Westminster Hall Sitting of 7 June 2000

Preamble
[MR. MICHAEL J. MARTIN in the Chair]

Sri Lanka
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Pope.]
9.30 am
Mr. Simon Hughes: I am very glad to have the opportunity of a debate on the civil war in Sri Lanka, although I am sad that we need to have such a debate. I am grateful to the Minister for his attendance. Coincidentally, he and I were last together at the lunch given by the Foreign and Commonwealth Office for the high commissioner of Sri Lanka before his departure, so we were able to speak together to people with an interest just a few days ago.
I should like to declare my interest. It starts with nostalgia: when I was a little boy, the story that I was told very often was how my mother gave up the chance of an appointment to be on the British forces staff in Kandy to marry my dad. I think that the ultimatum my dad gave her was "there or me". My mother always said that she regretted, at least up to 49 per cent., making the choice to marry my dad and not go to what was then Ceylon. But from then on, my family always had an interest and an aspiration to go there.
Sri Lanka became independent just over 50 years ago and was recognised as one of the world's beautiful and historic countries. We in Britain increasingly felt that we had strong links with Sri Lanka. I retained my nostalgic interest until I moved to London and gradually met more and more people from all the different communities in Sri Lanka. I got to know their character and their contribution here, as well as the deep sense of despair and desperation of many about what was going on at home. That led, over the following years, since I have been in the House, to an increasing interest and a desire to do something to help the process of peacemaking in Sri Lanka.
At the beginning of last year, I went to Sri Lanka for the first time. I arrived on new year's day with Simon Hunt, who works with me here, and with a Sri Lankan Sinhala party colleague of ours, Dai Liyanage, who has recently finished his year as mayor of Medway. The visit was also made with the encouragement of the Tamil community in this country, whose headquarters in London had moved into my constituency. I have been often to Eelam house and talked to people there.
So I come to this debate with historical interest, the experience of having been to Sri Lanka and increasing concern that the country, which has huge opportunity and possibility, is frustrated at nearly every turn by the civil war which has effectively been going on, unbroken, since 1983. That in many ways handicaps a country that would naturally be so outgoing, effervescent, fun-loving and enriching—and I am not just talking about the cricket. I should add that I have enjoyed nearly all the recent Sri Lankan contributions to cricket, although the
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last match that I witnessed, not very far from here, was not a great English success. [Interruption.] The Minister, with at least two partisan interests, no doubt has to split his allegiance somewhat.
The point about cricket may be superficial, but it is representative. The country wants to contribute internationally in all sorts of ways, but often it cannot do so to the full.
At International Development questions the other day, I asked the Secretary of State what her Department's priorities in Sri Lanka were for this financial year. Her answer was this:
Finding a lasting solution to the long-running conflict is the major priority in reducing poverty in Sri Lanka.—[Official Report, 3 May 2000; Vol.349, c.130.]
She sent me the country strategy paper produced by the Department for International Development at the end of last year. This well-written document makes it clear that although poverty exists, there is little "extreme" poverty. It says that groups of extreme poor exist in the conflict zones, but that resolution of the war is the first priority in reducing poverty, and that for future stability, the fundamental causes of chronic conflict in Sri Lanka also need to be addressed. The country, with its huge potential for economic development, is perpetually thwarted by the endemic conflict within its borders.
I should like to give some statistics. The population of Sri Lanka is between 18 million and 19 million people. About three quarters are Sinhala and about 18 per cent. are Tamil. Some 7 per cent. of the population are Muslims, of Moorish extraction, and there are small Burgher, Malay and Veddas communities. The Sinhala community is effectively Buddhist—about 70 per cent. of the population are Buddhist. That is very important—Buddhism is written into the constitution, as pre-eminently important, which I respect. I had helpful and constructive discussions with some Buddhist religious leaders when I was there.
The Tamil community is effectively Hindu—15 per cent. of the population is Hindu. Then, 8 per cent. is Christian, and there is a Muslim population of 8 per cent., too. Sinhala is the predominant language, and Tamil the minority language. Interestingly, the language that is the great link between both communities is English. I was told very clearly by everyone that the development of English in Sri Lanka is a unifying feature and is not perceived as a colonial or ex-colonial contribution at all.
When I was there, I confirmed how much the politics of Sri Lanka is dynastic. Some families have been in power for generations—the current President's mother is still the Prime Minister, for example. That means that there is a determination for the Sinhala to defend the unity of the country, because it is the centre of their world tradition. There is also a desire for independence among many of the Tamils. That is not the universal Tamil view, but there is a huge desire for self-determination, and that will not go away.
As in all other places, we cannot pretend that there are not different communities with their own aspirations which will want to reassert their differences until self-determination is achieved. As a result, there has been, effectively, a continuing attempt by each community to assert its predominance. There is a form of

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proportionality in the election system, but the Government have a pro-Sri Lanka majority and want to preserve the unity of Sri Lanka. They have used the armed forces, in no uncertain terms, to do that.
The Tamil community, some of them through the Liberation Tigers of Tamil Eelam, has grown and, at different dates, has been more or less effective in occupying territory and resisting Government intervention. In effect, it controls much of the northern part of Sri Lanka, especially the Jaffna peninsula—the area in which the Tamils are most concentrated.
The result of that conflict is that both sides are so committed to their own resolution that it is clear that neither will win the conflict outright. The Government will not manage to suppress or eradicate the Tamil freedom fighters—they will not go away. Likewise, the Tamil Eelam Liberation Tigers are unlikely to able to take over and hold, without contradiction or challenge, the Tamil Eelam territory in the north and the east that they espouse. There has to be a way to mediate and accommodate them.
Sri Lankan politicians say that they want to try to achieve peace through their words, but often they act and speak in ways that undermine that exercise. However, I do not seek to cast aspersions on the good faith of politicians. I understand the huge historical baggage that exists and the huge pressure from the communities that people represent. I realise how difficult it must be for the President, for her mother, the former Prime Minister, as for previous Presidents, to deliver a peaceful solution.
My first proposition to the Chamber—especially to the Government—is that we must do more to bring about discussion, negotiation and resolution of this conflict which has taken probably 60,000 lives. For reasons that I shall give, it is almost a forgotten civil war. However, it is a devastating, painful and absolutely awful conflict, with the most horrible casualties. It is the responsibility not only of Sri Lanka, but of the Commonwealth and the international community.
Yesterday, my right hon. and learned Friend the Member for North-East Fife (Mr. Campbell) reminded me that Kofi Annan had said that we must now be more concerned with the sovereignty of the individual in the world than with the sovereignty of the state. We must say to the Sri Lankan Government clearly, but in friendship and support, that the resolution of this conflict is not only for them; the rest of us have a duty and an interest, and should be involved.
That is true not least because many people in the United Kingdom were born in Sri Lanka and have links with that country. According to the last census, about 40,000 permanent residents of the UK were born in Sri Lanka. That number is growing. Furthermore, many people from Sri Lanka seek asylum in this country and many are accepted—although I shall raise a point on that matter later in my speech. My London colleagues, my hon. Friends the Members for Richmond Park (Dr. Tonge) and for Kingston and Surbiton (Mr. Davey), who are in the Chamber, have many Sri Lankans in their constituencies—as do I. Colleagues elsewhere in London and beyond regularly have dealings with Sri Lankan members of our community—both
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Tamil and Sinhalese. They contribute hugely in Britain—in business, medicine, the caring services, local authorities and so on. I pay tribute to that enormous contribution; we value it greatly.
Mrs. Cheryl Gillian: The hon. Gentleman makes a powerful argument that the international community should have an even greater involvement in the internal problems of Sri Lanka. What is his view of the recent calls from the European Parliament for the matter to be brought before the UN Security Council? Is that a helpful intervention? Will it make any contribution to the peace process?
Mr. Hughes: I am grateful to the hon. Lady for her interest. I have a specific proposal to make on that point, but I also note that colleagues in the House are increasingly lending support to a proposal made by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) that a UN peacekeeping force should be sent to Sri Lanka. It is not only the European Parliament, but colleagues in this House, across the party divides, who are asking for something to be done.
The direct answer to the hon. Lady's question is that I welcome the proposal that the UN should take a greater interest. I think that the UN would be ready to do so, were it not for the fact that the Sri Lankan Government have always made it clear that they would not welcome external intervention. That is why I make an alternative proposition.
When my colleagues and I visited Sri Lanka, we were determined to explore the ways in which a peace process could be developed. Before I left, I talked to people who might be players—with the knowledge of the Foreign and Commonwealth Office, the Sri Lankan high commission and the Tamil community in London. Following those discussions, the Norwegians have offered—and been accepted—to lead the facilitation process. They see their role as being at the disposal of the Government and all other parties. They will talk to all parties, but they do not see themselves as the people who will come up with proposals and solutions. I understand that.
Given this position, will the Minister consider what initiatives it might be appropriate for him to take? Would he consider holding consultations with the Norwegian embassy? Could the Commonwealth meet—in some appropriate form—to decide whether to make representations to Sri Lanka? For evident reasons, it may be that the Commonwealth, rather than the UN, is the best mediating body.
There are some additional reasons for that. India has a direct interest—as it always has had—although it is unlikely to want to make another military intervention because of its previous experience. Australia, New Zealand and the south Asian Commonwealth countries have commercial and other interests. Many Sri Lankans work and travel in Australia. There are many good reasons for Commonwealth interest. The highest proportion of Sri Lankans abroad live in Commonwealth countries—not only in the UK, but in Canada, for example.
Will the Government think positively, within the context of the Commonwealth, about supporting the Norwegian initiative and about putting that matter

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higher on the agenda? Before the debate, my hon. Friend the Member for Richmond Park and I were discussing the fact that we need to move from what seems to be almost a passive position to one that is more proactive. After nearly 20 years of civil war—there is no point in beating about the bush, it is a civil war—we can no longer say that the matter is one on which only the Sri Lankan Government can set the ground rules.
My assistant, Simon Hunt, Councillor Liyanage and I met various people in Sri Lanka. The enormity of the conflict was brought home further to us when, after our return, we learned that two of those people whom we met were later assassinated. One was killed in the very car in which we had travelled with him a few months before. Those people—from different perspectives—were trying to do something to bring about the peace process.
In Sri Lanka, people live in perpetual fear of assassination if they are involved in the political process. It is not only in the north, the Vanni or the Jaffna peninsula that those matters impose In Colombo, the police and armed forces are everywhere. In effect, the city and the country are under a martial law regime, because the Government consider that that is necessary. When an assassination attempt was made on the President just before the election, thousands of people were rounded up and arrested. Thousands of people are held in detention. That is the sort of place it is at present.
I also want to put to the Minister a proposal about humanitarian issues which lies in the area of responsibility of my hon. Friend the Member for Richmond Park, the hon. Member for Chesham and Amersham (Mrs. Gillan) and others. The areas of conflict in Sri Lanka are almost unique in that they do not benefit from the humanitarian support that other places would receive in similar circumstances. The north of Sri Lanka is effectively a no-go area. The Red Cross, Médecins Sans Frontieres and other agencies have, I understand, almost no presence there because the Government of Sri Lanka will not allow many of them in. They will not allow people in because they regard their presence as likely to prevent continuing military action. We cannot tolerate a position in which relief agencies are unable to go in, evaluate what is needed and take action.
I qualify my remarks because information is difficult to come by, but disease is apparently rife, many injured people are apparently not being treated and supplies, such as penicillin, that would normally be allowed in are sometimes not allowed in because it is felt that they might assist the Tamil freedom fighters. That is not acceptable. It is also not acceptable that the civilians who are not involved in the conflict are not allowed to leave. They are effectively being held as prisoners of the civil war. I want us to consider how better the international community can ensure that the humanitarian aid and support that is seeded reaches the areas of Sri Lanka in which there is conflict.
Mr. Edward Davey: Is my hon. Friend aware that food aid was used as a weapon of war against refugees in the Vanni? Will he tell us how
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he thinks the British Government could put pressure on the Government in Colombo to ensure that such action never happens again?
Mr. Hughes: My hon. Friend makes another point in the litany of points about what is being used as a method of war. It must be possible for the international community to exert pressure. I am sure that the Minister and his colleagues will be sympathetic to the idea of negotiating so that we can ensure that food, water and drugs, for example to prevent malaria, get to where they are needed. When people need hospital treatment that cannot be provided, they should be taken out of the region. I shall not go through the litany of the United Nations obligations, but I know that many of them seem to be broken or are not being upheld.
I gather—again I cannot say it categorically—that the number of people in Sri Lanka who have disappeared and cannot be traced is the second highest in the world. According to human rights agencies, it is second only to Iraq.
A linked issue is that the press has been censored in a way that has not happened in Sierra Leone or Kosovo to the same extent. There has been a much more effective ban that has prevented information from coming out.
In that context, will the Minister answer a further point? Licences have been granted to arms exports to Sri Lanka. The normal rule is that such arms must not be used for the purposes of internal repression. How do we know that they are not being used for repression if no one can get into the areas of conflict to see what is happening? We cannot be certain that they are not being used for that purpose. I am not criticising the Government precisely or saying that I know for certain that the arms are being used for repression, but information from around the world and not just from Tamil sources confirms that foreign arms are being supplied. For example, it is not coincidental that Sri Lanka has recently restored diplomatic relations with Israel. Will the Minister give us a specific statement on past, present or future supplies of military equipment and hardware? What mechanisms are in place to ensure that no abuse of that equipment takes place?
Mrs. Gillan: The hon. Gentleman mentioned the exchange that he had with the Secretary of State for International Development. He said that he was pleased with her response and with the position paper that was sent to him. He raised with the right hon. Lady the question of arms sales to Sri Lanka and she said that she would write to him. Has he received a reply and will he tell us what she said on the subject?
Mr. Hughes: I do not think that I have yet received the reply, but I will copy it to colleagues when I do. I am a bit circumspect because the reply may have arrived, but I have not seen it. However, I raised the matter some time ago, so I will check to see whether any reply has been received and pursue the matter with the Department. It is important that we are not wittingly or unwittingly involved in anything that adds to what is already a desperate situation, where there are mass graves, many people are unable to leave and human shields have been used.
I appreciate that my next point relates to a matter that the Minister should pass on to his colleagues in other Departments. One of the consequences of the civil war

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is the number of people who have left Sri Lanka to come to this country to seek asylum. Because of the work, in particular, of Tony Paterson, who is a specialist in immigration cases, I want to express concern about the way in which this country has handled those cases.
According to last year's Home Office statistical bulletin, the Home Office granted asylum to 3 per cent. of Sri Lankan asylum seekers on initial consideration and 1 per cent. more were granted exceptional leave to remain. The applications of the other 96 per cent. were refused outright. However, after hearings by the adjudicators, 48 per cent. of those who appealed had their appeals allowed. Therefore, once the adjudicators considered the cases, nearly half of the applicants were allowed into this country when only 4 per cent. were allowed in initially. Those, I believe, are the worst figures for the ratio between the initial decision and appeal for the applicants from any country in the world. Someone must examine what is happening.
I believe that the people who take the decisions do not properly use the information available to the country assessment civil servants. There is no joined-up government between the caseworkers and the information. There is a further serious point. People receive a standard reply when their application is turned down. It says:
Regarding any ill-treatment which you may have sustained whilst in detention, the Secretary of State is aware of reports of continuing abuses of human rights by members of the Security Forces in Sri Lanka and concerns about the impunity of those responsible. However, he understands that the government of Sri Lanka, and in particular, the President herself, are firmly resolved to improve the country's human rights record … human rights training programmes for the Security Forces have been set up … the Government has undertaken to prosecute those responsible for human rights violations … the Secretary of State is satisfied that the Government has taken genuine steps to address this issue.
Our officials appear regularly to conclude that it is safe for someone from Jaffna to return to Sri Lanka, because he can live in Colombo. I have been to Colombo and life is not safe or secure there. Is it acceptable to say to a Sri Lankan from Jaffna that it is fine to return because he or she can live in Kandy? As I suggested to my right hon. and learned Friend the Member for North-East Fife, that is like telling him that his asylum application has been dealt with and, even though we know that he cannot return to North-East Fife, the Scilly islands are a nice place to live, and he could go there. It is not acceptable to tell people to go to the other end of a country where they have no family or roots and where they are not part of the community. Will the Minister ask the Home Office to undertake an inquiry into the processing of the asylum applications of people from Sri Lanka and to make sure that those who consider the cases do not give the fatuous and unacceptable reply that it is safe for them to return to a place that is less risky than the one from which they came or to one where, in theory, the Government are in control?
Other colleagues want to contribute. We do not have enough debates about Sri Lanka, which is a friend and Commonwealth country, so I am glad to be having this one. The Sri Lankan Government must sometimes think that those of us who get exercised about such issues are all allied to the Tamil cause, but I hold no exclusive brief
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for either community. However, I am sympathetic to the idea that there must be a better process for self-determination and that there must be a solution that gives the much greater autonomy and self-government sought by the Tamil people. The Government in Sri Lanka have not delivered that for 50 years.
We cannot stand aside and watch as tens of thousands more people are killed and injured. We have a responsibility to Sri Lankan residents in this country but, more importantly, we have a responsibility to a poor country which is in need of international community support and which should not have a terrible drain on its own resources. I hope that there can be an initiative that urgently will bring the parties to the table. There are difficulties every time elections loom—indeed, a parliamentary election looms later this year and political tensions mount. However, I hope that another peacemaking initiative can be made as soon as is humanly possible and that all parties in Sri Lanka understand that that is not just their responsibility. The rest of us have a responsibility, and the Sri Lankans are responsible to the rest of us for ensuring that peace, not more years of conflict, is brought to that beautiful country.
10.2 am
Mr. Edward Davey: I pay tribute to my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) for securing this debate and for his tireless work in trying to bring about peace in Sri Lanka. He undertook such work during his recent visit, as well as before and since. I also pay tribute to the remarkably balanced and fair way in which he presented his case.
I shall try to follow my hon. Friend's example. I have an interest in the issue following a visit by some of my constituents to one of my advice sessions. To my discredit, I knew little of what was going on in Sri Lanka before their visit. They told me about the tragedy taking place in that lovely island and talked me through the experiences of their families. One family in my constituency has lost loved ones in Sri Lanka: some have disappeared and some have been murdered.
That is the background to my interest in the issue, which also informs my approach to it. I therefore apologise if my argument is slightly less balanced than that of my hon. Friend. However, I agree with many of his points, especially his plea to the Government to take a more active role in the peace process. He is right to suggest that the Norwegian initiative is the way forward. It has the greatest chance of success and I believe that the Government support it. Will the Minister tell us how the Government intend to give that initiative active backing?
My hon. Friend said that the election in August may create difficulties. However, it also creates opportunities, as outside sources could give parties contesting the election an indication that a commitment to the peace process would be in their interest. The previous Government did a good job in ensuring that all parties contesting elections signed up to a peace process. The constitutional package put forward by the Kumaratunga Government in the approach to the August elections may not be liked by some in the Jaffna peninsula, but they are trying to get wider support for it,

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especially from the United National Party, which is the main opposition party. I hope that, in becoming more active in the peace process, our Government will push that further and suggest that more parties should try to commit themselves to that package prior to the election. That may be difficult, as nothing is easy in any peace process. However, such measures could underpin the Sri Lankan peace process, although I accept that the Government may have others in mind.
My hon. Friend referred to export licences for arms, which is an area in which the Government need to be rather less active. It is unfortunate that some export licences have been granted since the election. Will the Minister assure us that his Government will grant no more arms export licences? Indeed, I hope that he will go further than that. My hon. Friend spoke about the recent amazing thaw in relations between the Colombo Government and Israel, and explained how that is tied up with the purchase of jet aircraft and other arms supplies. The defence budget in Sri Lanka is now projected to rise to 6 per cent. of gross domestic product, which dwarves the amount spent on health and education. That extra money will go towards buying jets from Israel. Has the Minister—or his colleagues—had discussions with representatives of the Israeli Government or, indeed, of the American Government to prevent such escalation? A large, expensive introduction of new arms cannot be in the interests of peace.
My hon. Friend spoke about the press and raised the media embargoes sometimes imposed by the Colombo Government. We are told that those embargoes have been lifted recently: we shall wait and see. I wish to encourage the Colombo Government to remove them permanently and ensure that the international community can report events there fully so that we can monitor on the ground whether the Sri Lankan Government are meeting their United Nations and international obligations on aid, medical supplies and so on.
We cannot lay the lack of coverage of the dispute only at the door of the Colombo Government. The wider media are to blame, as they have stepped back from reporting it and have not tried hard enough to get to the truth. Of course, there are difficulties, but, in other international conflicts, certain broadcasting stations, channels and other media outlets have tried hard to get to the truth. However, they are not so willing to do so in this area. It is incumbent on all media outlets, such as the BBC, CNN and others, to ensure that the terrible tragedy of the civil war is exposed to an international spotlight so that it moves up the political agenda. In many ways, the media's role is more important than that which we are playing here. If they gave the conflict greater coverage and it became a more important priority for the Foreign Office, that might create a greater sense of activism in the Government.
I conclude on one point that is directly relevant to my constituents. If Jaffna falls, as is possible in the next few weeks, there is real concern that there will be a backlash against the members of the Tamil minority living in the rest of the island. We know that 55 per cent. of Tamils in Sri Lanka live in the Sinhala south. It is to the credit of the Colombo Government that, despite the war that is going on there and despite suicide bombers, for example, such a backlash has not been allowed to
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happen so far. I am not saying that there are not abuses of human rights and I am not saying that it is easy to be a Tamil living in Colombo, but there has not been a major ethnic backlash.
If Jaffna falls, the situation will be much more difficult. The Colombo Government must prepare for that possibility, and the British Government must give their support to them in that respect. If Jaffna falls in the next few days, we must ensure that Tamil citizens living in the rest of the island are not attacked in any way. We must ensure also that their civil rights are fully protected by the Colombo Government.
I say that passionately on behalf of my constituents. Many people living in Kingston and Surbiton have loved ones who are living in Colombo or in the rest of Sri Lanka. They expect the British Government to make representations in the strongest way possible. They expect also that the Colombo Government will respect the rights of their relatives.
10.11 am
Mr. Jeremy Corbyn: I apologise for missing the first few minutes of the speech of the hon. Member for Southwark, North and Bermondsey (Mr. Hughes), and I thank him for securing the debate. Like other Members, I have some constituents who come from Sri Lanka. Over the years, I have been involved in many asylum cases, divided family cases and cases of missing persons from Sri Lanka.
It is difficult for people who have been resident in the United Kingdom all their lives with families who have been so resident to understand how painful it is when a member of one's family simply disappears and there is no possibility of locating him or her because there is no Red Cross access. Indeed, there is no way of knowing what has happened. It is assumed that the person is dead, but one can never be quite sure. That constant pain that goes through the lives of many people, mainly from the Tamil community, throughout the world. There is an enormous Tamil diaspora in all parts of the world. Those concerned are often high achievers who are making an enormous contributions to their communities here, throughout Europe, in the United States, Singapore and many other places.
We should recognise that there is a strong human feeling, both for people in this country and, obviously, for those in Sri Lanka. I became involved in the issue in 1983 when I was first elected to this place. Riots took place in Colombo during the European summer. In a sense, the riots were a continuation of the civil strife between the Sinhala and Tamil communities that had gone on before, particularly from 1958 onwards. I went to Sri Lanka in 1984, shortly after the 1983 riots. I will never forget the sight of many Tamil people holed up in the Hindu college in Colombo, which was the only safe place for them. If ever there were internal refugees, they were in that category. There are many more internal refugees in Sri Lanka.
There is not time this morning to go into the full history of everything that has ever happened in Sri Lanka, but clearly there was manipulation by colonial Governments in the past between the Tamil and Sinhala communities. That was fairly normal in most British colonies throughout the world. It was a method of

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government. Tamil people on tea estates in central Sri Lanka were treated appallingly. There has been systematic discrimination against certain people, particularly Tamil people, for a long time. That background has led to the current crisis.
I have spent hours in discussions with people from the Sinhala community and from the Sri Lankan Government. I have also had discussions with representatives of the Liberation Tigers of Tamil Eelam and other Tamil groups, especially in Geneva last August when I was at the United Nations human rights session. In a sense, one can understand the strong feelings that both sides express. The national pride that is exemplified in many of the statements made by the Sri Lankan Government is understandable. They do not want foreign interference or outside influences. They say that they will sort the issue out. Also involved is the integrity of Sri Lanka. Issues of national self-determination quickly come to the fore.
When talking to the LTTE and other Tamil groups, I hear them express feelings of injustice and discrimination. Against that background, there is the sheer brutality of the war. The hon. Member for Southwark, North and Bermondsey talked about roughly 60,000 being dead. I have no reason to dispute that figure. I do not know how accurate it is any more than the hon. Gentleman does, but a massive humanitarian disaster has happened throughout Sri Lanka. There have been suicide bombers and assassinations. Many of us know people who have died as a result of their involvement in the conflict and their desire for peace. I think of the huge efforts that Neelean Tiruchelvam made to bring about peace, for which he was assassinated.
We must reflect on the military methods that have been used. Since the early 1980s, when the conflict reached a new intensity, arms sales to Sri Lanka have been taking place. Many arms brokers have made a great deal of money out of the conflict. The latest delivery of Israeli KFIR planes to Sri Lanka means that the Sri Lankan air force will be able to undertake high-level bombing of Tamil positions. It will be able to fly above the anti-aircraft positions that the LTTE holds. As far as I am aware, the LTTE does not have any air cover.
We are either in a situation of turning the corner and bringing about a ceasefire and a peaceful solution to the issue, or we are into a fight to the death. Many of the soldiers in the Sri Lankan army are deeply demoralised by the process of the war and by what has gone on. Having lost brothers and families in the war, they have little inclination to continue. They will either withdraw from the Jaffna peninsula in almost the style of the USA from Saigon, or there will be a fight to the death, in which event air cover will be used and there will be heavy bombardment of many Tamil positions. As the hon. Member for Kingston and Surbiton (Mr. Davey) said, the majority of Tamil people do not live on the Jaffna peninsula or in the north-east area; they live in the rest of the country. In that context, one fears for the future.
There is enormous rhetoric from both sides. The LTTE says that it will not negotiate on any terms. It claims that it is on the threshold of a military victory. There is rhetoric from Sinhala chauvinist politicians to
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the effect that they are not prepared to concede anything. The run-up to an election is always a dangerous time. Chauvinist politicians will make the most of alleged military inefficiencies and defeats, for example, and pledge to fight their way through to the death. That is a terrifying prospect.
Parliament—and the UK as a former colonial power—has some responsibility for the antecedents of the conflict. What do we do about it? I understand that the Government have attempted to promote a resolution at the UN. No doubt my hon. Friend the Minister will explain that. I understand also that the Russians and the Chinese were unhappy about such a move and threatened to veto any proposed UN involvement or resolution.
In a sense, we are left with the Norwegian efforts. I applaud and admire Norway for its patience and involvement. It has been a far more effective involvement in many instances than the US will ever muster. The Norwegians proceed quietly, patiently and persistently. High-profile visits from US Under-Secretaries of State are not necessarily an enormous help.
One always has half an eye on the economic interests of the powers that are promoting peace. I suspect that the South Asian Association for Regional Co-operation, of which Sri Lanka is a member, will try in the long term to turn Sri Lanka into a tiger economy. Many US companies see that as a basis for their operations in south Asia. They see it also as the basis for the development of free-market economies in that area. We must be slightly sceptical about US involvement.
Our immediate message must be that we are horrified by the loss of life in Sri Lanka and that we are terrified by the prospect of a fight to the death in the near future, with all that that would mean. We therefore must support what Norway is trying to do. We must insist that the Sri Lankan Government allow all necessary humanitarian aid to go in as quickly as possible. The embargo on medicines going into the Jaffna peninsula is outrageous. By any stretch of the imagination, it is not acceptable. Unfettered access for the International Committee of the Red Cross must be allowed.
Likewise, introducing censorship in the media and political control over methods of expression is no way to defend a democracy. Therefore, the early-day motions that we have tabled on that subject are particularly welcome.
We must say to the British Government and to others, "Please stop all arms supplies to the region." The normal rule is that any arms supplies carrying an end user certificate cannot be used for internal repression. There is no external threat to Sri Lanka. Those weapons are and can be used only as part of the prosecution of the war internally within Sri Lanka, so there is a strong case for an international arms embargo.
There are many signs that the peace talks that Norway is promoting will achieve something and, indeed, that the LTTE is prepared to negotiate, but it must be a peace with honour. There must be an understanding of the integrity—parity of esteem is a good way of describing it—of both communities in bringing about any solution. I look forward to what the Minister has to say in response. I hope that the Government fully support what Norway is trying to

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achieve and will persist with trying to gain some United Nations involvement. However, UN involvement can come only if there is some understanding from both sides.
It may be that, if the Norwegian efforts prove fruitful, there will be a role for the UN in monitoring a ceasefire. It may become involved, but, if we are looking at a war where there will be victors and defeated, I fear for the human rights of minorities on both sides of any devolved Government who emerge in Sri Lanka.
It is a tragedy which the world's media have not covered with anything like the degree of intensity that they should have done. It has cost the lives of tens of thousands of people. Unless the peace talks come to some good end, thousands more young lives will be lost in a war that should never have been started and could be stopped. The way forward must be respect both within and between both communities, and recognition that they will both have to live on the island in future, whatever form of devolved government is set up.
The idea of a single unitary state with no form of devolution is not an option. There must be some agreement on that and some acceptance of the right of self-determination and self-government within the island of Sri Lanka by the Tamil people. That is the only way to bring about a long-term and lasting peace.
10.23 am
Dr. Jenny Tonge: I shall be brief.
I congratulate my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) on raising the debate, which is of great concern to us all. As he says, many of us have Sri Lankans living in our constituencies. Sadly, the war in Sri Lanka is, as he said, a forgotten war. In the world today, there are an awful lot of forgotten civil wars. Some of them—indeed, a lot of them—are hangovers from the old colonial days, when, for administrative ease, two distinct peoples were slapped together and ruled as one. That happened with Sri Lanka, with the Tamils in the north and the Sinhala in the south.
I do not think that there are any natural resources involved; the Minister may be able to tell us. Often, one cause of civil war is that there are natural resources in one spot and everyone is trying to get at them, but I do not think that that is the case in Sri Lanka.
In the early 1980s, Sri Lanka was a success story. Child mortality was falling rapidly. The number of children in education was very high. Literacy rates among adults in Sri Lanka are about 95 per cent. I have no idea what the rates among the children are, but Sri Lanka was not a third-world country, or considered to be a developing country in that sense. However, now, with $850 million a year, which is nearly 8 per cent. of its GDP, being spent on the war effort, education and health spending is tumbling. That will have a serious consequence for future generations of Sri Lankans. Despite that, the war rages on.
There are two main aspects, but the main one is always the supply of arms. In 1998 alone, 56 SIELs—standard individual export licences—for heavy machine guns, projectile launchers and sub-machine guns were granted to Sri Lanka. I must question that again and again when we see what is happening in that country.
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Those must all have been used in some way for internal repression. What does the phrase mean? It is meaningless in this situation, and the Government must provide some clarity. There is no European Union or UN arms embargo on Sri Lanka, so the arms are flowing in there.
On the other hand, the other half of the equation, the Tamils, have become a fearsome guerrilla force built on arms trafficking and child soldiers. They have mastered the art of dealing in the world's small arms markets. They buy from Ukraine, Bulgaria and North Korea, no doubt helped by European arms brokers.
I think that the Minister says that I say this every week—but I now have to say it daily: when will we get some legislation to control the arms trade, and arms brokers in particular, before the world descends into chaos? What has happened to the EU resolutions to combat the excessive accumulation of light weapons? Landmines are used on both sides. What pressure have we put on Sri Lanka to sign the anti-personnel landmine treaty? What steps have we taken to condemn the use of child soldiers in the north? A lot of questions need answering.
We do not know how many tens of thousands of people have lost their lives in the war, but I know that there are 270,000 displaced children out of a total of 1 million displaced people. They are living in extreme poverty. They have nothing. They have had all their documentation taken away. I saw the same thing in Rwanda. People cannot prove who they are now. They are no one. They have no evidence to show where they came from or who they are, and no access to education and health care.
As we have heard, access to those people is difficult because the Sri Lankan Government block access to the north. One of the excuses about the delivery of aid is that the Tamil Tigers will misappropriate the aid and use it for themselves, and it will not go to the people—yet the Department for International Development has spent £7 million per annum in Sri Lanka over the past few years, half of which is spent on relief and half on education and reconciliation. It is channelled through non-governmental organisations, but how is it getting to the north?
What is our policy on development and humanitarian aid in situations of conflict? The situation in Sri Lanka differs from that in Sudan. Aid is not given to the north because it will be misappropriated, but the aid still goes to the south, where the perpetrators of the violence in the north are. I do not understand what the Government policy on aid is. I am puzzled by what they do in many other countries in the world, particularly Sudan. When will we persuade the Sri Lankan Government to help the displaced people and to allow the NGOs in?
The Tamils in south-west London whom I met in February asked me—and I will ask the Minister on their behalf—to call for sanctions on arms sales, more monitoring of human rights in Sri Lanka, relief for the displaced people, and ultimately expulsion from the Commonwealth. I support all those demands except the last. I do not think that that would help. I think that Sri Lanka needs to remain in the Commonwealth and that Commonwealth leaders should put pressure on Sri Lanka to negotiate a settlement. Like many other hon. Members, I urge our Government to take a more

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vigorous and proactive role in the future to achieve some peace in that poor country, through the European Union and the United Nations.
10.29 am
Mrs. Cheryl Gillan: We have had an interesting debate, which was movingly introduced by the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) with a guide not only to his family history, but to his developing awareness of the problems in Sri Lanka. He spoke of the development of Sri Lanka and the questions that he has raised in the House about what is going on in that country. I urge him to press the Secretary of State for International Development for a response to the questions that he posed on 3 May, as I am rather distressed to find that to date he has not received a response.
The hon. Members for Kingston and Surbiton (Mr. Davey), for Islington, North (Mr. Corbyn) and for Richmond Park (Dr. Tonge) made valuable contributions, a common theme of which was a criticism of the press for failing to highlight sufficiently the terrible goings-on in Sri Lanka.
It is therefore with a heavy heart that I tell hon. Members that during the debate, I received a message from outside the Chamber that BBC news and other media have a breaking story from Sri Lanka of a Cabinet Minister and at least nine others who have been assassinated today. The story was posted on the BBC at 9.36 am, and I know that the Minister of State will have news of this sad bombing and assassination. I hope that when he sums up, he will give us the latest information.
I am sure that the entire House sends its commiserations and condolences to the families of those who have been brutally murdered. We do not yet know the details, but we hope that the information will be forthcoming from the Foreign Office before the end of the debate. Today in Sri Lanka it is War Heroes day. One assumes that the bombing is a result of the events held in Colombo by the Government.
The conflict in Sri Lanka is a continuing story of violence and endless war. Like all hon. Members who have spoken this morning, we, too, want a political settlement, an end to the crisis and a return to normality and peace. The international community has rightly been engaged in the search for a solution. Mention has been made of Norway, but India and the United States have also made great efforts to broker a peace—sadly, largely to no avail.
When the Conservatives were in government, we called for a directly negotiated settlement between the Sri Lankan Government and the Tamils. Despite recent visits by the United States Under-Secretary of State, Thomas Pickering, and the Norwegian deputy Foreign Minister, Raymond Johansen, who have reiterated those calls, the military situation has deteriorated rapidly and the offers of mediation by the Indian Government have failed to gain momentum with either side.
Earlier this year the importance of securing a peaceful outcome was highlighted during the visit of my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), the leader of the Conservative party,
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who, as chairman of the International Democrat Union, chaired the executive meeting that was held in Sri Lanka in March. During that meeting, we as fellow Conservatives welcomed the membership of the United National party, which has joined the Asia-Pacific Democrat Union, one of the regional bodies of the IDU. At the same time, the UNP took up observer status at the IDU, which will lead to full membership at the next IDU party leaders conference in 2002.
Sri Lanka has gained an important new link with the international community through the inclusion of the UNP in that group. Now there is yet another opportunity of a forum in which Sri Lankans can pursue the shared values of democracy and freedom, which is essential for the resolution of the conflict.
During the IDU's executive meeting, there was an opportunity for some of the widespread problems experienced during the presidential elections to be aired. That led to a call, which we support, for the placing of independent monitors at an early stage in the forthcoming general election, to which the hon. Member for Southwark, North and Bermondsey referred. I hope that the Minister will support us in asking the Sri Lankan Government to issue early invitations to observers, particularly from the Commonwealth, the Inter-Parliamentary Union and the European Union.
I understand that when the leader of my party was there, nothing served as a more graphic example of the troubles in Sri Lanka than the bomb attack that took place during the IDU meeting. Again, the atrocity resulted in enormous loss of life and a huge number of injuries. Like the bomb today, it demonstrates the need to find a solution to the on-going problem.
The hon. Member for Kingston and Surbiton was generous enough to acknowledge the efforts of the Conservative Government. I single out the efforts made by my hon. Friend the Member for Woodspring (Dr. Fox), when he was a Minister, to promote the bipartisan approach that we seek. I believe that it was called the Liam Fox agreement, and has been promoted in Sri Lanka, not least by the opposition party. Part 1 of the agreement was signed by the Sri Lankan President. I should be interested to hear what steps the Minister and the Foreign Office have taken to build on that agreement.
There will be no winners in the war. It is an impossible war. There must be a negotiated settlement leading to a bipartisan solution. I hope that the Minister will let us know, as the hon. Member for Southwark, North and Bermondsey pressed him to do, what active role has been played in the three years of the Government's tenure.
Mr. Simon Hughes: I pay tribute to the hon. Member for Woodspring (Dr. Fox). The leaders of the Tamil liberation movement rightly accept the premise of that agreement—that if there is to be a settlement, negotiation must take place and there must be a bilateral view among the parties of government. It is no good reaching agreement with one party and then discovering that another party which might come to government is not bound by it. I understand that there is a general view, certainly in the opposition, that that is the way to proceed. There have been talks between the President

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and the leader of the opposition. They must be as one in their agreement, so that genuine negotiations can take place. That is the only way forward.
Mrs. Gillan: The hon. Gentleman makes a logical and powerful point, and I look forward to hearing the Minister's response. I thank the hon. Member for Southwark, North and Bermondsey for his kind remarks about my hon. Friend the Member for Woodspring. I am sure that my hon. Friend will read those with interest.
One of the main political issues in Sri Lanka is the emergency regulations imposed by the President on 3 May. It is believed that the Government's objective was to block reporting critical of the war, particularly at a time when 25,000 Government troops were trapped in the Jaffna peninsula. The early-day motions tabled on the issue have been mentioned in the debate. One was initiated by my hon. Friend the Member for Windsor (Mr. Trend).
I hope that in the Minister's response, he will take the opportunity to join us in condemning those draconian regulations, which limit the freedom of association and the freedom of the press, and allow for detention without trial for up to a year. That, coupled with the restrictions on political and trade union meetings, is deeply worrying in the run-up to the elections.
Mr. Corbyn: Sri Lanka's prevention of terrorism legislation, which has been in place for most of the past 20 years, is also a denial of civil liberties. The more recent draconian measures are to be deplored, but so are the earlier measures.
Mrs. Gillan: I was not implying that the earlier legislation was less problematic. However, the developments are disturbing, especially in the run-up to the elections. They send the wrong signals. What representations have the Minister and the Foreign Office made to the Sri Lankan high commissioner? Does the Minister believe that the regulations run counter to the recent European Union note, which requested that Sri Lanka show respect for human rights? Does he believe that the regulations contravene the United Nations charter on human rights? If so, what action does he propose to take?
It is not unreasonable to conclude that the Sri Lankan Government are trying to shut down political debate and handicap the opposition in an attempt to cover up some of the defeats that they have suffered, primarily through poor political leadership and apparent corruption. Sri Lanka needs free and fair elections. That is an important issue in many parts of the world. How can the United Kingdom contribute to the process and support conditions in which free and fair elections can take place?
I should like to know the Minister's response to the European Union proposals. That has already been requested during the debate. As the Minister knows, the European Parliament has called for European members of the United Nations to introduce the subject for discussion before the Security Council of the UN. That caused a furore in Colombo, where a senior Foreign Office official perceived such a discussion as the precursor to the development of whet he described as a
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mess such as those in Bosnia or Sierra Leone. Does the Minister believe that the EU demands are helpful and justified? Does he support them? If so, how will he pursue them?
We all want an end to the conflict, which has consumed thousands of innocent lives. I appreciate that numbers are always doubtful, but the latest reports state that some 62,000 people have already been killed in the conflict. I hope that the Minister will explain what commitment the Government will make to applying diplomatic pressure, thus contributing to a solution and hastening the end of a seemingly endless and pointless war.
10.42 am
The Minister of State, Foreign and Commonwealth Office (Mr. Peter Hain): I am most grateful to the hon. Member for Southwark, North and Bermondsey (Mr. Hughes) for raising this subject and for the timely opportunity to respond to his speech. It allows me to make the first ministerial statement on Sri Lanka for seven years. I readily acknowledge the hon. Gentleman's involvement with Sri Lanka, his family's connection with that country and the expert knowledge with which he spoke today. Madam Speaker also has a long and close association with the island. That underlines the importance that Britain attaches to the people of Sri Lanka.
I welcome the opportunity to express the Government's deep concern about the tragic situation in Sri Lanka, which was so well described by my hon. Friend the Member for Islington, North (Mr. Corbyn), by the hon. Members for Richmond Park (Dr. Tonge) and for Kingston and Surbiton (Mr. Davey), and by the hon. Member for Chesham and Amersham (Mrs. Gillan), with whose speech I agreed to a large extent. We are especially worried about the fighting on the Jaffna peninsula. The hon. Member for Southwark, North and Bermondsey urged us to do more. We are doing a great deal, which I shall explain.
I shall outline what we are doing, together with our international partners, to try to encourage a peaceful resolution of the ethnic conflict in Sri Lanka. However, I shall first bring hon. Members up to date, as the hon. Member for Chesham and Amersham invited me to do, with the appalling incident that took place today. As we have been speaking, reports have reached us about a suicide bomb near Colombo. The Minister for Industrial Development, C. V. Gunaratne, and at least 10 others have been killed, and several people have been seriously wounded at a memorial parade to commemorate War Heroes day. The British Government condemn such acts of terrorism in the strongest terms, and extend the deepest sympathy to the Sri Lankan Government and to all the families of those who have been killed and injured. I am sure that I speak for all hon. Members.
It is a tragedy that Sri Lanka, a country with such huge potential, should have been blighted for so long by civil strife. I agree with the hon. Member for Southwark, North and Bermondsey when he described the conflict as, to some extent, the world's forgotten civil war. The human cost of the conflict has been awful. More than 60,000 people have been killed, many more have been injured or maimed, and there are hundreds of thousands of refugees, both inside and outside Sri Lanka. Those are the people who have been directly affected.

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Indirectly, the conflict has touched many more: the families of the victims, those who have remained in poverty because of the damage that has been done to Sri Lanka's economic development, and, as has already been said, the distortion of the economy into one that is arms directed rather than one that provides humanitarian relief and decent public services for its citizens. Young Sri Lankans, both Sinhalese and Tamils, have been forced to leave their country to find new lives overseas.
Mr. Barry Gardiner: I am especially grateful to my hon. Friend the Minister for giving way to me, because I could not be here earlier as I had to attend a constituency engagement. I would dearly have liked to participate more fully in the debate.
The Minister spoke of refugees and people who have been displaced by the conflict. Will he join me in expressing anxiety about the Sri Lankan Government's refusal to allow a ceasefire during the current conflict in the peninsula, although the Liberation Tigers of Tamil Eelam offered one, to permit the 15,000 civilians who were there to leave the area? I believe that the United Nations High Commissioner for Refugees condemned that refusal. What representations did our Government make to the Sri Lankan Government on that specific point?
Mr. Hain: I agree with my hon. Friend. We made strong representations to the Sri Lankan Government, who were wrong to refuse to agree a ceasefire to allow such an exodus. The scale of the human disaster has been dreadful. The conflict has had a huge economic cost, not only in the money that has been spent on the war effort, but in the work that has not been done, and the opportunities that have been lost due to lack of investor confidence. The war has held back Sri Lanka when that country should have been forging ahead to the benefit of all its citizens.
Our anxiety about the dreadful situation is compounded by two factors. First, Sri Lanka is a good friend. It is not a distant island about which we know nothing or care little. On the contrary, Britain has had a long and close relationship with Sri Lanka for more than 200 years. Our bilateral relations are excellent, with strong links in many areas. Approximately 200,000 people in this country have their roots in Sri Lanka. It pains us to see what is happening there. We cannot stand idly by and watch yet another humanitarian disaster unfold in a country with which we have such close ties.
The second factor is the unshakeable belief that Sri Lanka's ethnic problems cannot be resolved by military means. Seventeen years of conflict have made it abundantly clear that, to put it bluntly, the war is unwinnable. I agree with the hon. Member for Southwark, North and Bermondsey about that. We are not alone in the international community in that view, and many in Sri Lanka share it. The cycle of violence, which has afflicted Sri Lanka for so long, must be broken if peace is to have any chance of taking root. For those reasons, we have long called for a lasting solution through a political settlement.
Since the Liberation Tigers of Tamil Eelam launched their "Unceasing Waves" offensive against Sri Lankan forces last November, they have occupied the Vanni and
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the strategic Elephant pass entrance to the Jaffna peninsula. While the battle ebbs and flows from day to day, the LTTE are close to Jaffna town, which they last occupied in 1995. In the past week, there have been reports that Sri Lankan forces are counter-attacking. There have been heavy casualties on both sides. The intensity of fighting has diminished in recent days, but the future of Jaffna remains uncertain. However, I must stress to the Chamber that, in the absence of reliable information, our assessment cannot be definitive.
There are also up to half a million civilians, the vast majority of whom are Tamil, trapped in the war zone—an area the size of Buckinghamshire. Although both sides have advised civilians to move away from the areas of fighting to safety, international non-governmental organisations believe that a significant number of civilians are trapped by the fighting. A curfew is in place, which not only hinders the movement of civilians, but hampers the aid agencies trying to help those displaced by the fighting.
It is difficult to be sure how many are affected, but there could be as many as 150,000 people. It is one of the most serious situations in the world. Water and sanitation appear to be the major problems. Government authorities and NGOs are trying to address those problems, but access to the areas affected by the conflict is difficult. The difficulties faced by the civilian population are therefore very real.
It would not be helpful to speculate on what might happen next in Jaffna, but continued fighting would add to the death toll on both sides, both civilian and military. Further heavy fighting would also delay the start of negotiating a political settlement of the conflict. It was because of our concerns about the continued impact of the fighting on civilians and on the prospects for peace that we pushed for a statement by the European Union on the deteriorating situation. The statement was issued on 15 May and called upon the Sri Lankan Government and the LTTE to cease hostilities and begin negotiations immediately, with a view to securing a peaceful resolution to the conflict.
The EU reminded both sides of their responsibility to ensure the safety of the civilian population in conflict zones, in particular on the Jaffna peninsula. The EU joined the UN Secretary-General in urging both parties to co-operate with the Norwegian Government in their endeavours to facilitate a negotiated settlement of the conflict. I should add that Kofi Annan, in his statements of 9 and 24 May, expressed concern about the humanitarian consequences of the recent upsurge in fighting. He, too, urged both sides to avoid placing civilian lives at risk.
We have taken that matter up with the Sri Lankan Government, and the LTTE is also well aware of our position. They know that the safety of civilians is of paramount importance and that we call on them to abide by international humanitarian and human rights law and to look after prisoners. We also call on the LTTE not to carry out attacks against its Tamil opponents. We cannot forget the killings and abuses of human rights that occurred when the LTTE last occupied Jaffna, in particular those against members of the minority Muslim community. The eyes of the international community are on the LTTE.

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A peaceful resolution of the conflict in Sri Lanka is vital, and Britain stands ready to help in the search for peace if both sides want us to play such a role. Far from being passive, as the hon. Members for Southwark, North and Bermondsey and for Kingston and Surbiton suggest, we are proactive, and I shall explain how. We have held discussions to make it clear that we welcome and support the Norwegian facilitation efforts. Let me take this opportunity to say that we recognise the importance of India's role in the search for peace, as the key player in the region. We welcome India's willingness to provide humanitarian assistance, if requested, and we are in close touch with the Indian Government.
As I said earlier, Sri Lanka is a good friend. We support its sovereignty and territorial integrity. The precise terms of any settlement are a matter for the people of Sri Lanka, but they will have to respect the rights and aspirations of all communities, including those that the LTTE claims to represent.
We welcome President Kumaratunga's firm commitment to a negotiated settlement and her attempts to reach consensus with the opposition United National party and other political parties, including the Tamil parties, on some form of devolution package to put to the LTTE. The constitutional status quo is neither politically desirable nor viable. We also welcome the undertaking given by the leader of the opposition, Ranil Wickremesinghe, to put aside Political differences to try to achieve a bipartisan position on a future constitutional framework. Those are important steps forward, and we have been encouraging them.
I pay tribute to President Kumaratunga. She is a brave woman who commands our respect. I also pay tribute to one of my predecessors, the hon. Member for Woodspring (Dr. Fox), whom the hon. Member for Chesham and Amersham mentioned, for the efforts that he made in 1997 to persuade the president and the opposition leader to adopt a bipartisan approach to the peaceful resolution of the conflict. We continue to take forward the Fox agreement. I welcome the Leader of the Opposition's recent visit, during which he adopted a similar position; it was a valuable visit.
The process of negotiation will not be easy, as we know from our experience in Northern Ireland. Both sides will need to show patience and flexibility as talks get under way. They will need to make compromises. After 17 years of bitter conflict, it is wholly unrealistic to expect negotiations to be concluded quickly. It will take time to build up trust between the two sides.
I agree with the hon. Member for Chesham and Amersham in reiterating the last point in the EU statement. We strongly regret the restrictions on civil liberties and press freedom under the emergency regulations introduced by the Sri Lankan Government. The EU called on them to lift the restrictions as soon as possible. Therefore, I welcome the lifting of restrictions on political meetings and processions on 2 June and the easing of the censorship rules for the foreign media on 5 June. I hope that that first step towards lifting the emergency regulations will soon be extended to the local media as well, as has been suggested by the Sri Lankan Minister responsible for the media.
We will continue to raise civil liberties and human rights concerns with the Sri Lankan authorities, although we acknowledge that they have taken steps to
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improve their human rights record. Our high commissioner in Colombo has provided funding to several NGOs that promote good governance and democracy.
The LTTE has been responsible for serious human rights violations. We condemn the terrorist attacks in Colombo and elsewhere, which have killed and wounded many innocent civilians, including President Kumaratunga herself. On the points made by the hon. Member for Richmond Park, we are strongly opposed to the LTTE's continued use of child soldiers, despite a 1998 commitment to the UN special representative for children and armed conflict not to use children under 18 years of age in combat.
Much diplomatic activity is taking place to try to bring about a cessation of hostilities and create the conditions for peace. I assure the Chamber that the Government, while happy for now to play a supporting role in the search for peace, remain in close and regular contact with the key international players. I have held discussions with the Indian deputy Foreign Minister, and my right hon. Friend the Foreign Secretary has held discussions with the Indian Foreign Minister. They undertook to keep in touch with us on the subject.
On 24 May, I held a meeting in London with my Norwegian counterpart, Raymond Johansen, as I did with his predecessor a few weeks before. I was keen to hear his impressions of the situation and we shared a perspective on it. We continue to keep in close touch and stand ready to help. We have kept in regular contact with the Sri Lankan Government. I have met, among others, leading bishops from Sri Lanka, who are in touch with a range of bodies, including the LTTE.
Mr. Simon Hughes: The Minister may not have time to deal with everything now, but I ask him to ensure that if he cannot give us answers on the arms issues now, answers will be given, and publicly. Specifically, will he consider the idea that Britain should make it clear to the Sri Lankan Government that there must be international access to all parts of Sri Lanka, both to make the facts and the public's views clear and to facilitate the solution, in terms both of peace and of a new constitutional settlement?
Mr. Hain: Indeed, I am very content to do that. I am about to respond to the points about arms, but first I shall respond to the issues raised about relief. I shall ask my right hon. Friend the Secretary of State for International Development to provide a detailed reply, a copy of which can be placed in the Library. We have made representations to Sri Lankan Government about the restrictions that have been placed from time to time on relief supplies into the Vanni, and we shall continue to do so.
On the detailed points about asylum seekers, which are obviously of concern, I shall ask my ministerial colleagues in the Home Office to reply in detail, taking account of the points that hon. Members have made, and to place a copy of the reply in the Library.
I understand the points that several hon. Members have made about arms sales. Our policy is very clear: we approve arms export applications only if they do not involve arms that could be used for internal repression or external aggression. However, Sri Lanka has an

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elected Government who have legitimate defence needs. Again, I shall write in detail to the hon. Member for Southwark, North and Bermondsey and place a copy of my letter in the Library.
We are discussing with the EU the dispatch of election monitors to monitor the parliamentary elections later this year. Although we have held discussions with our colleagues—the Indians, those in the United States and others—to try to reach a common position at the UN, we were unable to do so, but we continue our efforts.

Education Standard Spending Assessments
11 am
Mrs. Anne Campbell: I am pleased to have the opportunity to talk about a subject that is dear to the hearts of people in my constituency. I pay tribute to my hon. Friend the Member for Stafford (Mr. Kidney); he cannot be here today, and has made his apologies, but he convened the all-party group on this issue, which I think will be a very effective force. I hope that it will make a real input into the reforms of the system.
I want to express my gratitude for the increase in the education standard spending assessment in my constituency since 1997. I have asked a number of parliamentary questions on the subject over the past few months; indeed, my right hon. Friend the Secretary of State must be rather fed up with signing answers to my questions, but I have managed to elicit some useful information.
Cambridgeshire's SSA per pupil was at its previous highest, in real terms, in 1992–93. Schools then received today's equivalent of £2,578 per pupil. Throughout the years of the Tory Government the amount fell steadily, reaching its lowest level of £2,455 per pupil in 1995–96. There was a fall of £23 per pupil in three years. In those days we had a Labour-Liberal county council, which markedly increased the top-up provided from its own funds. It was at its highest in 1995–96, when it topped £15 million—but not for long: unfortunately, in the following year the council's budget was capped by the then Conservative Government, and it was no longer able to provide such a large top-up.
It is not difficult to see that it is the Labour party that believes in education, and the Conservative party that does not. Throughout the 1990s, the same pattern was repeated—a Conservative Government cutting money for schools, and a Labour-Liberal county council increasing the top-up. Since 1997, it has been a different story. The education SSA per pupil has increased in real terms year on year, and at £2,591 is now higher than it has ever been. However, the county council, which is now Tory-controlled, has reduced its top-up from £15 million in 1995–96 to under £5 million today. In 1998 and 1999, the council failed to pass on £3 million that was intended for school budgets. This year, pressure exerted by myself and others has forced it to pass on the full increase in education spending. At last schools are beginning to experience some relief from the downward spiral in their budgets.
Of course, SSAs are not the only source of funding for schools. The Government have also markedly increased the amount available for capital spending, and new classrooms and additional facilities are springing up like mushrooms all over the county. The cash that has made the largest difference has come from the standards fund: money to match the numeracy and literacy strategies, for computers, drug prevention and ethnic-minority achievement, and for many other important purposes. It totalled a massive £11 million last year, and will reach £15 million this year. That money has not been provided through the SSA, but has gone directly into school budgets.
We were all delighted with the additional £1 billion that the Chancellor found in his Budget this year

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specifically to support school budgets. David Somerville, head teacher of St. Matthew's primary school. received £9,000 extra in his school budget. He wrote to me:
Please continue to do all that you can to support growth in school budgets. The modest increase in my school's budget this year has had a positive impact on morale—it is a pleasure to be having discussions with the staff about what to spend the extra money on rather than having to decide what to cut.
Another school in my constituency, Priory infants school, has been able to reinstate the post of home-school liaison officer, which was removed some years ago because of the loss of funds. It will make a huge difference in a part of my constituency where levels of social deprivation are high. Chesterton community college will be able to create an extra teaching group in year seven, thus reducing class sizes. It will also be able to create two groups for GCSE music, rather than one that would have consisted of 32 pupils. The head teacher, Bev Jones, e-mailed that information to me on her new laptop, provided from Government funds.
That money has been handed directly to schools, and is making a real difference. It is a source of enormous frustration to me, and, I am sure, to my right hon. Friend the Secretary of State, that money made available for education has not always found its way into school budgets. Sometimes that is because it has been siphoned off for other services, like the £3 million that I mentioned earlier; sometimes it is because the local education authority is top-slicing the money allocated and spending it on unnecessary central support services. I was quite shocked by the answer to a question that I asked my right hon. Friend last year about the percentage of the general schools budget that was devolved to schools by each LEA. In one of our neighbouring counties, Suffolk, the figure was nearly 80 per cent., but in Cambridgeshire it was a paltry 64.9 per cent., lower than in any other shire county.
I wrote to the Conservative chairman of the education committee, Councillor Wilkinson, to ask why the amount was so low. His reply made it clear that he did not consider the matter important. It would have been of enormous interest to schools. If Cambridgeshire had delegated its budget at the same level as Labour-controlled Suffolk, schools would have had an additional £27.7 million to spend. It is true that they would have had more services to buy, but they could have made their own choices about expenditure rather than the decisions being made for them centrally.
With the introduction of fair funding, Cambridgeshire has had to delegate more of its budget to schools. The way in which that has been done is a complete sham. I do not believe that any school has yet noticed a difference, or has been able to make decisions different from those dictated by the county council. In the past, Cambridgeshire held a very high proportion of the special needs budget centrally, and allocated resources to schools on the basis of the number of statemented children. Now the council is required to delegate that money to schools. Its pamphlet containing guidance for special-needs delegation to schools operating bank accounts was issued in March this year, and makes it clear that it regards the fair funding scheme as a bit of a distraction. It admits in the pamphlet that for new statements
The nominal budget allocation bears little relation to the allocation of resources to the school.
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It also says:
A number of schools have expressed concern that having a budget on their budgetary control printouts that bears little resemblance to the actual allocation of resources could create a distraction and perhaps confusion.
I should say so! There is a considerable disincentive for schools to run their own bank accounts and to take control of their budgets.
The LEA points out that all is not lost: if schools were prepared to join its learning support assistance indemnity scheme, lo and behold, the LEA would continue to operate the existing familiar arrangements. In other words, nothing changes. It is clear that Cambridgeshire LEA is doing its best to ensure that it retains control of the school budgets. The method of achieving the 80 per cent. required delegation is highly questionable. I recently spoke to inspectors from the Office for Standards in Education who were completing their inspection of Cambridgeshire county council, and I hope that those concerns will be reflected in their report.
I welcome the recent announcement by my right hon. Friend the Secretary of State that he was considering funding schools directly from Whitehall, without the money being filtered by the LEA. That would certainly overcome the problems that I have outlined. His statement produced a mixed reaction in Cambridgeshire. Conservatives condemned the proposals, but Labour councillor Josephine Percy was quoted in the Cambridge Evening News as saying:
This government is trying to do something about it by giving money to schools to spend their own way and not to someone else's sticky fingers at Shire Hall.
She went on to make the good point that
Some School Governors are better business people than County councillors. It's a very good idea.
In Cambridgeshire, it is clear that Conservatives want to hold on to central control of budgets while Labour councillors are prepared to give schools the autonomy that they want.
Finally, wide differentials in funding per pupil between LEAs are immensely important to parents and schools in my constituency. We are still operating a system introduced by the Conservative Government, and I am disappointed that the method of allocating funds has not been reformed. Most authorities compare themselves with Hertfordshire, one of the most generously funded shire counties. Cambridgeshire has the misfortune to share a boundary with Hertfordshire, and our schools know that others a few miles down the road have £160 a year more for each primary pupil and £206 a year more for each secondary pupil. The system is unfair, and I know that my right hon. Friend the Minister for School Standards is as keen as I am to see it reformed.
Mr. David Taylor: Does my hon. Friend acknowledge that Leicestershire, which has a short common border with Cambridgeshire, is the worst-funded of all counties? We are £332 per secondary school pupil adrift of Hertfordshire, and that plus our primary underfunding amounts to £13 million a year.
Mrs. Campbell: I am grateful to my hon. Friend for making that point. Propaganda is often put out that

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Cambridgeshire is the lowest funded shire county for education, but I know that that is not true as Leicestershire is in an even worse position.
A White Paper is expected in July, and I hope that it will produce a workable and fair system. It will take time to implement its proposals, and schools cannot therefore expect real reform before 2002. In the meantime, however, some extra money allocated for education should be used to raise the funding of authorities in the bottom half of the league table to the funding of the middle one. Answers to my questions suggest that the costs of implementing that idea in England would be £511 million. It is a large sum, but the idea is affordable given the expanding education budget that the Government have provided. It would bring primary funding up to £2,435 per pupil, and secondary funding to £3,130, in each of the bottom 75 English authorities. That would aid my hon. Friend's county as well as my own and others.
That system would win widespread support, and it could be implemented quickly and easily. It would be seen to be fair, and it would not reduce funding for authorities in which there is high social deprivation. It would do an enormous amount to reduce pressure on authorities languishing at the bottom of the league. I hope that my right hon. Friend the Minister will consider the proposal seriously. She is not responsible for deciding how SSAs are allocated, but I hope that she will press for the proposal, at least as interim relief for authorities, such as Cambridgeshire, that are in the bottom half of the league.
11.14 am
Mr. Andrew Lansley: I am pleased to be the first to congratulate the hon. Member for Cambridge (Mrs. Campbell) on securing the debate. Like hers, my constituents see this as a matter of great importance and will welcome a debate that allows us to examine it. Several Members wish to speak, and the debate is a short one, so I shall make just three points on my constituents' behalf and leave it to my hon. Friend the Member for Hertsmere (Mr. Clappison) to make points from the Front Bench.
My first point is that the Government have plainly shifted the basis on which standard spending assessments—education and others—have been calculated. Far from being unable to change the system inherited from the previous Administration, the Government have, the evidence increasingly suggests, distorted the system. I recall the Government's introduction of a plain English guide to grant distribution. In the first edition, in 1998, the document contained a section on SSAs entitled "Assessing Spending Needs". It referred to the fact that an SSA, though not a spending target, was an assessment of the budget required for an authority to meet a standard level of service, given its needs and costs.
When the second edition came out in 1999, that sentence had disappeared, and the paragraph was retitled "Sharing Out Resources", which is indicative of the route taken by the Government. They have stopped trying accurately to assess the needs, costs and relative resource of areas when it comes to distributing grant.
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Instead, they take account only of their own choice of social deprivation indices and raw population statistics. The net result is a mechanism by which the Government have shifted resources away from shire counties and districts to metropolitan areas outside London. I am sure that my hon. Friend the Member for Hertsmere will pursue that point further.
Secondly, that policy has unhappy consequences for Cambridgeshire, which has the lowest SSA per head among education authorities in 2000–01. The Government are increasingly moving away from recognising the additional costs and needs associated with counties such as Cambridgeshire. The Secretary of State for Education and Employment was bold enough to admit that in a letter to me of 20 December. He acknowledged that Cambridgeshire's SSA increase was below the national average on a per pupil basis, but added that that
reflects a reduction in the share of the national total which it receives to reflect social deprivation and area costs.
The point is that matters that should have been considered for the SSA on a per head or per pupil basis were not included. The Secretary of State and other Ministers have acknowledged that the difference in funding for education SSAs between areas has largely to do with differences in area cost adjustment and the additional educational needs index. On both counts, I share the view of the hon. Member for Cambridge that the Government could and should have done more to arrive at a more equitable basis for distribution of funding.
The combination of failure on those two counts disadvantages Cambridgeshire pupils. The hon. Lady mentioned the relationship between Cambridgeshire and Hertfordshire—the border lies in my constituency, and I know only too well that there are variations between £150 and £200 per pupil in some schools.
Thirdly, not only should the Government have done something, but they promised that they would. The hon. Lady did not refer—unsurprisingly—to a an interview given by the Prime Minister to the Cambridge Evening News on 30 April 1997, days before the general election, when he said that he would review the area cost adjustment and that its abolition would deliver at least £5 million more for Cambridgeshire. He also said that he would review it in time for the next financial year. The Prime Minister is presently making a speech elsewhere about traditional values, and I reckon that one traditional value that he should have maintained after the election was honesty. When he said that he would review the area cost adjustment in time for the next financial year, he did not mean that he would look at it; it had been looked at already.
Mrs. Anne Campbell: I hope that the hon. Gentleman will accept that my right hon. Friend the Prime Minister said that he would review it, and that he would do so in time for the next financial year. Review it he has certainly done, and that promise has been met. I am just disappointed that the review did not lead to fundamental changes in the formula and that we are still undergoing that process. However, my right hon. Friend has met his promise to review the SSA.
Mr. Lansley: I am grateful to the hon. Lady for making precisely the point that I was making. The Prime

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Minister made a pledge to review it in time for the next financial year. However, a review had already been done. The subsequent specific costs inquiry was, in practice, a basis on which a decision could have been made—arguably, not necessarily for the 1998–99 financial year, but certainly for the 1999–2000 financial year. The reason that the Government give for not having made a change to the area cost adjustment is that local authorities were not able to reach a consensus on it.
Forgive me, but I thought that the job of Government was to decide on grant distribution the basis of consultation, not necessarily to delegate their responsibility to the Local Government Association. It would come as an interesting revelation to the LGA if it were told that it was in charge of the standard spending assessment and grant distribution structures, as the association thought that the Government were in charge of them. The way in which, in particular, the Deputy Prime Minister has worked other changes in grant distribution demonstrates that he does not necessarily take the actions that the LGA would have told him to take.
It is also true that the Prime Minister, in saying that he would review the area cost adjustment, made it very clear that, on the basis of the current Elliott review, he was prepared to take action. He made it absolutely clear that he was making effectively a promise to the people of Cambridgeshire—it would have been read similarly in other places—that the system would be reformed. It has not been reformed. The hon. Member for Cambridge is disappointed that it will not be reformed until 2002—not that there is a promise that it will be—but I think that it is a disgrace. This summer's consultation paper—it may or may not be a White Paper—should be a proposal for substantial reform, so that something can be achieved by 2001.
Mr. David Heath: Would it surprise the hon. Gentleman if I told him that the view that he has just ascribed to the Prime Minister is exactly the same as the one that was presented year after year by the right hon. Member for Suffolk, Coastal (Mr. Gummer), who required consensus between the then Association of County Councils, the Association of Metropolitan Authorities and the Association of District Councils on reform of the area cost adjustment? That requirement is precisely why no change was ever made.
Mr. Lansley: The hon. Gentleman may make that point, but we are not here to debate the previous Conservative Government. Moreover, it was the previous Administration who instituted the Elliott review, which provided a basis for the work. He may also care to read my Adjournment debate of July 1997, in which I acknowledged that the Government had a responsibility to undertake further work and that the specific costs inquiry was intended for that purpose.
The question is, which Government made promises to change the system, which Government undertook the second review to do it, and which Government had the material on which to do it, but have failed to do it? The answer is the current Government.
Mr. David Taylor: I agree with the hon. Gentleman that there is still some way for the Government to go in
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reforming education finance. However, does he agree that the problems and difficulties that we need to resolve pale into insignificance compared with the distortions that the previous Administration incorporated into education finance in relation to, for example, grant-maintained schools and the chronic neglect of the fabric of British schools, including information technology systems? The current Government have dealt with those matters in a major way.
Mr. Lansley: The hon. Gentleman is tempting me into the debate on grant-maintained schools. I should dearly love to do that, because many of the schools in my constituency that were grant maintained, but have lost that status precisely because of the Government's interference, were exhibiting precisely the qualities that the hon. Member for Cambridge exhorted when she said that the county council should be passing money to schools.
I should add that the hon. Lady should have applied that principle not only to the county council but, even more so, to the Government. The need for the principle to be applied to the Government is demonstrated by the size of the standards fund and by the fact that the annual report of the Department for Education and Employment lists 38 schemes—I counted them the other week—by which the Government are top-slicing money for this and for that. The Department has even top-sliced the SSA to cover the teachers pay and performance review. If the principle of getting money into schools applies to the county council, it applies even more to the Government—who are engaging in bureaucratic management from desks in Whitehall, rather than concentrating on supporting teachers at desks in schools.
Mr. David Chaytor: Although we are not debating the previous Government's record, we are concerned about consistency. Did not the previous Government say, year after year, that there was no agreement among local education authorities, and use that as an excuse for not changing the system? The real question is, which Government are now about to publish a document that will introduce proposals for the definitive reform of the system that I think all hon. Members in the Chamber desire?
Mr. Lansley: The hon. Gentleman is a rampant optimist, as the Government may or may not make such proposals—although such proposals already existed. There were 23 proposals in the specific costs inquiry on mechanisms to reform the area cost adjustment, but the Government chose to adopt none of them. If consistency is what he is looking for, he should have been there making that point—perhaps he was—in December 1999, when the Deputy Prime Minister said that he was dealing with the unfairnesses in the grant distribution system and the standard spending assessment. He clearly did not deal with unfairnesses in SSA in December 1999. He did not do what the Prime Minister, back in 1997, had promised my constituents, and, I think, what he had promised the constituents of the hon. Member for Cambridge. I am afraid that the Prime Minister and the hon. Lady will have to suffer, at the minimum, the embarrassment and, potentially, the harm that will come when, at the next general election, my constituents and theirs realise that that promise has not been fulfilled.

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I hope that the Minister will be able to give us a positive statement on what will be said in the document that will be published in July.
11.26 am
Mr. David Chaytor: I, too, should like to congratulate my hon. Friend the Member for Cambridge (Mrs. Campbell) on initiating this debate. It is extremely timely in view of the imminent publication of the Government's proposals, which I believe are expected in July. The matter is extremely important for the local authority in which my constituency is located.
Although I do not necessarily wish to contradict the hon. Member for South Cambridgeshire (Mr. Lansley), on the figures that I have, Cambridgeshire is not the lowest-funded local education authority by any stretch of the imagination. For the current year, the standard spending assessment for my local authority of Bury is £2,299, whereas it is £2,313 for Cambridgeshire. In my local authority, the secondary SSA is £2,941, whereas in Cambridgeshire it is £2,964. I should like, therefore, to shift the emphasis a little from Cambridgeshire and describe very briefly some of the difficulties faced by the local education authority in Bury.
Mr. Lansley: There will be a limit to how often we can trade statistics, but my hon. Friend the Member for Hertsmere (Mr. Clappison) has very kindly supplied me with the figures. According to an answer given on 10 May by the Minister for Local Government and the Regions, for 2000–01 Bury has an SSA per head of £782, whereas Cambridgeshire has an SSA per head of £613—which, according to the Department's table, is ranked 150th out of 150 education authorities—[Interruption.] The hon. Member for North-West Leicestershire (Mr. Taylor) interrupts, but—
Mr. Deputy Speaker (Mr. Frank Cook): Order. The hon. Member for South Cambridgeshire (Mr. Lansley) is making an intervention, not a speech.
Mr. Chaytor: I think that the confusion may have arisen because I am quoting education SSAs, not per capita SSAs.
Mr. James Paice: The point is that there is a direct correlation between the education SSA and the SSA per head. The hon. Member for Cambridge (Mrs. Campbell) failed to emphasise the point that Cambridgeshire county council, under several different political leaderships, has consistently added to the education SSA, because it was not enough. However, as she said, the council has done it at the expense of other services. The fact is that, if the overall education SSA were higher, it would be much easier not only to pass on education SSA increases, but to improve the other services that have had to suffer, rightly, to maintain the higher level of education spending.
Mr. Chaytor: Of course there is a relationship. The hon. Gentleman's argument is exactly the same as the one that we in Bury put to the previous Government. Our local education authority spent at about 10 per
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cent. above SSA to ensure that schools were adequately funded. It is interesting that, in the year before the last general election, our capacity to spend above SSA was almost entirely taken away by the spending cuts in the Conservatives' last Budget.
I shall move on from trading statistics relating to Bury and Cambridgeshire and focus entirely on Bury. In addition to being in the bottom sixth of authorities for education SSA, Bury is one of the smallest metropolitan districts in the country, and the combination of low funding and small size causes particular problems. Bury has historically been underfunded—it was underfunded by Conservative Governments throughout their 18 years in office—but, as I said, the local authority was able to compensate by spending above SSA. It spent about 10 per cent. above SSA for several years, which provided a degree of protection to Bury schools and laid the foundation for their now widely recognised excellent quality. That capacity was taken away by the Conservatives' last Budget. As a consequence, the local authority had to cut education funding by 10 per cent., which resulted in dramatic cuts in local school budgets. That became one of the most important themes of the general election campaign in my constituency.
At this point, I shall draw another comparison between Bury and Cambridgeshire. It will be the last, because I am not criticising my local authority in any way—it is one of the best-regarded local authorities in the United Kingdom. It received an excellent Ofsted report and it is highly regarded by schools in the district, which is an important test of an LEA's value. Despite the historically low funding, the local authority's fine track record of making valiant efforts to compensate for that means that it has delivered, through local schools, remarkably high achievement. In SATs and GCSE results—I regard league tables with some scepticism, but that is the raw information we have to work with—Bury is always one of the best-performing metropolitan districts. In terms of key stage 2 results, it is one of the best-performing districts in the United Kingdom.
I concede that some might say that, even if it is poorly funded, the authority has recorded high achievement, which undermines the argument for an increase in funding. My response is to say that that high achievement has been achieved by staff, both at the LEA and in schools, working in excess of reasonable expectations. They are overworked, stressed and exhausted, entirely because the funding available to them is significantly less than the national average and significantly less than that received by districts that, to all in intents and purposes, are similar or even parallel in terms of socio-economic indicators.
That brings me to the index of social deprivation produced by the Department of the Environment, Transport and the Regions. There is an interesting contrast between Bury's positions in the SSA league table and in the index of social deprivation. I realise that the index is under review and that consideration is being given to new methodology, but in the 1998 aggregate index of social deprivation, Bury is 116th out of about 355 local authorities—not all of which are LEAs, of course. Therefore, we are in the bottom third of authorities in terms of socio-economic indicators. However, in terms of education SSA funding, we in the bottom sixth of authorities; in primary SSA, we are 126th out of 150 LEAs; and in secondary SSA, we are

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128th out of 150 LEAs. There is a clear discrepancy between the methodology used to arrive at education SSAs and that used to compile DETR's index of social deprivation. That discrepancy between Bury's socioeconomic status and the funding the authority receives is the cause of our concern.
There are weaknesses in the system. The hon. Member for South Cambridgeshire mentioned the area cost adjustment, which is the subject of our strongest criticism as well. He also said that tie Government have not changed the SSA methodology, but that is not strictly true. I recall that a change was made two years ago to the social services SSA to cover the element relating to children's services. There was almost, but not quite, a change made to the additional educational needs allowance. However, a significant feature of the debate in the past two years is that, finally, all sides have come to agree that the area cost adjustment is no longer an accurate or sustainable measure by which to allocate SSAs.
The area cost adjustment gives a significant advantage to London boroughs. No one denies that London boroughs have special needs that have to be addressed, but it is ludicrous that the 20 best-funded authorities in the education SSA league table are all in London, whereas in the index of social deprivation the ratio of the major midlands and northern cities to the poorest London boroughs is about 50:50. There is clearly a problem in distribution between north and south.
Another problem is that all London boroughs and those on the fringes of Greater London benefit from the impact of the area cost adjustment, regardless of the precise needs of their area and their position in terms of socio-economic indicators. Therefore, many boroughs located in the leafier suburbs receive a generous benefit and, even within authorities, many schools located in leafier suburbs receive the general benefit from the increase in authority's funding attributable to the area cost adjustment.
We have made progress in the past two or three years, albeit riot as much as we would have wanted. I welcome the announcement of the publication in July of the Government's paper—I am not sure whether it will be a Green or a White Paper. My local authority, Bury's schools and I are not ungrateful for the changes that have already been made—for example, the year-on-year increase in SSA for the past three years, the new funding through the standards fund, and the new deal for schools. In the last year of the Conservative Government, about 50 per cent. of primary school classes had more than 30 pupils, whereas, as of this September, no child in Bury will be in an infant class of more than 30 pupils. There has been a significant increase in funding. Like my hon. Friend the Member for Cambridge, I regret that the standards fund and the new deal have not been used more specifically to correct the deficiencies inherent in the SSA mechanism. The Government could have done that over the past two or three years. None the less, we are grateful for the extra funding.
My main point is that the current SSA system is unsustainable and methodologically unsound. The results stand in contrast with the DETR index of social deprivation because the two methodologies used contradict each other. Reform is needed. To an
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increasing extent, we are operating a national system of education: teachers salaries are set nationally and we have a national curriculum. There is clearly a minimum amount of spending needed to run a school successfully in any part of the country, so we must examine the possibility of setting a national minimum level of funding. In the interests of fairness and equity, that funding should not vary much between different parts of the country. I support the E40 group of local authorities, which is campaigning for a basic standard of funding that does not vary by more than 5 per cent. from the median SSA for all local authorities.
11.39 am
Mr. Steve Webb: I shall be brief because I know that several hon. Members wish to speak.
I congratulate the hon. Member for Cambridge (Mrs. Campbell) on securing this important debate. The first of my three points is to thank her for her role in the all-party group that is trying to tackle the issue on an all-party basis. So far this morning, we have—perhaps understandably—slipped into a bit of a party political dogfight, but the only way forward is for us to come together to recognise common cause. Sniping at each other's records or achievements does not help to achieve a fair deal for all authorities of all political complexions. I hope that we can maintain that cross-party drive, because we will make more progress by doing so.
Secondly, I continue my campaign to ensure that, when the Minister is opened up, the words "South Gloucestershire" are written across her heart. Statistics have been traded, but if I may, I shall quote just one. Of all unitary and metropolitan authorities and shire counties, South Gloucestershire is at the bottom of the league for primary education funding.
I mention that because South Gloucestershire is a young authority. It was created as a shadow authority in 1995, but it is like a child who has been shackled from birth. In every year of its existence, under both major political parties in government, it has been bottom of the table and never received fair funding. That is a dreadful birthright for a new authority which wanted a bright new start.
The Minister knows that I am concerned that the position is made worse by out-of-date data. Many children regularly move into the area, but official figures take a long time to catch up. I have even offered to type them in myself if it would speed up matters. I implore the Minister in this age of the internet and modern technology to consider the use of provisional school numbers. If they turn out to be wrong, adjustments can be made the following year. It is unacceptable for funding to take nearly two years to catch up with pupil numbers. We end up educating a primary school's-worth of pupils for not below average funding, but for nil money. Therefore, we suffer a double whammy: less funding per head than anybody else and many invisible pupils. That is the background against which we are working.
I pay tribute to my local authority, South Gloucestershire, as the hon. Member for Bury, North (Mr. Chaytor) has to his. It has achieved very good results—not least because it is having to spend well above the standard spending assessment for education.

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That extra is found by putting up council tax by much more than anybody would want, and by starving some other vital community services. A low education SSA has a knock-on effect on the range of council services. Many of the things about which people complain in our surgeries are rooted in the fact that education, which my authority prioritises, is starved of adequate cash.
To give an indication of the magnitude of the problem, my authority has calculated that, if it received average education and social services funding, the council tax could be not £20 or £50 but £200 lower. To put that another way, the authority could spend more on education and other services and the council tax could still be lower. The scale of underfunding is huge. In a band D council tax of about £820, £200 makes up the shortfall. My constituents are very angry about the council tax that they must pay. They recognise the council's commitment to education, but such underfunding surely cannot be allowed to continue.
My final point is about how long such underfunding will go on. I hope that the Minister will give a clear idea of time scale. My worry is that, following the consultation paper—perhaps no more—in July and completion of consultation on it, there is no way that, on the brink of an election, there will be any change by April 2001. Therefore, adjustments will probably not be made until the financial year 2002–03. Presumably, in any change, there will be many gainers and many losers, but the Government will not want big losers. Unless there is significant extra money, there will be no big gainers. Therefore, it will be years before the injustice disappears. Children who entered school when the Government were elected in 1997 will have probably completed their primary education and have missed out before the problem is rectified.
I hope that the Minister will give a clear indication that, during the transition, additional money will be made available to oil the wheels in order to protect the losers, so that those who have suffered rough justice will not be told that they will have to wait another five years for a fair deal.
11.44 am
Mr. David Rendel: I am also delighted that we have had this important debate, as I am part of the group of 40. Needless to say, I would not be in that group if my local education authority, West Berkshire, were not among those most poorly funded under the standard spending assessment system. I am sorry to see that and hope that something will be done about it. The Government have a wonderful opportunity to do so in the spending review this summer. I hope that we shall see more funding for education, particularly for authorities that are among those least funded.
My point about West Berkshire is not the main subject of my remarks. I should like to make a much more fundamental point about the methodology under which SSAs are calculated. There is an important lesson to be learned in considering future methodology.
As I understand it, the current system is an attempt to decide the standard spending assessment in each area according to need. Obviously, the number of pupils, both primary and secondary, is the main consideration,
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but SSAs are also based on the number of pupils with additional needs of one sort or another—whether they come from single-parent families, have parents who live outside the United Kingdom or whose parents are on income support—on sparsity, which affects the size of schools and the amount of school transport needed, on the number of pupils who are eligible for free school meals and on the area cost adjustment. Most of us would accept that all those indicators in some sense affect educational needs. The question, however, is how much weight is given to each indicator.
The weight is calculated through regression analysis of education spending in each area in 1990–91. The system works only if one assumes that such spending was a fair indication of each area's needs. The flaw in the logic of the methodology is that we do not know whether such spending was an accurate indicator of real need. Indeed, it is fairly clear that it was not. In 1990–91, a number of shire authorities were Conservative-controlled, and spending on education in them compared with that on other things was probably lower than in areas elsewhere. On the whole, the emphasis in those shire counties was to try to keep down local taxation.
It is not my case to argue whether that was right or wrong; it does not matter to my argument whether it is politically more sensible to try to keep down local taxation or to push up education spending. My point is that, if one assumes that education spending in that year is dependent on need, one fails to take into account the fact that some areas were keeping down their education spending for political reasons rather than because their needs were not as great.
Mrs. Anne Campbell: I am grateful to the hon. Gentleman, who makes the point well. It is one that I shied away from making. It is certainly true that Cambridgeshire county council, which was a very low-spending authority in 1990, has suffered from that legacy ever since. I hope that that will be put right by the White Paper.
Mr. Rendel: I thank the hon. Lady for that intervention.
On the whole, those areas that were controlled by authorities that were trying to keep down local taxation tended to be ones with comparatively high sparsity and comparatively few pupils with special needs, whereas those areas where education spending was higher and the need to keep down local taxation was less of a priority tended to be ones with lower sparsity and more pupils with additional needs. The regression analysis may simply show which parts of the country were controlled by which party rather than the real weight that should be attached to the different need factors.
If we continue to use such regression analysis, we will always come up against that problem. To make sense of such analysis, one would have somehow to find a year in the past in which the spending of local education authorities was in proportion to each area's real needs. If it is not true that 1990–91 is such a year, it is even less true that any subsequent year is, because education spending has continued to be based on what it was in 1990–91 and the flaw has been maintained throughout. If we were to choose a year before 1990–91, we would

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have to find one in which every authority in the land was governed by the same party or al least had the same weight given to the area's real needs. Frankly, there is no such year.
My point is not only that West Berkshire would like some more money but that, more importantly, the use of regression analysis to discover what weight should be given to the various additional needs of different education authorities has a basic logical flaw. I beg the Government, when they come up with their new system, not to use such analysis but to try to come to an objective view of what extra money should be given to each area because of sparsity or special needs.
In practice, the Government have already accepted that regression analysis does not work, because the value that would be given to the sparsity factor according to such analysis is lower than the value that is currently given. It has become clear from the level of funding that is given to local education authorities with a high sparsity factor that the regression analysis has failed to come up with an adequate value. The Government have had to intervene and give an artificially high value.
Having accepted that such analysis does not work, I hope that the Government will abandon a false methodology that inevitably leads to a formula that is not fair and does not provide for the real needs of an area. I hope that they will look for a more sensible way of calculating the weight to be given to each value in future.
11.54 am
Mr. David Taylor: I want to high light the Leicestershire position and to endorse the comments of my hon. Friend the Member for Cambridge (Mrs. Campbell), whom I congratulate on securing this debate at precisely the right time. We may be having a Dutch auction concerning who has the lowest SSA per capita, but Leicestershire is at the bottom of the league tables for county, not unitary, authorities. We are 6 per cent. adrift of the county average for primary and secondary pupils and about 12 per cent. adrift of the best-funded county, Hertfordshire.
We are pressing my hon. Friend the Minister to ensure that a more equitable system results from the review, which is at such an advanced stage. Yes, we want a national pupil funding rate and a minimum education funding level, but we must not fail to recognise the key measures of social deprivation—London weighting and rural weighting—and squeeze out those attempts to create a fairer system. We all know that there is no absolutely fair system, no holy grail in some cellar of the Department of the Environment, Transport and the Regions that, when opened, will reveal the perfect SSA formula., but we want to alter the mechanisms at the fringes in a way that will improve matters significantly for our own authorities.
I strongly welcome the recent initiatives, especially in the last Budget, for some direct funding of schools. I chaired the governing body of one of the largest schools in Leicestershire, Ashby Grammar school—despite its name, a comprehensive—until the general election. The last governors' meeting that I attended was heartened and encouraged by the announcement that we were to receive £50,000 for our standards fund, and that is most welcome.
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This may seem perverse, but I would caution against going too far down the path that leads to very high levels of funding going directly to schools, because that way lies the inevitable demise of local education authorities. I am troubled by the language that I hear, sometimes from Ministers but more often from Opposition Members, about local education authorities top-slicing and siphoning off funding that is intended for schools. If we are not careful, we will starve and accelerate the end of some well-regarded education authorities, with Leicestershire among them.
Leicestershire was one of the very first authorities to introduce an effective system of comprehensive education when the 11-plus was widespread and to introduce high-quality community education. We are highly regarded not only in the United Kingdom but in Europe for the musical, literary and cultural dimension in our schools.
I hope that there is no hidden agenda to let local education authorities wither on the vine. If there is, I cannot subscribe to it. Poorly funded though Leicestershire is, we are immensely grateful for the huge strides that have been made since 1 May 1997. The improvements in our overall grant and other forms of finance outstrip the gaps that we still have.
Let us put the matter in context. There are still one or two steps that my hon. Friend the Minister can take to ensure that the Department of the Environment, Transport and the Regions responds effectively and provides an adequate formula, but let us not overstate the case or have a secret agenda to end LEAs, particularly in areas with a record like Leicestershire's.
11.58 am
Mr. David Heath: I congratulate the hon. Member for Cambridge (Mrs. Campbell) on securing a debate that I have been trying to get for the past two months. She obviously has some secret that I do not share. I also congratulate the many hon. Members who have spoken today. There is an element of repertory company about this debate. My hon. Friend the Member for Northavon (Mr. Webb) and I have certainly had many debates on the subject with the Minister, and it is good to see that some of the old arguments are being rehearsed yet again. They are arguments that we have been urging both at Westminster and elsewhere for many years.
One of the problems is that there was a real expectation, or at least aspiration, that the new Government would introduce changes in this area, and many of us whose education authorities are losers have not seen the changes that we had hoped for. Indeed, to some extent, the distortion in the SSA distribution is increasing, which means that the disparities between the authorities with the highest funding per pupil and those with the lowest are increasing all the time. That is difficult to accept for the education of children in our areas.
I shall start with some basic premises. We cannot get away from the need for a distribution system, and whatever system is chosen will inevitably have its complexities. We should also accept the fact that there will be differences in the total amount of funding available to pupils in different situations in different parts of the country, because there are differences in needs. A simple flat rate would not achieve the sort of education system that we want to see.

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We should also accept the fact that some variation is acceptable, but it could reach a level that is unacceptable and that is the difficulty that many of us perceive in the system at the moment. The variation has grown to such an extent that it is clear that some children in some schools are not getting the entitlement that they should expect from a state education system in comparison with their better funded peers elsewhere.
Many components contribute to that, and we have already discussed some of them. For example, the area cost adjustment is significant. We have discussed that over the years, and we have asked what possible justification there can be for a system that gives additional funds to London and the home counties to meet so-called additional employment costs that simply do not exist, because we have a national wage rate for the major labour areas of teaching, the police and other services. Indeed, the argument could be made the other way that in some parts of the country—the west country, the midlands and the north—teachers tend to stay longer in their schools and reach the higher end of the scales, so that they cost more than teachers in London schools. That is why the area cost adjustment has been described in my part of the country for many years as a tax on the west. It is equally a tax on the midlands, the north and East Anglia, but not on the home counties, which do very well out of it.
Ministers have adduced the argument that stability itself provides a value. My argument—and the Minister has heard it before—is that stability of injustice is not stability but perseverance with an unfair system. Although I acknowledge the fact that we seek stability of funding throughout the education system, we want stability of fair funding, not stability of an unfair system.
My hon. Friend the Member for Northavon and the hon. Member for South-East Cambridgeshire (Mr. Paice) have made the point about the effect on other services of an inadequate education SSA, and it applies within the education service and outside. If a local authority does not have sufficient funding for education, it still has to channel what it has into the statutory education service, because that is a principal responsibility. The effect is that the non-statutory sector loses out. Other essential services have to be robbed to maintain the education service. The social services do not receive the money that they should and highway maintenance is affected.
In Somerset—I was trying not to mention Somerset too often, but I have failed—we have, for many years, moved massive amounts of money out of the highways budget into education to fund our schools and that has the obvious knock-on effect that the roads do not get mended. People eventually wonder why they are paying higher council taxes but getting a lower service for their roads, and they are right to do so. It is a political decision that we are happy to take, but it is based on a basic injustice in the national system of distribution.
We have already touched on the impossibility of reaching a consensus on the issue, and I urge Ministers not to retreat again behind the facade of waiting for consensus from the Local Government Association. That would be like waiting for Godot. It is not possible
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to achieve consensus, because that would mean that some members of the LGA were failing in their duty to represent their areas properly. Consensus cannot be achieved, because any system would create winners and losers—and the losers cannot be expected wholeheartedly to support that system. For many years, I represented the Association of County Councils in its negotiations with Government, and every time the right hon. Member for Suffolk, Coastal (Mr. Gummer), the then Secretary of State, would say, "Well, you do not agree about the matter; therefore, we cannot do anything." That is not acceptable, because it is the Government's responsibility to make the system fairer.
The Elliott review has been mentioned, but I hope that the Government do not go back to it. It was a disastrous review that made matters worse rather than better in many parts of the country. It was based on false premises and arrived at the wrong conclusions. I hope that we hear no more about Professor Elliott and his review.
The Government have, in previous answers on this issue, laid stress on the other funding mechanisms that are available and the extent to which they have been used to mitigate the unfairnesses in the SSA. It is true that, up to a point, standards funds and other funds have been used for that purpose, but, first, they are no replacement for basic, stable funding. Secondly, they put too much power in the hands of Ministers to decide what is appropriate, rather than the schools themselves—which is where we would like to see it. Thirdly, they involve new thresholds. In my constituency recently, we had the ridiculous situation in which a primary school lost £3,000 from the Government's welcome initiative to provide more money simply because its roll, which had been at 102 for the past six years, dipped to 99 because one family moved in the crucial month. A new family has moved in, so the school roll is back over the hundred mark, but the school has still lost the £3,000. That is an illustration of the blunt instrument of the thresholds for funds. The bidding system itself consumes huge resources.
Adjustments in the distribution formula will be made effectively only in the context of rising overall budgets. If there are real-terms losers across the system, people will object—and rightly—if their schools lose money because of a change in the system. If budgets are rising, a differential can he introduced that enables the poorest authorities to catch up a bit. That is what we ask Ministers to do.
We seek a system based on fairness and an entitlement on the part of children and schools to a basic level of funding. The proposals from the all-party group form one way of achieving that. I do not claim that that is the best way, or that the proposals accord with any party's policy position. The mechanism that has been put forward would not create effective losers, because it does not address the issue of the London boroughs: instead, it proposes that the least well funded authorities should have an increase to bring them up to the level of the median. I hope that the Government will take that seriously. The Government profess an interest in education and social justice, and this is a clear illustration of how they can put that into effect.
Ministers in the Department for Education and Employment understand the arguments very well, but the question is whether they are able to put them

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sufficiently forcefully to their colleagues to achieve real change in the system. What is the timetable for that change? Those are the questions that we would like the Minister to answer today.
Mr. Deputy Speaker (Mr. Nicholas Winterton): Order. The hon. Member for South-East Cambridgeshire (Mr. Paice) has indicated that he would like to make an extremely brief contribution. He has listened to the whole debate, and I intend to call him.
12.10 pm
Mr. James Paice: I shall start my very brief contribution with an apology for the fact that I missed the first minute of the speech by the hon. Member for Cambridge (Mrs. Campbell). I congratulate her on securing this debate.
The central issue is clear cut. My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) has already spoken about the Prime Minister's broken promise of April 1997. It is nonsense to say that the matter was reviewed. Any fool can hold a review if all it amounts to is looking at the books and then closing them again. A review needs to be comprehensive, and the Prime Minister's promise will not be fulfilled if no changes are made.
The hon. Member for Cambridge criticised Cambridgeshire county council for not spending more than £4.7 million above the education SSA. However, as my hon. Friend the Member for South Cambridgeshire noted, the Government said, in their first 18 months in office at least, that SSAs were designed to provide a standard level of provision. Therefore, if Cambridgeshire were to spend at the level that the Government consider to be the standard level of provision, £4.7 million would be cut from the education budget.
Finally, the hon. Member for Cambridge spoke about transferring other resources as what she called an "add-on" to the education SSA. However that money would have to come from other services. The hon. Lady criticised the county council for taking £3 million out of education for use in other services a year or so ago, but she failed dismally to suggest which of those services should have borne a budget cut. In the year to which the hon. Lady referred, the social services budget was given a zero rise and so could not possibly have absorbed a cut. That means that roads, public safety, or some other service would suffer.
Thank you, Mr. Deputy Speaker, for allowing me the opportunity to contribute to the debate. Cambridgeshire people feel very angry about this matter. They see what happens over the county border and they believe that the April 1997 promise made in Cambridge to the Cambridge Evening News has been broken. Come the next general election, they will remember that broken promise.
12.12 pm
Mr. James Clappison: I, too, congratulate the hon. Member for Cambridge (Mrs. Campbell) on securing this debate. We have heard good and well-informed speeches from my hon. Friends the Members for South Cambridgeshire (Mr. Lansley) and for South-East Cambridgeshire (Mr.
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Paice), as well as from the hon. Members for Bury, North (Mr. Chaytor), for Northavon (Mr. Webb), for Newbury (Mr. Rendel), for North—West Leicestershire (Mr. Taylor) and for Somerton and Frome (Mr. Heath).
Two points of controversy arise from the speeches by the hon. Member for Cambridge and by my hon. Friend the Member for South Cambridgeshire. My hon. Friend the Member for South-East Cambridgeshire referred to the promise made just before the general election about the area cost adjustment. There are many differences of opinion on the matter, and the hon. Member for Cambridge offered a defence of the Government's actions, but it is fair to say that nothing came of the Prime Minister's promise. People in Cambridge who relied on that promise will have been disappointed.
My hon. Friend the Member for South Cambridgeshire underlined the extent of that disappointment, when he referred to figures contained in a written answer given by the Minister. It seems that all the hon. Members present for the debate represent authorities that are bottom of the league, but the Department for Education and Employment statistics in the written answer of 10 May show that, on the basis of standard spending assessments per head of population, Cambridgeshire education authority comes 150th out of 150.
That is slightly surprising, as the hon. Member for Cambridge said that Cambridge—and, no doubt, other parts of Cambridge—has its own particular needs. I understand that Cambridgeshire has a rising pupil population.
Mr. David Taylor: Will the hon. Gentleman give way?
Mr. Clappison: I am afraid not, given the time constraint. I shall come to the point that the hon. Gentleman made earlier in a moment. As he knows, tables of SSAs per head of population are important, given the knock-on effects on other services. My hon. Friend the Member for South-East Cambridgeshire underlined that, as did the hon. Member for Northavon.
Why is Cambridgeshire bottom of the league? Is there a clue in the identity of the authority in 149th place, which is Oxfordshire? I began to wonder whether the residents of those authorities were being punished for the presence of elitist institutions in their midst, but I believe that more of an explanation can be found in the detailed speech from my hon. Friend the Member for South Cambridgeshire. His analysis of the changes that have taken place in SSA distribution under this Government was correct. The changes have happened quietly, while the Government held the review and prepared the Green Paper.
The Government appear to have shifted away from the previous system, which took into account needs, costs and resources. The priorities have changed, and weight is now placed on different factors. That has disadvantaged shire counties such as Cambridgeshire.
Mention has been made of SSA per pupil. Cambridgeshire has slipped markedly down these rankings too during the lifetime of the Government and is now further below the average for SSA per pupil than it was in 1997.

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Other changes have taken place since the election. There has been a shift in resources allocation within the SSA, and there has been a very important change in the proportion of SSA funding devoted to core funding for schools. As my hon. Friend the Member for South Cambridgeshire said, that amount has shrunk since the Government came to power. It has been estimated that this year the proportion of funding devoted to schools from SSAs, after local authority contributions are taken into account, will be 92.4 per cent. In 1997–98, the proportion was 98.2 per cent.
Although it is right to say that the proportion of funding for schools coming through the standards fund has grown, that has been at the expense of the proportion devoted to core funding. Many people have pointed to the consequences for schools. Dr. Keith Major of the Wiltshire Association of Governors found that the core funding for his school fell well short of what the Government promised. In an open letter to the Secretary of State, he said:
This does not take account of the additional funds for specific purposes available to schools from the Standards Fund. It does seem ludicrous to be having to consider further redundancies in support staff only to be recruiting others, albeit on short-term appointments, supported by the Standards Fund. It should not be necessary for a school to have to rely on this fund to maintain the basic activities of a school.
The debate has to be set against the background of a system that has become ever more complex. It was never exactly straightforward, but the Government have heaped extra layers of complexity on it. They have channelled funds through many different streams of funding, to the perplexity of schools, governors and local education authorities alike. We want a more straightforward system that will bring more direct funding to schools. Money should follow schools, and heads and governors should take their own decisions.
Judging by the contributions from the hon. Member for Cambridge and others, we appear to have some support from hon. Members who want more direct funding for schools. In contrast, the Government seem to want to create a very complex system.
We shall wait and see whether the Green Paper will introduce a more straightforward and fairer system, but we doubt that it will remedy all the cries of disappointment. We believe that those who want a more direct and straightforward system will be disappointed by the Green Paper but it is possible that they will get some consolation and satisfaction in the fullness of time—which may be a shorter period than is currently envisaged by Labour and Liberal Democrat councils.
12.20 pm
The Minister for School Standards (Ms Estelle Morris): May I first congratulate my hon. Friend the Member for Cambridge (Mrs. Campbell) on securing the debate? She told me last night that she first requested it more than two months ago, so the hon. Member for Somerton and Frome (Mr. Heath) has some time to wait yet.
I find myself in an unusual position, although it is always the same when we debate standard spending assessments. I do not disagree significantly with the
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comments of most hon. Members who have spoken in the debate. There is a genuine issue about authorities that are underfunded. It is perhaps opportune that we are in Westminster Hall, where we do not tend to sit in such party political groupings. In the debate on SSAs, the dividing lines of the battle are not drawn along political lines. There is no member here today who represents an inner London borough. As the hon. Member for Hertsmere (Mr. Clappison) did not say so, I will say on his behalf that we are the only two Members here whose constituencies are not massive losers because of the SSAs that relate to Hertfordshire and Birmingham.
Of course there are massive disparities. I do not for a minute defend the fact that children who go to school in Bury, Cambridge, Northavon, Somerset in Oxford or anywhere else should be worth less than those who go to school elsewhere in the country, or that their teachers should have to manage with fewer resources.
The hon. Member for Newbury (Mr. Rendel) summarised the position. In the past, the formula was not perfect, but it has become less perfect as we have tried to adjust it year after year. It is like trying to keep a leaking boat afloat. We plug each hole as it arises, but new initiatives cause funding problems, so we knock the balance out of the funding system elsewhere.
Hon. Members will know, because I have talked about it so often, that I am deeply unhappy at having to explain a system that is flawed. I wish it were otherwise, and I, too, wish that it could have been changed in a year. I will come on to that in a moment. However, the Government do not believe that the way in which schools are funded and the inequality in funding between children in different areas is somehow defensible for reasons of social justice or fairness. To that extent, we are all on the same side.
Since the election, there has been far more public concern about the funding system, yet it is the same as it was before the election. Opposition Members say that that is because expectations were raised and the change was not made in the first year. The Government were right to put this on the agenda. They were right to be open and say that the funding system was not fair enough. I suspect that it was not on the agenda before the election and was not such an issue of public debate across the country because not only did the previous Government do nothing about it, but they did not put it on the agenda or draw attention to it. Not only did they not try to rectify the system, but they never publicly acknowledged that it was wrong.
I do not want to be party political about this, however, because I agree with Opposition Members who have said that the only way to get this right will be to look at the country as a whole. For once—and this will be tough for all of us—we must put party political differences aside and try and secure a system that will give local politicians, whatever their party, an equal chance of running an education service that they can be judged on, without being hampered by inequalities in the system.
The issue is probably more in the public domain now because as more money is pumped into education, the formula becomes more important. If the formula is not fair to begin with, inequality is piled on inequality. Therefore, one is made angry twice, thrice, four, five and

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six times. Not only was the base budget not fair in 1997, but Members, local authorities and parents have seen a Government who have honoured their commitment to putting more money into education, and as long as the flawed formula is used, people feel that they are suffering even more than they did in the past.
We could have distributed the £50 million that was made available in the Budget. A number of hon. Members have mentioned this. It would have been reasonable; it might even have been expected. We could have distributed it along SSA formula lines. It would simply have meant that the constituencies of hon. Members here today and others like them would not have received as much money, while others, like me, would have seen schools in our constituencies benefit from more money. I think that what we did was right—it was a small sign, a small acknowledgement. We paid that £50 million through a special grant and, where possible, we took the opportunity to distribute it as a flat rate. There was an element of rough justice in its distribution—I feel desperately sorry for the school that lost its pupils—because it was done quickly, and we wanted to make it as simple and fair as possible.
In the time I have left, I want to concentrate on what we are going to do about it. I accept that there is an obligation to do something. I say openly that I would be deeply unhappy if the Government said in July, "Sorry, we could not get agreement, and will not do anything." Let us go back to what happened—I was there, and I know. It was not a case of opening the books in the first year and saying, "Dear, dear, we can't get agreement, let's move on." There was a more honest and detailed attempt to adjust the formula in the first year.
I take seriously what hon. Members on both sides have said—that if we wait for the Local Government Association and everyone to agree, we will never get anywhere. The Government are responsible for making the decision. We have to accept what the hon. Member for South Cambridgeshire (Mr. Lansley) said—that is why we were elected, and we will have to carry the can whether we get it right or wrong.
The Government need to know that they have explored, as thoroughly as possible, all the different viewpoints. Any decision they make will, inevitably, not suit some local authorities, parents or schools, but the Government need to be able to say, "We listened and explored the solution that you came up with, but at the end of the day, we could not agree with you."
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I will be honest—within the first year that the Government were in office, it was not possible to come to that conclusion. We could have said that we had opened the books, seen the figures, looked at the options and now we are making the decision. I would have felt ill at ease doing that. We need to go through the necessary consultation process and explore the range of options in a way that makes such a significant decision defensible for a long time, because I do not want to have to go through this again. What we come up with in the Green Paper will have to be a system of funding that serves us well for years to come. Otherwise, is not fair to Members of Parliament and pupils—it is not even fair to Ministers, because more time is spent, research done and work undertaken to get this right than can be imagined.
Where do we go from here? I did not see it in the first year, but one of the advantages of having gained some extra time was referred to in a very interesting point made by my hon. Friend the Member for Bury, North (Mr. Chaytor) and by the hon. Member for Newbury. Everyone wants a minimum entitlement, but they want a system that acknowledges different needs in local authority communities. Nobody supports the idea of a minimum entitlement with no added extras. My hon. Friend the Member for Bury, North threw out, for instances, the Department of the Environment, Transport and the Regions indices of deprivation. That is an interesting idea that I had not thought about particularly before. Perhaps the advantage of having bought ourselves three months is that we do not have to build on a system that was flawed because it looks back to 1990. Perhaps we will be able to do something more radical so that we do not adjust the weightings to the values that dictate the SSAs, but change the way in which we measure minimum entitlement and added benefit on top.
Nobody would expect me to say what is likely to be in the Green Paper. I can simply give assurances that the hon. Members of all parties who have, on this issue, been excellent representatives of their constituents and have spoken vociferously will have their voices heard in Government. I will, as I have on many previous occasions, give an undertaking to feed their views back to the Government and make sure that they are a proper part of the decisions and discussions that we will eventually hold.

Steelworkers (Pensions)
12.30 pm
Mr. Denis MacShane: I declare two interests—as I do in any debate on steel. The first is my ownership of 25 shares in Corus, formerly British Steel. The second is a close collaboration with all the steelworkers unions, because steel is the dominant employer in my constituency.
The issue touches some of the poorest members of the community, whose life's work was devoted to making the steel that helped Britain grow during the previous century. It is a story about the age-old struggle between justice and greed. It is an unreported contest between, on the one hand, men and women who felt that a life's honest and honourable work should be sufficient to provide them with a decent retirement and, on the other, the controllers of our nation's financial resources, who have other priorities.
Many pensioners feel that they deserve a better deal—a view that I share for the whole pensioner community. However, in addition to Government, it is time for pension funds to accept their responsibilities. That is not currently happening in the case of retired steelworkers.
Pension funds are so swollen that their size now overshadows modern market economies. They need to be examined properly and made accountable to the men and women whose earnings have contributed to the creation of those new financial behemoths.
The debate is about the most important question in a society in which the rules of the market and the needs of capital are perceived by many to have a higher priority than the decency of human existence and obligations owed by one generation to another. Government must answer the question: who is responsible for the oversight of those huge sums?
According to 1998 figures, UK pension funds currently manage more than £700 billion. The House of Commons Library informs me that, taken with pensions managed by insurance companies, the total amount of pension funds comes to more than £1 trillion. That is more than the gross domestic product of the United Kingdom. Ministers and civil servants manage a total budget of about one third of the sum for which a large number of anonymous, mostly unaccountable, men and women are responsible.
I want to look more closely at the pensions paid to British steelworkers and the use of the pension fund that their past and present labour has created. Does my right hon. Friend the Minister think that the role of the pensions ombudsman should be reconsidered? Do we need to modernise and reform our pension law so that the concept of fairness is added to the fiduciary responsibilities of trustees and managers?
Like Britain's other great industries, our steel industry gave birth to a mixture of pension funds which were amalgamated when the industry was nationalised. When the fund was launched for manual workers in 1973, there were three times as many steelworkers in work—the number was 197,000 in 1975—as pensioners claiming from the fund. There were only 65,000 such pensioners 25 years ago.
The picture has changed. At present, 30,000 steelworkers pay into the fund; 109,000 receive benefits; and 57,000 are waiting for the years to tick to 65—the
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victims of the anti-manufacturing and anti-industry policies of the previous Conservative Government. They are not helped by the current discrepancy between the pound sterling and the euro; or by high electricity prices and other leftovers from the Conservative era.
Over the past 25 years, the British Steel pension fund has grown from being worth £338 million to its current value of nearly £10 billion. There is a different pension fund for British Steel Engineering Steels employees—many of whom are my constituents in South Yorkshire. My remarks will address the main British Steel pension fund, but my general observations also apply to the Engineering Steels pension fund.
The British Steel 1990 pension fund is extremely well managed; it invests wisely and, thanks to the miracle of compound interest and a judicious mixture of bond and equity investments, it has more than adequately maintained its value to meet all its current and future obligations—and then some. With about half its £10 billion in bonds, the income from those Government-guaranteed securities alone is sufficient to meet all current and future demands.
The question remains as to the rest of the money in the fund. As an American senator once said:
If you add a million here and a million there, sooner or later you start talking about reel money.
In the case of the billions in the steelworkers pension funds and the billions in other pension funds, we have sums that are almost unimaginably large—greater than the GDP of most countries. How should those giant sums be used?
At present, all the cards are stacked in favour of the companies. Of course, they discharge their legal and contractual obligations, but thereafter, those billions of pounds are for their benefit as companies, rather than for the benefit of the pensioners or of the communities that gave rise to that source of wealth.
Let us not forget the origin of that colossal wealth. It was created by steelworkers themselves; either directly, through deductions from their pay packet, or via the contribution put in by the companies. However, that contribution was not company money; it reflects value added, research, good management and the hard, dirty and often dangerous work inside the steel plants of Britain over the past decades.
Until privatisation in 1988, the Government provided a generous pension fund contribution of up to 12 per cent. to match the employee's 5 per cent. That enabled the British Steel pension fund to grow more than tenfold during its first 15 years and ensured that the newly privatised British Steel had a pot of gold, courtesy of the British taxpayer and of a compliant Tory Government who stacked the financial cards in favour of their privatised offspring.
Under a dozen years of private ownership, the fund has increased, but only by a little more than twice as much, in contrast to its much faster growth under public control. Why is that? I do not have time to go into the arguments made by those who are expert in tracing the movements of money inside the British Steel pension fund. However, I stress that, at every stage, the company, the pension fund management and the trustees have acted with full legality. They have not tried to duck questions put by the trade unions or by the

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national British Steel pensioners association, whose chairman, Mr. John Batstone, has been most diligent in keeping an eye on the fund and in asking tough questions.
The core problem remains. Under the Conservatives, pension law was so organised that power remained in the hands of the companies, which were able to use that £1 trillion pension fund to bolster their own financial strength, rather than being more generous to pensioners—especially those such as the manual grades in Britain's steel industry, whose enforced early retirement during the great demannings of the 1980s and the steady attrition of the 1990s has often meant that they do not have enough contribution years to secure more than a meagre supplement to the state pension.
There are many examples of major FTSE 100 companies taking what are described as "pension holidays". That means that either the employer or the employees do not pay into the pension fund at all. According to a survey carried out two years ago by the National Association of Pension Funds, more than half of private sector pension funds were taking a contributions holiday. Of course, that is excellent news for a company's cash flow and also for employees. However, the price of such generosity to the firm or to its existing employees is that there is less money—over and above the contractual obligations—to pay the men and women whose previous contributions helped grow the pension funds that can currently be used to oil a firm's financial operations.
The practice may also distort the real financial worth of a company. In the United States, according to The Wall Street Journal on 30 May, the Securities and Exchange Commission is
concerned that the pension income is giving less sophisticated investors a distorted view of some companies' health.
Mr. Frank Roy: My hon. Friend has referred to the manual grades of steelworkers, and he is aware that pensions not only take the type of holiday that he mentioned, but that thousands of steelworkers lost their jobs in the late 1980s and 1990s. They transferred their British Steel pensions to private pensions, and I am a member of that group because I received a manual grade pension after I was made redundant when the Ravenscraig plant closed. My British Steel pension was worth £32,000, but three weeks ago, I was informed that my pension had been mis-sold—the sum concerned is £11,000.
I took the trouble to find out what would happen to my pension, but does my hon. Friend not agree that ex-steelworkers need to be made aware of what is happening and that such cases needed to be cleared up as quickly as possible? Like the people who currently work in the industry, those steelworkers built it up.
Mr. MacShane: I very much agree with my hon. Friend. As I shall say later, I believe that there is enough money in the British Steel pension fund to clear up such anomalies. Steelworkers and the pensioners of this country will never forget the crime committed by the private pensions swindle. They declared their verdict on that on 1 May 1997 and it will take a generation or two before the dishonesty is forgotten.
Thanks to taxpayers' generosity prior to privatisation, the British Steel pension fund has been consistently able to report surpluses in each year since
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1990, when the new scheme was set up. Thus, when British Steel merged last year with the Royal Dutch Hoogovens firm to create Corus, it brought a handsome dowry to the marriage—a pension fund worth close to £10 billion running an actuarial surplus in 1999 of just over £1,009 million.
It is over the disposal of that surplus that great concern has arisen. At the time of the merger last autumn, the rules were suddenly changed for the pension fund and the company cut its contribution from 5 per cent. to just 2 per cent. The union trustees opposed that major reduction in the firm's contribution to the British Steel pension fund, but, as the law presently stands and given the way in which the 1990 British Steel pension scheme was set up, the company decides and the trustees have to bow down before its decision.
Mr. Llew Smith: As my hon. Friend will know, until recent years, at least one steel plant in my community employed 14,000 workers—it now employs 1,000. However, in one way or another, the steel industry still dominates my community. The people who built up the industry repeatedly tell me that they did the work and that the pension fund was set up for them. However, they are not receiving the benefits from the fund that employers, such as Corus, now enjoy. Those employers did not do the work and they did not build up the industry in the way that the people in my constituency did. Surely, that cannot be justified; it is like Robin Hood in reverse. Private steel owners rob the poor to maintain their rich positions in life.
Mr. MacShane: The point of the debate is very much to appeal to Corus to take a more responsible and socially just approach to the moneys in its pension fund. As my hon. Friend rightly pointed out, those moneys represent the deferred earnings of the workers—the savings appropriated from them. They have the right to be consulted, but the company's management has the power of decision. There was a take-it-or-leave-it order from the company on changing the rules of its pension fund, so will my right hon. Friend the Minister comment on whether the Government will consider making the rules rather more equitable rather than, as at present, so heavily loaded in favour of the company?
The union trustees considered appealing to the pensions ombudsman. However, on the basis of experience and legal precedent, it was not clear that this would be a fruitful approach even if it would have provided a bonanza for lawyers' fees. Does my right hon. Friend agree that the role of pensions ombudsman needs strengthening so that the trustees of pension funds can have confidence that he will support their case for full examination by an independent body in contested cases of the distribution of pension funds surpluses?
At the same time, British Steel made a one-off payment of about £800 million to shareholders as a sweetener for the merger. I know that, because my cheque for £1.25 arrived in the post. Two thirds of that £800 million went across the Atlantic because, along with many other firms in Britain and Europe, majority institutional share ownership is now in the hands of American pension and mutual funds. The coincidence of this huge payment of £800 million from a company which, thanks to the strong pound, is trading at a loss, taking place when the pension fund was rejigged to

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provide the new firm with a massive injection of year-on-year cash by more than halving its pension contribution has caused outrage among steel communities throughout the country.
I stress again that I am not accusing the company or the British Steel pension scheme of doing anything illegal or improper. Given the large sum in the scheme and the handsome surplus posted regularly, the scheme has been able to make improvements in payments that have benefited all pensioners. However, because something is legal and because some charity has been doled out does not remove the claim that I make on behalf of the 10,000 steelworker pensioners in my constituency and the many more who live in other constituencies that the call of justice and the appeal for generosity should now met in full.
I think of Mr. Horace Bolton in Rotherham, who worked for 44 years in the steel industry. After all that effort, his pension is just £50 a week. In fact, because of the different schemes and rules, that payment comes from two pension fund sources, but his appeals to have his years of service treated as a continuum have fallen on the deaf ears of a pension fund worth £10 billion.
I think of Mrs. Hingley in Brierly Hill, who was a supervisor in the British Steel Cookley stamping works. After 45 years labour, her pension is £22 a week—50p for each year that she worked. I think of Mr. Les Harper of Middlesbrough who after 40 years of continuous service receives £25 a week, and he is 92. Surely a company that can shape remuneration packages of up to £500,000 for its top executives can treat its retired workers with more generosity.
Mr. Deputy Speaker (Mr. Nicholas Winterton): Order. I express the hope to the hon. Gentleman that he will refer, if only briefly, to the ombudsman.
Mr. MacShane: I have.
Mr. Deputy Speaker: I am not sure that the hon. Gentleman has. Such a reference will make the debate relevant to the Minister.
Mr. MacShane: I asked whether my right hon. Friend the Minister agreed that the role of pensions ombudsman needed strengthening. That is what I said, Mr. Deputy Speaker. That question and this repetition of it will appear in Hansard tomorrow.
Instead of giving the new company Corus a major cash flow boost and a huge handout to existing shareholders, it would have been possible to reduce both employers' and employees' contributions to 2 per cent. for the next five years and then to review the situation. A £500 lump sum could have gone to all pensioners and to all widows. Those suggestions were put forward by British steel pensioners, but were turned down. They would have made a direct, immediate improvement to the quality of life of scores of thousands of retired steelworkers in Britain. They would have left the fund fully secured and thus approved of by the pensions ombudsman, but would have been a use of the surplus cash to help the many not the few. I appeal to the
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management of Corus, once the current actuarial review is over, to think hard about being more generous to existing pensioners.
Let us not forget that, under the present rules which are supervised by the pensions ombudsman, if the British Steel pension fund were to get into trouble, the active members—today's employees—would have to bail it out. British Steel as a company has put in only 34 per cent. of the contributions of the scheme since it was set up in 1990—the rest coming from employees. Yet all power lies with the management of British Steel, now Corus. This structure is a tribute to ripe old high Thatcherism in which partnership, equal responsibilities and equal rights were all dirty concepts.
I urge Corus, in conjunction with the unions and existing pensioners, to restructure the scheme so that the company and the trustees have an equal say in important decisions. I also urge the scheme to consider using its surplus to support existing steel communities in the UK, which remain the hardest hit in terms of loss of jobs and especially well-paid jobs for men associated with the steel industry. The winding up this summer of the European Coal and Steel Community and its linked funds take away an important source of financial support for constituencies such as mine struggling to come to terms with the end of the coal and steel jobs that once provided the backbone of the economy of South Yorkshire, south Wales, Teesside, Humberside, Lanarkshire and other industrial heartlands.
The steel and other giant pension funds now constitute a central part of the so-called new economy. If properly harnessed, those funds can help to rebuild the communities from which they draw their wealth without jeopardising their prime obligation to meet their pension requirements. Sending remittances to an area where men need new work confuses relief with the need for investment, which can create permanent hopes for a new economy. I do not expect the Minister to provide answers to all those problems, but we need to take a fresh look at the operation of pension funds. They should not only dole out small sums, but help to create new sources of wealth in the communities in which they originate.
12.50 pm
The Minister of State, Department of Social Security (Mr. Jeff Rooker): I glad that my hon. Friend the Member for Rotherham (Mr. MacShane) does not expect answers to each of his points because, in nine minutes, I cannot do justice to them all. However, I congratulate him on raising the issue and the important role of the pensions ombudsman in the treatment of surpluses in pension fund schemes.
I shall begin by briefly explaining the role of the pensions ombudsman, who can investigate scheme members' complaints about maladministration in the running of their scheme. Those complaints can be against the trustees of the scheme, managers, administrators and the employer. In investigating a complaint, the pensions ombudsman considers whether the actions of the subjects of it, such as the trustees, the employer and scheme administrator, have been in accordance with the scheme rules. Failure to comply with the scheme rules can be considered as maladministration.

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If the ombudsman determines that maladministration has occurred, he can direct that certain action is taken to rectify the situation. The ombudsman can consider complaints about the use of a scheme's surplus. Indeed, we have made an amendment to the rules under which the pensions ombudsman the Child Support, Pensions and Social Security Bill, which is currently in the other place and which we shall consider again when we debate the Lords amendments to it. That amendment will ensure that the ombudsman's procedures allow him to continue to consider such complaints.
Cases involving surplus may affect the interests of several parties, as my hon. Friend said. Our amendment will allow the pensions ombudsman to link to a case all those whose interests may be affected by the complaint and will give them an opportunity to have their say. Without that strengthening amendment, it would be difficult for the ombudsman to accept such cases. The previous Government were not wholly to blame for the position because the Pensions Act 1995 cleaned up much of the Maxwell scandal. Indeed, it is a tribute to everyone concerned that that Act was passed. It includes requirements on the treatment of scheme surpluses, which I wish had been in force when I was supporting constituents involved in the Lucas pension scheme who were robbed blind on surpluses. I make no apology for that remark.
My hon. Friend talked about pensions holidays and spoke about a firm operating at a loss transferring funds to shareholders, implying that that money came out of the pension fund. I do not know about that. However, before a payment is made from a surplus to the employer, the rules require that several things must be done. First, all current and future pensions in payment must be increased annually in line with the retail prices index up to a maximum of 5 per cent., including pensions accrued in the past. Secondly, the trustees of the scheme must satisfy themselves that the use of the surplus is in the interest of the members. Thirdly, the scheme members must be notified of the trustees' proposals in the manner required by law, which ensures that members' benefit from the surplus and their interests are taken into account.
In schemes in which payment from the pension fund to the company is permitted by the scheme rules, members have a right to challenge the trustees' decision by appealing to the Occupational Pensions Regulatory Authority if they believe that statutory criteria have not been followed. Opra will investigate the case and decide whether to allow the payment. In schemes that do not permit a payment, Opra has the power to modify the scheme rules. The statutory criteria are the same as those for schemes that permit payment, and Opra can decide whether to modify the scheme rules to allow a payment to be made.
The pensions ombudsman is barred from investigating complaints about those requirements for the simple reason that non-compliance is a matter for the Occupational Pensions Regulatory Authority. Opra can investigate non-compliance and sanction the trustees if they do not follow those requirements. The sanction can take the form of a fine of up to £5,000 per trustee or the trustee's removal from the scheme.
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To the best of my knowledge, the pension fund discussed by my hon. Friend has not applied to make a payment. Before such payment can be made, permission must be given. The merger took place last year and, now that it is June 2000, the Department and the regulatory authorities have no knowledge of the scheme or company ever applying for permission to make such payments. As I say, I am not certain about the exact nature of my hon. Friend's allegation.
Mr. MacShane: It is not a question of direct transfer. By cutting the contributions from 5 to 2 per cent., the company's cash flow is so altered that it can use other funds to make a payment to shareholders. That worry has caused outrage among steelworkers.
Mr. Rooker: That may be so. Surpluses are an emotive issue, and, as I made clear, I have experience of that. However, in considering trustees' treatment of a surplus, one must make a distinction between actuarial surplus and statutory surplus.
Actuarial surpluses are identified by the scheme actuary in the course of regular valuations. Statutory surplus, however, is calculated according to a formula prescribed by the Inland Revenue. A scheme is classed as being in statutory surplus when it holds assets in excess of 105 per cent. of its liabilities, calculated on the basis of the Inland Revenue formula. There are many tax reliefs associated with such funds, to which the public make a massive contribution. Indeed, they would not have achieved success without the contribution made by the public by means of tax relief.
It is important that the Inland Revenue should protect the public purse, so it makes certain requirements of the schemes, which are intended to make sure that pension funds do not receive undue tax relief. When the scheme holds funds in excess of 105 per cent. of its liabilities, it must reduce the excess if it is to retain full tax exemption. That can be done in may ways, including employer and employee contribution holidays, increasing the benefits to current and future pensioners, and making a taxable refund to the employer. Such a refund has been made in many cases, but permission must be obtained. Of course, the employer would have to pay 40 per cent. tax on such a transfer.
Regardless of the methods chosen, the plans for the elimination of the surplus must be approved by the Revenue. Occupational pensions are voluntary and companies are not under any legal requirement to run such schemes. I appreciate that surpluses are a contentious issue, as we must consider who owns them. However, under the rules on the minimum funding requirement brought in after 1995, which are currently being reviewed and on which we shall pronounce, no one will lose a pension.
The pension may be insufficient, but that is a matter for the trustees and those who run the scheme. Pensions already obtained in payment or accruals will be protected as a result of the security in managing the surplus. No one will lose out. However, the pension fund not being generous enough to its pensioners or its deferred payers is a matter for the trustees. The Child Support, Pensions and Social Security Bill will make fund members' involvement in trustee boards mandatory. However, that provision is not yet in place.

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I know nothing about the composition of the board of trustees of the fund described by my hon. Friend or about the fund members involved. However, I would be astonished if the trade unions were not heavily involved, given the nature of the industry and the unions' support.
Mr. MacShane: I welcome the Minister's comments, which tilt the balance in favour of trustees representing employees past and present. Will he join me in suggesting that Corus examines its surplus distribution and adopts a more generous approach to the poorly paid pensioners whom I mentioned?
Mr. Rooker: Corus is a blue chip company which, as my hon. Friend made clear, is operating within the law. It is, therefore, incumbent on it and all good employers who want to make a good impression on the communities that they serve, their former pensioners, their deferred pensioners and their existing work force, to make the most advantageous and generous provision for pensions that is possible within the rules. If surpluses are available, that avenue should be explored.

London Stock Exchange
1 pm
Mr. William Cash: The proposed merger of the London stock exchange and the Deutsche Börse raises important concerns about the regulatory and competitive environment of the City of London as a whole, and of United Kingdom public companies in particular. These concerns are, or should be, vital to the Government both as a matter of national interest and, as I shall show, as a matter pertaining to the Government's obligations to the City under the terms of a memorandum of understanding signed in 1997.
The issue should have been debated in the House on a Government motion. However, the Government ran away until they were forced here today. These concerns, which it is my purpose to raise, arise in large measure from the vagaries of the merger terms on offer. First, the London exchange, Europe's premier financial centre, which until now has drawn inward investment from the foremost financial institutions in the world, is under the deal valued the same as an exchange which, in terms of assets managed, is seven times its junior.
Secondly, the loss of London's position as Europe's financial capital would have a negative effect on the City's competitiveness in general, sparking an outflow of financial institutions such as market analysts, investment banks and advisory firms. Thirdly, under the deal, the UK's blue-chip firms will in Frankfurt be subject to financial regulation that is gravely inferior to that which they Presently enjoy under the Financial Services Authority—regulation that in London is underwritten by the memorandum of understanding to which I have referred.
Fourthly, competition between the London and Frankfurt exchanges will be skewed by the presence, at 0.5 per cent., of stamp duty on share dealing in the former. Fifthly, the interests of the Frankfurt exchange are likely to supersede those of London given that its 50 per cent. shareholding in the new entity will be held en bloc, whereas London's 50 per cent. will be divided between its 298 shareholding companies into individual holdings of just 0.17 per cent. each.
These broad concerns are compounded by a host of questions left unanswered from the debate in the House of Lords on 24 May and under the merger terms, including the location and funding of a central counterparty for the new exchange. The matters raised in the House of Lords require answer, and they were not answered by the noble Lord who responded for the Government on that occasion. They must be answered; if they are not answered today, they must be answered soon.
I recognise that modern global companies require immense liquidity in the exchanges on which they list. Companies listing in New York already have access to such liquidity, and I see no reason why European companies should not be put on an equivalent footing. The fact that Europe's share market is overly fragmented does not speak to the question, on whose terms should it be consolidated. As I put it in my letter to The Daily Telegraph of 5 May—I pay tribute to that newspaper for its tenacious investigation of this matter—the question is, who is to call the shots? At first glance, the answer to the question is overwhelmingly self-evident—it should be London.

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The London stock exchange manages 700 per cent. more assets than Frankfurt, its closest rival in Europe, and transacts 100 per cent. more by volume. There are more German banks headquartered in London than there are in Frankfurt and Berlin combined. The City's regulator, the Financial Services Authority, is world renowned for its probity, in contrast to its opaque equivalent in Frankfurt. Indeed, so attractive is the City that the American technology exchange, NASDAQ, chose recently to locate its European operations in London in preference to Frankfurt.
Despite all of these advantages, the London stock exchange is embarked upon a 50:50 merger with the Deutsche Börse in Frankfurt, causing the NASDAQ to reverse its decision to set up in London. Even this so-called merger of equals is far from equitable. It is nothing of the kind. It has all the hallmarks of a politically motivated reverse takeover. What Don Cruickshank, the merged entity's proposed chairman, describes as a 50:50 merger is in fact, owing to the distribution of shares, a 50:0.17 merger. Under the deal, the Deutsche Worse will hold its 50 per cent. of shares en bloc, but the London stock exchange holding will be split evenly between its 298 shareholding firms. It does not take a genius—I am sure that that includes the Minister—to work out that it will take only one London shareholder to vote with the Deutsche Börse, and Frankfurt will carry the day.
We are told by Gavin Casey that that is a temporary anomaly and that Frankfurt's holding will eventually be broken up. However, what assurances do we have? I urge the London stock exchange urgently to provide clarification on that point. A second and no less important defect of the proposed merger concerns shoddy financial oversight in Frankfurt. It is common knowledge that traders there conduct huge block trades in secret and that the company listing rules are complicated, to put it mildly. Even one of the supposed advantages of Frankfurt, its Xetra trading system, has broken down on more occasions than its London equivalent, SETS.
We are told that, under the merger, all high-tech or "new economy" stocks will be traded in Frankfurt, London being left with the blue-chip or "old economy" stock. Yet Mr. Cruickshank and his friends have so far failed even to address the thorny issue of how exactly a high-tech or blue-chip firm will be defined. Many companies defy or straddle such classifications. Where are their shares to be traded? There is also the danger that if blue-chip firms relocate to Frankfurt, many of the advisory and investment banking firms which depend upon them will go there too.
Of further concern is where the central counterparty for the new exchange will be located and how it will be funded. Until recently, the London stock exchange planned to create such a counterparty in collaboration with the London clearing house, yet we have heard nothing from Mr. Cruickshank on where the counterparty for the new exchange might be located. On this issue, too, we must have clarification.
In sum, while the merger is presented as one of equals, its terms are clearly quite advantageous to the smaller Frankfurt exchange. Heaven alone knows what it thinks it is playing at. Little wonder that last month Werner Seifert, the proposed chief executive of the new entity, wrote that
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whilst London is still centre stage, Frankfurt is waiting in the wings, ready to take a lead role.
Yet there is still hope for those who are opposed to the terms of the merger, for there is an obligation for intervention by the Government despite denials to the contrary. A memorandum of understanding between the Bank of England, the Treasury and the FSA, which was agreed in 1997, made it crystal clear that the Treasury has departmental responsibility in relation to exchanges and in maintaining confidence in the UK financial system. The memorandum states that the
Treasury is responsible for the overall institutional structure of regulation, and the legislation which governs it. There are a variety of circumstances where the FSA and the Bank will need to alert the Treasury about possible problems: for example, where a serious problem arises, which could cause wider economic disruption; where there is or could be a need for a support operation; where diplomatic or foreign relations problems might arise; where a problem suggests the need for a change in the law; or where a case is likely to lead to questions to Ministers in Parliament. This list is not exhaustive, and there will be other relevant situations.
The proposed merger of the London and Frankfurt exchanges qualifies under almost all of the terms specified in the memorandum. For example, is not hitching our stock exchange, and so our country, to the crisis-prone euro a problem
which could cause wider economic disruption …?
Would not the merged exchange push for common European oversight and so suggest
the need for a change in the law …?
What about the situation that is
likely to lead to questions to Ministers in Parliament …?
In fact, it did.
I tabled a question, which was answered on 11 May by the Economic Secretary to the Treasury. My having tabled a question to the Chancellor of the Exchequer requesting him to indicate what representations had been received, and asking him to make a statement on the matter, in a manner that can be described only as contemptuous of Parliament and of the obligations set out in the memorandum of understanding, he declined to make a statement. He left it to a junior Minister to reply, and the response was as follows. I was told that there had been no representations. The answer continued:
The terms of the proposed merger are a matter for the parties involved, subject to their securing the necessary approval of the relevant regulatory and competition authorities.—[Official Report, 11 May 2000; Vol. 349, c. 476W.]
That answer is simply outrageous. It is absurd that there have been no representations on the proposed merger. Further, according to the 1997 memorandum of understanding, it is manifestly not just a matter "for the parties involved"; the memorandum makes that clear. The Minister simply cannot get out of it.
I point out merely that Europe's pre-eminent stock exchange can secure better terms than those currently on offer. Olof Stenhammar, chairman of the Swedish stock exchange, summed up the poor terms on offer to London when he expressed
surprise that London was accepting a merger of equals.
He went on to describe the deal, accurately, as having
a top-down approach with bureaucratic and political undertones, favouring institutions at the expense of retail investors.
The whole issue is a disgrace.

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As if the criticisms identified by Mr. Stenhammar were not enough, the authorities in Frankfurt have made it clear that they will seek to extract even better terms for the Deutsche Börse, possibly preventing the new entity from being headquartered solely in London. Any such development, likely as it is, must be resisted at all costs. Indeed, the entire deal should be rejected.
I ask the Minister whether the Chancellor of the Exchequer or any other Cabinet Minister will make a statement on the whole matter to the House of Commons and thereby provide the proper, correct, constitutional and urgent clarification that is needed on the important points that I have raised. It is an outrage that he has not come to the House, or indeed to Westminster Hall today. I call on the City to see sense, to realise its own worth and to vote to reject the deal.
Mr. Deputy Speaker (Mr. Nicholas Winterton): The hon. Member for Arundel and South Downs (Mr. Flight) has the permission of the initiator of the debate to participate and has notified both me and the Minister.
1.12 pm
Mr. Howard Flight: I congratulate my hon. Friend the Member for Stone (Mr. Cash) on securing a debate on an important subject. Subject to the regulatory permissions and whatever Government involvement is required, the stock exchange is a private entity now. It is up to its members to do what they want, but it is becoming increasingly apparent that an unsatisfactory deal is being proposed, which will be voted down by the members in September, with opposition from large and small members.
The Opposition are not against the concept of a pan-European stock exchange, but against the terms of the proposed deal, which seem to smack of a lack of confidence and, indeed, of long-term strategy among the management of the London stock exchange. As my hon. Friend pointed out, London is overwhelmingly the biggest market in terms of companies quoted, turnover and value. It handled some 50 per cent. of international share trading, against the 5 per cent. handled in Germany.
What seems to have happened is that the strength of character of Mr. Seifert has dominated. When mergers occur, they inevitably lead to one party taking over. It is clear that a merger on those terms will lead to a market dominated by his leadership in Frankfurt.
What is wrong with the deal? It does not cut costs. What is crucially needed is a United States-style net settlement system. At present, transaction costs are nearly 10 times as much here and in Frankfurt as they are in the United States. It will create six markets. In addition to blue chip in London, NASDAQ International in Frankfurt and AIM, or the alternative investment markets, there will be a Midcap-middle-sized capital stocks—in London, a Midcap in Frankfurt and German growth stocks on the Neuer market.
Two regulatory authorities will continue. Companies will be subject to the opaque German trading rules and, indeed, to a stock market that is controlled by two or
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three banks in an oligopolistic situation in Germany. A crucial point is that London has the machinery for multi-currency settlement in the CREST arrangements, which Frankfurt does not. That will be crucial for any pan-European stock exchange.
It is clearly unwise for London to surrender to Frankfurt the stocks of the future—the growth stocks. Excellent though the blue chips may be today, they are inevitably "old economy"—companies that will decline in future. Therefore, to do that is to sell out on the future.
There is no evidence that Xetra is any better than the combination of CREST and SETS. The change would cost UK brokers a fortune, raising the issue of who will pay for it. The Fund Managers Association has made it clear that it is a poor deal. It provides no cost reductions and worsens the regulatory situation. It is, if anything, less efficient than the present arrangements. A far better deal can be done It is time that the London stock exchange started to talk to NASDAQ directly. We thought that the Chancellor had arranged that for the exchange.
1.15 pm
The Economic Secretary to the Treasury (Miss Melanie Johnson): I was pleased to hear that the hon. Member for Stone (Mr. Cash) has lost none of his knack of putting his view in a controversial manner. We have had a very good example of that today on an important subject. The proposed merger between the London stock exchange and the Deutsche Börse is clearly an important subject, which has understandably attracted considerable comment since it was announced on 3 May.
The London stock exchange is by any standards a major financial institution and one of the world's leading equity exchanges, as the hon. Gentleman remarked. However, the environment in which the LSE operates is undergoing a period of dramatic change. Technological developments such as electronic trading systems mean that it is—or soon will be—possible to have access to an exchange from virtually anywhere in the world. Allied to the general process of internationalisation of financial services, the result is the breaking down of barriers between national markets.
In Europe there are increasing customer-driven pressures for integration of financial markets. Institutional investors are increasingly looking at the European market in terms of industrial sectors rather than individual countries.
Against that background, it is hardly surprising that there is pressure from market users for consolidation of the exchanges within Europe, and the attractions of creating a single trading platform for European stocks are obvious. In response, the exchanges are coming forward with initiatives for mergers and alliances. The French, Dutch and Belgian exchanges are merging to form the Euronext exchange. Various Scandinavian exchanges are combining. Tradepoint, the UK electronic equities exchange, is in discussion with the Swiss stock exchange. Against that background, it is hardly surprising that the LSE should be pursuing its own merger initiative.
There are good reasons for mergers. Investors and companies both benefit from the creation of broader and deeper equity markets. Companies are able to offer

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their securities to a much greater number of potential investors. Investors have the opportunity to invest in a much wider range of equities. All sides should benefit from the lower trading costs that result.
I should make clear, however, that the terms of the deal to create iX—the international exchange—are a commercial matter for the parties involved, subject, of course, to their obtaining the necessary clearances from the relevant regulatory and competition authorities. The hon. Member for Arundel and South Downs (Mr. Flight) recognised that point. The Government were not a party to the negotiations.
Mr. Cash: Will the Minister concede—perhaps she is coming to it—that there is an important matter that she is leaving out, namely the memorandum of understanding. It lays down the ground rules and deals with exchanges—I have already made the point. I hope that she will refer to it because it is crucial to recognising the Government's obligations.
Miss Johnson: It is a matter of how the hon. Gentleman has interpreted the MOU. I understand that a merger is not a threat to financial stability. It would be in those terms that there might be some case for pursuing the provisions under the MOU. I make it plain that the Government were not a party to the negotiations.
On the competition aspects of the merger, the merger is below the asset and turnover thresholds that would make it a matter for the Commission. It therefore falls to the national authorities to consider. In the UK, if the proposals for the merger proceed, the Secretary of State for Trade and Industry will make his decision on whether to refer the case to the Competition Commission in the light of the advice of the Director General of Fair Trading. It is obviously not for me to comment on a particular case.
On the regulatory issues, which are of considerable interest to hon. Members, the Government made it clear in another place during consideration of amendments to the Financial Services and Markets Bill, which some of us find it difficult to leave behind us—the hon. Member for Arundel and South Downs laughs—we have no doubt that the provisions of the Bill relating to the recognition of exchanges are adequate to deal with structures such as the proposed iX. Although iX will have operations in both the UK and Germany, its component markets will need to be based in one or other of the countries for regulatory purposes. The markets based in London will fall to the Financial Services Authority to oversee, and those in Germany to the German authorities.
Both the FSA and its German counterparts will need to be satisfied about the regulatory arrangements if the merger is to proceed. They are already working together and considering the practical implications of the proposed merger. Indeed, Howard Davies visited the BA We last week for discussions with his German opposite number.
Much of the detail of the proposed merger is still to be worked out by the exchanges, and therefore the regulatory authorities cannot at this stage say precisely what the regulatory arrangements will be. However, it is worth noting that the merger is not without precedent in
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terms of its implications for regulation. For example, there is already an instance of two separate exchanges with a single owner operating in two countries. The OM Group owns the OM Stockholm exchange, which is regulated by the Swedish regulator. Another subsidiary is OM London exchange, a UK recognised investment exchange regulated by the FSA.
Mr. Cash: Does the Minister recognise that legislation was required with respect to Lloyd's of London, for example? That was a highly contentious matter and has been referred to in subsequent public legislation. The reasons are those that I gave in relation to the memorandum of understanding. These are issues of seminal importance to the future of the City of London. Lloyd's of London was a good example. I ought to declare an interest, as I was involved in advising on the matter as a lawyer, before I entered Parliament. When one is dealing with the centre of gravity in stock exchanges, that must be dealt with properly, not through private deals, as is the case at present.
Miss Johnson: I do not accept the hon. Gentleman's suggestion.
The FSA and its Swedish counterpart have their separate roles in the case that I was describing, and the arrangements work satisfactorily. There is a clear parallel between that and the present case.
As regards iX, the pan-European blue-chip market is expected to be run as part of a recognised investment exchange in the UK, and will therefore be regulated by the FSA. The FSA will also continue to supervise the London market for UK smaller and medium-sized companies and AIM. The derivatives market and the pan-European market for growth companies will be run from Germany and will be regulated by the German financial services authorities.
Details of the listing and admission to trading standards for the iX markets have not yet been announced. However, the stock exchange has made it clear that companies will not be required to give up their home market listings in order to be admitted to trading on the new iX pan-European markets. German companies listed in Germany will be traded on iX's pan-European markets, along with UK listed companies. This will not be a unique situation. Tradepoint intends to introduce pan-European trading in the near future and a similar situation will pertain there. To date, Tradepoint's plans have not given rise to any insurmountable problems for the FSA.
The fact that the shares of UK and German companies will be traded on the same market does not necessarily mean that investors will automatically assume that the same listing regime applies. It is already the case that foreign companies that are traded on the London stock exchange are not required to comply with all the provisions of the UK listing rules.
The iX will consider what standards it wishes to impose on companies trading on its markets—for example, in terms of disclosure requirements—in addition to those required by the company's domestic listing authority. iX will be a commercial operation and will obviously have to take into account the wishes of its users, and the companies quoted on the exchange will need to consider the standards that investors expect.

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The arrangements for companies transferring between the various components of iX have yet to be settled, but I understand that the intention is that to be included in the new blue-chip index, a company would need to be traded on the London blue-chip exchange.
With regard to company law requirements, UK-registered companies must follow the requirements of UK company law, regardless of where they are quoted and traded. Again, it is worth noting that the customers of exchanges take the standards of regulation into account when deciding where to do business. Companies will therefore have to take account of what the market wants, as well as the legal requirements to which they are subject. That has been one of the attractions of being based in London, as the hon. Member for Stone accepted.
The merger has raised other issues, including the issue of trading in different currencies, as we heard. The stock exchange has clarified its position on that in evidence to the Select Committee on the Treasury on 17 May, and elsewhere. The stock exchange's press release on the same day stated:
The new exchange will need to offer trading in a company's shares in the currency which best meets the needs of investors and other users of the market. In the event that the primary currency of trading was not sterling for a UK company, the Exchange would ensure that sterling prices were still available for private investors, newspapers, indices etc.
As for the implications for the UK's entry into the euro, the Government's position is unchanged. It remains as set out by the Chancellor of the Exchequer in October 1997—a statement with which I am sure the hon. Member for Stone is familiar. The determining factor underpinning any Government decision on economic and monetary union is whether the economic case for the UK to join is clear and unambiguous.
In conclusion, a number of questions raised by the merger proposals cannot be answered definitively at this stage. The London stock exchange will issue its information memorandum in July, which will set out in detail the terms of the merger. As the hon. Member for Arundel and South Downs commented, it will then be for members of the exchanges to judge the merits of the proposed merger, and for the regulatory authorities to satisfy themselves about the arrangements for the merger.
Mr. Cash: May I make a brief reply?
Mr. Deputy Speaker: Unfortunately, the hon. Gentleman has had his say and made his interventions, the Minister has replied, and the debate comes to an end. We move on to the next subject a few minutes early.

Domestic Violence
1.27 pm
Ms Margaret Moran: I begin by quoting from survivors of domestic violence. A child who was involved in domestic violence said:
My worst moments were when my dad said he was going the throw the baby out of the window, and when he said he was going to cut my mum's ears off and poke her eyes out.
Those are the words of a child terrorised by domestic violence.
A parent said:
After he was released from prison for stabbing me, he saw my daughter at the probation office under supervision. After a while they persuaded me to let him have her on his own. Things went OK for a long while but when she was eleven, she became very depressed and unhappy and tried to get out of seeing him. It turned out he had started hitting her on contact visits.
Another parent reported:
On every occasion he came to the house he would force his way in. He continued to abuse me physically and verbally in front of the kids. I had to call the police to remove him after contact visits, and on several occasions he raped me. I still belonged to him, or so he thought. The thought of him coming to collect the children from the house terrifies me. At the moment his parents collect and bring back the children, but from May the court has ordered that he can come to the house. Once again I will be unsafe and at risk from this person.
All those are the words of survivors of domestic violence, as expressed in a recent online consultation initiated by the all-party parliamentary group on domestic violence. That e-consultation, Women Speak, links survivors of domestic violence with parliamentarians in order better to inform our policy, legislation and practice on the subject.
Ms Debra Shipley: I am grateful to my hon. Friend for giving way so early in her presentation. I record my great respect for her work on violence in the home, in particular the effect on children. Does she agree that the online consultation, Women Speak, was a huge eye-opener for all of us who were involved? I promoted the Protection of Children Act 1999 with the help of my hon. Friend and I thought that I knew a lot about violence against children, but the direct information that came over was appalling. It is extremely important that we have direct contact with survivors, so that we can learn how to tackle the issue.
Ms Moran: I thank my hon. Friend the Member for Stourbridge (Ms Shipley) for that important intervention, which emphasised that we heard the powerful voices of women who have experienced domestic violence and its impact on their children. In a month, more than 1,000 contributions from throughout the country and almost every conceivable community were made to the online consultation. It highlighted subjects on which policy is not being implemented, and gaps in legislation. The debate results from the voices that we heard. I hope that we shall listen to them carefully because it is almost unique to hear directly the full and frank testimony of survivors in the circumstances that we are considering.
The issue that emerged from the consultation cried out for action. The survivors called for an end to the courts almost automatically granting a violent parent

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access to children through child contact orders. We must heed those calls and take action to protect women and children who are at further risk of violence and abuse. More than 90 per cent. of contributions from survivors that referred to child contact raised fears that they and their children were at continued risk of violence or abuse. That is a powerful statement, which we should heed. Women and children who have fled violence, ostensibly to a place of safety, continue to be subject to violence and abuse. There is evidence of women even being murdered as a result of child contact orders.
Changes to the Children Act 1989 are urgently needed. Neither the Act nor the guidance refer to domestic violence. The Act does not require the court to consider the safety of the parent or any other children in the family. The measure, which was intended to protect children, is generally good. Yet it fails to protect the children who need most protection—those who have experienced domestic violence. Consequently, judges almost always grant child contact orders as being in the children's best long-term interests, even if a parent is known to be violent within the family.
Research evidence shows that the courts do not recognise that women are at greatest risk of fatality after separation, and that when there is violence in the family, there is a higher than average likelihood of violence towards, or abuse of, children. The case of Georgina McCarthy, who was murdered almost two years ago today, illustrates the problem. Every agency tried to protect her, but she was murdered and her child was abducted as a result of a child contact order by the courts.
In 1999, a survey of 130 survivors found that 76 per cent. of 148 children ordered by courts to have contact were said to have been abused by the violent parent. Research by Hughes et al in 1989 showed that child abuse and woman abuse occurred together in 40 to 60 per cent. of cases.
Eleanor's ex-husband broke into her house in 1995 and subjected her to five hours of violence. While he was in prison, her daughter, aged four, revealed that her father had sexually abused her. That was confirmed by medical evidence and contact was stopped. However, in 1997, the court decided that there was insufficient evidence of sexual abuse by the father and restored supervised contact. The effect on the child was devastating. Contact was stopped again and social services decided to prosecute the father. The Crown Prosecution Service dropped the charges because it did not wish to put the child in the witness box. A judge ordered supervised contact in a family centre. Eleanor appealed because none of the local contact centres provide supervision. Despite that, she has received a notice, arid will be sent to prison if she does not comply with the order.
Contact is refused in fewer than 2 per cent. of child contact cases. In 1997–98, contact was granted in almost 33,000 out of 36,000 cases. That figure is an underestimate because many women are advised by solicitors that there is no point in contesting a contact order and that it is in their best interests to agree informally to contact. For example, solicitors persuaded Sarah Heatley, who was worried by her husband's violent behaviour, to agree to contact without a court hearing. Her two children were murdered during a child contact visit.
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For a woman and her children, the apparent safety of a hideout or women's refuge is illusory because, in a few weeks, she is likely to receive a summons that requires her to respond to her ex-partner's application for contact with the child. The nightmare begins again.
Violent partners frequently use contact orders to track down and harass the fleeing partner. A child's address is often disclosed accidentally by order of the court. There are examples of some courts giving out the addresses of refuges, thus endangering many women and children. By applying for seek-and-find orders, men can require the police, social services or the Department of Social Security to disclose a child's address to the court. Those orders were never intended for that purpose. Even if the address is kept secret, it is easy for the violent parent to locate the child and the abused woman through the source of the child contact order and the location of the court in which the hearing will be held. Pity the five-year-old who thought she could protect her mum by telling her father that they lived in Bedding rather than Reading; imagine the intolerable pressure on a child so young and desperate.
Families who flee violence are more vulnerable to being tracked down by their abusers because the courts almost invariably issue child contact orders. They have been used as a method of harassing families. A writer from Kent told us that her ex-husband's consistent attempts to find her through repeated court orders to obtain child contact over five years destroyed her life and the lives of her children. Contact was eventually prevented by a sharp-eyed community psychiatric nurse, who faxed the court a damning report on the schizophrenia of the violent ex-partner. Otherwise, the mother would have faced imprisonment if she had prevented child contact. How many other families' lives have been destroyed? How many children's formative years have been lived in fear and uncertainty because of the contact orders?
The Department of Health has accepted the impact of domestic violence and the strong link between it and child abuse. That is reflected in the Department's training pack, "Making an Impact", which is intended for professionals who work with children. Sadly, the message is not getting through to some people, even when there is every reason to believe that the child has been abused.
It is clear that many judges are unaware, when they issue child contact orders, that supervised contact becomes unsupervised in six months. Only about 1 per cent. of contact centres offer supervised contact. Even if they were safe, many are run by volunteers. Excellent though volunteers are, many are untrained and cannot offer the safety and security that women who have been abused and children need. The centres urgently need wholly safe environments and well-trained staff. Child counselling should also be provided. Sadly, such provision is lacking and underfunded. Perhaps the Lord Chancellor's Department could examine that with colleagues in other Departments, for the safety of the women and children involved.
Abido Choudhry fled to a refuge after years of violence. Her husband was granted supervised contact with the three children. After six months, those contacts became unsupervised. The oldest child complained to social services of their father's mistreatment during contact, but the court ordered overnight stays. As a

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result, two of the children were abducted, are now thought to be in Pakistan and are unlikely ever to see their mother again.
Women and children should not be put in such danger by our courts. Those regrettable incidents are not isolated. They were entirely predictable and could have been prevented if we had adequate legislation and court procedures to deal with domestic violence.
The Government's consultation paper, "Contact between children and violent parents", which outlines good practice guidelines, is welcome and may lead to better court procedures. They are urgently needed, but they are not mandatory. That is why we need to change the Children Act 1989. Such a change has been made in Northern Ireland and, indeed, in many other countries. It is perverse and dangerous that such changes should be delayed here. We are, in effect, condoning de facto court-approved child abuse.
The law is preventing the police, social workers and child protection agencies from doing their job of protecting the most vulnerable. The case of Georgina McCarthy—murdered by her ex-husband, despite all the attempts of every agency—had a tragic inevitability, and such cases may happen again, perhaps tomorrow.
The recent consultation by the Lord Chancellor's Department on the issue, undertaken by the advisory board on family law's Children Act sub-committee, is also welcome. It proposes guidelines to be followed in cases where domestic violence is alleged, but many of the agencies believe that legislation is still needed. Those agencies include Women's Aid, which is to be congratulated on all its work on the issue, and a wide range of women's and children's organisations under the Best Interests coalition. I understand that the National Society for the Prevention of Cruelty to Children is also involved and is due to start a campaign on the issue. Those bodies are supported by the powerful voice of the women—the survivors—whom we heard in the all-party online consultation.
If we are to introduce guidelines, as is proposed, what will be the mechanism for monitoring their impact? The sad fact is that, at the moment, little or nothing is done by the Government to monitor the impact of the Children Act in cases of domestic violence. Research has been done by academics on a small scale and by Women's Aid. Perhaps my hon. Friend the Minister will liaise with her colleagues in other Departments to ensure that we track child contact outcomes where domestic violence is an issue. Sadly, my parliamentary questions on the subject have elicited the fact that social services reports, undertaken as part of part VIII reviews under the Children Act, are not collected, tracked or monitored, so information about the impact of child contact orders on domestic violence is not collected systematically.
I ask the Government to find out precisely how many children have been killed in recent years by parents known to be violent before and after contact visits. That information is contained in the part VIII reviews, and we need to study and learn from it if we are serious about tackling the problem. It could also be used to develop detailed risk assessments before contact orders are granted.
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The domestic violence intervention project is piloting such a scheme, which crucially includes the women's views about the risks involved in granting access to children, but, sadly, no funding is available to evaluate it properly. That needs to be considered urgently. Vital evidence collected by police and social services when they advise women to leave their homes for their own safety should be provided in writing and the abused parent should be able to use it to seek a court order under section 91(14) of the Children Act, thus requiring the violent parent to seek leave from the court before applying for a contact order. That procedure is little used at present, but the relevant departments could instigate it relatively speedily.
The Department of Health urgently needs to undertake research, perhaps in conjunction with the Lord Chancellor's Department, on children's experiences of different levels of contact where there is a history of violence in the family, including the impact on children's health and development. In that way, we will achieve a sounder basis on which to develop policy to prevent further tragic cases, such as those which I have described.
Finally, but not least, we need adequate funding for refuge services and for counselling children. All of that adds up to an important package that could help to protect our children. However, it is important that we review the need to legislate and to amend the Children Act. The proposals to change future contact involving unmarried parents might be welcome in principle. However, as the Children Act stands, they could also be unwelcome because they could include unmarried parents, who might be involved in even greater incidence of child contact in the circumstances that I have described.
I am pleased to have had this opportunity to raise an issue that, among all the powerful contributions to the all-party group's online consultation with the survivors of domestic violence, is perhaps the most amazing and most appalling. We have heard the powerful voices of the women survivors and their continuing experiences. They fear for their children when child contact orders are issued if there is violence in the family. I hope that the power of the survivors' voices will help to persuade the Government that urgent action needs to be taken to amend the law and protect those women and children.
1.47 pm
The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): Although we are debating a serious issue this afternoon, it is a pleasure to be under your chairmanship, Mr. Deputy Speaker, and to discuss it so constructively. I pay tribute to my hon. Friend the Member for Luton, South (Ms Moran) for the way in which she has presented her case. She has described in the most graphic terms exactly the difficulties faced by the survivors of domestic violence, and brought their cases to light. This is a rare opportunity to discuss such issues, especially those involving child contact orders and concerns about domestic violence.
I acknowledge the good work that my hon. Friend has done as chair of the all-party group on domestic violence. I am also glad to acknowledge and put on record her work in putting forward to the Prime Minister recently a petition that was signed by more

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than 5,000 people and presented to mark the second anniversary of the murder of Georgina McCarthy, whom she has mentioned. I have discussed that serious and appalling case with the hon. Member for St. Ives (Mr. George) who visited me with representatives of Women's Aid. Georgina was tracked down and murdered by her ex-husband, as my hon. Friend has said. Her case is a warning to us all that we cannot afford to be complacent. As my hon. Friend's petition points out, Georgina's case is not an isolated example.
In 1998, 75 women were killed by a current or former spouse, cohabitant or lover—more than one a week. However, the problem is not simply one of male violence. It is only fair to say that, in the same year, 37 men were killed by a current or former spouse, cohabitant or lover. To complete that gloomy roll of statistics, in 1998–99, 69 children were killed by a parent—unfortunately, the statistics do not capture whether by their mothers or fathers.
Violence between spouses, or between parents and children, does not always lead to murder, manslaughter or infanticide; but domestic violence is a serious problem, which we take seriously. I therefore welcome the opportunity to explain what is going on, and what the Government are doing. About six months ago, my right hon. Friend the Home Secretary launched the zero-tolerance campaign in Liverpool, and it has proved very successful. Although today we are focusing on court decisions and court contact orders, the Government are involved in many other matters.
As my hon. Friend's petition makes clear, there is a significant fear that contact orders are sometimes made inappropriately, and, in particular, that the courts do not always take proper account of allegations of domestic violence. That is a valid concern, as both the judiciary and the Government recognise; but it relates to a difficult area, in which no solution will please everyone.
We can all agree that children and women—and, for that matter, men—ought to be protected from violent parents or former partners. We also know that, other things being equal, it is in the interests of children to maintain contact with both their parents. We know that, when contact is appropriate and is maintained, nonresident parents are more likely to pay maintenance for their children. Parents, too, have a right to their family life, unless positive evidence has shown to the satisfaction of the courts that that would put their children at risk of harm.
We could not agree to create a system in which any parent—it could be a father, as well as a mother—could automatically deny the other parent any contact with their children simply by making an unsubstantiated, and possibly unfounded, allegation of abuse. We must recognise that that could sometimes be used as a device to exclude parents from contact, or to delay that contact. We must also recognise that some blameless parents—most often fathers—have immense difficulty in enforcing contact orders that have been made in their favour, and that the system of enforcement, which is largely ineffective in these cases, lets such parents down.
I am glad to say that the Children Act sub-committee of the Lord Chancellor's advisory board on family law, to which my hon. Friend referred, has taken on these knotty problems. Last year, the sub-committee—which
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is chaired by Mr. Justice Wall—published a consultation paper on contact with violent parents, which my hon. Friend also mentioned. Around Easter, the sub-committee reported the results of its consultation to the Lord Chancellor, and made its final recommendations. The report has been published. Mr. Justice Wall and his sub-committee will embark on a similar exercise in relation to the enforcement of contact orders.
The report on domestic violence and child contact concluded that legislation was not necessary—a view supported by most respondents—but that there should be guidelines for the talks. The draft guidelines are several pages long, and I shall not quote from them fully, but they include the following main points.
Wherever possible, the court should make findings of fact as to whether allegations of violence are true, and as to the effect of the violence on the child and the resident parent. When allegations are found to be true, the court should consider the harm that the child has suffered and the harm that the child is at risk of suffering, and should make an order for contact only if it is satisfied that the safety of the resident parent and that of the child can be secured before, during and after contact.
When the court has made findings of violence but nevertheless considers that contact is in the best interests of the child, it should consider what additional directions may be necessary to ensure that the order is implemented safely. It should also consider whether to make a non-molestation order under part IV of the Family Law Act 1996. The court should always explain how its findings on the issue of domestic violence have affected its decision. In particular, when it has ordered that there should be contact despite having found that domestic violence has taken place, the court should explain its view that contact is in the best interests of the child.
The sub-committee recommended that the guidelines should be brought into force through a practice direction to be made by the Lord Chancellor and the president of the family division, Dame Elizabeth Butler-Sloss. However, at the time when the sub-committee was finishing its report, four appeals raising these issues were heard by the Court of Appeal. Judgment has been reserved on those cases. The Lord Chancellor has agreed that the sub-committee's draft report should be made available to the Court of Appeal. We look forward to its judgment, and to finding out whether it lays down any guidelines as a result. The Lord Chancellor has agreed with Dame Elizabeth that, once a judgment has been made, they will consider whether a practice direction to the judiciary would be helpful, and what further action may be necessary.
In its consultation paper, the sub-committee compared the different approaches to domestic violence and child contact in Australia, New Zealand and Northern Ireland. Some people would like the law to be amended so that, like the New Zealand legislation, it included a presumption against unsupervised contact when domestic violence has taken place. It is worth emphasising that that statutory presumption is a presumption against unsupervised contact, not a presumption against contact altogether.

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As I said, the suggestion was canvassed in the subcommittee's consultation. Most respondents agreed that legislation was not necessary, and that sufficient safeguards could be introduced by way of guidelines. The Government accept that view.
Ms Moran: I welcome the sub-committee's findings. The issue, obviously, is whether the guidance will be interpreted differently in different parts of the country—a disparity that would be resolved by some change to the Children Act, but not necessarily by the Australian system. May I press my hon. Friend on the question of monitoring? Might it be possible to consider legislation if the effects of the guidance are not the effects that were intended?
Jane Kennedy: I hope that what I will say shortly will reassure my hon. Friend.
As recently as yesterday, officials in my Department who are responsible for the development of family policy and the effect of the Children Act met staff who are responsible for the administration of the courts to discuss the collection of more information about domestic violence in Children Act cases. It is a live issue in the Department, and one that we are pursuing.
We would be more persuaded that legislation was required if it were the case—as my hon. Friend's petition says—that the courts operate an overriding principle that absent parents should be awarded contact with
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their children, and that that principle does not take account of cases in which a parent and children are in danger of experiencing violence. That is not correct. There is no overriding principle that contact should be maintained with an absent or non-resident parent. Section 1 of the Children Act says that the paramount consideration that the courts shall apply in determining any question with respect to the upbringing of a child is the welfare of that child. When considering whether to make a contact order, the courts must also have regard to the so-called welfare checklist, which includes such factors as the child's wishes and feelings, the likely effect on the child of any change in his or her circumstances, and any harm that he or she has suffered or is at risk of suffering.
Although we began the debate early, I realise that we are rapidly running out of time. I would have loved to make many more points; perhaps I can make them in a letter to my hon. Friend.
This is not the end of the story. The Georgina McCarthy case raised several questions about the way in which cases are currently handled, and the Lord Chancellor's Department and the Home Office are considering them. There is much work for the Government to do—much work that they are committed to doing. The subject is critically important, and I thank my hon. Friend for raising the profile of that crucial work.
Question put and agreed to.
Adjourned accordingly at Two o'clock.