Westminster Hall Sitting of 19 December 2000

Preamble
[MRS. SYLVIA HEAL in the Chair]

Equitable Life
Motion made, and Question proposed, That the sitting be now adjourned.—[Miss Melanie Johnson.]
9.30 am
Mr. Richard Ottaway: I should like to raise the situation at the Equitable Life Assurance Society. I declare my interest as a policyholder of Equitable Life.
Since I announced that I was to instigate this debate, I have been deluged with advice, e-mails and faxes. I apologise to those who might be following the debate because, in the short time available, I cannot address every technical point. However, I am sure that this will not be the only debate on the subject and there will be plenty of opportunity in future to examine the minutiae. Today, I intend to consider some fundamental questions.
The Equitable Life Assurance Society is the oldest mutual assurance company in the world and it is a tragedy that this debate should have to take place. The situation at the Equitable is of extreme concern to the hundreds of thousands, if not millions, of people who are caught up in it. The frenzy of media coverage over the past few weeks—much of it uninformed—has not been helpful. We need a period of calm reflection so that the situation can be satisfactorily resolved.
It is important to remember that there has been no fraud and no intent to deceive. Although, in the view of many, there may have been misjudgment, every penny that has been paid to the Equitable is still there and has not gone away. That money is competently managed and the issue is an argument over which policyholders are entitled to which assets of the society. That argument can be resolved by rational intelligence and proper leadership. My thinking is based on my family maxim, "It's not how you get into the hole, it's how you get out of it that counts."
The recent case, culminating in the House of Lords decision in July, concerned the validity of the society's decision to award lower terminal bonuses to those whose with-profits pension policies matured with guaranteed annuity rates, known as GARs in the industry. A with-profits pensions policy is one in which the insurance company pays bonuses that are added to the fund at intervals. When the plan comes to an end, a final bonus is paid. The level of bonus depends on the investment performance of the insurance company. When the plan matures and the individual retires, part of the final pension fund must—I emphasise the word "must"—be converted to a regular income by the purchase of an annuity, either from the original pension provider or from another insurance company. The amount of annual income payable from the annuity depends on the market.
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I shall now make the only party-political point that I intend to make. The Conservative party plans, after the next general election, to change the obligation to buy an annuity. We shall adopt the recommendations of the committee headed by Dr. Oonagh McDonald, which will virtually remove that obligation.
The with-profits policies at the centre of the Equitable Life case were first sold in the late 1950s and offered a guaranteed annuity rate regardless of the annuity rate at the time the individual retired. Annuity rates have fallen considerably in recent years. In the past 10 years, they have fallen from around 16 per cent. to 8 per cent. per annum, halving the income that a newly retired person, with the same lump sum, would receive.
Rates have fallen for two reasons. First, the value of yields from Government bonds—more commonly known as gilts—that are used by insurance companies to back their annuities has fallen sharply as the Government's borrowing requirements have reduced. Secondly, people's life expectancy has increased and annuity rates have fallen to reflect that. As a result, the Equitable, along with many other pension providers, stopped offering GARs in the late 1980s.
However, the Equitable faced growing costs as about 90,000 GAR policies, already sold, began to mature. A greater proportion of the company's profits was subsequently allocated to those policyholders than had been originally anticipated. Equitable attempted to offset some of those costs by paying a lower final bonus to policyholders with GARs, compared with bonuses paid to policyholders without a guaranteed annuity.
Guaranteed annuity policyholders were effectively given a choice between exercising the right to a guaranteed annuity rate, in which case the final bonus would be reduced, or relinquishing the guaranteed growth, purchasing an annuity at current market rates and receiving the full bonus. The financial effect of both those options was roughly neutral. As a result of the Equitable board's policy and management, a number of the GAR policyholders complained to the Personal Investment Authority ombudsman, who agreed to allow the dispute to be referred to the High Court to test the validity of the society's actions.
In September 1999, the Vice-Chancellor of the High Court, Sir Richard Scott, held that the Equitable's actions had been valid. A representative policyholder appealed to the Court of Appeal, which reversed the decision and allowed the appeal in January 2000. The society appealed against the decision to the House of Lords. The Law Lords published their judgment on 20 July, finding that the Equitable's actions had not been valid, and saying so in extensive terms that went much further than the decision of the Court of Appeal.
That decision by the House of Lords obliges the society to pay a full bonus to the GAR policyholders and to pay the guaranteed annuity on the whole sum. That has created two different classes of policyholders in the Equitable: those with guaranteed annuities and those with annuities at market rates. The upshot is that the non-GAR policyholders are funding those with GAR policies. To cover that cost, the Equitable has frozen bonuses for seven months, which has raised the sum of £1.5 billion to cover those with guaranteed annuities. However, I understand that that is only an estimate, and the liability remains unquantified.

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After the House of Lords decision, the management immediately announced that the society was for sale. No less than 15 parties expressed an interest. The last, Prudential plc, withdrew from the process two weeks ago, precipitating what some have called a crisis inside the society. It should come as no surprise that it was impossible to find a buyer for the Equitable when the precise liabilities to the GAR policyholders remained unknown.
At the same time, the company announced that it would take no new business. That, coupled with the regulator's demand that investments be switched to more secure investments such as gilts, means that the fund will inevitably lose its momentum and pay lower returns. This has led to widespread concern. I am particularly concerned about the plight of existing annuitants, who face a shrinking annuity for the rest of their lives with no way out.
Having set the scene, the question is, where do we go from here? The number of policyholders involved is truly alarming. There are 90,000 policyholders with guaranteed annuities, and it is believed that there are 390,000 with-profits policyholders without guaranteed annuities. In addition, it is thought that up to 700,000 individuals have an interest in the matter through company group schemes.
Some of Britain's finest blue-chip companies, such as Sainsbury and Shell, as well as organisations such as the Consumers Association and the BBC, are caught up in the situation. Last, but not least, the parliamentary pension funds are involved, as they offer policies that are commonly known as AVCs for people who wish to make additional voluntary contributions.
I have been swamped with advice about what the Equitable has done wrong and what it should do in the future. I am sure that the management of the Equitable would agree that misjudgments were made; some people have described what has happened as incompetence, others as negligence. Some people talk about suing the Equitable or its directors, but that would achieve little and waste a lot of money. As the Equitable is a mutual society, those concerned would, in effect, be suing themselves. Other people say that the society's advisers should be sued. That would be a long drawn-out struggle and, as it is far from clear how they may have misled investors, in my judgment would achieve little.
The right way forward is for the Equitable to realise the massive and widespread concern, anxiety and dismay about the way in which the society has been managed, and to take a number of steps to restore confidence. At the society's last annual general meeting, an effort was made to elect a member on to the board of directors. The management resisted the attempt—slightly surprisingly, as the Equitable is, after all, a mutual society—and advised members not to vote for the person concerned. I hope that the management will change its attitude, and that the non-executive directors will insist that the board is expanded to include three further non-executive directors, all of whom are policyholders affected by the situation and who can bring their experiences into the boardroom.
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I have nothing against the present chief executive, but I do not believe that he should also hold the post of the society's actuary—although I understand that that is only a temporary arrangement. The management team should accept the appointment of someone credible from outside the society. A world-class pension fund manager without any involvement with the past should take over the reins and bring a fresh start and fresh thinking. I appreciate that the management are up to their neck in muck and bullets and are doing their best to stabilise the situation, but I hope that, as time passes, they will recognise that the best way forward is to accept such appointments.
When the board has been so constituted, it should address a clarification of the law. Many people believe that policyholders without guaranteed annuities were not properly represented at the successive court hearings at the High Court, the Court of Appeal and the House of Lords. The management of the Equitable invited the courts to approve its handling of the guaranteed annuity policy holders. The courts did not approve and, as their focus was on the guaranteed policy holders, the arguments of the with-profits policyholders without guaranteed annuities were not properly considered. It is the opinion of people far more qualified than I am that there was a conflict between the views of the Equitable's management and the non-guaranteed annuity rate policyholders. The least that the society can do is to take an independent legal opinion on the point and consider legal action if it supports the contention.
It is essential to stabilise the situation, so that the society can navigate itself through its difficulties without causing significant damage to its members' interests. If peripheral interests are to be sold off, that must done in an expeditious and orderly manner.
As I said at the outset, the fund is still there and has not gone away. It is not a Maxwell-type situation where funds are missing. It is simply a discussion or argument among intelligent people about who exactly owns what. I hope that agreement can be reached between the different classes of policyholder and that the liabilities can be quantified. I am sure that everyone involved in the matter wishes the management of the Equitable well and hopes that they will open up, loosen up, become transparent and work with policyholders to resolve this difficult situation.
On the role of the regulator, it is the view of many in the industry that the Equitable has been treated differently by successive regulators; by the Department of Trade and Industry until 1998 and by the Financial Services Authority thereafter. It is clear that something had to give. It was not possible for some policyholders to have guaranteed policies with guaranteed annuities, while other categories of policy holder were not so entitled, without there being some difficulty.
In the High Court, which found in favour of the Equitable, the Vice-Chancellor, Sir Richard Scott, believed that the society was right to pay a smaller final bonus to guaranteed policy holders, as the society was only obliged
to bring the value of the benefits being taken by the policy holder on maturity up to a level that equates to the policy holder's notional 'asset share' in the Society's with profit funds.
That is known as the asset share argument.

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In other words, the judge said that there was no need to pay a large final bonus because the high annuity would give the guaranteed policyholders their fair share. However, in the House of Lords, in a most lucid judgment, Lord Cooke of Thorndon said:
The Vice-Chancellor's description introduces the concept of asset-share, which is nowhere mentioned in the policy but dominates the approach of the Directors.
That is the nub of it. Lord Cooke was absolutely clear about that and so were his four colleagues. The highest court in the land has found that the Equitable management took an approach that was nowhere mentioned in the policyholders' contracts.
What was the regulator's view? When it looked at policyholders' contracts, did it think that the directors were adopting a policy that was nowhere mentioned in the contract? If not, why not? Why was that clear to the Law Lords, but not to the regulator or, indeed, to the Treasury? It is possible that the worst impact of the situation could have been ameliorated if it had been examined some years ago.
The Treasury, too, must answer an essential question. In December 1998, the Treasury was still offering guidance to all companies authorised by it to carry on long-term business in the insurance sector to the effect that the policyholders entitled to some form of guaranteed annuity could reasonably expect to pay some premium or charge towards the cost of their guarantee. In a letter of 18 December 1998, the Treasury said:
This could be achieved in some cases through some reduction in the terminal bonus that would be payable if there were no such guarantee.
There we have it. The Treasury was, in effect, endorsing the situation and the management of the Equitable. There is no doubt whatever that, in the Treasury's view, the Equitable's policy of paying smaller final bonuses to those with guaranteed annuity options was right. The Treasury must answer exactly the same question that I posed to the regulator. Why was the situation obvious to the Law Lords but not to the regulator or to the Treasury? When questioned on that point, the Minister's answer of 6 September to my hon. Friend the Member for Arundel and South Downs (Mr. Flight) was far from satisfactory. I am not sure where that leaves the Government, but the Minister will undoubtedly tell us in her winding-up what responsibility she accepts for the situation, why the Government acquiesced in the situation and why they issued guidance in support of the Equitable's decision and in support of the view that many now believe to be misguided.
The situation needs thorough investigation and I urge the Treasury Committee to look into it. I hope that the Minister will accept that there is widespread concern and that a calm, rational approach is needed, but that important questions must be answered to ensure that such a dreadful situation does not happen again.
9.50 am
Dr. Vincent Cable: I congratulate the hon. Member for Croydon, South (Mr. Ottaway) on securing this topical debate and on the balanced way in which he introduced it. He made it clear that we are talking not about dishonesty or sharp practice, but
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about a major error that has had serious consequences. Like many hon. Members, I am a member of the parliamentary pension scheme and, therefore, have an interest that I should appropriately declare.
My initial point leads directly from the hon. Gentleman's closing remarks in addressing the question of whether there has been a regulatory failure. I do not assert that there has been, but the question needs to be asked. If there has been a failure, or indeed negligence at a regulatory level, that will have substantial implications. The matter would cease to be merely an issue between the policyholders and the company, and we would need to ask what were the Government's liabilities. There have been precedents of regulatory failure—for example, Barlow Clowes. In that case, policyholders received compensation.
The question of whether there has been regulatory failure focuses on different periods, the first of which concerns the distant past, when the guaranteed annuities were written. With the wisdom of hindsight, the Financial Times said that guaranteed annuities were actuarially based on mathematical brilliance and economic illiteracy, but we should ask at what point the Government began to have doubts about the policies being based on the assumption of continued high inflation. It has been the objective of successive Chancellors to produce low inflation and low long-term interest rates. It must have occurred to someone that there was a conflict between those objectives and the assumptions under which an important part of the insurance industry operated.
A more important question concerns the run-up to the House of Lords ruling. At what point did the Government, who regulated the industry, realise that something was seriously amiss? It is becoming clear that, about two years before the House of Lords ruling, serious worry was expressed in Government. I have been shown a minute— I am sure that there are many others—written in a note from the insurance directorate to the FSA on 5 November 1998. It says:
The greatest public attention is focused on the Equitable Life, because of its controversial policy of paying the guaranteed annuity rate only on the guaranteed sum built up in the fund…Our preliminary view is that the Equitable is entitled to do this, though we are seeking further information to test the position further.
That confirms what the hon. Gentleman said concerning the Government's judgment about the policies being pursued by Equitable Life and makes his point that the Government regulator did not anticipate the House of Lords ruling.
The second comment—which is more serious—in the note says:
However, our primary concern is over the company's ability to reserve adequately for these guarantees. The information received to date is unconvincing, and raises serious questions about the company's solvency.
That was written 18 months before the House of Lords ruling. The insurance directorate gave a clear signal of the danger of insolvency, and the need for urgent and major action. We must ask why the FSA did not act. It took action to strengthen reserves, but why did it not act commensurately with the scale of the problem that had already been identified?
To assess regulatory failure, we also need to focus on the period since the House of Lords ruling. The hon. Gentleman has already asked whether it was

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appropriate to stop writing policies. I would ask a slightly different question: why was it not considered necessary to launch a rescue operation in the City, such as that launched when Barings bank collapsed some years ago? Of course banks are not insurance companies and different principles apply. For example, there are issues of confidence in the banking sector, which do not apply to the same extent in this case. None the less, the City was encouraged to rescue a major flagship British bank but not a major insurer in which hundreds of thousands of people had invested their savings. Why was that urgency and sense of importance not communicated? Has there been a regulatory failure? Will the Economic Secretary explain how that will be investigated? How will the investigation take place and will it be undertaken by the Treasury or by someone independent?
Is a more comprehensive inquiry into how the insurance sector operates appropriate? Mr. Cruickshank led a major inquiry into the operation of the banks. A whole set of factors have come together in the Equitable Life case which suggest that the insurance sector should be subject to the same degree of overarching inquiry. I will illuminate some of those factors.
First, the Government are launching stakeholder pensions, a scheme I wish well. It is important that pensions are available, particularly to low-income families. However, in many ways, the concept of a stakeholder pension is based on the same form of operating as that followed by Equitable Life. As the hon. Member for Croydon, South said, Equitable Life was an admirable company. It operated socially aware policies, including flexibility in the payment of premiums. If Equitable Life got into trouble by operating socially enlightened policies for pension provision, can we be as confident as we were that stakeholder pensions will succeed?
My second question relates to mutuality. The Equitable Life case has exposed the instability of the mutual sector within the insurance industry. The ultimate source of Equitable Life's weakness was low reserves. However, had the company provided substantial reserves, it would have become a target for carpetbaggers. I can only speculate whether that was one of its reasons for not increasing reserves, although it was probably more to do with a wish to appear at the head of the performance tables. None the less, as a consequence of trying to operate according to the spirit of mutuality and not lay itself open to carpetbagger attack, Equitable Life was highly vulnerable. As we have seen in the building society sector, the lack of a proper regulatory structure for mutuals requires further investigation.
The orphan assets problem that we attempted to debate a few weeks ago is a third issue. Equitable Life was disadvantaged by not having orphan assets; indeed, one of the companies that tried to buy it used orphan assets as leverage in the purchase. Orphan assets are often accumulated through policies that are not entirely consistent with the welfare of policyholders, such as low rates of persistency and not paying out on with-profits policies. Equitable Life appears to have been penalised
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by its lack of orphan assets. That perverse state of affairs raises, yet again, the question of whether the Government have an appropriate policy for dealing with such problems.
The issues raised do not simply relate to Equitable Life. We must ask whether there has been a regulatory failure, but we must also ask the more general question of whether the insurance sector as a whole is properly managed and regulated. It is the Government's duty to address both problems.
9.59 am
Mr. David Lidington: I start by declaring that one office building in Aylesbury occupied by Equitable Life is leased from the Aylesbury Conservative association. Although the registrar tells me that that is not a registrable interest—it is a straightforward commercial arrangement—it is sensible for me to be completely open about it.
I sought to intervene in today's debate because Equitable Life is, by a long chalk, the largest private sector employer in my constituency. About 1,500 jobs in Aylesbury are at stake because of Equitable Life's troubles. That entails a threat to the purchasing power that its employees put into the town's economy.
I am grateful for the measured speeches of my hon. Friend the Member for Croydon, South (Mr. Ottaway) and the hon. Member for Twickenham (Dr. Cable). The sense of shock in Aylesbury during the past few weeks has been compounded by the high reputation that Equitable Life has always enjoyed locally, both as a good employer and as a company that takes pride in its mutual status and contributes to the local community. For example, it has supported the youth enterprise scheme enthusiastically year after year, and readily seconds staff to voluntary and charitable activities in the area.
Many of the points that I wanted to make have already been raised by my hon. Friend the Member for Croydon, South and the hon. Member for Twickenham. I will not repeat them, because other hon. Members wish to speak. However, I endorse their approach and their requests for further explanation, parliamentary debate and inquiry.
Many of my constituents are employed by Equitable Life, and many have invested in Equitable Life products over the years. I speak with the interests of both staff and investors in mind. I hope that the Economic Secretary will explain in detail her view of the role of both the Treasury and the FSA during this saga.
The hon. Member for Twickenham suggested that the Equitable's policy on reserves might have been prompted partly by awareness of performance league tables and partly by commitment to the spirit of mutuality. When I have met Equitable directors during the years in which I have represented Aylesbury, they have always impressed on me their commitment to the principle of mutuality. They take pride in it as a factor that differentiates Equitable from limited liability company competitors. It should not have surprised the regulatory authorities that few reserves were available to make good a loss such as that which has now occurred. Equitable's board was not keeping a secret, or covering up failure. It was a declared policy by successive boards that believed it was in the best interests of the society and all its members.

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At what point did alarm bells start to ring in the Treasury and the FSA? Was it when the court cases were first brought, or after the judgment in the court of the first instance? Was it after the House of Lords ruling? Has the Treasury changed the advice to which my hon. Friend the Member for Croydon, South alluded when he quoted from the letter from Treasury officials stating that the guidance had been suspended on 20 July this year? Perhaps the Department should have reconsidered that advice earlier. Why did the Financial Services Authority agree that Equitable Life should continue to sell new policies after the House of Lords ruling, although the future of the society was at that stage uncertain, to put it mildly?
The most difficult questions concern what should be done now, not how to discover what went wrong in the past. As my hon. Friend the Member for Croydon, South said, matters remain in a state of considerable confusion and flux. We wish the management of Equitable Life and other concerned parties well as they try to quantify the liabilities involved and to decide on the best way to make good the duty hat Equitable Life owes to every one of its policyholders. A great deal of discussion has taken place about the sale of various parts of the business to various parties, but the final outcome remains unclear.
It may be too early for the Government to answer some of these questions. However, an investor in my constituency has suggested the possibility of some kind of Government underwriting—not of the £1.5 billion estimated loss in growth stemming from the GAR, but to allow Equitable Life to continue to invest in equities instead of restricting its portfolio more closely to gilts. That would allow the asset base to grow over the years, helping both the annuitants to whom my hon. Friend the Member for Croydon, South drew attention and other policyholders who do not stand to benefit from the guarantees that were the subject of the recent litigation.
Have the Government considered appointing a troubleshooter or facilitator to help to bring the parties together? It is generally accepted that these circumstances are not comparable to those of the Maxwell case, in that no fraud has been involved. However, there are contending parties with different interests, and the experience of the Maxwell case proved that sometimes an impartial and respected third party is able to broker a way forward that the parties and their lawyers are unable to achieve if left to themselves.
About a week ago, in response to 2,000 redundancies in Luton, Ministers announced to the House a package of measures to help employees there to find new work. I ardently hope that the people of the neighbouring town of Aylesbury do not face a comparable situation to that in Luton. If the worst came to the worst and such an employment disaster occurred, I hope and expect that the Government would present a similar package of help and support for redundant employees in Aylesbury.
This has been a timely debate, but it is important that Parliament and Select Committees continue to inquire into the circumstances affecting Equitable Life and the insurance sector in general and continue to debate the development of this crisis.
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Several hon. Members rose—
Mr. Nicholas Winterton (in the Chair): Order. I hope to call two further speakers before the Minister winds up, but she will require sufficient time to reply to this very important debate.
10.10 am
Ms Oona King: I shall endeavour to be exceptionally brief, Mr. Winterton.
I want to take this opportunity to discuss the problems faced by my constituents and, as we have heard, many others. I congratulate the hon. Member for Croydon, South (Mr. Ottaway) on securing this important debate. I admit to being rather shocked, as many Members seemed to be, at the detail of what has happened to Equitable Life investors. In 1997, two of my constituents, Melvyn and Alizah Litvin, took the advice of Equitable Life and invested money in the managed pension with-profits bond. Like many others, they had no reason to mistrust such advice. Indeed, as the Financial Times pointed out this week, Equitable Life
was regarded by most observers as a pillar of the establishment.
My constituents were unaware that, in the 1980s and 1990s, Equitable Life was, as some might put it, recklessly marketing guaranteed annuities that proved unsustainable when the financial climate changed.
As we have heard, Equitable Life is now raiding the with-profits fund to honour those guaranteed annuities. Essentially, it is robbing Peter—or Melvyn and Alizah and others like them—to pay Paul. It has now closed its fund and imposed a 10 per cent. deduction on anyone who wishes to remove their investment, which represents a double whammy. My constituents have already lost a substantial sum, and they will lose even more if they try to get out. Naturally, they are aggrieved. As they put it:
We did not have unrealistic unsustainable expectations for our investments, we invested in a reputable company considered very ethical and therefore we feel very aggrieved and angry about the outcome.
My constituents have two questions for the Minister. First, why was the quality of supervision by the authorities so low? Secondly, why was Equitable Life apparently allowed to operate with a much slimmer financial cushion than comparable insurers? As the hon. Member for Croydon, South pointed out, it seems extraordinary that its directors were adopting a policy that was nowhere to be found in policyholders' contracts. Naturally, we must ensure that that cannot happen again, and I look forward to hearing about the Government's plans to prevent such an injustice from recurring.
10.13 am
Mr. Howard Flight: I congratulate my hon. Friend the Member for Croydon (Mr. Ottaway), South on securing this debate. It is a serious matter when the bluest of blue-chip insurance companies encounters a problem that threatens to undermine public confidence in insurance and pension provision. It will cause considerable problems in promoting the stakeholder product, and weaken greatly public confidence in regulation.

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As we know, the problem occurred because of the obligation to buy annuities, because liabilities were not reinsured and because the company—partly because it was a mutual—adopted a policy of paying out and not reserving. The regulators, the Department of Trade and Industry, the Treasury and the Financial Services Authority, must have known what was going on for at least the past three years. Indeed, the increase in the cost of annuities has occurred mainly during that time.
The letter of 18 December 1998 is perhaps the tip of the iceberg. The bodies concerned concluded that the problem could be fixed by the method outlined in the letter, which was that those with guaranteed annuities would suffer a loss of with-profits. As my hon. Friend pointed out, that seemed legally doubtful at the time and unlikely to fix the problem effectively. The problem exploded two years later, by which time it had probably worsened. Meanwhile, the cost of annuities rose further with the fall in real interest rates. It is not only falling nominal rates and falling inflation that drive up the cost of annuities, but the dried-up supply of gilts. Many lawyers who are members of Equitable Life feel that there is a possible case for Government liability, given that the regulatory body did not address the problem two years ago.
I urge the Government to encourage a rescue, and I ask the Minister if the Government are willing to make available public funds to smooth the path of a possible rescue. If there is no rescue, the problem will get worse because many people will seek to withdraw, given the change in investment policy. In that case, the scope to recover will be reduced by the lower equity element and the higher gilt element. If large numbers of people decide to pay the 10 per cent. penalty and withdraw, there will be a declining pot of assets at Equitable Life to finance the fixed annuity liabilities. I take the point made by my hon. Friend that the matter requires a responsible and calm approach. If it is not addressed urgently, the potential problems for both Equitable Life and the public perception of insurance pension schemes will become significant.
10.16 am
The Economic Secretary to the Treasury (Miss Melanie Johnson): I shall do my best to respond to the points that have been raised. I congratulate the hon. Member for Croydon, South (Mr. Ottaway) on securing the debate. When Equitable Life announced that it was to close to new business on 8 December, its president said that
this is a very sad day for all in the Society.
Many hon. Members have shared that sentiment today.
As a number of hon. Members have pointed out, the size of Equitable Life means that news of its closure to new business is of great interest to many thousands of families across the UK. Before discussing the circumstances that led Equitable Life to close to new business, it is important to make it clear where responsibilities lie. First and foremost, it is for the board and management of Equitable Life—as for any insurance company—to account for their stewardship of the business to their owners and customers. In the case of Equitable Life, which is a mutual, that
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responsibility is particularly vivid, since its customers own it. Its policyholders have a range of interests, depending on the terms of the policies that they hold, and over the years it has been Equitable Life's responsibility to strike a proper balance between those different interests.
I speak as a Treasury Minister in this debate because the Treasury has policy responsibility for the FSA. The FSA is the prudential regulator for the insurance industry, including of course Equitable Life. Equitable Life sold a range of investment-linked insurance policies whose distribution was regulated under the Financial Services Act 1986. The main regulator responsible for setting rules relating to this part of Equitable Life's business was the Personal Investment Authority. Some professional bodies may also have been member firms that did business with Equitable Life. The PIA is in the process of being absorbed into the FSA as part of the Government's policy of establishing a single regulator for financial services.
Equitable Life is, of course, a large mutual insurance company. Its premium income in recent years has placed it as one of the UK's three largest pensions providers, with total assets of around £33 billion. Equitable Life has approximately 1 million policies in force and 650,000 policy holders, of whom 450,000 are members. It is the oldest mutual life assurance society in the world, and the unexpected news of its closure to new business came as a shock to policyholders and members—and, as the hon. Member for Aylesbury (Mr. Lidington) said, to the staff and the whole of the financial services industry.
The Government have noted the recent statements on the matter by the Financial Services Authority and by Equitable Life, and welcome the fact that the FSA and the society are working closely together to protect the interests of policyholders. I stress that that work is continuing because it has been suggested that the FSA might be acting as a sort of ring-holder in the process. At the moment, it is actively engaged.
The Government appreciate the concern that the closure to new business has brought to the 650,000 policyholders of Equitable Life, especially in the run-up to Christmas. We welcome the society's efforts to provide timely information to policyholders, so that they can fully consider their options. We also welcome the fact that the FSA is providing information to affected policyholders via the consumer section of the FSA's website and its consumer helpline. The FSA's advice is that policyholders should reflect carefully on their options before taking action. It is only right that they should have access to the best possible information to enable them to make appropriate decisions. The Government support that approach.
Equitable Life has said that its inability to find a buyer means that the loss of growth in with-profits policies between January and July 2000 is now unlikely to be restored. The society has said that the investment performance of its with-profits funds is likely to be impaired because it will need to be invested to a greater extent in bonds and gilts rather than in equities, which have historically generated higher returns in the longer term. The FSA has advised policyholders to take that into account when deciding on their options for their existing investments as well as for their future investment strategy.

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I turn briefly to the remarks made by the hon. Member for Arundel and South Downs (Mr. Flight). We should be clear that no theft has taken place, that Equitable Life is not insolvent, that the contractual elements will be honoured and that the policies are valid. I thank hon. Members for their generally measured tone, but it is important that we do not over-emphasise the problem. We should remember that the factors that I have just mentioned still hold true, and we should feel confident about the matter.
Many hon. Members will, of course, have an interest in the FSA's advice because they are making additional voluntary contributions to the parliamentary pension scheme. I do not hold any AVCs, so I do not have an interest in the matter.
The FSA is concerned that material changes to the expectations of Equitable Life policyholders are seen in context, and that policyholders should not rush to take precipitate action. The FSA has advised Equitable's customers to remember that the society remains solvent and that their existing policies are still valid. The society therefore continues to meet the statutory requirements that apply to insurance companies. The society has made it clear that it is still able to meet its contractual obligations to policy holders.
The hon. Member for Croydon, South alleged that the regulator had treated Equitable Life differently. The regulator is obliged to treat every firm in the same way and under the same principles, taking account of the risks of the business. The Treasury's guidance on running such a business does not absolve Equitable's management of responsibility for taking legal advice about running the society. It can do no more than give its best assessment of how the courts would interpret matters.
The hon. Gentleman suggested that there might be several proposals that involved new board appointments and new external management in selling off assets, but that is primarily a matter for Equitable Life. Any new manager will be subject to regulatory approval by the FSA, as any senior manager in a financial services business would be. It is for Equitable Life to consider and take legal advice if there is an issue about the clarity of the law, as the hon. Gentleman suggests that there is.
The FSA is concerned that material changes to the expectations of Equitable Life policyholders are seen in context. That is why the FSA has advised policyholders to reflect carefully on their options before taking early action. The FSA has noted that the early surrender of an Equitable Life policy, for example, may not be the best option. In addition to the information being provided to policyholders by Equitable Life, the FSA has helpfully posted information on its website to enable policyholders to assess their situation. The FSA's information includes several questions that policyholders considering a transfer to another product provider should ask financial advisers.
The hon. Member for Twickenham (Dr. Cable) referred to a 1998 document that was recently leaked, which he said showed that the regulator was aware that Equitable Life was not managing its risk properly. I believe that a more accurate interpretation of that document is that the regulator recognised the problem
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and was taking action to deal with it. It is a matter of public record that Equitable Life's reserves went up by £1.5 billion in the following year as a result.
The hon. Member for Twickenham also raised the issue of the FSA allowing Equitable Life to keep advertising and selling new business after the Lords' judgment. Immediately after the judgment, the FSA accepted Equitable Life's view that it seemed likely that the society could be sold as a going concern. The FSA appreciated that stopping the business from trading normally would have prejudiced the chances of a successful sale. Of course, it was only with the benefit of hindsight that the FSA appreciated that there might have been merit in earlier closure.
Mr. Ottaway: Will the Minister give way?
Miss Johnson: Very briefly, if the hon. Gentleman wants me to answer any questions.
Mr. Nicholas Winterton (in the Chair): Order. The hon. Gentleman must be brief.
Mr. Ottaway: If the Minister believes that the guidance from the Treasury was the right advice, why was it suspended two days after the House of Lords decision?
Miss Johnson: It was suspended because the House of Lords decision was a legal judgment that obviously altered the circumstances.
The question of mutuality being doomed was raised. It is wrong to draw such a sweeping inference. Mutual institutions can offer a range of valuable advantages to their customers, as members of several building societies have found. In the case of Equitable Life, the FSA has pointed out that the circumstances of its business challenges were unique and did not betoken wider-ranging problems.
The hon. Member for Aylesbury (Mr. Lidington) suggested that the FSA should compensate Equitable Life investors. Compensation for the customers of financial services firms is available if they become insolvent, as the hon. Gentleman is aware. The FSA has made it clear that Equitable Life is not insolvent, that its customers' policies are valid and that it will meet its contractual obligations.
I am afraid that I have little time to make some of the points that I wanted to make, but I shall concentrate on one, which is the question of what happens next. Several hon. Members made it clear that they sought further information about the events that led to Equitable Life's decision to close to new business. Those concerns are understandable and timely, as it is important that lessons should be learned promptly from the unfortunate episode.
Hon. Members will want to know that the FSA chairman will invite the board, when it meets later this week, to put in hand a review of the events that led to Equitable Life's decision to close to new business. The review will cover the FSA's actions as a prudential regulator and in carrying out its functions under the

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Financial Services Act 1986. The FSA's internal audit department will carry out the review with external assistance as necessary; for example, from expert accountants and lawyers. The Treasury will publish the conclusions of the review, which is likely to take a number of months.
Mr. Nicholas Winterton (in the Chair): Time is up. The next debate, initiated by the hon. Member for Reading, East (Jane Griffiths), is on key worker housing in the south-east.

Key Worker Housing (South-East)
10.30 am
Jane Griffiths: I am very grateful for the opportunity for this debate. I have been applying for a debate on the subject since the House returned from the summer recess. [Interruption.]
Mr. Nicholas Winterton (in the Chair): Order. Will hon. Members who are leaving the Chamber please do so quietly, so that others can hear the hon. Member who has the Floor?
Jane Griffiths: Thank you, Mr. Winterton.
The state of affairs with respect to recruitment and retention of key workers varies around the country. No two parts of the United Kingdom have identical economies. Economies also vary within regions. My colleagues from Kent will say that regeneration is needed in parts of the county. Hon. Members from the Thames Valley would probably report the opposite—that there is a tendency for the economy to overheat at present.
The definition of a key worker needs careful thought. We all assume that the term covers police, nurses and teachers, but does not the private sector also contain key workers? What about bus drivers and retail staff? Who are the key employees in our economy, ensuring that people can carry on their lives?
Decisions by my right hon. Friend the Chancellor in the comprehensive spending review have revealed the importance that the Government place on public services. In July, my right hon. Friend announced an extra £11.9 billion for education—a 33 per cent. increase, which pays for another 6,000 teachers; an extra £11.4 billion for health—a 35 per cent. increase, to include 4,780 extra doctors and help to pay for 20,000 more nurses; an extra £4.2 billion for transport—a 50 per cent. increase; and an extra £2.4 billion to fight crime—a 19 per cent. increase. All those increases in spending and all those extra staff are welcome. However, in Reading, East and in much of the south-east of England there may be no beneficial outcome from those decisions with respect to staff. People will not take jobs in areas in which their pay does not enable them to afford a place to live.
The debate should proceed in the context of an understanding of the real benefits that the Government have brought about for people in Reading, East. Figures from the Treasury reveal that homeowners there are saving about £1,000 a year because of lower and stable mortgage rates. About 30,000 homeowners in my constituency have benefited from mortgage rates that have averaged 7 per cent. interest, instead of the 11 per cent. that was the average under the previous Government. Across the south-east, 2.5 million homeowners are benefiting from low and stable mortgage rates.
The Government's assured handling of the economy has reduced housing costs for people in Reading, East and the south-east as a whole. Welcome as that is, it has benefited people who already own a home, rather than helping to make home ownership easier. It could even be argued that the stability and careful handling of the economy has helped people to feel more confident in

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their working lives, and has caused some of the house price inflation that is particularly a noticeable in the south-east. Some examples and figures will give an idea of the situation in Reading, East.
Last Friday, I visited St. Martin's primary school, in Caversham Park village in my constituency. The school had just been awarded beacon status for writing. My visit revealed why it had been chosen as a beacon in writing, because I saw the enthusiasm and commitment to the teaching of writing throughout the school.
While I was looking around the school and talking with the children and staff, the head teacher told me about the school's experience in trying to recruit a year 2 teacher. St. Martin's primary advertised for a new teacher. The advertisement attracted some interest—people asked for information—but the interest and expense incurred in advertising did not result in any application.
Fortunately for the school, the head teacher managed to attract an Australian teacher, who was travelling in the UK, to come on a one-year contract. The teacher was interested in working at the school, but found that she would not be able to find accommodation in the area that she could afford. She was therefore not able to take up the job offer. The head teacher was very concerned, and her only solution was to offer the teacher a room in her house so that she could take up the job. While that was very kind and considerate, it is clearly no way to recruit teachers. The upshot is that, because of all the difficulties, the Australian teacher has decided that she will go elsewhere, and will not be teaching in St. Martin's school. That leaves the school in a quandary.
It is important that schools such as St. Martin's primary continue to deliver quality education. For the school to be able to spread best practice, which is why it was awarded beacon status, it must be able to attract good teachers. It is not right that a head teacher has to put a teacher up in her own house so that the person can afford to come to Reading.
The head teacher of the Hill primary school, in another part of Caversham in my constituency, wrote to the director of education and community services at Reading borough council on 25 October, on behalf of Reading primary head teachers association. He set out the concerns of the association with regard to the recruitment and retention of teachers as a result of the high cost of housing in my constituency. The problem experienced by schools is not that Reading borough council is doing or has done nothing, which is a point to which I shall return.
Earlier this month, I received a letter from the chair of governors at Caversham primary school—yet another successful school like the Hill and St. Martin's—which already delivers the quality education that we are striving for across my constituency and the south-east in general. The chair of governors, Mr. Odel, had written to me previously about the difficulty in recruiting and retaining teachers for the school. This month, he wrote that the problems were intensifying. Recently, the school advertised for a maternity cover teacher. In spite of placing a large advertisement in a national publication—again, at considerable expense—he described the response as dreadful. The school has had to resort to persuading former teachers to return to work there. Mr. Odel is aware that Caversham primary
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school is not alone in Reading in experiencing that problem. His concern is that it is only a matter of time before some schools in the area introduce a four-day week.
The situation is the same elsewhere in the public sector. Figures from the Royal College of Nursing show that the three-month vacancy rate has risen by 30 per cent.—almost one third—in the south-east in the past year. That situation is reflected at the Royal Berkshire and Battle Hospitals NHS trust in my constituency, which said today that it currently has vacancies. It has done the same as many others in the same situation—recruited nurses from abroad. It attends every recruiting fair that it can, and, sometimes, recruits three or four times for the same job. When people come for interview, they are happy to come and work in the area, until they find out the cost of housing.
I am grateful to my hon. Friend the Member for Reading, West (Mr. Salter), who highlighted the situation regarding police recruitment on 28 July. He said:
My local police force, Thames Valley, has been hardest hit by the shortage in affordable housing and the previous Government's actions. In 1996, police numbers fell to an all-time low: 3,674 officers. Luckily, they have now risen a bit to 3,783. The fall was the result of the change in funding formula by the then Home Secretary…which cost some 200 officers overnight.
My hon. Friend then highlighted the difficulties caused by the Government's good decision to increase the pay of the Metropolitan police and said:
As a result of the payment of £3,000, a differential of £2,500 has risen to some £6,000. It is small wonder that so many police officers in my neck of the woods—officers living in Reading or Slough, who can easily commute to London—want to transfer to the Metropolitan police. Some 55 officers want to transfer: that constitutes a record increase.—[Official Report, 28 July 2000; Vol. 354, c. 1446–47.]
The recruitment and retention of firefighters has also been debated before in the Chamber. Some firefighters have to travel ludicrous distances to Reading—from places such as Lincolnshire and Dorset—because they cannot afford to live in Reading. There are implications for key workers in jobs that are crucial to public safety—for example, tiredness. It worries me that firefighters may have driven more than 100 miles before starting their shifts.
Who are the key workers? The starter homes initiative, which was launched last week, does not outline a definitive list of key workers, and rightly so, but funding under the scheme will be prioritised to teachers, police, nurses and other health workers. We have all heard the good news that nurses and other health workers are to receive a significant pay increase. It will help them, but it will not help them enough in my constituency.
Last week, my right hon. Friend the Chancellor announced a sum of more than £7 million to tackle Reading's traffic problems. It is a welcome tenfold increase on the money that was made available by the previous Government and is a signal that the present Government are serious in their commitment to tackle traffic congestion. Prosperity brings with it congestion. Last month, Reading Transport, the local bus company, had to reduce its mileage by 5 per cent., partly as a result of serious congestion in the city. Buses cannot keep to their timetables, and people are less willing to use that

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mode of transport if they expect to have to stand in the rain. However, the main reason for the reduction in mileage was the shortage of bus drivers. That resulted in lost mileage to such a level that the bus company was at risk of incurring serious fines for not keeping to its timetable. The company made the difficult decision to reduce mileage so that people could be sure that the bus was likely to arrive, rather than running a more ambitious timetable.
Reading Transport is 25 drivers short of the number that it needs to run a full timetable, although the recruitment of five drivers this week has improved the situation. At its worst, the company was 40 drivers short. That is not because it pays badly, although historically bus drivers do not earn a great deal. Reading Transport is known for its pay and conditions. For example, Stagecoach Swindon has just given its drivers a 25 per cent. pay increase, yet those drivers are still earning less than those who work for Reading Transport, which pays £7.53 an hour compared with the top rate of £6.50 an hour at Stagecoach Swindon.
According to the managing director of Reading Transport, the situation is worse than when we previously had a boom economy. Now there is a greater shortage of affordable rented accommodation in the town. Interestingly, when FirstBus won the contract for the Madjeski park-and-ride, it brought in drivers from south Wales to fulfil it. The fact that unemployed people in south Wales were willing to travel that distance to work in Reading speaks volumes about the relative difference in the economy of south Wales and that of Thames valley.
Who else can be considered to be key workers? It is all well and good having a generally healthy and booming economy, with people earning good money, but they need the opportunity to spend it in a smooth-running local economy. This autumn, Reading university had a slightly later start of term than other universities. The result was that Reading-based students who had had summer jobs in shops, cafes and bars left them to return to their universities, and there was a two-week gap before students at Reading university appeared on the scene.
In that two-week period, the queues and waiting times were longer at restaurants, bars and shops. I experienced the problem when I was eating lunch in a restaurant. The apologetic manager said, "I am sorry for the long wait. We had a very good student working as a waitress, but she has left. We are getting a new one, but she cannot start for another two weeks and we simply cannot serve you as quickly as we want to." That is how tight the situation is.
Well-staffed public services underpin not only successful communities but successful local economies. On 1996 figures, the retail sector is the largest single employment sector in the Reading economy, providing more than 20 per cent. of jobs. That was before the opening of the Oracle shopping and leisure destination, which provided 3,500 jobs.
Last week, the Government announced the £250 million starter home initiative for consultation until March next year. Local councils have welcomed the initiative, and see it as complementary to other
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policy and financial tools. But what does the scheme really mean? The starter homes initiative shows a current upper limit of £93,000 in Reading's lower-quartile housing market values according to Land Registry data for the first quarter of 2000–25 per cent. of the properties sold in Reading during that time cost no more than £93,000.
In a dynamic market such as Reading's, a threshold such as that of the "lower quartile" is more welcome than a fixed-value figure. For example, in the property section of the Reading Chronicle on 15 December, seven properties were priced at less than £93,000. The cheapest property advertised in that edition was a one-bedroomed, first floor maisonette conversion selling for £79,950. Four years ago, a similar property was selling for approximately half that price. To purchase the property today would require a single person's salary of approximately £21,700, assuming a 95 per cent. mortgage based on three and a half times a person's salary, with £6,000 available for deposit and fees. That is more than most public sector workers earn, and a newly trained teacher or newly qualified nurse is unlikely to have the £6,000 required for the deposit. That is why the starter homes initiative is so welcome. Due to the assistance offered under the initiative, the salary requirement is brought down—from £21,700 to less than £16,000. That brings home buying within the reach of many more public sector staff.
Dr. Alan Whitehead: Does my hon. Friend agree that the existing schemes, such as do-it-yourself shared ownership and similar proposals already piloted by local authorities, could be of great assistance in making affordable homes for people on their first salaries, and that that is the way forward for a number of local authorities in the south-east where the price of houses is of the order that she mentioned?
Jane Griffiths: My hon. Friend is absolutely right. Schemes such as do-it-yourself shared ownership play an important part. I congratulate local authorities that have piloted them. I also note, with approval, schemes that exist in London but not in other areas, such as that of the Peabody Trust, in which housing is available for public sector workers who can share ownership. When the owner moves on, the property remains available for another key worker in the public sector. That seems to be an excellent notion, and local authorities and others should look at such trust schemes. There is more than one answer to any problem.
Reading borough council has taken steps to create the right strategic policy framework to enable employers to partner the local authority. It seems simple and attractive to give the name "key worker" to our teachers, police officers and nurses and to say that they should be eligible for affordable housing. However, the pitfall for local authorities in acquiring a new designation of key worker would be that it would have the opposite effect and put even more pressure on public housing.
We need well-staffed public services. Government initiatives have helped towards that but, however commendable, they cannot provide a blanket solution to the nation's problems. I want to highlight the problems that come with prosperity. I may be unusual among Members of Parliament in that I have lobbied, in

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the past, for new jobs not to come to my constituency. That is not what Members usually do. However, new jobs that come into a local area do not necessarily bring benefits with them. The Meteorological Office in Bracknell needed to relocate, and it was suggested that it should move to south Reading I proposed that it should go somewhere else, because those who work in the Met Office live in the Bracknell, Wokingham and Reading areas. They would be unlikely to move house—they would simply drive into my constituency. We do not need those new jobs.
The housing market appears to be moderating, at least in London, and what happens in the capital tends to happen a little bit later in the rest of the south-east. The Halifax and Nationwide building societies report a sharp decline in house price inflation, this year. That is welcome, but problems remain with rented housing. When the local market is dynamic, as it is in Reading, rented housing becomes available at a growing rate. However, the rented housing that becoming available in my constituency is, to an increasing extent, towards the upper end of the market—luxury apartments in the city centre. That accommodation is welcome, but it is not affordable to nurses, teachers or junior police officers.
It is difficult to create affordable rented housing in flourishing city centres, but that is what we must do—that is the road that we must take. There is no space to build many houses with gardens for family use, so people will move to apartment dwellings. That change in culture is necessary, but it will not happen unless affordable housing can be found. I welcome the Government's starter homes initiative and those initiatives taken by local authorities, but I ask my hon. Friend the Minister to look at the problems that prosperity brings.
We should look ahead to what we fear may, but hope will not, happen. We do not want schools working only a three or four-day week; we do not want our streets not to be policed or patients to lie on trolleys in hospital corridors owing to a lack of nurses. We do not want there to be no buses because there are no bus drivers; we do not want an unbelievable crush in our shops because not enough people are serving behind the counters, although people are walking in with money to spend on their Christmas shopping. That is the nightmare scenario that is before us. I ask my hon. Friend the Minister to consider ways in which the Government might assist to provide affordable housing for all our key workers in the south-east.
Several hon. Members rose—
Mr. Nicholas Winterton (in the Chair): Order. This is a one-hour debate and we want to give the Minister adequate time in which to respond. If those who have said that they want to catch my eye limit their remarks to five minutes, everyone will be able to speak.
10.54 am
Mr. Tim Loughton: I shall make a few brief comments. I largely agree with the remarks made by the hon. Member for Reading, East (Jane Griffiths), whom I congratulate on securing this debate on the key issue for key workers in the south-east and for us all. She rightly said that there are differentials
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within the region, but much of what she said will strike a chord in my part of the south-east on the Sussex coast, where there is a problem with housing for key workers, particularly in public services such as nursing. Before I became the Member of Parliament for East Worthing and Shoreham, the Worthing and Southlands hospital had about 75 nursing vacancies. People from the local hospital trust have been to South Africa and Australia to try to recruit additional nurses. As we speak, they are in the Philippines, because we still have 75 vacancies three and a half years later.
The local police service also has many vacancies. Despite everything that the Home Secretary says about recruiting additional policemen and the fact that 4,535 policemen were recruited throughout the country last year, 5,948 policemen left the police service last year—a net loss. That is partly due to problems with housing conditions, as the hon. Lady said. She was right to say that the Government will be unable to deliver on pledges of extra staff if people cannot find affordable homes in the areas where vacancies exist.
I am pleased that the hon. Lady did not mention only public service workers. The example of bus drivers strikes a chord with me. The Brighton and Hove bus company, which serves my part of Sussex well, has been haemorrhaging staff for many years. Recently, many staff have moved from Sussex to the north, simply because they cannot afford to buy homes in our part of the south-east. That has led to the problems of transport infrastructure weakness that have been mentioned.
There is also a problem with the recruitment of teachers, particularly male teachers in primary schools. I visit all the primary schools in my area, and it is rare to find a male teacher—there may be a lone one—on the staff of primary schools. That also applies to nursery schools in both the state and private sectors. To encourage greater nursery provision, we need to recruit and house staff.
There is a particular problem with nursing. Last week's report from the Royal College of Nursing suggests that as many as 70,000 registered nurses do not work in the nursing profession. That is a large factor in the 22,000 nursing vacancies. One in five trainee nurses fail to complete their training, and I am sure that the pressure of housing conditions must be a factor.
The hon. Lady rightly identified the problem of defining a key worker. The Government's proposal to leave the definition largely to local authorities does not make the situation any easier. The definition is supposed to cover nurses, but will it extend to doctors, who are surely key workers also? Equally importantly, will it extend to ancillary workers, without whom hospitals could not operate? The definition will supposedly cover teachers, but will it also cover ancillary workers such as caretakers, without whom schools could not remain open? Will the definition include civilian police staff? Without them, uniformed policemen could not spend as much time out on the beat, because they would have to stay behind their desks in police stations doing paperwork. Many civilian personnel have been recruited to the police service over the past 15 years to remedy that problem.
There is also a problem in social services and we have a particular problem in Sussex with the recruitment of child social workers, which is partly due to the cost of

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living in the south-east. I think that the average pay for a child social worker in the north of West Sussex is about £5.50 an hour. When one considers that Burger King at Gatwick airport pays just over £7.40 an hour, it is a real no-brainer. That is why we lack so many key workers in key public services. How will it affect people working in mental health in the community, of whom there is a severe shortage in my constituency? What about local authority employees who were such key workers in dealing with emergencies during the recent floods?
Yesterday's figures from the Minister's Department overruling the democratically arrived at Serplan figures are just another example of the Secretary of State providing the wrong houses in the wrong places and not concentrating at all on the problem of affordable housing in the south-east. Employment demand is likely to grow by some 6 per cent., especially in the high-tech, higher status employment areas, which is likely to lead to further upward pressure, overheating in the property market and further employment shortages. Average incomes in our region are high, but the distribution around that average is particularly uneven so that lower income households are disproportionately disadvantaged in the housing market. Inevitably, whatever the Government say, the south-east will always be dominated by the City of London and City salaries spilling out into the region, and the situation is worsening.
I leave the Minister with some questions about the consultation document that was published last week. We welcome initiatives to help with starter homes, but can he tell us more about which key worker jobs will be covered? Will the financial help be in the form of grants or loans? What happens if the key worker in a family leaves a key worker job or moves away altogether? What happens if that key worker is promoted to a grade that no longer qualifies for key worker assistance? What help will all this bring to private renting where there is a big problem too? How will the proposed means testing work?
The real problem is supply. The key worker initiative within the starter homes initiative is all about helping demand. The problem will never be solved unless we tackle the problem of supply. These proposals have the potential greatly to distort the housing market, particularly in housing prices up to £100,000. We certainly need more shared ownership perks schemes. The hon. Member for Southampton, Test (Dr. Whitehead) was quite right. Do-it-yourself shared ownership schemes were very successful under the previous Government, but they have been cut to such levels that in my local authority area of Adur, there is funding for just one such scheme in the current year.
We need more homesteading proposals. We need proposals such as zero stamp duty on starter homes for young couples starting on the housing ladder. We must consider more imaginative solutions, as is already happening in certain parts of London, such as tax breaks for hostel accommodation that is particularly suited to student nurses and trainees in other public services. There are many other considerations for retaining public service workers, particularly nurses, such as better child care facilities and so on. The questions that the hon. Member for Reading, East raises are perfectly legitimate and her concerns are shared by
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all of us in the Chamber today. The proposals put forward so far by the Minister in the consultation document sound good, but in practice are fraught with problems. Perhaps he will start to address some of them by responding to the points that I have raised.
11.3 am
Mr. Martin Salter: I congratulate my hon. Friend the Member for Reading, East (Jane Griffiths) for securing a timely debate. It is significant that a large proportion of the hon. Members in the Chamber come from the Thames valley and M4 corridor, which suffers disproportionately from the strain on public services and burgeoning house prices. We have seen changing patterns of employment in Reading, Slough and Newbury, which is very much the high-tech capital of the region. But even high-tech internet company chief executives need the services of fire fighters, police officers, ambulance drivers and hospital porters.
If the debate achieves anything, we need to get the problem across to some of our friends in the north. Some members of my party think that the south-east is featherbedded and that people enjoy record levels of prosperity, so everything must be fine. However, as my hon. Friend the Member for Reading, East (Jane Griffiths) said, the region is facing problems caused by prosperity, which is the price of success.
A few short years ago, in the early 1990s, there were record numbers of house repossessions in Reading: 2,200 homes were repossessed in 12 months. It was difficult to find a street in my constituency or that of my hon. Friend the Member for Reading, East that did not have boarded-up properties. One could not point the finger at Reading borough council for being negligent as it won national awards for its empty homes strategy. The council used the downturn in the housing market—the tragedy caused by negative equity and by the boom-and-bust policies of the previous Government—to create a larger supply of social housing. But someone who has studied at police college or for a graduate place in teaching should be able to afford to buy a two-up, two-down terraced property in a town like Reading, Slough or Newbury. Those houses were built more than 100 years ago for workers at the Huntley & Palmers biscuit factory and on the railways. However, as my hon. Friend said, such properties now sell for £110,000 to £120,000, which is far beyond the reach of someone graduating as a teacher or a public service professional on a salary of about £20,000 to £22,000.
Fiona Mactaggart: Does my hon. Friend accept that the solution to the problems in the Thames valley corridor, which he and my hon. Friend the Member for Reading, East so vividly described, must include rented properties? One of the most important things about the education action zone in Slough is that rented properties are offered to new teachers. It is the only housing for new teachers and the policy is working. Rented property in Slough is not as expensive as in Reading—it is quite cheap—but it is full of asylum seekers, so the market does not work. Rented housing would be helpful to key workers in a range of employment.
Mr. Salter: I accept my hon. Friend's point, but while the supply of affordable rented housing in the short term

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may attract people to an area, in the long term people's aspirations to home ownership must be recognised and Government policy must be targeted with that in mind.
I am currently serving on the police service parliamentary scheme, which is a useful secondment because I can get to know the problems and challenges that face the police service in the Thames valley. I say to the hon. Member for East Worthing and Shoreham (Mr. Loughton) that the rot in the police service started when the previous Government implemented the recommendations of the Sheehy report and abolished the police housing allowance. That ripped £4,800 a year from the salaries of police officers in the Thames valley and triggered the recruitment and retention crisis in the south-east and many other regions. Conservative Members should recognise that the decision to implement the Sheehy report was catastrophic and triggered the problems that we face now. They should apologise for past mistakes.
As my hon. Friend the Member for Reading, East said, the problems have been exacerbated by the huge £6,000 differential created between the Thames valley and other police services surrounding London and the Metropolitan police force. It is little wonder that officers who live in Reading and Slough apply to the Metropolitan police force for an additional £6,000 per annum, or do their probation in the Thames valley and then go to Lincoln, Dorset, Cumbria or Northumbria where they can afford to purchase properties on the national salary rate and do not have to endure the financial penalties of living in a high-cost area.
I welcome the Government's starter homes initiative. However, is the £250 million to help 10,000 public service workers—or key workers—a one—off initiative or part of an on-going support programme? Moreover, will it be enough?
Although market forces have their place in mixed economies, they cannot deliver for us in this respect. The civilising element in the make-up of any mixed economy is the quality of its public services. The previous Government have a lot to answer for: they screwed down public service wages year on year and took bad decisions, such as the removal of the police housing allowance.
We need highly trained, highly motivated public service workers—be they teachers, doctors, nurses or hospital workers—and they need, above all, a roof over their heads. The marketplace will not provide that. It is up to the Government and public, authorities to ensure that public service workers can afford to live in the south-east and other high-cost housing areas.
11.10 am
Mr. David Rendel: Key worker housing is a vital issue in west Berkshire, so I am delighted that the subject has been introduced. There are some 10,000 more jobs in west Berkshire than there are people to do those jobs, and that figure will rise to 14,000 when the Vodafone headquarters are completed.
Consequently, many local firms have vacancies, salaries are being forced up as the local economy overheats, and house prices are going through the roof. That puts further pressure on the small stock of available and affordable rented accommodation, some of which is being sold off under the previous
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Government's right-to-buy policies. The price of land is being pushed up so quickly that it is almost impossible for housing associations to buy more land on which to build. Those are the problems of success, which are preferable to the problems of failure that are experienced by those in inner cities. I am happy to represent an area that is so successful. Nevertheless, they are problems, and we must find solutions.
As the hon. Member for Reading, East (Jane Griffiths) said, it is difficult to arrive at an exact definition of key workers. However, there is no question that they form ever more and ever larger groups—not only teachers, nurses and policemen, but bus drivers, for example. I have to tell the hon. Lady and the hon. Member for Reading, West (Mr. Salter) that bus drivers are paid even less by Newbury Buses than by Reading Buses. It is difficult to recruit bus drivers and yet ours is a predominantly rural area in which the only form of public transport is the bus. That is causing great problems.
We are very short of postmen, and the Royal Mail is constantly trying to recruit more. When I was in my local post office yesterday, I was told that they could not remember a time when they did not have vacancies.
We are short of local authority staff, including planners. In an area such as mine, where the number of planning applications has soared, planners are difficult to find—many are leaving for less stressful jobs in other parts of the country.
Broadly speaking, I welcome the Government's starter homes initiative. However, they are only scratching the surface of a major problem. My calculations suggest that, on average, 10 to 20 households per constituency may be helped by the policy. Given that there are 14,000 more jobs than people in my area, that is a low figure—even if, as I suspect, we would be well above the average.
I should like to focus on the police, who face a crucial problem in the Thames valley, especially in west Berkshire. The extra salaries for the Metropolitan police are attracting people to commute from as far out as west Berkshire—and I know to my cost how difficult that can be. The position may get even worse if parts of the Thames Valley police are given a small salary increase, but it does not stretch as far as west Berkshire. Our policemen could be sucked away into places such as Slough, Reading and Wokingham because they pay a little extra, so the problem in west Berkshire will, if anything, worsen.
I am delighted that the Government have set up a crime fighting fund to try to increase the number of policemen throughout the country. For 2000–01, sufficient money for Thames Valley has been allocated to increase the number of policemen by 111. However, the current predicted increase is 42 and falling, and the chief constable said only a couple of weeks ago that the actual increase could prove to be zero. That is not because there is no money to recruit or pay policemen, but because no one is prepared to take on those jobs. As quickly as policemen are recruited, they are lost to other parts of the country, or through retirement or premature sickness.
The local police force has applied to defer to next year the money that cannot be used, but that application has not yet been successful. Would it not be better to spend

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some of the money set aside for recruiting policemen on providing extra housing? I put that suggestion to the chief constable, who seemed keen and rapidly accepted it, but unfortunately the Minister said that that is not possible. The money must be spent simply on the salaries of extra policemen, and not, for example, on a shared-ownership housing scheme that might encourage policemen into our area.
That is a great pity. I hope that the Minister can assure me that he will try to persuade his Home Office colleagues to reverse their current dogmatic policy of spending that money only on salaries. Spending it on other means of encouraging police recruitment in our area would be in line with the starter homes initiative, and would marginally increase the money available for that initiative. Given that it would lead to the recruitment of more policemen, such a policy would also be fully in line with the crime fighting fund. As it stands, the money will probably go back into the pot, never to be used for recruitment. In the light of those points, it would be madness and grossly illogical for the Government not to follow up that idea.
Mr. Nicholas Winterton (in the Chair): I call Mr. Alan Whitehead, who I hope will be extremely brief.
11.17 am
Dr. Alan Whitehead: I shall be very brief indeed, Mr. Winterton.
Everyone should welcome the starter homes initiative. It contains provisions to encourage local authorities to bid for available funds, and given that there is considerable pressure in my local authority area, I want to encourage Southampton city council to make an early bid. Southampton general hospital has recently recruited more than 70 nurses from the Philippines, who are currently lodging in nurses' homes. Reference was made to the police rent allowance and recruitment, and discussions with the chief constable of Hampshire constabulary have suggested a problem in that regard.
If local authorities get involved in the starter homes initiative, I hope that they will consider imaginative schemes for opening up new housing, rather than eroding existing council house stock. I commend the Southampton city council scheme, "opening up the empties", which has put back on the market housing above offices and shops that was hitherto vacant. That is the way forward, and I hope that schemes such as the starter homes initiative will be used in a positive way to bring new housing into the market. Such housing should not allowed to compete with existing stock, which is in short supply in my local authority and elsewhere in the south-east.
Mr. Nicholas Winterton (in the Chair): I am very grateful to the hon. Gentleman for being so brief.
11.19 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): My hon. Friend the Member for Reading, East (Jane Griffiths) has raised an important issue that affects not only her constituents but, as she says, many others in
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the south-east. As some hon. Members have remarked, these are problems of prosperity. It is ironic that in my constituency and many others that are further north, we are demolishing houses that are unsaleable—that has happened 200 yd from where I live—whereas at the other end of the country, we have the problems described by my hon. Friend. There is a case for regional planning to try to share out the benefits of the undoubted prosperity that the economy, through safe management, is starting to produce. This is the first time that I have heard an hon. Member plead for jobs not to be transferred to their constituency, although I understand that my hon. Friend was making a serious point. If she would like to put in a word for my constituency, or for one or two others that are further north, we would be grateful.
The Government recognise the need to ensure that key workers can live within a reasonable travelling distance of the communities that they serve. Recruitment and retention of key workers such as nurses, teachers and police has become a problem in the south-east because of high prices and high rents, and my hon. Friend is naturally concerned about that. The problem is not new, but it has worsened as house prices have mushroomed in recent years. We must recognise that access to subsidised rental housing was adversely affected by right-to-buy sales of some of the best local authority housing stock and by sales of other public sector housing.
Last night, I talked to someone connected with a London hospital trust, who told me that under the previous Government many nurses' homes in central London were sold off for short-term gain, with the current Government left to face the consequences. I make that point gently, because the hon. Member for East Worthing and Shoreham (Mr. Loughton) did not lay it on too much, but had he done so, I could have been provoked. Although I do not pretend that the seeds of the problems that we face today were all sown under the previous Government, as my hon. Friend the Member for Reading, West (Mr. Salter) remarked in relation to police housing allowances, some problems can undoubtedly be traced back to them.
Our Government are taking a number of measures to address those issues. On 13 December, we announced details of the starter homes initiative, which will make available £250 million in the next three years to help key workers in high-price areas. In the same period, we shall double the funding for the Housing Corporation improved development programme and take measures to improve its targeting and delivery. Next year, we shall provide more than £240 million for south-east housing authorities, including increases of more than 50 per cent. for almost one-third of relevant authorities. As suggested by my hon. Friend the Member for Southampton, Test (Dr. Whitehead), we are providing stronger incentives to bring empty properties back in use. Both our housing strategy, which we announced last week, and the draft revised regional planning guidance for the south-east—RPG9—emphasise the need for local implementation of our policies for affordable housing. Those initiatives highlight our additional investment and other mechanisms through which local authorities and others can help to deliver affordable housing, not only for those on council waiting lists, but for the key workers to whom hon. Member: have referred.

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Several local authorities are already taking positive steps to tackle housing problems. My hon. Friend the Member for Slough (Fiona Mactaggart) said that an education action zone in her constituency has come to an arrangement with a local housing association to provide 25 homes for rent and shared ownership by local teachers. We want such schemes to be introduced elsewhere. In Runnymede, some health authority workers have priority rights to specific flats. I am aware that in other areas—including Reading—work is in progress to assess the need for affordable homes, define local key workers, establish strategy, review letting policies and take action to deal with problems. A range of partnerships with health authorities and other key regional partners is developing. The Government's measures are intended to support such partnerships.
As I have mentioned, £250 million is being provided over the next three years for the starter homes initiative. Full details of the scheme and an invitation to bid were released last week as part of our housing policy statement. Preliminary bids are due to be submitted in mid-February and final bids by the end of April. We expect to announce allocations to successful schemes in June. We expect the starter homes initiative to help about 10,000 key workers, particularly teachers, police, nurses and other essential health workers, to buy their homes in urban and rural areas where high prices might otherwise price them out of the communities they serve.
Several hon. Members asked about the definition of key workers. Groups other than those I have listed could be assisted if a good case were made for doing so. The hon. Member for East Worthing and Shoreham gave some examples and my hon. Friend the Member for Reading, West mentioned bus drivers and firefighters. The wage increases for bus drivers in Reading that my hon. Friend mentioned are a rare example of market forces operating in favour of the workers.
Mr. Salter: Will my hon. Friend give way?
Mr. Mullin: If my hon. Friend will forgive me, I have only a short time in which to respond to many points.
Bids should reflect local circumstances. It will be necessary to demonstrate that they will help workers whose services are essential to the community and who must be housed in or near that community. We will expect bids to have the support of the local authority and to provide evidence that high housing demand and prices are creating recruitment and retention difficulties for the key workers who are targeted. We are keen to encourage a wide range of bids. We are not placing any restrictions on the type of help that might be offered, which could include, for example, shared ownership, by which a person part rents and part buys a property;
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interest free loans, or cash grants. Bids will, however, have to demonstrate value for money. We have not imposed restrictions on the organisations eligible to bid. Our aim is to ensure that the programme is well targeted and that it contributes to meeting the needs of key workers and the communities that they serve.
The hon. Member for East Worthing and Shoreham suggested that my right hon. Friend the Secretary of State had imposed the wrong number of houses on the south-east. In our draft revised regional planning guidance, we make it clear that a range of types and sizes of houses, and even a range of tenures, should be provided within localities. We fully recognise the problems and we provide local authorities with a range of mechanisms for dealing with them. If some people are fortunate enough already to own a home in one of the more prosperous parts of Britain, it is no good their trying to pull up the drawbridge after them, but when I hear some of the protestations about our plans to build houses uttered by the hon. Gentleman and his hon. Friends from such areas, I sometimes think that that is what is on their mind. People should recognise that, if they want services, they will have to arrange affordable housing for the people who provide those services. I am not always sure that that is appreciated.
The hon. Member for East Worthing and Shoreham referred to do-it-yourself shared ownership. In response to the housing Green Paper, we said that we would consider changes in the future. There is relevant research funding, which will continue to be available to local authorities until March 2002 at the earliest. The hon. Gentleman also suggested that the starter homes initiative would distort the housing market and fuel further prices rises. Obviously, we must try to avoid that, but our funding will be spread over three years and will be carefully targeted. Help will go to small numbers of people relative to all housing market transactions, and we expect the impact on the housing market to be marginal. As to what will happen when key workers leave or are promoted, people who have been assisted will not be required to repay their assistance in those circumstances. However, when they move house, they may have to repay the assistance provided if it was provided as an equity loan or through shared ownership.
My hon. Friend the Member for Reading, West asked whether the starter homes initiative was a continuing project or a one-off. As he knows, we now plan three years ahead, so it is designed to cover the next three years. Who knows what will happen after that? We will judge by the circumstances prevailing at the time—
Mr. Nicholas Winterton (in the Chair): Order. Time is up.

The Moluccas
11.30 am
Mr. Edward Leigh: I am pleased to have the opportunity to raise the urgent issue of sectarian violence in the Moluccas islands of Indonesia. According to Moluccan Church leaders, there are 7,000 or more Islamic militants in the Moluccas waging a violent jihad—a so-called holy war—against Moluccan Christians. Church leaders believe that the Islamic militants are intent on destroying the Christian presence in the Moluccas by killing, forcibly converting or driving out all the Christians.
In many parts of the Moluccas, Christian villages have been wiped out by Islamic militants. Reports from local churches suggest that 75 per cent. of the island of Ambon has been cleared of Christians. The Maranatha Church and the Masariku Network, a human rights group, both of which are based in Ambon, report estimates of 487,000 internally displaced Moluccan Christians. Of those, about 300,000 have fled the Moluccas islands to other parts of Indonesia. Semmy Weileruny, one of the Moluccan Church's team of lawyers, states that at least 5,000 Moluccan Christians have been forced to convert to Islam by the Islamic militants, and that thousands more are under threat of death if they do not convert.
The allegation is that the Islamic militants are assisted by elements of the Indonesian military, which has also helped to equip them with automatic rifles, hand grenades and even mortars. Moluccan Church leaders report that, since sectarian violence began in January 1999, at least 455 churches have been destroyed, and more than 5,000 Christians have been killed. Those figures are, again, according to the Masariku Network. We think that that is a conservative but reliable estimate. We do not quote estimates with a considerably higher death rate.
Many, perhaps thousands, of Muslims have also been killed. Muslims and Christians have used violence in the conflict. That is not surprising, given that Christians have mostly been defending themselves, especially as the Indonesian military is generally reluctant to protect them. One must be balanced. Some Christians have used violence out of a desire for revenge, which is unforgivable. They have used violence in more than self-defence, but we are told that such incidents are rare.
One must recognise that there are aggressors in most conflicts, and that conflict is rarely even handed. In the Moluccas, the evidence suggests that the aggressors are militant Muslims. That view is supported by the fact that the situation in the Moluccas had relatively calmed down by April, but the chances of peace and reconciliation that we had all hoped for between Moluccan Muslims and Christians were sharply reduced when thousands of Islamic militants from other parts of Indonesia entered the Moluccas to wage what they described as a holy war against Moluccan Christians. The influx of thousands of Islamic fighters from outside pushed the Moluccas into its most intense phase of violence.
The issue will worry the Foreign Office. As the Christian Serbs were generally viewed as the aggressors against the Muslims in the sectarian conflict in Kosovo—despite the presence of an armed Muslim
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organisation, the Kosovo Liberation Army—so, too, the Foreign Office should be prepared to recognise that there are aggressors in iii the Moluccas conflict: the Islamic militants, including the group Laskar Jihad.
The level of violence in the Moluccas is already as bad as, if not worse than, in East Timor, and we allege that agents of the state—that is, elements of the Indonesian military—are actively participating in atrocities. The Kostrad unit, a particularly notorious Indonesian army unit, has been carrying out such abuses. For example, in August 1999, soldiers from the Kostrad unit herded 25 or more Christians into the Yabok Protestant church in the Galala area of Ambon and then opened fire on them. After killing them all, the troops tried to cover up the evidence by cutting up the bodies and setting fire to them.
Until now, the Indonesian authorities do not appear to have punished the soldiers responsible for that or for any other atrocities. On 19 June 2000, more than 200 Christians were massacred by Muslims in the village of Duma. The Indonesian military did nothing to stop the slaughter, and Moluccan Church leaders are desperately appealing for United Nations peacekeepers to come to the Moluccas because they cannot rely on the Indonesian military to protect the Christian community. Instead of supporting the request for UN peacekeepers, the Government have chosen to keep repeating the distinction that East Timor was not recognised by the United Nations as part of Indonesia but that the Moluccas are.
That argument is far from satisfactory. It implies that, merely because the Moluccas are part of Indonesia, the Indonesian military and Islamic militants should be left free to destroy the Moluccan Christian community and that, if the Indonesian Government do not wish to do much to try to stop it, we can do nothing. That was not the attitude that the Government took when they intervened in KOSOVO, which was part of Serbia at the time. Perhaps it is as a the result of taking a selective approach to suffering and human rights issues that atrocities in Europe are treated with more gravity than atrocities in south-east Asia. I do not blame the Government for that attitude. We all suffer from it.
The Minister of State, Foreign and Commonwealth Office (Mr. John Battle): I am grateful to the hon. Gentleman for letting me intervene. The crucial difference is that the whole UN did not accept East Timor as part of Indonesia, but that the whole UN does accept the Moluccas as part of Indonesia. It is not only our bilateral relationship with Indonesia that is at stake, but the role of the UN.
Mr. Leigh: I am grateful to the Minister for that comment, because it reinforces the point that I am trying to make. The Moluccas are, always have been and always will be part of Indonesia. I am not speaking on behalf of any sort of independence movement. I contend that, because everyone knows that the Moluccas always have been, and will remain, part of the UN, western Governments are reluctant to become involved.
East Timor was quite different; it was a former Portuguese colony and was never recognised as part of Indonesia. It was wrongly invaded by Indonesia but, because it had an obvious minority Catholic population,

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the west was prepared to act. This is different; the Moluccas are part of Indonesia. Surely we are not going to accept, simply because the genocide is taking place somewhere admittedly very far away that is part of another nation, that we should not become involved, that we should not talk to other members of the UN to try to put pressure on them to take an interest and, if necessary, to take action.
The intervention in Kosovo and the trials of those responsible for genocide and crimes against humanity in the former Yugoslavia and in Rwanda demonstrate that national sovereignty can no longer be used as an excuse to permit widespread atrocities. I should be grateful if the Minister were to confirm that that principle is now accepted in the western community. We cannot be indifferent to such atrocities, wherever in the world they may be taking place.
I emphasise that I am not suggesting a Kosovo-style military intervention in the Moluccas. I am simply asking that the British Government should do their best to put maximum pressure on the Indonesian Government to accept United Nations peacekeepers.
The Government imposed an arms embargo on Indonesia over atrocities in East Timor, and urged the European Union to take steps. They should seriously consider imposing a similar embargo over the Indonesian Government and military's continued failure to stop the violence in the Moluccas. The Indonesian military are a powerful force in Indonesia. We have strong bilateral relations with Indonesia and our view is listened to with respect—we have influence there.
The Indonesian Government have for more than 20 months repeatedly failed to control the same soldiers who were supposed to restore order but who, instead, have made the Moluccan situation worse by taking sides with the Islamic fighters and helping to arm them. An arms embargo would send a strong signal to the Indonesian armed forces that the international community is deeply concerned about the military's failure to act neutrally in the Moluccas and its participation in several of the atrocities that have occurred. I hope that the Minister will consider that point.
Mrs. Hanja Maij-Weggen, the European Parliament's rapporteur on the relationship between the European Union and Indonesia, recently returned from a working visit to Indonesia. She says that the situation is still disastrous and that things are worse than they were in East Timor in 1999, when the United Nations decided to send a peacekeeping force. She writes:
For the people of the Moluccas, and for the Moluccan community in the Netherlands, it is unacceptable that the international community intervened in 1999, but not now. Aid is not enough, if the government doesn't quickly restore order to the Moluccas, a role for the international community can no longer be ruled out.
In light of those comments and of the systematic destruction of the Moluccan Christian community, it is time for the Government to put as much pressure as possible on the Indonesian Government to accept UN peacekeepers in the Moluccas. We should consider the attitude of the United Nations to this question. Farhan Haq, a spokesman for the UN, has said that the organisation is ready to play a role in resolving the violence in the Moluccas, if the Indonesian Government
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desire it. Indonesia's state-appointed national human rights commission has declared that UN intervention is needed in the Moluccas as the Government have failed to stop the violence. Despite the UN's willingness to help and the view taken by Indonesia's human rights commission, Abdurrrahman Wahid, the Indonesian president, obstinately continues to refuse to allow UN peacekeepers into the Moluccas.
The only chance of saving the Moluccan Christian community from eventual destruction is intervention by UN peacekeepers. The mistakes and tragedies in the Moluccas in the past 23 months show that no other credible security force can intervene and restore order. Moderate Muslims and Christians have demonstrated in Jakarta, calling for urgent intervention in the Moluccas by UN peacekeepers. They argue that what is happening in the Moluccas is nothing short of religious and cultural genocide.
Mr. Battle: I am grateful to the hon. Gentleman for giving way and for introducing this debate, which allows us to discuss particular points in detail. He said that he was not asking for a military intervention in the Moluccas. During the difficulties in East Timor, I was party to the discussions to persuade the then Indonesian authorities to invite the UN peacekeepers to come in. If they had failed to invite the UN in, I do not think that even the hon. Gentleman would have argued for sending in troops and fighting our way into Indonesia. Does he suggest that that should happen in these circumstances? Does he expect British soldiers to go into the Moluccas?
Mr. Leigh: No; but, if the Minister will excuse me, I will throw the question back at him. Has he invited the Indonesian Government to allow UN peacekeepers into the Moluccas, as he did so effectively in the case of East Timor, on which I congratulate him?
Mr. Battle: If the Indonesians invite the UN peacekeepers, our offer to support and accept that invitation is there. We have regularly made it plain to the Indonesian authorities that we view what is happening in the Moluccas with great concern. I will spell that out in detail in my response.
Mr. Leigh: I am grateful for that little debate because, although the answer was not absolutely firm, it has highlighted that our Government are happy for the UN to go in. They have expressed their concern. However, I want the Minister to convince me that he is putting pressure on the Indonesian Government to invite UN peacekeepers in.
Mr. Battle: I have made it plain throughout our debates on this subject, and in my regular correspondence with the hon. Gentleman, that we would stand by the Indonesians if they felt that they could not resolve the situation.
Mr. Leigh: I am grateful to the Minister for his interventions.
We believe that mass forced conversions are going on. More than 1,000 Christians in Bacan island in the northern Moluccas have been forced by Muslim militants to change their religion. There is not enough time to give all the many examples that I have. An

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ultimatum has been given that those Christians in Bacan who do not convert by 31 December will be killed. One of the Christian pastors in Bacan was caught by Islamic militants, tortured and killed. And so it goes on. On Seram island, about 400 Christians from Hatu village and 300 from Hatumete were told by Islamic militants that they had until 30 November 2000 to convert.
I apologise for reading out all these examples but it is important to get them on the record. Mr. Weileruny, whom I have quoted before, reports that eight people were killed in the attacks on Christian villages. About 3,000 fled to the forests. Their attackers, including Muslims from the Gorong island group, pursued them and had captured about 671 of them by the next day. So far, about 93 Moluccan Christians have been killed by Islamic militants on Kasiui island for refusing to convert to Islam. About 760 Christians on Kasiui island are reported to have been forced to convert, as have 75 Christians in Bonvia, 215 Christians in Solan and 300 Christians in Dawang villages. The list goes on and on.
The conflict in the Moluccas appears to be part of a general attempt to promote violence against non-Muslims, especially Christians, throughout Indonesia. Indonesia is the largest Muslim country in the world. However, its constitution is based not on Islam, but on Pancasila, the five principles. The first principle is belief in God. Since the formation of Indonesia's first constitution in 1945, some Muslims have tried to change the multi-religious basis of the country's constitution to one that that is solely based on Islam.
The apparent goal of the Islamic militants is to Islamicise by force not only the Moluccas but Indonesia as a whole. Attempts have already been made to provoke sectarian violence in provinces with large Christian populations such as Sulawesi. That attempt to change the Indonesian constitution and impose Islamic Sharia law was made by Muslim parties during the Indonesian parliamentary session in August 2000. The incitement by Islamic militants of anti-Christian violence throughout Indonesia is likely to trigger widespread violence and chaos, and that will probably weaken and ultimately unseat the Government of President Wahid if we do nothing.
There was the incident of the armoured car, although there is not time to go into it in detail. There has been correspondence between the Minister and Lord Alton about it. The present Government are not responsible for exporting the car to Indonesia but it is reported to have been involved in attacks there. The Government have denied that it was used in attacks, but I hope that they will send someone out to check the story. Richard Lloyd Parry of The Independent who was on the spot quoted Andi Jatmiko as saying:
The military were definitely helping the Muslim side attack the Christians and the Saladin was part of that.
I hope that the Foreign Office will check that story, as it is extremely worrying. It shows just how concerned we should be about the use of British military resources that have been sold to the Indonesian Government. That was not the first time that British armoured units have been misused in the Moluccas. On 26 December 1999, the Silo Protestant church in Ambon was attacked and destroyed by Indonesian troops and Muslim militants.
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Indonesian soldiers took part in the attack and even used the British-made Saladin armoured car in the assault.
What action are the British Government taking to persuade the Indonesian authorities to stop the Islamic militants from mass forced conversions of Christians in the Moluccas? Will the British Government urge the Indonesian Government swiftly to evacuate all Christians from Muslim-controlled areas of the Moluccas to rescue them from pressures to convert to Islam and place strong pressure on the Indonesian Government to accept United Nations peacekeepers in the Moluccas? Will the British Government, if necessary, institute an arms embargo on Indonesia and urge the European Union to do likewise, at least until the sectarian violence in the Moluccas is stopped?
The Moluccas are one of the few areas in the world where such large numbers of Christians are being killed or forced to change their religion. I hope that the Government will show a strong sense of urgency about the matter and not be deterred from taking action, despite the islands being so far away.
I was recently given a book about the spice islands by Giles Milton called "Nathaniel's Nutmeg: How One Man's Courage Changed the Course of History"—
Mr. Battle: I have read it.
Mr. Leigh: I am delighted that the Minister has read it. At one time in our history, the spice islands were incredibly important economically because of their nutmeg. The book states:
Nutmeg, the seed of the tree was the most coveted luxury in 17th century Europe, a spice held to have such powerful medicinal properties that men would risk their lives to acquire it. Always costly, it rocketed in price when the physicians of Elizabethan London began to claim that their nutmeg pomanders were the only certain cure for the plague…But nutmeg came from much further east, from the fabled Indies, which lay far beyond Europe's myopic horizons. Ships had never before plied the tropical waters of the Indian Ocean and maps of the far side of the globe remained a blank. The East, as far the spice dealers were concerned, could have been the moon.
As far as much of the British press is concerned, it is the moon. There were oceans of column inches at the weekend about what our politicians are or are not saying about each other, but how much coverage was there of the slaughter and the genocide in the islands? How many British journalists go there? I would not be surprised if there were none, but I wonder how many will cover Madonna's wedding? I do not expect reportage of this debate but I do expect British journalists to take an interest in genocide, torture and forced conversions.
I also ask the Foreign Office to take the matter seriously. The Minister invited me to a briefing on Burma, where we heard lots of harrowing stories. At the end of the briefing, when someone from a well-known Christian human rights group stood up to make allegations, a Foreign Office person of ambassadorial rank, a senior former diplomat, who had already spoken, said, "Oh, my God," in a tone of exasperated contempt.

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The Minister, whom I respect, does not take that attitude; he takes a genuine interest in human rights. At prayer meetings with ministerial colleagues—Conservative Ministers held them every morning when we were in power, although not much praying went on—and when he talks to the Foreign Secretary, I ask him to raise the issue to ensure that his office takes a stand. If the Minister visits the islands and does what I know he can do, he can save lives.
Several hon. Members rose—
Mr. Nicholas Winterton (in the Chair): Order. Three Members have sought to catch my eye, all of whom will be able to speak if they keep their remarks relatively short.
11.53 am
Mr. Win Griffiths: I shall try to do so, Mr. Deputy Speaker.
I congratulate the hon. Member for Gainsborough (Mr. Leigh) on raising the urgent issue of human rights abuses that are part of the sectarian conflict in the Moluccas, which seems to be more than an internal matter.
It appears that Islamic fighters in the Moluccas are receiving assistance from radical foreign Muslims in carrying out their objective of exterminating the Christian community. Reports from the Catholic Church in the Moluccas indicate that non-Indonesians, including Afghans, southern Filipinos, Pakistanis and Saudi Arabians, have been fighting alongside Islamic militants. The leader of Laskar Jihad, the main Islamic militant group attacking Moluccan Christians, has stated publicly that it receives financial backing from people in Saudi Arabia, Jordan and Yemen. All those actions are in line with the general tendency of radical Islamic movements to possess agendas on both a national and international scale. Victory in the Moluccas will encourage Islamic militants to take their violent and intolerant agenda to other parts of Indonesia with large non-Muslim communities. With more than 20 million Christians in Indonesia, such tactics will, if left unchecked, result in horrific chaos and bloodshed and have serious consequences for the region's stability.
Recently, there have been repeated Muslim attacks on the remaining pockets of Christians on Ambon island and in Halmahera. Such attacks appear to be an attempt to exterminate what is left of the Christian presence in those areas. Following threats by Islamic militants that no church bells will be ringing in Ambon by Christmas day, Christians in Halmahera and Ambon are worried about a possible major Muslim offensive around that time. In anticipation of such an attack, some Christians are celebrating Christmas early this year.
Sectarian violence has raged in the Moluccas for 23 months, but the Indonesian Government and military have repeatedly demonstrated their unwillingness to do whatever is necessary to end it and protect the Moluccan Christian community, which faces impending annihilation at the hands of Islamic militants. Moluccan Christians are besieged on all sides and elements of the Indonesian military are working in close co-operation with Islamic militants to wipe out Christians.
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Moluccan Church leaders know that they cannot rely on the Indonesian military to protect their community, so they continue to appeal desperately for United Nations peacekeepers to come to the Moluccas. However, while failing to stop the systematic destruction of the Moluccan Christian community, President Abdurrahman Wahid refuses to allow UN peacekeepers to enter the Moluccas. For nearly two years, Moluccan Christian leaders have called repeatedly for UN peacekeepers to be sent to the Moluccas, for UN human rights monitors to be allowed to investigate atrocities committed in those islands and for those responsible for such atrocities to be punished.
Since the influx of thousands of Islamic militants into the Moluccas in April, the violence has escalated sharply and desperate appeals have been made for the Indonesian Government and military to remove those Muslim fighters from the Moluccas islands. Until now, the Indonesian Government have ignored those requests. As a result, Islamic fighters have overrun most Christian areas of the Moluccas and thousands of Christians in Muslim-controlled areas are confronted with the difficult choice of converting to Islam or being killed. The very least that the Indonesian Government should do is evacuate Christians from Muslim-controlled areas so that they can escape the pressure to change their religion, but they have not taken even that measure.
The usual Indonesian Government solution of simply sending more troops to the scene of unrest is likely only to make the situation worse, until those soldiers are willing to conduct themselves neutrally and responsibly, instead of lending their manpower and firepower to the Islamic militants' cause. The Indonesian Government have verbally expressed many concerns about the Moluccas conflict, but little practical action has been taken in the past 23 months to end the violence. As the hon. Member for Gainsborough pointed out, that violence also results in Muslim fatalities. The mayhem that has been created in the Moluccas causes deaths and casualties on both sides, but those responsible for atrocities continue to walk free and cause destruction.
Evidence has been produced of British armoured vehicles being used to commit human rights abuses in the Moluccas, yet it appears that the British Government have not thoroughly investigated that claim. I should like to hear the Minister's view.
Violence caused by Islamic militants is unlikely to end with the Moluccas, as their objective appears to be to islamicise the whole of Indonesia. It should thus be in President Wahid's interest to stop the Muslim fighters in the Moluccas now, before their powers grow any further and they are encouraged by victory to seek further conquests in other provinces of Indonesia.
The minimum that the British Government should be doing is to impose an arms embargo on Indonesia and to urge the European Union to do the same, at least until the Indonesian Government agree to permit the entry of UN peacekeepers into the Moluccas. The British Government, along with their European partners, should also put strong and continual pressure on the Indonesian authorities to stop the forced conversions, evacuate the Moluccan Christians from Muslim-controlled areas, bring justice to the civilians and soldiers who are responsible for atrocities, and remove the Islamic fighters from the Moluccas. If the

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Indonesian Government are not prepared to take such action, Britain and the European Union should contemplate other sanctions besides an arms embargo against Indonesia.
It is misleading to think that the situation in the Moluccas has really improved while forced mass conversions and attacks on Christians continue. Such conduct by Islamic militants creates doubts about their willingness to make peace and the possibility of reconciliation between Muslims and Christians in the Moluccas—an outcome that I should dearly welcome. I hope that the Minister will be able to make such an outcome possible by means of diplomatic channels at national, European Union and United Nations levels. Perhaps the Indonesian Government will then intervene even-handedly to bring peace in conditions in which good will can be re-established. Unfortunately, it is too late for the Christmas message of peace and good will to be a reality in the Moluccas in the Christmas celebrations of 2000, but I hope that there will be a change for the better in 2001 and that that message will be a reality by Christmas 2001.
12.1 pm
Rev. Martin Smyth: For 500 years Christians and Muslims have lived with each another peacefully in the Moluccas. We want to return to that situation, which is vital for the well-being of Indonesia. The hon. Member for Gainsborough (Mr. Leigh) developed the debate effectively, but said that it was unlikely that the world media would pay much attention to it. All that I can say is that, having initiated a similar debate when I was in Australia with the Commonwealth Parliamentary Association delegation in September, I was informed that that debate was the first to alert the world to what was happening. I trust that the present debate will likewise stir up people, and particularly Governments, so that they will not remain silent in the United Nations or other arenas, but will use their influence to maintain pressure on the Indonesian authorities.
I do not want to speak at length because time is pressing, but I remind the Minister that the involvement of the Kostrad group in East Timor was a factor in the extreme way in which the situation developed. It was not defending but persecuting the citizens. It is important that that group and others like it should be restrained by the lawful authorities in Indonesia for the well-being of the whole country.
The authorities tried earlier to stop Jihad people going to the Moluccas. Unfortunately, because of our concept of civil liberties, they were allowed to enter because they had no weapons on them. The weapons entered by another route and some have since been supplied by the armed forces serving in Molucca. We need to keep up the pressure.
The tragedy is that the Moluccas and Ambon have been a haven of light in their area for centuries. The outstanding university in Ambon has been ravaged and burnt, and now there are plans to replace it with an Islamic centre on the same site. The Indonesian Government are trying to be fair and even-handed, but they are unlikely to be able to be so unless the
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international community combines to maintain pressure on them to restore property and land to families driven out of their communities after seeing many relatives put to death.
I know that others want to speak, but I wanted to make those simple points to enforce what the hon. Members for Gainsborough and for Bridgend (Mr. Griffiths) said. We are deeply concerned—we know that the Minister is worried—because we are not convinced that our representatives in the United Nations have pressed for UN input. It is not enough for one Government to maintain pressure. That job must be for the world population, especially when we realise that there are those outwith Indonesia who participate in the extermination of communities. It is not only Christians who have become victims of the jihad, but moderate Muslims who oppose what is happening. We cannot stand idly by while claiming to be human.
12.6 pm
Mrs. Cheryl Gillan: I congratulate my hon. Friend the Member for Gainsborough (Mr. Leigh) on securing the debate. I, too, will try to be brief, because I am interested in the Minister's response. The contributions made by the hon. Members for Bridgend (Mr. Griffiths) and for Belfast, South (Rev. Martin Smyth) should have given the Minister the message that there is a high level of concern about the Moluccas.
It would be wrong of me to speak without acknowledging the tremendous work of Christian Solidarity Worldwide and the Jubilee campaign. Both have been consistent in pressing the case of the Moluccas. I was privileged to meet the Rev. John Titaley earlier this year, who, at some danger to himself, came here to brief parliamentarians on the dreadful situation in the Moluccas.
The case of the Moluccas is especially tragic, as was pointed out by the hon. Member for Belfast, South, because for centuries Christians and Muslims lived side by side in peace. The islands were models of religious harmony, but the tensions that built up during recent years have exploded into the dreadful sectarian violence in which many thousands of people have been killed and more than 250,000 displaced. Even now, more violence is threatened. It seems as though the situation is set to reach a tragic conclusion, unless the Indonesian Government demonstrate the political will to stop the violence, and friendly Governments such as ours help to give them the backbone to take action in the Moluccas.
It is appalling that religiously motivated massacres take place almost weekly in what amounts to systematic extermination of an entire religious community. The level of concern expressed in the Chamber today possibly understates what is happening in those islands.
The causes of the current conflict are complex. They include demographic, economic and political factors as well as religious ones. For example, the former Government's policy of encouraging large numbers of settlers into the region upset the demographic balance. The Christians started to be marginalised in local government, the military and the police force, and there were more injustices and tensions. All that was exacerbated by the arrival of large numbers of self-proclaimed jihad warriors. There was great concern

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about the tremendous influx of people, primarily men, who stated that their aim was to remove the Christians from the island. It has become clear from comments made by Laskar Jihad that the threats that have been issued are unacceptable. Indeed, they make one's blood run cold. The threat to which the hon. Member for Bridgend referred was that there will be no church bells ringing in Ambon by Christmas. That is probably the most appalling thing that we have heard in this Chamber for some time.
On the official Laskar Jihad website, the Muslims apparently refer to celebrating a bloody Christmas this year. I hope that the Minister will comment on the statements made by Laskar Jihad, and explain what representations the Government plan to make to the Indonesian Government, especially about such violent and inflammatory statements.
We have heard some blood-chilling examples of individual massacres and murders, which I do not want to repeat. However, I want to ask the Minister a couple of questions, which I hope he will answer when he winds up. Last week, during a debate on arms export controls, I drew attention to a report on the BBC website that the French had offered arms to Indonesia in exchange for a maritime exploration licence. Will the Minister comment on that in the light of remarks that have been made on the EU code of conduct? A response was not provided by the Minister of State, the hon. Member for Neath (Mr. Hain), during last week's debate, or by Baroness Ramsay in another place yesterday, to a question on the Moluccas. Such an answer would be helpful, because to sit back and idly say, "We will not make any comment on the French arms situation" is, in light of the concerns expressed by hon. Members, not good enough. I hope that the Minister has come armed with the latest information on the French situation and, likewise, on the reports of the sale or donation of arms by Jordan to Indonesia.
Defence Minister Mahfud in Indonesia has said that the US embargo has semi-crippled the military capability in Indonesia. I hope that the Minister will say how successful that embargo was and whether he plans to make further representations on the arms situation, either to other countries with which we have diplomatic relations or to our colleague countries in the European Union.
The Government's response in another place yesterday contained many warm words. Indeed, Baroness Ramsay said:
All that the international community can do at the moment is support the democratic regime of President Wahid and try to give him all the help we can in his efforts to find peaceful solutions to the problems of his country.—[Official Report, House of Lords, 18 December 2000; Vol. 620, c. 567.]
I share that sentiment, as do the other speakers in this debate. I hope that the Minister, who is in charge of such matters, will go a little further and provide hard facts on what he has done, what help has been given and what support has been offered. For example, has there been an exchange of correspondence between Her Majesty's Government and the President of Indonesia that does not merely contain warm words and sympathy but offers practical advice and help? If so, I hope that, in the spirit of this debate, the Minister will place such correspondence in the Library for hon. Members to see.
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It would be good to know that our Government are taking an active role and not merely relying on warm words and sympathy.
A clear message should go out today from this Chamber, the British Government and all hon. Members that there is no place for such slaughter anywhere in the world and certainly not in Indonesia. I had the great privilege of visiting that country last year and I must admit that I was impressed by the people whom I met and the prospects for prosperity and peace. It is a bitter pill to swallow that a section of the Indonesian people are being systematically wiped out in such murder. In echoing the words of the hon. Member for Bridgend, I hope that the Minister can offer more than mere comfort, so that a message can go out to the people of the Moluccas at Christmas 2000 that the British people are behind them and that we will help to restore peace in that area of the world.
12.14 pm
The Minister of State, Foreign and Commonwealth Office (Mr. John Battle): I sincerely thank the hon. Member for Gainsborough (Mr. Leigh) for raising the issue of what is happening in the Moluccas. It is important that such matters are debated. In the world of economic globalisation, I believe that the campaign for justice and peace internationally should be global, and I am sure that we share the hon. Gentleman's sentiments about the attention to such matters sometimes being less than negligible. I thank also my hon. Friend the Member for Bridgend (Mr. Griffiths), the hon. Member for Belfast, South (Rev. Martin Smyth) and the spokesperson for the Opposition, the hon. Member for Chesham and Amersham (Mrs. Gillan).
All who have spoken in the debate have sustained a high level of commitment to what is happening, whether in writing to me, encouraging others to write to me, tabling early-day motions or in meetings with me. I want to continue such meetings, as I do with the Jubilee Campaign and Christian Solidarity Worldwide, which have contacts in the Moluccas islands through the churches and on the net. The information is valuable and makes it known that we are as aware as we can be of what is going on. Having said that, what do we do about it? A tragedy is taking place there and we all share the sense of urgency. Horrific events have unfolded this year. In fact, they go back further than that. We deplore the activities that have brought such pain, suffering and loss to the communities in the Moluccas over the past 18 months.
The hon. Member for Gainsborough asked whether we recognised the role of Laskar Jihad. Yes, we do. We kept tracks on those ships that carried its people from Java to the Moluccas. They were not armed, but they claimed that they were free to move about. That was a worrying development. We do not support Laskar Jihad, and nor do the Indonesian Government. I want to challenge some of the points that have been made. It is not true that no one in Laskar Jihad has been touched. On 5 July, 250 members of the group were arrested by the Indonesian navy, soon after the Duma massacre. I assure hon. Members that a blind eye has not been taken to such problems. The Indonesian military were instrumental in restoring order in North Maluku.
The conflict in the Moluccas has complex origins that go back many years. I also recommend "Nathaniel's Nutmeg" as a good read. It ties in 500 years of history of

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the Dutch, Portuguese and the British colonial traders in those islands fighting for control of them with their rich treasures. That colonial trading left Indonesia with a legacy of a diverse mix of Catholic, Protestant and Muslim traditions and local customs, and more than 150 different dialects. On 23 and 25 October, I visited Sulawesi, an island in the direction of the Moluccas, which was too dangerous to visit at the time. I never fail to be amazed by the sheer size of Indonesia, with its 212 million people and 17,000 islands that stretch across 3,000 miles. The Indonesian archipelago is a huge continent. I emphasise that, because sometimes it merely seems that the Indonesia islands are a few small dots on the map.
As the hon. Gentleman said, we must take seriously what is happening in the Moluccas. The rough split of 40 per cent. Christians and more than 50 per cent. Muslims is rare in Indonesia, but it has existed in the Moluccas since the 16th century. Communities have lived peacefully in close proximity for centuries. The Dutch exerted a strong influence over the islands until Indonesia became independent in 1949. Soeharto ruled it with an iron fist until 1998. We must remember the breakthrough in September 1999, with the democratic election of President Wahid and civilian control of the army—for the first time for generations. Given that move towards democracy in Jakarta, there has been increasing pressure at the periphery for a relationship between the edges and the centre. As we know, tension has been at the edges of the archipelago. In January 1999, violence and destruction erupted between Christian and Muslim communities in the Moluccas.
It is generally agreed by the United Nations that the peak of that violence was between December 1999 and January 2000—this time last year. Thousands died, hundreds of buildings were destroyed and more than 150,000 people were forced from their homes. We urged the Indonesians to pursue conflict resolution, and we raised the matter with the authorities. I say to the hon. Member for Chesham and Amersham that it was not a case of saying that we support, as we all do, the democratic forces in the emerging democracy. We must go further and say that, because of the conflict, the process does not appear to be working. We want the conflict resolved, and we have made that plain.
A UN resource centre was established. The United Nations Development Programme undertook humanitarian assistance and there was a period of relative calm. However, violence flared in the summer following the arrival of the Laskar Jihad extremists, and the escalation of the violence illustrated the fragility of the reconciliation that had been worked through in the previous months. That matter was raised with the Indonesian authorities, including the movements of Laskar Jihad, and our people in Jakarta supported that.
To add to the complexity, it is sometimes difficult when those even in the other place approach me, write to me and suggest that we give more support to some of those opposing Laskar Jihad. I point out that the issue is not always clear-cut. It is sometimes suggested that the conflict is simply Christian-Muslim. It is not. Social, economic and political tensions exist between local interests that are also factors. It is essential to understand that violence affects all communities.
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Christians and Muslims alike have been victims and perpetrators of attacks and atrocities. Churches and mosques have been destroyed.
In the past few days, I have obtained the latest report from our ambassador, which describes an attack on a speedboat carrying Muslims that triggered further violence in Ambon in November, although the situation has been calm since the beginning of December. The North Maluku governor reports that progress continues, with grass roots peace agreements now in place between Christian and Muslim communities in Halmahera. The two Christian provincial parliamentarians have already returned to Ternate. The report states:
On 18 November a speedboat carrying 16 Moslems from Ambon to Sin Son Islam, the only remaining Islamic village on Saparua Island, disappeared. On 21 November the bodies of two mutilated female passengers washed ashore in Ambon. The UN Resource Centre, based in Ambon, tell us this was followed by tit-for-tat attacks on speedboats, sniper fire and bombing, which lasted until 7 December. For the last week the situation has been better but this may only be temporary.
On 30 November the Diocese of Ambon Crisis centre reported coordinated attacks on the four Christian villages on Kasiui, Island, also known as Keswui, south east of Seram. The villages of Utta, Karlomin, Wunin and Tanasoa were destroyed between 23–28 November. The Crisis Centre reports that between nine and 91 were killed, with up to 700 Christians imprisoned and being forced to convert to Islam. However, on 13 December the Crisis Centre withdrew their earlier statements and said they would wait until the mixed-faith investigation team from the Governor's office reported their findings. The National Commission on Human Rights (KomnasHAM) are participating in the team which left Ambon on 13 December. The Crisis Centre reported that on 10 December Moslems had attacked Catholic villages on the neighbouring Tior island. An unknown number of IDPs—
internally displaced persons—
had fled to the nearby Kai Islands, SE Maluku.
I read that out not simply to say, "Is it one lot or another—is it Christians or Muslims?" We need to know the truth about what is happening, but, crucially, we must put on the pressure to resolve the basic conflict and crisis. Calm was broken on 7 December, when unidentified assailants attacked a boat carrying 40 Muslims from Ternate to Halmahera. The important point, however, is that we are now working together, trying to exert pressure internationally, but also trying to ensure that there are conflict prevention measures on the ground to work with the communities in an attempt to remove the violence.
Despite reports of over-reaction and partisanship from a number of police and military units, the role of the police and the military is generally not as negative as is sometimes suggested. A naval blockade is in place to stop more Laskar Jihad boats going to the island. That is welcome. The marine commander has proved especially effective in North Maluku. The death toll would almost certainly have been higher if personnel had not been deployed or had been withdrawn from the province.
As a result of the violence, the European heads of mission visited the Moluccas to see the devastation and to consider how best to deliver humanitarian assistance and support for conflict resolution. In October this year, the delegation visited Ambon in Maluku province and Ternate in North Maluku. It reported that Ambon resembled Beirut in the 1980s and that warring communities were separated in devastated streets, living

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with daily bombs and gunfire. However, the situation in North Maluku improved greatly when order was restored, largely as a result of the marine commander's efforts. The deputy governor believes that there is a strong desire for peace and reconciliation.
Mrs. Gillan: I am grateful to the Minister for giving way, especially as he is running out of time.
Does he find it ironic that, at the same time as the EU is sending a mission to the region to try to bring aid and relief, the Defence Minister reports that the French are offering arms in exchange for maritime exploration licences? Will the Minister tell me what he knows about that?
Mr. Battle: I know little more than the hon. Lady. Those allegations have been made, and I urge the French strictly to apply the terms of the EU code of conduct on the sale of arms. I shall be happy to raise the matter with them at the appropriate time. The idea is to calm the situation down and to ease, not heighten, tensions.
Peace agreements are now in place in Christian Tobelo and Muslim Galela in north Halmahera, and internally displaced persons are returning home. The governor of North Maluku has persuaded two Christian provincial parliamentarians to return to Tenate, which will allow them to work in the communities. The UN and the international NGOs have started to deal with the immediate humanitarian problems, and we have worked closely with them to establish the mechanisms to deliver assistance.
Peace in the Moluccas is fragile. We are concerned about recent incidents such as attacks and forced imprisonments in Christian villages on Kasiui island and the attack on a boat carrying Muslims to which I referred.
I am often asked about the possibility of UN military intervention in the Moluccas. I must repeat that the situation is very different from that in East Timor. The
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UN Security Council did not recognise East Timor as part of Indonesia. To draw a parallel—without wishing to be offensive—I remember its being suggested that a UN peacekeeping force should be sent into Northern Ireland. People were not keen on that, because it was felt to be an internal security matter within the United Kingdom. We must respect such boundaries. Even in the context of the EU report, to which the hon. Member for Gainsborough referred, the role of the international community cannot be ruled out. I hope that I made that plain to the hon. Gentleman in our exchange.
We must wait for an invitation to intervene, thus respecting the democratic sovereignty of Indonesia now that it is established. However, that does not mean that we will not continue to put pressure on the Indonesian Government. We regularly raise such matters with the authorities, Government and President of Indonesia, as I make clear in my replies to hon. Members' questions on the subject.
President Wahid's reform-minded Government are intent on halting the violence. The people of the Moluccas want peace, not independence. That is the specification, although it is different in other parts of Indonesia. Nationalist tensions are running very high in Jakarta. The UK is actively trying to find ways of providing practical back-up and support. We funded two events promoting reconciliation and conflict prevention and we have helped to put people on the ground to work on those matters.
The hon. Member for Gainsborough mentioned journalists and the fair reporting of events. Reporting crisis, tension and war is a difficult business, and this year we have worked to ensure that journalists in the Moluccas participate in training programmes. The Department for International Development seconded a specialist to help establish mechanisms for managing the humanitarian response of the entire UN, and we are considering funding further conflict prevention work. As recently as last week, I discussed Indonesia's efforts with Foreign Minister Shihab at the EU-Association of South-East Asian Nations Foreign Ministers' meeting in Vientiane, and offered further practical support.

Crime and Prostitution (Leeds)
12.30 pm
Mr. Fabian Hamilton: I am grateful to Mr. Speaker for allowing this debate, especially given that I failed to catch his eye in last Tuesday's debate on the Queen's Speech. I hope to show what is really happening on the ground in the fight against crime. I want to get away from the hype, headlines and cartoons, such as that in The Guardian today, which depicts a "political football" commentator saying:
Now the political football results; Hague, own goal.
When local police forces are asked to establish their policing priorities, and they, in turn, ask the local population on what their policing plans should concentrate, prostitution rarely appears at the top of the list. That is because prostitution affects only the women involved, their families and—when it occurs in a residential area such as Potternewton in my constituency—local residents.
One of the biggest problems that my constituents face is the constant stream of vehicles carrying kerb crawlers and visitors to houses that are, in effect, brothels—usually houses in multiple occupation, interspersed with family homes in which children and young people live. Those families are trying to live a decent, ordinary life, but they are constantly plagued by the noise, detritus and disruption that are caused not only by the women who ply their trade, but by vehicles, pimps and drug dealers who make their deals in nearby phone boxes. People whom I meet regularly have formed an effective residents and communities association to fight the scourge. Although they live in a pleasant, albeit poor area of the city—in streets such as the Avenues, the Hiltons and the Roundhays—they have to put up with the problem day in, day out. They cannot get a decent night's sleep because of the goings-on around them. An 11-year-old girl was recently accosted on her way home from school by someone who was looking for sex from a prostitute; thankfully, she was released unharmed.
There are many ways in which to begin to deal with the problem. We can try to remove the immediate trade—the kerb crawlers themselves. Last year, we in Leeds established an effective trial scheme—the kerb crawlers rehabilitation programme, administered by Leeds Metropolitan university. Of the 81 men who attended the programme throughout the year, only one was known to reoffend. The scheme, which ended last December, was a partnership that was largely funded by the police and other agencies such as the health authority. That is one way to tackle the problem. Instead of being referred to court and named and shamed—as the police and press put it—first-time offenders were sent on the programme at a cost of about £120—a sum similar to the fine that they might have received had they been convicted. Attendance is voluntary: during a full day's programme, the men learn about prostitution's effect on and the pressures experienced by prostitutes themselves, local residents, and the families of those caught kerb crawling.
That is one measure that we can use to try to deter kerb crawling, but I am delighted to see an alternative measure, to make kerb crawling an arrestable criminal offence, included in the new criminal justice and police
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Bill that will be presented to the House next year. Once the Bill becomes law, it will have a salutary affect on kerb crawlers, who will be easier to catch and convict. The kerb crawlers' rehabilitation programme was effective, but it closed last year, mainly because West Yorkshire police thought that they should not continue to fund it, believing that savings were made by the Crown Prosecution Service, not by them. Some in West Yorkshire police feel that kerb crawlers who are caught should be referred to the courts, to be named and shamed and convicted. As we have said, that will be easier once new legislation is enacted.
The Home Office, and the Minister of State, my hon. Friend the Member for Norwich, South (Mr. Clarke), helpfully put together a crime reduction fund specifically for programmes to fight prostitution. A group got together in Leeds to put in a bid together for that funding: it included Leeds city council, West Yorkshire police and an organisation called CROP—the Coalition for the Removal of Pimping. Unfortunately, I recently learned that the Leeds bid was unsuccessful. I am deeply unhappy with the role that Leeds city council played in that. I hope that lessons will be learned, and that next time, should further funding become available, Home Office officials will work together with different agencies to form a true partnership bid. We must ensure that the next bid is successful, so that we can re-establish the kerb crawlers rehabilitation programme. I must thank the Yorkshire Evening Post for highlighting the effectiveness of the programme and pressing for its re-establishment; I hope that it will continue to support the programme.
A woman called Irene Irene was key to CROP. She had a daughter, Fiona, who, after three weeks working as a prostitute, was murdered at the age of 17. She had come under the influence of a pimp at the age of 14. Irene made it her life's mission to stop pimps, who often get away—literally—with murder. Irene set up CROP and was heavily involved in Rotherham's successful bid for crime reduction funding. I am delighted that Risky Business has received funding. The organisation tries to assist the families of prostitutes and to help prostitutes to get away from prostitution and leave the trade. Tragically, Irene died prematurely last month. We all mourn her.
I thank my right hon. Friend the Home Secretary for his visit to Leeds in April. As the Minister will know, I have been pressing the Home Office and raising the issue wherever I can. The Home Secretary agreed to come to my constituency in April to see and hear for himself some of the problems that residents face day in, day out, and he listened to the Potternewton community action group for nearly an hour. I am also grateful to the Minister of State present today, who came to my constituency last month, primarily to speak to the community action and support against crime annual general meeting, where he was well received. At his request, he also met residents from the Potternewton community action group. We had a fruitful discussion, and I was pleased by his interest. CASAC is trying to fight crime in the Chapeltown and Harehills area, and it does so successfully. In no small measure, that is due to the work of Travis Johnson, who set up CASAC and is its current chairman.
Today's debate is also about crime. Recently, we have heard a great deal about the police—their numbers, their impact on crime and other issues that are currently

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in the headlines. During the debate on the Queen's Speech my right hon. Friend the Home Secretary said that the number of police is, of course, important in trying to fight crime, but that so too is the way in which the police use their resources. I shall draw the House's attention to some examples of how police in the city of Leeds have used their resources both more and less effectively.
In the Chapeltown division of West Yorkshire police, Chief Superintendent Frank Farmer has been enormously successful in solving a series of shootings and murders that took place in Chapeltown, north Leeds and east Leeds during the first six months of this year. Through good intelligence and concerted policing, every one of the perpetrators is either dead—shot, not by the police, but by one another—or behind bars. That is a 100 per cent. clear-up rate for some 20 shootings, all drug related; and the associated drug dealing has also been largely cleared up through the efforts of the Chapeltown police. I thank Chief Superintendent Farmer for concentrating so hard on something that disturbed every resident of the area, not only those who live in my constituency.
More trivial incidents cause disturbance. A few weeks ago, Steve and Wendy Jones-Blackett, two residents of Chapel Allerton, a district centre in my constituency, visited my advice surgery to tell me about a gang of youths, perhaps the product of yob culture, who were robbing shopkeepers and sometimes holding them up at knifepoint. Again, thanks to effective and swift action by Chapeltown police, and to the use of anti-social behaviour orders, that scourge has now been ended.
I contrast that with the situation on the Queenshills in the Moortown area of my constituency, which is policed by another division of West Yorkshire police. A spate of crimes there has involved my office and other premises, including the newsagents, where Mr. Singh was held up at gunpoint this weekend. Earlier in the week, the hairdresser's premises were burgled and the door kicked in. Luckily, however, video cameras had been temporarily installed and video footage was taken; I hope that the police will follow up that evidence. Earlier still, an office was burgled: because it had been burgled once before, the police had installed a temporary direct-line digital alarm, and at 2 am, when the office was burgled for the second time, the police arrived swiftly. Unfortunately, they forgot to turn their sirens off, thus warning the criminals inside the building and allowing them to escape. It might have been easier if the police had telephoned to say that they were on their way.
Other areas of my constituency have suffered the effects of crime. One small example is that of Moortown Methodist church on Alderton crescent in the north of my constituency. The minister there, Richard Bryant, telephoned the police a few months ago, after youths had been found throwing stones at the church and houses in the locality. The police said that they were unable to attend because they could not find the church in the telephone book and so did not know the address. When Mr. Bryant told them the address, they said that Alderton crescent was not on their map and that they could not help. That is one example of poor-quality policing. However, I know that the point has been made and that it has been taken up by the divisional commander.
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In the fight against crime, partnership is everything. It is vital. As we know from trying to fight prostitution in Leeds, all the agencies, including the police, must fight the scourge of crime together. The Government have made an extremely good start with some of the initiatives that I have mentioned, including anti-social behaviour orders and the crime and police Bill, which I know will help in the fight against various aspects of crime. There is certainly no question of complacency. Communities must fight together. Headline grabbing is not a solution: what counts is the work on the ground, as CASAC has shown.
Supporting communities and the police in their fight against crime is part of the answer, but no one has the whole solution. It is clear that attacking the causes of poverty, deprivation and unemployment are also an important part of the solution, and the Government have made an effective start on that. Being tough on crime and its causes will finally bring a real reduction in crime. The Government are going the right way about the problem and they deserve our full support.
12.44 pm
Mr. Paul Truswell: I am grateful for this opportunity to make a short contribution to the important debate secured by my hon. Friend the Member for Leeds, North-East (Mr. Hamilton). He graphically described the problems within his constituency and the increasing frustration felt by his constituents about the capacity of the police to address them. Communities throughout West Yorkshire, including my constituency, face to varying degrees the problems that he has raised.
West Yorkshire police force has a good record of efficiency. It has continued to maintain downward pressure on overall crime figures and has an especially good record on crimes such as burglary and car crime. This year brought good news about funding: the force's budget uplift has been an above-inflation 4.6 per cent. and extra money has been allocated to begin the process of recruiting 300 officers. The force has also been successful in bids for £2.5 million from the reducing burglary initiative and £500,000 for the distraction burglary initiative, about which I have personal interest in lobbying the Minister. A little time ago, it was feared that the cost of a new police radio system would fall wholly or partly on West Yorkshire police authority, but those fears were assuaged when the Home Office announced an extra £500 million to fund the project.
Despite those improvements, my colleagues and I have become increasingly concerned about the possible impact on West Yorkshire police authority of the proposed increased contributions that it may have to make towards the National Crime Squad and the National Criminal Intelligence Service—increases for NCS of 32 per cent. and for NCIS of 108 per cent. That would result in an additional levy of £3.2 million on the police authority, which represents a real-terms increase of £2.9 million above the settlement figure for West Yorkshire police. That is the equivalent of more than 100 officers.
The marked gains that the police authority has made on the swings may therefore be lost on the roundabouts of increased funding contributions to NCS and NCIS. West Yorkshire Members are convinced that the

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Minister and his colleagues will want to avoid that, having given the area the boost that it desperately needed to address the problems described so graphically by my hon. Friend. Will the Minister assure us that increased contributions to those two national squads will be made from central funds, or set at a level at which they will not impact so profoundly on our force's ability to boost officer numbers and tackle the issues raised in the debate?
12.48 pm
The Minister of State, Home Office (Mr. Charles Clarke): I begin by welcoming the opportunity to debate an important and difficult subject. I congratulate my hon. Friend the Member for Leeds, North-East (Mr. Hamilton) on securing the debate and my hon. Friend the Member for Pudsey (Mr. Truswell) on his contribution.
As my hon. Friend the Member for Leeds, North-East said, I had the opportunity to visit his constituency, Potternewton in particular, to discuss the issues with some of the people involved. I am well aware of the nuisance and misery that prostitution can cause and the serious risks that it can pose. I am especially concerned about children being drawn into prostitution. We should all recognise that those people are victims, not offenders, and approach the question from that viewpoint.
The issue was the subject of a major guidance document produced by the Government earlier this year as part of the working together initiative, which was widely welcomed by the agencies involved. I have great sympathy with people in Leeds who are affected by the activities of prostitutes, kerb crawlers and pimps. The Government are strongly committed to tackling the crime and disorder associated with prostitution. The police and criminal justice Bill will contain provisions to make kerb crawling an arrestable offence, which would assist police in tackling the anti-social behaviour of kerb crawlers and improve the environment for residents and visitors. We believe that a combination of legislative change and other interventions is the best way forward.
I shall say a little about the funding that the Government are making available from the crime reduction programme, then discuss briefly some recent research and reports, and finally note the areas in which the Government are introducing legislation. I should like to take this opportunity to pay a personal tribute to my hon. Friend the Member for Leeds, North-East, who has been campaigning on the issue of prostitution for many months. He has taken it up with me and with my right hon. Friend the Home Secretary, arguing strongly and forcefully that prostitution needs special Government attention, as it has not received sufficient attention in the past. It is a tribute to his work that we now have a fund from the crime reduction programme, the details of which I shall announce today.
There has been very little research to determine what strategies are effective to combat prostitution. The purpose of the schemes that we are announcing today is to find out what works to reduce some of the general crime and disorder associated with such activity. It is a coincidence that we are announcing the results for the
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bids for these projects on the same day as the debate. Some excellent bids are to be funded. The basis of the bids is partnership between the various local agencies to tackle the nuisance and crime associated with prostitution, as well to tackle long-term aims such as providing exit routes from prostitution. We are addressing a number of issues specifically to deal with kerb crawling and soliciting, noise and harassment, discarded needles and condoms, thefts and muggings, drug-related offences, violence to women by pimps and so-called clients and extremely serious offences such as rape and the sexual exploitation of children. Projects that will receive up to £100,000 each are being approved in Bournemouth, Bristol, Huddersfield, Hull, Liverpool, London, Manchester, Nottingham, Rotherham, Sheffield and Stoke. Each project offers a series of ideas on how to deal with the whole range of problems.
The money will be used as seed funding to develop models of good practice to be used by other multi-agency partnerships in the future. As I said on the phone to my hon. Friend yesterday, I regret that it has not been possible to fund the Leeds bid in the current round. In the eyes of those experts looking at the project, there was insufficient partnership between all the relevant agencies to enable the bid to be funded. As my hon. Friend said in his speech and to me yesterday, he is strongly committed to ensuring that those partnerships are built and developed.
I am confident that, although the money that is being announced today is used as seed funding, it will develop models of good practice to be used by other multi-agency partnerships in future. They could well include Leeds, if a bid is made that builds on the foundation of partnership. I regret that Leeds could not be one of the pilots announced today, especially given the important role that my hon. Friend has played in pressing the case, but the professional assessment was that partnership should be at the core of our approach. My hon. Friend the Member for Pudsey mentioned the 15 crime reduction projects worth slightly more than £4 million that are currently being funded in Leeds. They deal with burglary, targeted policing, violence against women, neighbourhood wardens and a variety of different schemes of that type. It is not a question of Leeds being left out of our approach on crime reduction: it is just that the city's bid did not meet the criteria that we had set out.
We are looking at the funding of the National Crime Squad and the Nat ional Criminal Intelligence Service. I have had friendly, frank and fraternal discussions with both the chief constable and the chairman of the West Yorkshire police authority on these matters. No doubt, we shall reach a solution that is welcomed and applauded by all—except, perhaps, my Conservative opponents, who usually oppose anything that is agreed on any grounds of good sense.
In addition to the overall crime reduction partnership approach, which has led to a unique departure in the funding of bids to try to attack the evil of prostitution, the Government have decided that a change in the law is necessary. As my hon. Friend the Member for Leeds, North-East said, the Bill to be considered in this Session will include the power to arrest kerb crawlers. We intend to take action to allow the police greater powers in tackling that menace, and the Bill will make kerb

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crawling an arrestable offence, which will make a real difference to all the areas of the country in which prostitution is a problem, including that represented by my hon. Friend.
Last week, we also announced plans to make an offence of and to ban the advertising in telephone boxes of sexual services. Cards advertising such services are a nuisance and often advertise trafficked women or the sexual services of children, constituting the marketing end of a vile trade. We are keen to crack down on the problem and we will legislate as soon as parliamentary time is available to do so. The advertising of sexual services is a particularly severe problem in London, Brighton and the south-east, but it is a problem in all our major conurbations. It is another important element on which legislative change is needed.
Through our research, we have forcefully addressed other aspects of this appalling trade. Pimping is a crime and tackling it effectively is a key element in dealing with the evils associated with prostitution. Domination and bullying by the pimp can lead to many consequent and damaging crimes. Some of the successful projects that I have mentioned have picked up that theme. Our research report "For Love or Money: Pimps and the management of sex work" found hat young people were at greatest risk of being pimped and suffering violence from pimps. I commend the report to hon. Members interested in studying the relationship between pimping and prostitution, as it is useful and fills gaps in our knowledge. We hope that our research work and the practical action that we are funding will make more effective action possible.
In July, we published "Setting the Boundaries", the report of our sex offences review, which recognised the need for effective legislation to deal with those who exploit others for the purposes of prostitution. That report has gone out to consultation. It is an important and profound report, which recommends the creation of new offences to deal with the sexual exploitation of children and adults. It is apparent from our research and the report that there are significant holes and loopholes in our legislation. Prostitution is only one aspect of
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sexual exploitation, albeit an important one. The Government are awaiting responses to the report's conclusions before adopting a firm view, but the report proposes that separate offences should cover the exploitation of children and adults to set an unambiguous standard that states absolutely that sexual exploitation is wrong and outside the law. It may seem trivial or absurd to say that, but the current law is not sufficiently clear and needs to be made clearer.
Many solutions to the difficult problems under discussion will be practical, rather than based in the law. Solutions such as the provision of advice and support to sex workers who wish to exit prostitution are important in tackling problems in the long term. Helping people to leave prostitution is important: it involves breaking the power of pimps and establishing real alternatives for the young women who have ended up in a situation in which their lives, if they are not careful, will slide away into uselessness and despair. It is our job to do what we can to address the problem much more coherently. Many interventions funded by the crime reduction programme will help us to understand which methods are effective in assisting sex workers to find alternative ways of living.
I am delighted that crime and prostitution are now being debated more openly. I warmly commend my hon. Friend the Member for Leeds, North-East on his campaigning work and on securing this debate to allow the issue to be debated much more widely. It has often been dealt with under cover and must be brought out into the open. People need to discuss the issues in far greater depth.
The Government are working with all parties in the House—there are no differences of political opinion on the matter. We are determined to tackle the nuisance of prostitution to ensure that communities are not blighted by the resulting crime and disorder. We are also determined to help those trapped in prostitution to find a way out. The projects that we are funding and other initiatives should make a difference. I hope that the proposed legal changes will win support and that we make a fundamental difference to an appalling situation.

Farming (Vale of Aylesbury)
1 pm
Mr. John Bercow: Interest in agriculture and farming has been reflected in the House since May 1997 in 2,100 oral and written parliamentary questions, 30 Adjournment debates and seven early-day motions. I am especially grateful to Mrs. Virginia Crick and Mr. Tim Whitlock, secretaries of the Aylesbury and Buckingham branches of the National Farmers Union, and to farmers to whom I have spoken recently: Mr. Antony Aston, Mr. Robin Culley, Mr. Mike Duckworth and Mr. James King.
A deep-rooted crisis is afflicting British agriculture. The recent Deloitte & Touche report showed that for a typical, 500-acre, often family farm, incomes have been slashed to the desperate level of £8,000 a year. As the Minister knows, that is a cut of well over 70 per cent. in the past five years. In addition, the albatross of a £10,000-million debt is hanging around the industry's neck. It is salutary to remind ourselves that about 450 people a week leave farming; no fewer than 24,000 have done so in the past 12 months. I know from personal experience in my constituency that there are two continuing problems, the first of which is that some farmers earn as little as £4,000 a year, showing beyond peradventure that they earn less than the national minimum wage for the amount of work that they do. That is by no means uncommon. Secondly, many farmers in my constituency no longer farm for 12 months a year as farming simply will not sustain them. They usually work for four or five months a year on their farms and undertake contract work to keep themselves and their families for the remainder of the year.
That is an appalling situation. What is to be done about plummeting incomes, declining numbers and severely depleted morale? The answer is that we must construct a fair deal for farmers, which should be characterised by three principal themes. First, there is an urgent and compelling case for slashing—I use the word advisedly—red tape. Lord Haskins, chairman of the better regulation taskforce conceded that this country is too eager to implement European Union directives and regulations that have an impact on British agriculture. Eighty per cent. of rules relating to environmental matters originate in the European Union, and we are too prescriptive about the means of implementation. Typically, we take "insufficient account" of British interests, which gravely damages British agriculture and that must be changed as a matter of determined public policy without delay.
Secondly, there must be honesty in labelling, so that consumers can see at a glance the country of origin and the method of production of the food that they are invited to buy. Thirdly, we need to ensure that British agriculture is protected from unfair competition—competition from countries that do not produce food to our standards, in terms of either animal welfare or protection of public health, on which Britain has traditionally prided itself. Those three themes should inform the gamut of public policy in relation to agriculture.
I shall address some of the agricultural sectors which are represented in significant numbers in my constituency and which I have had the pleasure and
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experience of seeing at first hand in the past three and a half years. We need a fair deal for the arable sector. Arable farmers need to be protected urgently. Government action is required to protect them from the threat of contamination of crops. We need to ensure, as I hear again and again as I visit farms in my constituency, that the regulations relating to the washing of arable farmers' equipment are not overly burdensome or interpreted with excessive zeal. We must also do what we can to cut the price of diesel for those farmers: I am sure that the Minister is well aware that the continuing high price of diesel adds about £10,000 a year to some cereal farmers' bills.
We also need a fair deal for beef farmers. We need to ensure that the remaining conditions, and, therefore, restrictions on the export of British beef are removed. We need to promote actively, as has not hitherto been done, our own produce. We need to slash again Meat Hygiene Service charges, which remain exorbitant and a significant blight on a struggling sector that needs the hand of Government assistance and impartiality on that front. Honesty in labelling must be established, and, as beef farmers continually remind me, we need to stop unfair competition. The best and most efficacious way in which the Government can do that is to invoke article 36 of the revised treaty of Rome to prevent the import of substandard beef, the most recent examples of which come from France, although there have been many others over the years. We must ensure that we bat for our agriculture as, typically, continental Governments do for theirs.
We also need a fair deal for dairy farmers. The quota settlement under the common agricultural policy of Britain's dairy farmers is pitiful and risible. Even the Prime Minister has said that the deal so far secured was "not satisfactory" and "disappointing".
The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin)indicated dissent.
Mr. Bercow: The Minister chunters and shakes her head, but the position is deeply unsatisfactory. Dairy farmers in my constituency holler at me about it all the time, and I make no bones about the fact that it is the Government's fault. Farmers expect Ministers to do something about it, and not simply to wait until 2005 in the hope of crumbs descending from the table. We cannot afford to wait that long without the risk—nay, the certainty—of large numbers of dairy farmers going out of business in my constituency and across the United Kingdom.
Secondly, as a matter of public policy for the dairy sector, we need to encourage farmers co-operatives to produce, process and sell their milk, along the lines undertaken by the great continental conglomerates. I do not want to revisit the argument about the neutering of Milk Marque, but I hope that the Minister accepts that the tendency towards agri-businesses and the development of conglomerates is commonplace and growing on the continent. Measures to encourage a similar process here are necessary if a decent dairy sector is to be sustained in the future.
We also need a fair deal for pig farmers. The National Pig Association has calculated that the sector—
Mr. George Stevenson (in the Chair): Order. It is difficult to have a debate on farming in the vale of

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Aylesbury by talking about general farming policy. I am sure that all the factors that the hon. Gentleman is discussing are relevant to the vale of Aylesbury, and that he will refer to that.
Mr. Bercow: I most certainly shall, Mr. Stevenson, and I am sorry if I have somehow fallen foul of your exhortations. However, I emphasise the fact that the individuals whom I consulted in my preparations for this debate were conscious that each of the sectors to which I have referred are affected.
I am glad that I have been given the opportunity to remind hon. Members that I met Mr. James King of Cowley farm in Preston Bissett, which is near Buckingham in the northern area of my constituency. He is a decent, hard-working, effective and talented pig farmer—I congratulate him on his imminent wedding—who suffers under the depredations of the Government. He is concerned that he faces a big loss—for reasons of confidentiality, hon. Members would not expect me to disclose precisely what his balance sheet is; suffice it to say that Mr. King has been severely hit.
There has been an exodus of people—about 25,000—from the sector in the past two years, with the prospect of a similar exodus unless efficacious action is taken in the next two years. Mr. King told me that there must be honesty in labelling and that, if his farm is to have the chance of survival, we must be prepared to restrict or prevent the import of pigmeat that does not satisfy our standards. He appealed for the review of integrated pollution prevention controls to ensure that they do not adversely discriminate against our pig sector relative to those of our continental counterparts. Those are issues of pressing concern in the south, north, east and west of my constituency.
It is commonly held that some restructuring of agriculture is required, including in my constituency, but we need to think afresh. There is a requirement for diversification. The Minister will know from her visits that many farmers across the country are willing to entertain the prospect of diversification. However, they need some guidance, encouragement and the prospect of their hopes being fulfilled.
From visits around my constituency, especially during the past 12 months, I have learned that there is an interest in and a desire to preserve the business rate concession on the letting of accommodation of up to six lets. Farmers who are struggling to make a decent income should be encouraged, if they are willing, to let a property commercially, which is to the advantage of many people who cannot afford to purchase property in the vale of Aylesbury. I hope that the Minister can assure me that the concession will remain.
I cheekily invite the Minister to consider another proposal, which is that we should relax the planning controls on the conversion of farm buildings. A threshold could be set; I have seen many such developments in my constituency, typically of around 1,500 sq ft. Let people have the chance to convert to different types of businesses, so that farmers who want to leave the sector can do so, and farmers who want to share their time between farming and other activities and so prop up their incomes can do so. Diversification is important.
When I address Young Farmers meetings in my constituency, and especially when I listen to what those who attend them have to say, an issue that arises again
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and again is the attraction of young people into farming and the prevention of the exodus of those currently in it. We need a fair deal for young farmers. I put it to the Minister that it would be good if there could be some sort of pension arrangement for tenant farmers in this country, perhaps funded from the rural development regulation. That would give people an incentive to leave the sector and create an opening for youngsters to enter the industry. That subject came up at a recent question-and-answer session in Buckingham. The Minister will be aware that the average age of farmers is 58 and rising. I would like that to be changed. That is not an ageist observation; it is true in my patch, as I am simply citing the evidence. The Minister and I have nothing against farmers of mature years, but we would like to think that young people will come into the sector. The proposal that I outlined would be one way to give them their chance.
An NFU officer from Haddenham in my constituency suggested to me that there should be a siphon of milk, sheep and suckler disposals to provide finance to attract young people into the sector—young people, I emphasise—who are industrious, able and ambitious for a career in farming, but who happen not to possess money. We all know that, traditionally, a person's chances of entering and remaining in the sector have been dependent on money—on having the backing of capital, buildings and land. I would like to think that the sector could be opened to people who lack such assets, but who can help to maintain British agriculture as a thriving part of British industry.
The Minister is an agreeable individual, but the record of the Government is deeply disagreeable from the point of view of farmers in my locality. The verdicts of some of them on the Administration's record for the past 43 months are unprintable. That record is characterised by indifference, disdain and contempt, but, even now, it is not too late for the Minister to repent, admit error and seek clemency from rural Britain. Above all, she should go back to the drawing board and come up with a package of robust, credible and attractive policies to help all sectors of British agriculture. In my humble and modest way, I have tried to offer the Minister the key to the survival of British farming and her own personal redemption. I shall now sit in eager anticipation, with bated breath and beads of sweat on my brow, to hear her reply.
1.16 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): First, as is traditional, I congratulate the hon. Member for Buckingham (Mr. Bercow) on securing the debate and on introducing a topic of great interest to him and, as I hope he appreciates, to me. He began by referring to the many questions that have been tabled on agricultural issues and the large number of Adjournment debates on such subjects. I concur in that observation, since I seem to have responded to many of the questions and a considerable number of Adjournment debates.
The hon. Gentleman's concerns are wide ranging. I appreciate that he has spoken from his constituency experience and with reference to the vale of Aylesbury, but he will appreciate that, given the number of issues that he raised, many of which have been debated in the wider agricultural context, it will be impossible in 15

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minutes to discuss every aspect of what he said about the future of farming. However, I am sure that he and his hon. Friends will, as in the past, detect all the parliamentary opportunities to pursue those issues.
The hon. Gentleman will not be surprised that I do not accept some of his strictures against the Government. Certainly with respect to CAP reform and, indeed, tackling red tape, the Government have done more in the past three years than Conservative Governments did in 20. Also, I reject any charge of indifference, or of lack of concern or of policy with respect to the future of such an important sector of our economy. That is far from the case. Ministers have both a short-term and a long-term strategy for agriculture, and they take great personal interest in what is happening, in their regional and constituency visits.
We are very aware of the extent of the crisis in agriculture. I do not dispute the statistics with which the hon. Gentleman began his speech, about the reduction in farming incomes and the personal and financial difficulties that farmers have experienced as a result. Indeed, I recently met representatives of the Arthur Rank Centre, which, as the hon. Gentleman will know, is involved in the establishment of the rural stress network throughout the country, to provide support to farmers. That is in addition to the various financial support measures that I want to mention.
The hon. Gentleman will certainly not disagree when I say that agriculture is highly supported by public expenditure, whatever else one might say about it. There may be common ground between the present and the previous Governments on the issue of whether that money—most of which relates to expenditure under Europe's common agriculture policy—is wisely spent. The sector is highly supported and there is no question of there not being a public commitment to help it. In addition to some £3 billion that comes in direct support from the common agricultural policy each year, the Government have given not far from an extra £1 billion to ensure that farming is in a better state to face the future and the long term.
The hon. Gentleman raised several issues. I will refer to both the short-term strategy for agriculture pursued by the Government and some of the longer term measures—especially diversification and forward-looking measures for the future—relating to issues that he mentioned towards the end of his speech.
The Government have paid out a considerable amount of support in agrimonetary compensation to the agricultural sector. The hon. Gentleman—he seems to be having a conversation, but I am sure that he is listening to my reply—is concerned about the dairy industry. We have given that industry the maximum amount available to us under agrimonetary compensation and have introduced several measures specifically to help it, including the removal of the over30-months scheme weight limit, on which many dairy farmers in his area and in others had lobbied Ministers.
The hon. Gentleman referred to the break-up of Milk Marque, which has caused much concern to farmers. However, I hope that the hon. Gentleman will agree with me that my right hon. Friend the Secretary of State for Trade and Industry made a welcome statement on
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that subject, in which he said that the successors to Milk Marque would be able to get involved in processing and vertical integration. The hon. Gentleman, understandably, referred to some of the large conglomerates in the European Union, many of which are involved in processing. The successors to Milk Marque are considering some of the patterns of co-operation and collaboration that exist elsewhere in the European market.
The hon. Gentleman also referred to Meat Hygiene Service charges and the situation in respect of abattoirs. That area is mainly the responsibility of the Food Standards Agency, but I assure him that Ministers are concerned about the health of the agricultural sector. Important to that sector's health is the availability of a range of abattoirs and the costs of that system, which are broadly comparable to those elsewhere in Europe. I hope that the hon. Gentleman will welcome the Government's acceptance of the recommendations made in the Maclean report on abattoirs, which is good news, especially for small and medium-sized abattoirs that serve several rural areas. I hope that the hon. Gentleman will recognise, too, that the Government have taken a number of measures for the removal of existing charges or the deferral of proposed charges to help the abattoir sector and, through that, individual farmers, including those in his constituency.
The hon. Gentleman made great mention of red tape. That does not surprise me, although I must point out to him that the spectacular growth in red tape occurred very much in the lifetime of the previous Government. Given that he was trying to blame the Government for agriculture's red tape problems, it is reasonable for me to respond by saying that that was not the case. Having been a member of the Agriculture Committee of the European Parliament about 15 years ago, I was astonished when I became an Agriculture Minister at Westminster to discover the growth of red tape during the intervening period. It has been a real problem and I am not surprised that farmers have complained bitterly about it. I am sure that the hon. Gentleman would not decry necessary rules to guarantee hygiene and health standards, but there has been a growth in farm bureaucracy, which we are determined to tackle.
Understandably, the hon. Gentleman referred to the report for which Lord Haskins was responsible. Its recommendations are welcome and the Government will be responding to them within the deadline. Lord Haskins' report is not the only initiative that has been taken up to combat red tape. My right hon. Friend the Minister set up several working groups to consider red tape as it affected farmers in particular sectors, including the integrated administration and control system, meat inspection and the intervention system with which farmers are much concerned. Several measures have already been introduced as a result of those red tape reviews. For example, of the 29 recommendations that required administrative action to be taken on intervention, 22 have already been implemented and progress is being made on a further three. Of the 29 recommendations concerning inspections of the integrated administration and control system, progress is being made on 26 As for the meat industry, 32 of the 35 recommendations were accepted.
I stress to the hon. Gentleman that the red tape initiative was very much the result of the Government acting together with the industry. There was industry

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representation on each of the review groups. While we have taken action on those recommendations that can be progressed domestically within the United Kingdom, the hon. Gentleman will understand that, because we are part of a common agriculture policy, it has been important to pursue some of the recommendations at EU level, and that we are doing.
I am also pleased to report that, whatever the shortcomings of the common agricultural policy—of which there are many—our desire for an attack to be made on red tape and for a greater simplification of the system is now widely shared in the European Union. At the Agriculture Council meeting in October, there was general agreement by the Commissioner, Franz Fischler, and the majority of delegations around the table that we needed a wide-ranging simplification of the CAP rules and regulations to help farmers throughout the European Union.
The hon. Gentleman referred to the need for honesty in labelling. Labelling is now the responsibility of the Food Standards Agency, but, before the agency was created, the Ministry of Agriculture, Fisheries and Food had made significant progress. For example, the work of the verification officer in the Ministry led to the changing of labels in some of our leading supermarkets. Labels are now a good deal more accurate than they used to be, and that includes origin labelling, especially on meat. Evidence shows that consumers are looking increasingly for such labelling. Some misleading examples of origin labelling have been tackled successfully by our verification officer. The Minister also issued guidance to local trading standards officers, and we have monitored its implementation.
We have also worked with the industry and organisations such as the NFU and the Women's Food and Farming Union, all of which have actively pursued the labelling issue. As a result, there is much greater honesty in the labelling system.

M25 Parkway Station (Stevenage and Hertfordshire)
1.30 pm
Barbara Follett: I am grateful for the opportunity to raise a matter that is of considerable concern to my constituents and many others in Hertfordshire. The cause of this concern is Great North Eastern Railway's bid to renew its franchise to operate inter-city services on the east coast main line. If GNER wins the franchise, it proposes to build a large out-of-town multi-platform parkway station on a greenfield site at Hadley Wood, at the junction of the M25 and the AIM, near Potters Bar, in Hertfordshire.
At first glance, the proposal seems eminently sensible. The large, low-cost car park that such a station would provide would be welcomed by Hertfordshire commuters who are eager to travel to London by train, but are compelled to reach the station by car because of the paucity of bus services in the many villages and small towns that dot the county. London's overburdened roads and polluted air would also benefit from commuters leaving their cars at Hadley Wood and travelling to the city by train. However, a longer and more careful look at the proposal reveals flaws that cause my constituents and many others in the county much concern. That concern has nothing to do with the concept of a parkway station, which my constituents are wholly in favour of, and everything to do with its proposed siting at the southern end of the county at Hadley Wood, just on the M25.
First, the proposed siting would shift the centre of gravity of Hertfordshire's transport system to the very edge of London. It is also contrary to the county council's strategy, which bases long-distance rail services at the two railheads at Watford and Stevenage. At present, Stevenage, which is about 16 miles further down the line than Potters Bar, is the first stop after London for most inter-city trains that use the east coast main line. If the proposal were implemented, the first stop would be Potters Bar, and no fast train worthy of the name would also stop 16 miles later at Stevenage.
Secondly, additional traffic would be drawn into an already congested area of south Hertfordshire, which includes a stretch of the M25 for which there are no proposals for improvement or widening. Some of that additional traffic would come from Stevenage itself because, as I said, no fast train worthy of the name would stop at both Stevenage and Hadley Wood.
Caroline Flint: Is my hon. Friend aware that GNER envisages that the introduction of parkways will not involve a reduction in services to stations such as Stevenage and Doncaster, for which a parkway is also planned? Does she agree that Ministers involved in granting franchises to rail operators should perhaps establish a condition that services to mainline stations such as Stevenage and Doncaster must not be adversely affected by the introduction of parkways?
Barbara Follett: I agree. However, although Doncaster can perhaps survive with a parkway station, I shall argue that Stevenage cannot.
Thirdly, the proposal would downgrade Stevenage station. Instead of being one of Hertfordshire's major gateways for long-distance and local routes, it would

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become a small, provincial siding. That would be a terrible pity for a town that has experienced significant growth in recent years. It would betray the vision of the planners who built Stevenage as the first post-war new town and designed it to be a centre for high-tech industry. The proposed development to the west of the town means that the population is set to grow from around 79,000 to an estimated 92,500 in 2016.
Fourthly, the new parkway at Hadley Wood would significantly retard the regeneration of Stevenage town centre, which, despite valiant efforts by the local council, is beginning to show signs of wear and tear. After all, the town was built 55 years ago, and after 55 years of heavy use it could do with some serious refurbishment—like most of us of that generation.
Fifthly, the proposal would have a negative effect on the economy of the town and its surrounding area. Stevenage is only just recovering from the recessions of the late 1980s, which took unemployment to a peak of 12 per cent. in 1993. In the late 1980s, Stevenage suffered the equivalent of five pit closures in respect of job losses. In the early 1990s, when I first came to the town, I found families with three generations unemployed. That had a devastating effect on the people of Stevenage and their self-confidence. There is still deprivation and suffering in the town. Its unemployment rate of 2 per cent., although low, is the highest in Hertfordshire.
The recent closure of Vauxhall's passenger car-making facility at Luton, where 274 of my constituents are—or were—employed, means that we have to do all that we can to attract new businesses into the area and to provide the right climate for the expansion of those that are already there. The siting of Hertfordshire's parkway station on the M25 would do the exact opposite.
Stevenage train station is situated in the heart of the town—next to the bus depot, in the middle of a shopping centre and next to a new leisure complex. It is also at the heart of the town's current and future economic success. It allows Stevenage companies easy access to a large pool of labour from the surrounding towns and villages—the town has a net inflow of commuters—and gives local people direct and quick rail access to London, Cambridge and the north. That reduces congestion on the AIM to the south and north of Stevenage and allows a freer movement of goods and commercial vehicles between Hertfordshire and the rest of the county. It also allows the continuing development of the Cambridge-Stevenage corridor, which is being actively promoted by the East of England development agency. The agency has identified Stevenage as a town with the potential to develop a high-tech cluster of new employment. If Stevenage loses its direct link to London and the rest of Britain, I fear that its potential will never be realised.
My fears are shared by local businesses, many of which have lobbied me. As many hon. Members will know, Glaxo Wellcome's Stevenage site contains the biggest research and development facility in Europe. An executive recently told me:
The reason that the company chose the Stevenage site was the excellent communications links with the rest of the country.
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He went on to say that the removal of the station
could have a detrimental effect on future inward investment for business in the town.
Stevenage has many insurance companies and businesses that employ a large number of people. An executive from Norwich Union told me:
Not to have a mainline station here would be a disaster. We have offices in Norwich, York and Perth and in most cases it would mean people driving to Peterborough to pick up a train, which would increase traffic—
especially on the already congested A1M. He went on to say that
it would be a point to consider when looking at expansion.
Matra BAE Dynamics, one of Stevenage's biggest employers, told me:
An M25 Parkway station would make it hard for us to be a green employer. We would probably have to send people up to Peterborough to catch the train because of congestion on the M25.
Finally, the Hertfordshire chamber of commerce wrote:
Many of our 450 companies rely on the rail service for their business needs…it is wholly beneficial to the future strategy of local and government policy that any parkway development should be based in Stevenage.
I agree with the business people of Stevenage and the surrounding area. The parkway station should be built in Stevenage and not at Hadley Wood. That decision would have national as well as local benefits. First, it is more environmentally sound. If the station were built at Stevenage, it would be on a brownfield site, but the Hadley Wood site is greenfield and development would, possibly, eat into the green belt.
Secondly, the decision to build the station at Stevenage would cause less congestion on the county's already over-burdened road network. Being a new town, Stevenage has a planned internal transport system. Although the parkway station would generate more traffic on the A1M, that traffic would be travelling contraflow at peak hours, and there are existing proposals to widen the section of road affected.
Thirdly, it makes sense to direct resources to a scheme that promotes the Government's twin aims of urban regeneration and integrated transport. Finally, Stevenage borough council is at an advanced stage in the process of investigating the feasibility of moving the existing bus depot, and integrating it with the existing train station to create a combined bus-rail centre. The new centre would provide easy access to the town and the leisure park with a concourse built over the main road. The concourse would contain shops, cafes, newsagents, waiting-lounge areas, toilets and showers. There would be plenty of room for short and long-stay car parks, park-and ride facilities and cycle storage. The new development could also include a hotel, offices, commercial and even some residential units. The planning for that is advanced. In other words, Stevenage is ready and willing to have a parkway station.
With the Great North road running straight through it, the town has been a transport gateway since Roman times. In his diaries, Pepys describes travelling to the north through Stevenage. It is no accident that Dick Turpin was based just outside Stevenage—he knew where to fleece the customers. However, modern day Stevenage is not into highway robbery. We want to

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ensure that the whole county benefits and prospers. If we put the Hertfordshire parkway station on the M25, it would seriously affect the ability to attract new business and would restrict the ability of existing businesses to expand.
An M25 parkway station would also positively promote more car travel in Hertfordshire, which would be disastrous in a county that already has one of the highest levels of car ownership in the country. I wholeheartedly support the measures that the Government are taking to reduce the number of car journeys. I beg them to take into account the effect of an M25 parkway station on that laudable aim. A decision must be made on the franchise in 2001. I urge the Government, for the sake of the people, the economy and the environment of Stevenage and Hertfordshire, to do all that they can to prevent the siting of a parkway station in the southern tip of the county, near the M25. They should seriously consider the advantages of moving the station to Stevenage.
1.43 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): I begin, as is customary, by congratulating my hon. Friend the Member for Stevenage (Barbara Follett) on securing the debate. As ever, she has proved herself to be a most hard-working constituency Member and an outstanding advocate of the interests of her constituents. I also note that my hon. Friend the Member for Hemel Hempstead (Mr. Mc Walter) and the hon. Member for Hertford and Stortford (Mr. Wells) are in their places and, doubtless, were in sympathetic mode.
For the second time in recent debates, I congratulate my hon. Friend the Member for Don Valley (Caroline Flint) on her tireless campaigning efforts on behalf of her constituents, although I remind her that the responsibility for granting franchises lies with the franchise director and not Ministers.
My hon. Friend the Member for Enfield, Southgate (Mr. Twigg) raised the subject of the Hadley Wood parkway station in a similar debate on 19 January 2000. I say, as I did then, that there are no firm plans at this stage for a new M25 parkway station.
To set the scene, I want to outline our strategic approach to the railways and the east coast main line before returning to the Hertfordshire issues. We set up the Strategic Rail Authority with the specific aim of looking at the long-term development of the railway network. In our 10-year plan we have provided unprecedented resources for railway development. The SRA, in its current shadow format, is taking forward an extensive franchise replacement exercise, which will, in return for long franchises of up to 20 years, bring in important improvements to train services. That focus of public and private resources and expertise will take the railways into a new era.
On the east coast main line, Railtrack already has in hand an exciting programme of improvements. In the east of England, that will result in a four-track route all the way from London to Peterborough. That additional capacity will create the opportunity for a significant number of additional train services. To develop those services the SSRA has the franchise replacement of the
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present GNER services well in hand. It has also initiated the Thameslink 2000 franchise replacement exercise for regional trains through London from Bedford, Peterborough and King's Lynn. All those services are important for Hertfordshire and many will use the east coast main line.
In carrying out the franchising replacement process, the SSRA is consulting widely, at various stages in the exercise. The franchising director is consulting, among others, local authorities, regional planning bodies, regional development agencies and rail passengers' committees.
By that means the SSRA is keeping people and organisations informed and also learning about aspirations for rail service development. The SSRA will obviously have to work with Railtrack, the rail regulator and the train operating companies to balance these aspirations with the resources available to create a comprehensive service pattern for all users on routes such as the east coast main line.
I shall speak now about the current position on the inter-city east coast franchise. The House will be aware that my right hon. Friend the Deputy Prime Minister has asked the SSRA, through the franchising director' s instructions and guidance, to deliver improvements through renegotiation and replacement of the terms of franchise agreements.
When considering renegotiation and replacement proposals, we asked the franchising director to give due weight to commitments in six issue areas: first, current performance, customer services, innovation, investment and efficiency; secondly, new or earlier investment; thirdly, securing better performance; fourthly, initiatives to promote integrated transport; fifthly, a willingness to give passengers a greater voice in the level and standard of services; and finally, value for the taxpayer. The franchising director has received best and final offers from Sea Containers, the parent company of GNER, and Virgin Rail, in conjunction with Stagecoach, for replacement of the inter-city east coast franchise. These are now under consideration. I cannot say when a decision will be made, but the franchising director is looking for assurances of better performance, more investment and expansion of network capacity and improvements for passengers, which he believes are deliverable.
Caroline Flint: In the guidance provided to the franchising director, would ensuring integrated transport include the protection of inter-city services at existing main line stations if parkways were developed?
Mr. Hill: One of the criteria that we expect the franchising director to examine in looking at franchise proposals is obviously the element of integrated transport, but there is no presumption in favour of one or another aspect of transport integration and certainly no presumption in favour of particular projects within the franchise proposals.
The M25 parkway station is one of the new parkway stations proposed as part of Sea Containers' bid. As I said, no decision on the replacement of the intercity east coast franchise has been taken. Even if Sea Containers' bid were successful, implementation of the proposal for a parkway station would still be dependent on local

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planning consents, which may require a Transport and Works Act 1992 application. Careful consideration would need to be given to a number of important issues including planning, transport and wider environmental and economic development implications, before any parkway station could be approved. If a parkway station proposal were to be adopted as part of a franchise commitment, planning permission and full local consultation would be required.
Meetings to discuss the M25 parkway proposals were in the process of being confirmed with the Government Office for the East of England, Hertfordshire county council, Stevenage borough council, Hertsmere borough council, Welwyn Hatfield district council and North Hertfordshire district council, but the proposals were put on hold due to the Hatfield tragedy. A meeting is now planned to discuss the matter further, as early as possible next year.
We are keen to encourage integrated transport proposals that are designed to encourage people to travel by public transport and to reduce the need to travel by car. I understand that Sea Containers' proposal is intended to encourage a modal shift from car and air travel to rail travel and to allow a seamless transfer between transport modes. GNER believes that the parkway stations would considerably reduce long-distance car usage, thereby reducing road and motorway congestion and associated pollution problems.
We are keen also to improve the quality of rail services. Sea Containers believes that the parkway stations would make long-distance rail travel more accessible and attractive. The parkway stations would be served by a planned new fleet of high-speed trains. I understand that GNER's stations would be airport-style in design, and built to accommodate the needs of all passengers, including those with special needs.
Parkways are not, in common parlance, park-and-ride facilities, as their prime purpose is not to develop short-distance, commuter services. Rather, they provide important gateways to new markets and communities that currently find it difficult to access fast passenger rail services between the north and the south. They build on existing rail provision, rather than detract from it.
I am aware that, for the east of England, Peterborough and Stevenage are currently the key railway stations for passenger access to east coast inter-city services. In Hertfordshire's rail prospectus, which was submitted with the local transport plan in July, the county council made it clear that its strategy for access to long distance rail services would continue to be based on two railheads—at Stevenage for the east coast and Watford for the west coast. Although there has been little analysis of the full effects of an M25 parkway station, the county's initial impression is that it is not ideally suited for Hertfordshire users, and it therefore opposes the proposal. In the council's view, an M25 parkway station would be likely to have a negative impact on service levels at Stevenage, where the council is looking for long-distance services to be developed.
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In its rail prospectus, Hertfordshire set out its ideas for the significant development of Stevenage station, with a bus-rail interchange, parking and station facilities, as my hon. Friend the Member for Stevenage pointed out. The council is keen to work in partnership with train operators, Railtrack and others to create a quality interchange facility. The refranchising process will establish long-term train operators who will, in their turn, be keen to work with partners to develop the railway.
In the local transport plan settlement announced last week, we increased Hertfordshire's block allocation from £5 million in 2000–01 to £12.5 million for 2001–02, with similar annual levels of expenditure over the five-year period. Deciding which projects to pursue is a matter for the county council, according to the priorities set out in the local transport plan, but those considerable extra resources will enable it to plan integrated transport schemes with confidence.
I am aware that GNER objected to the deposit draft of the Hertsmere local plan on the ground that it did not include the provision of a parkway station on green-belt land to the north of Hadley Wood. Following a public inquiry in 1999 the inspector concluded that the plan should not be altered to meet GNER's objection. Consequently there are no provisions to include a parkway station in the proposed modifications to the plan published in September 2000.
My hon. Friend has set out clearly the issues that would need to be carefully examined should a parkway station be seriously proposed. She has emphasised the importance of Stevenage as the railhead for Hertfordshire and the east coast main line and its potential for further development as a modern, major transport interchange, well sited in an important urban area. She has pointed out clearly the differences between parkway-type stations, which take large areas of green-belt land and attract significant numbers of cars, and the potential integrated transport solution that could be created at Stevenage. In addition, there are concerns about the dilution effect of parkway stations on the level of service at other important stations in Hertfordshire.
The issues that I have outlined would all need thorough examination should a parkway station scheme be proposed. A full analysis of all the pros and cons would be needed. Clearly, such a scheme would not accord with the local plan in the Hadley Wood area. That is something that any promoter would have to consider carefully.
I reiterate that GNER's proposal must be regarded, for the present, as an option, not as a firm package that can be implemented without further consultation and the most detailed analysis.
Mr. Tony McWalter: Does my hon. Friend accept that it would be appropriate for his Department to be slightly more proactive about the relationship between car use and train use? Leaving things to Railtrack and the operators has often resulted in a higgledy-piggledy system with overpriced car parks and massive disincentives to people to get out of their cars and into trains.
Mr. Hill: I take the point, and that is why, through the Transport Act 2000, we are establishing the new Strategic Rail Authority, which will, as its name implies, take a strategic role in the development of the rail network.
My hon. Friend the Member for Stevenage has set out in her speech the wide range of concerns that are entertained at district and county level. It is important that the new railway that we are creating meets users' needs. We are keen to achieve the maximum use of the
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railways, as a cornerstone of our integrated transport policy. Obviously, a great deal of work would need to be done if the new train operator on the east coast main line wanted to pursue the project of an M25 parkway station. I hope that I have been able to reassure my hon. Friend that any decision would be taken only after the most detailed investigation and consultation.
Question put and agreed to.
Adjourned accordingly at three minutes to Two o 'clock.