons, one of the consequences of that policy is that every region looks to maximise its own growth. There is a lack of co-ordination in the dispersal of government functions throughout the country, and little thought is given at the centre of government to balancing regional economies.
Lord Bassam of Brighton: My Lords, I cannot agree that there is a lack of co-ordination. Our policies demonstrate that we are well co-ordinated. The noble Lord made the important point that regions are keen to promote themselves and ensure, rightly, that they get a fair share of the action and a fair slice of the cake.
Lord Campbell of Alloway: My Lords, does the Minister remember that the noble Lord, Lord Brooke of Alverthorpe, asked, "Why not?", in his supplementary question? The Minister does not appear to have answered the question.
Lord Bassam of Brighton: My Lords, I thought that I had answered the question. I apologise to your Lordships' House if I have not. My noble friend Lord Brooke of Alverthorpe made an important point

1259
about a matter that the Government consider carefully, in the light of operational needs and the pressures on each department.
The Earl of Northesk: My Lords, notwithstanding the Minister's assurance that the matter is kept assiduously under review, is it not the case that, on 9th January, the Deputy Prime Minister insisted that,
"no assessment has been made,"
of the scope for relocation of the executive functions of government departments.
Lord Bassam of Brighton: My Lords, my reply was not inconsistent with that. I am sure that the Deputy Prime Minister was speaking wisely, as he does at all times.
Lord Roberts of Conwy: My Lords, will not the proposals in today's White Paper make it more difficult to disperse work to different parts of the country? Each part that has a regional assembly, including London, will jealously guard its own employment.
Lord Bassam of Brighton: My Lords, reading the runes of government policy is something that we all do. In the light of the debate about regionalism and the importance of the regions, the noble Lord must reflect that the announcements made today will probably make things easier, rather than harder.

Consolidation Bills
3.13 p.m.
Lord Rentonasked Her Majesty's Government:
Which consolidation Bills will be considered by the Joint Committee on Consolidation Bills before 31st July this year.
The Parliamentary Secretary, Lord Chancellor's Department (Baroness Scotland of Asthal): My Lords, the Joint Committee on Consolidation Bills considered the European Parliamentary Elections Bill on 30th April. That will be the only consolidation Bill to be introduced before the Summer Recess. But the Government have also introduced legislation like the Land Registration Bill and support projects like the Tax Law Rewrite Project, which modernise legislation and bring it together in one Act, even though they are not pure consolidations.
Lord Renton: My Lords, I thank the noble Baroness for that reply so far as it goes. Will the Government persuade the Joint Committee to undertake much more consolidation? We should bear in mind the fact that Acts of Parliament which have been amended by other Acts are difficult for people to understand,
1260
including judges. For that reason, lack of consolidation leads to longer and more expensive cases in the courts.
Baroness Scotland of Asthal: My Lords, certainly I endorse what the noble Lord says with regard to the importance of consolidation. Indeed, in 1975 the noble Lord was himself one of the prime movers in highlighting that as an issue. Quite rightly, the noble Lord continues to draw attention to the problem today.
The importance of consolidation has not changed, but there are now many more ways in which people can keep up to date. Not the least of those is the fact that our legislation is now available online so that references can be made with the greatest of ease. Judges currently sitting in our courts are perhaps a little more familiar with IT procedures than they were in the past.
Baroness Nicol: My Lords, does my noble friend accept that there is a great need to consolidate a number of Bills dealing with environmental issues? I do not believe that any attempt has been made at consolidation since 1981. Recently we have passed a number of new Acts, making it extremely difficult for NGOs to understand the legislation. Will my noble friend look at this problem? Not only is it time consuming and confusing for people outside; it is also very expensive.
Baroness Scotland of Asthal: My Lords, I have been happy to accept that consolidation in general is a consummation devoutly to be wished. However, priority has to be given to legislation which forms a part of the Government's agenda and is of the greatest importance to the citizens of our country. When one looks at matters of consolidation in relation to other issues, one can see that priority has been given to the correct kinds of legislation, certainly in this Session and every Session since 1997.
Lord Brightman: My Lords, is the Minister aware that the Social Security Administration Act 1992 has been amended by no fewer than 18 Acts of Parliament? In Part VI, dealing with enforcement, every single one of the original sections has either been repealed or amended, while 14 new sections have been added. However, there is still no consolidation in sight. Is this legislative quagmire acceptable.
Baroness Scotland of Asthal: My Lords, the noble and learned Lord is always right in terms of detail. His strictures aimed at the Government in relation to other matters have been taken on board. Thus, in the most recent legislation to come before the House, the noble and learned Lord will see that the cross-referencing to which he usually refers has been assiduously applied. In relation to the particular Bill he mentioned, I can say no more than that we shall continue to ensure clarity. I can confirm that this is one area where we shall continue with our endeavours.
Lord Goodhart: My Lords, I believe that the noble Baroness and the noble and learned Lord, Lord

1261
Falconer of Thoroton, sat through the proceedings on the Commonhold and Leasehold Reform Bill, as I did. Does she agree that, over the years, leasehold legislation has become completely chaotic and that this area is a prime target for consolidation.
Baroness Scotland of Asthal: My Lords, I certainly agree that the Commonhold and Leasehold Bill was a line piece of legislation. We did much to consolidate the position in this area, as well as reforming and refreshing the law. However, I must accept that there is still more to be done. I am sure that the noble Lord will join me in saying that the Land Registration Bill was a fine piece of work. In that Bill we pulled together 77 years-worth of reform and amendment in one piece of legislation. I am sure that that exercise also gave pleasure to the noble Lord, Lord Renton.
Lord Hughes of Woodside: My Lords—
Lord Peyton of Yeovil: My Lords—
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, yet again I believe that it is the turn of the noble Lord, Lord Peyton.
Lord Peyton of Yeovil: My Lords, twice. Does the noble Baroness not agree that almost total incomprehensibility is not to be regarded as a virtue in legislation? If the noble Baroness requires a little light reading, or something to put her to sleep at night, she should take a look at either the Police Reform Bill or the legislation concerned with the National Health Service—both presently before Parliament. I think that she will find in both of them a cure for insomnia and will have to acknowledge that both are monuments to incomprehensibility.
Baroness Scotland of Asthal: My Lords, I understand the point being made by the noble Lord, but I should stress that both Bills must pass through this House and through the other place. If I have learnt only one thing, it is the contrast between the incomprehensibility of a Bill coming to this House and its greatly improved state when it leaves. If a Bill is incomprehensible, I would say to noble Lords, "We have more work to do".
Lord Hughes of Woodside: My Lords, is it not the case that the problem is not consolidation of legislation, but the frequency with which it is amended.
Baroness Scotland of Asthal: My Lords, of course amendment is not always in the Government's hands. However, when something needs to be fixed, it is the duty of the Government to ensure that that is done. It is a duty which we have sought to discharge with energy, precision and effectiveness.
Lord Cope of Berkeley: My Lords, I am sure we are all grateful to the Minister for complimenting the House on the amendments it has made to legislation
1262
recently. Having said how important consolidation is, can she remind us just how poor the record of the Government is by telling us how few consolidation measures they have initiated by comparison with the previous government.
Baroness Scotland of Asthal: My Lords, I do not accept the premise as the number of consolidation Bills does not in fact reflect the amount of reform and consolidation that has taken place. I have mentioned the reform and consolidation inherent in Bills such as the Land Registration Bill and the Commonhold and Leasehold Reform Bill. I can tell your Lordships that between 1997 and 1998 there were two measures, the Petroleum Act and the Audit Commission Act. Between 1999 and 2000 there was the Powers of Criminal Courts (Sentencing) Act. I am sure the House will not want me to tire it with all the other Bills that this House and the other place have managed to pass in the past five years, all of which were of great importance to our country and our citizens.
Lord Wedderburn of Charlton: My Lords, would my noble friend—
Lord Williams of Mostyn: My Lords, it is time for the next Question.

Urban Green Spaces
3.22 p.m.
Baroness Greengrossasked Her Majesty's Government:
What plans they have to implement the conclusions of the Urban Green Spaces Task Force report.
The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): My Lords, the Urban Green Spaces Task Force published its final report on 7th May, Green Spaces, Better Places. We plan to announce our response to the conclusions and recommendations of the report in July.
Baroness Greengross: My Lords, I thank the noble and learned Lord the Minister for that reply. I was particularly heartened that greater efforts are to be made to engage with young people to use urban green spaces better. I also welcome the efforts of the Children's Play Council in this regard and the report that it published on 7th May entitled More than Swings and Roundabouts.
What further support do the Government intend to give to involve young people in regenerating their parks and play areas and, particularly important to me, what are the ways in which we might promote inter-generational partnership? I should declare an

1263
interest as chair of the Experience Corps, which is a government-supported initiative to involve many more people of 50 and over in volunteering.
Lord Falconer of Thoroton: My Lords, I am grateful to the noble Baroness for mentioning the Experience Corps, of which she is the chair, and which will make a major contribution to engaging older people in volunteering. As regards engaging younger people in the use of green spaces, what is at the heart of both Green Spaces, Better Places and the current cross-cutting review into public space in the context of the Comprehensive Spending Review is that, if the quality of existing green spaces and parks is improved, more people will use them. That is achieved by focusing on who is responsible for keeping them in proper condition and making them much more accessible to young and old alike. That is the process in which we are engaged; we are looking at the recommendations in this report and at those in the cross-cutting review.
Lord Greaves: My Lords, Green Spaces, Better Places is the normal sort of tongue-twister with which we have to deal in titles of reports nowadays. However, on first looking through the report, I congratulate its authors on what appears to be an extremely valuable and useful contribution to the vital green spaces in our towns and cities. Would the Minister agree with what appears to be a vital part of the report, that during the next five years a capital contribution of £0.5 billion will be required,
"to begin reversing the decline of urban parks and green spaces and to create new good-quality ones".
I repeat, £0.5 billion pounds over five years. In the Government's response to the report, will they not only agree to find ways of contributing that money, but also find ways to reverse the catastrophic decline in revenue spending on parks which has taken place over most of the past 50 years in the face of dramatic cuts in, and pressure on, local government spending.
Lord Falconer of Thoroton: My Lords, I thank the noble Lord for his welcome for the report, which makes a number of very important suggestions. He is absolutely right that it calls for £500 million more to be spent over the next five years, and it also calls for partnership arrangements in relation to parks which will improve delivery arrangements and park maintenance. As the noble Lord will understand, I am not in a position to give any indication about what the response to that report may be, but I can tell him that the response will come in July.
Baroness Hamwee: My Lords, the Minister appears to have acknowledged that maintaining open spaces costs money. Would he take back the need for clear advice on the use of planning gain to fund the maintenance of open spaces.
Lord Falconer of Thoroton: My Lords, planning gain is a useful way of ensuring that funds are available for the maintenance of parks in certain cases. Just as
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important is the design of public buildings and public parks because that contributes hugely to the quality of the parks and the ability to maintain them. The planning system has a very important role to play in the matter raised by the noble Baroness, Lady Hamwee, and in relation to the design of parks.

Zimbabwe
3.26 p.m.
Lord Freemanasked Her Majesty's Government:
How they intend to respond to President Mugabe's declaration of a "state of disaster" in Zimbabwe.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the Government of Zimbabwe have been slow to recognise the food crisis and to declare a state of disaster. The Department for International Development saw potential for crisis last year, arising from complex causes including the Zimbabwe Government's ill-managed land reform programme. The situation has now been exacerbated by drought. DfID commenced supplementary feeding programmes through non-governmental organisations in September 2001 and is currently delivering assistance to around 400,000 poor Zimbabweans.
Lord Freeman: My Lords, I am grateful to the Minister for that reply. Will she accept that, although drought is certainly one factor, some of the causes of the food shortage and possible famine are man-made and are the responsibility of the Zimbabwean regime; for example, the illegal seizure of farm land and the failure to replant? Will the Minister ensure that emergency aid is given direct to the people of Zimbabwe and not through the present regime.
Baroness Amos: My Lords, I thought that I made it absolutely clear in my original response that some of the responsibility rests on the Government of Zimbabwe, in particular on their land reform programme. Indeed, UNDP last year stressed that it thought that the land reform programme was not sustainable. As to the second question, our bilateral feeding programme uses local NGO networks, churches and schools for distribution and we avoid local government structures to mitigate against politicisation of that process. I am aware that there are concerns. We are concerned that it is difficult to screen out political selection under the World Food Programme process. It is an area which we have picked up with the World Food Programme and which we shall monitor.
Lord Shutt of Greetland: My Lords, does the Minister agree that the lack of fuel in Zimbabwe may

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be another reason why food, which must be given as humanitarian aid, cannot be brought to the people who deserve it.
Baroness Amos: My Lords, I agree. Distribution is a problem, not only in Zimbabwe but in other parts of southern Africa which are also facing a crisis in terms of food availability.
Lord Blaker: My Lords, is the conference between Zanu-PF and the M DC, planned for next week on the initiative of President Mbeki and President Obasanjo, still expected to take place? If so, would not one Of the most important issues for discussion be precisely the deplorable agricultural situation? On the commercial farms in particular, it is reported that many animals are suffering very badly and that production has fallen catastrophically.
Baroness Amos: My Lords, the next meeting is due to take place on Monday, 13th May. As noble Lords know, these meetings are being held under the auspices of the governments of Nigeria and South Africa. I do not know the agenda for that meeting but I am aware that there are concerns about the growing economic crisis in Zimbabwe. I anticipate that this is one of the issues that particularly the Government of South Africa will want to see addressed.
Lord Astor of Hever: My Lords, do not the Human Rights Forum's shocking statistics—55 deaths and 960 incidents of torture from politically motivated violence between January and April—show what an unsuitable channel for aid is Mr Mugabe and his cronies.
Baroness Amos: My Lords, noble Lords will know that we have condemned all acts of violence in Zimbabwe. We are concerned that there continues to be harassment and violence, particularly towards the opposition. That is why we channel our aid through NGOs. As I said in response to the noble Lord, Lord Freeman, we are working with the World Food Programme, which is using local structures, including the chiefs structure, to ensure that any kind of complaint is investigated. If the problems continue, the World Food Programme will consider suspending food aid in those particular areas. We all hope that it will not come to that.
The Lord Bishop of Guildford: My Lords, does the Minister accept that the real disaster in Zimbabwe is the gross abuse of political power and that its victims are the institutions of law and order, religion, culture, the media and the very structures of society that make for any civilised community? Does she further accept that until those issues are addressed there is not a great deal that we can do except ameliorate some of the problems.
Baroness Amos: My Lords, I agree with the right reverend Prelate that it is important that the institutions of law and order, culture, the media,
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freedom of expression and human rights should be seen to be observed in Zimbabwe. We have all expressed concern about that. But, as I have said repeatedly in the House, we are dealing with an independent state which, given the economic crisis facing Zimbabwe, clearly does not put the concerns of its own citizens before its need for political power.
Lord Acton: My Lords, I believe my noble friend gave a figure of £400,000. In view of the state of the disaster, is this figure being kept under review and is there any chance of it being increased.
Baroness Amos: My Lords, I apologise if I said £400,000; it is 400,000 people. We have committed £6 million for feeding programmes and emergency medical supplies through the UN system.
Lord Avebury: My Lords, has the Minister noted the reports of starvation in Matabeleland in particular? Is she satisfied that by arranging for the distribution of aid through the NGO community an even and fair distribution will occur as between Matabeleland and the rest of the country? Can she say what are the implications for Zimbabwe of the general drought and shortage of foodstuffs in southern Africa as a whole? Will that issue be considered at the G8 summit in June and discussed with NePAD on that occasion.
Baroness Amos: My Lords, we and the World Food Programme have people on the ground carrying out assessments. The channelling of money and food for distribution is across the board in Zimbabwe. The noble Lord, Lord Avebury, is right. It is important that we look at all areas in Zimbabwe.
As to the impact on the region as a whole, there is a problem in that we have a food crisis in Malawi and in Lesotho as well as in Zimbabwe. There are shortages across the region. The price of grain has gone up considerably and there are distribution problems. I was at a meeting this morning where we were considering whether or not this issue would be raised in June as part of the G8 Africa action plan, but we have to await developments.
Baroness Sharpies: My Lords, is the Minister aware that a great deal of food aid is disappearing into the black market? I know that as a fact from a friend who lives there.
Baroness Amos: My Lords, we do not have evidence that food aid is disappearing in that way. As I said in response to the noble Lord, Lord 'Freeman, in our feeding programmes we use local NGO networks, churches and schools for distribution. There have been some isolated incidents of violence and intimidation against distribution workers and attempts by militia groups to affect the targeting of the food. In all cases where that occurred, feeding was suspended pending resolution of the difficulties. As to the World Food Programme, it is committed to investigating all reports, and to resolve them it has deployed additional

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programme and monitoring staff. Where serious abuse is confirmed it will suspend distribution if intervention at ministry level fails.
Lord Davies of Coity: My Lords, while recognising fully our responsibility to provide humanitarian aid, does my noble friend agree that in doing so we are likely to be propping up the very person who contributed largely to the disaster? Is there not more we can do to ensure that there are fair elections in that country to remove Mugabe from office.
Baroness Amos: My Lords, we are totally committed to free and fair elections in Zimbabwe. We have made it absolutely clear that we did not consider the outcome of the last elections to be free and fair. But we cannot punish the people of Zimbabwe.

Regional Assemblies
3.36 p.m.
Lord Falconer of Thoroton: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Deputy Prime Minister. The Statement is as follows:
"Today, my right honourable friend the Secretary of State for Transport, Local Government and the Regions and I are presenting our White Paper,Your Region Your Choice—more democracy, less bureaucracy. Copies are available in the Vote Office.
"Right across the United Kingdom and Europe there has been a growing recognition of the importance of regions as a focus of economic growth and social identity.
"This Government have challenged the notion that the only decisions worth making are those taken in Whitehall and Westminster. We recognise that people in Birmingham or Bradford, Liverpool or Lowestoft, Falmouth or Faversham, Newcastle or Norwich, deserve to have their voice heard as well. We believe that Britain as a whole cannot achieve its full potential unless all of our regions share in success and drive that success.
"When we offered devolution, we placed our trust in the people of Scotland and Wales. Today I am announcing measures to bring decision-making closer to the people of England by strengthening the regional powers and by giving them the choice of regional government.
"We trust the people to make that choice and, if they so wish, to choose to elect a regional assembly and give a new voice to their region. This White Paper gives effect to our manifesto commitment to provide for directly elected regional assemblies for those regions that want them.
"My interest in regional policy goes back over 30 years. In the early 1980s Michael Foot asked me to draw up a new policy framework to secure agreement for devolution for Scotland, Wales and
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the English regions—which, as some of you will remember, was causing us a local difficulty. The result was our Alternative Regional Strategy, published in 1982, which set out a framework for devolving power to Scotland and Wales and decentralising power to the English regions.
"Later, in 1994 I appointed Bruce Millan, the former Scottish Secretary and European Commissioner, to chair the Labour Party's Regional Policy Commission. His report,Renewing the Regions, said that,
'without strong regional policy rooted in the regions themselves, and without firm commitment to decentralisation we are unable to develop our national economy to its full potential'.
"Many of the ideas in this White Paper find their origins in those earlier pieces of work. I would like to express my appreciation to those who worked on these reports, some of whom are Members of this House today.
"This Government have always recognised the regions' potential. In 1997 we inherited one of the most centralised systems of government in the western world. We have changed that. In our first term we devolved power to Scotland, Wales and Northern Ireland. And in England we restored democratic city-wide government to London—abolished by the Opposition. We reformed local government. We strengthened and broadened the Government Offices for the Regions. We set up nine regional development agencies, which in their first two years created or safeguarded more than 80,000 jobs. And we helped establish a network of regional chambers and assemblies, which have improved accountability and given the regions a new voice.
"Today's White Paper takes that a step further. It sets out a range of options for people in the English regions. But whatever they decide, this White Paper will strengthen regional policy across England.
"In all regions we are giving extra resources and greater flexibility to the regional development agencies. In all regions, regional chambers will have greater responsibilities and will have a greater role in regional planning. In all regions we will give extra responsibilities to the Government Offices to strengthen regional decision-making and to ensure that government is joined up in the regions. But for those regions that wish to proceed to directly elected regional assemblies this White Paper sets out the process.
"Members are well aware of the different needs and aspirations of our English regions. There is a strong and growing demand in some regions to have a distinct democratic voice and a greater say over their own future.
"The people of the English regions should rightly have the same choice that we gave to the people of Scotland, Wales and London. This White Paper is about striking the right balance; it is about trusting the people; it is about responding to the needs of a modern, diverse, and more progressive society; and

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it is all about creating the conditions for greater prosperity and reducing disparity in and between our regions.
"The key is flexibility. That requires a pragmatic approach and the consent of the people of the regions. Where there is a referendum in favour of them we will establish elected regional assemblies. And I believe where one or two regions lead, others will follow.
"This White Paper sets out the powers, functions and financial arrangements for these new elected regional assemblies. They will have real power and funding to improve the quality of life of people in their region—particularly by improving regional economic performance. Indeed, raising growth by just half a per cent for the worst-performing regions would increase our national wealth by £20 billion in 10 years. And, as my right honourable friend the Chancellor's Pre-Budget Report made clear, if all regions raised their productivity to the national average, the average person in the United Kingdom would be £1,000 a year better off.
"Regional assemblies will be responsible for developing joined-up regional strategies on issues such as: sustainable development; economic development and regeneration; skills and employment; planning; transport; housing; health improvement; and culture.
"Assemblies will have a range of powers to help them deliver those strategies. For example, they will allocate funding for economic development, housing, tourism, arts and sport. And they will be responsible for the regional development agencies—appointing the board and approving the regional economic strategy.
"Regional assemblies will be funded primarily by central government grant; and they will have complete freedom to spend that grant as they judge best. We will agree targets with them and provide a single pot for regional government.
"In addition, they will have the power to raise further funds through a precept on council tax and, indeed, through borrowing. Naturally, budgets will vary depending on the population of each region. But on current expenditure the budget for the North East would be around £350 million a year, and in the North West it would be around £730 million. On top of that, assemblies will have a direct influence over large amounts of central government's public expenditure—some extra £500 million in the North East and £1.3 billion in the North West. This is over and above the £3 billion spent by local authorities.
"Elected assemblies need to be big enough to properly represent the interests of the different communities in the region, but not so big that they become unmanageable. We therefore propose that assemblies should have 25 to 35 members. For an assembly of that size it is important that there is broad political representation in the assembly.
"In Scotland, Wales and London we have used the additional member system of proportional representation to elect the members of the
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Parliament and Assemblies. On balance we have decided to use the same system for English regional assemblies. The boundaries of each region will be the existing ones used by the Government Offices for the Regions and the regional development agencies.
"In addition to elected regional assemblies, we would like to see greater involvement of groups such as the business community, trade unions, voluntary organisations and environmental groups. We want to encourage the regional assemblies to draw on the experience and skills of individuals in the region who may not be able to stand for election themselves.
"We want to build on the experience of the Scottish Civic Forum, the partnership arrangements in Wales, the London Civic Forum and the arrangements introduced in a number of English regional chambers. Different regions may want to use different models and we are specifically asking for views on this. For example, there could be appointed assembly members who could play an active part in the role of assemblies but without the right to vote.
"Regional assemblies represent a new tier of political accountability. Regional assemblies will work closely with their local authority partners. However, in areas that currently have county and district councils, an assembly would add a third tier of government. We believe it would be more efficient and simple if, in those cases, we moved to a fully unitary system of local government. So where a decision is made to hold a referendum for an elected assembly—and only in those regions—there will first be an independent review of local government structures conducted by the Boundary Committee for England. This review—before the referendum—will examine the two-tier areas of the region and make proposals for a wholly unitary local government system. Existing unitary authorities in the region will not be affected.
"We believe that when a referendum is held voters should know what the proposed structure of local government would be and be clear who would do what in their area. I should emphasise that these reviews will take place only in those regions where a referendum will be held; and any restructuring of local government would take place only if there is a `Yes' vote in that referendum.
"This White Paper sets out the process and timetable for establishing elected regional assemblies. Before we decide which region or regions should hold the first referendum, we will consult all the English regions on our proposals. The Secretary of State will decide whether a region should hold a referendum, primarily by assessing the level of public interest in the region. In reaching his conclusion, he will seek the views of the regional chamber, local authorities and other key stakeholders. We intend to introduce legislation to provide for referendums and local government reviews as soon as parliamentary time allows.

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"Our intention is to allow for a referendum to be held before the end of this Parliament. After a region has voted for an elected assembly, we intend to introduce further legislation enabling assemblies to be established. This would make it possible for the first regional assembly to be up and running early in the next Parliament—under a Labour Government, of course.
"In conclusion, all English regions will benefit from our strong regional policy, and we will continue to develop the regional structures and agencies we put in place in our first term. In addition, our White Paper now offers the opportunity of a new constitutional settlement for the English regions—a choice which has been denied to them for far too long.
"The opponents of these proposals must answer this question: if devolution is good enough for Scotland and Wales, why would they deny that choice to the people of England? Our proposals today will give the regions of England new choices, new powers, and a new voice. By devolving power, we can elevate our democracy. By empowering our regions, we can engage people more effectively. By harnessing the energy of the regions, we can drive forward the nation's economic growth. By embracing diversity, we can strengthen the United Kingdom. And by liberating the potential of our regions, we will be helping Britain to prosper. I commend these proposals to the House".
My Lords, that concludes the Statement.
3.49 p.m.
Baroness Hanham: My Lords, first, I thank the Minister for repeating the Statement. At least he has had a quieter background against which to deliver it, as he has not been competing against the "Byers Show" which has been taking place in the other House.
I should make it clear from the outset that on this side of the House we are against regional government. This Government have already carved up this country into three, and they have foisted a further layer of bureaucracy on London—all in the name of choice by the people—which they now extol for the regions.
In that regard, it is worth recalling that the votes in the three referendums that took place to bring about those changes accounted for less than 25 per cent of the population, and therefore expressed the will of a tiny minority of the electorate. Will there be a threshold of a significant proportion of the population taking part on this occasion.
The same problem is in prospect again. Allied to that is the prospect of further fractionalisation of this country into incoherent regions that bear little relationship to each other and in many cases do not have a commonality of interest within them. Devon, Cornwall, Northumberland and Durham would all vanish. Does the Minister recall the controversy over the loss of the Ridings in Yorkshire? How much worse
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would be the loss of Yorkshire itself. Bristol is nearer to Brighton than it is to Falmouth, but it would be in a common region.
Local government should be for local people and by local people. We do not need a further tier of government, which removes local accountability, is decided by proportional representation, introduces the possibility of fringe parties and creates more full-time, well rewarded political jobs. Nor do we need the inevitable reorganisation that is threatened—the abolition of the county councils, which are the historic seats of this country's government, established before the Domesday Book and well in advance of May 1997, the start of current history as seen by this Government.
There is little point in the Deputy Prime Minister saying that this will come about only by the will of the people. It has been the clear intent of this Government since the Prime Minister said that regional government could come about only if another tier of local government was removed, as is the case with the proposals that county councils should be shorn of their role in structural planning. Is it the intention that in the areas where regions are put forward, that will mean the end of the county councils.
It is also clear that, even if the electorate do not vote for elected regional assemblies, far greater powers will he given to those greatest quangos in the sky, the regional development agencies and the regional planning bodies. That means further powers in the hands of non-elected officials.
There are many questions that need to be asked. I hope and expect that there will be an opportunity to do so in a full discussion on the White Paper in this House. Until then, will the Minister say whether the Government are proposing that regional government will be established before or after a review of local government structures within it? As the Deputy Prime Minister said last year:
"Of course we will need to make sure the structure of local government fits with any new regional tier, and that may require some adjustments".
That may prove to be the understatement of all understatements.
Will the Minister give an estimate of the likely total costs of the establishment of the regional structure and the consequential reorganisation? On the basis of the costs associated with the Deputy Prime Minister's county council of Humberside, the rest would cost in the region of £2 billion to change. Is that a good use of taxpayers' money? Is the Minister aware that the Greater London Authority alone is spending £34 million a year on administration and that a precept on the council tax has increased by 30 per cent in two years.
Will the grant to be given by the Government be top-sliced from the local government grant? If so, does that anticipate a reallocation of resources for the rest? Will there be a review of the Barnett formula, which gives Scotland and Wales substantially greater funding per head of population than elsewhere, or will regions be bought by similar over-provision.

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I understand that today is Europe Day. Is it not ironic that this announcement should be made today? It brings the federalisation of this country ever closer to a federalised Europe. Perhaps Kent will be joined with Calais, Flanders and Wallonia—as it is already in the Interreg programme—as a European self-governing region. Perhaps the Minister would like to tell the House whether the regional government that he proposes—or that the Deputy Prime Minister proposes—would be able to deal directly with European institutions, bypassing the scrutiny of Parliament and doing their own deals for funding. Truly, Romano Prodi must be dancing on his tippy toes at the prospect of so much influence in this land.
We believe that the general tide of post-war centralisation has gone too far under Labour. Under this Government, councils have been burdened with mountains of red tape and local democracy has been undermined. Regional government will not improve that; it will accelerate the trend. Far from giving power to local people, the proposals will take it further away. We do not believe that the White Paper has anything to offer that will enhance democracy in this country.
3.56 p.m.
Baroness Hamwee: My Lords, we on these Benches welcome the principle of devolved government. I had better follow that up quickly by saying that the detailed proposals will require and deserve detailed consideration. We are enthusiasts for democracy and we recognise and celebrate the diversity of our country. We believe that it is entirely appropriate for the announcement to be made on Europe Day, given the role of the regions in Europe.
I declare an interest as a member of the Greater London Assembly. I hope that the Government will learn from the London experience. An executive mayor with an assembly whose role is pretty much limited to scrutiny may be the worst model of all. From my quick look at the White Paper, it appears that the Government have learnt that lesson, at least in their proposals for an executive consisting of a leader and a cabinet, though I am not sure whether that is a public or a private Labour Party matter. We certainly need something closer to the parliamentary than the presidential model.
We are all aware of the electoral events in France, the Netherlands and our own cities over the past week. That highlights the need for every government to be relevant to their people. Electoral engagement follows power and delivery. Will the assemblies' powers be token or really strategic powers? Can the Minister assure the House that the assemblies will take down powers from central government, not take up powers from local government? Will they have all the relevant powers so that, for instance, health and housing—which I see are on the list—and tertiary education, to take but a few, are knitted in with economic and social development, as I believe they should be.
I said that powers should not be taken up from local government. We regard it as appropriate that no change is made to the local government structure until
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elected regional government is in place. At that point, both local and regional tiers and the Electoral Commission can be involved in any change.
Currently, there is an enormous raft of quangos. Will the regions have control, with power to define their shape and structure? I have never believed that the regional development agencies amount to democratic devolution; they are merely a degree of decentralisation. We shall need to examine the detail of the proposals on them. This may be one of the few points on which I agree with the noble Baroness, Lady Hanham.
Will central government this time adopt a self-denying ordinance and keep their hands off regional issues? As happened with the Greater London Authority Bill, no doubt someone will count: the number of references to the Secretary of State. I hope that they will not find that he scores higher than the new assemblies.
Are the Government prepared to learn from two years' practical experience? I can speak only for London, but there is also experience from Wales and Scotland. That experience was gained at various levels including the human level. A new body needs to be of a size which facilitates the dynamics of the political process. In my experience, which includes a year of chairing the London Assembly, 25 members is too small a number for the breadth of responsibility involved and quite the wrong size for a full meeting at which everyone considers himself or herself a "Front Bencher" as it were by virtue of that small size and wants to have his say. I am aware of the representational role but I believe that the figure of 25 to 35 members is too small. I believe that all assembly members should be elected. Local government has managed to lose co-optees; it clouds the issue of accountability to have appointees.
Does the Minister also recognise the need for shadow running? I know that the public want to see action and to see the pigeons banished from Trafalgar Square a week on Thursday following the election, but does the Minister accept that it is necessary for there to be sufficient time allocated to set up a new assembly? Two years into the process of working towards an effective operation in London I am still not sure whether I am involved in politics or in anthropology.
Will the Minister also acknowledge that where the scrutiny arm has powers these need to be effective? I give merely one example. It is no good allowing the scrutiny arm to veto the totality of a budget if it cannot alter and control the powers of virement of the executive with regard to that budget.
I refer to a serious point which I hope that we can correct with regard to London on the back of regional legislation. Does the Minister accept that access to information must be at least as good as it is in local government? In London we appear to have less access to policy development decisions of the Mayor than is the case at local level.
Does the Minister accept that the legislation should be a framework? I make that heartfelt plea as one of those who sat through the proceedings on the Greater

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London Authority Bill. It is not possible to anticipate all the detail that will be needed when this new form of government is in operation and certainly not to get the detail right if it is imposed in advance.
Will the Minister consider the need to address the relationship of government offices to regional assemblies? The Government Office for London is now larger than it was when the GLA was created. I am unpersuaded that extra responsibilities given to government offices will achieve regional or, indeed, much other accountability.
In conclusion, I hope that the Minister will accept the good wishes of these Benches in regard to those who embark upon what I hope will be a fulfilling and effective venture.
4.3 p.m.
Lord Falconer of Thoroton: My Lords, I thank the noble Baroness, Lady Hamwee, for her support and good wishes. I say to the noble Baroness, Lady Hanham, that her party opposed devolution to Scotland but now supports it; it opposed devolution to Wales but now supports it; and it opposed devolution to London but now supports it. I understand from her remarks that her party opposes the regional government proposals in the document we are discussing. I am not sure when it may change its view in that regard.
I turn to the specific questions asked by the noble Baroness, Lady Hanham. She asked whether a threshold would have to be crossed in regard to a referendum. However, there is no reference to a threshold. The noble Baroness asked foursquare whether the proposals signalled the end of county councils. That matter was dealt with in the Statement. I draw the noble Baroness's attention to the relevant part of the Statement which states:
"So where a decision is made to hold a referendum for an elected assembly—and only in those regions—there will first be an independent review of local government structures conducted by the Boundary Committee for England.
This review—before the referendum—will examine the two-tier areas of the region and make proposals for wholly unitary local government. Existing unitary authorities in the region will not be affected".
Therefore, it will be for the Boundary Committee for England to make recommendations on an independent basis as to how to produce a wholly unitary local government system in those parts of the region where there is to be a referendum and where there are two-tier arrangements for local government. How it proposes to do that is a matter for the independent review. That could involve the counties or the districts.
Baroness Hanham: My Lords, I thank the Minister for giving way. Does he accept that it is extremely unlikely that a unitary authority would end up as a county? A unitary authority is a unitary authority and a county is a county. To try to pretend that a county would become a unitary authority seems to me to be
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utterly ridiculous if I may say so. I believe that the Minister confirms what I said; namely, that county councils will be abolished.
Lord Falconer of Thoroton: My Lords, no doubt the bodies concerned will attach the importance they see fit to those opinions of the noble Baroness. The Isle of Wight and Shropshire are two areas with unitary counties. The noble Baroness also asked whether the Government would envisage a review of local government before such a change is proposed. The part of the Statement that I have just read out makes the position absolutely clear. As regards estimates of costs, I believe that the noble Baroness asked about the costs of an assembly and the costs of any local government reorganisation. As regards the costs of running an assembly, we would envisage a sum in the region of £25 million per annum. However, I am not in a position to give any realistic estimate of the costs of any reform of local government connected with that as I do not know what the reorganisation would involve.
The noble Baroness asked whether the grant would be top-sliced from local government. The answer is "No". No review of the Barnett formula is envisaged. As regards whether it would be possible for any region with its own elected assembly to have direct relations with the European Union, the body which has relations with the European Union is obviously the United Kingdom. That is the constitutional position. There may be representative bodies in various towns where activities are carried out by the European Union but the body that relates to the European Union will continue to be the United Kingdom, as is the case in relation to Scotland, Wales and Northern Ireland.
The noble Baroness, Lady Hamwee, asked a number of questions. However, many of them concerned advice. I accept them in the good spirit in which they were offered. I believe that she asked whether the powers of assemblies would be token or strategic. That is what I have written down. As the Statement made clear, they would have power to determine the strategic direction of the region. In addition, they would have specific powers to deliver on their strategies. I gave some examples of that. More detail on that matter is contained in the White Paper.
The noble Baroness, Lady Hamwee, also asked whether the power would flow down from central government or up from local government. The power will flow down from central government. The question of whether assemblies would have power over quangos in the regions will depend on the quango concerned. I draw the noble Baroness's attention to the fact that assemblies would have power over RDAs, which are perhaps among the most significant bodies in a region. She asked whether government would keep their hands off regional issues. That is a slightly rhetorical question. Surely a White Paper that is designed to devolve down from Whitehall and Westminster to regions, whether or not they have elected regional assemblies, is a strong indication of a Government who are keen on genuine decentralisation.

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The Government are, of course, prepared to learn from existing experience. One of the issues that we need to debate is that of the size of regional assemblies. The noble Baroness drew attention to the problems of the London Assembly in that regard. As regards shadow running, obviously sensible arrangements must be made for the setting up of any elected regional assembly once a referendum indicates that it is wanted. Scrutiny powers need to be effective and will have to be debated. The noble Baroness drew attention to scrutiny powers in relation to budgets. I believe she said that the only power that was available was in effect to veto the whole budget. We shall need to consider that matter.
Access to information is incredibly important for any government or legislative body. The proposal that legislation should involve a framework is plainly right. I believe that the noble Baroness was referring to the setting up of the assembly's legislation, not the referendum assembly. That will come only after legislation implementing the referendum procedure and after a referendum had voted "Yes". We should then move on to that legislation.
The noble Baroness's point about the need to address the relationship between government and the regional assembly was of course correct. That will be a very important relationship. She concluded by offering the proposal her good wishes, for which I am very grateful.
4.10 p.m.
Lord Waddington: My Lords, does the Minister realise that in the North West, following the abolition of the county councils, having wholly unitary local government would be an appalling piece of constitutional vandalism? Can he not see that in the North West a combination of unitary authorities and a regional government would be bound to be dominated by Merseyside and Manchester, and that that would mean that the voice of those living in small towns and the countryside would be completely extinguished? People outside the conurbations would get nothing but hefty bills, fewer fields and more concrete.
What on earth is all this nonsense on page three of the Statement about the people of the English regions having the same choice given to them as has been given to the people of Scotland? Regional government will be expensive, but the noble and learned Lord knows perfectly well that it does not involve the devolution of powers that are remotely similar to powers that have been devolved to Scotland. It really is ridiculous and insulting to pretend that the proposals are an English answer to Scottish devolution.
Lord Bridges: My Lords, if the move to—
Noble Lords: Order.
Lord Falconer of Thoroton: My Lords, I apologise. On the noble Lord's first proposition—he referred to constitutional vandalism—I disagree. On whether
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there should be an elected regional assembly, that will be a matter for the region to decide in a referendum. Before it makes its decision in that regard, the precise consequences relating to local government will be known because the proposals require that the Boundary Committee has made its recommendations for bringing unitary authorities into being. People will know before they vote what the precise consequences in relation to local government are.
On the comparison between Scotland, Wales and Northern Ireland, the proposals involve, for those regions that vote for them, the opportunity to have significant decentralisation of power from Whitehall and Westminster. There are people in north-west and north-east England—and in other regions—who believe that it is better that some of those important issues should be dealt with at a reasonable level, which is closer to where they live than Whitehall and Westminster.
I should correct an error that I made earlier. I said that Shropshire was a unitary authority but I should have referred to Herefordshire. I was wrong in what I said and I apologise for that.
Lord Morris of Aberavon: My Lords, I welcome the Government's proposals to give the choice to English regions to repair their democratic deficit. Given that the Government have evolved different structures for Scotland, Wales, Northern Ireland and London, and differing proposals, including precepting for the English regions, which may not in the event prove adequate, will they consider building into primary legislation the power further to decentralise responsibilities and powers to the proposed assemblies, as is indicated in paragraph 4.50 of the White Paper.
Lord Falconer of Thoroton: My Lords, I am grateful to my noble and learned friend for his welcome. He, more than practically anyone else in the House, has experience of giving choice to those parts of the United Kingdom that want devolved assemblies. His views on this matter carry particular weight. I note his proposal, which we shall certainly consider.
Lord Greaves: My Lords, as someone who lives in the North West and who has been a passionate supporter of regional government for most of the past 50 years, I find it difficult to be enthusiastic about the White Paper. It is a good example of the fact that if one gives the Government a good idea, they will make a mess of it.
Will the Government look again at the proposed electoral system? It is paraded as being proportional representation but it is no such thing; it involves semi-proportional representation at best. In regions such as the North West and the North East, it is likely to produce a permanent majority for the Labour Party.
Will the Government look again at the proposed size of the assemblies? I refer not to political representation but to the representation of a large and diverse region such as the North West, which has a larger population than that in Scotland. The Minister

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said in the Statement that people in Liverpool deserve to have a voice. However, the people in places such as Carlisle—and even in Silloth, Nelson and Colne—deserve to have a voice. Under the proposals Cumbria would at best have perhaps two representatives. Is the proposal a recipe in the North West for permanent rule by the regional Labour Party mafia.
Lord Falconer of Thoroton: My Lords, I disagree with that proposition. It is important to have broad political representation in the assembly. The noble Lord knows better than I do that if we seek to reach agreement—a broad consensus—on the precise form of the electoral system to be used, we should, unfortunately, never be able to do so; that is because, in relation to what is the best system, the issues and differences are so detailed, complex and wide. In Scotland, Wales and London we used the additional member system of proportional representation to elect Members of the Parliament and the Assemblies. On balance, we have decided to use the same system for English regional assemblies because we believe that it would produce broad political representation in those regional assemblies, as it did in the bodies to which I referred in Wales, Northern Ireland and Scotland.
The Lord Bishop of Guildford: My Lords—Lord Woolmer of Leeds: My Lords—
Noble Lords: Bishop!
The Lord Bishop of Guildford: My Lords, if my good friend the right reverend Prelate the Bishop of Durham were here, he would warmly welcome the publication of the White Paper. He has been active in seeking to give voice to the north-east region. That is an example of the fact that, for all the diverse responses that will happen throughout the country, the voluntary sector and the Churches are already actively engaged in that process.
I press the Minister on those proposals and the report. In the south-east of England, from Oxfordshire right round to Kent, I do not think that we shall be rushing for a regional assembly. Nevertheless, regionalisation has drawn the voluntary sector and the faith communities—I chair a faith forum—into the process. I want to hear a little more from the Minister on the future role when we formalise those arrangements in the legislation. We struggle, if I may say so, with the public sector sometimes in getting real roles in the democratic process for the voluntary sector and the faith communities. It is good to be consulted but the word "partnership" needs to have some substance to it. In the coming weeks, how do the Government intend to draw us into the consultation exercise in relation to that aspect of the report.
Lord Falconer of Thoroton: My Lords, I am grateful to the right reverend Prelate for his welcome to the proposals and for suggesting that the right reverend Prelate the Bishop of Durham would welcome them
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equally strongly. I pay tribute to the Church for the part that it has played in developing these proposals and earlier proposals in relation to devolution, such as devolution in Scotland—the Church played a considerable part in that regard.
We are completely serious about the commitment to having a true partnership with the voluntary sector and faith communities. In the weeks and months to come, we need to work out precisely how that is to be done. That means proper, real consultation with faith communities, among others, on how that should be done as we develop the proposals.
Lord Woolmer of Leeds: My Lords, does the Minister recognise that people in Yorkshire and Humber welcome the opportunity to demonstrate their desire to play a major part in developing and running their own region? Does he recognise that they will judge the proposals by the extent to which power is devolved from the centre to the regions? Will he elaborate on the powers relating to health, education and transport? I note that the power to allocate funding in those areas appears not to be in the Government's mind.
Lord Falconer of Thoroton: My Lords, I agree with my noble friend that the proposals will be welcomed not only in Yorkshire and Humber but also in other regions throughout the country as a genuine opportunity to devolve power down from Westminster and Whitehall to the regions, where, rightly, many, many issues should be decided.
So far as concerns transport, health and education, the proposals do not envisage the distribution of a substantial amount of funds to those three areas. But they do involve the elected regional assemblies playing a significant part in the development of strategies in those areas. However, in areas such as housing, it is envisaged that the elected regional assembly will have funds at its disposal.
Lord Biffen: My Lords, is the Minister aware that there is a deep sense of cynicism about public life and politics at all levels in this country? Is he also aware that, unless the proposals that he is bringing forward are widely acclaimed and successfully effected, they will add to that sense of disillusion, to our political danger.
In that context, can he tell us a little more about what he means by the term "social identity"? Perhaps I may tell him that there is no social identity between Shropshire, Birmingham, Wolverhampton and Coventry. There is, in fact, a great danger throughout England that the rural areas will feel increasingly neglected by the processes of the Government. That anxiety will be intensified if we find that the rural areas are simply being attached to major urban areas, which are at the core of the new regional arrangements. As I am certain that it is not the

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intention of the Government to add to social discontent but rather to ameliorate it, can he assure me that he will take that into account.
Lord Falconer of Thoroton: My Lords, I believe that there is cynicism in relation to politics in some parts of the country. Part of that cynicism comes from a lack of connection or a remoteness between the governed and those who govern. In those circumstances, we believe that giving regions the option—I make it absolutely clear that it is an option—of regional government is a sensible way to increase the connection by seeking, where a region wants it, to decentralise power from Whitehall and Westminster. It will happen only where a region wants it and only where the region is aware, before the decision is made in a referendum, what the effect will be on the local government arrangements. We consider that to be a sensible and fair approach. We also believe that it is a way in which to increase, rather than decrease, people's faith in politics.
The noble Lord asked me to take into account what he said. Of course, every contribution will be taken into account.
Lord Bridges: My Lords, if the move to regional government is to be made on a voluntary basis, as appears to be the case from the noble and learned Lord's last remarks, and if it is not intended to guarantee the destruction of the counties, as appears to be the case from his exchange with the noble Baroness opposite, does it not follow that, at the end of these changes, there will be no uniform pattern of local government in this country? There will simply be a patchwork of one form of government in one part of the country and another form in another part. Will that not be extremely confusing both for central Government and for the nation as a whole.
Does the Minister agree that this calls to mind the image of a celebrated drawing by the artist, Edward Lear? He produced a beautiful drawing of an imaginary plant with people in odd postures hanging from it. Its title was "Manypeeplia Upsidownia". Is that not the direction in which we are heading.
Lord Falconer of Thoroton: My Lords, it would be right to say that at present the nature of local government is a rather complicated patchwork with unitary and two-tier arrangements. Noble Lords may remember the previous government's response to the Banham review. That government abolished six metropolitan county areas.
I am finding it difficult to make myself heard due to the remarks being made from a sedentary position by a former Secretary of State for the Environment, whose responsibilities included local government.
There is a patchwork at present. We also recognise that different arrangements will apply in different parts of the country. We see that in relation to parts of the United Kingdom where devolution has already occurred. We also envisage the possibility that different arrangements will apply throughout England. We fully recognise the possibility that some areas will want a regional assembly and some will not.
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However, we believe that that is the right way to approach the issue; namely, if regions, fully knowing what the arrangements will be at both regional and local government level, vote for regional government, then they should have it.
Lord Stoddart of Swindon: My Lords—
Lord Maclennan of Bogart: My Lords—
Lord Filkin: My Lords, I believe that the Liberal Democrat Benches should be allowed to put forward a question first, followed by these Benches. There will be time for questions from all three Benches.
Lord Maclennan of Bogart: My Lords, I welcome the Minister's recognition that the imposition of uniformity in a heterogeneous country such as England would be unwelcome. However, is he not at some risk of imposing a uniformity in respect of local government which is not apt to sustain regional government and certainly not to make it as popular as I have no doubt he and other members of the Government believe it should be? Is there not a case for recognising that, although unitary government should be the norm, in certain parts of the country good cases may be made for a retention of the status quo or some modification in the light of regional government.
Secondly, again for the avoidance of the imposition of an unwanted framework on the country, can the Minister set out the Government's thinking on the future modification of boundaries to take account of any criticisms that there may be of existing regional boundaries? Although they may make sense as a starting point for this exercise, they would not necessarily commend themselves throughout the whole country as a basis for this reform.
Lord Falconer of Thoroton: My Lords, I hope that that is implicit in what I said. However, perhaps I may now make it explicit. Where a particular region does not have, or does not move towards, a referendum, then there is no proposal to change the existing local government arrangements. That means that they will continue to differ in different parts of the country. However, where there is to be a referendum and where people vote "yes" in that referendum, the White Paper says as a matter of principle that there should be only unitary local government. If one adds an additional tier, there would be too many tiers. That does not necessarily mean that one abolishes the role of counties. It is for the independent Boundary Committee to express its view before a particular region embarks upon a referendum.

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So far as concerns the question whether there are any proposals to change the existing regional boundaries within England, the answer is: not that I am aware of. However, I shall need to confirm that.
Lord Stoddart of Swindon: My Lords—Lord Lea of Crondall: My Lords—
Lord Filkin: My Lords, the noble Lord, Lord Stoddart, has not yet spoken, so let us hear him first.
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Lord. When the Minister said that if devolution was good enough for Scotland, Wales and Northern Ireland, why was it not good enough for England, was he not confusing the issues? Devolution for Scotland restored the nationhood to the Scots, whereas devolution in England appears to be taking it away. I should like him to address that point.
My second point is that people in the North East and the North West who are concerned and are perhaps in favour of regionalisation are so in favour because of the Barnett formula. I understood the noble and learned Lord to say that the Barnett formula would not be altered. In that case, the North East and, indeed, other regions in England would suffer the same deficit as they are suffering now. I hope that the Minister can deal with that point again.
Finally, are these proposals in any way geared to, and associated with, the proposal of the European Union Committee of the Regions and the Commission to have a Europe of regions? The Minister did not answer that question, which I believe was asked in the first instance by the noble Baroness, Lady Hanham.
Lord Falconer of Thoroton: My Lords, the first question was: is this not different from Scotland, Wales and Northern Ireland because it is giving back to them whereas it is taking away from the regions? That is not the right question. The right question is: what promotes good governance? Secondly, has this anything to do with the proposal made by the European Union Committee of the Regions? The answer is no; it has not. The third question was: what about the Barnett formula? I made clear that there are no plans to change that.
Lord Lea of Crondall: My Lords—
Lord King of Bridgwater: My Lords—
Lord Filkin: My Lords, I suggested that it was this side first. If we are brief, we should be able to hear both the noble Lord, Lord Lea, and the noble Lord, Lord King. It would be good to hear both.
Lord Lea of Crondall: My Lords, does my noble friend not agree that, although some of us came reluctantly to the concept of variable geometry, it is inevitable? The difference between these carefully
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thought out proposals and what was happening under the previous government was that, rather like Oliver Cromwell going round with his commissioners, the Banham committee was deciding what would happen in the counties. That happened in several counties in England. There will now be a democratic mandate and this will not happen without a democratic mandate in any part of England.
Lord Falconer of Thoroton: My Lords, I thoroughly endorse the comments of my noble friend Lord Lea. Underlying the proposals in relation both to any reform of local government in a region where there is to be a referendum, and for there to be an elected regional assembly, there must be the consent of the people through a referendum. We believe that that is the right approach.
Lord King of Bridgwater: My Lords—
Lord Filkin: My Lords, with regret, we are out of time. I very much regret that. That clearly signals that we need an early debate on the matter, as the noble Baroness, Lady Hanham suggested. Perhaps we could have a word subsequently with the noble Lord, Lord King, to ensure that we are aware of his question.

Education Bill
4.31 p.m.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Baroness Ashton of Upholland.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Deputy Chariman of Committees (Viscount Allenby of Megiddo) in the Chair.]
Clause 18 [Governing Bodies]:
The Deputy Chairman of Committees (Viscount Allenby of Megiddo): Before calling Amendment No. 93, I must inform the Committee that if that amendment is agreed to, I cannot call Amendments Nos. 94 to 96.
Baroness Ashton of Uphollandmoved Amendment No. 93:
Page 11, line 42, leave out paragraphs (a) and (b) and insert—

"(a) persons elected or appointed as parent governors,

(b) persons elected or appointed as staff governors,"

The noble Baroness said: I shall begin by explaining the changes which lie before the Committee today in terms of governance. The past 20 years have seen progressive delegation of funding and responsibilities from local education authorities to individual schools. Schools are now largely self-managing, responsible for their own budgets and accountable for all aspects of their performance.

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The public accountability of governing bodies is an essential feature of current arrangements in which schools, rather than education authorities, are the key unit of delivery. That has brought about a dramatic increase in the weight and range of governing body responsibilities. Concerns about how governing bodies are made up and the role they have played has been debated at length.
That led to a public consultation in November 2000 and to the Way Forward Group, on which all the main national governing body organisations and the churches were represented. It was established in April 2001 and led to the consultation paper, The Way Forward. I shall go into more detail about those arrangements, but I now turn to the amendments.
Amendment No. 93 serves three purposes, which I shall take in turn. First, the proposed changed wording of subsection (2)(a) will allow us to address parent governor recruitment and representation issues. Under current legislation, if it proves impossible to find a parent of a registered pupil at the school, governing bodies are allowed to appoint a parent of any child of compulsory school age. As currently drafted, that option would no longer be available to governing bodies. The amendment therefore allows us to maintain the status quo in that respect.
Secondly.. Amendment No. 93 proposes a change to Clause 18(2)(b). Subsection (2) sets out the categories of governor that a governing body must consist of. 'The amendment prescribes that:
"persons elected or appointed as staff governors"
must be on the governing body. The advantage of the proposed change is that the phrase,
"employed to work at the school"
is not used here. That phrase could be interpreted restrictively to mean only staff employed under contracts of employment, which would be unhelpful and contrary to our intentions. Staff who work at a school under a contract for services, for example, catering staff, are currently able to serve as staff governors and we want to put beyond doubt that such staff will continue to be eligible to serve as a school governor. It is important to have clear definitions in the Bill, and that is what the amendment aims to achieve.
Thirdly, the proposed changes to paragraphs (a) and (b) create consistency in the definitions used in paragraphs (a) to (e) of this subsection, and thus give this provision in the Bill greater clarity and transparency.
1 should like also to take this opportunity to alert the Committee to a further amendment, which will be needed and which I shall table on Report. There is a drafting error in Clause 18(2)(d), which relates to community governors, formerly known as co-opted governors. As drafted, it would mean that every school must have a community governor. Voluntary aided schools have never had such governors and we did not propose any change to that in the consultation. I apologise to the Committee. I shall table an amendment to provide that Clause 18(2)(d) does not apply in the case of voluntary aided schools. I hope
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that the Committee will agree that Amendment No. 93 will benefit governing bodies, and I trust that noble Lords will accept it.
I turn to Amendment No. 106. Paragraph 3(4) of Schedule 1 relates to the powers of governing bodies to borrow money and grant security. The wording of this paragraph is intended to replicate the current provision in Schedule 10 of the School Standards and Framework Act 1998, which currently states:
"The power to borrow sums and grant security mentioned in sub-paragraph (2)(a) may only be exercised with the written consent—

(a) of the Secretary of State, or

(b) if an order under sub-paragraph (4) so provides, of the local education authority".

It was always intended to carry forward the provision that governing bodies would have to seek consent from either the Secretary of State—or in Wales the Welsh Assembly—or from their LEA where an order required that. However, as currently drafted, governing bodies would have to seek consent from the Secretary of State or the Welsh Assembly as well as from their LEA, where an order requires that under subparagraph (5).
The amendment is needed to make approval by the Secretary of State or Welsh Assembly and approval by the LEA alternative options as we intended, and as is currently provided for in the School Standards and Framework Act 1998. I hope, therefore, that the Committee will accept the amendment. I beg to move.
Baroness Blatch: I have a number of concerns about the amendments. First, I am concerned that if Amendments No. 93 and 106 are accepted—we know that the noble Baroness will ask that they are—there will be no debate today on the inclusion of teachers in the governing bodies. I think that that is monstrous. For that reason I want it to be recorded that, by their amendments, the Government have made it impossible for us to discuss what the nature of staffing members will be.
Baroness Ashton of Upholland: I apologise to the Committee. Until the Deputy Chairman said that, that was not my intention. My intention was, indeed, to debate the group of amendments tabled by the noble Baroness. I am completely in the hands of the Deputy Chairman. That was not my understanding of what would happen if we agreed to the amendments. Had I known that, I would not have asked for them to he debated in this order.
Baroness Blatch: The noble Baroness would not have had any choice about debating the amendments in this order because they come in this part of the Bill. I do not know how many officials are helping the noble Baroness on this matter. It is not the Deputy Chairman who should have enlightened her as she stands up in the Chamber; her own officials should have enlightened her. I believe that they are remiss. This will inhibit debate on the composition of governing bodies as regards the nature of staffing members, which is monstrous.

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Even with the letter received from the noble Baroness and the explanation we have had today, I find it difficult to understand the technical difference between persons who at the time of their election are parents of registered pupils at the school or persons elected or appointed as parent governors. One way or another they will be parents. They usually are parents of registered pupils at the school. If they are not, there is always a fallback position as with other statutes. There is no reference in Clause 18, and certainly no reference as far as concerns the two amendments, to that applying specifically to voluntary aided schools. The noble Baroness referred to an amendment which will be tabled on another day. However, we are talking about the words of the amendment today. I find that particularly disturbing.
I refer to a letter received from the noble Baroness. I suspect that anyone else with any involvement in the Bill has also received the same letter. The part which refers to Clause 18 states:
"The amendments to Clause 18",
that is, Amendments No. 93 and 106,
"concern the definition of parent and staff governors".
Simply to say,
"persons elected or appointed as parent governors"
does not make it any clearer. So the idea that this is the better definition of parents and staff governors is wrong. It does not do that. It continues,
"Current regulations state that parent governors should be drawn from the parents of children at the school. When that is not possible,"—
as I hinted earlier, there is a fallback position—
"current regulations allow the governing body to appoint a parent of a registered pupil or where that is not possible a parent of a compulsory school age child".
It then states:
"The latter route is not available to Voluntary Aided schools".
What tells us that it is available to voluntary aided schools in the amendment? I certainly do not see that in the amendment. It continues:
"Partners"—
I assume that the partners are Church communities—
"have raised this issue and, on reflection,"—
that is to say, the Government have reflected—
"we think it sensible to provide that VA schools also have this option".
I have no objection to that. In fact, I wholeheartedly support voluntary aided schools enjoying that if that is what they want. I also hope—although I cannot presume because it is not in my field—that voluntary aided schools would want the staff to be represented by teachers in the school. Again, we shall not be free to have that debate today. That is unfortunate.
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The Government then say that they have taken the opportunity to clarify the definition. I do not believe that they have done that either for parents or staff. It continues,
"(the definition of staff governor having also been the subject of representations to the Department), following advice from Parliamentary Counsel that this would provide greater consistency with the rest of that clause".
I think that they have failed on all counts in these amendments. I just lament the fact that we shall not be able to discuss our amendments about the nature of the staffing members, including teachers.
Lord Peston: I am slightly appalled and I am also a little taken aback because if Amendment No. 93 were grouped with the remainder, we could debate them all together. I do not understand why we just do not group the amendments together. That would solve the problem. It would not distress either the Minister, the Official Opposition or me—me counting a great deal in this regard.
I have one or two points to make. But perhaps I may first inquire whether we can group the amendments so that we do not ruin our whole afternoon's proceedings.
Baroness Blatch: Before the Minister answers that, perhaps I may make another suggestion. If she does not move Amendments Nos. 93 and 106 today they will both be left on the table. It would leave us free to discuss all the other amendments in their normal groupings.
Baroness Ashton of Upholland: I am grateful to my noble friend Lord Peston. I should prefer to take these amendments with the bigger group and have the kind of discussion which the Committee would welcome on the whole area.
Lord Peston: If that is agreeable to Members of the Committee, perhaps I may proceed as if we were in the group. However, I want to talk about Amendment No. 93 for the moment.
My difficulty, to which I hope my noble friend will reply, is that the amendment does not do what I thought it would. In particular, it does not make sure that the parent governors are parents of children at the school, or that the staff governors—and we shall define the staff in more detail later—should be staff at the school because it says,
"elected or appointed as".
My understanding of the English language is that anyone could be "elected or appointed as" and then told, "Well, you are the staff governor". It does not say that,
"a member of staff should be elected or appointed as",
and it does not say that
"a parent in the school should be elected or appointed as".
I know that the parliamentary draftsmen are fantastic people. We may well be told in due course—as I have been when dealing with many other Bills—that the English language seems to tell us something completely different, but it means what I have just said

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that it should mean. Subject to that, we need some explanation that the amendment does the trick. Certainly, in terms of ordinary parlance, it does not do the trick. It does not remotely tell us that the staff governors will be staff and that the parent governors will be parents.
Amendment No. 93 is not in the large group, but none the less I think that it would be helpful to debate it as an amendment in the group. I shall certainly, as will other Members of the Committee, be talking about other amendments in the group in due course.
4.45 p.m.
Baroness Walmsley: I rise to speak to Amendments Nos. 94 and 97 which I now understand are in the group. The amendments seek to ensure the representation of both teacher and staff governors. As the Minister wants to amend the clause, the Bill would only require,
"persons elected or appointed as staff governors".
It is not stated on the face of the Bill that we have both a teacher and a member of the support staff as staff governors. The Explanatory Notes state in paragraph 73:
"The regulations will also establish a single staff governor category … and … within that category one place should be reserved for a teacher".
From these Benches, we believe that teacher governors are very important to the deliberations of governing bodies. A well-informed governing body, which listens to the professional views of those responsible for its pupils, is less likely to make mistakes on decisions relating to the curriculum and the morale of the school.
The status quo allows for representation of both teacher and support staff on the governing body. Indeed, it is not long since support staff gained the right to sit on governing bodies. In my personal experience, they make a very important contribution. They have a completely different perspective from that of teachers. Therefore, I believe that it is important to ensure that both those categories of people employed at the school are represented on the governing body.
All members of a school community should be represented on the governing body and be able to contribute to the improvement of their school. However, simply replacing one category of governor with another is not the way to ensure an inclusive and representative body. So, whatever the Government's reasons for the amendments, I believe that it is essential that when changes—in particular, to the curriculum—are proposed the role of both teaching and non-teaching staff is protected.
The Lord Bishop of Blackburn: I rise to speak to Amendments Nos. 99 and 100. However, before I do, I would seek to advise the Minister—but who am Ito do that?—that I do not intend to press these amendments today. There is a real cause for concern about clarity. I did not want to get into the debate about teachers and other members of the staff. It is not so much to do with the English language, but it is to
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do with common expectation. People expect governors from the staff of the school to include, at least, the teachers, who are absolutely vital to the school and the curriculum and so on. There is also the worthwhile part played by other members of the staff. If there is any doubt about that, we should pause.
I am grateful to the Minister for her willingness to table an amendment in the area of community governors in voluntary aided schools. My amendments seek to preserve in primary legislation, so far as concerns governance, the position of the churches and other voluntary bodies in relation to the schools that they have founded.
I appreciate that the Government have made clear that they want the Bill to concern principle rather than detail, which will follow in regulations. Amendments Nos. 99 and 100 deal with a point of principle. We regard a majority of two foundation governors as a requirement if the religious character—the special character—of the school and its distinctiveness are to be retained. That was set out in the definition of a foundation governor in Section 78(2) of the 1996 Act.
Similarly, in the case of a voluntary controlled school, we seek to ensure that there are at least two foundation governors or such number as constitute a quarter of the governing body.
That in no way undermines what the Government seek to do. It seeks to do no more than continue the principle enshrined in the 1944 and subsequent Education Acts. It also fulfils the commitment given in November 2000 by the then DfEE in its consultation on school governing bodies in paragraph 21. That stated that the new model—that is the size of existing voluntary aided governing bodies—would protect the existing position whereby foundation governors hold a majority of two or three places. It is for that reason that I bring forth these modest amendments which we hope will be seen as a principle and therefore should he on the face of the Bill.
Baroness David: I shall speak to Amendments Nos. 96 and 98, tabled by my noble friend Lord Peston and I. As my noble friend said when moving his first amendment to the Bill, we have no intention of dividing the Committee.
Amendment No. 96 refers to teachers and support staff. I agree with the noble Baroness, Lady Walmsley, about the importance of having support staff on the governing body. The status quo allows for representation of both teachers and support staff. All members of a school community should be represented on the governing body and able to contribute to the improvement of their school. However, simply replacing one category of governor by another is not the way to ensure an inclusive and representative body. To replace a specific category of teacher governor with a generic staff governor would seriously undermine the effectiveness of the school.
There seems to be little rationale to change the constitution of governing bodies as they have only recently—in 2000—been reconstituted. In their consultation document, The Way Forward: A

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Modernised Framework for School Governance, the Government propose that there should be a single stakeholder group referred to as staff governors. The Explanatory Notes state:
"The regulations will also establish a single staff governor category to replace separate teacher and non-teacher staff categories and will also establish that within that category one place should be reserved for a teacher".
I cannot agree with that.
The National Association of Governors and Managers argues that no stakeholder group should form a majority on the governing body. The National Union of Teachers agrees with that principle and therefore opposes the proposal to form a single governor stakeholder group to represent staff employed at the school. Teachers and other staff groups reflect different perspectives and there should be adequate representation of both of them. The staff and groups of staff are now so many: we have the kitchen staff, dinner ladies, cleaning ladies, lollipop men and women and people who deal with sports grounds. They are innumerable but they should be represented and could make a great contribution to the governing body. I hope that my amendments and those tabled by the noble Baroness, Lady Walmsley, are accepted.
I turn to the question of pupil governors, which is perhaps more controversial. I am clear that we should have pupil governors. I have worked with them, although it is true that that was in a sixth-form college. We had two pupil governors, who were a help to each other—in a big school, that is suitable. Attitudes have changed and the climate is much more friendly to young people in school having a greater voice.
Let us consider the background. In the White Paper, Schools: Achieving Success, the Government state that they
"will encourage students' active participation in the decisions that affect them, about their learning and more widely".
The whole of Chapter 3 of the new SEN code of practice, which has statutory status, is devoted to pupil participation. It states:
"Pupil participation should be the goal for all children and opportunities for such participation should expand as pupils develop".
On average, children spend 12 years in an environment where they have no legal right to be consulted or involved in decisions that affect them—in their own education, the running of their schools or the formation of wider educational policy and practice. A place on the governing body would put that right, increase their experience and make them a little more knowledgeable in the ways of the world. It is widely recognised that listening to and involving children and young people in schools plays a key role in preventing and combating disaffection.
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With the introduction of the citizenship and personal, social and health education curricula from September 2002 and the requirement at key stages 3 and 4 to teach children about the,
"legal and human rights and responsibilities underpinning society",
it is inconceivable to deny them the right to participate in school life. Furthermore, participation of pupils in a democratic process—through debate, listening to the opinions of others and taking responsibility for decisions and the resulting consequences—would make a vital contribution to the curriculum, and, indeed to the running of the school, through practical experience. That was recognised by the Advisory Group on Citizenship in 1998.
So what do we know about the Government's intention? In recent months they have suggested that they are prepared to issue non-statutory guidance on pupil participation but have reservations about placing statutory requirements on governing bodies and teachers. The Government should be bolder. They have taken some steps towards pupil representation. They should take that extra step. Let us at least have a pilot scheme for pupil governors, which I hope could be made universal.
Baroness Sharp of Guildford: I shall speak to Amendments Nos. 94 and 97, which concern teacher governors and support staff governors. It is important that both groups are represented on the governing board. It is extraordinary that having only just arrived at that position with the new regulations in 2000, we are now moving away from it. In particular, I should like to endorse the remark of the noble Baroness, Lady David, that there is an increasing number of support staff in schools. There is an increasing number of teaching assistants and we want to expand that number. It is absolutely right and proper that they are represented, but if they are, it is extraordinary to think that teachers should not be represented.
I do not understand why, having finally conceded in the last round that support staff should be represented, the Government are now going back on that—other than because of pressure in the background from head teachers, who have been worried about the number of people represented from schools. I do not understand why the government are caving in to that pressure. Both groups are stakeholders in the schools and it is vital that they are both separately represented.
5 p.m.
Baroness Blatch: I assume that we are discussing Amendments Nos. 93 to 101 and 106. I shall speak to Amendment Nos. 95 and 101. Amendment No. 95 follows the theme of our debate. Reference to teachers is conspicuous by its absence. We can only assume that somewhere in the bowels of the department a view has been taken—supported by Ministers—that it should not prescribe that teachers specifically, necessarily and in their own right should form part of the governing body. We know that it is not just possible but probable that members of staff will include a teacher, but

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teachers are not specifically mentioned, so the Minister must tell us why the department has chosen not to do so.
If the department believes that the provision should be widened from teachers to include other members of staff, is it entirely happy to accept that any member of staff representing other interests in the school could be chosen, or is it just assuming that one or more would be teachers but wants other sections of the staff to be represented? I do not know; I pose it as a question. It is important that the question is asked specifically.
I have tabled Amendment No. 101 to tease out from the Government the meaning of "other persons". The words,
"such other persons as may be prescribed".
are a catch-all phrase. The Government may think of someone later and are not sure who that may be. I prefer powers of co-option to a governing body. We should specify the categories of people who would belong to it. I have been carefully through the categories. I find it difficult to imagine anyone outside those categories. The catch-all category is paragraph (d) which refers to,
"persons appointed as community governors".
They could be anyone from within the community: the business, commercial, voluntary or charitable sector. That is the catch-all part of the clause. It is difficult, therefore, to envisage why we have the words,
"such other persons as may be prescribed".
I intend to take the provision out of the Bill in order to give the Government the opportunity to state on this part of the clause the composition with regard to categories of people.
I assume from the Bill that the regulations will come forward under the negative resolution procedure. I shall ask the Minister to consider their coming forward under the affirmative resolution procedure. With regard to the regulations governing their operation, I regard composition as more important. Once the composition is established, one should leave the governors to get on with the job of governing the school. Therefore the affirmative resolution procedure seems appropriate.
The debate is somewhat unsatisfactory. We are talking about a disparate aspect. However, there is a common theme running through some of the amendments contained in the second group: the importance of teachers as a specific category. Not only on the face of the Bill but in government amendments to the Bill teachers are conspicuous by their absence.
I return to my original point about Amendments Nos. 93 and 106. I am not sure that the provisions are any clearer than they were in their original form.
Baroness Massey of Darwen: I refer to Clause 18(2)(d) with reference to,
"the term of office of governors".
I understand that a parent can stay on as a governor, even though the child is no longer at the school, but only for a certain period. I believe that a teacher
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governor has to relinquish that post once he or she leaves the school. Perhaps I may have clarification on that.
Lord Peston: That is an important question which is worth clarifying. Perhaps I may add a few words to my noble friend's remarks on pupils in schools. My daughter was among the first, if not the very first, pupil to be a governor of a school in Haringey. We were very proud and asked, "What was it like'?". She said, "It's a complete waste of time". We inquired why. She said, "The teachers are hopeless"—not surprisingly because that was her view of teachers generally. But in particular the governors were not merely hopeless but ignorant and had no idea about what went on in the school. That shattered me at the time, but it leads me to two views. First, being a governor undoubtedly involves having a great deal to do with the school. It is not something that one puts on a CV and assumes that that is it. Nowadays it involves a great deal of commitment. It requires one to have people who really know about the school.
The group which, overwhelmingly, knows most about the school is the pupils. The idea that such a group should be optional seems absurd. I have never considered that one needed much in the way of formal teacher assessment. One just asks the children who teaches well and who does not, who bunks off and who does not. One needs no investigations. Therefore, I am genuinely surprised that at best pupils are an optional category when it should be compulsory. Equally, although we make the usual remarks in this Chamber about local democracy, the need of the community, and so on—I stand second to none in my support of those views—the fact is that we do not require the kind of people I have met on other bodies who talk a great deal at the relevant governing or other meeting and consider that as their contribution. Anything involving work or involvement is beyond them. Under another heading, we shall come to multiple governors and so on, which makes the matter even worse.
I strongly press my noble friend to face the reality of the school and the importance of governors, realising how important are those we have mentioned, the teaching and non-teaching staff and the pupils. I reiterate my noble friend's question. I am concerned to be assured that "parent governors" means parents of children at the school and that the staff are people on the staff rather than those who may have had some connection at some time.
We shall return to other topics in which we are interested. Amendment No. 106 seems to have nothing to do with what we are talking about. I assume that until we ran into our earlier troubles it was for the convenience of the Minister to group the two amendments together although that made difficulties unknown to any of us. I do not understand Amendment No. 106 and apologise, therefore, to my noble friend. I am sure that it is completely right and deserves all our support.
Lord Dearing: We are having a relaxed discussion and I presume, therefore, to join in, confessing my lack

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of detailed knowledge. First, perhaps I may say yes to pupil governors. However, before returning to the issue on Report, or whenever, on reflection perhaps we may satisfy ourselves that there are no legal impediments to having a minor as a governor, accepting all the legal responsibilities that go with being a governor. That may need to be thought through.
Secondly, one tends to have in one's mind a typical, fairly large, school. But there are a vast number of tiny primary schools in rural areas. When we think of having perhaps a teacher governor and a non-teacher staff governor, one may have the whole staff of the school on the governing body. We need to think through that angle too.
Baroness Blatch: The noble Lord, Lord Dearing, reminds me of a point relating to another clause. Where a school forms a company, we are putting on the governors a special and different responsibility. When considering the composition of governing bodies, we need to think of them as being members of companies, coming under the full panoply of company law.
Baroness Ashton of Upholland: I say to my noble friend Lord Peston that I, with other noble Lords, pay tribute to the work that governors do. Until last year, I was a chair of governors—perhaps a slightly easier job than I have today. Nonetheless, I thoroughly enjoyed that job and know from that experience over seven years, as do others, how much work governors do on behalf of us all in supporting schools and our children.
I view this debate against that backdrop. We seek to address the point reflected on by the noble Lord, Lord Dearing, about how different schools may be and creating flexibility. I know that noble Lords will regard it in that spirit. These debates are important. The Government's objective is to ensure that we get the matter right.
In reply to my noble friend Lord Peston, the current legislation is framed so that the elected parent governor is a parent with a child at the school. Sometimes such a parent cannot be found so we consider that other categories of people should be included, such as parents of school-aged children. That is quite rare—I have never come across it—but I gather that it happens. Another category is carers of children who may not necessarily be parents.
We want to re-enact the current position so that there is a broader meaning in law. We are doing precisely that in what, clearly, I have not set out well. I hope that clarifies the position. I apologise that we are not where I had hoped we would be, but I shall address the individual amendments. My noble friend Lady Massey is right to say that parent governors serve out their term of office, which is up to four years, and that teacher governors—staff governors—resign on leaving the school.
Baroness Blatch: The noble Baroness quite rightly describes the situation as it is at the moment, and the letter states:
"When that is not possible, current regulations allow the governing body to appoint a parent of a registered pupil or where that is not possible a parent of a compulsory school age child".
That is the current situation. I do not understand what the amendment does to widen that further. In what way does it widen it further.
Secondly, the letter goes on to say,
"The latter route"—
appointing a parent of a school-aged child—
"is not available to Voluntary Aided schools".
In these amendments, what makes it available to voluntary aided schools.
Baroness Ashton of Upholland: The purpose is to put on the face of the Bill the wider definition of "parent" so that in regulation the current position can continue. We approach the matter in that way to ensure that we can continue as we want. We also want to address in regulation the same issue in regard to voluntary aided schools. Up to now they have not had that freedom. By putting that wider definition on the face of the Bill, within regulations we can say that that would be available for all schools.
Of course, wherever possible it is important to recruit parent governors from the parents of the children who attend the school. I believe that the Committee will agree that such a provision should include carers. We have said, in terms of the stakeholder model, that if, at the end of the day, that proves impossible—we know that in some special schools it has proved quite difficult—to have someone who is a parent, and who approaches issues from a parental point of view, would be of use.
Lord Roberts of Conwy: Is the noble Baroness aware that Amendment No. 93, which substitutes,
"persons elected or appointed as parent governors",
for what is currently in the Bill, excludes direct reference to
"parents of registered pupils at the school".
That implies that the Government have changed the balance of the appointment.
Baroness Ashton of Upholland: On the face of the Bill we have "parents of registered pupils". That excludes any other category of parent. We are seeking to achieve the opposite of what the noble Lord suggests. We are widening the definition of "parent" on the face of the Bill so that in regulation we can stipulate that schools should look initially to parents within the school, but if that is not possible—I have described the situation of some special schools—they can look more broadly. That should be allowed to happen for all categories of schools, and it is a power that voluntary aided schools have wanted.
We are not trying to take anything away from parents of children attending the school. Of course, wherever possible they should be the parents involved,

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but if we were unable to achieve that we feel, as we have for some time, that we should still have a parental viewpoint or a carer's viewpoint. I hope that makes the position clear.
5.15 p.m.
Baroness Blatch: I may have a mental blockage about this. That is the current position so why do we need an amendment? Which statute prevents voluntary aided schools from enjoying that extension? What is there in the extension under the proposed amendment of the noble Baroness that includes voluntary aided schools? They are not named in the amendment at all.
Baroness Ashton of Upholland: I am sure that the noble Baroness does not have a mental blockage. The way in which the Bill has been framed takes away from the current position. That is why we need to amend it. As of today, the position is that if a school is unable to find a parent from within its ranks who is willing to serve, it can look more widely. The way in which we have framed the Bill removes that provision. My amendment puts it hack. Voluntary aided schools have not had that opportunity. By widening the position on the face of the Bill we can, by regulation, allow the voluntary aided schools to have that right.
Lord Peston: Perhaps I can reassure my noble friend that I understand what she is doing. Therefore, I believe she should soldier on as she has taught at least one person, out of all those present, something.
Baroness Ashton of Upholland: Thank you. If I can convince one other person of the point, that proves that I have understood it. I turn to the amendments that are now in this group, and speak, first, to Amendments Nos. 94, 95 and 97.
We have approached this matter through a consultation group called The Way Forward. Represented on that group were all the major stakeholders, including the National Association of Governors and Managers, the National Governors' Council and various other representatives of whom Members of the Committee will be aware. I was fortunate enough to chair the final meeting, having just been appointed. The purpose of the group was to consider some of the issues that governing bodies raised with it. Following those discussions I met with groups of governors around the country in order to test our proposals.
On the single staff stakeholder group, I fully understand why concerns have been raised. We had 4.385 replies to the consultation. The proposal was supported by 77 per cent and, to some extent, the support from head teachers and other staff was 78 per cent.
As the noble Baroness, Lady Walmsley, said, non-teaching staff are very much part of the school team. The amendments before us would alter the balance struck within The Way Forward group. I offer the noble Baroness reassurance by saying that we shall
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safeguard teacher representation on the governing bodies by making provisions in regulations that prescribe that at least one place on the single staff stakeholder group should be taken by a teacher. If no teacher stands for election, we want to ensure that the position is filled rather than being left unfilled. So a position is held for a teacher within that group on the understanding that if no teacher comes forward, the school should be able to fill the place, if it felt that was appropriate. We agree with those who have argued—a large percentage of those directly affected—for flexibility.
I turn to Amendment No. 96 in the name of my noble friend Lord Peston. The Way Forward group recommended that at least one member of the staff group should be a teacher. We believe that the level of support indicates that that is the right approach. Non-teaching staff make an important contribution. I hope that we shall be able to see that the maximum flexibility being created within the group enables schools to develop the model that suits them. We want to create a flexible model wherever possible to enable schools to develop the size, the type and the style, within the Way Forward group's proposition of the stakeholder model, that has been carefully worked out with them.
Perhaps I may turn to the subject of pupils and Amendment No. 98. I agree with everything that has been said about pupils being at the heart of education. It is important to consider how to involve them. However, over the years, it has become very clear to us that governing bodies have been given increasingly strategic—and, I would say, demanding—responsibilities: they set out the strategic direction of schools; they monitor and evaluate the performance to provide support and challenge the role of the "critical friend"; and secure accountability. So they have a tremendously demanding role to play.
In the light of what has been said about school companies by the noble Baroness, Lady Blatch, and by the noble Lord, Lord Dearing, I believe it would be helpful if I were to say a little about the legal position of governing bodies, because of the implications involved. When we debated school companies, we discussed at great length the issue of the body corporate. However, as those deliberations made clear, the governing body does have a distinct legal identity, which is separate from that of the individual governors who exercise their powers through collective decision making.
Thus a governing body in its own name can enter into contracts, and, depending on the category of school, hire and manage staff, acquire and manage the premises occupied by the school, open a bank account, and hold and manage the school budget. Provided that the governing body acts responsibly and in good faith, individual governors are protected from any personal liability for debts or obligations incurred by the governing body.
A body corporate can sign documents upon which third parties are entitled to rely as evidence of legal commitment. Therefore, it is important that those who

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deal with a body corporate are confident that it will act in a responsible manner. That depends to a large extent on the quality of the individual people who make the corporate decisions. To protect third parties, legislation that regulates public bodies, charities and companies—all of which are "bodies corporate"—is concerned with who may and who may not participate in corporate decision making through membership of the controlling body.
A lack of legal capacity in corporate decision making is a ground for disqualifying potential members from being members of bodies corporate. That is generally accepted to cover persons under the age of majority; that is to say, 18 years of age. For pupils under 18 to be eligible for governorship would, at best, be inadvisable. However, I believe that pupils' voices should be heard. They can, of course, make a valuable contribution to decision making. Pupils can already attend governing body meetings and committees at the invitation of the governing body. We know that a number of schools do so on a regular basis.
I want to ensure that there are clear mechanisms for taking pupils' views into account. I therefore intend to provide in regulations for governing bodies to be able to appoint pupils to a committee or committees as associate members. The regulations will, of course, be subject to public consultation—
Lord Peston: I am sorry to interrupt my noble friend, but is she saying that those pupils who previously served as school governors were behaving illegally? We are not inventing school governors here. As far as I know, schools have had pupil governors for some time. After all these years, I am a little taken aback to discover that there was a legal side to the matter. I should never have let a child of mine become remotely involved if I thought that there was any legal commitment, because I may well have ended up with a similar problem. This is absolutely news to me. I am not saying that it is incorrect, but perhaps my noble friend could clarify the situation.
Baroness Ashton of Upholland: Those young people who serve as school governors are unable to vote; and, therefore, are not members of the governing body because they have no voting rights.
I am trying to offer an appropriate category for young people, so that we can bring them into the process in a positive way. I strongly emphasise the fact that I want governors to be recognised for the valuable contribution that they make, and for the responsibilities that they carry. It is my view that associate membership is a good way of involving that participation. If people become governors, they should recognise that they are taking on a serious responsibility—I know that governors do—which has some effect in law. I make that distinction in the hope that it will address the issue raised by my noble friend. This amendment would make it compulsory to have pupil governors. I hope that I have persuaded my
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noble friend that that would not be the right way forward, and that he will agree not to press his amendment.
Perhaps I may move on to Amendment No. 99, tabled in the name of the right reverend Prelate. The guiding principle for foundation and voluntary controlled schools was that up to and including one-quarter of the places will be reserved for foundation or partnership governors. In our policy statement, which has been made available to noble Lords, we set out our commitment to implement the proposals of the Way Forward Group in this respect. I am pleased to have the opportunity to repeat that commitment here in Committee. We shall be implementing the proposals recommended by the Way Forward Group, and supported through consultation.
The provisions of Clause 18 ensure that there will be at least one governor place in each of the categories listed. The right reverend Prelate made clear that the Churches are seeking a minimum representation of two, or one-quarter where this is the greater. We have had discussions with Church representatives on this point, and are exploring how we might go some way towards meeting the point of concern. I am pleased, therefore, to offer a commitment to provide in regulations for a minimum of two foundation or partnership governor places at foundation and voluntary controlled schools.
As our proposals received such widespread support in consultation, I am sure that noble Lords will appreciate that I am keen to ensure that we do not depart significantly from the principles that I previously outlined. I hope that my offer of providing for a minimum representation of two foundation or partnership governor places at foundation schools will be sufficient to meet the primary concern of the right reverend Prelate.
I should also like to draw attention to an additional safeguard for the Churches that applies to voluntary controlled and voluntary aided schools, as well as to foundation schools with foundation governors. At the local level, the LEA will be unable to make an instrument of government detailing governing body membership for any governing body having foundation governors, unless the foundation governors themselves, the trustees, and any diocesan body, are content. Where the parties cannot agree, the disputed instrument will be referred to the Secretary of State for determination. These are existing provisions, which have worked to resolve disputes. We shall carry them forward into the regulations governing the process for making instruments of government. As for voluntary aided schools, I can confirm that the guiding principle for these schools is that foundation governors outnumber the other governors by two.
If we were to define one stakeholder group's membership in the primary legislation, I am sure that the Committee will appreciate that we would undoubtedly receive similar requests from all other stakeholder groups. If we distinguish between the various groups, that would imply differences in parity of esteem.

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However, I can confirm that there is no disagreement on the level of foundation governor representation on voluntary aided school governing bodies. The Way Forward Group proposed that foundation governors should outnumber the other governors by two. Responses to the consultation showed that over 90 per cent supported, at least in part, the proposals on representation—there was 88 per cent support from voluntary aided school respondents. I am pleased to have the opportunity to place on the record a specific commitment to provide in regulations for a majority of two for the foundation governors at voluntary aided schools.
I hope, therefore, that the right reverend Prelate the Bishop of Blackburn will appreciate why we are not defining the level of the majority on the face of the Bill, believing, as we do, that that is a matter for regulations. None the less, I listened most carefully to what the right reverend Prelate said. I know that this is an important point for the Churches. I recognise the importance of foundation governors in relation to voluntary aided schools. I trust, therefore, that we can meet the concern of the right reverend Prelate, without changing our general approach in the area.
I am prepared to bring forward on Report a government amendment that would establish the principle of a majority for the foundation governors for voluntary aided schools. I can confirm that we shall provide in regulations for the foundation to have a majority of two. I hope that this approach, which enshrines the principle in primary legislation, will meet the concern of the right reverend Prelate and that he will not seek to press his amendment.
Finally, I turn to Amendment No. 101. When discussing Amendment No. 95, I mentioned that the stakeholder model has been consulted on, and has received widespread support. I should like to reiterate our commitment to that model, and to preserving the balance between the different stakeholders: parents, staff, LEA appointed governors, community governors: and, for voluntary and foundation schools, foundation or partnership governors. The Way Forward Group emphasised the importance of maintaining the commitment to the stakeholder model of school governance.
Clause 18 defines the categories of persons who must be represented on the governing body, and thereby holds true to the principles of safeguarding representation of the key stakeholders. But there is a limited number of other persons whom we want to allow to be included on governing bodies, if governing bodies so choose. These are sponsor governors, and governors nominated by the Education Action Forum, if the school is part of an education action zone. To achieve this we need the provision that is the subject of this amendment; namely, that regulations may provide for governing bodies to consist of,
"such other persons as may be prescribed",
as set out in Clause 18(2)(f).
I hope that I can reassure the noble Baroness, Lady Blatch, by saying that we shall provide in regulations for a maximum of two sponsor governors per
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governing body. We intend to set a maximum of two, because we are committed to the stakeholder model. We want to ensure that the balance between stakeholders is maintained. However, we believe that it is right to extend the definition of sponsor governor beyond the current definition in Schedule 1 to the Education (School Government)(England) Regulations 1999, which applies only to individuals providing substantial financial assistance or benefits in kind, excluding services, to schools. Naturally, such individuals must declare an interest and withdraw from discussions on any issue relevant to that interest.
We plan to extend the current definition to include other external partners providing advice and support, including the provision of assistance by providing services to the school, as we explained in our recent consultation paper. Those offering support to a school—for example, through partnership working—could make a valuable contribution to the governance of the school, particularly by strengthening governance arrangements if the school is in difficulties. That might include, for example, a successful school, FE college or other body supporting or partnering another school. It is right that there should be scope for the school or body that is providing support to be represented on the governing body. That could be an important way of strengthening weaker governing bodies.
In the interests of parity, it is important to allow anyone providing a school with such potential benefits through a partnership to have an equal right to be represented on the governing body as those providing financial benefits, if they and the governing body of the recipient school so choose. I hope that, with the reassurances that I have given, the noble Baroness, Lady Blatch, will not move the amendment.
5.30 p.m.
Lord Peston: I want to ask my noble friend two questions. She has clarified some things but has left me feeling rather lost on the subject of pupil governors. My understanding of what the Minister said is that no person under the age of 18 can be a pupil governor. That is what she seemed to say. That is news to me, and it would represent a drastic change. That is what puzzles me. I do not need the answer to that question today.
My other question relates to religious schools. Much as I am opposed to religious schools in all forms, I understand that, if we are to have such bodies, the religious sponsors should have a dominant role. It would make no sense otherwise. Subject to my general attitude to such schools, I was glad to hear my noble friend's reply. However, bells started ringing none the less. Can I have an assurance that, in all other schools, none of the interested parties will have a guaranteed majority or be allowed to consider having such a majority? That frightens the life out of me with regard to some of the new forms of school in which the

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Government have taken an interest. Can I assume that everybody else will be in a definite minority on governing bodies.
Baroness Ashton of Upholland: I thought that I had addressed the point about pupil governors. Pupil governors as currently designated are students who are part of the governing body but do not vote. They are not full members of the governing body. The amendment would have made them full members. I hope that I have elucidated the reasons why that would not be appropriate and why there is the new category of associate members, which gives them status and a role, without their having to carry inappropriate responsibility as members of a governing body.
The noble Lord is right about the other schools. The position is exactly as he described it.
Baroness Blatch: One of the difficulties with this group of amendments is that not only does the Minister move the lead amendment, but she winds up the debate on the group. I am not blaming the Minister; it is a quirk of our procedures. However, it is true.
I am grateful for the detail given by the Minister, and I shall not press Amendment No. 101. On the subject of the responsibilities of governors should their school and/or schools and/or joint working with other companies form companies, the Minister said that, as long as an individual acted responsibly and in good faith, he or she would be protected. That is no different from the position of, for example, trustees of charities.
I had an experience as a trustee of a charity that is seared into my mind. We had decided collectively to sell a piece of land, but that decision was challenged by a group of local people. The only thing that saved us was that we had taken counsel's opinion, for which we paid, before we took the decision. The case went on for five years and came all the way to the House of Lords. It was only at that stage that we were cleared of a debt of about £5 million that had been hanging over each of us. I hope that the Minister and her officials will be mindful of such cases. We acted in good faith, as was ultimately proven. However, if we had not taken counsel's opinion, even if we had made the same decision and acted in the same good faith, we would have lost our homes and all our wherewithal. That is an important point, if we are to make school governors responsible under company law.
Baroness Sharp of Guildford: Can the Minister clarify the position in respect of the new academies? As I understand it, there is a majority of foundation governors in foundation schools. Presumably, that would also apply to the new city academies that are to be established.
The Lord Bishop of Blackburn: I am not sure about the right procedures, but I thank the Minister for her answer and her commitment in making instruments for voluntary-aided schools. It is right that we should
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continue existing provision. I shall read the Minister's reply carefully; I think that it was in line with what I sought. I will not move my amendment.
Lord Dearing: I shall ask the Minister to clarify one point and apologise for not having followed what she said sufficiently closely.
I am concerned about very small schools with a head teacher, one other teacher and one non-teaching staff member. I am worried that the position of the head teacher would be undermined, if that one teacher and the one non-teaching staff member were on the governing body.
I am sorry. Shall I say it again? I was asking whether there might be a problem with micro-schools.
A Noble Lord: No.
Lord Dearing: No? I shall shut up then.
Baroness Ashton of Upholland: I apologise to the noble Lord for being unable to hear him. I meant no disrespect, and I thank whomever it was who responded to him.
To the noble Baroness, Lady Sharp of Guildford, I say that the position depends on the nature of the academy. We will debate academies later, and I shall set out the model clearly for her then.
Baroness Sharp of Guildford: Am I right in thinking that foundation schools have a majority of foundation governors.
Baroness Ashton of Upholland: No—yes. I apologise for that. I shall now give the noble Baroness the correct answer: they are not in a majority. That is where I began my answer.
On Question, amendment agreed to.
Baroness Walmsleyhad given notice of her intention to move Amendment No. 94:
Page 12, line 1, after "work" insert "as teachers"
The noble Baroness said: With reference to the Minister's comments on Amendment No. 94, can I ask whether she thinks it odd that teacher governors should not be mentioned in the Bill, given the Government's determination to raise the morale of the teaching profession? I also understand that the Way Forward group had no teacher representatives.
Baroness Blatch: When speaking to these two (now composite) groups of amendments, the Minister named all the groups that were in favour. The NAHT, the NAS/UWT and the NUT, which represent a large proportion of teachers, do not support the leaving out of teachers. They support the demarcation and inclusion of teaching and non-teaching staff, but they include them as separate entities on the list. They also are not mentioned.
The Deputy Chairman of Committees (Lord Elton): The words to which Amendment No. 94 is addressed

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have been withdrawn by the amendment to which the Committee has already agreed. The amendment has, therefore, been pre-empted, and I should not have allowed it to be moved. In any case, it was in a group that had been spoken to.
[Amendment No. 94 not moved.]
The Deputy Chairman of Committees: Amendment No. 95 is also subject to pre-emption.
[Amendment No. 95 not moved.]
[Amendments Nos. 96 to 101 not moved.]
Baroness Sharp of Guildfordmoved Amendment No. 102:
Page 12, line 8, leave out "may" and insert "shall"
The noble Baroness said: I rise to move Amendment No. 102 and to speak at the same time to Amendments Nos. 105, 108 and 109. The amendments address some of the issues that we have already discussed, but they also seek to question some of the central tenets of the new school governing arrangements being proposed in the aftermath of the consultations on The Way Forward which took place last year.
The question which the Committee has to address is whether we need any new regulations governing the management of maintained schools. As has already been said, the last set of regulations came into force only two years ago. Discussions I have held with a wide range of organisations indicate a broad agreement that those regulations—the current regulations, which were finalised after a long period of trial and error—are about right. That process took a long time, developing gradually through a series of education Acts from the time of the Taylor report, published in the 1970s, onwards in which the role of governors was honed. As a result, many feel that we have now got things about right. Why then is there a need for change.
It appears that the pressure for change came from two sources. First, from quite a number of head teachers who were rightly concerned at the burdens being shouldered by governors, and, given the responsibilities borne by governors, were also concerned at the difficulty of recruiting people to fill those positions. Secondly, from the Government themselves who, as always, are wedded to the notion of modernisation and change. They believe that all innovation is good and that shaking up established institutions is worthwhile. However, in that process of shaking up, sometimes the Government forget that such continuous change can in fact destabilise institutions.
Be that as it may, the result of all that was the establishment two years ago of the Way Forward Group to discuss the future of school governance. That group met only four times. It had representatives of head teachers, governors, the Churches and, from local government, those who train governors. However, it did not include any representatives of teachers or parents. I understand that, far from finding the way forward, the group actually rather lost its way and drifted into a fog. Nevertheless, as the Minister
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has already indicated, the outcome was the publication of a consultation paper, The Way Forward—A Modernised Framework for School Governance.
As we all know, it is easy to run a consultation when one starts from a certain set of premises and then asks which, from a series of changes that are going to be made, would the consultees prefer. That, essentially, was the way in which the consultation took place. As a result, I believe that it was a somewhat flawed exercise. The outcome was agreement to the proposals put before the Committee today.
One of the main findings of the Way Forward Group was that there should be much greater flexibility and that schools should be able to vary the rules of governance from one school to another. Do we really need to do that? Amendments Nos. 102 and 109 are technical amendments which change the "may's" to "shall's" in Clauses 18(3) and 20(3). This approach would have the effect of requiring the Secretary of State to lay down national rules and structures for governing bodies. I agree that it may seem a little odd for noble Lords on these Benches to argue for more centralisation rather than less, although in this case there has been centralisation.
What is being proposed is to give schools greater discretion on matters such as the size of the governing body, who would be eligible to serve on it, what would constitute a forum, what sub-committees should be set up and so forth, along with addressing the standing orders framework required of governing bodies. From these Benches we would argue that it is more suitable for such matters to be laid down centrally rather than that they should vary from school to school.
I seek that position for a number of reasons. First, writing the rules is a time-consuming function to which the clerk for the head teacher would have to give a great deal of time and attention. Secondly, it would put too much power into the hands of the head teacher to restrict, for example, the number of staff governors or to marginalise their rules through the rules governing working together. The influence of head teachers on revision of the rules, such as restricting the role of support staff appointments, could also be rather too strong. Thirdly, national rules confer prestige and weight to a governing body. Being a school governor is a responsible position and is acknowledged as such by its national identity and framework—just as the magistracy, too, has a national identity. It is another volunteer body, but through its national framework it acquires a national identity.
I think that it is unsatisfactory for boards to determine their own size and composition within a set of general principles. For example, there is no requirement for non-teaching staff to be represented, even though we have already debated the fact that that requirement was finally included on the statute book only two years ago. Similarly, a minimum teacher representation of one person regardless of the size of the school is something that we feel is desirable. In larger schools it is important for there to be at least two teacher representatives. Indeed, all these reforms to

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governing bodies will put power into the hands of head teachers at the expense of parents, teachers and the community as a whole.
Because it has been only two years since the last set of reforms, which in general were welcomed and did introduce long-needed changes such as a role for support staff on the governing body, I do not understand why the Government propose to turn everything upside-down again.
Amendments Nos. 105 and 108 refer respectively to subsection (7) in Clause 18 and subsection (4) in Clause 19. Both foresee the possibility of federations of schools being formed under one governing board. Those of us who remember the pre-Taylor days in the 1960s, when 10 or even 20 schools were often grouped under one governing board, know what a difference individual governing boards have made to the ethos and morale in schools. Quite frankly, we do not want to go back to those days. The clauses in question are Clauses 23 and 24. I shall return to those when we consider whether they should stand part of the Bill.
I should like Members of the Committee to bear in mind that the pre-Taylor days were not good days in terms of school governance. We have moved a long way from that position. Where we have discovered good methods, then we should now stick with them. Stirring everything up and introducing changes is not always the right way forward, modernisation or no modernisation.
For the moment, I go back to Amendment No. 102 and the need for there to be national rules and national structures for governing boards. I beg to move.
5.45 p.m.
Baroness Blatch: I feel that we might be talking at odds on these amendments. I certainly agree with the fundamental question put by the noble Baroness: why do we need to make changes? It appears that some pretty good arrangements are already in place. However, I am worried about the arrangements being controlled entirely from the centre. Flexibility at the local level is quite important and schools should be free to determine how they are going to operate, but within the framework of the law.
Turning to federations, my own view on including the clauses on federations rather than removing them, as the noble Baroness seeks to do, is that I, too, have grave reservations about the overall proposal for federations, which we shall come to later. However, if they are to be set up, then there have to be certain rules setting out how they are to be governed. It would be quite wrong to leave the proposal for federations on the face of the Bill without the Government setting out some view of how such schools are to be represented and how the different interests in particular schools would be protected. Those interests may be ones covering special needs, specialist matters or protecting the interests of professional versus non-professional staff. Whatever might be the interests, there will need to be some regulation.
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For that reason, I would not be able to argue against the inclusion of subsection (7) in Clause 18 and subsection (4) in Clause 19. They should stand part of the Bill if the Government succeed in establishing federations of schools as a possible way forward.
Baroness Ashton of Upholland: I turn first to Amendment No. 102. I agree with the noble Baronesses, Lady Sharp and Lady Blatch, that there is a need for an appropriate level of prescription on the constitution and procedures of governing bodies to ensure that the necessary safeguards are in place.
It is our current intention to make regulations covering the specific items listed in Clause 18(3). We have set out our intention in our policy statement which has been available to the House. The point about "may" is that there may come a time when such regulations are not needed. Making unnecessary regulations would impede governing bodies' ability to choose and adopt arrangements that best suit their particular circumstances and it would thereby risk making governing bodies less effective.
For example, within the clause, paragraph (1) provides for,
"other matters relating to the constitution or procedure of governing bodies".
Paragraph (j) refers to,
"the appointment of persons other than governors to serve on committees of governing bodies".
Subject to consultation, those paragraphs may not require regulations under the proposed new arrangements. It may be more appropriate and helpful to governing bodies to cover those areas in guidance rather than in regulations.
I turn to Amendments Nos. 105 and 108. We shall debate the whole concept of "federation" and I look forward to doing so. However, the purpose behind it is to enable schools to collaborate strategically.
Amendment No. 105 would mean that each individual school which chose to federate would have to retain its own individual governing body. That in turn would mean that the governing body of the federation would effectively be an overarching structure that would sit above each school's individual governing body. It seems to me that this amendment would result in the worst of both worlds. The existence of a supra-governing body for the federation of schools would undermine the role of the individual governing bodies while adding greatly to the workload and bureaucracy.
I do not consider that that would be a way forward. It is our intention—we shall debate the matter at length—that when a school chooses to federate, it will come under the auspices of a single governing body for the whole federation in order to minimise bureaucracy and retain and increase accountability.
As regards Amendment No. 108, perhaps I may make it clear that when schools decide to federate under a single governing body, it is our intention that the governing bodies will make a request to the LEA to draw up an instrument of government for the

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federation. As Members of the Committee will be aware, the instrument of government for a school is an important document that sets out the constitution.
In our view, drawing up an instrument of government is the only sensible mechanism through which to make a change to the constitution of the governing body. I emphasise that the federation approach is not about the merger of two or more schools into one. Indeed, within the federation each school will retain its character and structural arrangements.
As regards Amendment No. 109, perhaps I may reassure Members of the Committee that it is indeed our intention to make regulations setting out the terms of reference for the governing bodies of maintained schools; to define the respective roles and responsibilities of the LEA, the governing body and the head teacher in the conduct of the school; and to confer functions on governing bodies and head teachers.
We intend to build on the existing regulations to include one important additional element. Schools have greater autonomy than ever before, but there are a number of areas where the local education authority does have a role and responsibility in the conduct of individual schools; for example, in offering advice on head teacher appointments to community and voluntary-controlled school governing bodies, or taking direct responsibility where the delegated budget has been suspended.
The role of the LEA in school education has been fully described in the revised code of practice on LEA school relations, issued last year. It is not our intention to amend in any way LEA roles or responsibilities, but rather to ensure that governing bodies are fully aware of the issues.
I hope I have reassured the noble Baroness that we intend to regulate on all the areas provided for. The use of the permissive "may" is not intended to water down that commitment, but rather to recognise in legal drafting terms that there is no over-riding requirement to have such regulations in existence in order for governing bodies, head teachers and LEAs to conduct their statutory responsibilities. As time progresses, it may be that in certain areas we would want to rely more on guidance than regulations, but for the present time I can assure Members of the Committee that we fully intend to regulate in this area and that the existing regulations will remain in force until we have done so.
I hope that in the light of those assurances the noble Baroness will feel able to withdraw her amendment.
Lord Peston: We appear to be having the debate under a misconception. I have previously enunciated to Members of the Committee the golden rule of opposition. It is that every time the word "may" appears it is the duty of the Opposition to substitute -shall" and that every time the word "shall" appears it is the duty of the Opposition to substitute "may". I did that for many years when I was desperately trying to make a contribution to a Bill I did not understand.
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It is inconceivable that we could have governing bodies if they did not have regulations. Therefore, I do not see what the debate is all about. Clearly there will be regulations and I do not know why we are debating that. As the noble Baroness, Lady Blatch, pointed out, we shall need to debate the regulations when they are published. However, I say to my old friend the noble Baroness, Lady Sharp, that I do not see why we have spent so much time debating the issue. Can she give me an example of how this world can proceed with no regulations? We would have no governing bodies.
Baroness Sharp of Guildford: In response to the noble Lord, Lord Peston, I was on this occasion changing "may" to "shall", thereby obeying the particular rule that he laid down! Part of the idea of the reorganisation of governing bodies is to move to a situation in which there is variable geometry and where governing bodies can vary. The proposed draft regulations indicate that there can be considerable variation but there are problems with that. Problems arise when we do not have national rules about what shall constitute quorums and instruments of government. That is the issue about which I was concerned.
I thank the Minister for her reply. I am somewhat reassured by it because she appears to have in mind some of the issues about which I was concerned. I am most reassured by what she has said about federations. If she is right that they are largely a strategic function, it is all the more important that schools should be able to preserve their own individual boards. They may come together for particular issues, but there is a considerable difference when schools have their own boards of governors. We shall debate that matter when we discuss federations but, meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blatchmoved Amendment No. 102A:
Page 12, line 18, leave out paragraph (h).
The noble Baroness said: In rising to move Amendment No. 102A, I shall speak also to Amendment No. 102B. I hope that the noble Lord, Lord Peston, will not feel that I ought to be rebuked for delving yet again into the shape of the regulations.
I do not argue that there should be no regulations. There are many issues for governors and the governing body which need the protection of a framework within which to work. However, I question whether there need to be regulations relating to how governors elect their chairman or vice-chairman. I am delighted to see the word "chairman" on the face of the Bill, but the way in which he or she is elected should be a matter for the governing body. I am happy for the regulations to state that there shall be a chairman and a vice-chairman, but I do not believe that the method of their election should be covered by regulations.
I turn to Clause 18(3)(i). Having served on governing bodies—and on more than one at any given time—I know that some will have a finance and general purposes committee, some will have an

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administration sub-committee and others will have other forms of committees. Governing bodies do not all have the same types of committees. They will meet their legal obligations, whatever they may be, but in their own way. In the spirit of genuinely devolving some flexibility to the governing bodies, at least paragraphs (h) and (i) should be removed from the list. I could argue that one or two others are suspect, but for the moment I believe that paragraphs (h) and (i) are otiose. I beg to move.
6 p.m.
Baroness Ashton of Upholland: I am intrigued to know what the noble Baroness thought would be there if the word "chairman" was not there. I presume it would be "chairperson" or some such other term.
Baroness Blatch: When Cambridgeshire ceased to be a Conservative controlled authority when I was the leader, the following morning I went to meet the leaders of the other two parties. I found that we had gone from being "chair" to being "spoke". For a while I was called "Madam spoke" but for much of the time we were just called "spokes". I was described as an "equal member of an egalitarian triumvirate" at the time. It was absolute nonsense. I like to be called "chairman" or "Madam chairman", but I do not like to be called "chair", "spoke" or any other such word.
Baroness Ashton of Upholland: My noble friend Lord McIntosh says "triumvirate" is sexist too. I am perfectly happy with the word "chairman". When I have been in the position of a chairman, that is what I have been called. I thank the noble Baroness for her explanation.
I hope I have made clear that we have a commitment to deregulating governance legislation where it is possible and appropriate. But we want to ensure a balance between safeguards and flexibility, and while I can confirm that we will consider carefully what level of detail the regulations should contain I do not want to give the impression that we would wish to deregulate this area completely.
The positions of chair and vice-chair are crucial to the performance of a governing body. They ensure the good conduct of meetings, that the meeting does its business well and that responsibilities are carried out. Certainly, having performed that function myself, I am well aware that chairmen of governing bodies spend a great deal of their time working closely with head teachers and with staff. They are, if you like, the first port of call for issues involving governing bodies. Their role is crucial.
When governing bodies are looking to the "centre", if I may describe it as such, to support them, they want to know how to do certain things. It is not natural for everyone to be able to design and devise their own way of doing things. As we encourage more people to become involved in governing bodies, we do want flexibility, but we also need to lay the ground rules that will help them in their task.
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I appreciate that the provisions which at present require the clerk to seek nominations in advance from individuals and to list those names on the agenda for the meeting, and so on, were brought in to bring more openness and transparency into the procedure. However, I am prepared to reflect on the points that the noble Baroness has made and take them into account in revising the regulations. But if we deregulate in this area, each governing body could then determine how to elect its own chair. There would be a lack of consistency and I am not sure that there would be a clear safeguard to ensure a fair process. It is possible that chairs could be appointed without election.
We want to do as much as we can to remove burdens. I hope that I can reassure the noble Baroness by saying that we will include only the minimum provision necessary in regulation to safeguard a transparent and fair election process for chairs and vice-chairs.
As to Amendment No. 102B, my concern is about accountability, which is a key function of a governing body. There may be scope to deregulate some of the current provisions that apply to the establishment of committees—I hope I can reassure the noble Baroness by saying that we will consider this carefully—but a certain level of prescription is needed to clarify and safeguard accountability lines. For instance, if a governing body gives delegated authority to a committee, then the committee is accountable for the decisions it takes. It is therefore important to prescribe that the majority of members on that committee must be governors, as opposed to associate members who can be appointed to committees but are not governors, as I described earlier in relation to pupils.
Governing body committees also deal with a number of statutory duties, such as staff discipline and, in some cases, admissions. Here again it is important to safeguard transparency and fairness by making some provision as to the membership of these committees.
With the commitment that we will deregulate the provisions on elections of chairs and vice-chairs and the establishment of committees, where possible, within the safeguards that I have indicated, I hope that the noble Baroness, Lady Blatch, will feel able to withdraw her amendments.
Lord Peston: Before the noble Baroness, Lady Blatch, responds, perhaps my noble friend will be able to clarify one issue. My noble friend said that she will reflect on what has been said on this matter. Can she tell me, either now or later, if we do not make provision for these matters by regulation, are we certain legally that the governing body could do these things? Perhaps I may make a not perfect analogy. After your Lordships had set up my economic affairs Committee I discovered that you had not set it up with any powers to establish sub-committees. When I suddenly announced that we were going to establish a subcommittee I was told, "No, you can't, because no one has given you that power".

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If my noble friend were to leave some of these matters out of regulations, can we be sure that the governing body would be allowed to do them? I do not need an answer now. I would like the same answer my noble friend gave earlier, that she will reflect on these matters before coming to a final conclusion on the regulations.
Baroness Ashton of Upholland: I hope that I have indicated that we do wish to reflect. As I said, it is a question of achieving a balance between ensuring that we have consistency and fairness and, in terms of responsibility, that the governing body is given support and regulation to ensure that it operates effectively, while at the same time recognising that some of the ways in which we have tied up our governing bodies in procedural terms could be altered and changed. As I said, I shall reflect on all of those issues and come back to the Committee on them.
Baroness Blatch: I am grateful to the Minister for saying that she will reflect on the amendments. However, whatever happened to "trust the people"? If one looks at the regulations which I have not sought to remove from the Bill, such as,
"the number of governors, or of governors falling within any category,
"the person or persons by whom, and the manner in which, governors are to be elected or appointed,
"eligibility for election…
"the term of office of governors,
"resignation or removal from office of governors"—
I shall not read them all out but they are pretty considerable—anyone who gets through those rules that far is capable of being either a chairman or vice-chairman of a governing body. Certainly they would be a group of people capable of forming committees and sub-committees and running them because they would have to meet their legal obligations under the Bill anyway.
In answer to the point made by the noble Lord, Lord Peston, I thought that the basis of law in this country was that you could do anything as long as there was not a bar in law to prevent you from doing it. So, for example, if paragraph (i) was removed from the Rill, it would not mean that no governing body could form sub-committees in order to carry out their work.
Lord Peston: We do not live in a society where you can do anything you like. We live in a society where all kinds of bodies, public and private, are subject to laws which empower them to do certain things corresponding to what they were set up for and which prevent them from doing other things. It may well be that the law exists to enable the governing bodies to do all the things that the noble Baroness wants them to do. I was simply inquiring whether that was actually the case. My experience when serving on a body is that when dealing with matters which look reasonable to you and which you feel you should be able to do, you often discover that you have not got the powers to deal with them, even though you thought you did
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I am merely asking my noble friend, who has promised to do exactly what the noble Baroness wants—that is, to look at this issue—to bear that in mind. It seems a perfectly reasonable thing to ask and I am delighted with her reply that she will look at these matters. I do not wish to rebuke the noble Baroness, Lady Blatch, but I do not know why she is persisting with her remarks on this issue.
Baroness Blatch: It is because I believe implicitly that the governing bodies will get on with it and do an extremely good job. There is no evidence anywhere that there has been an abuse of this procedure. I was told a long time ago that rules and regulations are only there as a guide for when things go wrong. I was always told that a body which worries about its rules and regulations is usually a body failing. By and large, governing bodies do the right thing in the interests of their schools, their children and their parents. I trust them to do that.
I certainly trust them to appoint from within their number a chairman or vice-chairman. In answer to my question about that, the noble Baroness said that it is possible that a chairman could be appointed without an election. The governing body would have to guide that. If someone put their hand up and said "I would like to be chairman", and the governing body were happy with that and everyone said "Fine", that would be an endorsement by the governing body and perfectly all right. It does not usually happen like that. There is usually more than one person who wants to be the chairman, although in other governing bodies and in some parts of the country, getting someone to be a governor, let alone to be the chairman of governors, is quite difficult.
I want to go down the road of trusting the people. I hope that the noble Baroness will come forward with an amendment to satisfy me in that regard. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 102B not moved.]
Baroness Walmsleymoved Amendment No. 103:
Page 12, line 25, at end insert—
"provided however that such regulations may not make different provision for different governors, nor for different categories of governors, save as may be necessary to give effect to requirements for the election of governors in certain categories"
The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 104.
This is a probing amendment. It seeks to ensure that all the various categories of governors are governed by the same or similar regulations. As my noble friend Lady Sharp of Guildford said earlier, the Government last changed the constitution of governing bodies only just over two years ago. The vast majority of head teachers, governors and teachers believe that there is completely and utterly no need to make further changes to the constitution of governing bodies at this stage. The status quo has evolved and is deemed by most to be satisfactory.

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Therefore, will the Minister clarify the issue of teachers standing to be parent governors in their own school? Currently, a teacher with a child in the same school as the one in which he or she teaches is able to stand either as a parent governor or as a teacher governor.
The DfES consultation document, The Way Forward, proposed to prevent teachers who have a child in the same school from standing as parent governors. Yet the Bill makes no reference to that. What are the Government's intentions on the issue? Although I can see the potential difficulties and conflicts of interest that may be seen to arise in such cases, the Government must be able to trust all governors and governing bodies to function professionally and in the best interests of the school as a whole.
Therefore, it seems counter-productive to set up unnecessary barriers to teacher-parents when it is difficult enough to recruit and retain parent governors, as in the cases referred to earlier by the Minister in which the parents of children who are not at the school sometimes have to be recruited. What impact does the Minister think these proposals will have on the recruitment and retention of governors.
Amendment No. 104 seeks to prevent a reduction in the number of teaching and support staff governors on school governing bodies within the stakeholder group, unless the teaching and support staff governors have conducted the necessary ballot to approve the reduction. The amendment would mean that no change could be made to the status quo regarding the constitution of existing governing bodies without the agreement of the majority of teaching and non-teaching staff in schools.
It is important to note that the status quo allows for representation of both teachers and support staff on the governing body—which is clearly welcome, not only to Members of the Committee, given the debate earlier, but to all the governing bodies I know. My noble friend Lady Sharp reminded us that the number of teaching assistants in schools is set to rise; therefore, it is vitally important that they, too, have the opportunity to serve on the governing body. I beg to move.
Baroness Massey of Darwen: I again seek clarification on an issue raised by the noble Baroness, Lady Walmsley. It is my impression that a person who teaches in a certain local education authority cannot be a governor in a school under that authority unless the person is elected to be a teacher governor in his or her own school.
Baroness Walmsley: Frankly, I am not sure whether that is correct. I understood that the person could be either a teacher governor or a parent governor. Perhaps we could be advised by the Minister.
6.15 p.m.
Baroness Ashton of Upholland: I am happy to deal with the matter of teacher and parent governors, although it does not follow directly from the amendment. The amendment, as I understand it, seeks to ensure an equal voice on the governing body in terms of stakeholders. Perhaps I may address that specific matter and then turn to the points raised by the noble Baroness, Lady Walmsley.
Our stakeholder model was the subject of full discussion and negotiation. Although I appreciate the comments that have been made about history and background, we were very clear that we needed to arrive at a point where the model made the best sense for all the stakeholders. Within that model, we do not have complete parity between the different groups. It is, for example, our view that parents and staff should represent a third of the governing body, and so on. We can discuss the stakeholder model at another time. The consequence of the amendment as drafted would be parity—which would, of course, include the sponsor governors to whom I referred, who would be additional governors. It is a consequence that we do not want.
To take the specific issue of staff and parent governors, in deliberations on The Way Forward and in all the discussions that I have had with governing bodies around the country, we discussed the matter at length and put our proposals forward to hear different views.
All staff will be able to put themselves forward. So those parents who are also teachers or lunch-time supervisors, or are connected with a school in any other way, will be able to put themselves forward to be elected by their peers as staff governors. We believe that that is the best way to ensure that those people who have a relationship with a school are defined in one category or another.
The current position is that staff cannot be co-opted as governors in the schools where they are employed. We are simply extending that principle to say that, in the case of a staff member, that is his or her primary role within the school and that is the group to which he or she should be elected to the governing body. In the case of parents, it is people who are not connected with a school in terms of drawing a salary or having some kind of contract with the school. That is the principle. We are defining parents in that way and saying that, while we very much welcome people who are parents and who are involved in the school as teachers or other staff, they should stand in the category of staff governors. I hope that that makes our position as clear as possible.
Turning to Amendment No. 104, we have attempted to get the maximum amount of support for our proposals. I am pleased with the level of support that we have received for this model. It is designed to give increasing flexibility and to recognise that schools are different and have different needs. We believe that governing bodies are best placed to decide what works for them, taking account of local and specific

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circumstances. That is partly in response to what I believe the noble Baroness, Lady Blatch, is partly looking for from us.
The approach that we are advocating is about giving governing bodies a choice while ensuring that the balance between the different stakeholders is maintained. But in that context I do not believe that it is right to say that there can be a veto in terms of allowing certain groups of stakeholders to say that they will not accept it. For example, a governing body might decide that it wished to change its size. It would then have to hold ballots—which we believe would be a serious disincentive. Nor do I think it right to allow schools to retain separate categories—for example, staff and teachers—and the option to retain existing numbers. What we are attempting to do is to set out guiding principles, the model around which schools are able to determine what they want to do.
That is our position. I recognise that this change has come at the end of other changes. However, we have committed ourselves to giving governing bodies three years to adopt a new constitutional model. We shall not move on these matters until 2006, so they will have the time for that. It is important also to emphasise that existing governors will be able to serve out their term, but we shall ask governing bodies to move by that date to the new stakeholder model with the flexibilities it entails. I hope that with those reassurances the noble Baroness will feel able to withdraw her amendment.
Baroness Blatch: Perhaps I may put a question to the Minister about community governors. In the policy document, the noble Baroness reminds us that the School Standards and Framework Act refers to the community governor as the person who is appointed a member of the school's governing body by being co-opted by governors who have not themselves been so appointed. As I understand it, the regulations will extend that, and it is not made clear in which way.
It is my understanding that a teacher in the community—who may not necessarily be a teacher at that particular school—up until we left office was available for co-option or even for election as a governor at the school. I am not sure how the present definition in paragraph 1 of Schedule 9 in the School Standards and Framework Act is to be re-written in the regulations, and in what way they will be extended to include wider interests.
As to the draft regulations, it would be enormously helpful to all sides if we could have sight of those before we reach the next stage of the Bill.
Baroness Ashton of Upholland: I am certainly happy to take away the noble Baroness's request to look at draft regulations. The position of a teacher who does not teach at the school and who might be co-opted through the community route is as it was. As a co-optee, that would be perfectly appropriate. The purpose of extending and looking at the community group is specifically to see whether we can widen out within that co-opted group. For example, if the school has a number of looked-after children, one of the cooptees might be someone from social services who has
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particular expertise in that area. A school might look to co-opt around particular groups of children people who have expertise in special educational needs, and so on. We want to enable schools to think creatively about who can bring additional support and interests to the school. Another example might be someone with a particular interest in a curriculum subject. We are trying to broaden things out in that way. I shall take the noble Baroness's request on board and I repeat again that teachers at other schools can be community governors.
Baroness Walmsley: I think that the amendments have served their purpose in clarifying the Government's position. As I understand it, under the regulations a teacher with a child at a school will be able to serve on the governing body only as a teacher and not as a parent. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 104 and 105 not moved.]
Clause 18, as amended, agreed to.
Schedule 1 [Incorporation and powers of governing body]:
Baroness Ashton of Uphollandmoved Amendment No. 106:
Page 129, line 18, leave out "and" and insert "or"
On Question, amendment agreed to.
Schedule 1, as amended, agreed to.
Clause 19 [Instrutnents of government]:
Baroness Sharp of Guildfordmoved Amendment No. 107:
Page 12, line 43, leave out subsections (2) and (3) and insert—
"( ) The local education authority shall make the instruments of government for all its maintained schools and shall determine matters to be dealt with in such instruments, the form of such instruments, and the review and variation of such instruments."
The noble Baroness said: The amendment would re-establish a principle currently in primary legislation. Every school has an instrument of government controlling who is a member of the governing board. Since the Education Act 1980, these have been made by the local education authority. Before that, the LEA made the instrument for county schools and the DES for voluntary schools.
The current law requires that the local education authority makes the instruments of government for each school. The Bill will make subject to regulations the body that will approve the instrument. It does not say that the LEA will do it, although until now the LEA has been written into primary legislation as the body that shall do that. There is no suggestion that the regulations are not going to designate the local education authority as the body to do it. It is the obvious body to do so. It has local knowledge of the schools and it has the authority to do it. Moving the principle that the LEA should make the instrument of government out of primary legislation and into secondary legislation seems pretty pointless. It has the

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opposite effect to the Government's desire to deregulate and creates more bureaucracy. Why is it necessary to make the change? I beg to move.
Baroness Ashton of Upholland: We propose that the procedures will be largely a continuation of the existing arrangements in Schedule 12 to the School Standards and Framework Act 1998. I assure the noble Baroness that local education authorities will continue to he responsible for making instruments of government for all maintained schools and that the requirements for consulting interested parties will not be changed. Those assurances are contained in section 4.2 on page 18 of the policy statement that has been put in the Library.
We believe that it is necessary that regulations are provided in this way. Noble Lords will be aware that existing legislation obliges LEAs to ensure that all maintained schools have an instrument, but allows the governing body to prepare and submit a draft instrument to the LEA for authorisation. The governing body of any school with foundation governors is required to submit a draft to other relevant parties, such as those who appoint foundation governors, the trustees and the diocesan authority.
The existing arrangements are consistent with the flexible approach of the new stakeholder framework and are therefore being carried forward. They reflect the spirit of the new framework, which allows governing bodies to choose their membership in response to the particular needs and circumstances of the schools. We believe that they are therefore best put in regulations. With that explanation, I hope that the noble Baroness will agree to withdraw the amendment.
Baroness Sharp of Guildford: I seek a little clarification from the Minister. Am I right in thinking that the change that she is proposing is that schools should be able to make their own instruments of government, which would be vetted by local education authorities to make sure that they met the required principle? Whereas primary legislation currently puts responsibility for making the instruments of government into the hands of the local education authority, that responsibility can now shift to the schools.
Baroness Ashton of Upholland: Existing legislation allows that schools can draft their own instrument and submit it to the LEA for authorisation. We are putting the issue in regulations because we think that that is a simpler way. That does not change the substance. We think that it contributes to simplifying education legislation and adds no extra bureaucracy. There will be a partnership between schools and local education authorities in the drawing up of the instrument, but the responsibility is firmly with the local education authority.
Baroness Sharp of Guildford: I thank the Minister for that reply. There seems little need to change current legislation, but I beg leave to withdraw the amendment.
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Amendment, by leave, withdrawn.
[Amendment No. 108 not moved.]
Clause 19 agreed to.
Clause 20 [General responsibility fir conduct of school]:
[Amendment No. 109 not moved.]
Clause 20 agreed to.
Clause 21 agreed to.
Clause 22 [Clerk to the governing body]:
Baroness Blatchmoved Amendment No. 110:
Page 14, line 6, at end insert "provided that, for a foundation or voluntary aided school, the body shall be the governing body"
The noble Baroness said: I echo the comments of the noble Baroness, Lady Sharp. We seem to have pages and pages of changes, but we have to ask what they are improving, what they are changing and what is their purpose. A great deal of time could be saved, as could a great deal of anxiety on the part of schools. When we pass a new Act of Parliament, schools start to worry about what new things they have to do. In an attempt to be helpful, the Minister constantly tells us that the proposals are no different from what schools are doing at the moment, so they need not worry and there will be no extra burdens. The underlying question is: why change.
I shall speak to Amendments Nos. 110 and 111 and argue that the clause should not stand part of the Bill. Paragraph (b) says that regulations shall cover,
"prescribing the body by whom any such appointment is to be made and any restrictions or other requirements relating to any such appointment".
In foundation and voluntary aided schools, that should be a matter for the governing body. Paragraph (c) refers to,
"the dismissal of any such clerk and the procedure to be followed in connection with his dismissal".
For a foundation or voluntary aided school, the decision to dismiss a clerk should be taken by the governing body.
One of the reasons why the body that represented grant maintained schools went along with the proposals to give them the option to become community schools or foundation schools was the promise that they would continue to enjoy a great deal of autonomy on how they ran their affairs. It is important to continue to honour that pledge. The governing body should be given responsibility in such cases.
I then argue against myself and ask why we should have regulations at all. Let the governing bodies get on with what they do well. This is an area that does not require regulating; that there should be a clerk to the governing body is sufficient. How it appoints the clerk or how he or she operates as a clerk to the governing body and whether he or she does his job well, badly or indifferently should be a matter for the governing body. Whether a clerk should be dismissed should also be a matter for the governing body. I hope that the noble Baroness will be sympathetic to that argument. I beg to move.
6.30 p.m.
The Lord Bishop of Blackburn: I feel that I ought to be grateful to the noble Baroness, Lady Blatch, for raising this matter and, indeed, I am. However, I am in some difficulty because it is not clear to me who is the prescribed body for other schools. It seems to me to make perfect common sense, given that voluntary-aided schools and foundation schools appoint head teachers and so on, that this small task should be given to them. However, I should have thought that all governing bodies would he perfectly capable of handling that task and would not need some other body to do it. As I do not have the regulations, I have tried to study the Explanatory Notes but they do not help me in this regard. Therefore, I should be grateful for some clarification on the matter. I hope that we shall receive some elucidation on who appoints clerks to all schools.
Lord Peston: I, too, wish to ask a question or two for elucidation. I take it that we are still discussing maintained schools here and not any other schools. I am intrigued that the Bill uses the words "appointment" and "dismissal" with regard to clerks. However, it does not use the word "employment" with regard to clerks. Therefore, I ask whether there is some special significance in the word "appointment"? I would normally assume that whoever employs a person has the right to dismiss him or her. However, is a clerk in some relevant legal sense not employed but appointed? If "appointment" here simply refers to the employer and we then assume that a governing body is the employer, there can be no doubt whatsoever who is the correct body to dismiss a clerk. However, if I am completely wrong and the clerk is not employed but appointed and that means something different, it does not follow logically that the governing body is the relevant body to dismiss him, in which case the noble Baroness, Lady Blatch, is correct to say that as that is the appropriate body we ought to make it clear that it is the relevant body or rather the legally entitled body.
However, no problem arises of the kind that the noble Baroness, Lady Blatch, mentioned if the governing body is the employer of the person we are discussing. If the governing body is the employer, it may dismiss that person. That is very clear. I raise these points in the form of questions. It is important that we have been enabled to do so as a result of the amendment of the noble Baroness, Lady Blatch.
Baroness Blatch: I shall not answer on behalf of the Minister, as I do not know what the response is for the generality of cases. However, my local school had a clerk to the governing body for about 35 years. He was a volunteer, as were the governors. Therefore, he was not employed but he had duties under the law. He was appointed by the governors. He carried out the job extremely well. It was for the governors to appoint him and for them to say that they no longer wished to retain him as clerk if they were dissatisfied with him.
Lord Peston: In that case, the amendment is not needed. If it is simply the case that the governing body
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appoints the person, it can "unappoint" the person. There is not a problem there and I do not see what the fuss is about. However, I am sure that there is some subtlety here that I am completely missing.
Baroness Ashton of Upholland: I shall try to enlighten my noble friend Lord Peston. I shall, as it were, "park" for a moment the volunteer clerk mentioned by the noble Baroness, Lady Blatch. Clerks in many schools are paid. As regards foundation and voluntary-aided schools, the governing body is the employer. As regards community and voluntary-controlled schools, the LEA is the employer. That is the employment position.
I take a moment to eulogise clerks. Anyone who has served on a governing body—I am sure that the noble Baroness, Lady Blatch, will agree with this point—will know that clerks are truly vital people. They play an important role in ensuring that governing bodies operate effectively. It is their job to ensure that procedures are followed. They keep in touch with local education authorities. Many have developed further expertise through training and understand issues of law. It becomes obvious if such clerks are lacking in a governing body. Governing bodies can get into difficulties if they do not have an efficient clerk. Many schools have excellent clerks but that is by no means universal.
From my own experience and from my more recent experience at the department I have been struck by the fact that there has not previously been a common understanding of the role that a clerk should play. They play different roles in different schools. That is why this is an incidental point——we have commissioned the development of a training package for school clerks. We have ready to deliver next year a training package that we believe will be relevant to all school clerks whether they are employed by LEAs, individual governing bodies or whatever. It will include a self-study option, so that we can provide some support at last for this band of people who do such an important and valuable job.
I turn to Amendment No. 110. The regulations we envisage making under Clause 22 will largely roll forward the existing requirements in Part IV of the 1999 School Government Regulations. It is an important principle enshrined in those regulations that the governing body should select its own clerk. The clerk is answerable to the governing body and should be chosen by it. The existing regulations provide for foundation, foundation special and voluntary-aided schools to appoint their own clerks. In community, community special and voluntary-controlled schools the clerk is still, as I said, selected by the governing body but, as with other staff appointments in those schools, is appointed and employed by the local education authority. I hope that that makes the position clear for my noble friend.
I turn to Amendment No. 111. In the rare cases where it is necessary to dismiss a clerk, the governing body will normally take that decision. Governing bodies retain the right to determine that they do not wish to accept the services of a particular individual,

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even where clerking is being provided under a subscription buy-back service from a local education authority.
We believe that it is right that governing bodies should select and have the power to dismiss the clerk and we shall replicate that principle in the new regulations. As I say, that is in keeping with the principle of individual school autonomy and will he appropriate in the vast majority of cases.
I address both Amendments Nos. 110 and 111. I hope that those reassurances are helpful. Let me now turn to the exceptions to this general position. The existing regulations already prevent governing bodies of voluntary-aided or foundation or foundation special schools appointing or dismissing a clerk without the local education authority's consent if the school has lost its delegated budget and to allow the LEA to direct that a clerk in one of those schools should be dismissed.
However, where things go wrong it may be appropriate to allow a local education authority, or the relevant contractor where it has taken over the local education authority's functions, to be nominated as a prescribing body. A good clerk can play a crucial role in helping to turn a failing school around and it may be appropriate in those circumstances to allow a local education authority in supporting a school in special measures to designate who that clerk should be. The Ofsted representative on our Advisory Group on Governance has told the group that Ofsted has observed that placing a good clerk on a governing body of a school in special measures can play a significant role in training and supporting that governing body to play a more effective role.
Amendments Nos. 110 and 111 would remove any possibility that the local education authority could make decisions about clerking in any foundation or voluntary-aided school which had had its delegated budget removed. The local education authority has a responsibility to intervene where schools are in difficulties and we believe that its powers should apply equally to all maintained schools whatever their category. I agree that the principle of self-determination is an important one for schools. I also recognise that in voluntary-aided and foundation schools the governing body is the employer. But where schools have serious weaknesses or are in special measures it is surely right that special arrangements should apply to allow for the removal of a weak clerk in order to allow the governing body to take the school forward.
I turn to the Question whether the clause shall stand part of the Bill. As I said, the clause replicates without amendment provisions that are currently contained in Schedule 11 of the School Standards and Framework Act 1998. It is required because Schedule 11 will be repealed by the Bill. It will enable the Secretary of State to make regulations relating to the appointment and dismissal of clerks. Good clerking is the key to good governance and key provisions relating
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to appointment and dismissal should be the subject of some regulation. The clause is therefore a necessary part of the Bill.
I hope that Members of the Committee will accept that in the vast majority of cases governing bodies will continue to select and dismiss their own clerk and that we should be able to make appropriate provisions with regard to clerking through regulations. With those explanations and assurances I hope that the noble Baroness will withdraw the amendment and her opposition to clause stand part.
The Lord Bishop of Blackburn: That is extremely helpful. The education of young people and children is what we are about. If a school is failing, they need all the help that they can get. I take the Minister's remarks about the clerk's role in that regard; it is absolutely essential.
On regulations, I wonder whether the LEA could work in collaboration with the diocesan authorities. In my diocese, quite a lot of that already goes on and is very helpful. I should not want to make that binding but it would be a helpful addition; perhaps the phrase, "in consultation with" could be used. I hope that the clause will stand part because we do not live in a perfect world and there are circumstances in which it is necessary to have regulation of clerking—of the way in which people are appointed and dismissed.
Lord Peston: I have no particular interest in the sub-set of schools; I have an interest in clerks in general. The clause should clearly stand part of the Bill; it would be absurd if it did not. I am a little troubled about one aspect of my noble friend's reply.
In my experience, one can have a perfectly good clerk—perhaps an excellent clerk—who simply does not get on with the chairman or the governing body. One sometimes has to accept that one has a simple choice: either the governors go or the clerk goes. That is not the clerk's fault; the people concerned simply do not get on. I can imagine a similar case in your Lordships' House, which, happily, has never happened to me. Those of us who chair committees are simply told that X is our Clerk. I could be given a Clerk—I hypothesise entirely—whom I did not like. That has never happened; I have always had marvellous Clerks. I have no right to dismiss a Clerk. Goodness knows what would happen if I suddenly found myself in that position.
One has to accept the fact that, as the right reverend Prelate said, this is not a perfect world and that we do not all get on with each other. We therefore must have procedures whereby one simply has to say to a clerk, "Look, you are very good but you have to go". That is the reverse of what my noble friend the Minister was saying. I hope that she is not saying that one can only get rid of a clerk who is not very good. Sometimes, one has to get rid of a clerk who may be too good but the governing body cannot cope with him.
Baroness Ashton of Upholland: I hope that I did not give the impression suggested by my noble friend Lord Peston. I was trying to be specific. The relationship

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between a clerk and a governing body, in the vast majority of cases, is a relationship between all good people trying to work together. That occasionally does not work. That is for them to work out. This is a different instance; we are concerned purely with the case in which a school is in real trouble and how the position could affect the way in which it tries to get out of trouble. I say to the right reverend Prelate the Bishop of Blackburn that I am happy to talk further with him about a collaborative approach.
6.45 p.m.
Baroness Blatch: I am sure that there are clerks who occasionally have not got on with their governing body. However, the level of dependency of a governing body on a clerk is usually such that it is only too pleased to have him; he receives the mail, reads all the bumf that comes into school and alerts teachers, head teachers and governors to what they should be thinking about or doing. A clerk is one of a governing body's best friends, not one of its worst.
I do not think that the sky would fall in if the situation was not regulated. I accept absolutely the point made by the right reverend Prelate. One difficulty with regulation is that when things start to go wrong with schools, some schools are in denial and will not seek help but others are desperate for help and are very happy to collaborate. I do not believe that there is anything that stands in the way of an LEA collaborating with a Church school or a maintained school. Schools are free to seek that help. I should not want to stand in the way of that.
Another problem with regulation—I have not yet seen many flexible regulations—is that Bills can be broad-brush painted canvases but when regulations are produced, they are "one size fits all" regulations. Very few regulations state, "This is how you should do something". Some schools may have their own way of doing things. My worry is about the straitjacket of regulations and the fact that one constantly has to hold the manual in one hand while trying to be good governors and good clerks to governing bodies. I have a natural dislike of regulations. They should exist only when absolutely necessary.
I have a question in passing, although I do not expect the Minister to answer it tonight. It would be interesting to know how many sets of regulations will be spawned by the Bill. We are only up to Clause 22 but we have already passed a fair number of regulations.
The language of regulations is very off-putting. The Plain English Society has been fighting for years for us to do something about regulations. What do we do when regulations are complex and legalistic? We produce guidance. That means that in this area there will be: an Act of Parliament; cross-referencing from one piece of legislation to another because we have not consolidated enough; regulations; and guidance or guidelines on how to operate the regulations. There may also be a poor clerk to a governing body—that is the subject of my amendment—who has to interpret all of that for the governors. The more flexibility that there is in regulations, the better.
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The right reverend Prelate made an important point. When schools need to seek help, they should not be inhibited; they should be free to do so—we should not stand in the way of that. I shall not press the amendment but there is at least something for the Minister to reflect on between now and the next stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 111 not moved.]
Clause 22 agreed to.
Clause 23 [Federations of schools]:
Baroness Walmsleymoved Amendment No. 112:
Page 14, line 17, after "may," insert "after obtaining the consent of the local education authority and"
The noble Baroness said: In moving this amendment, I shall speak also to Amendments No. 134.
The Bill introduces two new, innovative and powerful ways in which schools can work together; namely, through federation and the joint discharge of functions. Local government will wish to support schools as they develop new ways of working. The amendments will ensure that before schools develop those new structures, they will have the advice and support of an LEA.
Amendment No. 112 requires any school that intends to federate to receive the consent of the LEA. It is necessary, given the financial, legal and administrative issues involved in federation, for the LEA to be involved and supportive from the earliest possible opportunity.
Amendment No. 134 would ensure that the LEA was consulted before two governing bodies arranged to discharge any function jointly when they do not wish to federate. The purpose of the clause is to encourage joint working when government bodies do not wish to federate. The amendment provides a safeguard for local communities and community interests—that governing bodies that wish jointly to discharge functions can do so only after consultation with the local authority. The amendment will also help local authorities to encourage schools jointly to discharge functions when individually they might not be keen to do so. That could assist local authorities to raise standards because a strong governing body would be encouraged to work with a weaker one in specific circumstances. In practice, joint working and partnership has always been seen as being beneficial to both parties because even the weakest corporate body has some strengths from which lessons can be learnt.
As we said in relation to other amendments dealing with this issue, it is crucially important for the LEA to be able to assess the impact on other provisions, so as not to distort existing provisions or enhance one or two schools to the detriment of others in the authority. I shall not repeat the arguments about LEA involvement—they were well rehearsed in a previous sitting. I beg to move.
Baroness Blatch: I rise to speak to Amendments Nos. 113 and 114, which are included within this

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group. I have reservations about the federations. The Minister has not yet given us examples of things that schools can do together under one governing body without the whole panoply of these clauses and rafts of regulations necessarily being imposed on them.
I am reminded of something that the noble Baroness, Lady Sharp, said earlier, which raised alarm bells for me. That was the description of the pre-Taylor governing bodies. Large swathes of the country, in particular in county areas, had one governing body. Under those bodies, some schools were very successful, some performed indifferently and some failed badly. But, somehow or other, those situations were allowed to go unattended and unaddressed because the governing bodies simply were not geared to representing the interests of each school. The implementation of the Taylor report brought about great change, and schools gained their own governing bodies.
Having said that, some Members of the Committee will know that we fought very hard for two small Church schools—one primary and one junior—on one site to have a single governing body. However, that is not what I am talking about. I am talking about the pre-Taylor days when large swathes of schools were represented by one governing body. I hope that that experience will be in the back of people's minds when these federations are formed.
Secondly, the federation idea is not new. Again, I refer to my experience in Cambridgeshire. The noble Baroness will know the area that I am talking about the Newmarket area. In those days, there was a great deal of concern about very small schools. We put together three small schools whose total number of pupils, I believe, was fewer than 50—that is, for all three.
We believed that that was the answer to a prayer. Rather than close the schools, the children would stay put and the teachers would move around the federation. It did not quite end in tears but it failed as an experiment due to the logistics of coping in a country area with different schools and with the same teachers running around them. It is true that the schools had more teachers and that the system extended choice to the children. But, ultimately, it did not work. Eventually the schools closed and the children were amalgamated into a single school.
We should not underestimate some of the difficulties that can arise in relation to federations. It may make sense for two or more schools to come together for a particular project—perhaps a building or educational project, or perhaps to provide economies of scale and further liberate capacity. I see no inhibitions in relation to that happening at present.
However, we are talking about something very different here. The notion of federations, as incorporated within these clauses, is that schools would come together for everything that they do. A single governing body would manage all the schools within the federation. There would be no limit on the number or type of schools. I believe that we should think very carefully about whether that would work.
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I know that the noble Baroness will probably say, "But this is not an imposition. These are permissive clauses. Schools can opt, if they wish, to become federated. They will not be compelled to do so". I accept that, but I worry about the detail. As always, the devil will be in the detail, and we shall not see the detail until these dreaded sets of regulations, governing how the whole system will work, are produced.
Amendment No. 113 seeks to deal with a concern that I have at the back of my mind about the use of federation as a mechanism for doing other things. Coming together collaboratively is one thing, but it is possible that, as it pools its sovereignty, if I may use that word, a school will also lose some of its distinctive character.
Therefore, the amendment states that the action of becoming a part of a federation should not be used to change the nature or character of a school. I cite, for example, religious schools, single sex schools, coeducational schools and the legal status of a school—that is, foundation, voluntary-aided, community or academy. Having read the clauses in the Bill, I am not sure whether under a federation a school would be an academy, a nursery school, a Church of England voluntary-aided school or a Catholic voluntary-controlled school. Would it continue to enjoy that status and would that status be in any way compromised by the act of becoming part of the federation.
In relation to single sex schools, of which there are not too many, there is now a great deal of evidence to show that teaching boys and girls separately at certain stages and for certain subjects in the curriculum is educationally beneficial. I know of an experiment in Essex—it is probably now past being an experiment in which the headmaster of a single school—not a single sex school—decided to separate the boys and girls and teach them separately. So far as I know, that worked extremely well. I believe that it is important to protect the distinctive character of schools.
It is possible that a governing body will wish to compromise its own character voluntarily. It may wish to relinquish the distinctive ethos of a school. If that is permitted under these clauses, I should like to build into the legislation some form of protection for the parents and children of a school in order to ensure that it would not happen without a procedure being in place.
Amendment No. 114, again, seeks to ensure that a single governing body—I am talking now in terms of the Government getting their way and of these clauses remaining in the Bill—includes parents and teachers from each of the constituent schools. Whether it is a specialist school, a nursery school, a religious school or a school that is co-educational or single sex, the distinctive ethos of each school should be represented on the single governing body.

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These are important points. They seek to ensure that important safeguards are put in place. I look to the Minister for a number of reassurances and, ultimately, I shall look for those reassurances on the face of the Bill.
The Lord Bishop of Blackburn: I rise to speak to Amendment No. 116, which stands in my name and that of the noble Lord, Lord Alton of Liverpool, who has an engagement in Lancashire today and cannot be here.
On these Benches, we were quite excited about the possibility of federation. As the noble Baroness, Lady Blatch, has just said, it is not a new idea. We were excited until the noble Baroness, Lady Sharp of Guildford, spoke about the pre-Taylor days.
I am reminded that, when I was married, my wife was the head teacher of a large infants school. I was diocesan director of education for the diocese of Durham. In the early days my wife was very surprised that I kept going out to attend governing body meetings at different schools. In the borough of Sunderland the education committee was the governing body of all the schools in that authority. My wife simply submitted a report now and again. I do not consider that that was a true governing body, and I hope that that is not in the Government's mind.
I believe that the idea of federation is to be welcomed because, in some senses, it is visionary. In some circumstances it may serve to meet the concerns that some people have about faith schools and the separation which they believe such schools should have. I do not have those concerns but some people have them. However, that will only come about if each school is allowed to make its contribution in terms of variety and diversity of approach.
As an example of that, today is Ascension Day. I was determined to get that into this debate somehow as I have to spend my time here when the rest of Church House is having a holiday. I hope that it might be possible for some schools to have a holiday on this day. However, that is a very simple illustration. It seems to me that the proposal is a sensible way forward provided that there is, as I said, a contribution from all the schools.
Real issues have been raised, and I believe that the noble Baroness, Lady Blatch, has illustrated some of them. I do not want to look at the matter in a negative way; I prefer to turn it on its head and look at it in a more positive manner. But the concerns are there.
For us, perhaps the most important concerns would be twofold: the constitution of the governing body of such a federation, the number of governors to be appointed by the foundation or the Church and the powers that they would exercise; and the safeguards in the appointment of a head of a particular ethos of a Church of England school within the federation. I know that the Roman Catholic Church shares those views and does not believe that the Bill as drafted is sufficiently robust in providing the protection as would be the contribution we want to make.
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In a federation of three schools, for example, one of which is a Church or other religious voluntary-aided school, the Church or other religion should be able to appoint sufficient governors to the federating governing body to allow for the preservation of the religious character of the school concerned. I turn to the key aspects of the ethos of the school. "Ethos" is not a word I like. I spent a good deal of my time interviewing head teachers yesteryear. When asking, "What is distinctive about a Church school?", one would always receive the lovely answer, "It's the ethos, Cannon Chesters". Then one would go on, as I know the noble Lord, Lord Peston, would, to say, "Would you please tell me what that ethos is and what it means?" It includes such aspects as the practice of collective worship and the syllabus for religious education. Those should be matters for the Church-appointed foundation governors and not, perhaps, for the whole governing body. They are to do with the distinctive contribution of a particular school or schools. Likewise, the governors in question should have the responsibility of engaging in the appointment of a head and other members of the leadership team.
Further, if the federation has one head and one leadership team for several schools, some of which are voluntary-aided schools, Church schools or other faith schools, there will need to be legislation about how that head is appointed and how that leadership team is constituted so as to preserve the contribution—the religious character, or whatever it is— of such schools in the federation and vice versa. We do not want to see those federations as a takeover. That works both ways. Given the popularity of voluntary-aided schools at present, we could well see a federation going that way. I have nothing to fear. I am not paranoiac about this, nor are these Benches. However, we believe that if we are to have federation, each school should contribute. As a Church, we have a fair amount of experience of federating parishes within various groupings and schemes, which has proved beneficial both in urban and rural areas.
My amendment seeks to require the consent of the appropriate diocesan authorities before such a federation can go ahead. The schools to which I refer in my amendment are part of a family of schools. They do not exist on their own and, in the case of the Roman Catholic schools, belong to the diocese or to the bishop. I am not entirely sure about the ecclesiology of the Roman Catholic Church, but I believe that that is right. In our case, we want to work within a family and to co-operate and collaborate together. The noble Baroness, Lady Blatch, is right; we do not want a maverick group of governors to sell the birthright that others have gained by getting rid of what the foundation stands for. I do not believe that the federation is about that.
Those are my reasons for probing the Minister with the amendment. I am an optimistic person. Surely, she will want to give me something on Ascension clay. I am not too hopeful, but we shall see. I shall listen carefully to what the noble Baroness has to say and perhaps return to this on Report if I am not satisfied.
7 p.m.
Baroness Blatch: A question that occurred to me while the right reverend Prelate was speaking about enthusiasm for federations concerns the constitutional position of the diocese. Certainly from my experience, standing in the shoes of the Minister, some dioceses have a strong and, in some cases, even dominant relationship with a school. Sometimes the school acquiesces in the face of that and sometimes there is a tension between the diocese and the school. It occurred to me that as well as schools federating with other schools and other partners, there is the constitutional position of the diocese. I wonder what the right reverend Prelate has to say about that.
The Lord Bishop of Blackburn: That is right, although in the case of Anglican schools, each school is an autonomous body. It is a larger issue for the Roman Catholic Church. Relations between dioceses and schools have improved over the 30 years or so that I have been playing this particular role in one form or another. That is because there is greater dependence on the resources which a diocese can provide in the variety and complexity of education from when I was first ordained in Southwark 40 years ago. The whole position has changed. However, the point raised by the noble Baroness is more a question for the Roman Catholic Church in law. Our schools tend to be autonomous, and there are not too many. The role of the diocese is in the appointment of governors and in giving advice to the "family" of schools in getting a sense of direction across an area.
Lord Peston: I am working hard to try to take the amendments seriously. I shall try, but if I fail I hope that Members of the Committee will forgive me. When I first saw this part of the Bill, I wrote, "Oh no" in the margin because, like the noble Baroness, Lady Sharp, I thought that this was taking us back to the pre-Taylor days. However, it does not remotely do so. I can see no reading of this that could possibly take us back to the pre-Taylor days. The right reverend Prelate is right to remind us, first, how appalling the pre-Taylor days were for many local authorities, and, secondly, that that cannot happen here. It cannot happen for the obvious reason that this is all permissive. This is not the Government or anyone else using powers to say, "Your two schools will federate. You will have your own governors, having had separate ones". As the Bill allows for federations of federations, the next stage will be to say, "You two federations will not federate", and so forth.
As mentioned by the noble Lady, Baroness Walmsley, the provisions in the clause will be used only if schools, opting for "jointness", co-operation or any other word that has the same meaning, feel that they cannot do so on an ad hoc basis or by other means of acting jointly, but need a more formal measure. Therefore, it seems to me—perhaps my noble friend will confirm this in due course—that each will propose to the other that that is the correct interpretation. The schools will say, "We are getting closer together for all sorts of things. This particular Act of Parliament", if
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such it becomes, "enables us to federate. Don't you think that would be a good idea?". That seems to be a perfectly sensible way of moving forward if we believe that "jointness" is a good thing, which in many cases we do, and that federation is the way to achieve it. I have some difficulty, as have other noble Lords, in trying to think of enough jointness to lead to federation. Presumably the Government have one or two examples. I would think that most co-operation could be done on an ad hoc basis.
The right reverend Prelate seemed to assume that somewhere out there is a group of revolutionary Catholics or Protestants who will take over a school. That group would have to find another revolutionary group with which to federate; it cannot do so on its own. That is why I have difficulty taking the amendment seriously. The mind boggles at the idea that there are great numbers of governing bodies, all of which are suddenly about to break loose and federate. Given my philosophical views, I should love to see that, but I find it impossible to believe.
Let us take another example. When my children were young, there was Highgate Primary School—I would not describe it as the local secular or atheist school, but if we look for its ethos, that would be it—and St Michael's School down the road. The schools were simply separate. Even if this law were passed, it is impossible to believe that the two schools would federate under any circumstances. Therefore, I cannot see the problem.
However, let us suppose that two schools cooperated closely. At my first secondary school, the boys' school was next door to the girls' school. Two such schools might get closer; the boys and girls might get closer and the two schools may federate and set up a joint governing body. I have to say to the noble Baroness, Lady Blatch, that the character of both schools would change, but the whole point of the federation would be that the character of both schools would change. Therefore, to have an amendment which seeks to provide that the two schools would get closer together and that somehow we can define a concept of character which they must not change is ridiculous. The fact is that they would co-operate. From then on, some of the boys would be taught by some of the women teachers and so on. I do not think that that would be a bad thing.
Therefore, I am particularly opposed to subparagraph (1A) of Amendment No. 113, which states that nothing should allow for the change of character. I should like to see character evolving through time. That is quite different—despite my views on religious schools—from anything being a threat to the religious nature of the school. This section could not possibly have that effect in any real world. Therefore, I reply that I have tried to take this matter seriously. I have particularly tried to take it seriously because of my original opposition to the whole idea of federation. On the assumption—following on from what the noble Baroness, Lady Walmsley, said—that we like co-operation as a way of working within education, this gives us a step forward. I doubt very

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much whether many schools will decide to federate, but if they want to try the experiment, I certainly feel that they should be given the chance.
Lord Dearing: I wish to pick up a point made by the right reverend Prelate. He said, "It is not just the school, but there are other interests". Suppose we had an area where there is one Church secondary school but 10 primary Church schools. If that Church secondary school disappeared into federation and lost its character, the children's lives, as their parents see it, would be affected. So the authority of the diocese could legitimately he involved.
However, that is not the point that I want to raise. I want to suggest that the Government should not have one model federation in mind but should be open to different varieties. Perhaps I may give an example from higher education. The Church higher education college at Roehamption comprises one Anglican college, one Methodist college, one Roman Catholic college and the Froebel Institute which does not have any affiliation.
In that college there is one governing body for the college, but each of the individual foundations has its own governing body with reserved powers and responsibilities. Moving on, Roehampton Institute has federated with the University of Surrey. Three major responsibilities and powers are reserved to the governing body of Roehampton. Therefore, in the federation one has one body with overall responsibility for the federated entity. But that does not deny the possibility, and, indeed, the desirability of having reserved to the governing bodies of the constituent elements, certain powers and responsibilities. That would be one way to maintain particular distinctions which the noble Baroness, Lady Blatch, and I dare say the right reverent Prelate were concerned to maintain.
In approaching this exciting idea, which I might have extended to a federation between a school and an FE college—I leave that to one side—the Government should keep an open mind about the opportunities and possibilities rather than prescribe.
7.15 p.m.
Baroness Sharp of Guildford: I did not intend to intervene in the debate but it has become a debate on the whole issue of federation. Later we are due to discuss clause stand part, but I suspect that that debate will be somewhat truncated as we shall largely have discussed the matter.
People are confusing the concept of co-operation and clustering with that of a federation. I read to Members of the Committee subsection (3) of Clause 23:
"Where any schools are federated by virtue of this section, they shall
(a) have a single governing body constituted under a single instrument of government".
That is clear in the proposed legislation.
I join with the right reverend Prelate, with the noble Lord, Lord Dearing, and with the noble Lord, Lord Peston, in thinking that, "Yes, schools getting together
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and co-operating is an absolutely splendid thing". We have had too much of schools standing on their own and competing with each other. It is clear that working together is a sensible idea. In Guildford, for example, the secondary schools work together. There is a certain amount of sharing, in terms of the curriculum and specialist subjects and so on. But perhaps there is not enough.
Let us take what happened to a group of primary and secondary schools in Guildford at the time we were talking about the King's Manor—now King's College—problems. It was proposed to create an education action zone. A group of half-a-dozen primary schools and two secondary schools were to be put into that education action zone. They would each lose their boards of governors. There would be a single governing body for the whole zone.
I was immediately worried, partly because the primary school of which I was a governor was one of those proposed for the zone. I recognised how important it was for that primary school, which had been in special measures but was moving out very fast, to have its own board of governors because it helped to create a good feeling. The board reflected the local community. That is what boards of governors do. For a school it is an important channel of communication into the local community.
There are great dangers in moving down this route without thinking hard about it. I take the point of the noble Lord, Lord Peston, that this is a permissive rather than a statutory regulation: we are not forcing schools. I am worried that in some hands the whole concept of clustering will become more than just clustering. It will push schools into the concept—as they were trying to push on us with the Education Act—of doing away with the individual ethos of schools and with the individual governing boards.
We must be a little wary of the provision. I suspect that we shall end up by leaving it on the statute book. It is vitally important that we recognise that it is permissive on the statute book and that it is not mandatory on schools to go down this route. Schools should not be pushed along this route for spurious economies of scale, which are pushed on them either by the Secretary of State or by local education authorities which are short of funds.
The Lord Bishop of Blackburn: I hope that the noble Baroness did not gain the impression that I was not taking the federation seriously. That is why I spoke for rather longer than I have previously about our concerns. Nevertheless, in some circumstances, this is a possible way forward which might meet some of the challenges that we face. But I hope that I did not give the impression that we were not concerned about the one governing body. That was not the purport of my remarks.
Lord Peston: I do not want to let this matter go because it is a very serious argument. I hope that my noble friend will, first, reassure the Committee that this model of pressure, "You schools, if you want any money, will have to federate", is not one that is

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remotely implied by the Bill. It certainly did not occur to me that that was so. Secondly—and I am sorry that the noble Baroness, Lady Sharp, views the matter so grudgingly—I view federating as an opportunity. I accept that logically it follows that the federated school would become the federated school with its governing body. That must be the case. One would then have to accept that in any local area this group of two or three took a wise decision.
I hate to make any tart remarks to Members of the Committee opposite, but they have said how keen they are on governing bodies and how important they are to the school. If the schools federate it follows that they should trust the governing bodies. If they get together and decide that it is in the best interests of all their schools to federate, that is the right outcome. But at this point it will be the governing body of the federated enterprise. It is unavoidable.
The noble Baroness has put her finger on the issue of regret: "Oh, I am sorry that our separate school has now gone". The answer is that we are sorry that it has now gone, but a case has been made out by the relevant people that this is the right way forward. I know that it is a situation of, "Is the pot half full or half empty?". However, in this case I am optimistic—I think that the right reverend Prelate used that word—that this is an opportunity that could be grasped. I repeat that I think that that will be rare, but I should like—what is my cliché for today?—to give it a fair wind.
Baroness Blatch: Before the noble Lord sits down, did I hear him say that a school would go with its governing body? My understanding is that it would go without its governing body. It would share sovereignty over the running and management of the school. The governing body would be disbanded. For many schools that would be a leap into the dark that might or might not work.
Lord Peston: I trust governing bodies to take the decision to form a federated school. My model is therefore not one of outside forces making people do things that they do not want to do. It is one of governing bodies thinking about what is in the interests of each of their schools and forming a federation with a federated governing body. If I may provoke the noble Baroness, it is like the countries of Europe deciding to pool some of their sovereignty to produce a European Community—which many of us favour overwhelmingly as the future. We do not feel any loss of sovereignty or anything else. That is the model that I should like the noble Baroness to think of when she considers the matter.
Baroness Ashton of Upholland: I shall attempt to follow my noble friend's remarks. This is a dangerous area, but the French are still French, the Italians are still Italian and the Spanish are still Spanish. The point is that schools will retain their ethos. The decision is about a strategic objective.
I want to build on the enthusiasm of the right reverend Prelate the Bishop of Blackburn and encourage other Members of the Committee to be
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enthusiastic. The provision is part of a range of collaborative approaches to allow schools to come together in different ways and work together in collaboration.
Clause 29 provides the opportunity for schools to form joint committees. Those of us who went through de-grouping—which I am pleased that no Member of the Committee has yet mentioned—as I did, remember that one of the big issues for an infant and junior school when de-grouping was how to ensure that curriculums worked effectively together. We are considering a range of collaborative measures of which federation is one.
I shall give the Committee two or three real examples from schools and local allocation authorities to whom we have been talking about the provision—because it has arisen from discussion. I can think of at least one area where a special school is co-located on a community school site—something that we are considering in other contexts to support our special schools but also to enable the special school's expertise to become part of the expertise within the mainstream sector. It is considering the model of federation. It may decide to choose another collaborative model, but it is considering whether that model would make sense for it.
Infants' and junior schools may want to federate. Those working in rural communities such as those described by the noble Baroness, Lady Blatch, may consider that a federated model would be easier for them and allow them to think more strategically. Schools with sixth forms that are working increasingly in collaboration are thinking about how to ensure that their sixth forms thrive and that their students can come together to take advantage of the different subjects offered in the different schools. Federation may be an approach that they want to follow.
Another example was mentioned by the right reverend Prelate the Bishop of Blackburn, which concerns what I would call the social inclusion agenda. Schools coming together in some areas could enable us to consider closer collaboration—working effectively together—between schools of different faiths and of none.
That is the backdrop. Federation is permissive. It can work only if it is what governing bodies want to do— I stress that.
I shall deal with the amendments individually because they raise different points about ensuring that the character and ethos of a school remains. I shall deal first with Amendments Nos. 112 and 116. Federation will work only if it is entered into because schools want it and are committed to making it work. As my noble friend Lord Peston said, the decision to federate must be entirely voluntary. I am not sure that that would be the case if the appointing body for one stakeholder group had power to determine which schools could federate. That would be the effect of the amendments.
Amendment No. 112 would effectively allow local education authorities to decide which schools should or should not federate. I take this opportunity to say that we do not intend federations to become a tool for

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local education authorities to rationalise governance provision within their area. That is not their purpose. Federations are in no way intended to reduce the diversity of schooling provision available.
Amendment No. 116 would mean that any Church of England, Church of Wales or Roman Catholic school could join a federation only with,
"the written consent of the appropriate diocesan authority".
The amendment would have the unfair effect of applying a two-tier system for considering federations involving any maintained school with a religious character" as the religious leaders of minority faith schools would not enjoy a similar veto. It should be remembered that there are a range of other stakeholders, including parents and staff, who are just as important. I am sure that the Committee would agree that we must be fair in allowing each stakeholder to have an equal voice in the decision to federate.
The people best placed to weigh up the views of all the relevant stakeholders and take a balanced decision on whether federation is in the best interests of the school involved is the school's governing body—including the LEA and, where appropriate, foundation representatives. That is why we propose that the decision whether to federate should rest with the governing body of each school. Of course, as part of the decision-making process, the governing body will have to consult. I recognise the importance of ensuring that that consultation is carried out thoroughly and consistently. That is why we will develop regulations setting out the procedures for consultation with all the key parties, including the local education authority and the diocesan authority, before the decision to federate is taken.
I draw the Committee's attention to a further important safeguard in the process for agreeing an instrument of governance for the governing body for federation. I assure the Committee that we will not be removing any rights currently enjoyed by bodies in relation to agreeing the instrument of government. Currently, for maintained schools that have foundation governors, the school's governing body and the local education authority are required to agree the instrument of government and any alteration to it with foundation interests. That includes those who appoint foundation governors, trustees and the diocesan authority. In the interests of parity and fairness, regulation will provide that that requirement also applies to the instrument of government developed for schools with foundation governors that are federated under a single governing body.
If any of the parties above, including the diocesan authority, disagrees with the instrument of government or any alterations to it for a school within a federation involving foundation governors, the case can be referred to the Secretary of State. She will then arbitrate after taking representations from the relevant parties and come to a final decision.
That is exactly the same process as currently successfully applies to any maintained school with foundation governors. It will ensure that dioceses have the protection of arbitration by the Secretary of State if they disagree with a proposal to federate.
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I turn to Amendment No. 113. As I said, our purpose is to enable schools to collaborate strategically and through that to improve educational standards for their children. It is in no way a proposal to reduce the diversity of schooling provision available in any one area. Indeed, we have taken steps to ensure that schools within a federation should be treated as separate schools for most purposes—other than governance, of course. That means that no school will be able to change its religious character, admission arrangements, category or from single-sex to coeducational simply through the act of joining or being a member of a federation. I agree with the noble Baroness, Lady Blatch, that it is important to state that in the Bill, as we have indeed done in subsection 3(b).
In relation to the character and structure of a school, the requirements set out in Chapter 2 of Parts 2 and 3 of the School Standards and Framework Act 1998 will continue to apply to all schools within or joining a federation. Let me explain what safeguards that provides. Section 33(2) of the 1998 Act prohibits a change in the religious character of any school. That will continue to apply, regardless of whether a school joins or is already in a federation.
In practical terms, I reassure the Committee that any proposal to change a school's religious character could, as now, be realised only by publishing proposals to close one school and open another. If a federated school wants to change its category or change from single-sex to co-educational, it will be required to publish a statutory proposal under Sections 35 and 28, respectively, of the School Standards and Framework Act 1998. Federation cannot be used to bypass that statutory process.
Clause 23(3)(b) also states clearly that schools which have federated may not be treated as single schools for admission purposes. There will continue to be separate admission arrangements for every school within the federation.
I hope that this has given reassurance that federations cannot be used as a back-door for schools to change either their character or their structural requirements. We agree with the motivation behind the amendment: that any changes in these areas should continue to require statutory proposals and he subject to scrutiny by the local school organisation committee.
Amendment No. 113 also makes reference to "academy". Academies are not within the scope of Clause 23, which relates to maintained schools only.
I turn to Amendment No. 114. It will be vitally important to ensure that the governing body of a federation is not too large and unwieldy to be effective. That will not help schools towards the ultimate goal of improving standards. However, at the same time, we need to ensure that all participating schools are broadly content with their level of representation on the governing bodies of federations. We expect all governing bodies of federations broadly to comply with the stakeholder principle as recommended by the Way Forward group which under Clause 18 of the Bill will be set out in regulations. We believe that that is

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vital to ensure that a fair balance of interest between the key stakeholders of parents, staff, LEA community, foundation and partnership governors is secured.
All of the categories of governors applicable to the relevant schools within a federation will need to be included. Thus within a federation including aided, voluntary aided or foundation schools there will always be foundation or partnership governors.
While it would be preferable for at least one parent representative from each school within a federation to sit on the governing body, regulation on this point could unduly constrain the ability of the governing body of a federated school to choose the size of governing body which works best for them. Simply requiring that each school within a federation has a specific level of staff representation reduces flexibility for schools. One of the objectives of federation is to allow strategic collaboration to facilitate that which is already often occurring on the ground.
With that in mind, particularly the possibility of schools sharing staff, we think that it should be left to the governing bodies of the schools involved to propose the appropriate level of staff representation from each school on the governing body of the federation. On the stakeholder group, perhaps I may reassure the Committee that whatever the combination of schools involved in the federation, each stakeholder group particular to the category of any one school proposing to federate will be represented on the governing body.
We think it advisable that the proportion of representation for each group should be determined on a case-by-case basis informed by consultation at local level. We intend to develop overarching principles to ensure the level of representation is fair and we shall be consulting extensively ahead of finalising the principle. However, again we would wish the regulations to leave enough scope and flexibility to allow for local circumstances surrounding each individual mixed category federation to influence the precise proportion of representation in these stakeholder groups rather than to prescribe a single formula.
On Amendment No. 134, I emphasise that we intend to leave as much flexibility as possible open to schools so that they can devise the form of collaboration that is best for them. We firmly believe that the decisions on whether to collaborate and with whom to collaborate, the extent of collaboration and the nature and form of joint working arrangements must rest with the individual governing bodies of the school involved. Such safeguards as are necessary to ensure proper accountability—for example, that the full governing body and not a committee of each school should consent to such an arrangement, that any proposal for such an arrangement should appear as an agenda item, and that joint committees should have proper terms of reference, and so on—will be placed in regulations.
We do not believe that it is necessary for LEAs to be formally consulted. Schools should be free to find their own partners and have sufficient experience of running
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their own affairs to take these decisions for themselves. But that is not to say that governing bodies should not be able to seek advice from the local education authority if they feel that it would be helpful. However, I believe that the option of whether to do so should rest with the governing body of the school involved and should be decided by them on an individual basis.
I hope that in the light of the explanation and assurances I have provided the noble Baroness will feel able to withdraw the amendment.
Baroness Walmsley: In explaining her objection to Amendment No. 112, the Minister believed that local authorities would then decide which schools would federate and which would not. The decision to federate is down to the schools. It would be right for local authorities to be able to decide which schools could not federate given their responsibility to the community in which those schools are based.
Throughout the Bill I have been disappointed by the Minister's attitude to consultation with local authorities. In some cases where local authorities already have powers, the Government seek to remove them and give them to schools forums, and so on. In cases of new initiatives such as this one, the Government seem determined to ensure that LEAs are not involved integrally with the initiatives. That is disappointing. We shall no doubt return to the matter on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Davies of Oldham: I beg to move that the House be resumed. In moving the Motion, perhaps I may suggest that the Committee stage does not begin again before 8.36 p.m.
Moved accordingly, and on Question, Motion agreed to.
House resumed.

Court of Protection (Enduring Powers of Attorney) (Amendment) Rules 2002
7.36 p.m.
Baroness Greengrossrose to move, That an humble Address be presented to Her Majesty praying that the rules laid before the House on 27th March be annulled (S.I. 2002/832).
The noble Baroness said: My Lords, the effect of this statutory instrument is to increase substantially some of the fees paid to register an enduring power of attorney. I should add that I speak also to Statutory Instrument 833, against which the noble Lord, Lord Kingsland, has prayed, as it relates to the same subject; namely, reforms for the Public Guardianship Office (PGO) and the Court of Protection.
This order is all about the welfare of, quite literally, the most vulnerable people in our society: those who rely on others to manage their affairs. The general public could be forgiven for sometimes thinking that

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Parliament is more concerned with the welfare of foxes. It is important that we take this opportunity to consider how well the Public Guardianship Office is operating for the benefit of those who need our support so much: those who lack mental capacity.
I have tabled my Motion because I want to ask the Government to justify the Public Guardianship Office fee increase, to highlight concerns in the way the office operates and to ask the Government to undertake to monitor the reforms to the PGO more closely, particularly in the light of the long delayed incapacity Bill which I hope will be presented shortly to Parliament.
I was very grateful for the time the Minister gave me last week to discuss my worries about the PGO and for providing me with some factual information asked for by Written Question. I am also grateful to a number of organisations and individuals who have written to me since the debate was secured to alert me to their concerns about the PGO and specifically this statutory instrument. They include the Law Society, MIND, Action on Elder Abuse, Alzheimer's Society and Age Concern and also individual solicitors and the Master of the Court of Protection.
The facts are these. It seems that without much notice the PGO fee structure was altered radically. Indeed, a misleading Written PQ in another place was answered on 3rd April stating that no date had been set for the new fees when in fact the regulations had been laid on 27th March and were implemented, on 17th April. So we are debating tonight a statutory instrument which has already been implemented. For example, the fee to register an enduring power of attorney rose from £75 to £220 and the first year fees for receivership rose from £230 to £565. Those are substantial increases.
The Minister has pointed correctly to the introduction of a new £65 short order fee from which many will benefit. I welcome that. But there are concerns that the new fees will still deter people from registering when there is already great concern about attorneys not registering as they should, despite the Government's policy to encourage registration. Will the impact of the new fee structure be monitored.
Frankly, I do not believe that this legislation is being handled as well as it could be by the Public Guardianship Office. That has resulted in many people who work with the office in a professional capacity becoming frustrated with the way in which it operates. Since its establishment from the relics of the Public Trust Office, one might have expected fees to rise with inflation. However, if they were to rise substantially one would normally expect a period of notice and consultation about their impact. Instead the matter was all done and dusted within three weeks over the Easter holiday. We have to ask why.
My second concern relates to the fee remission scheme. That there will be a clear and publicised remission scheme for both enduring powers of attorney and receiverships is welcome, but it has not yet been published nor even adequately consulted upon. I believe that the cart has come before the horse
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and that it would be better to delay implementation of the new fee structure until the remission scheme is firmly in place. I invite the Minister to withdraw the statutory instrument and to introduce another when the remission scheme is agreed.
Alternatively, could the Public Guardianship Office undertake to inform any new cases that have arisen since the 17th April that they can apply under the existing unpublished remission scheme for fee remission pending the publication of the new remission scheme? If the new scheme is more generous, a procedure will have to be built in to review and to reimburse those who would have come under its remit. It is also vital that there is a clear and independent method of appeal available to those people whose fees are not remitted.
I seek reassurance about those people, some of whom are very young, who have fluctuating mental health conditions such as schizophrenia or bipolar disorder and who during their lifetime may make more than one application either for registering an enduring power of attorney or for a receiver. In such cases I firmly believe that there should be only one initial fee and no further setting-up fees requested.
I have some wider concerns about the Public Guardianship Office that have been brought into sharp relief by the way in which this statutory instrument has been handled. The Public Guardianship Office was set up last year on the grounds that it would be self-financing; hence the fee increases are borne by the people it aims to help, for example those who lack capacity. Is there any guarantee that those fee changes do not herald further increases if the office's financial targets are not met? Can we be reassured that the changes are not being implemented because they benefit the financial viability of the Public Guardianship Office rather than the protection of the vulnerable? An additional —5.1 million will be raised in 2003–04. It also begs the question why the Public Guardianship Office has to be self-financing.
This short debate needs to be seen in the context of proposed changes to mental incapacity legislation. That could mean that the Public Guardianship Office will have to register many more continuing powers, covering health and welfare decisions as well as financial decisions. That will be welcome.
A further worrying anomaly has been brought to my attention that could adversely impact on the judicial discretion of the Master of the Court of Protection. There is an enormous difference between the fees—possibly many thousands of pounds—that a person would face if it were decided that he required a panel receiver and the fact that there is no fee for last resort receivership, where the Public Guardianship Office itself manages the affairs of a client directly. I seek reassurance that that will not undermine the discretion of the court in choosing a receiver as the court is obliged by statute to act in the best interests of the client.
Although the Public Guardianship Office is self-financing, cross-subsidisation between clients still exists. Contested enduring power of attorney cases are

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being funded by the larger fees for uncontested cases, which on average cost £140, which is £80 less than the new fee level. A wider issue that may be of even greater importance is the fact that legal aid is not available for the Court of Protection. That is despite the fact that it is available in all other cases where a decision has to be made in the best personal interests of a person who lacks capacity, such as mental health tribunals and Children Act proceedings. The Government need to consider whether legal aid should be available for Court of Protection cases.
In conclusion, I hope that the Minister can provide an explanation for why the statutory instrument has been implemented so quickly and how the other place was misled. Perhaps she will reassure the House that the impact of the new fee levels will be monitored; that the new remission scheme will be quickly implemented and back-dated to 17th April; and, in the longer term, that the continuing reforms to the Public Guardianship Office will work for the benefit of people of all ages who are the most frail and vulnerable in our society. If the Minister is unable to give the House clear assurances, the House should annul the statutory instrument. I beg to move the humble Address and hope that it has the support of noble Lords from all sides of the House.
Moved, That an humble Address be presented to Her Majesty praying that the rules laid before the House on 27th March be annulled (S.I. 2002/832).—(Baroness Greengross.)
7.47 p.m.
Lord Kingsland: My Lords, in speaking to the prayer of the noble Baroness I seek permission to speak to my own. I am not against increased fees as such, and I am pleased that the power of waiver remains to deal with hardship cases, although I share the observation of the noble Baroness in that I would prefer to see a more specific scheme relating hardship to concession. I hope that the Minister will deal with that matter.
My purpose in speaking in the debate is to ensure that the money yielded by the fees is spent in guaranteeing, through effective supervision, that patients are properly cared for by their respective receivers.
What is the general supervisory scheme? I take that to have been set out by the noble and learned Lord the Lord Chancellor in a statement that he made on 29th March 2001. Perhaps noble Lords will forgive me if I quote extensively from it. In paragraph 3 of the statement the Lord Chancellor said:
"The Public Guardianship Office is committed to making a difference to its clients. It will not be remote: it will work in partnership with Receivers, and others, to protect and manage the financial affairs of some of the most vulnerable members of society. The Public Guardianship Office will deliver better customer service, and will be more accessible to its clients. For Receivers, this will mean a vastly improved advice and information system, available locally wherever possible—a service which supports as well as monitors. It will be a personalised service, designed to meet the needs of individuals. The staff of the Public Guardianship Office will be fully trained, effectively led and managed, and equipped with the tools to do a difficult job in a modern environment".
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In the following paragraph the noble and learned Lord continued:
"This Framework Document sets the framework in which the Public Guardianship Office will operate … It also sets out the Public Guardianship Office's responsibilities to all those who use its services and its ultimate accountability to me".
The noble and learned Lord then stated:
"The creation of the Public Guardianship Office is part of a radical programme of change. The last twelve months of change and preparation has been only a beginning. I look now to the Chief Executive and the staff of the Public Guardianship Office to focus their efforts on building a genuinely new organisation that can deliver radically improved services".
As the Lord Chancellor then went on to say, these are "challenging targets" for the office.
The latter brings me to my first line of questioning to the noble Baroness the Minister. In that statement, the noble and learned Lord the Lord Chancellor is, in effect, saying that the buck stops with him. I wonder whether the noble Baroness will be able to tell your Lordships how the Lord Chancellor's Department will be monitoring the performance of the Public Guardianship Office. Can she say what resources in the noble and learned Lord's department will be devoted to that task? For example, will there be a specific unit to fulfil the heavy burden that the noble and learned Lord has placed upon himself, or will specific individuals be asked to undertake certain tasks.
Further, can the noble Baroness say how regularly the Lord Chancellor's Department will investigate the affairs, not only of the office as a receiver but also of the disparate receivers that it is the ambition of the PGO to appoint? What I am seeking to establish is: how will the hierarchy of responsibility work through as the system develops.
How, indeed, is the system working so far? I have been reading a document produced by the Public Guardianship Office called Reaching Out. There is an article on the front page of the February 2002 edition written by Mr David Lye, who is the chief executive of the office. Under the general heading of "Other Challenges", he says:
"I know from the letters, emails and telephone calls I have received from some of you, that some areas of our service have not been satisfactory recently … I know that recently you have been most frustrated by our poor communication and for this I offer sincere apologies. A number of factors have affected our ability to respond to your queries and complaints in the usual way. Working from two sites … has delayed our postal services. We introduced a new telephone system at the same time; and of course we physically moved office. At the same time, casework staff moved into new team working practices and such change inevitably reveals some teething problems".
I mean no disrespect to Mr Lye—he is the third chief executive officer in the Public Guardianship Office within the past year—in wondering whether his analysis really gets to grips with the fundamental problems faced by the office.
As a result of my familiarity with a recent and difficult case—that of Miss Elizabeth Laurence—I have identified at least two of those fundamental problems. The first concerns the way in which cases are dealt with by the staff. As far as Miss Laurence is

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concerned, there have been about 90 separate telephone or written communications in the past two years between the Public Guardianship Office and Miss Laurence's trustees or her cousin, Lord Iliffe. Those communications have been dealt with by no fewer than 20 members of staff. I recognise that there are occasions when individuals are away on holiday, or when specific technical tasks are undertaken by particular individuals. However, if the confidence of the office is to be established in the minds of its clients, it is absolutely vital that one specific person should have overall responsibility for each patient.
Having reached that conclusion, and bearing in mind Mr Lye's article in Reaching Out, I was a little concerned to read that the office is now thinking of shifting from an individual caseworker scheme to a team caseworker scheme; in other words, it will be a team of staff and not an individual member of staff who will be responsible for a particular case. I can understand why different technical skills may be needed in some cases. However, if an individual is not specifically tasked with ultimate and overall responsibility for a patient, the process of accountability in the office will be extremely difficult to establish. I should be most grateful if the Minister could reflect on that point when she replies.
The second fundamental problem concerns accounting. As I understand the present situation, it is not possible to extract any financial information from the PGO about particular patients without an order of the Court of Protection. Yet very large sums of money—much of it trust money—are handed over to receivers who have no obligation to account to anybody for anything. Fortunately, in the case of Miss Laurence, such an order has been forthcoming from the court. A firm of independent accountants has now been charged with the task of investigating inconsistencies between payments in by trustees and the PGO recorded receipts, inconsistencies which, in one case, go back 12 years. I should like, incidentally, to express my thanks to the noble and learned Lord the Lord Chancellor for ensuring that that step was taken.
Had there been a proper and regular system of accounting and auditing, none of that particular and special investigation would have been necessary. I shall, therefore, be most interested to hear what the noble Baroness has to say about proposed accounting plans for the future. In my submission, this issue is especially important when your Lordships take into account the aspiration of the Public Guardianship Office to devolve more and more of its receiver responsibilities on family members, other individuals, professionals, groups of trustees, and so on. As I understand it, the PGO increasingly aspires to supervise the supervisors. That is an admirable aspiration, as long as the PGO has established a system of supervision that can really call to account the receiver outside the office.
In that regard, I was somewhat surprised at the rather low fee that the Public Guardianship Office intends to charge in relation to the operation of receiverships by individuals other than the chief executive. Unless all these individual receivers are
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properly called to account on a regular basis, there is enough evidence to demonstrate that bad practices—even, on occasions, fraudulent practices—are likely to find their way into the system. Thus all the aspirations of the noble and learned Lord the Lord Chancellor, and of the Minister, will be set at nothing.
Lord Carlile of Berriew: My Lords, I should like to speak in support of both prayers. I agree with every word that was said by the noble Baroness, Lady Greengross. I also agree with the call from the noble Lord, Lord Kingsland, that there should be the best possible management practices within the Public Guardianship Office.
I went to my family solicitor a few years ago to make a new will. While I was instructing him on how to prepare the will, he asked me if I was minded to prepare an enduring power of attorney. I was a little offended at first blush, as I was then in what would politely be described as the "very early fifties". He explained to me that, these days, it was part of the everyday kit for solicitors advising clients of whatever age on the making of wills. The reason for that is obvious: people live much longer. Many people survive well into their late 80s and, for a large number, into their 90s. If they create an enduring power of attorney, they have a useful and practical opportunity to ensure that the people whom they choose—people whom they trust—will manage their affairs in the event of serious incapacity.
The result of having an increasingly ageing population is that the number of enduring powers of attorney is increasing fast, particularly as solicitors give the sort of responsible advice that was given to me. In almost every instance, enduring powers of attorney work well. As it happens, my wife exercised an enduring power of attorney over an elderly aunt who had become mentally incapacitated. As a result of hard work under the power of attorney, my wife was able to ensure that her aunt's assets were maintained and that her aunt had the highest possible quality of life consistent with her incapacitating condition. That fulfilled the aspirations of the aunt before she became incapacitated.
Registration of enduring powers of attorney is not compulsory. I have no idea what proportion of EPAs is not registered; I suspect that it is a large majority. One of the reasons why they have not been registered is that people have been put off even by the previous fee that was charged. Registration is important. It gives a degree of protection against fraud, and the discipline of registration itself—the knowledge that an enduring power of attorney has been registered—will discourage any temptation of fraud. Registration is in the public interest. As I understand it, government policy is that registration should take place in as many cases as possible. I should welcome confirmation of that.
I should not complain for one moment if the registration fee were increased by a sum that reflected the cost of living or even if the fee took into account something that was demonstrable and specific, such as an increase in the cost of processing the forms. The

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registration of EPAs is a modest administrative exercise; it cannot cost more than a few pounds. The increase from £75 to £220 for registration—a staggering increase of 300 per cent—cannot possibly reflect an increase in costs. I should be grateful if the Minister could confirm that. It looks awfully like a punitive form of tax collection, in which enduring powers of attorney are an easy target.
Whether it is right or wrong and even if the Government can demonstrate that an increase is necessary to meet the costs of the registration and administration of powers of attorney, the matter must be subject to an element of public interest consideration, for the reasons given earlier. An increase to £220—a significant cost for people making wills that certainly exceeds the cost of many wills by some distance—will discourage people from securing the power of attorney for when they become vulnerable. It must be in the public interest to ensure early registration, so that the person who creates the power of attorney has a hand in the process. He or she will want to know that it has been registered, so that there is full protection. The increase in the fee for registering powers of attorney will discourage that.
It would be more convincing if the Government had said anything that demonstrated an improvement in the monitoring arrangements for powers of attorney. We return to the point made by the noble Lord, Lord Kingsland. We have not been told a single thing about any improvement in monitoring arrangements. It would be helpful to know how many extra staff will be employed in monitoring powers of attorney. How many more investigations will there be into the use of the powers.
It is also surprising that there was so little consultation, prior to the increase, with those who might have had something constructive to offer, such as the Law Society, whose members are involved in the great majority of cases involving enduring powers of attorney, the major charities and other professional groups. I hope that I will be corrected about this, but I understand that there was limited consultation even with the Public Guardianship Office's consultative forum, which was set up for the specific purpose of being consulted on such issues.
My other point relates to receivership. Under the previous arrangements, there was a standard fee of £1,750 per annum for the administration of receiverships. One of the reforms that flowed from the quinquennial review of the PGO was the use of external receivers. Those receivers are drawn from a panel of professional receivers who are mostly—not exclusively—solicitors. Some of the receiverships cost less than £1,750; some cost a great deal more. The flat-fee arrangement has compensated for the existence of dearer and cheaper receiverships. That is a fair, rounded system.
The PGO no longer charges fees, but it has retained some receiverships of last resort. It was always recognised that there would be a residual number of cases—200 or 300—in which the Public Guardianship Office would act as the receiver of last resort. They
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might include, for example, cases of fraud by a family member or in which the patient is particularly violent or demanding. Under the new arrangements, that service is provided free of charge by the PGO, subsidised wholly by the taxpayer. However, a choice must be made by the PGO as to whether it is a receivership of last resort or one that will be put out to a member of the panel. There will be many marginal cases. What will be the effect in those marginal cases.
Cases that fall on the non-residual side of the line must pay the full charges of the professionals who are involved in the receivership. In some cases, that could run to several thousand pounds a year. Those in the residual category will not have to pay. That creates a serious problem for the Public Guardianship Office. How can it justify the appointment of a panel receiver as being for the benefit of a patient when the panel receiver will charge several thousand pounds, even though the in-house provision is entirely free? How can the Master of the Court of Protection give a serious and reasonable answer to a member of the public who has in his hands the interests of a patient and says, "I want this to be a residual case because I won't have to pay for it"? The cost of a panel receiver will be prohibitive.
That puts the Court of Protection in a difficult situation and makes something of a mockery of the PGO's panel receiver system. I do not believe that that point has been fully considered. If it has, I should welcome the Government's response to why they have allowed such an anomalous situation to arise.
The regulations have been introduced in haste and without proper consultation. It would be better if they were withdrawn, so that consultation could take place in the normal way. That way, we could return to the matter in due course with more balanced regulations.
Baroness Scotland of Asthal: My Lords, first, I thank the noble Baroness, Lady Greengross, for raising this issue. A number of noble Lords have raised many important questions. The noble Baroness was right to say that the Public Guardianship Office plays a crucial role in the lives of some of the most vulnerable people in society—people who suffer from mental incapacity. Its clients include people who suffer from mental illness, people who have learning disabilities, people who have suffered brain damage and elderly people who suffer the effects of dementia.
These are people who are easily forgotten or sidelined. They need champions. For many years, the noble Baroness, Lady Greengross, has been their champion through her work with Age Concern and other organisations. Perhaps I may say also that the noble Lord, Lord Kingsland, and the noble Lord, Lord Carlile of Berriew, have both demonstrated that they too share concerns about these vulnerable people in our society. I take the remarks made by all noble Lords very much in the spirit that they were meant and I shall respond as fully as I can. I appreciate the concerns that these rules have given rise to, and I shall try to answer as many of the points as I can before the

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close of today's debate. However, if I do not respond to all of them, I hope that noble Lords will write to me. I shall then seek to give a fuller response.
The noble Baroness, Lady Greengross, asked for an explanation of how the fees arose. I am happy to give that explanation, which I hope will also be to the elucidation of the noble Lord, Lord Carlile. Before doing so, however, I think that it is important to explain the principle that we followed in setting the new fees.
We wanted to ensure that we act in line with the findings of the Public Accounts Committee in its 1999 inquiry into the affairs of the Public Trust Office which, as noble Lords will recall, was the predecessor body of the Public Guardianship Office. The PAC was very critical of the way in which the costs of services to some clients were being cross-subsidised through higher fees being charged to other clients.
It has been the policy of successive governments that people should pay for the services they use and that those who cannot afford to pay should be subsidised. Taking this important principle together with the criticisms of the PAC, we have devised these new rules to reflect more accurately the cost of services used by clients and to support the provision of better services to them, based on a system which is fairer to all.
The new fees fulfil those aims. They ensure that the fees reflect the costs. They eliminate cross-subsidy between groups of clients and they will allow the PGO to develop and improve its services. Most important, they contain improved protections, support and better value for poorer clients.
Quite naturally, noble Lords have focused on where the fees have increased. I should like to respond to those concerns but, first, I wish to place on the record that we have reduced some fees. For protection cases, the commencement fee, which covers the cost of processing a first application to the court, has been reduced from £230 to £65. In Court of Protection cases, where clients have net assets below £16,000, their representative can be given authority to manage a client's finances under a "short order", and will have to pay only the £65 fee. That is one example of the way in which the new fees will help the poorest clients of the PGO. Previously they would have paid £230, the same amount as for more complex applications. That higher fee partly subsidised users of other PGO services, in particular enduring power of attorney clients, to whom I shall turn later in my remarks.
Officers of the Court of Protection and the PGO have also developed new guidelines for remission of fees which are both more generous and wide-ranging in their scope and which will be more widely publicised than in the past. They have consulted the main stakeholders, bodies such as Age Concern, the Alzheimer's Disease Society, Action on Elder Abuse, MIND and the Law Society. The new remissions scheme reflects their views. For example, the guidelines increase the capital limit for remission of all fees from £3,000 to £11,750, an increase of almost 300 per cent.
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There are two other important aspects of the remissions scheme to which I should like to draw the attention of noble Lords. First, the increase in enduring power of attorney registration fees has caused concern, a point mentioned by the noble Lord, Lord Carlile. Under the revised remissions guidelines, clients with assets of less than £16,000 will be treated in the same way as "short order" protection clients. They will pay a registration fee of only £65; that is another illustration of how the fees policy will protect the PGO's poorest clients.
I should like to remind noble Lords what the full fee for registration of an enduring power of attorney covers because, as the noble Lord, Lord Carlile, demonstrated in his speech, there does not seem to be much clarity on that point. The fee of £220 covers the cost of registration, handling any disputes or technical problems and correspondence during or after registration, helping and advising attorneys or their legal representatives, investigating allegations of financial abuse against the donor and cancelling registration on the death of the donor. The registration fee covers that work over the lifetime of the case. It is not for a simple act of registration of a document, as perhaps the noble Lord, Lord Carlile, thought or suggested. I hope that noble Lords will agree that a fee of £220 over such a period represents incredibly good value.
Finally, the Public Guardianship Office will publicise its remissions guidelines and will incorporate them in a review process if a client believes that the PGO has failed to apply the scheme properly. I hope that that will be of reassurance to the noble Baroness. The PGO will retain the discretion to remit fees for clients who do not meet the set criteria if it judges that they would suffer hardship as a result of having to pay fees.
Lord Carlile of Berriew: My Lords, I apologise for interrupting the noble Baroness, in particular as my question will take her back to her last but one sentence. Are figures available to illustrate the average cost per enduring power of attorney of registration and all the other processes which she mentioned in her remarks.
Baroness Scotland of Asthal: My Lords, in setting the fee, an assessment was made in relation to how much are the real costs. I do not have that information to hand, but certainly if the noble Lord wishes to write to me, I shall do my best to satisfy his interest in that regard.
It may be helpful if I give an example of the exercise of the discretion. Mr A is a client of the PGO. He lives with his wife in a house that they own. His income and capital exceed the minima that would automatically qualify for remission but his expenses are also significant. He receives remission on the ground that if he did not he and his wife would be forced to sell their house to raise capital. I am happy to confirm that the PGO will notify all those who have made applications since the order came into being advising them of the remissions procedure that is now available. Furthermore, the PGO is already taking steps to

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ensure that the office itself raises these issues with those whom it believes may be entitled to such remission. We are taking proactive steps in that regard.
Before going on to respond to some of the specific points that have been raised, I wish to cite one more example of how the new fees scheme will protect the PGO's poorest clients. The difficulties of the Public Trust Office were exposed to all by the PAC report published in 1999. One of the actions that we have taken since then was to seek to devolve the PGO's in-house receivership work to panel receivers, mentioned by the noble Lord, Lord Carlile; they are professionals, usually solicitors, who are better able to provide a more local and professional service. However, some in-house receivership clients remain. These tend typically to be people who have no one to act as receiver for them or there are complexities which make them resource-intensive to manage. The majority will fall below the £16,000 capital threshold.
Those cases involve liaison with other agencies which are stakeholders in the care of our most vulnerable clients and tend to require a more senior grade of staff to manage them. The cost is estimated at £2,535 per annum per case. The PGO expects to be left with about 50 cases where clients would not be exempt fees on grounds of hardship under the current fees instrument. In most of those cases, the clients are very elderly or very ill and regrettably are unlikely to survive long.
Given the complexities and the opportunity costs involved in serving this small number of clients, the full cost in the very few cases where fees would normally be payable, the charges to receivership clients would have been £665 for the first year fee; £2,535 for the annual administration fee; and £1,390 for the winding-up-fee, compared with £500, £205 and £360 in protection cases involving private receivers. This would clearly be unacceptably high.
In view of the nature of the remaining client base and the impact of introducing steep increases in fees for a very small number of the PGO's most vulnerable clients, we will subsidise those clients' fees, as the noble Lord indicated. The subsidy will be from government funds rather than a cross-subsidy from other PGO clients. We believe that that system will work and work well.
I turn to some of the specific points raised. The noble Baroness raised the issue of parliamentary time and consultation. There have been suggestions that there was insufficient time for consultation regarding the rules laid before a Recess. As regards laying the rules, we have complied with the necessary procedures. The new rules were laid before Parliament on 27th March and came into force on 17th April. That was in accordance with the normal 21-day rule for this type of secondary legislation.
I stress that such measures have been taken in accordance with the normal procedure. However, I accept the concern that the laying of the regulations coincided with Easter. That was a regrettable result of the proximity of Easter to the financial year-end.
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I have already apologised for the fact that the Answer given in the other place appears to have been inaccurate. It was certainly accurate and correct when it was written. Unfortunately, publication was delayed because of the Easter Recess, and therein lies the difficulty.
The noble Baroness also asked when the next fee increase would be. We do not know the date of that but the PGO reviews its fees every year and fees may go up or down depending on the cost of the service. However, we are hopeful that for the next two or three years fees will need to increase only in line with inflation. The PGO will also be making efficiency improvements which we hope will exert downward pressure on costs.
I turn to the two major issues raised by the noble Lord, Lord Kingsland. They appear to be the issues arising out of the change in the team working and also the supervision by the PGO of the panel of receivers. The Lord Chancellor's Department has an agency-monitoring unit. It monitors on a day-to-day basis. There is a ministerial advisory board which my colleague in the Lord Chancellor's Department, Miss Winterton, chairs. It meets quarterly to review performance and the PGO produces annual reports setting out that performance. Therefore, there is a robust scheme for monitoring.
In relation to the change that has taken place from case working to team working, we entirely understand the attraction of having a named caseworker. Having a named caseworker worked well in many cases but by no means all. In some cases, the client and the caseworker did not work well together. Individual case working meant that when a member of staff was away or left there was a risk of lack of continuity.
Finally, individual case working was not the best way to develop consistency of practice. The growth in the number of cases with which the PGO deals also necessitated a change. Team working offers the opportunity to develop better continuity and consistency, but I sympathise with the concerns expressed by the noble Lord, Lord Kingsland. I can say to him that the issue will be kept under review and the PGO is determined to have the most efficacious means of delivering well targeted help and support to the people whom it serves. Therefore, the process which we now have in place will continue unless and until such time as change seems to be indicated.
As regards supervision by the PGO, I want to reassure the House that as a result of the concerns expressed the panel receivers work under a more structured supervisory framework. They agree a service level agreement with the PGO at the start of their appointment to the panel, which includes an outlying framework of the level of service the clients can expect. In addition, they are subject to the same supervision as other professional receivers and the PGO reviews their annual accounts as well as the requirement on the panel receiver to seek specific court authority for a number of actions such as sale or purchase of property. The court and the PGO continue

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to ensure that clients whose affairs are managed by panel receivers receive an appropriate level of protection.
When the PGO hands over cases to panel receivers, they are accompanied by a brief review of the client, details of income arrangements, expenditure projection, property details, investment holdings, an up-to-date account and other relevant information. Therefore, the PGO aims to ensure that cases which transfer to panel receivers are in good order for panel receivers to manage them in the future.
I hope that I have reassured noble Lords on the points raised today. If, having considered what has been said, noble Lords feel that there are further and other matters which need to be explored, I shall be happy to respond. I want to re-emphasise that those rules offer the opportunity for clients of the PGO to be charged as fairly as possible for the services offered by that organisation and that the new fees recognise the need to protect the finances of the poorest and they do that. The PGO will continue to seek every opportunity in the future to consult with the relevant organisations to ensure that any policy affecting fees, such as remission and fee levels, continues to reflect a just system of assessment of each individual circumstance. With that explanation, I hope that noble Lords will find themselves content.
Baroness Greengross: My Lords, I shall be brief. I am grateful to the Minister for that response. I am grateful in particular for her obvious commitment to fairness; a more tailored service to meet clients' individual needs; to a review process; and to notify everyone who may not have been aware of the new remission scheme and of subsidy schemes in particular circumstances.
Noble Lords have spoken from all sides of the House and I hope that we shall soon have the opportunity again to debate such vital people-centred issues. It is easy to see the debate as about an organisation, the Public Guardianship Office, but it is really about people with mental incapacity. We really must be sure that they are always in the forefront of any such discussion.
This House is now aware that there has been a great deal of concern about the Public Guardianship Office. The reforms and changes, including changes to fees and to how we look after those with a mental incapacity, must be better monitored. I hope that this debate will have played a small part in making sure that this is so. I was pleased to see the explanation of the remission scheme which appeared on the website today.
On this occasion I do not intend to test the opinion of the House. To have done so might have meant that I would need the protection of the master myself. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.
Lord Kingsland: My Lords, I thank the noble Baroness for her reply. No doubt inadvertently, she said nothing about improved accounting procedures.
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Perhaps she will be kind enough to write to me on that matter at a later date. In the mean time, I do not intend to move my Motion for an humble Address.
Lord Bassam of Brighton: My Lords, I beg to move that the House do now adjourn during pleasure until 8.36 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended front 8.31 until 8.36 p.m.]

Education Bill
House again in Committee on Clause 23.
Baroness Blatchmoved Amendment No. 113:
Page 14, line 19, at end insert—
"(1A) Nothing in this Chapter shall provide for the character of a school to be changed as a result of federation.
(1B) In subsection (1A) "character" shall he defined as including admissions arrangements; religious character; single sex or co-educational policy; or the status of a school as a foundation, voluntary aided or community school or academy."
The noble Baroness said: I am responding now to the Minister's reply to Amendments Nos. 113 and 114.
I am largely reassured by much of what the noble Baroness said in regard to Amendment No. 113. As I understand it, there is absolutely no way in which the nature, ethos or character of a school can be changed as a result of belonging to a federation. Even if a governing body thought it was a good idea and wished to relinquish its ethos as part of joining a federation, there is a procedure that it would have to go through in the normal course of events to change the character of the school. So I am reassured about that.
I do not know if something along those lines will appear in regulations or where it will be stated. There may be some schools which will believe that that is one way of changing the ethos of a school—for example, where there is a build-up of people of the same mind as the noble Lord, Lord Peston, who would like to relinquish the religious character of a school. It is important, therefore, to have that reassurance, but I wonder whether it will be built into the statute.
I cannot help feeling quite vexed about the example given by the noble Baroness of infant and junior schools. Certainly I have been present when infant and junior schools have merged and observed the pain and anxiety that it caused to the schools. But almost always it was the right thing to do. As mixed junior and infant schools, they became better for being one school rather than two.
This House fought very strongly, and defeated the Government by one vote only, for a little church school that had been there for a couple of hundred years which wished to keep its separate infant and junior school governing bodies. It went to another place, where that decision was brutally overturned, and we lost that—and here we are now saying that it is a jolly good thing to come together as a federated school under one governing body. I am sorry; it was the other way round. It is no comfort to that school.

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We had a part debate about pre-Taylor groups. I tried quickly to write down the words of the noble Lord, Lord Peston. He said:
"I have no reason to share the anxieties of the noble Baroness, as I read the Bill".
I want to believe the noble Lord—I hope he is absolutely right—because then I need not worry about some of the points that I raised.
As the first federations start to be formed, some schools will start to feel pressure. In an area where there are half a dozen schools, of which three or four come together, the other schools may feel pressure to become part of the federation. My worry is that, so far as I know, there is no limit on the number of schools that can come together as a federation—unless a figure is to be included in the regulations. It would be helpful if the Minister could answer that point when she replies to the other matters that I want to raise.
If the number is too high, the schools lose something. I believe that it was the noble Baroness, Lady Sharp, who raised the point that a school gets a great deal of comfort from knowing that on a daily basis governors are taking an interest in it and passing through on both an informal and a formal basis. They become known not only to the children and the parents but to the teachers and staff. The smaller the school, the more important that is. That will not be the case.
In urban areas the proximity of schools is manageable but in rural areas the distance between schools is considerable. It is possible that from one term to the next schools may not even know who the governors are and will not see them. This is an important point to be taken into account.
The noble Lord, Lord Dearing, who is not in his place, talked about schools themselves having some governing body functions and the overarching single governing body having other functions. I do not believe that such an idea is contained in the legislation or that that is a proper reading of it. However, there is a very good argument for subsidiarity; namely, that some things are better done at school level than by the governing body overall. I do not know whether that will be a consideration.
As regards the regulations that will be produced under Clause 23(4), many of the areas of concern are covered, but perhaps I may refer to one in particular. I do not believe that there is a trial period for a school entering a federation. The formation of a federation is in itself something of a leap in the dark for some schools. What looks good on paper may not turn out in practice to be what they hope for. I do not know whether a trial period has been considered.
Secondly, although the regulations will cover a governing body leaving a federation, and even the dissolution of the federation itself, will there be a fixed period before the end of which a school will not be able to reverse its decision? A school having opted in to a federation, what will the procedure for opting out if it feels that too much of its autonomy has been compromised and that the federation has not delivered what it hoped for.
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I believe that the Minister covered my final point, but perhaps I may check it again. To give an example, if we take a foundation school, a voluntary aided school, a community school and possibly a maintained special school, not only are they different in nature—and we have dealt with the nature, characteristics and ethos of a school—they also have very different governing body responsibilities. For example, in the case of a foundation school, the school itself, not the LEA, is responsible for staffing. I understood the Minister to say that all of that is unaffected by these provisions—that a foundation school will continue to appoint its own staff, that the LEA will continue to be the employer of the staff in a community school. I understood her to say that those areas are completely unaffected and that the governing body will have to take into account that for each school a different set of rules operates in terms of staffing and certain procedures.
Earlier, I raised a point with the right reverend Prelate about possible tensions between diocese and faith schools. We chatted informally about the matter following our debates in Committee. I take his point that this is more of an issue for Roman Catholic schools than it is for Anglican schools; but it needs to be addressed. To my knowledge, the diocesan authorities have more of a practical, almost day-to-day input into the running of a Catholic voluntary aided school than Anglican dioceses do into their schools. That is another constitutional point that will need to be thought through in terms of federation.
Before I decide what to do about the amendment, I should be grateful if the Minister would touch on some of those points. I beg to move.
8.45 p.m.
The Lord Bishop of Blackburn: My amendment is grouped with this one; therefore, it is appropriate that I should reply before the Minister speaks again.
I was attempting to be helpful to the Minister. There are deep issues as regards the relationship of schools within a federation which are of a different character and have a different foundation. We are talking in the case of voluntary aided Church schools—and, I suspect, all voluntary aided schools whatever their background—about premises which are owned for a particular purpose by the trustees. I find it difficult to get my mind around the arrangements that pertain for the appointment of staff in individual schools. I do not know how the provisions will be exercised by an overarching governing body involving many people unless there are specific directions in the legislation. It is not only the foundation governors who appoint staff in a voluntary aided school; it is the whole governing body, in which the foundation governors are the majority. So some real issues arise.
If this idea is promoted as a possible way forward—and I genuinely wanted to attempt to do that—engagement with the diocese could be a lever for bringing this about rather than, as it has been perceived, a veto to prevent it happening.

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In her response, the Minister did not give me the Ascension Day gift that I was looking for. However, she made some very helpful comments which I shall want to reflect on. We may need to return to this matter on Report.
Baroness Sharp of Guildford: Before the Minister replies, perhaps I may ask for clarification on one point. There has been a great deal of discussion on the part of the noble Lord, Lord Dearing, and the right reverend Prelate on the concept of a confederation of schools, a group of schools coming together. However, the conception has not been that on such occasions—as is quite clear from the Bill—they would be run by a single governing board. Am I right in thinking that the Bill as drafted does not conceive of a federation where each individual school could retain its own governing board and there would be an overarching governing board.
Baroness Ashton of Upholland: We are now at the stage of "replying to the replying". In response to the noble Baroness, Lady Sharp, no, we do not see that as the way forward, for the reasons I gave earlier. That would be an extra layer rather than a provision that was helpful. As I said earlier, there are many ways in which schools can collaborate without going that far.
The noble Baroness, Lady Blatch, made a point about a trial period. We have not included such a provision—partly because we are working on the principle that schools will deliberate and probably set up ways of working together under other options as a method of moving towards federation. In other words, I imagine that schools will not leap into federation.
That said, we want to make sure that schools that do enter a federation can exit from it or that the federation can he dissolved. We have not yet considered any period of time during which schools must stay in a federation, although it may be a matter that the noble Baroness will want to press later. We are looking at what triggers would enable a federation to be dissolved. We shall examine that carefully. So if, for example, in a federation of three schools members of one school decided that the federation was not for them and felt that they would be better off under different arrangements, they could come to the federated governing body, having discussed the matter within the school, probably having consulted with the parents and having put forward the proposal that they should remove themselves from it. We shall set in train a mechanism that will enable that to be an informal process and a formal process.
If it would be helpful to the noble Baroness, I am happy to write to her setting out our thoughts on the matter. An exit strategy will be laid out so that schools are clear that they can leave a federation but providing some flexibility for them to be sure that it fits their circumstances.
We have said that up to five schools can federate. If more than five schools wanted to do so, it would be an exception that could be granted only by special consent of the Secretary of State. We do not want to go back to the time when there were 10 or 20 schools
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under one federation; nor indeed do we want to make it impossible for governors to stay in touch with a school. But we recognise that there are already many governors who are governors of more than one school and who perform those functions very effectively. We expect schools to take that on board.
I am sorry that I did not give the right reverend Prelate an Ascension Day gift. I rather hoped that I had. We have said that the diocesan authorities are very important. We expect governing bodies to consult them. We are simply saying that the decision must be made by the governing bodies. Local education authorities and diocesan authorities are important players, particularly with regard to the instrument of government, but the ultimate responsibility belongs to the governing body.
Baroness Blatch: Would the powers of a voluntary aided faith school, for example, be vested in the new, all-embracing governing body? On a linked point, sub-paragraph (iii) in my Amendment No. 114 suggests that the distinctive nature of each school should be represented on the governing body. In other words, if there are two or more faith or specialist schools—even up to five—coming together, the distinctive aspect of each of those schools should be represented on the governing body. I am not sure whether the Minister covered that.
Baroness Ashton of Upholland: I accept that this is a complex procedure, particularly when dealing with schools of different faiths or different kinds of school. The situation is more straightforward if two or three community schools come together. I recognise that we have to look at the detail.
Admissions is an important issue. We imagine that a governing body would propose an admissions procedure that would enable there to be a majority on the panel, however it was done, that would represent the interests of the school for which that admissions procedure applied. That would help the new governing body determine its numbers and membership to ensure that that is built in on issues for which it is responsible as the employer of staff or for admissions procedures and appeals if need be.
All that would have to be demonstrated in the way in which the federated governing body came together to enable that to happen. We would be keen to ensure that that could happen so that there was a procedure for those schools to be represented on the governing body and to be enabled in doing so to fulfil their obligations as admissions authority, employer and so on.
Baroness Blatch: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 114 not moved.]
Baroness Sharp of Guildfordmoved Amendment No. 115:
Page 14, line 30, at end insert ", and
(c) have collectively and individually the same responsibilities towards disabled pupils and pupils with special educational needs as any individual school."
The noble Baroness said: The noble Lord, Lord Rix, who has added his name to the amendment, apologises for not being here this evening. The purpose of the amendment is to ensure that the individual schools within a federation have the same SEN and disability responsibilities as they would have if they were not federated.
In the discussions that we have had about the concept of federation, there are obviously some rather exciting possibilities for special needs provision. When we discussed what is now the Special Educational Needs and Disability Act 2001, we talked about the possibility of special schools becoming a resource for a group of schools. That aspect of involvement in a federation is a positive way of looking at a federation. I certainly recognise that some advantages can be gained from that.
However, there are also some concerns about working in federated arrangements within the Bill. Above all, there is a danger of the issue falling between two stools. Everybody might think that someone else has responsibility for the issue.
The amendments respond to those concerns. There is already sometimes confusion between the responsibilities of schools and those of local education authorities on special educational needs. Parents who are concerned about their child's progress are often pointed in the direction of the local education authority for additional support through a statement, but when they approach the local education authority they are often told that the responsibility really lies back at the child's school. That confusion could be further exacerbated by the introduction of yet another level of responsibility—the federation. When schools choose to federate, it needs to be clear to whom the parents should turn when they are concerned about their child's progress or how their child's special educational needs are to be met.
Amendment No. 115 would ensure that a federated school and the individual schools within the federation had the same SEN and disability responsibilities as they had when they were not federated. In effect, responsibilities would be held locally by the individual schools and across all schools in the federation.
Amendment No. 118 provides a model of how the federation might apportion responsibilities in respect of special educational needs policy requirements. Some elements of the SEN policy could sensibly be maintained at the level of individual schools, but more strategic aspects of the policy might more appropriately be held at the level of the federation—for example, the way in which SEN provision is reviewed and developed might be across all the schools
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in the federation rather than just at the individual school level. That is the purpose of the amendments. I beg to move.
Baroness Darcy de Knayth: In the absence of my noble friend Lord Rix, I should like to say a word in support of the noble Baroness, Lady Sharp. There are enough problems with children's special educational needs. It is very important that parents are clear about where to turn for advice. Parents are not clear at the moment about the division of responsibilities. It would be good to make the situation clearer. I hope that the Minister can give a positive response.
Lord Peston: I do not want to say anything negative about special educational needs, especially in this Chamber. As your Lordships know, I am firm believer in the idea of passing a general special needs amendment before we consider any Bill, covering any thoughts that anyone has on special educational needs so that we do not need to debate the subject further.
I am concerned about a deeper point. My interpretation of this part of the Bill is that federations will be what are called technically super-additive—that is, good will come out of them and the best of the constituents will become characteristic of the whole. The noble Baroness, Lady Sharp, appears to assume the reverse—that this will be a recipe for the worst in every one of the members of the confederation becoming the characteristic. That is a deep divide.
I ask the noble Baroness to reflect on whether she may be mistaken. Maybe the point is that schools will get together and share all the good or best things that they do. Special educational needs provision is as good an example as I can think of. One of those schools will be much better at it than others and will set higher standards. That will become the characteristic of all the schools. That is one reason why we ought to support the proposals and see the positive side, not just with special educational needs but with almost anything else that I can think of.
The noble Baroness, Lady Blatch, said earlier that people who do not care for religion will take over. If she could tell me how to do that, I would be the first to put it into practice, but I cannot remotely think where her fears come from. If she knows how, posting the information on her website or e-mailing it to me would be all that I need and I would be in there like a flash.
My main point is simply that this is a chance for the best to take over. That is the point of it. We do not need amendments such as this one or anything else that we can think of in this area that needs protecting. We need to say that we want the idea to work.
Baroness Blatch: I hope that the noble Lord, Lord Peston, was supporting the notion of having an all-embracing statement about special educational needs in the Bill.
Lord Peston: No, I was not. My whole point is that I am totally committed to special educational needs provision, but over the years I have found it rather

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tedious that there are certain topics on which we are always asked to have special general statements. Special educational needs is one. Wales is another—it gets whole sections of Bills devoted to it. Occasionally, those who press for these things ought to accept the good faith of a number of us who are totally committed to doing the best things. I cannot say a word for the Government, because I have no responsibility for them, but I have—this is not my favourite word—faith that occasionally the good will out. We do not need a general statement on SEN or any of the other pressure group issues that dominate the House. That is my general position.
9 p.m.
Baroness Blatch: I am sorry that the noble Lord feels that way. I refer to my disappointment when we discussed the Special Educational Needs and Disability Act 2001 during its passage through this House. I believe that that applied to most of us who were involved in that discussion. I had been involved in the minutiae of the 1993 and 1996 Bills which contained large sections devoted to children with special educational needs. However, in 2001 we discovered that the situation was not working on the ground and that the quality of statements and their detail and content left a great deal to be desired. There were inadequacies as regards the rights of parents to have the appropriate provision made for their children and the quality of diagnosis of children with special educational needs. I refer to the increasing number of children with difficult to detect conditions such as autism and Asperger's syndrome. Many other conditions were not being detected at an early stage and young people were drifting through school and developing behavioural problems. Some were withdrawn from school. A number of problems exist in that area and we have not yet got the matter right.
It seems to me that one way of keeping this matter at the front of the agenda is, rather than table amendments on the subject as we progress through the Bill—as we are all trying to do at the moment—to make a statement that there is a group of children with special educational needs who must not be lost in the understandable wish to raise standards for all children. The phrase "all children" includes children with special educational needs. A neater and more profound way to deal with the matter is to have a portmanteau statement in the Bill. It is a long and disparate Bill with many different objectives such as setting up companies, forming federations and curricular changes. All we are saying is that there could be a statement at the beginning of the Bill to the effect that nothing in the Bill will have the effect of reducing or in any way marring the provision of education to meet the needs of children with special educational needs. I believe that that would be one way to cope with the matter rather than having this debate.
I know that the noble Lord, Lord Peston, cares as passionately about education as everyone else in the Chamber and has done so for many, many years, but I refer to what is almost a war of attrition with regard to everyone concerned with the delivery of services to
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children with special educational needs. There is still more that can be done. It is a question of making sure that the Bill recognises that. There is not a mention of special needs in the Bill from beginning to end. It is our mission to do something about that before the Bill returns to another place.
Lord Davies of Oldham: I, for one, am enormously grateful that the noble Baroness, Lady Sharp, moved the amendment as I was in danger of participating in the debate so late in the evening that the sobriquet "something of the night about him" was beginning to become appropriate. Therefore, I am rather glad of the opportunity to be on my feet at the extraordinarily early hour of 9 p.m.
I say to my noble friend Lord Peston that he may not be able to speak for the Government but he is quite capable of taking the Government's best lines and using them before we get the chance to deploy them ourselves. What he says is absolutely right; namely, we have great sympathy with the motivation behind the amendments we are discussing as they share our concern to ensure that the best possible provision is made for students with special educational needs.
As the noble Baroness, Lady Blatch, has just reminded us, we spent many arduous months and expended a considerable amount of intellectual energy in seeking to improve provision for special educational needs during the passage of the Special Educational Needs and Disability Act 2001. Therefore, it is scarcely likely that the Government would bring forward a measure which in any way, shape or form threatened that broad objective of an inclusive agenda in which special educational needs must play the fullest possible part. On that basis I seek to reassure the Committee.
I am grateful to my noble friend Lord Peston for expressing more graphically and more accurately than I the fact that what we hope to achieve through federation—as I believe the right reverend Prelate indicated in his welcome of the concept—is a framework within which best practice can be deployed and developed. I make the obvious point that the inevitable pooling of resources which federation implies also indicates that such resources can potentially be operated more effectively within such a framework. There is certainly likely to be expertise in a group of schools coming together in a federation which can be made available to students across the federation. At the present time it is more difficult to release that expertise within the framework of each individual school.
I understand and greatly respect the points that the noble Baroness, Lady Blatch, made. She indicated that we ought to be able to address the issue of special educational needs in a general portmanteau statement. However, the only thing I would say to her in this regard—mistress of detail that she is—is how difficult it is to produce such a framework without laying ourselves open to a whole range of potential difficulties, not least that of judicial review in respect of the operation of such a measure.

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We said that we would consider this matter and we are doing so very seriously. The issue was raised earlier. However, it should be recognised that the matter is not straightforward. Given the representations that have been made by a whole range of people in this Chamber with tremendous expertise in special educational needs, it was not beyond our wit to anticipate that the issue would arise. We all regret the fact that the noble Lord, Lord Rix, cannot be present this evening. Given the representations that have been made, if we thought that we could meet the obvious challenge that would be made with regard to a general statement on special educational needs, I assure the Committee that we would probably have been able to produce such a statement.
As I say, we are considering the matter and our efforts may bear fruit. However, in the meantime, I reassure the Committee and the noble Lord, Lord Rix, in his absence that there is nothing within the framework of federation that jeopardises the concept of proper facilities, treatment and resources for special needs; far from it. Our whole intention is to ensure that those are enhanced.
I turn to Amendment No. 118 which is grouped with Amendment No. 115. We intend to regulate that it will be for the governing body of the federation to look at each school's special educational needs provision and decide whether developing a common policy would be both feasible and beneficial, or whether distinct SEN policy should be established for certain—or each and every—school within a federation. We envisage, for example, that federations involving special schools would wish to retain a distinct special educational needs policy for any special school.
However, it is worth noting that federation would provide an opportunity for special schools to share best practice in this area. That in turn could be used to enrich SEN policies and provision in other schools in the federation. It would also contribute to a wider strategy of sharing best practice.
I hope that, on the basis of those arguments, I have reassured the noble Baroness, Lady Sharp. We recognise the motivation that lies behind the amendment. I am grateful to her for the way in which she expressed her views. I hope that I reassure her that we regard federation as an enhancing development.
Baroness Sharp of Guildford: I thank the Minister for that reply. I am sorry that the noble Lord, Lord Peston, feels that I am unduly gloomy on these issues. I began by trying to be positive about them all. I am particularly grateful to the Minister for his reassurance. It is important to stress the need to bring all schools in a federation up to the standard of best practice. As the noble Lord wishes, we should look positively on these issues. This is an opportunity to do so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 116 not moved.]
Baroness Walmsleymoved Amendment No. 117:
Page 15, line 18, at end insert—
"( ) Notwithstanding the provisions of subsection (6), regulations made under section 18(2) shall, in so far as they make provision for the composition of the governing body of a federation, provide that the number of persons in each category of which the governing body consists shall be the same in proportion to the total number of governors, or as near thereto as is reasonably practicable, as would be the case if the federated schools were together a single school."
The noble Baroness said: The amendment would ensure that any regulations make provision for securing the same balance of stakeholder representation for federated school governing bodies as that required for single school governing bodies—in other words, as would have been the case if the federated school were a single school. It would ensure that the governing body of the federation had the benefit of experienced representation from different types of school within the federation. I refer, for example, to a special school within a federation of mainstream schools or a nursery school within such a federation. There may be advantages in bringing a group of schools together to share expertise, resources and facilities. However, bringing schools under one governing body may be problematic.
Will the Minister clarify the role of the governing body when one school in a federation enters special measures? How will grouped governing bodies be fully accountable to the community and to each of the schools within the group that they serve, particularly if the group is large? There is a danger, for example, of a decrease in social representation on governing bodies because some governors might find it difficult to travel considerable distances to meetings. Would governing bodies be required to move their meetings around the schools in a group.
The workload for a grouped governing body is likely to increase with more than one school budget, school development plan, action plan and other school policies to be considered. In light of the increasing difficulty of getting school governors, could that make the problem even worse.
More research should be undertaken into, and more evidence gathered on, the benefits of grouping schools under a single governing body before any change takes place. Collaboration between schools is essential to the provision of first-class education. That is already happening all over the country anyway. There appears to be no obvious reason for the reintroduction of grouped governing bodies.
The amendment seeks further clarification. How will the Government ensure that all types of governors and schools are represented appropriately on a federated governing body when the schools within the group are of differing types? I beg to move.
Baroness Ashton of Upholland: I agree with the noble Baroness that maintaining a healthy balance is very important for any governing body, including federated governing bodies. I reassure Members of the

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Committee that we intend that the composition of the governing body of a federation will broadly conform to the stakeholder principles as recommended by the Way Forward group, which, under Clause 18, will be set out in regulations.
I reassure Members of the Committee that where schools of the same category wish to federate, there will be regulations requiring them to conform exactly to the proportions of representation for each stakeholder group to be set out in regulations, as for single maintained school governing bodies. The only issue that may have a small bearing on the degree of conformity is the size of the governing body of the federation. In order for that not to become so large as to be unwieldy, combined schools will have fewer governors in each category than they would have had if they had remained under separate governing bodies. However, the representation within the whole governing body will be the same as for a single school.
Clauses 23 and 24 allow for schools of different categories to federate. We do not want such combinations to be prevented merely because schools belong to different categories. I hope that Members of the Committee agree that the goal of improving standards should not be constrained simply by the different categories.
Again, as for federations involving schools of the same category, we would expect the governing bodies of mixed category federations to conform broadly with the stakeholder principles outlined in Clause 18. We shall be regulating to ensure that parents and staff are represented in the same proportions as they will be in any single maintained school.
I recognise that it is important for all participating schools to be content with the level of stakeholder representation on the governing body of the federation. Therefore, we shall consult widely to develop the principles that allow for sufficient involvement for each school and each stakeholder group in the governing body of the federation.
As I said, we intend to regulate that schools putting forward for consultation plans to federate must include as part of their proposals the stakeholder composition that they intend to put in place for the governing body. That should make clear the proportion of representation for each stakeholder group that is required to be represented on the governing body. That means that all the parties which governing bodies will be required to consult—that is, parents, staff, the local education authority, the community, and partnership or foundation governors—will have the opportunity to comment on the proportions of stakeholder composition.
It is, of course, only at the end of that consultation process, after hearing the views of all the affected stakeholders, that each governing body will decide whether it wishes to federate. I hope that, in the light of those assurances, the noble Baroness will feel able to withdraw her amendment.
9.15 p.m.
Baroness Walmsley: I thank the Minister for her answer. However, can she clarify the situation of a school in special measures within a federated group.
Baroness Ashton of Upholland: I am sorry. I did intend to answer that point. Such a school would be part of a federated governing body. The federated governing body would be responsible for that school as part of its work. Therefore, the local education authority would be working with that body as the governing body of the school. That may require the local education authority to consider additional governors, or it may mean that the budget of the school is controlled by the local education authority, and so on. But that is all possible within federation. We would need to ensure that intervention was possible, regardless of the nature of the governing body, in order to protect the education of those children.
Baroness Walmsley: I thank the Minister for that clarification. Can she assure me that, in deciding whether or not federation was desirable, the social composition of the governing body would also he taken into consideration? In some cases, the distances involved might be great, and it wound be important that governors were not constrained in serving on a governing body because of problems of that nature.
Baroness Ashton of Upholland: I return to the original point. It would be for the governing bodies of the schools involved to decide whether they wanted to proceed in that way. The people involved in such a decision are those whom we recognise as having good sense, and they will also consider the logistical issues. We would want them to do that, and it would be part of their job to do so. However, ultimately they must make the decision. They will consider all the issues, including the benefits that will arise for the children— that is, after all, what this is all about—and make their decision accordingly. I am sure that they will take those issues on board.
Baroness Walmsley: I thank the Minister for that further clarification. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 23 shall stand part of the Bill.
Baroness Blatch: We can be fairly brief because we have had quite a long discussion on these amendments. However, I want to make one point, particularly in response to the last amendment moved by the noble Baroness, Lady Walmsley.
We are at a disadvantage. The Minister is being careful and diligent in her replies to us and, I believe, extremely empathetic and sympathetic to many of the points that have been made during the course of the debate. However, ultimately, it is what goes into statute that will matter. Personal reassurances are very welcome and warming, but that is not what the words

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on the page of the Bill say. Therefore, we shall be looking very carefully at the detail to ensure that some of the reassurances that have been given personally by the Minister appear somewhere in the legislation.
That leads me to my next point concerning regulations. I have already asked how many sets of regulations there will be on the passing of the Bill. But I wonder whether we are likely to see a draft form of these particular regulations before the Bill proceeds very much further. We have no policy paper on federations. We have policy papers on almost everything else but not on federations. And there is an enormous amount of detail that we want to see. I do not wish to be negative but, as the only part of Parliament that carries out this work, our duty is to test some of the propositions that the Government put forward so that, when the legislation becomes law, it is as workable as possible.
The reassurances that we are given will be matched only by the detail that follows. Only after federation is in place will people consider some of the practical points that have come to light in the debate. For example, they will realise how time-consuming and costly it may be to cope with the logistics of travelling between schools. They will need to ensure that no single person is disadvantaged by becoming a governor because of the amount of travelling involved. Although a governing body may have thought through such matters and consider them to be acceptable, new governors will inherit the obligation to move between schools. That is a particular issue in rural areas. One can separate the urban from the rural areas in this case. There would have to be an evaluation and monitoring process to ensure that the arrangements are working and that each of the schools are being treated on a par with one another.
The dissemination of working papers, agenda materials and other materials between schools would be time consuming and at a cost. We hope that such matters are thought through. It would help enormously to have an assurance from the Minister that we shall see at least a draft form of regulations before the Bill progresses much further.
Baroness Sharp of Guildford: From these Benches I thank the Minister for the degree to which she has clarified some of the ideas behind the concept of federation. Certainly, I have a much clearer understanding of the purpose of federation. I share the doubts expressed by the noble Baroness, Lady Blatch, about the implementation of some of the detail. Clearly, it would be good to see draft regulations before Report.
We retain some reservations. The point which comes through to me most clearly is that it is probable that few schools would make use of these procedures to federate because there is not such advantage in it. As has been said, co-operation can come without federation. Having said that, I do not intend to oppose the Question whether Clause 23 stand part.
Clause 23 agreed to.
Clause 24 [Federations: supplementary provisions]:
[Amendment No. 118 not moved.]
Clause 24 agreed to.
Baroness Sharp of Guildfordmoved Amendment No. 119:
After Clause 24, insert the following new clause—
"NATIONAL PARENTS'COUNCILS
(1) The Secretary of State in England and the National Assembly for Wales shall make arrangements for the establishment in each country of a National Parents' Council, which shall consist of elected representatives of parent governors, one from each local education authority area.
(2) Regulations shall provide for—

(a) eligibility for election to the respective Councils;

(b) the procedures by which such elections will take place;

(c) the terms of office of members and officers;

(d) the procedures by which the chairman and vice chairman are to be elected;

(e) arrangements for meetings of the respective Councils;

(f) the reimbursement of members for travel and expenses;

(g) any other matters relating to the constitution, procedures and meetings of the Councils as are appropriate."

The noble Baroness said: I tabled Amendment No. 119 as a probing amendment to gauge the Government's response. However, I have been thoroughly surprised by and pleased at the number of letters and e-mails that I have received congratulating me on tabling the amendment and supporting it wholeheartedly. That has led me to recognise that there is a latent demand for a national parents' council, which perhaps the Minister recognised and which I had not fully appreciated until I came to investigate the issue.
It appears that there is a real need for an organisation at national level to speak for parents. After all, we have a large number of teachers' unions. We have unions for head teachers, which the Government consult regularly on their educational proposals; but there is no equivalent stakeholder group for parents. As a former active member of the national executive of CASE, which was a self-chosen representative group, we could never claim to be representative of parents because we were not elected to speak for parents. Likewise the National Confederation of Parent Teacher Associations does invaluable work supporting PTAs but again is not an elected group; nor is the National Governors' Council, although that too represents many parent governors.
Therefore, it is sensible to move forward in this way. The School Standards and Framework Act introduced parent governor representatives at LEA level. They are elected by parent governors from schools. A national democratically-elected representative voice for parents could be provided by building on the existing right of parents to elect parent governors, and for those parent governors then to elect parent governor representatives at LEA level.

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Government guidance for parent governor representatives at LEA level states:
"Parent governor representatives' do not just represent parent governors. They are elected to represent all parents whose children are in local maintained schools or in some other education provided by the local authority. Parents (and their children) have the biggest stake in how well schools perform and how well local authorities support them. It is therefore only right that parents should have a say in local authority decisions that affect parents".
If those arguments apply at local authority level, they apply at national level.
A consultative body, regularly re-elected, could meet to consult with the Government as of right. Its function would be consultation. It would provide a means of consultation for the Government directly to parents in schools via parent governors. It could allow a voice for parents, elected only by parents, on to national bodies, such as the Qualifications and Curriculum Authority.
If we look at other countries, the Organisation for Economic Co-operation and Development (OECD) in its 1997 report entitled Parents as Partners in Schooling compared the representation of parents at national level in different OECD countries. The report drew attention to the fact that Spain and Ireland, which most recently had reformed their educational systems, had chosen to give parents a voice at every level, including national level. Denmark, which has always involved parents, was attempting to deepen that involvement. In Canada and the United States a number of provinces and states had reformed their regulations to give parents a voice at state, local and school levels. Denmark, France, Germany, Ireland and Spain all have parents represented on key national policy-making committees and there are national representative parental organisations which are consulted by government. In Germany every Land has a state parent council, made up of elected parent representatives, which advises the Minister of Culture on educational issues, including drawing up curricula and authorising textbooks. For the most part, the OECD report said, parental representation is set down in the legislation of the countries concerned.
However, the report noted that in England, Wales and Japan parents are not represented as of right on any national policy-making body or advisory committee. Since the report there has been one change in that the Secretary of State has appointed members of the General Teaching Council to represent parents. If there is a case for having parents on the General Teaching council, there is also a case for having a national parents council.
Another organisation that has advocated a national parents council is none other than the Government's favourite think tank, the IPPR. Joe Hallgarten in his report entitled Parents Exist—OK? advocates a national parents council. In the report he says,
"The Government should seek to create National Parents' Council. As with the General Teaching Council, the body would be consul Led about all initiatives … A National Parents' Council could stimulate and support school-based participation. The formation of a National Parents' Council in Ireland in 199:5 has sent ripples of increased parental participation throughout their school system".
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I return to where we started. Involving parents and allowing them to speak with a clear voice is a risky business. Parents may want what the Government do not want to provide. And of course parents might be wrong. But, in a mature democracy, parents should be allowed to speak with a collective voice. I beg to move.
Lord Davies of Oldham: The Government recognise the essential role of parents in education. Their involvement and support for their child's learning is critical. We all know that education is most effective when teachers and parents work together in close partnership to the benefit of the child.
We have some doubts about the concept of the national parents council, not least because—and I think that the noble Baroness, Lady Sharp, would recognise this—of the extent to which the Government have taken steps to give parents a more effective voice. They have an effective say in their children's education as a result of the home-school agreements. We have increased the number of parent governors on school governing bodies. The new provisions for the constitution of governing bodies will provide consistently for one third of governor places to be for parents. We have created the parent governor representative in order to give parents a voice on local authority committees that deal with education matters.
Our view is that the role of parent governor representatives is to represent to the local education authority the views of all parents in the area on locally provided education. That meets many of the broad objectives of today's proposal. The PGRs act as an apolitical voice for parents in the local authority area. They also have a valuable role to play in feeding back to parents the local authority's discussions and decisions on education issues. We have been concerned to move from the local to the national. We established the national network for PGRs to enable them to keep in touch with each other and to share best practice. That network is proving a useful tool in helping parent governor representatives in their task and by providing a further channel of communication with parents.
Where we disagree with the amendment is on the question of whether a further national body would be helpful. I recognise that the noble Baroness has gone to considerable care to identify the composition of such a body. She outlined its functions in her speech, but the amendment does not spell them out. In any case, the broad objectives that appear to underpin the amendment are met by the extensive developments in parents' representation that the Government have effected in recent years. Of course, we are committed to the support mechanisms available to parent governor representatives to ensure that the parental voice continues to be heard as effectively as possible.
I hear what the noble Baroness says about international comparisons, but developments in recent years have struck out the concept that I recall reading about in a newspaper article only earlier this week, when Professor Wragg referred to those days when a

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line was drawn in school playgrounds which parents were expected never to cross. We have moved a long way beyond that now.
So we share the concern of the noble Baroness that parents should be encouraged to make as large a contribution to their own child's education as they can and representatives of parents to play their full part with local authorities and, through the network, across the nation. But we do not accept the concept of a national parents council.
9.30 p.m.
Baroness Sharp of Guildford: I thank the Minister for his reply, but my inclination is to say to him, "Get real!". Who makes decisions about education in this country? They are no longer made by local education authorities. Yes, we are trying to get them made by local education authorities. The Minister is quite right to say that there is no longer any line in schools with parents behind it. It is excellent that we now have real co-operation. The Minister is right: good schools are those where parents and teachers co-operate to educate their children.
But the line is drawn at the national level. There is no proper discussion or consultation with parents at the national level. We are asking for a proper, representative stakeholder group for parents. The Minister said how good it was to have that locally but, as I say, decisions are taken nationally. It is therefore appropriate that there should be consultation at national level. We shall probably return to the matter on Report, but I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clause 26 [Limits on power to provide community facilities etc.]:
Baroness Blatchmoved Amendment No. 120:
Page 16, line 27, leave out "to a significant extent"
The noble Baroness said: We now move to a separate subject. Clause 26 allows governing bodies to provide facilities or services to further any charitable purpose for the benefit of pupils, their families or local communities. They may incur expenditure, enter into agreements, co-operate, facilitate or co-ordinate the activities of any person and provide staff, goods, services and accommodation to any person. Any charging must be subject to Chapter 3 of Part 6 of the Education Act 1996. That is also subject to the school's instrument of government or Section 48 of the School Standards and Framework Act 1998.
According to Clause 26(2) all this is also subject to regulations. Clause 26(3) allows the governing bodies to exercise the powers conferred by Clause 25(1) only if anything they do does not to a significant extent interfere with the duty imposed on them by Clause 20(2) or by any other education Acts.
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Clause 20(2) states that,
"The governing body shall conduct the school with a view to promoting high standards of educational achievement at the school".
I cannot accept that a governing body should do anything to interfere with its duty to promote high standards. The only thing that is forbidden by Clause 26(3) is any activity that may interfere to "a significant extent". It remains my contention that the duty of a governing body and school is the children's education and that no level of compromise is acceptable.
It seems extraordinary phraseology. It is in the Bill for a purpose. It is important that we know that purpose. I propose that Clause 26(3) reads as follows:
"A governing body shall exercise the power conferred by section 25(1) only if and to the extent that they are satisfied that anything which they propose to do will not interfere with the performance of any duty imposed on them by section 20(2) or by any other provision of the Education Acts".
If the Government insist that the phraseology remains, they are saying that some compromise in a governing body's primary duty to raise standards in school can be accepted. That is unacceptable. I argue that there should be no compromise. That is supported strongly by the teacher unions and teachers. They do not wish to be placed in a position where a level of compromise of their primary function is acceptable. I beg to move.
Baroness Ashton of Upholland: The inclusion of the wording "to a significant extent" ensures that insignificant incidental effects on a school's main educational role are not seen as obstacles that would prevent worthwhile services being established. For instance, it might be argued that adults using an ICT suite on school premises during school hours could potentially impact on teachers' and pupils' flexibility to use that suite. But the other side of that example is, of course, that it should have no significant effect in practice on children's learning; and evidence shows that this type of activity can have a positive impact on the achievement of those pupils. Adults learning in schools provide good role models for all pupils, developing positive attitudes towards teaching and learning. We expect all schools that develop family and community services to see a positive impact on the educational standards of their children.
Perhaps I may reassure the Committee that individuals will not be making these decisions on their own. In exercising their powers under Clause 25, school governors must have regard to guidance issued by the Secretary of State and to any advice given to them by the local education authority. That guidance will make it clear that where governors are considering providing community services, they must consult all interested parties.
In this context, the noble Baroness, Lady Blatch, and I ate in almost the same place. The words "to a significant extent" imply that there has to be a significance in the extent. In other words, to remove those words is to suggest that an insignificant extent could be taken forward. This may sound pedantic, but it relates to drafting.

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I agree with the noble Baroness that the provision is not about allowing schools to interfere with the raising of educational standards in the education of children. The wording seeks to ensure that children's work is not interfered with to a significant extent. I ask the noble Baroness to withdraw the amendment.
Baroness Blatch: I find the answer wholly unsatisfactory. The Minister is saying that a governing body will be able to exercise the power conferred on it if, to an insignificant extent, its primary duty, which is that it will conduct the school with a view to promoting high standards of educational achievement, can be compromised or interfered with—not to a significant extent, but if insignificant activities take place. That is unacceptable. Nothing, but nothing, whether significant or insignificant, should interfere with the primary duty. There is no way of measuring what is significant and what is not. In my book it is unacceptable for schools to be allowed to indulge in activities that interfere to any extent with the governing body's primary duty to promote high standards of educational achievement.
How does a teacher, a school or a governing body know what will be deemed significant or insignificant. There is no scientific measurement; it is in the eye of the beholder. I do not believe that the schools, the governing bodies or the teachers should be detracted in any way from their duty to promote high standards of educational achievement. I find the situation wholly unsatisfactory. I do not accept that answer, but the matter is too important for me to rely on the remnants of the membership of the Committee that surround me this evening. I shall return to the issue, hopefully with a great deal of support. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Walmsleymoved Amendment No. 121:
Page 16, line 27, after "with" insert—
"( ) the ability (to be determined in consultation with the stair concerned) of members of the staff of the school to perform properly the functions that may be required of them in relation to the education of children at the school, in particular the contribution which they make to the fulfilment of the duties imposed upon local education authorities and upon governing bodies under section 13A(1) of the Education Act 1996 (c. 56) and section 38(2) of the School Standards and Framework Act 1998 (c. 31) (promoting high standards); and"
The noble Baroness said: While we on these Benches in general welcome community schools, Amendment No. 121 seeks to ensure proper consultation with staff prior to any decisions taken by a governing body with respect to the provision of community's facilities. The amendment seeks to clarify the Government's intentions on issues such as additional resources with respect to "extended schools". I gather they are known as "full service" schools in the United States, but on the face of the Bill they are referred to as "community facilities".
In theory, the proposals to enable governing bodies to provide a full range of activities for the benefit of their staff, children and parents and for the members
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of the wider community are welcome. Research has shown that programmes that support schools in working together and in planning the allocation and distribution of resources and projects have resulted in a shift towards more collegiate approaches to educational provision. The development of school clusters, such as the one in Crewe near where I live, have helped to break down some of the needless rivalry and competition for pupils fostered by recent education reforms. They have also led to a better understanding by schools of each other's needs and have encouraged the sharing of good practice between schools. Of course, in the case of clusters, those wheels have been oiled by extra cash.
Schools should be given support to respond to the needs of their immediate communities; for example, in developing out-of-school activities and in encouraging the active involvement of communities in local school settings. If effective health and social services provision were situated in schools, particularly in disadvantaged areas, that may help to address a wide range of needs that impact on pupils' attainment, as well as perhaps benefiting their families; for example, adult literacy programmes. Initiatives that promote multi-agency approaches to tackling socio-economic impediments to learning at school level can assist schools in facilitating access to essential support services, thus allowing teachers to focus on improving their pupils' academic achievements. As long as appropriate extra resources are provided, I have no doubt that teachers will welcome that kind of approach.
Such schools could be an effective way of tackling many of the barriers to learning faced by pupils and their families, in the same way as the Sure Start initiative does in the early years. Teachers in schools in areas of social disadvantage are often expected to respond to the social needs of pupils. Schools that have a range of welfare services co-ordinated alongside educational provision would be in a better position to respond to the needs of families and their children without teachers solely being expected to take on that role.
I understand that the Full Service Schools programme in the United States has been highly effective in helping to improve attainment and relationships between teachers, parents and the wider community. In Scotland, a similar initiative, the New Community Schools programme, has reported comparable findings, with pupil attendance and exclusion rates also much improved. I believe that pilot schemes for such schools should be established with the involvement of teaching and non-teaching staff and with the careful delineation of responsibilities that are based on expectations that avoid excessive workload before the idea is rolled out.
However, a number of questions need answering. Can the Minister say what additional resources the Government will be able to offer schools to encourage them to widen the use of their facilities and to expand their services? What are the Government's expectations about agreeing provisions with, for

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example, the local strategic partnership? Does that provision also apply to maintained nursery schools? I beg to move.
9.45 p.m.
Baroness Andrews: In terms of the range of options that we have developed in this country over the past five years for such full-service schools as regards out of school activities, it is worth recording that we are pioneering a great range of new ways to do things using schools as community resources, and so on. First, we have longitudinal research, which is unique to this country and certainly backs up what has been achieved in the United States and in Australia. It shows that there is a direct academic benefit to those who regularly participate in activities, which is revealed not only in their attainment of GCSEs but also in their attitude. We have a very sound path of research that is beginning to accumulate.
Secondly, over the past five years we have seen the beginning of policy frameworks for enabling schools to develop a whole range of activities with both families and communities out of school. Through this development we have also brought in experts and volunteers to work with teachers in schools to allay some of the fears that the noble Baroness rightly identified in terms of teachers' workload during the school day, which can be intolerable. We have also had the building of capacity at the school level, which has proved to be extremely innovative.
Thirdly, we have seen a great deal of new funding go into schools through the New Opportunities Fund and through the standards fund. We now have local infrastructure as local authorities have introduced out-of-school-hours learning officers who work with the range of partnerships to maximise such opportunities. We are beginning to develop all these struts of proper policy framework funding and development, which is extremely effective. To an extent, all that addresses some of the points raised by the noble Baroness, Lady Walmsley, and, indeed, some of the issues highlighted by the noble Baroness, Lady Blatch, as regards the impact on the effectiveness of teaching and learning during the school day. In so far as we have evidence, it seems that such developments are very powerful in terms of raising achievement.
The noble Baroness is right to raise the issue of consultation with staff, because none of these innovations will take place unless the staff are fully involved and fully in agreement. They must see it in terms of their own professional development as something from which they can really benefit; otherwise, they will not do it. Teachers are realistic about what is possible as regards their own time and energy. We have witnessed a very positive feedback from the staff towards students and a virtuous circle being created. This is a positive development in the education system over the past few years.
Baroness Walmsley: Perhaps I may comment on the noble Baroness's contribution. As a supporter of the holistic approach to education, especially in the early
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years, I very much understand the benefits of the sort of experiments outlined by the noble Baroness. In terms of the work that they undertake, I realise that there is a potential for lightening teachers' workload with such initiatives—or, indeed, possibly increasing it.
I tabled this amendment so that we could ensure that provision is made on the face of the Bill for teachers at least to be consulted on these developments. Such consultation should not just be a case of following best practice, which has been happening. It is a very important issue in terms of these experiments.
Baroness Ashton of Upholland: In exercising the powers under Clause 25, governors must have regard both to the guidance issued by the Secretary of State and to any guidance given to them by the local education authority. Where governors are considering providing community facilities, the guidance will make clear that they must consult all interested parties, including school staff. As my noble friend Lady Andrews said, the school staff are crucial if this is to work and prove to be appropriate for the school. In drawing up the guidance we are working with a range of partners, including teachers, to ensure that this development is covered effectively.
In response to the specific point raised by the noble Baroness, Lady Walmsley, I can confirm that this provision will also apply to nursery schools, if they so wish.
I should point out to the Committee that not only are governors required to consult their local education authority, but any proposed activity that would significantly interfere with the fulfilment of the LEA's duty would, by definition, also significantly interfere with the governing body's duties under Clause 20(2).
I reassure the Committee that, if governors choose to provide community services or facilities, those services must not have a detrimental effect on the performance by school staff of their existing duties—quite the opposite. We know of many schools that have adopted that approach and brought in other professionals to support families and pupils, with the result, as my noble friend Lady Andrews said, that educational attainment has been raised, parental involvement has increased and pupils' behaviour has improved.
We also know that many teachers are required to deal with numerous non-educational inquiries and problems, brought to them by pupils and families. If governors decide, with others, that a particular service or facility could reduce that burden and support the work of school staff, they should be able to provide such a service. Clause 25 gives governors that power, and Clause 26 provides sufficient safeguards to ensure that any service does not undermine the main role of schools—the provision of a high quality education.
I hope that, with those reassurances, the noble Baroness, Lady Walmsley, will feel able to withdraw her amendment.
The Earl of Sandwich: In view of what the noble Baroness, Lady Andrews, has just said, can the

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Minister give further consideration to the marrying of the two amendments? In retrospect, I think that the noble Baroness, Lady Blatch, was right: we do not need the previous amendment. Perhaps we should consider them together.
Baroness Ashton of Upholland: I am not entirely certain that I understand what the noble Earl seeks to do. Can he give me a little clarification.
The Earl of Sandwich: I am talking about interference with the normal operation of a school. It is clear from what the noble Baroness, Lady Andrews, said that we are moving towards a situation in which there is no such interference. The two amendments feed into each other.
Baroness Ashton of Upholland: I apologise to the noble Earl for not picking up his point. I believe that there is no difference between what we are trying to achieve. We want to ensure that schools that wish to provide community services do so in consultation with their staff, the education authority and others and provide those services in order to support the educational attainment of their children and as a community resource.
Those are compatible objectives, and the evidence so far is that, when that is done, educational attainment, behaviour and attendance improve. That must be an overall objective for a school as a community resource. I am happy to discuss further the particular words that we use with the noble Baroness, but I believe that we are all on the same plane.
Baroness Blatch: It is an important point. The noble Baroness, Lady Andrews, gave us some powerful reasons why so many positive things are going on, helping schools to achieve their own ends. That is what the noble Earl, Lord Sandwich, was saying.
The funding that the Government put in to address the issue of class sizes for children up to the age of seven partly achieved its objectives. However, at the other end of the scale—almost as a direct result—class sizes for other age groups worsened. We know now that there will be a concentrated effort to move up the age range. We do not want to see newer or developing activities that interfere at all with the primary duty of schools to educate their children and achieve standards. That is the safeguard that we seek, and, as long as those words remain in the Bill—I am sorry to go back to my amendment, but the amendments are linked—there will be a suspicion that some of the activity will be at the expense of those things.
We must put it beyond doubt that no activity will be acceptable if it interferes with a school's primary duty to all its children, however important it is to provide community facilities. What the noble Baroness, Lady Andrews, said was persuasive, but we must get the balance right and make sure that there is no compromise.
Baroness Walmsley: I thank the Minister for her reassurances. Guidance is, of course, good, but it
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would be better to have in the Bill a requirement for consultation with staff about such initiatives, particularly because of the impact that having such facilities on the school site would have on their job—teaching the children. I was, however, delighted to hear the Minister say that, at least in that case, the local authority would be involved.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 26 agreed to.
Clause 27 [Additional functions of governing body]:
Baroness Massey of Darwenmoved Amendment No. 122:
Page 17, line 17, at end insert—
"(6) The governing body of a maintained school shall use their best endeavours to secure that—

(a) reasonable steps are taken by the governing body, head teacher and staff to ascertain the views of pupils on matters which affect them, and

(b) due weight is given to the expressed views of pupils on matters affecting them, having regard to the pupil's age and understanding."

The noble Baroness said: I rise to move this amendment tabled in my name and those of the noble Baroness, Lady Howarth, and my noble friend Lady David, who cannot be here this evening. The amendment was tabled and received with support and enthusiasm in the other place. To me it seems to be irresistible and one that is totally in line with national and international wishes to see children consulted about matters which affect them.
The amendment states that governors,
"shall use their best endeavours",
rather than "may"; the word "shall" is what I mean here. The proposal ties in with what my noble friends Lady David and Lord Peston said earlier about pupil governors. Indeed, my noble friend Lady David talked about pupil participation on Second Reading. I listened carefully to my noble friend Lady Ashton's earlier remarks about pupils as associate governors, so presumably she agrees with the principle of consulting pupils. We must ensure that reasonable steps are taken to do just that, which is what the amendment seeks to achieve.
Education is an important context for consultation with young people, because children spend so long in it. The UN Convention on the Rights of the Child states that if a child can form his or her own views, then those views should be taken into account,
"being given due weight in accordance with the age and maturity of the child".
My noble friend Lady David quoted the White Paper, Schools—achieving success, in which the Government state that they will,
"encourage students' active participation in the decisions that affect them, about their learning and more widely".
That might include issues such as organisation, school meals, discipline, policies on bullying as well as curriculum matters. Many schools have school councils and other mechanisms in place for consulting

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pupils. I know of examples of consultation with regard to PE lessons: what should be worn and what should be taught.
It is good that citizenship education is to be introduced into the school curriculum this year. Citizenship will include debates and discussion on human rights and responsibilities, and community involvement. However, it seems that citizenship as a subject without citizenship in practice across school life may be seen as tokenistic and pointless. The Advisory Group on Citizenship in education would agree with that. The group states that:
"Formal preparation for citizenship in adult life can be helped or hindered by the ethos and organisation of a school, whether pupils are given opportunities for exercising responsibilities and initiatives or not; and also whether they are consulted realistically on matters where their opinions can prove relevant both to the efficient running of a school and to their general motivation for learning".
A recent study on schools councils and democracy commissioned by the Association of Teachers and Lecturers found that where schools councils existed and, within school structures, enabled pupils to take an active role in society, then citizenship education and understanding of democratic processes were enhanced. The Children's Consortium on Education points out that the UK is behind the rest of Europe in pupil democracy. We have no legislation on pupil involvement and no system for consulting pupils on educational policy. This amendment would contribute to remedying that situation.
But this is not just about democracy. Pupil participation has been shown to influence academic achievement. In a recent study, high levels of attainment at GCSE were found to be associated with active pupil involvement. That is not surprising, given that with participation, positive attitudes to school are likely to be increased.
In the guidance for applications for the power to innovate, related to this Bill, paragraph 9 states that:
"We would expect applicants to consult all those who are likely to be affected by a proposal".
Paragraph 11 states that:
"Those we would expect the applicants to have consulted include the teaching staff, parents, pupils and any other relevant parties. In assessing proposals, the Secretary of State will wish to be satisfied that all those with direct interest have been properly consulted".
We surely should not encourage consultation and participation in one document but not embed consultation and participation for pupils in the whole Bill.
I hope that I have convinced the Minister that this amendment is useful and constructive in promoting both democracy and pupil achievement and that she will embrace it with enthusiasm. I beg to move.
10 p.m.
Baroness Walmsley: I rise to support Amendment No. 122. One of the most worrying things about our education system today is the large number of pupils who feel disaffected with their education to the extent
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that they are disruptive in the classroom. Indeed, one of the main reasons teachers give for leaving the profession is that they are unhappy with the effort it takes to maintain discipline in the classroom.
There may be many causes of that in the wider society and we need to look carefully at the curriculum, particularly that for 14 to 19 year-olds. However, when the Government are about to introduce citizenship into the curriculum, surely it makes sense to allow children to learn to make decisions about things that affect them right there in their own schools. Schools forums have been with us for a long time and the best schools take a great deal of notice of what they say. Pupil governors too have made an important contribution to all matters discussed by a governing body, except the pay and conditions of staff.
However, these structures involve only small numbers of pupils and it is desirable that consultation with pupils becomes much wider. Putting Amendment No. 122 on the face of the Bill would ensure that this happens and send out a message that children are respected and that their views not only matter but are very valuable to schools.
The Government have made many statements of intent about encouraging more student participation in decisions that affect them; for example, as the noble Baronesses, Lady Massey and Lady David, mentioned, in the White Paper, Schools—achieving success, and in the special educational needs code of practice. Furthermore, by ratifying the United Nations Convention on the Rights of the Child, the Government have committed themselves to ensuring that the views of the child are given due weight.
This piece of legislation gives an excellent opportunity for the Government to show that they mean business as regards student participation, but only if it is on the face of the Bill. Non-statutory guidance is not enough. The amendment sets out a light-touch duty with phrases such as reasonable steps and due weight. It is not unduly onerous to schools to be able to comply with it. Indeed. I believe that schools which have not done enough pupil consultation in the past will, when encouraged to do so by this amendment to the Bill, find it so worthwhile that they will want to do more and more of it.
The Earl of Sandwich: As the Minister knows, I, too, am a supporter of citizenship education and I believe that the Children's Consortium on Education has a powerful voice in the area. It, too, supports the amendment tabled by the noble Baroness. Lady Massey.
I declare an interest as a foundation governor of a school in west Dorset where we have a degree of pupil participation. However, we like to see the Government giving more encouragement by putting the provision on the face of the Bill. Children may not know much about the Education Bill—nor do I believe do many adults—but they are aware of the current workload on teachers and the new responsibilities which schools have under a succession of Bills. In my experience,

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older children benefit enormously from participation and discussion, especially on their own environment and the working practices of the school. Therefore, there is a two-way benefit.
Moreover, there is evidence that participation leads to a higher level of attainment, as the noble Baroness, Lady Warmsley, has already said, as well as to qualities such as motivation and engagement. I want to quote from the report of Professor Bernard Crick's Advisory Group on Citizenship published in 1998. I am sure that the Minister knows it:
"It is obvious that all formal preparation for citizenship in adult life can be helped or hindered by the ethos and organisation of a school, whether the pupils are given opportunities for exercising responsibilities and initiatives or not; and also whether they are consulted realistically on matters where their opinions can prove relevant both to the efficient running of a school and to their general motivation for learning".
I do not want a token commitment. I know that the noble Baroness is behind the idea but I should like to see a firm statement in the Bill itself. Save the Children, which is a member of the consortium, states that,
"failing to place pupil participation on a statutory footing would risk sending the message to schools that listening to and involving pupils is desirable 'best practice', but not essential and not a basic human right of all children and young people".
The second part of the amendment is so important. We can all live with paragraph (a), but to encourage schools under paragraph (b), which seeks to give weight to the expressed views of pupils, is to make a move forward.
Lord Peston: My noble friend Lady David told me that I had to participate in the debate on this amendment as she could not be here—and I always do what I am told.
I strongly support the amendment. I should say to my noble friend Lady Massey that we are not discussing democracy here; we are discussing benevolent despotism. A school is run by the despots and we are asking them at least to show some response to those whom they are teaching. That does not mean that benevolent despotism is not better than many other forms of despotism.
I agree that it is not only a matter of asking young people for their views. The essence of' the amendment concerns the response to what they say; to show, as the amendment states, that "due weight" is given to their views. That is not the equivalent of saying to pupils that they are right. Indeed, if you have any concept of citizenship at all, one of things that you have to learn is that a lot of the time you will be wrong. Pupils will have to learn that they will have their say and that there will be a response—and they will have to accept that one of the responses may be "You do not know what you are talking about", and sometimes that they do know what they are talking about.
If you are a teacher this kind of thing can be threatening. When I was at university—reverting to the subject of benevolent despotism—I was appointed head of department for life. Although I gave up the position long before that, I found it immensely threatening when this idea was put forward. I also
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found it very frustrating in responding to what, in this case, students wanted. They typically said that they did not care for the pressure of examinations and wanted more course work. So I, being a benevolent despot, said, "Let us move in the direction of more course work". When the course work did not turn up, I said, "You are now going to fail this course because the date for the course work is such and such and you have not got any". They would then say, "Oh, we would rather have examinations"—to which the answer is, "I am sorry, but you gave your views and we responded to them. One of the things you have to learn as a citizen is that you bear the costs of the decisions you take".
I exaggerate a little—although not in the case that I have in mind—but it does mean that if we go down this route, which I very strongly hope that we do, the pupils themselves must understand what it is that we are moving towards. The essence of this is the combination of listening and responding.
It may well be that the amendment is not well drafted but, in terms of everything that we have been doing for the past few days, if ever an amendment—or, perhaps, the concept of a possible amendment—should be accepted, it is this one. I believe that my noble friend the Minister should say either yes, she accepts the amendment, or that she does not like the drafting but will come back with her own amendment to cover precisely this issue. That would he a good thing. I do not wish to hear from my noble friend about guidance or the fact that it is already covered elsewhere.
This is a clear cut case where your Lordships' Committee—particularly having regard to our age group—can speak for young people and say that not only do we want this in the Bill but we very much expect our Minister—because she is the only one who can do anything about this—to come forward with a positive response.
The Lord Bishop of Blackburn: I, too, support the thrust of the amendment. I am not sufficiently expert in parliamentary or legal language to know whether the amendment is drafted correctly or how in legal terms words such as "best endeavours", "reasonable steps" and so on would be interpreted if a governing body was put to the test. But I am absolutely sure that the thrust of the amendment ought to be a part of what we are looking for in the improvement of educational standards, particularly with regard to secondary education. Therefore, I lend my wholehearted support to the amendment.
I am not sure that I agree entirely with the noble Lord, Lord Peston. It seems to me that we need a provision on the face of the Bill, but that an interpretation in guidance will also be important in terms of how this is done and how the best endeavours are achieved. However, I lend my support to what the noble Baroness, Lady Massey, is trying to achieve.
Baroness Andrews: I want to indicate my support for the amendment with a reference to the kinds of things that are happening in schools where pupils have a direct input. I refer, for example, to anti-bullying

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strategies and to positive behaviour strategies. There is tremendous variety in the practice of schools up and down the country. The spread of good practice is necessary. We need proper frameworks. I am not against advice: we need help in spreading good practice. Some schools are so much more successful than others and are involving pupils. Those qualities are sticking and are making a difference. Different children have different needs. In supporting the amendment we must seek to reflect that. In the areas of discipline and behaviour and the development of character there is particular benefit to be had from the amendment.
Baroness Blatch: Ascertaining the views of pupils on matters that affect them and, as far as possible, giving due weight to those views seems to me to be fundamental in schools. I am nervous about this becoming part of the legislation, and I shall come to that point in a moment.
The noble Baroness, Lady Massey, gave a number of examples of very good practice. I can think of a number of schools which have schools councils which meet with the staff; they have mechanisms in place for voicing their concerns about, for example, better facilities for sixth form study areas, more effective use of technology, shaping the school day so as to be more effective, homework clubs and many other ideas. They have a "feet on the ground", commonsense, effective view of how matters can be improved for them.
The other method of ascertaining the views of pupils which was introduced by the Government when I was the Minister was the provision of a slot in the inspection procedures where the inspectors go to the parents and to the children to ask them about the school. Their discussion with the children is confidential; there are no staff present, so they are able to be uninhibited in expressing their views. They are given opportunities for a one-to-one interview if they specifically ask for it. The inspector will make a general comment on the performance of a school to the effect that it has or does not have a good relationship with its children as the case may be. That too is a very good idea.
I am concerned about this becoming part of statute and make the same point as the right reverend Prelate made; namely, how one measures reasonableness. For example, among children, just as among adults, there are some very quirky ideas. Some children are more proactive in making their views known. Sometimes, the more sensitive and more vulnerable children are the ones who do not say what would improve their lot at school.
So this is a difficult area. It is a tricky area for teachers. I am concerned about the way in which our community generally is becoming more litigious. Such a provision would provide an opportunity for children and/or parents—children are becoming pretty streetwise about claiming and exercising their rights—to enter into litigation. I am concerned about the kind of protection that would be needed for teachers if they were put in the position of being tested or challenged.
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The last thing we want is to clog up the world of the tribunals or the courtrooms with claims that children made their voice heard and due weight was not given. The question could arise as to what was reasonable and whether due weight was given to something that a teacher thought impractical.
The Earl of Sandwich: Perhaps the noble Baroness will forgive my interruption. Does she see any difference between young people and adults as regards unruliness.
10.15 p.m.
Baroness Blatch: I do not think that any of us escapes from being described as unruly in some way. Some of us have a propensity for being more unruly than others. In today's world, teachers are vulnerable to all sorts of problems. There is the potential for challenges by parents or by pupils, as well as the full weight of human rights legislation. There has to be protection for children, but children will have different views about what schools should be providing, the method by which it should be provided and the way in which teachers should provide education. The extent to which that is listened to and responded to and the weight that is given to those views—that is the subject of the second part of the amendment—would be judged and could be challenged. I am fearful that the system could be open to vexatious claims and to a great deal of time wasting.
I support the thrust of what is being asked for—that the voice of children should be ascertained, listened to and, when possible, heeded and given due weight. The working of the inspectorate, which goes in and out of schools regularly, could be strengthened to test the way in which schools do that. I should prefer it to be done by encouraging examples in which the children come together. I recently came across a school in the North East that has a school pupil counselling service. A group of young people set aside part of their lunchtime and, after a bit of training in counselling, become a listening ear for any other pupil in the school who wants to come to talk to them. All sorts of safeguards are built in in case they are being told something disturbing.
The system is working in that school and it allows those who have been singled out to be the counsellors—to be the eyes and ears for the staff—to go to the staff and initiate new thinking about changes that could be made in the school that would make life easier or would pick up on the signs of the bullying that people do not see on the surface.
I am behind the aims of the amendment, but I am fearful of it going on the statute book, because without proper scientific ways of measuring the issue and without proper protection for teachers against vexatious claims, it would be difficult to implement in practice.
Lord Lucas: I entirely agree with my noble friend and support the thrust of the amendment in the way in which she has done. What she says about the school she mentioned in the North East is right. Such policies

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tend to result in the nice kids being those with power, influence and respect among the pupils, because they will be chosen as counsellors and will have the ear of the teachers. That produces a power structure in which the nice ones rather than the rough ones or the smart ones attract the adulation of the younger pupils. That produces an enormous benefit.
However, I take a lot of caution from what the noble Lord, Lord Peston, said about the fearfulness with which teachers will greet the idea if they are dumped into it and have to plunge into democracy with a lot of kids who may have been managed in a different way, particularly in more difficult circumstances. Such systems should be grown from inside rather than imposed from outside. To work, they have to come from within the school. The role of the Government is to encourage that.
There is a lot that the Government can do. They can put some real effort behind making sure that the next round of beacon schools contains some schools that are beacons for these ideas. They can make sure that the curriculum of the head teachers training college includes real experience of what it is like to run a democratic school. Perhaps they should spend a week or two in a Steiner school to see what it is like. Such schools work very well because of the commitment of the children, the parents and the staff to that environment, because that kind of democracy has grown up through the spirit of the school. To impose it through legislation is the wrong way. We want some real commitment from the Government to put force and money behind the idea, but I would not like to see it in statute.
Lord Peston: I refer to a point that has already been made. Why does not the noble Lord, Lord Lucas, apply the same argument to parents? What has he got against children, to put it bluntly? And what has he got against difficult children, to put it bluntly? His comments were a classic, but not surprising, example of a speech against democracy. For hundreds of years a case has been made against democracy on the ground that all the difficult people would start to exercise power and make demands. It has been suggested in quite a kw of our debates on the future of this great Chamber that if we permit certain measures we might attract the wrong kind of people who will start, to create difficulties.
I regard the arguments of the noble Lord, Lord Lucas, as absolutely ridiculous. Either you believe in a free society, citizenship and democracy, which may lead to problems, but you believe in it because you think that ultimately it is right, or you do not. I reject those arguments from the Benches opposite. They are absurd. We have fought for a long time in this country not to be taken in by exactly that kind of argument. The argument was advanced that teachers will find the measure stressful. I make the point that they are meant to find it stressful as it is a good thing. I had to respond to this stressful process and it did me good. Other professors also gained from running their departments bearing in mind the interests of their students. I am
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sorry to press the noble Lord, Lord Lucas, but he has explained exactly why I think our side of the argument is right.
The Earl of Listowel: I have listened to this debate with fascination. With regard to the value added criteria that the Minister is considering, will she say whether she might consider this measure as one of those criteria; that is, the engagement of children in the processes of a school.
Baroness Walmsley: I find the objections of the noble Baroness, Lady Blatch, and the noble Lord, Lord Lucas, somewhat depressing. Must we really be held back from a great advance in engaging children and making them feel valued and consulted within a school simply because of a fear of possible bad behaviour? Almost anything is open to challenge. The wording of the amendment is "light touch"; it is not onerous. It is relatively easy to interpret. Although it may, of course, be challenged on occasion, a governing body that is genuinely attempting to give due weight and due consideration to the views of children and can justify the way in which it has done that will be impervious to scurrilous challenge.
Baroness Blatch: I respond to the noble Lord, Lord Peston, on the subject of parents. There is a requirement in statute that one must heed parents' preferences for school places where that is possible and where it is consistent with the educational needs of a child. However, I know of no statute that states that one has to ascertain the views of parents and give due weight to them as regards the running of a school. It is the governing body that does that. Almost any school worth its salt knows its pupils. If it does not, that should come out in inspection reports which will state that the school concerned does not have a satisfactory relationship with its pupils or understand that it has some disquieted pupils. That would emerge in an inspection.
The idea that one must exhort tilts area of school activity through legislation is in my view depressing. I honestly believe that there are many ways in which one can encourage and disseminate best practice and give children a voice and make sure that the voice is properly heard. However, once such a measure is included in a statute, it becomes open to challenge in a way that I think would not be beneficial to teachers, or even frankly at the end of the day to children.
Lord Peston: The noble Baroness probably does not go as far back in education as I do. I go back to the days when a line was drawn and you could not go through the front door. I was part of those groups who fought to let parents through that door. I was part of a group who formed the first parents' association in a school in Haringey. Therefore, I know all about the battles and the stresses involved in these matters. But eventually parents managed to move forward.
The Bill contains measures which concern parents. I refer to the parent governor measure and the parent meetings measure. There are various other such

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measures. The hour is late and I am glad that the noble Baroness will return to the matter on Report. We may well have to debate that further.
I regard the argument about litigation as so farfetched as to be unbelievable. The current scale of litigation in our country, which could be large, is minimal. We were told in relation to many matters involving standards—this is also true of universities—that there would be court cases on a massive scale. People would say, "Why was I given this grade, not that grade?". We have had hardly any experience of that. We should not have such fears. We should embrace the possibilities—the noble Baroness, Lady Walmsley, put that very well. It is particularly incumbent on your Lordships' House to give a lead in this area. One certainly cannot expect that from the other place, which has no vision at all in relation to such matters. That is why I press the matter strongly on my noble friend.
Baroness Ashton of Upholland: We have had an interesting debate, which mirrors, in some ways, the debate that we have had in the ministerial team on how to approach this matter and how to get it right. I am aware of the views that have been expressed and recognise that people are saying to me, very clearly, that there is an important role for children and young people, which needs to be recognised.
Members of the Committee have their own experiences in this regard. Having chaired a school governing body, I know the value of involving children in thinking through issues such as bullying. At the risk of further delaying the Committee, I shall give a brief anecdote.
To work out where in a school children were worried about bullying, we took a plan of the school and asked young children to draw on the plan in red where they felt safe and blue where they did not. That helped us to redesign the school building. We used the pupils' involvement to support them. They illustrated, in that simple way, which parts of the school needed decorating or were areas in which bullying might be occurring. There are many approaches and methods that we need to consider when translating the principle into reality.
The Government's view is very clear. We cannot deal with this matter overnight; we need long-term investment, real commitment and incremental change to the way in which we do things. The biggest error that the Government could make would be to implement anything that was tokenistic in its approach and which did not genuinely value the contribution that young people make. That means facing some real challenges. For example, as the noble Baroness, Lady Blatch, said, we must avoid consulting only the articulate and visible in schools or the wider community. We must ensure that the hardest to reach—some of our most vulnerable children—can participate and have an opportunity to be involved. The noble Earl, Lord Listowel, will be interested to hear that I refer, for example, to children in care.
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We believe that we have a firm foundation on which to build. We set out in the schools White Paper some of the areas in which we have acted on our commitment to involve young people. Members of the Committee have mentioned citizenship and the noble Baroness, Lady Blatch, referred to the role of schools councils. We have produced a secondary schools toolkit to support students' active participation, building on what we have done at the primary level.
We have also consulted young people within the department and are currently in the process of consulting on changes to the strategies for 14 to 19 year-olds. We have genuine commitments in this regard. The question is: how do we take them forward? We believe very strongly that participation can and should take many different forms if it is to fit the particular circumstances in which schools will find themselves and if it is to be relevant to the age of the children and the circumstances that best fit that.
For that reason, we believe that the best way forward is to go to statutory guidance. That will result in amendments to the Bill. That statutory guidance will, we believe, offer schools a flexible menu of options. From our point of view, that is the best way forward. It will allow schools to adopt the best-fit model of participation and adapt it over time as circumstances change.
Nevertheless, schools will not be able to do nothing. Schools will, as part of Ofsted's inspections, be checked—I assure the noble Earl, Lord Listowel, in that regard—to ensure that they are adhering to the guidance, just as they are checked in relation to all other statutory obligations. It is already consulting on a mechanism to ensure that young people's views are heard in schools generally and in inspection reports.
The Government are strongly of the view that that is the way forward. We wish to consider how best that can be achieved. I hope that my noble friend appreciates that we are committed to finding an effective way forward. We believe that statutory guidance would help us to do that. We would like to put that in place as soon as possible. On that basis, I hope that my noble friend will feel able to withdraw the amendment.
10.30 p.m.
Baroness Massey of Darwen: I thank noble Lords for their support and contributions this evening. We have had a most interesting discussion and many useful examples have been given. Of course, young people sometimes have to learn that they cannot have their own way. As a head of year in an inner-city school, I remember having to discuss with a group of pupils their wish to have more ventilation in the toilets because young people were smoking in there. It provided me with a good opportunity to hold a health education lesson.
I believe that it is the role of government to encourage consultation with pupils, and that that needs to be stated. After all, inspections take place only every four years or so, I believe. Rather than

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being hindered or frightened by them, teachers sometimes find that a democratic approach and consultation with pupils helps them to teach. I have certainly found that in my own experience.
I thank the Minister for her reply, which I obviously need to consider. I know that we shall return to this issue as there is much interest in it. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 27 agreed to.
Clause 28 [Governors' reports and other information]:
Baroness Sharp of Guildfordmoved Amendment No. 123:
Page 17, line 19, leave out "shall" and insert "may".
The noble Baroness said: In moving Amendment No. 123, I shall speak also to the other amendments grouped with it. These amendments have been tabled at the behest of the National Association of Head Teachers and the Local Government Association. Both believe that the degree of prescription from the centre about annual reports is quite unnecessary. It makes the whole procedure highly bureaucratic. At a time when the Government are aiming to cut back on regulations and bureaucracy, the National Association of Head Teachers, in particular, questions even whether an annual report of this nature is required. Many schools issue regular newsletters to parents updating them on developments, and it is felt that these often provide as good a basis as anything else for discussions at the annual meeting between parents and governors.
In addition, the Education (No. 2) Act 1986 put into primary legislation that a school—both the head teacher and governing body—should give the local education authority the information that it needs to discharge its functions. It has always been assumed that that was the case but it was considered best to put it into legislation. The original wording appears in the School Standards and Framework Act 1998. But this Bill makes the existing powers and duties which were written into the Act subject to regulations being made. It exposes the degree to which the Government are gold-plating the whole regulation issue, if I may say so.
Any local education authority worth its salt has regular meetings and correspondence with its heads. Why should central government prescribe the documentation that has to be provided? Why cannot central government let go the reins and allow local education authorities to decide what is and what is not required.
The aim of the amendments is to give greater discretion to heads and local education authorities to decide what documentation is required and to minimise the degree of direction from the centre. I beg to move.
Baroness Blatch: I rise briefly to support the amendment. Frankly, this is the nanny state gone mad. Let us give schools the space. The annual report now produced by schools is well established. They now
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know that there is an expectation that they will produce information for parents. It seems to me that the requirements under this clause are unnecessary.
Lord Davies of Oldham: As the noble Baroness has indicated, Amendment No. 123 would leave it open to individual governing bodies to decide whether or not to produce an annual report for parents in any year. Under the amendment, if a governing body chose never to do so, parents would not receive the full information to which we believe they are all entitled if they are to become more involved in their child's education. We believe it is important that all parents continue to be given a copy of the report. We also encourage schools to place a copy of the report on their website, if they have one, in addition to giving a copy to parents. We believe that parents have the greatest interest in pressing for rising standards. If they are denied access to key information about how their child's school is performing, they will not be able to do that.
I recognise the representations made in the introductory comments of the noble Baroness, Lady Sharp, and recognise also that there is validity in the comments of the noble Baroness, Lady Blatch. We want to reduce the bureaucratic demands upon headteachers. We have reduced the amount of information which, by regulation, must be included. In doing so we have taken account of the concerns about bureaucratic burdens. However, we believe that governing bodies should not be able to decide that parents should not have any, information. Surely, that is a step too far. We believe that this particular obligation in the report, which is fulfilled in many other varied ways by schools, guarantees that parents can be assured that they have the information they require in order to fulfil their obligations in respect of their child's education. On that basis I hope that the noble Baroness will feel able to withdraw the amendment.
Lord Lucas: I do not know whether the noble Baroness intended to speak to Amendment No. 132A in this group. If she did, I should very much like to hear the Government's views on it.
Baroness Sharp of Guildford: The noble Lord, Lord Lucas, is right. I should have spoken to Amendment No. 132A. The noble Lord, Lord Rix, is not here and I have a brief from him. I thank the noble Lord for reminding me of that.
I shall speak briefly to Amendment No. 132A. The Special Education Consortium is concerned about the impact of schools giving priority in admission to children who show an aptitude for a particular subject. Although the Bill does not mention specialist schools, it provides the necessary framework and encouragement for other schools to join rank. The Government have set a target of 50 per cent for all secondary children being educated in specialist schools by the year 2005. Up to 10 per cent of admissions to those can be selected on the basis of ability or rather more speculatively by aptitude.

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Research from both Ofsted and the Sheffield Hallam University indicates that specialist schools are not taking their fair share of pupils with special educational needs. Given the doubt that that research casts on selective admissions policies and practices, I should welcome an assurance of better things from the Minister. Specifically, I should welcome assurances that disabled children and pupils with special educational needs are not consigned to the non-specialist less favoured schools and that schools applying for specialist status will have to demonstrate high special educational needs standards, and to commit themselves to improving access and curriculum support for disabled children and pupils with special educational needs.
The new clause proposes a modest solution to the problem. It focuses on the information that schools will provide for parents. Schools would be required to publish in their information to parents what percentage of their intake they select and what percentage they do not select.
If the Minister wishes to offer assurances rather than legislation, I shall be glad to hear them. So far, the Minister has been able to give us warm assurances throughout the debate. However, I fear that such assurances may fall on deaf ears outside the House. Why will the Minister not offer assurances on the face of the Bill or promise them in regulations.
Lord Davies of Oldham: I am sure that the Committee is grateful to the noble Lord, Lord Lucas, for advancing the debate tonight and for reminding us that Amendment No. 132A is grouped with the amendments we are discussing. I am therefore grateful to the noble Baroness, Lady Sharp, for speaking to the amendment. Once again, we miss the presence of the noble Lord, Lord Rix, who takes a keen interest in all these issues.
We want to make a parent's expression of preference for a school as meaningful as possible. I think that Members of the Committee would agree on the importance of giving parents sufficient information to ensure that they can make an informed preference for a school.
However, it is an obvious fact that no matter how much information is provided on how a previous year's places were allocated, that cannot be an accurate prediction of how places will be allocated the following year. It can only serve as an indicator. Local circumstances fluctuate and the number of children who gain admission because they fall into specified criteria—for example, siblings, worshippers in a particular parish or those living in a particular area—may vary greatly from one year to the next. I want to reassure the noble Baroness that 93 per cent of our specialist schools do not select for entry.
The current provisions under Section 92 of the School Standards and Framework Act 1998 already require the specific school to which this proposed new section applies to publish information about its admissions arrangements. In addition, the Education
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(School Information) Regulations 1998, as amended, require local education authorities to publish composite prospectuses for their areas. These must include details of each school and its admissions policy, including how priority for places will be given to applicants if the school is oversubscribed.
The prospectus must also give information on the number of places that were available the previous year and the number of applications made for them. Some authorities go further than that and already publish the information suggested by noble Lords today. Indeed, the department's Code of Practice on School Admissions encourages LEAs to publish other information about local admissions which they consider will be of interest to local parents.
Research conducted on behalf of the department by the Sheffield Hallam University and the Office of National Statistics found that, nationally, 96 per cent of children found places at a school with which their parents were happy. Although we are seeking to ensure that even more parental preferences are met, by strengthening the admissions framework, it is clear that the present requirements for provision of information are working for parents.
Both under existing legislation and the new provision proposed by the Bill, all admission authorities already are, and will continue to be, required to publish a significant amount of information which we believe assists parents in making informed choices for their children. I can see, as the noble Baroness indicated in her remarks, the warmth of commitment to the real interests that the noble Lord, Lord Rix, brings to his contribution on these issues with regard to admissions and the specific groups of children in which he takes such a keen interest. I want to emphasise once again that we are entirely with him in spirit in his objective, but we believe that we have in place the necessary structure which works to the satisfaction of the vast majority of parents. I do not believe, therefore, that Amendment No. 132A, in which the noble Lord, Lord Lucas, also expressed a keen interest, is necessary. Therefore, I hope that the noble Baroness will consider withdrawing the amendment.
Baroness Sharp of Guildford: I thank the Minister for his reply. The key issue is that there is worry that these specialist schools are not at the moment taking their full share of those with special educational needs. This is clearly shown from the research undertaken by the Sheffield Hallam University. It is necessary that the Government monitor these things in order to ensure that these schools, which are offering, after all, specialist facilities which are supposedly open to the whole community, are fully serving the community and those with special educational needs and disabilities.
Lord Davies of Oldham: Perhaps I may intervene. Of course the noble Baroness is right. The research was commissioned by the department in order to inform us more fully about the provision. She is right that it was

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undertaken to look at specific areas. We give the undertaking that we are looking at the findings very closely indeed in order to guide future action.
Baroness Sharp of Guildford: I am grateful to the Minister for giving us that undertaking. With that, and with his assurances—although I am not sure that they were assurances; rather, his acknowledgement that the procedures relating to information are perhaps somewhat over-bureaucratic—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.45 p.m.
Baroness Sharp of Guildfordmoved Amendment No. 124:
Page 17, line 28, at end insert—
"( ) the inclusion in the governors' report of information about the effectiveness of the school's provision for disabled pupils and pupils with special educational needs;"
The noble Baroness said: I shall speak also to Amendment No. 133. The Bill substantially rewrites the existing arrangements for governing bodies. That affects not only the running and structure of schools, which we have discussed, but schools' special educational needs policies.
The exposition of the special educational needs policy of a particular school is given each year in the annual report. Although I argued earlier on behalf of the National Association of Head Teachers that an annual report may not always be necessary, from the point of view of parents with children with special educational needs or disabilities, it is often the one place where each year they have the necessary information written down and produced coherently. Equally, the annual parents meeting, while not always well attended, is the only occasion at which parents can discuss the school's general approach to matters such as special educational needs.
The amendment would require each school's governing body to comment to parents in its annual report on the effectiveness of its special educational needs policy in improving the educational standards of its special educational needs pupils and disabled children. It would provide parents with a method of tracking what is happening and would allay their fears that their children are not receiving the best possible education, whether they are in a mainstream, specialist or special school.
Amendment No. 133 would ensure that when schools operate jointly, they do so for the benefit of special educational needs pupils and disabled children. I do not want to detain the Committee for long with the amendments, because my concerns about the schemes are the same as with the issue of federation, which we discussed earlier. We do not object to the introduction of those innovative schemes, but there are fears that some proposals could act to the disadvantage of pupils with special educational needs or disabilities; and that their needs may be forgotten. It is important both in the annual report and if there were
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a federation—as is covered by Amendment No. 133—that there should be regular monitoring and reporting back to parents. I beg to move.
Baroness Blatch: My memory may not serve me terribly well—it is late, so that is possible—but my understanding is that annual reports comment on the progress or otherwise of all children in a school, so I am not sure that Amendment No. 124 is necessary. I agree that that should happen, but I await confirmation that it is already part of statute—or at least of the regulations that govern what annual reports should contain.
On Amendment No. 133, which would require governing bodies that propose joint discharge of functions to show how they would discharge their responsibilities towards disabled pupils and pupils with special educational needs, I return to my perennial suggestion. If there was some form of fundamental, portmanteau obligation at the beginning of the Bill stating that nothing in the Bill shall in any way affect the quality of provision for special educational needs, we could dispense with going through the Bill in penny packets asking for amendments to include special educational needs.
The school governing bodies are now expected to venture into some new territory with the joint venture. Although not entirely new, the concept is new in the formal sense in the Bill. The excitement of engaging with a third party may result in the needs of a group of children being neglected. The safeguard should be in the Bill. I should prefer in Clause 1 or 2 a statement with weight given to it whereby, whatever other activity was given statutory force, the requirements of children with special educational needs were protected.
Baroness Ashton of Upholland: First, we are looking at precisely that issue. As my noble friend said, if it were a straightforward exercise we would have brought it forward. There is a real commitment by the Government to ensure that we protect all our children, but especially those who are most vulnerable and, included within that, children with special educational needs. We shall come back to this Chamber and we shall be in discussion with noble Lords between stages to see how far we have got. I make that commitment openly.
I assure the noble Baroness, Lady Sharp, that we agree about the importance of schools being accountable to parents on their policies towards pupils with disabilities and with special educational needs. Revised regulations on the content of the governors' annual report are being introduced in May. Schools will have to include within governors' annual reports a summary of the governing body's policy for the school in relation to children with special educational needs, any significant changes to that policy since the last governors' annual report and a statement on the success in implementing that policy in the last year.
We sent guidance to schools in April on these regulations which made clear that annual reports must contain these elements. The noble Baroness has put

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forward the perfect case as to why we need an annual report to parents. I realise how difficult it is to move an amendment on behalf of someone else.
In addition, the Special Educational Needs and Disability Act 2001 has amended the Education Act to require that from September 2002 governors' annual reports contain a description of the arrangements for the admission of pupils with disabilities, details of steps to prevent disabled pupils being treated less favourably than other pupils, details of facilities to assist access to the school by pupils with disabilities and, once it has been drawn up, details of the school's accessibility plan under Section 28D of the Disability Discrimination Act 1995. Guidance on this planning duty, due out in June, will further recommend that schools reproduce the whole of the accessibility plan within the annual report where possible. I hope that, on behalf of the noble Lord, Lord Rix, that reassures the noble Baroness.
On Amendment No. 133, I believe that our provisions for allowing schools jointly to discharge their functions, including functions relating to providing for children with special educational needs, have a potential to lead to better standards for those pupils. However, I recognise the importance of accountability and fully agree that the ultimate responsibility for effective provision for pupils with special educational needs and disabilities should remain with the governing bodies of individual schools where they are not federated. If two or more schools wish to set up a joint committee to have a specific oversight of school arrangements and provision for meeting special educational needs and their DDA duties, Clause 29 of the Bill will enable them to do so.
Perhaps I may reassure the Committee that, although certain special educational needs and disability functions may be delegated to a joint committee, each governing body of each school involved will still be responsible for ensuring that its school is making special educational needs provision, making reasonable adjustments for disabled pupils and planning for disabled access in accordance with legislative requirements and the 2001 special educational needs code of practice.
There will be no watering down of accountability for this important and vulnerable group of pupils. We plan to consult widely on how the proposals will be implemented and will talk to key people within the special educational needs lobby and disability stakeholders as part of the process.
Baroness Sharp of Guildford: I am grateful to the Minister for her forthcoming reply on these two amendments. It is quite clear that she will consider the issue of special educational needs within the context of the Bill, for which I am grateful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 125 to 132 not moved.]
Clause 28 agreed to.
[Amendment No. 132A not moved.]
Clause 29 [Arrangements for joint discharge of functions]:
[Amendments Nos. 133 and 134 not moved.]
Clause 29 agreed to.
Clause 30 [Control of school premises]:
Baroness Walmsleymoved Amendment No. 135:
Page 18, line 21, at end insert "subject to the principle that the local education authority may give such directions as to the occupation and use of the premises of a community or community special school as they think fit"
The noble Baroness said: The purpose of Amendment No. 135 is to re-introduce into primary legislation a principle that already exists in Schedule 13 to the School Standards and Framework Act: that the LEA may give such directions for the use of community school premises as it thinks fit.
It is important to have legislation on the use of school buildings because, on the whole, the buildings are not owned by schools but by local authorities on behalf of the community, or in the case of Church schools by foundations. The Bill aims to shift primary legislation to regulation. At present there are six pages of the School Standards and Framework Act on the topic.
While shifting the bulk of the legislation may be sensible, there should be a few principles about the use of school buildings on the face of the Bill. The amendment inserts the principle that the occupation and use of the premises of the school both inside and outside school hours shall be under the control of the governing body, subject to any directions given by the LEA. Perhaps the Minister will say why the Government are reluctant to put such principles on the face of the Bill. I beg to move.
The Lord Bishop of Blackburn: I want to speak to Amendment No. 136 which stands in my name and that of the noble Lord, Lord Alton of Liverpool. I am sorry to introduce a slightly technical, but important, amendment at this late hour. It deals with foundation, voluntary-aided and voluntary-controlled schools. In a voluntary-aided school where the foundation governors are in a majority, the Church-appointed governors are in a position to control the use of the premises outside school hours.
The main point of the amendment is that the foundation governors are, of course, in a minority in foundation and voluntary-controlled schools. Therefore, special safeguards are needed. I believe such safeguards have been enshrined in education law since the 1944 Act. I seem to remember that if one disposes of a voluntary-controlled school which has been closed, three-fourteenths of the proceeds go to the local parish because of the use that it makes of it for Sunday school and other purposes. The purpose of the amendment is to continue that practice so that the foundation governors may have the use of the school for the purpose of a Sunday school or, if it is next to the church, to prevent noisy alternative use during divine worship on a Sunday.

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This amendment will require regulations to provide that the foundation governors of a controlled school can control the use of the school premises on Sundays and that in a school with a trust deed the use of the premises must not be inconsistent with the provisions of the trust deed. With those brief remarks I have put the thrust of the amendment. I hope that on this occasion the Minister will be sympathetic.
Baroness Blatch: In my rather amateur way, Amendment No. 137 tries to achieve the same ends as that of the right reverend Prelate. I am not territorial about the amendment, but it is important to safeguard the rights of trustees where school premises are held in trust for a voluntary-aided or a foundation school.
The two lines of Clause 30 state:
"Regulations may make provision relating to the control by the governing body of a maintained school of the occupation and use of school premises".
There is no caveat there at all. If Clause 30 is to remain part of the Bill, it needs to be qualified in some way. Therefore, depending on what the Minister says in response, I would be prepared to give way to the amendment tabled by the right reverend Prelate, because I believe it would achieve the same end as Amendment No. 136.
However, I have given notice of my intention to oppose the Question that Clause 30 should stand part of the Bill. I am not absolutely certain that this provision is necessary. Again, now that we have so much self-government in schools, is it not possible to leave schools in charge of their own affairs? During the time that we had grant-maintained schools—and even now that we have foundation schools—schools proved themselves to be very responsible. They know all their duties tinder statute as regards providing education. Indeed, there are so many rules and regulations that guide NN hat they do.
Let us take, for example, Clauses 20, 25 and 26. Clause 20 deals with the general responsibility for the conduct of the school; Clause 25 sets out the powers of the governing body to provide community facilities in the first place; and Clause 26 sets out the limits on the power to provide community facilities. I cannot believe that Clause 30 is necessary. Therefore, although I support the right reverend Prelate in his amendment—and/or my amendment—I must at least argue, albeit briefly, that Clause 30 should not stand part of the Bill.
11 p.m.
Baroness Ashton of Upholland: I shall begin by speaking to Amendment No. 135. I can confirm that we have no intention whatever of altering any existing local education authority rights regarding the occupation or control of school premises. I am pleased to be able to give a clear commitment that provision in both those areas will remain as currently defined in Schedule 13 to the School Standards and Framework Act 1998. This means that there will be no reduction in the control of the occupation and use of premises by
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either the education authority or individual governing bodies from that which they are currently permitted to exercise, as set out in Schedule 13.
The reason for moving these provisions into regulations is that, as they currently exist, there are five pages of schedules containing many provisions, which, frankly, are too detailed. Building on what the noble Baroness, Lady Blatch, said, we are trying to simplify this and reproduce the important aspects within regulations. That is the motivation behind our move in this direction.
I turn to Amendment No. 136. I can reassure the right reverend Prelate that existing rights in relation to foundation and voluntary schools regarding the control and use of land will also be preserved in regulations. This means that the current provision in paragraph 7(2) of Schedule 13 to the 1998 Act, which allows for foundation governors of a voluntary controlled school to determine the use to which school premises are put on Sundays, will be maintained in the regulations that we intend to develop.
All rights of ownership, control and use of land will remain with exactly the same parties—be it the local education authority, governing body or trustees—where such rights currently rest. The rights of trustees under trust deeds currently provided for in paragraph 5(4) of Schedule 13 will be preserved.
I turn specifically to Amendment No. 137, tabled in the name of the noble Baroness, Lady Blatch. This amendment raises similar concerns about the position of trustees. I hope that I can reassure the noble Baroness that in no way will Clause 30 alter the ownership of school premises. We shall ensure that provisions in regulations will reflect all rights of ownership, control and use of land, as they currently exist. I should like to place on the record that regulations will provide for the rights of trustees in the terms currently provided for in paragraph 5(4) of Schedule 13 to the 1998 Act.
Perhaps I may say a few words about the clause stand part element of this debate. We believe that the control, occupation and use of school premises by governing bodies are important issues, but we do not believe that it is essential to have the detailed provisions set out in primary legislation. By transferring to regulations from guidance those provisions mainly relating to the process and conduct of statutory responsibilities, we believe that we shall create a more flexible framework of governance legislation that will allow any future minor adjustments to be made. This clause is part of our commitment to achieve that aim.
The clause provides for regulations to define the control of occupation and use of school premises by governing bodies during and outside school hours. As I said, ownership will remain unaffected. I can confirm that we shall be making no material changes to the ownership and control of school bodies. Therefore, the existing rights of the respective parties will be preserved. However, we shall consider whether some of the administrative detail—for example, measures setting up transfer of control agreements, and so on—may be candidates for deregulation.

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This is an important clause because it allows us to put such provisions into regulations. Given those assurances, I hope that noble Lords will agree not to press their amendments.
Baroness Walmsley: I thank the Minister for what was probably the clearest and most positive reassurance about local authorities that she has given during our debate on the Bill. I beg leave to withdraw the amendment.
The Lord Bishop of Blackburn: I thank the Minister for her generous reply and for the Ascension Day present that I eventually got. I am most grateful.
1400
Amendment, by leave, withdrawn.
[Amendments Nos. 136 and 137 not moved.]
Clause 30 agreed to.
Lord Davies of Oldham: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at six minutes past eleven o'clock.

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