Sitting of 18 November 2002

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

  SPEAKER'S STATEMENT
  Mr. Speaker: Before I call the first question, I have a short statement to make on some aspects of Question Time. In the first Session of this Parliament, progress at Question Time was disappointingly slow. In its recent report, the Procedure Committee expressed the view that the Chair should foster more incisive, tightly focused exchanges. I intend to do exactly that. I expect questions to be sharp and to the point: no long preambles; one Member, one question; and Ministerial answers no longer than a single printed paragraph of modest length in Hansard. Ministers in charge of Departments and leading Opposition Front-Bench spokesmen have been some of the worst offenders. I ask them in particular to set a good example to their colleagues. I intend to enforce those ground rules. In doing that, I may have to interrupt Members in all parts of the House when they are in full flow. I regret that, but in the wider interests of the House I feel it my duty to take action.
  Secondly, I remind hon. Members of the Procedure Committee's suggestion that in certain circumstances, I might invite a Member to ask a second supplementary question. I shall bear that in mind.
  Finally, I should like the House to be aware that, where I call for a supplementary a Member who has a later question to the same Minister on the Order Paper, it will be automatically unstarred.

Oral Answers to Questions
  CULTURE, MEDIA AND SPORT
  The Secretary of State was asked—

  Licensed Entertainment
  Siobhain McDonagh: What studies her Department has made of the noise implications of the reform of licensed entertainment for residents living near licensed premises. [81368]
  The Minister for Tourism, Film and Broadcasting (Dr. Kim Howells): We have made several such studies.
  Siobhain McDonagh: Whatever the reply was, Mr. Speaker, does the Minister agree that, although it
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  is important to introduce sound insulation so that residents who live close to pubs can lead good lives, it is important that the new licensing legislation increases the amount of live music in Britain?
  Dr. Howells: We believe that our proposed legislation will create many venues for live music in this country. For the first time, there will be a proper review of licences that are sought and granted. It will include the views of residents who sometimes have to put up with loud music.
  Nick Harvey: Although I welcome the Government's moves to sweep away arcane licensing laws, I urge them to make their new measures deregulatory, and not replace those that they are removing with a load of new bureaucratic regulations.
  On noise, would not it be better for police and environmental health officers to be told when licensed premises opened rather than acquiring all the information through the licence?
  Dr. Howells: We believe that our proposed legislation is deregulatory and will do away with much red tape and bureaucracy, allowing for a premises licence that will enable the licensee not only to sell alcohol but to provide entertainment. That is a major plus for the music industry and I support it wholeheartedly.

  European Capital of Culture Bid (Newcastle/ Gateshead)
  . Joyce Quin: What discussions she has held on Newcastle-Gateshead's bid to be the European capital of culture.[81369]
  The Secretary of State for Culture, Media and Sport (Tessa Jowell): None specifically.
  Joyce Quin: My right hon. Friend will appreciate that I enthusiastically welcome Newcastle-Gateshead's inclusion in the short list for European city of culture.[Interruption.] I am sure that other hon. Members welcome the inclusion of their cities, too.
  The link between culture and economic regeneration is important. Does my right hon. Friend agree that awarding capital of culture status is not simply a matter of high-profile cultural projects, but a matter of considering what it means in reaching out to local communities, promoting employment and enhancing the quality of life?
  Tessa Jowell:The short list that I announced on 30 October was recommended by the panel according to the clear criteria for capital of culture status that were established by the European Union and developed by the Department. Regeneration is not a specific criterion, but I accept my right hon. Friend's point that arts and culture can be powerful drivers of successful regeneration, as her cities of Newcastle and Gateshead clearly show.
  Miss Julie Kirkbride: I hope that the Secretary of State is also aware of the bids made by other

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  cities across the United Kingdom to become the European capital of culture, and that she will therefore see Birmingham as by far the superior bid, not least because of the cultural opportunities that that city now offers. Does the right hon. Lady not regard that as a more important benefit than the economic regeneration referred to by the right hon. Member for Gateshead, East and Washington, West (Joyce Quin)?
  Tessa Jowell: The panel has recommended the bids received by Bristol, Birmingham, Oxford, Liverpool, Cardiff and Newcastle/Gateshead, on the basis of their excellence. The remaining shortlisted bidders—Brighton, Bradford, Belfast, Canterbury, Inverness and Norwich—were also very strong contenders. This competition has unlocked the cultural potential in many of our cities. There will only be one winner, but we hope that the efforts made by every city will be developed and capitalised on, and that the visions described in their bids will be translated into practice.

  Seaside Resorts
  Mrs. Joan Humble: What plans she has to revive the tourist industry in British seaside resorts.[81370]
  Mr. Anthony D. Wright: How many holidaymakers visited British seaside resorts in the summer of 2002.[81376]
  Lawrie Quinn: What is her Department doing to encourage domestic and international visitors to visit English seaside resorts throughout the year.[81377]
  The Minister for Tourism, Film and Broadcasting (Dr. Kim Howells): The reforms of the support given by the Government to tourism, with a new focus on domestic marketing, e-tourism, and greater involvement of regional development agencies and the private sector, will help to revive seaside resorts.
  Mrs. Humble: I thank the Minister for visiting Blackpool as part of his recent tour of seaside towns. Will he take this opportunity to re-emphasise the importance of tourism as a key economic driver in regeneration, and of the role of the Department for Culture, Media and Sport, working with other Departments, in regeneration projects, and especially in delivering the success of key local initiatives such as the bold vision outlined in Blackpool's master plan?
  Dr. Howells: I know that my hon. Friend is a great supporter of the master plan, and so am I; it is a very imaginative project. The key to the plan will be to ensure that the regional development agencies, as well as the regional tourist boards, understand the importance of seaside resorts not only as places where people take their holidays but as the great drivers of economic success and of jobs within each of the regions. I shall expect those organisations to work closely with all local authorities in seaside resorts to ensure that they become even greater successes than they are now.
  Mr. Anthony D. Wright: Does my hon. Friend agree that, to increase the visitor numbers to seaside resorts,
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  we need to modernise? To that end, the Government have recently given most seaside resorts objective 2 status, which has opened up new avenues for them. Does my hon. Friend agree that we need to get that finance to the seaside resorts with all speed, so that they can initiate the modernisation that they require to increase visitor numbers to the United Kingdom?
  Dr. Howells: It is useful that so many seaside resorts are included in objective 2 support areas. I hope that imagination will be used in deciding where that money is to be spent. We need new attractions, and many seaside resorts need to reinvent themselves, in many ways, as major attractions of the future. Indeed, if they do not succeed in doing so, we shall have great difficulty in persuading people from abroad to visit anything other than our most established attractions. We really need seaside resorts to replenish that pool of attractions.
  Lawrie Quinn: My hon. Friend will remember my constituency's unique selling points from his visit in the summer—Captain Cook in Whitby and Alan Ayckbourn in Scarborough. Should we not be focusing on the branding of seaside resorts, in terms of both international and domestic visitors?
  Dr. Howells: It is true that the visitors who come here from abroad tend to spend a lot more than visitors from inside Britain, generally because they stay longer at their destinations. The figures are sometimes quite startling. When the Endeavour came to Whitby, it had such an effect on the number of visitors to the town that it has actually driven house prices up in the area, because so many people want to go and live there. If that is not the best example imaginable of a link between a successful tourism project and the general well-being and health of a town, I do not know what is.
  Peter Bottomley: My grandmother came from Whitby, but I want to talk about Worthing. Will the Minister be kind enough to meet the Worthing hospitality association, and other such associations, to enable him to understand that this is a question not just of the money that the Government spend, but of the money that they might withdraw from the rate support grant? It is not only tourists and visitors, but residents as well, who help to maintain the quality of the town.
  Dr. Howells: I should be pleased if the association wrote to me. I would try to fit it in.
  As the hon. Gentleman implies, tourism is very much a cross-departmental issue. Important decisions have to be made in other Departments. I think those representing seaside resorts understand that, and the Government certainly understand it; putting the two together is the key.
  Mr. Adrian Sanders: As the Minister surely recognises, one of the problems affecting most seaside resorts is their crumbling infrastructure. Local authority grants cannot repair it, because they are focused on statutory duties. What discussions has the Minister had

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  with the Minister for Local Government and the Regions to ensure that such grants reflect the cost of improving infrastructure and wet-weather facilities?
  Dr. Howells: I have discussed the matter with other Departments on numerous occasions. I want tourism to be a mainstream economic activity, and to be recognised as such by local authorities and regional development agencies, as it is by Government. If we are to create new jobs and reinvent the attractions of which I spoke earlier, we must understand the importance of infrastructure. If towns look shabby they will not keep their visitors: even their traditional visitors will eventually shy away. Tourists can spend their money anywhere in the world, and do so regularly, so it is important for our seaside resorts to look their very best.
  Mr. Nicholas Soames: Does the Minister agree that many seaside resorts are among the most golden assets in the portfolio of tourism that we have to offer? Does he also agree that in many cases standards are so dismal, and there is so far to go, that resorts need more advice on how to make the most of themselves? Given the confused state of tourism marketing, might it be possible to establish an overarching benchmarking standard to help those resorts raise themselves to the standard of the best?
  Dr. Howells: I am pleased to tell the hon. Gentleman, who I know is passionate about these issues, that the confusion is over. A single agency will now be responsible for the marketing of England, and indeed for the marketing of Britain generally in the world. It is important that we drive standards up; if we do not we will lose the tourists, including the most important tranche. I am thinking especially of the Americans. We must get them back, and we must keep them.
  David Cairns: Will my hon. Friend join me in intervening with Network Rail to help resurrect the long-overdue redevelopment of the lovely seaside resort of Gourock in my constituency—a project that was scuppered by shortsighted, bureaucratic, idiotic decisions made by the thankfully now defunct Railtrack?
  Dr. Howells: My hon. Friend is clearly a major attraction in his constituency. We could do worse than market him.
  Mr. John Whittingdale: Does the Minister accept that the tourism industry is the biggest contributor to the economy for which his Department is responsible, and that it should therefore have the strongest voice? So far there has been virtually no comment, in Parliament or in the press, about the abolition of the English Tourism Council, which was announced just over two weeks ago. Is it not the case that while seaside resorts in Scotland and Wales will continue to benefit from the promotion activities of the Scottish Parliament and the Welsh Assembly, as well as the British Tourist Authority, English tourist resorts will in future have no national voice to promote their interests?
  Dr. Howells: That is not true. As I explained to the hon. Member for Mid-Sussex, (Mr. Soames), there will
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  be a single body in future. I believe that it will do a much better job than the two separate bodies, because it will be structured and funded differently and will have different targets. The English Tourism Council worked hard at fulfilling its remit and in many respects it did an excellent job, as indeed did the British Tourist Authority, but we have picked up signals from the industry as a whole. It clearly wants one body with which to connect and work on all facets of tourism, and that is what we are providing.
  Mr. Whittingdale: The Minister says that the new body will be given responsibility for marketing English tourism, but does he accept that it was a mistake for his Government to remove the marketing function from the English Tourism Council in the first place? Can he guarantee that the new body will be given sufficient resources to market England properly and that that will not be left to the regional tourism bodies in what many suspect is a further move towards this Government's regional agenda?
  Dr. Howells: I am not about to attack the Government's regional agenda, but, yes, I believe that it was a mistake to take away the ETC's marketing role. I am sure that the hon. Gentleman knows that the industry has had an unprecedented sum in the £20 million that we allocated to the BTA for the 1 million visitor campaign to try to help the industry to recover after the terrible events of 11 September and foot and mouth in this country. I am confident that it is bringing good rewards now.
  Jim Knight: I am grateful to the Minister for including Weymouth in his trip to English seaside towns earlier this year, but the single issue that tourism businesses in my constituency are raising with me is the proposal to reorganise the school year into six terms. What discussions has he had with the Department for Education and Skills on the proposal, which some tourism businesses in my constituency liken to removing from retailers the last shopping week before Christmas?
  Dr. Howells: I enjoyed my visit to Weymouth, and my visits to Portland and Swanage, very much. You can tell what I have been doing with my time, Mr. Speaker.
  I am confident that our discussions with the Department for Education and Skills will result in a good outcome to all that, although I say to tourism businesses that change is always difficult to accommodate and come to terms with, as well as a bit of a daunting prospect. However, I am sure that no one in the private sector, and certainly no one in the Government, wants the revival of tourism after a bad year in 2001 to be detracted from in any way by some new regime that makes people's lives much more difficult.

  Elite Sport Funding
  Mr. Nick Hawkins: What plans she has for funding of elite sportsmen and sportswomen over the next 10 years[81371]
  The Minister for Sport (Mr. Richard Caborn): Funding to our elite sportsmen and sportswomen is

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  provided through the national lottery. The Government are committed to maintaining lottery funding to elite athletes at the same level in the run-up to the Athens Olympics as was provided in the run-up to the Sydney Olympics.
  Mr. Hawkins: Despite what the Minister claims, I am told by leading sports administrators who speak to me and to my hon. Friend the Member for Ryedale (Mr. Greenway) that they are being briefed by the Minister's officials that, despite the successes of our sportsmen and sportswomen at the Sydney Olympics and the Manchester Commonwealth games, their funding will be cut, and removed altogether in some successful sports, because lottery ticket sales are falling. That is what we are hearing from people at the sharp end whom the Minister's officials are briefing. The Prime Minister loves basking in the reflected glory with receptions for sportsmen and sportswomen at No. 10, but is not the funding being removed?
  Mr. Caborn: What the hon. Gentleman says is totally and utterly untrue. We give a clear commitment this afternoon that the funding was there as we went into the Sydney Olympics and that it will be there in the run-up to Athens. That is the position. The Government have given that commitment up to Athens to all our Olympic sports that received it up to Sydney. I can be no clearer than that.
  Dr. Jack Cunningham: Does my right hon. Friend's answer mean that the Government will guarantee to implement all the financial recommendations of the elite sport funding review group, which reported last year and which the Prime Minister described as an excellent piece of work? Does it mean that, in addition to maintaining pre-Sydney funding for Olympic athletes up to Athens, implementation of the report's other financial recommendations will also be guaranteed?
  Mr. Caborn: The answer is yes. The vast majority of the 40 recommendations given in my right hon. Friend's report—the Cunningham report—have been implemented. Beyond the 40 commitments that were asked for, we are investing £120 million in the English Institute of Sport, which I hope will be on stream in the next 18 months. That will probably give the best infrastructure for elite athletes anywhere in the world.
  I have just come back from Australia. The Australian Institute of Sport is being revised and responsibilities are being devolved to the states. It involves higher education much more effectively. It is rightly revisiting its arrangements. What this country puts in place for our elite athletes in the next 18 months to two years will be unrivalled throughout the world.
  Mr. John Bercow: What are the nature, extent and results so far of funding for junior tennis players who have talent but no money?
  Mr. Caborn: The Lawn Tennis Association is investing about £17 million per year in grassroots tennis. We welcome that. We have been working with the association for many years, and we shall continue to do
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  so through the English Institute of Sport and our other facilities. I hope that more elite tennis players will come through than we have now.
  Mr. Speaker: I call Dr. Iddon.
  Dr. Brian Iddon: Question 5, Mr. Speaker.
  Mr. John Greenway rose—
  Mr. Speaker: Dr. Iddon, I am sorry. I call Mr. Greenway on Question 4.
  Mr. Greenway: I am grateful, Mr. Speaker, because we would like an important issue to be cleared up. After Sydney, the Prime Minister promised that funding for our elite athletes would be increased. Despite what the Minister has just said, the only announcement that we have had was in a written answer that he gave me less than two weeks ago, which showed a 15 per cent. cut in funding from the lottery fund. As my hon. Friend the Member for Surrey Heath (Mr. Hawkins) suggested, that is why sports governing bodies are being briefed to expect a cut. I assure the Minister that we want this Conservative initiative to thrive, but we need some clear answers. If the money is not coming from the lottery, where is it coming from; and when will a proper announcement be made?
  Mr. Caborn: I think Conservative Members are confused. Everyone knows that there has been a reduction in lottery income for all good causes. That is not the question that was asked. The question asked was whether there will be a reduction in the investment in our elite athletes in the run-up to Athens, and the answer is no: there will be no reduction in the investment in our elite athletes or in the commitment that the Prime Minister gave that we will continue to fund at the same level as we funded up to Sydney. We will do that up to Athens, and we will continue to do that. The money will be found from inside and outside the lottery.

  Cricket
  Dr. Brian Iddon: What assistance she gives to create new facilities for the game of cricket.[81372]
  The Minister for Sport (Mr. Richard Caborn)rose—
  Dr. Iddon: My second innings.
  Mr. Caborn: Very good. The Opposition were obviously slow at getting to the wicket.
  The Government support the provision of new cricket facilities through various means, including funding from the sports lottery fund administered by Sport England. The lottery sports fund has awarded almost 600 grants totalling £74.8 million towards the creation of new cricket facilities.
  Dr. Iddon: Fortunately, cricket is still very popular in my constituency, but some of the older grounds need investment, especially in pavilions. My ethnic minority

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  constituents are finding it increasingly difficult to play the game owing to a shortage of grounds. Will my right hon. Friend bear that in mind when he is facilitating and helping the game of cricket?
  Mr. Caborn: Very much so. If my hon. Friend wants to write to me about any specific case, I will take it up. I congratulate the England and Wales Cricket Board on its recent initiative. It is now one of the best governing bodies in sport, and has involved the grassroots through every secondary and primary school and through the facilities in its academy. The link with Channel 4 through "Howzat?" is good to look at and is used by schools. Other governing bodies should look into ways of involving grassroots sport. There are probably more young people playing cricket now than there have been for many generations.
  Mr. Tony Baldry: Will the Minister find time to visit Banbury cricket club so that he can have a better understanding of the difficulties that it is experiencing with the Charity Commissioners? Is it not time that charity law was overhauled? It seems strange that recreation is a charitable pursuit, but not sport. For many cricket clubs such as the Banbury cricket club that is a complete headache.
  Mr. Caborn: I could not agree more, which is why the performance and innovation unit report on charities a few weeks ago stated that amateur sport ought to have charitable status as of right. We would welcome that, and it is unfortunate that it has taken something like 150 years to revisit the subject of charities. The hon. Gentleman is right that the subject should have been revisited earlier, probably by the previous Administration. However, I agree that the matter needs to be simplified and we have done what we can within the current rules. I hope that more clubs will apply for and get charitable status, but the Charity Commission is looking at that sympathetically under the new leadership of John Stoker. I hope that we can make progress.
  Mr. Stephen Hepburn: Is the Minister aware that there is not one school cricket side in South Tyneside? Surely if we are to try to encourage greater participation in cricket, we need to get to the schools and make sure that youngsters get involved at an early age. Will he look into the unique case of South Tyneside—and at other boroughs with a similarly low wealth base—to make sure that cricket is available to everybody, not just the better schools?
  Mr. Caborn: I will look at that matter. The ECB wants to get round to every single primary and secondary school with senior players and to provide facilities. Anyone visiting Lord's will see that the facilities that are being developed, including a new CD-ROM, are excellent. The facilities are there to get cricket into schools and the investment is going in, as the ECB has a strategy for the development of indoor and outdoor cricket facilities. Quick cricket is also taking off in many
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  schools. I am surprised by what my hon. Friend says, but if he wants to write to me I will take the matter up with the ECB and see if we can do something about it.
  Mr. David Heath: In my village, we are aware of the support given by the ECB and by Somerset county cricket club, which has been excellent. However, the key to good cricket is good cricket pitches. What is the Minister doing to encourage the training and employment of good groundsmen in the public sector?
  Hon. Members: Good question.
  Mr. Caborn: That is a very good question, as my hon. Friends have said. I cannot answer it at the moment, but I will ask the ECB. The quality of our pitches is not what might be expected, but the development of artificial surfaces ought to be looked at. Such pitches do not need the same maintenance and are more cost-effective. They are a little more expensive on the capital side but are much more effective on the revenue side and, with floodlighting, can be used 24 hours a day, 7 days a week, with very little wear. There is a revolution in terms of sports facilities and cricket is looking at that. However, I will take the point up with the ECB.

  Film Industry
  James Purnell: If she will make a statement on the Film Council's plans to build a sustainable and growing UK film industry.[81374]
  The Minister for Tourism, Film and Broadcasting (Dr. Kim Howells): On 5 November, Sir Alan Parker, chair of the Film Council, set out his vision for the future of the UK film industry, and called for a debate about where the industry goes from here. I very much welcome this. I agree with Sir Alan that the key areas to be addressed are education and skills, the distribution of films—as well as their production—and the role of the UK industry on the international stage through sales or in the making of films.
  James Purnell: Does my hon. Friend support the Film Council's suggestion of a tax incentive for the distribution of films? Will he make sure that, in any proposals, the role and funding of cultural films and of young film makers will be enhanced?
  Dr. Howells: One of the Film Council's chief objectives is to support cultural films. It is for the Film Council itself to work out the detail of how best to deliver that objective. I agree with the council in the work that it is undertaking as part of its specialised exhibition and distribution strategy to channel a considerable amount of money into a cinema fund to increase access and broaden audiences for specialised films, and for cultural films especially. There is no point in funding those films—whether they are cultural or any other kind—unless somebody goes along to see them, so the films have to be made available.

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  On tax, the last estimate is that tax relief has provided more than £100 million of direct benefit to film production in this country over the last three years. I am glad that my right hon. Friend the Chancellor has extended this relief to 2005.
  Miss Anne McIntosh: Will the hon. Gentleman join me in congratulating films such as "Gosford Park" and "Bend it like Beckham", which are a great tribute to the UK film industry? Will he see fit to do all he possibly can for private cinema exhibitors, who are under increasing pressure in trying to compete with the big exhibitors?
  Dr. Howells: That is a real problem. As the hon. Lady knows, I am a great believer in the market. The growth of multiplex cinemas is a boon but we must look after the film makers whom my hon. Friend the Member for Stalybridge and Hyde (James Purnell) mentioned earlier. I am glad that UGC, one of the big owners of multiplexes, has decided to set aside a screen for the showing of films that are not blockbusters or mainstream, which is important.
  We must also look after those cinemas that are still in our high streets or rural areas. Through its digital fund, the Film Council is looking at how it can help regional cinemas, for example, to take advantage of technological advances. That must be a good thing for the distribution of non-mainstream films and for their exhibition throughout the country.
  Mr. Barry Sheerman: I know that my hon. Friend is probably exhausted from travelling around the seaside resorts in the UK, but when he has more energy will he talk to his opposite number in the Department for Education and Skills, because often at the heart of the problem of the British film industry is a mismatch of skills and the industry's production needs? Will he urgently take that part of the report and talk to the Department? We produce many skilled people but there are big deficiencies. When he sits down and has a bit of time, let us get something going.
  Dr. Howells: Sir Alan Parker and John Woodward, chief executive of the Film Council, are keen that we work with the Department for Education and Skills to ensure that the skills are there. I am especially interested in script development; a good script is at the heart of every good film. All too often, we do not learn lessons from the Americans, which have been there for a long time, on team writing and on working at scripts in such a way that not just the originator of the script but the person who does the seventh rewrite and turns it into a great film is given the status. Until we learn the importance of those skills, of being able to pay for them and of using them in the most effective way possible, we will always struggle when it comes to international competition in films.
  Michael Fabricant: Of course many of the Los Angeles script writers were born in Britain. I am pleased that the Minister acknowledges that distribution is important. May I urge him not to go down the route adopted by France, where there is a
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  quota system and so many screens every week are reserved for French films? That would be completely wrong.
  Dr. Howells: I have no intention of arguing for a quota system.

  Sport Education
  Mr. Charles Hendry: How many children aged five to 16 receive at least two hours sport and PE each week during the school day.[81375]
  The Secretary of State for Culture, Media and Sport (Tessa Jowell): Through the first stage of our school sport partnerships, we estimate that about 25 per cent. of five to 16-year-olds are taking part in PE and sport for at least two hours a week. It is our intention that that figure should increase to 75 per cent. by 2006.
  Mr. Hendry: I am grateful for that answer. I think that the Secretary of State will understand why many of us are disappointed that that figure is so low. Many of us believe that all children who are able to should be taking part in a reasonable amount of sport in school every week. Is she aware that the Government spend 800 times as much on health as they do on sport? They spend £1,135 per head on health, thereby essentially countering ill health, but only £1.38 per head on sport, or promoting good health. Should not that shocking disparity be reduced? Would not more sport in schools be a good place to start?
  Tessa Jowell: As the hon. Gentleman says, a school sport policy is also good for children's health. Few things that my Department is engaged in are more important than reintroducing sport as part of every child's life. It is an area where perhaps one of the greatest educational inequalities has opened up—particularly in the years when his party was in power. We are committed to ensuring that every child, within the time scales that I have indicated, spends at least two hours a week playing high-quality sport or physical education. That has been matched not just by nearly £0.5 billion to fund the programme but by investment of over £1 billion in facilities throughout the country—new playing fields, new running tracks, new pavilions—and investment in coaches. We cannot simply will that more children should play more sport; we have to address the complexity and the detail of putting every bit of the policy in place. That is what we are going to do for all the children in our country.
  Mr. Gareth Thomas: Does my right hon. Friend share my view that the increased enthusiasm of children aged five to 16 for participating in sport would be one small part of the legacy of a successful Olympic games bid—perhaps by London?
  Tessa Jowell: I have promised the House a debate on the question of Government support for a London bid for the 2012 Olympics, which will provide a very good opportunity to air those issues. However, as I made clear in the debate on Friday, the Government will assess a

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  bid against the following criteria: its deliverability, winnability and affordability, and—in keeping with my hon. Friend's point—its legacy.
  Mr. Andrew Mackay: Does the Secretary of State not see that many of us will consider her response to my hon. Friend the Member for Wealden (Mr. Hendry) as both unambitious and very complacent? May I point out to her that it is essential that competitive sport—I stress "competitive" sport—be made available in all schools for all children in this age group as soon as possible?
  Tessa Jowell: We try to conduct a lot of debates in this area in a spirit of reasonable cross-party agreement, where such agreement is possible, but a contribution such as the right hon. Gentleman's does him no justice whatsoever. It was his Government who presided over the sale of more than 5,000 playing fields, and who effectively removed competitive sport from the curriculum of children in state schools. That is what we intend to change for the benefit of all the children in our country.
  Tony Cunningham: It is of course vital that our young people take part in such activities in school, but given the apparently huge drop-out rate post 16, does my right hon. Friend not agree that much tighter links between schools and clubs are needed?
  Tessa Jowell: My hon. Friend is absolutely right, and that is why we have announced money to invest in school-club links to deal with, among other things, the point raised by the hon. Gentleman who represents the liberal tendency in his party—
  Mr. John Bercow: Buckingham.
  Tessa Jowell: Indeed. The hon. Member for Buckingham made a very fair point about the lottery—the random chance—that so many talented children face in terms of realising their talent. One way in which we address that is, as my hon. Friend the Member for Workington (Tony Cunningham) says, by improving and strengthening school-club links.

  Chess and Bridge
  Dr. Evan Harris: If she will extend the definition of sport to include mind sports, with specific reference to chess and bridge. [81378]
  The Minister for Sport (Mr. Richard Caborn): Officials from my Department are currently considering the potential for amendments to the Physical Training and Recreation Act 1937 to include mind games, and the possible implications.
  Dr. Evan Harris: I thank the Minister for that answer, and for his support for chess and bridge. We have achieved great success in both bridge—notably women's bridge—and chess, coming fifth in the chess Olympiad. Does he recognise that his answer takes us back to the commitment to move matters along—given in March 1999 by his predecessor but one—so that, for example, disabled players of these games can access lottery funds
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  to enable them to participate to the same degree as able-bodied players? Will he arrange a meeting between his officials and representatives of the British Chess Federation and of the English Bridge Union, to progress matters further?
  Mr. Caborn: I am more than willing to meet the individuals and organisations that the hon. Gentleman refers to, but I should make the very important point that sport is now a devolved matter: devolved Administrations would have to take action to amend the 1937 Act, and we are far from having reached that position at the moment. The hon. Gentleman would do far better to lobby those devolved Administrations to get unanimity, so that we can consider amending the 1937 Act.
  Mr. Andy Reed: With the pressure on Sport England funding for genuine sports, will the Minister assure me that no funding will be diverted to chess?
  Mr. Caborn: That will have to be considered if and when the 1937 Act is amended to include chess and bridge. It is not only lottery funding that is important: we also have to consider VAT and the other tax advantages of being designated a sport.

  CHURCH COMMISSIONERS
  The hon. Member for Middlesbrough was asked—

  Church Repairs (VAT)
  Miss Anne McIntosh: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what recent representations the Commissioners have received concerning VAT on repairs to church buildings; and if he will make a statement.[81524]
  Huw Irranca-Davies: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, if he will make a statement on discussions with European partners on obtaining a reduced rate of value added tax on repairs and maintenance of church buildings.[81527]
  Second Church Estates Commissioner (Mr. Stuart Bell): The Commissioners have not received any formal representations on this matter recently. However, a number of right hon. and hon. Members who have a strong interest in this matter visited the Church Commissioners recently, and I shall be leading a strong delegation to the European Parliament for meetings on 4 December.
  Miss McIntosh: I thank the hon. Gentleman for that reply and declare that I am one of the humble Members of Parliament to have been given hospitality by the Church Commissioners. What has been the take-up of

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  the grants in lieu of VAT reduction on church repairs? Is not this a hugely bureaucratic exercise, costing the Church a vast sum to put the applications together?
  Mr. Bell: The hon. Lady's continued interest in this matter is greatly appreciated, not only in the House but by the Church as a whole.
  The number of claims received and being processed by the end of the third quarter of 2002 was more than 1,500, and the total payments to churches from the scheme, as at the end of August, was nearly £3 8 million. More applications are now coming in. The question of bureaucracy is currently under consideration with the Department for Culture, Media and Sport and we are hopeful that it might be relieved somewhat, making it easier for the applications not only to be submitted but to be successful.
  Huw Irranca-Davies: Does my hon. Friend agree that the interim measures for listed places of worship have been very welcome, although I agree with the hon. Member for Vale of York (Miss McIntosh) that there is concern about what is an alteration and what is a repair, and what are fixtures and what are fittings? There is also a problem with the original invoices, which are often needed for other grant applications. Will he extend his consideration beyond listed buildings, which would be especially valuable in Wales for—
  Mr. Speaker: Order.
  Mr. Bell: I am grateful for your assistance, Mr. Speaker. As we say in courts of law, that was not one question but two.
  The Church Commissioners are always glad to see my hon. Friend, and we welcome his taking an interest in this subject. As he is aware, the question of invoices and of how we can speed up the process is very much in the mind of the Church. He will be happy to know that more application forms are now sent out and that the company administering the scheme on behalf of the Government is considering the matter. We hope that any problems with invoices will be solved and that they will all be successfully paid.

  ELECTORAL COMMISSION COMMITTEE
  The right hon. Member for Berwick-upon-Tweed was asked—
  ELECTORAL COMMISSION COMMITTEE

    Voter Participation
    Fiona Mactaggart: To ask the right hon. Member for Berwick-upon-Tweed, representing the Speaker's Committee on the Electoral Commission, what proposals the Committee is considering to increase participation in electoral politics of under-represented sections of the community[81525]
    Mr. A. J. Beith (representing the Speaker's Committee on the Electoral Commission): Consideration of such proposals would fall outside the statutory remit of your Committee, Mr. Speaker. The Committee has, however, endorsed the Electoral Commission's current corporate
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    plan, which includes plans for promoting public awareness of elections, with a particular focus on groups that currently have relatively low levels of participation in elections.
    Fiona Mactaggart: I hope to persuade the right hon. Gentleman to encourage the Electoral Commission to use its powers under section 13 of the Political Parties, Elections and Referendums Act 2000 to ensure that, in the education on electoral systems and democratic processes that it is able to fund, it targets groups such as women and ethnic minorities within all political parties, to ensure that they understand the electoral system and have better strategies to participate in it.
    Mr. Beith: We are all aware of the under-representation of women as Members of this House and as candidates, but that is primarily a responsibility with which the political parties will have to deal. There is little evidence that women vote in smaller numbers than men; therefore the commission's work in that field has not included direct attempts to encourage women to go to the polls, since they regularly do so. However, the commission has approached the Equal Opportunities Commission to discuss areas of common interest and possible research projects. In addition, the new initiatives fund administered by the commission provides an opportunity for organisations to submit proposals for pilot projects, which might well meet some of the hon. Lady's goals.
    Mr. Derek Wyatt: May I ask the right hon. Gentleman for some guidance? Councillor Stephen Worrall of Sheerness has raised a question to which I do not know the answer. His is one of the poorest parts of Britain, yet the local council, Swale borough council, is to reduce the number of polling booths, and he wants to know what legislation can be used to challenge that reduction. Not only is his area poor, but it is one of the areas of lowest turnout in the country.
    Mr. Beith: I shall certainly ask the Electoral Commission to write to the hon. Gentleman with any useful advice it can give, but some of the responsibility may lie elsewhere.
    Michael Fabricant: While it is, of course, important to ensure that pilot projects continue to ensure accessibility for people, so that they can participate in elections and cast their vote, does the right hon. Gentleman agree that until greater relevance is perceived in this place, rather than abuse by Whitehall and by Ministers, people will be disinclined to vote in general and other elections?
    Mr. Beith: The Electoral Commission has engaged in quite a bit of research into reasons for not voting, but we all have our personal opinion, and in that respect mine and his are not far apart.
    Mr. Chris Bryant: May I urge the right hon. Gentleman to give particular consideration to the needs of former mining constituencies, which do not fall into either the rural or the urban category? There is a

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    specific problem with providing polling stations in next May's elections—indeed, in my constituency, one third of polling stations are likely to close.
    Mr. Beith: Mine is both a mining and, in some parts, a former mining constituency, so I am aware of the problem. The matter is one that will have to be drawn to the attention of other authorities, including those in Wales, but I shall ask the Electoral Commission to keep a close watch on it.

    CHURCH COMMISSIONERS
    The hon. Member for Middlesbrough was asked—

    Clergy (Employment Rights)
    Mr. John Bercow: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what representations he has received about the employment rights of the clergy.[81526]
    Mr. Huw Edwards: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what recent discussions the Church Commissioners have had on employment rights for clergy.[81523]
    Mr. Ben Chapman: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, when an announcement is expected on the review of employment rights for clergy.[81530]
    Second Church Estates Commissioner (Mr. Stuart Bell): Hon. Members may recall from an answer I gave some months ago that the Church of England is considering the Department of Trade and Industry discussion document on employment status in relation to statutory employment rights. The Church will make a formal response by 11 December.
    Mr. Bercow: I am grateful to the hon. Gentleman for his typically helpful reply. Does he agree with me that the idea that the spiritual nature of the work undertaken by the clergy should continue to prevent them being granted contracts of service is now thoroughly anachronistic, and that a compelling case has been made for the use of the power in section 23 of the Employment Relations Act 1999 to extend proper employment rights to members of the clergy, who are frequently under-rewarded, but who should be equitably treated?
    Mr. Bell: I am grateful to the hon. Gentleman for his question; it is a pleasure to have him back at Church Commissioners Question Time. In the interests of Parliament, I hope that it is a brief sojourn and that he will not be with us for too long.[Laughter.] The Second Church Estates Commissioner can be dispassionate about these matters.
    The Church is fully cognisant of the view that the hon. Gentleman expresses, which has been expressed on the Floor of the House on previous occasions. Clergy do not have legal protection against unfair dismissal, as they
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    are not employees but office holders. As part of formulating the Church's response to the DTI on 11 December, we are examining the employment status of atypical workers. Consideration will be given to the issue, and the hon. Gentleman's comments and support will be helpful to the Church.
    Mr. Edwards: My hon. Friend may recall the question I put to the Prime Minister on this very issue. I have some faith that the Government will be persuaded to grant employment rights to clergy and ministers of religion, but less faith that the Church will campaign for that as vigorously as it could. May I urge my hon. Friend to work with the Church Commissioners to ensure that the submission they make to the consultation supports the campaign for employment rights for clergy?
    Mr. Bell: Yes, I was in the House when my hon. Friend put that passionate question to the Prime Minister, and I think that we all felt for him at the time. The person to whom he was referring is not in the Church of England but in another Church. We have campaigned on the matter, and thanks to my hon. Friend the Member for Wirral, South (Mr. Chapman), who has also asked a question, there has been a consistent campaign in the House for five years. The Church is listening carefully and the bishops have discussed the matter. I am hopeful that we will come to a conclusion that will satisfy my hon. Friend the Member for Monmouth (Mr. Edwards) and the House.
    Mr. Chapman: It is important that we move forward from this out-of-date position whereby the clergy have spiritual rather than temporal contracts and poor conditions of service, and they are effectively excluded from employment rights and legislation. It is good that we will have an early announcement, and I hope that it is as positive as hon. Members have suggested it ought to be.
    Mr. Bell: The Church of England is working closely with ecumenical partners on this issue because it realises that it crosses many boundaries and involves many Churches.
    The hon Member for uckingham (Mr. Bercow) mentioned stipends. In the 1990s the national average stipend was £11,668, and by 2001 it was £17,030, so we are generous to our clergy. We hope to move to a salary of £20,000, and that fact should be recognised as we consider employment rights.

    Assets
    Sir Sydney Chapman (Chipping Barnet): To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what assessment he has made of the effect on the Church Commissioners' assets of the fall in the value of shares.[81531]
    Second Church Estates Commissioner (Mr. Stuart Bell): Following their detailed triennial review as at the end of 2000, the Commissioners' actuaries carried out an interim review of the fund's position at the end of 2001 and concluded that the forecast distributions for

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    2002–04 were not likely to lead to an adverse consequence for the long-term financial position of the Commissioners.
    Sir Sydney Chapman: I am grateful to the hon. Gentleman for that answer. Does he recall that a few years ago the Commissioners were taken to task for allegedly investing too much of their money in property? Now that the cycle has gone full circle, does not the moral stand—that in their investments the Commissioners ought, if he will accept the phrase, to have a policy of a catholic spread?
    Mr. Bell: I am always grateful to the hon. Gentleman for his contributions. When I took over this post five years ago I was assured that it had more to do with the balance sheet than the Bible, and I am happy to see that the Church's assets have increased from £3 billion to £4.5 billion under my stewardship. If victory has a thousand fathers, I may be No. 995.
    In answer to the hon. Gentleman's substantive question, we have 60 per cent. of our assets in shares and the remainder in property, which means that we are less subject to the volatility of the stock exchange than we might be. Our distribution policy has not therefore been affected by a fall in shares on the stock exchanges of the world.
    Mr. Peter Pike: My hon. Friend will realise that it will be shown that the Church Commissioners could have done slightly better on the stock exchange if they did not have an ethical investment policy. However, does he accept that the majority of people in the Church and in the House believe that it is right to continue to pursue that ethical policy and that income is not always the main criterion to be taken into account?
    Mr. Bell: My hon. Friend makes a pertinent point. If the Church had invested in British American Tobacco and breweries, we would be doing better on the stock
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    side. However, we have an ethical investment policy—I nearly said ethical foreign policy—which aims to obtain the best long-term return on our investment without undue risk, and we are committed to that policy.

    English Cathedrals
    Michael Fabricant: To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what steps the Commission is taking to allocate sufficient funding for the maintenance of the fabric of English cathedrals.[81534]
    Second Church Estates Commissioner (Mr. Stuart Bell): The Commissioners will continue to liaise closely with the Association of English Cathedrals, the body responsible for negotiations on public funding, and the Church Heritage Forum, which is now working towards a policy statement to inform development of a strategy on the future funding of church buildings.
    Michael Fabricant: The hon. Gentleman mentioned the Association of English Cathedrals. Is he aware that there are two groups in that association—the wealthier cathedrals, and the respected older cathedrals such as Lichfield which may not have quite as much money. What consideration has he given to creating a sub-grouping in the association so that smaller cathedrals like Lichfield can seek additional funds, whereas cathedrals like Westminster abbey, which are well funded, may not need money so urgently?
    Mr. Bell: I know that the hon. Gentleman has a strong interest in the subject—he has written to me and I wrote back on 15 November. On structures and groupings, he will be aware that each cathedral is responsible for assessing its fabric repair costs to help it meet the requirements of the Cathedrals Measure 1999 and the Care of Cathedrals Measure 1990. On the groupings to which he referred, I am happy to give any assistance I can to make it easier for cathedrals such as Lichfield to get a little extra grant.

Welfare-to- Work and Benefit Uprating
3.31 pm
The Secretary of State for Work and Pensions (Mr. Andrew Smith): With permission, Mr Speaker, I should like to make a statement on the next stage of our welfare-to-work strategy for people with health problems or disabilities and to report to the House the annual uprating of benefits.
On the benefits uprating, I can confirm that most national insurance benefits will rise by the retail prices index—that is, by 1.7 per cent. For the third year running, retirement pension will be uprated by more than the RPI, with an increase of £100 a year from next April for single pensioners and £160 a year for couples. The minimum income guarantee will rise by more than £200 a year, in line with the Government's aim of targeting extra help on the poorest pensioners. There will also be above-inflation rises in maternity allowance and statutory maternity pay, which will be uprated from £75 a week to £100. Most income-related benefits will rise by the Rossi index—1.3 per cent.—in the normal way. I shall place details of the uprating in the Vote Office and arrange for figures to be published in the Official Report
Ensuring that as many people of working age as possible are in employment is central to the Government's strategy to tackle poverty and social exclusion. We inherited a major problem of worklessness, not just among those traditionally seen as unemployed, but for millions of other people who were offered little or no help to find work. Between the 1970s and the mid-1990s, the number of lone parents on benefit and the number of people claiming sickness and disability benefits both trebled. As industrial restructuring took place, one in three men aged between 50 and state pension age were out of work and reliant on benefits, and one in five men between 50 and state retirement age were receiving an incapacity benefit. At a time when many people should have been given the help they needed to find other work, they were effectively written off.
Over the past five years, we have started to tackle that legacy through economic stability and our active labour market policies, providing people with individually tailored help to move into work. As a result, employment is at record levels, with well over a million more people in work than in 1997. Long-term unemployment has been massively reduced and the number of lone parents in work continues to grow. But there is still more to do; almost 4 million people of working age are out of the labour market and on benefits. Of those, 2.7 million are receiving an incapacity benefit—nearly three times the number on jobseeker's allowance. However, as is clear from surveys, many people with health problems and disabilities want to work. Indeed, more than three quarters of a million people on incapacity benefits tell us that they want a job-just because people are on IB, it does not follow that they cannot work. Indeed, nine out of 10 people who start a claim for incapacity benefit expect to get back to work. It is right that we provide the proper support to help them to do just that.
We must continue to reform the tax and benefit system from one based on what people cannot do to one based on what they can do. For people who are off
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Work—through illness or disability—it is often a lack of confidence or knowledge about the support and advice available which stops them getting back to work. Today, I want to announce the first steps in a new approach to remove those barriers and help people realise their potential.
Our proposals are set out in the consultation paper, "Pathways to work: Helping people into employment", which sets out a new framework of help for those who through illness or disability have applied for incapacity benefit. It combines better and more intensive advice with mandatory work-focused interviews, new opportunities for rehabilitation and new financial incentives to encourage people to move into jobs. We propose phased pilot schemes of the new approach in six areas around Great Britain from next autumn.
Let me make it very clear that this is not about forcing sick or disabled people into work. It is about encouraging people to look at their options and helping those who want to work to achieve their goal of getting a job. I should like to reassure the House that those with the most severe conditions will not be required to attend the ongoing intensive interviews. We all understand how important it is that the development of the initiative does not threaten their security and the vital support that incapacity benefit provides for them.
Our new approach has a number of aspects. First, we need to provide the right support from the outset of a claim. We will build on the framework offered through Jobcentre Plus, and ensure that new claimants get early and frequent support once their claim has been sorted out. We will train a new team of specialist personal advisers to help claimants to stay focused on their capabilities—building on their expectation that they will return to work. We want as many as possible of those moving on to incapacity benefit to be seen as people with a working future, not as people at the end of their working lives.
Secondly, some people with disabilities and health problems of course need specialist help to get back to work. In the past, that has not been available. So, we will introduce groundbreaking rehabilitation programmes, working with the national health service, general practitioners and occupational health specialists, to combine work-focused support with health-focused rehabilitation for conditions such as back pain and depression. The programmes will be tailored to people's individual needs—helping people to understand the effects of their condition and working to increase their confidence to move back into work.
Making the move from welfare to work is a big step; it creates uncertainty and, often, financial worry. There is already a range of extra help available. The disabled persons tax credit guarantees a weekly income of £167 for a single person working 30 hours. That will increase to £189 a week from April next year when new tax credits are introduced. Today I can announce that we will build on that support by piloting a return to work credit for people leaving incapacity benefit for work. It will be paid at £40 a week for 52 weeks where personal income is less than £15,000 a year. For someone returning to work for 30 hours on the national minimum wage and the new working tax credit, that will guarantee an income of at least £229 a week for the first year in work, compared with £167 under the current system, and just under £80 a week on incapacity benefit.

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We realise, too, that the first step into work is a big one. Finding money for the first month's bus pass or for work clothes can too often be barriers to work. That is why I also announce today that we will extend access to the advisers discretion fund, enabling advisers to make awards of up to £300 to spend on anything that will help their clients move into work.
Better support for people with health problems will not stop at incapacity benefit. We will also increase support for people with less severe health problems who move from incapacity benefit to JSA, but who might none the less face significant barriers to work, by ensuring that they automatically see a specialist adviser when they first claim JSA. I can also announce that we will refer those people to tailored support through the relevant JSA new deal, without the usual waiting period of 18 months. We will further reform the system so that people awaiting an appeal are not moved on to reduced rate income support, but receive JSA and work-focused support.
People with health problems or disabilities get support from a number of sources. Today I have outlined the role that the state will play, but others have an important role, too. We want to encourage an environment where as many employers as possible are managing health at work actively and positively. That makes good business sense. In an era of full employment and a tight labour market, people with health problems or disabilities are an untapped resource that employers and the country cannot afford to ignore.
We also want to support doctors, who can sometimes face pressures to sign off people from work. There is now clear evidence of the medical, psychological and therapeutic benefits that work can have, so we will work with doctors to raise awareness of the importance of work retention or resumption in improving the health of their patients.
To conclude, this package of reforms is about providing support to help people with health problems or disabilities to move back into work. It is about them fulfilling their desire to work and realising their own ambition. It is about changing attitudes, both their own and those of others. Those claiming IB will, I believe, respond to a focus on what they can do, rather than on what they cannot do. We are not abandoning them and denying them opportunity, as in the past, but supporting them with help towards a better future.
Mr. David Willetts: I thank the Secretary of State for his statement, and welcome the uprating of benefits. Despite his devoting only seven sentences of his statement to the uprating of all social security benefits, it is important for the House to ask about the right hon. Gentleman's overall strategy for benefits, before turning to what he said specifically about incapacity benefit.
Next year, £19 billion of benefits for families, including child benefit, will have been handed over to the Treasury to satisfy the Chancellor's strange obsession with tax credits. Will the Secretary of State assure the House that they will be covered in any future uprating statements? More importantly, will the Secretary of State pledge that the different tax credits for families which will replace benefits will all be uprated annually, at least by inflation?
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The benefit system is to go through enormous change over the next 18 months, with more means tests and more tax credits. I regret that in his short remarks about the uprating, the Secretary of State did not describe the measures that he was taking to deliver those changes. There is widespread concern about their practicability. The pension credit has already been delayed from April 2003 to October 2003—and the computers will not be ready even then, so the complicated new formula is supposed to run on the old computers for at least two years. Is the Secretary of State confident that he can deliver that?
With child support, the position is the other way around: the new computers are available, but they are supposed to be operating on the old formula, and we still do not know when that will start. The child support changes have already been delayed from October 2001 to April 2002. Then, a few days before that deadline, they were delayed a second time, so millions of families still have no idea when the new rules for child support will take effect. Is it this year, next year, some time or never? The uprating statement is an opportunity for the House to be informed about that.
As if the pension credit and child support changes were not enough, there are all the changes to family benefits as well. Millions of families were told that they would receive the Chancellor's new tax credits in 2003, but that plan has been abandoned. Instead, the move to the new system is supposed to take place in three stages—in April 2003, October 2003 and April 2004. Can the Secretary of State assure us that that programme for the former family benefits, for which he is still responsible, is on track?
In April 2003, the Government will start the process of paying benefits into bank accounts. Hon. Members in all parts of the House will know that that has caused great concern, especially to pensioners in our constituencies. However, we still do not have reliable information about the post office card account, and none was offered today. Will the account indeed be available, ready and operational in all post offices for April 2003? We need to know from the Secretary of State whether it will be ready on time.
We would not mind all those changes to just about every main area of benefit if they were going to give us a better system, but the reason why the Government are having such difficulty in implementing them is that they are so complicated. That is because there is so much means testing. That is what we have got—more means testing for more families, and people simply do not like such tests. Does the Secretary of State accept that that is the reason why take-up of his benefits is falling? Is that why he has not even dared to publish his figures for the take-up of benefits even for the year ending April 2001, despite the fact that they are long overdue? When will he report to the House on the take-up of benefits?
Mr. Brazier: Answer.
Mr. Willetts: Quite right. What we want from the Secretary of State, with the minimal information about the benefits system in his uprating statement, is some answers. We need to know how many people he thinks will take up his new benefits. Will he confirm that buried in his Department's own forecast is the expectation that

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only two thirds of pensioners eligible for the pension credit will receive it? How many families eligible for his family credit will receive it? In the Chancellor's fantasy world, he tackles child poverty—an admirable objective to which we know he is personally committed—but he does so by assuming 100 per cent. take-up of his benefits. In the real world, there is nothing like 100 per cent. take-up, which is a very serious problem.
The Secretary of State devoted most of his statement not to the uprating of benefits, but to his particular proposals on incapacity benefit, about which I should now like to ask some questions. Will he confirm that the number of people on incapacity benefit has now been growing for two and a half years? That has happened despite the Government already having introduced some means testing of incapacity benefit claimants and years of briefing about crackdowns on disabled people who are not working, including the notorious spin last summer about the MOT tests for disabled people. Despite his glossing over the issue, the number of workless households is now rising again.
We very much hope that after years in which Ministers have talked a lot but delivered very little on disability benefits, things might be starting to change. However, in order to improve the system and genuinely to reform it, they will have to be much more honest about the problems that they have already encountered. The Secretary of State spoke as though a new deal for disabled people had not already been introduced, as well as the ONE programme and work-focused interviews for disabled people.
May I remind the Secretary of State of the evidence from his own attempts at piloting the very sort of schemes that he has once again announced today? I sometimes think that I am the only person in the country who ever reads his Department's research reports. Maybe I should have better things to do with my time. None the less, let me remind him of what his own research reports show. He talks as though there had never been a new deal for disabled people, but it has been in place for four years. I should like to quote from an evaluation of the letters sent to invite incapacity benefit claimants to interviews. His research states that, of the disabled people on incapacity benefit who received letters asking them to work-focused interviews,
"3 per cent. had responded to the invitation letter directly".
He had only a 3 per cent. success rate in even getting people to the interviews under the new deal for disabled people.
Why will the new interviews be any more successful than those that the Secretary of State has already piloted, launched and, indeed, already evaluated? If people turn up for the interviews, what will happen then? Again, an evaluation has been produced by his own Department. Let me remind him what it found when it compared the pilot areas—[Interruption.] I am asking him whether he is learning the lessons from his own evaluations of his own pilots. That is the question. I shall quote. In the pilot areas
"respondents in the sick or disabled group who had not participated"
in these interviews
"were more likely to be in work than were participants."
The research continues:
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"This finding is not easy to explain."
In other words, the right hon. Gentleman's compulsory interviews were not effective. Why does he think that things will be any different this time round? We have had announcements, crackdowns, evaluations and pilots before. We hope that it will be different next time round, but given the Government's record I doubt very much it.
We need to know from the Secretary of State how many people he expects to participate in his pilots. How many people does he expect to find work as a result of the new schemes that he has announced? We hope that he will make a success of things. We hope also that he will learn from the many charities that work with disabled people. We hope that he will learn from the commercial sector that is involved in commercial disability insurance, such as Unum. Above all, we hope that the right hon. Gentleman will finally break free from a cycle of overspin, overhype, failed pilots and failed initiatives. If he can break free, we will support him.
Mr. Smith: I glimpsed one or two questions in the hon. Gentleman's speech. He might have started by welcoming the fact that this is the third year that the state pension has been increased by more than the retail prices index. The Conservative Government conspicuously failed to do that during every year that they were in office, except the year that they were taking money off pensioners with value added tax on fuel. Since 1997, the basic state pension has increased by £275 a year above the rate of inflation. The hon. Gentleman should welcome that.
As I have said, I glimpsed some questions. Pension credit has not been delayed. It is on course to be delivered next October, as was promised. The hon. Gentleman asked whether the stages for phasing in the introduction of the credits were on course. The answer is yes. If he does not understand why it does not make sense with such a great change to phase in the introduction, it is clear that he learned nothing from the Conservative Government's administrative failings.
The hon. Gentleman asked about post office card accounts and whether they would be ready. As I have reported to the House previously, we concluded contracts with the Post Office on the universal bank. The Post Office has assured us that the card is on course for delivery.
The hon. Gentleman referred to complications. Surely he should have learned from the lessons of the Child Support Agency. There was support on both sides of the Chamber for the original, over-complicated approach. We have had to simplify it and bring forward child support reforms.
The hon. Gentleman asked about the publication of benefits statistics. As he knows, take-up is a matter for the Office for National Statistics. I am as anxious to see the figures as he is. I hope that before the end of the month I shall be able to tell him when they will be available.
Eventually, the hon. Gentleman got round to the announcement that I have made on help for those with illness and disability.
Mr. Brazier: Pilots.
Mr. Smith: Surely it was sensible to pilot a groundbreaking initiative. That should be welcomed by the Opposition as it will be welcomed by many disabled people and their representative organisations throughout the country. More sensitive help and new rehabilitation are being brought forward, with new partnerships working with occupational health specialists and the national health service. New financial incentives are involved. I would have thought that £40 a week for a year for someone moving off incapacity benefit into work would be welcomed by Opposition Members.
The hon. Member for Havant (Mr. Willetts) referred to the existing new deals. We learned from them and from those who have been successfully providing the new deal for disabled people, as well as from the experience of where it has been less successful. We are considering how we can incorporate the lessons of the best practice and the good providers. The hon. Gentleman asks how many people would be affected. Depending on the pilot areas that are selected, I anticipate that it will be about 8 per cent. of the flow on to incapacity benefit in the first instance.
As I said, the benefits uprating statement is good, and includes a good proposal to help deal with the longstanding increase in those who move on to incapacity benefit by encouraging them to consider their options, and offering them new hope and help into jobs.
Mr. Frank Field: I welcome the Secretary of State's uprating statement and the initiative to help those who are unemployed back to work through buying a bus pass. However, does my right hon. Friend accept that for that to be effective, there must be a bus on which they can travel? Does he know that in Birkenhead, where there are 15 per cent. unemployed, 38 per cent. of job vacancies were withdrawn at the jobcentre 20 miles down the road because no one could travel to the area to take up the jobs?
I make a plea to my right hon. Friend that when he develops his welfare-to-work strategy, which Labour Members greatly welcome, he bears it in mind that his next initiative may need to link the unemployed to where the jobs are. According to the latest data, more than 200 constituencies have fewer people in work now than when we were elected in 1997, although there are 1.5 million extra jobs in the economy. One of the reasons for high unemployment in some areas is not that people do not want to work, but that they cannot travel to where the jobs are located.
Mr. Smith: I thank my right hon. Friend for his welcome for the statement and recognition of the contribution that the bus pass can make, and the other help that access to the £300 discretionary fund can provide.
My right hon. Friend made important points. They are precisely the matters on which our action teams for jobs, based in the most disadvantaged areas where unemployment is highest, can work. I urge employers, Jobcentre Plus and the Employment Service in his constituency and elsewhere to work with the action teams for jobs to realise our provisions.
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In the experience of the action teams for jobs, more than 10 per cent. of those who volunteered to take advantage of their help are incapacity benefit recipients. Moreover, that applies to more than 10 per cent. of those whom the teams got into jobs.
Mr. Steve Webb: I thank the Secretary of State for his statement and welcome some of the measures that he has proposed to make it easier for disabled people to move into paid work.
I want to ask three questions on the aspect of the statement that the right hon. Gentleman glossed over: benefits uprating. A section of the statement is headed "Better support for people on JSA". Without mentioning sordid matters such as cash, will he explain what 1.3 per cent. means for someone on jobseeker's allowance? Will he confirm my calculation that it means 70p or 75p? Does he believe that that is a fair reflection of the increase in the cost of living that unemployed people face in the next 12 months?
Secondly, will the right hon. Gentleman confirm that the pension uprating obeys what I would call Webb's law of benefits uprating: the increase in the state pension declines with distance from the last general election? Does he confirm that the pension increased by £5 when the election was being held, by £3 the following year because a promise had to be made, but by only £2 this year?
Thirdly, will he launch an immediate and urgent internal investigation into the Department? Earlier this month, it gave a straight answer to a written question. When the Department was asked for the real value of the retirement pension in today's prices in 50 years time, it replied that it would be 75p higher than now. Will he confirm that he is again asking pensioners to accept 75p, but that this time they have to make it last for 50 years?
What sense does it make for the pension, which is supposed to be the foundation of income in old age, to increase by only 75p above inflation over half a century, when the economy will double in size?
Mr. Smith: I thank the hon. Gentleman for his welcome, if such it was, for the statement. He referred to the section on extra help for recipients of JSA. Extra help is being provided for those whose application for incapacity benefit has been turned down, and who will go on to JSA. They will be able to access early the help that the new deals provide. I hope that he will endorse that. The hon. Gentleman referred to the level of the increase. It is the inflation increase, fair and square. He also referred to the levels of increase in pensions, but, as I told the hon. Member for Havant, the cumulative impact of our pension increases, over and above inflation, is very substantial—as, indeed, it is for the poorest pensioners in receipt of the minimum income guarantee. We are making real inroads into pensioner poverty, which is something that the hon. Member for Northavon (Mr. Webb) ought to welcome.
Mrs. Joan Humble: Will my right hon. Friend, in expanding the work of his Department in jobcentres, take into account the excellent work done in the community by organisations such as Progress Recruitment in Blackpool, a newly incorporated company that was

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previously an arm of local government? It is successfully getting people—often those with profound disabilities—into work, because it listens to what they have to say. It also listens to what employers have to say, and allays the fears of both. It matches people with appropriate jobs and offers them support so that their jobs are successful not only in the short term but in the long term. Will my right hon. Friend look at enhancing the work of such organisations?
Mr. Smith: Yes, indeed. My hon. Friend makes a good point, and I join her in congratulating groups such as Progress Recruitment on their work. There are important lessons to be learned from how the new deal for disabled people is working successfully, and from other initiatives being undertaken by voluntary organisations in the community. They will have a central role to play in the collaborative working that we envisage as a crucial part of the new pilot.
Mr. Archy Kirkwood: Will the Secretary of State confirm that there will, as usual, be a full debate on the uprating element of his statement? The contributions from the two Front-Bench spokesmen show that much needs to be discussed, and it would be beneficial if that could be organised before Christmas. As Chairman of the Work and Pensions Committee, I welcome the welfare-to-work aspects of his statement. The Committee is about to undertake an inquiry into that very important subject, on which I would like to ask the right hon. Gentleman two questions.
First, the Department's own research on moving from sickness into work, published in 2001, showed that it was time to examine the conceptual basis of incapacity benefit, and the way in which it is assessed. Will the consultation that the Secretary of State has launched include measures that consider the essence of how incapacity benefit is measured currently?
Secondly, the Secretary of State mentioned encouraging employers to manage health at work more actively. Does he agree that we need to use stronger language than that? If we are to create new vacancies for people who are not in good health, or who are disabled, it will take real encouragement and some pretty hard persuasion by the Government, using all their means, to establish vacancies for which disabled people can apply.
Mr. Smith: On the hon. Gentleman's first question, I expect the debate on the order to take place in the normal way. On his subsequent questions, I said in my statement that we needed to shift further the philosophy of the tax and benefit system from one based on what people cannot do to one based on what they can do. I take it that that is the sort of conceptual shift to which he referred. In the pilot areas, we shall build on the experience of the personal capability reports that will provide essential information to feed into the assessment, through which clients, jointly with Jobcentre Plus, medical advisers and those organising their rehabilitation will need to craft the right sort of programme to help them to move into jobs. There will, of course, be lessons to be learned from that process.
Of course, we need to do more to encourage employers. As I said in my statement, there is a good business case here as well. We should not miss any
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opportunity to put across the message that it is in a firm's own interests to have an enlightened recruitment policy, as many that have successfully recruited disabled people, or people who have suffered illness, will attest. In addition, as part of the approach that I have outlined today, the Health and Safety Executive is working with Middlesex university on a good practice guide to help employers to make the most of this kind of opportunity.
Mr. Terry Rooney: I welcome the thrust of the statement, but one of the biggest barriers preventing those with disabilities, especially mental disabilities or illnesses such as epilepsy, from getting work is the attitude of employers. What work will my right hon. Friend do with his colleagues in the Department of Trade and Industry to challenge those prejudices, which, sadly, apply to all too many employers?
Mr. Smith: I am glad that my hon. Friend welcomes our proposals. We shall continue to work closely with employers through, for example, the Disability Rights Commission, to promote the responsibilities imposed by the Disability Discrimination Act 1995, including those that will apply to small as well as large firms from 2004. We shall also work through the National Employment Panel to encourage and support employers who recruit more disabled people.
Mr. Nick Gibb: As the Secretary of State knows, when it comes to the quite proper allocation of further resources to the uprating of benefits and new resources to welfare-to-work schemes, his Department's accounts have been qualified owing to the huge amount of social security fraud; yet only 5 per cent. of fraudsters are prosecuted. Has he any plans to change the policy?
Mr. Smith: We take every opportunity to bear down on fraud, and to minimise the amount of fraud. As for the qualification of the accounts, we are working closely with the National Audit Office to end the present situation.
Ross Cranston: I welcome the changes in incapacity benefit administration. As an old industrial area, my constituency contains a significant number of men over 50 who will be helped by the new scheme. My obvious question is this: when will it be rolled out nationally so that Dudley can benefit?
Mr. Smith: The first three pilots will begin in October next year, and three more will follow in April 2004. We shall need to learn from that experience what works best and how cost-effective the programme is before deciding on when to roll it out, but the new approach promises a great deal, and I hope that we shall be able to extend it more generally.
Mr. Andrew Mitchell: Today's statement ranged more widely than the traditional uprating statement that the House has come to expect at this time of year. Along with outside bodies that take an interest in these matters, we shall have to examine the Secretary of State's words carefully to ensure that what he has proposed will actually happen.

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May I invite the right hon. Gentleman to answer the question posed by the shadow Secretary of State about the timing of the Child Support Agency reforms? May I also point out that his proposals for incapacity benefit are almost identical to those in the last Conservative party manifesto? Why does he not go the whole hog and introduce a proper integrated system?
Mr. Smith: Ours are consultative proposals, and we shall work closely with outside organisations. We shall listen to their comments, and make sure that what is implemented works well. As for the timing of the child support reforms, I wrote to all Members in September updating them on the progress of the testing of the new system. I cannot say more today, but I assure the House that, as soon as I can say when the new system will be operating, I shall seek to make a statement here.
I was not aware of a resemblance between our proposals and those of the last Conservative Government. If I had been, I might have expected a warmer welcome from Conservative Members today.
Mr. James Plaskitt: I particularly welcome my right hon. Friend's emphasis on the importance of piloting reforms such as these. As he will know, the ONE reform was piloted very successfully in my constituency. One thing that emerged then was the advantage of targeting and tailoring services according to the needs of individuals. Will that approach be extended to my right hon. Friend's reform of incapacity benefit?
Mr. Smith: I thank my hon. Friend for his welcome and, like him, I think that there are important lessons to be learned from the ONE pilots. Indeed, I was pleased to visit the office in his constituency when the ONE pilot was being established there. The approach needs to be individually tailored, drawing on the personal capability report as well as medical advice and advice from other occupational health specialists to ensure that we meet the needs of the individual. The barriers that people face, whether of confidence, skills or health, are very individual and the programme needs to be individually tailored.
Mrs. Angela Browning: Will the Secretary of State take another look at how welfare to work impacts on the more able end of the spectrum of those with learning disability and those with ongoing mental health problems? He will understand that a rather different approach is required, because they are not necessarily people who have had something wrong with them or have fallen sick and recovered. They need time. In that context, will he re-examine his changes to the therapeutic earnings rule and how it affects those people? I seek for them not jobs that are just make-work schemes, but real, paid jobs. That extra time would make a difference to them.
Mr. Smith: The hon. Lady makes some good points, and we shall continue to develop our policies in ways sensitive to those whom she describes as being at the able end of the spectrum. That is very important indeed.
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In relation to the therapeutic earnings rule, it is important to understand that when an adviser or health support worker thinks that there is continuing health and personal development benefit from that work experience, it can extend beyond the initial 26 weeks and the second 26. We need also to consider those matters in line with what the hon. Lady says about the potential of those at the able end of the spectrum to see what we can do to enable them to move to self-sustaining employment. I would have thought that the right support and training for people who have been taking advantage of therapeutic earnings for up 16 hours would help them to move beyond that, extending opportunity rather than denying it. That is what the pilots are intended to provide.
Dr. Jack Cunningham: Should not everyone welcome the important benefit upratings that my right hon. Friend has announced today and the changes in procedures that his statement envisages? Will he be rigorous, however, in ensuring that the Government's intentions and our constituents are not let down by information technology system failures, on which Whitehall, sadly, does not have a good record? Is it not obvious that, with 2.7 million people receiving incapacity benefit, many tens of thousands of them would like to work if the opportunity were there for them? I therefore welcome his imaginative proposals to give those people help, professional guidance and encouragement to rejoin the labour market. But do not they also need a new deal from employment and recruitment agencies to ensure that outdated prejudices against people with disabilities are swept away once and for all?
Mr. Smith: Yes, indeed. I thank my right hon. Friend for his welcome and the points that he makes with characteristic eloquence. He is right about changing attitudes—that is one thing that we hope the initiative will do. It is perhaps not sufficiently realised that, every year, some 150,000 people move off incapacity benefit and into jobs. Reference has been made to the new deal for disabled people, which has already helped 14,000 people off incapacity benefit and into work, so with the extra support and the tailored advice, many more people, as he advocates, can progress to jobs. As to sorting out IT system failures, my Department is working night and day to get it right.
Hywel Williams: I also welcome the moves to help people with disability back to work, representing as I do an area of low economic activity that contains a large number of people with disabilities.
May I ask the Secretary of State about areas of high unemployment and extreme rurality? The statement talks about an era of full employment and a tight labour market, but that certainly is not the case in parts of the UK, parts of Wales and parts of my constituency. How will the pilot schemes address such questions in areas of high unemployment? On areas of extreme rurality, he referred to bus passes. According to the 1991 census, in my area at least, about 2 per cent. of the working population travel to work by bus. People with a

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disability will find it difficult to travel to any jobs that might be appropriate. How will the scheme in the six areas address those questions?
Mr. Smith: I acknowledge the hon. Gentleman's point about the challenge not just on unemployment as conventionally recognised, but on labour market inactivity, especially in some parts of Wales. I very much hope that we will be able to operate one of the pilots in Wales precisely so that people trapped in inactivity can have a greater opportunity to get into jobs. The initiatives that we are already implementing through the action teams in the most disadvantaged areas have a lot to commend them, and I would certainly urge strong local collaboration between Jobcentre Plus and the health and occupational specialists, and with employers. There are vacancies even in areas of high unemployment, and it is crucial for people who have been trapped out of the labour market to be able to access them.
The discretionary support available for travel is not confined to bus passes. I gave that as an illustration. It can help with travel to work by other means.
Mr. George Foulkes: May I urge the Secretary of State to ignore the Jonahs on the Opposition Front Benches, and instead commend the excellent work that is already being done to get disabled people into work by the skilled professional advisers in jobcentres? Will he expand on the work of the action teams for jobs, such as the one in East Ayrshire, which is successfully providing minibuses for groups to get to work, and helping people with driving lessons so that they can pass their test and drive to work? All those teams are doing extremely well. Will he consider rolling out the action teams on jobs initiative to other areas, such as Girvan—an area you know very well, Mr. Speaker? Will he also confirm that one of the new, excellent pilot schemes will be in Scotland?
Mr. Smith: Yes, I hope that one of the pilots will be in Scotland. I thank my right hon. Friend for his remarks about the staff in jobcentres and elsewhere who are doing such good work in helping disabled and other unemployed people into jobs. I shall listen to what he has to say as we carry forward this initiative on action teams for jobs. I shall consider carefully his recommendation for it to be extended.
Mr. Gary Streeter: If the proposals that the Secretary of State has announced have the intended impact, they deserve to be supported. However, he seemed to be establishing a new battery of special advisers, experts and others who will help disabled people to go from welfare into work. How many new advisers does he anticipate will be required for these extensive measures, and what will that cost?
Mr. Smith: As I just said, we shall draw on the expertise that is already available from disability employment advisers. We shall need to recruit and train more advisers in the pilot areas. That will have to be a collaborative effort in those areas as the initiative gets under way. The hon. Gentleman asked a sensible question about costs. It shows the scale of our commitment to this initiative that provision was secured
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through the spending review for extra resourcing. There will be £15 million next year and £41 million in each of the two succeeding years.
Mr. Tom Levitt: I have no doubt that the credit of up to £40 a week for people coming off incapacity benefit into work and the grant of up to £300 for the one-off costs of going into work will be a tremendous help to people who would otherwise find that transition difficult. Will the Secretary of State help me with regard to disabled people who could work but perhaps not full-time? I am thinking of severe asthmatics and people with arthritis or ME. My constituent Joe Bush is a severe asthmatic. He is a few years from retirement, and is allowed to earn up to £66 a week on top of his incapacity benefit, but only for 26 weeks, after which he must start from scratch. What is there in this package for people like Mr. Bush, who are capable of work, but not full-time, regular work?
Mr. Smith: The provisions for therapeutic earnings are not limited to the first 26 weeks. Where it is clearly to the benefit of the client, as judged by a medical professional or by their adviser, that period can be extended. Moreover, that is one of the reasons why, in the pilots that I have put forward today, the back-to-work credit—the extra £40 a week—would not depend on someone working full time and would be available to someone working more than 16 hours a week. That greatly increases the gains from working for someone with a disability moving into a job, even when they cannot work full-time.
Paul Holmes: I welcome some of the Secretary of State's comments about helping people who are on incapacity benefit back into work where that is appropriate, but the emphasis must be on "where appropriate". I should like to ask two questions in relation to that. First, he talks of compulsory interviews in the pilot areas for all but the most severe cases. What criteria will be used to determine those cases? This year, we have seen successful appeals against decisions to withdraw incapacity benefit increase from more than 40 per cent. to a massive 53 per cent. Obviously, people concerned do not want to be forced back into work when they are not ready or capable. Secondly, all the surveys undertaken by the Government and by disability organisations indicate that 40 per cent. of people with disabilities positively would welcome the chance to get back into work if they could overcome the obstacles. Many of the things that the Secretary of State said will help in that area, but why not, rather than beginning with blanket back-to-work interviews—
Mr. Speaker: Order. I have allowed the hon. Gentleman two questions. He is doing well.
Mr. Smith: I thank the hon. Gentleman for his supportive remarks. It is not a question of forcing anyone to undertake work. We will be using the existing provisions that can make work-focused interviews mandatory, and, in excepting the most severe cases, we will be guided by the personal capability report. That is precisely something on which we wish to consult as we develop the proposals, which is one of the reasons why

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these are Green proposals today. We want to learn from those in the field, the wider public and those who represent disabled people.
Mr. Chris Pond: I welcome my right hon. Friend's determination not to write off people with disabilities, as occurred before 1997. In addition to the welcome measures to help disabled people into work, will he make sure that there is continuing support so that they can continue in work and do not find themselves back on benefits soon after getting into employment?
Mr. Smith: I thank my hon. Friend for his support. We shall examine how we can ensure that the support does not stop the minute someone starts work. That support must continue, so that they have that back-up, which is an essential part of the rehabilitation process.
Mr. John Bercow: Why is the Secretary of State so timid and coy in failing to appreciate the significance of the problem highlighted by my hon. Friend the Member for Havant, namely that the complexity and intrusiveness of means-tested benefits are such that one third of pensioners do not claim them? Will he recognise that that is an urgent problem that needs to be urgently addressed?
Mr. Smith: I am not aware that I was being coy. As the hon. Gentleman recognises, there is a balance to be struck between simplicity on the one hand and ensuring that available resources are used most effectively to help the poorest on the other. We have been doing that; notably in respect of the huge inroads that are being made into pensioner poverty, precisely because we have brought in the minimum income guarantee and increased it in real terms by so much.
Mr. David Kidney: I welcome the benefit upratings, especially the above-inflation increases for the state retirement pension, the minimum income guarantee and statutory maternity pay. In the case of older people on benefit who want to return to work, does my right hon. Friend also recognise the problem of age discrimination by some employers? If sticks and carrots can be applied to those employers, will he
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consider bridging the gap between the current voluntary code of practice and the legislation that will not be with us until 2006?
Mr. Smith: One of the programmes that we have learnt from in devising the pilots is the new deal 50-plus, where the back-to-work credit was such a success in supporting so many people back into jobs. I am aware of the problem that my hon. Friend refers to. It is why we are running the age positive campaign. Since we launched that, the proportion of job advertisements in which an age limit is specified has more than halved. Moreover, the Government are committed to bringing forward measures to tackle age discrimination through legislation.
David Cairns (Greenock and Inverclyde): A recent meeting of the all-party group on brain injury heard evidence that entirely substantiates my right hon. Friend's claim that many people with brain injuries want to work and are capable of working but lack the necessary advice and support. Can he reassure me that, among the specialisms of the new advisers that he has announced today, there will be expert knowledge on the many complex issues facing people with acquired brain injuries?
Mr. Smith: Yes. That is precisely the sort of expertise that we have drawn on in bringing forward the proposals. I referred in my statement to the medical evidence on these matters. There is the Acheson report and work by Waddell and Burton on occupational health guidelines for the management of back pain. Others have expertise in head injuries. Increasingly, the evidence shows that, in the right circumstances, the right progress back into work helps people in terms of health as well as of self-esteem. We shall draw on the expertise.
Huw Irranca-Davies: Does my right hon. Friend recognise that the approach tailor-made to the individual is exactly the right approach but extremely resource-intensive? Can he build on the action team for jobs and avoid the aberration where one community in one ward benefits from it, yet one equally deprived next door cannot? It has released pent-up demand and is thoroughly to be welcomed. Can he try to avoid the aberration of the postcode lottery?
Mr. Smith: Yes, except that in bringing forward pilots there will have to be boundaries to the pilot areas. I am not sure that all boundary problems will be unavoidable. We will try to do this as sensitively as possible, recognising the needs of local communities.

ASW Steel Mill
4.27 pm
Mr. Derek Wyatt: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 24, to debate a specific and important matter that should have urgent consideration, namely, the closure of the profitable ASW steel mill at Sheerness where 190 were made redundant last week and approximately 150 will be made redundant shortly.
Roger Oldfield acts for the receivers, KPMG. He said at an open meeting in the summer at Sheerness that we would find a buyer but thought that it was unlikely that ASW Cardiff would. Last Monday, he announced the reverse and closed ASW Sheerness.
Three elements about that decision concern me. First, during September 2002, there were four bids on the table: Caparo Industries offered to buy Sheerness. Hopewell Investments offered a similar deal. Ittifaq, a Saudi company, offered to buy Sheerness but the receivers set a condition that it could only sell the product called billets outside the European Union.That was because they had had a better offer from Celsa, a Spain-based steel company. Celsa offered the higher price; it offered to buy ASW Cardiff and some parts of the Sheerness mill.
The receiver's job is to extract the highest price for his list of creditors. No one appears to regulate what he does and though both plants have received Government assistance over the years, it seems that the Government are frozen out of the procedure once a receiver is appointed. That needs to be re-examined.
Secondly, ASW Sheerness is a modern plant with an outstanding management and work force. ASW Sheerness was not closed after the holding company went into receivership in the second week of July but its
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counterpart in Cardiff was. I am glad that the Office of Fair Trading has accepted an invitation from me to look at the Celsa deal.
Thirdly, during the whole period from July and throughout last week, I was in constant touch with Rhodri Morgan, First Minister of the Welsh Assembly, and a number of Welsh MPs, including my hon. Friend the Member for Cardiff, West (Kevin Brennan), my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael) and my hon. Friend the Member for Cardiff, North (Julie Morgan), as well as the Iron and Steel Trades Confederation. I know that they were also working with the Welsh Development Agency but here is the anomaly. In the south-east, we have a regional development agency the equivalent of the WDA, but it has little profile; it is called SEEDA. We also have a Government office for the south-east, called GOSE. Not one person from either of those offices was in touch with the ASW management or ASW workers at Sheerness: not one phone call, not one meeting-nothing. It is outrageous. I hope that the SEEDA chairman is carpeted and the chief executive of SEEDA offers his resignation, as they have badly let down my community. They are out of touch and out of sight. The south-east needs its own Minister, so that the management and work force that I represent have the same chances as our fellow citizens in Wales, Scotland and Northern Ireland.
I hope that you will agree, Mr. Speaker, to the adjournment of business to allow the House to discuss how we can best save ASW Sheerness and ASW Cardiff.
Mr. Speaker: Order. I have listened carefully to what the hon. Gentleman has said, and I have to give my decision without stating any reasons. I am afraid that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 24, and I cannot therefore submit the application to the House.

Points of Order
4.31 pm
Mr. George Foulkes: As you are aware, Mr. Speaker, question 6, from the hon. Member for Perth (Annabelle Ewing), was withdrawn earlier today, even though it was tabled only last Wednesday. Also, no Scottish National party MPs were present during the very important statement on pensions and benefits. Will you inquire into both those points, and ask why there has been such a lack of participation? Many of us from Scotland believe that they are only part-time Members.
Mr. Speaker: The right hon. Gentleman knows that I will not inquire into these matters.
Andrew Selous: On a point of order, Mr. Speaker. In view of today's widespread publicity of allegations that the Government blocked an offer to the firefighters in the summer, will you tell the House whether the Deputy Prime Minister has indicated to you that he might wish to come to the House to comment on his statement of 22 October? In it, he said:
"I did not interfere in any way with the firefighters' negotiations." —[Official Report, 22 October 2002; Vol. 391, c. 129.]
Mr. Speaker: I think that the Deputy Prime Minister is busily involved in negotiations.
Mr. Gary Streeter: On a point of order, Mr. Speaker. At the weekend, there was an alarming breach of security at the naval base in Devonport, Plymouth, when two untrained amateurs
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were able to gain access to the base and clamber all over a nuclear submarine. Given that we are supposed to be in a heightened state of security, may I ask whether you have received an indication from the Secretary of State for Defence that he wants to make a statement to this House today about this awful breach of security, and to reassure the people of Plymouth that security will be upgraded and that such an incident will not occur again?
Mr. Speaker: That is not a matter for the Chair.
Mr. Simon Thomas:Further to the point of order raised by the right hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), Mr. Speaker, will you bear in mind—as I am sure you will—our discussions with your office about the establishment of a joint SNP-Plaid Cymru parliamentary group, the fourth largest parliamentary grouping in this House, and the fact that members of Plaid Cymru can speak on behalf of SNP members as well? [Interruption.]
Mr. Speaker: Order. I am just about to tell the hon. Gentleman that that is not a point of order or a matter for me.

BILL PRESENTED
  INDUSTRIAL DEVELOPMENT (FINANCIAL ASSISTANCE)
  Secretary Patricia Hewitt, supported by The Prime Minister, Mr. Secretary Prescott, Mr. Chancellor of the Exchequer, Mr. Secretary Murphy, Mrs. Secretary Liddell, Secretary Peter Hain and Alan Johnson, presented a Bill to amend section 8(5) of the Industrial Development Act 1982:And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 5].
Orders of the Day
  Debate on the Address

    FOURTH DAY
    Order read for resuming adjourned debate on Question [13 November],
    That an humble Address be presented to Her Majesty, as follows:
    Most Gracious Sovereign,
    We, Your Majesty's dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Foulkes.]
    Question again proposed.

    Economy and Trade and Industry
    4.33 pm
    The Chancellor of the Exchequer (Mr. Gordon Brown): At the heart of the Queen's Speech are policies for stability, enterprise and fairness—policies that in the past five years have helped to build strong economic foundations and brought us the lowest unemployment for 25 years, the lowest inflation for more than 30 years, the lowest long-term interest rates for 40 years, and the lowest debt interest payments as a share of national income for nearly 100 years. These are policies for enterprise, stability and fairness that this Queen's Speech—and, later, the Budget—will reinforce, as we overcome the uncertainties since 11 September and the most difficult world economic down-turn for 20 years. Twenty other countries, accounting for 60 per cent. of the world's output, have been in, or are in, recession, while Britain, despite world uncertainties that are felt here, has continued to grow.
    In this debate on the economy and on trade and industry, my argument is that, in a world where we are more aware every day of both the opportunities and insecurities of globalisation, and the challenge constantly to upgrade our technology and skills, the best way forward for the British economy is, first, to hold firm to our policies for stability and not risk monetary or fiscal instability; and secondly, to continue to create new enterprise, new jobs and better services with reform, and to reject policies that would undermine investment, undermine our new deal for jobs, and undermine our commitment to make work pay.
    Mr. Steve Webb: There is one economic statistic about which the Chancellor is uncharacteristically coy: he never seems to mention the whopping great trade deficit. Does he believe that that is a problem, and if so, when will it be solved?
    Mr. Brown: The trade deficit rose to 4 per cent. of gross domestic product under the last Government. It is now around 2 per cent. of GDP. While it is obviously better when exports are rising faster than imports, the hon. Gentleman must recognise that world trade has virtually stalled over the past two years.
    I want to say something about our responsibilities in a more insecure world and to make two announcements. This is the first Queen's speech since the tragic events of
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    11 September. Over the past year, we have worked ever more closely with the United States of America and other authorities not only to confront the threat of terrorism but to cut off the finance that makes it possible. I can tell the House of the progress that we have made, starting with the $100 million of assets of more than 100 organisations and 200 individuals suspected of terrorist financing that have been frozen.
    The new terrorist finance unit has been passed 3,500 suspicious reports, and 600 have been referred to Scotland Yard. There have been 20 arrests in connection with terrorist fundraising, and 15 people have subsequently been charged. The first conviction for terrorist financing has taken place in the United Kingdom under the Terrorism Act 2000. As the House knows, police have acted swiftly against suspects here in London, with a substantial seizure of terrorist funds last week. Only yesterday, there was another significant seizure from an al-Qaeda suspect listed by the United Nations. Tomorrow, I will make a further announcement that adds to our list of individuals and organisations designated because they are suspected of financing terrorism. Next week, the US Treasury Secretary, Paul O'Neill, will visit Britain, and our common aim, working together, is to ensure that every financial centre in the world has measures in place to identify, and then stop the flow of funds to, terrorists. I believe that I will have the support of the whole House when I say that we must take all the steps necessary to intercept, root out and cut off all the sources of terrorist finance.
    As we insist on exchange of information not only to stop and track terrorist financing but to tackle money laundering and tax avoidance, I want to thank Jersey, Guernsey, the Isle of Man and the Caribbean authorities for their co-operation, and so that all countries are included, I can announce that we will do all that is necessary to ensure that the Cayman Islands joins the list of territories offering full exchange of information.
    Not only because of 11 September, but with events unfolding in Iraq, high oil prices, the problems that we know with the IT sector, the danger of contagion from further emerging markets where there is instability, and remaining major current account imbalances between major economies, the ongoing uncertainties facing the world economy are unprecedented in number and more widespread than at any time in our recent economic history.
    Of the 20 of the world's biggest economies that have been or are in recession, the US was in recession for three quarters of 2001, as was Germany, and Japan was in recession for most of last year, resulting in a contraction of output. The global economic background to this year's Queen's Speech, as for the pre-Budget report next week, is, continent by continent, throughout Europe, America and Asia, the first simultaneous world slowdown for almost 30 years. The G7 countries as a group are experiencing the sharpest annual reduction in growth since the recession of 1974 and the worst deterioration in their industrial activity since that oil crisis. As a result, there are the largest increases in Government deficits around the world since the series of figures began in the 1970s.

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    Beyond the G7 group, the sharpest contraction is taking place in world economic growth also since 1974, and world trade, which was rising by 13 per cent. two years ago, was at a standstill last year and is barely growing this year.
    Chris Grayling: Does the Chancellor believe that the situation in Germany is cyclical, or does he agree that there are also longer-term structural problems affecting that economy?
    Mr. Brown: I talked about this last week, when we debated the matter at Question Time. The Germans believe that their deficit will fall below 3 per cent. within the next two years. That is why they have announced today measures to cut their budget deficit and a rise in capital gains tax and said that they intend to deal with public expenditure. As I said last Thursday in the House, the stability and growth pact should take account of cyclical factors and investment. There is no doubt that countries with low debt to GDP ratios are in a better position to be able to borrow for investment. I believe that the stability and growth pact needs that reform to enable a cyclical problem to be taken into account. The right hon. and learned Member for Rushcliffe (Mr. Clarke) might wish to comment on the pact, as he was one of those who negotiated it and is probably the only Member of Parliament who now supports it.
    I believe that most hon. Members will agree that in this period of continuing uncertainty, we should continue to steer a course of stability, be vigilant to the risks, maintain strong fundamentals, and be ready to act decisively with our international partners with the toughness and determination to take the right long-term decisions. Here in Britain, we will not be diverted from that tough and disciplined approach. There will no risks taken with inflation and no attempt at the old quick fixes, and just as we must have continued discipline on pay in the private sector, it is essential that there be continued discipline in our approach to public sector pay.
    When the issue is how we can maintain growth and employment in an uncertain and unstable world, it is exactly the wrong time, with the wrong claim, pursuing the wrong methods, to demand wage rises that are so much higher than inflation that they would, if they were repeated across the public sector, lead to a rise in the wage bill that no prudent and responsible Government could be expected to finance. Every additional 1 per cent. on the nation's pay bill costs an additional £1 billion. To have to pay excessive wage rises would be at the cost of jobs or other investment in public services. That is why we must have the strength to take the right long-term decisions for our country.
    This morning, my right hon. Friend the Deputy Prime Minister met the firefighters leader to discuss safety issues. Those discussions were encouraging and we hope that the local authority employers and the firefighters will return to the negotiating table this week to discuss pay and modernisation. Every pay negotiation demands,
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    responsibility on all sides, and every pay rise must be related to productivity so that investment is matched by reform.
    Mr. David Cameron: In the light of what the Chancellor has just said and what the Governor of the Bank of England said yesterday on "Breakfast with Frost", will the right hon. Gentleman explain why ACAS workers—who I am sure will be busy—have had a pay rise of 17 per cent., Welsh Assembly staff have had a pay rise of 22 per cent., and Ministry of Defence staff have had a pay rise of 20 per cent.? Why did we not hear such fulminations when they were happening?
    Mr. Brown: Overall rises in public sector pay over the past five years have been less than rises in private sector pay. The ACAS settlement was to make good problems that arose from the application of the Equal Pay Act 1970. Every pay rise within the public sector has to be related to the needs of the sector and productivity—but we take no lectures from one who was a special adviser to Lord Lamont when he was Chancellor of the Exchequer.
    It is by holding fast to our economic disciplines that Britain, despite the world slowdown, has not only achieved low inflation and low interest rates, but managed to combine low inflation with low unemployment—indeed, the lowest unemployment for 25 years. Today, Britain has the lowest unemployment among men since 1979, the lowest unemployment among women since 1976, and the lowest long-term and youth unemployment since 1975. The International Labour Organisation unemployment rate is 8.3 per cent. in Germany, 8.6 per cent. in France, and 8.3 per cent. in the euro area as a whole, while in the United Kingdom it is 5.3 per cent.—more than 50 per cent. lower. Today, unemployment in Britain is lower than in Europe, Japan and America together for the first time since the second world war.
    I believe that we are better placed because our monetary regime was designed not only for times of high growth, but for times of global difficulty as well. Because that regime has established credibility by meeting our inflation target year after year, the Bank of England has the capacity to make the right decisions at the right time for the long-term interests of the British economy. In the same way, it is because our fiscal rules are set for the long term that our fiscal policy can adjust to the economic cycle, with the automatic stabilisers able to play a full role. Fiscal and monetary policy can respond because we have kept within the sustainable investment rule, which demands that debt be less than 40 per cent. of GDP.
    It is precisely because we have created a fiscal and monetary regime that targets inflation with a symmetrical target, works within clear rules and requires low debt before investment, and is therefore rigorous and disciplined, that during the recent downturn we have been able to respond to the world economic cycle, its risks and uncertainties. Although not immune to the downturn, we are one of the few countries to have averted recession in the past few years. The figures show that in a global downturn deeper and more serious than that of the early '90s, Britain is doing better than the rest of the world, whereas in the early `90s, faced with a lesser contraction in global growth and output, Britain did far worse.

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    Let us remember that in that earlier downturn the world economy continued to grow but we contracted by 1.5 per cent. Today, with the world in a worse growth trajectory, we continue to grow. Indeed, last year, growth in the UK was the fastest in the G7 countries. Instead of being, as in previous downturns, first in and last out of recession—the country that suffers most—we have continued to grow.
    Let us remember also that, in the last world downturn, interest rates were above 10 per cent. for three years and at 15 per cent. for an entire year. No one will ever forget the 250,000 mortgage repossessions or the negative equity that affected 1.5 million homeowners and, for many, lasted nearly a decade. It is because we have consistently achieved low inflation, which averaged 6 per cent. under the previous Conservative Government but is 2.3 per cent. under Labour, because debt has reduced from 44 to 30 per cent. of GDP and because we have achieved lower interest rates, that the UK, spared 10 per cent. inflation and 15 per cent. interest rates, is in a stronger position to maintain our economy, sustain high employment and meet our commitments to health, education and the public services.
    Mr. Jonathan Djanogly: The Chancellor has repeatedly referred to increased employment, but is it not the case that it is the public sector that has been growing, while the private sector has had massive job losses?
    Mr. Brown: No, both the public and private sector have been growing over the past year, and the vast bulk of the 1.5 million jobs created in the economy in the past five years are in the private sector. I should have thought that the hon. Gentleman would be the first to congratulate us on that.
    Mr. Patrick McLoughlin: The Chancellor mentioned negative equity and the problems that it causes. Does he expect to see negative equity in the property market in this country in the next two years?
    Mr. Brown: It is certainly true that house prices, as a share of income, have risen a great deal, but it is also true that because interest rates are low, mortgage rates, as a share of the income of people buying houses and of those who already have houses, are lower than at other times. Whereas, in the early 1990s, mortgage payments were about 36 per cent. of the average income of a house buyer, they are now about 14 per cent., which is why people have been in a position to make their mortgage payments.
    Mr. Kenneth Clarke: The Chancellor is supplying many hostages to fortune. Had he forgotten, when he replied to my hon. Friend the Member for Huntingdon (Mr. Djanogly), that in the third quarter of this year the number of full-time jobs in the private sector fell by 72,000?
    Mr. Brown: The right hon. and learned Gentleman cannot deny that 1.5 million jobs have been created in the last five years and that half of the jobs created in the
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    last year are in the private sector. At the same time, we have the lowest claimant unemployment that this country has seen for 25 years.
    I listen carefully to the right hon. and learned Gentleman because his contributions give an added dimension to Tory party thinking, given that he normally disagrees with his Front-Bench colleagues, and I have followed carefully what he has been saying over the last few years. He said in 1997 that he was against the independence of the Bank of England and he predicted that there would be a recession. He then said that we were wrong not to keep to the spending rules when we cut debt so that we are in a position to borrow at times that are more difficult for the economy, and he now says that our spending is unacceptable. It seems—this may give comfort to the shadow Chancellor—that on every major issue since 1997 the right hon. and learned Gentleman has been wrong, and he is wrong, of course, in being the only person in the past week to come out in favour of the existing interpretation of the stability pact.
    Mr. Kenneth Clarke Mr. Kenneth Clarke rose—
    Mr. Brown: I will give way once more so that the full views of the Conservative party are represented.
    Mr. Clarke: I shall refer to some of the inaccurate descriptions of my forecast when I get the chance, if I catch your eye, Mr. Deputy Speaker.
    The only reason why the Chancellor is defending the growth and stability pact is that he does not want to raise taxes before the next election, so the only criticism of my forecast may turn out to be its timing, which could be extremely embarrassing for him when tax and spend on the present scale finally comes home to roost.
    Mr. Brown: In 1997, the right hon. and learned Gentleman said:
    "Gordon Brown's claim that he could control public spending is beyond belief. Hell will freeze over before Gordon Brown could control spending."
    We kept to our two-year spending guideline and we maintain the view that I have expressed continuously since 1997: the stability pact, which, unfortunately, the right hon. and learned Gentleman must take some credit for negotiating, must be reformed to make it more consistent with the needs of the economic cycle—which, many people now accept, is affected by what is happening in Europe—with the need to recognise investment as an important part of public spending and with the need to recognise that countries such as ours with low levels of debt, compared with others with high levels of debt, are in a position to borrow, whereas others are not.
    In the last world downturn in the early 1990s, employment fell by 3.5 per cent, and unemployment rose by almost 1.4 million. Today, as I have said, employment has risen, with 1.5 million more jobs since 1997. The record is undeniable—world conditions are worse now than in the early 1990s, but Britain is doing better. When world conditions were relatively better in the early 1990s, Britain did not just relatively worse, but decisively worse.

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    Labour has attacked the previous Tory Government's record. The Liberals, of course, continue to attack their record. Home owners and industry have attacked it, and so have the British people. I watched the Conservative party conference, where Tories were attacking it. It was even attacked by the Tory party chairman and the Tory leader, or should I say the current Tory leader? In an interview with The Sunday Telegraph on 6 October—[Interruption.] I think that the Opposition should listen to their own leader. Speaking about the early 1990s, he said that
    "businesses went to the wall, we broke our pledge on taxes, there was negative equity in homes, the public felt hurt. Then we lectured them, and we seemed arrogant. We said it was all your fault, not our fault—you are the problem, not us…they still remember that we were in power, and that is what we left them with."
    So who are the guilty men, and where are they now? Where was the shadow Chancellor when all that was happening? He held three Cabinet posts, but perhaps he did not attend Cabinet meetings. The Tory chairwoman has said:
    "You know what some people call us—the nasty party".
    To whom was she referring? When she said that Tory Ministers were unrepentant and unattractive, whom did she have in mind? She said that the previous Government were arrogant. Is there a specific exemption for the shadow Chancellor because he has been so humble? The current Leader of the Opposition said that the previous Tory Government were uncaring, but was not the shadow Chancellor Employment Secretary when unemployment went up by 1.5 million, and did he not destroy the employment programmes that were in place? The Tory chairwoman said that the previous Government were incompetent and broke their promises, but was it not the shadow Chancellor who, as Employment Secretary, was reporting every month on inflation, which rose to 10 per cent., and interest rates to 15 per cent.?
    Was it not the shadow Chancellor who had ministerial responsibility for financial services when there was pensions mis-selling? Was he not also Home Secretary? Under the Tories, crime doubled. The Tories complain that the last Government were hectoring and lectured people, but was it not the shadow Chancellor who, as Minister for Local Government, told us—indeed, insisted—that the poll tax that he was introducing was clear, simple and fair? The record that is being denounced by the Tories' current leader is the record of the poll tax-introducing, inflation-raising, unemployment-creating, pensions mis-selling, crime-doubling shadow Chancellor, so it is difficult to take lectures from him.
    Now, the shadow Chancellor is showing the same good judgment about the economy. He says that Britain is
    "less well placed to weather any world economic slowdown",
    and that the British economy is
    "less able to withstand the dreadful events of September 11th and their economic consequences".
    However, I have just given the figures for 20 countries in recession and for Britain's continued growth.
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    Since 1997, every shadow Chancellor has made forecasts of gloom. We had four shadow Chancellors before the right hon. and learned Gentleman, all of whom predicted recessions. It was not the recessions that came and went—it was the shadow Chancellors. Now we have a fifth shadow Chancellor predicting the worst for the economy—I just wonder what the sixth will say. I ask the right hon. and learned Gentleman and his colleagues on the Front Bench: what is Conservative policy on monetary and fiscal matters? Does anyone know? Does anyone care?
    During the 1980s and 1990s, when other countries were making decisions on central bank independence, the Conservatives could have made the Bank of England independent. Even after 1997—even after we had made the Bank of England independent—the shadow Chancellor continued to oppose the decision.
    What of the fiscal disciplines? I see that it is now the shadow Chancellor's argument that ours are too lax, despite the fact that in a speech in April he said that neither of the Government's fiscal rules
    "is entirely new. The golden rule was anticipated in Ken Clarke's last budget document …the origins of the sustainable investment rule can be traced to Tim Congdon's 1976 proposal…that was incorporated into policy in the 1980s."
    In April, the right hon. and learned Gentleman was claiming authorship of the golden rule and other fiscal rules, but he now questions their validity.
    If the shadow Chancellor agrees with fiscal discipline, has he in mind another fiscal rule? What fiscal rules would the Conservative party follow? Would it go back to the balanced budget rule, for which the right hon. and learned Gentleman argued in 1997—a rule that would mean that we would have to cut billions of pounds from investment in education, health and other public services?
    Would the Tories follow the ideological rule, which reveals the truth about the shadow Chancellor and the Conservative party? That is the one that the right hon. and learned Gentleman set out when he stood for the Conservative leadership and received 23 votes in 1997, but has sought to keep quiet about since. He said:
    "For the past few years we have held real spending growth to 1 per cent. per year…We had planned to maintain that performance over the course of this Parliament."
    If he had got his way, spending by 2006 would have been £72 billion less than we plan it to be.
    Is the shadow Chancellor's fiscal rule the one that he also enunciated in 1997: that public spending should be cut to 35 per cent. of GDP? Let us remember what he said:
    "I believe our aim should now be to reduce the proportion of national output taken by the state towards 35 per cent…I believe that 35 per cent. is a realistic and attainable long-term goal."
    By the end of our spending round, that would mean £78 billion a year less—the equivalent of the entire UK hospitals budget. Each of those rules would mean massive cuts in our public services. That explains so clearly why the shadow Chancellor will not commit himself to matching our health and education spending plans.
    The Conservatives can visit housing estates, single-parent clubs and night shelters, and talk about compassion for the poor and how they are helping the

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    vulnerable and supporting public services, but if, as at the last election, they refuse at the next election to match us on education and health, we will ensure that they will have to spend all their time explaining which hospitals or schools will close and how many nurses, doctors and teachers will lose their jobs under their plans. We will pursue them into every constituency to explain what their plans will mean for British families and people across Britain.
    Chris Grayling: Perhaps the Chancellor can answer a question that has puzzled me for some years. He says that the policies that he inherited in 1997 were built on Tory economic and spending guidelines. If the policies were so fundamentally wrong, why has he spent five years talking about their virtues?
    Mr. Brown: I did not say that; I said that after 1997 we, first, made the Bank of England independent; secondly, we devised a new monetary regime that was based, unlike the Tories' regime, on a symmetrical inflation target; and, thirdly, we introduced new fiscal rules so that we could reduce the debt, which rose under the Conservatives, by not spending additional moneys over the first two years. The result is that we have cut debt, which had been rising under the Conservatives, from 44 per cent. to 30 per cent. of GDP. I should have thought that the hon. Gentleman would want to congratulate us on our prudence and the stability that we have tried to create for the British economy.
    Having created a platform of greater stability with clear monetary and fiscal rules—unlike those of the Conservative party—the next stage is to make Britain better equipped to face the new challenges of globalisation, with more competition, more business creation, more investment and a more skilled work force. So, in the Queen's Speech, we have matched last Session's Enterprise Act 2002 with measures that will open up competition, which will be in a water Bill; with measures that will reduce barriers to entrepreneurship; and with measures to reduce planning delays by introducing business planning zones, which will be in a planning Bill.
    At any point in the past 20 years, it was open to the Government of the day to make our competition authorities, like the Bank of England, independent and free of political influence. At any point, it was open to them to reform the insolvency laws. At any point, it was open to them to cut capital gains tax from 40p to 10p for business assets held for two years or more, to create a more favourable tax regime for capital gains than that of the United States. At any time over recent decades, it was open to the Government of the day to cut corporation tax from 33p to 30p, to create the lowest corporate tax in our history. I am pleased that it is this Labour Government and the Budgets that we have introduced that are pushing forward this agenda for business prosperity.
    At any time in the past 20 years, a Government could have reduced the tax on small companies. It was open to the previous Government to introduce a new flat rate and simplified system for payment of VAT to replace accounting for every VAT item, thus cutting form-filling for nearly 700,000 businesses. We should be pleased that it is a Labour Government who have reformed VAT, cut
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    the small companies tax rate from 23p to 19p and reduced the new starting rate to zero for 150,000 small companies.
    Andrew Selous: What does the Chancellor say about the statement from the Confederation of British Industry last week that the £47 billion that he has taken from British business is enough, and that if he goes any further, we will not have the money to pay for the services that he has been describing?
    Mr. Brown: The CBI welcomed what we achieved on stability and continues to do so, whereas it criticised the last Conservative Government every year. On tax, it is hardly surprising that the CBI, representing businesses, should press for less taxation of business, but I point out to the CBI, as I point out to the House, that we have reduced corporation tax from 33p to 30p, that the small business tax is now at 19p and that we have eliminated the 10p band, so that the first £10,000 of a small company's profits are not subject to taxation. In all these ways, including the cuts in capital gains tax, we are helping business. We should be pleased that it is a Labour Government who have cut corporation tax in this way, and in the Queen' Speech it is a Labour Government who are extending competition and introducing much needed planning reforms that will remove the need in many areas for detailed planning permission.
    These announcements are just the start. In the pre-Budget report, working in partnership with local authorities and regional development agencies, we will designate 2,000 new enterprise areas, so that we can encourage home-grown economic activity in areas that were formerly areas of high unemployment, by cutting the cost of starting up, investing, employing, training and managing the payroll for those businesses.
    At the heart of our response to the world economic downturn and the challenge of globalisation are policies for more flexible labour markets to raise employment and make work pay, and policies for family prosperity, including a child tax credit and a pension tax credit. I want to explain why, at every point, our policies are right for this country, and why we reject as wrong the policies of the Conservative party.
    When the previous Government were in power, longterm unemployment among young people went as high as 350,000. By contrast, it is now less than 6,000. What was an average of 500 per constituency is now an average of nine per constituency—single figures. This was the purpose and the achievement of the new deal, with 1.7 million participants, 830,000 young people and, for the long-term unemployed, more than 500,000 participants.
    However, this is not the time to relax. Instead, we must accelerate our efforts in pursuit of the goal of full employment in the longer term, not just in one region, but in all parts of Britain. Where vacancies exist side by side with large numbers of unemployed, we are introducing intensive targeted initiatives to help the unemployed back to work and to break the destructive culture summed up by the claim, "No one around here works", which damages areas and diminishes people's hopes. In pilot areas, we plan to test a more intensives

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    approach to tackle the worst concentrations of unemployment street by street and estate by estate. As we insist on unemployed adults and young people going back into work, we will identify the barriers to their employability, offer them training, advice and sometimes cash help, and link them to the jobs that exist in their vicinity.
    Yet the new deal, which has helped nearly 2 million men and women, has been opposed throughout by the Conservative party. The work spokesman for the Conservatives said:
    "We would not have had the new deal…we would not have had the windfall tax on the public utilities."
    He said that the new deal was
    "making no improvement to the job opportunities of young people."—[Official Report, 11 March 1999; Vol. 327, c. 522.]
    Mr. Djanogly: Will the right hon. Gentleman give way?
    Mr. Brown: I have already given way to the hon. Gentleman.
    The hon. Member for Havant (Mr. Willetts) also said:
    "The new deal has had no effect whatever."—[Official Report, 27 March 2000; Vol. 347, c. 53.]
    But let us remind Opposition Members of the effect: a 75 per cent. reduction in youth and long-term unemployment in this country. What is now the policy of the Opposition? Do they support the new deal or not?
    When the shadow Chancellor was Secretary of State for Employment, he cut the enterprise allowance scheme, jobstart and the job share programme. Even as jobs were being cut, he was cutting help for the jobless. The question is: do we want the Labour policy, which has created 1.5 million more jobs, or do we want the shadow Chancellor's policy as it was when he was Employment Secretary and 1 million jobs disappeared?
    The difference is not only about employment, but about making work pay. Our policy is to ensure that work will pay more than benefits, so we have introduced the working families tax credit and are now ready to expand it to make work pay. For the first time, next April, single persons and couples aged 25 or over without children will be eligible for in-work support that makes jobs pay. Couples with wages of less than £280 a week or £14,000 a year and single people with less than £10,000 a year will start to gain from that tax cut.
    In return for the responsibility to take up the opportunities that are available, the working tax credit fulfils our promise not simply to families with children, but to single people and couples without children, to make work pay by paying more to be in work than to be on benefits. We have introduced those changes on the foundation and building block of the national minimum wage—it could not have been done otherwise—which is now £4.20 an hour and covers 1.2 million people. Through the new chairman of the Low Pay Commission, we are now reviewing that rate.
    What is the Conservative policy on that issue? Let me read out what the shadow Chancellor said when we discussed the minimum wage while he was Employment Secretary. He said that it would
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    "wreck our economy…smash job prospects"
    and
    "add up to 2 million people to the ranks of the unemployed."—[Official Report, 9 July 1991; Vol. 194, c. 795–97.]
    He said that it
    "would mean increased inflation and maximum unemployment…and drive out investors."
    He later said:
    "The minimum wage is Labour's axe on jobs"
    and that it was
    "not just a threat to jobs: it would damage every indicator of economic performance. The minimum wage would raise inflation, reduce growth, undermine the value of the currency"—
    and that comes from the Conservatives. He also said that it would "send unemployment soaring". Of course, we know that he is an expert on inflation and unemployment. He said that a minimum wage would cost at least 1 million jobs. At least he got the number right; under the minimum wage, Britain has not lost 1 million jobs, but created them. Does he now admit that he got it wrong, and will he now accept the minimum wage?
    What does the right hon. and learned Gentleman's party have to say about tax credits? The Conservatives now oppose tax credits, yet tax credits and the integration of tax and benefit were introduced in the United States of America by Ronald Reagan. They are supported by President Bush, who has just raised the tax credit. Ronald Reagan said that it was
    "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."
    That integration of tax and benefits was supported by the Conservative party in 1974 and 1979. The former Secretary of State for Social Security, Norman Fowler, said that he was prevented from pursuing such a policy when he held that position. On the pension credit, he said only a few months ago in the House of Lords:
    "To be frank, I should have preferred it if my government had introduced the pension credit…It is long overdue, and my hope is that it will provide support for some of the most deserving people in this country."—[Official Report, House of Lords, 18 December 2001; Vol. 630, c. 165.]
    The shadow Home Secretary, one of the few people in the Conservative shadow Cabinet who is prepared to say what he thinks, said:
    "I think that some aspects of the Budget are admirable…aspects that should be welcomed include the general principle of transferring from one form of benefit to a tax credit."—[Official Report, 19 March 1999; Vol. 308, c. 1492.]
    The Leader of the Opposition opposes tax credits. He said:
    "we would cut the working families tax credit…saving us all money…stop wasting our time".—[Official Report, 19 October 1998; Vol. 317, c. 951.]
    We have a policy that was supported by the Conservative party in the 1960s and 1970s. Presidents Reagan and Bush also supported it. It is even supported by the shadow Tory Home Secretary. However, with the rightwards lurch of the Tory party, it does not have the support of the shadow Chancellor and the Opposition Front Bench. On the minimum wage and on tax credit, the Conservatives are completely out of touch with the people.
    Sir Peter Tapsell: I congratulate the Chancellor on his conversion to

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    Reagan economics, but will he follow the example of Reagan and start reducing taxes across the board instead of increasing them all the time?
    Mr. Brown: I remember that it was a Republican Administration who ran up the greatest deficit ever as a result of not being able to take the right decisions. The key issue is that we do not allow ourselves to return to the days of Conservative government of the early 1990s, when we had a £50 billion deficit—it rose to 8 per cent. of gross domestic product—that led to 22 tax rises, despite the promise that the Conservatives made at the election that they would never increase taxes. I am determined that we will pursue prudent and responsible public finances, even if the shadow Chancellor cannot begin to tell us what his fiscal rules will be.
    We shall announce the new level of the pension credit, which will be introduced in October. I can confirm that the winter fuel payment is being sent out now. The free television licence is worth £112 for the elderly. The shadow Secretary of State for Work and Pensions wanted to take it away from pensioners, but it will continue. For tomorrow's pensioners, my right hon. Friend the Secretary of State for Work and Pensions will shortly publish our Green Paper on pensions.
    The Tories would cut investment in education, and in every major public service. We know that in the modern economy we cannot afford to waste the potential of one child. Investment per school pupil will rise from just under £2,500 a year under the Conservatives to £5,000 a year on average per pupil—twice as much—by 2006. That requires 10,000 more teachers, 50,000 more classroom assistants, 20,000 schools renovated and the right to nursery education for not only every four-year-old but every three-year-old.
    The new resources that we will put in will be accompanied by reforms—for example, freedoms and flexibilities for head teachers through the direct payments that were introduced in previous Budgets; a reduction in ring-fenced funding; new incentives for successful schools; new specialist schools and city academies; a national roll-out of education maintenance allowances to persuade young people to stay on at school and get qualifications, even when their families do not have the income to support that; and further education reform under the paper that is to be published this week to increase opportunities for post-16-year-olds, including an expansion in the number of modern apprenticeships. We shall widen access to higher education. University reforms will be outlined by my right hon. Friend the Secretary of State for Education and Skills in the new year.
    Again, there are questions for the Opposition. They refuse to match us on education. They say that we are spending too much on it. How can they claim that it is not cost-effective for expenditure on education to rise to £5,000 per pupil when they are prepared to spend money on assisted places schemes for pupils to go to private schools that charge an average £9,000 a year? We say that it benefits the nation to invest substantially not only in some pupils at some schools but in every pupil at every school.
    Matthew Taylor: As it appears that each member of the Cabinet is to have a free vote on university top-up fees, will the right hon. Gentleman tell the House whether he believes that top-up fees are an acceptable way forward for higher education?
    Mr. Brown: I know that the Liberals will oppose every change that we even consider. Even on the Queen's Speech—I know that I share common ground with the shadow Chancellor on this—the other shadow Chancellor has set out 19 new spending proposals. That is on top of the Liberal Democrats' calls since the previous Queen's Speech for an end to prescription charges and for free personal care for the elderly. I could go through the list.
    The hon. Member for Truro and St. Austell (Matthew Taylor) would like to support us on university funding because we are increasing it to 2006. We will honour our manifesto commitment on top-up fees, and he, like everyone else, will have to be patient and wait until the White Paper on universities is published. However, he cannot go on claiming that he will spend more and more on everything. At some time, the Liberal party, and the hon. Gentleman with his new, dignified title of shadow Chancellor, will have to face up to their responsibilities.
    Let us consider the national health service. To ensure that it has the resources that it needs, we announced in the Budget the largest sustained increase in funding in NHS history: 7.4 per cent. a year for five years. thus raising spending to £90 billion by 2008. We also announced that spending on social services would increase. As the Queen's Speech makes clear, resources will be matched by reform. That includes: NHS foundation hospitals with growing devolution of money; multi-year budgets; flexibility down to primary care trusts and hospital trusts; payment by results; new and streamlined audit and inspection, with new national regulators; an annual report to Parliament and local reporting. The public have a right to know how health service money is being spent.
    Mr. David Wilshire: Will the Chancellor give way?
    Mr. Brown: I have given way enough.
    Reform and investment will reduce waiting lists and times. I believe that the British people will listen to what we say about taxation to pay for the NHS. Like us, they will agree to put public services before tax cuts; like us, they know that a properly funded NHS through general taxation is the best insurance policy in the world. It is clear that the difference lies between those of us who want to invest in the NHS and public services and those who want to introduce and subsidise private medicine.
    Let us consider Conservative policy again. In the general election campaign, the Conservatives said that they would match us on spending on hospitals and the health service. After the election, they decided that that was too moderate and left wing. Now, they refuse to match us on health service spending. Worse, they prefer subsidies for private medical insurance and subsidies for private operations to spending on the NHS.

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    How would the shadow Chancellor fund private insurance tax relief at a cost of at least £500 million? How would he fund subsidies for private operations at a cost of £1 billion? How does he square a precise and absolute commitment to spending public funds on subsidising private medicine with his failure to make any commitment to financing the NHS?
    Does not it say something about today's Tories that their first pre-election commitment is not to the NHS but to subsidising private medicine? They used to tell us that they could not give us their spending commitments because they would make no early decisions. After claiming for a year that they would not make spending commitments on health, they were prepared at their party conference to make them on private medicine but not on the NHS. There is no better illustration of the priorities of today's Conservative party. It is not that they cannot but that they will not announce their commitment to the NHS.
    It matters more to Conservatives to finance one person on BUPA than to fund the 50 million people who depend on the NHS. Dogma, not economics, leads them to deny the health service money. Let us remember the letter that the shadow Chief Secretary, who is present this afternoon, wrote to the shadow Chancellor a few months ago. It stated that the reforms that he proposed
    "will require a degree of charging for healthcare services…The reforms which we will propose…entail those who can afford it making some payment for healthcare services."
    Such a policy leads to vouchers, extra charges and privatisation. The Conservative party has again become the party of public spending cuts and privatisation. It has become the party that is not for but against the health service and public services.
    In the most difficult world economic circumstances, the Queen's Speech tells the country that even in exacting times, the Government will continue to steer a course of stability. We will reject the Opposition's policies for instability, unemployment, cuts in public services and undermining family and pensioner prosperity. Instead, we will pursue policies for a strong economy with employment opportunities for all, strong public services and a Britain that is enterprising and fair. I commend the Queen's Speech to hon. Members.
    5.19 pm
    Mr. Michael Howard: For the avoidance of doubt, I draw attention to my declaration in the Register of Members' Interests.
    It is no part of my attitude, unlike that of the Chancellor, to denigrate anything and everything that emanates from the other side of the House. I shall, therefore, begin by welcoming the announcement that he made on the financing of terrorism. We are at one with the Government on that issue, and we welcome the progress that has been made. Indeed, we look forward to more progress being made in that important endeavour.
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    This afternoon, we have once again heard a speech from the Chancellor that was a masterclass in complacency. It is the latest in a series; he made a very similar speech at the Labour party conference. Then, too, he tried to give the impression that all was for the best, in the best of all possible worlds. The moment he sat down, however, his spin doctors were scurrying around telling the world that his forecasts would not be met. Indeed, the private press briefing in advance of next week's pre-Budget report has already been going on for some time. Two weeks ago, the press were briefed that the Chancellor had told the Cabinet that he was running out of money, and no doubt his spin doctors are scurrying around briefing privately as we debate these matters in public this afternoon.
    Today, the Chancellor had stern words to say about public sector pay. Yesterday, the Governor of the Bank of England warned against a high pay settlement for firefighters, saying that wage inflation would
    "impact the whole of the economy",
    with "not just inflation higher" but "unemployment higher", too. He said that that would be "very damaging indeed". How does the Chancellor reconcile what the Governor said yesterday with those above-inflation settlements in the public services—referred to by my hon. Friend the Member for Witney (Mr. Cameron)—that have already been made? There have been increases for ACAS workers of 17 per cent. over two years, increases of 22 per cent. over three years for the staff of the Welsh Assembly and increases of 20 per cent. over four years for civilian workers in the Ministry of Defence. The Governor of the Bank of England said that

    "other elements in the public sector …
    would say 'me too' and … that would be very difficult to stop if it were allowed to start."
    As it has already started, how does the Chancellor propose to stop it?
    The Chancellor also said something about the public services today; he did not say as much as he normally does, but he referred to them. Nowhere is the Government's failure more stark than in their failure to deliver on those services.
    Tony Cunningham: Will the right hon. and learned Gentleman give way?
    Mr. Howard: The hon. Gentleman will have to wait just a minute.
    In its 1997 manifesto, the Labour party said:
    "The level of public spending is no longer the best measure of the effectiveness of government."
    Now, all that the Government can do is to boast about the level of public spending.
    Tony Cunningham Tony Cunningham rose—
    Mr. James Plaskitt Mr. James Plaskitt (Warwick and Leamington) rose—
    Mr. Howard: I give way to the hon. Member for Workington (Tony Cunningham).
    Tony Cunningham: At a recent press conference, the Leader of the Opposition was asked about his commitment to matching Labour's investment in health and education. He said:
    "You cannot say I am committed to matching anything."
    Does the shadow Chancellor agree with that view? To use the Leader of the Opposition's recent words: yes or no?
    Mr. Howard: We have made this absolutely clear. I shall say it again for the hon. Gentleman and the Chancellor, and I hope that, this time, it will register with them. Our commitments on public spending will not come from the failing policies of this Government; they will come from our policies, which we believe will succeed and provide the country with the public services that it needs and deserves.
    Mr. Plaskitt: In that case, will the right hon. and learned Gentleman confirm that it is still his view that public spending should fall to 35 per cent. of gross domestic product?
    Mr. Howard: I have said this a hundred times before, too: no, it is not. When that statement was made, the proportion of GDP that was taken in tax in this country was 36 per cent., so that was not really as radical or dramatic a policy as the hon. Gentleman makes out. Since then, however, the burden has increased substantially, and we shall have to deal with the situation as we find it when we return to office, and not with the situation as it was in 1997.
    Although, understandably, Labour Members do not want to talk about their record on public services, that is what I want to talk about now. The Chancellor's recipe for reform could be found in his public service agreements. In his first spending review, he said that they were an "essential change", helping to ensure that Government would do what they did "to the highest standard". But what has happened? The Government have failed, or are on course to fail, to meet nearly 40 per cent. of the targets that they set in 1998 and 75 per cent. of those that they set in 2000—and that is if we accept their own assessment, and their own interpretation of success or failure, at face value.
    A helpful guide to the Government's interpretation can be found in today's edition of The Times. Under the heading "Avoid slippage by rolling forward", we read:
    "New Labour target talk (a glossary of the baffling terms used by Treasury target-setters)".
    We then find the following helpful guidance:
    "Slippage: A target that has not been met, but might yet be
    Rolled forward: Not the Lotto jackpot, but a way of keeping a target going past its sell-by date, rather than admitting it has been missed
    Not met: As near as ministers come to saying 'failed' or 'broken'; this passes for strong language
    Baseline not verified: Baffling term; basically means a target the terms of which are so unclear that it cannot be measured
    Not yet assessed: Crops up frequently, a way of keeping a difficult target going indefinitely
    Ongoing: A bit like 'rolled forward', only not so specific. Rolled forward carries a slight admission of failure; ongoing is target speak for 'we never said this would ever be finished'
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    On course: 'Stop asking so many awkward questions, we'll let you know when we're ready'
    Measure changed: Admission that the original target has never been completely revised
    Cannot assess: The Treasury's admission that a target is too baffling to make sense of
    Non-smart: A target that was never meant to be assessed, has no set timetable and no set definition."
    Some of the targets themselves beggar belief.
    Mr. Colin Challen (Morley and Rothwell): Will the right hon. and learned Gentleman give way?
    Mr. Howard: The hon. Gentleman will have to listen to this first.
    Some of those targets are just targets for the setting of targets. In 1998, for example, the Department of Transport was given the following target:
    "Establish in 1999 new targets for reducing road casualties from road accidents in the period up to 2010."
    To be fair to the Department, it met that target: it did indeed set a new target, which counts as a success. I fear, however, that the same cannot be said of the Lord Chancellor's Department. This is one of the targets set for it:
    "Reduce by 2004 the time from arrest to sentence or other disposal by reducing the time from charge to disposal for all defendants with a target to be specified by…March 2001."
    Well, March 2001 has been and gone. March 2002 has been and gone. But still no target has been specified by the Lord Chancellor's Department.
    What about this target for the Department for Culture, Media and Sport?
    "Facilitate and promote our competitiveness both at home and abroad of the creative industries."
    That target has been declared met. We do not know how this remarkable achievement has been assessed, what benchmark was used or what the criteria were for meeting the target; what we do know is that the achievement has not been repeated in respect of either the 2000 or the 2002 set of targets. Apparently the target was met in 2000, and that is that.
    Let me give one final example. This is a target set for the Treasury, by the Treasury, in 1998:
    "To ensure that all departments are set efficiency targets by the end of 1998, and to work with them to ensure that they meet their targets by their deadlines."
    That target, too, has not been met. Indeed, the Treasury now says that it cannot even assess it. Perhaps it should have thought of that before setting it in the first place.
    David Wright: Will the right hon. and learned Gentleman give way?
    Mr. Howard: Yes, I will give way to the last surviving defender of the Treasury's targets.
    David Wright: Will the right hon. and learned Gentleman tell us what the target for inflation was under the last Conservative Government? Was he pleased when it reached 10 per cent?
    Mr. Howard: I can understand why the hon. Gentleman will go to any lengths to try to divert us from

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    his Government's failed targets, but the people of this country are more interested in the Government's failure than the paths down memory lane that he wants us to take.
    Mrs. Angela Browning: Does my right hon. and learned Friend recall that, in 2000, the Government set a target to improve palliative care? They put £50 million behind it, but, two years on, a ministerial written answer to me given only this week says that it is disappointing that not a penny has yet been delivered to hospices to meet that target.
    Mr. Howard: I am grateful to my hon. Friend for reminding me of that shameful statistic. In fact, this would all be laughable were it not so serious. Those targets are at the heart of the Government's attempts to deliver on our public services, and they are the particular brainchild of the Chancellor. They are well on the way to making him a laughing stock.
    Meanwhile, the Government continue to pour money—taxpayers' money—into those unreformed public services. This Government are taking £115 billion more every year from the taxpayers of this country, which is nearly £40 a week for every man, woman and child. That is before next April's national insurance contributions rise—the Brown tax on incomes and the
    Brown tax on jobs. Under this Chancellor, next April's tax rises will not be the last, because the Government's failure to modernise the public services means that their only answer is higher and higher spending and higher and higher taxes. Despite that extra spending, we are not seeing the improvements in our public services that we all want.
    Laura Moffatt: My constituents are still completely confused by the right hon. and learned Gentleman's view, and it is not surprising that they say to me, as a former nurse, "All this criticism is coming at the Labour Government, who are putting so much more money into public services, but there is a given statement from the Conservatives that we would have to pay for particular services in the health service." What services are they? He needs to tell my constituents clearly what health services they would have to pay for under a Conservative Government.
    Mr. Howard: I am sorry to say that confusion in the hon. Lady's constituency is obviously contagious and it is hardly surprising, given her state of mental confusion, that it has been transmitted, as she suggests, to her constituents.
    The truth is that all we see under this Government is more and more money being taken out of people's pockets and the slow but inexorable undermining of the competitive advantage of British business on which everything depends. The problems in the UK economy have been building for some time. Of course it is true, as the Chancellor says, that all countries are affected by events such as 11 September, but the causes for concern in the UK economy run deeper. It is five and a half years since Labour took office, so it is time to test the Government, not merely against the much-hyped forecasts for growth and public spending this year,
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    but against the promises and objectives that the Chancellor set out before he took office. Let us take a look at just a few of his promises.
    In opposition, the Chancellor said that the test was "how you increase productivity". Britain was
    "one of the poor productivity performers of Europe."
    In his first pre-Budget report, he said:
    "The first challenge is to increase our productivity."—[Official Report, 25 November 1997; Vol. 301, c. 773.]
    Here we are, five years later. How has he fared on the very first challenge that he set himself? Britain's productivity growth has more than halved in that time, falling behind that of the United States. In the immortal words of the Chancellor's spin doctors, there is plenty of "increased room for catch-up".
    What about the Chancellor's other promises? In opposition, he was concerned about
    "the vicious cycle of poor competitiveness".
    So, what has happened to competitiveness under his stewardship? On the world competitiveness scoreboard, Britain has fallen out of the top 10, slipping from ninth to 16th. There is plenty of room for catch-up there too.
    In opposition, the Chancellor said that he would
    "implement an industrial policy so that our manufacturing industries can grow again."
    How is that industrial policy faring? Since 1997, half a million manufacturing jobs have been lost. Indeed, manufacturing jobs are being lost at the rate of 12,000 a month. Output in the manufacturing sector is lower than it was when the Government came to office.
    As part of the new industrial policy, the Chancellor promised that Government must implement a co-ordinated programme of manufacturing investment. However, manufacturing investment in the last four quarters was 13 per cent. lower than in the last four quarters before Labour came to office. Business investment as a whole has fallen for six quarters in a row. We do not have to look far to see the root cause of many of those failures. For five years, the engine of wealth creation in this country has been over-taxed and almost run into the ground. It can take no more.
    Rob Marris: Will the right hon. and learned Gentleman give way?
    Mr. Howard: The hon. Gentleman should take heed before he rises to his feet. Those are not my words: they are the words of the director general of the Confederation of British Industry. That organisation has estimated that the combined cost of the burdens on business over the past five years—taxes and red tape—could be as high as £15 billion a year.
    Rob Marris: The right hon. and learned Gentleman talks about rising taxes. Does he think that that is a more undesirable way to proceed than doubling the national debt, which is what happened when he was in government?
    Mr. Howard: I fear that the people of this country are much more interested in what is happening today and in the damage that the Government are doing to our economy than in the hon. Gentleman's mistaken and misleading history lesson.

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    In its pre-Budget report submission today, the British Chambers of Commerce talked of the
    "excessive burden of taxation and regulations facing businesses".
    Far from acknowledging the concerns of business, still less doing anything about them, the Government's reaction is to spend their time rubbishing them. The Chief Secretary, that renowned authority on these matters, informed the CBI that its figures on tax were "wrong and misleading". He said that Britain is doing better on tax than our competitors. That is despite the fact that Britain has overtaken Germany in the high tax league.
    The Secretary of State for Trade and Industry has gone one better. I am sorry not to see in her place, although she was here earlier. Not content with telling Britain's business leaders that they are wrong, she has informed them that they are incompetent too. She said:
    "Too often it is poor management"
    that accounts for Britain's low productivity. Apparently, she believes that the quality of management has declined in the past five years, and that that is what has gone wrong with productivity. Meanwhile, her colleague Lord Macdonald thinks that the way to increase his productivity is to write press articles defending the 4,642 new regulations brought in by the Government last year. That is a record number: one for ever 26 minutes of the working day.
    I referred earlier to Labour's statement in opposition. In its business manifesto in 1997, the Chancellor said:
    "We will not impose burdensome regulations on business,
    because we understand that successful businesses must keep costs down".
    Can any promise have been broken more comprehensively than that?
    Mr. Tom Harris: Will the right hon. and learned Gentleman give way?
    Mr. Howard: I hope that the hon. Gentleman will answer that question.
    Mr. Harris: The right hon. and learned Gentleman mentioned that business is now over-regulated. Can he name three regulations that he thinks should be removed from the shoulders of industry?
    Mr. Howard: The question that the hon. Gentleman poses completely misses the point.[Laughter.] I shall answer his question in a moment. It is the cumulative consequence of 4,642 regulations that is so damaging. He asks for an example, and I shall give him one. I suggest that he look at new part L building regulations, statutory instrument 2002, No. 440. He may not know what that does; it forces building firms and traders to pay new charges to be allowed to install windows, conservatories, roof lights, roof windows and doors. If the installer is not registered, building regulation consent and a fee to the council is required, which costs a minimum of £150 for new windows. I suggest that the hon. Gentleman ask small builders in his constituency what they think of that regulation.
    The Chancellor said two weeks ago that enterprise would be the theme of the pre-Budget report, but enterprise was supposed to be the theme last year, too.
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    In fact, it seems to have been the theme every year but, every year, his policies damage enterprise. Only this week, a study by the London business school reported that the interest shown by would-be entrepreneurs in starting new businesses dropped by 31 per cent. last year. Strangely enough, the London business school did not blame this on the failure of managers. Paul Reynolds, its professor of entrepreneurship, said that the Government were
    "failing to convince people that it is worth setting up a business and that they will not be unduly penalised if they do."
    Mr. John Bercow: My right hon. and learned Friend is rightly highlighting the impact of costly and damaging regulation. However, will he confirm, for the balance of the argument and the completeness of the record, that we in the Conservative party have no intention whatever of abolishing the national minimum wage and that the logic of the existence of such a wage is that it will be periodically and affordably increased?
    Mr. Howard: My hon. Friend knows that we have made it clear that we would not abolish the minimum wage, and I am happy to confirm that again this afternoon.
    No one is denying that some of the decisions that the Government have taken on the economy—notably their reforms to the Bank of England—were the right ones. I have fully acknowledged that on a number of occasions. The Government inherited a golden legacy—[Interruption.] Labour Members who doubt that should wait for just a moment. Thankfully, unemployment, inflation and mortgage rates are still low. But, now, clouds of uncertainty are gathering and it is when times are less good that the foundations of the economy will be tested.
    It was the supply-side reforms of the previous Government that led to what the Financial Secretary described, in a radio interview just a few weeks ago, as
    "the good times in the late 1990s when we first came to office."
    How right she was. Those "good times" did not happen by chance, but the solid foundations on which they were built are being weakened little by little with every new regulation and burden that the Government introduce; each one seemingly harmless and defensible but, cumulatively, causing untold damage. Is it any wonder that the director general of the CBI has said that we are "sleepwalking to decline"?
    The Government do not want to face that reality. After more than five years in office, business is getting fed up with Labour, fed up with Labour's red tape and regulations, fed up with Labour's new business taxes and fed up with Labour's inability to improve public services such as health, transport and education that are vital to a first world economy.
    Of course it was not just on business that the Chancellor made promises against which he will be judged. Five years ago, he criticised our low level of national saving and announced new measures that he said would
    "encourage more people to save"—[Official Report, 25 November 1997; Vol. 301, c. 775.]
    So what has been the result of the Chancellor's new measures? The savings ratio is forecast to fall this year to the lowest level ever recorded. Meanwhile, borrowing has risen, with household debt at record levels.

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    Far from alleviating this problem and encouraging people to save, the Chancellor has done precisely the opposite. It was the Chancellor who brought in the £5 billion a year pensions tax. So far, that has taken £25 billion from our pension funds. Some £400 is removed in tax every year from every single contributing member of a pension scheme. Another £130 is taken every year through the miserly uprating of the contracted-out rebates. When the Chancellor introduced the pensions tax in July 1997, he tried to justify it by saying that pension funds were in surplus and companies were enjoying pension holidays. In June this year, the Prime Minister defended the policy by claiming that the stock market was "up massively" on where it was five years ago. Alas, the pension funds are no longer in surplus and, unlike the American stock market, our stock market value is now lower than when the Government came to office, yet the tax continues to drain money from our pensions at the rate of £5 billion a year.
    Nor have the Chancellor's other measures encouraged savings. The replacement of personal equity plans and tax-exempt special savings accounts with individual savings accounts was complicated and unnecessary. The last pensions Green Paper said that stakeholder pensions were likely to be taken up by "many people" but they have been such a dreadful flop. Help the Aged has said that pensions have faced
    "a disastrous year of chaos and confusion",
    with the pensions credit creating
    "a new range of anomalies".
    The Government still have not acted on the proposal in last year's Budget to abolish the minimum funding requirement, yet the Chancellor is having to bring in another pensions Green Paper to clear up the mess that his first Green Paper made worse. What about the effect on savings of his tax and pensions credits and the growth in means-testing, which send the message loud and clear that the more people save, the less they get? So much for the Chancellor's promises to cut means-testing.
    The Chancellor also promised a transparent system. Indeed, that was the first of his five so-called "principles of fiscal management". In December 1998, Parliament approved his code for fiscal stability, which said that there would be
    "transparency…in the publication of the public accounts".
    Four years later, the Government are financing, off balance sheet, some £100 billion of public sector capital spending through the private finance initiative alone. On top of that, they are guaranteeing through letters of comfort and similar schemes some £50 billion in public-private partnership deals with London Underground, London and Continental Railways and the not-for-profit structure of Network Rail.
    Those deals do not feature in the accounts at all, not even as a note in the Red Book. They would send the Chancellor's debt ratio closer to 40 per cent. than the 30 per cent. of which he frequently boasts. Indeed, if we took the PFI liabilities into account, it would be well above 40 per cent.—o much for transparency in the publication of the public accounts.
    The Government have said that their treatment of those items in the national accounts conforms with all accounting rules. Perhaps they are not aware that the
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    executives at Enron said very much the same thing. Is it any wonder that the wannabe iron Chancellor is in danger of becoming the Enron Chancellor?
    Next week, the Chancellor will deliver his pre-Budget report. We look forward to hearing what he has to say about his growth forecasts and revenue forecasts but most of all we look forward to how he responds to the concerns of taxpayers and of business. Will he start to mitigate their burdens? Will he start to address the economic imbalances that his policies have exacerbated? Will he change direction on the public services or will he continue his policy of spending without reform? Will spending continue to grow faster than the economy year after year? Will taxes continue to go up and up? Will he carry on taxing and spending and failing?
    Those are the questions that the Chancellor must start to answer: questions about the long-term effects of his policies, about the sustainability of his approach to taxes and spending, about the way in which we are sleepwalking to decline. After five and a half years, it is time to start judging the Chancellor and his colleagues against the promises they made. That is the basis on which we and the nation will hold them to account.
    Several hon. Members rose—
    Mr. Deputy Speaker (Sir Michael Lord): Order. Before I call the next hon. Member to speak, I remind the House that Mr. Speaker has placed a 12-minute limit on Back-Bench speeches and that it starts now.
    Mr. Patrick McLoughlin: On a point of order, Mr. Deputy Speaker. Can you confirm that, under the new rules that have been passed by the House, when interventions are taken not only will the clock stop, but each hon. Member will get an extra minute, up to two interventions? The rules were debated just a few weeks ago. I raise the point of order so that everyone can be assured that they are in operation today.
    Mr. Deputy Speaker: The hon. Gentleman is correct. For the first intervention, the clock will stop while the intervention is made and then a minute will be added to the time allowed for that speech. For the second intervention, the clock will stop again while the intervention is made and a second minute will be added to the time allowed for the speech. After those first two interventions, no allowance will be made either for the intervention or the response. I hope that that is clear and that I have not taken too long in explaining the position.
    5.49 pm
    Mr. John McFall: Thank you, Mr. Deputy Speaker, for providing such clarity on that point.
    The shadow Chancellor's speech could be described as a commitment-free zone. We are still waiting, although perhaps I should modify that a little. After the Tory conference, the entire shadow Cabinet went into a conclave. Its members emerged with one, perhaps unanimous, commitment: to attack their leader, day after day after day. I should like them to add other commitments to that one.

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    I congratulate my right hon. Friend the Chancellor on his speech, and on highlighting the issues in the Queen's Speech that he considers important, and with which we empathise: economic stability, high and stable growth, the delivery of good public services, the international obligations that he and the Secretary of State for International Development have set in train, and Europe. We all agree that we are operating against a dismal global background. We are witnessing the first simultaneous downturn of the global economy in 30 years. Last year, Japan's economy retrenched by 0.5 per cent., Germany is suffering the threat of deflation, and the International Monetary Fund has recently estimated eurozone growth of 1 per cent. for next year.
    The background is dismal, but last year the United Kingdom enjoyed 1.9 per cent. Growth—the fastest growth of any G7 country. We must celebrate and rejoice at the fact that we have the lowest inflation for 30 years, and the lowest inflation in Europe. We also have the lowest unemployment for 25 years—lower than that of Japan, the United States and the eurozone. Many Labour party members remember when we marched against unemployment more than 10 years ago, when unemployment stood at 3 million. Now, we have the lowest unemployment for decades, which is a cause for celebration.
    As the Chancellor said, we have reached this point not by accident, but by design. Ten years ago, full employment was just a dream. It became an aspiration and then a commitment; now, it is almost a reality. The House need not take Labour Members' word for it. As recently as last month, the economic correspondent of The Times, Anatole Kaletsky, said that the British people have a level of relative prosperity higher than
    "they have enjoyed since the 1940s."
    He continued by stating that Britain's "economic fundamentals" are as strong
    "as they have been for a century past."
    There are worries, however, such as pensions, the falling stock market and pay demands. On pensions, the issue of trust is extremely important. As a result of past actions, trust has been dented. In recent months, the Treasury Committee took evidence relating to the split capital investment trust industry. As its chairman, I have received many letters from people who, on approaching their local independent financial adviser or a fund managing company, were sold zeros as part of a split level capital trust investment. Those products were advertised as being safer than a Volvo. It was said that if people put their money into such investment funds, it would sleep more soundly than a baby. Some people told us that having invested £7,000 or £8,000 to look after their elderly parents a few years down the line, their investment had reduced to less than £25. That is a scandal. It has dented people's confidence in the financial market and the stock market, and that confidence needs to be restored.
    I need not say too much about Equitable Life, because we know, all too sadly, about the scandal that has affected it. Last week, with-profits annuities for pensioners were cut by almost 20 per cent. People who have saved every week of their lives, thinking that they were going to receive a pension and that they were investing in a blue chip company, have suffered a 20 per cent. cut. The Government should look urgently at that matter.
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    I firmly believe that the firefighters 40 per cent. pay demand is absurd and that we should refuse to entertain it, even though we should acknowledge the good work that firemen and women do. Incidentally, I should point out that women and ethnic minorities each account for only 1 per cent. of the fire service, so there is a long way to go in that regard. I am not condemning firefighters, but if we give in to the 40 per cent. demand, our current low level of debt—at 30 per cent., it is lower than that of the eurozone—will increase. If debt increases, borrowing will increase, and so will the cost of borrowing. As a result, public investment will decrease, the good investment in public services will be no more, and we will end up with a black hole. Money will go into a pit, and nothing will come out at the other end. Investment, standards and wages will suffer. It is for that reason that such demands must be resisted.
    Mr. Simon Thomas: There is a lack of women recruits to the fire service. The hon. Gentleman says that a 40 per cent. target is not feasible, yet a lot of women must be put off by the fact that so many firefighters do two jobs to pay their mortgage. Surely it would be better to reach a settlement, no matter what it costs, to achieve a modernised fire service that can attract women.
    Mr. McFall: Perhaps the hon. Gentleman has been speaking to the Deputy Prime Minister, because the issue is indeed modernisation and ensuring that we get a change in practices. Negotiating the issue of modernisation might result in a better service, so I thank the hon. Gentleman for his intervention.
    On the spending levels to which the Chancellor has committed himself, I note with interest that spending for September 2002 has risen by almost 14 per cent.-a move that I support. Such an increase is encouraging, as is the knowledge that the goal of quality public services is being delivered.
    I agree entirely with the Chancellor that we should encourage enterprise, particularly in the disadvantaged areas that a number of Members represent. For every three jobs created in the best areas, only one is created in poorer areas. That results in reduced income for services in the poorer areas, reduced quality of life, and increased poverty. The best anti-poverty programme is to assist people in poorer areas in starting up their own businesses, but at the same time we must ensure that they have access to capital, advice and skills.
    On the Chancellor's international obligations, one big issue is economic reform in Europe, which has not been delivered. The hon. Member for Epsom and Ewell (Chris Grayling) mentioned structural reform in Germany, and I agree with him. The problem with Germany—and with several other countries—is that it has not reformed structurally. The Treasury Committee visited Frankfurt last week—we also visited Paris—and it became obvious to us that the German economy needs a great deal of restructuring. That problem has yet to be tackled.
    Chris Grayling: Does the hon. Gentleman believe that Germany has a further long-term problem, in that—as

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    many economists now argue—it joined the euro at the wrong exchange rate? Of course, there is no way out of that.
    Mr. McFall: I agree. Sotto voce, several German politicians told us that German interest rates ought to be lower.
    The big issue in Europe is the common agricultural policy, which is in urgent need of reform. A typical family of four now pays £16 a week in taxes for higher food prices, when food prices should be lower. They are propping up a regime that has as its centrepiece overproduction and environmental degradation. That conflicts with the Chancellor's wider aim on the international stage of helping developing countries. The CAP undermines the livelihoods of millions of farmers in developing countries by dumping cheap food on those countries, while denying them export opportunities to the single largest market in the world. Developing countries are getting fed up with western countries saying, "You liberalise while we subsidise." That has to change.
    Despite World Trade Organisation commitments, agricultural support from the Organisation for Economic Co-operation and Development has risen from $300 billion to $330 billion in the past decade. That is five times the global aid budget, so the Chancellor's worthy aims, aspirations and actions on behalf of developing countries are being undercut.
    Three quarters of the world's 1.2 billion extremely poor people live and work in rural areas. The average for developing countries is 50 per cent. of the work force in agriculture, and in some countries it is as high as 80 per cent. Women are particularly affected. Anyone who has been to developing countries knows the crucial role that women play not only in keeping families and society together but in the economic field. Agriculture plays a crucial part in reducing poverty, and I would like the Chancellor and others to put it high on their agenda.
    We know that the WTO met at Doha last week. We should all bear it in mind that if all the trade barriers were cut by half, the world's income would rise by $400 billion, which is equivalent to adding an economy the size of Australia's to the global economy. It would liberalise and bring prosperity to people who are living in abject poverty. Quality of life would improve, and so would international stability. We cannot get away with a world in which we increasingly gather material resources to ourselves and deny them to the vast majority of the world population. Disorder and anarchy will surely flow from that. Our economic and our social objectives must be at one. I urge the Government to work towards both sets of objectives, to make this not only a more prosperous but a more peaceful world.
    6.1 pm
    Matthew Taylor (Truro and St. Austell): The Chancellor spent a lot of time on the Conservative Government's record, and the Conservative shadow
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    Chancellor spent no time at all on what a future, hypothetical Conservative Government might do. The Government's approach to the economy in the Queen's Speech was notable as much for what it did not say as for what it did. We heard about sound public finances, high levels of employment, economic stability, investment, and reform in public services—nothing new or objectionable in those aims. The Queen's Speech said that the Government would not renege on the commitment to assess the five tests on the euro by June 2003, but of course gave away nothing new.
    More significant was what it did not mention. There was no mention of investment, which is down 10 per cent. on the year and has fallen faster over the past year and a half than that in the United States of America, France, Japan or Italy—yes, faster even than in the sluggish, depressed economy of Japan.
    There was no mention of the longest manufacturing recession since the second world war, the deepest recession since 1981 and the loss of 500,000 manufacturing jobs since Labour took office. There was no mention of the problems in tourism, with visitors down 2.5 million on the 2000 level. There was no mention of lower productivity growth in this cycle than in previous cycles. Output per job has increased at an average annual rate of 1.4 per cent. since the mid-1990s, and output per person by just 1.2 per cent., compared with average productivity growth of just over 2 per cent. since the 1960s. Let us not forget that the Chancellor used to say that productivity is his first test.
    There was no mention of the fact that growth is sustained by an unsustainable consumption boom while manufacturing withers. Between 1995 and 2002, the economy expanded by 20 per cent. and services by 28 per cent., but manufacturing fell by 1 per cent. Returns in manufacturing are now down to only 4 per cent. compared with 14.1 per cent. in services. In the same period, consumption grew by 4.2 per cent. per annum, while gross domestic product—the wider economy—grew by only 2.6 per cent. Consumption has consistently been rising 1.5 per cent. faster than growth. How long does the Chancellor believe that that is sustainable? How much personal debt can people build before it all goes bust?
    We intend to say what we think the Government's fiscal and monetary stance should be, even though—perhaps unsurprisingly, a week before the pre-Budget report—the Chancellor did not give much away. The Conservative shadow Chancellor had nothing at all to say on the subject, which is rather more surprising from someone who supposedly offers an alternative to the Government position. Despite the speculation, we do not believe that, with an economy facing the current risks, with the record that I have spelled out, this would be an appropriate moment, economically or in any other respect, to have further tax rises or cuts in spending.
    Indeed, the present spending plan, before the Chancellor had any idea of the economic situation that would unfold, has fortuitously proved to be the best timed piece of counter-cyclical spending that any Government have introduced. It always used to be said that Governments never step on the accelerator at the

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    right time, but this time, arguably, the Chancellor has, although even he would not claim to have foreseen the problems coming down the track.
    Chris Grayling: The hon. Gentleman said that his party does not believe that there should be any further tax increases. What, then, is the status of its spending commitments made in recent years, and most notably the intention to abolish tuition fees? Does that commitment remain, and if so, how will it be financed?
    Matthew Taylor: As the hon. Gentleman knows, the Chancellor has announced substantial extra spending on both education and health—more than enough to fund the programme for which we argued. As yet, the Government have not told us how they will allocate that spending. We will press them to abolish tuition fees. We await delayed announcements early in the new year. We would not now need to argue for the penny on income tax for education for which we argued in the past because the money is there, but if the Government mis-spend the money, as they may well do, we will be honest enough to say, in the approach to the election, whether a tax rise may be necessary. Certainly, that would not be right for the economy now, and we have spelled that out.
    Perhaps the hon. Gentleman can clarify the position of Conservative Front Benchers, who have said that they do not believe in the extra spending for the health service and have voted against it, while announcing a series of spending policies to give tax breaks to those who already have private health insurance. Perhaps he will explain how they intend to pay for that—although if he did he would get into trouble with the shadow Chancellor, who assiduously avoids giving any clue to his tax or spending plans.
    Mr. Martin O'Neill: Will the hon. Gentleman take me back two steps? As I understand it, he told the House that there is sufficient money in the notional budget afforded to education by the Chancellor to pay for tuition fees. If that is the case, surely it must be at the expense of something else in the education budget—or has the Chancellor, with his characteristic generosity, afforded even more largesse than we had anticipated?
    Matthew Taylor: When the Chancellor tells us how the money is to be spent, I will be able to answer that question, but as any answers on higher education have been delayed until at least the new year—they are now two years overdue—we are no more able than the hon.Gentleman is to second-guess how the Government intend to spend that money.
    While the Conservative shadow Chancellor has been reticent about Conservative plans for the economy, his party leader has been somewhat more forthcoming. In a recent speech to the Institute of Directors, he backed our view that this was a moment for neither tax increases nor spending cuts. We agree that it is perfectly reasonable for the Chancellor to plan his spending on the long-term growth potential of the economy, not on fluctuations around the trend.
    In that respect, it is the Conservatives who are in a complete muddle. Do they want to spend less, or more, or the same? Do they want to tax less, or more, or the
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    same? Some Conservatives want to tax and spend more. The hon. Member for Tunbridge Wells (Mr. Norman) said just last week that
    "Investment in those services, if it comes at the expense of temporarily raising taxation, can be a good deal."
    Chris Grayling: Will the hon. Gentleman give way?
    Matthew Taylor: I will in a moment, because the hon. Gentleman might want to add to the range of views expressed, or at least align himself with one of them.
    Some Conservatives want to spend less—perhaps that is the hon. Gentleman's view. We were told by the Conservative shadow Chancellor, speaking not so long ago:
    "the lower we can get public spending as a proportion of GDP, the better"
    Although the right hon. and learned Gentleman says that this might not be the moment to do so—he will not say whether it is or not—presumably he believes that at some point it will be desirable to cut spending. Some Conservatives want to tax and spend the same. Their health spokesman, the hon. Member for Woodspring (Dr. Fox), told the BBC earlier this year that he conceded that
    "Taxes may have to rise"
    to pay for improvements to the NHS. However, he subsequently voted against tax increases.
    The Conservative leader described the Chancellor's penny national insurance increase as a tax on jobs, which contradicts what he told BBC Online on 19 April and shows that the right hon. Gentleman has more than one policy of his own. In addition, those competing to lead the Conservatives all offer different interpretations. The Conservatives voted against the tax increase, which comes as no surprise, given that tonight we have already heard Conservative Back Benchers calling for across-the-board tax cuts. Perhaps the hon. Member for Epsom and Ewell (Chris Grayling) would like to tell us with which faction of the Conservative party and which leader he aligns himself.
    Chris Grayling: I am intrigued by the hon. Gentleman's use of the word "muddle", because he has just told the House that as of today he does not believe in a tax increase or a tax cut, but he may well change his mind before the next election. In my view, that constitutes a muddle.
    Matthew Taylor: What I said was perfectly coherent. I said that given the state of the economy, the Government do not have to either raise taxes or cut spending; it would be inappropriate to do so and it would worsen the risk of recession. Conservative Front Benchers have failed to give any indication of whether they believe that that is true, or whether they want to cut spending or increase taxes. Because they have no policy that they are prepared to make public, the shadow Chancellor instead read out a long section from The Times today—presumably that is a replacement for a policy position of his own. However, he should be wary of reading from The Times because it has a lot to say about the Conservative party. I will not read out the full

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    text, but less than two weeks ago, under the headline "Stop digging", The Times editorial said about his leader's comments:
    "Rarely can a political boast have seemed so shallow…counter-productive and embarrassing as a firework that misfires and goes swirling off into the crowd."
    That is not a bad summary of the Conservative party's current position.
    We are concerned about the long-term strategy being followed by the Chancellor. In the last Budget and the comprehensive spending review, he built his whole programme around his belief that there would be an increase in long-term growth from 2.5 per cent. to 2.75 per cent. We now know that that was optimistic. It is one thing to even out fluctuations in the economy over time in one's spending plans, but it is quite another to assume that long-term growth will continue to be strong when one's policies are consistently weakening it and one has thrown prudence to the wind in one's assumptions about increased growth.
    To be fair to the Chancellor, he built his spending projections around a figure of 2.5 per cent. growth, not the 2.75 per cent. that he thought the economy would deliver. He called the difference the margin of prudence—the margin for error. However, the Government's own figures reveal that that margin has entirely evaporated. The Chancellor increased his growth forecast on the basis of population growth, yet the Government Actuary's latest estimate of the British population is 1.2 million less than the Treasury figure, and the Government Actuary says that the population is growing by 65,000 fewer people a year than the Treasury assumes in its fiscal projections. At the end of the current spending period, that difference will account for a loss of income for the Chancellor of some £5 billion a year.
    Worse still, the Chancellor appears to have known that by using those figures, he was flattering himself. On the very day that he published the assumption of increased population growth, he published in the Wanless report on the national health service another assumption of population growth that was some 1 million lower. That figure, too, flattered the right hon. Gentleman, because a lower population reduces the amount he has to spend on the national health service, whereas the figure used for the wider economy flattered him by suggesting that growth and therefore Government income would be higher.
    The latest Government Actuary's Department figures suggest that matters will worsen for the Treasury, because they predict that there will be more than 2 million fewer people by 2020. No wonder that those figures—unlike most Government assumptions of that sort—were never put to the National Audit Office for its comments. The Treasury's increased growth estimate increases tax revenues by £1 billion in the first year, rising to £5 billion in 2006–07. There has therefore been a significant loss of the room for error that the Chancellor had built into his projections. I hope that he will put that right in the pre-Budget report. My argument is based entirely on the Government's own figures and the assumptions that he used in the detail
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    underlying his last Budget. The National Audit Office was not asked to audit the revised estimate of growth. It noted that although the new estimate was
    "reasonable…it would be less cautious than the previous assumption."
    That was before the latest figures were produced by the Government Actuary.
    That leaves us the entirety of the Government's spending plans balanced on a tightrope—the assumption of 2.5 per cent. growth. That brings me to the underlying structural problems that raise serious questions about the Government's ability to deliver their plans—[Interruption.] That is one Back Bencher who might also have difficulty delivering.
    The underlying structural problem in the economy is the over-valuation of the pound driving a booming consumer sector and a depressed tradeables sector. Services growth is at more than 2 per cent., whereas manufacturing is suffering the deepest recession since 1981. The trade deficit was almost £40 billion last year, and it is on course to be £35 billion this year. Demand is driven by Government spending and consumers while exports fall and investment slumps. Investment accounts for a lower proportion of national income than it has done for five years, manufacturing profitability stands at less than half that of services, and services price inflation is 6 per cent. higher than goods price inflation.
    Those are fundamental imbalances in the economy. I believe that the Chancellor knows that, but he has failed to come to grips with them. He talks about increasing productivity, but productivity growth has been lower than in the past. He talks about increasing investment, but investment is slumping. He talks about our success compared with other economies, but the truth is that success in the British economy is now built almost entirely on a consumption boom and increasing levels of consumer debt, house prices and house equity withdrawal. The Governor of the Bank of England, the Monetary Policy Committee and all serious commentators know and have argued that that is unsustainable. Unless the Chancellor can pull a rabbit out of the hat and turn manufacturing around, he faces a long-term problem with his spending and tax plans, not the short-term problem with which we are all familiar.
    Mr. Kelvin Hopkins: The hon. Gentleman suggests that all our problems—if problems there are—arise from the strength of the pound. Is he suggesting that we intervene actively in the currency markets to bring down the value of the pound?
    Matthew Taylor: I do not believe that all the problems are the result of the pound's value, and I shall talk later about some of the other issues. Clearly, there is no agreement in the House on what I regard as the best solution, which is entry into the euro at a sustainable rate. The Chancellor has not yet told us his view on that.
    The other issues about which I shall speak include the red tape, tax complication and bureaucracy that have been the Chancellor's hallmark. He prides himself on

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    being a micro-interventionist and believes that the Treasury's role is to try, through micro-management, to affect business investment decisions. The figures that I have given the House show that all of that has proved to be wholly counterproductive.
    Mr. Mark Hendrick: Will the hon. Gentleman give way?
    Matthew Taylor: I shall give way in a moment.
    We must remember that Britain's record of investment is astoundingly bad. The Bank of England recently noted that the fall in investment in the last two years is comparable with those in the recessions of the early 1980s and 1990s and worse than those in the supposedly worse economies of the USA, France, Japan and Italy. If this is not, therefore, a reflection of what is happening globally, it must be a reflection of what is happening in 11 Downing street.
    The figures for foreign direct investment seem to confirm that. Foreign direct investment into the eurozone increased by 383 per cent. in the first two years of the euro, compared with an increase of 12 per cent. for the non-eurozone countries. A report by Ernst and Young showed that, in 2001, Britain attracted 21 per cent. of new European investment projects. We are still leading in the EU, but that lead is falling, as is the proportion of projects, down from 28 per cent. in 1998 and 26 per cent. in 2000. Again, the fall in investment does not reflect what is going wrong in the wider economy; something is going wrong here in Britain, and that is down to the Chancellor, whose policies are not delivering.
    Mr. Hendrick: I thank the hon. Gentleman for finally giving way. He says that his party would not alter the Government's spending plans—it would spend no more and no less—but asserts that growth projections are over-ambitious and that the figure should be, say, 2 per cent. Would his party still stick to the spending commitments and run up a deficit, or would it make a cut, and if so, what cuts would it make?
    Matthew Taylor: That is a perfectly reasonable question, and the answer is equally reasonable. In the short run, the Chancellor does not have the problem that some are suggesting. The simplistic view is that one runs up a deficit because economic times are bad, so one should cut spending or raise taxes. That would worsen, rather than improve, the situation. However, there is a long-term problem, and I shall propose changes that the Chancellor should make that would allow him to deliver his planned spending increases. To be fair, the right hon. Gentleman has recognised over and over that no Chancellor in the world, if he does not get the economy right, can afford the spending that we all believe—at least the Liberal Democrats and the Labour party believe; I am not sure that the Conservatives do—is necessary to deliver the public service improvements for which we have argued.
    We welcome the fact that the Government are now making real spending increases, financed by tax increases, broadly similar to those for which we have argued. That should have been done earlier, but we will not now dispute it or shy away from it. However, long-
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    term problems need to be tackled, and the reason they are not being tackled is a flaw in the Chancellor's view of how the economy should be managed. He desires to control, to meddle and to micro-manage, and that has not delivered, and will not deliver, the necessary improvements.
    A Government obsessed with central control create bureaucracy and red tape for business as much as for the public sector. That process can be reversed, but that is not the Chancellor's solution. When his targets are missed and his controls fail, he adds further levels of bureaucracy to both the public sector and the private sector. He then finds that they are still not delivering, so he thinks that the process of control is not working and adds yet another tier. That is why there is a list of failures for the Government's targets, such as the ones that are not met or are rolled over. The process is flawed. Labour Members do not have far to go to find support for my view. They can ask the other Cabinet members, who are subject to those controls. The Chancellor's flawed personality seeks to control everything from a spider's web at 11 Downing street.
    We need a simpler tax system. The Chancellor has to stop being a micro-meddler. The extraordinary thing about the extra layers of tax, which have increased the size of "Tolleys", the tax guide bible, by almost a third in the short time that the Government have been in office, is that the Treasury has admitted that it is not even checking whether most of the changes are having any effect. There is no process for analysing any of that complication to find out whether it is helping. The truth is that it is a total waste of money, and we can see that by the economic failure that I have described.
    We need to cut red tape on business. We have published a long list of changes that could be made. It is time that the Chancellor recognised that one can load only so much red tape on to business before there is an inevitable cost in investment because companies will go to other countries where it is easier to operate.
    We need to sort out the public transport system. I hardly need say more about that because hon. Members are among the biggest users of a system that is failing.
    Finally, I turn to the euro. There is not agreement in the House on that and there is not agreement in the country, but our view has been consistent and clear—
    Mr. Bercow: And wrong.
    Matthew Taylor: The hon. Gentleman says that, but one of his colleagues does not agree at all. That is another example of the Conservative party trying to appeal to everyone by having every possible view on every subject.[Interruption.] Hon. Members may criticise the Liberal Democrats for putting our necks on the line and for consistently arguing the case for the euro, but it is perfectly apparent that the Conservative party has no consistency on the issue whatever.
    The Conservatives offer no explanation that makes any sense of the present problems in manufacturing. Only a few years ago, they welcomed a fall in the exchange rate as rescuing British industry—some of them even called it White Wednesday. However, in recent years exchange rates have been substantially higher than the level from which we previously fell,

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    and a similar deep recession in manufacturing has resulted. Each of the deep recessions in the early '80s, the late '80s and the early '90s has been associated with massive over-valuation of sterling based not on the realities of the economy but on speculators seeking to make a fast buck and, in the process, destroying jobs and industry. If the Conservative party has a solution that is an alternative to the euro, it has yet to tell us what it is.
    Mrs. Browning: Following the hon. Gentleman's teasing of the Conservative parliamentary party for its views on the euro, will he clarify whether the Liberal Democrats' position is that, come a referendum, all his parliamentary colleagues will be expected to campaign for a yes vote?
    Matthew Taylor: Unlike that of the hon. Lady's party, our Front-Bench team will certainly campaign on a consistent basis. We will have to see about the rest of the party when the time comes.
    Mr. McFall: Will the hon. Gentleman clarify whether, in his opinion and that of his party, the five tests set down by the Chancellor in October 1997 have been passed?
    Matthew Taylor: I hope that the hon. Gentleman's Select Committee will conduct an inquiry to tell us the answer to that question before, rather than after, the event. That would be helpful.
    We have published a report to which we invited a wide range of senior economists to contribute, and they advised us that the five tests have either been met or are in the process of being met, and we believe that that is correct. However, one serious issue would have to be dealt with as part of the process of joining the euro—the exchange rate itself. We need confirmation from the Government that that test will be passed. It would be helpful if the Chancellor clarified what he believes a sustainable long-term exchange rate is. It is notable that every time that he has talked about euro entry, and noises are made, there has been a fall in the value of the pound. The markets believe that it is over-valued in the long term, but they constantly speculate about the short term and are making a fast buck. They do not care much about manufacturing in the United Kingdom or elsewhere suffering the costs.
    Mr. Hopkins: To return to the eurozone, is it not in serious trouble, teetering on the brink of recession? Joining the euro at anything like the present parity—and even with a substantial devaluation-would still drag us into a zone facing long—term recession.
    Matthew Taylor: People must bear in mind the fact that, since the creation of the euro, the average growth of the eurozone has been faster than growth in this country. Employment in manufacturing in the eurozone has increased when such jobs have plummeted by 500,000 in this country. In testing whether the British economy is genuinely performing much better than the rest of Europe, the hon. Gentleman must consider my points about the two-speed economy and whether our
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    economic success in personal income and employment is built on long-term structural achievement or short-term debt explosion—the boom in consumer spending and house prices. If it is the latter, we have no reason to congratulate ourselves because growth is not sustainable in the long term. I believe that we would be better joining the euro, although we must do so at a competitive exchange rate. Frankly, that is more likely while eurozone countries continue to make it clear that they would like Britain to join early than if we join some years down the line when things have settled for them, but are less settled for us. Our past experience in agricultural and fisheries policy is pertinent in that respect.
    Rob Marris rose—
    Matthew Taylor: I have spoken for a long time and have given way many times. I therefore hope that the hon. Gentleman will understand if I do not give way, as I do not want to detain the House.
    I shall touch briefly on issues that affect the delivery of Government spending improvements. I have talked a lot about the economic background, but to be successful, it is necessary not just to have an economy that is functioning well but to spend that investment well. I shall sound two notes of caution. First, we agree with the Chancellor and the Government's stance—we cannot allow extra spending to be grabbed by large pay claims rippling through the public sector. We are sympathetic to much of what the firemen say about the lack of change over the years and the fact that there has been no proper review for a generation; nevertheless, a 40 per cent. pay claim was never realistic, and we are glad that the Fire Brigades Union appears to be changing a position that was never deliverable.
    Investment cannot be spent on across-the-board pay increases, but in our last manifesto we identified areas of the public sector with a specific need for substantial increases—above all, areas where it is no longer possible to recruit or retain staff in sufficient numbers. If there were ever a sign that pay and conditions are not appropriate, it must be not being able to recruit or retain. That covers trainee teachers, for example, and certain grades of staff in the NHS and other sectors. Leaving things as they are is no more a solution than allowing general wage inflation to take a grip, as it wastes the opportunity for public service improvements.
    Secondly, on central control, it is not right for the Chancellor or the Secretary of State for Health to describe as decentralisation and letting go the creation of foundation hospitals that are limited to certain communities and built, not according to local discretion but to whether local managers have followed to the letter and met centrally set targets, irrespective of their application to the locality. That creates not just further centralisation but the great unfairness that some people benefit from health service improvements purely because management have toed the Chancellor's line, following instructions to the last dot and comma.
    Other communities, by contrast, will not get investment in their hospital because they have broken a tiny bureaucratic rule or Government target, often for reasons that have nothing to do with local management. In my area, for example, the hospital was downgraded

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    for one reason alone—debt—as the Government pay for out-of-county treatment of tourists two years in arrears. In the future envisaged by the Chancellor, that would cost the Cornish community millions of pounds of investment in their local hospital, which cannot be right.
    The Chancellor must therefore let go. He must simplify and stop micro-managing or we will not achieve improvements. Services cannot deliver improvements if they do not give doctors, nurses, teachers and police officers the discretion to do their front-line jobs properly or if the build-up of long-term economic problems is allowed to overwhelm and eventually destroy the effort to make badly needed investment.
    6.36 pm
    Mr. Martin O'Neill: Having had to listen to the last two speeches from Front-Bench spokesmen, I now understand what shadow-boxing involves—it certainly does not involve laying a glove on the Chancellor but on one another.
    I welcomed the Chancellor's speech but, to be a bit churlish, I would have preferred him to make the autumn statement first. We are in something of a fiscal vacuum—the likely output and revenue figures as adjusted by the Treasury are central to several issues thrown up by his address, and it would have been helpful to have a more realistic framework. I am glad that the Secretary of State for Trade and Industry is in the Chamber, as the fiscal vacuum is not necessarily matched by a policy vacuum in her work for manufacturing industry. That is welcome—for a period after 1997 her Department was infatuated with issues involving information technology and so on, and did not focus clearly, effectively and consistently on other areas in the manufacturing economy which, it is only fair to acknowledge, it engaged with following difficulties in the car industry. Now, however, it has a more coherent policy. I am not sure whether the seven pillars will be the seven pillars of wisdom, but one—macro-economic stability—has been discussed today.
    On macro-economic stability and the firefighters' dispute, in the 1970s I went on strike as a teacher to get a rise. We were lucky as, for about 18 months, we benefited from the Houghton award, getting about 23 per cent. to catch up with what had escaped our grasp in the early 1970s. Within 18 months of our receiving that award, however, inflation was even higher and interest rates were so high that the mortgage payments that my wife and I had to make made the increase virtually worthless. We cannot afford to go back to those levels. If we are going to achieve a settlement in the present dispute, it must be sustainable. We cannot afford to open the floodgates for deals that would destroy or certainly seriously jeopardise this Government's greatest single achievement: economic stability.
    Although controlling inflation and keeping down interest rates are important, investing in our manufacturing base is a prerequisite to the survival of the sector. Our dependence on financial services has allegedly become greater—it is a matter of a couple of per cent.—but striving for manufacturing efficiencies will more than anything else impose self-discipline in the economy and be the most effective means of securing long-term economic prosperity.
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    I do not want to downgrade the financial services industry, but such services will be in decline for some period. There will be difficulties; we have not yet seen the level of lay-offs experienced in the United States. My point is completely independent of the issue of Enron. I refer to the fact that financial services are going through a period of difficulty, and that will be reflected in unfortunate but probably necessary savings, meaning redundancies and lay-offs.
    If we want to sustain economic growth in this country, we need not just long-term but short-term improvements in manufacturing. It is highly appropriate that not only are the Treasury and the Department of Trade and Industry working together, but that there is a cross-departmental initiative which will involve investment in skills and people through various training on the shopfloor and of management, as my right hon. Friend the Chancellor has identified.
    If we can start to equal the commitment to improvement in skills with that to improvement in equipment, we can go some way to sustaining such growth. Low interest rates ought to be an incentive to businesses to borrow to invest, but sadly, as has been said across the House, we are not investing. These facts do not bear disputation. France, Germany and Italy, with which we must compete and catch up, are still committing more to investment than us. Part of our problem is that, because our currency is over-valued, we are seeking to depress price by using profits to assist in keeping down costs rather than for funding investment in the way that we want.
    I hope that the Chancellor will begin to look again at support for investment and at providing investment incentives. If it is good enough to invest in research and development, surely it is good enough to invest imaginatively. I use the word "imaginatively" because there is a Treasury mantra—perhaps in the case of the Chancellor a "metrical sang" that is repeated time after time—that if we give money to potential investors, we are really giving it only to those who would have invested anyway.
    Last year, when I thought that investment levels were going to be very low, I was worried that the Treasury might slip in an investment-incentive stream that nobody would take up, and to which they would then point cynically, saying, "We tried it. We told you so; it is not having any impact." We should persist in trying to find ways of getting investment into industry because across the political divide we have not been successful in doing so over the years.
    There are those who argue that if prices are too high on the international markets, it is because we are not in the eurozone. Even though there is an over-valued pound and an under-valued euro, the last thing that we require at the moment is a sterling devaluation. The Liberals can use all the euphemisms they like, but at the end of the day, if there is to be a currency adjustment and it does not quite work perfectly—I broadly subscribe to the idea that if we talk seriously about joining the euro, the pound will fall and the euro will rise-there will be a gap. That gap will have to be bridged by a package of deflationary, monetary and fiscal measures.
    It would be wholly irresponsible given the fragility of the international economy for us to jeopardise the macro-economic stability that we are enjoying by

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    prematurely entering the eurozone. Therefore, although I would like us to join the euro, we must remember that other parts of the world are in many respects unaffected by it. I think of North America, of the fact that China has just joined the World Trade Organisation and of the market possibilities in areas where the United Kingdom can provide goods and services as efficiently and effectively as anybody else. We should not forget the role of exports and trade. The work that has been done in the promotion of Trade Partners UK and the like has gone a long way to helping that matter.
    There is a somewhat convoluted reference in the Queen's Speech to draft legislation on a nuclear liabilities authority. That will be an important piece of legislation not least because of the problems confronting British Energy. I am aware that there are some who use the problems of British Energy as an excuse to denigrate the whole nuclear industry. I cannot see the UK meeting its international commitments on carbon emissions, whether those made in Kyoto or anywhere else, without investing in the nuclear industry.
    The significance of a liabilities management authority—LMA—is that it would assume responsibility for the historical cost component in the nuclear power equation. That would enable a proper debate on the cost of the next set of nuclear reactors. We must take account of that. I only hope that the Government will be able to move quickly not just on LMA but on steps towards a new system of electricity trading arrangements that will encompass the whole UK.
    Mr. Crispin Blunt: Will the hon. Gentleman give way?
    Mr. O'Neill: No, I have only one minute left.
    Mr. Blunt: The hon. Gentleman will be given extra time.
    Mr. O'Neill: In that case, I give way.
    Mr. Blunt: I hope that the hon. Gentleman will make it clear in his extra minute that, like us, he regrets the absence of proposed legislation not only on LMA but on British electricity trading and transmission arrangements.
    Mr. O'Neill: I do not think that LMA is an issue of contention. If a draft Bill is published in the next few months, I would imagine that the fact that it was mentioned in the Queen's Speech will allow it to be dealt with as carry-over legislation, and we would still be able to enact the legislation in a reasonable time. BETTA is a different issue. Legislation will be required, but I suspect that between now and next October there will have to be arm-wrestling and complex negotiation. It is important that we get things right this time. The new electricity trading arrangements—NETA—did not take account of the need for additional capacity and did not reward it. They also did not take account of the need for appropriate investment. Those matters must be incorporated in any draft of BETTA before we can talk blithely about legislation.
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    I want finally to address the options facing British manufacturing. We must ensure lean production. We need better investment behind our people and assured levels of charges for energy and the like so that our industries—manufacturing in particular—know where they are going. The Government's Queen's Speech offers several indications of the direction that we are taking, and they are a realistic basis on which manufacturing in Britain can hope to progress in the very difficult times over the next 12 months. I therefore welcome the Queen's Speech.
    6.49 pm
    Mr. Kenneth Clarke: I refer the House to my business interests, as registered in the Register of Members' Interests.
    The Chancellor of the Exchequer is skating on thin ice when he gives such a rosy view of the outlook for the British economy. He displays his usual fiery rhetoric in the House and exudes glowing optimism—both qualities that are not altogether suitable when one is skating on thin ice. I am worried, because I believe that in this Session of Parliament, it is possible that the Chancellor will face some of the toughest and most difficult decisions that he has faced so far during his tenure in the Treasury—thanks, I might say, to the inheritance that he had, and also to the way in which our economy was sustained in the wake of the American-led boom, before it went bust, for the most of the first Parliament of his period of office.
    The Chancellor gave his usual robust performance to the House, but such a complacent description of our economic outlook ought to be worrying. I can only hope that he did not believe a great deal of it himself, and I trust that he had his fingers crossed behind his back when he gave us some of those descriptions of where he thought we were going. He tried to exchange with me some arguments about our past forecasts. I do not have a great regard for other people's forecasts. I do not want to go back into history defending all mine, and the Chancellor certainly could not defend all his, but I think that more of mine were right than he claims.
    The forecasts most relevant to today's debate, as has already been said, are the forecasts of growth that the Chancellor of the Exchequer was giving to the House only six months ago. I took part in the Budget debate, as did most of the hon. Members who have spoken so far. I tried hard to mock the forecasts for growth that the Chancellor was then giving, in order to explain the sustainability of the plans that he was setting out. The mockery was justified. Those forecasts for growth are already wrong. The whole world knows from repeated briefing that they are already wrong. Presumably, we will be told officially next week, when we have the November statement, but I would guess that growth this year is 1.5 per cent. The hon. Member for Truro and St. Austell (Matthew Taylor) set out at some little length the reasons for casting doubt on the underlying estimates for growth upon which the next several years' spending plans were based.
    One thing on which we are all agreed—I think the Chancellor joins in this—is that the politics of so-called tax and spend will become increasingly relevant as this Parliament goes on. They are an important matter for us to discuss. I object yet again to the way in which

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    the Government, including the Chancellor of the Exchequer, try to cheapen the debate by claiming that if one raises doubts about the sustainability of their Harold Wilson-type programmes, one is somehow committing oneself to extraordinary figures for cuts in health and education. What they are committing themselves to is several years of growth in the totality of public spending. The explanations that they have given about how that is to be financed are unsatisfactory. We, as Parliament, are entitled to discuss that in terms of the prospects for future taxation and to discuss the impact on the real economy, which is where I part company with the Chancellor.
    The British economy has had more than 10 years of growth with low inflation—the longest period that we have had in living memory. At present, that record is looking more sickly than it has for a long time, as I said. We are of course maintaining 1.5 per cent. growth. That is quite good. We have been growing at less than the average for most of the past four or five years among the G7 nations. Currently, we are just ahead of all the economies, although we have slowed down.
    The problem is that the present growth of the British economy in 2002 depends fundamentally on two things, as far as I can see. One is a housing boom of an extremely worrying kind, with massive withdrawals of equity taking place and being turned into spending. The second thing sustaining our present sickly level of growth, which is well below trend, is a very high level of consumer spending, based on rapid growth in public sector spending and public sector pay. Both those, in my opinion, are extremely worrying. We should not expect to sustain a healthy level of economic growth on those two bases for very much longer.
    First, on the housing boom, which I am sure we will discuss at greater length before this Parliament is out, house prices have gone up 30 per cent. over the past 12 months. I hate to say it, but I do not think that that is sustainable. There will be a correction. I hear all the arguments. They were not given today—the Chancellor did not get round to it—about why it is all right, it is different this time and we should not be worried about it. Those are pretty good arguments. I used many of them myself in some Cabinet office or other in the late 1980s. I have learned from experience on that front. One cannot have such rapid growth in house prices without there being a correction, and in a period of low inflation that will hit people hard. I hope that it does not, but negative equity may come back to trouble us before long.
    Retail sales, as I said, are very healthy. In October they were up by 7.1 per cent. compared with a year earlier. That is all kept going by some public sector pay increases, and also by an extraordinary level of household debt. As a percentage of our gross domestic product, household debt is now 109 per cent. In France, for example, a healthy economy that until recently has been doing better than ours, it is only 46 per cent. of GDP. Household savings in this country have dropped as a proportion of GDP to 4.5 per cent. in the second quarter of this year. The savings ratio in France is 15 per cent.
    The significance of that is that if we want stability—the Chancellor always goes on about stability—we need a higher level of personal savings and a lower level of household debt. It is all going in the wrong direction.
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    The Chancellor is doing nothing about it, but claiming credit for the fact that we are still growing a little faster than other troubled economies in the G7.
    What is going wrong? I shall not repeat what has already been said. It is extremely important to notice that business investment is down 10 per cent. compared with a year ago. Investment in business in this country has fallen to 12 per cent. of GDP, a record low. Again, I will go back to the past. I can remember how, in opposition, the present Chancellor used to go on about our investment performance. It has deteriorated throughout his time in office. He spoke about employment and completely misanswered a question. Private sector employment in the third quarter of 2002 dropped by 36,000, but full-time jobs went down by 72,000. My hon. Friend the Member for Huntingdon (Mr. Djanogly) was right to say that it is public sector employment that is the only thing continuing to grow.
    We have a dismal record of investment. What is the significance of that? Looking forward in the medium term, if we do not get business investment, the result is low productivity, when our record is already terrible, low growth of the economy, and lost tax revenues, compared with every forecast that has been given, when we get back to tax and spend.
    What can be done to rebalance the economy? The Bank cannot help, because of the situation into which the Government have put themselves. Underlying inflation is 2.1 per cent.—below their target. That is the prime aim of the Bank of England, looking forward. Service sector inflation is running at 4.8 per cent. over the past 12 months. Public sector inflation is higher than that. Inflation is being kept down because there is a positive deflation in the price of goods. That is not a healthy way of hitting an inflation target.
    The Bank of England is stuck. I agree with Sir Eddie George. If it were to lower rates, it would feed the housing boom and household debt. It cannot do that. If it raised the present rate of interest, it would worsen the difficulties for business investment and business in general. The Bank has therefore stuck at 4 per cent., somewhat powerless in the situation, and left us with the tightest monetary policy in the developed world, but it does not have much alternative.
    The bank is stuck partly because of the fiscal policy of the Chancellor. Where does he come in? In my two remaining minutes, I am glad to say that I have no more than to echo what has already been said. What is the Chancellor contributing with regard to the uncertain outlook and the impossible problem of monetary policy? What is his fiscal policy? It has been the consistent increase of taxation. I shall again cite the CBI's perfectly accurate figure: a £47 billion cumulative increase in tax since 1997, which this Government have the nerve to scoff at because they are wrapping and rolling up annual increases, as the Government always used to do in presenting their public sector spending plans to the House. Another £6 billion has already been put in the pipeline for next April in a tax on jobs through national insurance hitting us at this time. The Government have been reminded about their taxation on pensions, which is plainly feeding into a serious pension crisis in this country. That is their contribution.
    The Government say that they can pay for all their huge public sector plans without more taxation. Those plans are already feeding into public sector pay.

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    They were bound to do so, as they were announced ahead of reform. They claim that the only way in which they can afford to finance those plans is borrowing and that the current debt level is low enough to allow that. It will not work. They will need more taxation if they commit themselves to those plans. Next week, when we return for the autumn statement on the pre-Budget report, we want some honest forecasts and accounts, and we want the Government truly to face up to the impact of what they have saddled us with and its implications for business.
    Business must be the priority in the Chancellor's policies from now on, because if wealth creation is damaged in this country, all those plans will fall about his ears—and well before the next election
    7.1 pm
    Mr. Colin Challen: I want to focus on the very last sentence in the Queen's Speech, in which the Government pledge themselves to
    "work for a successful outcome to the current round of world trade negotiations that benefits industrialised and developing countries alike."
    I heartily endorse that aspiration, but I have some thoughts about whether success is around the corner.
    The word "success" is highly relative in the context of trade liberalisation. If one harks back to the days of President Reagan, whose economic policies were based on an idea of wealth trickling down to the poor through market mechanisms rather than Government action, one may suppose that a little success has been achieved, as Governments seem to be surrendering more of their economic powers to the market. Our aspirations for lasting gains from trade will wither, however, unless we assert more strongly the human values that are meant to underpin the benefits that are meant to accrue from trade liberalisation. All too often, the terms of the debate have been set by business interests well before they enter mainstream discussion. There is far too much secrecy in the build-up to major negotiations and far too much privileged access to negotiations: our governmental involvement with a private sector committee on the liberalisation of trade in services—LOTIS—is one example of that. Not only do such shadowy groups exist to advance their own agenda, but they discuss ways of attacking their critics.
    In a democracy, however, we can be sure that there will be public debate, even if it seems unbalanced at times. Talking in a roundabout way about how the British worker must seize the opportunity to downsize his or her pay packet, Digby Jones, director general of the CBI, recently told us how the Government had got our competitive position all wrong. He said that the Prime Minister is too focused on competing inside the European Union and that we should concentrate on getting the upper hand in competing with the likes of China. To many people, that might sound like very good sense. After all, China is a semi-industrialised nation with one fifth of the world's population, many of whom are skilled. Of course, what Mr. Jones meant was that we have to compete with what is euphemistically described as a flexible labour force—a labour force that is low paid and has low benefits, low pensions and all the rest that
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    is implied by "flexibility". Needless to say, with the stock market currently failing to live up to its promise, low pensions are already here in abundance.
    The time has come to take stock of what China's accession to the World Trade Organisation means for world trade. Its entry into the utopia of world trade liberalisation will have far-reaching consequences, not least for the Chinese. One issue on which I do not imagine the trade negotiators spent much time was China's human rights record. I am sure that they believe that, trade liberalisation being the panacea it is, all ills will be cured in time—the positive engagement myth that western countries have embraced since the Tiananmen square massacre. Positive engagement is the flip side to Reaganomic trickle-down, on the basis that unrestrained capitalism cures all if it is left to its own devices and that it must be left to its own devices above all else.
    Today's China, with its endemic corruption and secretive, undemocratic Government, offers capitalist enterprise a land of many marvellous opportunities. The country has only one official trade union, the All-China Federation of Trade Unions. The evidence is clear that the absence of independent trade unions in China is a major boon to foreign investors. Here is a country where demands to be paid outstanding back pay, never mind a decent wage, can be crushed with the help of the police and the army, and where the suppression of the work force goes without comment elsewhere in the world. I have not heard of any WTO factotum speaking on the subject, and all that we hear from anybody else in authority is the usual positive engagement routine, saying that one day all will be well.
    The right to join an independent trade union is not very high on the WTO agenda. Indeed, the issue is not on its agenda at all, since it says that labour issues are a matter for the International Labour Organisation and have been since at least 1996, when the ministerial conference in Singapore decided that the WTO should not have anything to do with them—I bet that our then Government's representative went along with that all right. That separation of responsibilities is very revealing, since the WTO has many powers to enforce the resolution of trade disputes, but the ILO, wonderful body that it is, has to rely on persuasion.
    As always, labour is the underdog. In China's case, the underdog is now represented at the ILO by a representative of the All-China Federation of Trade Unions—in other words, a representative of the Chinese Government, as the two are components of the same machine. How does the federation see its role in protecting workers' rights? The following example of official Chinese trade union thinking, taken from the World Tibet Network News website, gives a mind-numbing flavour:
    "To enhance the workability of trade union cadres at all levels, the trade unions at all levels in Tibet organised different forms of training classes on many occasions and gave professional and theoretical training to trade union cadres. With the help of the Workers' Movement College and the regional committee's party school, the regional federation of trade unions successfully trained more than 100 grass-roots trade union cadres, thus increasing the vigour of the trade unions."
    The job of those cadres is presumably to tell the people of the Tibetan region—Tibet appears no longer to be a country—that they should be grateful that they have

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    such enlightened employers or, as they are often told, that they are indeed the masters themselves. They may also be told that if they try to organise themselves, as workers at the Tianshui City Auto Transport Company did when hundreds of them were being made redundant, they could face imprisonment of 10 years to life. They may also be told that their right to strike was abolished in 1982 because Chinese businesses belong to the people.

    Today's newly appointed leader of China, Hu Jintao, described the role of the trade unions thus in 1998:
    "Chinese trade unions are mass organisations of the working class under the leadership of the party, act as a bridge linking the party with staff and workers and play a role as a key social pillar of the state political power."
    Hu Jintao enjoins trade unionists consciously to accept the leadership of the party and consciously to submit to and serve the party and the state—a state whose central Chinese Communist party committee now accepts wealthy capitalists among its membership. No wonder that those who consciously seek to challenge the party and the state come off so badly; they will always be underdogs while they have no right to strike, no freedom of association and no right to organise independent trade unions.
    Scores, possibly hundreds, of industrial disputes have led to public demonstrations in China this year and every year for the past decade. The closure of older industrial activities has made millions unemployed, but has also lined the pockets of asset strippers. An example is the fate of the 2,000 workers—mostly middle-aged women—employed at the Shuanfeng textile factory who went on strike. The police dragged them by their hair and jabbed them with cattle prods during a factory occupation. These workers had been forced to buy shares in their own company on pain of losing their jobs. Last November, the company had gone bankrupt, but was started up again by the same bosses, offering half the wages.
    The owners, unlike their workers, were at least freed of their previous debts.
    Mr. James Gray: What has this to do with the Queen's Speech?
    Mr. Challen: If the hon. Gentleman is patient, he will find the answer at the end of my speech.
    Such bankruptcies—fake bankruptcies—are common in China. The Ferroalloy plant in Liaoyong province is another example. The average wage was $150 a month for technicians, when they were paid. Corrupt management issued false reports of inflated profits to pay themselves bonuses. Members of the management did so while working in collaboration with the provincial people's congress chairman, Gong Shangwu.
    It all sounds pretty familiar, does it not? Supplant Ferroalloy with Enron and Shangwu with a former governor of Texas, and we can see the parallels clearly. As Ferroalloy faced bankruptcy, the workers tried to organise themselves and expose the misdeeds of the management. For their pains they were met with riot police, under-cover police, plain-clothes police, road blocks and paramilitary troops. The entire panoply of state oppression was there to greet them whenever they wanted to organise or demonstrate. These events took place in March and have been fully documented, along
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    with other cases, by human rights watch. They were not fully documented by the local newspapers, of course, since they were told not to report them.
    Is that what is meant by having a flexible labour force, against which, according to the CBI's Digby Jones, we must compete? Is it right that we should permit without question China's membership of the golden WTO club, the express concern of which is not to interfere with the comparative advantage of low pay, long hours, poor working conditions and the crushing of independent trade unions that challenge these iniquities? Will the Government call for real teeth for the ILO so that it can impose its sanctions with the same force as the WTO? Will countries that fall foul of the ILO face financial penalties? Or will we be told that insisting on the same standards as we seek to apply at home is an outdated mode of protectionist thinking?
    If the WTO or the global business community believe that a nation's comparative advantage may reside in its ability to suppress working conditions and oppress workers, we should pursue a vigorous policy of elevating workers' rights to the same high altitude as is already enjoyed by the free marketeers. Our emphasis in future negotiations should elevate people above property. The current emphasis on the trickle-down approach and positive engagements must give way to a stricter international regime that supports human rights.
    7.13 pm
    Mr. John Bercow: I shall focus on three themes, the first of which is that labour market flexibility must mean flexibility for employees as well as for employers. On current reckoning there are 28.6 million people in the British work force, of whom 25.1 million, or 87.8 per cent., are employees. It seems, therefore, that it is obligatory for members of all political parties rigorously, enthusiastically and publicly to debate how to translate personal choice from a political slogan into a welcome fact for millions of our fellow citizens.
    It seems the reality that job sharing, part-time working, career breaks and home working will increasingly be vital if we are to achieve both economic efficiency and job satisfaction. There is a responsibility incumbent on each and every one of us to address these issues.
    I recognise that the Government have taken a number of steps to facilitate progress. However, if we are to secure a proper balance, much greater attention should be paid to these issues by members of all political parties, including, and perhaps in particular, my own as we seek to take the agenda forward in the much more diverse economic situation and labour market of the 21st century. I would welcome anything that the Secretary of State might have to say on that subject when she replies to the debate. I would be particularly interested also in the vantage point of my hon. Friend the Member for South Suffolk (Mr. Yeo), the shadow Secretary of State for Trade and Industry.
    Secondly, we need to improve both the quantity and the quality of child care—that is of the essence. I am fully prepared to acknowledge at the outset of commenting on this subject that the Government have taken several steps. These steps have been heavily but not exclusively focused on the demand side of the equation. I do not knock that because the various steps

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    have made a difference and are proving to be useful. However, there is also a supply side that should not escape our attention. My experience, locally and elsewhere, is that two phenomena are potentially hampering the supply of child care and ensuring the continuation of large gaps in the provision that is required.
    The first of the phenomena is the rigidity of the planning process, which frequently is much less friendly than it should be to prospective providers. I have had that experience in my constituency. People have wanted to provide child care, but what I might describe as a backward looking and—dare I say it?—otiose planning process has, regrettably, prevented them getting away from first base. If the Government are considering reform of the planning process—they have certainly earmarked their intention so to do in the Loyal Address—I appeal to the Secretary of State closely to consider how that reform might usefully apply in this context.
    Malcolm Bruce: The hon. Gentleman is making a good and constructive point. Does he agree that there is an inherent unfairness in the system whereby people who go to employer-provided child care secure 100 per cent. tax relief, whereas those whose employers are too small to provide child care secure no tax relief? Is that not a penalty on individuals who work for small businesses and a penalty on small businesses?
    Mr. Bercow: The hon. Gentleman is making an extremely valid point that bears focus and concentration by people in all political parties. It is a widely acknowledged truism that there are many citizens—overwhelmingly women—who would work if they had the option of available and affordable child care. Too often that is not the case. The consequence is both socially unjust and economically inefficient. Therefore, we should be prepared to consider all steps to change that state of affairs for the better.
    The second phenomenon that seems to hamper the provision of desirable and affordable child care is an Ofsted inspection regime that is as inflexible as frequently it proves to be burdensome. Once again, constituency experience can aid and abet us in deliberating on these matters. I am aware, for example, of a provider who lives in my constituency who specialises in mobile child care provision. She goes to venues throughout the country offering a service at conference centres and so on. She laments to me and to the Government that she has to comply with a positively Kafkaesque regulatory regime if she is to deliver the service that she would like to provide, admittedly and perfectly properly for a profit. I hope that the Secretary of State will take my remarks in a constructive spirit and offer me a response to what I have had to say.
    Thirdly, we need a balanced approach to regulation. Let me own up. I have been as insistent and ferocious in denouncing over-regulation as any other hon. Member. I make no apology for that and I do not resile from that stance. However, as we move forward, it is important to consider regulation in the round. As any commonsense analysis suggests, regulation can be onerous and debilitating but it can be equally enabling and protective.
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    The Conservative party has an honourable track record on regulating for enabling and protective purposes. Legislation includes: the Mines Act 1842, which stopped children going down mines; the Contracts of Employment Act 1963, which gave people the right to a written statement of their terms and conditions and a period of notice that they did previously enjoy; and the Offices, Shops and Railway Premises Act 1963, which established minimum standards for heating, lighting and ventilating commercial premises. To the enduring credit of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the purpose of the Disability Discrimination Act 1995 was to outlaw discrimination in the workplace against people with disabilities. Those Acts were good, constructive, Tory social reforms in the finest traditions of our party. Their effect was to enable, protect and improve the quality of people's lives.
    Some Government regulations are flawed. They include the ozone depleting substances directive and the physical agents directive. The Government have not taken as discriminating and robust an approach as they should have done to defend British interests. Those are examples of onerous and debilitating regulation.
    Let us try to expunge the national minimum wage from the daily preoccupation and table tennis of political debate. I was a furious and, I believed at the time, inveterate opponent of the national minimum wage. However, the Tory party and Conservatives at their best are pragmatic. The national minimum wage has not been the disaster that Conservatives, including me, predicted. It has combated genuine exploitation without resulting in the heavy job losses that my hon. Friends and I predicted, partly because it has been set at a relatively low level. We should acknowledge and accept that reality.
    Mr. Challen: Did the hon. Gentleman realise that the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) did not answer the second part of his earlier question about increasing the national minimum wage?
    Mr. Bercow: The hon. Gentleman expresses his view and I have expressed mine. I shall continue to do that. On the whole, my views on such matters are audible and comprehensible. Discretion dictates that I say no more about the subject this evening.
    We have a choice about regulation. We can opt for healthy scepticism, which is sensible, or furious denunciations in principle of every regulation, which is not wise. First, it jars with our historical record; secondly, it strikes many people as indiscriminate; and, thirdly, it is politically counterproductive for my own Conservative party. We should not pursue the matter in that way; it is foolish to do so. We should be more constructive, reasonable and inclined to consider each issue on its merits.
    If we accept the premise that employee rights are at least as important as those of employers or that each proposal should be considered in isolation on its merits, we might eventually lose the stigma that results from ritually opposing the rights extensions whenever they are made, only to accept them grudgingly long after the event.

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    I am making a polite and, I hope, positive suggestion for taking forward our approach in the best Tory tradition. We should oppose what is bureaucratic, poorly drafted and unnecessary, and support what proves wise, beneficial and to the advantage of the British people.
    Mr. Simon Thomas: Will the hon. Gentleman give way?
    Mr. Bercow: No; I am drawing my remarks to a close.
    I believe that my concluding remarks apply to all politicians, about whom there is pervasive cynicism in the United Kingdom. If we, as a class of public servant, are to become popular again, we must be respected. If we are to be respected, we must be credible. If we are to be credible, we must be reasonable. Those criteria must inform public debate and policy making on both sides of the House throughout this Parliament and beyond.
    7.25 pm
    Linda Perham: I believed that it was right to apply to speak in today's debate on the economy and trade and industry when I saw Friday's headline in The Guardian: "Hewitt Rules the World". Then I realised that I was reading the sports pages, not the business news, and that the headline referred to the world men's tennis number one, not my right hon. Friend the Secretary of State. Indeed, Mr. Deputy Speaker, you and I are cricket supporters, and therefore one moves on quickly from the sports pages at the moment.
    I warmly welcome the concentration in the Queen's Speech on tackling crime and antisocial behaviour, and investment in and reform of the public services. I am sure that many of us can testify from our constituency surgeries that such matters deeply worry our local residents, who come to us desperate for help to cope with troublesome neighbours, yobbish behaviour, noise, dumped cars and other assaults on their environment and quality of life.
    We share the goal of prioritising public services with our constituents. The investment that we have made is possible only because of the Government's achievement of economic stability, low inflation, low interest rates, record numbers of people in work and improvements in employment rights, especially for women and part-time workers.
    Britain's entry into the euro is vital to our economy's continuing success. I therefore welcome the commitment in the Gracious Speech to make a recommendation on entry into the single currency on the basis of the famous five economic tests. Fifty-seven per cent. of our trade is with EU member states, generating 3.5 million jobs. My firm commitment to Britain joining the euro has been reinforced by my work on the Select Committee on Trade and Industry.
    At the beginning of last year, the Select Committee produced a report on vehicle manufacturing in the United Kingdom after problems at Longbridge with BMW/Rover, at Luton with Vauxhall and at Dagenham with Ford. Clearly, some of the difficulties were caused by issues that related to the value of sterling and uncertainty about our future membership of the euro.
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    Major car manufacturers such as Ford, Toyota and Nissan have made it clear that they want us to join the euro and that otherwise, inward investment by foreign companies will be put at risk. On 13 October,The Observer quoted Unilever chairman, Niall Fitzgerald, who said that if we do not join the euro,
    "Britain would float away from being a central part of Europe, which is its major market, and lose influence, investment, jobs and economic growth"
    I am pleased with the commitment to rapid progress on EU enlargement. I especially welcome the accession of the Baltic states of Estonia, Latvia and Lithuania. The Select Committee was made aware of the enthusiasm of their people to join when we visited the region two years ago to investigate industrial and trade relations.
    Cyprus is another country about which I feel passionately, as do many other Members of this House and the other place. I fervently hope that the island's future will be as a member of the EU with Greek and Turkish Cypriots living together in peace and prosperity.
    My constituents are greatly concerned about trade with the developing world. A few weeks ago, at the end of One World Week, I spoke about fair trade at two churches in my constituency, St. Mary's in Woodford and Hainault Baptist church. I was therefore pleased that the Gracious Speech reaffirmed the Government's commitments to the agreements made in Monterrey and Johannesburg.
    The agreement in Monterrey begins to define our global role. The developed world, through protectionist subsidies and tariffs, imposes poverty and deprivation on billions of people, including countless children. According to War on Want, halving such protection in agriculture, industrial goods and services could boost developing countries' incomes by about $150 billion a year, which is three times the total aggregate aid budget of every country in the world. The World Bank advises that substantial trade liberalisation could reduce the number of people living in poverty by more than 300 million by 2015. At this point, I would like to pay tribute to the Chancellor and to the Secretary of State for International Development for their world leadership on increasing debt relief to the poorest countries.
    Hon. Members may be aware of my interest in corporate social responsibility, as I have presented two Bills on the subject to the House in the last few months. At the world summit on sustainable development this year, the UK agreed actively to promote corporate responsibility and accountability through the full development and effective implementation of national regulations, among other measures. I was disappointed, therefore, by the lack of any specific mention in the Queen's Speech of a companies Bill, which would have presented an ideal opportunity to fulfil that undertaking, particularly as our new House rules would enable the legislation to be carried over, if necessary. I should be grateful if the Secretary of State for International Development would tell the House how she intends to fulfil that commitment in the absence of such a Bill in the present programme.
    I look forward to examining the proposals for changes to the planning system, particularly those relating to improving the involvement of local

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    communities. I and many other hon. Members deal with a large number of inquiries from constituents regarding planning matters, and a frequent complaint from the public is that there is a lack of consultation. In recent months, I have had a number of representations from local residents who felt that they had not been consulted or kept informed about the siting of mobile phone masts. The Select Committee on Trade and Industry held an inquiry into mobile phone masts at the beginning of last year because of the growing public concern reflected in early-day motions, Bills and the formation of a national umbrella organisation, Mast Action UK. That organisation has been set up to reflect the concerns made known to us by constituents.
    Two of the Committee's recommendations were on community consultation. The first stated:
    "It is essential that those closely affected by a possible development hear about it early, directly and accurately. That is the responsibility of operators at least as much as local authorities."
    Mr. Bercow: I strongly agree with what the hon. Lady has just said. Does she agree that there are many examples of mobile phone operators treating local communities in which they intend to erect masts with indifference, disdain and contempt, and that if it were not for effective local lobbying and action, those companies would not be brought to book at all?
    Linda Perham: I thank the hon. Gentleman for his support on that matter. There have been a number of briefings from those companies, and they are certainly on the defensive. They know that local people should be kept informed, and I hope that we shall make some progress on that. I am sure that many other hon. Members have been lobbied about this; it is a serious matter, about which people care very much.
    The second recommendation of the Select Committee stated:
    "Changes in the planning regime fail to address the main problem, which is that objection to base stations comes not from local authorities but from individuals who suffer from loss of amenity or fear of ill-effects for themselves and their families. Unless it is clear that the planning system has a robust way of dealing with health fears expressed by people, the results of the changes will be yet more frustration."
    Speed of decision making is another cause for concern addressed by the planning Green Paper. A planning application to build a racecourse in my constituency took more than a year to be decided. We must do better. There is also concern that planning reform will be focused too closely on the needs of corporations and may fail to protect the interests of vulnerable individuals. I envisage planning reform providing opportunities for innovation that will finally turn the tide of the housing crisis in London. I dearly hope that the Government will be radical—and, dare I say, bold—in their plans to help the homeless, key workers and, in London, anyone whose salary is less than £30,000 a year, as people in those circumstances have very little chance of getting on the housing ladder. There are 190 families with children currently accommodated in bed and breakfast by my borough of Redbridge. Unfortunately, at the same time, the Tory council is
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    proposing to reduce drastically the density of future residential developments, at a time when homes are most urgently needed.
    The Trade and Industry Committee has looked at the matter of Britain's nuclear liabilities, and I am pleased that the Government are taking seriously the need for a resolution to this issue. Nevertheless, I stand by the Committee's recommendation that there needs to be an independent inquiry into the value for money for the taxpayer in transferring those liabilities. Nuclear power is expensive and dangerous, and I am concerned that we may be asked to bail out this industry with many billions of pounds of taxpayers' money. Perhaps we should consider what would be the relative benefit if that money were invested instead in the production of renewable energy or in energy conservation. I look forward to the publication of the energy White Paper next year, and I hope that it will include non-nuclear options.
    I welcome the announcement of legislation to enable Parliament to reach a conclusion on hunting with dogs. I share the opinion of more than 300 of my constituents who have contacted me on the issue since my hon. Friend the Member for Worcester (Mr. Foster) introduced his Bill in 1997; the only conclusion is a complete ban. Four hundred and eleven hon. Members voted in favour of that Bill. There could have been no clearer statement of the will of this House than that, and we should have concluded the issue in the last Parliament. I hope that we shall at last, and not before time, end this monstrous, barbarous and cruel practice, which masquerades as a sport.
    I support the Queen's Speech and the Chancellor's robust statement of the Government's achievements and future programme. In the absence of any policies being put forward by the shadow Chancellor, the public will judge which party can best be trusted with the future of the country.
    7.36 pm
    Alistair Burt: I am delighted to have the opportunity to contribute to what has already been an excellent and interesting debate. It was opened with characteristic ebullience by the Chancellor, but he seemingly has a certain amount about which to be ebullient. It would be a poor commentator on British public affairs who did not recognise that the public perception of the Labour Government and their handling of economic matters are completely different from that of previous Labour Governments. And yet, as in all classical tragedy, there is a moment at which the greatest strength can start to become the greatest weakness. At a moment of apparent control, having weathered the storms of public perception about what a Labour Government could achieve in relation to the economy, those little things that appear, on the horizon, to be no bigger than a man's hand start to take on greater and greater importance.
    The Chancellor was well and successfully challenged by my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) on some of those issues. Labour Members then listened to my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) in a very different way from the way in which they had listened to their own Chancellor, because my right hon. and learned Friend began to drive

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    home to them that this was a moment of real uncertainty for the British economy, and that all the ebullience in the world will not prevent the Chancellor from missing the problems that will come to dominate the economy.
    Those problems will include not noticing that a very difficult public pay dispute that is being massaged towards some sort of a conclusion is being carefully watched by others in the public pay round. They might also include the glossing over of the problem of the very low savings ratio in this country, and not being overly concerned about the steady increase in taxation. At the moment, with all the plaudits ringing in the Chancellor's ears, those things probably seem sufficiently far down the line not to be of concern. They are all, however, matters that will come back to haunt him.
    Mr. Hendrick: Does the hon. Gentleman agree that the right hon. and learned Member for Rushcliffe (Mr. Clarke) did not make one reference in his speech to the fall in equity prices that has led people to put their money into property, which has, in turn, led to the property boom and to many of the problems that we now face? Neither did the right hon. and learned Gentleman give any indication of what he would do, if he were Chancellor in a future Tory Government, to put the matter right.
    Alistair Burt: I think that the record of my right hon. and learned Friend, who created the economy in which the hon. Gentleman and his colleagues have enjoyed themselves so lavishly over the past few years, speaks for itself. As for the hon. Gentleman's concern about falling equity prices and people putting their money into homes, while for whatever reason there may be a housing boom, the fact that such a boom exists and is something of which the Chancellor should take serious note was the point made by my right hon. and learned Friend.
    In that regard, my right hon. and learned Friend was rightly supported by the deputy governor of the Bank of England, Mervyn King, who said recently:
    "Beneath the surface of overall [economic] stability lies a remarkable inbalance between a buoyant consumer and housing sector on the one hand and weak external demand on the other."
    My point is that there is enough evidence of problems for the Chancellor to be more worried than his performance this afternoon suggested. I feel that his failure to act, and the absence in the Queen's Speech of the sort of action that might be needed to assist the economy, imply that the Chancellor is missing something quite significant.
    Let me now move from the general to the particular, and talk about some of the factors affecting business and the economy as they apply to my constituency. I want to say something about engineering, and in this regard I am grateful to the Mid-Anglia branch of the Engineering Employers Federation for its assistance.
    Engineering and manufacturing represent the silent casualty of recent years. No wonder that casualty attracted no attention from the Chancellor—although it did attract attention from the hon. Member for Ochil (Mr. O'Neill), whose contribution I welcomed. According to the latest survey carried out by the Mid-Anglia branch of the EEF in respect of the third quarter of 2002, 46 per cent. of firms reported a drop in total
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    output volume. Output volume has been in negative balance since the first quarter of 2001. Moreover, 46 per cent. reported a decline in new orders over the past three months. Fifty per cent. said that they had reduced the number of people whom they employed, and 38 per cent. expected reduced capital expenditure in the next three to six months. They, unlike the Chancellor, are worried about where the economy may be going, and are expressing that lack of confidence.
    There may be many reasons for these pressures. Our manufacturing industry does not exist in a vacuum—we are part of a global economy, and the slowdown in the economy of the European Community naturally has an effect on us—but Governments can make matters worse. It is significant that those in engineering and manufacturing to whom we speak know that some of the problems lie with the Chancellor, and with the running of the economy. It worries them that the Queen's Speech has not dealt with such matters.
    Let me quote from the September 2002 issue of "Engineering Outlook", produced by the Engineering Employers Federation, which covers a wider area than my constituency.
    "We start by analysing where the government itself is exacerbating an already difficult situation… the overall tax burden has been rising since 1993/94 and is set to hit a 20 year high by the middle of this decade. At the same time, international surveys show that the UK's rating on the regulation burden has worsened in recent years. Though taxation and regulation remain lower than in the rest of the EU, a continuation of current trends risks eroding our historical advantages in these areas."
    The article looks at matters in more detail, and then states:
    "The results suggest that many companies will take a hit on margins, indicating further bad news for investment."
    It concludes:
    "Overall our message to government is simple. There is little it can do about the state of the world economy but there is much it can do to ease the administrative and cost burden manufacturers face."
    Mr. Jim Cunningham: The hon. Gentleman probably feels that the issues he has raised are very important, and I do not think the House would necessarily disagree; but does he not expect the Chancellor to deal with some of the matters he has accused him of taking lightly in the pre-Budget report?
    Alistair Burt: I might feel more confident if the general display from the Chancellor had suggested that at the back of his mind were certain niggles about where we were going. He has, of course, tried to appear confident himself—a confident Chancellor, with his finger on the pulse—but the impression that is given is one of someone who is missing something that is going on which others are spotting.
    Those who have been here as long as the hon. Gentleman and me have seen what goes on. It does not matter which party is in power: Conservative Governments are not immune. A Government may start thinking that what they are doing is so right that they miss something else that is going on. With the benefit of the experience of colleagues, Members sense that the economy is in a particular state. It might be assumed that a Chancellor would say something to ensure that we understood that despite what he might think was going right, certain things might be going wrong.

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    Having quoted some general comments made by the engineering employers, I want to deal with particular examples of ill effects that we might expect legislation to deflect. The agency workers directive, which is currently being dealt with by the European Community, will hit industries and others whose time is given through contractual relationships with companies, as opposed to long-term employment. In the aerospace industry, those with particular skills have always tended to follow the work and the pay round. To gain experience, they have moved to different companies after a year or so. They have taken their skills to companies that have needed those skills. The agency workers directive will make it more difficult for them to be employed, and for companies to employ them. Where does the Loyal Address show any concern about that?
    The climate change levy continues to have a disproportionate impact on manufacturing. It appears from surveys that Government measures are not encouraging even those hit by the levy to do anything about the problem, so it is doubly ineffective. I listened to the Queen's Speech, but I heard no suggestion that a measure that is damaging manufacturing so much would be repealed.
    Small businesses in my constituency bring me problems of a more general nature. In a recent survey, more than 1,000 businesses in the area were asked whether legislative changes over the past year or so had helped them. According to the subsequent report,
    "Changes in legislation were felt to have been far more negative than positive. Employment legislation changes were felt to have had a positive effect by only 4 per cent. of businesses compared with 35 per cent. who felt they had a negative impact. A similar story was true of responses on business taxation, such as IR35. Even health and safety changes were positively received by only 11 per cent.
    Greatest dissatisfaction was expressed at the rate of change, complexity and volume of legislation. Respondents in the East of England expressed similar levels of dissatisfaction as the rest of the country, with 66 per cent. dissatisfied against 1 per cent. satisfied."
    The problem is the cumulative burden of the issues I have raised. That applies whether we are talking about higher taxation, specific measures that damage particular industries, or the growing burden of regulation and bureaucracy. All that is fuelling the gradual collapse and disintegration of engineering and manufacturing in my constituency and the neighbouring area. The loss of jobs and the lack of investment lead to a further loss of confidence, and suddenly, instead of a boom, there is a wormhole. During a boom, as soon as certain issues raise their heads, everything starts to tumble. Given the amount of public expenditure that is based on the continuation of the boom—given the Chancellor's spending plans—once the hopes start to unravel, where will the Chancellor and the economy be?
    Farming and agriculture are also important to my constituency. According to the latest survey by the National Farmers Union, 8,500 farmers left farming this year, and 6,600 farm workers followed them. A total of 67,000 people have left farming in six years. Farm incomes are 71 per cent. down on those of 1995. Yet, with rural deprivation growing, the Government plan to take money from rural areas and give it to urban areas in the future. I cannot see that as being fair and just.
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    Accordingly, I have tried to point out that although there is an understanding of where we are in terms of the world economy—better placed than some—the seeds of destruction are there. If a Government do not pick that up when times are good, they will not notice until things have turned much worse. Then, it will be too late. Be warned, because the House will address those issues again before too long
    7.50 pm
    Mr. Nigel Beard: Taken as a whole, Britain's economic performance has excelled beyond its own record and the performance of the rest of the world. The stability achieved over five years has provided the conditions to address structural weaknesses that have prevailed for many years. Coupled with prudent management of the public finances, that economic stability has enabled the notable deficiencies in our public services—education, health and transport—to be addressed for social as well as economic reasons.
    There are powerful pressures toward recession in Europe, America and Japan. The major public investment programme planned for the next three years will help to counteract those recessionary forces in Britain.
    The American authorities are also shaping their monetary and fiscal policy to head off recession. Whether it is admitted or not, the UK and USA are following Keynesian principles to enhance demand. In neither case does that take risks with inflation. The expansion is well within the capacity of both economies. That contrasts with the European Central Bank and the German Government, which appear to have a fixation with inflation although the alarm bells warn of recession. Moreover, the cautious inflexibility of the resulting monetary policy cannot be compensated for by more expansionary fiscal policies, because the stability and growth pact will not allow sufficiently large public spending deficits.
    There is a need for a commonly agreed and firmly enforced policy to prevent extravagance in Government spending in the eurozone. However, that must take into account the position in the economic cycle and national debt, as the United Kingdom's fiscal rules do. I am sure that there is no one better placed than my right hon. Friend the Chancellor to remind his friends in ECOFIN of the difference between prudence and sadomasochism. Such an over-tight monetary policy and rigid rules restraining fiscal policy are dangerous not just because of the immediate economic consequence, but because, in the popular mind, the euro will become associated with stagnation and recession.
    No doubt those anti-Europeans who associate everything from original sin to global warming with the European Union are already saying that those restrictive macro-economic policies are inseparable from monetary union, but they are wrong. The stability and growth pact needs amending to something nearer the UK's fiscal rules, but the concept of European monetary union does not need to be set aside to achieve that. Japan provides a cautionary tale as to what could happen if it is not done. That economy continues to be in thrall to deflationary forces, which have proved very difficult to throw off.

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    There is a real risk of the world economy in general moving into a similar position. With American interest rates at 1.25 per cent., there is not far to go before US monetary policy can have no further stimulating influence on the US economy. If Europe keeps on digging its current hole deeper, there will be no source of economic growth in the world and contraction of the world economy becomes possible. If that happens, Britain cannot escape the consequences, no matter how wise its economic policy may be.
    I do not believe that deflation is the most likely future for the world economy, although I do believe that it is sufficiently possible that we should establish what to do if it happens. The nearest the world economic community has come to a contingency plan appears to be whistling in the dark to keep the evil spirits at bay. A beginning would be my right hon. Friend the Chancellor telling our European friends about the third law of holes, which is, "If you're in one, stop digging." That is a profound truth enunciated by his predecessor, Lord Healey.
    Beyond that, no one really knows what to do to counteract world deflation. For that same reason, the world economy languished in such a condition throughout the 1930s, only to be pulled out of it by the second world war and the Keynesian economic policies that followed it. I ask the Minister, what steps, as a contingency measure, are being taken to map out an approach to deflation at home and to develop a concerted international approach if that should become necessary?
    I turn from the gloomy possibilities to the more usual probabilities for the future—namely, that the economic cycle will continue, with counter-cyclical macroeconomic policies modifying the peaks and troughs so as to avoid the boom and bust that we have come to associate so clearly with Conservative Administrations.
    In recent months, growth has been sustained by high consumer demand based, to an extent, on increased personal debt. Underlying that, however, have been certain imbalances such as the growth of the service sector along with difficulties for manufacturing, a significant balance of payments deficit and continuing house price inflation. Such inflation, which makes the conduct of monetary policy so difficult, reflects the fact that too few dwellings are being built. The programme recently announced by the Deputy Prime Minister is addressing that problem.
    The other issues are interrelated. Despite the general growth in the economy, to which services contributed, domestic manufacturing has not been able fully to supply the increased demand for goods. Thus, imports have been sucked in. The high value of the pound against the euro has reduced the competitiveness of manufacturing exports, just as the volatility of the exchange rate over many years has reduced incentives to invest in manufacturing.
    Manufacturing is the key to curing many weaknesses in the economy, and it is not just a few bricks in the economic edifice—it provides the keystones and the flying buttresses that keep the whole building upright. Manufacturing is the source of most of our export earnings. Without it, a vast range of skills and abilities could not be used for the economic benefit of either individuals or the country. For all those reasons, it is
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    essential to place on productivity the emphasis that the Chancellor has provided. Government policy is now putting that into practice.
    Our productivity lags behind that of competitors. For example, the USA has more graduates in the work force while the European Union has more people with intermediate qualifications in the work force. Investment levels are poor, because economic instability has led to uncertain expectations of reward. As a similar consequence of short-term horizons, research and development as a proportion of gross domestic product has been falling behind the figure among competitors and innovation has not been foremost among management objectives.
    All those issues are being addressed by Government policy, which is underpinned by maintaining economic stability. The exchange rate remains a maverick element, distorting both import and export competition. The trade element of the $100 billion that crosses the world's exchanges every day is minuscule. The exchange rate is not settled by considerations of the competitiveness of goods traded, as traditional economic theory would have it.
    To take the random foreign exchange element out of manufacturing competitiveness, it is imperative that this country join European monetary union. That would eliminate the impact of volatile foreign exchange rates for the majority of our overseas trade, which would also be no worse than for any other EU manufacturer when exporting outside the EU. For the same reason, the exchange rate affects the prospects for inward capital investment in manufacturing from overseas. There are already signs of that investment falling away because Britain is outside the European monetary union. We should not forget that after the industrial mayhem produced by the overvalued pound in the early 1980s, inward investment has sustained this country's technical and managerial skills in several industries, such as motor manufacture.
    One the famous five tests is the impact on the financial services industry of joining European monetary union. I do not demur from that, but given the role that manufacturing industry plays in the economy, it has a claim to be up there, too.
    Alone, we cannot escape from the effects of worldwide deflation, if that should happen, but we can prepare contingency plans to minimise the impact and to speed recovery. Equally, alone we cannot protect our industry and thus our economy against the maverick effects of today's foreign exchange markets. The solution to that is ready for us to take up by joining European monetary union.
    Mr. Hendrick: My hon. Friend said that changes to the stability and growth pact were needed. If those changes were not made, would he still be in favour of entry, notwithstanding what he said about manufacturing industry?
    Mr. Beard: I would still be in favour of joining European monetary union, because if we are to influence the stability and growth pact and what comes after it, we will do better within than without.

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    For the reasons that I have given—the exchange rate and the risk of deflation—the only way to protect and advance the welfare of this country is to take concerted action with allied nations. There is no economic future for Britain in the false superiority of sullen isolation.
    8.2 pm
    Mr. Simon Thomas: I am pleased to respond to the Government's legislative programme on behalf of Plaid Cymru. I was interested in the Chancellor's ebullient opening remarks. He was confident and positive, and much of what he said was correct. I want to concentrate on some of the regional disparities that have grown up in the past four or five years and the effect that that has had on Wales. Many Members from other parts of the United Kingdom, including the English regions, will find something to agree with in what I am about to say.
    Some of the economic indicators of what has been happening in Wales in the past five years do not show such a rosy picture. In 1998, there were 204,000 manufacturing jobs in Wales, whereas the figure is now 187,000. When the Government came to office, gross weekly earnings in Wales were 89.1 per cent. of the UK average, which is more than 10 per cent. behind, and the figure is now 86 per cent., so the position has worsened. The number of VAT-registered businesses in Wales was 94.5 per cent. of the number of UK businesses, and now the figure is down to 90 per cent., so we are losing our businesses as well. When the Government came to power, the index of production and construction in Wales was 95.6 per cent. of that for the UK, and it is now 91.4 per cent.
    However the economic fortunes of 1997–98 were created—I accept that there is a ping-pong battle about who was responsible—there is no doubt that in the past four or five years the position of Wales has declined in relation to the rest of the United Kingdom. It is that position that we want to see reversed, and that we want this legislative programme and next week's pre-Budget statement to address.
    One tool that is specific to Wales is objective 1, which is a six-year programme of regional structural funds from the European Union. I welcome the objective 1 programme and the way in which it is working. It is a sign of weakness, but nevertheless it is a tool to improve the Welsh economy. It is regrettable that, in the first two years of objective 1, we have been able to commit only 77 per cent. of the resources available. The most under-committed part of objective 1 is that dealing with infrastructure, and I shall concentrate most of my remarks on that.
    The subtext of the Chancellor's remarks was that unemployment was no longer a problem. We need to consider the unemployment figures very carefully. In Wales, the percentage of people living in households with at least one person unemployed has gone up in the past four years from 15.6 to 16.7. The number of people in employment, which is a bit different from the unemployment figures, has declined. In Wales, the figure is now less than 70 per cent., whereas the UK average is about 75 per cent. Neath-Port Talbot, which covers the constituency of the Secretary of State for Wales, is languishing at 56 per cent. of the working-age population in employment.
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    As well as the sickness statistics, the problem of people who do not choose to register for employment and the difficulty of getting women into the employment market because of the lack of child care are infrastructure problems in the Welsh economy. That is reflected in the average earnings figure for Wales, which is £380 a week compared with £440 a week for the UK. The infrastructure difficulties in the Welsh economy should be addressed.
    It is fortuitous that this aspect of the Government's legislative programme is being discussed tonight, because today Plaid Cymru launched its economic strategy for Wales. I am sure that hon. Members will be interested to know what it contained, so I thought that I would take this opportunity to tell them what we propose. There is a UK economy and a set of UK fiscal measures to deal with that economy, but the presence of the public sector has a specific bearing with regard to Wales, because 60 per cent. of the Welsh economy is based on the public sector as opposed to 40 per cent. in the rest of the UK.
    Certain aspects, such as the public finance initiative, public procurement and the Barnett formula, impinge on the economy of Wales in a way that they do not in most of the UK, although they have resonances in some parts of England. We would like a statement on the Barnett formula. It was not in the legislative programme, but it may be appropriate for the issue to be included in the pre-Budget statement next week. We do not think that Wales has anything to lose from a review of the Barnett formula or from the establishment of a more needs-based formula. Indeed, many areas in England would also benefit from such a review. I think that many Labour Members would be interested in a review to see what it would bring to their regions, particularly with regional government now being introduced in England. The United Kingdom overall would benefit from a lack of regional disparities.
    Mr. Andrew Love: Has the hon. Gentleman checked with the Scottish National party?
    Mr. Thomas: The hon. Gentleman will be present tomorrow night when the hon. Member for Banff and Buchan (Mr. Salmond) will hopefully catch the Speaker's eye to make his views clear about where he stands on this matter. I am speaking for Wales and for Plaid Cymru.
    The response of the Liberal Democrat and Labour coalition Government in Wales to these challenges has been pretty abysmal. The economic strategy of the National Assembly was published after the objective 1 programme started, so the unique fiscal tool that we have in Wales, which is separate from what happens at a UK level, was in place before any strategy was established. The strategy fails to address the real needs. It has wonderful targets: we would all like the GDP of Wales raised to 90 per cent. in the next six years, but it will not happen, certainly not as the strategy sets out. We would like 135,000 jobs to be created in Wales in the next six years, but I doubt that that will happen, not without a strategy to increase the number of businesses in Wales, especially small and medium-sized businesses, which is what Wales specialises in. It will not happen without helping existing businesses to grow, and without a way of sharing economic success throughout Wales.

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    Under the National Assembly for Wales and the objective 1 programme, the majority of jobs in agriculture are based in Cardiff, which is not the most agricultural part of Wales and nor is it in the objective 1 area. Surely at the very least we should roll out public sector jobs in Wales: agriculture to the west and objective 1 jobs to the north.
    We have set out the key tasks for Wales in the economic development strategy, and we would like to see the Government's legislative programme help them. They include regional development within Wales and a plan for jobs within Wales; for example, we do not have control over the Office for National Statistics, so we do not know what the labour market assessment in Wales is at the moment. We must wait two years until it filters down to us. That is vital to Wales, as is selecting the most promising sectors for development in the Welsh economy.
    In my constituency, we have just lost Dewhirst, a clothing manufacturer from the town of Cardigan. The company was lost because it is cheaper to make jeans in Morocco and Turkey than in Cardigan. It has nothing to do with the work force, who were effective and efficient. It was often said that they were the best in the group and they were the last to go, which says something about them. However, 400 jobs lost in a small market town of 2,000 people is a big blow to take. Some 80 people have found jobs with local businesses. The small and medium-sized enterprise sector has picked them up, although some have to drive for more than an hour and a half to get to work. However, that leaves 300 people without jobs and another 150 jobs are to go at the old Ministry of Defence range at Aberporth. Those constituents who are affected will ask what is in this legislative programme for them. What can they take from it? There is nothing that we could usefully use in Wales—"neutral" would be the most generous description—to support the sectors that we can grow in my constituency and throughout Wales.
    There are sectors at which we can look, such as renewable energy. It is important that the energy review will come from the Government very soon and I agree with the hon. Member for Ilford, North (Linda Perham) that we need to invest in renewables and not nuclear. That is pertinent to Wales.
    Mr. Love: The history of choosing winners in Wales is not a good one. Is the hon. Gentleman suggesting that politicians can choose those sectors of the economy in which we ought to invest?
    Mr. Thomas: The hon. Gentleman makes a reasonable point. It is not for politicians to choose as such, but it is for politicians to note which sectors are likely to be goers in Wales. For example, we have the Welsh Development Agency—it is independent, and many parts of England would like something similar—to do the groundwork. However, without the labour market assessment, it is difficult to see the way forward. We are not talking about picking winners and then expecting inward investors; we are trying to pick some sectors that are growing with indigenous Welsh businesses, and support them to create more employment opportunities. That has been shown to be more successful in the longer term than getting interim
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    investment. I do not have to talk about the LG plant in Newport; the hon. Gentleman may remember that example.
    Another important factor is IT and, in this context, the communications Bill will be vital. Out of the 11 indicators of IT take-up promoted at an EU level, Wales lags at the bottom of seven in the UK and is in the bottom three in all 11. Only 30 per cent. of SMEs in Wales have a website. Here in London, the figure is 65 per cent. That digital gap in Wales, parts of England and Scotland will grow unless Ofcom and the Bill provide a statutory duty to ensure the roll-out of broadband and IT communications to all parts of the UK.
    We can imagine what would have happened had we left electricity connections in rural areas to the free market. There are still businesses in my constituency that do not have mains electricity. That would have been worse had we not faced the challenges in the 1950s and 1960s of getting mains electricity to all parts of the United Kingdom. We must get IT and broadband to all parts as well.
    My final point concerns agriculture. Reference has been made to common agricultural policy reform, and I agree. If there is genuine CAP reform, which looks at sustainability, the countryside and the unique role that agriculture plays in Wales in sustaining rural tourism, the language and social cohesion, I do not think that Welsh farmers will have much to fear. However, we do fear a fudged reform in which France, Germany and perhaps the United Kingdom fudge around the issues, try to protect some interests and do not address the over-production issues in agriculture. With farm incomes in Wales at £4,200 in upland areas, farmers have everything to play for within CAP reform. However, there are also huge dangers in the way in which the present bigger political game is being played out.
    Plaid Cymru views the present legislative programme as a continuation of present policies. Regional disparity has widened in the past four or five years; it is likely to do so again under this programme. In Wales, we want a proper Parliament with tax-varying powers to look at things such as corporation tax, and to employ an economic strategy that builds sustainable development in Wales, to help indigenous businesses, to address the increasing number of economically inactive people in Wales and to raise the wealth of the people of Wales.
    5 pm
    Keith Vaz: I am happy to follow the hon. Member for Ceredigion (Mr. Thomas) in this interesting and important debate on the Queen's Speech. I was astonished that we heard yet again from my near neighbour in the east midlands, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who claimed to have been responsible for the economic success of the Chancellor of the Exchequer and followed that shortly after by denouncing those same policies and predicting doom and gloom for our country.
    I would like to pass on my thanks on behalf of my constituents to the Chancellor for his wonderful stewardship of his office and for delivering the prosperity that our country has had over the last five years. As we have heard from many of my right hon. And

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    hon. Friends, we have the lowest inflation, the lowest level of unemployment and the lowest interest rates for years. I want a continuation of those policies because it is only through that that we will be able to implement the promises that we made in our manifesto.
    The Queen's Speech is a repetition of the radical and modernising agenda that we have put forward over the past five years. Unless we have a proper stewardship of the economy, we cannot spend the money wisely on our social programme. The Queen's Speech sets out a number of important areas of legislation, all of which merit attention and none of which could have been carried out but for the economic success that we have achieved over the past few years.
    I want to mention the emphasis in the Queen's Speech on law and order, and fighting crime and the fear of crime. If one looks at the printed version of the speech, the whole of the front page deals with law and order legislation, the reform of the criminal justice system and putting victims at its centre.
    A constituent came to me last week. She was a victim of crime who had been assaulted by an individual. She went to court and waited in the witness room for more than 12 hours before her case was called, only to be told that the charges against the person who had hit her had been dropped by the Crown Prosecution Service. I want to ensure that once the proposed legislation in the Queen's Speech is passed, the victim will be at the centre of the Government's attention.
    I welcome the thrust of the Queen's Speech. My hon. Friend the Member for Ilford, North (Linda Perham) mentioned Europe and the euro. I know that she was depressed when she read the sports pages recently because like me she is a supporter of Leicester City football club. I can assure her that we are second in the league, that we are going up and that we will be in Europe in two years. In the meantime, it is important that the Government have re-emphasised our commitment to the EU. The Government are pro-euro and pro-Europe. We have made it clear that the five economic tests will have to be assessed in June next year.
    My plea to the Economic Secretary and, through him, to the Chancellor, is that once the tests are met, we need to get on with a decision on the referendum as soon as possible. If we do not, this could be a saga even longer than the Eurovision song contest. People are waiting for the economic tests to be assessed and we are happy to accept the judgment of the Chancellor on this issue, as we have been happy to accept his judgment in the way in which he has been running the economy. It is important that we get on with the decision. We know the Government's formula. If the tests are met, there will be a meeting of the Cabinet, a decision by Parliament and then an all-singing, all-dancing referendum. I hope that that timetable will be stuck to very soon after the tests are assessed. Of course, if the tests are not met, we will not have a referendum—I understand that—but it is important that we move forward.
    Enlargement is very much on the agenda of the Ministers' meeting in Brussels. A date for enlargement should be set at that meeting—1 May 2004. It is essential that we stick to that date because the entry of the 10 applicant countries is vital to the success of our
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    economy and the economy of Europe. It will create the largest single market anywhere in the world—a single market of 500 million people—and provide the security and umbrella of co-operation that have been missing from Europe over the past few decades.
    All the applicant countries want progress on enlargement. I am grateful to our Ministers for doing so much to ensure that the enlargement process has taken place. In his speech in Warsaw two years ago, the Prime Minister gave it a suitable boost.
    I have just two final points to make because I know that many of my colleagues wish to speak, although it appears that not many Opposition Members do. That shows that the case advanced by the Chancellor of the Exchequer is unanswerable. There appear to be only two Back Benchers left on the Conservative side—
    Mr. Henry Bellingham: Conservative Members are at dinner.
    Keith Vaz: Oh, they are at dinner. Some of us have been here for the past few hours listening to the Chancellor and to the other speeches but I am not surprised that the Conservatives have run out of speakers.
    I want to say something about regeneration because I see that the Minister for E-Commerce and Competitiveness is on the Front Bench; the Department of Trade and Industry has responsibility for regeneration. I thank the Government for all the money and resources that they have given to the people of Leicester but I worry about our regeneration strategy. People do not understand when they hear the vast figures mentioned in relation to regeneration. They want to see regeneration on the ground. They want to be part of the regeneration process. We cannot have Canary wharf being built throughout the country. People can see flagship regeneration schemes. We must involve people in that regeneration process.
    I am sorry that my right hon. Friend the Secretary of State for Trade and Industry is not here. I pay tribute to her for her work as Secretary of State and her outstanding work as a constituency Member. We share Leicester with my hon. Friend the Member for Leicester, South (Mr. Marshall), and she is assiduous in her constituency duties. She has been around a lot of the textile firms in our city and seen for herself the problems in the textile industry.
    In 1981, there were 19,900 jobs in the industry in Leicester. Today, there are only about 7,700. I do not blame the Government for that but I ask the Secretary of State—I know that this matter is close to her heart—whether we can have some measures to help us to redress the balance—some assistance for the textile industry in Leicester. It has benefited from the economic policies of the Government but needs specific help, because many countries dump their goods within the EU area and many other EU countries do not stick to the EU's rules and guidelines. The textile industry in Leicester and throughout the country has been very good in sticking to the rules. We just want a level playing field.
    If anyone can help us, the Secretary of State can. She will want to make a special initiative of that. I cannot invite her to visit Leicester because she is Member of

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    Parliament for Leicester, West and visits every week. I just ask that, in her busy schedule, she remembers us in Leicester and the textile industry in particular.
    I am happy to support every measure in this Queen's Speech. It is a radical and modernising Queen's Speech that Labour Members are proud to support in full.
    8.24 pm
    Malcolm Bruce: We have had a number of speeches that related to the euro and I want to say only one thing about it. Increasingly, I find among businesses throughout the country a deep desire to end the uncertainty that means that they cannot put in the necessary decisive planning. People can put up reservations about when the right time will be, but it is infinitely more damaging to the country to have a Government who say in principle they want to join but cannot tell us when or under what circumstances. They are not allowing businesses to plan. The uncertainty is deeply damaging.
    I echo the concerns expressed about the fragility of the British economy. If we go through each sector of the economy, it is difficult to find what constitutes the success that the Government are claiming. Manufacturing has been effectively in recession and jobs and investment are falling. Farming is in a disastrous plight. Tourism is in huge difficulty. Telecommunications is not exactly thriving and the stock market is at its worst level for many years. The only thing sustaining the economy is property prices and the borrowing against that. If those were to take a nosedive, the Government would be in deep and serious trouble. No one wants that to happen but we are all saying to the Government that they should resolve the uncertainty of the euro and remove that one fundamental problem—it exists whichever side of the argument one is on. There is an inability to plan ahead. Businesses have to deal with the consequences of being outside. The Government must recognise that the economy is so unbalanced that if we do not use the opportunity before we hit a crisis, we will have nothing to fall back on when we do.
    I want to raise a number of specific matters arising out of my constituency concerns. I represent an area that is heavily dependent on farming and food processing. There is no doubt that they are suffering severely. The biggest single thing that they are suffering from is the adverse effect of the exchange rate.
    My other industries include paper making. There is no doubt that it is a difficult industry to be in at the moment. It is important that the UK maintain a paper-making capacity.
    Mr. Love: Will the hon. Gentleman give way?
    Malcolm Bruce: I will not because we are anxious to ensure that as many hon. Members as possible get to speak.
    It is important that the Government recognise that many of those businesses are hanging by a thread and that if the issues are not resolved soon, they will not be able to hang in there for much longer.
    The oil and gas industry is very important in my part of Scotland. The Government produced tax proposals in the last Budget without consultation and without
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    warning that have deeply damaged confidence in the industry. I know that the Government will be able to point to academic studies that bear out the claim that the package of measures will benefit investment in the established fields. It will if the royalties part of the package is delivered. The industry is getting increasingly irritated that the Government are giving assurances that royalties will be abolished but have not yet explained why they have not been abolished, or abolished them.
    The Government should not underestimate the damage that has been done to the confidence of what is a mature province. The industry has many opportunities to deploy its investment elsewhere in the world. There is no incentive within the Government's tax regime to look for new, more marginal fields that will sustain the life of our province. There is a real danger, therefore, that potential oil and gas reserves will never be recovered from the North sea, if the existing regime continues in its current form. To my mind, that would be both a waste of resources and deeply damaging to an industry that is very important. It provides about a third of a million jobs and a very high proportion of UK industrial investment, which the Government continually treat as a milch-cow rather than a real industry that sustains jobs at home and exports abroad.
    On the back of that, it is important to take on board the ridiculous state of the electricity market, which is having very serious repercussions. A questionable investment of £650 million in British Energy may yet be vetoed by the European Commission—a clear indication that the electricity market that the Government boast about simply is not functioning. If it is functioning, it is telling us that nuclear power is so expensive and dangerous that it should be taken out of capacity and off the market. Doing that overnight would present a range of practical and capacity problems, but we should not allow the market to be distorted.
    Those of us who want a real commitment to expanding energy efficiency, particularly through investment in combined heat and power and in renewables, want a framework that makes some sense. At a meeting in my constituency on Amec's proposal for a very large wind farm, I made it clear that I support wind technology. I am pleased that one wind farm has been given the go-ahead in my constituency, but we should note that a large protest movement is already asking a question that those of us who support renewables are having difficulty answering. That question is, "If we don't happen to like the look of these wind farms, can you explain to us what the benefit is to our rural community in accommodating them?"
    We are talking about an international company that employs nobody from the area, sends letters from somewhere in deepest England and has no real understanding of, or connection with, what we are about. We get no rent for such farms, because Forest Enterprise is involved and the money will be taken outside the area. Indeed, there is no perceivable economic benefit. The Government should think very hard about structuring the development of renewable energy to ensure that the communities that play host also get a share of the economic benefit—for example, a royalty from the units of energy generated.

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    As an MP for a Scottish constituency, I know that Scotland has committed itself to 40 per cent. renewable energy by 2020. The question that is being asked, however, is why should Scotland do it? What will Scotland get out of it? The UK will get the benefit of assistance in meeting its Kyoto objectives, but if all these investments are to be carried out by multinational companies with no significant base in Scotland simply to export electricity to England, it seems that no obvious benefit flows to the Scottish economy. I urge the Government to think hard about structuring the development of renewable energy in a way that gives the host communities a real economic stake in it.
    I am also concerned about the overall condition of the privatised utilities. It is some 12 to 15 years since they were privatised, and we need to reassess how they are performing in a somewhat contradictory market. Nobody is suggesting that we could, should or would wish to unscramble privatisation. As somebody who served on the Bills that privatised gas and electricity, I can testify that we did not oppose those privatisations in principle. We did criticise the way that it was done, and we pointed out that there would be problems. Gas's privatisation as a monopoly immediately led to an inquiry by the then Monopolies and Mergers Commission. In the electricity industry, distortion of the market led to the collapse of coal industry and the dash for gas. That wasted a great deal of money—never mind the billions of pounds of support that has been given to try to massage the real cost of nuclear power.
    Whether we are talking about electricity or telecommunications, a clear conflict exists between the objectives of private companies and their need to make a return for their shareholders, and the fact that they remain public utilities, providing vital services for which there needs to be a public policy delivery. Last week, the Minister and I attended a meeting on post offices. At the end of it, I mentioned my concern about broadband. There are businesses in my constituency that depend heavily on a regular daily postal delivery service—preferably early in the day. They are deeply concerned at the prospect of a two or three times a week service and of perhaps having to collect their own mail. They regard that as an unacceptable threat to the viability of their business. They could of course get round that by using modern technology—broadband technology—except that it is not available in rural areas. Indeed, huge irritation has been caused by advertising campaigns by British Telecom and others asking people to sign up, and explaining that broadband is cheaper, better and more efficient. However, if it is a rural postcode, such companies say, "Ah, not only do we not serve your area, we have no plans to do so—unless you're prepared to go and find our customers for us." Ministers—I do not mean the Minister who is in the Chamber—say that they are talking to BT. Well, excuse me, BT is a private company but we are talking about a public service.
    Many of us look to the Government either simply to require the providers to give a universal service or to help them to do so; I do not have a strong view about which would be best. When Hydro-Electric was set up in the 1940s, it was required to provide electricity to pretty well every property in Scotland, including the north and the highlands and islands, and it has done so
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    substantially, and spread the cost among all the suppliers. That would be a reasonable way of delivering broadband, with only very marginal exceptions requiring to be paid for separately or excluded.
    The electricity market is in a mess, and nothing in the Queen's Speech will help. The new electricity trading arrangements are not working, and now the British electricity trading and transmission arrangements are mooted. It is not the right moment to go to BETTA, when NETA is getting worse.
    Other utilities are operating in a contradictory market, trying to make a return for their shareholders and operate as a private business while being asked to provide a service for the whole community, which they are conspicuously failing to do. The Government, in the Queen's Speech, seem unwilling to do anything about that.
    8.36 pm
    Laura Moffatt: I am pleased to support the contents of the Queen's Speech. It is difficult for us to choose which aspect of the speech to speak on, because it is apparent that all its aspects are interdependent: for example, a safer community attracts business, and education and skills training are essential for a thriving economy. It is important to consider all those aspects when we discuss trade and industry and economic matters.
    It is important for me to contribute as a south-east Member. It is all too easy to think that the south-east is comfortable and has plenty of jobs, and that we do not need help from the Chancellor's policies. I hope to demonstrate that it is extremely important that we look after the region's delicate economy.
    My constituency is in Sussex, in a region that is our second highest contributor to gross domestic product, and Gatwick airport is at its heart. It is easy to understand the impact of 11 September. People from my constituency had to leave their jobs on 12 September, because they could no longer pack metal cutlery to go on the aircraft. The impact was real and painful. Sussex Enterprise has been very helpful. We were afraid that it would be a very difficult picture, and although we have not got back to the employment position of before 11 September, the impact has been far less than we feared.
    The reason for that is stability. Companies have felt reasonably calm about the future, so they have not overreacted and laid people off in a zealous attempt to protect their own interests. The stability created by the Chancellor's policies had a very positive impact in limiting job losses. It is difficult for those who lost their jobs, but they are far fewer than we expected.
    We in the south-east face many challenges. It is a lovely place in which to live, but that is difficult because the average house price is £140,000. Low interest rates give people the opportunity to get into the housing market, so that policy has had an important and positive impact on my constituency. I remember when massive interest rates meant that young people felt they had no opportunity to enter the housing market, and they had no sense of having a future in the south-east. It is important to ensure that our young people can participate in the economy of the south-east and do not

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    feel that they have to leave to find job opportunities elsewhere because of the difficulties of living in the region.
    There is long list of policies—not only those announced in the Queen's Speech, but those introduced throughout this Parliament and under the Labour Government—that make it possible for families in the south—east with relatively moderate or low incomes to survive and feel good about the contribution that they make to the economy. Let me outline some of the specific issues that face us.
    Many hon. Members have heard their constituents say, "Goodness, there are so many empty offices around—why are you building offices when we could have housing?" In the south-east, it is vital to have a healthy portfolio of offices to allow companies to change and grow. In any one year, about 1.5 per cent. of our business community changes premises—not leaving Sussex, but moving within the Sussex economy. It is vital that we continue to support that community, so reform of planning will be essential to ensuring that we have a healthy and vibrant business property market that enables that growth to continue. Limiting growth in the south-east does not benefit anywhere else in the United Kingdom. We now know that to be true. Once, we thought that if we tried to redirect everybody elsewhere, everything would be fine, but the reality is that we must allow our positive and vibrant business communities to thrive and survive.
    Let me describe how important policies and fiscal influences are to my community. In education, we have to tackle the skills gap to ensure that we have people who are fit to take up the jobs that we need done. It is not good enough to say that we in the south-east have lots of jobs and people will fill them. We must make sure that people are in a position to fill high-tech jobs, or that they can go to university and then fill the graduate jobs that are so important to us.
    It is important to understand that policies such as sure start and good child care are economic policies. Women walk into my office in Crawley and say, "Thank you very much. My child is now in a nursery, I have been to college and I now work at the airport." It is thrilling to be able to experience that sort of thing, and, to be frank, we would like more of the same.
    The working families tax credit has transformed the lives of 10,000 families in Crawley, and I am sure that other hon. Members can say the same of their constituencies. On average, my local families receive £25 a week, which enables them to survive in an expensive part of the world. They have to pay more for housing and transport, so working families tax credit is crucial to them.
    Investing in our health services ensures that people are able to live and work and be serviced by good public provision, such as hospitals. We in Crawley have had enormous investment: we await a decision on whether to have a new hospital or to have massive investment in our existing hospital. That sort of investment was unheard of before, but it is vital to our economic well-being.
    In housing, ensuring that our local authorities are able to deal with the supply problem in the south-east and that we are able to provide decent, affordable housing are vital if people are to be able to remain in the south-east. The Government have also provided huge
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    investment for transport—£12.5 million has been added to the £23 million scheme to allow people to move between Crawley and the airport. We have never before seen such investment.
    This great family of policies contribute to our well-being. They are part of what is making this country a better place to live, and my constituents reflect that
    8.45 pm
    Mrs. Angela Browning: The Chancellor had much to say about enterprise, and I shall concentrate on a particular group of entrepreneurs—small businesses and the self-employed. Some 55 per cent. of our private sector work force is employed by small businesses, so they are in the majority. I was rather disappointed that the Gracious Speech did not include a robust deregulation Bill that sought tangibly to remove the burdens on small businesses.
    This country has had a reputation for having flexible labour markets and low levels of regulation, certainly compared with some of our European partners, but that situation is being increasingly transformed, particularly by the introduction of European legislation. When will the Government call a halt to that? When will they demonstrate that such regulation, which is now a burden on businesses on all sizes, but especially on small businesses, will be removed or moderated?
    The self-employed, many of whom start out working from home, have particular concerns.The Mail on Sunday, which I know is read avidly by Labour Members, reported yesterday that the Chancellor intends to cut out red tape to help entrepreneurs mainly as a result of the plunge in self-employment in the past year. Perhaps we shall hear more about that in the Chancellor's autumn statement, but with the possible exception of some relaxation in the planning laws for businesses, there was nothing in the Queen's speech to make me think that the problem is being taken as seriously as it should be.
    Self-employment is becoming increasingly difficult, but once one has established a business, it is more difficult still to make the quantum leap to take on another person and to assume the responsibilities of an employer. I was alarmed to hear that the Inland Revenue is being extremely active in identifying self-employed people who work from home with a view to taxing them through the business rates. An article in The Times last month made it clear that thousands of people have already been hit with bills of up to £600.
    I am referring not to people who have, for example, changed their outbuildings into a large business but to people who are working from a bedroom. Apparently the Treasury's guidance includes a 6 o'clock rule that if domestic use can take place in a room after work has finished it is unlikely that business rates will be charged. I was self-employed and based at home for many years, although I travelled a lot, and there is no way that I would have wanted somebody going into what I called "my office" after 6 o'clock and doing anything with my paperwork or my computer.
    I have to say to the Minister that we are getting mixed messages. The Chancellor talks about entrepreneurs, who are the backbone of the economy, risking their own capital to set up a business, often in a small way to begin with. However, punitive laws and regulations will put

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    them off taking that risk. We are already seeing enterprise stifled in many small business areas. Residential and nursing homes have come under pressure, and we have debated many times in this Chamber the difficulties facing them. Sub-post offices and rural petrol stations are also experiencing difficulty. We all know that it is hard to get a plumber or electrician. Regulations affecting self-employed plumbers and electricians put people off doing the job, even though they can apparently charge whatever hourly rate they like. At the moment, it is not a question of whether or not one can afford a plumber—they can name their own price. It is about getting someone reliable to come along and do the work.
    Many small businesses in waste management are under huge pressure. My hon. Friend the Member for North-East Bedfordshire (Alistair Burt) pointed out that the Chancellor must be aware not just of burdens imposed by the Government on business but of external factors that have an impact on entrepreneurs and the business economy. At my surgery a fortnight ago, I met a gentleman who is the third generation of a family business in waste management and employs just 20 people. He has had great difficulty obtaining public liability and health and safety insurance—at my business breakfast club last week that theme was picked up by people from just about every sector in my constituency. People who have been able to get insurance have found that premiums have gone up by more than 100 per cent. this year. The gentleman in waste management, for example, has to have a minimum insurance cover to get a licence and undertake work for local authorities such as fridge and car disposal under contract. He went right up to the day that his policy was due for renewal—even then, he had difficulty getting sufficient cover to be licensed to carry out those contracts.
    Businesses in my constituency have asked whether their problems getting insurance and, if they are lucky enough to get it, the huge increase in premiums are a one-off or whether they will experience the same difficulties next year. Many of them say that if there is a repeat next year they will think twice-they may lay off employees and shrink their businesses rather than expand them. For some, it will mean the difference between staying in business or going out of business completely. Since 1997, there has been a plethora of tsars, envoys and all sorts of people with grand titles who all turn out to be Lord Haskins trying to reduce regulation on the Government's behalf—it does not work. My hon. Friend the Member for North-East Bedfordshire mentioned the European Union directive on temps—the Government, we are told, are braced for defeat this week. Marketplace flexibility and 160,000 people will be affected, yet it looks like the EU will force the Government to comply. The Government, however, are completely impotent to do anything.
    Environmental taxes are being introduced. The Government were warned of the impact of the climate change levy, particularly on the manufacturing sector—I attended a briefing at which the Minister was lobbied by the industry about that long before it became law. It is not as if the Government have not had fair warning of all the factors that are having an impact on engineering
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    and manufacturing. The Engineering Employers Federation says that there is going to be doubling of the landfill tax. I do not expect the Minister to say yea or nay, because he is in purdah—he can nod discreetly across the Floor of the House to me if he wants—but businesses affected by the plethora and cost of regulation, as well as additional Government taxes, cannot take any more.
    Entrepreneurs are far from thriving in the small business sector. People do not want to take the risks that they would take in an economic climate with low interest rates. It is always more difficult to set up and run a business when interest rates are high because few businesses can run on capital without a high element of borrowing. Even at a micro-business level, businesses are struggling and are disincentivised. Nationally, we are seeing a reduction in our competitiveness. Another factor that the Chancellor did not mention is how we have slipped down the world's competitiveness league table since this Government took office.
    The Government seem unable to do anything about yet more regulations from Brussels—this time to do with financial services and the way in which our mortgages are set. We were told in yesterday's papers that the DTI is fighting back as new mortgage rules from Brussels hit us. It was interesting to hear the Under-Secretary of State for Trade and Industry, the hon. Member for Welwyn Hatfield (Miss Johnson), who is responsible for consumer affairs, pointing out how important mortgages are to such a greater number of people in the UK by comparison with other European Union countries.
    I smiled just a tad as I heard the Chancellor talking about the five economic tests and I witnessed the euphoria of Government and Liberal Democrat Members over taking us into the euro and scrapping the pound sterling, because here we have a Minister on one hand pointing out the economic differential and differences in mortgage regulation between our economy and those of other EU states, while on the other trying totally to ignore the fact that the same would almost certainly apply to the setting of mortgage interest rates. Ministers seem very willing to concede such power to a body outside these shores.
    The House has heard me before on the subject of the pound sterling versus the euro, and I promise will do so on future occasions. I would not want the unemployment of Germany or the fines imposed on Portugal. I certainly would not want the problems that Germany has experienced with its increased taxes. Why we should want to give up what the Chancellor paints as a sound economy for that sort of mess and chaos I really cannot imagine.
    8.57 pm
    Richard Burden: In the short time that I have available, I should like to say a few words on the regional angle of the Queen's Speech, which has been touched on already today, but on which we shall have our main debate tomorrow.
    Getting regional government right is hugely important, not only constitutionally and because it concerns reconnecting the citizen with the political process, but because it is vital to securing sustainable industrial and economic development. The reasons for

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    that are fairly clear. We know that the gap between the best-performing regions and the worst-performing regions of England in gross domestic product per head is 40 per cent—one of the biggest disparities in the European Union.
    There are equally large disparities in productivity and in education and skills. It has been estimated in a Department of Trade and Industry and Treasury report that if we were able to level up average productivity performance to that of the best, the average person in the UK would be £1,000 better off. There are also disparities in the skills agenda. We have a great skills base in the west midlands, yet it is a source of anger to me and to many that we still have the second worst record on people having no qualifications.
    Manufacturing is still hugely important to the west midlands; it accounts for 22.5 per cent. of the region's employment, compared with just over 15 per cent. nationally. The automotive sector is still at the core of the west midlands regional economy, and we are doing quite a lot regionally to try to bolster and modernise that. The Accelerate programme—a great partnership between the DTI and the Society of Motor Manufacturers and Traders forum—was pioneered in the west midlands and is doing very well. We have a modernisation and diversification programme, in which the regional development agency is actively involved. Indeed, I helped a number of businesses launch a seminar on that just a couple of weeks ago. The results of such effort are businesses competing not just domestically but internationally. Their ability to get the right advice and support to raise their game and productivity, and to spread best practice, is great to behold.
    Motor sports and performance engineering—I draw Members' attention to my entry in the Register of Members' Interests—is a vital industry for the UK. In that industrial cluster we are world leaders, but we face big international threats. Again, it is great to see the RDAs coming together and working with the industry to secure the future. I am glad to see my right hon. Friend the Secretary of State for Trade and Industry taking a personal interest in that industry by bringing together a competitiveness panel to look to the future. If all those initiatives are to succeed, it is important that we keep them action-focused.
    In the west midlands, our rich industrial heritage and our ideas base are being brought together in a bid to bring the national microsystems and nanotechnology centre to the west midlands, the heart of manufacturing, which would benefit other regions as well as ours. Birmingham international airport is an institution that is not only vital for transport links, but brings £165 million into the regional economy. All these aspects are important and are evidence that we are getting our act together in the region.
    However, there is a gap. There is still a democratic deficit in that structure. About £8 billion is being spent in the west midlands by bodies that are often doing a good job, but do not have the necessary accountability to the public. That is a practical as well as a democratic problem.
    We know that Germany is facing severe economic difficulties, but we should not lose sight of the fact that some of its successes in the second half of the last
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    century, and some of its successes in rising to the present challenges, were conditioned by the fact that German political, industrial and financial institutions are intertwined at national and at regional level. On the Select Committee on Trade and Industry, we received powerful evidence from the Work Foundation about how and why it is so important for raising industrial competitiveness to get such intertwining and complementarity right. That is why the regional angle is important.
    It is also essential for the Government to continue their good work in looking for new models of corporate governance. Community regeneration can play a role in building a healthy regional economy. That is why I was pleased that in the last Budget the Chancellor announced new initiatives to promote community reinvestment. I hope that in the winding-up speech today we will hear a little more about how that will be implemented.
    I know that time is short and other hon. Members want to speak. In conclusion, one size will not fit all for regional assemblies. I am not interested in merely creating a new layer of county councils—county councils on steroids, so to speak. That is not what regional government or regional assemblies are about. If we can think creatively about democratic regional government, and be clear that we are not just combining local government functions, but providing a real voice for the region in the European and international context, regional government for England could be a very exciting prospect. It will help to reconnect the citizen with the political process. Equally important, it is a vital element in securing the industrial and economic regeneration that areas such as mine in the west midlands so desperately need.
    9.3 pm
    Mr. Jonathan Djanogly: British business is hurting; of that there can be no doubt. The Chancellor spoke earlier of falling unemployment, but I found that grossly complacent. Thousands of jobs are going by the day in the City of London, in manufacturing, where 400,000 jobs have been lost since 1997, in the high tech and communications sectors, which have had the stuffing knocked out of them—only last week, 3,500 jobs went at Cable and Wireless—and in agriculture-related businesses, which are in desperate straits.
    My hon. Friend the Member for North-East Bedfordshire (Alistair Burt) gave a good picture of the situation in the eastern region, which is also my region. Some 41 per cent. of companies are showing falling output, and there are declining new orders, reduced staff numbers and reduced capital expenditure. All those issues present a very serious picture that goes somewhat against the complacency shown by the Chancellor. How the situation changes in the public sector, where there are increasing head counts across the board. Not only are there more employees, but requests for wage increases of up to 40 per cent. are being made at a time when people in the private sector are worrying about whether they will have a salary at all.
    Business is now starting to see what Labour is all about. It, now realises that 80 per cent. of the £4.5 billion of taxes raised this year is coming from business. As

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    more people in the private sector lose their jobs and start to see public sector salary hikes without improvements in public services, they will see how their companies—and therefore, indirectly, themselves—are having to pay for Labour's tax and spend policies. At the same time, companies are now also realising that they have had to pay 87 per cent. of all the tax hikes made since 1997—some £29 billion, according to the CBI. That is apart from the fact that they are reeling from so many regulations.
    We have a Government who are increasingly obsessed with micromanagement and intervention to equalise regulations to the lowest common denominator with our European neighbours. The result is that we are fast losing our competitive advantage in an increasingly world economy. We have fallen from ninth to 19th on the world competitiveness scoreboard and our share of world exports is falling, together with poor rates of productivity that are rapidly falling behind those of America, France and Germany.
    Burying our heads in the sand and ignoring the impact of the global economy and possible deflation, with the introduction of endless new regulations, may keep the unions happy, but, as the 950 employees of Black and Decker who lost their jobs in the Prime Minister's constituency know, it is destroying our ability to compete. Where are those jobs now? They are in the Czech Republic, because we can simply no longer compete in terms of labour costs and taxes.
    Rather than face up to the problem, what are the Government doing at the moment? They are delaying the inevitable by restricting the movement of goods and people from our new eastern European partners. In short, we try to make them less efficient to hide our own deficiencies. Yes, the economic slowdown is global, but the less flexible our markets become, the less we can adapt to international pressure. While the Chancellor equivocates over the euro, we are losing sight of the big picture.
    I do not feel that the Government are advising people on the real implications of technology; of course, cheap travel and communications are the core components of globalisation. The fact is that the service sector is now every bit as much at risk as the manufacturing sector. Clerical jobs can be carried out at a massively lower cost in the east than in this country, which is why banks and other institutions are now transferring their operations abroad. One can set up a call centre in India and employ bright university graduates who speak perfect English at one fifth the cost of employees in this country. Indeed, I was delighted to see that the Department of Trade and Industry has significantly increased its staff numbers in China, not least because, at this rate, that is where most of our services sector and manufacturing could be located in five years' time.
    If we are to survive as a serious business player and encourage more investment, we must act now to cut taxes on business and start excluding companies from regulations—especially smaller growing firms. As the
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    Federation of Small Businesses has rightly pointed out, such firms incur a much large proportionate negative impact from such regulations than larger companies.
    Mr. David Laws: Will the hon. Gentleman give way?
    Mr. Djanogly: No, I am afraid that I will not do so, given the time that remains.
    The lack of engineering-based apprenticeships and the shortage of skilled staff is also of enormous concern. Employers in my constituency continuously mention that to me, and much more needs to be done. Two weeks ago, I visited a university to be told that it is cutting its engineering courses because of lack of demand and increasing its psychology courses. I think that that says it all.
    Finally, I was disappointed not to see the long-awaited companies Bill in the Queen's Speech. British company law is in urgent need of reform—I declare my
    interests as a corporate lawyer—and after three years of consultation on this largely uncontentious issue, business wants the Bill and we should get on with it.
    9.10 pm
    Mr. Jim Cunningham: The Queen's Speech gives Back Benchers an opportunity to talk about things that we would to like to see in the Queen's Speech but which do not appear in it. That being so, we hope to see them in the pre-Budget statement. I hope that my right hon. and hon. Friends on the Government Front Bench will take note of what I have said.
    Today, the shadow Chancellor of the Exchequer missed a golden opportunity—it is only about a month since the Conservative party conference—to tell us
    about the 20-odd new policies that the Conservative party has developed. He was repeatedly challenged, and I thought that we would hear something about the new policies. We did not. We waited in vain. Perhaps we shall hear something about them next week. I look forward to next week's debate. Let us see whether the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) announces his party's new policies then.
    It seemed that at the Conservative party conference those present were going through the process of telling the truth and admitting their guilt in the past. The chairman of the Conservative party talked about the arrogance of previous Tory Governments, as did the Leader of the Opposition, and said that Conservatives wanted to change their image. No one really knows where the shadow Chancellor stands on that. He did not declare himself. I do not know whether the right hon. and learned Gentleman wants to put me right on that. He has the opportunity to do so. I do not know whether he is at variance with the leadership of the Conservative party or whether he will tell us all about where he stands.
    The Opposition talk about regulation. When the Conservative Government were in office—I was working in industry at the time-we had a heck of a lot of regulations. Opposition Members in glasshouses should not start throwing stones at Labour Members. However, I take the point that we should not overburden small businesses with regulations. We should think through carefully any regulations that we introduce.

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    The Opposition are in danger of talking the country into recession. It is suggested that my right hon. Friend the Chancellor of the Exchequer is approaching the economic situation in a disinterested or cavalier manner. When we used to say those sorts of things in Opposition, we were told that we were talking the country down. I hope that the Opposition's intentions and their economic strategies are not designed to do that. Indeed, we have heard about generating confidence. I am sure that confidence is not generated when the Opposition go down the road that they chose to take this evening.
    We all remember the exchange rate mechanism shambles. I remember it in Coventry, where companies were going to the wall. We also remember high interest rates. I am sure that many Members will remember that they reached 22 per cent., with VAT at 17.5 per cent. Conservatives say that they represent the party of low taxes, but we remember when there were high taxes under a Conservative Government.
    I shall move on to the positive rather than the negative in having a go at the Opposition. As I have said, I look forward to the pre-Budget debate. Anyone who has been a member of the Select Committee on Trade and Industry and has visited Washington will know, having talked to people in world trade organisations, that the two big difficulties will be the French or the Americans. The Americans use their defence budget for various development projects, and we should not lose sight of that. When British Governments try to negotiate on the same basis, they are told where to go. At the same time, there are concerns about third world debt and the closure of European markets to third world trade. I appreciate that the Prime Minister and the Chancellor have taken a lead on that, but I hope that we shall return to considering such subjects shortly. Again, that must be placed against the background of the lowest interest rates for a generation and probably longer. It was probably in the early 1960s or late 1950s when interest rates were last at 4 per cent.
    We should be worried about Britain's manufacturing base. The west midlands manufacturing economy probably employs a quarter of our labour force. That is a hefty chunk, which will be affected if there is a recession in the area. As hon. Members know, in Coventry, and probably nationally, there have been job losses at Marconi, and we do not know whether the company will survive. We all want it to survive, and perhaps the Government can reach some conclusion about whether we can use broadband to help it.
    Other household names in Coventry, such as Massey Ferguson, have suffered, and Rover recently had to be assisted, in some instances by the Government, but also by the sheer determination of the labour force. In the west midlands, we have a labour force that is second to none; it has the ability to adapt and the determination to succeed.
    I welcome the Government's new manufacturing strategy, which is the first for 30 years. It should help, but there remains a need for inward investment. We need more investment in transport, which is the basis of the economy. Transport costs can also affect product costs.
    Some of my hon. Friends mentioned the regional development agency in the west midlands. It has established training and support programmes for
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    automotive component companies. Nevertheless, I believe that it should be more dynamic and I hope that colleagues will accept that. The trade unions that I have met have not been impressed with the west midlands regional development agency's responses.
    Many of my constituents are worried about tuition fees, and I hope that the Government will not introduce them in this Parliament.
    On antisocial behaviour, I should like the Government to consider fireworks legislation carefully. Fireworks are a growing antisocial phenomenon.
    9.17 pm
    Chris Grayling (Epsom and Ewell): Our economy has prospered recently under Conservative and Labour Governments because, unlike the rest of Europe, we have a diverse, deregulated economy that has also been a low tax economy for a long time. Those gains are now being wasted. Step by step, the Government are interfering, regulating and taxing the creative, wealth-generating parts of our economy. The consequences will come home to roost.
    The past five years show what can happen. Businesses and industries in which the Government have interfered have almost universally taken a step backwards. For example, the pensions industry was burdened with a tax of £5 billion and considerable Government interference. The establishment of stakeholder pensions has substantially reduced the margins of the financial services industry without generating much take-up. Consequently, our financial services industry is in a worse state than it has previously been in my lifetime.
    The Government have failed to recognise the importance of profit and of businesses making money. They use a rhetoric that consistently decries success in our businesses and does not like our biggest companies to make significant amounts of money. The implications for our companies are fundamental. That is apparent in the performance of our pension funds.
    Mr. Marris: Will the hon. Gentleman give way?
    Mr. Grayling: I am sorry, there is not time.
    The utilities sector represents the worst example of Government intervention, with the windfall tax and the over-regulation of sectors such as the electricity industry, the consequence of which is that many parts of the industry are almost no longer viable. British Energy is having deep financial problems, we are seeing the closure of power stations, and electricity companies are being taken over. The truth is that today, five years after the windfall tax, most of our major utilities have been taken over by overseas competitors, because they are no longer able to withstand the strength of their competitors' balance sheets, or the pressure from companies in countries that provide a degree of protection to their utility sectors. Our utilities have been left bare on the international stage.
    We must also consider the impact of over-interference in the telecoms sector. The Government were no doubt delighted by the windfall that they secured from the mobile phone auctions. Many of our providers had no option but to enter that auction; if they did not bid, they did not have a business. Our telecoms sector has been significantly weakened as a result.

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    It is in small business, however, that the real impact of over-regulation and over-taxation is being felt. It is crippling many of our smaller businesses, particularly those experiencing more difficult times. In the year and a half since I became a Member of Parliament, I have seen very little evidence that Labour Members truly understand the problems and issues involved in running a small business. Almost no Minister has had experience of running a small business. Ministers do not understand the human consequences of what they are doing.
    Life in a small business is one of long hours and business uncertainty. Life becomes much more difficult when times are tough, as they are increasingly becoming now. I know that from experience. I have been in frontline business, in a concern in which the funding stream from a parent company dried up almost overnight when the company went into financial difficulties. I have also been in a company whose biggest customer went bankrupt, leaving us with a huge challenge to keep the business afloat. The last thing anyone needs when trying to keep a small business afloat in difficult times is additional taxation and regulation, yet that is what the Government are offering today. Next April, all small businesses will face a significant increase in the taxation on the employment in their companies, regardless of whether they are making money. That will mean fewer jobs.
    This is the wrong moment to introduce more regulation. The Government are once again conducting a review of employment laws. We are seeing new directives coming from Brussels—often gold-plated in this country—such as those affecting agency workers and the haulage industry. We are also hearing about the Government's plans for landfill tax. Perhaps they are desirable for environmental reasons, but the consequences to a small business of implementing them could be devastating.
    I see a common theme in the sectors that have suffered in recent years, and in the smaller business sector, which is increasingly coming under pressure, particularly in manufacturing—increased taxation and Government interference. The consequence to the wealth-creating part of our economy will be devastating if the Government carry on in this way. They must stop before it is too late.
    9.23 pm
    Mrs. Louise Ellman: I would like to call on the Chancellor of the Exchequer and the Secretary of State for Trade and Industry to intensify their good work in supporting enterprise in the knowledge economy, particularly in developing excellence and in building on the excellent research work being carried out in our universities and other institutions outside the south-east. There will be a number of opportunities for them to show that commitment during the next 12 months.
    At Daresbury, the Centre for Accelerator Science Imaging and Medicine—the CASIM project—is proceeding, and the fourth-generation light source is moving ahead very satisfactorily. The Sirius project for the detection and treatment of cancer appears to be
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    more problematic, however. At Liverpool university, five-star graded departments have set up the AIMES project—the application of internet technologies and emergent systems—to develop grid technology for the support of business.
    In that gem, the Liverpool school of tropical medicine, expansion is being sought to enable the school to continue its work in beating disease, developing health services and fighting poverty in developing countries across the world. In the last two or three weeks its director, Janet Hemingway, and her colleague Alastair Craig have published groundbreaking research on malaria treatment.
    We have some of the means to deal with such issues. The Government are clearly supportive, as is the North West development agency, and in appropriate cases Liverpool Vision is giving its backing; but I would feel far more confident if we had a directly elected regional assembly that demonstrated transparency in decision making and followed up these vital matters, recognising the importance of enterprise and the knowledge economy in the north-west and elsewhere. I support what was said about this by my hon. Friend the Member for Birmingham, Northfield (Richard Burden).
    I urge the Government to engage in joined-up thinking in this vital effort. I urge them to continue to support enterprise and the knowledge economy in the regions, and to remember that enterprise, expertise and excellence are not confined to the south-east. Indeed, developing the regions is part of developing the excellence of the United Kingdom.
    9.26 pm
    Mrs. Annette L. Brooke: I want to talk about funding for my local police authority in Dorset. I trust that the buoyant economy described by the Chancellor will provide a real opportunity to address the inequities in funds for different authorities.
    This year's Queen's Speech contained even more proposals for law and order legislation. I believe that since 1997 there have been 20 such Bills, and we have criminal justice and antisocial behaviour Bills ahead of us. Some proposals are welcome and others less so, but the Government clearly recognise the concern and, indeed, fear that arise from a perceived or actual increase in crime. That is undoubtedly uppermost in the minds of many, including my constituents.
    Violent crime has risen in Dorset, although Dorset is one of the safest places in the country. However, much of the existing and proposed legislation will do no more than move the deckchairs on the Titanic unless police authorities receive adequate funds. The Government have, at long last, increased police numbers, and my police authority is on target to achieve a record number of 1,410 officers by March 2003. Only last Friday, however, along with other Dorset Members, I was invited to hear powerful representations on future funding for our councils, police and fire authorities. We were told that the Dorset police authority needed £6 million just to stand still.
    All our police authorities are experiencing pressures. There is, for instance, the issue of police pensions. Others have mentioned the general question of pensions today. It is vital for our public services—our fire and

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    police services—that the Government help. It is predicted that pensions in Dorset will represent 25 per cent. of the budget by 2005–06.
    My hon. Friend the Member for Truro and St. Austell (Matthew Taylor) spoke of micro-management. A further pressure arising from police reform relates to the expected national policing plan. Targets will be set, and it seems that individual forces will have to prove that they can use extra Government money to produce better results. It is a familiar story in every public service: more demand, more red tape, and, in this instance, the question, "Will officers be kept off the beat rather than, as we want, on the beat?"
    There are further pressures, caused by public expectation, internet crime and so much more. What I want to know is whether Dorset's police will receive the extra money they need. Consultation is in progress on five options for funding. My police authority fears—let us set aside the "floors and ceilings" proposal for the moment—that 300 officers may be lost. It is an enormous problem, which applies throughout the south-west.
    Either council tax will go up massively, or there will be massive cuts in police numbers. We have heard nothing about possible reforms in the way in which money is raised locally.
    Successive Governments have reduced and changed Government funding of our local services, putting pressure on the council tax—an inequitable tax that needs to be reformed in the general round of the economy. We need a more equitable and fairer system of local taxation if the trend of pushing more and more on local councils and local bodies is to continue.
    I want to refer briefly to the fire service, which has been mentioned by many Members. People want a quick and fair settlement, with modernisation taken on board, but the important point is that the Chancellor finds the funding from the Exchequer.
    I shall conclude, as I am conscious of the time. The issue of policing, which is vital to my constituents, links into the economy, particularly the local economy. Unless we get our policing right, all our businesses and the quality of life of all our residents will be affected. It is essential that the Chancellor address it in the round.
    9.31 pm
    Mr. Tim Yeo: I congratulate the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) on making a speech that might be more appropriate to Wednesday's debate. She stuck honourably to the time available and I am grateful to her for that, as is, I am sure, the Secretary of State for Trade and Industry.
    I hope that the Chancellor will return before I sit down, so I shall save my remarks on his speech for a moment or two. I pass straight to the speech of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), his immediate predecessor as Chancellor, who gave a much more realistic and, indeed, sober analysis of the prospects facing the British economy than did the Chancellor. My right hon. and learned Friend included a timely warning about the unsustainable nature of a number of current trends, for example in household debt, the savings ratio, business investment and several other areas.
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    I would like to find something nice to say about the Liberal spokesman, the hon. Member for Truro and St. Austell (Matthew Taylor), but the kindest thing to say is that, on the evidence of his remarks, the Liberal Democrats remain firmly anchored in cloud cuckoo land.
    My hon. Friend the Member for Buckingham (Mr. Bercow) gave one of the thoughtful speeches for which he is becoming renowned, although I am grateful for the fact that he has no opportunity to cast his vote at the end of the debate as I cannot be held responsible for failing from the Front Bench to persuade him to support us. He spoke eloquently on the need for flexibility for employees as well as for employers and on the need to maximise job opportunities for women. I say quite genuinely that I would welcome his advice on how regulations might be revised with those concerns and a number of his others in mind. I hope he discusses that with me in due course. He is engagingly frank about the direction and extent of his political journey; my only hope is that it does not take him too far.
    My hon. Friend the Member for North-East Bedfordshire (Alistair Burt), whose remarks were reported to me, made a strong speech that rightly emphasised, among other things, the disastrous consequences of the agency temps directive not only for the engineering and aerospace industries, but for many others. Other Members referred to that most important measure, the key point of which is that it bears particularly onerously on this country. It is a European Union measure, but, because of our employment patterns, Britain will be hit harder than our main competitor countries
    The hon. Member for Dumbarton (Mr. McFall), the Chairman of the Treasury Committee, rightly condemned the continuing scandal of the common agricultural policy. I can only say that it is a pity that France and Germany have so little respect for the Government's views that they recently stitched up a deal to preserve the CAP for many more years to come, without any reference to British Ministers.
    The hon. Member for Gordon (Malcolm Bruce) gave a timely warning on the impact of Labour taxes on North sea oil and gas. I share those concerns. My hon. Friends the Members for Tiverton and Honiton (Mrs. Browning) and for Epsom and Ewell (Chris Grayling) made powerful pleas on behalf of small and medium-sized enterprises. I endorse all that they said about those vital contributors to the prosperity of the British economy. Few groups suffer from the burden of over-taxation and regulation as acutely as small and medium-sized enterprises.
    The hon. Member for Birmingham, Northfield (Richard Burden) expressed the hope that the forthcoming regional assemblies may help the economy of the west midlands, among other places. I am glad to have a chance to express my opposition to the establishment of regional assemblies. Another tier of government will do nothing to improve the competitiveness of British business, just as it will do nothing to put a single policeman on the streets, a single nurse on the wards or a single teacher in the schools. There will merely be more politicians and bureaucrats, and I have never found anyone in my constituency or elsewhere who thinks that an increase in those two categories of people will do any good.

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    My hon. Friend the Member for Huntingdon (Mr. Djanogly) rightly described the damage to our competitiveness inflicted by more regulation and less flexible labour markets. I shall save up what I intended to say about the Chancellor in the vain hope that he will return before a quarter to 10.
    The key question that we should address is what the Queen's Speech means for business and for enterprise. What is there in the Queen's Speech to arrest the deterioration in Britain's competitive position, to which my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) referred in his powerful response to the Chancellor of the Exchequer? What is there to speed up productivity growth, which has halved in the five and a half years of Labour Government since 1997? What is there to halt the decline in business investment? The answer is not very much.
    We know what is not in the Queen's Speech. There was no announcement of higher taxes; indeed, one was not needed, because the Chancellor already announced higher taxes for 2003 in his 2002 Budget. The increases in national insurance contributions hit both employees and employers with an extra £8 billion of taxation. The Engineering Employers Federation says that those increases will mean that more firms will send jobs abroad. More than half the companies surveyed by the EEF said that the national insurance contribution rises would reduce employment levels. I hope that when the Secretary of State for Trade and Industry concludes the debate she will tell us whether she spoke up for British business when she heard that the Chancellor was to impose those increases. Perhaps she was able to persuade the Chancellor to curb the amount by which he originally wanted to raise national insurance contributions. Possibly she heard about them so late in the day that it was too late to have any input. Like my right hon. and learned Friend, I fear that the third option is the most likely.
    Tax increases do not have to be announced in the Queen's Speech, because, sadly, under the Labour Government, businesses have had to get used to having tax increases sprung on them year after year. The pensions tax takes £400 a year from every contributing member of a pension scheme. The climate change levy, which has nothing to do with climate change, is a burden on many businesses. A Queen's Speech that contained a proposal to abolish the climate change levy and replace it with an emissions trading system would have received a warm welcome from industry and from Conservative Members. The petroleum tax, the aggregates tax and many more taxes are burdens placed on business by the Government. The Confederation of British Industry estimates that Labour has added £47 billion to industry's tax bill. That burden has been referred to and needs to be stressed. Few people can be optimistic that that figure will fall in the near future.
    Something else that was not mentioned in the Queen's Speech was the thousands of new regulations that the Government will introduce during this Session of Parliament. The Institute of Directors estimates that those regulations will cost business £6 billion a year. Ministers talk the language of deregulation, but the experience of millions of business people, small and large, up and down the country is different. More than
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    nine out of 10 businesses surveyed by the Institute of Directors believe that the burden of red tape relating to employment law is growing. In view of that, is it any surprise that the number of jobs in the private sector has now started to fall, as my right hon. and learned Friend the Member for Rushcliffe said? Many of us fear that although unemployment may remain low for some time to come, we have a situation where the loss of jobs in the private sector is merely being masked by an increase in jobs in the public sector, another of the unsustainable trends that the economy is now facing.
    Lord Macdonald has argued that not all the regulations are aimed at business. He cited orders dealing with road closures as an example in an article to which my right hon. and learned Friend the shadow Chancellor referred. Only someone who spends his days being whisked around in a chauffeur-driven limousine could make such an absurd claim. The traffic chaos caused by road closures, however necessary they may be, inflicts a huge extra cost on business in lost employee time and late deliveries. The British Chambers of Commerce has estimated that road congestion now costs business £19 billion a year. There is nothing in the Queen's Speech that addresses that problem, either.
    There is no Bill to stop the Mayor of London bringing the traffic in our capital to a total standstill. There is nothing to prevent London's decline from a great capital city to one whose transport system would be an embarrassment to a developing country. The misery that Labour's transport disaster imposes on private citizens and business alike, the damage it has done to our tourist industry, the erosion of Britain's appeal as a location for international business; not one of those problems is addressed in the Queen's Speech.
    Equally serious is the omission of any reference to another crucial element in our national infrastructure, broadband. Many parts of Britain—sadly, they include much of my own constituency and many other rural areas, as the hon. Member for Gordon said—cannot access broadband. They see advertisements for broadband and know that it will not reach them in the foreseeable future. Those parts will be at as much of a disadvantage as the areas with no proper road connections. The Government set an ambitious target for broadband in Britain but we have been lagging behind other G7 countries in terms of broadband subscribers. On this issue, as on so many others, Labour Ministers complacently seem to think that rural communities can be ignored.
    Energy policy is another concern. In addition to the White Paper, which is late, we are to have a liabilities management agency Bill that is actually only a draft. The Government cannot postpone indefinitely decisions about nuclear power. The deadline for sorting out the future of British Energy now looms very close. The Secretary of State committed £650 million of taxpayers' money without having submitted herself to questions in the House since making the decision; questions such as when Ministers first heard about of the extent of British Energy's problems and whether the Treasury overruled the Department of Trade and Industry over the renegotiation of British Energy's contracts with BNFL. If she cannot shed light on those questions this evening, will, she at least confirm that an oral statement will be made to Parliament about the British Energy bail-out

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    and the £650 million loan before the final date? Since Parliament is not sitting on 29 November, that means we need a statement no later than 28 November.
    Another subject on which the Department has been conspicuously silent is rural post offices. Five weeks ago, when confirming the closure of many urban post offices, the Department was busy trailing news of a £450 million plan to help rural post offices, since when there has been total silence. Surely we are due at least a re-launch of the policy. Sub-post offices in my constituency and in other rural constituencies look forward to learning more details of what the Government have trailed in the press.[Interruption.] I am delighted that the Chancellor has returned just before I am to sit down.
    The Chancellor opened the debate in characteristically cracking form—I have long been a connoisseur of his speeches. We all recognise that he is formidable debater, with a style that reminds me somewhat of my noble Friend Lord Heseltine, who had the same breezy disregard for facts that did not suit his argument and the same confident trumpeting of successes regardless of whether the achievements were his responsibility or someone else's.
    The Chancellor shares another characteristic with Lord Heseltine. They both cherished ambitions to lead their parties and both believed that they could do the job better than the Prime Ministers whom they served. Indeed, the Chancellor's speech sounded to me suspiciously like a leadership bid, with so many successes being trumpeted. I have to say that many of my right hon. and hon. Friends wish him well in his leadership ambitions. But I wonder whether he has started to believe that the connection between hubris and nemesis has been permanently suspended.
    The clear message from the debate is that the Government's mood about our economic and business prospects remains one not of optimism but of complacency, not of realism but of self-congratulation, while the people who have first-hand knowledge of what is happening at the sharp end know that business of all kinds is facing a tougher and tougher climate where new taxes and new regulations are increasingly undermining Britain's competitive position.
    9.45 pm
    The Secretary of State for Trade and Industry (Ms Patricia Hewitt): This has been a lively, instructive and often thoroughly enjoyable and entertaining debate, especially for those of us on the Labour Benches watching the debate on the Conservative Benches—in particular the exchanges between Mr. Nice on the Conservative Back Bench and Mr. Nasty on the Conservative Front Bench
    Several hon. Members referred to the position of manufacturing. My hon. Friends the Members for Ochil (Mr. O'Neill), for Leicester, East (Keith Vaz), for Birmingham, Northfield (Richard Burden), for Coventry, South (Mr. Cunningham) and for Bexleyheath and Crayford (Mr. Beard) all referred, rightly, to the importance of our manufacturing sector to the future of our economy. We all know—several hon. Members have referred to it—how tough it is for manufacturing firms and manufacturing workers when the markets in the rest of the European Union, in the United States and in south Asia have all been so hard hit.
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    As my right hon. Friend the Chancellor said today and on many other occasions, despite the decisions that we made five years ago and the enormous strength and stability that those decisions have brought to the British economy, it is impossible to insulate every one of our manufacturing firms and exporters from the difficulties and downturn in the rest of the world economy. However, as we know, not only from every manufacturer that we talk to but from just about every business leader, what they welcome and need most of all is precisely that climate of economic stability, the lowest interest rates, the lowest inflation, the lowest unemployment and therefore the lowest bills for unemployment for more than 30 years.
    Mr. Ian Davidson (Glasgow, Pollok): Does the Secretary of State recognise that French unemployment has risen every month for the past 17 months and does she accept that that is a clear indication that the euro is not working?
    Ms Hewitt: My hon. Friend makes an important point about the level of unemployment in France. In many other continental countries, unemployment is far higher than our own. I would not myself attribute that to the effect of the single currency, which has enormous benefits in terms of transparency and the reduction in exchange rate and transaction costs that its gives, particularly to manufacturers. However, those problems of high and stubborn unemployment within the eurozone are one of the reasons why this Government have been the leading proponent of economic reform in the European Union and we will continue to be so.
    Alistair Burt: No Conservative Member denied the problems and issues affecting manufacturing industry in relation to the global climate, but our point was that manufacturing had raised several specific issues that had caused it problems and had been laid at the Government's door, from national insurance to the climate change levy. The Government cannot blame world economic conditions for that. Why do not the Government take notice of what manufacturing is saying and change some of the things that manufacturing wants them to change?
    Ms Hewitt: I do not know whether that was a bid to be the Mr. Very Nice of the Conservative party, but let me stress that under the climate change levy, which is precisely designed to increase renewable energy, any manufacturer who enters into an agreement for pollution reductions gets an 80 per cent. discount. For any manufacturer or other company that is contracting to buy clean electricity there is no impact from the climate change levy.
    Of course, as I have said, what manufacturers need is the climate of economic stability that we have created. However, on top of that, and in response to requests from manufacturers, we have put in place the first Government manufacturing strategy that the United Kingdom has had for 30 years. In pursuit of that, we are opening in every region centres for manufacturing excellence that are directly helping manufacturers to be more competitive in these very difficult world conditions.

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    My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) referred specifically to the importance of science and innovation. It is indeed the investment in our world-class science base, and the commercialisation arising from it, that will form the foundation for prosperity in the future. I particularly welcome, as I know she does, the very successful efforts—led by the North West Development Agency—of the north-west science partnership.
    My hon. Friendthe Member for Ochil, the hon. Member for Gordon (Malcolm Bruce) and others have referred to the extremely important issues that we face on the energy question. I readily confirm that, with your permission, Mr. Speaker, I will make a statement to the House of Commons before the loan facility that we put in place for British Energy expires at the end of next week. As hon. Members know—I have said this on many previous occasions—the only reason why we extended that financial assistance to British Energy was the overriding priority, and our responsibility in government, of ensuring security of supply and the safety of nuclear generating plants. I shall have more to say on that subject in the statement, just as I will have far more to say—especially in the energy White Paper, which we will publish in the new year—on the important issues raised concerning the operation of the energy market.
    The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) and the hon. Members for Tiverton and Honiton (Mrs. Browning), for Huntingdon (Mr. Djanogly), for North-East Bedfordshire (Alistair Burt), and for South Suffolk (Mr. Yeo) raised the question of regulation. The shadow Chancellor was challenged to name three regulations—just three out of the thousands that he is supposedly complaining about—that he would scrap. He had some difficulty, but he finally came up with just one candidate for repeal out of all the thousands that led them to make accusations against us statutory instrument No. 440. Well, he clearly has not read it. I have had the opportunity to do so, and I shall give him a copy. What he failed to realise is that it is a deregulatory measure. In schedule 2(a), at the heart of this statutory instrument, are the exemptions from requirement to give building notice or to deposit full plans. It is a deregulatory measure—one of several that we have brought forward in government.
    It is worth reflecting on this Government's record on regulation. In 1996—
    Mrs. Browning: A document published in February, entitled "Realising Europe's Potential: Economic Reform in Europe", lists the next steps for such reform, the second of which is
    "lighter and more targeted regulation"
    Can the Secretary of State give us some examples of such regulation?
    Ms Hewitt: I have just mentioned the excellent and now very well known statutory instrument No. 440, but I could also mention my right hon. Friend the Chancellor's excellent initiatives on VAT. A radically simplified VAT scheme has cut red tape for 500,000 small businesses, and saved a typical small business up
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    to £1,000 a year. I could also mention that, in 1996, under the Government of which the right hon. and learned Member for Folkestone and Hythe was a member, 230 statutory instruments imposed a cost on business. That has steadily fallen: in 2001, 93 statutory instruments imposed a cost on business.
    If the shadow Chancellor would bother to look at all the statutory instruments to which he is so fond of referring, he would realise that a large proportion of them derive directly from the foot and mouth crisis, and only 93 last year imposed costs on business. We have halved the proportion of regulation that imposes any costs on business
    Chris Grayling: As the Secretary of State claims to be in deregulatory mode, will she give a clear undertaking that the agency workers directive will not become law in this country?
    Ms Hewitt: We led the way in persuading European Union colleagues to sign up to the better regulation action plan. We are busy negotiating with our EU partners to ensure that they understand the completely different context for agency temporary workers in the United Kingdom, where they are extensively used, to the great benefit of both the workers and the businesses that use them.
    Mr. Howard: Will the Secretary of State confirm that if the Government had not signed up to the social chapter, they could have blocked the agency workers directive, whereas now the matter will be decided by majority voting so they cannot block it even if they want to?
    Ms Hewitt: The shadow Chancellor did not believe in the minimum wage when we introduced it and refused to say today whether he would be in favour of regular updating. Let me be clear: we are in favour of the social chapter. If he and his party want to continue to be against it, they can make that argument with the British people—but I do not think that the hon. Member for Buckingham (Mr. Bercow) will support him in that.
    One of my predecessors in this job, a distinguished former Conservative Front Bencher, Lord Heseltine, recently said that one of the reasons why the United Kingdom is one of the best places in the world to do business is the lack of a regulatory climate here. Of course, that judgment is supported by the OECD, The Economist intelligence unit and all the benchmarking studies.
    Both the shadowChancellor and the right hon. and learned Member for Rushcliffe (Mr. Clarke) made great play of taxation, so I want to take this opportunity to put on the table a few facts on the subject. The OECD shows that the United Kingdom remains a relatively lightly taxed economy, with one of the lowest total tax burdens in the European Union, well below the EU average. Conservative Members are very fond of citing the tax burden on business, but the OECD shows that in 2000 it was just over 7 per cent. in Britain, lower than in France, Italy or Germany—lower, indeed, than in 12 European Union countries.
    Mr. Kenneth Clarke: I wondered where on earth those figures were coming from, and now the Secretary of

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    State reveals that they are for 2000. Will she acknowledge that since that time Germany has overtaken us in having a lower tax base—or rather the reverse: Britain has overtaken Germany in having a higher one? The Chancellor has just told us that the Germans are about to put up taxation again, because they, too, have made reckless spending commitments over the past two years. We are now engaging in a race to put up our taxation into the higher levels of the European Union. Germany has forged ahead of us in getting taxes down since the time to which those figures refer
    Ms Hewitt: The right hon. and learned Gentleman is, perhaps uncharacteristically, confused. The German Government announced just today that they are to put up taxes, and the only reason why receipts from business taxation have fallen in Germany is that corporate profitability is on the floor and the German economy is so weak.
    The economy is safe in our hands. Under my right hon. Friend the Chancellor, and with the support at least of the hon. Member for Buckingham, whose journey has indeed been an interesting one-so interesting that we look forward to welcoming him to these Benches shortly—we will continue to create the best environment for business in the world.
    Debate adjourned—[Derek Twigg]
    Debate to be resumed tomorrow.

    BUSINESS OF THE HOUSE
    ordered
    That, at the sitting on Thursday 21st November—
    (a) notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents) the Speaker shall put the questions necessary to dispose of proceedings on the Motion in the name of the Prime Minister relating to Fisheries not later than four hours after their commencement; and
    (b) notwithstanding the practice of the House in relation to motions relating to the Committee of Selection, the Motion in the name of Mr Keith Hill relating to the Committee of Selection may
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    be made during the time of public business and the Speaker shall put the questions necessary to dispose of proceedings on it not later than one hour after their commencement,
    and proceedings under this Order may continue, though opposed, after the moment of interruption
    Ordered,
    That Private Members' Bills shall have precedence over Government business on 31st January and 7th and 28th February and 7th, 14th, 21st and 28th March and 4th April and 16th May and 13th and 20th June and 4th and 11 th July 2003—[Derek Twigg.]

    DELEGATED LEGISLATION
    Ordered,
    That the Nitrate Vulnerable Zones (Additional Designations) (England) (No. 2) Regulations 2002 (S.I., 2002, No. 2614), be referred to a Standing Committee on Delegated Legislation—[Derek Twigg.]

    STANDING COMMITTEE ON THE CONVENTION
    Motion made,
    That the Order of 12th June 2002 relating to the Standing Committee on the Convention be renewed for the current Session of Parliament, with the omission, in paragraph (4)(b), of the words `or be counted in the quorum'—[Derek Twigg]
    Hon. Members: Object

    COMMITTEES
    Mr. Speaker: With permission, I shall put together the motions relating to the Committee of Selection
    Ordered,

    HOME AFFAIRS
    That Mr Humfrey Malins and Angela Watkinson be discharged from the Home Affairs Committee and Mr James Clappison and Miss Ann Widdecombe be added to the Committee.
    INTERNATIONAL DEVELOPMENT
    That Mr Andrew Robathan be discharged from the International Development Committee and Alistair Burt be added to the Committee—[Mr. Mc William, on behalf of the Committee of Selection.]

    Mr. J. Woodbridge
    Motion made, and Question proposed, That this House do now adjourn. —[Derek Twigg.]
    10.1 pm
    Dr. Stephen Ladyman: I am grateful for the opportunity to put the case of Mr. J. Woodbridge before the House. As it is complex and reads like the introduction to a John Le Carre novel, I hope that the House will forgive me if I make fairly rapid progress and stick closely to my notes.
    The case concerns my constituent, Mr. Jeff Woodbridge of Minster in Thanet. Mr. Woodbridge is an employee of Sigma Enterprises Ltd. of 3 Lion Yard, Clapham. My purpose in bringing the matter to House is three fold first, to put the extraordinary story on the record, along with my constituent's view of events; secondly, to ensure that Ministers are aware of the way in which consular and other Government services appear to have fallen below the standard that United Kingdom citizens are entitled to expect; and, thirdly, to express my disappointment that when I turned to Ministers for assistance, I did not receive a timely response, so my constituent in turn could not get from his Member of Parliament the support to which he was entitled.
    First, let me give the background to the case. Seventeen years ago, a company called Dong Ah was involved in the "Great Man-Made River Project" in Libya—a project to bring water to the desert that at the time had the support of the international community, including the United States of America. Dong Ah purchased hydraulic shears from a US company called Pacific Press for use on the project. That equipment was supplied with the knowledge and support of the US Government.
    In September 2001, a German company called BIB approached Pacific Press to acquire spare parts for those hydraulic shears. It is not known—by me at least—who acquired spares for the shears from Pacific Press on behalf of Dong Ah or the Libyans in the intervening period, although it stands to reason that someone must have done so as equipment of that nature would need regular maintenance. BIB was quoted a price of about $7,500, but did not respond until January 2002, when it placed its order and paid for the goods. Having received the money, Pacific Press subsequently reneged on the order, claiming that it would not export the goods directly, but would only supply to some other party in the US. BIB is a small company and it was unable to ignore the loss of the money that it had already paid, so it had to look for a US partner that was prepared to take delivery of the goods on its behalf and export them to Germany for onward shipping to Libya.
    That is the point at which Mr. Woodbridge entered the picture. BIB contacted him to ask if he could help, as he trades extensively with the USA. After consulting his employers, it was decided on commercial grounds that Sigma could not directly assist—after all, the goods had already been paid for and there was no way in which the company could earn from the transaction. However, as a service to BIB, which is a valued customer of Sigma, it did agree to put BIB in touch with a company in
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    Miami with which Sigma had dealings and which it thought might be able to help. That company was Minequip, and its president is a Mr. John Clements
    BIB contacted Mr. Clements and asked if he would take delivery of the parts and arrange their export. Mr. Clements accepted the parts from Pacific Press but, on discovering that they would need an export licence, returned them to Pacific Press and declined BIB's request for help. About two months later, out of the blue and for reasons about which I will speculate in a minute, Mr. Clements changed his mind, agreed to accept the parts and asked Sigma if he could ship the parts to them for onward road shipment to Germany as that was the cheapest means of transportation. Mr. Woodbridge and Sigma agreed
    That was the total extent of Mr. Woodbridge's involvement in the affair:first, to pass on to BIB the name of the Miami contact and, secondly, to act as a staging post in the shipment of goods to Germany. Those acts were carried out by a UK company in the UK. Mr. Woodbridge at no time entered into negotiations on US soil. He has not broken any UK laws, and no one, including the DTI, has ever suggested that he has.
    VAT and duty were paid on the goods as normal, so it is not realistic to suggest that there was anything clandestine about the arrangements. The parts themselves were for equipment that had been legally supplied by a US company, with the knowledge of the US Government, and which was to be used in an irrigation project. No equipment that is in any way capable of military, terrorist or hostile use was involved.
    Despite that, on his next business trip to the US, Mr. Woodbridge was arrested at Minneapolis airport and charged with conspiring to supply the enemy. He spent 10 days in jail until his employers posted $50,000 bail. Mr. Woodbridge was flown to Benton, Illinois to appear before a judge for court appearances to be agreed. When considering future court appearances, the judge said that the case appeared to be a waste of everyone's time; nevertheless, the trial was scheduled for 7 October and subsequently took place on 24 October. On release by the court he was rearrested by US marshals—a decision that led to an argument between the state prosecutor and the US marshals—but released later that day, although he had to remain in the US until his trial.
    How were others involved? It appears from information that emerged during the trial that Mr. Clements's telephone was being tapped and he was suspected of criminal activity. It emerged also that Mr. Clements was not, as everyone thought, a naturalised US citizen but a UK citizen and held two passports. One of those passports he used for trips to Cuba, but Cuban visas would not endear him to US immigration officials, so he used a different passport at other time
    We can only speculate that Mr. Clements was offered immunity for other actions, possibly in connection with his trade with Cuba, in return for help with a sting operation against BIB. Hence he unexpectedly reversed his initial decision not to help BIB by exporting the parts from Pacific Press. Although Mr. Clements has been charged in respect of this case, and claims to have been tried and sentenced, the US probation service reports that the case is still pending.

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    We can only speculate also as to why Pacific Press has not been charged with any offence. During the trial it emerged that the company, or an employee, is also being helpful to the authorities in return either for a reward or for immunity against other charges. Presumably the company, or the employee, notified the authorities of the order in the first place as down payment for whatever consideration it, or he or she, subsequently received
    I turn now to the trial and Mr. Woodbridge's experience of consular services. Throughout his detention in the US, Mr. Woodbridge attempted to get UK officials to help him. He and his employer hoped for diplomatic activity to assist him, but there is no sign that it ever took place. He is diabetic, and he had financial problems caused by having to stay in the US. He hoped that consular officials would offer advice but, in his view, no effective advice was forthcoming. He hoped also that the UK Government would take up the case with the US trade authorities on the ground that the US had acted in an extraterritorial manner, to the detriment of a UK company. He and his employers contacted the DTI.
    I have seen e-mail correspondence with a DTI official who deals with extraterritorial issues, and she appears to have had a genuine interest in helping. Mr. Woodbridge's employers met her and other DTI officials, and contact was then made by the DTI with US lawyers who advise the DTI on these issues. The DTI also said that it would contact the British embassy in Washington to ask for its assistance
    Those efforts do not appear to have been followed up. Why? Perhaps a clue can be found in an e-mail erroneously sent to Mr. Woodbridge by another official who was asked for advice as to how the DTI should proceed. When the official realised that the e-mail had been wrongly sent to Mr. Woodbridge he tried to recall it, but it had already been delivered. The e-mail makes it clear that this case has diplomatic and legal implications and advises officials to avoid getting involved
    Mr. Woodbridge e-mailed a strong protest to the author and received a handsome apology. The official made it clear that he did not intend to minimise Mr. Woodbridge's suffering, and he made it clear that he was concerned that officials trying to help may be unfairly implicated in the case and so should proceed with caution. Nevertheless, after that exchange of correspondence, it is hard to escape the conclusion that the risk of involvement was seen as greater than the potential benefits of helping a UK citizen and a UK company.
    Mr. Woodbridge also contacted me as his MP, and e-mailed me on 19 August. After making inquiries, I wrote to the Secretary of State for Trade and Industry and the Secretary of State for Foreign and Commonwealth Affairs on 21 August. As well as posting those letters, they were faxed to the Ministers' private offices and marked urgent. Receipt was acknowledged by the Foreign Office on 22 August. Several reminders and telephone calls from my office later, a substantive reply was posted from the Foreign Office on 2 October. In other words, an MP's request for help for a constituent unfairly held in a foreign country and suffering from serious health problems did not get a response for over five weeks.
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    The response from my noble Friend Baroness Amos claimed that consular staff had contacted my constituent's family at the time of arrest and remained in constant touch over the weekend. Mr. Woodbridge and his family have no such memory. The letter claims that consular officials made prison authorities aware of his diabetes and health concerns. Mr. Woodbridge has no such recollection and received no health assistance. The letter, patronisingly I feel, went on to advise me to tell Mr. Woodbridge to seek his own legal advice and provided me with a Foreign Office leaflet on consular services abroad
    An example of the disparity between Baroness Amos's version of events and Mr. Woodbridge's relates to his health care. In her letter of 2 October, the Minister claimed that officials notified prison authorities of his health needs. In reality, after his release, Mr. Woodbridge approached a consular official to explain his need for treatment for diabetes, which she was not aware of, and was told to look in the "Yellow Pages". The Minister's letter was such an abject disappointment that I was loth to give it to Mr. Woodbridge, but I did so at his request. His response was dramatic—he concluded that as his Government had abandoned him he would instruct his lawyers to negotiate a sentence with the prosecution if he pleaded guilty to a crime that he had no knowledge of, had not committed and which was based on legal actions in his own country.
    The response from the DTI to my letters was stranger still. It replied more quickly, writing back on 13 September—a delay of three weeks—but the letter from the assistant private secretary said only that it was a matter for the Foreign Office, so my letter had been sent on. The Minister will recollect from what I said earlier that that was the response from the Department that had genuinely tried to help initially. A Minister's office clearly did not even bother to investigate what work officials had undertaken despite the fact that I had supplied it with copies of correspondence showing that the DTI had been involved. Ironically, in the e-mail between a DTI official and his colleague that was wrongly sent to Mr. Woodbridge, the author said that his DTI colleague should not get involved but advise Mr. Woodbridge to contact his MP, who would contact Ministers, who would then instruct officials. But when Mr. Woodbridge did contact his MP, and the MP contacted Ministers, officials batted the letter to the Foreign Office and did not even show it to Ministers. Although my staff contacted that private ministerial office and asked it to look at the case again, I have still have had no response.
    In any event, the matter proceeded to trial, and Mr. Woodbridge—his health insurance having run out and having lost all hope of Government intervention—pleaded guilty. Fortunately for him, the trial judge was a man of independent mind. He immediately said that he was not minded to give a custodial sentence—he could have given up to two years—and would tailor his sentence to allow Mr. Woodbridge to return home. Subsequently, he was asked to pay a $7,000 fine and given three years' unsupervised probation. He is now recovering at his home in Minster, although he will never be able to return to the United States
    After Mr. Woodbridge decided to plead guilty, I again wrote to Baroness Amos. She has responded in greater detail giving an account of efforts by consular

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    staff to assist, including telephone records to show that consular staff made calls to the UK over the weekend of the arrest. I can only say that the recollection of events by Mr. Woodbridge and his family remains very different from that of those who briefed my noble Friend. For example, in the letter of 2 October, she claims that it was her officials who notified the family of the arrest and in her letter of 4 November cited the phone records to support her case. In fact, the only substantive call to the UK shown on those records was a call that was not initiated by consular officials as my noble Friend implied. It followed a call by Mr. Woodbridge's son, who had by then already heard of his father's arrest from the Minneapolis probation office. It was Mr. Woodbridge's son who first rang the consulate in Chicago to ask if it could help. The officer said that he would investigate and call back, and it was that call that is on the phone records. Worse still, that officer reported that his boss was aware of the arrest, and had intended to leave a report on it, but had gone away for the weekend and forgotten.
    I accept that during that phone call Mr. Woodbridge's son told the officer of his father's diabetes and a call was then made to the prison, presumably to relay that fact. Unfortunately, nobody appears to have checked that the US authorities acted on this information—they had not.
    I understand that, at times of strain, people may not recall all the various contacts that they have received or even appreciate fully when genuine efforts are being made to help. Certainly they will not know of efforts behind the scenes. The lesson that should be learned in a case such as this is that consular officials should err on the side of overkill in contacting people and always drop them a note to confirm and clarify important issues after the conversation.
    Mr. Woodbridge committed no UK crime, and it is still not clear what US authorities suspected was going on. However these events are viewed, the US has acted extraterritorially and the UK Government appear to have allowed them to get away with it. Consular officials and others gave an inadequate service to my constituent, and seem to have acted from the view that he was seeking free legal advice or health care, which he was not. Finally, Ministers' offices acted weakly and deplorably slowly to my request for urgent assistance—more than five weeks for a substantive reply to an MP in a case such as this is unacceptable.
    Mr. Woodbridge realised that the Government could not get involved in the US judicial system; he did not expect us to send a gunboat to release him. He did however expect sympathy, support, clear advice and possibly some help through diplomatic channels. As his MP, I did not expect us to break off relations with the United States or the Prime Minister to pick up the hotline to President Bush, but I did expect a thorough and proactive response to a serious situation. I fear that we were both let down.
    My hon. Friend the Minister will in his response not wish to be too critical of his officers, and I fully understand that. I just hope that in private, in the next day or two, someone in the Foreign Office will read my remarks, look hard at what happened and have thoughts on what should have happened
    10.16 pm
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Mike O'Brien): I congratulate my hon. Friend the Member for South Thanet (Dr. Ladyman) on securing this Adjournment debate and on bringing the case to the attention of the House and those who read Hansard.
    I have no doubt that the past few months have been a very stressful and difficult time for Mr. Woodbridge and his family. I welcome this opportunity to discuss the response of Her Majesty's Government in the months leading up to his conviction and departure from the United States.
    I should say at the outset that I accept that we did make mistakes in this case. We must apologise for three in particular. First and foremost, we should have replied much more quickly to my hon. Friend's original letter requesting our help. Secondly, the Department of Trade and Industry and the Foreign Office should have been more joined up in our work on the case. Finally, we should have communicated more effectively with Mr. Woodbridge about the work that the Government were doing on his behalf, and then followed it up with him after his release from jail to ensure his health requirements were being looked after. I shall address each of those issues in due course, but first I should like to say something about what we did do for Mr. Woodbridge
    Mr. Woodbridge was arrested on 18 July 2002 in Minneapolis, Minnesota. His case was not brought to our attention until the following day when his lawyer contacted our honorary consul in Minneapolis. By that time, the authorities had already contacted Mr. Woodbridge's family, and his employer had in turn arranged for a lawyer. If we had been notified sooner of his arrest by the local authorities, we would have arranged, if Mr. Woodbridge had wished, for his family to be informed. Our staff members can make contact with next of kin only after they have been informed of an arrest. In this case, the United States authorities failed to notify us before notifying Mr. Woodbridge's family.
    After speaking with Mr. Woodbridge's lawyer on 19 July, the honorary consul alerted the duty officer in Chicago, which is our nearest consulate. The duty officer in Chicago tried several times to speak to Mr. Woodbridge directly, but the US authorities refused permission. Although it was not an ideal situation and consular officials would have preferred to speak to Mr. Woodbridge directly, the duty officer received assurances of Mr. Woodbridge's well-being from his lawyer as well as from staff at the jail. We have since complained to the US State Department regarding that denial of access.
    The duty officer then contacted Mr. Woodbridge's son Andrew. It was through the contact with Andrew Woodbridge that the duty officer learned that Mr. Woodbridge has dietary diabetes. Mr. Woodbridge may dispute this, but the duty officer immediately alerted prison authorities to his medical condition. I am told by officials that there are telephone records from Chicago to support that communication. In addition, the duty officer was told of claims by jail authorities that Mr. Woodbridge himself would have had an opportunity to inform them of his medical condition at the time that he was taken into custody.

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    On 19 July, the consulate was informed by the US Customs Service that Mr. Woodbridge was to be charged with conspiracy involving the export of US goods to Libya. The authorities planned to transfer him to the jurisdiction of the Federal district court of the southern district of Illinois, where the goods were manufactured. Around that time, Mr. Woodbridge's employer contacted our honorary consul in Minneapolis, where Mr. Woodbridge was being held. The employer sought our honorary consul's advice as to where to engage legal counsel for Mr. Woodbridge—Illinois, where the case was likely to be heard, or Minneapolis, where Mr. Woodbridge was initially being held.
    The honorary consul used his personal network of contacts to arrange a conference call between himself, the former US Attorney for Minnesota, and the former US Attorney in the central district of Illinois, both leading private legal practitioners. He gathered their views and passed them on Mr. Woodbridge's employer. Here, the honorary consul was extremely helpful in using his access to those lawyers to get free advice for Mr. Woodbridge.
    On 23 July, Mr Woodbridge went before the court in Minneapolis and bail was set at $50,000. His employer paid the bond on 30 July and Mr. Woodbridge was released. On 5 August, Mr. Woodbridge contacted our consulate in Chicago and informed staff there that he was living at his employer's expense in southern Illinois and had retained local counsel.
    During his telephone call, Mr. Woodbridge asked whether the consulate could recommend a doctor specialising in diabetes. Unfortunately, although we maintain doctors lists in some places in some countries, I regret to say that we do not do so for many countries in which health care is generally good and readily available, such as the United States, nor do we generally maintain doctors lists for very small municipalities, such as the one in which Mr. Woodbridge was residing. The vice-consul, therefore, advised Mr. Woodbridge to seek a referral at the nearest hospital. The vice-consul also suggested that Mr. Woodbridge might consult the local yellow pages where doctors are listed by speciality. I know that Mr. Woodbridge found this approach unsatisfactory.
    On 17 August, Mr. Woodbridge sent an e-mail to the Department of Trade and Industry. I must say that the Government failed Mr. Woodbridge twice with respect to that communication. First, a DTI employee intercepted Mr. Woodbridge's message and forwarded it to a colleague, along with his opinion that the issues raised by the case were best left to Mr. Woodbridge's legal team. He advised that the DTI should not get involved. Unfortunately, the employee mistakenly sent his reply not only to his colleagues at the DTI, but to Mr. Woodbridge. He apologised to Mr. Woodbridge the next day. The entire incident was wrong and I accept that it should not have happened. I apologise to Mr. Woodbridge for what happened.
    The second failure came when the same e-mail was forwarded to the Foreign Office under cover of a letter from my honourable Friend. We took far too long to respond to that letter, part of the time being spent coordinating our response with the DTI. I regret very much that that happened. However, Mr. Woodbridge was already on bail and living in his apartment in Illinois
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    at the time of his first writing. Our tardiness, inexcusable though it was, had no bearing on Mr. Woodbridge's situation.
    On 27 August, DTI officials met Mr. Woodbridge's employer and contacted the embassy in Washington. The DTI wanted to investigate whether the US may have acted extraterritorially in its pursuit of Mr. Woodbridge. In addition to seeking advice from the Department's lawyers, the DTI also asked the embassy to seek legal advice from US lawyers specialising in export control laws and extraterritoriality. Following that, officials at the embassy contacted Mr. Woodbridge's lawyer and the US Department of Commerce to discuss their detailed concerns. On the basis of these discussions, and on the advice of DTI and US lawyers, the DTI decided on 6 September that US actions were not extraterritorial. I know that there is some disagreement about that, but that is certainly the position that the DTI reached. Therefore, the Government would be unable to intervene. Mr. Woodbridge and his employer were informed the same day.
    Dr. Ladyman: Iam grateful to my hon. Friend for giving way. Mr. Woodbridge's company would never have even been involved at that stage if Minequip had not specifically asked for the goods to be shipped via Sigma. It seems most likely that Minequip was asked to do that by the US authorities, which wanted to implicate not only BIB, but Sigma. Surely, that is evidence of extraterritorial behaviour.
    Mr. O'Brien: I recognise that my hon. Friend has a view about that. No doubt, Mr. Woodbridge's lawyers also have a view. All I can say is that we have taken legal advice and have an alternative view about where the law stands. Our view remains that the US actions were not extraterritorial. While I accept some of what he says about the behaviour of Mr. Woodbridge not being unlawful in this country, the situation is somewhat different in the US context. Our view was that the US actions were not extraterritorial and were lawful in the context of US law. Therefore, we were not in a position to intervene. Our consular staff were not fully aware of all the discussions at the time, however, and I accept that the Government could have been more joined up in addressing the issue.
    Since then, officials have spoken to Mr. Woodbridge several times. On 8 November, he pleaded guilty to the charges against him and received three years' probation. It was stipulated in the plea agreement that Mr. Woodbridge depart the United States voluntarily by 13 November.
    I am aware that Mr. Woodbridge is not happy with the way in which his case has been handled. We are always disappointed when that is the case and we aim to provide an effective consular service. The main role of the consul is to advise on local practice and ensure that UK national detainees are treated no worse than nationals from the country in which they are held.
    Mr. Woodbridge was convicted of a crime in the United States, and as far as we can ascertain, his treatment was no worse than that which an American would have received in the same circumstances. As I said, there were certainly things that I would change

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    about the way in which we handled the case. I am concerned about the time that it took to respond to Mr. Woodbridge's initial e-mail from my hon. Friend and about the fact that we should have been more joined up with the DTI in our various roles. Most especially, I regret very much that Mr. Woodbridge thinks that the Government did not care about him or his case.
    There is clearly a limit to what consular staff can do in particular cases and circumstances. There are a limited number of staff and often a large number of demands. Sometimes, expectations are greater than can be delivered in practice, but in this case, I am satisfied that in some respects, although not all, the response was not all that I would have hoped for. Substantial help was given to Mr. Woodbridge in the handling of the case and a number of officials did their best to be as helpful to him as possible. However, in other instances, the response was not all that he had a right to demand from his Government. That is why I have set out clearly our apologies where we felt them appropriate. I hope that Mr. Woodbridge will feel that that is the sort of response that he would have expected. Where we have got it
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    wrong, we have apologised and where we feel that the criticisms have been harsh, I hope that we have given an explanation.
    Dr. Ladyman: I am very grateful to my hon. Friend for offering that apology to Mr. Woodbridge. I think that it was the right thing to do and it is very magnanimous of him to do it on the Government's behalf. The one piece of advice that I might offer, if he does not mind, is that during that five weeks when I was waiting for a response, if somebody had picked up the telephone and said, "We are working on it and doing our best", an awful lot of the problems could have been headed off.
    Mr. O'Brien: I am sure that my hon. Friend is entirely right. All I would say is that most officials are doing their best throughout the working day, and they work enormously hard under a great deal of stress and pressure. Sometimes, the stress and the pile of work can mean that the sort of telephone call to which he referred is not made, and I appreciate that in individual cases such this one, there can be a price to be paid by the constituent.
    Question put and agreed to.
    Adjourned accordingly at half-past Ten o'clock.

ENVIRONMENT, FOOD AND RURAL AFFAIRS

  Air Quality
  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs which organisations are responsible for monitoring air quality. [80503]

  Alun Michael
  In England, legal responsibility for monitoring ambient air quality lies with the Secretary of State for Environment, Food and Rural Affairs. In addition the Environment Agency is responsible for ambient air quality monitoring arrangements in relation to regulated industrial processes in England and Wales. Local authorities are responsible for reviewing and assessing ambient air quality in their areas. This usually includes some monitoring of key pollutants. Defra manages the United Kingdom ambient air quality monitoring network on behalf of the Government and the devolved administrations.

  Mr. Sayeed
  To ask the Secretary of State for Environment, Food and Rural Affairs (1) what air quality targets have been set by her Department over the last five years; [80507]

  what procedure is followed to review air quality targets; [80515]

  what plans she has to implement higher air quality targets. [80502]

  Alun Michael
  The Government set out their targets for safeguarding people's health and protecting the environment from air pollution in the Air Quality Strategy for England, Scotland, Wales and Northern Ireland, which was first published in 1997 and revised in January 2000. The strategy includes health-based standards for benzene, 1,3-butadiene, carbon monoxide, lead, particles, sulphur dioxide, nitrogen dioxide and low level ozone. It also includes policy objectives for each pollutant to be achieved between 2003 and 2008. On 5 August 2002 we announced tighter objectives for particles, benzene and carbon monoxide and introduced a new objective for polycyclic aromatic hydrocarbons.

  Section 20 of the Environment Act 1995 requires the Secretary of State to keep the Air Quality Strategy and its standards, objectives and measures under regular review. The Secretary of State is required to consult with a wide range of interests and organisations on any proposals to modify the strategy. We carried out a comprehensive review of the overall strategy and its objectives between 1997 and 1999. A further review began in 2000, concentrating on strengthening three of the current objectives and adding an objective for a new
  6W
  pollutant. We intend that the next review, which is likely to begin during 2003, should focus more on progress towards meeting the objectives, rather than on objectives themselves. Should new evidence emerge, however, which indicates that existing air quality targets should be amended, or new ones introduced, this will be taken into account in future reviews.

  Countryside Stewardship Scheme
  Mr. Hurst
  To ask the Secretary of State for Environment, Food and Rural Affairs how many participants there are in the Countryside Stewardship scheme(a) in England and (b) in each of the English regions. [80479]

  Alun Michael
  The total number of Countryside Stewardship scheme agreement holders within England as at October 2001 was 14,225. This is broken down by Government Office region as follows:

  Region

  Number of agreements

  East Midlands

  1,540

  Eastern

  1,632

  Greater London

  68

  North East

  954

  North West

  1,629

  South East

  2,016

  South West

  3,147

  West Midlands

  1,511

  Yorkshire/Humberside

  1,728

  Total

  14,225

  Rights of Way
  Dr. Naysmith
  To ask the Secretary of State for Environment, Food and Rural Affairs when her Department will make an announcement on whether the new rights of access under Part 1 of the Countryside and Rights of Way Act 2000 will be implemented on a regional basis; and if she will make a statement. [80808]

  Alun Michael
  I am strongly in favour of implementing the new rights of access to open country on a region by region basis but additional costs and organisational issues have to be addressed. Work is currently being undertaken to make sure that early commencement is a practical proposition. Our aim is to make this historic new right a reality as soon as is practicable and I shall announce a decision shortly.

  Slaughter Premium Scheme Payments
  Mr. Peter Duncan
  To ask the Secretary of State for Environment, Food and Rural Affairs how many farm businesses were in receipt of slaughter premium during each of the last three years. [80141]

  Alun Michael
  Information is available only on the number of producers who received slaughter premium scheme payments. These details are set out in the table. Because the scheme in Great Britain was administered by different Government Departments in relation to the over and under thirty-month elements of the scheme, there is an element of double counting. Full details are given in the footnotes.
  7W

  Number of producers to receive payment under the Slaughter Premium Scheme

  20001

  20012

  20023

  England

  Adult

  33,264

  29,076

  UTM1

  30,560

  OTM1

  26,090

  Veal

  75

  825

  490

  Total

  Wales

  Adult

  8,178

  6,886

  UTM1

  5,322

  OTM1

  7,137

  Veal

  14

  112

  78

  Total

  Scotland

  Adult

  7,776

  UTM1

  5,566

  6,561

  OTM1

  6,006

  4,963

  Veal

  2

  0

  16

  Total

  Northern Ireland

  Adult

  19,898

  19,286

  11,873

  Veal

  243

  217

  97

  Total

  1 UTM = under thirty months. OTM = over thirty months.

  2 The figures quoted here are the number of producers who have received payments.

  3 The 2002 scheme is still open. The figures quoted are the number of producers who have submitted claims for premium so far.

  Notes:

  England and Wales

  During the 2000 scheme year, the Slaughter Premium Scheme for England and Wales was administered as two separate schemes. The UTM element for England was administered by the then Ministry of Agriculture, Fisheries and Food (MAFF), and the OTM and UTM element was administered by the then Intervention Board. In 2001, these elements were combined for producers in England and Wales.

  Scotland

  During the 2000 and 2001 scheme years, the OTM element of the scheme was administered by the Intervention Board, and latterly, the Rural Payments Agency (RPA). Scottish Executive Environment and Rural Affairs Department (SEERAD) administered the UTM element. In 2002, SEERAD took over the full responsibility for both elements and combined them to run as one adult scheme.

  Northern Ireland

  Department of Agriculture and Rural Development (DARD) have administered the adult scheme as one element since the 2000 scheme year.

FOREIGN AND COMMONWEALTH AFFAIRS

  Cyprus
  Mr. Dismore
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment he has made of the new UN plan for a settlement in Cyprus; and if he will make a statement. [80493]

  Mr. MacShane
  The British Government received a copy of the UN Secretary-General's proposals for a comprehensive settlement of the Cyprus problem on 11 November in our capacity as a Guarantor Power of Cyprus. We will be studying these proposals carefully,8W
  particularly in so far as they affect our responsibilities under the 1960 Treaty of Guarantee, and will be responding to Kofi Annan in due course.

  The Government warmly welcome the UN Secretary-General's decision to table his proposals for bridging the remaining gaps after the months of negotiations between the two sides. We believe this is a timely initiative which we will be giving our full support.

  As my right hon. Friend the Foreign Secretary said in a press statement on 11 November, the British Government believe that there is now the best chance to solve the Cyprus Problem in decades, and that this opportunity is not likely to recur in the foreseeable future. We will be working with all those concerned for a positive outcome.

  Democratic Republic of the Congo
  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs what further information he has received from the UN in relation to the allegations set out in the UN Panel of Experts report on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the DRC. [80934]

  Mr. Rammell
  We have requested more information from the UN, but have not yet received a response.

  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to introduce targeted sanctions against businesses or individuals profiting from the trade in conflict goods as referred to in paragraph 143 of the final report of the Panel of Experts on the alleged exploitation of natural resources and other kinds of wealth of the Democratic Republic of the Congo. [81323]

  Mr. Rammell
  The proposal to introduce targeted sanctions is one of a wide range of recommendations made by the UN expert panel report being considered by Whitehall departments. In consultations at the UN on 13 November, a number of states asked for more information to be made available to substantiate the report's allegations. The UK has also asked the UN directly for more information, but has not yet received a response.

  At the 13 November consultations, the UN panel's chairman—Ambassador Kassem—restated that the panel would recommend a grace period of 5–6 months before imposing any sanctions, to allow the accused individuals and companies a chance to change their working practices.

  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he has to follow the recommendations set out in paragraph 176 of the report of the UN Panel of Experts in request of companies and individuals listed in Annex 1 and 11 of the report whose operations are carried out in whole or in part of the UK. [81324]

  Mr. Rammell
  The recommendations made by the UN Expert Panel report are being considered by Whitehall Departments. At Security Council consultations on 13 November, a number of states asked that more information be made available to substantiate the
  9W
  report's allegations. The UK has also asked the UN for more information directly, but has not yet received a response.

  IT Security
  Brian White
  To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he has taken to review the security of the Department's IT system; and how many digital attacks there were on the Department's system in(a) October and (b) 2002. [80776]

  Mr. Rammell
  FCO IT security advisers have carried out limited reviews of the FCO's IT system in the UK. A full penetration test will be conducted on the upgraded system in 2003.

  The number of cases of digital attacks detected was (a) nil in October and (b) nil in 2002.

  John Bredenkamp
  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations British Government officials in(a) Zimbabwe and (b) other African countries have received over the last two years from John Bredenkamp and other representatives of ACS with regard to the sale of military equipment manufactured by BAe Systems; and when such representatives were received. [81320]

  Mr. Rammell
  None since the UK arms embargo of May 2000.

  Zimbabwe
  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will launch an investigation into the supply of spare parts for the Zimbabwean Air Force's Mark 60 Hawk fighters. [80927]

  Mr. Rammell
  I refer the hon. Member to the answer I gave him on 4 November 2002,Official Report, column 72W.

  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on what legislative and other changes he proposes to make to the sanctions arrangements in relation to Zimbabwe. [80928]

  Mr. Rammell
  EU sanctions on Zimbabwe have been extended twice since 18 February, on 22 July and 13 September. We keep the policy under constant review.

  Norman Lamb
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) whether British Government officials in(a) Zimbabwe and (b) other African countries have had discussions over the last two years with John Bredenkamp (i) with regard to facilitating sales of military equipment from the UK and (ii) other matters; [81319]

  (2) what discussions his Department has had with BAE Systems concerning the supply of spare parts to the Zimbabwean Air Force for their Mark 60 Hawk fighters. [80926]

  Mr. Rammell
  In the last 12 months, we are aware of two meetings and two telephone conversations between John Bredenkamp and British High Commission officials in Zimbabwe, all at Mr. Bredenkamp's10W
  initiative. In one meeting, Mr. Bredenkamp raised the allegations that had been made against him in the House on 6 March.

  We are not aware of any conversations between Mr. Bredenkamp and officials in other African countries. I will write to the hon. Member if I receive any further relevant information.

CULTURE, MEDIA AND SPORT

  BBC (Scotland)
  Annabelle Ewing
  To ask the Secretary of State for Culture, Media and Sport what discussions she has had with the Director-General of the BBC concerning the BBC's forthcoming review of news and current affairs output in Scotland. [81373]

  Dr. Howells
  My right hon. Friend has not held any such discussions with the Director-General of the BBC.

  Alcohol Licences
  Mr. Steen
  To ask the Secretary of State for Culture, Media and Sport what assessment her Department has made of the additional cost to local authorities if responsibility for alcohol licences is transferred from the magistrates courts. [81384]

  Dr. Howells
  There will be no additional burden on local authorities. Following the transfer of responsibility for alcohol licensing from the licensing justices to local authorities as proposed in the Licensing Bill, licensing fees will be set at a level that fully recovers the costs to local authorities and industry.

  Charter Marks (Libraries)
  Linda Perham
  To ask the Secretary of State for Culture, Media and Sport how many public libraries have received a Charter Mark award. [81379]

  Mr. Caborn
  61 Charter Marks have been awarded to library services since the scheme came into operation 10 years ago.

  National Lottery
  Dr. Palmer
  To ask the Secretary of State for Culture, Media and Sport what representations she has received on improvements to the distribution of lottery grants. [81380]

  Tessa Jowell
  We have received over 400 responses to the review of Lottery funding consultation paper launched in July. These include views from voluntary and community organisations, charities, local government, hon. Members, distributors and individual members of the public.

  Licensing Hours
  Mr. Pickthall
  To ask the Secretary of State for Culture, Media and Sport what plans she has to tackle binge-drinking associated with the 11 o'clock closing of pubs. [81381]
  11W
  Dr. Howells
  The Licensing Bill will introduce flexible opening hours—with the potential for up to 24 hour opening seven days a week, although we expect most premises to extend their opening hours to a more modest extent. This will discourage the culture of binge-drinking before last orders, stimulate a more mature attitude towards alcohol consumption, and help reduce public disorder resulting from artificially early fixed closing times.

  School Sport
  Hugh Robertson
  To ask the Secretary of State for Culture, Media and Sport what support the Government is giving to sport in schools. [81382]

  Mr. Caborn
  £459 million is being invested by DCMS and DfES to transform physical education, school sport and club links over the next three years. The funding will help deliver a joint DfES/DCMS Public Service Agreement target to increase the percentage of children who spend at least two hours a week on high quality PE and school sport in and beyond school—to 75 per cent. by 2006.

  Youth Sport
  Mr. Randall
  To ask the Secretary of State for Culture, Media and Sport what measures she intends to take to improve sports opportunities for young people. [81383]

  Mr. Caborn
  We are working with DfES, Sport England, governing bodies and other partners to transform sports opportunities for young people both in school and in their communities. Initiatives include building on the foundations of the Specialist Sports College and School Sport Co-ordinator programmes, investing in local sports clubs facilities and junior provision and improving the range and quality of provision for gifted and talented young sports people.

  Phil Sawford
  What her Department has done to improve participation rates of young people in sporting activities. [81395]

  Mr. Caborn
  The Government is supporting a variety of initiatives to encourage and assist participation in sport by young people. For example, in September 2002 some 750 school sport co-ordinators and 3,500 primary or special school link teachers were in place working in 142 partnerships across England. In the community, the 45 county sports partnerships have developed 279 junior sport development plans and Sport England has been helping young people to improve their sporting skills through a co-ordinated programme that will provide access to organised sport.

  Tourism
  Mr. Tynan
  To ask the Secretary of State for Culture, Media and Sport if she will make a statement on the promotion of UK tourism, while respecting the district identities of Scotland, England and Wales. [81385]

  Dr. Howells
  On 31 October we announced plans to develop a lead Government body for inbound tourism to Britain and the marketing of England within Britain. This will create a more coherent marketing focus across Britain, one that ensures that England, Scotland and 12W
  Wales retain and develop strong separate brand identities to attract both domestic and overseas holidaymakers.

  Under-age Drinking
  Mr. Blizzard
  To ask the Secretary of State for Culture, Media and Sport what measures she is taking to clamp down on under-age drinking. [81386]

  Dr. Howells
  The licensing Bill has a clear focus on protecting children from harm. For the first time, it will be an offence to sell alcohol anywhere to under 18s. In addition, the package of measures in the White Paper, around which the Bill is based, made provision to legalise test purchasing to aid enforcement.

  Museums and Galleries
  Rob Marris
  To ask the Secretary of State for Culture, Media and Sport what measures her Department is taking to improve museums and galleries in the regions. [81387]

  Tessa Jowell
  We will be providing £70 million for regional museums from this year until 2005–06.

  Extra funding will also be made available to the national museums to enable them to work in partnership with regional museums. Additionally there will be funds from the Department for Education and Skills to support museums' education.

  Elite Athletes
  Bob Spink
  To ask the Secretary of State for Culture, Media and Sport if she will make a statement on the world class performance funding programme. [81388]

  Mr. Caborn
  This is a lottery funded programme which supports the training and preparation programmes for elite athletes who have the potential to win medals, or equivalent, in significant international competitions and events such as the Olympics and Paralympics, now and within the next four years. UK Sport provides funds to UK governing bodies for athletes who compete exclusively or primarily for the UK or Great Britain, while Sport England funds English governing bodies for athletes who represent England.

  Elgin Marbles
  Mr. Dismore
  To ask the Secretary of State for Culture, Media and Sport what plans she has to visit Athens to discuss the issue of the Parthenon Sculptures with the Greek Government. [81389]

  Tessa Jowell
  I have no plans to visit Greece. However, my right hon. Friend the Minister for Sport will be visiting Greece in December when I hope that he will have the opportunity to meet the Greek Under Secretary for Culture to discuss other cultural issues.

  Football
  Mr. Betts
  To ask the Secretary of State for Culture, Media and Sport whether she will make a statement on the future governance of football in England. [81390]
  13W
  Mr. Caborn
  The Football Association remains the overall governing body for football in England. The Association will shortly begin the process of appointing a new Chief Executive, and that is no concern of the Government. The Independent Football Commission will continue its important work of considering complaints made against the Association, and football's other governing bodies, under the sport's customer service charters.

  Sporting and Fitness Activities
  Sue Doughty
  To ask the Secretary of State for Culture, Media and Sport what discussions she has had with the Secretary of State for Health about increasing the effectiveness of preventive health care through the encouragement of greater national participation in sporting and fitness activities. [81392]

  Mr. Caborn
  I chair monthly cross-governmental ministerial meetings, attended by Ministers from the Department of Health, where issues relating to sports policy are discussed, including the role that greater participation in sport and physical activity can have in improving health. My Department has also been working closely with the Department of Health to ensure effective coordination of sport and health policy.

  Media Regulation
  Mr. Soley
  To ask the Secretary of State for Culture, Media and Sport what recent meetings she has had with the Press Complaints Commission about regulation of the media. [81393]

  Dr. Howells
  Whilst my right hon. Friend has not met with the Press Complaints Commission (PCC) recently, the Department continues to monitor closely the effectiveness of the newspaper industry's self regulatory system, and my Ministerial colleagues and I have no hesitation in suggesting improvements to the PCC and the industry, as and when appropriate.

  Local Radio
  Mr. Pond
  To ask the Secretary of State for Culture, Media and Sport what plans she has to ensure that independent local radio reflects the identity of local communities. [81396]

  Dr. Howells
  We recognise the importance of maintaining the distinctive local basis of commercial radio. We therefore propose to retain key local ownership rules, and to give Ofcom a duty to protect and promote local content.

  Young Artists
  Miss Begg
  To ask the Secretary of State for Culture, Media and Sport what financial support is available to young British artists. [81397]

  Dr. Howells
  The Arts Council of England has provided £1.5 million over the last three years for developing and supporting individual artists. In addition, ACE funds a number of organisations to provide studio space, resource and training to artists like Studio Space in London which receives £60,000 per annum and offers 400 studios to artists. The 14W
  Government has also invested £40 million in Creative Partnerships which will help develop the artists of the future.

  Olympic Games
  Mr. Burstow
  To ask the Secretary of State for Culture, Media and Sport what recent representations and discussions she has had about a potential London bid for the 2012 Olympics. [81391]

  Mr. Caborn
  Officials from my Department have held regular meetings during this year with all the key stakeholders to discuss the implications of London bidding to host the 2012 Olympic Games. These stakeholders were the Greater London Authority, the British Olympic Association, UK Sport and Sport England. In addition all interested Government Departments have been involved in assessing the ARUP report on the Costs and Benefits of a 2012 London Olympic Bid. My right hon. Friend the Secretary of State has met the Mayor of London and will meet the British Olympic Association and other non-government stakeholders to discuss the practicalities of such a bid.

DEFENCE

  Bullying
  Mr. McNamara
  To ask the Secretary of State for Defence what steps has he taken to eliminate bullying from HM armed forces. [80614]

  Dr. Moonie
  I refer my hon. Friend to the answer given on 4 November 2002,Official Report, column 57W, by my right hon. Friend the Minister of State for the Armed Forces to my hon. Friend the Member for Selby (Mr. Grogan).

  Service Personnel
  Mr. McNamara
  To ask the Secretary of State for Defence how many are serving in each of HM armed forces; how many of these are serving in(a) Great Britain, (b) Northern Ireland, (c) Germany and (d) each other overseas posting. [80615]

  Dr. Moonie
  I refer my hon. Friend to Tri-Service Publication (TSP) 6 Global Location of Service Personnel. A copy of which is held in the Library of the House.

INTERNATIONAL DEVELOPMENT

  Basic Education
  Mrs. Spelman
  To ask the Secretary of State for International Development if she will make a statement on progress in meeting the global aim of a basic education for every child by 2015; in which countries her Department supports education; and what recent evaluation her Department has made of the impact of her Department's programmes on meeting its education targets. [80553]

  Clare Short
  We recognise the huge importance of the education and gender equality targets within the Millennium Development Goals. We have fully
  15W
  achieved the goals in this area set in our current Public Service Agreement, but there is a huge challenge in getting to the 2015 objectives. Our willingness to put more resources into universal primary education is demonstrated by our new PSA target (20 million more children in schools in 20 countries by 2006), and by plans for support to education. This forecast support for basic education amounts to £1.3 billion over the next five years, either through education sector support or direct budget support. Of this, about £500 million will go to Africa and £800 million to Asia. The figure of £1.3 billion forecast for the next five years exceeds the £700 million committed to UPE since 1997. These spending figures are forecasts, not targets or commitments, and depend on agreeing high quality programmes with our partners.

  Education
  Mrs. Spelman
  To ask the Secretary of State for International Development what plans are in place to maintain the quality of education in the commitment to reach the millennium target on improving access to education. [80556]

  Clare Short
  Improving the quality of education is recognised as a key requirement of national education policies. Quality issues are therefore addressed in all our education programmes in developing countries.

  Fast Track Education Initiative
  Mrs. Spelman
  To ask the Secretary of State for International Development what financial support her Department has provided to the fast track education initiative established by the World bank. [80555]

  Clare Short
  We are working to improve the fast track initiative so that it is embedded in country-led processes. We will provide support within our overall programme of support for Education for All. This means that there must be respect for local priorities and integration into poverty reduction strategy and medium-term economic framework processes. There must also be a recognition that money is only one ingredient in achieving progress and, that in many cases, significant absorptive capacity problems must be addressed before additional funds can be used effectively. There also needs to be much more emphasis on the five high population countries (India, Pakistan, Bangladesh, Nigeria and DRC) where so many of the out-of-school children are. A substantial proportion of the £1.3 billion, which we are forecasting to spend on basic education over the next five years, will be committed in fast track countries, particularly these five.

  John Barrett
  To ask the Secretary of State for International Development (1) what contribution her Department is making to the G8 education fast track initiative in low income countries; [80938]

  (2) what progress is being made towards the selection of additional low income countries for inclusion in the G8 education fast track initiative; [80937]

  (3) what progress has been made towards the implementation of the G8 education fast track initiative in low income countries. [809391
  16W
  Clare Short
  Our forecast support for basic education amounts to £1.3 billion over the next five years, either through education sector support or direct budget support. Of this, about £500million will go to Africa and £800million to Asia. A substantial proportion will go to low income countries included within the Fast Track Initiative, notably to the five high population countries with large numbers of children out of school (India, Pakistan, Bangladesh, Nigeria, DRC) which the Government successfully pressed to have included in the initiative. These spending figures are forecasts, not targets or commitments, and depend on agreeing high quality programmes with our partners.

  Countries vary in the rate of progress they are making in preparing their proposals for fast track support. The UK is stressing that it is important to get the process right rather than to rush ahead with ill-prepared plans. We are therefore working to ensure that the initiative is rooted in existing country processes and that proposals are consistent with each country's medium-term expenditure framework and poverty reduction strategy.

  Democatic Republic of the Congo
  Norman Lamb
  To ask the Secretary of State for International Development if she will make a statement on whether she plans to make aid disbursements to Burundi, Rwanda and Uganda conditional on compliance with relevant agreements in the Lusaka peace process and on verifiable measures taken to halt the illegal and illicit exploitation of the resources of the Democratic Republic of the Congo as recommended by the report of the UN Panel of Experts. [81321]

  Clare Short
  Compliance with the terms of Lusaka and other regional peace agreements has been taken into account in assessing the nature and scale of our development partnerships with Burundi, Rwanda and Uganda, and their responses to the UN Panel report will be factored into future assessments. The recent decisions by the Rwandan and Ugandan Governments to withdraw their forces from the DRC have been significant and very positive contributions to the fulfilment of the Lusaka accord and to the goal of peace in the DRC.

  Afghanistan
  Mr. Swire
  To ask the Secretary of State for International Development how much money was pledged by Her Majesty's Government to Afghanistan to help rebuild that country since October 2001; how much money has been paid by Her Majesty's Government to bodies in Afghanistan tasked with rebuilding that country; what percentage of money pledged to Afghanistan was promised to nongovernmental organisations; and what percentage of money pledged to NGOs in the rebuilding of Afghanistan has been paid. [77942]

  Clare Short
  At the international donor conference in Tokyo in January 2002, the UK Government pledged £200 million of Department for International Development (DFID) resources over five years for humanitarian and reconstruction needs in Afghanistan. This was in addition to the approximately £60 million DFID had provided to address the immediate humanitarian need since October 2001. For the current
  17W
  financial year DFID have allocated £65 million for Afghanistan, of which just over half has been disbursed. Of this £7.7 million has been allocated directly to NGOs, of which over 95 per cent. has been disbursed. My Department have made significant contributions towards UN humanitarian appeals, which are putting into place important foundations for Afghanistan's longer term reconstruction. £10 million has been paid into the Afghanistan Reconstruction Trust Fund to help meet the costs of the Afghanistan Transitional Authority.

PRIME MINISTER

  Appointments
  Mr. Donaldson
  To ask the Prime Minister what plans there are for the Independent Appointments Commission to make further appointments of non-party political peers to the House of Lords. [80674]

  The Prime Minister
  The make-up of the House of Lords is kept constantly under review.

  Correspondence
  Mr. Allen
  To ask the Prime Minister if he will place in the Library a table of his Departments' performance in replying to Members' correspondence. [80525]

  The Prime Minister
  The Cabinet Office, on an annual basis, publishes a report to Parliament on the volume of Members' correspondence received by Departments. The report for 2001 was published on Friday 24 May 2002,Official Report, column 674W. Copies of previous reports are available in the Library of the House. The report for 2002 will be published as soon as possible after the end of the current calendar year.

  For information about the handling of correspondence within my own office, I refer my honourable Friend to my reply to the hon. Member for Sutton and Cheam (Mr. Burstow) on 7 November 2002, Official Report, column 444W.

  Gibraltar
  Mrs. Iris Robinson
  To ask the Prime Minister if he will make a statement on the result of the referendum in Gibraltar. [80814]

  The Prime Minister
  We have always been clear, as I reaffirmed to the House on 6 November, that no deal will be imposed on the people of Gibraltar against their will. Our aim remains a better future for Gibraltar and resolution of the problems it faces. We will continue our dialogue with Spain and Gibraltar to this end.

  Gifts
  Mr. Alan Williams
  To ask the Prime Minister what the ceiling is on the value of gifts which may be retained by Ministers when they are undertaking official visits. [80817]

  The Prime Minister
  Guidance on the acceptance of gifts is set out in paragraphs 136 to 138 of the Ministerial Code.

  Leak Inquiries
  Mr. Allen
  To ask the Prime Minister if he will make it his practice to decide whether to comment on leak inquiries on a case-by-case basis. [80521]

  The Prime Minister
  No. In order to safeguard security and investigative arrangements, it has been the practice of successive governments not to comment on the conduct and outcome of leak inquiries.

  Legal Advice
  Mr. Allen
  To ask the Prime Minister if he will make it his policy to put the legal advice given to Government in the Library, when appropriate. [80523]

  The Prime Minister
  There is a longstanding convention, followed by successive Governments and reflected in the ministerial code, that legal advice to the Government remains confidential. This enables Government to obtain frank and full legal advice in confidence, as everyone else can.

  Ministerial Code
  Mr. Liddell-Grainger
  To ask the Prime Minister whether he has amended paragraph 27 of the Ministerial Code relating to current announcements. [80644]

  The Prime Minister
  The Government's position on paragraph 27 of the Ministerial Code remains as set out in its response to the second report of the Public Administration Select Committee on the Ministerial Code (HC 439).

  Mr. Liddell-Grainger
  To ask the Prime Minister what guidance he gives to Ministers who are in breach of the Ministerial Code relating to public announcements. [80645]

  The Prime Minister
  As section 1 of the Ministerial Code makes clear, Ministers are accountable to Parliament for their decisions and action. This includes the content and timing of individual announcements.

  Ministerial Travel
  Mr. Tyrie
  To ask the Prime Minister what the total cost to the Government was of chartering(a) RAF and (b) civil aircraft for ministerial travel between 31 March 2001 and 31 March 2002. [80527]

  The Prime Minister
  The overall cost of Ministers' visits overseas and the annual list of overseas visits by Cabinet Ministers costing more than £500 for the period 1 April 2001 to 31 March 2002 were published on 24 July 2002,Official Report, column 1373W. The list provides details of the occasions in which RAF aircraft or private charter flights were used and the cost.

  Parliamentary Questions
  Mr. Allen
  To ask the Prime Minister (1) if he will list the areas of written questioning on which he will not answer written questions in this session; [80522]

  (2) if he will undertake a review of the areas of written questions which his Departments do not provide answers to. [80524]
  19W
  The Prime Minister
  Ministers' responsibilities are set out in the "List of Ministerial Responsibilities". Answers to Parliamentary Questions are provided in accordance with the Ministerial Code and the Civil Service Code.

  Press Briefings
  Mr. Liddell-Grainger
  To ask the Prime Minister what embargos are in place relating to press notices concerning legislation to be proposed in the Queen's Speech; and if he will make a statement on his policy relating to briefing the press, with special reference to the Extradition Bill. [80643]

  The Prime Minister
  Background notes relating to the Queen's Speech are issued to parliamentary journalists at 0930 hours on the day of the speech. These notes are strictly embargoed until after Her Majesty the Queen has completed her Speech. This has been the practice of this Government and previous Administrations. No background note was issued in relation to the Extradition Bill, which did not appear in the Queen's Speech, and the Home Office held a briefing for journalists on the day the Bill was published.

  Royal Prerogative
  Mr. Allen
  To ask the Prime Minister if he will list the powers which he may exercise under the Royal Prerogative; and if he will make it his policy to(a) keep a list of his use of Royal Prerogative powers and (b) place it in the Library each year. [80520]

  The Prime Minister
  Records are not kept of the individual occasions on which powers under the Royal Prerogative are exercised, nor could it be practicable to do so.

  Security Services
  Mr. Allen
  To ask the Prime Minister if he will publish the full accounts of the Security Services. [80519]

  The Prime Minister
  No. It is long-standing Government policy not to comment on details of intelligence and security matters. While the overall budget of the Security and Intelligence Agencies is made public in the Single Intelligence Account, the budgets of the individual agencies are not. The Intelligence and Security Committee scrutinises the detail of each agency's finances on Parliament's behalf.

TRADE AND INDUSTRY

  Former Icelandic Water Trawlermen
  Shona McIsaac
  To ask the Secretary of State for Trade and Industry how many refused claims for compensation for former Icelandic water trawlermen are awaiting(a) first appeal and (b) a decision by the independent adjudicator. [80118]

  Nigel Griffiths
  At present there are 248 claims awaiting a decision on initial queries against the decision of the Watford Office. There are 71 appeals awaiting the decision of the Independent Adjudicator.
  20W
  Shona McIsaac
  To ask the Secretary of State for Trade and Industry how many appeals from former Icelandic water trawlermen have been dealt with by the independent adjudicator. [80119]

  Nigel Griffiths
  366 appeals have been dealt with by the Independent Adjudicator.

  Shona McIsaac
  To ask the Secretary of State for Trade and Industry how many refused claims for compensation for former Icelandic water trawlermen have been overturned(a) at first appeal and (b) by the independent adjudicator. [80121]

  Nigel Griffiths
  414 queries against the decision of the Watford office have been allowed. Of these, 92 were because of the change in the rules concerning fishing after 1979. 36 appeals have been allowed by the Independent Adjudicator, a number of them because of the change in the scheme rules after the Watford Office considered them.

TRANSPORT

  Air Transport Consultation
  Mr. John Taylor
  To ask the Secretary of State for Transport if the ultimate recommendation for the future of Birmingham airport will be drawn from and confined to the three options set out in the Government's consultation document. [81072]

  Mr. Jamieson
  We are consulting on a range of development options throughout the midlands, including at Birmingham international airport. No decisions have yet been taken and no final view will be taken on any option until we have taken full account of the consultation responses.

  The purpose of a proper consultation is to seek views from a wide range of stakeholders and, as part of their formal responses, different options may be brought forward. We would need to consider and assess the merits of any other option as a necessary part of the consultation process.

  Mr. John Taylor
  To ask the Secretary of State for Transport when answers will be given to written inquiries from members of the public regarding the air transport consultation process with particular reference to questions submitted to him in writing during the first week of October. [81073]

  Mr. Jamieson
  To date, we have received over 25,000 letters from the public on the midlands options alone. My officials are cataloguing each letter and drafting responses as quickly as practicable.

  Buses
  Mr Redwood
  To ask the Secretary of State for Transport what the average age is of the UK bus fleet. [81030]

  Mr. Spellar
  The average age of the bus and coach fleet in Great Britain was 8.4 years in June 2002. The age profile of the GB fleet is published in the Department's quarterly Transport statistics bulletin bus quality indicators, copies of which are available in the Libraries of the House.

  Cyclists and Pedestrians
  Mr. Ben Chapman
  To ask the Secretary of State for Transport how many people have received hospital treatment in each of the last five years following collisions between cyclists and pedestrians. [80393]

  Mr. Jamieson
  Information is not available on the number of people who have received hospital treatment as a result of road accidents. The Department's statistics of road casualties identifies those who were "seriously injured"—which includes those who were detained in hospital as an in-patient, as well as those who suffered a range of other injuries whether or not they were detained in hospital.

  The number of people seriously injured in collisions between cyclists and pedestrians in Great Britain for each of the last five years is listed in the following table:

  Year

  Seriously injured

  2001

  57

  2000

  65

  1999

  75

  1998

  85

  1997

  90

  Disabled People (Parking)
  Mr. Chope
  To ask the Secretary of State for Transport (1) when the review of the disabled persons' parking card scheme will be completed; and if he will make a statement; [80762]

  (2) if he will publish the response and recommendations of the Disabled Persons' Transport Advisory Committee to the Government's review of the disabled persons' parking card scheme. [80763]

  Mr. Jamieson
  We are currently finalising our response to the DPTAC recommendations. We aim to make a statement to the House shortly.

  Driver and Vehicle Licensing Agency
  Clive Efford
  To ask the Secretary of State for Transport what proportion of parking enforcement notices were not paid due to inaccuracy of information provided by the DVLA in each of the last five years. [80806]

  Mr. Jamieson
  The information requested is held neither centrally nor by local government.

  London Traffic
  Mr. Redwood
  To ask the Secretary of State for Transport how many miles of road in London have been closed to through traffic since 1997. [81029]

  Mr. Spellar
  Roads are closed to traffic, either temporarily or permanently, for a variety of reasons by the police or the local traffic authorities. There is no central record of such closures.

  Road Safety Improvements
  Mr. Redwood
  To ask the Secretary of State for Transport how many miles of urban road have been given safety improvements since 1997. [81032]
  22W
  Mr. Spellar
  The information requested is not held centrally.

  Strategic Rail Authority
  Mr. Don Foster
  To ask the Secretary of State for Transport what review of the Strategic Rail Authority his Department has carried out which(a) was required under the terms of the Transport Act 2000 and (b) has been required by any subsequent changes to legislation. [81743]

  Mr. Jamieson
  None. It has been normal practice for an executive non-departmental public body to be reviewed every five years. The SRA assumed its full powers on 1 February 2001.

  Train Safety Incidents
  Mr. Paul Marsden
  To ask the Secretary of State for Transport if he will list(a) the location and (b) the number of major train safety incidents in each year since 1992. [81006]

  Mr. Jamieson
  The Health and Safety Executive have provided the following list of major railway accidents since 1992. A major accident has been defined as those where either the Health and Safety Commission directed the Health and Safety Executive to produce a special report or where the Commission (with the consent of the Secretary of State) directed a public inquiry.

  Date

  Location

  15 October 1994

  Cowden

  31 January 1995

  Ais Gill

  8 March 1990

  Rickerscote

  8 August 1996

  Watford Junction

  4 February 1997

  Bexley

  19 September 1997

  Southall

  5 October 1999

  Ladbroke Grove

  17 October 2000

  Hatfield

  28 February 2001

  Great Heck

  10 May 2002

  Potters Bar

  Comprehensive railway safety data and analysis can also be found in the Chief Inspector of Railways Annual Reports on Railway Safety, copies of which are available in the Libraries of the House.

TREASURY

  Annuities
  Phil Sawford
  To ask the Chancellor of the Exchequer what steps the Government has taken to ensure that consumers who are considering buying an annuity have clear information about all the options available to them. [80420]

  Ruth Kelly
  Since 1 September annuity firms have been required, by Financial Services Authority (FSA) rules, to draw to the attention of their customers their right to exercise the "open market option", that is to say to shop around among annuity providers.
  23W
  The FSA has at the same time introduced a fact sheet for distribution by firms that explains the importance of choosing the right type of annuity and shopping around for good value, and provides help with exercising those choices.

  This fact sheet also draws attention to other FSA fact sheets and guides for those approaching retirement and contemplating the purchase of an annuity.

  Equitable Life
  Sir Michael Spicer
  To ask the Chancellor of the Exchequer when he expects to publish the Penrose report into Equitable Life. [80925]

  Ruth Kelly
  I refer the hon. Member to the reply I gave to the hon. Member for Colchester (Mr. Russell) on 15 October 2002,Official Report, column 608W.

  Musical Instruments
  Bob Russell
  To ask the Chancellor of the Exchequer how much he estimates will be raised in the current financial year from the levying of value-added tax on musical instruments. [80756]

  John Healey
  The lack of reliable data means it is not possible to estimate accurately the revenue from the levying of VAT on musical instruments.

CABINET OFFICE

  Civil Service Pensions
  Mr. Viggers
  To ask the Minister for the Cabinet Office what information was given to retired civil servants prior to the transfer of their pension administration to the private firm Capita; and how many complaints have been received about(a) the change and (b) the manner in which the change was effected. [80797]

  Mr. Alexander
  Civil Service pensions have been paid through the private sector since the former Paymaster Agency was privatised in April 1997. The contract with Paymaster (1836) Ltd. expired on 30 September 2002 and, following a competitive procurement process, a new contract was awarded to Capita Hartshead.

  As part of the procurement process, Cabinet Office consulted the Civil Service Pensioners' Alliance, the Civil Service Retirement Fellowship and the Council of Civil Service Unions. Cabinet Office also consulted pensioners at local branch meetings of the Alliance and the Fellowship. As a result of feedback from pensioners' groups and others, Cabinet Office was able to include a number of improvements in the new contract as well as tighten the performance standards.

  All pensioners were advised of the change before Capita Hartshead paid their first instalment of pension. Letters to pensioners explained that:
  Cabinet Office had appointed Capita Hartshead to pay their pensions;
  they would get the same amount of pension on the same day of the month as before;
  their pensions would continue to be paid from public funds;
  24W
  Cabinet Office continue to be the managers of the Civil Service pension schemes; and
  Capital Hartshead abide by the Data abide by the Data Protection Act.

  The letters were sent to the 550,000 pensioners in batches from 20 September, as soon as the live data, with all the details required, was available for use by Capita Hartshead. It would have been premature to make an announcement before data had transferred successfully from Paymaster, acceptance testing had been completed and a Permit to Operate issued. If these processes had not been completed successfully, pension payments would continue to have been made by Paymaster at least in the short-term.

  Cabinet Office has received 27 inquiries from pensioners about the change of provider, of which nine were complaints about the manner in which the change was effected.

CHURCH COMMISSIONERS

  Non-stipendiary Ministers
  David Taylor
  To ask the hon. Member for Middlesbrough, representing the Church Commissioners, what assessment the Church Commissioners have made of the need for new ordained non-stipendiary ministers to succeed all ministers who are likely to retire in the next 10 years. [81529]

  Mr. Bell
  No assessment has been made within those parameters, nor is there an express strategy for attracting NSMs. However, there continues to be an expansion in the number of ordained local ministry schemes, and considerable effort is being devoted to increasing vocations generally to all types of licensed ministry.

  Clergy Pensions
  Mr. Clifton-Brown
  To ask the hon. Member for Middlesbrough, representing the Church Commissioners, if he will make a statement on the level of pensions of clergy. [81536]

  Mr. Bell
  Clergy in office receive a stipend and are housed. When they retire, they have to meet the costs of their own housing, but they receive a pension from the state as well as that provided by the Church's clergy pension scheme. The basis for determining the benefits provided by the latter—a lump sum at retirement plus a pension—was designed to take into account all of these factors. The full service pension is currently £10,693 per annum and the retirement lump sum is £32,079.

  House of Lords Attendance Costs
  Mr. Bryant
  To ask the hon. Member for Middlesbrough, representing the Church Commissioners, how much bishops' attendance in the House of Lords has cost the Church Commissioners each year since 1997. [81537]

  Mr. Bell
  Bishops claim reimbursement of their costs in respect of attendance at the House of Lords directly from that body. There is no cost to the Church Commissioners.

  VAT (Repairs and Maintenance)
  Huw Irranca-Davies
  To ask the hon. Member for Middlesbrough, representing the Church Commissioners, if he will make a statement on discussions with European partners on obtaining a reduced rate of value added tax on repairs and maintenance of church buildings. [81527]

  Mr. Bell
  The Churches Main Committee will be represented on the delegation I am leading to Brussels. The committee has made a submission to the European Commission urging that the rate of VAT on the repair and maintenance of listed places of worship be reduced to 5 per cent. I welcome the Chancellor of the Exchequer's indications of support from the UK Government for this case and the churches have discussed their submission with HM Treasury who I understand are preparing the Government's own representations on this matter.

DEPUTY PRIME MINISTER

  Domestic Violence
  Norman Lamb
  To ask the Deputy Prime Minister, what research has been carried out by his Department into the impact of dispersal and settlement patterns on the cost of providing services in rural areas as part of the local government formula grant review. [80931]

  Mr. Raynsford
  I refer the hon. Member to the answer given to my honourable friend the Member for Brigg and Goole (Mr. Cawsey) on 4 November 2002,Official Report, column 49–50W.

  Emergency Fire Cover (Bedford)
  Mr. Edward Davey
  To ask the Deputy Prime Minister how many Bedford self-propelled pumps were available for emergency fire cover in each year since 1972. [81698]

  Mr. Raynsford
  Information about the period 1972 to 1990 is not held centrally and could only be provided at disproportionate cost. The current arrangements for an emergency stockpile of vehicles were started in 1991 when the vehicles were concentrated at Marchington. At that time there were 1037 useable vehicles for England and Wales. An additional 116 vehicles were added in 1994 from Scotland. There are currently 1027 vehicles including the 116 for Scotland.

  Exchange Flags, Liverpool
  Mrs. Ellman
  To ask the Deputy Prime Minister (1) what arrangements he has entered into with the Walton Group to ensure that the agreement to recover Government grant in respect of Exchange Flags, Liverpool, will be implemented in full; [81098]

  (2) whether the out of court settlement with the Walton Group in relation to Exchange Flags, Liverpool, included the payment of interest charges; and if he will make a statement; [81097]

  (3) if he will ensure that the monies to be recovered from the Walton Group in respect of Exchange Flags, Liverpool, are invested in Liverpool City Centre. [81099]
  26W
  Mr. McNulty
  English Partnerships, acting as agent for the Office of the Deputy Prime Minister, has secured a first legal charge over the Exchange Buildings, which is owned by the Walton Group. In the event that the Walton Group do not honour its commitment, EP will enforce the security.

  The City Grant agreement made no provision for an automatic legal entitlement to interest. We believe that the settlement represents a satisfactory outcome, which avoided further legal costs. There is however, provision within the agreed settlement terms for interest to accrue under certain circumstances.

  I am conscious that the original City Grant was provided to assist the regeneration of Liverpool City Centre. I am therefore looking at how this original intention can be best fulfilled.

  Homelessness
  Linda Perham
  To ask the Deputy Prime Minister what assessment he has made of the emotional strain on families of long-term homelessness. [80530]

  Mrs. Roche
  The Office of the Deputy Prime Minister recognises that the experience of homelessness can place families under emotional strain, particularly when they are placed in bed and breakfast hotels. This is why we are investing £125 million this year to tackle homelessness more effectively. This includes helping local authorities develop new approaches that tackle the problems that are making and keeping them homeless.

  The Office of the Deputy Prime Minister has also commissioned research which will explore the range and type of support needs of homeless families and approaches to meeting these support needs. We are expecting to publish the research in late summer 2003.

  Lynne Jones
  To ask the Deputy Prime Minister what additional housing has been funded to enable local authorities to meet their additional responsibilities under the Homelessness Act 2002. [80732]

  Mrs. Roche
  The Homelessness Act places new duties on local authorities and, together with the Priority Need Order, extends the priority groups whom local authorities have a statutory duty to help. Affordable housing is an important part in tackling homelessness that is why we have doubled the resources available for housing since 1997 and will be increasing investment by a further 1.4 billion over the next three years. However, as we made clear in 'More than a roof', the provision of affordable housing will not solve homelessness on its own.

  Investment of 125 million this year, together with changes to Housing Benefit subsidies, is helping local authorities to meet this commitment. It will also support new approaches that help people tackle the problems that are making and keeping

  them homeless.

  Local Government Finance
  Norman Lamb
  To ask the Deputy Prime Minister what account he has taken of the extra cost of providing services in rural areas in the local government formula grant review. [80929]
  27W
  Mr. Raynsford
  I refer the hon. Member to the answer given to my honourable friend the Member for Brigg and Goole (Mr. Cawsey) on 4 November 2002,Official Report, column 49W.

  Mr. Leigh
  To ask the Deputy Prime Minister what account he has taken of the cost of providing services in rural areas in the local government formula grant review. [80389]

  Mr. Raynsford
  I refer the hon. Member to the answer given to my honourable friend the Member for Brigg and Goole (Mr. Cawsey) on 4 November 2002,Official Report, column 49W.

  Mr. Leigh
  To ask the Deputy Prime Minister what assessment he has made of rural deprivation in the local government formula grant review. [80390]

  Mr. Raynsford
  I refer the hon. Member to the answer given to my honourable friend the Member for Brigg and Goole (Mr. Cawsey) on 4 November 2002,Official Report, column 52W.

  Mr. Leigh
  To ask the Deputy Prime Minister what impact changes in the local government formula grant will have on public services in West Lincolnshire. [80391]

  Mr. Raynsford
  We will announce the new system for distributing formula grant, including detailed grant allocations for individual authorities, at the time of the provisional local government finance settlement which we expect to be around the start of December. Once the Government has allocated its grant, decisions about budgets and services are primarily for local councils to make. However, we have already guaranteed that no authority will face a cut in grant next year on a like for like basis, and we hope to do better than that when we announce the actual floors and ceilings scheme as part of the provisional settlement.

  Mr. Leigh
  To ask the Deputy Prime Minister what research was done by his Department into the impact of dispersal and settlement patterns on the cost of providing services in rural areas as part of the local government formula grant review. [80392]

  Mr. Raynsford
  I refer the hon. Member to the answer I gave to my honourable friend the Member for Brigg and Goole (Mr. Cawsey) on 4 November 2002,Official Report, columns 49–50W.

  Norman Lamb
  To ask the Deputy Prime Minister, what assessment he has made of rural deprivation in the local government formula grant review. [80930]

  Mr. Raynsford
  I refer the hon. Member to the answer given to my honourable friend the Member for Brigg and Goole (Mr. Cawsey) on 4 November 2002,Official Report, column 52W.

  Neighbourhood Renewal
  Mr. Edward Davey
  To ask the Deputy Prime Minister, what the estimated(a) date, (b) cost to his Department and (c) cost to other Government bodies is of the incorporation of the neighbourhood wardens and street wardens into a new Neighbourhood Renewal Unit funding channel. [81703]
  28W
  Mrs. Roche
  The incorporation of the neighbourhood and street wardens into a new Neighbourhood Renewal funding stream is already under way. There will be no cost to the office of the Deputy Prime Minister or other Government departments. Indeed, a single wardens funding stream should help to streamline and simplify arrangements both for grant recipients and those administering the programmes.

  Prisoners (Housing Resettlement)
  Lynne Jones
  To ask the Deputy Prime Minister, when he will be responding to the Social Exclusion Unit's recommendations on prisoners' housing resettlement needs in their report on reducing re-offending by ex-prisoners. [81041]

  Mrs. Roche
  I refer my hon. Friend to the answer given to my right hon. Friend the Member for Manchester, Withington (Mr. Bradley) on 24 October 2002,Official Report, column 495W.

  The Office of the Deputy Prime Minister is awaiting the production of the Reducing Re-Offending Action Plan. It will work closely to influence cross-cutting solutions to impact on prisoners' housing resettlement needs before and after release.

EDUCATION

  Class Sizes
  Mr. Willis
  To ask the Secretary of State for Education and Skills how much was spent through the Standards Fund in 2001–02 by each local education authority on class size reduction. [81083]

  Mr. Miliband
  In 2001–02 just over £156 million revenue and £23 million capital grant was allocated to local education authorities, to reduce infant class sizes for five, six and seven-year-olds to 30 or fewer.

  The following table sets out how much grant was allocated to each local education authority.

  Capital and Revenue Allocations 2001–02

  £

  LEA name

  2001 (FY01–02) Capital

  2001 (FY01–02) Revenue

  Barking and Dagenham

  0

  185,526

  Barnet

  0

  146,250

  Barnsley

  11,568

  911,262

  Bath and North East Somerset

  284,818

  349,563

  Bedfordshire

  372,766

  1,815,474

  Bexley

  10,718

  516,693

  Birmingham

  0

  1,266,912

  Blackburn and Darwen

  154,347

  803,038

  Blackpool

  112,564

  392,902

  Bolton

  67,000

  1,158,745

  Bournemouth

  1,600,491

  380,375

  Bracknell Forest

  60,480

  361,463

  Bradford

  0

  2,355,563

  Brent

  0

  126,000

  Brighton and Hove

  0

  752,033

  Bristol

  0

  851,063

  Bromley

  0

  990,000

  Buckinghamshire

  845,898

  2,263,231

  Bury

  0

  1,286,688

  Calderdale

  2,459

  980,476

  Cambridgeshire

  23,155

  1,886,827

  29W

  Capital and Revenue Allocations 2001–02

  £

  LEA name

  2001 (FY01–02) Capital

  2001 (FY01–02) Revenue

  Camden

  0

  78,667

  Cheshire

  224,677

  2,407,878

  City of London

  0

  0

  Cornwall

  0

  1,977,256

  Coventry

  776

  1,262,035

  Croydon

  0

  324,212

  Cumbria

  72,848

  1,584,188

  Darlington

  37,027

  433,500

  Derby, City of

  0

  1,163,438

  Derbyshire

  2,746,361

  3,517,617

  Devon

  155,212

  2,625,967

  Doncaster

  148,358

  907,103

  Dorset

  417,995

  1,836,945

  Dudley

  0

  509,293

  Durham

  0

  2,550,014

  Baling

  496,959

  716,211

  East Riding of Yorkshire

  160,000

  1,626,258

  East Sussex

  121,000

  1,457,630

  Enfield

  9,251

  916,206

  Essex

  156,051

  3,337,250

  Gateshead

  0

  237,153

  Gloucestershire

  269,514

  2,467,212

  Greenwich

  0

  186,667

  Hackney

  0

  217,000

  Halton

  0

  664,488

  Hammersmith and Fulham

  0

  46,667

  Hampshire

  320,773

  3,596,433

  Haringey

  0

  438,511

  Harrow

  0

  297,000

  Hartlepool

  0

  231,729

  Havering

  143,160

  559,572

  Herefordshire

  90,478

  586,075

  Hertfordshire

  0

  3,298,000

  Hillingdon

  0

  672,162

  Hounslow

  0

  355,500

  Isle of Wight

  16,787

  384,632

  Isles of Scilly

  0

  0

  Islington

  0

  0

  Kensington and Chelsea

  0

  0

  Kent

  1,133,432

  2,822,425

  Kingston upon Hull

  0

  673,625

  Kingston upon Thames

  1,459,978

  971,325

  Kirklees

  167,574

  1,960,159

  Knowsley

  0

  471,750

  Lambeth

  0

  135,333

  Lancashire

  361,887

  4,753,165

  Leeds

  0

  2,998,906

  Leicester City

  124,000

  773,743

  Leicestershire

  522,032

  2,481,575

  Lewisham

  0

  311,918

  Lincolnshire

  1,865,542

  2,115,816

  Liverpool

  85,000

  611,573

  Luton

  1,987

  650,173

  Manchester

  0

  1,645,352

  Medway

  0

  655,853

  Merton

  482,128

  862,441

  Middlesbrough

  0

  285,459

  Milton Keynes

  0

  488,620

  Newcastle upon Tyne

  1,000

  932,510

  Newham

  0

  361,667

  Norfolk

  552,587

  3,324,266

  North East Lincolnshire

  37,321

  646,908

  North Lincolnshire

  0

  807,883

  North Somerset

  155,587

  480,253

  North Tyneside

  0

  523,833

  North Yorkshire

  95,000

  2,380,694

  Northamptonshire

  441,345

  2,077,400

  Northumberland

  11,275

  1,185,963

  Nottingham City

  0

  732,510

  Nottinghamshire

  181,250

  3,471,302

  Oldham

  22,373

  1,042,829

  Oxfordshire

  338,658

  1,406,290

  Peterborough

  0

  640,120

  Plymouth

  0

  833,071

  30W

  Capital and Revenue Allocations 2001–02

  £

  LEA name

  2001 (FY01–02) Capital

  2001 (FY01–02) Revenue

  Poole

  34,514

  381,438

  Portsmouth

  351,000

  461,853

  Reading

  4,900

  277,100

  Redbridge

  85,000

  565,598

  Redcar and Cleveland

  39,146

  560,628

  Richmond Upon Thames

  769,280

  384,750

  Rochdale

  0

  1,160,250

  Rotherham

  85,050

  860,625

  Rutland

  78,568

  157,250

  Salford

  0

  977,499

  Sandwell

  0

  1,159,622

  Sefton

  24,924

  1,156,452

  Sheffield

  114,000

  1,055,096

  Shropshire

  4,000

  1,039,816

  Slough

  0

  259,268

  Solihull

  3,750

  942,163

  Somerset

  283,786

  2,075,063

  South Gloucestershire

  122,457

  1,297,950

  South Tyneside

  2,300

  497,250

  Southampton

  0

  417,461

  Southend on Sea

  0

  414,375

  South wark

  315,875

  279,472

  St. Helens

  91,393

  541,875

  Staffordshire

  183,800

  2,672,217

  Stockport

  6,800

  1,355,407

  Stockton on Tees

  0

  799,850

  Stoke on Trent

  0

  1,023,721

  Suffolk

  261,000

  819,328

  Sunderland

  0

  367,625

  Surrey

  432,794

  2,523,980

  Sutton

  0

  618,750

  Swindon

  87,950

  806,650

  Tameside

  100,708

  1,087,696

  Telford and Wrekin

  0

  680,000

  Thurrock

  0

  251,596

  Torbay

  352,506

  353,813

  Tower Hamlets

  0

  0

  Trafford

  68,030

  590,750

  Wakefield

  64,326

  1,444,546

  Walsall

  0

  639,625

  Waltham Forest

  190,000

  176,759

  Wandsworth

  0

  305,667

  Warrington

  264,000

  699,125

  Warwickshire

  143,685

  2,151,704

  West Berkshire

  235,813

  522,622

  West Sussex

  27,662

  1,406,750

  Westminster

  0

  16,333

  Wigan

  2,429

  1,440,750

  Wiltshire

  4,781

  1,890,846

  Windsor and Maidenhead

  129,249

  506,263

  Wirral

  393,000

  726,028

  Wokingham

  484,500

  473,317

  Wolverhampton

  107,000

  764,575

  Worcestershire

  132,500

  1,731,457

  York

  0

  621,562

  Total England

  23,255,924

  156,159,421

  Comprehensive Spending Reviews
  Mr. Willis
  To ask the Secretary of State for Education and Skills if he will make a statement on the role of comprehensive spending reviews in enabling local education authorities and others to plan expenditure over the longer term. [81082]

  Mr. Miliband
  The spending review 2002 set out the resources that the Government would be making available for education over the three years 2003–04 to 2005–06. The allocation of general funding to each local
  31W
  education authority, taking account of the increases from SR2002, and the new local authority funding system, will be announced by early December. Those allocations will set a trend for local education authorities for the next three years, and we will work with local education authorities to encourage them to deliver three-year budgets for their schools. These will be firm budgets for 2003–04, but will be indicative for 2004–05 and 2005–06 because of the impact of changes in pupil numbers and other data.

  Exam Grades
  Mr. Willis
  To ask the Secretary of State for Education and Skills if he will list, by subject, the adjustments made by the Examination Boards' accountable officers to the grade boundaries recommended by principal examiners in(a) 2001 and (b) each preceding year for which the information is available. [80586]

  Mr. Miliband
  The Government do not hold the information requested. This is a matter for the awarding bodies.

  School Standards Grant
  Mr. Brady
  To ask the Secretary of State for Education and Skills which schools have moved between bands for the purposes of School Standards Grant in each of the last two years as a result of a change in pupil numbers, showing in each case the increase or decrease in the school budget and the date on which the change took effect. [81087]

  Mr. Miliband
  Local education authorities (LEAs) are responsible for paying School Standards Grant (SSG) to individual schools on the basis of a central grant received from the Department. The format of LEAs' financial returns would mean that providing the required information would incur disproportionate cost.

  Teaching Assistants
  Mr. Willis
  To ask the Secretary of State for Education and Skills (1) if he plans to limit the number of hours per week that a pupil should be(a) taught and (b) supervised by a teaching assistant; [81081]

  (2) what plans he has to limit the subjects which can be taught by advanced teaching assistants. [81314]

  Mr. Miliband
  The Government's proposals on developing the role of support staff, which were published for consultation in October, include proposals which would for the first time provide a regulatory framework to underpin the involvement of support staff in the teaching and learning process. These are based on the key principles that qualified teachers must have overall responsibility for effective teaching and learning, and that there must always be a clear system of leadership and supervision by a qualified teacher to ensure high standards of teaching and learning. Provided those conditions are met, it is proposed that determining what should be delegated should be primarily a matter for the professional judgment of headteachers and qualified teachers rather than for rigid national demarcation. The draft Education (Teaching Work and Registration)32W
  (England) Regulations 2002 do not include proposed limits on the hours or subjects that a pupil should be either taught or supervised by a teaching assistant. The draft regulations provide that teaching assistants may only undertake a list of "specified teaching work" under a system of supervision determined by a qualified teacher using his or her professional judgment. Qualified teachers will remain responsible and accountable for the quality of teaching and learning in their classrooms.

  Technology Colleges Trust
  Mr. Willis
  To ask the Secretary of State for Education and Skills what plans he has to ensure that the Technology Colleges Trust has the resources to support the proposed expansion of the specialist schools programme. [81078]

  Mr. Miliband
  The Department provides annual grant-in-aid to the Technology Colleges Trust to support the specialist schools programme. As in the past, we will consider the level of resources required for this in the context of the expansion of the specialist schools programme.

  Trainee Teachers
  Mr Willis
  To ask the Secretary of State for Education and Skills what recent assessment he has made of progress toward his Department's targets for the recruitment of trainee teachers in 2002, broken down by subject. [81076]

  Mr. Miliband
  Provisional figures published today by the Teacher Training Agency show that 31,261 people have been recruited to courses of initial teacher training in England in 2002–03, 2,067 more than in 2001–02. This third successive annual rise in recruitment vindicates the Government's decision, announced last December, to make 1,900 more training places available this year than in 2001–02.

  The table shows numbers of trainees recruited as a percentage of the total number of training places available by phase and subject. Figures do not include the 1,904 new entrants to the Graduate Teacher Programme so far this year, of whom 935 are training in the priority subjects of mathematics, science, modern languages, technology and English.

  2002–03

  ITT recruitment

  ITT places

  ITT recruitment as percentage of ITT places

  Primary

  14,447

  14,000

  103

  Secondary

  Mathematics

  1,681

  1,940

  87

  English & Drama

  2,475

  2,350

  105

  Science

  2,648

  2,850

  93

  Modern Foreign

  1,733

  2,050

  85

  Languages

  Total Technology

  2,401

  2,500

  96

  History

  985

  950

  104

  Geography

  1,028

  1,100

  93

  Physical Education

  1,324

  1,200

  110

  Art

  880

  850

  104

  Music

  608

  700

  87

  Religious Education

  576

  700

  82

  Citizenship

  185

  200

  93

  33W

  2002–2003

  ITT recruitment

  ITT places

  ITT recruitment as percentage of ITT places

  Other

  174

  300

  58

  Secondary Reserve

  100

  Secondary Total

  16,698

  17,790

  94

  Total

  31,145

  31,790

  98

  Fast Track

  116

  Grand Total

  31,261

  —

  —

  Source:

  Teacher Training Agency ITT Trainee Numbers Census 2002 (Provisional).

  Notes

  1. The recruitment figures by subject exclude the 116 entrants on the fast track teaching route, attending ITT in 2002–03 as part of the programme. Of these, 29 are train in primary, and 87 in secondary, (8 mathematics, 20 English, 22 science, 16 modern foreign languages, 1 technology, 13 history, 3 geography, 1 physical education, and 3 music).

  2. The 2002–03 ITT target includes a margin of flexibility. The 100 places available under the margin of flexibility is used as a provision for the TTA to "vire" places between secondary subjects within certain parameters.

  3. Other secondary subjects, includes classics, economics and other social sciences and other subjects.

ELECTORAL COMMISSION COMMITTEE

  Local Elections (Turnout)
  Simon Hughes
  To ask the right hon. Member for Berwick-upon-Tweed, representing the Speaker's Committee on the Electoral Commission what evaluation is being made of the difference between the turnout for local council elections during the last year(a) where there has been a directly elected mayor and (b) where there has not been a directly elected mayor. [81532]

  Mr. Beith
  The Electoral Commission monitors turnout at local elections in the UK. There have not yet been full council elections in any area in which a mayoral election has already taken place.

  Postal Voting
  Kevin Brennan
  To ask the right hon. Member for Berwick-upon-Tweed, representing the Speaker's34W
  Committee on the Electoral Commission what discussions he has had with the Electoral Commission on more active promotion of postal voting. [81535]

  Mr. Beith
  The Electoral Commission is actively engaged in work to raise public awareness of the availability of postal voting.

  A key element of this programme is dedicated activity to promote postal voting across Great Britain in the spring of each year in which there are public elections. In support of this, the Commission will be producing new leaflets about postal voting by December this year, which will be distributed to Electoral Registration Officers and displayed in post offices across Great Britain prior to the elections planned for next spring.

  Information about postal voting is also available from the Commission's website and the Commission published good practice advice to local authorities on local promotion of postal voting and other issues in its October 2002 report "Making an impact".

HEALTH

  Mental Health Act 1983
  Dr. Evan Harris
  To ask the Secretary of State for Health how many representations he has received with regard to the reform of the Mental Health Act 1983 since the publication of the draft mental health Bill. [80483]

  Jacqui Smith
  I refer the hon. Member to the answer given to the hon. Member for Vale of York (Miss Anne McIntosh) on 29 October 2002,Official Report,column 750W.

  >National Service Framework for Diabetes
  Mr. David Stewart
  To ask the Secretary of State for Health when he expects to publish the national service framework for diabetes. [81480]

  Mr. Lammy
  We will be making an announcement on the publication of the national service framework delivery strategy for diabetes shortly and would hope to do so by way of a written ministerial statement. I shall make sure that my hon. Friend receives a copy.

DEPUTY PRIME MINISTER

  HRA Subsidy System
  The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Tony McNulty)
  Following consideration of proposals made in a consultation paper issued in July 2001, the Housing Revenue Account (HRA) subsidy system was changed from 2002–2003 to support the policy of social rent reform announced in the December 2000 housing policy statement—Quality and Choice: A Decent Home for All.

  We consulted local authorities and others in summer 2002 on further proposals to adjust the HRA subsidy system to take account of aspects of the new policy that it was not possible to address in 2002–2003. We also consulted on proposals about the treatment of service charges within the HRA subsidy system. There was general support for our objectives, and the HRA subsidy system for 2003–2004 will be adjusted as necessary to reflect the consultation proposals.

  For 2003–2004, we will increase the resources per dwelling available at the national level for management allowances by about 8.1 per cent and for maintenance by about 5.7 per cent in cash terms, of which about 2.2 per cent will be to correct for technical changes to the subsidy system. This is an increase on the amounts proposed in the previous Spending Review, and will provide authorities with an extra £63 per dwelling compared with 2002—03.

  The Government is committed to fighting antisocial behaviour. Local Authorities, as social landlords, are essential in winning this battle. We will encourage local authorities to use this real terms cash increase to tackle this blight, through imaginative prevention, enforcement and rehabilitation initiatives.

  The Major Repairs Allowance will increase by about 2.5 per cent per dwelling in cash terms at the national level. For subsidy purposes, we are assuming that all local authority rents will be subject to two changes for 2003–2004. First an increase by about 3.5 per cent from their levels in 2002–2003. Secondly an adjustment, which for some authorities will increase and for others reduce rents, to move rents a second step towards the formula set out in our policy for rent restructuring. We have assumed that all authorities made a first step towards the formula rent in 2002–2003.

  We have today issued for consultation the drafts of the HRA subsidy and Item 8 determinations for 2003–2004, as well as the draft general determination of administration of HRA subsidy 2002, which translate these national figures into subsidy allocations for individual housing authorities. Copies of the draft determinations and supporting material are being placed in the Library of the House, and will be available
  8WS
  on my Office's web site. These allocations are based on the most up-to-date information available to us from authorities, and may change as that information is refined. Authorities have until 12 December to comment on the draft determinations

  Regional Planning Guidance for the North East
  The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Tony McNulty)
  "Regional Planning Guidance for the North East (RPG1) is being published today.

  RPG1 sets out the spatial development strategy that encompasses proposals for the development of the region's economy, housing, transport infrastructure, and other land uses. The priority of the strategy is to direct the majority of new development to the built up areas of the Tyne, Wear and Tees conurbations, and adopt a sequential approach to identifying sites for development to ensure that development is located in the most sustainable locations. RPG1 also sets out proposals for the conservation, management and enhancement of the region's natural and cultural environment.

  I am pleased that much of the vision, objectives and core strategy of RPG1 carries forward to a great extent what was proposed in the original draft RPG prepared by the Association of North East Councils (ANEC). RPG1 reflects the effective working that was achieved between ANEC, local authorities, the Regional Development Agency, One NorthEast, and other stakeholders, all of whom have made valuable contributions to refine and enhance the original draft guidance. It builds on the inclusive process for preparing RPG that the Government has put in place. Many of the comments received in response to the consultations carried out earlier have made a positive contribution to the overall strategy for sustainable development and have been taken on board.

  The North East Assembly, which now has the role of Regional Planning Body, will work with partners to ensure its effective implementation, monitoring and review."

HOME DEPARTMENT

  Police and Criminal Evidence Act
  The Minister of State, (Home Department (Mr. John Denham)
  In May, my right hon. Friend the Home Secretary commissioned a fundamental review of the Police and Criminal Evidence Act 1984 (PACE) and the accompanying Codes of Practice to be conducted jointly by the Home Office and the Cabinet Office.

  The review focused on the basic requirements of PACE and the Codes that underlie police procedures with particular emphasis on, but not limited to, those aspects that govern detention and the custody process. In particular, the review team was asked to consider whether the Act and the Codes were still the best way of ensuring that the powers of the police are properly exercised and the rights of suspects are adequately protected.
  9WS
  The review team has now reported and I have today placed a copy of their report in the Library. The main conclusion of the review is that the basic PACE approach is sound and still strikes broadly the right balance between the powers of the police and the rights and freedoms of the public. In particular, the review found that the general view of PACE is positive, especially in terms of the way it is viewed as having standardised and professionalised police work. The police have a clear framework within which to operate, whilst the provisions of the Act protect the individual.

  However, the review also found that there are aspects of PACE that require updating to reflect changes in society over the years since the legislation was brought into force. Taken together, the review has proposed a challenging programme of change to amend the PACE legislation and the Codes of Practice which the Government has accepted and will take forward as part of its ongoing police reform agenda. This is a vital opportunity to improve the way the police operate and taken together with the measures we have already introduced in the Police Reform Act 2002, will bring about a real difference to the everyday lives of police officers on the front line and consequently to the delivery of services.

DEFENCE

  War Pensions and Allowances
  The Parliamentary Under-Secretary of State for Defence (Dr. Lewis Moonie)
  New rates of war pensions and allowances proposed from April 2003.

  The annual uprating of war pensions and allowances for 2003 will take place from the week beginning 7 April 2003.

  War Pensions Rates

  Disablement Pension (100% rates unless otherwise shown) (Weekly rates unless otherwise shown)

  Rates 2002£

  Rates 2003£

  officer (per annum)

  6,356.00

  6,465.00

  other ranks

  121.80

  123.90

  Age allowances

  40%–50%

  8.15

  8.30

  over 50% but not over 70%

  12.55

  12.75

  over 70% but not over 90%

  17.85

  18.15

  over 90%

  25.10

  25.50

  Disablement gratuity

  specified minor injury (min.)

  775.00

  788.00

  specified minor injury (max.)

  5,792.00

  5,890.00

  10WS

  War Pensions Rates

  Disablement Pension (100% rates unless otherwise shown) (Weekly rates unless otherwise shown

  Rates 2002 £

  Rates 2003 £

  unspecified minor injury (min.)

  321.00

  326.00

  unspecified minor injury (max.)

  7,532.00

  7,660.00

  Unemployability allowance

  personal

  75.25

  76.55

  adult dependency increase

  42.45

  43.15

  increase for first child

  9.85

  10.00

  increase for subsequent children

  11.55

  11.75

  Invalidity Allowance

  higher rate

  14.90

  15.15

  middle rate

  9.50

  9.70

  lower rate

  4.75

  4.85

  Constant attendance allowance

  exceptional rate

  92.00

  93.60

  intermediate rate

  69.00

  70.20

  full day rate

  46.00

  46.80

  part day rate

  23.00

  23.40

  Comforts allowance

  higher rate

  19.70

  20.00

  lower rate

  9.85

  10.00

  Mobility supplement

  43.85

  44.60

  Allowance for lowered standard of occupation (max)

  45.92

  46.72

  Exceptionally severe disablement allowance

  46.00

  46.80

  Severe disablement occupational allowance

  23.00

  23.40

  Clothing allowance (per annum)

  157.00

  160.00

  Educational allowance (per annum) (max)

  120.00

  120.00

  War widow's pension

  Widow(er) (private)

  92.00

  93.85

  Widow(er) (NCO)

  92.30

  93.85

  Widow(er)—officer (p.a.max)

  5,689.00

  5,786.00

  Childless widow(er) u-40 (other ranks)

  22.12

  22.50

  Childless widow(er)-u-40 officer (p.a. max)

  5,689.00

  5,786.00

  Supplementary Pension

  59.95

  60.97

  Age Allowance

  (a) age 65 to 69

  10.55

  10.75

  (b) age 70 to 79

  20.20

  20.55

  (c) age 80 and over

  30.05

  30.55

  Children's allowance

  increase for first child

  14.55

  14.80

  increase for subsequent children

  16.20

  16.50

  Orphan's pension

  increase for first child

  16.50

  16.80

  increase for subsequent children

  18.15

  18.45

  Unmarried dependant living as spouse(max)

  89.95

  91.50

  Rent allowance (maximum)

  34.80

  35.40

  Adult Orphan's pension (maximum)

  70.95

  72.15

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

Electricity Supply
Lord Ezraasked Her Majesty's Government:
Whether the fall in wholesale electricity prices and the consequent problems being encountered by generating companies will lead to difficulties in the supply of electricity.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the Government do not expect the fall in wholesale prices to lead to difficulties in the supply of electricity but, as always, we are monitoring carefully the short-term balance of supply and demand. The energy review is considering all aspects of security of energy supply for the longer term, and we shall publish a White Paper in the new year.
Lord Ezra: My Lords, I thank the noble Lord for that Answer. But, as he is obviously aware, since 1998 wholesale prices have fallen by 40 per cent. Is he further aware that that has caused serious financial problems for a number of generating companies and has led to the mothballing or closure of a number of power stations? While this substantial market adjustment is taking place, is it not likely that serious interruptions of supply could occur from time to time and, therefore, does that not argue for a change in the new electricity trading arrangements?
Lord Sainsbury of Turville: My Lords, there has been a considerable and, I believe, highly desirable fall in wholesale prices from what were previously clearly artificial levels, and that has been of huge benefit to consumers. It has led to some mothballing of capacity which is not required at this stage. As I said, we have been monitoring carefully the position as regards capacity and demand. The latest National Grid company figures suggest that this winter 65 gigawatts of capacity are available for England and Wales against a forecast of peak demand of 55.3 gigawatts under average cold-spell conditions. That gives a margin of 17.5 per cent, which we regard as adequate in the circumstances.
Baroness Miller of Hendon: My Lords, following the detailed and somewhat comforting answer given by the Minister, can he be absolutely certain that that position is right? After all, that is what was thought in America but, as a result of very low prices, the generating industry got into trouble and a black-out occurred for many days. We certainly welcome low prices and consider them to be very good. But, in view
134
of the American experience, can the Minister tell the House what representations are being made to the regulator to ensure the financial viability of the electricity generating industry?
Lord Sainsbury of Turville: My Lords, we keep that matter under review. Of course, it should be understood that, if a generator gets into financial difficulties, that does not necessarily mean that capacity will go out of use. As we saw in the case of TXU, it is likely that generating capacity will be taken over by another supplier, given that, in most cases, energy prices are still higher than the cost of supplying it. Therefore, I do not believe that that represents a danger. As I said, overall capacity is in reasonable condition and, in emergency circumstances, mothballed plant could also be brought back within a reasonable timescale.
Lord Mason of Barnsley: My Lords, first, can my noble friend say how much we are importing from abroad and, secondly, are we still importing electricity from France?
Lord Sainsbury of Turville: My Lords, so far as I know, we continue to obtain a large amount of our coal supplies from abroad and we also obtain energy from France.
Baroness Oppenheim-Barnes: My Lords, is the Minister aware that a number of practices by suppliers are greatly disadvantageous to consumers? Is he a ware that it took me six months to change supplier and that, since the change took place, I have been bombarded daily with letters from the old supplier asking whether I am sure that I have not made a big mistake?
Lord Sainsbury of Turville: My Lords, I do not believe that it is for me to defend the position of all suppliers. I am sure that the noble Baroness can do that very well for herself. However, that does not have anything to do with a fall in wholesale prices, which is another issue.
The Lord Bishop of Hereford: My Lords, can the Minister say what effect these very low prices have had on the viability, and therefore the availability, of electricity from renewable sources, which is not the cheapest form of power? Is it still possible for those who wish to buy electricity from renewable sources to do so in this particular commercial climate?
Lord Sainsbury of Turville: My Lords, I believe that there is no question that if lower prices have an impact on the generating industry, that will have an effect on the ability of suppliers of renewables to sell into the grid. However, the renewables obligation scheme, which applies to the electricity generation industry, makes the situation very advantageous for renewables.
Lord Stoddart of Swindon: My Lords, is the Minister aware that spare capacity of 17.5 per cent is the barest

135
minimum that should be available if one is to have a safe and viable electricity supply system? Is he also aware that, if this winter is very hard, that amount of spare capacity will not be sufficient? Are we not becoming over-reliant on imported gas supplies since our own indigenous gas supplies are being run down at a very heavy rate?
Lord Sainsbury of Turville: My Lords, I do not accept that that is the bare minimum. I believe I said previously that there is thought to be a 50 per cent chance of the average cold-spell conditions being reached or exceeded in any one winter. That has happened only twice since 1990. The margin is quite significant. As I also said, the assumption is that 7.1 gigawatts of mothballed plant are available. That is probably an overstatement of what the situation will be and it is probably also a slight overstatement of demand. In reality, the figure is probably closer to 20 per cent, which is reckoned to be the base line that one should have.
Lord Dixon-Smith: My Lords, is the Minister satisfied that the regulator is sufficiently fleet of foot and of policy to avoid the electricity industry needing to make further calls on the Treasury?
Lord Sainsbury of Turville: My Lords, I believe that the noble Lord refers to the situation that has arisen with British Energy. Given the Government's overriding priorities as regards the safety of nuclear generation and the security of supply, we have taken action to maintain the situation with that supplier. I do not believe that that action should be taken across to other situations in the industry.
Lord Stoddart of Swindon: My Lords, will the Minister answer my question on gas supply?
Lord Sainsbury of Turville: My Lords, on the importation of gas, yes, we are dependent on a substantial amount of imported gas, which will grow considerably in the future as we become an importer rather than an exporter of gas. Account will have to be taken of that in the long-term review of energy security that will be covered in the White Paper when it is published.

Chechnya
2.44 p.m.
Lord Lamont of Lerwickasked Her Majesty's Government:
Whether they support the policy of the Russian Government towards Chechnya.
The Minister for Trade (Baroness Symons of Vernham Dean): My Lords, Her Majesty's Government recognise the territorial integrity of the Russian Federation and we share the Russian Government's outrage at the recent terrorist attack in
136
Moscow. Our sympathy goes out to the families and friends of the victims of this appalling tragedy. We have unequivocally condemned the perpetrators of that attack and their links to international terrorism. Of course, we believe that the Russian response to that incident, and their military operations in Chechnya, must respect the rule of law and their human rights obligations.
Lord Lamont of Lerwick: My Lords, I thank the Minister for that balanced reply. I totally condemn, as she did, the recent action of Chechen rebels in the theatre in Moscow, but is it not the case that terrible things have been done in Chechnya by Russian troops and that ultimately the issue will have to be solved through politics and political negotiation? Is not one of the problems of the so-called global war against terrorism the fact that people with an internal dispute can justify whatever they do and whatever repressive measures they take by aligning themselves with the West and calling it part of the fight against terrorism?
Baroness Symons of Vernham Dean: My Lords, the attack on the theatre in Moscow was not the only attack to be perpetrated by some in Chechnya. They have perpetrated such attacks on civilian targets before; they have also used land mines indiscriminately; and they have maltreated Russian prisoners. Of course, allegations have also been made about the conduct of Russian forces. We believe that any such operations have to be proportionate and in accordance with the rule of law. We press the Russians to investigate thoroughly any allegations of human rights abuses. We would like to see more effective co-operation between the Russian authorities and humanitarian aid agencies and we do not believe that the problem can be solved by military means alone. It must also be solved through discussion.
Lord Rea: My Lords, does my noble friend agree that although in the past few years some fundamentalist Islamic groups have joined the Chechen resistance, we are seeing the continuation of a colonial war that has continued on and off for the past 150 years? Will my noble friend suggest to the Russians that the only way in which they can solve the problem is to talk to the elected president of the Chechens and his government in exile?
Baroness Symons of Vernham Dean: My Lords, that is a difficult question. We do not believe that there can be a purely military solution; there must also be a political process. We recognise that in light of the events in Moscow the Russian Government are having great difficulty in finding a credible interlocutor. My noble friend suggests that Mr Maskhadov may be such a credible interlocutor, but I remind him that in July this year Mr Maskhadov shared a public platform, the proceedings of which were broadcast by Al-Jazeera, with Mr Basayev, who was responsible for the outrage in the Dubrovka theatre. That will not enhance

137
Mr Maskhadov's standing with those who want to advance him as an interlocutor. I believe that he did his cause great damage by doing that.
Lord Avebury: My Lords, is the Minister aware that at the same time the Russians are forcing internally displaced people in Ingushetia to return to Chechnya and denying admission to the UN rapporteur on violence against women and the Secretary-General's special envoy on internally displaced persons? Will the Government reinforce the demand made by the previous High Commissioner for human rights that a comprehensive independent inquiry should be conducted into the abuses? Will she and her partners in the European Union try to persuade the Russians that they should comply with the special procedures of the Human Rights Commissioner and the Secretary-General?
Baroness Symons of Vernham Dean: My Lords, as I am sure the noble Lord, Lord Avebury, knows, we asked the Russian Government to issue invitations to all the relevant UN special rapporteurs, including the special rapporteur on violence against women, during the talks held in September this year. The Russian Government responded that an invitation to the rapporteur on violence against women will be issued when the security situation permits. There have been various initiatives among ourselves and our European partners. The Russian Government have taken note of the EU position, but so far the EU representatives have not succeeded in persuading the Russians to change their approach in Chechnya.
Lord Howell of Guildford: My Lords, I am glad that the noble Baroness raised the question of the behaviour of the Russian army. Will she and her colleagues, when next in dialogue with their Russian opposite numbers, say that although we have every sympathy with and support for President Putin in his battle against international terrorism, particularly after the Moscow theatre horror, it is the sheer brutality and hideousness of the incidents in which the Russian army is involved, when it seems to behave more like a rabble than a disciplined force, that are losing him the support that he needs? Would she see that he gets that message? If he wants more support he must, as the noble Lord has just said, seek to conform to the highest international standards and to involve the international community in his fight against international terrorism.
Baroness Symons of Vernham Dean: My Lords, I have already indicated that we have pressed the Russian Government to investigate thoroughly any allegations of human rights abuses. We have also said that we believe that those responsible for such violations should be prosecuted and, where appropriate, punished. But it is terribly important for us constantly to keep some balance in answering these questions, both publicly and in private discussions. The fact is that a number of these groupings in Chechnya have either directly or indirectly been involved with international terrorism. The latest
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outrage might have cost the lives of 800 innocent people in the Dubrovka theatre. I pause merely to make the deduction for the number of people perpetrating the violence. But there were almost 800 innocent people in that theatre who might have lost their lives.
Baroness Cox: My Lords, does the noble Baroness agree— I think she has already said that she does—that this second Chechnen war is not primarily a war of independence but is an Islamist-funded and inspired war with the objective of obtaining the oil from the Caspian oil field for militant Islamism? That is well documented. The intention was also to extend that war into Dagestan. The Russian response must be seen very much in that context and perspective. Indeed, as the noble Baroness has already said, the Russians themselves suffered appalling violations of human rights at the hands of the Chechnen terrorists.
Baroness Symons of Vernham Dean: My Lords, I cannot agree with the noble Baroness that the war is fundamentally inspired by Islamic extremists. I agree with the noble Baroness that some Islamic extremists have allied themselves with international Islamic extremists. I have mentioned Shamil Basayev who was responsible for what happened in Moscow: I could equally mention Abu Walid who leads the Mujaheddin operating in Chechnya. But there are other elements who, although they are by Russian lights behaving murderously, are not necessarily so closely linked with Islamic terrorism but who are perpetrating acts of violence still against civilian objectives in Chechnya.

Individual Learning Accounts
2.53 p.m.
Baroness Blatchasked Her Majesty's Government:
What was the extent of fraudulent activity during the administration of individual learning accounts.
The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland): My Lords, the department's Special Investigations Unit has been asked to investigate 152 learning provider organisations. Ninety-nine of those cases have been passed to the police. The total amount paid to those organisations is £70.9 million. The department is withholding £10.8 million in outstanding claims. The precise extent of fraudulent activity will not be known until the investigations are complete.
Baroness Blatch: My Lords, I am grateful for that reply. However, does the Minister not accept any responsibility whatever for the department in this matter?
Baroness Ashton of Upholland: My Lords, as our permanent secretary made absolutely clear when he appeared before the Public Accounts Committee, we

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do take responsibility. This was a brilliant scheme: 91 per cent of those who participated received a valuable learning experience. However, there is no question but that it was badly implemented.
Baroness Walmsley: My Lords, does the Minister accept that, before their withdrawal, ILAs presented a welcome respite from the tangled web of funding available to those seeking qualifications in early years education and childcare? Given the urgent need to recruit more workers into that sector and to improve the quality of provision, how urgently will the Government replace the system with a new fraud-proof system of ILAs?
Baroness Ashton of Upholland: My Lords, I agree wholeheartedly with the noble Baroness, Lady Walmsley. There are key issues here in terms of the advantages to those taking up that learning. We want to have a successor scheme, and we have decided to link this very firmly to our school strategy, which will be published next June. Work has already been undertaken to produce a successor scheme, which has now been fully integrated into the programme. I look forward to putting that before your Lordships' House.
Lord Marsh: My Lords, can the Minister give the House any indication of how long it took to discover this somewhat strange problem?
Baroness Ashton of Upholland: Well, my Lords, as noble Lords will be aware, and as we have mentioned in your Lordships' House before, we have been examining complaints from individuals which they brought to us in the preceding months. I can give the noble Lord some figures. In September 2000, we had five complaints; by October 2001, we had 8,448 complaints, by which time the number of accounts opened had reached 2,529,000.
It is quite clear that, towards the time that we took action, we began to see systematic activity that needed to be addressed. We undertook a variety of different schemes in order to try and prevent the situation. When it became very obvious, in October of last year, that we had to do something dramatic, we did exactly that and closed the scheme.
Baroness Sharples: My Lords, can the noble Baroness say when we will hear the true cost of this disaster?
Baroness Ashton of Upholland: My Lords, we know from our discussions with the police and with those investigating the matter that it could take up to two years to know the full extent. I have given some preliminary figures, but I speculate that the total figure could be up to £97 million. I am speculating only
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because I want to give your Lordships as much information as possible. It is speculation and I would not wish noble Lords to see it in any other way.
Lord Roberts of Conwy: My Lords, can the Minister tell us what lessons the Government have learned from the poor implementation of this brilliant scheme?
Baroness Ashton of Upholland: My Lords, the noble Lord, Lord Roberts, makes a very important point. There is a great deal to learn, not only for the Government, but also for Capita, which administered the scheme for us. As I said, 91 per cent of people had a good experience, but we have a number of lessons to learn.
There is much to learn about how to make a scheme as unbureaucratic as possible without making it so unbureaucratic that fraud can occur. We need to make sure that we have the proper registrations in the process, and we need to make sure that we have a scheme that does precisely what this scheme attempted to do and was successful in doing—to attract those who would not go through the normal learning routes. We are looking very carefully at those lessons, and I am sure that the scheme which comes forward will be to the benefit of those whom the noble Lord would wish to benefit.
Lord Rotherwick: My Lords, is Capita liable for any of these losses since it was administrating the scheme? Will the Government again use Capita to administer a new scheme?
Baroness Ashton of Upholland: My Lords, decisions on who will administer such a scheme will be for a tendering process at the point at which we move forward with that. We are in discussion with Capita, particularly about the robustness of some of the systems it has in place. That is all that I am able to say to the noble Lord at this stage.
Baroness Blatch: My Lords, why is it that, in view of the failure by Capita in this matter, the Government have given a contract for criminal record checks to the same company?
Baroness Ashton of Upholland: My Lords, the decisions on Criminal Records Bureau checks were taken by the Home Office, and taken on the basis of the right kind of proposals being put forward in the normal tendering process. The Department for Education and Skills has a number of contracts with Capita which are running very successfully. There are particular lessons to learn in this case and we should all learn them.
The Earl of Listowel: My Lords, can the Minister confirm that there are more teachers in training than there have been at any time in the past 12 years, and that, this year, there has been a 7 per cent increase in

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the number of teachers in training? Does she, in the face of this very sad episode, take some consolation in those facts?
Baroness Ashton of Upholland: My Lords, I do indeed take comfort in the number of teachers in training. I am sure that noble Lords across the House would welcome the fact that there are more teachers in training. This scheme was not applicable to teachers, but it was important because of the number of those who were consequently able to develop their skills.
Lord Swinfen: My Lords—
The lord Privy Seal (Lord Williams of Mostyn): My Lords, we are now well out of time, I am afraid.

University Top-up Fees
3 p.m.
Baroness Sharp of Guildfordasked Her Majesty's Government:
How far they consider the imposition of top-up fees, as proposed by some universities, to be compatible with the Government's objectives of widening participation and promoting social inclusion.
Baroness Ashton of Upholland: My Lords, the Government have promised to publish a strategy document setting out a 10-year vision for higher education in January. I assure noble Lords that the Government remain absolutely committed to widening participation in higher education and are determined to reduce the traditional barriers that have prevented able people from benefiting from it.
Baroness Sharp of Guildford: My Lords, the Government cannot have their cake and eat it. The current crisis is entirely of their making, because they failed properly to implement the recommendation of the Dearing report to invest new funds in higher education. Instead, they milked universities of the extra funds raised and heightened the crisis that they now face. Is the Minister aware that if they concede to the demands of some of our top universities to charge substantial top-up fees, they will perpetuate in our universities the damaging and class-ridden two-tier divide from which we already suffer in the public/ private school system? Is that really what the new Labour Government want?
Baroness Ashton of Upholland: My Lords, this new Labour Government do not want further widening of the divide. It is worth noting that we have allocated £1.7 billion to university funding for the six years to 2003–04. That is a 37 per cent increase in cash terms and an 18 per cent increase in real terms, so I do not accept that we are not investing.
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However, noble Lords who had the good fortune to read the article written by my right honourable friend the Secretary of State in the Sunday Times will understand the issues as he set them before us. He recognised the existence of the funding deficit—a backlog estimated by him at £5.3 billion. Noble Lords will be aware that my right honourable friend has asked for a little more time to consider all the proposals buzzing around the press—if I may put it that way—but wants to reach a conclusion. I hope that I have made clear some of the fundamentals about that conclusion.
The Lord Bishop of Portsmouth: My Lords, can the Minister tell us exactly what is government policy on top-up fees? If not, will she tell us exactly how and why the Government will arrive at such a policy and express it publicly?
Baroness Ashton of Upholland: My Lords, the Government made a manifesto commitment not to introduce top-up fees. As my right honourable friend the Prime Minister made clear last week, he stands by that manifesto commitment. On future university funding, noble Lords will be well aware that we have spent considerable time considering how to balance university requirements, which are substantial and recognised, with the requirement to ensure that students are able to go to university, recognising the substantial benefits that they will receive from doing so, but not preventing them doing so because of fear of debt.
Baroness Blatch: My Lords—
Lord Morgan: My Lords—
Lord Williams of Mostyn: My Lords, perhaps we should hear from the noble Lord, Lord Morgan.
Lord Morgan: Diolch yn fawr, my Lords, thank you.
When the reappraisal of university finance takes place, will the Minister note that many universities are not in favour of top-up fees—including Cambridge, which I suppose would be considered a top university, and all of the Scottish universities, that cradle of the democratic intellect? Scotland does not have top-up fees, other fees or a poll tax but the much fairer system of a graduate tax based on the ability to pay.
Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord, Lord Morgan, for explaining the position in Scotland. I am clear that there are many differing views—in your Lordships' House and far beyond—on how we should approach the matter. The debate has now reached an interesting point. We are reviewing all the options to ensure that

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when we return to your Lordships' House in January we can present a policy that can receive the benefit of your Lordships' scrutiny.
Earl Russell: My Lords—
Baroness Blatch: My Lords—
Lord Williams of Mostyn: My Lords, perhaps we may hear from the noble Baroness.
Baroness Blatch: My Lords, there is confusion. Who should we believe: the Prime Minister—and the manifesto—who says that there are no plans for top-up fees, or education Ministers, who are using radio, television and the newspapers to tell us that they are actively considering top-up fees? If they are actively considering them but the Prime Minister is also right, does that mean that nothing will be done for universities for at least four years?
Baroness Ashton of Upholland: My Lords, I agree with final implication of the noble Baroness of the need to do something for universities as quickly and efficiently as we can. I reiterate: there is a manifesto commitment; we shall of course stand by it. That is important. In considering the future for universities, short-term and longer-term issues are involved. It is right for my right honourable friends the Prime Minister and the Secretary of State for Education and Skills to consider the full range of views advanced by many universities, institutions and individuals.
Earl Russell: My Lords, will the Minister consider the effect of top-up fees not only on student entry but on graduate employment? Is she aware that, both in the United States and here in the 1990s, the introduction of loans produced a massive movement of graduates into high-paid lawyers' firms and management consultants? In the light of that, what does she think will be the effect on the recruitment of teachers? Please will she not give me an answer in terms of entry to teacher training which, as today's edition of The Times confirms, is a poor guide to teacher recruitment.
Baroness Ashton of Upholland: My Lords, I shall not give the noble Earl an answer in those terms. One issue that must be addressed when considering the future of education and higher education is indeed the recruitment of teachers and people with the skills that we need.

Business
3.6 p.m.
Lord Grocott: My Lords, with permission, I should like to make three brief announcements. The first concerns today's Statement. At a convenient time after 3.30 p.m., my noble friend Lady Hollis of Heigham will repeat a Statement which is being made in another
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place on Welfare to Work and benefit uprating. Secondly, on today's debate, Members of the House will remember that, following a decision made in July, we have a target rising time for this evening of 10 p.m. If I may say so, the system of an advisory time worked well on Thursday. If Back-Benchers were to restrict their speeches during today's debate to 10 minutes, the target time of 10 p.m. would not be exceeded.
Finally, on my favourite subject, which is recess dates, your Lordships will be aware that an announcement about recess dates was made in the Commons on 31st October by my right honourable friend Robin Cook well in advance—right up to next autumn, which is quite a precedent. I cannot go as far as that, much as I should like to. Many people naturally want as much as advice of recess dates as possible. Before I announce them, perhaps I may say that there is no need to make notes, because I shall ensure that the dates are placed in the Library, where I am sure that they will be popular reading matter. I strongly stress that, as everyone will appreciate, they are provisional and dependent on the progress of business. That is especially true because I have tried to give such good notice.
The dates are as follows: at the Christmas recess, we aim to rise after business on Thursday 19th December and return on Tuesday 7th January—or possibly the previous day. That is always the proviso. At Easter, we rise after business on Thursday 10th April and return on Monday 28th April. At Whitsun, we rise after business on Thursday 22nd May and return on Tuesday 3rd June or the previous day.
The eagle-eyed among your Lordships will have noticed that those dates pretty well match those for the other place, with the exception of their February break, to which they have become accustomed. Sadly, I cannot make any promises about a February break but, if business were to move speedily, it may be possible to arrange for a day or two during the week beginning 17th February.
I think that I said that the dates would be available in the Library. They will not; they will be in the Printed Paper Office. I am sure that wherever I had put them, your Lordships would have found them. As for the summer, which is the area to which I cannot progress at this stage, my view is that the two Houses of Parliament work best when the sitting patterns of the two Houses run roughly in parallel—as has been the case in the past. That now means that, if we were to follow precisely the pattern in the Commons, this House would rise two weeks earlier in July and sit for two weeks in September. That would, of course, be a major change, and the House will, naturally, wish to express an opinion on it. Therefore, my noble and learned friend the Leader of the House will table an appropriate Motion on an agreed date. The usual channels have agreed to that, and it will now take place on Monday 25th November, as first business after Questions.

Address in Reply to Her Majesty's Most Gracious Speech
3.10 p.m.
Debate resumed on the Motion moved on Wednesday last by the Baroness Turner of Camden—namely, That an humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
Baroness Ashton of Upholland: My Lords, in opening the debate, I shall outline the content of the Bills coming forward from the Office of the Deputy Prime Minister and the Bills relating to environmental and rural policy. I shall also outline my department's continued commitment to raising educational standards and the ways in which it will continue to tackle the problems of truancy and other anti-social behaviour and promote the development and reform of higher education.
I shall begin with the local government Bill from the Office of the Deputy Prime Minister. The Government believe that local government is of critical importance in delivering high quality public services to local people. As the White Paper Strong Local Leadership—Quality Public Services stated, we want vibrant, innovative and responsive local government, delivering the quality of local leadership and public services that their communities need. We want to work in partnership with local government to make that happen. The Bill represents an important part of the new agenda for local government and will help councils to deliver more effectively, so that they can make a real difference to the quality of life for local communities.
Perhaps the most important measure in the Bill is the replacement of borrowing approvals with a new prudential regime that gives local authorities greater freedom to borrow, provided that they have the means to service the debt. Deregulation is an important aspect of the new agenda, and the draft legislation will help to cut red tape and improve efficiency, by giving freedoms and flexibilities to councils as well as additional incentives to high-performing councils. All local authorities will have the power to charge for discretionary services. New trading powers will be conferred on best value local authorities. That will be available to local authorities depending on performance. Local authorities will, of course, not be allowed to charge for services that they have a statutory duty to provide.
In addition, the introduction of the business improvement district schemes will allow authorities and businesses to work together as partners to put in place local projects to improve town centres and
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commercial areas. Small businesses will also benefit from a new small business rate relief scheme that will benefit properties with rateable values of under £8,000.
The Bill will keep council tax fair, through a fixed 10-year cycle of revaluations. It will be made clear that additional bands can be created without new primary legislation. Authorities will have greater freedom on the discounts and exemptions from council tax that they grant, notably allowing them to reduce the discount on second homes. The Bill will also remove rent rebates and rent rebate subsidy from housing revenue accounts. There will be additional flexibility in the determination of housing revenue accounts subsidy, and perceived barriers to rent restructuring will also be removed.
I turn now to the planning and compulsory purchase Bill. As noble Lords will be aware, planning plays a keyrole in the delivery of other government priorities, such as new housing, transport infrastructure, hospitals and schools. Without an effective planning system, we risk constraining the economy, at a cost to everyone in the UK. In our reforms, we will ensure that the changes do not erode the ability of the public to participate as appropriate. The planning system has served us well over the years. However, 90 per cent of councils fail to meet their speed of decision-making targets, while the process of updating plans is expensive and takes several years.
In July, the Deputy Prime Minister announced an extra £350 million for the planning system over the next three years. More money, however, must mean a better standard of service. Extra money will go only to authorities that demonstrate their commitment to high quality planning. We will not hesitate to take action if local authorities are not performing.
Alongside those additional resources, the planning Bill will put in place the reform needed to make the planning system fairer, faster and more predictable. We want to bring clarity, certainty and a better sense of strategic direction to planning. Therefore, the Bill will speed up the planning system at national, regional and local level; reform the process for handling major infrastructure projects; increase the participation of the local community from the start; simplify the development plan process, ensuring a more responsive plan-led regional and national system; improve the development control process; introduce business planning zones to help businesses start up and grow; and take forward some of the necessary reforms to the compulsory purchase system that were announced by the Deputy Prime Minister on 18th July.
With the proposed changes contained in the planning Bill, we seek to introduce a planning system for the 21st century. We want a system in which the role of the community is strengthened but in which the shackles are removed from business. Most of all, it will have agreement and consultation at its heart, ending the damaging adversarial system that has held too many of our regions back for too long.
The Regional Assemblies (Preparations) Bill was published on 14th November. It takes forward our commitment to establish elected regional assemblies in

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the English regions that want them. Part 1 provides for the Government to cause referenda to be held on whether a region should have an elected assembly, sets out the questions to be asked and defines those eligible to vote. An elected assembly will happen only if the people in each region want it. The Bill sets out the conditions to be met before the Government can require a referendum to be held, including consideration of the level of interest in holding a referendum.
Part 2 provides for local government reviews to be conducted by the Boundary Committee for England before referenda are held. They would determine the best unitary structure of local government for the parts of a region that currently have both county and district councils. The changes would go ahead if—only if—an elected assembly were established. Part 3 provides for the Government to require the Electoral Commission to give advice on the electoral areas for an elected regional assembly, if the Government propose to establish one. Part 4 provides a power for the Government to pay grant to the voluntary regional chambers.
Our approach offers prospects for all our regions. It offers elected regional assemblies to regions that choose one, while strengthening existing arrangements in all regions. Assemblies will have real powers to make a difference in key areas—jobs, transport, housing, culture and environment—and to tailor regional solutions to regional problems. In short, they will help all regions to contribute to and share in the nation's prosperity.
I turn now to the measures proposed by the Department for Environment, Food and Rural Affairs to protect our environment in the Water Bill and the Waste and Emissions Trading Bill.
The Water Bill takes the Government's commitment to the sustainable management and use of water resources in the face of climate change to a new level. Reform of abstraction licensing will give new impetus to water conservation but will also reduce the regulatory burden. The Bill will also help to build a more stable and transparent regulatory environment for the water industry. At the same time, it will put customers at the heart of regulation and extend the opportunities for competition within the Government's wider agenda for water.
The Bill will reform abstraction licensing to improve water resource management and promote greater water conservation by water companies, giving the Environment Agency new powers to manage licensing in the interests of the environment. The Bill will also simplify the abstraction licence application process and set a threshold, so that many smaller abstractors will no longer need a licence, while removing most of the existing exemptions based on the purpose of use of the water.
The Bill will replace the existing Director-General of Water Services with a regulatory board, amend the regulator's duties to strengthen regulatory certainty—thereby giving greater weight to customers' interests—
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and give the regulator a duty to contribute to the achievement of sustainable development. The Bill will also provide for the setting up of an independent consumer council for water to represent and pursue the interests of customers and consumers and to extend the opportunities for competition in the supply of water for large non-household users.
The Waste and Emissions Trading Bill will help to address two key environmental challenges: climate change and sustainable waste management, which is part of sustainable development. The Bill will take forward the UK's policy to combat climate change by putting on a statutory footing penalties for the world's first economy-wide greenhouse gas emissions trading scheme. It will also help meet our obligations under the landfill directive to reduce the landfilling of biodegradable municipal waste, which is itself a source of methane, a powerful greenhouse gas.
This Bill shows our firm resolve to meet both our domestic and Kyoto commitments on combating climate change and to take forward sustainable waste management following the waste summit last November and the strategy unit's report on delivery, which will be published very shortly.
As the Gracious Speech made clear, a Bill will be introduced to enable Parliament to reach a conclusion on hunting with dogs. My right honourable friend the Minister for Rural Affairs will bring forward a Bill based on evidence and principle once his considerations of the consultations are concluded.
Finally, I wish to turn to the business of my own department and to reaffirm the Government's commitment to raising standards in education. As mentioned in the gracious Speech, raising educational standards remains the Government's main priority for Britain's future prosperity. We have already achieved significant milestones as a result of the increased sustained investment in education. These have included making a real difference to the lives of children, families and their communities through the Sure Start programme; through the Early Years commitment to education; and, through the childcare provision, more than 1 million children now benefit from new childcare places.
We have the best ever results at key stage 2; we have made sure that infant class sizes have been cut; 50 per cent of our 15 year-olds achieve five or more GCSEs at grade C or above, a target we met a year early; and record numbers of students are starting university, with a 3 per cent increase in the number of UK-domiciled students enrolling at UK higher education institutions between the academic years 2000–01 and 2001–02.
Despite these achievements, we want to go further. The transformation of secondary education will continue to raise standards, improve classroom discipline and enhance choice for pupils and parents. The £12.8 billion investment in education announced in this year's Spending Review will provide the investment we need to see through the programme of transformation.

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With the implementation of the new Education Act, the reforms will see a new school system that will be specialist both in the distinctive ethos of each school and in the focus it will bring to each child's individual talents. This means diversity, not uniformity, with every school being unique and having the incentive to improve. This means a move away from the one-size-fits-all model with the expansion and creation of different types of schools. We therefore want to increase the number of specialist schools to 2,000 by 2006, create 33 new academies and 300 advanced schools.
We want to use our best schools to raise the standards of the rest by encouraging schools to learn from each other and, where necessary, take over weak and failing schools. Success will, in turn, be rewarded with greater freedoms and flexibility.
To take these reforms to the next level we need clear and effective leadership at all levels within our schools. The new national college for school leadership will lead the transformation in the quality of school leadership, and the new leadership incentive grant will ensure that our most challenging schools have the leaders they need.
It also means a relentless drive against poor behaviour, indiscipline and truancy. Parents have a legal and moral responsibility to ensure that their children attend school regularly, but, as noble Lords know, about 50,000 children are absent every day without their schools' permission, and in our recent truancy sweeps half the children stopped were with their parents. The Government are determined to reduce unauthorised absence and to make parents face up to their responsibilities and are already implementing a number of measures to help achieve that. These include setting targets for local education authorities and schools; funding electronic registration schemes in high-truancy schools; a sustained publicity campaign, including leaflets setting out parents' responsibilities; regular truancy sweeps, including a national campaign in December; and powers for magistrates to impose a variety of sentences on parents, including parenting orders, fines of up to £2,500 and imprisonment.
We are also launching a pathfinder scheme to speed up the existing prosecution process. Parents will be given 12 weeks to ensure that their child attends school regularly. A hearing date will be set for the end of that period and if there is no sustained improvement the case will come to court then.
But unauthorised absence has a wide variety of causes and so local authority education welfare services, which work with parents to secure regular attendance, need a range of tools to deal with parents in different circumstances. We are therefore considering ways of extending that range, including options for swifter and more effective action against parents who refuse to take their responsibilities seriously. We will be bringing forward proposals in this area in due course.
The development and reform of higher education forms a central part of the Government's commitment to education. We believe that the country's record on
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higher education is already first class. Our universities and colleges are crucial to our economy and if we are to sustain our position against increasing global competition a programme of rigorous and continuing reform and investment is essential.
In January we will publish a strategy document setting out our vision for the development and reform of higher education over the next 10 years. The strategy will have three key elements: ensuring that our universities can continue to compete with the best in the world in terms of the excellence of their teaching and research; widening participation towards our target of 50 per cent of 18 to 30 year-olds having the chance to enter higher education by 2010; working to break down the traditional barriers that have prevented people from disadvantaged backgrounds benefiting from higher education.
The strategy will also outline the Government's plans for making the most effective use of the additional resources we are making available for higher education, and will set out how we will be developing the student support system so that it reinforces our aims of excellence, access and participation while sharing the costs of higher education fairly among all those who benefit from it.
In conclusion, the Government are committed to building a strong society through the continuing reform of the public sector with reforms to secondary education, higher education and local government, as well as protecting our environment through the promotion of greater water conservation and meeting both our domestic and Kyoto commitments t o combat climate change and take forward sustainable waste management. The Bills and programmes that I have outlined today support these aims.
3.26 p.m.
Baroness Blatch: My Lords, I thank the noble Baroness for opening today's debate on the gracious Speech. I always consider it a privilege to take part in these debates which signal the start of a new Session of Parliament.
It was once regarded as a cardinal sin to leak the contents of a Budget or a Queen's Speech. Today things have changed dramatically. There are no more witch-hunts to find the perpetrator of the leak because no less a person than the Prime Minister himself openly—some would say blatantly—uses radio, television and newspapers to disclose the contents of the gracious Speech. I, for one, lament this trend. I believe that it does a great disservice to Her Majesty.
The subjects covered by the debate make it very difficult to do justice to the many issues which arise from the seven Bills mentioned in the gracious Speech. It is also inconsistent with the time allowed under the new procedures of the House. However, I shall be ably assisted by my noble friend Lady Byford, who will wind up the debate for these Benches. My noble friend will also deal with environment and rural affairs issues. I can think of no one more able to deal with Bills on the environment and the countryside, or more dedicated to these issues, than my noble friend Lady Byford.

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I am also conscious that my noble friend Lady Hanham will be taking at least three of these Bills through the House and, including pre-legislative scrutiny, perhaps even four. My noble friend has a distinguished record in local government and I know that she will bring her expertise to bear when it comes to the detailed scrutiny.
I make one plea to the Leader of the House—that is, that the recent procedural changes do not impede in any way our ability to scrutinise and revise the Bills set out in the gracious Speech.
By way of pre-emption, I should like to make one procedural comment about the Hunting with Dogs Bill. As I understand it, when introduced, the Bill will be on the basis of a free vote in both Houses. The Minister, Alun Michael, said in another place:
"The votes this week leave the two Houses diametrically opposed—indeed, I have rarely seen an issue on which the divisions have been greater. It is precisely for that reason that it is right to see how it can be resolved with as much agreement as possible".
He went on to say:
"We promised in our manifesto that this issue would be resolved. Should there be no way through, and should the new Bill be frustrated in its passage rather than scrutinised and improved, the Government could not properly stand in the way of the application of the Parliament Act, which of course would be a matter for this House".—[Official Report, Commons, 21/3/02; col. 457.]
I have no doubt that the Prime Minister and Mr Alun Michael are genuinely seeking the widest possible consensus on this issue. It is my fervent hope that sensible and tolerant minds will prevail.
However, apart from the inordinate use of parliamentary time, if an acceptable compromise is thwarted by a Back-Bench amendment for a complete ban, and if the two Houses remain "diametrically opposed", to use the Minister's own words, the Government—and it would be the Government—would be unwise to use the Parliament Act on the back of a free vote and on an issue which not only divides both Houses but divides colleagues within each House. It is an issue which is very divisive throughout the land between town and country people.
My noble friends and other noble members who wish to defend hunting with dogs will not deliberately frustrate the Bill, but you can be sure that they will defend their right to fulfil the role and duty of this House, which is to scrutinise the options with energy and much expertise. Should the Government continue to defend the use of the Parliament Act on the grounds that the commitment was a manifesto pledge, might I remind the Prime Minister, so was the promise not to introduce tuition fees before the 1997 election—a promise that was broken within months of coming to office. I shall return to that later.
The local government Bill, which has been considered in draft form, was described by the Deputy Prime Minister as "dry and technical". When my noble friend Lady Hanham comes to discuss this Bill—technical it might be, but dry—no—my noble friend, on behalf of these Benches, will be concerned to
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influence the final form of the Bill to ensure that the reforms will be in the interest of local government and of local people.
Certainly, the Local Government Association has welcomed the new freedom for local councils. However, like us, it will be interested in the detail of the proposals, especially those features of the Bill which were not included in the draft version. Of course, the Bill comes at a time when local government funding is a very vexed issue. As we all know, there is a review of the local government funding system under way which will report before too long. The Government have stated that they are concerned to make the new system more easily understood and that it will improve transparency and accountability. I am tempted to say, "Do not hold your breath". The system is about as transparent as a London smog of yesteryear and it is subject to constant manipulation.
Some say that the system should be fair and simple. We believe that it should be transparent and as fair as possible. However, too much simplicity creates too much rough justice. And talking about rough justice, it is understood that substantial moneys are to be moved from the south of England to the north and the metropolitan areas. To emphasis that point, I quote from the words of my right honourable friend Sir George Young, in another place:
"More than £304 million is being taken from a group of people who happen to live in one part of the country and given to a group of people who happen to live in another".
He continued:
"A Hampshire teacher will contribute towards 47 per cent of the county council budget whereas a teacher in Durham will contribute towards 20 to 25 per cent. That is a geographical stealth tax".—[Official Report, Commons, 24/10/02; col. 432.]
It looks as though the situation for the southern local authorities is about to get worse.
An issue that will be dealt with by my noble friend Lord Howe in the debate on health nevertheless has an impact on local government finance; namely, the Government's plans to tackle bed blocking by the elderly in hospitals. How crazy it is to levy a financial penalty on a local authority that is already spending above its standard spending assessment on social services and which cannot afford the money to fund sometimes expensive home support packages, especially where the relationship between the local authority and the health authority is good and where much is being done in partnership to tackle the problem. Perhaps the Minister, when he winds up, will explain the logic behind that proposal.
Before I leave the issue of funding I must raise one more point on behalf of local government. What percentage of the police and fire service budgets is now being spent on meeting pension obligations? The last time I saw figures it was over 25 per cent and still rising. I ask that question because it must be having an impact on that part of the respective budgets to pay for operational services.
The regional assemblies Bill will be vigorously opposed by my noble friend Lady Hanham on behalf of these Benches. The United Kingdom is top heavy

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with governments—European, national, a separate parliament and assembly for Scotland and Wales respectively, London government, county councils, district councils, town and parish councils, town mayoral offices and now regional government.
Public services will not improve by creating a new type of politician and more talking shops will not boost economic growth or help the vulnerable. The taxpayer is funding that inexorable additional cost of more committees, more politicians and their support systems, much greater bureaucracy and a burgeoning number of quangos. The argument that regional government will be closer to the people is fallacious. The regions are enormous and local knowledge will be at a premium which will result, as we all know, in a poorer service to local people.
Many of us have suffered the frustration in this House of trying to get answers to questions about how national taxation is being spent in Scotland, Wales and London. Even given the ingenuity of my noble friend Lord Peyton and the omnipotent and always courteous noble Lord, Lord McIntosh of Haringey, we still do not succeed.
Those who may be seduced by the idea of regional government because they believe it will bring more money to their area are very naïve indeed. The first call on funds will have to pay for buildings to accommodate officers and members of the authority, the bureaucracy, staffing and members' costs and, if Wales is anything to go by, the growth of many quangos—even before one penny is spent in their area. The Government, of course, will argue that the buildings and offices are already there in the regions. That is what we thought with Scotland, Wales and London which, between them, have spent hundreds of millions of pounds on accommodation and member services.
We are all aware of the Deputy Prime Minister's agenda—bigger, costlier institutions, more distant from the people and strengthened central control. Regional government will inevitably threaten the future of county councils and that will be fiercely resisted. When the Minister comes to reply, it will also be helpful if he can confirm that the future of the lieutenancy and the office of High Sheriff is secure. I ask that because there are rumours that they too are threatened. Therefore, reassurance from the Minister of their future would be welcome.
One issue that is being lost with this piecemeal approach to reform of government is the integrity and coherence of the United Kingdom. Already we hear siren voices from Scotland calling for more powers and separate representation in the European Union. Wales is also looking enviously at the powers enjoyed by the Scottish Parliament. No doubt London will follow suit in due course. Also, if and when, one or more regions is formed, what will provide coherent government for England? Surely, just as the whole of Scotland and Wales voted in a referendum, why cannot the whole of England?
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If the Government genuinely believed in local communities they would be reducing the size of national government and resisting the constant urge to intervene in local government. Instead, such interference has soared under Labour. Anything that further undermines the integrity and coherence of the United Kingdom will not have our support.
An issue that will inevitably be discussed when the Bill comes before the House is a threshold for the referenda. We have witnessed what happened in Wales and London and now we have the experience of electing town mayors. For example, in Bedford, a mere 18 per cent out of an electorate of 96,000 turned out for the referendum. The turnout for the actual election, with eight candidates, was only 25 per cent. The winning candidate polled 9,500—less than 10 per cent of the electorate. That is hardly the settled will of the people. Therefore, is it any wonder that one town voted for a man in a monkey suit? If the Government succeed in getting their way with this reform, we must fight for a meaningful voting threshold below which there will be no case for change.
We agree that the planning system is in need of reform and should be streamlined. Therefore, much of the planning Bill will be welcome. However, a point that has been discussed many times in this House, particularly by my noble friend Lord Renton, is that people's confidence in the planning process will be damaged if their voice cannot be heard in a meaningful way. As the Government's proposals stand, local communities will be stripped of their involvement in the local planning decisions. The county council's role in the planning process will be abolished and the new regional authorities will have the power to ride roughshod over local councils and local people.
Reference was made in the gracious Speech to a Bill for pre-legislative scrutiny to improve the standard of housing and the standards of management of private rented accommodation by landlords. Housing is a very complex issue and therefore the pre-scrutiny process is well advised. We all wish to see better housing and more people in accommodation of a good standard. However, we do not want a repeat of what happened to care homes for the elderly. The changes brought in by government, however well intentioned, had the effect of closing down hundreds of much-needed homes for the elderly.
The balance has to be to legislate in such a way that the range of rented accommodation is increases; that people are prepared to consider homes for rent; and that the rules regarding standards are practical, affordable and fair to the landlord and the tenant. I ask Ministers not to start from the premise that all landlords are crooks, for the majority of them are not. While safeguards are important, such an attitude will destroy the sector.
It is almost impossible to know where to start on the issue of education. Although there was no specific Bill mentioned in the gracious Speech, we shall no doubt see many pieces of secondary legislation which will be spawned by the recent Education Bill.

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The gracious Speech included the words:
"Raising educational standards remains my Government's main priority for Britain's future prosperity. Secondary school reform will continue to promote opportunity and choice through greater diversity for parents and pupils. University reform proposals will be published to improve access and build on excellence".
These are fine words with which it is not easy to take issue. However, let us look at the state of education after almost six years of Labour government. Teacher recruitment and retention is in crisis. Morale among teachers is low. Too few teachers are applying for key posts in our schools. Teacher vacancies have doubled in recent years. Schools are trawling around the world to fill vacancies in their schools. Record numbers of teachers are leaving the profession early and many are citing not pay as the reason for leaving but workload, bureaucracy and meddling government interference. Far too many temporary teachers are employed, which creates insecurity for children. Too many teachers are teaching subjects for which they are not trained. Of the 20,000 extra teachers the Government claim to have recruited since 1997, 5,600 are unqualified, 2,800 are trainees and 2,520 posts remain vacant.
A survey has shown that 80 per cent of teachers believe that behaviour in our schools is getting worse. According to the Association of Teachers and Lecturers, assaults on teachers have risen fourfold. Standards in primary schools have not reached the Government's targets. In fact, they have been virtually unchanged for three years. Added to that, there is now concern about the way in which the 11 year-old tests are administered.
Truancy remains a real problem for schools. I have lost count of the press releases from the Department for Education and Skills with headlines such as, "Ministers to crack down on truants", or, "Ministers to get tough with parents who fail to send their children to school".
Stephen Clarke, a director of Truancy Call, has estimated that 50,000 children play truant each school day. That has now been confirmed by the Minister. However, much more seriously, Mike Tomlinson, as head of Ofsted, said that up to 10,000 are effectively lost to the system. What are the Government doing to find them? I hope that those of us who listened to the gracious Speech will be forgiven for feeling somewhat cynical when we hear the words,
"My Government … will also bring forward proposals to tackle problems of truancy".
Since the Government came to office in 1997, initiative after initiative has been tried, including fast track prosecutions; parenting orders; fines of up to £2,500 and imprisonment; police patrolling schools; taking away child benefit; and tens of millions of pounds have been spent. And yet, truancy levels are as high as ever and now we are to expect yet more proposals. I wonder whether it has occurred to Ministers that there may be a link between disaffection and the lack of high quality vocational education both pre-16 and post-16.
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Then there is the A-level and AS-level debacle. Thousands of students had a very unsettled time and to make matters worse, while the issue was being reviewed, without any hard evidence and in order to deflect criticism from Ministers, Sir William Stubbs was sacked. That in itself created even more panic than was necessary. Then we had the failure of the ILA scheme due to poor oversight and leadership from the department and the continuing problem of criminal record checks which is disrupting the ability of schools to employ staff and to use volunteers.
The aims of the Government for choice, diversity, greater autonomy, more power to heads, governors and parents, and less bureaucracy and interference by government are music to our ears and if they were to be achieved, they would have our enthusiastic support. I have just one small question en passant. If Ministers really trust schools, why is a place reserved on governing bodies of academies for a DfES official?
Finally, there is the future of higher education. Margaret Hodge, the higher education Minister, said to an audience in a room in this House only about three weeks ago that the report of the review would be published this month. We now hear that it is delayed. On coming into office in 1997, the Government reneged on a promise to students that tuition fees would not be introduced. However, not only were they introduced within months of taking office, but maintenance grants were abolished at the same time and against the advice of the Dearing report recommendations. Now we have a manifesto pledge not to introduce top-up fees, with the Prime Minister confirming this at Question Time in another place. At the same time, Ministers are appearing on radio and television telling students that there is no such thing as a free lunch and that they are actively considering top-up fees.
There is no doubt that there are problems with the funding of higher education. It is true that under the previous Conservative Government entry into higher education expanded from one in eight young people to one in three and that the unit funding per student was reduced. That was one of the reasons why the Dearing committee was set up in 1996 with, I might say, all-party support. However, the present system and the present problem are of the Government's own making, as the noble Baroness, Lady Sharp, said earlier today.
The Government have been in office for more than five and a half years and in that time they have set a target of 50 per cent of young people to enter university without any thought of how it shall be funded. The Betts report on higher education salaries has gathered dust for years. And the introduction of post-code entry into university is social engineering at its most patronising. Money has been tagged for the universities which admit students from nontraditional backgrounds. Such interference with academic freedom would have my late noble friend Lord Beloff spinning in his grave.

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The key to enter university has to be to improve the education of young people in order for them to qualify for entry on merit. Secondly, it must be to support the many excellent schemes which are working to persuade school children to think positively about education, both in further and higher education, post-16. And instead of shoe-horning students whose qualifications barely, if at all, merit it into a university place, one answer is to make greater provision of high quality vocational education. That is where the weakness in the system lies and it is those skills that the country needs badly.
A recently produced report by CIVITAS found that students who enter university with poor qualifications are seven times more likely to drop out. Nothing can be more dispiriting than spending a year or two amassing a debt and leaving because it was the wrong decision to attend university in the first place. No one is pretending that the solutions to the way forward for our universities are easy, but much time has been wasted by this Government and time is running out.
The strength of this House is the seriousness with which it carries out its function of scrutiny and revision. One of its pleasures is the unfailing courtesy between Members on all Benches and especially between the Front Benches on all sides of the House. The programme before the House will be testing, for the devil, as we know, is always in the detail. I look forward to the rest of this debate and I wish my noble friends Lady Byford and Lady Hanham, who have the prime responsibility for seeing through the seven Bills under discussion today, every success, for they shall have my full support.
3.49 p.m.
Baroness Sharp of Guildford: My Lords, I thank the Minister for her wide-ranging and clear speech on the various issues covered in today's debate. A strange conglomeration of issues are pulled together: regional and local government; environment; agriculture; and education. I shall not emulate the Minister and the noble Baroness, Lady Blatch, by trying to cover all the issues. Some of my noble friends will speak on other issues, and my noble friend Lady Hamwee, like the noble Baroness, Lady Hanham, will guide the two Bills on regional and local government through this House when they come to be considered.
I shall concentrate on education. It has some common ground with the other issues; for example, local government finance is very important, particularly given that under the local government funding review the Standards Fund is to be amalgamated into the local government grant. Likewise, issues such as the closure of village schools in rural areas can strike at the heart of agricultural communities. I shall dwell not on cross-cutting themes but on mainstream educational issues, particularly the two raised in the gracious Speech.
The gracious Speech contains only one paragraph, of 42 words, about education. As the noble Baroness, Lady Blatch, mentioned, it did not promise legislation. That is welcome after so many years of education Bill
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after education Bill adding to the complexity of the bureaucracy. This year we will not have one. First, it promises the continuation of reforms to the secondary sector,
"to promote opportunity and choice through greater diversity".
Secondly, it promises the publication of reform proposals for the universities,
"to improve access and build on excellence".
We have already had a skirmish about universities on these Benches today. Next week we shall devote an entire afternoon to debating developments in this sector. Therefore, I shall point out only that the two aims set out in the gracious Speech—to improve access and to build on excellence—are not necessarily compatible unless the Government are prepared to put their own share of resources into the pot and not just to expect students to fork out money.
I am glad that Ministers have finally admitted that the universities are in crisis. For many a long year, they were not prepared to admit that. Little funding has gone into the universities other than into the science budget. If I have one bone to pick with the Minister about her reply to me earlier, it is that in quoting the billions of pounds poured into the university sector she mixes the research budget with the teaching one. She knows well that the unit of funding per student has decreased over the past few years and remained static. We are concerned about that. At £4,500 per student, most universities now subsidise students. Unless that unit of funding is raised, there will be difficulties in universities. This crisis confronts universities today. I add one word of warning: no magic formula will provide the answer to the universities' problems, which are very complex. It will take time and commitment on all sides to restore trust and to bring changes necessary to the system if it is again to become a jewel in this country's crown.
I shall concentrate most of my remarks on the other aspect of education policy mentioned in the gracious Speech, namely secondary education and reforms to promote opportunity and choice through greater diversity. We do not deny the achievements that the Minister outlined when talking about education. We thoroughly welcome the developments in the foundation stage and the commitment to early childhood education. We accept that we have seen considerable improvements in achievement at key stages 1 and 2, even though in some respects they seem to have stalled recently. We accept that over 50 per cent of students now achieve grades A to C at GCSE. We should not forget that this year's results at A2-level, the new second phase of A-levels, were so good that some people did not believe them to be true. There hangs a tale that is not necessarily to the Government's credit.
As the gracious Speech made clear, this Government see offering more choice and diversity in the secondary sector as the way forward. They are accelerating the conversion of what they call "one size fits all" comprehensive schools into specialist schools, each picking up one of what is now a very wide range of possible specialisms and half a million pounds along

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the way. In this so-called post-comprehensive era, we now have a wide range of different institutions at secondary level, including community schools, foundation schools, voluntary-aided schools, city technology colleges and the new city academies. All have different specialisms, different governance arrangements, funding schemes and admissions arrangements. Diversity certainly exists, and choice in the cities is enormous—too wide, sometimes, for parents to comprehend. As always, middle-class parents learn quickly where the best deal can be found. Outside cities, in urban areas, the choice is more limited. In rural areas, choice is non-existent. If your local secondary school happens to be a sports college, that is your lot.
The Minister knows well that on these Benches we share little of her enthusiasm for the diversity of institutions. We do not see education as a marketplace with schools competing against each other, and with different offerings to meet different tastes. That is partly because the market does not work other than in a city environment—it is questionable whether it works well there—but mainly because we see schools as a community resource. They are part of a network of educational establishments serving their local community and, ideally, funded by, and accountable to, that local community. As a part of a network, their relationships with one another should be co-operative, not competitive. In that respect we are far from the market-driven model of new Labour thinking.
The reverse side of the coin of achievement is failure. Fifty per cent of students may achieve five A-C grades at GCSE, but 50 percent fail to reach that standard. Ten per cent of students—60,000 a year—still leave school each year with no qualifications, largely illiterate and innumerate. They become part of what is known as the NEET group—not in employment or education or training. These numbers have not changed over the past 10 years. Each year, 60,000 pupils, many aged 13 or 14, drop out of school. Once they have dropped out, they are the core of our antisocial behaviour problems.
My noble friend Lady Walmsley will talk at greater length about the issues that create and perpetuate the NEET group of young people. I add one thought: this Government came to power on the back of two powerful slogans that we got to know very well: "education, education, education" and "tough on crime and tough on the causes of crime". The gracious Speech reflects very well the first half of the second slogan. We are confronted by a raft of legislation that will be very tough on crime. But they are neglecting completely the joined-up thinking that links education and being tough on the causes of crime. Fining the parents of truants or locking them up in jail will in the long run do nothing to lessen the problems of vandalism or hooliganism. It may make them worse.
I return to the issues of diversity and choice. The leader of my party in another place, in response to the gracious Speech, remarked that for our party it was no longer a question of whether policy was left or right, but, rather, whether it was liberal or illiberal. The
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essence of a liberal education policy is that it is child-centred. We believe that each child, each pupil, each student, and each young person has the right to be treated as an individual, developing at his or her own pace, with different skills and aptitudes, and motivated by different phenomena; and, of course, coming from different backgrounds with different needs and requirements. Schools have to accommodate those differences. Where needs are greater, we know that we have to provide more support and help and, indeed, that the earlier such support is provided, the more effective it will be in helping a child overcome any disadvantages.
However, are we taking enough cognisance of the other innate differences in children? Is there not a danger that in imposing a curriculum that is increasingly dictated by a series of age-related standard aptitude tests we are imposing a "one-size-fits-all" education on our children? Maths and English now dominate the primary school curriculum, but what has happened to the history and geography, art and music, drama and sport, that they used to do? Are we not in danger of losing the spark and the creativity that used to be such a mark of the upper classes of our primary schools? And in our secondary schools, is not the drive to achieve the academic A to C grades in GCSE and to go on to take academic A-levels putting those whose skills lie in learning by doing at a disadvantage compared to those who are good at learning by rote? Is there not a danger that here, too, we are stifling the more creative parts of the curriculum in our drive to promote basic literacy and numeracy? Does this not ignore the fact that there are many children who learn only when they are motivated? Are we really confident that this top-down, test-oriented, one-size-fits-all, illiberal curriculum is the best way of motivating and teaching our children?
The Government now pour scorn, if I may put it this way, on the "bog standard" "one-size-fits-all" comprehensive school. Yet the ideal, for which many on their Benches once fought, was, and is, precisely the opposite. It is for secondary schools to recognise and provide for the diversity of abilities, aptitudes, talents and rates of development among their pupils. The best, and there are many such schools—indeed, many of us have visited them—achieve these ideals and offer outstanding opportunities to those who attend. I do not deny that this is not always the case and that there are others, particularly in our poorer metropolitan areas that struggle, often overwhelmed by the poverty of their surroundings. We should not forget that 90 per cent of schools in special measures are located in low-income areas. Does it ever occur to the Government that the problem lies not in the lack of diversity among the institutions on offer, but in the inappropriateness of the regime that they are trying to impose?
Noble Lords on these Benches welcome many of the achievements of this Government in the education sector—the extra resources that are now finally finding their way into our classrooms; the recognition of the professional status of teachers; and the provision of more adult hands to help in the classroom. We continue to warn of the problems of recruitment and

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retention because, despite the rhetoric, the shortages are still there. There is a grave danger that in a subject as important as maths the supply of teachers may dry up completely.
We reject completely the top-down nature of the Government's interventions. Liberal Democrat education policies seek to treat the child as an individual, not just as a statistic. We reject the prescriptive, authoritarian policies of this new Labour Government that have resulted in directive after directive landing on teachers' desks, thus piling on the bureaucracy, undermining their professional status, and leaving the individual child as little more than a test result—a statistic—in the growing flood of performance indicators. As I have said previously to this Minister, Gosplan, with all its plans and performance indicators, killed innovation and creativity in the Soviet production system. This new Labour Government is in grave danger of doing exactly the same with our education system.

Benefits Uprating
4.4 p.m.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Work and Pensions. The Statement is as follows:
"With permission, Mr Speaker, I should like to make a Statement on the next stage of our welfare to work strategy for people with health problems or disabilities, and to report to the House the annual uprating of benefits.
"On the benefit uprating I can confirm that most national insurance benefits will rise by the retail prices index, which is 1.7 per cent. For the third year running retirement pension will be uprated by more than the RPI—with an increase of f 100 a year from next April for singe pensioners and £160 a year for couples.
"The minimum income guarantee will rise by over £200 a year in line with the Government's aim of targeting extra help on the poorest pensioners. There will also be above inflation rises in maternity allowance and statutory maternity pay. These will be uprated from £75 a week to £100 a week. Most income-related benefits will rise by the Rossi index—1.3 per cent—in the normal way.
"I shall place details of the uprating in the Vote Office and arrange for figures to be published in the Official Report.
"Ensuring that as many people of working age as possible are in employment is central to this Government's strategy to tackle poverty and social exclusion. We inherited a major problem of worklessness—not just among those traditionally seen as unemployed, but for millions of other people who were offered little or no help to find work.
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"Between the 1970s and the mid-1990s. the number of lone parents on benefit and the number of people claiming sickness and disability benefits both trebled. As industrial restructuring took place, one in three men aged between 50 and state pension age were out of work and reliant on benefits. And one in five men aged between 50 and state retirement age were receiving an incapacity benefit. At a time when many people should have been given the help that they needed to find other work, they were written off.
"Over the past five years we have started to tackle this legacy through economic stability and our active labour market policies providing people with individually tailored help to move into work. As a result, employment is at record levels, with well over a million more people in work than in 1997. Long-term unemployment has been massively reduced and the number of lone parents in work continues to grow.
"But there is still more to do. There are nearly 4 million people of working age who are out of the labour market and on benefits. Of these, 2.7 million are receiving an incapacity benefit—that is nearly three times the number on jobseeker's allowance.
"But, as is clear from surveys, many people with health problems and disabilities want to work. Indeed more than three quarters of a million people on incapacity benefits tell us that they want a job. Just because people are on incapacity benefit it does not follow that they cannot work—nine out of 10 people who start a claim to incapacity benefit expect to get back to work. It is right that we provide the proper support to help them do just that. We must continue to reform the tax and benefit system from one based on what people cannot do to one based on what they can do.
"For people off work—through illness or disability—it is often a lack of confidence or knowledge about the support and advice available that stops them getting back to work.
"Today I want to announce the first steps in a new approach to remove these barriers and help people realise their potential. Our proposals are set cut in the consultation paper: Pathways to work—-Helping People into Employment. This sets out a new framework of help for those who through illness or disability have applied for incapacity benefit. It combines better and more intensive advice with mandatory work-focused interviews, new opportunities for rehabilitation, and new financial incentives to encourage people to move into jobs. We propose phased pilots of the new approach in six areas around Great Britain from next autumn.
"Let me make it very clear, this is not about forcing sick or disabled people into work. It is about encouraging people to look at their options and helping those who want to work to achieve their goal of getting a job. I should like to reassure the House that those with the most severe conditions will not be required to attend the ongoing intensive interviews. We all understand how important it is

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that the development of this initiative does not threaten their security and the vital support that incapacity benefit provides for them.
"Our new approach has a number of aspects. First, we need to provide the right support from the outset of a claim. We shall build on the current framework offered through Jobcentre Plus, and ensure that new claimants get early and frequent support once their claim has been sorted out. We shall train a new team of specialist personal advisers to help claimants stay focused on their capabilities, building on their expectation that they will return to work. We want as many as possible of those moving onto incapacity benefit to be seen as people with a working future, not people at the end of their working life.
"Secondly, some people with disabilities and health problems need specialist help to get back to work. In the past this has not been available, so we will be introducing ground-breaking rehabilitation programmes, working with the NHS, GPs and occupational health specialists to combine work-focused support with health-focused rehabilitation for conditions such as back pain and depression.
"These programmes will be tailored to people's individual needs—helping people to understand the effects of their condition and working to increase their confidence to move back into work. Making the move from welfare to work is a big step. It creates uncertainty and financial worry. There is already a range of extra help available. The Disabled Persons Tax Credit guarantees a weekly income of £167 for a single person working 30 hours per week. This will increase to £189 per week from April next year when new tax credits are introduced.
"Today I can announce that we will build on this support by piloting a return to work credit for people leaving IB for work. It will be paid at £40 per week for 52 weeks where personal income is less than £15,000 per year. For someone returning to work 30 hours on the national minimum wage and the new working tax credit, this will guarantee an income of at least £229 per week for the first year in work, compared with £167 under the current system, and just under £80 per week on incapacity benefit.
"We realise too that the first step into work is a big one. Finding money for the first month's bus pass or for work clothes can too often be barriers to work. That is why today I can also announce we will extend access to the Advisers' Discretion Fund, enabling advisers to make awards of up to £300 to spend on anything that will help their client move into work.
"Better support for people with health problems will not stop with IB. We will also increase support for people with less severe health problems who move from IB to JSA but who might nonetheless face significant barriers to work, by ensuring that they automatically see a specialist adviser when they first claim JSA. I can also announce that we will
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refer these people to tailored support through the relevant JSA New Deal, without the normal waiting period of 18 months. We will further reform the system so that people awaiting an appeal are not moved onto reduced rate income support, but receive JSA and work-focused support.
"People with health problems or disabilities get support from a number of sources. Today I have outlined the role the state will play, but others have an important role too. We want to encourage an environment where as many employers as possible are managing health at work actively and positively. This makes good business sense. In an era of full employment and a tight labour market people with health problems or disabilities are an untapped resource that employers and the country cannot afford to ignore.
"We also want to support doctors who can sometimes face pressures to sign people off work. There is now clear evidence of the medical, psychological and therapeutic benefits work can have. So we will work with doctors to raise awareness about the importance of work retention or resumption in improving the health of their patients.
"To conclude, this package of reforms is about providing support to help people with health problems or disabilities move back into work. It is about fulfilling their desires to work and realising their own ambition. It is about changing attitudes—both their own and others. Those claiming IB will, I believe, respond to a focus on what they can do rather than on what they cannot. We are not abandoning them and denying them opportunity, as in the past, but supporting them with help towards a better future."
My Lords, that concludes the Statement.
4.14 p.m.
Lord Astor of Hever: My Lords, the House will be grateful to the Minister for repeating the Statement. The Government have lost their way on welfare reform. Recent figures from the department itself have shown that by the end of the Government's second term in office, the welfare bill will have increased to over £141 billion per year.
Between 1996–97 and 2005–06, it is predicted that welfare spending will increase by approximately £46 billion in cash terms and £20 billion in real terms. This means that by 2005–06 more will be spent on welfare than on health and education combined. These figures are nothing short of staggering, more so given the Prime Minister's pledge to reduce the "welfare bills of social failure".
What has happened to Labour promises on welfare reform and the abolition of means testing? Benefit expenditure is out of control, means testing is growing and real reform of the social security system seems to have been dodged. Instead we have had a confused mish-mash of spending on means-tested benefits, on universal benefits and on complicated tax credits.

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Despite promises to the contrary, the Government are means testing more and more people. I wonder whether the Chancellor of the Exchequer remembers his words to the 1993 Labour Party conference. He declared,
"I want the next Labour Government to achieve what in 50 years of the welfare state has never been achieved. The end of the means test for our elderly people".
Yet today we see further confirmation of an altogether different agenda.
The minimum income guarantee is to be worth far more than the basic state pension and is to increase in line with earnings, not prices. It will provide the base for the pension credit. More than half of pensioners will therefore have their total income determined by that means test and the value of the basic state pension will become irrelevant for them.
Once the pension credit is up and running, almost 60 per cent of pensioners will be subject to means tests. Does the Minister accept that the implications of the policy are not as clear-cut as the Government would have us believe when affirming that the pension credit represents a reward for savings? Can the Minister be so confident that she is rewarding savings when more pensioners than ever will face benefit withdrawal rates of at least 40 per cent?
It is widely acknowledged, including by the Government, that we are facing a pensions crisis and that many people are facing an impoverished retirement because of inadequate pension provision. I therefore add my voice to the rising swell of criticism of the Government's increasing use of means testing—both on the grounds that the system is too complicated and also that it offers an acute disincentive to save.
According to a report published earlier this year by the Prudential, more than £1.2 billion in benefits is going unclaimed each year because pensioners do not understand what they are entitled to. This situation will only be exacerbated by the introduction next year of the pension credit.
I turn to the Government's "Welfare to Work" agenda. This demonstrates a strange dichotomy in the Government's welfare policy. While statistics show an ever-increasing welfare bill, at the same time they show that unemployment is at a record low. That contradiction is in part due to Labour's failure to grasp the nettle of welfare reform. While moves to eradicate the so-called unacceptable culture of worklessness are to be welcomed, I question the validity of the Government's declarations on this issue.
For example, in a keynote speech in June, the Prime Minister outlined plans aimed at helping people on disability benefits back to work. However, as commentators were quick to note, his words represented nothing more than a reaffirmation of previously announced policy. There is a sense that we are continually going over old ground, throwing yet more wise words at a problem that has persisted and continues to persist. We do need to help people who are out of work back into jobs. We must seek to do more to help them. The Government are rightly seeking to help those on incapacity benefit who wish to
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work. Sadly, since 1997 we have witnessed increasing numbers of incapacity benefit claimants and this is a trend we must seek to reverse.
Despite all the activity in that area in the past, there has been much recent criticism of the Government's approach. A Public Accounts Committee report published in October on the New Deal for young people, found that many people would have found jobs without the programme, that the Government are not measuring outcomes effectively and that just 0.2 per cent of New Deal participants have suffered sanctions.
A report from the Work and Pensions Committee in the other place, published in July, concluded,
"Within the New Deal programmes, performance needs to improve",
while recent press coverage has affirmed that half of the Government's pet projects to help people in deprived areas are to be scrapped or merged, including action teams for jobs, the ethnic minority outreach service and employment zones. This all leads me to conclude that announcements on Welfare to Work represent reworkings of the script, often made in the run-up to the pre-Budget, or Budget, report.
The next 12 months represent a challenging time for the department. The scale of change is immense, with the pension credit, housing benefit framework changes, Jobcentre Plus roll-out and the Pension Service implementation to name but a few. The Government have set themselves a demanding programme. The need to ensure accurate and proper delivery in all these areas must be a central point of focus for the Minister and her departmental colleagues.
I take this opportunity to seek assurances on perhaps the most fundamental of the reforms currently being undertaken—the implementation of the universal banking service from next April. Can the Minister assure the House that the project is on track and that the transition to the new system will be both smooth and efficient? In the other place, Ministers have admitted that the number of benefit claimants who lack a suitable bank account rose by a quarter of a million over the past year for which figures are available. Moreover, the most detailed research on the issue has found that nine out of 10 people who will have to move over to the new system think that it has disadvantages and that four out of 10 were "entirely negative".
4.22 p.m.
Earl Russell: My Lords, I have always said that it is a basic skill of opposition to see all hell in a grain of sand. The noble Lord has just demonstrated that skill very clearly indeed. I see something a little more complicated here. One might possibly describe it as all purgatory in a grain of sand but it is even more complicated than that.
I remember one occasion when I became very tired of setting the same exam questions over and over again. I asked my wife to supply me with some, which she duly did. Our minds work in very different ways.

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One of my pupils who had just sat the paper came in, having no idea who had set it, in an utter rage, and said that it was an incredible paper that looked as if it had been set by Hieronymus Bosch. I add that it was the only paper that year on which he got a first-class mark, so it cannot have been too awful.
I wonder whether the Statement has been drawn up by Hieronymus Bosch as I see an incredible mixture of things within it. I see a good deal of generosity and a good deal of imagination in some of the small proposals. Many of the proposals concerning the new disabled person's credit and the run-on are welcome but I see them as coming within a general analysis of the difficulties of those who are out of work, which I regard as mean-spirited, harsh and, as I think the Minister knows, totally mistaken. These sit uneasily together. Hieronymus Bosch is perhaps somewhat to the point.
I wish to make a couple of points about uprating. I note that, as last year, we are told that most national insurance benefits will rise by 1.7 per cent. For form's sake I should ask what are the exceptions to most. I have done that before and have been told that it is trivial but those exceptions should be on the record.
I refer to another point that needs to be on the record. The MIG rise is in itself welcome but what is happening to the take-up figures for MIG? That has always been the interesting and the difficult point.
As regards the analysis of the New Deal and incapacity benefit, I should like, first, to remind the Minister of the passages in the Acheson report, confirmed in many other pieces of research, that there is a clear link between unemployment and sickness and that being unemployed makes one more liable to become ill. So, there is a causal connection that flows rather the other way from the way this document has it.
I should like the Minister to attempt at some stage a breakdown of incapacity benefit figures by area to see whether there are—as I have been told by some of the voluntary organisations—a great deal more people on incapacity benefit in those areas where people have long-term difficulty finding work. I am glad that the Statement raises the question of the number of people over 50 who are out of work. Last time I was given that figure at the end of the previous government, it was 2,594,000. I should be glad to know what the corresponding figure is now and for some allowance to be made for the economic cycle in the change. It must, I think, have come down. The question is how much it has come down because it is on that that the Government should be judged.
As regards the analysis of people on incapacity benefit, we are told that they were written off because they were given benefit. Here is one of the places where I simply cannot follow the logic of the Statement. When someone is ill and unfit to work, I simply cannot understand the idea that giving them benefit, and indeed waiting for them to get better, is writing them off because, after all, this is not the Department of Health we are dealing with here. It was the
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Department of Social Security and is now the Department for Work and Pensions. It is not responsible for curing those people, it is responsible for making sure that they do not starve until they are cured. Calling that "writing off" is beyond my understanding.
What seems to me to be true of most of the areas concerned is that they are areas in which there is no work, or at least no work for unskilled, able-bodied and often ageing men. That, incidentally, has been grossly exacerbated in places such as South Wales by the failure of Corus. It makes one regret the more that there is no definite statement in the gracious Speech about the euro. The fall in inward investment has been catastrophic and that can only make the problem of shortage of work worse.
I happen to live next door to one of those areas, Carlton Ward, Kilburn, in which during the worst of the recession the percentage of the population on means-tested benefits rose as high as 37 per cent. The latest figure I have seen was only 24 per cent, which is a good improvement, but it is still one of the worst wards in the country. I cannot help having the suspicion that there is a postcode discrimination against job applicants coming from that particular ward. I believe that it has a reputation for being a rough and drug ridden place. I suspect that employers avoid employing people from there. Will the pilots investigate the question of whether there is genuine postcode discrimination? Will the pilots also investigate whether there is any correlation between the supply of local services and facilities and the difficulty of finding work, the decline of local bus services, the post office and the universal bank about which I agree with everything the noble Lord said? There is also the fate of the village shop which in many cases has closed after several arson attacks. Possibly, we can be told what happens to people when they believe that they have been totally forgotten. All these matters need attention.
When we begin to help those who are out of work, the first thing to do—if there is anything about incapacity benefit which is constructive—is to reform the all-work test, because people who are classified as unfit, according to that test, do not in any way correlate with those who are working. Can the Minister say whether it is still true, as stated in DHSS Report No. 86, that one is more likely to get work if the all-work test finds one unfit to work?
The Annunciator has just announced that no further action is required. I should add that that statement did not come from these Benches. Indeed, we on these Benches would like to see the all-work test fundamentally reformed. It cannot be a proper test of unfitness to work if one is more likely to get work if one is found unfit rather than fit. As we have always said from its introduction, the test does not measure the effect of fatigue and acute pain. I am in correspondence at the moment with a former pupil of 40 years ago whose son suffers from myalgic encephalomyelitis and who has been found by the all-work test to be fit to work. Anyone who knows anything about ME, the medical genuineness of which

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has recently been confirmed by a major survey, will know that saying that people are fit to work when they have that disease can be at least a very limited statement. They need a better test before anything else.
When talking with people about the work they can do, one needs very badly to listen to their judgment of what they can do. Only the person concerned can know how much pain is being felt; no one else possibly can. Unfortunately, there are no decibels in which pain can be measured. So telling people that it is something which they can afford to ignore is a statement which must always be made from ignorance. One has to work with the grain of what the person is fit to do. Even if they believe that they are unfit when in fact they can work—and this does happen—until they can be convinced, they can be taken to the water but they cannot be made to drink. One has to go with the grain.
Finally, we have here a revised version of the Chancellor of the Exchequer's press release. I heard what the noble Baroness, Lady Blatch, said earlier today about the delay between making statements to the press and making them to Parliament. In this case it is quite a substantial matter. It might have been saved for just a few days until the secret could be shared with this House. It would not have cost a great deal. What was in that press release, but which is not in the Statement, is a very big threat of coercion. The Chancellor of the Exchequer said that people must take the jobs which are offered. That is an attempt to judge people's medical condition for them and that cannot be done.
As a result of the absence of those words from the Statement, am I to take it that wisdom has struck the Chancellor of the Exchequer in his old age or is it just that the nasty bit is hidden under the carpet? It may be that the Minister can tell us which.
4.34 p.m.
Baroness Hollis of Heigham: My Lords, I am in a dilemma because I should not reply at all as 20 minutes has expired. I am not quite sure what I should do, whether I should simply sit down and write to the noble Lord, Lord Astor, and the noble Earl, Lord Russell. I believe that the understanding of the House is that the Opposition speeches and my reply take 20 minutes. I do not know what to do.
Noble Lords: Reply!
Baroness Hollis of Heigham: In that case, I am counting on the understanding and the tolerance of the House if I also transgress the conventions which we have so recently arrived at. I shall be as brief as I can.
The noble Lord, Lord Astor, spoke about welfare spending. He was running together benefits spending with the tax credits which support people who are in work. Primarily, as the noble Lord will know, wages do not reflect family need and therefore for many people with a large number of children in particular, they may be better off not being in work given the low level of income which many people experience. That is why I am delighted—and make no apologies
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whatever—for the work of the Chancellor of the Exchequer in targeting family poverty by supporting those in work whose wages are low and who as a result need increasing support. That is the place of tax credits and I am delighted that we are providing them.
I link to that the question asked by the noble Earl, Lord Russell, about which benefits are not subject to RPI. Most of them will be more generous than RPI, such as the retirement pension. The only provision I am aware of which has been frozen for several years is the lone parent additional premium.
The second issue raised was that of pension credit. The noble Lord, Lord Astor, pressed me about means testing. It is not means testing but targeted support. We are talking about a five-yearly assessment or very broad bands of income which will only need to be changed if there has been a life-changing event in a pensioner's family such as the loss of a spouse. The noble Lord asked me whether it was a reward for saving. Yes, it is. At the moment the primary beneficiaries of pension credit are older women. For example, the widow of a manual worker might be receiving a local authority pension of £100 a month. At the moment she sees not one penny of it because she is no better off than if she had a minimum income guarantee.
As a result of pension credit (which is almost like an ISA wraparound in some respects) that widow will receive £60 per month. For the first time the pension credit will ensure that those with modest savings, which in the past would not have floated them off the minimum income guarantee, will now enjoy the majority of those savings. I hope that, the whole House will welcome them.
I now turn to incapacity benefit. It is the case that 2.7 million people are on incapacity benefit. About 1 million people have told us that they want to work but they are not doing so. We cannot read across from the degree of disability to the degree of ability to work as those receiving the independent living fund support tell us. It is the case that when people first go onto incapacity benefit 90 per cent of them expect to work. Of that number 40 per cent are still receiving incapacity benefit a year later and of that percentage fewer than one in five go on to find work.
I know that with the noble Lord's expertise in the field of disability, he will want, with us, to make these proposals work. This may give reassurance to the noble Earl, Lord Russell. It is a consultation document which in due course will lead to six pilot schemes. 'They will be assessed. The schemes will run to April 2006. Only then will we decide whether it is the right way forward.
I emphasise that the thrust of these measures is t o try to keep people attached to the labour market. We know that someone on incapacity benefit who gets back to work within a year of receiving that benefit, will stay in work. If that is not so, as my statistics show, it is unlikely that that person will ever return to work. The point about the interviews is not to make the person return to work. As the noble Earl, Lord Russell, said, that is the person's choice. We want to

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keep the person attached to the labour market with information, rehabilitation and extra material which they may not know about. Above all, there is the return to work credit thus showing the financial advantages of returning to work.
I do not believe that we have an alternative but to seek to keep people attached to the labour market so that they can make informed choices when they are ready to return to work. Many of them wish to do that at the moment, but do not do so. We shall see whether the pilot schemes are the right way forward and we shall all share that knowledge.
Finally, the noble Lord, Lord Astor, asked me about universal banking. I can assure him that the Post Office tells us that everything is on track. We hope to set out more details of our implementation plans shortly. However, universal banking will help us to overcome financial exclusion; it will help us to offer greater flexibility to people as regards budgeting—they will be able to take out small parts of their benefit rather than the entire benefit; they will be able to go to any post office in the country; and they can be assured that, as a result of universal banking, there will be greater safeguards against fraud, theft and error than in the past. I hope that, as a result, we shall deliver a service which allows people both to claim and to take up the benefits to which they are entitled.
I have trespassed on the House for only six minutes. I apologise to both noble Lords if I have not answered all their questions. However, I shall write to them on any aspects that I have missed. I could have taken another 10 minutes but shall not do so.

Address in Reply to Her Majesty's Most Gracious Speech
4.40 p.m.
Debate resumed.
Baroness Massey of Darwen: My Lords, it is a pleasure to speak in this debate following the gracious Speech and the very stimulating introductory speeches during the first part of the debate. I shall focus on education and, within that, the importance of citizenship education and personal, social and health education. Those subjects used to be referred to as the "soft underbelly" of the curriculum. I shall argue that they are fundamental to the whole body of the curriculum, contributing to raising standards of academic achievement, social and moral responsibility and health and well-being, as well as reducing antisocial behaviour.
The main concern that I shall raise is the importance of putting children and young people at the heart of any government agenda and all Bills. I must apologise to the House for having to be absent for much of the afternoon. As co-chair of the All-Party Parliamentary Group for Children, I shall be involved in an event in
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Westminster bringing together 70 young people to meet Ministers and all-party politicians at the launch of our first annual report.
This has been a good Government for children—probably the best over the past 50 years. They have introduced many positive initiatives, such as investment in education, referred to by my noble friend Lady Ashton, tackling child poverty, neighbourhood renewal, Sure Start, strategy development by the Children and Young People's Unit, Quality Protects, the Children's Taskforce and the National Service Framework for Children. We must now ensure that those initiatives meet at a community level and interface with schools in delivering citizenship education and personal and social education. I know that Ministers are concerned about that, and my noble friend Lady Ashton has been instrumental in supporting schools to encourage social as well as academic development and achievement.
I shall first describe some issues for children which are still areas for attention before I go on to suggest that citizenship and personal social education can make a difference. A recent Save the Children report expresses concerns about the number of children who are still in poverty—about 4 million. The NSPCC is concerned about violence towards children, with one or two children dying every week at the hands of parents or carers.
Research suggests that, by the age of two, many indicators for social and academic achievement are set and that, by the age of three, behavioural indicators can detect the likelihood of committing offences and being convicted. The charity, Young Minds, has produced evidence that 20 per cent of children between the ages of five and 15 have a mental health problem. It insists that schools must promote mental health to reduce social exclusion.
Truancy is still a problem for schools. There is serious concern among experts about what has been described as an "epidemic" of child obesity, which is likely to lead to problems of diabetes and heart disease in later life. Schools may not he able to resolve all those issues but they can certainly contribute and, indeed, are contributing.
It is always interesting to hear what young people have to say about their own concerns. Recent messages from the consultation carried out by the Children and Young People's Unit to inform the UK strategy for children and young people showed that all children and young people surveyed were concerned about their health and fitness and about being safe. Those above the age of 12 felt that more emphasis should be given to the importance of families, happiness and love. Schools can help to address some of those concerns.
Citizenship education, which is statutory in secondary schools from this year and recommended in primary schools, is intended to develop the knowledge, skills and understanding required to play an effective role in society, to help young people to become informed, thoughtful and responsible citizens, aware of duties and rights as active citizens, and to develop

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values and skills to deal with difficult moral and social questions as they grow up. In a changing and often material world, such skills and values of citizenship surely need emphasis in families and in schools.
Surely there is also a need to include parenting education for both boys and girls before they leave school and become parents. Sure Start is helping with such skills. But Sure Start is not everywhere and is intended to help existing families. In my capacity as chair of the National Treatment Agency for substance misuse, I visit family rehabilitation centres and prisons where parenting skills are taught. Surely that is a little late. Being a good citizen must also involve being a good parent. It is not only a matter of being punitive and prosecutory. This may be an issue for a separate debate and further discussion.
I spoke earlier about consulting young people. That is surely an area that must be taken seriously in schools and other institutions. Much good work is being undertaken by, for example, the Gulbenkian Foundation and many children's charities. Consultation with young people is key if we are to improve services for them; we cannot extol democracy and involvement without engaging young people in it. This is not just a matter of trying to increase the numbers who vote in local and national elections, although that may be an important by-product; it is about respecting the views and concerns of others, and it should begin at an early age.
Perhaps there is a fear that young people will not be able to cope with responsibility. I cannot support that view. The school council in the primary school where I am a governor takes itself very seriously and has produced. among other things, guidelines for behaviour which pupils are expected to follow. It works. If we give young people responsibility, then of course we sometimes have to risk that they will disagree with us or not conform. That is an essential part of growing up and of democracy.
I was told a story the other day about a school council in a secondary school which took democracy very seriously. The head teacher was ill and he received a letter from the school council saying:
"Dear Sir, the School Council has voted to send you a get well card. The vote was in favour by seven to six, with five abstentions. This vote will, of course, need to be ratified by the plebiscite".
The point is that young people will, thank goodness, be unpredictable and that they need, with support, to try out and experience systems and relationships in order to develop their own values and ways of operating.
Personal social and health education also helps young people to do that. The framework for PSHE has been in place since 2000 for pupils aged five to 16. Through the four key stages there is a structured programme of learning through which pupils can develop the knowledge, skills and understanding to have self-respect and respect for others. White Papers on education and health have recognised the importance of education in promoting better health and emotional well-being for children.
The national healthy schools standard award for schools has been a phenomenal success in engaging teachers and communities in developing local
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programmes to improve health, school ethos and achievement for all and in reducing anti-social behaviour. The impact of the national healthy schools standard is now to be evaluated formally. That should be worth watching for evidence of how personal social and health education can influence teaching and learning and partnerships with parents, carers and local communities.
In summary, the Government deserve congratulations on their emphasis on trying to improve the health and well-being of children and young people. The All-Party Parliamentary Group for Children will be watching to see how collaboration between initiatives at a local level shows real benefits for children and how government. Bills impact on children and young people. My noble friend Lady Ashton is aware of those concerns.
My noble friend Lord Whitty has the mammoth task of trying to summarise this debate, so I do not ask for much response. I know that he, too, is concerned about children and young people. I know that all noble Lords on all Benches are prepared to work on improving the well-being of children and young people and on supporting families. No doubt we shall have many constructive debates in the future.
4.50 p.m.
Lord Waddington: My Lords, I want to talk about regional government which, we are told, Mr Prescott has been dreaming about for a long time. I am extremely suspicious of politicians who do not know the difference between a dream and a nightmare. The prospect of granting democratic legitimacy to wholly artificial entities drawn on the map by bureaucrats really is a nightmare.
We are not talking about regions such as those on the Continent that were units long before the nations of which they have become a part had been invented. We are talking of wholly artificial areas which, with the possible exception of the North East, reflect no natural regional loyalty or community of interest whatever. Does anyone but Mr Prescott seriously believe that good would come of Cornwall being governed from Bristol, or Cumbria from Manchester? Frankly, if anyone believes that, he has taken leave of his senses.
Before making this speech I promised myself that I would not utter the word "Europe", but I cannot resist mentioning that while our ancient counties that are rooted in our history, and to which people feel a loyalty, are under threat, a recent Brussels publication states that the South East, drawn on a map attached to the publication as stretching from Kent to Oxford, and down to the New Forest is—wait for it—
"a region of the European Union with Roman and Norman ties that stretch back into history".
Reading such utter balderdash, one does not know whether to laugh or cry.
Some say, "What's all the fuss about? Every region can choose whether to have an assembly or not". But what kind of a choice will it be? We already have the spectacle of bishops lending respectability to this

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grubby exercise by chairing constitutional conventions. It amazes me. If those bishops feel the need to fight disenchantment with politics among the young, why do they not direct their energies to teaching people the importance of our Parliament at Westminster? Indeed, why do they not urge Labour MPs to turn up there now and again to scrutinise the activities of the Government rather than working a two-day week. That would be an excellent exercise on which the bishops of this land should embark.
The Government say that there will be a free choice. Although the north west convention is housed in a dilapidated hut at the back of a pub, one can be certain that the convention's very existence, with a bishop at its head, will be taken as evidence of some popular support in the North West for an elected assembly. I fear that when there is a referendum in the North West, the unthinking will not ask why bigger and bigger regional bureaucracies have been created and powers transferred to those wholly artificial regions; they will say, "Now the regions have been given the powers, there had better be assemblies to control them". They will be encouraged to say so by Labour politicians salivating at the prospect of election to super councils where all will be paid generous salaries. And of course once one region has voted for an assembly, Mr Prescott will hint broadly that others would be foolish not to follow suit, because if they do not they will miss out on government largesse ear-marked only for those regions that have voted themselves a proper democratic structure. One can see it a mile away.
One thing is certain: regional government à la Prescott will not mean more power for local people; it will mean taking power away from them. It will not mean government closer to the people; in most of the country it will mean making it much more remote. We know all that from the Queen's Speech which tells us that county councils' powers over planning will be abolished and given to the regions. If that does not make government more remote I do not know what does.
In the North West, where the assembly will be completely dominated by representatives from Manchester and Merseyside, the voice of those living in the countryside and small towns will be drowned and the chances of our countryside disappearing under brick and concrete greatly increased. Meanwhile, as a result of the local government changes that we are told will accompany the arrival of such monstrosities, local authorities like my own Ribble Valley, will be destroyed and their powers given to more remote unitary authorities also dominated, in the case of my part of Lancashire, by urban interests. The whole thing is, quite frankly, horrific and will mean the end of any sensible and meaningful local government to which people can turn to have their concerns dealt with.
Already in the regions bureaucracies are burgeoning, often with a proliferation of pointless non-jobs. Every week the Guardian is full of advertisements not for teachers and nurses, but for consultation officers, outreach workers, ethnic minority project leaders, community development
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workers (Turkish speaking). Boris Johnson wrote recently about an advertisement for the post of director of infrastructure and community affairs in the Government Office of the East Midlands. The fatuous job description read:
"Responsibility for ensuring GOEM delivers the step-changes we are seeking in the implementation of joined-up policy throughout our own geographical structure".
Have noble Lords ever heard such absolute nonsense?
Already 40 people are employed in the GOEM— Government Office of the East Midlands—but I can assure noble Lords that that is only the beginning. Wait until people are recruited to service the elected assemblies and the fourth-rate party hacks elected to them. We do not have to speculate; we only have to look at Scotland. MSPs draw up to £48,000 per annum for a one-and-a-half day week; the First Minister in Scotland draws more than £100,000; 22 other Ministers—five were needed before devolution— receive more than £80,000.
Baroness Michie of Gallanach: My Lords—
Lord Waddington: My Lords, I am sorry, I do not have time. I am sure that it will soon become apparent to everyone that the Liberals apparently subscribe to this ridiculous exercise. I hope that they suffer the electoral consequences as a result. All of those 22 Ministers are served by an extra 1,000 civil servants.
I shall tell your Lordships what regional assemblies will mean: committees in each region willing and dining with other regions in the name of liaison; other committees visiting their regional offices in Brussels to see whether they can screw more out of the Commission than the region next door; and costly visits to the European Union Committee of the Regions and its many sub-committees. Does anyone seriously imagine that any of that will be good for amity or for national cohesion? Will any of it make for a happier country? If anyone believes that, he has taken leave of his senses.
Frankly, I am amazed at the sheer absurdity of most of the arguments put forward for regional government. Some speak as though it is the English answer to Scottish devolution, when we all know that there never has been the slightest chance of powers being devolved to the regions remotely like the powers devolved to Scotland. Some suggest that regional government is necessary to ensure that England receives as fair a share of public expenditure as Scotland, when all that is necessary to right that wrong is an adjustment in the Barnett formula.
Of course the north/south divide exists and there is reason to be worried about it. Of course I want to be sure that people in the north of the country are able to articulate clearly what they need and to get the resources that they deserve. But surely what the burghers of Bootle and Gateshead need is not new regional authorities, but more authority in the hands of the councils that already exist. What the citizens of Newcastle want is not more councillors but more investment.

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Not for the first time I quote the Prime Minister. Not so long ago, and before he found it necessary to give Mr Prescott something to do, he said:
"We need regional government like a hole in the head".
5 p.m
Earl Russell: My Lords. the noble Lord, Lord Waddington, reminds me vividly of a 17th century MP who once declared:
"The Britons are divided from the world".
The figures are quite interesting. The proportion of taxation and spending administered nationally in the UK is 78 per cent. The second highest proportion anywhere in the European Union is France at 44 per cent. Germany is at 29 per cent. I have not observed that either France or Germany is at the point of immediate collapse. So, what is proposed can be done in other places.
If the noble Lord, Lord Waddington, thinks that there is something absolutely peculiar about the British, which means that we cannot do what everyone else can, then I should be glad to know what it is. Furthermore, it has not only been done in other places, it has been done to a large degree within this country in towns.
In the 17th century the majority of government in this country was county government, which, in terms of the geography of that period and the difficulty of travel, was much the same degree of devolving that is now envisaged in regional government. It is only since 1988 that this totally centralised political universe that we now live in has been created. Although that may be a long time in politics, it is not time immemorial in history. So what we have done before we can do again.
The north and, for a brief period, the west of England had regional government. So we have done it before. I do not see why we cannot do it again. The noble Lord, Lord Waddington, observes that that is nonsense.
Lord Waddington: It is nonsense.
Earl Russell: My Lords, if the noble Lord would like to maintain that opinion, I will willingly give way to him. No? Very well, then.
What I wanted to talk about today was our plans for public services. We have just had a working group on that subject on which I happened to be one of the Back-Bench members. Since that concerns both regional government and education, I thought that this was perhaps the proper place in the debate to bring the matter up.
Both the private sector and the public sector are good, but they are good at different things. The private sector is normally better in the production of goods and services, where one needs innovation, change, a variety of experiments and risk and seeing which succeeds and which does not. But there are certain things at which the private sector is not good. It is not good at managing monopoly, because the basic discipline of the private sector is competition. Where
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that is missing the private sector is inappropriate. The private sector is not good at managing anything that cannot be left to go bankrupt because the other basic discipline of the private sector is the need to remain solvent. If that had been understood before the privatisation of NATS or the railways it would have saved us all a great deal of trouble.
The other thing that the private sector is not good at delivering—this is vital for the future of the public services—is universal access. It is not in the nature of a market to have no losers. So if one is trying to bring that about, one is asking a market not to be a market. That is an unfair request. One has only to look at the problem of the supply of school places in the London Borough of Bromley. One has only to look at the 40 million Americans with no health insurance, including, I believe, 64 per cent of American children. That is a frightening figure. So we think that where universal access is needed the public sector is also needed.
Private delivery of a public sector service on the other hand is a different matter. That is not necessarily wrong in principle, but it carries several difficulties. In particular, one must avoid conflicts of interest. Where that has been tried before—mainly in the reign of James I—it led to a conflict of interest almost every time. The nearer the service is to a monopoly the more likely is a conflict of interest, because one creates a situation where one gets a bigger profit by delivering a worse service. That is in my book a conflict of interest, which is to be avoided. The PFI, for example, needs to be far more transparent than it is at the moment before it is to be a really constructive vehicle for investment.
One needs also to look carefully at the public sector comparator, which we believe is fairly heavily biased in favour of the private sector. That needs investigating. We have two general lines of complaint about the public services. One is about funding and the other is about freedoms. The Government seem to think that there is nothing that is not their business.
Mrs Hodge, whom I know and like, spoke recently about government taking decisions about what should be the standard and content and classification of a degree. That is simply not the Government's business. I would no more trust Mrs Hodge to do that than I would trust her to conduct a tonsillectomy on ine. I daresay that she would do both with the best will in the world, but she simply does not have the qualifications or the knowledge. But if one gives people absolute power they are tempted to use it.
When people talk about a monopoly in the public service, they are looking in the wrong place. Any hospital competes against any other hospital. Any university competes against any other university. The monopoly is not in the provider, it is in the purchaser. The monopoly is the Treasury. That applies equally whether one's service is being purchased privately or publicly. With the new public sector contract, where one can regulate even the number of paperclips used by the organisations concerned, one perhaps has even tighter central control under privatisation than under public ownership. So, the only way to stop the

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situation where the monopolists can force costs down to below the economic costs so that an organisation cannot work, where the Treasury can meddle with everything that it cannot understand—the Aeroflot system of funding as I always used to describe it—is to break up its monopoly. That is why we want to regionalise the purchase of' our public services. We want a guaranteed level of central funding, minimum standards of provision to be worked out by negotiation between the Treasury, the regions and other interested parties and not just decided by the Treasury. We want regional government, with a power to raise local income tax, purchasing the services.
That will mean that standards of services will not be the same in one place as in another. That must be accepted. It is the way that competition works. It will lead to a competition to make services better, to counteract the competition the Treasury always builds up to make them cheaper. It will produce what I referred to as the "Cubie effect". The day after Cubie was published, one of my pupils came in through my door and said:
"Why can't we have this here?"
To which my answer was:
"Yes, if you are prepared to pay for it".
So voters will be able to choose whether they want to pay the extra money for better services. If they do not, they will have to do without them.
I hope that that will produce competition to improve services, instead of competition to continue to worsen them. As I remember once saying to the noble Baroness, Lady Blatch, when she was a Minister: efficiency is not efficient. We end up by reducing costs to the point at which nothing works. If we do not try something such as I described, soon we will not have any public services. This is urgent.
5.10 p.m.
Baroness Warwick of Undercliffe: My Lords, I shall speak on education—in particular, the future of higher education. I declare an interest as chief executive of Universities UK. Although there is to be no higher education Bill this Session, I welcomed Her Majesty's reference to the on-going review of higher education. Indeed, if a White Paper emerges after all, it may well lead to future legislation, so this is an ideal time to shape the results of the review.
I am quite clear what I want to see in the review and any future legislation. It is a vision that will safeguard our world-class university system, a system that has strength in diversity, delivers world-class teaching and research, and to which there are no financial barriers to participation for those from less well-off sections of society.
Your Lordships may rest assured that I do not in this short speech intend to deal with all the aspects of higher education policy that may be covered in the Government's review. I shall concentrate on one key issue: resources. There is little disagreement—this was said during Questions earlier today—that our universities have been seriously underfunded for more
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than 20 years. I am sure that all noble Lords agree about that. Indeed, in a paper published on the department's website only yesterday, the Secretary of State acknowledged the funding deficit. He stated:
"there is a funding gap which needs to be filled. I accept the case for filling it".
Evidence shows that the sector now faces a major investment backlog. The bill to clear that backlog is huge. If we are to meet government targets, the £10 billion identified must be found. However, I fear from ministerial statements that the bill cannot be fully met from public funds. Of course. it is for the Government to decide whether that is the case and whether part of the bill will be met from increased private contributions. But such increases in private contributions will not, on their own, meet the bill. Public funding must remain central to the delivery of excellence in higher education.
So what can we expect in the review? There has been much speculation about where the Government are heading and talk of so-called top-up fees, of a graduate tax, or even of a return to grants. We clearly need a full debate about what will strengthen our universities and what unforeseen dangers may lie ahead. I hope that my noble friend agrees that it is vital to consult widely and genuinely across the whole higher education sector about any proposed changes to how universities are funded. I hope that he further agrees that detailed modelling of any proposals is vital to insure against unintended consequences of any reform.
Whatever new system the review leads to should be based on a number of key principles, which have been enunciated by Universities UK speaking on behalf of all universities. They are essential to the successful implementation of any reforms.
First, any recommendations must generate sufficient additional funds so that the sector is placed on a sound financial footing. If the Government decide to increase private funding for universities, that must be truly additional, not offset by reductions in existing taxpayer support.
Secondly, any changes in the level of private contributions must be judged by their impact on the participation of students from lower socio-economic groups, so that universities' efforts to widen participation are not compromised.
Thirdly, if a more market-based fee system were to be introduced, as has been suggested by the media, a transparent national bursary scheme would be needed to meet the cost of fees for those who were not liable to pay them from their own resources. It certainly cannot be left to individual institutions to create their own schemes. That would be unaffordable for many universities and could create a confusing mess.
Fourthly, a new funding scheme for universities will need to be accompanied by revised arrangements for maintenance support for students based on the principles of clarity and consistency.
Fifthly, any funding solutions must address the financial problems of all universities, not just of some. It would be iniquitous to create what would in effect be a two-tier system. That would betray the promise that

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the Government want to make to talented but disadvantaged young people: that they will be guaranteed a first-class higher education that will open up great opportunities for their future; nor would it solve the financial problems of the sector, and it could seriously damage the reputation of British higher education at home and abroad.
Sixthly, we must ensure that standards are maintained as a result of the review, with universities maintaining their control over the award of degrees. That is vital to safeguard the attractiveness of UK higher education in the international market-place.
I realise that my noble friend will not at this stage be able to state which path for increased funding the Government may eventually choose. As I said, a White Paper is expected on that in January. So does my noble friend agree that, despite all the problems of past funding faced by universities—and acknowledged by the Secretary of State—universities across the board have maintained the world-class reputation of British higher education? Does he further agree that the maintenance of a wide range of institutions across the country—all different but all with their own strengths—is vital to achieve targets to widen participation and promote high quality research and involvement in local communities?
Finally, will my noble friend confirm that the Government are committed to maintaining high standards and quality across the higher education sector by providing new investment that benefits the sector as a whole and does not draw artificial boundaries between different institutions?
Perhaps I may ask for the indulgence of the House and take advantage of the wide-ranging nature of the debate to raise an entirely different issue that has been raised with me: the common agricultural policy. Commissioner Fischler has called for change to the common agricultural policy. Earlier this year, the Curry commission set out a clear way forward for farming and the food chain that involved farmers in fundamental change. Can my noble friend tell us how much progress will be achieved at UK and European level to achieve what the Secretary of State has referred to as a new settlement for agriculture, respecting the environment and, in particular, meeting consumers' needs?
5.18 p.m.
Lord Jenkin of Roding: My Lords, by its nature, this debate tends to range widely. I shall pursue the question of education and, although she is not in her place, follow up the point made about citizenship by the noble Baroness, Lady Massey. Those who have spoken about education have already cited a sentence from the Queen's Speech:
"Raising educational standards remains the Government's main priority for Britain's future prosperity".
There are two aspects to that. There is the question of educational standards and of its link—which I entirely accept— with our prosperity. In my few minutes, I shall draw attention to one important aspect of' that aspiration and connection: the serious situation affecting science education in our secondary schools.
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I declare an interest as this year's president of the Association for Science Education, although I hasten to add that what I shall say represents my view, not necessarily that of the ASE.
The House may remember that, two to three years ago, I chaired the Select Committee inquiry Science and Society. Our report, published in March 2000, drew attention to the need for science in schools to,
"adapt itself to a dual role: it must maintain its traditional and vital focus on preparing the most interested and talented pupils for science courses at university; at the same time, it must equip all—
we stressed "all"—
"students for what has been called 'scientific literacy' or 'science for citizenship"'.
Both aspects of that dual role are vital, and, three years on, I am depressed to realise just how far the country is from achieving those aims.
More recently, the Select Committee on Science and Technology in the other place held an inquiry, which reported in July this year. The report was called Science Education from 14 to 19, and that committee went into the subject in much greater detail than we had two years earlier. The Government's reply was published last month, and I must say to Ministers that it largely failed to reflect the dual aim that the Select Committees in both Houses had identified. I was not in the least surprised, therefore, to read in the short commentary that the Select Committee in the other place made that it found the Government's reply "unsatisfactory" and intends to ask the School Standards Minister to appear before it. That may, in fact, not be the noble Baroness, Lady Ashton of Upholland, so she may escape that; it will he one of her colleagues.
Our main complaint—certainly my main complaint—is about the curriculum and the examinations that are based on it. Science became a core subject of the national curriculum for all children aged 5 to 16 as long ago as 1989, but the syllabus has not changed fundamentally since the days when it was designed primarily for the 10 per cent of students going on to do science at A-level and at university, rather than the 90 per cent that had other ambitions. Some of the most compelling evidence that my committee received argued that that needed to change, if what is taught and learnt is to equip all students with scientific literacy.
Witnesses called for less emphasis on imparting facts and more on the nature and processes of science. People need to know more of the history of science, so that they can begin to understand that a scientific theory is valid only until it is displaced by later work leading to a new theory. One distinguished scientist told us that the present way of presenting science as facts,
"leaves people unprepared to encounter as adults the uncertainties of much current science".
Others blamed the emphasis on facts for,
"a profound misunderstanding of the whole scientific process amongst the general public".

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Three years later, the same points were made by the Select Committee in another place. It said:
"What is important is not that citizens should be able to remember and recall solely a large body of scientific facts, but that they should understand how science works and how it is based on the analysis and interpretation of evidence. Crucially, citizens should be able to use their understanding of science, so that science can help rather than scare them".
I mention, in passing, that one of our science centres advertises one of its exhibitions as "Science for the Terrified". We must recognise that that reaches out to part of our public.
There is no lack of advice to Ministers as to how the matter should be tackled. My Committee drew attention, three years ago, to the report Beyond 2000: Science Education for the Future by Professors Robin Millar and Jonathan Osborne. Since then, there has been a new, experimental AS syllabus, from the same stable, called "Science for Public Understanding". The SPU course aims to do just those things that we identified three years ago as likely to make science more enjoyable and more relevant to students' lives and help them to develop an understanding of scientific knowledge as the product of sustained work by scientists over time. There is much more, but time does not allow me to go into it.
Six hundred students sat the SPU examination in 2001 and 800 in 2002, and it is still in its early days. However, the course is not even mentioned in the Government's reply to the Select Committee in another place. It was not referred to in any way in Ministers' replies. Why is there no reference to that ground-breaking work? A few weeks ago, I attended a Nuffield seminar on a survey of the SPU syllabus. The survey was entitled Breaking the Mould?, and its main conclusion was as follows:
"this course does offer an educational experience about science that is significantly different from traditional science courses and is engaging and interesting for students. In that sense, this course has broken the mould and framework which has structured science education for the past 40 years and is to be welcomed".
Do the Government share that assessment? If not, why not? If they do, why do they not refer to it? Why do they not applaud it? Why do they not say that they want to see the course expanded? The importance of the SPU course is not so much at AS-level, although it is valuable at that level; it is in the influence that it will have on the development of GCSE syllabuses for the 14 to 16 age group, on which work is going on at York University.
I recently chaired a Foundation for Science and Technology seminar on the Sir Gareth Roberts report on the supply of scientists and engineers for the future. Towards the end of that evening, discussion focused entirely on the question of science in schools. One participant said:
"If students had not been persuaded from the age of 14 that science or engineering was a good choice, that science would give them a better chance than other subjects of getting to the university of their choice and be 'fun', the battle was lost".
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That is a sobering reflection, and it indicates the importance of the subject. We need to know whether Her Majesty's Government really understand and welcome the new work on the curriculum and will help it forward.
Like the noble Baroness, Lady Warwick of Undercliffe, I have a related question to ask. I hope that I will get an answer. It concerns the science centres and the contribution that they make to scientific citizenship. Last July, Mrs Estelle Morris received a delegation from the centres and invited them to explore with the DIES how they might move forward in harmony with the department's objectives. I hope that the noble Lord, Lord Whitty, will give me a clear assurance that there will be continuity in that consultation process under the new Secretary of State, Mr Charles Clarke.
There is a great deal of wisdom in the science and education communities. I hope that the gracious Speech means that Ministers will start to listen to their advice.
5.29 p.m.
Baroness Walmsley: My Lords, in my contribution, I shall talk about the link between the Government's stated intention to "promote opportunity and choice" in education and their other proposals in the gracious Speech about how to deal with truanting and antisocial behaviour. There is a strong link between those two things, but, sadly, the solutions to anti-social behaviour and truanting that are being proposed by the Government are nothing to do with education.
That is hard to understand from a government who purport to want to be tough on the causes of crime and to be enthusiasts for joined-up government. There is a whole raft of research showing that many of those who offend have been failed in one way or another by our education system, so why not start there? That is the cause of much of the crime on our streets, and it can certainly be the solution.
Most medical practitioners will tell you that prevention is far better than cure; most economists will tell you that it is cheaper; and most social scientists will tell you that it is much better for the fabric of society that we prevent the alienation and dysfunction that leads to offending behaviour than to have to deal with the damage to both offender and victim after it has happened.
It is therefore hard to understand the Government's emphasis on crackpot ideas such as on-the-spot fines for parents of truanting children when the same idea for yobs on the streets was laughed out of court. I should like to see effective measures to stop offending behaviour, but on-the-spot fines are not an effective solution.
Many young offenders are truants or have been excluded from school. Let us be clear about the damage that truanting and exclusion do and put the emphasis on preventing them rather than punishing the children or their parents. At a time when the Government are introducing citizenship into the curriculum—presumably in order to foster a sense of

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responsibility and inclusion among our young people —is it not ironic that the only substantial mention of young people in the gracious Speech was about punishing them when they reject what the state has to offer them? Real inclusion, like real drug rehabilitation, has to be voluntary. It cannot be imposed. Punishment of the parent will not lead to the inclusion of the child. Identification of the problems and putting resources into tackling them will.
One of the major causes of crime is exclusion from school, according to a Home Office report by Berridge, Brodie et al in 2001. Let us consider the extent of the problem. Every year 8,500 children are permanently excluded, with 12,000 out of school at any one time. There are also 65,000 fixed-term exclusions from school each year. Unless all of them are very rapidly found alternative provision, which they are not, that is an awful lot of children roaming around the streets getting into mischief.
Research shows that excluded children feel alienated because the criteria for exclusion are inconsistent and often perceived to be unfair. Their attitude to society is coloured by a sense of injustice, failure, and lack of belonging, and this affects their educational attainment and long-term employment prospects, and vastly increases the likelihood that they will get on to the wrong side of the law. Many of them have parents who cannot cope with them. Often they have a long history of truancy. Does it make sense to fine or imprison those parents for their inadequacy, or would it make more sense to support them and help them to cope?
Just because we are biologically capable of being parents does not mean that we all know how best to bring up children in the society of today, which is very different from the one in which we grew up. We all need help, but those parents facing multiple social problems are the ones needing most help. Social workers tell us that they can identify as much as 80 per cent of the future prison population before the children are 10 years-old. Why do we not heed these warnings and put resources into changing the factors which lead to such a situation?
There are many common denominators among children who truant and children who are subsequently excluded. Most children who are excluded from school come from backgrounds of extreme social and economic disadvantage. Children with special needs are six times more likely to be excluded; children in public care are 10 times more likely to be excluded; and 40 per cent of them come from single-parent families. There has been a 400 per cent increase in exclusions since 1998. Does this indicate that the Government are coping with the problem? I do not think so.
Does excluding the child solve the behaviour problems that arise in the classroom? I do not think that it does. It also leads to other agencies going into a crisis response when they could have been positively involved in preventive and restorative work instead. Would it not be better for teachers, parents, school managers, LEAs, social workers and specialist
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voluntary agencies such as INAURA to work together on a zero exclusions programme to prevent the situation reaching crisis point in the first place, but then, if it appears that remaining in the school is wrong for the child, to manage the transfer of the child to alternative provision that meets his or her needs?
My noble friend Lady Sharp of Guildford referred earlier to the NEET group of young over-16s—those that are neither in education and training nor in employment. These young people who have dropped out of the system are more likely to be the ones who have found the education offered to them to be so inappropriate to their needs that they either truanted or behaved so badly that they were excluded from school. The system has failed these young people. The horse has bolted and all the Government are now trying to do, with the proposals in the gracious Speech, is to close the stable door.
If asked what would be my solution to truanting and anti-social behaviour, I would give the Irish answer to the person asking directions, "I would not have started from here". But where should we have started? First of all, with high quality nursery education and care for the very youngest children. The Government must be given credit for the progress that they have made in this sector, but there is still a long way to go. Without more investment in early years, the changes to secondary education which the Minister announced earlier are just fire-fighting. The issue of the curriculum has already been covered by my noble friend Lady Sharp of Guildford and I shall not say any more about that.
There is a need to treat young people as individuals, to look at why they are rejecting school and to deal with their underlying problems. That way is better for the child, better for the other children in the school, better for the teachers, better for the parents and better for society. We in this country lock up more children than does anywhere else in Europe. That is more an indictment of our society than the fault of the children themselves. British children have as much innate ability and character as any in Europe. It is how we treat them that is different. It is time that we took a very critical root and branch look at that issue. Sadly, I regret that I did not find that in the Prime Minister's programme for government in the forthcoming Session.
5.37 p.m.
Lord Morgan: My Lords, this is a miscellaneous debate, which has certain advantages. It enables those of us engaged in regional policy to reflect on the great success of the Government's policy in regard to devolution. I am sorry that the noble Baroness, Lady Blatch, is not in her place. Her observations on the subject—the stern, unbending unionism which she expressed—might explain why the Conservative Party scored zero in Scotland and zero in Wales.
The noble Lord, Lord Waddington, threatened dire electoral consequences for the Liberal Democrats. Whether they would score less than nought I do not know, but it is a rather dire prospect. Devolution has been a great success, and I hope that it will be extended

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to regional government in England. Although I gather that the noble Lord is not in total agreement on that, he at least spared us the details of the Anglo Saxon Heptarchy which we heard about from another speaker on a previous occasion.
As for agriculture and rural affairs—and I live in the country—this debate gives the Government an opportunity to say something about DEFRA, and to explain how the department is ensuring that rural areas receive their share of prosperity and access to public services. Perhaps the Minister could tell us about the progress being made in relation to the excellent rural White Paper which was published two years ago.
I wish, however, to talk primarily about education—to which the Government have given priority, and in which, as the noble Baroness, Lady Sharp, said, the Government have scored considerable successes in literacy and numeracy. I almost feel that I should declare an interest as I was the moral tutor of the person who was mainly responsible for that strategy, Professor Barber. He was my pupil, as was one of his Downing Street colleagues. At one stage, I was also in charge of the supervising arrangements for Mr Adonis. I take some reflected pleasure from the achievements of these distinguished former pupils.
Higher education, however, has not been a success. It has been a sad story, from the failure fully to implement the Dearing report, to the failure as yet to announce higher education funding in the Comprehensive Spending Review. Too often, we have taken the approach—which I do not believe is part of the progressive or democratic socialist tradition in this country—of regarding university education as something for the middle class, something for an elite. That is not the tradition with which I grew up in Wales, where universities were thought of as people's universities.
There has not always been such sympathy, or even respect. The term "elitism" has been appallingly misused and misunderstood, and I hope that, now that Charles Clarke has exposed it, it will finally go into the dustbin of history. There have indeed been signs of a welcome departure so that, rather than use the abused term "elitism", we are talking about institutions of excellence and international quality. I hope that we will have no more talk of "elitism", no more cases such as that of Laura Spence, and no more insults to university institutions.
The Labour Party has a proud record in higher education. The much criticised Wilson and Callaghan governments of the 1960s and 1970s—and my noble friend Lord Jones was a member of one of those Governments—fulfilled the Robbins report and promoted higher education. In many ways, the years 1964–79 were a golden era for our universities. I am sorry that the noble Baroness, Lady Thatcher, is no longer in her place. She was Minister of Education in that period, and she saved the Open University. I do not know whether she would agree, but I regard that as one of the great achievements of her career. The Open
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University benefits our society enormously. That was perhaps the only period in which we took our education as seriously as other countries do.
As we have heard, there has been positive action from the Government, particularly in scientific funding. The Science Research Investment Fund, in 2000, was one important initiative. Nevertheless, there are some well-known problems—as we discussed not long ago in our debate on the encroachments on university autonomy and academic freedom. Free universities are everywhere in chains, albeit paper chains, because of excessive assessment and auditing. Now, however, those bureaucratic encroachments show welcome signs of diminishing.
It appears that the role of the Qualifications and Assessment Authority is to be scaled down in terms of both intensity and frequency. Moreover, the RAE—the research assessment exercise, which has done enormous damage to scholarly and intellectual life in this country—will also be conducted less frequently. It is welcome that Charles Clarke and the Prime Minister have made a priority of defending academic independence and saying that it should not be jeopardised.
My noble friend Lady Warwick clearly and admirably explained the funding situation; she did so much more expertly than I could. However, we know the problems. We know that many great universities are in debt but are without the power to raise additional finance. The problem is therefore getting worse, particularly for many universities which, socially, are doing a valuable job. Universities in the London area, for example, that cater for ethnic minorities and poorer people are in particularly dire straits. The problems that that causes for students, and particularly for mature students, are well known. I believe—speaking from memory—that mature students comprise approximately one fifth to one quarter of the student population at the University of Wales. Their percentage has not increased as it should, and that demonstrates a serious social weakness.
Speaking as a former member of the AUT—where my noble friend Lady Warwick was our admirable "shop steward"—I know that university staff are dreadfully underpaid. Since the 1980s—when I ceased to be a university teacher pay has increased by just 6 per cent, whereas pay for comparable professions has increased by 44 per cent. We are losing not only teachers, but, alarmingly, the graduate students who supply the teaching profession in many key areas such as modern languages.
The remedies will undoubtedly be unveiled in January, and not before time. Although we shall debate this topic next week, I should like to consider a few possibilities now. Top-up fees would be better than what we currently have, as they would allow some of the more prosperous universities to survive, but they are a poor option. Not only are top-up fees opposed by many vice chancellors, including, as I said, every vice chancellor in Scotland; they divide even the famous—or notorious—Russell group. They would be very harmful to some of our newer universities whose

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students simply could not begin to afford such fees. It is an illusion to imagine that they can be made up by bursaries. The figures simply do not add up.
I am still a teaching member at Oxford, and what has been done there is excellent. However, although some colleges there could add to the sum, they could not supply the necessary £4,000, £5,000, £6,000 or whatever is worked out. Such fees would lead to impoverishment and social exclusion, and they would also damage the sciences.
I prefer the graduate tax, which is based on fairness. However, more important than my own views is the fact that, today, Clare Short expressed support for it. I believe that Charles Clarke also supports it. Such a tax would be based on fair principles. Collection of the tax might initially be slow, but, as we know, Gordon Brown is very interested in university access. The amount of time which can elapse before the tax is collected will be an important test of the Treasury's resolve on higher education.
Scotland presents an excellent example—indeed, devolved Scotland seems to be a model community. One previous speaker was not too keen on Scotland, but I believe that there is a great deal to be said for it—particularly in respect of higher education, the absence of fees, and the way in which its graduate tax makes special provision for mature students, single parents and the disadvantaged.
I hope and believe that the advent of Charles Clarke will mean a new deal. Yesterday, in the Independent on Sunday, he wrote about protecting "and even celebrating" diversity. The present system talks about diversity, but it does not celebrate or help achieve diversity. The current funding system promotes uniformity in a way that damages the stronger universities without helping the weak ones. If Charles Clarke amended that system, he would amend 20 years of erroneous policy in university funding.
I hope, finally, that the Government will not make too much of a target of 50 per cent of pupils at university by 2010. Targets can, as we have seen on hospital waiting lists, lead to fudging. I believe that such a target would diminish quality, or, alternatively, lead to false accounting. I hope that the advent of Charles Clarke means not only a new departure, but that, for the first time, "education, education, education" includes higher education.
5.48 p.m.
Lord Pilkington of Oxenford: My Lords, I rise today to ask the Government if they will consider giving some attention to the problems that are facing our examination system, particularly the difficulties facing A-level. Please forgive me for reminding your Lordships of a little history—a little less distant than that mentioned by the noble Earl, Lord Russell, but a little history nonetheless.
A-level was designed 40 years ago to assess those who wanted to do demanding—and I emphasise demanding—academic courses at university. As such it worked well for about 30 years. It is true that only 10 to 20 per cent of the ability range took this
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examination. However, because it was such a defined group it meant that examining was much easier. The patterns of performance changed little from year to year when dealing with a group as narrow as 10 to 20 per cent of the ability range. Therefore, it was possible to use the method of assessment known in the trade as "norm referencing". That sounds more technical than it is. It simply meant that a certain percentage were awarded As, a certain percentage awarded Bs, and so forth. It continued in the same way from year to year.
I have never opposed the desire of this Government and previous governments to extend the number of those who go on to further education. I acknowledge that in a more technical and developing world it is valuable that more and more of our citizens go on to higher education. However, the point I am making today is that it is a mistake to use only A-level as a method of assessing a larger and more varied group. One is deciding whether students in such a group are accepted by, say, Imperial College for a demanding course in pure science or mathematics or are accepted by another and different kind of university for a vocational course.
Germany and France share the desire of this and previous governments to expand the number of citizens who participate in higher education. However, it is interesting that neither of them use one examination to assess who should go on to further education. For example, France has the academic baccalaureate which bears comparison with A-level. Germany has the Abitur which also bears comparison with A-level. However, each has evolved a separate, more vocationally based examination. France has the professional baccalaureate and Germany has a number of vocational examinations.
Our attempt to use A-level, which was designed for a particular academic group of the age range, as an assessment of the wider group led to the disasters of this year. As we all know, one examination group suddenly and in panic decided to use a crude method of norm referencing, like that of the past. And of course it was a total failure. I gather from the Observer. on Sunday that there is much more to be revealed. It was a problem which everyone in the trade could see coming.
Norm referencing cannot be used for such a varied group. What has been used is "criteria referencing" where examiners are told that each candidate must have certain points. They must tick that he or she has covered this, that and the other. It is a little like saying that 10 per cent of the apple is red and fruity, forgetting to say that a bit is discoloured at the bottom. Criteria referencing plus modules and course work, if not carefully controlled, can lead to grade inflation. Grade inflation, like monetary inflation, means that the examination loses its value.
Therefore, is the Minister in reply today prepared to give us a clue as to whether the Government are examining the problems in education and will he delight my heart by saying that he might even look at the French and German experience and not be dogmatic as regards the UK? But I urge him to beware

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of those siren voices which urge him to opt for the international baccalaureate. It has set subjects and it would suit the brilliant—I emphasise brilliant—all-rounder. However, for those who are dedicated scientists but not so good at modern languages, and for other dedicated specialists it could be a disaster. In many ways, the English pattern of specialisation has been more beneficial to such people.
One could of course turn to the French baccalaureate, which is very different. The French have a series of set menus, some with a science base, some with a humanities base, some with a classics base and so forth. It has much to recommend it; for instance, a wider range of subjects. But I think that Ministers' hearts will tremble when they realise that every baccalaureate on the Continent demands four-year university courses. I do not know whether they are prepared to consider that, but if so Mr Brown will have to open the Exchequer much more than he has hitherto.
My purpose today is to ask the Government to try to avoid dogma: let us not have the argument that there are two examinations, one of which is élitist and the other is not. I agree with the noble Lord, Lord Morgan, that the word " élitism" ought to be banned from public debate. It has caused more harm in English education than almost anything else. I hope that in reply the Minister will find time to give a little thought to the problems I have outlined.
5.54 p.m.
Lord Ezra: My Lords, I want to turn to environmental issues. The gracious Speech, in referring to the Johannesburg World Summit, states that the Government,
"will focus on tackling climate change and finding new ways to meet our energy needs".—[Official Report, 13/11/02; col. 4.]
I will concentrate my remarks on that, which is particularly appropriate in view of the forthcoming White Paper on energy policy.
There are two interlinked issues of energy policy. They are the need to reduce emissions and the need to provide energy security. The two are indissolublely linked. It would be unacceptable to deal with the emissions problem and risk security, just as it would he to deal with the security problem but not with emissions. The trouble is that if we go on as we are, we are unlikely to achieve either objective. Emissions are currently rising and are likely to rise more. Security is imperilled by the substantial prospective imports of gas which, far from the self-sufficiency we now have, could reach 90 per cent of our requirements by 2020. Therefore, the need for positive policies in the White Paper is urgent.
The electricity generating market is crucial in all this. The major emissions savings in the 1990s were achieved by the increased use of gas in power stations and the reduction in the number of coal-fired power stations which in fact produced greater savings than anywhere else in the economy. However, we are now going to face a reverse situation. With the progressive
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withdrawal of nuclear plant and the increased use of gas or other fossil fuels, we are likely to see an increase in emissions in the power sector and elsewhere too. The way in which electricity is to be generated in the future is therefore crucial to the whole debate.
The Government have put a major emphasis on renewables, with which most people would agree. In practice, that presently means wind power. But the Government's modest targets—a 5 per cent contribution to electricity generation by 2003 and one of 10 per cent by 2010—are most unlikely to be met, let alone fill the gap left by the nuclear withdrawal. In fact, the contribution of wind power to electricity generation in 2000 was less than 0.5 per cent. We all know the planning difficulties which stand in the way of the expansion of wind power.
Therefore, a more broadly based approach is required. This could be provided by promoting the production and use of clean energy of which renewables could form a part. There are other important contributors to clean energy; for example, combined heat and power. That is a way of producing electrical energy but making use of the waste heat by using smaller plant than the conventional stations. The Government fully support that concept, but unfortunately CHP is going through a bad time. Having increased by 800 megawatts of new capacity in 2000, it increased by only 38 megawatts last year and is now declining in its contribution. That is due partly to the fall in wholesale prices, to which I referred earlier in a Question, and to the way in which the balancing mechanism operates in NETA, the new electricity trading arrangement.
There is also micropower, which is a very small form of CHP—and in which I declare an interest. This is a technological breakthrough. These appliances, which would fit into domestic premises to produce heat and electricity, would provide a degree of security hitherto unknown. How many people in various parts of the country suffered as a result of the recent storms? If they had had a combined heat and power installation in their homes, they would have been quite secure.
There is clean coal technology, which has long been advocated by supporters of the coal industry. Now, apart from clean coal technology, if CO2 is extracted by known methods, in environmental terms coal could in the future compete with renewables.
There is methane from abandoned coal-mines—of which, unfortunately, there are now a large number. This too, if converted into electrical power, could reduce emissions substantially. If methane enters the atmosphere, it is very harmful.
All these aspects of clean energy should be treated on all fours with the way in which government are presently treating renewables. Unless some such major effort is made, it is difficult to see how present trends can be reversed.
There is the question of the future of nuclear power. But, as the PIU report indicated, this raises enormous financial, environmental and security problems. The

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Government are taking a first step to deal with these issues by means of the proposed legislation on the management of nuclear liabilities.
But all this will take time to sort out. Meanwhile, more immediate steps must be taken to widen the scope of the efforts to achieve reduced emissions as well as energy security. I have made certain suggestions to that end.
6.2 p.m.
Lord Sawyer: My Lords, decent affordable housing provided in sustainable communities for people on modest or low incomes is a particular concern of mine. I declare an interest as chairman of the Notting Hill Housing Trust.
Earlier this year, we heard from the Deputy Prime Minister in his July Statement that radical action is needed to reform the planning system. It was a good speech. It was an admission of failure by all governments, including his own. He talked about a step-change in attitudes.
This issue will require more than a step-change. It will require a wake-up call to all those involved in planning and housing: local government, the Civil Service. housing associations, developers and builders. Everyone involved will have to take one giant step, think differently, work in a new paradigm, if we are to make a difference to the housing problem in this country.
We are all acutely aware of the failures in housing provision. We see an increase in demand for housing, but we are building 150,000 fewer homes today than we were 30 years ago. That is not good enough. Regional planning guidance aimed for 23,000 new homes a year in London and 39,000 in the rest of the South East. These goals are clearly not being met. It is obvious that our regional planning policies have no teeth. Will the new planning legislation enable regional bodies and central government, if necessary, to take quick and effective action if local planning authorities do not deliver? That is a key point.
Housing is not just about legislation or numbers; it is most of all about communities. Good housing that is sustainable has the support of local communities. Too often, our planning process fails local communities and falls victim to loud and often powerful interests or pressure groups, with communities being sidelined or not being considered at all.
We need to speed up the planning process. I applaud the proposals to help with the training of staff in local planning authorities. However, we must look at the processes themselves, and particularly at the democratic element in the processes.
We have to ensure that everyone in the community has his or her view taken into account. We must listen not merely to our own peer group and to the movers and shakers in the industry, but to the next generation of young people who will have to be housed in villages and towns in the future. We must answer their question: where will the affordable housing be built to meet their needs? We must listen to local businesses.
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How can they attract the investment that will produce jobs and allow communities to grow and develop successfully?
Radical reform of the consultation process is needed to make it community driven in the widest sense. The narrow background of local development control is a dreadful waste of energy, and leads to fewer and fewer houses being built.
Where in the forthcoming legislation shall we see fundamental improvements providing facilities, resources and back-up for local communities that want to be involved in the process of local consultation—the processes and involvement that will lead to sustained development being welcomed and understood in communities, rather than being unwelcome and misunderstood, as it often is, through a lack of proper consultation, support and advice within those communities?
Good housing that is sustainable provides for a mix of incomes. I am afraid that even under this Government too much of our housing is segregated in terms of income groups, most of it going to the wealthy rather than to the poor. Yes, there are many more examples now of affordable housing being provided alongside higher cost homes that are for sale; but examples of affordable housing to meet the needs of the less well-off are still relatively few and far between.
The Notting Hill Housing Trust has been a pioneer of mixed tenure development and we are proud of the positive results. A recent survey indicated that 87 per cent of our customers were satisfied or very satisfied with their neighbourhood. However, in our experience, the majority of house-builders and developers want to segregate one housing type from another. Some go to great lengths to put the affordable housing on the other side of brick walls or even on separate sites. That does not provide for mixed, sustainable communities.
The lesson that we have learnt is that better results come from having control over the land. In this way, we can design better for sustainability; we can provide the amenities that the community has sought; and, most importantly, we can cross-subsidise from housing that is for sale to make affordable housing truly affordable for those on modest incomes.
I ask my noble friend what measures we shall see in the new legislation to make sure not only that affordable housing is built in mixed tenure communities, but that its availability reflects the gain in land values that is so often generated by the granting of consent to build. We must capture the land value gained for the benefit of the community, not merely for the developers and builders.
The surest way of doing that is to use compulsory purchase orders. Without these, we have to wait not only for the painfully slow planning process, but for house-builders to decide at what point to release part of their land bank. A wider use of compulsory purchase orders could help to ensure that the outcomes for our communities are those that they seek.

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In addressing the ills of our planning system we should re-examine the role of compulsory purchase orders: to assemble sites and bring forward housing supply; to ensure that the essential infrastructure is put in place; and to deliver the financial leverage that makes a sensible proportion of the new housing affordable housing. When will we see effective measures to make that happen? When will we see compulsory purchase orders used as a more effective tool in housing and planning policies? When will we see effective measures that lead to genuine community consultation supported and financed by government, and when will we see effective measures to ensure that regional planning targets for housing have really been achieved?
Finally, I see in the newspapers that the Deputy Prime Minister has taken issue with IKEA about the development of its superstores. I do not know the arguments on either side—the newspapers rarely provide such information—and I will be careful. Affordable furniture is as important as affordable housing, and no one does it better than IKEA. I have no interests in this regard. It combines high-quality design with fair prices. If as many people queued to get into the meetings of my party on a Sunday morning as queued to get into an IKEA superstore, we should have a flourishing democracy.
We want affordable furniture. IKEA is one of the companies that provides it successfully for those on low or modest incomes. Whatever happens, we must ensure that we do not obstruct its ability to deliver that. We should help it to serve the community in the same way as the Government should be so doing.
6.10 p.m.
Lord Prior: My Lords, I am tempted to speak on rural affairs but I had better leave that in the very capable hands of our Front Bench spokesman, who made an absolutely outstanding contribution in the previous Session, as in every Session, in relation to the horrendous problems that rural affairs and agriculture now face.
Instead, I shall say a few words on education, which is a subject on which I believe I have not spoken in either House for more than 40 years. I shall focus on one small but vital part of education; that is, the subject of learning to read.
About 18 years ago, a constituent got in touch with me to say that she was having considerable success at teaching phonics in a primary school in Lowestoft, which was in a rather depressed area, and the children would normally perhaps have been rather behind. I looked into the matter and found that she was having great success. As a result, I wrote to the local education authority and the then Secretary of State, my noble friend Lord Baker, asking them what they were doing about it and whether they had notification and experience of what my constituent was able to do. I had a very polite reply from the local education authority saying that it was aware of what was going on in that school and of its success but that phonics
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was only one of a number of ways of teaching to read and that this particular lady was obviously an extremely gifted teacher who was so good that she could probably teach her children to read by using any method. The reply from my noble friend was much along the same lines but perhaps even more anodyne.
I am afraid to say that I did nothing further but now, some 18 years later, I return to the attack. During. that time, various others have joined in the attack to try to get something done about phonics teaching. Some very intrepid teachers, who now form the Reading Reform Foundation, have managed, by sheer persistence, to persuade teachers in all parts of the United Kingdom to adopt what is now known as synthetic phonics. That is also being done in Canada, New Zealand, Australia and parts of the United States.
I turn to my first question for the Government Front Bench, although it is not for the Minister who is currently sitting there; I hope that the noble Baroness, Lady Ashton, will write to me. My question is: why does the DfES keep ignoring the available research on phonics? I refer to the Clackmannanshire research, the classroom findings of the exemplar synthetic phonics schools and the classroom findings of many schools that report a rise in standards since using phonics and other synthetic phonics programmes. Even Conor Ryan, who I gather is Mr Blunkett's former education adviser, is asking similar questions.
I apologise for giving a brief lesson on phonics. We all know that "C", "A", "T" spells "cat" and so on; basically, that is phonics. I suspect that it is the method on which most of us in this House were brought up when we were learning to read. Broadly, I advocate returning to that.
Where has it all gone wrong? Following the war, new ideas began to emerge, including that known as "look and say": whole words were shown on flash cards. Fifty per cent of children succeeded quickly, 30 per cent struggled and 20 per cent failed altogether. After that came the "real book" method. whereby teachers would read an exciting book to children, which would encourage them to pick up naturally how to read for themselves.
However, by the late 1980s concern was growing about poor standards of reading. Phonics was therefore put back in the curriculum but, unfortunately, "analytical" phonics was involved; it is based on the sight of a whole word rather than simply the sounds of an individual word. In essence, by putting back analytical phonics, those involved tried to please everyone by recommending a bit of everything without proper research. That is really the basis of the national literary strategy. I welcome the emphasis that has been placed on learning to read and the energy with which that has been done. It is having some beneficial results but they are nothing like as good as they could be, particularly for the bottom 20 per cent. For them, we now have early literacy support. That is not necessarily for the bottom 20 per cent who are the most stupid; it is for those who find particular difficulty in learning to read. That is very

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cumbersome in the classroom, because generally the class has to be split into a number of groups, which involves difficulties for the teacher and requires other people to take the groups, so it is expensive.
The whole scheme—the NLS and the ELS—was introduced without scientific testing and it was not tested or compared to other approaches. Why? What really worries me is that head teachers and others, including teacher training establishments, appear to accept the Government's programmes without question or investigation, even when alerted by the Reading Reform Foundation. What are LEAs and Ofsted" which has an advisory role, doing about that? Even more worrying, those who have questioned the NLS and its programmes have been made to feel professionally compromised. They are actively discouraged from teaching any programme that is not part or the NLS. That is very distressing for young teachers, who fear for their careers if they adopt synthetic phonics. Surely it is overdue that the DfES produced research statistics to support the NLS and which contrasted it with synthetic phonics.
I say in parenthesis that in trying to research my short speech I have been appalled to learn of the frustration caused to teachers by constant bureaucratic officialdom demanding tests, reports and so on: a veritable avalanche of electronic mail pouring forth from the DfES. That really does need to be looked at. Teaching children to read early and fluently is the most important contribution that education can make to the future success and well-being of our nation.
To coin a phrase, it is time to get back to basics. The Reading Reform Foundation must be listened to. It is made up of teachers at the coal-face of learning. That is a real challenge for the new Secretary of State. His constituency is only 20 miles from where my former constituent lives. I suggest that they get together for the benefit of the country.
Earl Peel: My Lords, in addressing countryside matters. I shall not cite all the ills embracing rural Britain today, for two good reasons: first, it would take too long; secondly, every noble Lord is well aware of the ills and how serious the situation is. I declare an interest as the owner of land in the north of England, all of which is subject to tenancies.
Not even the most short-sighted optimist could have doubted that change in farming was inevitable, even before BSE and foot and mouth disease ravaged the farming sector so tragically. But change is difficult to embrace. It needs to be supported by guidance and encouragement from above. Uncertainty, combined with a lack of confidence, is the real blight that needs to be addressed.
CAP reform remains a pivotal part of the future. Most people now acknowledge that the present agricultural support system, with all its baggage and distortions, must be phased out. Most in the rural sector appreciate that, if we are to earn public support, we must provide a wanted and respected service. Let us not forget that nearly £3 billion a year comes from the
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CAP into rural countryside in Great Britain. Support for well co-ordinated and well researched environmental schemes, along with support for new rural enterprises and new crops, is the way forward. I noted with great interest that Ben Gill, the president of the National Farmers Union, predicts that 12 million hectares of new crops could be planted by 2010, which would help to soak up harmful carbon dioxide emissions. I am certain that the noble Lord, Lord Palmer, would welcome that.
I welcome the mid-term review of the CAP announced recently by Herr Fischler, the Agriculture Commissioner. His recommendations for the decoupling of production support to paying farmers a flat rate in exchange for certain environmental and animal welfare standards seems a move in the right direction. I accept that the devil is in the detail and that the proposals must be realistic. But, in broad terms, I thought it was the sensible way forward. I also thought that it was generally accepted by most member states not simply as a means of providing the taxpayer with a more acceptable use of public funds but also of complying with our obligations under the various world trade organisations.
It seems that things are not quite as we assumed. Lo and behold, the old alliance of France and Germany at the European heads of state gathering re-emerged with their own cosy version of reform. I am hound to say that our Prime Minister appeared to be spectacularly sidelined in a manner that defies his claim of being at the centre of Europe. Will the Minister explain how two member states can claim to have introduced their own version of CAP reform, when such matters—I thought—were dealt with under qualified majority voting? Secondly, and just as baffling, how can two member states agree the financing of Europe's largest policy, the CAP, until the year 2013, when there has been no decision on the general level of financing of the EU after 2006. The real question is: does Herr Fischler's mid-term review remain a realistic proposal or simply one that Mr Chirac and Mr Schroder can scupper to meet their own narrow objectives? We need answers to those questions.
Returning to the more realistic world of domestic rural policy, I welcome the Government's decision to modulate 4.5 per cent of this country's shares of CAP by 2004; in other words, to put 4.5 per cent of the money that would have been distributed in agricultural production subsidies into agri-environment schemes and rural development. I also welcome the introduction of the broad and shallow environmental management scheme as suggested by Sir Don Curry in his very forward-thinking and comprehensive report. It is now called entry-level stewardship, as the original names are never retained. I also welcome the extra £500 million that the Government have committed to supporting such schemes over the next three years.
Farmers are the stewards of the countryside. There is no reason why, through proper support, the wellbeing of the countryside should not be put at the top of the rural agenda. But there remains one simple and overriding caveat, recognised and acknowledged by

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Sir Don Curry: farmers can survive only if they make a profit. It is essential that these environmental schemes, important though they are, give the farmer a proper return on his labour and capital, and that our farmers are not discriminated against by other EU states not engaging in modulated schemes. A payment based on profits forgone may be acceptable in the good times but it is simply unacceptable during the bad times.
I urge the Government to carefully monitor the success or otherwise of all such schemes. All too often in this country, environmental schemes are established, at considerable cost to the public, with the sole purpose of habitat restoration. When that is achieved, those responsible often sit back in the belief that the job is done. That is not enough. Only when the creatures associated with such habitats return can the scheme be deemed a success. Too often that does not happen. I compare this to the building of expensive houses that no-one lives in. It is essential to work closely with those who have to make such objectives operate, for it is often a worthless exercise, when those responsible for the financing and planning of such schemes fail to engage those with the practical skills and know-how, from the outset. It is not just about nature conservation or bio-diversity objectives. They do not just happen; it requires management and taking people with you.
Recently, in Johannesburg, Clare Short accused Greenpeace of being "eco-imperialists", pushing one agenda and ignoring the human dimension. I think she has a point. Important though the environmental initiatives are, and important though it is to secure public support for any subsidies that may flow from the public to the private sector, there remains one overriding essential that is dangerously overlooked at times. It is incumbent on every Minister, official, government agency, NGO, quango, tsar, retailer and consumer to do everything in its power to ensure that we have, once again, a healthy and profitable agricultural industry. I wish people would stop taking every opportunity to talk down what we produce in this country and that they would start looking at the good, which is there to be seen in abundance. Unless British farming is profitable, there may not be anyone left to look after the countryside, which we all wish to see well cared for.
To bring my concerns into context, a recent report by Deloitte and Touche claims that Britain's £65 billion food industry, which employs 500,000 people, is on the verge of collapse. The social fabric of the countryside, its infrastructure and management, are all at risk. So, too, is the tourism that flows from it. The lack of young people prepared to commit to farming is another barometer of concern. Farmers know they must change. But there are too many regulations, and those from Brussels are gold-plated on every occasion.
I am driven to ask the question: what has happened to the report of the noble Lord, Lord Haskins, entitled, Environmental Regulations and Farmers? How many of those recommendations have been implemented by the Government? To the best of my knowledge, the answer
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is none. We have imports coming into this country which are below the standards demanded of our own farmers and which undercut them. Our farmers are having to produce food of a very high standard, but at a very great cost to themselves. I know the answers to these problems are not easy, but solutions must be found. The Government must be seen to be leading from the front in putting farming back on its feet for all our sakes.
6.30 p.m.
Lord Beaumont of Whitley: My Lords, I regard it as a privilege to follow the speech of the noble Earl, almost all of which I agreed with; indeed, it was tremendously important. I calculate that this is the 26th debate on the Queen's Speech in which I have taken part, and for nearly the 26th time, I find myself concentrating more on what is not in it, but should be, than on what is.
My personal disappointment is that we had understood that the Government were contemplating the creation of an offence of corporate homicide. That is well overdue. I and my party, the Green Party, believe that as great a threat to both society and the citizen is posed by the power of transnational corporations (TNCs) as is posed by terrorist organisations. We may have been heard to say from time to time that TNCs metaphorically get away with murder. All too often, as we have seen in recent cases, they do so literally. This would have been an occasion to put an end to that state of affairs. I can only hope that the Home Office, the Lord Chancellor's Department, or whoever has such responsibility, has not abandoned the idea completely.
I should also like to comment that my party believes that a lot of the Home Office legislation, which looks, as usual, as if it wishes to impinge on the rights and liberties of the subject, would be better replaced by adequate finance for the present system of justice. But the main thrust of my party's domestic policy is concentrated on making the economic life in this country sustainable. As I hear from time to time the other parties represented in this Chamber paying lip service to the same principle, I live in hope that, sooner or later, something will be done about it. Indeed, I am sure that it will, although I fear that I shall not still be on the planet to benefit from it.
The principle of sustainability is that we should he able to pay a fair price for what we get in life. I shall no doubt be talking from time to time during the next year, as I have in past years, about our failure to pay for our food and our farming and rural community—a failure that is rapidly destroying the last two, as the noble Earl has just pointed out.
However, today I want to raise the subject of aviation. Of all the many ways in which we rob the planet when we travel by plane, the most obvious is our complete and utter failure to tax aviation fuel. This week sees the publication by the Green Party of a startling report by leading transport expert professor John Whitelegge, entitled Aviation's Economic Downside. Aviation is the most highly polluting

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transport mode in the world, and its pollution constitutes a major hidden cost to the economy. Professor Whitelegge's report calculates the health costs of air pollution by the UK aviation industry as more than £1.3 billion a year, the economic costs of aircraft noise at £3.3 million a year, and the costs of its contribution to climate change at £2 billion a year. None of this includes sums such as the £500 million of subsidy given to British Aerospace to help it to develop a new airbus.
Aviation is massively under-taxed compared to other sectors. Flight tickets, aircraft and aviation fuel are zero-rated for VAT. HM Treasury collects a billion pounds in air passenger duty per year, but forgoes £3 billion due to VAT zero-rating of aviation products and loss of excise revenue. Aviation fuel pays no tax at all.
I turn to the cost to the country of the massive size of airports, which we are constantly urged to expand. Many of your Lordships will have received an invitation to a celebration of the life and heritage of Five Parishes. This heritage, which has in the past nurtured such artists and creators as Shaw, Pissarro, Louis McNeice, Gustav Hoist and John Pudney is now threatened by the proposed Stansted airport expansion.
The inhabitants of these villages are to be congratulated on the campaign that they are mounting against this threat, and are not to be dismissed as selfish NIMBYs. They may be saying, "Not in my backyard", but I hope that they are also saying NIABY (not in anyone's backyard). Aviation should be paying the full cost of the damage that it does to the community. If paying the full cost means that many fewer people will be able to afford to fly than do at present, so much the better.
This is not conventional wisdom, but then Green Party policy is usually ahead of conventional wisdom. We were warning about climate change when it was dismissed as the idea of cranks; and we were opposing huge roads expansion programmes long before other political parties and 61 per cent of the population agreed with us.
Professor Whitelegge's report proposes a seven-point plan for making aviation sustainable. We can no longer play with the idea of expanding our airports. We can no longer allow aviation fuel to go untaxed. Air traffic congestion charges have been proposed by the Greens in the London Assembly. We must concentrate on supporting other means of transport. It is a national disgrace that we have trailed so far behind the French in the Eurostar project that we have to travel al half the speed in our trains that they do. An article in today's Financial Times suggests that there is a sizeable switch on the Continent from travelling by air to travelling by rail, wherever the trains are good and efficient.
If the Government were to embark on these actions they would be carrying on the good work of the NGOs, which have organised this as aviation awareness month—including, the Aviation Environment Federation, CPRE, FOE, Transport 2000, and the
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National Society for Clean Air—and to which the report by Professor Whitelegge for the Green Party has made a valuable contribution.
I do not expect the Minister to reply to these points today. The noble Lord has far too much ground to cover, without having also to take to the air. But I shall return to the fray. Your Lordships might like a later opportunity to debate the report Aviation's Economic Downside when we could persuade the Government to at least think about the economic cost of sustainability instead of merely using it as a parrot cry.
6.37 p.m.
Lord Kimball: My Lords, I cannot follow the noble Lord, Lord Beaumont, regarding what is not in the Queen's Speech, because, like many others, I am very much concerned about what is in it. I must begin by declaring an interest. I am deputy chairman of the Countryside Alliance, and chairman of the Cottesmore Hounds in Rutland.
I was once lucky enough to be chosen to move the Loyal Address in your Lordships' House in 1989. I can still remember the Prime Minister of the day saving, "Chief Whip, guard the door", in order to ensure that there would be no leaks of the Queen's Speech. The door was unguarded and wide open on this occasion, as my noble friend Lady Blatch has already mentioned. I hope that we can return to the established custom of not leaking the gracious Speech in advance.
I was among the 1 million feet walking through London on 22nd September in support of country sport. At that point, I was much encouraged by the Prime Minister's remark:
govern for the whole of the country, and will take note of opinions that are democratically expressed".
I realise the difficulties that the Government will face to gather sufficient support in both Houses of Parliament. But the Countryside Alliance will continue to approach the subject in a really constructive way.
The alliance feels that there is no evidence to justify a ban on any properly conducted hunting with hounds, especially in view of the evidence that emerged in the course of the consultation that took place in Portcullis House in September. There is, however, a need for a solution that would give public confidence as to the manner and circumstances in which hunting is conducted. We have never contested the relevance of utility and the need to avoid cruelty in the context of such a solution. We will maintain that stance.
Recent public opinion polls have confirmed a sharp and consistent swing away from a ban and in support of a regulatory system. which we support. If the Government were minded to regulate hunting with hounds by a fair licensing system, that would be supported by the hunting community and the broader rural community.
I would go so far as to say that if there were objections to the granting of licences, provided that the burden of proof lay with the objector, they would also be supported. If the Government declared that certain activities could not be licensed and were unlawful,

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there would be no objection provided that those forms of hunting with hounds were already outlawed by the hunting association and by the Independent Supervisory Authority for Hunting.
Any attempt to include properly conducted hunting with hounds would result in fierce resistance within the rural community, because no evidence has emerged to justify such a form of hunting being banned, either because of an inherent lack of utility or the infliction of unnecessary suffering.
6.41 p.m.
Lord Palmer: My Lords, it is once again an honour for me to be able to take part in the debate on the gracious Speech. For the past three years I have done so in the belief that as one of the 90 elected Peers it would possibly be my last contribution.
As usual, I was distressed that rural affairs have not featured, other than the vague reference to a Bill about hunting with dogs. Here I echo the comments of the noble Baroness, Lady Blatch. To my mind, even to consider the implementation of the Parliament Act on such a Bill is a parliamentary scandal. I think that political commentators will look back in 30 years' time in sheer and utter disbelief that Westminster, and indeed, the devolved fiasco in Edinburgh, have wasted so many hours in debating the welfare of the fox while crime is rampant, hospital waiting lists are at an all time high and, as we have heard this evening, Her Majesty's Government's education policy is in tatters.
I must declare an interest as someone who is struggling to farm, as a lover of the British countryside and as president of the British Association for Biofuels and Oils. Farmers, who are the custodians of our rural environment, as the noble Earl, Lord Peel, so eloquently said in his powerful contribution, have always faced a tough life. They are out in all weathers and they cannot farm from nine to five, whether they be arable, livestock or dairy farmers.
The right weather at the right time can be all important to yields and quality. For example, I have just finished sowing all my winter sown crops. During the past 15 days we have had half our annual rainfall. I have stopped preparing budgets as I have no idea what my winter sown crops will cost me to grow, to harvest, to dry and, more importantly, what they will be worth.
No other business has to operate under such conditions of uncertainty. There are far too many uncertainties which are beyond the control of farmers. This, of course, discourages investment, especially bearing in mind the long turn around period that shrouds the farming world. In layman's terms, to change or expand an agricultural enterprise takes very careful long-term planning. When I used to make biscuits, technically speaking we could produce a new product and market it within weeks, whereas in the farmers' case it takes years.
I wish for a moment to quote some statistics which I hope will emphasise the real and perilous plight of the farming community. I make no apology for quoting
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my own figures, but at least I can guarantee that they are accurate. In 1982 I received £114 per tonne for my wheat; this year, 20 years later, the gross figure I received was £62—a drop in actual terms of 52 per cent. The farm gate price of malting barley has dropped 38 per cent and yet the price of a nip—it is nice to see the noble Lord, Lord Mackie of Benshie, arriving at such an opportune moment—has increased by 116 per cent in the past 15 years. Wages in the agricultural sector have risen by 179 per cent while the basic hours worked have decreased by 3 per cent.
Of course, I am aware of the introduction of the IACS payments but in reality they fall very far short of giving farmers a decent return. Pre-IACS, my cereal income 20 years ago was £314,000 and this year my cereal income along with my IACS payment is £176,000, which in actual terms is a drop in income of £182 per acre. Milk is perhaps the only bright star on the horizon. The price paid to the producer has increased by 2.6 per cent over the past 20 years—2.6 per cent in 20 years. Yet most producers are losing 2p per litre on every tanker that leaves their farm. Fortunately I no longer produce milk, but my neighbours do and to think that bottled water is more expensive than milk is a classic example of the mess, muddle and confusion that we are in.
I turn to potatoes. The current producer's price of top quality white potatoes is £60 per tonne. That is £13 per tonne less than it was 20 years ago. How much does that tonne cost to produce today?—£73 per tonne. Yet those same potatoes are retailing at just under £1,000 per tonne. Farmers cannot and will not be allowed by the banks to struggle on in such a crazy financial climate.
I wish I had the answers to help the country out of this frightening situation—and I believe it is frightening. I have not, but for the twenty-first time on the Floor of your Lordships' House, I am going to beg, to beseech and to implore Her Majesty's Government to take on board the really positive role that biofuels could and will play in rural regeneration given a little help—and I emphasise the word "little"—from Her Majesty's Government.
Biofuels are a cost effective means to help the Government meet the terms of the Kyoto agreement and indeed their domestic energy targets. Biofuels reduce greenhouse gas emissions by as much as 50 per cent in comparison to fossil fuels. In the long term, biofuels will stimulate economic development in rural areas. Even a 5 per cent blend of the total fuel use would create a substantial number of jobs.
Biofuels increase national fuel security which, at this particular moment in time, I should have thought must be paramount. One must not forget that North Sea oil is not going to last for ever. A 30 pence per litre reduction in excise duty for a minimum of five years would be sufficient to start investments in the UK for both bio ethanol and biodiesel.
Everyone I meet from any walk of life who knows my interest in agriculture and, indeed, in biofuels asks the same question, why won't the Government listen? I simply do not understand the Government's

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reluctance to grasp this lifeline to help not only the rural economy but to meet their environmental obligations and for the sake of national security.
I should like to ask Her Majesty's Government how the £81 million of public money spent on biomass support for electricity generation and CHP has benefited the taxpayer, how many tonnes of carbon have been saved and at what cost per tonne? I should also like to ask Her Majesty's Government what amount of public money has been spent on support for liquid biofuels for road transport in the past five years?
It is worth reminding your Lordships of the report of the Commons Select Committee on Environment, Food and Rural Affairs published only last Thursday which states:
"The framework in which agriculture operates, which determines whether it is able to function profitably, is largely dependent on decisions taken by the Government and the European Union. Whether it likes it or not, DEFRA is more than just an interlocutor for agriculture and a wide range of other related industries; it is a funder, regulator, negotiator and mediator. It is important, therefore, that DEFRA makes clear the central role played by agriculture in delivering a host of its objectives and in particular those relating to rural communities, the countryside and sustainable development".
I believe most sincerely that the electorate will never forgive a government who put food and fuel supplies in jeopardy and I hope that Her Majesty's Government will act now and act before it is too late.
6.52 p.m.
Lord Livsey of Talgarth: My Lords, the noble Lord, Lord Palmer, graphically described the situation in farming at the present time. I make no apology whatsoever, therefore, in addressing the subject of agriculture as it has tended to be shaded out by the creation of DEFRA which has many functions other than purely agriculture.
Under the DEFRA mantle, water appears as an important topic in the gracious Speech. I believe that the hunting with dogs legislation is, frankly, an absorber of parliamentary time and a misconceived utiliser of Back-Bench energy. Therefore, I should like to speak about an alternative measure that we should adopt; namely, a new agriculture Bill and, indeed, Act. It seems extraordinary that the Labour Party that created the epoch making Agriculture Act of 1947 now seems unable to tackle the enormous crisis in farming, which is at its most serious since the 1930s. I believe that a new agriculture Bill is required due to the virtually terminal crisis afflicting UK farming. No one should underestimate the impact that the farming recession is having on the rural economy.
There is only one small glint on the horizon in the gracious Speech in the form of the possibility of entry into the European single currency after June next year. In the past 12 months, 15,000 people have left the land, 8,700 of them farmers. As a former Member for Wales, I am aware that if 15,000 people lost their jobs in a steelworks—as, indeed, they did in the early 1980s—that would be considered a major crisis. However, the situation in farming constitutes a drip, drip of erosion of the rural population from viable employment.
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The issue of abysmal farm incomes has been ignored. The most recent farm management survey results indicate for the year ending March 2001 that the average net income of all UK farms was £5,000—a figure substantially lower than the national minimum wage. In the same year hill farm incomes in Wales were as low as £2,000. Reports from the 2001–02 year show that many farms are making a loss. At this rate making a living from farming in the UK is now unsustainable. The very future of farming is at dire risk and many young people are leaving the land. Is that really what the Government want? I hope not.
The report by Sir Don Curry proposed a number of routes out of the crisis although I cannot agree with its comments on world prices because in my book there is no such thing. Nearly all food production in the western world is subsidised in one way or another. Making farming sustainable in terms of making a living as well as sustaining the environment must surely be the objective, but such is the level to which farm commodity prices have sunk in the UK that, as we have just heard, grain prices are at the level they were 25 years ago. Until very recently, lamb prices were at the level they were 20 years ago. However, I am happy to report that the situation is slightly better now. However, milk prices are lower than the cost of production.
Making rural areas sustainable is in large part linked to the fortunes of agriculture. Adding value to Gann and horticultural produce must surely create rural jobs and improve incomes for all rural communities. I refer to competition from food imports into the UK marketplace that are eased in at prices less than the cost of UK production. Added to that is an excessively strong pound and subsidised farming in many countries that contribute to the global market. UK farmers, with practically no marketing infrastructure, are being picked off by the big battalions in their own marketplace.
What is required now is the kind of vision that we saw in the early 1930s when UK farmers were in almost the same dire position. The riposte then from government was the creation of the marketing boards, not least the late lamented Milk Marketing Board. Cooperative power against the big battalions to which I have referred is absolutely essential if higher prices are to result. The answer must surely lie in new style cooperatives that should address milk, meat, grain, horticulture and biofuels, as have just been mentioned. Otherwise, we simply cannot compete in the marketplace. The alternative is that the rapacious big retailers offering ever lower prices will create a situation where farming is totally unsustainable. A new agricultural marketing Bill is also needed. That is an important point. Such a measure must come in a new guise that conforms with the rules of the European Union.
As has already been mentioned, UK farmers received £3 billion in support. I believe that supermarkets have siphoned off most of that money by exerting downward pressure on commodity prices; in fact, a 30 per cent decline. In other countries, for example, the United States, it is illegal for retailers to

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purchase farm produce at less than the cost of production. Eight years ago, UK farming had a £3 billion net profit. Today it is less than £1 billion. I believe that the supermarkets have pocketed a good deal of the deficit of £2 billion lost by UK farmers. In fact, the taxpayer has paid for this. Indeed, the Competition Commission carried out an investigation about two years ago. The supermarkets were supposed to be subjected to farmgate prices in the investigation. That was sidelined into whether consumers were getting a fair deal and the conclusion, of course, was that they were. The Welsh Select Committee in the other place, of which I was a member, called the four main supermarkets before it. They produced four different accounting methods to try to prove their case. The waters were muddied and indeed they all said that they were whiter than white. In fact, they had marked up by a factor of four many depressed produce prices. Now they are deconstructing organic prices, too, and organic farming in the process.
Supermarkets are a social phenomenon. They are convenient and lead food fashions. They even persuade the consumer to buy the produce they have, even when, possibly, six months earlier the consumer did not really want it. Their main preoccupation is the bottom line of their accounts and I believe that any other interpretation is very naïve indeed. We should compare the situation when the UK milk co-operative wanted 35 per cent of the market about three or four years ago, which was ruled out of order by one Stephen Byers of the DTI. This was at a time when the Dutch and Danish co-ops had 80 per cent of their market. It is a one-in-three hill climb for UK milk producers.
The Government want cheap food at the cost of family farms. That results in mammoth profits for the supermarkets. Indeed, some of the money is pocketed by two political parties. I believe that there are other big issues which cannot be ignored and in the next two minutes I shall try to mention them. We support CAP reform and the mid-term review and the decoupling of support from commodity prices. I am glad that the Government do as well.
Modulation is a very important matter and the capping of modulation will assist family farms. The Chirac-Schroder deal was devious and pre-emptive, but by capping the budget to 2006 and then to 2013 means that transition is going to be less painful for UK producers. It takes a long time to turn around natural systems of production.
The 10 new accession countries will be a huge problem, but gradual transition arrangements should take care of that. I was going to go into the problems of DEFRA, but the noble Lord, Lord Haskins, is looking into it. I shall be most interested to learn of his results.
As regards the rural economy, the regional development authorities in England have made a good start. Devolution in Wales and Scotland has proved very successful indeed and I congratulate the Government on the creation of these bodies. The countryside is the jewel in our crown. I believe that tourism has enormous potential.
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Finally, I make no apology for saying that we need a new agriculture Bill and a new marketing Act. We want a sustainable rural community with proper rewards for sustaining the environment and the countryside. We want an income on which people who live and work in the countryside, and family farms in particular, can live because they are not going to be there much longer at the present rate.
7.4 p.m.
The Lord Bishop of Hereford: My Lords, it is a privilege to take part in this debate and bewildering to know on what subject to speak given the very wide variety of topics we are talking about today. The right reverend Prelate the Bishop of Truro had been hoping to make his maiden speech on this debate on agricultural and rural affairs on which he is a considerable expert but, sadly, he is not able to be here today. So I should like to divide my brief time between that subject and another arguably even more important one, the environment.
I am tempted to start with three cheers, or at least with two cheers, because I believe that this is the very first time that the gracious Speech has included two references to environmental matters to,
"measures to protect our environment, including legislation on the conservation and proper management of water",
to which the noble Baroness referred in her opening speech, and to the,
"implementation of agreements reached at the World Summit for Sustainable Development in Johannesburg, tackling climate change and finding new ways to meet our energy needs".
That is indeed very welcome, especially the emphasis on water conservation.
But I fear that the government proposals lack a sense of urgency and fail to make any adequate provision to deal with the most pressing of all the problems that confront the human race. Climate change is having a much more serious impact and much more quickly than even the most expert people believed to be the case. Drought in southern Africa, drought in the Horn of Africa, drought in Australia, catastrophic flooding in many parts of the world and rising sea levels are already having a devastating impact on people and often on the poorest and most vulnerable, those least able to cope or to take countermeasures, those without any resources of food or water to sustain them over a period of crisis.
The Government's own document about the Johannesburg conference, Reaching the Summit which, incredibly, failed to mention the Kyoto Protocol—although it was doing its best to find some good news stories—emphasised that,
"environmental problems affect us all. but they affect the poor most … The poor live in the most marginal areas: they are the most vulnerable to natural disasters and they often depend directly on natural resources for their livelihoods".
So for their sake, if not for our own, we must give a higher priority to tackling climate change. Although Kyoto was most welcome as a beginning and the Government's proposed emissions trading Bill is a step in the right direction, all this is totally inadequate to

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deal with the colossal scale of the problem. I have been involved in correspondence with the noble Lord, Lord Sainsbury of Turville, about this without receiving a lot of satisfaction. I would urge the Government to look again, with much greater enthusiasm and commitment, at the project called Contraction and Convergence developed by the Global Commons Institute and now vigorously championed by the Institute for Public Policy Research, and specifically affirmed by the Anglican Congress on the Environment, which brought together representatives of the 70 million members of the Anglican communion around the world and which met in South Africa in the week before the Johannesburg summit.
In the barest outline, Contraction and Convergence involves calculating the maximum tolerable level of greenhouse gases in the atmosphere—450 parts per million volume. That is a considerable increase on present levels and reflects on what present levels are already doing to the climate. Then one has to calculate the reduction in emissions which would enable us to stabilise that degree of atmospheric pollution by the end of this century. Then one has to allocate to every member of the human race an identical target for per capita emissions —the principle of equity—then place a financial value on that target figure, the "permission to pollute"; and then introduce a system of emissions trading by which the developed countries, which are already grossly exceeding the per capita target which we would have to aim at, would be able to buy from developing countries during the period of convergence the right to continue excessive pollution while they took vigorous measures to bring their own emissions down to the permitted per capita level. That would involve all those wise things which the noble Lord, Lord Ezra, was speaking about, and many others besides, in terms of biofuels, energy conservation and so on. There would he a dramatic change in our lifestyles and transport systems. It would require an enormous effort.
Contraction and Convergence is scientifically based, as Kyoto was not. It is equitable, as Kyoto is not. It would help developing countries by giving them the means to invest directly in clean energy technology which we in the developed world could provide for them. The most extraordinary thing is that it would overcome every single objection raised by the United States Government to the Kyoto Protocol. It sounds too good to be true, but it is possible.
Let the United Kingdom Government take a vigorous lead in propounding this scheme. There is not much time. Alas, I have not time to quote to your Lordships from an article underlining the desperate urgency of this matter. But let not the Government of this country simply express vague and polite interest in Contraction and Convergence; let them make every possible effort to bring it about for the salvation of the planet.
I turn to rural affairs and, in particular, to matters which have already been mentioned by many noble Lords—that is, the deepening crisis faced by the farming community and especially by small and medium-sized farms. Is there any good news? I believe
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that there is some. But, in trying to draw up a balance sheet to weigh the encouraging factors against the problems, I fear that the outcome looks very gloomy with the difficulties far outweighing the actual or even potential signs of hope.
What are those signs of hope? From what some noble Lords have said, one might imagine that there are none at all. I believe that there are a few, and the fact that the Curry report is being implemented is a matter of congratulation for the Government and a matter for some rejoicing. Entry-level stewardship and some degree of modulation are good news. But there are pressing questions as to how quickly any of those benefits can, in practice, feed through to farmers and whether they are economically sustainable, even if they are environmentally sustainable.
Secondly, land prices remain remarkably stable, which is good news for those who own their own land. Thirdly, the rural White Paper of two years ago, with its emphasis on vital villages, market towns, rural housing and transport and planning issues, gave some grounds for hope. Fourthly, the food chain initiative is very welcome as an attempt to enable farmers to retain a higher proportion of the value of what they produce. Fifthly, farmers' markets are excellent and very encouraging so far as they go; but of course they can help only a limited number of farmers and are patronised by a very small percentage of the shopping population.
That seems to be the sum total of the good news that I can think of. I shall now embark on the task which the noble Earl, Lord Peel, perhaps rather prudently avoided—that is, to catalogue the downside. Briefly, it includes: desperately and impossibly unsustainable low prices; the fall-out from foot and mouth disease; globalisation; ridiculously cheap imported food produced in often highly dubious conditions; the power of the supermarkets; the ruthless demands and often cynical manipulation of contracts; and red tape and gold-plating—again, again and again.
There is a new threat—this time from the European Union—to small abattoirs from EU documents 1420 and 1774. To its credit, DEFRA is vigorously opposing them, but they are seriously bad news. Inadequate import controls are still a hitter cause of complaint. I believe that there are still only two dogs, unless the noble Lord, Lord Whitty, has been able to find some more since he spoke about this a week or so ago. There are new threats of animal disease, such as blue tongue. Shall we foresee animal disease this lime, as we did not in the case of foot and mouth? Bovine TB is a desperate problem, and there is still no proper solution. The 20-day rule is inflexibly and damagingly insisted on, despite the very different judgment made in Scotland on the same scientific evidence.
There is still no retirement scheme for farmers, especially tenant farmers, and still no help for young enthusiastic entrants to the industry. There are delayed payments to farmers—whether arable area payments or foot and mouth clean-up payments. There are organophosphate health problems and a reluctance to acknowledge them. There is the unwelcome and

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unrealistic demand that producers pay a levy to share the cost of future outbreaks of animal disease. From what income, I ask, can it possibly be done?
There are at least 15 reasons to be deeply, deeply concerned and there is, once again, no mention in the gracious Speech of the need to support farming. No food and farming Bill has been promised. We face a meltdown of farming. The Deloitte & Touche report, to which the noble Earl, Lord Peel, referred, is only one of many showing just how desperate the situation is. By the time that some of these hopeful or beneficial measures begin to take effect—if they do—very few farmers may be left to enjoy them. Like other Members of your Lordships' House, I beg the Government to take the extreme seriousness of the farming crisis to heart and to take some vigorous action on it.
7.14 p.m.
Lord Smith of Leigh: My Lords, in this wide-ranging debate, I want to beg your Lordships' indulgence and bring the discussion back towards the matters of local and regional government with which we started. In doing so, I need to declare my interest as the leader of Wigan Council, as the former chair of the North West Regional Assembly and the English Regions Network and, in view of something else that I want to say, vice-chair of the Special Interest Group on Municipal Authorities. Perhaps, although he is not in his seat, in the view of the noble Lord, Lord Waddington, I am therefore a fourth-rate political hack.
I turn, first, to the proposed local government Bill, which I welcome very much. I believe that it will give legislative backing to the Government's promise to give greater freedoms and flexibilities to local authorities, while still exposing them to the rigours of delivering successful local services. I believe that they will find a positive way of rewarding performance and a far better way of maintaining a proper partnership with local authorities than the more negative methods used by previous governments and by this Government. Therefore, I welcome the Bill.
As is often the case with the Office of the Deputy Prime Minister and its various predecessor organisations, it does not always march to the same beat of the drum. We shall find that some parts of the department are not consistent with that message. To raise a point which is particularly personal to me, the allocations for housing capital, housing renewal, disability grants and so on will go down for my own authority by approximately £0.5 million this year. Why? Because we are a good performer; we are rated as three-star and likely to improve. We have beacon council status in this area but, because the performance measure is being taken down by the regional office, we shall begin to lose money. Therefore, it is more difficult to sustain such a policy.
I turn to a matter which has already been referred to by noble Lords—that is, the proposed changes to the council tax. I certainly welcome the idea of increasing the number of bands, but I hope that the Minister will
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remember that they have to work at the lower as well as at the higher level. In my own authority, only 48 houses out of 130,000 are in the current high band of H. Therefore, we need to see more distinction at the lower level to ensure that people can afford to pay what is necessary.
However, I am more interested in the proposed revision to council tax values, which the Government are proposing to carry out over a 10-year timescale. I am very disappointed to see that timescale. We should recall that, when Mrs Thatcher introduced the council tax in order to get rid of the embarrassment of the poll tax, it was not done in a scientific way. The then Secretary of State employed a few estate agents to drive round areas and guess what the council tax banding might be for particular housing. On the whole, it stuck. It seemed a sensible and reasonable compromise. But the fact that we are still working on the valuations of the early 1990s and that one has to ask what a new house built in 2002 would have been worth more than 10 years ago is something of a nonsense.
All building societies and many government agencies keep on record the rate of house price inflation. I believe that the measures of council tax bands could be updated on a regional basis so that it did not come as a big shock to people to find that, because such an exercise had not been carried out for a very long time, their properties suddenly came under a different valuation. If the job could be carried out more slowly, that would help to make the tax a little more buoyant to local authorities. I hope that my noble friend will regard that as being a bolder approach because I understand that someone said that we are at our best when we are bold.
In view of the comments made earlier by the noble Baroness, Lady Blatch, I want to comment also on the review of local government finance that she mentioned. I believe that we need to remind ourselves that the Government are proposing a reform of a system that, again, was introduced in 1990 by the then Conservative government. What happened then was the exact reverse of what the noble Baroness implied would happen now; in other words, funding was moved away from the North and into the South and London. If the Government do what they say they will do, they will only be getting the playing field back to the same level that it was at previously.
However, this time the Government are proposing to include in any changes floors and ceilings which balance out any large shifts that might occur in the system. In 1990, as we found to our cost, the government simply offered us crude capping. That was not the way forward. The council tax levels in the North tend to be much higher for the same band of property than in the South and in London. That is reflective of the funding gap. Those authorities have benefited for 12 years or more from generous funding. I hope that the noble Baroness is right and that my noble friend will assure me that the Government will put money into northern authorities like mine.

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I turn to the regional assemblies. I am sorry that the noble Lord, Lord Waddington, is not in his seat. I speak as one from the North West, as he claims to, but I speak for the 72 per cent of those in the North West who, in a recent opinion poll, said that they would welcome the introduction of regional assemblies. The party opposite is quite used to being in a minority. That is why it is in its present state. As was said earlier, it opposed devolution to Scotland and to Wales. It was wrong then and it is wrong on this issue now.
When the Conservatives were last in government they recognised that there was a regional dimension to what happens in Britain; that there is not just national and local government, but that there is a regional tier of government. Their solution was two-fold: first, to appoint a load of unaccountable quangos to run big public services in the regions; and, secondly, they came up with a wonderful idea of regional offices with regional directors. From my perspective that was the last vestige of empire. Whitehall civil servants were appointed to go into the far reaches of the empire—now much reduced—to the North East, the North West and Yorkshire, and administer to the natives to ensure that they do not become too uppity but understand what is taking place.
Local people have no influence over all the key decisions taken in relation to them. In the North West the quangos and the government offices are responsible for £7 billion worth of public expenditure over which the people in the region have no real control. I believe that we should have more elected, democratic, regional government to fill that deficit.
However, that is not the only reason. As there is now devolution in Scotland and in Wales, English regions are at a disadvantage because no one is able to voice a coherent view and develop coherent government in the areas. In the North West we have contact with Scotland and Wales and we see the way in which those locally devolved bodies are much more dynamic in dealing with issues. They may make mistakes, and may do things that I would not want them to do, but they are accountable to local people, and if they do not conduct matters correctly the local people will treat them in the way that they should all politicians who do such things and kick them out.
Eighteen months ago I heard a Cumbria farmer on the radio comment on the foot and mouth disease and on the different way in which he was treated in Cumbria as opposed to a farmer across the Border in Dumfries, which was more responsive to farmers and was much more successful in controlling the disease. That is a reason to have regional governance.
Economic performance is another point and the key to the matter. It is not surprising—I believe the noble Lord, Lord Waddington, admitted this—that those regions in the North that lag behind are those that are most supportive of regional self-governance. The GDP of the North West is over £3,600 less than in the South East. The neglect by previous Conservative governments helped to reinforce the view that the people will get nothing from London and that they will have to do more for themselves.
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Unfortunately, at the moment the gap is not narrowing. That is not just bad for those in the North West, but it is also bad for the country as a whole. We are failing to maximise our production potential, but there is also the danger of over-heating in parts of the country where all the development takes place. In my area we do not have the wonderful increase in house prices that appears to be causing problems in the South. We need to understand that parts of the country are behaving differently economically from other parts. When the regional assemblies are in place it is important that we apply that test.
One thing that made up my mind in regard to regional government was what happened to a major scientific investment in Daresbury. Welcome decided to move it to Oxford, of all places, because it did not believe that the North West was suitable. No one could voice the opposition that a regional government could supply so I support it.
7.25 p.m.
Lord Elliott of Morpeth: My Lords, like the previous speaker, I want to refer to the proposal in the gracious Speech that legislation will be introduced to provide for the holding of referendums on the issue of regional governance.
In another place I represented a constituency in the North East for a considerable period. In the 1950s of the last century the region knew considerable social problems consequent to the rapid contraction of the then principal industries: shipbuilding, steel and coal. In my early days in another place the major concern of those of us who carried responsibility for the social wellbeing of so many people was unemployment. Redundancy became a dreaded term. I have many memories of interviewing decent people who were facing redundancy at such times as Christmas and knowing falling incomes and a bleak future.
However, things are different now in the North East. Today the position is that much old industry has been replaced by new industry: the pits have gone altogether and the steel mills have disappeared. They and other redundant industries have been replaced by long-term, good, new industries, employing a remarkable number of people. Unlike the North West, the improvement has been rapid indeed. Regional unemployment in the North East stands at 6.2 per cent; the national average is of course lower than that, at 5.3 per cent. I well remember, over a long period, the gap between those two percentages being much wider than it is now.
Government aid in the dreadful days of the 1950s and 1960s during the time when both major parties were in government was considerable but local effort—it is important to emphasise that as we look to the future—has also been considerable. I remember Consett in County Durham having its main source of employment, the steel works, closed in September 1980. Immediately an enormous number of people were made redundant and to add to the difficulty at that time, two adjacent collieries were closed. In the other place I used to be asked whether in the North

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East one could see unemployment and I used to say, "No, the centre of Newcastle looks very prosperous", but in the Christmas Recess following the closure of the Consett ironworks one could see the effects of unemployment. However, because of the efforts of the Derwent Development Agency—an excellent body—which at that time had full local government support and co-operation, Consett now has a remarkable trading estate filled with new, shiny factories, employing ex-steel workers and their descendants and ex-miners and their descendants. Now Consett is a remarkably prosperous town.
I suggest that that well-known phrase "the north/ south divide", which has already been referred to in our debate today, no longer applies. The North is always described as the deprived area, but in some respects that situation has been reversed.
A recent survey was conducted nationwide in England. It should be noted that the best place to live, according to that survey, in England was not in the South or the South East but in Northumberland. The town that won the highest marks for being the most desirable town was Alnwick, which is right in the middle of Northumberland. Just 20 miles south of Alnwick is the town of Morpeth where I was born.
Morpeth has always been referred to as "the ancient borough". It is an ancient borough. The historian Gibbon once wrote:
"Morpeth was a borough before Newcastle was there at all".
He added:
"'Tis a fairer town than Alnwick".
Alnwick and Morpeth, both of which I know well, are typical today in the prosperity of the comparative well being of the North.
Therefore, my suggestion is—in the short time that I have available—that the North East has recovered enormously from being a deprived area to being a quite prosperous and, in industrial terms, an advancing area. So do we need a regional council? I do not believe that we do.
We have had agencies in the North East which have done very well. There have been three in past years. I was a member of each. It is quite right that such agencies have representatives from members of another place. Whenever they were set up the agency had a wide choice of Labour Members from Newcastle, Tyneside and Wearside. There was just me on the Conservative side. So I was on every body. I used to call it a temporary embarrassment. Unfortunately, it is still an embarrassment.
Those agencies did well. The present agency, One North East, an RDC, is doing a very good job in the North East of England. All the good work done by the agencies and by local effort has been in co-operation with democratically responsible local government. When we hear talk of regional government, there is always the great fear that this will be the end of county councils. I think that that would be disastrous. County Councils are good bodies. They have representatives from each area of each county. The representatives on
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the council know their people, their region and their areas. I should be very sad indeed if such bodies were abolished in favour of regional government.
Long-established bodies such as Northumberland County Council or Newcastle City Council should remain in being to ensure the continuing progressive well being of the North East of England.
7.33 p.m.
Lord Mackie of Benshie: My Lords, I have listened to the agricultural part of this debate so far with great approval. I think that the criticisms made are right and proper. It is quite extraordinary the lengths that the Department for Environment, Food and Rural Affairs went to in order to avoid the word "agriculture". There is tremendous suspicion in the farming community that DEFRA does not care what happens to it; that DEFRA is dominated by people who care more about corncrakes than crofters.
However, I must say to the noble Lord, Lord Whitty, that among his colleagues and the farming community he is reckoned to be by far and away the best Minister. Having buttered him up a little, I shall now proceed to produce one or two more useful figures. The noble Earl, Lord Peel, said that he would not produce the many figures available. But I think that there are one or two quite significant ones that illustrate the state of agriculture in the country generally and its effect on the country.
One is that household food consumption is up 18 per cent. Retail food prices are up 19 per cent, but the input costs are up 14 per cent. That means that the people of this country are able to buy the food at the price, but that its main cost is borne by the farming community.
Another significant point is that in 1990, 86 per cent of foods that we grow well in this country were produced in this country. That is now down to 75 per cent, which means more are imported. The percentage of GDP is only 0.7 per cent or some such figure. We are falling short in manufacturing goods and relying more and more upon services. So I do not think there is any question about the plight that farming is in.
This concerns not only the small farms. No one can tell me that the big farms can make money out of selling feeding barley at £50 to £60 when it was £120 five years ago. It is not possible. The figure of £5,000 income, which was quoted by my noble friend, is devastating. There is no doubt that applications for positions in the Fire Service from the farming community could be very large indeed.
The figures are quite interesting, but I turn to the total position. In the 1930s we had globalisation. In this country we were subjected to imports from all over the world at very cheap prices. Farming was in a desperate state. In Norfolk, for example, the people who care about the environment would have been delighted. The hedges were 10 yards wide. The fields were filled with weeds, thereby supporting a large number of rare species, I suppose. But it is better to see countryside doing something real—producing food and supporting people who maintain it properly.

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Modulation and converting a large amount of the acreage payments into payments for the environment is a good idea. But it must be administered with great care. It will be enormously difficult to administer.
We should consider the history of globalisation and a free market in agricultural produce. Every time, all over the world, the farmer has been hit. For example, if we ask the countries in Africa that are suffering at present to import their food at world prices, they will denude their countryside. That is what happened in Nigeria when they received oil money: they ruined farmers who were growing peanuts and so on in the north of the country. They flocked to Lagos and produced one of the most dangerous cities in the world.
There is no question but that millions of small agricultural producers will be hit by globalisation and we need the sort of measures that are in the common agricultural policy—not those of the present system but we need support. The reorganisation of the CAP will be enormously difficult. France, Germany and Austria have a point when they say that their countryside and tourist industry are dependent on it being a living countryside, not an empty one.
All those things pose enormous difficulties for the Government, but the noble Lord, Lord Palmer, is right to be fixated about bio-fuels, because nothing could help the environment so much as to produce bio-fuels in this country. A small amount put into diesel enormously improves diesel's performance as regards the environment. Government tax concessions and grants should be helping the setting up of large concerns. That will not be done unless the Government push it, but it must be done.
The Government say that farmers should co-operate, but they destroyed co-operation through the competition committee after the abolition of the Milk Marketing Board—for which I did not see the reason. I may say that this is the first time that I have heard a speech made from the my party's Front Bench with which I entirely agree, but it is true that without a real push, nothing will be done.
Farmers are willing. All over the country, people are producing new marketing schemes and companies, but they need a little more assistance. Milk Marque was broken into four, with the result that the supermarkets have simply been able to do what they like with farmers.
I end my speech with a little investigation of my own. Apples in the supermarket to which I went were £1,450 a tonne; carrots were £460 a tonne, of which farmers were receiving £50; tatties were 49p a kilo, which is £490 a tonne, of which farmers may have been receiving £60; and milk was 61p a pint, which is 109p a litre, of which farmers were receiving 17p. A little co-operation is necessary before we can combat the great power of the supermarkets—although, in many cases, I applaud what they do.
Bureaucracy is appalling. Perhaps the Minister will listen to this little tale of a friend of mine, who is a progressive fruit-grower who needs to employ a lot of students from Europe. They are happy to come, and he
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was installing four sewage tanks—septic tanks. He had to apply for permission for them and the geological surveyors came along, said that they had surveyed the area and that it was okay, but sent in a bill for £550. Then the Scottish Environmental Protection Agency said that it needed to inspect, but that before it inspected the four tanks—which were all in a short radius—it had to be paid. Its fee for inspecting four tanks, paid in advance, was £2,320.
That may not seem a lot to some people, but it is the greatest possible discouragement to enterprise. The fellow— the inspector—was there for half an hour, walked round the four tanks and said that they, were okay. That is only a small example, but it is something of which the ministry should take notice.
7.46 p.m.
Lord Hanningfield: My Lords, as a Member of the House and leader of Essex County Council, I welcome this opportunity to comment on the gracious Speech.
The Government have set out their stall to reform public services, but reform is not an end in itself. It must be a path that leads to improvement in the delivery of services. My colleagues and I in local government are absolutely committed to delivering improved services. We support modernisation and the development of improved working practices and we welcome new ideas and fresh thinking.
However, the Government's vision for local government does not support those objectives. Their approach seems rigid and bureaucratic. Modern local government is not about institutions, it is about outputs, processes, flexibility, partnerships and networks. The plans set out in the gracious Speech will take us a step backwards. The Government have put forward old-fashioned, out-dated, ill-judged and expensive proposals. They are committed to reform, but have no feel for local government and no idea about local government's role in bringing about real improvements in the lives of real people.
Many in local government will welcome sections of the local government Bill. However, there are sections to which we take exception. Through comprehensive performance assessment, the Audit Commission has established a template that defines the relative importance of every service for every local authority in the country. Every authority of the same type will be judged on the basis of the same template—regardless of size, demography, local circumstances or local priorities.
Essex County Council, serving a population of 1.3 million people, with a budget of £1.1 billion a year and a staff of almost 40,000, now gets marks out of 48. Wherever one goes in local government circles, one will hear whispered discussions about whether an authority has 36 or 37 points and how one might squeeze another point out of the Audit Commission. The irony is that the Audit Commission has now said that if those inspections do not result as expected, the results will be adjusted, so the whole thing could be a waste of time.

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Inspection does not come free. It costs us £800 million a year. It also shifts the focus of authorities onto the inspection process and off the delivery of services. We need inspection, but not as the only tool in the box. Real improvements to public services will be made only when central government gives local government genuine freedom to deliver. The local government Bill does not do that.
The local government Bill was a missed opportunity; the proposed planning Bill is altogether more disastrous. Of course, we support the creation of a faster, simpler, more accessible planning system, but why do the Government think that removing counties from the process will achieve that? According to the ODPM's analysis of responses to the planning Green Paper, nearly 70 per cent of local authorities, 75 per cent of businesses, 93 per cent of environmental and community groups and 96 per cent of the public were opposed. Perhaps everyone else in the world is wrong and the Government are right. There is a first time for everything.
The obvious reason for removing counties from the process would be their performance. That is not the Government's reason. The planning Green Paper contained no criticism of county councils' performance of their planning responsibilities. The Government's rationale is that counties are no longer the most appropriate level at which to deal with strategic planning issues because many of those issues cut across county boundaries. Of course they do; they always have done. They also cut across regional boundaries. Thames Gateway—a national priority for Government—cuts across the eastern and southeastern regions, as well as London.
The Government's proposals are centralising, rigid, static and dogmatic. They will cost upwards of £60 million a year in one-off costs and £62 million in additional running costs. We have talked about many things in the Chamber today, but we have not talked much about money. The Government's proposals will make planning decisions less transparent. The Council for the Protection of Rural England has said:
"The regions remain too big, too unaccountable, and too remote to be making vital strategic decisions on where new development should go".
I shall end by speaking about the Government's proposals for elected regional assemblies. Again, it seems that, while the rest of the world moves forward, the Government remain stuck in the past. We must free ourselves from the obsession with structures. In order to respond flexibly and quickly in the modern world, we need a system in which partners can join together to work for their mutual benefit. That may mean different partners at different times for different projects. That is what modern governance is all about.
The Government's proposals for the regions will bring massive upheaval. The reason given for the abolition of county and district councils is that three tiers are too many. That is not an argument. The Government have put forward no coherent argument to justify the dismantling of the existing structures.
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The cost of reorganisation in Essex alone would be about £120 million. We have barely mentioned money today. For people in Essex, it will beggar belief, given the pressures faced by public services, that the Government cannot find a better way to spend such a colossal sum.
The Government show little respect for and little faith in local democracy. One size does not fit all. What is right for Essex—a county not much smaller than Northern Ireland and bigger than at least one existing member of the European Union and at least three of the countries trying to join—may not be right for smaller units. The Government continue to believe that central command and control is the key to improved public services. That is a big mistake. John Stuart Mill said:
"It is but a small portion of the public business of a country, which can be well done, or safely attempted, by the central authorities".
The sooner the Government heed that warning, the better off we will all be.
7.54 p.m.
Baroness Maddock: My Lords, like the noble Lord. Lord Sawyer, I wish to discuss housing matters. In doing so, I declare several interests, as president of the National Housing Forum, a vice-president of the National Federation of Housing Associations and a vice-president of the National Home Improvement Council.
I shall begin by setting the scene. In this country, we have an insufficient supply of homes for the ever-growing number of households. Many homes are old and in poor condition. There are one million older people living in homes that are in poor condition. The new houses being built are not environmentally brilliant, if we are to be serious about sustainability. Some 750,000 homes lie empty. In areas of high demand and high economic growth, key workers—particularly those in public services—find themselves priced out of the market. Yet, in other areas, there is a total collapse of the housing market. Whole streets of houses can be bought for the price of a modest house in a boom area. The Government have introduced some measures that have made inroads into some of the problems, particularly street homelessness. That is to be welcomed. However, the number of people in temporary accommodation. particularly in bed and breakfast accommodation, continues to rise.
How have we got to that situation, although we are one of the richest economies in the world? For 20 years, we have built far fewer homes than we have created families and households. In 2001, the total figure for new housing completions was the lowest since 1924, excluding the war years. UK completions per thousand of population are among the lowest in the European Union. In the United Kingdom, between 1985 and 1998, gross fixed investment in residential building as a proportion of our gross domestic product was consistently the lowest in the developed world. Producer subsidies and personal subsidies for housing from governments have reduced in recent years. I find it even more surprising that, after

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five years, this Labour Government have never managed to equal even the figures for producer subsidies for housing for the last year of the previous Conservative administration.
That has a direct influence on the production of affordable housing. Over the past three decades, house prices have risen by a factor of 20, while construction prices have risen by a factor of only 10. That translates into higher land prices in areas of land demand and/or low supply. For obvious reasons, high land prices are particularly problematic for social housing developers. More money alone is not a total panacea. Our planning system has created ghettos of rich and poor. That ghettoisation has been exacerbated by land and property prices.
The Government seem slow to act on housing, despite the fact that tackling housing problems would greatly assist with many of the problems that they want to tackle, such as poverty—particularly fuel poverty—social exclusion, health inequalities and the rising cost to us all of our health service. On these Benches, we believe that housing is an important area. It defines people and their life opportunities. Where someone lives can dictate social position, access to education, the attitude of potential employers and what people think about themselves and the life opportunities that are available to them. That is why we need a coherent housing policy that tackles the long-term underlying problems, as well as taking immediate action in some of the crisis areas, such as bed and breakfast accommodation, affordable accommodation for key workers and the lack of affordable housing in rural areas, which we heard about briefly this evening.
What do we see in the gracious Speech to assist with the provision of more housing, better housing and more affordable housing? First, in the local government Bill, the freeing-up of capital finance and the reduction in the number of statutory plans is a step in the right direction. On these Benches, we welcome particularly the prudential framework for capital finance. It is largely based on proposals that the Liberal Democrat group in the Local Government Association has been putting forward for at least four years. However, the proposed system to pool and redistribute capital receipts threatens to undermine those proposals. The Government need to look carefully at the effect of those proposals on debt-free councils.
We also welcome local authorities being given the right to remove council tax discounts on second homes. Again, that is a measure we have proposed in the past. We particularly welcome the fact that council tenants will no longer subsidise housing benefit for other people in their area through the housing revenue account.
However, there seems to be relatively little movement on some of the key ideas raised in consultation over the draft local government Bill, particularly on those designed to achieve deregulation. The Government's approach remains interventionist and additional regulatory measures will only
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compound problems for local authorities. How does penalising poor-performing local authorities help the communities suffering under such administrations? Central government must learn to let go of its overzealous hold over local authority income, especially if we are to speed up more affordable housing provision and improve poor housing conditions.
As to the planning Bill, it is interesting that in the introduction it was referred to as the "Housing and Compulsory Purchase Bill". Is that the only addition to the Bill since the consultation, I wonder. We welcome the Government's intention to speed up the system and to improve the involvement of local authorities. However, we wonder whether what is in the Bill will achieve that.
We also welcome a simpler, fairer and quicker compulsory purchase system. This will greatly assist local authorities in two main areas— tackling the problem of long-term empty properties and enabling faster land assembly.
As to Section 106 agreements, simpler, more transparent agreements will be welcome, but the Government's reliance on them to produce more affordable housing is misplaced. Research by Alan Holmes has shown that perhaps 15,000 homes were produced under Section 106 agreements, not all of them additional homes. As many people believe that we need at least 200,000 additional dwellings each year, one can see that that is a drop in the ocean.
The Liberal Democrats believe that Britain needs a planning system which is driven from the ground upwards rather than directed from the centre. We believe that the United Kingdom should have a federal form of governance—my noble friend Lord Greaves will say more about this—with the powers at each level clearly defined.
Elected regional governments, free of central government interference, should be allowed to draw up their own spatial strategies in partnership with local authorities. We are particularly keen that house hold numbers should be decided at local and regional level and not at national level.
I did not intend to say too much about regional governance but, after listening to some of the contributions today, I should say particularly to the noble Lord, Lord Elliott of Morpeth, that now that I live in his area I strongly disagree with him about what he believes is happening in the North East of England. I have stood in this Chamber previously and I have reeled off statistic after statistic after statistic which shows that the whole region is under-performing and is one of the poorest in the country.
As to the regional government plans, we want to see a decoupling of arrangements for changes in local government organisation and the regions. That should not go together.
If we are to make the planning system work effectively, there need to be taxation incentives to encourage better land use. Once again we propose equalising the VAT on new build, refurbishment and conservation.

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As to a specific housing Bill, we are told that there is only a draft Bill and that we shall have to wait until the new year for that. Five years, and still there is not even a draft Bill to regulate houses in multiple occupation.
The private rented sector has much the largest proportion of properties in poor condition—more than 50 per cent—and recent research shows that the level of rent has little bearing on the amount of money invested in them.
Many of the homes in disrepair are in the privately-owned sector. Most are occupied by elderly people. The houses are in poor condition, lack decent heating and are in a hazardous state of disrepair. This means that when the occupiers go to hospital they cannot go home, which contributes to bed blocking.
I look forward to seeing the draft housing Bill. I hope that it will tackle some of these problems. In looking at all the local government Bills and any housing legislation, we on these Benches want to create neighbourhoods which are economically, environmentally and socially sustainable with a demographic balance. More importantly, they need to be under a system which gives the greatest freedom to local communities to organise their own local solutions for their own local needs.
8.5 p.m.
Baroness Billingham: My Lords, having spoken in the House before on regeneration, I make no apology for doing so again. But this time my comments and questions are against the background of the Queen's Speech, and in particular with reference to the planning proposals.
As the chair of an urban regeneration company in Corby, I acknowledge that planning is a vital—perhaps even the key—issue for successful outcomes. While drawing on and using Corby as an example of the tasks involved in urban regeneration. I have no doubt that very similar comments would be made on behalf of the 10 other urban regeneration councils, the URCs, which face the task—indeed, the uphill task—of renewing and revitalising their own areas, all of which show considerable decline and are among the poorer parts of our country.
My first question in regard to the planning legislation is, quite simply, will that legislation provide us with a solution to one of our greatest difficulties—that is, planning delays? We need the shortest possible timetable from the beginning to the end of the planning process to give investors the confidence to undertake essential long-term investment. Since the launch of Catalyst Corby some two years ago the timescale has been a key issue. Essential baseline and master plans have to be drawn up. They are all time-consuming but essential. The raising of public expectation following a launch has to be acknowledged and the time from the launch to tangible evidence of regeneration is crucial. Time saved in gaining the requisite planning permission would be invaluable and enormously welcome.
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I also express the hope that the planning legislation will be helpful in setting out proper road and rail infrastructures in relation to URCs. Regeneration is totally dependent on first-class accessibility and excellent public transport. Indeed, does Corby have the prospect of shedding from itself the unwelcome tag of being the largest town in Europe without a passenger railway station?
The Corby project is ambitious. It is set to double its size from 50,000 to 100,000 people. Critical mass is crucial to the huge investment needed to develop a first-class town. We aim to build at least 28,000 new homes, homes which will be served by public open spaces and excellent leisure facilities—in fact, all the features of a modern, vibrant town. All those factors hinge on a proactive planning framework. More specifically, will the planning legislation give special help to the regeneration of our town centre? Like many other towns, the centre has sadly declined with too many charity shops rather than retail outlets.
So, my Lords, my heart lifted when I read about the "Ikea issue", if I may call it that. At last, the concept of out-of-town giant retailers is being challenged. Is that a planning philosophy for the future? If so, it will be music to regenerators' ears. There has to be a better way forward. The heart of a town can be rejuvenated. Sensible compromise could see those excellent stores, such as Ikea, being brought, so to speak, "inside the city walls". Everyone would benefit— environmentally, socially and economically. In addition, will the planning legislation provide a framework, not just for new build, but for better build?
My noble friend Lord Rogers has set out those objectives in his fine report. Will we have the stimulus to strive for designs which will last and be a delight for generations to come? I am aware that the Deputy Prime Minister will be making a major statement in January specifically on the subject of sustainable communities, but there is no doubt in my mind that planning will form the backbone and, as such, is crucial to us today. There is a real urgency, not only in local regeneration, as has already been said by several other speakers, but within the framework of national need.
Nationally we are building fewer new homes than at any time since the 1920s. At the same time we have population growth, social and domestic change and higher expectation. Combined, those factors are stoking up demand at a greater rate than ever. With overarching planning needs so apparent, surely it is timely to remind the planners that Corby is ready, willing and able to expand and help address the shortfall. As part of the Corby/Milton Keynes axis, will we be given greater support?
I have dwelt solely on the planning aspect of forthcoming legislation, but be assured, we shall be lending our support to measures to make our community safer, applauding the strengthening of our health and education systems, and looking forward to further protection of our environment. I have no doubt that we shall even look positively at the

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liberalisation of the licensing laws, which will bring us in line with continental Europe and should bring the welcome benefit of more sensible drinking practice.
In short, we look to measures which will help us provide a decent town for young and old to savour. To conclude, perhaps I may add a note of hope that URCs will be increasingly well funded. As the real generators of regeneration, the 11 URCs must be supported and sustained. The proposals in the Queen's Speech give us real cause for optimism. We look forward to seeing our aspirations become reality and our poorer towns and cities become the focus for better living and a better future.
8.12 p.m.
Lord Dixon-Smith: My Lords, I am sure that the Minister will understand if I do not view the world through quite the same rose-tinted spectacles with which she introduced this particular part of the debate on the gracious Speech. In part, that is inevitably the consequence of my own experience. I began in local government in 1965 when the late GLC was created. Reforms have been planned, discussed, and implemented in the restructure of local government within about five years of every reorganisation that has previously been completed. That has continued until the present day, at huge cost. My noble friend Lord Hanningfield mentioned the costs of the proposals now under discussion and possible legislation. We have lived with that process for nearly 40 years. The cost in cash terms is huge, but the cost in physical terms, intellectual effort, disruption of service and the lack of concentration on the provision of service to the public is incalculable. At least, I have not yet seen anyone attempt to do so.
Now we come to a matter in respect of which I had hoped the Government might have learnt from the previous government. They have not and they intend to continue the process. Other countries have managed without such constant upheaval. They have modernised and restructured by co-operation, but we have constitutional turmoil. The fact that my own party initiated much of it gives me no satisfaction whatever. One might have thought that others might have learnt, but we are to consider the creation of regions.
The White Paper dealing with the subject has a glossy shop-front feel about it. It looks attractive and invites one in. But the consequence of the elimination of county councils and district councils—unitary authorities will have to be created—is not touched on except to say that the local government boundary commission will consider the consequences.
It is necessary to look at the White Paper a little closer and pick out some of the key phrases which reveal the Government's thinking. The White Paper states that the proposal will bring decision-making closer to the people it affects. That can only be a reality if the Government cede real executive decisions and authority to the regional development authorities. But if that is not the case—and I have seen nothing to make
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me believe that it is—regions and unitary authorities are further from the people. Communities will be diminished as a consequence.
One sees a little of the Government's deeper thinking when on page 26 one reads:
"The Government believes that regional planning bodies which involve only local authorities",
that is, locally elected representatives,
"are not sufficiently inclusive and does not propose to recognise them for purposes of the new regional spatial strategies".
I hope I might be forgiven for believing that the Government have no confidence in local democracy as representing communities.
At page 35 things begin to get Machiavellian because one sees that a regional elected assembly,
"will set out its key objectives in a small number of high-level targets, which it will agree with central government".
Well, we know what that means; that central government's targets will be applied.
Therefore, I believe that I have grounds for saying that two conclusions can be drawn from those statements. First, that the Government have no confidence in local democracy; and, secondly, that the Government will use their legislative programme to ensure that they get their own way. Of course the Government are the paymaster and they must have the right to oversee local government, but a large majority of local government is under the control of the Government's own political party. I have to wonder whether the Government either know too much about the membership of its own party or they do not trust the members of their own party.
There are other key indicators to which I shall turn. Let us consider the proportion of specific grants as a percentage of the revenue support grants paid to local authorities. My local authority, Essex, receives more than 45 per cent of its central government funding as specific grants. In 1997–98, that was 19.4 per cent. That is almost a ravishing increase in direct government control over the allocation of resources in a particular area. I regret that I do not have the national figure, but it follows that trend. This is specific government control over what happens in local areas. It is a reduction in the freedom of action of local communities.
An interesting point already touched on in the debate is that in regard to the local government finance Bill that will come before this House—and which has been subject to pre-legislative scrutiny—I have seen no explanation of the way in which revenue support grant might be distributed in the future.
Then there are all the other administrative tools used by government to whip the machine into line: regulations, guidance and plans—with funding tied to compliance. I asked my county council in Essex for a summary of the number of returns and plans it has to submit annually to the Government. The list is 23 pages long. I shall not attempt to explain it. With money linked to compliance, that is desperately controlling.

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If that is the case with local government, how about all the other government services, which are under direct government control anyway? My advice to any hospital that is considering its right and privilege to become a foundation hospital is that it should examine the small print very carefully. It will have to comply with a host of conditions before it does so, and it will still be rigidly controlled financially after it has acquired that enhanced status. It may be worth having—I agree with the principle of what the Government are doing—but the small print may well be wrong.
Industry and commerce do not escape. I am guilty, along with every Member of this House and indeed the whole of Parliament, of passing a flood of regulation and law annually. We look in detail at the way in which that law will work and we do our very best to make it practical. We rarely stop to see whether the overall impact of the combined effect of those laws is benign, even if the intention is benign in the first place.
It is an interesting fact that, as the quantum of legislation and controls has increased, the standing of politics and politicians has diminished. If I were to propound "Dixon-Smith's law", it would be just that: the standing of politics and politicians is in inverse proportion to the volume of law that they pass.
History has played its part, but this Government in particular have accelerated and exacerbated the situation. They believe in control. That will not be able to continue. The time will come when people will begin to demand that Parliament should once again take control over the "divine right" of the executive.
8.24 p.m.
Baroness Seccombe: My Lords, I shall confine my remarks to the issue of regional government.
I have always referred to myself as a mongrel, having a Scottish grandmother and a Welsh grandfather, in addition to two English grandparents. But having lived all my life in England, I do consider myself to be English and I am enormously proud to be so. I am proud of the wonderful heritage that has been left to us by our forefathers and the magnificent contribution that they and our fellow citizens today have made round the world. I am conscious also that this has been possible because of being British and because of the power of the United Kingdom. The UK is respected world-wide and our permanent membership of the Security Council reflects our standing in world affairs.
Maybe it is the Celt in me that gives me an understanding of the romantic desire of the Scots to have their own Parliament. However, I did not agree with them and I did not agree with the Welsh having an Assembly. Nor do I believe that the majority of Welsh people agreed with that, either. We should not forget that in Wales only just over half of the electorate voted and of those only 50.3 per cent voted in favour of devolution. For me, devolution was an error, and a costly one at that. One can only guess what Londoners think about their assembly.
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Excessive bureaucracy, extravagant new buildings and escalating expenditure place increasing financial burdens on taxpayers. We heard endlessly that the priority of this Government was "education, education, education". By their action it should have been, "bureaucracy, bureaucracy, bureaucracy". Ministers are indeed past masters at regulating everything and everybody. The problem is that the Prime Minister and his colleagues have let the genie out of the bottle and we are left in England with an Administration that is very Scottish in membership and that passes laws that affect our lives but do not touch Scottish and Welsh lives, while we in England have no say about laws in their countries. The West Lothian question has never been resolved and both Scotland and Wales are over-represented at Westminster.
Regional government in essence would replace county councils with regional assemblies that would be more under the control of the Government. Surely if the Government were really interested in devolving power and turning decision-making over to the people, the obvious answer would be to strengthen and to give more powers to existing local government. It would be a much cheaper and more flexible solution. The Government's main argument for regional assemblies appears to be the belief that by handing down decision-making from Whitehall to the regions, local people would be better able to tackle local problems. But county councillors representing smaller divisions are much closer to their local communities whereas a regional assembly member would overlap with the Member of Parliament. County councils could easily do much of the work envisaged for the regional assemblies. Why create artificial units where, within the same region, one community has little in common with another? I now declare an interest by describing the situation in my home county of Warwickshire. I live in the south of the county and five miles to the south-east is my doctor's surgery, and that is in Oxfordshire. Ten miles to the west is Gloucestershire and about 10 miles to the east is Northamptonshire. Under the proposals, Warwickshire—a small county, much of which is rural—would be situated in the West Midlands region, Oxfordshire would be in the South East region, Gloucestershire would be in the South West region while Northamptonshire would be in the East Midlands region. It seems crazy to me to draw new artificial boundaries lumping together communities that face very different local problems. People within about a 10-mile radius from me have little in common with, and face very different local issues from, those in Gravesend, Land's End, Deritend in Birmingham or Hulme End in Buxton. I believe that local government should be just that: local. Those vast regional assembly areas would be bound to be dominated by the large urban conurbations. The smaller rural counties would be overwhelmed and their very real and important concerns would not be understood and would be seen as insignificant in the grand scheme of things. Rural issues such as agriculture would be neglected in favour of urban priorities. That would benefit urban areas directly to the detriment of the countryside.

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I understand that there would be between 25 and 35 members of a regional assembly, with a total of between 250 and 350 countrywide. This could lead to constituencies three times the size of a Westminster one. At present, we have more than 20,000 county councillors, who know their areas and their constituents. Surely that is a much better way to get local people involved in making informed local decisions. Getting rid of historic county councils, far from bringing the Government closer to the people, would destroy an institution that people associate with, and feel an allegiance to. It would exacerbate the very real problem of apathy and would serve only to further alienate voters.
This Government say one thing and do another. The executive says it believes in devolving powers, but it centralises all it can by bypassing Parliament and keeping tight control in Downing Street. It may be convenient for European structures to have countries divided into regions, but it would be wrong for a small island to be insensitively hacked into chunks in such an arbitrary manner.
My father went through the First World War, so every year I support and watch the Remembrance Day programme. Last weekend, I was deeply moved as the horror of those terrible events was displayed before me. I cannot forget the pictures of young men laying down their lives for future generations, nor the haunting melodies of the songs that kept them going. As I was contemplating what I would say today, I heard "There'll always be an England". If this Government have their way, I fear that will not be so.
8.32 p. m.
Lord Cobbold: My Lords, I shall touch on two topics, the first of which relates to the Government's commitment in the gracious Speech to continue investing in the public services. I shall comment on public services specifically in relation to the beleaguered motorist. The motor car, perhaps more than anything else, has given more freedom, convenience, variety, travel and excitement to millions of people from all walks of life, particularly in the five decades since the last world war. That was not foreseen in the early days. The first new towns built under the 1947 Act were designed without garages. Now there is hardly a household without at least one car.
I am sure that noble Lords will agree that, by and large, motorists are a law-abiding, long-suffering bunch with an admirable safety record, given the volume of traffic. Why, then, are they so persecuted, and why do they not fight their corner more strongly? In all the Government's talk about improving public services, little is said about improving Britain's ageing and inadequate roads system.
As an inhabitant of the South East, based in Hertfordshire, I shall give a few examples, although there are obviously many others across the country. The first is the obvious need for a new east-west road linking Luton and Stansted, which would naturally form part of a new outer ring road to relieve the gridlock ed M25 and create a link from Reading. via
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Luton and Stansted, to the east coast ports of Ipswich and Harwich. Another example is that we were long ago promised a widening of the two-lane sections of the A1 motorway. We were promised that, until as far north as its intersection with the M1 in Yorkshire, the A1 would be upgraded to motorway standard. Nothing has come of these promises. As many noble Lords coming from the North may agree from bitter personal experience, at the A1's London end, the recent so-called improvements to the Apex Corner roundabout are a joke, given the retention of the Totteridge junction. Mill Hill is an obvious candidate for a flyover. There are many such pressing examples across the country. Not much investment seems to be going into this public service.
Could the situation be improved by toll-charging for motorways? Have the Government considered the Swiss system, for example, whereby road-users buy an annual pass that is displayed on their windscreen and permits usage of the country's motorways? This system avoids the need for expensive toll gates, and related traffic jams. One wonders how long the patience of road users can be relied upon. I urge the Government to face up to the problems, and the cost, of our increasingly inadequate road network.
My second topic concerns the housing situation—once again, specifically related to the South East and the Home Counties. I should declare a possible interest in that I am a landowner with an indirect interest in farming. As the noble Lord, Lord Sawyer, and the noble Baronesses, Lady Maddock and Lady Billingham, mentioned, there is a chronic shortage of housing supply in the South East, especially of affordable housing. When a small cottage in a Hertfordshire village is on the market for £625,000, something has to be amiss.
All of us share a desire to preserve the countryside, but the English countryside would not be what it is today without the farmhouses and cottages dotted about among the trees and hedgerows. I ask the Government: is it sensible to freeze the situation exactly as it is now and never to permit any further natural evolution? Is it fair to deny the children of rural families the opportunity of living in the countryside of their birth, and of their parents and grandparents? Council housing avoided the problem in the past, but such housing is now a thing of the past. Is it right for villages to become 100 per cent commuter dormitories?
It is obviously sensible to make the best use of brownfield sites where available, and where not required for employment. But there are many bits and pieces of greenbelt land where housing would in no way threaten the countryside and where affordable housing could be built. Given the problems of the farming industry, about which we have heard from many noble Lords this evening, one idea to help farmers might be to permit them to build one or two cottages on their land for rent or for sale, with the number being related to the size of the farm. The planners would concentrate more on what was built rather than where it was built. Traditional styles and materials would be priority criteria.

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The plea that I wish to make to the Government is that the planning rules should not be totally inflexible. They should make some room for the individualism, imagination and diversity that has created our English countryside over the centuries.
8.37 p.m.
Lord Greaves: My Lords, we now enter the final straight of today's debate on the gracious Speech. It has been a fascinating debate from all sides of the House. I do not intend to rehearse the ground that has already been covered by my noble friends, who made some outstanding contributions. My noble friend Lady Sharp of Guildford made an absolutely splendid declaration in favour of what education is all about. I refer to "what education is all about" because if it also relates to something else, it is not education. Many people may have thought that what my noble friend Lady Sharp said was perhaps very old fashioned. However, I suggest that the wheel turns, as always. What she said is visionary—a reaction against the present obsession with the mechanics of teaching, testing, and so on. I propose to say nothing further about education.
I should like to thank my noble friends Lord Ezra and Lady Maddock for their contributions on energy and on housing. In today's debate, which covers such a wide range of subjects, we heard eight speeches overtly on education, six on rural affairs, seven on the regional proposals, but only two speakers concentrated on the environment. Perhaps that says something about noble Lords' interests, and about the way in which the environment has been sidelined by this Government. It has, to some extent, been put within DEFRA, but the Government lack an overarching strategy in relation to the environment. Therefore, it is most difficult to get a handle on the subject in such debates.
I turn to the proposals for regional government outlined in the Regional Assemblies (Preparations) Bill. The noble Baroness, Lady Blatch, asked the Minister whether he would tell us the Government's proposals for the lord lieutenants and high sheriffs of the land. I come from Lancashire, where we have not only a lieutenancy and a shrievalty, but also a duchy. I counsel the Minister to keep his hands off the duchy; the Duke of Lancaster has enough problems at the moment. I had better move on quickly, as I do not want to be seized, put in a boat and taken down the river. It is widely thought in Lancashire that the Duke of Lancaster takes precedence over the sovereign!
I listened with great entertainment to the noble Lord, Lord Waddington. He is always good value when talking about regional government and regional affairs. I do not believe that everything he said was wrong—although most of it was. He was most wrong in his suggestion that the North West of England is an arbitrarily carved-up region with no sense of identity or belonging. I am no expert on Saxon or medieval history—I leave that to my noble friends behind me—
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but I believe that in this day and age there is a strong sense of identity in most of the North West. That is a basis for going forward with regional government.
I have been campaigning for regional government for some 40 years, so I am a great enthusiast. I have some doubts about the Government's proposals. I am not sure that they are devolving, rather than gathering up powers from local government. I am not convinced that they are taking democratic control over the existing regional quangocracy. I am not sure that their proposals will be sufficiently representative of such a large region either with the electoral system or the small size of assembly they propose. But at least the proposals are a basis for discussion and a step forward.
However, there are two great problems with the Bill, which no doubt we shall discuss when we debate it. One was raised by the noble Lord, Lord Waddington, who was not completely wrong: the linking of it to local government reform. There is something fundamentally wrong in proposing that people in Lancashire do not have the final say in the future of local government there. There will be a vote, if there is a referendum in the North West, which will involve dramatically changing the local government structure in Lancashire, Cheshire and Cumbria to a unitary system, on what basis we know not yet. But that vote will be determined by the votes of people in the two much larger sub-regions in the North West: Greater Manchester and Merseyside. It is entirely wrong that the future of the local government system in Lancashire and other counties should be changed by the votes of people in the other counties and regions of the North West. That is a flaw at the heart of the proposals that needs to be looked at.
The second problem is that people will be asked in a referendum to vote for a pig in a poke, because the referendum will come before the legislation setting out the powers, duties, size and other matters in relation to the regional authority. That is the wrong way round.
The Government will say that that is what happened in Scotland, but in Scotland there was a clear constitutional convention; everyone knew what was on the table. If the Government are to introduce regional government satisfactorily, we must know what is on the table before those of us who live in the North West, for example, are asked to go out and vote for it. I repeat what I have said before: I fear that regional government is one of those areas where, if you give New Labour a good idea, they will mess it up.
I turn to DEFRA. It covers two broad areas: the environment; and food, farming and rural affairs. As regards the environment, we are a little disappointed with the Bills that are to come before us although they are perhaps important in their own right. The Water Bill is certainly important, as is the Waste and Emissions Trading Bill—which no doubt will be known as the WET Bill—which we shall discuss the week after next. We should have liked to see a more ambitious programme of environmental Bills, for example, an environmental protection Bill, a clean energy Bill, a flood protection and marine habitats Bill and an animal protection Bill. If my party was running

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the Government—noble Lords should not laugh as we may be doing that sooner than they think the way things are going in British politics; noble Lords can laugh at that—we would introduce such Bills. However, we have to deal with the Bills that come before us.
I do not want to say much about the hunting Bill as we all have our individual views on it. I do not hide the fact that when the time comes I shall vote to ban fox-hunting. However, that is a personal decision. We on these Benches will be as split on the matter as noble Lords on other Benches. However, if the Government bring the hunting Bill forward in this Session, they should bring the matter to a close one way or the other. We cannot as a Parliament go on talking about the matter Session after Session after Session, Parliament after Parliament, for ever and a day. A decision has to be made one way or the other that people must then accept. That is my view.
A report was published last week by the Environment, Food and Rural Affairs Select Committee. I have not seen a copy of the report, which I look forward to reading, but I have read the BBC's account of it, which states that DEFRA appears to be,
"a jack of too many trades and master of none".
The BBC suggests that DEFRA rose from the ashes of the discredited Ministry of Agriculture, Fisheries and Food. Those are the words of the BBC, not of the Select Committee. The BBC further states that DEFRA's aim was to lead renewal in rural areas and to streamline decision-making. We cannot disagree with that. But, according to the report, the,
"significant change to the culture of the department is far from complete—indeed it has barely begun".
The report also states,
"we remain concerned about the ability of senior managers to ensure [the changes] take place".
I do not want to criticise civil servants; the people responsible for this matter are not civil servants but Ministers and the Secretary of State and they must be accountable for it.
The report voices concern that the focus on promoting sustainable development—I raise my eyebrows at this—has led to a lack of priority for rural concerns. The report states:
"It is vital that, as with sustainable development, mechanisms are put in place to enable Defra to exercise influence over other government departments to ensure they take account of the rural dimension in policy-making".
Surely, that is the real problem with DEFRA: it is responsible for everything in the countryside but, apart from farming, effectively it is responsible for nothing. Unless mechanisms are deployed to ensure that all the different government departments take proper account of the effect of their actions on rural areas, their efforts will come to nothing.
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I raised my eyebrows when I read of the great praise that appeared to be lavished on DEFRA's efforts with regard to sustainable development. However, the account related that even with sustainable development the MPs state that they,
"are pessimistic about Defra's ability to ensure that government departments will do more than pay lip service to the objectives of sustainable development".
In other words, the Select Committee's report simply states that DEFRA is not working. However, it is in all our interests that DEFRA does work in terms of rural development, its work in the countryside in general and its work on sustainable development and the environment. It is absolutely vital that that department is a success as, if it is not, so much of what is needed in this country will not be implemented. I do not want to be too critical of the Minister who is to reply to the debate. I simply say to him that if he and the Secretary of State take measures to turn round the deplorable state of affairs in their department, they will have our full support.
Finally, I turn to agriculture and its future. A great deal of what I might have said has already been dealt with by a number of noble Lords, such as the noble Earl, Lord Peel, the right reverend Prelate the Bishop of Hereford and particularly my noble friend Lord Livsey of Talgarth. They all set out the absolute crisis which is now facing British agriculture. I wish that sometimes Ministers would admit that there is a crisis. Clearly, it is not all their fault; in fact, it is possibly not their fault in the main. All kinds of international, European and British local events have impacted on the situation. But if the Government would accept that a crisis exists and that it has to be dealt with, I believe that they would be in a much better position to begin talking with the farming industry to bring it round.
We are supposed to be in the middle of a big debate at the moment on the Curry report. We are supposed to be discussing what that report defines as "public goods", which are things done for the public good, for which it is reasonable to pay out public money in subsidies. I do not believe that that debate is taking place outside the farming industry, and I do not believe that most people in that industry understand the terms of the debate. All kinds of word are being used, many of them European which very few people understand, such as "digression", "decoupling" and "modulation", the "first pillar" and the "second pillar" and so forth. How many farmers understand all that and what politicians are talking about? I do not know. What I am absolutely certain about is that most people do not know.
If we are to move to a situation, as the Minister and the Secretary of State keeping telling us, in which subsidies for production and to support prices are to be abolished over a particular time-scale, and if in return there are to be subsidies for the public goods, what are they? It seems to me that the implications for half of the agricultural industry in this country of removing production subsidies and forcing it to compete without subsidy in the world market are that it will become more and more efficient; the number of

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units will decrease and their size will increase; and we shall move to a countryside which is full of prairies and ranches.
It is absolutely clear that we do not want that. We want a traditional British countryside— and that can be maintained only by small and medium-sized family farms in a great deal of the countryside. Let us be clear if that is what we are talking about. Let us be honest about it and let the Government tell us what it is they are saying. How do they see the industry in 20 years' time and how do they see the subsidy structure then? Unless they can be far more specific about what they are doing now, the decline of agriculture, which has been very well set out by other speakers, will simply continue.
8.53 p.m.
Baroness Byford: My Lords, it is my great honour to respond to the debate on behalf of my colleagues on these Benches. I consider it a great honour so to do, but it is a somewhat daunting challenge, I must declare. Perhaps I may also declare my family's farming interests and remind the House of them. I also have a brother who is not only a parish councillor, but a county councillor and a husband who is a governor of two schools, one a village school and one an inner city school, both with very different problems.
The education front this last year has appeared to many people as a parade of muddle and mismanagement, including the question of the Criminal Records Bureau, doubts about the A-level results and the threat of top-up fees to students at our universities, which have been referred to by many speakers already today.
However, there are other uncertainties, too. I move swiftly to some of them. For example, responsibility for funding home-to-school transport has remained with local education authorities. The more rural local authorities are facing huge increases in their transport costs. It is likely that local councils will restrict in some way the money made available for transport for those in post-16 education. That will affect the numbers who stay on into the sixth form and stick it out for those two years, both at school and at local FE colleges. There will be a consequent adverse effect on the moneys from learning and skills councils to fund post-16 education. Is that what the Government intend? Perhaps the Minister will enlighten us further when he comes to respond.
Another problem is that the Government have introduced a performance-related pay policy. Two years ago many teachers passed the threshold. From September they are entitled—or are they?—to a rise from upper pay spine level 1 to level 2. Will the Minister clarify how a governing body can refuse increments on budgetary considerations, even though the head teacher has attested to,
"sustained and substantial performance and contributions to the school"?
Once again, I believe that the Government have created a situation which other people—many of them unpaid volunteers— will have to resolve. The
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Government are supplying only partial funding for those increases, and I believe that many schools—particularly those in counties low down the SSA tables—will have difficulty in finding the balance.
The question of funding and the timing of funding goes all through this Government's dealings with local authorities. Many noble Lords who sit in on our debates will know that there are fields full of fridges because the Government put in place legislation before money was made available to set up the mechanisms for dealing with the problem. Belatedly, funds have been found but it will take all of six months before the systems are ready to tackle a growing problem.
The Government have tightened the local authority budget protection system so that, under the Education Act 2002, a council must notify the Secretary of State for Education of its schools budget not later than 31st January preceding the new financial year. At the same time, they propose to change the current education SSA for each local authority. That seems unfair.
In addition, regulations were laid on 12th August requiring each authority to establish a schools forum no later than 15th January 2003. Some councils are doing so now in order to involve the forum in the entire budgeting process. But they are working in partial darkness because the department has not yet finalised various matters—for example, the detail of the reshaped Standards Fund, the precise definition of the "schools block" and the "LEA block", and how to calculate the passporting of the schools block. Yet decisions are supposed to be made on that basis.
We heard very good contributions from all around the House on the subject of education. The fine standard was set by my noble friend Lady Blatch, who has gained knowledge and experience over many, many years in the field of education. We are grateful for her contribution. Other Members touched on specific matters. My noble friend Lord Jenkin referred to the importance of science and the importance of the teaching of science in view of today's rapidly evolving knowledge on the subject. I believe it is important that science and the teaching of science move forward in a way that attracts people to participate in the subject. We need them badly.
My noble friend Lord Pilkington touched on the whole question of the exam system. We are seeking clarification from the Minister on the Government's thinking. My noble friend Lord Prior, who I thought was also going to speak on rural issues, reminded us of the importance of the phonics teaching system. It is a matter that I knew about but which had slipped my mind. We were reminded of how we have lost something that was considered to be most valuable. The teacher to whom my noble friend referred is known to my noble friend Lady Blatch.
My noble friend Lady Blatch then highlighted some of the big problems that we face. The question of truancy was raised earlier. Every day 50,000 children fail to attend school. That is a diabolical situation.

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There is also the situation with the A-level and AS-level examinations and the criminal checks that disrupted schools at the beginning of this term. First we were told that the children could not go back to school because the checks had not been carried out and in the end the Government had to make a U-turn and allow them back to school before all the checks were completed. The whole situation was a mess. Many noble Lords have raised the matter of top-up fees for university students. Are there to be top-up fees or not, or is the jury still out? Perhaps the Minister can clarify the position.
The most sobering and frightening points, touched on by my noble friend, are teacher recruitment and teacher retention. We all remember our school days and how important a particular teacher was as he or she inspired us to gain qualifications and to seek jobs. I believe that at the moment we are failing our children. The situation must be rectified quickly.
Beside the matters that have been brought to my attention, there is also a concern about a headline in The Times for today which states:
"Labour misses 75% of targets 'tied to funding"'.
There are three that relate to education:
"An increase in the proportion of those aged 11 meeting the standard of literacy for that age from 63 per cent to 80 per cent by 2002: not met.
An increase in the proportion of those aged 11 meeting the standard of numeracy for that age from 62 per cent to 75 per cent by 2002: not met
A one-third cut in school truancies by 2002: slippage".
All noble Lords will agree that all is not well in education, education, education.
Education is not the only aspect of the gracious Speech about which we have concern. However, we also welcome some points. We welcome the Waste and Emissions Trading Bill and the water Bill and hope that they will achieve what I believe they will set out to do. I hope that they will tackle the problem of waste. It is not just a matter of trading, but tackling it at source to ensure that we reduce the amount of waste. Water is the most important commodity in life. Without it we cannot survive and yet we waste it. I hope that that Bill will deal with the core issue and not just tinker with the edges.
We have heard speeches on the environment. The environment in which we live is highly prized by our citizens and by the many visitors who are attracted each year to our land, whether to ancient monuments, hills, mountains or just to our gentle lowland landscapes. 'The role of agriculture in the formation of those landscapes is absolutely crucial. Sadly, agriculture is still in decline. It is threatened by demography, by an ageing population—people are living longer—and by smaller families. In former years most farming families could be sure that at least one member of their family would work on the family farm. Nowadays people do not want to take on such a challenge. It is not considered glamorous; it is hard work and, most importantly at the moment, there is no future in farming so one understands the reservations.
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This morning's "Farming Today" broadcast gave the figures which are stark. Over the previous six years, 67,000 people have left the land and have not been replaced. In the past year, 8,500 farmers and 2,500 agriculture workers have gone. That cannot go on. Agriculture, as many have reflected, is still funded by handouts, whether from Brussels or from the Government. Some of those subsidies are outdated. We believe that they should be looked at urgently.
The gracious Speech made no mention of CAP reform, but its reform is urgent. Even more important—noble Lords have not touched on this matter today—is the reform of the common fisheries policy. A Britain without cod and chips is rather like a France without escargots and red wine. It is interesting to speculate that whereas our Continental neighbours would fight for their farmers, we believe our government are failing to fight for ours.
What steps have the Government taken to look at, for example, by-catches? What representation has been made about the industrial fishing of sand eels? What research has been carried out on the importance of sand eels to the ocean environment? There arc so many environmental questions that need addressing.
I return to where I started—fridges. Attempts to control disposal of waste shows the other side of the coin. We must be careful that the new restrictions do not result in increased fly-tipping and illegal dumping. So far the signs do not augur well. Fly-tipping and illegal dumping of waste of all kinds is now a regular part of living in the countryside and in the city. It is not just a countryside matter.
My noble friends have covered that particular section fully. There was a moving speech made by my noble friend Lord Peel. He spoke about, and highlighted what I believe is crucial, the total effect that a declining industry may have on our food industry—65 billion. Many thousands of jobs may be lost if we cannot get agriculture back on the rails. and able to make a profit. Profit is not a long word and one that at least I can spell.
Other noble Lords touched on the question of alternative fuels. The right reverend Prelate the Bishop of Hereford listed some of the good news. I share his view that the Curry report is an exciting report. I hope that the Government push ahead with its recommendations.
I turn finally to the question of regional government. I have declared that I have a brother who is a county councillor. Perhaps noble Lords will not be surprised that I have great reservations about regional government. To me government should be as local as it possibly can. Noble Lords will remember—it was perhaps only about 18 months ago—that there was a rumour that the Government wanted to get rid of parish councils. We fought a strong fight to stop the Government getting rid of parish councils. They are the nearest elected government. We feel equally strongly about regional government.

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Regional government is remote. My noble friend Lady Seccombe spelt the matter out clearly. Poor Warwickshire would be divided into four regions. Leicestershire I suspect would get lumped into East Midlands. That is not quite so bad. But what really does rural Lincolnshire have in common with urban Derby, Nottingham and Leicester? And which would carry more say? I would wish it to be the rurals. We shall certainly fight our corner. But I suspect by the very nature of what is being proposed that it would not be thus.
The debate we had this afternoon, which looked at local government, was interesting. One or perhaps two noble Lords spoke in support of regional government. That surely should send warning signs to the Government. I wonder whether they have got the matter wrong and whether even at this late stage they might have a rethink. Certainly, this Chamber has not given them the all clear today.
I turn briefly to the four proposed Bills. One deals with local government, about which I have spoken and about which we on these Benches have great concern. The second is the local government Bill. We have concerns about the comprehensive performance awards. Thirdly, there is the planning Bill—I understand that there were some 15,500 respondents—which proposes that 90 per cent of applications, including major developments, would be decided not by elected members but by the officers. If I am wrong, perhaps the noble Lord will clarify that matter for me.
It is absurd to take away the role of county councillors who know their area well, who know their locality, and hand that responsibility over to a vast organisation in regional government and, even worse, to people who are not elected and not democratically representative of anything. We need clarification on that.
Fourthly, I turn to the Housing Bill. The Government intend to increase affordable housing for key workers by 25,000 a year for the next 10 years. How will they do that? If that is to be on greenfield sites, will that devastate their greenbelt policy? If it is to be on brownfield sites, will they allocate more money to clear the sites in the first place and provide extra road and water infrastructure? Those are simple, basic questions that must be answered.
My noble friends Lord Dixon-Smith and Lady Seccombe spoke clearly about their view of regional government, but, if I may say so, they were outweighed by my noble friend Lord Waddington, who made it extremely clear why he thinks that regional government should not be introduced. I could not agree more with him. If I smiled slightly, that was only because it seemed so ridiculous that it could not possibly happen. But here we are: the truth faces us and it will happen. That is a nightmare for all of us.
Finally, I turn to a couple of smaller points on which I should like the Minister to comment. The article in The Times that lists the 75 per cent of targets missed
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mentions two others that return us to the Minister's brief and mine. I am sure that he will be as disappointed about them as am I. It states:
"Other targets are dropped when events supersede them. A target in 1998 pledges to 'prevent outbreaks of serious animal, fish and plant diseases by March … 2002",
was abandoned—after, we accept, the biggest ever outbreak of foot and mouth disease. But the target has now disappeared. I do not see why, just because we had an outbreak of foot and mouth disease, a target disappears. Again, perhaps the Minister can tell me.
I turn to the other target, which again returns to my concern about the environment. The article cites a target to
"Improve air quality by meeting our national air quality strategy targets".
The comment reads: "slippage". Does slippage mean that the target has finally disappeared, or will it return?
I asked the Library if it could help me. We would all agree that this Government have been full of consultation but not so full of action, so I thought that I would prepare my own brief. I asked the Library how many consultations DEFRA had undertaken— bearing in mind that it was formed in June 2001. Five, 10, or 20? Our English cricket team would be pleased with the figure: 83 consultations since June 2001.
Who pays for that? How many outside consultancies have been brought in for that? The cost of all of those must be huge. How many of those consultations have been acted on? I rest my case. We have heard that the Government have been consulting, but we look for action.
We welcome some of the Bills in the gracious Speech, and I have expressed our support for them. The Minister knows that I will try to support them in any way that I can. It is our role to ensure that they are workable. But the jury is out and we should have liked other Bills to have been mentioned—including, as the noble Lord, Lord Greaves, suggested, one to deal with labelling.
9.14 p.m.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, I thank all noble Lords who have participated in this wide-ranging debate, which is always difficult, covering as it does so many departments. I shall attempt to reply as best I can in the 20 minutes imposed by the new regime.
I will save a little time by saying that I do not propose to go into detail on hunting. As the noble Lord, Lord Greaves, said, the issue must be resolved, and the way to resolve it was spelt out in the Queen's Speech. It will be resolved, and I say to the noble Lord, Lord Palmer, that there is no constitutional reason why the Parliament Act should not be used, if that is necessary—I hope that it will not be. I will, therefore, put to one side what is likely to be the most controversial part of DEFRA's brief and concentrate on some other issues.

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Having agreed with the noble Lord, Lord Greaves, on one issue, I shall disagree with him on the next. The Select Committee in another place was excessively harsh on DEFRA. There are some things that we do not yet have in place, but to argue that we have had no influence over the rest of government policy on rural areas is wrong. We will respond to the committee's report in a few weeks, but, as a result of the impetus that established DEFRA and of DEFRA's influence, we have, for example, already doubled the amount of money available for affordable homes in rural areas. We have also helped health and social services ensure that there will be another 100 new primary one-stop mobile units in rural areas. The DTI decision to allocate £270 million to the Post Office to minimise the effects of the closure of, in the main, rural post offices is also due to that pressure. We have given another £30 million to ensure that there is additional rural policing in the coming year. From next year, public transport will be allocated another £239 million for rural areas.
All those things reflect the importance that the Government as a whole put on rural areas and the influence that my department has managed to exert on the Chancellor and on the delivery departments in Whitehall. That is a major effort. It must be improved and sustained, but it is not, to put it at its mildest, a record of failure for our rural areas—quite the opposite.
I must respond to the noble Baroness, Lady Byford, about DEFRA's targets. The animal disease target is now subject to the new contingency plans and the animal health strategy that we debated only a few weeks ago. It will continue to be a priority for the department. The air quality target, which is a target for the Department for Transport and DEFRA, has slipped. We intend to make good that slippage.
The noble Baroness made a point about consultation. Given all that has been said about being close to the people, listening to what they say and taking decisions that take account of their views, the fact that we have engaged in such a range of consultation ought, surely, to be a matter for congratulation, rather than criticism. I certainly do not take any criticism on that.
Agriculture continues to loom large among DEFRA's direct responsibilities for rural areas. The noble Earl, Lord Peel, my noble friend Lady Warwick of Undercliffe and others asked about the common agricultural policy and the reform of agriculture. Others referred to the difficult situation faced by much of British agriculture. The Curry report, of course, pointed the way forward for the UK. That was reflected by the way forward pointed out by Commissioner Fischler when he made his proposals for the mid-term review. The so-called Franco-German deal, which really related to the overall budget post-2006, does not, in any way, inhibit the progress that we intend to see in the mid-term review. Commissioner Fischler made that clear, we made it clear, and the German Chancellor made it clear.
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We expect radical reform following Commissioner Fischler's proposals, and we expect that, in the coming six months, there will be some difficult but, I believe, ultimately successful negotiations on the mid-term review. As I said when the mid-term review came out, it is clear that a sea-change has taken place in the approach to the common agricultural policy. The Fischler proposals give a new sense of direction, and the only questions are how fast, how far and in what timescale we go down that road. It is clear that the intention is that the common agricultural policy, like the Curry report, will deliver a shift away from production-related subsidies and towards subsidies that are for the public good, promoting environmentally sustainable systems of land management and the overall development of rural communities and rural areas.
A number of references were made to the present situation in agriculture which clearly deserve a reply. There is no legislative programme—primarily because much of this is dealt with at European rather than British level—but where we can within the CAP move faster than the CAP decisions along the lines outlined by the Curry report, we will do so unilaterally and as rapidly as possible. Indeed, the spending review has allocated the resources to enable us to do that.
But we have to consider how we deal strategically with the problems of low incomes in the agriculture sector now and the changes in agriculture which are taking place. We believe that the change in support for land management and for agriculture as a whole needs to shift away from production-related subsidies into broader support for effective environmental land management and contributions to the rural development theme. We need to phase that in and we need to take the farming community with us.
But we also need to transform the way in which farming relates not only to the remainder of the food chain— because this is a food chain problem, not only a farming one, and responsibilities rest on the remainder of the food chain as much as on the Government and the farming community to ensure that we get a sustainable farming sector in this country—but also relates to the environment and to the rest of the rural economy. How we manage our landscape will clearly have major effects on the desirability of operating many businesses—tourism and others—in our rural areas.
That will require a change of approach in much of farming from looking at subsidies towards looking at the market. The support will come for the public goods of a better landscape, a better environment and a better rural community, but the operation of the farming community over and above that must be more closely related to the market it ultimately supplies.
That does not mean that we are competing with world prices on commodity markets globally. It may mean that some parts of the farming sector can develop niche markets in their own areas—high added value products and so on—but others will be competitive. Those with proper investment, proper technology, training and support from the rest of the food chain and from government will be able to compete very well on a European basis and on an international basis.

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The noble Lord, Lord Greaves, asked me to say what agriculture will look like in 20 years time.
Lord Prior: My Lords, I am grateful to the Minister for giving way. Can he explain how, if the costs of production of many of the commodities produced by farmers are now not being met by the price obtained by farmers, and the subsidy as such is to be removed from production to some other kind, farmers will sustain themselves if nothing is done about controlling imports or if there are no other methods for raising the price of those commodities?
Lord Whitty: My Lords, it is not the Government's responsibility to determine the price of food and we are living in an increasingly globalised world. There is no going back on either of those points. Clearly there will continue to be a need for some significant structural adjustment in the farming sector. Not all farmers will survive. There will be a reduction in the total number of farmers.
There will be a concentration, in particular, on farming markets where we can develop products which will give a return to farmers over and above the return they will get from the generalised environmental and landscape support. That will give them a base income from which to work. But, over and above that, there is no reason why farmers should operate any differently from other small businesses. They will have to go for the market where the price is right over the medium and long term. That still means some serious adjustment.
I have only 20 minutes to respond to the debate. If noble Lords intervene now I am unlikely to be able to respond for the other departments.
Earl Peel: My Lords, perhaps I may seek an assurance from the Minister that there will be a radical review of the return that farmers will receive for delivering environmental goods to the public. At the moment, the existing schemes do not reflect a proper return on capital and labour. I hope that the Minister can assure the House that in future such schemes will do that and that farmers will be paid properly for the services they will be providing to the public through the public purse and the switch from pillar one to pillar two.
Lord Whitty: My Lords, as has already been made clear, the switch into what Sir Donald Curry originally called the "broad and shallow" scheme, or the entry level environmental scheme, will be without the overload of bureaucracy which many of the current agri-environment schemes have developed. It will also not depend on the principle of income forgone, on which those schemes are based. Therefore, there will be a return to farmers in return for the improved environmental output.
Clearly, we are not working on the basis of guaranteeing any particular profit level or return on capital, but that would make a contribution towards a
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more profitable farming sector. Over and above that, an adjustment to the farming sector towards meeting what are the demands of consumers rather than a structure of Brussels subsidies will enable it to operate to greatest economic effect.
As regards my department's other areas of responsibility, they include those relating to broader rural areas and the diversification of agriculture. I support looking carefully at the returns that we can get from developing, for example, bio-fuels and alternative crops and products. We should look at the structure of fiscal incentives as against other fuels. We need to look also at issues of how we use land, how we make it easier through the planning process and elsewhere to diversify the use, for example, of redundant farm buildings, and look at the planning process as regards the use of agricultural land. Certainly, a greater flexibility on both of those fronts is necessary if we are to be able to sustain an effective and growing prosperity within our rural areas.
In regard to the broader environmental aspects of my department's brief, I draw noble Lords' attention briefly to two Bills before us, both of which have been largely welcomed. They are called the "WET and water" Bill which is slightly misleading. The "WET" Bill deals with waste and emissions trading and is an important contribution both to the more effective use of our resources and not using landfill to the grotesque extent that is currently the case within this country for the disposal of waste, and makes a contribution through the market towards reducing CO2 emissions through an effectively-based emissions trading scheme.
The noble Lord, Lord Ezra, raised some detailed points on the energy contribution to our environmental objectives. The right reverend Prelate the Bishop of Hereford and others raised the broad strategy on climate change. We have a detailed policy on climate change to which energy, the contribution of renewable energy and, indeed, CHP, including micro-CHP, will make a major contribution. Further work on the direction of energy policy is now under way. We intend to publish an energy White Paper dealing with those issues and the medium and long-term objectives of energy policy to take account of the need posed to us, for example, by the Royal Commission for a 60 per cent reduction in carbon emissions by 2050.
I now move on to other parts of the debate. A good deal of time was spent on dealing with the issues of regional government. Taken together with our Bills on planning and local government I believe that there is a widespread misunderstanding of what the Government are trying to do. The Government believe that certain aspects of planning, transport and spatial development are best dealt with at regional level. Past governments have also believed that because we already have regional transport plans and regional spatial development plans which are dealt with by groups of county and unitary authorities. It would be better if that were dealt with by a democratic process rather than an indirect process which tends to relapse into Buggins' turn in terms of the priorities of the various county and unitary authorities.

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That is one reason why we would like to see democratic control of those regional institutions. The other reason is that some people want them. How many people want them will be the subject of a referendum. No region is being forced into it; every region will be able to have a choice. When they have that choice, they must also consider the implications for the current structure of local government within their region.
We are not laying a blueprint stating that we will abolish the counties; quite the opposite. We are saying that we need either to strengthen the counties or to strengthen the districts. If we have a regional authority, we do not want an additional tier; we want to look at the way that region will decide as a whole what the structure of its local and regional government should be. Therefore, when regions take the decision on whether they want a regional assembly, they also take a decision on the structure of local government beneath that level.
Likewise, on all the policies relating to local government and the planning Bills, contrary to what has been suggested today by the usual contingent from the Kingdom of Essex—that we are trying to be more centralised, bureaucratic and rigid—we are trying to provide more flexibility. We want to provide flexibility in relation to funding; flexibility to allow local authorities to raise capital; and flexibility to alter the way in which they approach their decision-making in respect of, for example, planning, regeneration and transport. All of those areas require more local decisions.
It is true, as the noble Lord, Lord Dixon-Smith, knows, that on occasion I have shown sympathy with his view that central government of all complexions occasionally legislates too heavily. However, this is a move in exactly the opposite direction. It is decentralising, deregulating and providing flexibility. I would have thought that noble Lords from both parties opposite—certainly the Conservative Party in its period of opposition—should be in favour of such moves towards greater flexibility.
I turn briefly to education, which I am sure my noble friend Lady Ashton will—
Lord Pilkington of Oxenford: My Lords, the Minister has imposed his own burden. Many of us are concerned about education. The House rises at ten o'clock, so I hope that he will not tie himself to winding up in 20 minutes. We want our questions answered.
Lord Whitty: My Lords, as I understand it, the House has agreed that all Front Bench speeches should be limited to 20 minutes. The noble Baroness and the noble Lord opposite observed that and it would be only right that I do so too—
Lord Pilkington of Oxenford: My Lords, I am sorry to interrupt. Questions were asked and they are
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important. We did not agree to that and I hope that the Minister will answer the questions on education. Two minutes is not enough.
Lord Whitty: My Lords, I appreciate that two minutes is not enough, but I would have had five minutes had there not been interruptions. The education questions related largely to the issues set out by my noble friend Lady Ashton at the beginning of the debate. They relate to our funding of higher education. In response to the noble Baroness, Lady Byford, the jury is out in relation to the longer term, but our manifesto commitment clearly stands for the moment as regards top-up fees. There is no intention to introduce top-up fees in the period of this Parliament and no decision to do so beyond that. But we will be looking at the whole issue of funding for higher education.
It is important to recognise that during the course of this government we have provided substantial additional funds for higher education. In terms of funding per student, while in the period 1989–97 that fell by approximately 36 per cent under the previous government, it rose in the first two years of this government and has remained static since. Therefore, the resources that the Government have allocated to higher education cannot be attacked in that way.
A number of points were raised, including by the noble Lord, Lord Pilkington, relating to vocational education. We provided an overall strategy in relation to that in the Green Paper, 14–19: extending opportunities, raising standards, published in February 2002. The intention is that we deliver to young people their individual requirements for qualifications, both through their schooling and through the wider education systems, and that vocational output from the education system will be as valid as it is, as the noble Lord, Lord Pilkington, indicates, in Germany and to some extent in France, more or less on a par with academic achievement. That is an important part of the mix of reforms that we have suggested and are pursuing in the 14 to 19 year-old strategy.
On teacher recruitment, referred to earlier today by my noble friend Lady Ashton, the latest figures show an increase of 9,400, indicating an increase since 1997 of 20,400 teachers in post over that period. The figure for teachers entering training has increased by 7 per cent over the past year. Understandable anxieties remain regarding the shortage of teachers, especially in certain disciplines. However, the overall picture is of substantial additional resources being put into teacher training and recruitment and teachers in post in schools.
We are reviewing the totality of higher education. We are examining not only the funding aspects but the diversity to which my noble friend Lady Warwick referred and the need to ensure excellence in all parts of the university sector, not merely in some parts of it.
The noble Lord, Lord Jenkin, referred to science education. I agree with him, and I commend the work that he himself has put in on this front. We are in the early stages of trying to turn around the situation—of

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trying to re-engage pupils with science education. The new GCSE course which starts this year is effectively a hybrid GCSE in relation to science, which is a new approach to getting relatively young pupils interested in science. We have also extended what was the science year into a second year, so that we can now focus attention on science in that further year.
The noble Lord, Lord Prior, referred to literacy. It is the one area of education about which I know something—which is probably why I have never been an education Minister. That is taken on board in the overall approach.
The noble Baroness, Lady Walmsley, referred to exclusions and truancy, which are continuing problems—although under the previous system pupils with special educational needs were seven times more likely to be excluded than the average pupil; whereas now the figure is three times that level. That in itself is an indictment of the previous system of exclusions. It is important, therefore—
Baroness Blatch: My Lords, the reference was to truancy, not to exclusions.
Lord Whitty: My Lords, the noble Baroness, Lady Walmsley, clearly referred to exclusions and to the crime and social problems caused as a result. Truancy is a parallel problem, but the noble Baroness's reference was to exclusions.
I have had to rush through my remarks. Reverting to the local government side of the debate, the only area that I have not covered is housing. There is a substantial commitment to look at housing, and particularly at the provision of affordable housing. The department of my right honourable friend the Deputy Prime Minister will be looking to deliver a larger programme of affordable housing both through the planning system and through the provision to local authorities of the new powers that they will have in terms of their internal funding arrangements to
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provide some support for affordable housing within their areas, particularly that which can also house the essential service workers that we need, particularly in inner city areas that are subject to housing stress.
I was given a signal from my noble friend the Chief Whip that I could speak for an additional five minutes. I have done so, and I must now sit down. My noble friend or I will write to other noble Lords.
Baroness Farrington of Ribbleton: My Lords, on behalf of my noble friend Lady Hollis of Heigham, I beg to move that the debate be now adjourned until tomorrow.
Moved, That the debate be now adjourned until tomorrow.— (Baroness Farrington of Ribbleton.)
On Question, Motion agreed to, and debate adjourned accordingly until tomorrow.

London Local Authorities and Transport for London Bill [H.L.]
The Chairman of Committees acquainted the House that, pursuant to the resolution of 31st October, the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent; the Bill was presented, read a first time, read a second time pro forma and committed to an Unopposed Bill Committee.

London Local Authorities Bill [H.L.]
The Chairman of Committees acquainted the House that, pursuant to the resolution of 31st October, the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent; the Bill was presented, read a first time, read a second time pro forma, reported from the Select Committee and recommitted to an Unopposed Bill Committee.
House adjourned at nineteen minutes before ten o'clock.