Westminster Hall Sitting of 11 July 2000

Preamble
[SIR ALAN HASELHURST in the Chair]

Land Settlement Association
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Kevin Hughes.]
10 am
Sir Nicholas Lyell: Thank you, Mr. Deputy Speaker, for calling me to open this debate on the problems of the former tenants of the Land Settlement Association. The Financial Secretary to the Treasury is aware of the long-standing taxation problems faced by those former tenants. Their circumstances are unusual and perhaps even unique in tax terms, and, unfortunately, the discussions that myself and parliamentary colleagues, several of whom are present, have had with the authorities on their behalf have run into the sand. I am, therefore, glad to have the opportunity to raise the matter in some detail in Parliament.
As a matter of background, I inform hon. Members that the land settlement schemes were originally set up in the 1930s in different parts of the country, including my constituency of North-East Bedfordshire, to provide a home and four or five acres of land on which unemployed people could earn their living. There are settlements in about 20 parliamentary constituencies throughout the country. Unfortunately, the scheme ran into serious trouble in the 1970s. It was badly managed and the tenants were obliged to buy their seeds, fertilisers and other essentials through the scheme and to sell their produce to it. The scheme was run by the Ministry of Agriculture, Fisheries and Foods, and was supposed to arrange cropping and market the produce. In practice, however, it was inefficiently managed, and the tenants and their families worked long, backbreaking hours for minimal rewards. They were often heavily in debt to the scheme, which was failing them at every turn.
In 1981, the decision was taken, rightly, to close it down. However, that left many tenants without jobs and potentially without homes. Eventually, most of them banded together to sue the Ministry. The claim was made under two headings. First, they claimed the loss of the earnings or profits that they should have made but did not. Secondly, they submitted a general damages claim for distress and anxiety, to compensate them for the acute hardships that they had suffered over so many years. Fortunately, most of them were entitled to legal aid and eventually, in the early 1990s, a settlement was reached. Overall, they settled for £7 million, to be divided between some 300 to 400 families. That represented about 25 per cent. of their formal monetary claim, leaving aside their important general damages claim for distress and anxiety—I use the words in which the claim was legally drafted. The average payment received by a tenant seems to have been about £20,000 to £25,000. That is no more, and perhaps less, than they could have expected to receive on their hardship claim alone. Such general damages claims are exempt from taxation.
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At the time of the settlement, the then Minister of Agriculture, Fisheries and Food, my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), who hopes to join us this morning, was given to understand that the settlement would not be taxable in the tenants' hands, as he has been good enough to explain publicly. The tenants were also so advised by their Queen's counsel at the time, albeit that his particular reasons for advising them that their settlement would not be taxable were incorrect in tax law.
Nearly all the tenants used their modest damages to help purchase the homes in which they lived. Most of them are now in their 70s, with few or no assets other than those homes and little or no income other than their state retirement pensions. The problem in their lives is the spectre of a tax bill that most of them do not know how they could pay. They are tired and frightened. Some of them have already sold up and moved away, hoping to avoid being chased for tax that they could have paid only by selling their sole home or by incurring a heavy charge against its value.
The problem on which we ask Ministers to focus, in consultation with their senior officials in the Inland Revenue, is that the tax burden as administered bears unduly harshly on the tenants. The established tax rule, which was laid down in a commercial tax case a considerable time ago—40 or 50 years—says that a claim for loss of profits over many years must none the less be treated as taxable in the year in which compensation is received. That is usually fair for a normal trading corporation, which can generally mitigate the effects by writing down plant and machinery, finding other offsets to mitigate the tax charge or by spreading the cost over future years. However, most of the tenants had no business to continue and, if they did, it was so poor that they were usually paying little or no tax. Many of them had had their businesses closed by the Ministry of Agriculture, Fisheries and Food when the scheme came to an end. Whereas in the ordinary course of events little or no tax would probably have been payable on the modest profits that they lost in each of the eight or so previous years, they now face something like a 25 per cent. tax burden on their damages.
A solution is available, if only the Inland Revenue could be persuaded to permit it, without forcing those impecunious tenants through the courts. It is well established, and common ground with the Revenue, that compensation relating to hardship claims—as theirs did—is not taxable. The Revenue has long made it clear that, provided that the tenants pay up the other half of their claim, it is prepared to treat 50 per cent. of the compensation as non-taxable. I welcome that, although I do not welcome the fact that the offer is held as a sword of Damocles over the tenants, which may be used if they seek to press their claim further. This country should not be administered in that way. I hope that the Revenue will take that point to heart.
Mr. John Burnett: I pay tribute to the way in which the right hon. and learned Gentleman has led the campaign with great perseverance and skill. He has many hon. Members

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behind him. Does he agree that the fair and tax-efficient apportionment of damages is invariably agreed between parties at arm's length?
Sir Nicholas Lyell: I am grateful to the hon. Gentleman for making that point because, as I will seek to explain, the matter could have been organised at the outset so that we and the tenants were not troubled.
Mr. John Gummer: I wonder whether my right hon. and learned Friend will take this point from me, as the Minister responsible at the time. There was no doubt in my mind or in the minds of the officials who advised me that the money was in no sense to be taxable. There was no question of that because it was seen as an ex-gratia payment, not for specific profits and the like, but because the LSA had been run appallingly and people's lives had been destroyed, simply because the Government—Governments of both parties—had failed to look after them as promised. We therefore always treated it as a non-taxable payment. This argument took place afterwards; had we known then, we would have made perfectly sure that the payment was not taxable. The Inland Revenue is reading back into circumstances matters that did not then exist. The sad thing is that successive Governments have failed to live up to their responsibility and to say that, if it is taxable—if the Inland Revenue will not listen—they should make a further payment to ensure that the tax is covered entirely.
Sir Nicholas Lyell: I am extremely grateful to my right hon. Friend. He makes a crucial point, which the Revenue and Ministers ought to take into account. It was an ex-gratia settlement; to divide it artificially into taxable and non-taxable parts to the disbenefit of the former tenants is not necessary.
My right hon. Friend also makes the excellent point that it is not a party political matter. There is all-party support for the case that I make today. The hon. Member for Forest of Dean (Mrs. Organ) represents about 40 tenants, and I hope, Mr. Deputy Speaker, that she will catch your eye. The right hon. and learned Member for North-East Fife (Mr. Campbell) and the hon. Members for Torridge and West Devon (Mr. Burnett) and for Torbay (Mr. Sanders) will speak for the Liberal Democrats. My hon. Friends the Members for South-East Cambridgeshire (Mr. Paice) and for South Cambridgeshire (Mr. Lansley) and my right hon. Friend the Member for Suffolk, Coastal are all concerned about the matter, as is my hon. Friend the Member for Salisbury (Mr. Key), who has to be in Scotland on public defence business.
Mr. Deputy Speaker: After that distinguished roll-call, it seems almost churlish not to have mentioned the Minister's parliamentary private secretary.
Sir Nicholas Lyell: I am most grateful, Mr. Deputy Speaker. I hope that all hon. Members will row in behind us, which is the object of the debate.
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Before I was so helpfully interrupted, I was saying that a solution was available if only the Inland Revenue could be persuaded to permit it without forcing those impecunious tenants through the courts. In so far as their compensation relates to their hardship claim, it is not taxable.
My question to the authorities is why the compensation should not all be treated as a hardship claim—at least to £25,000, which would cover the position of most tenants. I feel confident in saying that the general damages that a court might award for the sort of hardship suffered by those people for so many years would be at least £25,000; it might be substantially more. If this matter had been thought about correctly in the early 1990s when the settlement was reached, it could easily have been structured to do that.
Furthermore, there is no law to say that the Revenue cannot so treat it now; previous cases put no impediment in its way. No case that raises that precise issue has come before the courts. Case law is simply that such decisions must not be a sham. Payments cannot be treated as non-taxable if, in reality, they are made only as compensation for loss of profit. However, those payments were clearly claimed on the twin bases of general damages, which are untaxable, and damages for loss of profit, which are potentially taxable. As the total amount paid out would not exceed what could reasonably be attributed to the non-taxable proportion, I submit that that would be the fair way to do it.
To be fair to the Inland Revenue, this is, to some extent, a grey area. I have had a number of detailed conversations with its officials over the years and we reached the point at which they argued not that it could not be done but that it had never been done by the Revenue in such a way. The officials and I agreed that the matter should be taken to Ministers who, unfortunately, have persistently ducked, or been persuaded to duck, the issue. First, they have said that they are not allowed to get involved in individual cases because that is for the Revenue alone. Secondly, they have said that if the tenants wish to press their case, they must take it to the special Commissioners of the Inland Revenue.
I ask Ministers and their senior officials to think again. They know perfectly well that the tenants have no money to bring court cases and that legal aid is not available for cases that go before the special commissioners. There is no great issue of precedent because the situation of the LSA tenants must be virtually unique. The amount of tax involved in public terms is not large. The total, apart from interest, is probably no more than £1.5 million divided between the few hundred tenants. The problem is, however, that that represents many thousands of pounds for each tenant, which they have not got. There is also the difficulty of interest. That, too, is artificial. The former tenants have sunk their compensation into their homes and have no pot of money that is earning interest. Indeed, had they not invested in their homes, they would almost certainly have been drawing housing benefit for many years.
There is a way ahead. It is said that when the long-running litigation with the Ministry of Agriculture, Fisheries and Food was drawn to Mrs. Thatcher's attention, she simply ordered it to be sorted out and at least a settlement was reached. However, it is a pity that

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the settlement did not wrap up the overall tax position as it so easily could have done. The Revenue has argued that all the points must be
fair to the general body of taxpayers.
That is not really so. If the question of tax had been properly considered at the time of the settlement, the Ministry of Agriculture, Fisheries and Food could have agreed to attribute most, if not all, the settlement to the distress and anxiety factors.
Let me put in a word for the Revenue. It has tried to help with the debts forgone aspect, which affects a few of the tenants. We are grateful for that, but there is no rule to say that the two portions of the claim—the distress and anxiety factors and the loss of property factors—have to be split 50:50. The Revenue always has a wide discretion over interest.
In summary, this is a long and unhappy saga in which 300 to 400 families of modest means have been badly treated by Governments over the years. They are continuing to suffer great anxieties eight years after they reached what they thought was a final settlement. Ministers and the Inland Revenue have ample discretion to treat them fairly. Their tax burden should be kept to a minimum and they should be allowed to live out their lives in their own homes free from anxiety. I very much hope that the Minister will be able to say enough to show that there is a will to achieve this and that a way will be found to bring it about.
10.18 am
Mrs. Diana Organ: I am grateful to the right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell) for securing the debate on the Land Settlement Association. I pay tribute to his tireless campaign on behalf of ex-LSA tenants. It is interesting that I am probably the only Labour Member who intends to contribute to the debate. This is not a party political issue. We are all concerned about the history of the case and the way in which the ex-tenants have been treated by various Governments over many years.
The issues raised this morning are a source of considerable anxiety, hardship and distress to several of my constituents and their families in the Forest of Dean—hard-working growers who pay their taxes appropriately, but find the pressure from the Inland Revenue very disturbing. In the Scarr area of Newent, there were 40 ex-Land Settlement Association tenants. Unfortunately, since the compensation was agreed and the dispute began in 1991, five of those tenants have died. The Inland Revenue has agreed to put a temporary hold on collecting the tax as a result of the dispute about tax liability on the compensation. That has real implications for the widows and next of kin of the growers, because they cannot fully wind up the estates of those ex-tenants.
Now is the time for the question to be fairly settled. In my constituency, the case for the ex-tenants has been staunchly put by Mr. Duncan Reed of Newent on behalf of the other growers. I was first made aware of the problem within three weeks of my election in May 1997. Following correspondence and meetings with Mr. Reed and other ex-tenants, Treasury Ministers suggested in correspondence that the group should present individual cases to the Newent division of the General
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Commissioner of the Inland Revenue, an independent tribunal. That option was offered to the Newent growers five years ago, but was rejected.
Mr. Gummer: I wonder whether the hon. Lady would accept that it was not intended that those circumstances should arise. By saying that those people should go to the independent commissioner, the Government are avoiding their responsibility, because, in terms of the tax advice that they gave, the Government got it wrong in the first place. Therefore, they should not ask people to appeal; they should put it right. Would not the newspapers be appalled if a private company or organisation had got it wrong, but refused to do the decent thing by way of compensation?
Mrs. Organ: The right hon. Gentleman is right. The episode was bungled by politicians and must be put right by politicians, not by the General Commissioners. I have sympathy with the Newent group's decision to reject that option because, as we all agree, the episode was bungled through the incompetence of previous Governments. It should be put right by politicians.
According to my constituents in Newent, the scheme was poorly run, poorly managed, inefficiently marketed and wasteful. Growers worked for long hours with very little return. The closure came in the early 1980s. Again, questions were asked about the management and legality of the procedures taken with regard to closure. Closure meant that the growers had to band together with very few resources and sue the Ministry of Agriculture, Fisheries and Food. No consideration was given to the legal consequences or the suffering of tenants that would flow from the decision. The ex-tenants and I feel that, as the previous Government caused that unfortunate situation through their incompetence, the issue should be resolved by politicians, rather than by the Inland Revenue and the independent appeals commissioner, who adjudicates in normal tax disputes. This is not a normal tax dispute; it is a unique situation.
The argument of the Newent ex-tenants is clear and, I believe, wholly justified. When the scheme was wound up, they were given compensation of about £20,000 to £25,000 on average. That hardly covered their general damages claim, which was non-taxable. It is absolutely clear that the then Minister of Agriculture, Fisheries and Food, the right hon. Member for Suffolk, Coastal (Mr. Gummer), intended and believed that the settlement would not be taxable. He has made that quite clear publicly, especially in his letter of 25 January 1997 to Sir Anthony Battishill, chairman of the Board of Inland Revenue, in which he said:
it was quite clearly Ministers' intention at the time of the settlement that the out-of-court payments were intended to compensate the ex-tenants of the LSA for personal hardship caused by their association with the LSA. It was not, therefore, intended as taxable compensation for loss of earnings.
The letter also states that
it was Ministers' intention that the overall settlement was intended to compensate the ex-tenants for personal hardship and not for pecuniary loss.
It seems that the whole scheme—including the running of it, the closure of it, the settlement of it and the tax liability dispute—has been a fiasco. The Tory Administration from 1979 to 1997 never properly

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managed it or sorted out its problems, and they managed the whole affair incompetently. MAFF and the Treasury never sorted the matter out between them. Ministers did not make their intentions clear and give direction.
I realise that the intentions of MAFF Ministers do not normally count in determining tax treatment for out-of-court settlements, but the matter should have been sorted out by the Department and the then Government. However, the growers believed that it had been sorted out. They believed that the intention expressed to them by the then Minister meant that they were entitled to non-taxable compensation. Meanwhile, the growers of Newent, represented, as I said, by Mr. Duncan Reed, suffered hardship and anxiety. They struggled with the poor and inefficient running of the scheme and had to fight their case over the inept closure with poor resources. They are not young, and suffered terrible anxiety and personal hardship. That has been an extra burden. Many of those people are now in their 60s and 70s. They have had to use their modest damages to help purchase their homes—otherwise they would have been virtually homeless—and they have been frightened by the pressure on them from the Inland Revenue. That is no way to treat the ex-growers. They have little else by way of assets or income with which to fight the case and the whole bungled affair is a recurring nightmare for them. We must put an end to the nightmare for my constituents.
The previous Government created the mess and the present Government need to sort it out fairly, justly, humanely and sympathetically. I ask the Minister not to suggest that taking the case to the General Commissioners of the independent tribunal would be the best way forward. We went round that loop five years ago and it did not resolve the issue for the people concerned. We should be giving them what is rightfully theirs. The compensation for hardship should be tax-free. The spirit, intention, understanding and reality in which the compensation was given was that it was not for the restriction of trading opportunities but for the personal hardship that they suffered and for the capital loss. In that case the ex-tenants of the LSA in the Scarr area of Newent are not liable to tax on their compensation. We need to resolve the issue for them now.
10.27 am
Mr. James Paice: This issue has been on my desk, Mr. Deputy Speaker, ever since I have represented my constituency.
Mr. Edward O'Hara (in the Chair): Order. I am not the Deputy Speaker, and I should be addressed by name.
Mr. Paice: I apologise, Mr. O'Hara.
I have been aware of this issue since becoming the Member for South-East Cambridgeshire in 1987. I then had two of the former LSA estates in my constituency—Great Abington and Fen Drayton, which, since the boundary changes at the last election has become the responsibility of my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). My right hon. Friend
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the Member for Suffolk, Coastal (Mr. Gummer) will recall that I was his parliamentary private secretary when the case was settled. The hon. Member for Forest of Dean (Mrs Organ) waxed lyrical about how the previous Government messed everything up. It is worth pointing out, if we are going to make partisan points, that it was the Labour Government in the 1970s who caused the problem by messing up the way the whole thing was run. However, as my right hon. and learned Friend the Member for North-East Bedfordshire (Sir N. Lyell) said, the issue is not really partisan. It is a matter that goes across all parties.
Mr. Gummer: Before my hon. Friend moves on, will he dwell on that point? The LSA was appallingly run and the fault of that lies with all parties. The Labour party did not even bother to put it right. It was badly run and the way in which people were treated was almost slavery because they were tied in. They owed so much money that they could not get out. We understood that, which was why we tried to put matters right by winding up the scheme and paying compensation, not for loss of earnings or anything else, but for the way in which our fellow citizens had been treated.
Mr. Edward O'Hara (in the Chair):Order. The right hon. Gentleman's intervention is becoming a speech.
Mr. Gummer: May I just ask whether my hon. Friend accepts that, at all points, we would believed that the money would be without tax. If we had not believed that, we would have operated matters differently. Such people should not suffer.
Mr. Paice: My right hon. Friend is right. That is my recollection of the discussions at which he allowed me to be present. He was also right to refer to the shambolic way in which the LSA was run prior to the decision by Lord Walker of Worcester to abolish it soon after the Conservatives took office in 1979 because of the condition of the estate. It is worth emphasising that the tenants had no say in how the estate was run. I checked that fact this morning with the leader of the group of tenants on Abington estate in my constituency. The entire scheme was operated by Ministry of Agriculture, Fisheries and Food employees. I shall not get into the usual arguments about civil servants running businesses, but that was what was supposed to be happening. The tenants had no input. As my right hon. and learned Friend the Member for North-East Bedfordshire and my right hon. Friend the Member for Suffolk, Coastal said, the tenants were completely tied into the system, but it was one over which they had no operational influence or control.
I join all the tributes paid to my right hon. and learned Friend the Member for North-East Bedfordshire for his leadership of the group. As he said, the original claim was for about four times the final settlement. It was for £23.5 million and the tenants settled for about£7 million. I am the first to accept that individuals must decide whether to take advice from tax advisers and that the Revenue cannot be held responsible for that tax advice, but the tax advice given to the tenants was that the sum would not be taxable.

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I want to refer now to the papers given to the tenants that set out the agenda for a meeting at Sandy in Bedfordshire in what was then in my right hon. and learned Friend's constituency.
Sir Nicholas Lyell: It still is.
Mr. Paice: I thank my right hon. and learned Friend for confirming that. The meeting was to take place on 29 June 1991, when Simon Goldblatt QC and others were to consult the tenants about the offer that my right hon. Friend the Member for Suffolk, Coastal had put to them when he was the Minister of Agriculture, Fisheries and Food. The document contained sections entitled, "What is the offer?" and "Has the method of distribution been decided?" It stated that the fund would be divided into a
first slice from which a flat-rate payment will be made to each Plaintiff in the sum of £5,000,
but the main pool for distribution was on a time-related basis whereby points were allocated up to the previous six years. Incidentally, there was nothing to be gained for tenants who may have been in the scheme for 20 years or more.
The key point is that it had nothing to do with compensation for loss of profits because the settlement bore no relevance to the type of business, the level of trading, or the costs, efficiency or profitability of the businesses. In other words, no attempt was made to assess what profits may have been forgone. The fund was distributed purely on a time-serving basis without direct relevance to the businesses that were being undertaken. That is an important point and emphasises the fact that the compensation was not distributed in accordance with the loss of profit.
My right hon. Friend the Member for Suffolk, Coastal, my right hon. and learned Friend the Member for North-East Bedfordshire and the hon. Member for Forest of Dean all referred to the fact that the people were tenants and were, in effect, facing homelessness once the estate was abolished, as a result of which many of them borrowed significant sums to buy their homes. They would otherwise probably have been on housing benefit and in local authority housing. They used the money that they received, albeit a relatively small sum, to pay off some of their debts. Most of them were in their 70s and are now living on a state pension. As the hon. Member for Forest of Dean said, some of the tenants are deceased, including some of my former constituents, yet their widows still carry the heavy burden of concern, which we know is doubly worse for old people than others.
The 50 per cent. limit set by the Inland Revenue for distress and anxiety is arbitrary. It is therefore clearly open to dispute, and the Revenue can increase it if it feels so inclined. I should have said that by law the tenants would have had a right to local authority housing. It is not that they might have done; they would have had a right to it on the abandonment of the scheme.
The businesses were small. Most of them were one-man bands, or perhaps had a husband and wife working together. They operated on a low-profit basis, partly because of the shambolic way in which matters were organised. In an ordinary year, they would not have paid much tax, if any. To tax the debts forgone or the loss of earnings so that that will create a significant tax
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burden is far more onerous than if it is trickled out in the normal course of events. More important, many of the businesses ceased trading when Lord Walker of Worcester abolished the scheme in the early 1980s. The settlement was 10 years later. They had no method to generate the tax and mitigate the effects, because many of their businesses had ceased.
None of the former tenants has the resources to take the matter to the commissioners, which the Minister should take into account. The Revenue has helped at meetings; I have attended at least one meeting at which its officials were present. It has been intransigent in its actions, insisting on the arbitrary 50 per cent. rule. As I understand it—I am subject to correction—it is rolling up interest on the tax debts as it has assessed them. Although it gave the period of grace to which the hon. Member for Forest of Dean referred, that ended nearly a year ago, so interest is now rolling on those tax assessments.
Not all tenants were in the same position, as only some had debts. Therefore, only some had debts forgone. In the House of Lords, the tenants won a case for breach of contract. I am advised that some of the money that they received resulted from that case, so that should not be taxable either. The Minister's predecessors in this Government and, I am afraid, the previous one have consistently said that the matter is one for the Revenue to resolve and in which Ministers cannot interfere. I do not believe that that is the case.
By way of example, I shall make an analogy with another issue. A few years ago, a large charity for the homeless in my constituency was faced with a wholly unexpected and large VAT bill. I know that that concerns Customs and Excise, not the Revenue, but there was local outcry and Customs was adamant that it had to interpret the law that way and charge the VAT. Some people and I took a delegation to see the Conservative Minister responsible, who, needless to say, gave us the line that it was not for Ministers to intervene. Lo and behold, in a matter of days, Customs and Excise turned round and decided that there might be a way forward, and we were all able to emerge from the matter with some credit. Frankly, I do not accept that there is no way in which Ministers can influence such matters.
Mr. Menzies Campbell: Like the hon. Gentleman, I have puzzled over the intransigence of the Revenue. I suppose that it is based on the floodgates argument—namely, if a concession is made, it will somehow be relied on in future. However, the hon. Gentleman's remarks and those of the right hon. and learned Member for North-East Bedfordshire, the right hon. Member for Suffolk, Coastal and the hon. Member for Forest of Dean have made it clear that the circumstances are unique. Although precedent will never be eliminated in all circumstances, the notion that a favourable decision in this case will be relied on in future is so remote as to be discounted.
Mr. Paice: The right hon. and learned Gentleman is right. As Governments have generally ceased their involvement in running businesses during the past couple of decades, one cannot even imagine a similar case arising in future. Therefore, as the right hon. and learned Gentleman says, the precedent argument is an excuse rather than a realistic concern about the future.

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My right hon. Friend the Member for Suffolk, Coastal referred to a suggestion that I was going to make. Those of us in this Chamber who have been in government are conscious that Ministers always want a way out. Would not some kind of ex-gratia payment be possible? If the Revenue insists on tax assessments for various reasons—with which we do not agree—cannot the issue be reopened and an ex-gratia payment made that would nullify the tax burden? The income is peanuts in terms of public expenditure. It is of no consequence to the nation but of huge consequence to former tenants up and down the country, most of whom are elderly, have no businesses and are eking out their later years. Those people are very worried.
I have regular meetings with former tenants of the Abington estate, some of whom are still there, some of whom have moved away. Every time I have those meetings, their concern and anguish is clear. The matter must be settled. It is of no comfort to me that it has taken such a long time. It is now 18 years since the estate was abolished, and eight years since the settlement was agreed with the Ministry of Agriculture, Fisheries and Food.
I hope that the Minister will recognise that there is a wide body of concern in the House about the way in which this matter has been handled. We do not want to apportion blame or responsibility, but we want the threat that has hung over the heads of hundreds of people during the past eight years to be removed, so that they can look forward to a slightly more comfortable life in their later years. I hope that the Minister will understand the intensity of concern among tenants and those of us who represent them.
10.42 am
Mr. Adrian Sanders: I pay tribute to the right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell) not only for running a long-standing campaign on this issue but for keeping other hon. Members informed. That has been extremely helpful.
I speak on behalf of a constituent who is affected. First, in the light of the comments this morning, there is a great deal of unity across parties. We are considering not a party political issue but an issue of justice that unites Members from all parties. The apportionment of blame is not the way forward. Secondly, we are united in believing that tenants have been consistently let down, under the LSA and since its winding-up. Thirdly, an urgent resolution to the problem is needed, given the age of the people affected.
Two solutions are available. One is for the Inland Revenue to write off the debt and not pursue the tenants for the tax and the other is an ex-gratia payment to enable tenants to meet the tax liability. Justice will therefore have been seen to be done. I apologise to the right hon. and learned Member for North-East Bedfordshire that I cannot be here after 11 am because I have another engagement. I would have liked to hear the Minister's response. I hope that he will take on board the views expressed across the party divide, and that he will be able to give some hope to those tenants who have waited all too long for justice to be done.
10.45 am
Mr. Howard Flight: I congratulate my right hon. and learned Friend the Member for North-East Bedfordshire (Sir N. Lyell) on running the campaign for a small group in society who have had a particularly hard lot for a long time. I hope and believe that the Minister is a fair and decent person and that this debate will help towards a solution to the problem. It is a disgrace that the matter has dragged on for nine years, and that the tax situation has not been resolved, although the original intention seems to have been clear.
It is difficult to add to the excellent contributions made by my right hon. and learned Friend, the hon. Member for Forest of Dean (Mrs. Organ) and others. There is no legal requirement for the Revenue to treat the payments in the way that it is; it is not a matter of law from which it has no escape. The Revenue might take the view, within the narrow confines of its perspective, that payments of up to £25,000, for example, were made for general suffering and did not relate to loss of profit. The Revenue itself chose to use a commercial case as a case study, from which it took its 50:50 offer. As other hon. Members have said, the cases are not analogous, nor has there been any case before the courts that is precisely analogous. That is a good reason for the Revenue not to take the view that a common-sense approach to the matter would create a dangerous precedent.
It is unreasonable, and a sign of weak government, for Governments of both parties to have ducked the issue. The matter is a practical one: the individuals concerned are elderly and had to put up with virtual serfdom when they were members of that badly administered, crackpot land settlement scheme. By saying that the Revenue has to act in such a way because it is legally required to do so, Governments are passing the buck in the worst traditions of this country. Governments can advise and tell the Revenue what to do, as there is nothing in law to stop them, and the Revenue is free to take a sensible and enlightened view.
If the Revenue persists with the position that it has taken, the Treasury is likely to incur just as much expense as if it surrendered the tax. The cost of fighting the cases through the commissioners who made the unwise recommendations and of making housing benefit and other social security payments is likely to be just as great. The tax involved is only £1.5 million, which might be quickly consumed in such expenses.
It was fortunate that my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) could attend and put on record the Government's position at the time of the settlement. He made it absolutely clear that the settlement was intended as an ex-gratia payment for the various nasties that the Government had inflicted on the people involved, in particular the suffering resulting from poor administration and the unwise method by which the MAFF scheme was managed. In all practical senses, he committed the Government at the time. For the Inland Revenue to turn around afterwards in contradiction of the position expounded by the Minister responsible at the time is a form of retrospective taxation, which I trust the Government continue to set their face against as a matter of principle.

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The position of my right hon. Friend the Member for Suffolk, Coastal and the Government was made clear publicly at the time. The matter was not handled behind closed doors. The 400 families involved were clearly led to believe that the payments would not be subject to tax. For the Government collectively to go back on that is morally improper, and to find clever legal ways of proposing to do it is unnecessary.
As others said, two perfectly easy solutions are available.
The Financial Secretary to the Treasury (Mr. Stephen Timms): I should like the hon. Gentleman to clarify his comments, as he may have inadvertently misled the House. I am not aware that the Government ever said that the payments were not liable to tax, but the hon. Gentleman implies that they did. Will he correct that point?
Mr. Flight: I believe that that is so. The contribution of my right hon. Friend the Member for Suffolk, Coastal this morning made it clear that, when he was the Minister responsible he made it clear publicly that the Government intended the payments to be ex-gratia, and not subject to tax.
Mr. Timms: I do not believe that the hon. Gentleman is right or that a statement on record makes that point. The right hon. Member for Suffolk, Coastal made clear this morning his recollection of his understanding at the time, but I do not believe that the hon. Member for Arundel and South Downs (Mr. Flight) can point to a statement to that effect.
Mr. Flight: I thank the Financial Secretary for raising the issue. It might be appropriate for him to interview my right hon. Friend the Member for Suffolk, Coastal and put on record what my right hon. Friend believed that he said publicly. However, the Financial Secretary will find that the record shows that the right hon. Member for Suffolk, Coastal publicly communicated his understanding of the position.
Sir Nicholas Lyell: After the event, my right hon. Friend the Member for Suffolk, Coastal wrote a letter that clearly sets out the advice that he received from his civil servants and his clear understanding at the time, which, rightly, permeated MAFF. The tenants were advised from another angle, and they had a similar point of view. Of course there was some to-ing and fro-ing, and there has been some discussion about that. However, the general understanding in MAFF was perfectly clear.
Mr. Flight: I do not know the precise time involved, but I also have proper reason to believe that the view of my right hon. Friend the Member for Suffolk, Coastal, the Minister at the time, was not confidential but available and was therefore known, as I said earlier, by the 400 families involved.
Mrs. Organ: That is the crux of the issue. That may have been in the mind of the right hon. Member for Suffolk, Coastal, and the intention throughout MAFF, and the right hon. Member for Suffolk, Coastal may have subsequently written to the chairman of the Board
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of Inland Revenue, made a public statement or written a public letter. However, the problem is that when the settlement was made he did not give clear directions or lay down absolutely clearly that he intended it to be non-taxable. The problem is that no communication took place between the two Departments. That may have been the intention, but does the hon. Member for Arundel and South Downs agree that it was not clear?
Mr. Flight: Like me, the hon. Lady listened to what my right hon. Friend the Member for Suffolk, Coastal said this morning. In my view, he made it clear that there was no question at the time that the settlement would be taxable—on the advice of his civil servants and lawyers. It would therefore have been inappropriate to have even raised the issue of tax.
Mr. Menzies Campbell: If the hon. Gentleman can, will he put himself back into the minds of those to whom the settlement was offered? Does he think that they would have accepted it if they had been told that it was liable to tax?
Mr. Flight: The right hon. and learned Gentleman makes an excellent point. My right hon. Friend the Member for Suffolk, Coastal also said that if there had been any question of the settlement not being an ex-gratia payment, as his officials advised him, the Government would not have viewed it as an appropriate settlement.
Mr. Laurence Robertson: I support my hon. Friend's stance. Constituents who have come to see me said that they were clearly told that no tax would be payable on the settlement. It was clear in their minds.
Mr. Flight: As my hon. Friend says, that was the legal advice given to the 400 families at the time. My right hon. Friend the Member for Suffolk, Coastal has put clearly on the record his position both in regard to the intent of the Government at the time and the advice received by officials. With great respect to the hon. Member for Forest of Dean, the issue was not unclear. What happened was that subsequently, when everyone believed that the settlement was an ex-gratia payment that would not be taxable, some bright individual in the Revenue looked up that old commercial case and thought, "Ah, hah! We'd better levy some tax here." The thing has been sitting around disgracefully for eight years since then, because no Government can morally justify taxing the sum, thereby delaying, until a year ago, the date until which interest would run. For some extraordinary reason, no Government have chosen to grasp the nettle and resolve the matter.
Mr. Paice: Before my hon. Friend leaves the issue of what Governments said, it is important to realise that the statement by my right hon. Friend that no tax would be involved was not made only this morning. It was made five years ago when, although he was no longer the Minister of Agriculture, Fisheries and Food, he was still a senior member of the Government. The Minister is chasing for a Government statement; a senior Minister clearly said in 1995 that the events leading up to the settlement in 1992 were made on the basis that no tax was payable.
Mr. Flight: I thank my hon. Friend for that helpful addition. I cannot help but comment that it was

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therefore a great pity that the Government in 1995 did not follow what the then Minister had said. I am sure that the present Financial Secretary will wish to rectify that.
Mr. Timms: I want to put one further point to the hon. Gentleman. I agree with my hon. Friend the Member for Forest of Dean that at no time during the process did MAFF ask the Inland Revenue what the tax position would be. At the heart of the matter is the fact that the position was never resolved, which is why the Inland Revenue has subsequently had to take the decision that it has.
Mr. Flight: I thank the Minister for that comment, but I do not believe that that is a fair stance. There are all manner of situations whereby tax may or may not arise. If organisations go to the Inland Revenue for clarification, it frequently will not give a view. Clear advice was given in the Ministry on behalf of Government and much learned legal advice was given to the 400 families at the time. Although I am not questioning the good faith of the Revenue in subsequently erasing the tax claim that it raised, to suggest in retrospect that the Revenue should have been approached to give a ruling at the time of the settlement would be to put matters the wrong way round. The belief of all involved was that the payment was ex gratia and non-taxable. As I and my right hon. and learned Friend the Member for North-East Bedfordshire noted earlier, it was not legally necessary for the Revenue to apply that particular commercial case to the situation, which is different.
It is ridiculous for a Government—whether this Government or the previous one—to take such a Scrooge-like attitude to some of the most downtrodden members of our society. The matter is easily resolved, either by the Government persuading the Inland Revenue to take the approach that my right hon. and learned Friend has suggested or by their squaring the circle by making an exgratia payment of about £1.5 million to cover the burden if they feel—incorrectly—that there is an important point of tax law. They would probably save money by taking that approach as an alternative to allowing the matter to proceed, thereby incurring the various legal, social security and other expenditure involved.
The Minister knows that telling the people to go to the commissioners is no answer—they cannot afford the legal costs involved and they would not be entitled to legal aid. That five-year-old ducking tactic does not wash now. I hope that the Minister will justify his reputation and our proceedings by getting the silly issue resolved, as the Government have the power to do.
11.2 am
The Financial Secretary to the Treasury (Mr. Stephen Timms): I pay tribute to the right hon. and learned Member for North-East Bedfordshire (Sir N. Lyell) for his vigour in pursuing the matter and to all those who have so eloquently presented their constituents' cases in the debate. What we have heard has left me in no doubt about the anxiety experienced by constituents of several hon. Members.
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As we have heard, the Ministry of Agriculture, Fisheries and Food wound up the Land Settlement Association in 1983. There were 500 tenants at the time, 293 of whom joined in an action against the Ministry, which was on two counts—first, mismanagement and, secondly, distress and anxiety. The mismanagement issue regarded loss of profit and that is taxable. The distress and anxiety count concerns personal injury and so is not taxable. I make that important point because those two issues of profit and personal injury have been of concern from the beginning of the discussion of the case. The action led to out-of-court compensation from MAFF in 1991.
The nature of a compensation payment in an out-of-court settlement depends on the terms of the settlement read in the light of the pleadings. Establishing the precise details of the claims proved difficult in this case. The grounds for the 293 individual claims boiled down to just two grounds. The nature of the claims is now common ground. The loss of profits was quantified at £28.8 million. The personal injury claim was not quantified, but £6.5 million was offered and accepted in full settlement of all claims. In addition, debts of £677,000 owed to MAFF were forgiven.
To avoid for all parties the difficult task of analysing each of the 293 claims and apportioning the award for each individual between the taxable quantified elements and non-taxable unquantified elements, the Revenue offered a general compromise. In broad terms, it sought to tax 50 per cent. of the cash award and 40 per cent. of the debt forgone. It was for each individual to decide whether to accept that offer or pursue their claim in the normal way. About half the cases were settled on that basis. Negotiations continue on the remaining cases, principally because of a reluctance on the part of many individuals to accept that any tax is payable. When information was most recently collated a couple of years ago, 141 tenants had open appeals.
Sir Nicholas Lyell: The Minister is stating the Revenue's position that the apportionment depends on the settlement in light of the pleadings. Will he think carefully about the two cases of Wiseburgh v. Domville and Roberts v. W. S. Electronics, which I have mentioned repeatedly in correspondence? Both cases show that what is agreed must not be a sham but a genuine representation of what has happened. The cases do not mean that if someone makes an apportionment, it must be an arbitrary 50:50, and they certainly do not mean that we cannot take the general damages aspect first up to, say, £25,000.
Mr. Timms: It is true that the relevant tax case does not specify a 50:50 split of the cash award. The Revenue's offer was an attempt to produce a fair figure in the absence of specific information. Given that only limited information is available, the Revenue's general compromise to tax only half in recognition of distress in each case does not seem to be unreasonable. However, I understand the anxiety about that aspect of the offer.
The tax charge has been the subject of representations by taxpayers and several hon. Members over a number of years to the Revenue and Treasury Ministers to the effect that the situation of the Land Settlement Association is unique. The most recent approach to Ministers was an oral question last December in

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response to which my hon. Friend the Paymaster General explained that no change was made to tax legislation when the compensation was paid and that, therefore, the current tax law applied. My hon. Friend also pointed out that Ministers do not intervene in individual cases. If agreement cannot be reached between the Revenue and taxpayers about the meaning of tax law, the matter can be resolved by the appeal commissioners and the courts.
The most recent approach to the Revenue resulted in a meeting between the right hon. and learned Member for North-East Bedfordshire, the chairman of the Inland Revenue and officials on 4 April. It covered the Revenue's view of the relevant law. As well as the tax charge, the matter of interest chargeable on the unpaid tax was raised. The Revenue agreed to discuss that with the tenants to see whether a compromise on interest could be reached as part of a settlement of the open cases. It suggested that settlement of the open cases, including interest on unpaid tax, should be considered by the inspector who was dealing with them. The inspector wrote to the right hon. and learned Gentleman with an offer for the tenants to settle the outstanding appeals. It included charging interest only up to 5 April this year.
Sir Nicholas Lyell: The Minister is correct. The Revenue wanted to charge interest up to 5 April this year, notwithstanding the understanding that interest would be suspended while the difficult matters were discussed. I was shocked that it asked for interest to be paid up to 5 April when we had been going to and fro over such a grey area. Will the Minister reconsider that decision?
Mr. Timms: The point that I want to emphasise is that those are not matters for Ministers. I know that the right hon. and learned Gentleman finds that unhelpful, but that is the position. The chairman of the Inland Revenue wrote to him and said that the Revenue would see whether some compromise on interest could form part of the settlement of the open cases. He also suggested that the issue of the interest charged could be explored at a meeting between the inspector and the tenants to discuss the settlement of those cases.
The offer to explore all those issues with the inspectorate of taxes has not so far been taken up, although my advice would be that it certainly should be. Mr. Richard King is the inspector who is co-ordinating all the open cases, and he should be the next port of call for those who are dealing with the issue.
Mr. Flight: The Minister and the Government might choose to take the constitutional stance that he has described, but having heard what was the Government's intention at the time, is it not in the Minister's power to solve the problem by making an ex-gratia payment to cover the tax that must be paid?
Mr. Timms: I simply make the point that that is a matter of law. The responsibility of the Revenue is to interpret the law, and the law in that area is clear.
Sir Nicholas Lyell: The Minister says that the law is clear, but he knows that he cannot put his finger on any case that says that there must be a 50:50 split. What is
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more, the Minister has mentioned officials by name, which I have been extremely careful not to do. To push the tenants back to Mr. Richard King, who has been handling the matter for years, is simply to push them back to square one.
Mr. Timms: No, I suggest that that is the right place to take the discussion forward. A range of issues could be discussed with the inspector.
Mr. Paice: I am concerned about the proposition that we should go back to Mr. Richard King. My right hon. and learned Friend the Member for North-East Bedfordshire and I were present at a meeting with Mr. Richard King in one of the rooms off Westminster Hall three or four years ago, so we have been down that road. As a result of that, my right hon. and learned Friend had meetings with more senior Revenue officials, who suggested that the matter should be taken up with Ministers. Therefore, it is unreasonable for Ministers to say that we should now go back to square one and talk to Mr. Richard King.
Mr. Timms: It really is not for Ministers to take views on the tax arrangements of individual taxpayers. The hon. Member for Arundel and South Downs (Mr. Flight) raised the same issue. If it were for Ministers to do that, we would spend all our time in Westminster Hall debating the tax affairs of individuals. There is a procedure for pursuing such matters, which should be used to resolve this matter. The Inland Revenue must apply its interpretation of the law to the tenants of the Land Settlement Association, as it has been applied to other taxpayers who have received compensation for loss of profit. Indeed, many of the Land Settlement Association tenants have already settled their tax liability on the compensation received on that basis. The right hon. Member for Suffolk, Coastal (Mr. Gummer) made it clear that, when the payments were made in 1991, it was the intention of Ministers at the Ministry of Agriculture, Fisheries and Food that the payments should not be taxable. As my hon. Friend the Paymaster General made clear in a debate last December, no change was made to the law, so the current law must apply to this case.
Sir Nicholas Lyell: I had a succession of meetings with Mr. King and a very intelligent young lawyer called Mr. Deeps Jaggi, with whom I worked when I was a Minister. We agreed that, because the Revenue had never had to face such circumstances before, it would have to go to Ministers. The point was subsequently taken, however, that it should not go to Ministers, which is why I went to see the head of the Inland Revenue personally. These matters are not covered by settled tax law and I have received many letters suggesting that the issue should be pushed away to the special commissioners. The Revenue can clearly exercise discretion, rather than transfer the issue to the special commissioners and perhaps to the Court of Appeal, with which the tenants have no money to deal. None of that process is settled law, so does it not require proper intellectual consideration by Ministers with senior tax officials and the head of the Inland Revenue?
Mr. Timms: The right hon. and learned Gentleman said that this was a matter that needed to be settled by

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the Revenue and not by Ministers. I agree with that view. It is well established that compensation that is received for personal hardship is not liable to income tax, but that compensation for the loss of trading profit is taxable as trading income. The nature of compensation payments in out-of-court settlements depends on the terms of the settlement and on the pleadings.
I understand that the tenants received conflicting advice from professional advisers. Their counsel advised that no tax would be payable, but I understand that their accountants advised them correctly and said that tax would be payable—a point that has not so far been made. It was unfortunate that that mistaken advice was given, but that does not mean that the tax charge should be waived. Equally, problems with payment are not grounds for waiving a tax charge, as other taxpayers face difficulties in paying tax. As there are difficulties in analysing each of the many claims for compensation and apportioning the award for each individual between taxable and non-taxable elements, the Revenue has offered a general compromise to settling the tax charge. Some tenants have settled on that basis, but others have not done so.
Tenants and their Members of Parliament have made representations saying that the circumstances of the Land Settlement Association compensation are unique and that no tax should be payable. There has been disagreement about the Revenue's view that a relevant tax case means that all the elements of the claim—loss of profit and distress—must be taken into account when deciding on the nature of the out-court-settlement. It has also been suggested that the tenants should be able to choose the approach that is most advantageous to them. In this instance, that approach would be to claim that the payment was wholly for distress. I understand that the Revenue's view is that the judge in the tax case accepted that a head of claim could be dropped before settlement but not afterwards. That means that both heads of charge must be taken into account in the LSA case. Of course, tenants who want to pursue their argument through the appeal process are entitled to do so.
Sir Nicholas Lyell: To what case is the Minister referring? I have not been told that a case has established that one part of the claim has to be dropped. Surely he is speaking merely about the Revenue's interpretation.
Mr. Timms: I do not have the details of the case with me, but I can ensure that the right hon. and learned Gentleman receives them. I must emphasise that Treasury Ministers do not intervene personally in the Inland Revenue's application of tax law or in its handling of particular cases, although it has been suggested that we should do so. If hon. Members reflect on what such intervention would mean, they will be much less enthusiastic. Ministers do not influence the way in which local inspectors settle specific cases. The
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Inland Revenue is independent from Treasury Ministers in applying tax law. That independence in administering the tax system must be scrupulously observed.
Mr. Paice rose—
Mr. Flight rose—
Mr. Timms: I shall give way first to the hon. Member for South-East Cambridgeshire (Mr. Paice).
Mr. Paice: This is a fairly crucial point. I speak for myself, but I suspect also for others. I understand that Ministers should not interfere in the tax affairs of individual constituents, but we are not talking about individual cases. To describe these cases as individual is to pick on a weak point—almost, it seems, in order to divide and conquer.
I am not a lawyer, but I believe that it could be called a class judgment. The court has to look not at Mr. Smith's and Mr. Brown's tax affairs, but at the entirety of cases, especially as they arose as the result of government action. It should not be a matter of individual inspectors dealing with individual taxpayers, but of an overall ruling to resolve the affair for that class of former tenant.
Mr. Timms: It is a matter for the Revenue to resolve on the basis of the law as it stands. It is for the Revenue to decide how the matter should be concluded.
Mr. Flight: Is it not the case that if there is some doubt about the law—my right hon. and learned Friend the Member for North-East Bedfordshire has made it clear that that is the case in this instance—the Inland Revenue will often concur with the Government on the interpretation to be followed? Indeed, my right hon. and learned Friend said that when he spoke to the head of the Inland Revenue, he was advised that it was for the Government to make a decision.
Mr. Timms: No, the hon. Gentleman is not right. Such matters are determined by the Revenue on the basis of its understanding of the law. The Revenue does not ask Ministers for their views.
Mr. Menzies Campbell: I am grateful to the Financial Secretary; he has been generous in giving way. When are Members of the House of Commons entitled to seek redress on behalf of their constituents if not on occasions such as this? The hon. Gentleman should have no difficulty in persuading us that Ministers should not crawl over the tax affairs of individuals, but an issue of principle that goes beyond the affairs of individuals is surely the sort of issue upon which Ministers should take a view.
Mr. Timms: The Revenue has to work in line with established law and case law, as set out in statute or as determined by the courts. It is not for Ministers to seek to push the Inland Revenue in a particular direction. Individuals who have a problem with the tax system have recourse to the commissioners and the appeal system. That has always been the arrangement. That is how such matters should be resolved.

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The rules that the Revenue seeks to apply to the compensation received by the Land Settlement Association tenants are those that apply to other taxpayers who receive compensation. The tax system should be neutral. It should apply equally to all taxpayers. Disagreement about the meaning of tax law and its application to individual cases is a matter for the Revenue, not Ministers. The Revenue does not have policy discretion to ignore the application of tax law in certain circumstances.
As for concerns about the difficulties of paying a tax bill, tax collectors have some leeway to allow payment over a period if a taxpayer's personal circumstances justify it. I also understand the concerns about interest accruing on unpaid tax. As I said, the Revenue has agreed to consider that with the tenants to see whether some compromise can be reached as part of a settlement for the open cases. Again, I suggest that the tenants explore that with the Revenue.
I hope that agreement can be reached. I accept the strength of feeling expressed this morning, and I know that that reflects the concerns of the constituents of right hon. and hon. Members. However, if the Revenue's compromise offer or its view of the law continues to be disputed, the matter should go to the independent appeal commissioners and to the courts, to determine how the law should be applied.

Medicine Purchasing
11.24 am
Dr. Ian Gibson: The internet has given millions of people worldwide access to medical information and products in unprecedented volumes. It is becoming increasingly evident that many internet sites do not conform to United Kingdom standards. There are more than 20,000 health-related websites, with an increasing number selling powerful drugs that would normally be available only on prescription in the United Kingdom. Other products on offer include over-the-counter medicines, and vitamins, minerals, functional foods and herbal remedies, for which medicinal claims are made. New developments based on genome research will not only increase the number of medicines available. In the future, techniques such as gene testing and genome sequencing will be offered directly to the public via the internet and the situation could thus become increasingly complex.
At present, 7 million or so people in this country have home internet access and 45 per cent. of the United Kingdom population has used the internet at least once. Those figures will almost definitely increase in the near future, especially with the wider availability of new devices such as digital television, WAP phones and the later computer games consoles, all of which offer internet access. In the United States it has been predicted that the domestic market for online health services will increase from $200 million in 1999 to $10 billion in 2004—a 50-fold increase. In recent months, Pharmacy 2U, the first United Kingdom online pharmacy, has been launched. Both the British Medical Association and the National Pharmaceutical Association have expressed reservations about such developments.
The Government have taken e-commerce on board as one of the key elements for the United Kingdom's future in trading development, with a target of bringing the entire nation on line by 2005. However, specific areas of e-commerce, particularly those related to public health, will need more stringent validation processes to prevent malpractice. The number of relevant sites is likely to increase in coming years, which gives rise to several concerns. Consumers who bought prescription drugs from unregulated online websites could bypass medical advice before and after purchase and thus be at risk from the adverse affects of inappropriately prescribed medications, dangerous drug interactions or contaminated drugs, not to mention the issue of confidentiality of medical information.
Customers in the United Kingdom can purchase goods from overseas sites, some of which provide no contact details. That is a matter of concern in the light of potential negligence. Internet users should also be aware that products with the same name may contain different ingredients in different countries and that countries may apply different laws on what medical products can be sold and shipped across national borders. That means that it is possible that products that are not approved for marketing in the United Kingdom, or which have been identified as a hazard to public health, may not be allowed into the country, if they are identified at entry. That would leave the customer without the option of reimbursement.

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Obtaining a prescription drug by filling out a questionnaire and without seeing a doctor poses serious health risks. A questionnaire does not provide sufficient information to enable a health care professional to determine whether a drug is suitable, or whether another treatment would be more appropriate. It might not pick up an underlying medical condition that might make a drug harmful. An associated danger is that, once the questionnaire has been provided to the supplier, the customer has no control over the confidentiality of the records. A recent study by Health Which?, a Consumers Association publication, showed that some prescription drugs—Viagra and Xenical—were sold when, for medical reasons, they should not have been. That happened despite the fact that the information supplied in the questionnaires should have been sufficient to justify refusing the drugs. The research also highlighted the fact that in some cases the consumer could not gain access to information on the professionals who were in charge of issuing the prescription. One site was simply signed off in the name of "Your family doctor". In a society in which health professionals register with official bodies and accept an ethical and moral code of practice, that behaviour is surely unacceptable. Similar results were reported in a study carried out in the United States in 1999.
What can be done? The American Medical Association has issued guidelines for the development and posting of website contents to govern the acquisition and posting of online advertising and sponsorship, which will ensure site visitors' and patients' rights to privacy and confidentiality and provide effective and secure means of e-commerce.
In March, a 52-year-old man with a history of heart disease died in the United States of America after buying Viagra online. Following that, the Clinton Administration proposed an additional $10 million investment to target and punish those who engage in illegal drug sales over the internet. That strategy will establish new federal requirements for all internet pharmacies to ensure that they comply with state and federal laws. It will create new civil penalties for the illegal sale of pharmaceuticals and give federal agencies, including the Food and Drug Administration, new authority swiftly to gather information needed to prosecute offenders. It will also expand federal enforcement efforts and launch a new public education campaign about the dangers of buying prescription drugs online. The National Association of Boards of Pharmacy has unveiled its verified internet pharmacy practice sites programme, which provides consumers with valuable information about the credentials of online pharmacies.
In the US, the FDA has issued warnings about purchasing from sites outside US jurisdiction. In the United Kingdom, the Royal Pharmaceutical Society and the Medicines Control Agency have provided assistance to community pharmacists on commonly encountered aspects of the internet and e-commerce, such as confidentiality, encrypted data transmission, provision of professional advice, comprehensive information on products and home delivery of medicines.
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The intrinsic nature of the web is the provision of worldwide services, which opens up fantastic possibilities for the consumer. However, that translates into obvious difficulties in the regulation of services provided. The fact that the content of web pages cannot be regulated shows that alternative measures for quality control must be put in place. Immediate ones could be the creation of a validation scheme for online health-related purchases through kite marking, guaranteed widespread access to a listing of sites and confidentiality of data.
Internet providers of health-related services should comply to quality standards, which should be the product of discussions between all the professional bodies involved, including the Department of Health, pharmaceutical societies, on-line businesses, consumer associations and so on.
While keeping consumer choice prevalent on the agenda, we must guarantee quality. The internet could be a powerful tool for delivering health care services. However, we should keep in mind the fact that guidance from the internet should not be used as a replacement for consultation with the consumer's health care provider. Guidance has been issued not only at a national level, but as a result of international attempts to provide the possibility of an informative choice to the internet user. That is true of the guide issued by the World Health Organisation in 1999. That was developed not only for consumer information but to serve as a model for member states to adapt into locally meaningful advice for internet users, to help them to obtain reliable, independent and comparable information on medicinal products.
Do consumers have easy access to those guidelines? The provision of internet links between health information sites, such as NHS Direct, as well as institutions governing aspects related to the provision of medicines, would facilitate access to safe online traders. At present, most attempts to regulate and validate such sites are at the initiative of the industry itself. For example, in the UK the Association of the British Pharmaceutical Industry is considering a paper on internet trading. Some work has already been done on advertisement of medicines on internet sites. Parallel to that, the first meeting between stakeholders will take place on Monday 17 July, which is next week, in the presence of the chief pharmacist and members of the RPS, the Proprietary Association of Great Britain, the Doctor Patient Partnership, the Royal College of General Practitioners and the UK on-line pharmacy Pharmacy 2U. It will be some meeting. The British Standards Institute has facilitated the meeting. However, Departments should take a proactive approach to promoting dialogue and regulatory initiatives.
In the light of those developments, will my hon. Friend the Minister outline the steps that her Department and agencies such as the MCA are taking to tackle those problems? Do they have any plans to take an active role in co-ordinating the various schemes being considered by the ABPI and other organisations?
11.34 am
The Parliamentary Under-Secretary of State for Health (Ms Gisela Stuart): I congratulate my hon. Friend the Member for Norwich, North (Dr. Gibson)

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on securing the debate. The electronic purchase of medicines is a matter of increasing concern, and I welcome the opportunity to respond on the issue. As my hon. Friend has said, use of the internet is increasing at a pace that few would have anticipated. There are now at least 12 million internet users, and that figure is growing daily.
Electronic commerce, or e-commerce, lies at the heart of the Government's vision of a modern, knowledge-driven economy in the UK. That is why we are planning to make Britain one of the world leaders in e-commerce by 2002. E-commerce can bring major benefits to the public by providing wider choice and easier access to a vast array of products and information. However, more information does not always bring benefits; we must make sure that the information is reliable. It also sometimes takes time for the law to catch up with new developments. I remember from my days as a law undergraduate how long it took contract law to catch up with the availability of telephones and then fax machines, for example. Development of the law and of technology should happen in parallel.
The increased use of e-commerce should be balanced with the provision of essential safeguards for consumers, and that is particularly important for medicines. The availability of medicines on the internet is underpinned by controls on their advertising, promotion and sale. Before my hon. Friend entered Parliament he had a distinguished academic record and he knows only too well the importance of relying on scientific advice and ensuring that what is offered to the public for sale is safe.
In recent months, there has been a rapid development of internet sites offering medicines for sale. It is easy to see how such developments can offer advantages to people who find that shopping medium more convenient and attractive, but safeguards must be in place. We recognise that medicines are not like ordinary items that can be purchased on the net, such as clothing, electrical goods and jewellery. Everyone who buys a medicine, through whatever medium, must have medication that is appropriate to his or her condition.
A well-established framework of domestic and European law, providing safeguards to the public, is already in place. In particular, medicines are categorised on grounds of safety into those that can be used with or without medical supervision. In the case of prescription-only medicine, a doctor's or dentist's prescription is required, which provides an important safeguard. In addition, prescription-only and pharmacy medicines must be sold under the supervision of a qualified pharmacist, on premises that are registered and inspected by the Royal Pharmaceutical Society. General sale list medicines provide convenient access for some products that safely provide symptomatic relief for minor conditions and they can be sold by any general retailer if the premises are lockable and the medicine is in an unopened manufacturer's pack.
In addition to those legal controls, there are professional safeguards. In the past year, the UK's first true internet pharmacy sites have opened. The Royal Pharmaceutical Society has published interim standards specifically for internet pharmacy which make clear that pharmacists selling medicines online must exercise precisely the same care in supplying medicines as their colleagues working in other locations. It is part and
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parcel of a pharmacist's role, in any setting, that they have sometimes to refuse to sell people medicine if, in their professional opinion, it would not be safe or right to do so. That is an important safeguard. The safeguards already in place make it an offence to sell, rather than buy, medicines inappropriately. We put the responsibility clearly on the supplier.
There has been debate within the retail pharmacy world about the rights and wrongs—for commercial and ethical reasons—of internet-based pharmacy. What is clearly emerging from that debate is that some pharmacists believe that they can offer a fully professional service, which consumers and patients will trust and want to use, on the internet. Further safeguards are provided by the controls, through British and European Community law, on advertising. Those completely prohibit the advertising of unlicensed and prescription-only medicines to the general public. Although non-prescription medicines can be advertised, there are restrictions on the advertising of medicines for certain serious conditions. Those regulations apply as much to the internet as to any other medium.
The rapid development of e-commerce has encouraged, in parallel, an equally rapid development in electronic advertising and promotion through a variety of websites. That challenges the existing European legal framework, which was negotiated and implemented in the late 1980s when e-commerce and the use of the internet by European Union citizens was in its infancy.
The growth of e-commerce has prompted the European Commission to review the existing legislative framework. The United Kingdom is playing a leading role in the review, as a leading player in e-commerce and the internet. Our input will take account of the discussions that the MCA is having with other regulators involved in advertising control, industry and consumer groups. We will not ignore the agency's public health responsibilities while the European review of advertising and e-commerce is under way.
Our plan is not to limit the availability of useful information about medicines. We want to encourage the provision of good quality information and health care to consumers. Existing law already permits the provision of health information and the internet can play a leading role in that. For example, the right remedy campaign this winter empowered the patient by making more information available. The Government have told people clearly that there are many sources of advice, including pharmacists and NHS Direct.
As part of the Government's "Information for Health" strategy, a programme of work is in place to give public, patients, and health care professionals access to NHS accredited sources of information. That information comes not only from the NHS but from patient groups, from which people can learn about long-term conditions. However, we recognise our responsibility, and a source that has an NHS label is reliable and has been tested. Such information can make a significant contribution to ensuring that medicines are taken safely and effectively.
The hon. Gentleman must be aware of the telephone help line, NHS Direct. Last December, the Prime Minister launched NHS Direct online, which represented an important step towards making accredited information available on the internet.

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Experience gained from the help line is transferred to the online service, which is one of the most popular and best regarded health websites in the United Kingdom and provides a gateway to accredited information on the internet. Sex, religion and health are the three most searched-for areas on the internet. There is a lot of information about health, but some of it is extremely unreliable. The online service provides links to several hundred accredited sources of information on the internet and other formats. Users can feel confident that the information that they access will be reliable and of good quality.
I come now to the question of enforcement—the criminal investigation of alleged breaches of medicine regulations that can lead to prosecutions in the criminal courts. If a defendant is found guilty, the maximum penalties are two years' imprisonment and/or an unlimited fine. Powers also exist, and are used, to confiscate assets and seize and destroy products.
That work is also carried out on behalf of Ministers by the MCA's enforcement group, which is a team of highly trained and experienced investigators. The MCA works closely with other enforcement agencies here and overseas. In particular, the MCA has close ties and workings with the Food and Drug Administration's Office of Criminal Investigation, which investigates internet crime related to pharmaceuticals. My hon. Friend referred to the Clinton Government's initiative aimed at effectively controlling and policing the internet. We were pleased that that initiative was backed up by a substantial financial commitment. That is important, as about 75 per cent. of overseas websites potentially advertising prescription-only or pharmacy medicines in the UK are based in the USA. As such a close link exists, it is important for us to work together. The MCA's enforcement arm is also accredited to the National Criminal Intelligence Service. The MCA has an impressive track record and is recognised as a world leader in the successful investigation of pharmaceutical crime.
In response to the growing significance of the internet, the MCA has set up a special unit within its enforcement group whose work is to investigate possible breaches of regulations on the internet. Officers have received special training in web search techniques and investments have also been made in search engines and other specialist equipment that may be required. As a result of their investigation, action has already been taken against a number of websites that have been in breach of the law. Those breaches have involved both licensed and unlicensed medicines. Some websites have been closed down, while others have had to amend their web pages to comply with the law.
In the case of subversive, covert or apparently deliberate criminal acts, the MCA may attempt enforcement immediately through the criminal courts.
I assure my hon. Friend that mechanisms and the legal framework already exist to ensure that the interests of public health are met.
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When the business is located in the UK, direct action by the MCA is relatively easily achieved.
Dr. Gibson: Is my hon. Friend aware of how many such prosecutions there have been? Has there been one or more?
Ms Stuart: There have been a couple of prosecutions, and several are in the pipeline. I would be happy to provide my hon. Friend with precise figures. It is important to recognise that those who attempt to subvert often do so opportunistically, so the threat of action, or simply the process, often displaces them.
What happens when, as is not unlikely on the internet, the perpetrator is abroad? The market is increasingly becoming global. Although our experience is that there is often a UK base or business presence in the UK of some description, the perpetrator is more frequently an opportunist trader—a criminal seeking to make easy and quick money and evade the law.
In such situations we can and do seek the assistance of colleagues in other countries. In 1999, senior pharmaceutical law enforcement officers from 12 countries met in Ottawa and set up a permanent body known as the International Forum on Pharmaceutical Crime to foster the coming together of enforcement groups from different countries to enforce pharmaceutical law. The MCA was asked to provide support and act as a co-ordinating point for the forum's work, and was glad to do so. High on the list of the forum's policy objectives is a strategy for developing practical enforcement measures against criminal activities on the internet involving pharmaceuticals. As crime and illegal activities become increasingly international and use the most modern technology it is necessary to work in a co-ordinated fashion.
I assure my hon. Friend that we are committed to maintaining and developing existing enforcement capabilities so that, where the protection of public health requires it, the full weight of the law can be brought to bear swiftly and effectively.
What is the driving force behind e-commerce, making the internet available and providing information? We have no problem with the use of e-commerce; indeed, we encourage it. We want people to trade on the internet, and take the opportunities that it provides. However, as I said at the outset, medicines are a different matter. Consequently, we have placed specific responsibilities on suppliers. As a Government, we must ensure that the framework that we end up with is one that protects our citizens, provides them with reliable information, and, furthermore, provides them with the means to establish whether information is reliable. NHS Direct and NHS Direct online have been significant developments in that regard. In the light of rapid technological developments in the marketplace, the legislative framework must be examined to ensure that it meets the needs of the public and, in particular, strikes the correct balance between patient empowerment, ease of availability of medicines and adequate protection of public health. However, as I explained earlier using the analogy of contract law, it can take a long time before the legal framework is right.

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It is also important to recognise that the process is evolutionary, in which, especially in light of the international dimension, we work with the other agencies involved to create a system that will not allow evasion or create loopholes or conflict and will coordinate action. I hope that my hon. Friend will be reassured that we are including in the strategy not only stakeholders and the pharmaceutical industry but, more important, patient groups, because ultimately the failure or success of the strategy will be judged by whether patients have been adequately protected. It is on that basis that negotiations proceed.
I assure my hon. Friend the Member for Norwich, North that we are committed to striking the right balance. Effective regulation, enforcement and the provision of good-quality information are crucial to realising that aim. I am deeply grateful to him for having raised the issue. Something makes me feel that this may not be the last time that we discuss the issue in the House.

Fire Services (Shropshire)
11.50 am
Mr. Christopher Gill: There is great unhappiness and no little dissatisfaction in Shropshire following the decision to replace two appliances with a single appliance at five retained fire stations. The dissatisfaction in my county springs from the fact that the nature of the decision is not readily accepted. People are dissatisfied about the unsatisfactory way in which the consultation was carried out and about the underlying reason for the decision, which is the inadequate funding in our county. I shall deal with each of those points in turn.
The decision is almost universally opposed by Shropshire residents living in parts of the county that rely on retained fire service men. Six of the largest parish councils in the eastern part of my constituency—Alveley, Claverley, Chelmarsh, Cleobury Mortimer, Highley and Stottesdon—not to mention Bridgnorth town and district councils, have all voiced their strong objections, for sound and practical reasons.
The area covered by Bridgnorth district council is divided by the River Severn—which I am sure that the Minister will recognise as one of Britain's largest and most important rivers—with crossing points only at Bridgnorth itself or downstream at Bewdley in the adjoining county of Worcestershire. It follows, therefore, that simultaneous fires in Alveley, on one side of the river, and Highley, on the other, would, although those places are fewer than 2 miles apart as the crow flies, necessitate a road journey of about 15 miles by the northern route, or 19 miles by the southern route. In neither case would the bypasses at either Bridgnorth or Bewdley be accessed, because the road to and from Highley does not connect with the bypasses, but runs directly into each of the town centres.
As a result of reducing the number of fire appliances at Bridgnorth from two to one, calls on the single engine at Cleobury Mortimer are almost bound to increase. However, difficulties in recruiting suitable fire fighters in that town are already causing major headaches. A further practical anxiety is that, in the event of an incident in the area that requires the attendance of two appliances, one of the adjacent areas will inevitably be left without cover for the duration.
My constituents have many other, equally valid, practical objections to the proposals. For example, the eastern part of my constituency faces the additional hazard of fires started in dry weather spells by the steam engines that power the Severn Valley railway, which is an important tourist attraction in my constituency. Time prevents me from detailing all their other practical objections.
I come now to the vexed problem of the consultation process. Four consultation meetings have been held, the last one being in Bridgnorth on 8 June. However, on 24 March the chairman of Shropshire and Wrekin fire authority wrote to me and said:
Thank you for your letter…regarding the Fire Authority's proposal to replace two appliances with one at a number of retained stations… The new appliances were ordered some considerable time ago, and are scheduled for completion in April/May this year.

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Not only are my constituents angry that the consultation meeting was held after the decision had already been made, but they are incensed that the only people admitted to the meetings were the so-called stakeholders. The general public were specifically excluded from them.
The nub of the matter is the inadequacy of the standard spending assessment. My hon. Friend the Member for North Shropshire (Mr. Paterson) put it in a nutshell when he wrote to the Minister. He said that the Shropshire budget for fire services was £12.5 million, but that the SSA for this year was £8.5 million. He added that Shropshire was therefore underfunded by 47 per cent. and that the £4 million shortfall must be taken out of other services provided by the Shropshire county council.
To put it another way round, the standard spending assessment for fire services in Shropshire at £20.58 per head of population is the third lowest of all counties in England—a mere 63p above the lowest figure, but nearly £8 per head less than that of the highest. If Shropshire had achieved even the average of all English fire authorities at £28.17 per head, the SSA would almost exactly match the actual budget. We are asking for the same average deal as everyone else, as a result of which there would be sufficient funds for us to provide an adequate service throughout the county.
Mr. Owen Paterson: Is my hon. Friend aware of the real anger that the funding problem is causing in Whitchurch and Market Drayton, which will also be cut back to one pump? People contrast the £22.2 million that Cheshire receives and the £21.9 received by Staffordshire with the £8.1 million received by Shropshire. The formula is wrong.
Mr. Gill: My hon. Friend is absolutely right. The formula is wrong and it has been for a long time. What depresses me and my constituents, however, is that the Government have recently made it known that there is unlikely to be any change to the formula for determining such matters for at least another three years. That, taken together with the fact that, for the past three years we have been at a standstill in terms of any alteration to the formula, means that, in effect, something that was wrong six years ago—sorry, three years ago—will still be wrong in three years' time.
The Government are fond of blaming the previous Administration on such occasions.
The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): Will the hon. Gentleman give way?
Mr. Gill: Before I give way to the Minister, I want to say that the Government's excuse is wearing thin. The Labour Administration have been in power for three years and it is no use their looking backwards. The electorate in Shropshire want the Minister to look forward and to give us some hope for the future.
Mr. O'Brien: The hon. Gentleman referred to six years; he then paused and referred to three years, which
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is the time that the Government have been in office. But he supported a Government who, according to his argument, caused Shropshire to be severely underfunded. How did he justify that, and why, now that we have a different Government, does he want to change the standard spending formula that he previously supported?
Mr. Gill: I have never supported the formula. I am on the record in the House as having voted, together with the former Member for North Shropshire, against the revenue support grant settlement in the previous Parliament. I am a long-term opponent of the formula. My point about the three years and the three years is that the Govt have not altered the formula. They recently announced that they are unlikely to do so for the next three years. That is a period of six years during which time the residents of Shropshire will continue to be disadvantaged.
I agree with my hon. Friend that the formula is wrong. It gives Shropshire a bad deal on just about every count. Shropshire is almost bottom of the league for the funding of police, health, social services and almost everything else. It is self-evident that that is a result of the funding formula. The Minister does not have a point when he says that I have supported the formula. I am on record as being absolutely opposed to it and pleading with this and the previous Government to effect changes that would produce a more equitable solution for my constituents.
In the final analysis, what emerges is that the intention to downgrade the number of appliances at five fire stations from two to one is driven by economics. Our county's inadequate budget means that the fire authority is forced to make cuts wherever it can. Many of my constituents question the rationale of cutting back on the retained sector, which is extremely cost-effective. The current proposals will realise a saving of less than 1 per cent. of the budget, but will result in a massive 15 per cent. reduction in capacity. If we reduce the number of fire engines from 33 to 28, it follows—this is fact not opinion—that the availability of fire engines to fight fires in emergencies in Shropshire will be reduced by 15 per cent.
Furthermore, the fire authority was obliged by law to stage a consultation exercise which, in the circumstances, was nothing more than a charade. The general public are fed up and disillusioned with being invited to participate in a plethora of consultation exercises when it is increasingly plain that the decisions have often been made. Either the outcome of public consultations should be respected or Ministers should have the courage to do what they have to do and take the electoral consequences. It is not satisfactory to govern on the basis that the Government consult on an idea that they have already formed knowing full well that, come hell or high water, they will not be distracted from their original intention. The public have to spend a lot of time and, in the case of local authorities, a lot of money responding to such consultations, when the answer is invariably a lemon.
No change in fire cover in any county can occur without the Home Secretary's formal approval. What will the Minister do? Will he take a chance with people's lives and property by endorsing the fire authority's proposals, or will he demand a re-examination of the

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funding formula so that fire service standards, set by his Department, can be adhered to? Before the Minister responds to the debate, I respectfully remind him that the buck stops with him. Rural Shropshire will not be fobbed off with lame excuses or any attempt to shuffle off ultimate responsibility on to others.
I remind the Minister—not as an afterthought because this is central to our consideration—of the importance of firefighters and the damaging effect that failure to come up with satisfactory responses will have on morale. There is a fear among retained firefighters in my constituency that, if the two fire appliances in Bridgnorth are replaced with one, there will be a lesser requirement for retained firemen, which will affect recruitment and morale in the fire service generally. Retained firefighters are an essential and highly valued part of our rural community. Without them, the Government would be faced with massively increased expenditure, not to mention recruitment problems.
I trust that, in his reply, the Minister will acknowledge the importance of the human dimension, but, as things stand, the proposals are opposed by the tax-paying public, the county, district, town and parish councils, the trade unions and, not least, the firefighters themselves. All that comes on top of a catalogue of complaints from the countryside, which were succinctly summarised by Mrs. Morris, the clerk to the Stottesdon and Sidbury parish council, who lists them as follows:

Reduction in policing

Removal of Accident and Emergency to greater distances

Downgrading of Kidderminster Hospital

Loss of village shops and post offices

Local pubs closing

Lack of rural transport

Fuel/taxation/vehicle running costs are rising

Schools struggling due to budgets

Roads deteriorating very badly

Unreliable SHROPDOC service

Planned reduction in fire service.

I hope that when the Minister responds to the debate he will give people in the countryside some hope that the one service for which he is responsible will not follow those other services in being run down to an unacceptable level.
12.7 pm
The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien): As someone who also represents a rural area, and who is concerned about rural issues, I am pleased to note that, despite the many difficulties to which the hon. Member for Ludlow (Mr. Gill) referred, employment is increasing in rural areas. I am pleased that the hon. Gentleman has had the opportunity to raise his concerns about fire services in Shropshire.
Before I proceed, I am sure that hon. Members will want to join me in expressing our shock and sadness at the news of the very serious fire at Southgate near Telford on Sunday, when a mother and two young children died in a house fire. That was a serious incident, and I am sure that all hon. Members would want us to express our condolences to the surviving members of the family, their relatives and friends.
Mr. Bruce Grocott: I thank the Minister for that expression of regret and concern. As he rightly says,
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all hon. Members would wish to be associated with those remarks. That is an appalling tragedy and our hearts go out to the family.
Mr. O'Brien: That tragic incident reinforces the need for those of us in Government, Members of Parliament, the fire service and individuals to redouble our efforts to reduce fires and casualties in the home, and to treat that matter seriously, rather than as a political football. That is why, with the support of fire service interests, the Government are seeking to make a commitment to prevention as the first line of defence against fire, to develop a clearer vision for the fire service and to set out a clear strategy for the next 10 years with clear targets for improvements. We want to make progress in a way that can be measured against that commitment. To that end, we have publicly set a target of reducing the average number of accidental house fire deaths by 20 per cent. in the next five years.
I fully understand the importance that the hon. Member for Ludlow and his constituents attach to the quality of the fire service provided by the Shropshire and Wrekin fire authority. We have good reason to be proud of our fire service. In many ways, we have the best fire service in the world. It puts out fires. We can be grateful because, in some countries, there are substantial delays and other problems in fire services doing that job.
The fire service achieved consistently high standards of performance, often in difficult and hazardous circumstances. The high performance in responding to fire calls has been confirmed year after year by the Audit Commission. That body's latest figures show that, in 1998–99, the fire service nationally met attendance standards in responding to fire calls in 96 per cent. of occasions. In the Shropshire and Wrekin area, even that excellent performance was bettered—attendance standards were met in 97.6 per cent. of occasions. The fire service in that area has an extremely high standard and I am sure that it will do all that it can to retain it.
The ability to attend fires is influenced, among other factors, by the proximity of fire stations. A proposal from Shropshire and Wrekin fire authority is worrying the hon. Gentleman. The authority seeks to replace two pumping appliances at Ludlow fire station, which is in his constituency, and at Newport, Whitchurch, Bridgnorth and Market Drayton, with an extra large appliance that can carry nine staff. As the hon. Gentleman noted, the authority is consulting on the proposal, but has not yet made an application under section 19 of the Fire Services Act 1947. That application will not doubt be made to my right hon. Friend the Home Secretary in due course. It would be appropriate for Ministers to express a view at that point. I am sure that the hon. Gentleman will understand that it is inappropriate and wrong for Ministers to express views on matters on which they will have to exercise a semi-judicial role before they are submitted to them.
I will be clear on the matter. The statutory responsibility for the provision of an efficient fire services rests with a fire authority. That is all about local democracy and local control of fire services. It is for Shropshire and Wrekin fire authority to keep its fire cover provision under review and to set a budget that allows it to meet its statutory and other obligations and, in particular, to provide a service that meets the national standards for fire cover.

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I will come to finances, but I want to say more about the section 19 procedure. Under section 19(4) of the 1947 Act, a fire authority cannot reduce the number of fire stations, fire appliances or fire fighting posts without the express consent of the Home Secretary. The Home Secretary is given a specific statutory role, which he does not exercise until an application is made to him. Any wish that we express a view on the matter now would be inappropriate for that reason. The Home Secretary will grant an application only if satisfied that the proposals have been publicised sufficiently widely, in sufficient detail and with adequate time to enable an interested party to make representations. Recently, I referred back an application under section 19 because I was not satisfied about the extent of the consultation period.
I listened with great care to what the hon. Member for Ludlow said about the way in which consultation was conducted in this case. In considering such matters, I must also advise the Home Secretary on whether the fire authority has properly considered representations. That does not mean that the authority must do what the representations suggest: fire authorities are there to exercise judgment about the way in which they can best manage their budgets and provide effective fire cover standards. Her Majesty's fire services inspectorate will also advise on whether the national standards of fire cover are being maintained. In listening to the representations made by the fire authority, we will also consider the opinions of Her Majesty's fire services inspectorate, to ensure that we have a view on whether there is a risk.
Whenever change in the fire service is proposed, someone shouts "Danger to lives." However, past changes have not caused perceptible danger to lives. The debate appears to revolve around every single section 19 application. That is why the Home Secretary always relies heavily on the advice given by Her Majesty's inspectorate of fire services, which has great experience in assessing whether national fire standards are being maintained and protected.
Mr. Gill: I have been paying attention to the Minister's remarks, but does he accept that what the fire authority wants to do in Shropshire is driven principally by economics? We cannot consider the matter in isolation and say what we would like or what we need accordingly. Instead, the fire authority has to cut its cloth according to its pocket, and it will probably have to cut a lot of corners on public safety to do so. Ultimately, the buck stops with the Minister.
Mr. O'Brien: There is no question but that the Home Secretary will have to make a decision—I will consider the papers and advise him on it—on whether to grant the fire authority's application. However, it is for the authority and not for the Minister to make the initial application, set out the procedures and comply with the requirements for appropriate consultation. This country has a tradition of local control of fire services.
The hon. Gentleman also mentioned funding. Every single public service that I know of requests greater funding, and taxpayers often balk at the idea that they will have to pay more tax in order to provide it. There
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is always a balance to be struck. The hon. Gentleman's constituents will want to know that the fire authority is spending their hard-earned money in order to deliver value for money in fire cover. It is right and proper for taxpayers to want to know that the fire authority is exercising care in deciding how to spend its budget. It is spending taxpayers' money—funds that are provided by those who work in the hon. Gentleman's constituency and in the surrounding area. They want value for money and it is right that the fire authority should consider that in taking any decisions. It is also right for those constituents to want to ensure that their homes are safe and that proper and effective cover is in place. That is why the Government take great heed of the experienced voice of Her Majesty's inspectorate of fire services.
Mr. Gill: Does the Minister recognise that every taxpayer in Shropshire is obliged by law to pay the same rate of taxes as people in other parts of the country? Our complaint is that, out of every pound that we pay to the Treasury, we are getting back less pro rata than many other counties, including that of the Minister. In his own county of Warwickshire, for example, the SSA per head for fire services is nearly £3 more than in Shropshire. Surely, in equity, the figures should be balanced up and poor old Shropshire should not be bottom of the pile on every heading.
Mr. O'Brien: Warwickshire had serious problems in fire service funding under the previous Government. At one stage, the inspectorate was about to declare it unable to continue to operate. It is now in much better financial shape and we are providing a better settlement for the fire service than has ever before been achieved. The distribution of funding is based on the standard spending assessment formula that we inherited from the previous Administration. We consulted on that after we came to office in 1997. When a funding formula is changed, there are winners and losers; the hon. Gentleman obviously hopes that Shropshire will be a winner.
Mr. Gill: For a change.
Mr. O'Brien: I would hope that my constituency of Warwickshire, too, might benefit from such a change, but other hon. Members will be worried that their constituencies might lose.
We consulted on changes to the local government SSA formula, but we found that some local authorities did not want change. Later this summer, we shall publish a Green Paper to try to obtain local authority agreement on how to proceed. It is not simply a matter of the Government's issuing an edict. We need to discuss our proposals properly and democratically with those who represent local people. The Green Paper will set out proposals and options for change in the SSA.
We are prepared to tackle that issue in a way that the previous Government were not, but it requires some sort of consensus among local authorities. For entirely proper and legitimate reasons, the hon. Gentleman wants Shropshire to benefit, but other hon. Members will want to represent their constituents.
Mr. Peter Bradley: I can think of at least one way in which Shropshire and Warwickshire could benefit from a reform of the SSA system. The Home Office recently announced a £15 million increase in police funding in recognition of the sparsity factor in rural areas. Can the Minister say how seriously he and his colleagues are reviewing the inclusion of an enhanced sparsity factor in the funding of fire services?
Mr. O'Brien: Yes, I can. I have met people from Shropshire and Wrekin fire authority who suggest that the fire service SSA formula should include a sparsity indicator. If, in the light of consultation on the Green Paper, we decide to continue with a formulaic method of distributing grants rather than a system that gives greater recognition to the individual council tax payer, we shall have to consider the priorities further with the Local Government Association.
One of the problems will be how to gauge a sparsity indicator. Earlier work suggests that taking such an approach for the fire service could cause technical difficulties that do not apply to the police. It might produce perverse results. We already have enough problems with SSAs producing perverse results by giving more to those fire services with a higher number of call-outs. That is almost an incentive for more call-outs to be received.
We shall need to consider that proposal in the Green Paper. We want to take perversity out of the system. We do not want to put perversity back in by including a sparsity formula in the SSA that does not work. It is a technical and complex issue. None the less, sparsity raises proper and legitimate questions. There is no simple solution. We need to reconsider the means by which we distribute grants. I hope that we shall be able to do that during the wider consultation that we hope to undertake later this year.
I am aware of the financial pressures faced by the Shropshire and Wrekin fire authority, and other authorities. Indeed, in May I met a delegation from the authority, led by my hon. Friend the Member for Shrewsbury and Atcham (Mr. Marsden), to discuss its concerns about funding. More generally, we listened carefully to fire authorities' concerns during the comprehensive spending review. That provided that fire authorities in England would receive, overall, an increase in the fire service element of total standard spending of £143.6 million over three years, including £47.4 million, 3.5 per cent., for 2000–01. That is well above the settlements that were given under the previous Government. We are listening carefully to the
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representations of the fire service. It will take time for us to undo some of the problems that we have inherited, but we are determined to try to deal with them.
Mr. Paterson: The Minister kindly wrote to me on 14 June suggesting that my proposed delegation of all Shropshire's MPs to visit him should be postponed until after publication of the Green Paper. I want to stress the intense hostility, in Whitchurch and Market Drayton, to the proposed changes, which are forced on the fire authority, as my hon. Friend the Member for Ludlow has said, by the failures of the spending formula. Will the Minister commit himself to accepting a delegation before a final decision is made?
Mr. O'Brien: I shall certainly see a group of MPs—it might be appropriate to see the chief fire officer and chairman of the fire authority as well—before a final decision is made. I have no problem in giving that undertaking.
I have mentioned already that the increase in funding for 2000–01 was 3.5 per cent. as a national average. Shropshire and Wrekin's share of total standard spending for the fire service for 2000–01 has increased by the above average 4.4 per cent. That increase should be seen in the context of the firefighters' pay award of 2 November, but the Government have recognised the problems of Shropshire. We have acknowledged them in the funding for Shropshire, and provided extra help. I do not deny that there are inherited problems, which remain serious. I hope that we can tackle those in the long term, by considering the standard spending assessment overall so that we can deal with the wider problems of counties such as Shropshire, and in the shorter term, in dealing with the section 19 application when it is made. We should look at the question in the round.
I assure the hon. Member for Ludlow that no decision will be made that will put at risk the lives of people in Shropshire. Her Majesty's inspectorate of fire services will advise the Home Office on whether there is a risk to lives. Our clear position is that we do not put lives at risk. Sometimes difficult judgments must be made, but if Her Majesty's inspectorate advises us of a serious risk to lives, the relevant application will not be approved. However, if the advice is that the matter concerns redistribution and doing things differently, we shall, while others may take a different view, weigh heavily the views of those who have great experience and knowledge about the risks of fire.
I hope that I have provided some reassurance. I thank the hon. Member for Ludlow for initiating the debate, which concerns matters of great importance. I shall consider them very carefully when the section 19 application and the future funding of the fire service in Shropshire are considered.

Social Summit, Geneva
12.28 pm
Mr. Tony Colman: I declare an interest. I chaired the Low Pay Unit from 1988 to 1998, I am trustee of the Daycare Trust, and I am parliamentary representative on the executive committee of UNED-UK, for which I was nominated by Globe UK, of which I am the vice-chair.
I thank Madam Speaker for allowing this Adjournment debate on the conclusions of the UN social summit, the 24th special session of the General Assembly, entitled "World Summit for Social Development and Beyond: achieving social development for all in a globalising world", which was held in Geneva in June. It is a plus five UN conference, following the pattern of the UN subject-specific conferences that followed the Rio conference of 1992 on development and the environment.
The first social summit was held in Copenhagen in 1995 and I was present as a delegate representing local government. In 2000, I was a non-governmental organisation delegate on the UNED-UK delegation. I was pleased to discover that the Minister for Employment, Welfare to Work and Equal Opportunities, the right hon. Member for Dulwich and West Norwood (Ms Jowell), was leading the Government delegation. The summit looked back on what had been achieved in social development over the past five years, as well as looking forward to the UN development targets for 2015. The Minister laid a well-received emphasis on UK domestic policies in her address to the plenary session. It was an example of a developed country reporting on what it had done to deal with poverty rather than lecturing developing countries on what they must do. I am proud of our policies on the new deal, child care, the working families tax credit, the minimum wage, and so on. In contrast, Baroness Chalker, the leader of the delegation in 1995, completely ignored the subject of poverty in the UK.
The UK national report, dated December 1999 and presented to a UNED-UK conference in March 2000, has been widely welcomed, especially as a statement of intent. I particularly commend to hon. Members the social indicators in annexe 1. Will the Minister tell me when the first statistical series will be published to measure progress and the House given a chance to debate them? The only criticism of the report is that civil society in the UK was not involved in the analysis or conclusions before its publication. If the Government are almost to prescribe that civil society be involved in developing countries' Governments' reports on progress on social development, it is important that the Government should operate in the same way in the UK. I am always told that third-party endorsement is much the best.
The conference was attended by more than 7,000 people and some 160 Governments were represented. The UK report stood up well in comparison with progress elsewhere. The summit called for, among other things, the number of persons living in extreme poverty to be halved by 2015; the achievement of free, universal primary education by 2015; the avoidance of unilateral measures affecting the health and well-being of women and children, and greater steps to ease the debt burdens
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of developing countries. In opening the special session, Secretary-General Kofi Annan called for an end to extreme squalor, which he said was
an affront to common humanity.
He also said that no country could be called truly prosperous so long as many of its citizens were left to fend for themselves in the face of ignorance, hardship and disease.
Plainly, improvement since 1995 has been slight. The Oxfam report "Missing the target: the price of empty promises", available on its website, clearly sets out the failure of the international community. Controversially, at the beginning of the conference, a review document, "2000: A Better World for All", was jointly published by the UN, the World Bank, the IMF and the OECD. It was controversial because many non-governmental organisations felt that the UN should not be so directly associated with the other institutions. I disagree; the UN needs to ensure that those institutions works with it and are tied into the UN agenda. Furthermore, the factual analysis, which was not challenged by the NGOs, showed that while significant improvements are taking place elsewhere, many countries in Africa need special help—a message that was reiterated in the conference outcomes.
The document, "Voices of the Poor: Crying Out for Change", which was launched at the conference, was badged as being by the World Bank, but is in fact a co-production with the Department for International Development. It is a part of a series that started with "Can Anyone Hear Us?", published at the beginning of the year, and will end with "From Many Lands", which will be published at the end of the year. In the series, a poor man from Adaboya in Ghana is quoted as saying
Poverty is like heat; you cannot see it; you can only feel it; so to know poverty you have to go through it.
We all need to be reminded that sustainable social development can be achieved only by building from the bottom up, not the top down.
In a lengthy final document, the summit reflected concerns that had come to light or assumed greater prominence since the 1995 social summit in Copenhagen. In reaction to the Asian financial crisis, measures were recommended to assist in warning about, preventing and mitigating the effects of sudden international financial flows. Steps were called for to help countries in transition to market economies preserve and enhance basic social services and link up with global markets.
The final document, completed after the session was prolonged into a Saturday meeting, urged the reallocation of resources from excessive military expenditures to social programmes in response to the debt problems of middle-income developing countries. It also urged efforts to refrain from using food and medicine as tools for political pressure.
The conclusions in the outcomes document run to nearly 100 pages. I cannot discuss all the points, but they are on the website, which is www.un.org/socialsummit. The document consists of three parts. Part one contains a ringing political declaration on the centrality of more equitable, socially just and people-centred societies. Part two is an update on the five years since Copenhagen, and part three contains 160 paragraphs on new initiatives in the 10 Copenhagen commitments.

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The 10 commitments were to create an enabling environment for social development; to eradicate poverty; to promote full employment; to promote social integration; to promote full respect for human dignity and ensure that equity and equality are fulfilled; to provide education and access to primary health care for all; to accelerate development within Africa and the least developed countries; to ensure structural adjustment programmes to include social development goals; to increase resources; and to promote cooperation to deliver social development. I have paraphrased what is said more eloquently in the outcomes document.
What does the Minister think about the new initiatives? Commitment one is to enhance partnerships with business, trade unions and civil society at a national level in support of the goals of the summit. How do the Government plan to enhance such partnerships? Commitment three is to promote the goal of full employment. I am pleased that the Minister, who was present at the conference, announced that the Government will support the convening of a world employment forum by the International Labour Organisation in 2001, and that they have now ratified all the core ILO conventions, including ILO convention 182 on banning the worst forms of child labour. Well done. Can that be publicised, especially in terms of the ethical trading initiative? I have read nothing of it in the press. While I deplore overspinning, the matter has been underspun.
Commitment four is to promote social integration. Will the Government
facilitate the contribution of civil society organisations to relevant international forums?
That is a quotation from the document. It was disappointing that the United Kingdom delegation did not include civil society. The Trades Union Congress and NGOs asked to participate in the delegation, but apparently were too late.
Can it be a basic rule for all United Nations conferences that standard invitations go to business, trade unions and non-governmental organisations, which then nominate at least one representative to the delegation? This time, the UK delegation had none. Having said that, I thank the officials and the Minister for the courtesy that they extended to the representatives of NGOs who separately attended the conference.
Commitment five concerns equality and equity between women and men, and it reiterates a call for the gender mainstreaming of all social development policies. That has recently been dealt with in detail at the five-year review of the World Conference on Women, Beijing plus five, which was held in June. The document also calls on Governments to
consider signing and ratifying the optional protocol to the convention on the elimination of all forms of discrimination against women.
The UK Government have fought hard for the optional protocol at international level, so when will Ministers sign and ratify it? In promoting social integration, will the Government support the Second World Assembly on Ageing, which will be held in Spain in 2002?
Commitment six concerns education for all. Following the World Education Forum in Dakar, do the Government commit to their part in the $8 billion
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additional support for increased development assistance and debt relief for education and health care for all? A successful side meeting of the World Trade Organisation on intellectual property rights took place at the same time as the social summit. What actions do the Government intend on public-private partnerships to invest in research aimed at finding affordable remedies for diseases that especially afflict people in developing countries? That is a new commitment over and above that relating to HIV/AIDS.
In relation to commitment seven to accelerate development in Africa and the least developed countries, will the Government comment on the commitment to raise Overseas Development Administration funding from 0.15 per cent. to 0.2 per cent. of GNP for those countries? It was good that Ireland promised to be the sixth country to reach the overall UN aid target of 0.7 per cent. of GNP, and announced an immediate increase in order to reach that goal. I hope that the Government's comprehensive spending review will show similar commitment. It is equally important to ensure that ODA funding goes to the least developed countries. How are we measuring up to the 0.2 per cent. target for least developed countries? Are the Government working on the 20:20 initiative, in co-operation with civil society, to ensure access to basic social services for all in the countries of the world? I do not expect the Minister to have answers to all of those questions available now, but I look forward to his written replies.
Commitment nine would significantly increase the resources allocated to social development. I would like the Minister to respond in relation to that today. He may have a copy of my letter to the Financial Times of 6 July and my early-day motion 920 on 3 July, in which I celebrated moves at the summit to investigate the Tobin tax. The alternative social summit, which was held by NGOs the week before, concentrated on debt relief and the Tobin tax. Adjournment debates on the matter have been held in this Chamber this year, and parliamentarians all over the world are supporting the investigation of a Tobin tax.
The Canadian delegation took the lead at the summit by tabling a call for such an investigation, while the EU delegation, including the UK, supported it. Paragraph 111 emerged at the end of the negotiations. It states that the Governments agree to conduct
a rigorous analysis of advantages, disadvantages and other implications of proposals for developing new and imaginative sources of funding, both public and private, for dedication to social development and poverty eradication programmes.
Therefore, a study will be authorised, without dissent by the member countries of the UN, into a currency transfer tax—the Tobin tax—and other potential sources of revenue for social development. The form of words in paragraph 111 was agreed as a compromise that will enable a broader study. The Canadian delegate spoke at the final plenary, partly to say explicitly that the intention behind the paragraph is that a study of the currency transfer tax should be made.
Clearly, that could be the start of more effective global public management of the international financial system. Given that the UK, through the EU, supported an investigation of the currency transfer tax, what does the Minister believe is the first step in such an investigation? What do the Government intend to do?

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Will they work with the EU on proposals for the high-level intergovernmental event on financing for development, which will be held in 2001? Could a paper be tabled before Parliament before that event to enable a full parliamentary debate to take place? Do the Government intend to consult with financial institutions and academics—and NGOs, especially the Association pour la Taxation des Transactions Financières pour l'Aide aux Citoyens and War on Want—on the advantages, disadvantages and other implications of a Tobin tax?
The Government may want to comment on other proposals under commitment nine—international co-operation in tax matters; methods for dividing the liability of multinational corporations to pay taxes on profits among the various jurisdictions in which they operate; ways to combat the use of tax shelters and tax havens; mechanisms to stabilise commodity export earnings; ways to prevent tax avoidance and promoting treaties for avoiding double taxation; exploring ways and means to increase and widen flows of public and private financial resources to developing countries; and, promoting the micro and small enterprise sector. Another crucial mechanism is, of course, the heavily indebted poor countries initiative, as well as achieving the important goal of allocating 0.7 per cent. of GDP to the ODA.
I have dealt with new sources of finance at length because developing countries feel betrayed in that regard. Few countries have equalled the UK Government's real terms increase of 29 per cent. in ODA funding since 1997. Neither debt relief, aid nor trade is enough. A global taxation arrangement is necessary to provide the resources that will ensure that poverty is eradicated around the globe.
Commitment 10, which deals with promoting a partnership framework for delivering social development, lacks clarity on the way forward. Can the Minister tell us about any proposals tabled at the Economic and Social Committee of the European Union for following up this summit and the other plus five summits? The summits need to be drawn together, at least to ensure co-ordination of resources for agreed targets. The social summit covered the full range of world interests, with the exception of the environment. Does the Minister consider that there is a case ahead of Rio plus 10 and the 2002 summit for bringing together the Commissions on Social Development and Sustainable Development, so that their yearly focus is together rather than separate?
The outcome under paragraph 126 of the document is to
invite parliamentarians to continue to adopt legislative measures and to expand awareness raising, necessary for implementing the commitments of the World Summit for Social Developments and the further initiatives contained in the present document, and encourage the contribution of the IPU in this effect.
At the summit, the Inter-Parliamentary Union held a well-attended event at the ILO to review social security provisions throughout the world. Parliamentarians for Global Action held a separate one-day conference at the World Economic Forum on Social Development, with the noble Lord Paul of Marylebone as a key speaker. I understand that there is an intention to hold a joint
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World Trade Organisation and Inter-Parliamentary Union conference in February 2001 to examine the basis of a new development round. Clearly, parliamentarians throughout the world wish to support Governments who want to ensure that social development succeeds for all the people. We are the full representatives of civil society through the ballot box and we know that our voters want action. What action do the Government intend to take in response to the conclusions of the World Summit for Social Development?
12.45 pm
The Minister of State, Foreign and Commonwealth Affairs (Mr. Peter Hain): My hon. Friend the Member for Putney (Mr. Colman) is an excellent parliamentarian. I know that, because he is my Member of Parliament. I thank him for providing me with the opportunity to discuss the follow-up to the World Summit for Social Development. I welcome the special expertise that he has brought to the debate and the energetic way in which he is following matters through, which is extremely helpful to both the House and the Government. He has identified the importance of such issues.
As the Foreign and Commonwealth Office is the lead Department in the process, I have pleasure in replying to the debate. My right hon. Friend the Minister for Employment, Welfare to Work and Equal Opportunities addressed last month's special session of the UN General Assembly entitled "The World Summit for Social Development and Beyond: achieving social development for all in a globalising world". She emphasised the Government's determination to ensure that the wealth and opportunities created by globalisation are used to reduce global poverty.
Before turning to some of my hon. Friend's specific informed questions, I shall comment on the Copenhagen process more generally. The declaration and programme of action agreed at the World Summit for Social Development in Copenhagen in 1995 provided a clear framework for all countries to develop policies to promote social justice and to combat poverty. For the first time, agreement was reached on the importance of economic and social policies being mutually reinforcing. Economic growth, opportunity and fairness go hand in hand. An economy in which a significant proportion of the population is unable to fulfil its potential will be poorer and less productive. Stable and sustainable pro-poor economic growth and sound social policy are crucial in combating poverty.
We have worked hard to promote economic growth and social justice, both at home and overseas, in line with the commitments made in Copenhagen. Our ambition is for everyone in all countries to have the opportunity to make a contribution, to work, to learn, to enjoy the benefits of economic prosperity and to participate in community life. Although British society is rich in its diversity, not all of our citizens have always had the opportunity to maximise their potential and contribute to society. Economic growth, together with effective policies to help people into work, make work pay and raise skills through lifelong learning, have formed the basis of the Government's strategy to further social development at home.
Last September, in a document "Opportunity for All", we committed ourselves to increasing opportunity, tackling the root causes of poverty and investing in

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individuals and communities. We also identified a range of indicators against which progress could be monitored on income, employment, education, health, housing, pension provision and fear of crime. Our strategy is producing encouraging results. The number of those in employment has increased by more than 900,000 since the general election and long-term unemployment has been cut by half since May 1997. The proportion of children in workless households has fallen from 20 per cent. in spring 1994 to 17.6 per cent. in spring 1999. Furthermore, budget measures will lift 1.2 million children out of poverty by next year.
The Government have also demonstrated their commitment to promoting the goal of full employment agreed in Copenhagen five years ago. Our approach can be summarised as, "Work for those who can, security for those who cannot." Our policies and initiatives were designed to move people from dependence to independence. The new deal programme is the United Kingdom's largest ever investment in work. At its heart lies the simple proposition that the vast majority of workless people have the potential to earn their own living but, in the early days of going back to work or becoming self-employed, both employee and employer need positive help. The acquisition of new skills is essential for preventing poverty and social exclusion. For those out of work, the new deal provides access to a wider range of job opportunities and a route back to employment; for those in work, it provides a way of meeting changing job demands, finding greater job security and improving incomes.
The achievements of the new deal have been impressive. It provides intensive and substantial support for young people, the long-term unemployed, lone parents, people with disabilities, older workers and partners of unemployed people. Unemployment is much lower as a result of the new deal and employment is at record levels, with 27.78 million people now in work in the United Kingdom. That figure represents 74.3 per cent. of the working age population.
The Government have a legislative framework to promote social inclusion and increased opportunity for all. The Human Rights Act 1998 incorporates fundamental rights and freedoms in the European convention on human rights into United Kingdom law. That safeguards our basic liberties in law as enforceable rights and will help build a culture of respect for rights and responsibilities throughout the country. The Crime and Disorder Act 1998 introduced new statutory offences for racist crime and placed a new statutory responsibility on local authorities and the police to reduce crime and disorder. Those Acts, and part IV of the Family Law Act 1996, are also important in strengthening measures to prevent violence against women.
In our international development work, to which my hon. Friend referred, the eradication of poverty forms our central goal. There is no doubt that enormous advances in poverty reduction are possible over the next few decades. There are still massive obstacles to overcome but, with increased political will across Governments and civil society worldwide, the target of reducing by half the number of people living in extreme poverty by 2015 can be met.
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The Government recognise that progress depends, first and foremost, on the efforts of developing countries themselves, but they can only succeed if the international community provides effective support. We have worked hard to mobilise the international community into purposeful, meaningful action, not least by continuing to push for debt relief focused on poverty reduction in heavily indebted poor countries. We are also working for a more collaborative and harmonised approach among donors, coupled with genuine ownership of the process by recipient countries.
Britain is committed to working for the worldwide observance of labour standards to uplift the poorest members of society. In June 1998, member states of the ILO unanimously adopted a declaration on fundamental principles and rights at work, which covers freedom of association, collective bargaining, the elimination of discrimination and the abolition of forced and child labour. By adopting the ILO declaration, countries reaffirm their obligations to respect, promote and realise those principles.
As I have outlined, Britain has made substantial progress in furthering social development at national and international level since the world summit five years ago. The aim of those gathered in Geneva last month was not merely to assess the progress made in meeting the Copenhagen commitments; Governments agreed that it was important to identify new initiatives that take account of developments over the past five years and enable a more effective implementation of the Copenhagen declaration and programme of action, as my hon. Friend has called for.
In her statement to the UN General Assembly, my right hon. Friend the Minister for Employment, Welfare to Work and Equal Opportunities emphasised that a key objective for Britain at the special session was the need to define principles to underpin social policy. National ownership is crucial for the development of any effective social policy, and it is imperative to take full account of regional and national differences. For that reason, the United Nations is uniquely placed to lead an exploration of the key aspects of social policy that are essential for economic development.
I am pleased to inform the House that agreement was reached in Geneva that the UN's commission for social development should set in hand an exchange of experience and best practices involving the UN itself, its specialised agencies and the international financial institutions. We look forward to seeing the results of that exercise, initiated by the United Kingdom, in the months to come. The special session to follow up the world summit for social development also reached consensus on several other new initiatives to enhance implementation of the Copenhagen commitment. UN member states reiterated their commitment to the target of reducing by half the proportion of people living in extreme poverty, and committed themselves to a target date of 2015.
In Geneva last month, UN member states also reached agreement on a strong reference to ratification of the core ILO conventions, which are essential instruments for protecting workers' rights, increasing social dialogue and ensuring respect for individuals. The General Assembly recognised the important part that

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businesses play in social development, and the need to encourage the private sector, as well as the public sector, to exercise its social responsibilities.
My hon. Friend asked several interesting questions, to which the Government will provide written responses in due course, and I shall arrange for those responses to be placed in the Library of the House of Commons. However, I shall deal with four of his points now. He mentioned a currency transaction, or Tobin, tax. I have seen his early-day motion, 920, and his letter to the Financial Times. The special session agreed to analyse proposals for developing new and innovative sources of funding for social development, and one of those proposals is likely to be a tax on international currency transactions.
The Government believe that a so-called Tobin tax could have several serious drawbacks. In particular, it might introduce economic distortions into the international financial system, and it is unlikely to be effective in a crisis. It would also be practically impossible to achieve global coverage, and there would be huge scope for avoidance. Unless those drawbacks can be overcome, a tax on currency transactions will not be a viable source of funds for social development. Nevertheless, it is an important proposal, and the Government will be interested to see the results of an analysis of such proposals in the months ahead.
Mr. Colman: As London is the world financial centre, rather than waiting for conclusions, might the Government be willing to take the initiative for such an investigation, examining both disadvantages and advantages, much as we have led on the HIPC initiative?
Mr. Hain: I shall obviously consult ministerial colleagues who have direct responsibility for the matter, and I shall ensure that my hon. Friend's request is brought to their attention. We recognise that the issue must be examined carefully to ascertain the progress that can be made. I welcome the energy that he has contributed to the debate.
I agree with my hon. Friend about the crucial importance of international action on HIV/AIDS. The special session defined more clearly the contribution of
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health to social development, and identified the fight against HIV/AIDS and other major pandemics as central priorities for action in Africa and the least developed world. An appeal has been made to the private sector to develop medicines at affordable prices for the worst affected developing countries. A notable advance in that respect is the special session's recognition of the importance of supporting exemptions to intellectual property rights, giving due regard to international laws and agreements, in order to promote access to essential medicines that can save lives.
I strongly agree with my hon. Friend about the need to ensure better co-ordination of follow-up processes to global conferences in the 1990s. The UK, with our EU partners, is working towards that end during the current session of the UN's Economic and Social Council.
I acknowledge the valuable role played by my hon. Friend and members of the private sector and civil society in Britain through participation in the international symposium organised by the Swiss Government and exchanges with the British delegation before and during the Geneva meeting. We were offered valuable support, direction and encouragement in the negotiating process. We must now continue to work together to ensure that the commitments made in Copenhagen and renewed and developed in Geneva are pursued with vigour in the years ahead. Only then can we genuinely claim to have achieved the goal of social development for all in a globalising world.
I note the points that my hon. Friend firmly and legitimately made about participation of NGOs in Government delegations. We shall examine carefully the composition of future delegations, because we as a Government are more open to NGOs and civil society in general than any of our predecessors. We have, for example, NGO secondees working in the Foreign Office, and our own staff have been seconded to work in several NGOs that have Foreign Office interests. We want an open-door policy towards NGOs, and we shall consult on exactly how that can be accommodated in the context of international conferences and the composition of delegations. Regardless of the final outcome, I give a commitment to consultation with NGOs.
It being One o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.