Westminster Hall Sitting of 25 April 2001

Preamble
[MR. MICHAEL LORD in the Chair]

New Deal (Scotland)
Motion made, and Question proposed, That the sitting be now adjourned.—[Mrs. McGuire]
9.30 am
Mr. Ernie Ross: I am very pleased to be here this morning to talk about a subject that is so close to my heart. I spent 10 happy years as a member of the Select Committee on Employment. Although they were happy years for me because I was doing something that I enjoyed, they were disastrous for the people of this country because they were part of the 18 years of misery that we had to suffer as a result of the infamous pact to bring down the previous Labour Government. I make that point because I note that, once again, no representative of the Scottish National party is here. It seems that the nationalists do not give a hoot for the unemployed or for people living in poverty in Scotland. We should not be surprised. No doubt, they will have some excuse that will satisfy some of their colleagues.
We are here to examine the new deal's impact on Scotland. The idea of a new deal was born from our experience and that of people who were unemployed or seeking employment during those 18 years of Conservative Government. During the 10 years for which I was on the Employment Committee, we examined various Government initiatives but could perceive no coherence in the schemes there seemed to be no policy framework surrounding them, other than an aim to reduce the claimant count, which was high and rising.
I fought the 1979 election alongside the Minister of State, Scotland Office, and my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall)—all of us aspiring MPs. I remember a poster—"Labour isn't working"—that had a picture, allegedly of a dole queue. By the time that we got rid of the Conservatives 18 years later, that dole queue could have been replicated three or four times, without reflecting accurately the damage that those 18 years had done to people their life chances and the economy. That upset most of us who were trying to get our constituents back into work or help those seeking to enter the work force, for whom there was no ladder and no coherent strategy.
There was instead a series of schemes. I do not claim that every scheme that the Tories tried to introduce was wrong or bad—some were very good. I remember a community programme that many of us hoped might last, but did not, and there were other programmes that had a basis in good policy. The problem was that the Government did not believe in them. Their main criterion was to get the headline claimant count to below a magical number. We never really understood what that number was, but that was their idea. Every month, the Government would look anxiously at the claimant count, without noticing the individuals and their
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circumstances, families and communities—they were side issues to the main criterion of getting the claimant count down.
A group of people working at the Department of Employment was allegedly attempting to help people into work. I say "allegedly" because, although those civil servants had once been full of enthusiasm and fired by the belief that their task in life was to help people find work, once they were in the Department under the previous Government, they quickly learned that their job was to discipline the unemployed for failing to have a job—not to help the unemployed but to sanction them. Those civil servants became very dispirited. My experience on Select Committees, visiting various Departments and parts of the country and meeting officials from the Department of Employment, means that I know how the frustration and anger was apparent in those individuals. They wanted to do a job for which they knew they had the capacity, but the Government and their policies would not allow them to do it. They were particularly frightened at conference time, when prophetic speeches would be made at the Tory party conference.
Mr. David Marshall: Prophetic or pathetic?
Mr. Ross: Probably both, but they certainly excited the masses at the conference. The Tories are not the only culprits; occasionally, we do the same—or we did before we reinvented ourselves and got back on to the straight and narrow. However, making a speech at conference and translating it into something that will work in the real world are entirely different things.
I remember a party conference at which the right hon. Member for Hitchin and Harpenden (Mr. Lilley), then Secretary of State for Social Security, waxed lyrical about how he would drive the unemployed back to work; he received great cheers from the audience. He was supported by the right hon. Member for Kensington and Chelsea (Mr. Portillo), then Secretary of State for Employment. The idea was that itinerant people were wandering the country, living in hippy communes on the south coast, enjoying the palm trees and cream teas of Devon. They were supposedly enjoying the good life and turning up for job interviews in such a poor condition either of dress or of attitude that they could not be employed.
Those of us who understand the nature of unemployment and the way in which the unemployed are driven down know that after six months, one year, a year and a half or two years of unemployment and living in a household in which no one works, people are in no mental or financial position to turn up to an interview in an Armani suit and Gucci shoes. However, it was thought that if they did not turn up in such style, the employer could write on the green card that they would not employ that person because his or her attitude was wrong, the green card would be sent to the Department of Employment, and a sanction would be levied against the poor individual. That was the theme of the speech made at the Tory conference.
However, the two right hon. Gentlemen had to face reality when they came before the Employment Committee. I remember that I and other members of the

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Committee questioned them closely. We asked them whether they would expect someone who had been unemployed for two years and was living on subsistence money to turn up to an interview in a sharp suit, clean shirt, tie and the latest shoes. Both said no. They did not say it as emphatically as that, but their answers—which are on record in the Employment Committee minutes—show them backing off considerably from their rhetoric at party conference.
That Government had no coherent policies or strategies, and no long-term aim. There was a succession of schemes, but I challenge the hon. Member for Beaconsfield (Mr. Grieve) to name one scheme, which the Tories introduced during their 18 years, that went from start to finish.
Mr. Dominic Grieve: The statistics do not bear out the success of the new deal compared with earlier approaches. Since 1997, there has been a 25 per cent. reduction in youth unemployment because of the new deal, as the hon. Gentleman says; however, over a similar period previously, the reduction was 29 per cent.
Mr. Ross: I understand that the hon. Gentleman is here to defend the indefensible, but he did not respond to the question that I posed. Can he tell me of a single scheme introduced by the previous Government that started and finished? No, he cannot, because none of them did. Can he tell me of a single scheme for which there is any record of how successful it was? Again, the answer is no, because when we asked successive Secretaries of State for Employment and representatives from the Department for Education and Employment, we were told that no records were kept. That is not unusual. If one reads the latest Select Committee on Education and Employment report, one finds not enough record keeping is done even in respect of our own new deal programme. Our Government accept that we need to keep records and they are instituting a series of initiatives to ensure that we have a record of how successful such programmes are.
That was the overall situation. Then there were the trainers, who were a mixed bag, Mr. Chairman—
Mr. Deputy Speaker: Order. I remind the hon. Gentleman that this is not a Committee. It is the equivalent of the main Chamber of the House of Commons, and whoever is in the Chair ought to be addressed as Deputy Speaker.
Mr. Ross: I apologise, Mr. Deputy Speaker.
As I was saying, the trainers were a mixed bag. I remember a training and enterprise council in or just outside London that was allegedly providing horse riding for the disabled. The Select Committee discovered that the chairman of that TEC had bought himself a nice ranch: he owned the ranch, the horses, the paddocks and the fields and, even though the scheme went bankrupt he was—lo and behold—still left with the horses, the fields and the ranch. The disabled were left with no facilities.
That was an exceptional case, but there were many different types of trainers and serious mismatches. Something had to be done. Those of us who were
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involved in trying to do something about it all agreed that a new start was required. We therefore promised, in the 1997 election manifesto, that we would use the receipts from a windfall tax on the privatised utilities to introduce a welfare-to-work programme designed to get young people and the long-term unemployed back into work. It was one of our early five pledges.
We can look forward to the election, whenever it comes, knowing that we have met that pledge. We have not met it in its entirety—I remind those present that we set out a programme that ran until 2002, so we have not met all our targets. We still have at least a year to go before it can be judged whether we have met our targets. However, we are well on our way to meeting the initial targets, which included getting 250,000 young people back into work—
Mr. Grieve: The hon. Gentleman says that the target of getting 250,000 young people back into work has been met, but the statistics show that at the time that the Government were elected in 1997, there were not 250,000 young unemployed to be got back into work. Is that not an example of how the new deal has been a complete piece of spin?
Mr. Ross: I now see the way in which the hon. Gentleman intends to approach the debate. However, it will not work. The fact is that those people are well on their way to benefiting from a whole package of measures.
If the hon. Gentleman had allowed me to continue, I would have said that we realised that getting people back into work was not just a matter of welfare-to-work programmes—there was more to it than that. We had to deal with the economy as well. I would like to refer to a speech made by my right hon. Friend the Secretary of State for Scotland to the Centre for Scottish Public Policy on 12 March. In that speech my right hon. Friend clearly set out the criteria against which the Scottish economy should be judged as a part of the United Kingdom economy. She linked dealing with poverty, social deprivation, the long-term lack of investment and the need to develop the skills base of people in Scotland with the new deal—working hand in hand with measures to make work pay.
My right hon. Friend set out some facts that are worth sharing with the Committee. The new deal has helped 31,500 Scots to fined work. The national minimum wage, which is part of the same package, is benefiting 120,000 Scottish earners. The working families tax credit is making work pay for 108,000 families in Scotland. My right hon. Friend clearly demonstrated that our overall economic strategy is right, both nationally and for Scotland. We can use the new deal to deliver programmes that will make people more employable and get them into Teal, long-term, sustainable jobs. The Labour Government have delivered a strong and stable economy as the foundation for such opportunities. Because jobs have always been at the heart of our programmes, we have provided employment opportunities for all and we are moving towards a stage at which there will be jobs for all.
Not only have vie removed the barriers—such as low pay—to some people taking those jobs by introducing the minimum wage, affordable child care and personal

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advice to the individuals, we have done more. When we said that there were four options, we also said that there was to be no fifth option. We made it clear that we would not allow people living in poverty, who felt that they would be disfranchised, to believe that that was the life that Government envisaged for them. We showed that we did not intend to allow them to languish on the dole queue and in communities that were breaking down, but that they had a future and that we would shape it in a way that would benefit them and their families.
Having won the confidence of the unemployed, we also won that of the civil servants in the Employment Service. They have realised that the new deal has made it possible for them to do the job that they are trained to do. I should like to recount some of our experiences in Tayside, which, although it is a small part of Scotland, plays a large part in our lives and in the Scottish economy. We have one of the best Employment Service teams imaginable. Under its manager, Bob Alexander, it is as good as any in Scotland. I make it clear to my hon. Friend the Minister that if there is any attempt to move Bob Alexander from Tayside, dead bodies will come into the frame. He is one of the best Employment Service managers in Scotland and has been a real find. Our new deal has liberated him and his team and I should like to share some of the positive things that have happened in Tayside as a result of their entering wholeheartedly into the scheme.
Since January 1998, Tayside has blazed the trail in the Government's crusade to fight unemployment and tackle the scourge of social exclusion. Helping people into work is the best anti-poverty strategy, and the Government's welfare-to-work initiative is a central plank in our efforts to achieve equality of opportunity. The new deal for 18 to 24-year-olds was the most important of the welfare-to-work programmes. It was introduced with twelve pathfinder districts throughout the United Kingdom, with Tayside piloting the programme for Scotland. The pilot was launched in Dundee by Donald Dewar, the then Secretary of State for Scotland who is sadly no longer with us; my right hon. Friend the Chancellor of the Exchequer; and my hon. Friend the Member for Cunninghame, North (Mr. Wilson), then a junior Minister at the Scotland Office.
When the new deal was launched in Tayside, we had to break the pattern of households with no working adults. Some of the young people of working age had never had a job and had become almost completely detached from society. We have enabled more than 2,250 people to find jobs, ranging from retail positions with major companies to jobs in information technology. Of these, 1,087 Dundee new deal clients gained employment between April 2000 and March 2001. We have helped 1,336 young people, 379 25-plus clients, 251 50-plus clients, 272 lone parents and 28 partners of unemployed people to find jobs.
Under Bob Alexander's leadership innovative practice has been introduced in Tayside that has now been copied elsewhere in Scotland. The new deal support personal adviser was something dreamed up in Tayside. We discovered that the period in which young people were most likely to opt out of the programme was the first two or three weeks; we would lose them completely. The new deal support personal adviser is an advocate working with the young person and the employer to prevent dropping out. The new deal
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aftercare personal adviser was first used in Tayside, and phased attendance for options is another innovative approach used there. When someone experiences difficulties in taking up an option after long unemployment, an agreement is made between that person, the personal adviser and the employer for attendance on an agreed number of days, for agreed hours, during the initial period, to enable the individual to get used to being back in employment. We are hoping in the near future to implement a follow-through subsidy for clients leaving options and entering employment. It could include a £200 payment to clients who enter employment from the new deal. It could benefit them educationally or otherwise, perhaps through the opening of an individual learning account.
The range of innovative practices that I have outlined has been used by the local Employment Service team in Tayside, which is committed to preparing the people with whom it works for employment. Those involved have been happy to work in the relevant programmes. As well as seeing their own success in their chosen activities, they have witnessed the success of people entering real jobs. Those people have returned to thank the team and to ask for further help if they have difficulties.
There is also good news from Tayside about lone parents. A lone parent aged 33 joined the new deal case load in June 2000. She was an honours graduate in ecology and had experience as a care assistant. Initially she was trying only to find a job as a care assistant, but because of the presence of the Scottish Crop Research Institute nearby, she was encouraged to look for a job there. It was discovered that she was over-qualified for the job that she applied for. However, because of her qualifications and dedication and the intervention of the personal adviser, she found a research job at the institute, which is paying for her to do a masters degree. A lone parent aged 31 attended an interview with a personal adviser and was referred for an interview on the same day. She was offered the job, but the hours were unsuitable. The personal adviser intervened with the employer and as a result suitable hours were arranged. Another lone parent with a child of three had been claiming income support since August 1997. She attended an initial interview on 11 September and was referred by an adviser for 15 vacancies and several speculative approaches to employers. The client found a post, the local employer was delighted with the new employee, the person concerned was delighted to be working again and she was approximately £34 a week better off. That effect was repeated for another client, who was approximately £47 a week better off and loved the new job.
The new deal has been a success for people in Tayside because of a group of people working in the Employment Service who are doing the job that they have been trained to do. They get up in the morning and want to come to work. Under the previous Government, there was a series of shady trainers, but we have tried to ensure that there are much better training companies under the new deal. I want to quote one example from Tayside that is close to me personally, simply because it offers the best. Back in 1987, the Employment Committee accepted that Workstart, based in Dundee, was one of the best training companies, delivering

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training in a most helpful way. Workstart is now part of the Claverhouse Group, a not-for-profit charitable organisation in my constituency which provides training over the whole range of employment programme initiatives and, for the past 16 years, has tried to provide quality services to the local community.
More than 300 local employers throughout Tayside currently use the Claverhouse Group as their main source for new employees. Their occupation areas cover a wide range, but are predominantly factory work, packing, assembly, printing, catering, driving and office work. In 1999, the company managed to progress 590 unemployed adults into employment. That increased to 694 in 2000, and projected targets indicate that the figure for the current year will be close to 775.
I am a member of that company, although I receive no remuneration from it. In fact, my hon. Friend the Member for Dundee, East (Mr. McAllion) and I have been associated with the company almost from the start. It is dedicated to providing the best training and helping people to reach the highest levels in their employment. It has not been prepared to cut the targets that it has set for itself or the targets that it has set in preparing people for jobs, even though it has meant that the company has occasionally lost contracts. Under the previous Government, it lost several contracts simply because the training that it delivers costs money. It does not cost as much as some other trainers, especially the bigger trainers in Scotland. The company provides the best training, but at a cost that the previous Government were not prepared to meet.
Last Wednesday saw the conclusion of all the company's efforts. The Claverhouse Group has been trying to provide a one-door approach for anyone who lives in Tayside and has a problem finding work or other associated problems a one-door approach to getting people off the dole queue and back into employment. That one door is Claverhouse. Last week, the company signed a contract with the Employment Service in Tayside to deliver the new 25-plus programme—a £1.5 million three-year project. The contract will ensure that the company continues to deliver what businesses in Tayside require and what individuals require to get them back into employment.
When I was in Tayside last Wednesday for the signing of the contract, I noticed that one of the projects was called FUN, and I wondered whether the company had gone a bit too far. Then I was told that FUN stands for "further underpinning for novices". That programme recognises that some individuals need to acquire life skills in addition to training, and that unless they acquire those life skills, they will not be ready for employment. There used to be a community industry programme to deal with that, but the previous Government got rid of it. We now have an organisation that can get people job-ready for the employer and give them some knowledge of what will be expected not only from their employer, but from colleagues who will be working alongside them. That will ensure that they are ready for the job. The work force readiness certificate that people will be awarded at the end of that process will demonstrate to any employer that they understand the responsibilities that they accept if they take a job.
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For Tayside, the Government's policies are right. They are committed to ensuring that the national economic situation is right, offering jobs and a way out of poverty. The Employment Service is dedicated to its job and has demonstrated through the innovations that it has introduced under Bob Alexander that it will respond to the challenge. We want training companies such as Claverhouse, which can implement programmes in a way that is acceptable to the employer and the person who has been offered a place as a client. We in Tayside are saying, "Yes, we have problems and we still need help." I look forward to hearing what my hon. Friend the Minister has to say.
Mr. David Marshall: My hon. Friend referred to Tayside. Does he agree that the story there is being repeated up and down Scotland and that far from being a story of spin, as the apologist for the Tory party said earlier, the new deal in Scotland is in fact a story of success followed by success? I say that as someone whose constituency had for far too many years the highest unemployment among adults and young people. The new deal has made a tremendous difference to my constituents—we cannot commend it highly enough.
Mr. Ross: I agree with everything that my hon. Friend said. He and I understood that unless we looked at the whole picture and got everyone working together, change would not 1e possible. No one assumes that the previous Government did not have difficulties or that the current Government do not. Governments do not make jobs as such.
Sir Robert Smith: None the less, does the hon. Gentleman agree that Governments can destroy jobs?
Mr. Ross: Absolutely. However, much more disastrously, during their 18 years in government, the Conservatives destroyed people, communities and morale across the region. That is what I have been trying to say. They destroyed the organisation that was established to help the unemployed. Then, anyone entering one of the fortresses supposed to be centres to which people went to get themselves a job would have felt the tension. If we go into an Employment Service office now, we find it much more relaxed. I am not saying that there are not people who have got out of bed on the wrong side or who are trying to dodge the system; such things will always exist. However, there are now people in the Employment Service who see that they have a role in life and who can picture themselves getting on. They can enjoy the fact that some of the people with whom they work are moving into work either directly or after a period of training.
In the four years of our Government, we have managed with the help of many organisations and individuals—not least the Employment Service and training companies such as Claverhouse—to build a fairer society. We are on our way towards cutting unemployment, creating jobs and ensuring that the money that is intended to go round does so. Instead of using the trickle-down theory of the previous Govt, we are putting the money in at the bottom to ensure that it goes up. In that way, people will feel that their health and life chances are improving and that public service is

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improving. What we are really doing is tackling the exclusion and hopelessness of the Tory years. The programme in which we are involved is based on job creation and increasing the employability of those who have been unable to find work for long periods. The new deal represents a radical and unprecedented investment in people and their futures. We recommend it to everyone. My right hon. Friend the Chancellor has made it clear that the programme will continue after the next election to ensure that gains that we have made in the first term are mirrored and expanded throughout the years that we are in power.
several hon. Members rose—
Mr. Deputy Speaker (Mr. Nicholas Winterton): Order. I remind the Chamber that winding-up speeches must begin by half-past 10. At least three hon. Members wish to participate in this important debate, and if they are reasonably brief, all those who wish to speak will be able to do so.
10.5 am
Mr. Alex Salmond: I listened with great interest to the hon. Member for Dundee, West (Mr. Ross), and I congratulate him on securing this debate. He talked about his experience on Tayside, and to generalise from a particular constituency is no bad thing.
I shall make specific points about the new deal, but go on to talk about the economic background against which the new deal has been experienced over the past few years to examine whether them will be a major change in the economic forecast, with the economic problems that are looming.
The hon. Gentleman skated over some of the perceived problems in the new deal. I would not suggest—as perhaps the Conservative spokesman would—that the new deal has been a major disaster in every respect. On the contrary, I think that it has done some—
Mr. Grieve: I assure the hon. Gentleman that I will not be making that suggestion. I do not think that the new deal has been a total disaster, but it has not been anything like it has been cracked up to be by the hon. Member for Dundee, West.
Mr. Salmond: I apologise—I was basing my remarks on the hon. Gentleman's two previous interventions. Obviously, he will develop the point in his own speech. I was going to suggest that a balanced view would be that there have been limitations in the new deal. For example, in the 18 to 24-year-old programme, 38 per cent. of people stay in their placement for fewer than 13 weeks, and after placement, 39 per cent. either move back on to benefits or to what is called an "unknown destination".
Many of us have doubts, scepticism and regret about the compulsory element in the new deal. The hon. Member for Dundee, West described it by saying that there was to be no fifth option, but it is actually a compulsory element. I am experienced enough to remember when many hon. Members regarded compulsory elements on employment programmes as being too similar to workfare to give them unqualified support. For all that, many of the points made by the hon. Gentleman are correct, and every hon. Member
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can point to important life opportunities that have been given to people in their constituencies through the new deal process.
My main point—I disagree with the hon. Gentleman—is that the new deal has been introduced against an economic environment that has not been a success. I must re-examine the speech of the Secretary of State for Scotland to see the criteria by which he judged the performance of the Scottish economy as excellent. I would have described its performance over the past few years as disappointing, certainly in terms of international comparisons. Most of us support the International Labour Organisation's definition of unemployment, and on that basis, unemployment in Scotland is currently 6 per cent. compared with Austria at 3.6 per cent., the Netherlands at 2.8 per cent., Denmark at 5.3 per cent., Sweden at 5.4 per cent., and Ireland at less than 4 per cent. Therefore, if one compares Scotland's rate of unemployment with other small countries in Europe, its performance is disappointing.
Growth figures in Scotland over the past few years, have also been disappointing. The manufacturing industry in Scotland has experienced serious problems—since 1997, 32,000 jobs have been lost. Recent figures for manufacturing exports for the last quarter of 2000 reinforce that view. Food, drink and tobacco exports are down 24 per cent. since 1997, mechanical engineering exports are down by almost 20 per cent., and exports in textiles—a very troubled sector—are down by 34 per cent.
Despite the disappointing general performance of the Scottish economy and its under-achievement when one considers its potential, and despite the problems that have been concentrated on manufacturing and exports in particular, the service sector in Scotland has, generally speaking, been performing pretty well during the past few years. Many new deal placements—not all, by any means— have been in the service sector. I should be interested if the Minister, when replying to the debate, would give us an analysis of what proportion of new deal placements have been in manufacturing and in the service economy.
There are signs that we are moving into a much harsher economic climate. That was shown to all of us yesterday by the hugely tragic announcement in Bathgate, but we can also see across Scotland— with Compaq at Erksine and the Panasonic announcement a couple of weeks ago in East Kilbride— that continuing major job losses are on the way.
If we are entering a more troubled economic environment, it will be much tougher for a scheme such as the new deal to find suitable placements for young people. Of course, a tougher economic environment and a more difficult employment situation reinforces the argument for interventions such as the new deal, but one of the failings of the many schemes employed during the Conservative period of office was that they were always identified as attempts to disguise the unemployment figures as opposed to generating genuine employment opportunities.
Miss Anne Begg: Does the hon. Gentleman agree that the unemployment problem was often with the long-term unemployed? When people

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were unemployed for more than six months, and especially for more than a year, it became increasingly difficult for them to get a job. The challenge for Government in situations such as that at Bathgate is to ensure that people enter new jobs as quickly as possible. The new deal can only help to achieve that, because it ensures that people will have experience of work in the near future, which makes them much more employable.
Mr. Salmond: I take the hon. Lady's point. Of course, there is structural unemployment. After a period of employment catastrophe such as there has been in many areas and many industries over the past 20 years, we would expect structural unemployment—those without experience of work, whose families have not had experience of work and who are not familiar with the work culture—to grow. It is obviously right for the Government to introduce policies to try to bring back work experience, lifetime opportunity and the work culture to people, families and communities who have been disadvantaged for a substantial period. My point is that that is much easier to do in a relatively benign economic environment. Attempting to address structural unemployment is much more difficult if general employment opportunities are limited, because the people who tend to be squeezed out are exactly those whom the hon. Lady and myself are anxious to help.
Mr. Graham Brady: Is the hon. Gentleman aware that when long-term unemployed people enter the new deal but then return directly to unemployment and to claiming benefit, they no longer count in the statistics as being long-term unemployed? One of the successes of the new deal from the Government's point of view has been in disguising long-term unemployment.
Mr. Salmond: I do not absolve the Government from disguising the unemployment figures. I merely suggest to the hon. Gentleman that if they were looking for lessons on how to massage unemployment figures, they had 18 years of tutelage from his party. I accept that this Government perhaps all Governments—tend to pick up bad habits from their predecessors. In several areas they have taken lessons taught by the Conservative party to excess.
Mr. David Marshall: The hon. Gentleman has mentioned bad habits. I can pick on one bad habit displayed by him and his party. I am loth to raise the matter of voting records, because we all miss votes. However, apart from the vote on the national minimum wage, when no Scottish National party Member voted, the hon. Gentleman is well aware that the Finance Act 1997 contained the policy of levying the windfall tax on the privatised utilities in order to fund the new deal to reduce unemployment in Scotland. The vote on that occurred on 29 July 1997, less than three months after the last general election. Not one SNP Member voted to help the unemployed in Scotland. Where were they? Had they all gone on holiday early? Can we have an explanation? The hon. Gentleman comes along and criticises the Government—[Interruption.]
Mr. Deputy Speaker: Order. That was a very long intervention. I hope that the hon. Member for Banff and Buchan (Mr. Salmond) will deal only with the part of the intervention that is relevant to the debate.
Mr. Salmond: Unfortunately, that leaves me nothing to deal with, because the intervention was totally irrelevant. I can tell the hon. Gentleman that the House of Commons Library has furnished me with a list of hon. Members that shows, among other things, voting records. He will accept that I have been serving in two Parliaments for some time, and I am happy to compare my voting record with that of Labour Members who serve in two Parliaments. However, I shall not do so, Mr. Deputy Speaker, because you might prevent me.
The Library document shows that, if we examine hon. Members' speeches, interventions in the Chamber and questions together, it appears that I come 10th in the list of 72 Scottish Members of Parliament. I shall not embarrass the hon. Member for Glasgow, Shettleston (Mr. Marshall) by saying where he ranks, but it is substantially lower in the list.
Mr. Deputy Speaker: Order. The hon. Member for Banff and Buchan is not taking my advice, but is addressing his remarks to matters that are irrelevant to the debate.
Mr. Salmond: I apologise, Mr. Deputy Speaker, but I am sure that you agree that I was sorely provoked and tempted. My final point to the hon. Gentleman is that it seems that I have been more effective in two Parliaments than he has been in one.
I shall return to the new deal, which is the subject of the debate, and make a serious point. If we are moving into a more difficult economic and employment environment than that within which the new deal has operated over the past four years in the service sector in Scotland, the challenge for the Minister is to explain why, in such an environment, the new deal will not fall victim to the same pressures that I believe were instrumental in undermining confidence in previous employment schemes that were devised by the Conservative Government. I hope that we receive a substantial answer to that, because I do not want the matter to be yet another area of policy in which too many bad lessons were learned from the previous Government.
Mr. Deputy Speaker: I want to call at least two more hon. Members. I hope that the first hon. Member I call will be responsible and enable me to call the second.
10.18 am
Miss Anne Begg: I apologise for being late, but I had difficulty getting up in the lift. However, now I am here safe and sound.
I want to reflect on a report by the Select Committee on Scottish Affairs about welfare to work in Scotland and the new deal, which was completed in January 1998. That was the first report with which I was involved following my election. It is worth looking at its recommendations in order to measure the success of the new deal in Scotland. As my hon. Friend the Member for Dundee, West (Mr. Ross) said, we visited Tayside,

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which was one of the pilot areas. It was interesting to note that people had concerns about whether the new deal would deliver everything that the Government said it would. It has already been mentioned today that there were such bad experiences of schemes under the previous Government that there was some cynicism. Those who piloted the scheme, especially in Tayside, had to overcome that, because people did not believe that the Government's intention was to get people—particularly young people—back into work, and that we were serious about the promised fun ding and help.
The hon. Member for Banff and Buchan (Mr. Salmond) referred to the major concern felt by people about the compulsory element. They were worried that the new deal would be compulsory and that many young people would disappear down a black hole, come off benefits and not gain from it. However, that fear has generally been proved to be groundless. Because it was such a good—I was about to say "scheme", but I must avoid using that word—project for the young unemployed, it was spread by word of mouth that it was worth while becoming involved in it. The compulsory element has not been the big issue that many people feared that it would be.
Another fear was that there would not be enough personal advisers, or that they would not be properly trained or any different from those in the old Employment Service who just managed unemployment rather encouraging people into work That fear has not been realised either. There have been enough personal advisers. Indeed, their mere existence has been the major success of the new deal and set it apart from previous schemes.
There was a misunderstanding about the meaning of the new deal. Some people thought that it was a job creation scheme. It was never intended to be that. It was about making people work-ready so that they could take up the opportunities that already existed in the economy. As I said to the hon. Member for Banff and Buchan, problems often arise for the long-term unemployed for whom the work culture and ethos have disappeared. Such people find it increasingly difficult to get back into work. Because of the success of the new deal for the young unemployed as w as for the long-term unemployed, many fewer people fall into that category in Scotland. In my constituency, youth unemployment has fallen by 90 per cent., which is an outstanding figure. It shows the deal's success. The drop in long-term unemployed is 46 per cent. The new deal is working.
I must remind hon. Members that several worries were expressed about how the new deal would work in Aberdeen, because traditionally we have low unemployment. It was feared that those young people who were not already in work would' be difficult to place. My local enterprise company gave me a detailed brief setting out such fears and said that more options might need to be available so that people could swap between them. It said that in some cases the young unemployed needed a longer gateway to become work-ready. The Government have now put in place such changes, which have been an important development.
Provided that we continue to have a Labour Government, we can be optimistic that the new deal for disabled people will be expanded. It has not yet been fully rolled out and is only working in pilot form in some
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areas. I am picking up on the impatience that is felt among the disabled community. People with disabilities, particularly those with mental health problems, regard the new deal as a way of helping them get into work. They really want "a wee job", something that will get them out of the house and back into society. While I am hasty for the new deal for disabled people to be in place nationwide, I understand the difficulties in doing that too quickly. The personal advisers must be extremely well trained and sensitive to the needs of disabled people. It is no use putting people with severe disabilities into a workplace where they will fail because they have not been properly matched to it.
Sir Robert Smith: Does the hon. Lady consider that the Government should ensure that the subsidies provided to employers in respect of mainstream new deal participants are available in respect of disabled people?
Miss Begg: That should certainly be considered. It may help to encourage more employers. One problem is the search for more employers. Good work is being undertaken by one of the access to work groups in Aberdeen that operate from Choices on Westburn road. It tries hard to interest employers in employing people who are desperate to find work and to be productive members of society. The new deal has proved successful, and I hope that it will continue to roll out for the disabled and for people who are still not engaging in work or getting involved in society.
I am grateful for the debate, as it has provided an opportunity to state that Government policies can make a fundamental difference to people's lives. Because of the new deal, in the recent past fewer people have been out of work or experienced long-term unemployment. I hope that, in the future, if people find themselves unemployed because of the vagaries of the economy, they will be better equipped swiftly to find new employment.
10.25 am
Mr. Bill Tynan: I congratulate my hon. Friend the Member for Dundee, West (Mr. Ross) on securing this important debate.
I have visited local Employment Service offices in my constituency and the people who work in them are enthused by the new deal because it greatly improves the service that they provide. There has been a significant reduction in unemployment among people aged between 18 and 24.
However, I am concerned by some remarks that appeared in a recent poverty report by the Scottish National party. Its attitude towards the new deal is very different from that expressed by the hon. Member for Banff and Buchan (Mr. Salmond) this morning. He was conciliatory, but I want him to comment on the poverty report's statement that it
"has been an abject and expensive failure"
and that
"it has made little or no difference to the employment prospects of Scotland's people."
That is a staggering statement in light of the reduction in unemployment that has occurred because of the new deal. It is easy to mention statistics such as 5 or 6 per

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cent., but it is important to remember that they refer to many individuals who may have found themselves without jobs and excluded from society and its amenities. The new deal successfully addresses such people's problems, so it is essential not to be negative about it but to examine how it fails people so that we can ensure that we move forward and provide the employment opportunities that are essential for the people of Scotland.
The new deal must be continued, and changes to it should be welcomed by all parties.
10.28 am
Sir Robert Smith: I congratulate the hon. Member for Dundee, West (Mr. Ross) on securing the debate, and I agree with the hon. Member for Hamilton, South (Mr. Tynan) that it is important to recognise that we are discussing a matter that fundamentally affects how individuals become involved and take part in society.
The economy creates the wealth that funds society, and it is important that as many people as possible are able and willing to work. There are also non-economic reasons why we should try to ensure that people are involved in society and become engaged and connected with the wider community. I support the new deal's aspiration to create a climate in which there are no barriers to work, except for each individual's skills and experiences.
Like the hon. Member for Banff and Buchan (Mr. Salmond), I had decided to mention that it is important to recognise that the new deal has been launched and tested in the most benign of world climates. It will face harder challenges in the future, and the Government should tell us how they intend to ensure that it can cope with them. The Chancellor has issued vague warnings that we should not be quite as optimistic as in the past.
The hon. Member for Dundee, West was coming from two different directions; when I intervened on him, he said that Governments did not create jobs, but he spoke about job creation later on. Fundamentally, Governments do not create jobs, but they do affect the climate and the likelihood of jobs being created. We welcomed the Government's recognition when they came into office of the need for an independent central bank, which would bring stability to economic planning and take interest rates out of the political domain, so that they would no longer be subject to short-term decision making.
As the hon. Member for Banff and Buchan said, there are changes on the horizon, as evidenced by what is happening at Motorola. If the world market for mobile phones collapses, it will have an impact on employment in this country. If the jobs are not there, the new deal faces a much bigger challenge in helping and supporting people back into work. The foot and mouth outbreak has exacerbated the problems of the strong pound for farming and tourism, especially in Scotland. As a result, the rural economy, and those parts of the economy that depend on those industries, face many challenges in providing jobs. The new deal cannot be judged in isolation. To achieve the goals of the new deal, we need
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to ensure that everything is being done to create a climate in which innovation takes place and jobs are created.
An important and welcome development, on which the hon. Member for Dundee, West touched, is the creation of the personal adviser, who provides a link with the individual. Although different factors affect the ability of different groups to get back into work, people must be treated as individuals. Rather than having a scheme for a group—whether of young people, disabled people, single mothers or the over-50s, or a group which does not fit into those categories—we should consider all those who face the challenge of long-term unemployment, and make sure that all of them have access to a personal adviser to help them get back into work. It does not matter to long-term unemployed people which group they are in; they still face the challenge of unemployment, and they need help and assistance. Once people become disengaged from getting work, they enter a cycle that must be broken; that is why intervention is so important.
The hon. Gentleman—rightly and understandably—went on a brief tour of Conservative failures. In dealing with the needs of individuals to get back into work, the new deal responded to the failure to invest in the education service to ensure that our young people—and the next generation—were equipped with the tools and life skills that they needed to meet the challenges that they would face.
Mr. Eric Clarke: Do you believe in a policy to tackle ageism? Old fellas like me do not get a chance because, for instance, they are over 50.
Mr. Deputy Speaker: Order. The hon. Gentleman must refer to the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) by his constituency, or as "the hon. Gentleman". On the matter to which he refers, I have no view.
Mr. Clarke: I apologise, Mr. Deputy Speaker. I forgot where I was, and used the word "you" as if I were having a conversation. Does the hon. Gentleman accept that a policy must be laid down to tackle such bias?
Sir Robert Smith: I recognise the challenge of ageism. Given increased life expectancy, businesses are wasting talent and opportunities if they do not embrace the experience that people who have worked all their lives still have to offer to business and the community. The idea that a cut-off point exists at which people no longer have anything to offer means that we are wasting opportunities for society and the economy. I deprecate ageism and recognise the need to challenge it, and I encourage business to embrace that experience.
To break the cycle and, in the long run, to reduce dependency on intervention at the new deal and unemployment stages, we must ensure that the foundations are right. Good education stays with people for life; no one can take their skills away from them. Whatever happens to the economy or society, those skills are their personal assets and underpin people's participation in society and the economy. It is fundamental to our future to ensure that we put the necessary investment into education. Although the

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Conservative record was disappointing, the failure in the first two years of this Government to recognise that need was extremely disappointing, too, certainly for my constituents. The consequences on the ground were felt in the education system.
The hon. Member for Aberdeen, South (Miss Begg) said that, in our area, the challenge for the long-term unemployed might be even greater. Constituents whom I meet want to work, but are not finding out how to find work or match their skills. Lifelong learning and the abolition of tuition fees in Scotland to encourage more people into higher education are positive proposals that will help to undermine some of the need for the new deal.
The Minister should assure us that he understands the challenges that are to come in the wider economy. In the Scottish Grand Committee on 29 February 2000, I cited figures from Sheffield university that showed that 600,000 people in the UK were economically detached —that is, not employed and not on benefit—and did not show up in our statistics or have access to the new deal. I asked whether the Government had a breakdown of the figures or had examined them, to find out how they applied to Scotland. Has the Minister any further information? The new deal is designed to re-engage people in society by employment, but we must find and re-engage those who are not even showing up in the statistics.
The challenge in an area of high employment, such as the north-east of Scotland, is to find the skills and the people. For the economy to grow, we need more people to work in our industries. In the North sea oil industry, there is a great skills shortage. Similarly, in parts of the country that face high unemployment, we need to ensure that the Government do everything to avoid damaging job creation and putting barriers in the way of jobs, such as the problems of the strong pound.
I hope that the Government recognise that there is still a lot of work to be done to ensure that everyone has the best opportunity of getting a job. We welcome the work of personal advisers, and the Government must recognise not only the people who face unemployment, but the hard work of the people who make the scheme work, including the personal advisers. The service being provided and the atmosphere at employment centres is a breath of fresh air. We must congratulate those who are doing the work, give them all our support for their future endeavours and recognise the valuable contribution that they are making to improving our society.
10.39 am
Mr. Dominic Grieve: I congratulate the hon. Member for Dundee, West (Mr. Ross) on having secured the debate. I listened with great interest to his comments, especially his personal references to how the scheme had operated in his constituency. In my role as spokesman for Scotland, I am conscious that my constituency, being located in an area with the lowest unemployment in the United Kingdom—
Sir Robert Smith: On a point of language, I hope that the hon. Gentleman meant to say "Conservative spokesman for Scotland".
Mr. Grieve: I think that the correct title is "Opposition spokesman for Scotland".
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Representing a constituency with low unemployment, as I do, it is easy to be glib about what the new deal sets out to achieve or to be critical without paying attention to how it works on the ground. To that extent, I am grateful to the hon. Member for Dundee, West for bringing his personal experiences to bear on the matter. However, I hope that he will forgive me if I highlight one or two areas where I believe that his arguments—and, indeed, some further arguments that have been presented—seem to be a little out of touch with reality.
The first is the suggestion that the new deal has achieved some great revolution in getting people into employment. If one examines the figures, it is obvious that that is not the case. The process by which employment availability in this country surged began in about 1994, and was due to the previous Government's economic policies. It was also doubtless due to a revival in the world economy. So when figures are bandied about for the number of people who have been helped into work since 1997 through the new deal, I would simply say that more people were helped into work in the period from 1994 to 1997 than have been helped since.
By the time that this Government came into office, the back of the major unemployment problem—in terms of figures—had already been broken. Nothing reflects that more than the fact that one of the Government's key promises in 1997 was to reduce youth unemployment by 250.000. However, the statistics for 1997 demonstrate that there were not 250,000 unemployed people aged under 25 looking for jobs; it was pure spin. In fairness to the Government, I suspect that they came up with that figure before they discovered that it had sunk below 250,000.
Miss Begg: The most recent statistics I have show that 270,000 young people have been helped into work as a result of the new deal. We somehow seem to have helped back into work extra people who did not appear in the official statistics quoted by the hon. Gentleman.
Mr. Grieve: I should point out that 40,000 young people have been through the new deal twice. I wonder whether the Government's statistics involve some double counting. The hon. Member for Banff and Buchan (Mr. Salmond) rightly emphasised that all Governments doubtless seek to massage statistics, but the massaging of unemployment statistics by this Government has been distinct. It is also worth remembering that the new deal was achieved by means of the windfall tax on utilities, which, frankly, amounted to a theft of£3.1 billion and had serious adverse consequences on the economy. I am sometimes left with the horrible, niggling feeling that if the Government decided not to do anything to help the unemployed, we would still see patterns of rise and fall for which no Government—Labour or Conservative—could take credit. I have a worrying feeling that the Government's intervention in such matters tends to be peripheral.
The Government have admitted that the new deal is flawed. They do not say as much in the House but, on one occasion—at the Franco-British Council—the Government admitted that the new deal was unlikely to bring new recruits into modern business and industry because those employers required youngsters with knowledge of new technology, which the new deal was

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unable to provide. Again, we have an example of the Government admitting shortcomings in the new deal to other Governments, but those did not emerge from the various panegyrics that we heard this morning.
Miss Begg: The hon. Gentleman must take account of the fact that the new deal is not the only way for young people to get into work. They go through the normal education process, and investment in further and higher education—in the new technologies in particular—will allow them to be trained in the area that the hon. Gentleman mentioned. The new deal is specifically to help young people who are not job-ready; it is not meant to be a panacea to get all young people into work. It was never designed for that and nor should it have been.
Mr. Grieve: I accept that entirely, and have no difficulty with it. The new deal was designed to target those who were having great difficulty getting into work. As the economy began to boom and unemployment fell, obtaining jobs appeared to be relatively easy for those with the relevant aptitudes and skills. Indeed, in my constituency, the problem is not unemployment, but finding people. Those who are unemployed in a low-unemployment area tend to be those who have enormous difficulties holding down or attaining a job. However, we must consider whether we are getting a return on what we have put in. Various figures have been put around, but I believe that the correct statistic is that it costs about £20,000 a job to get people into the new deal.
The Minister of State, Scotland Office (Mr. George Foulkes): No.
Mr. Grieve: I shall listen in due course to what the Minister has to say on that subject. The provisions cost a great deal. The Financial Times noted last year that if one considered the amount of investment and the return—only about 20 per cent. of those involved hold on to a job in the long term—it is clear that we are not getting value for money.
I accept that the individual instances that the hon. Member for Dundee, West cited are heart-warming. I do not mean that pejoratively; it is pleasant to hear about them. I do not doubt that the staff are working hard and trying to help those who are trying to get a job. Nevertheless, the overall picture is not satisfactory. A great deal is being invested for a very limited return. In the long term, the number of people who are successfully placed in jobs that they then keep is poor.
Mr. Ernie Ross: Does the hon. Gentleman not accept that the unemployed individual who believes that he is outside the system will feel 100 per cent. part of the system by getting back into work? There are different levels at which people get back into work. We are beginning to approach employers, as happened in America; that is where many of our examples have come from. We are looking for ways in which to offer individual employers specifically job-trained people. That is the new deal.
Mr. Deputy Speaker: I hesitate to intervene, but we want to give the Minister sufficient time to reply.
Mr. Grieve: I am mindful of that and will try to ensure that that happens, Mr. Deputy Speaker.
I accept the point made by the hon. Member for Dundee, West, which is why I listened with such interest to what he said about the circumstances and individuals in his constituency. However, that does not get us away from the fact that the issues that we are discussing have arisen in a benign situation, as the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) said. It should be relatively easy to get people into work and to help them, but it costs a lot to do so. Furthermore, when we consider the overall statistics—I obviously cannot comment on the individual instances to which the hon. Member for Dundee, West referred—the overall return appears to be very poor in terms of the number of people in jobs.
As the hon. Gentleman will be aware, my party has suggested that we can and should make a radical reappraisal of the situation and that there is much to learn from the United States. We have suggested that the key to getting young people and people generally back into work when they have difficulties is not training so much as getting people into the workplace, keeping them there and ensuring that they get training there. That is why we have come up with the "Britain Works" scheme, which the Financial Times described as one of the best programmes for the jobless ever. It seeks to offer job experience to the long-term unemployed, which increases—[Laughter.] Labour Members laugh, which worries me even more. We have been provided with a classic illustration of the way in which the Government have sacrificed objective analysis of how to get people into work, replaced it with massaged figures and presented many individual instances that do not show the whole picture. There are better ways to approach the task, but I shall wait to hear from the Minister how the new deal is progressing. I am interested, but I hope for considered analysis rather than what I fear we shall be given; a further panegyric on a scheme with serious flaws.
10.50 am
The Minister of State, Scotland Office (Mr. George Foulkes): I join other hon. Members in congratulating my hon. Friend the Member for Dundee, West (Mr. Ross) on securing this debate on a vital subject. His long-standing commitment to the training and employment prospects of young people is well known in Scotland and beyond and deserves the commendation of the whole Chamber.
I remind the hon. Member for Beaconsfield (Mr. Grieve) that it is beyond even me to accomplish a detailed analysis of this subject in 10 minutes, but several important contributions have been made in an excellent debate and I shall reply to as many as I can. The new deal has made a huge impact on Scotland. Several of my hon. Friends have already paid tribute to its success and its effect on their constituencies. Contrary to the patronising contribution from the Opposition spokesman, and while the new deal may not be needed in the leafy lanes of Beaconsfield, it is vital in Dundee, Glasgow, Carrick, Cumnock and Doon Valley and in other parts of Scotland.

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The success of the new deal is to be found not just in statistics, but in the individuals affected. I do not apologise for giving two examples. The first, from Dundee, concerns Patricia, aged 51, who was unemployed for more than four years. She talked to a new deal adviser. My hon. Friends are right to say that personal advisers are a crucial element in the new deal. Patricia had been a voluntary befriender for the Dundee Society for Visually Impaired People. A full-time job was advertised, the adviser told her to apply for it and she found a job. She is now part of the success story of the new deal 50-plus, and there are many more. I say to my hon. Friend the Member for Midlothian (Mr. Clarke)—I do so with personal commitment—that people over the age of 50 are still vital to this country's work force, as well as to Parliament.
My second example is from my constituency and concerns Andrea Gardiner. She had been unemployed for three years and joined the new deal 25-plus. With the help of a personal adviser, she took a medical secretary course at Kilmarnock college in August 1999. On completing it, she applied for a job as a medical records clerk at Ayr hospital and started work in October 2000. Those are just two of the many real stories of people who have benefited from the new deal. Such carping criticism as we have heard from the hon. Member for Beaconsfield does the project a disservice.
The success of the new deal is to be found in the profound improvement in the situation of people who are given a chance, sometimes for the first time. As my hon. Friend the Member for Hamilton, South (Mr. Tynan) said, the Scottish National party did not acknowledge that in its poverty report. To be fair, the hon. Member for Banff and Buchan (Mr. Salmond) acknowledged it today. I think that he had to take his spokesman on poverty—or, rather, the spokesman of his colleague, the hon. Member for North Tayside (Mr. Swinney)—to task for not recognising the value of the new deal. It will be noticed in Scotland that not only did his party not vote for the new deal money, but it has talked it down day by day, month by month and year by year.
Mr. Salmond: On the subject of what will be noticed in Scotland, when the Deputy Prime Minister speculated yesterday about slashing Scottish public spending, did his analysis include cuts to new deal expenditure, or just to health, education and other public services?
Mr. Foulkes: If the hon. Gentleman reads today's papers, he will find an entirely different story.
When we introduced the new deal in 1997, unemployment among young people was effectively out of control. However, we did not accept the so-called accepted wisdom that, in a modern, high-tech, low-inflation economy, we could not find jobs for those people. We were determined to change a system that had consigned so many people to the scrap heap without any hope.
I would like particularly to talk about events in Dundee, because Dundee is a good example. Tayside has made a significant contribution to the new deal from the start. It operated as a pathfinder pilot area for the new deal for young people, testing and putting into
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practice our theory of work for those who can, and support for those who cannot. The pilot helped more than 1,000 young Scots into jobs in just six months. More than three quarters of those jobs were sustained. That answers Opposition Members.
Since the new deal for young people was introduced throughout the country in April 1998, Tayside has gone on to help a further 3,000 young people to find work, 780 of them from the Dundee, West constituency. Under the new deal 25-plus, Tayside has helped 639 long-term unemployed adults into work, 144 of them in the Dundee, West constituency. That constituency and Tayside are a microcosm of what is happening all over Britain and are an example to all of us.
We welcome the hon. Member for Banff and Buchan back to Westminster. I congratulate him on his Pauline conversion on the way to Macduff. He has suddenly realised, once again, the importance of this Parliament to Scotland, and its particular importance in relation to employment. There could not be a better example. However, his economic comparisons with other countries were highly selective. He picked the ones that suited his argument and left the other ones out. He forgot that unemployment in this country is at its lowest level for 25 years. That is the significant difference. The number of people actually in work is at its highest level since 1960, when I was just coming out of school, which shows how long ago that was.
Mrs. Anne McGuire: Primary school.
Mr. Foulkes: No, I am afraid not.
It may do the party of the hon. Member for Banff and Buchan some service to talk Scotland down. It may be wishful thinking on his part—he may wish to see more unemployment and more redundancies—but it does not help Scotland. If he is going to stand up for Scotland, not only must he and his colleagues turn up here, but they must speak up for Scotland and not keep talking it down. Of course there are job losses, but there are also significant job gains. If he had come with me to Atmel and to Caledonian Clear he would have seen job gains. Those gains must be significant, otherwise unemployment would not be steadily decreasing.
Mr. Grieve: Will the Minister give way?
Mr. Foulkes: No, least of all shall I give way to the hon. Gentleman.
The hon. Member for Banff and Buchan talks failure. The SNP talk failure all the time. Why will the new deal not fail? It will not fail because it is personalised. It is not a job-creation scheme. People get real jobs in the real job market—sustainable jobs.
Sir Robert Smith: Will the hon. Gentleman give way?
Mr. Foulkes: No, not even to the nice hon. Gentleman.
I will, however, reply to the ridiculous claims of the hon. Member for Beaconsfield about the cost of the new deal. Even the Conservative party's own policy announcement "Britain works" states that the cost per job is around £4,000, not the £20,000 that he mentioned today. For every £5 spent on the new deal, the

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Exchequer gets back nearly £3 in lower benefit spending. That is the advantage of the new deal. It gets people off benefits and into work and they become taxpayers and contribute to society. Not only do they make an economic and practical contribution, but it is better for their morale.
In conclusion, youth unemployment is now at its lowest level since the mid-1970s. Long-term unemployment among young people was 15,700 in 1997; now it is down to 4,400. That is a significant gain. The new deal has made a real impact, but we accept that there is still more to do. I say to the hon. Member for Beaconsfield that it is relatively easy to place people with doctorates and degrees in jobs. As unemployment reduces, we must find work for those who are more difficult to place. We are determined to find work for lone parents, for those with disabilities, for all people. Only a Labour Government will do that. Thank goodness, there will be a Labour Government for the foreseeable future.
Mr. Deputy Speaker:The fight is over.
Mr. Brady: On a point of order, Mr. Deputy Speaker.
Mr. Deputy Speaker: No points of order can be made now. We must move to the next debate.

Child Sex Trafficking (West Sussex Social Services)
11 am
Mr. Tim Loughton: I am pleased to have secured this debate after many weeks of trying in the ballot. Over the past five years, the problem of child sex trafficking has reared its ugly head in West Sussex, largely because of the location of Gatwick airport—this is often forgotten—in what is a predominantly rural county. However, it is a problem that could spread to the rest of the United Kingdom. I hope that you will forgive me, Mr. Deputy Speaker, if I speak at some length about the background, because it is a complicated issue.
As I see it, the problem is threefold. First, it reveals a serious loophole in the law. Police have been powerless to bring convictions against international traffickers in human beings, which is what this amounts to. In the eyes of the Foreign Secretary, it should contain a Government health warning, because it touches on the problem of asylum, an issue that dare not speak its name for the duration of the run-up to the general election, at least in the view of the Commission for Racial Equality and various Ministers. However, I make no apology for mentioning it today, given the direct threat that the inadequacy and failure of the present system poses to the lives and well-being of scores of young women from west Africa who arrive in West Sussex.
Secondly, it is a problem that needs the involvement of the Foreign Office, the Department for International Development and International Social Service, in taking preventive action to protect young women embarking on the perilous journeys from their families in Nigeria and Sierra Leone.
Thirdly, and more pertinently to my constituency and that of my hon. Friend the Member for Arundel and South Downs (Mr. Flight), who is present, the problem has made an impact on the county of West Sussex, particularly, unwittingly, on the social services department of our county council. I pay tribute to West Sussex social services department, which has devoted significant resources and time to the problem, in collaboration with other agencies, particularly Sussex police. However, it is costing West Sussex social services department £1 million a year—a cost that that department can ill afford, given the many pressures on its budget due to the fact that our county has a larger number of pensioners than any other in the country. That is a nice problem to have, but it places additional financial pressures on social services and on the national health service.
I am glad that the Minister of State, Department of Health is responding to the debate, as I know that he is acquainted with the problem, having been to Chichester to speak to West Sussex social services officials and councillors. Colleagues from West Sussex will want to participate in the debate on behalf of all our constituents so that we can talk about the pressure being experienced by the social services department.
Recently, we have heard much about suspected child slave trade ships in west Africa. The Nigerian ship, the Etireno, sailing from Benin, was the focus of a big press story last week. Fortunately, it turned out not to have the dire consequences that had been feared for the future

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of the young children involved. There has been a lot of publicity about the so-called chocolate slaves on the Ivory Coast, who cause much anguish in that part of west Africa, and about the young women trapped in the sex trade in the United Kingdom and on the continent, who come from eastern Europe in particular. Today's papers report police raids on various houses in Southampton over the past few days where the deputy chief constable said that people trafficking is now second only to drugs as a major problem in the county. I am sure that that also applies in other parts of the United Kingdom. In West Sussex, we have seen what I can only describe as a modern-day example of the slave trade—an especially grotesque version that is unacceptable in this day and age.
Since 1990, 479 child asylum seekers have arrived at Gatwick airport in West Sussex and been placed in the care of West Sussex social services. Since 1995, 64 of those children have gone missing. Forty of them are young women who travelled from Nigeria—most are Nigerians, although some are from Sierra Leone. Strong evidence shows that they end up as prostitutes in northern Italy, predominantly in Turin. West Sussex social services became aware of the pattern of disappearing minors in 1997, the rate of which increased 50 per cent. year-on-year until the end of last year.
I pay tribute to the officers of West Sussex social services, especially the child asylum team officers such as Lynne Chitty, who have worked on the problem for some while. They are devoted to helping the young women, and provide a rapid response team at Gatwick airport to deal with the girls when they first arrive. I also pay tribute to the work of the dedicated colleagues in social services, in the children's homes where some of the girls are taken and the foster parents with whom some of them are placed.
A BBC "Southern Eye" documentary called "Lost Girls", which recounted some of the girls' stories, helped to raise the profile of this much-neglected issue a few months ago. Nigerian girls as young as 12 leave their families because they are abducted or to seek better prospects abroad. In some cases, the girls' families sell them to traffickers so that the girls can raise money from working overseas.
Once in the hands of the criminal Traffickers, the girls are subjected to hideous voodoo rituals. One girl, who was traced to Italy by social services and police, revealed some of the details. Girls are subjected to macabre voodoo ceremonies involving up to 50 cuts about their bodies with razor blades. Things are placed beneath their skin, or so they feel. They can be taken into a room where there are human heads on spikes, and forced to drink the blood of dead women. In fear of their lives they are forced to do what they are told by the orchestrators of those evil practices and forced not to tell anyone about what is going on.
In the hands of the international pimps—the only way to describe them—the girls are flown to Gatwick airport, provided with false passports and given a story in order to claim political asylum. The teenagers are often dressed in the same clothes, have similar luggage, and a similar script from which to quote. In some cases, they arrive with one of the pimp's henchmen who claims to be a parent or guardian. In fear of their lives, the girls dare not deny that.
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Some girls are under the impression that a better life awaits them—some expect to get jobs in supermarkets that will enable them to send money back to their families in Nigeria. Some have a slightly better idea of what insalubrious fate awaits them, but fear the consequences of what will happen if they do not go along with the traffickers who profit from this trade in human beings.
If the girls are under 18, they become the responsibility of the social services department, and are placed by West Sussex social services either in children's homes or with foster parents, some of whom are my constituents. As I said, some of the girls are only 12 years old.
In a matter of days in some cases, or up to four-and-a-half months in others, despite the best endeavours of social services, 40 of the girls disappeared, often in the dead of night or at gunpoint, picked up on the beach. Under the Children Act 1989, it is not an option to detain girls in secure accommodation, which might solve the problem. They are therefore free to go whenever they like—although they are obviously vulnerable to the evil men who are cajoling them to go on to terrible things. Most of the traffickers come down from London. There is evidence that, via the port of Dover, they cross to Belgium and then go on to Turin. Once in Turin, the girls are sold on to madams for a large fee and face a life of prostitution.
By that stage, a lot has been invested in the business. The traffickers will have paid for flights and travel, they may have paid fees to the parents and they might have paid for false documents. In many cases, they will have had to bribe immigration officials in Nigeria. The girls are therefore told that a lot of money will be required if they want to buy their freedom. In some cases, that has amounted to up to £38,000—an enormous sum that they have no hope of raising. In fear of their lives from the voodoo curses that they think have been placed on them if they do not obey instructions, and in fear of their lives because a large price hangs over their heads if they do not do what they are told, they are reduced to a life of prostitution in northern Italy. Few return; many are subjected to beatings, and at least seven prostitutes from Africa have been murdered in Turin during the past few years.
As I said, it is a modern version of the slave trade coupled with a grotesque modern version of the sex trade, which is wholly unacceptable. What is being done about that, and why is it happening? First, why are the girls not taken directly to their end destination in Italy? The Italians made their asylum-seeker laws somewhat tougher some years ago, and the United Kingdom is seen as the soft touch to bring the girls into Europe. Gatwick airport has been alighted upon as a suitable disembarkation point. The United Kingdom is seen as a soft touch by international criminals trafficking in human beings—profiting from human beings—so the problem comes to the United Kingdom, and specifically to west Sussex.
As I said, the police have been heavily involved with the problem; they have worked closely with social services and immigration authorities. A pattern of such abductions was established back in 1996, and operation Newbridge was set up by the Sussex police. They spent two years intensively investigating the matter and gathering evidence. They sent officers to Italy, liaising

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with the National Crime Squad and police forces on the continent. I pay special tribute to Superintendent David Gaylor and his team from Sussex police, who headed that investigation and who feel passionately that something must be done. Those policemen tracked down some of the girls and heard their stories, the accounts of which have formed part of my speech. In one case, they actually stopped an abductor in the process of taking a girl abroad at a port but nothing could be done within the law to prevent them leaving. They have raided houses in the county and found hair samples connected with voodoo ceremonies; they have collected a lot of evidence, but no criminal convictions have been obtained.
The National Crime Squad operation, Operation Egypt, which took place after operation Newbridge, was concluded last July as a result of the Crown Prosecution Service not supporting a prosecution against one of the trafficking suspects due to lack of appropriate legislation. Amazingly, strictly speaking it is not illegal to traffic in humans if they are apparently compliant—as the girls are, because they are in fear of their lives if they do not say what they have been told to say. If those criminals were trafficking drugs, a whole host of laws could be brought to bear upon them, and they would hopefully be in jail. Due to a loophole in the law, the fact that they are trafficking human beings means that they escape conviction. That is an obscene and strange anomaly in our legal system. The police are more frustrated than anyone, and have made many complaints about the weaknesses in the law. Superintendent Gaylor points out that we appear at present to have little contact with the girls' country of origin, despite the fact that there is clear evidence of corruption among airport officials in Nigeria.
Immigration authorities have sent staff to Lagos to identify potentially trafficked girls, and for a short while that resulted in a reduction in the number of those arriving at our airport. However, that was not sustainable, and staff who were sent over were subject to intimidation and threats, so the sending of such staff stopped.
The police will say that we must update legislation and review immigration regulations in order to frustrate the traffickers and protect the young women. The acts that we would consider to be offences are not sufficiently covered by the Sexual Offences Act 1956. Any changes must be joined up internationally to take such offences into account. In this case, the offence begins in west Africa, moves through the UK and ends up in Europe. That is the complexity of the crime.
West Sussex needs national help and Sussex police require more support from the Home Office. So far, the Home Office has declined to take any action, and that has only hindered local investigations. The Home Office has been cautious about attempts to identify the girls who have gone missing and to produce publicity, because it feels that that may endanger the girls further.
Following the BBC programme, I wrote at length to the Home Secretary on 12 March. I am still awaiting a reply. The Home Office's attitude to Sussex police is that this is not their problem. However, it is a problem for us all and a moral issue that concerns us all, especially those of us who are close to the problem in West Sussex.
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The Government must, and should, be seen to take direct action on the matter, and the Home Office is falling parlously short of taking such action.
We must examine the experiences of other countries, particularly Australia, which introduced the Criminal Code Amendment (Slavery and Sexual Servitude) Act 1999. That contains new federal offences directed at slavery, sexual servitude and deceptive recruiting. The legislation contained flaws, particularly the reliance on witnesses' willingness, to testify, and in this specific case, that is a problem because the girls dare not say anything.
There is a suggestion from Sussex police that that the facilitation of removal or exit from the United Kingdom of children who have sought political asylum, or the accompaniment of such a child, should be made a criminal offence. If there were such a law, action could be taken at the point of exit—the port of Dover or wherever—when the abductors were taking the young women to the continent.
There is no specific law against trafficking people into the UK, but those who traffic and sexually exploit women are breaking a large number of laws. Technically, however, that is not happening in West Sussex. Superintendent Gaylor recently said:
"We feel neutered and disempowered."
I wholly agree with his frustration.
The other side of the matter relates to the Foreign Secretary. I also wrote to him on 12 March, and I am glad that the Foreign and Commonwealth Office is keener to take the matter seriously than the Home Office. The Minister of State, Foreign and Commonwealth Office, the hon. Member for Cunninghame, North (Mr. Wilson), replied to me and said that the FCO is aware of the problem and is liaising with the Nigerian authorities. That is a good start, and I wish to see practical results from it. However, the Minister also said that the UK is signed up to the United Nations convention against transnational organised crime, and that Nigeria has signed up to many conventions. However, the acts are still happening, because too many people in Nigeria are turning a blind eye, and too many people are profiting from the criminal trade.
We also need closer liaison with Nigerian social services so that they lake the matter seriously. We must link overseas aid programmes that exist between Britain and Nigeria in order to address the problem, which is of immense common interest to Nigeria and the UK. We must stop it happening at source in the first instance, and keep the girls safe with their families, where they belong.
We must also utilise the media in Nigeria to show that prostitution is not a way out of poverty. If families were really aware of the true fate of their children, they would do more to prevent them from leaving the country. In some cases, there is evidence that families are selling their daughters into the ghastly business.
We also need help from the High Commissioner in London. We must use International Social Service, an organisation that has been around since 1924. It has 146 branches throughout the world. It is a transnational social and criminal problem and such an organisation should do something about it. We must stop the problem at source to ensure that the girls are safe in

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Nigeria and stay there with their families. We want those girls who are obviously not genuine asylum seekers, although they are tutored to claim political asylum when they arrive, to be returned to Nigeria to live with their families in safety. We must ensure that there is a safe haven for them. As long as they are not in danger, that is the best place for them to be. We need to work internationally with the social services organisations, with the Nigerian Government and the overseas development industry to ensure that they are safe. They would like to return to Nigeria, but we must stop them embarking on the planes in that country in the first place.
Dr. Jenny Tonge: I thank the hon. Gentleman for introducing such a debate. What he has told us is extraordinary. I am linking the problem with the so-called cocoa slaves and the slave ship that left Nigeria. Has the hon. Gentleman contacted UNICEF? In respect of the cocoa slaves, it was curious that UNICEF appeared to know about the children. It thought that the children were on the ship, but nothing else has happened or has been done. Is the problem not something with which the United Nations organisations should be concerned?
Mr. Loughton: I agree with the hon. Lady. Before she came into the Chamber, I referred to those whom I believe are called the chocolate slaves. It is a problem that hit the press recently and is one with which UN organisations and International Social Service should be involved. West Sussex social services has liaised with such organisations and other agencies. I have not done so personally, but I know that social services has been exhaustive in working with people to deal with the problem. The hon. Lady is right about which organisation should be dealing with it.
I realise that I have taken up a lot of time, but this is a complex issue, the details of which I want to put firmly on the record before the Minister and others respond to my remarks. This terrible business is an unfair and uncalled for burden on West Sussex social services because it is happening through Gatwick airport. I pay tribute to the excellent work of the social services department; to John Dixon, the director of West Sussex social services, who raised the problem with West Sussex Members of Parliament some time ago; to Councillor Barry Mack, who has been a most exceptional chairman of the social services committee over the past four years and to the child asylum team, especially Lynne Chitty, who feels passionately about the girls. She said recently:
"I can't believe how brave they are. They arrive here, they don't even know where they are. They deserve to be safe, to be cared for. They are children."
We have a moral duty to stamp out such abuse and to care for the girls. The problem is adding to the already intolerable pressures on West Sussex social services. It is costing about £1 million per year from its budget. West Sussex is acting as an unwitting warehouse for what is an international criminal trade in human suffering. The Minister knows the problem; he has recognised it on his visits to West Sussex, although with due regard to him, the financial compensation that has been forthcoming is woefully inadequate. He well knows the demographics of our county. He knows that a quarter of the population, and rising, of West Sussex is of pensionable
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age against 18 per cent. Of the population nationally. He knows that the number of over-75s in West Sussex is increasing by 1 per cent. each year. He knows that 32 per cent. Of my constituents are of pensionable age. In Chichester, the figure is a third; in west Worthing, it is the highest in the country, at 47 per cent.
There are big pressures on social services accommodation in our county and on the availability and cost of home helps. There are staff shortages and extra cost factors associated with employment and living expenses in the south-east. The Minister will also know about the particular pressures that feed through to the local health service because of the elderly population. That is why, in spite of the fact that Worthing hospital is an excellent hospital with dedicated staff and in spite of the Government's paranoia about setting targets rather than achieving results, we now have the seventh longest waiting times of any hospital trust out of the 259 in England and Wales. The average waiting time has worsened by around a quarter over the past four years. That is intrinsically connected with the problems of the extra costs posed by an older population. A recent letter from the chairmen of social services from the counties of West Sussex, Kent and Surrey stated:
"The situation in most authorities has now reached crisis proportions with care homes closing at an alarming rate, staff vacancies rising sharply and ever increasing numbers of older people being denied the care that they desperately need."
Local authorities provided on average 9 per cent. More than the standard spending assessment for their social services departments in the financial year 2000–01. That figure is forecast to increase to 11 per cent. more than the SSA in 2001–02, the current year. However, those authorities are not being profligate. They have been required to achieve 2 per cent. Annual efficiency savings.
The Local Government Association, together with the Society of County Treasurers, the Society of Municipal Treasurers and the Association of Directors of Social Services, carried out a survey. Of 150 local authorities, 146 responded. Of those, 85 per cent. Said that in the current year they will overspend in their social services budget. More interestingly for this debate, 64 per cent. Said that children's services were the most under pressure.
The biggest problem is in children's services. In West Sussex, the pressure is compounded by child asylum seekers, on which we are second only to Kent. In West Sussex, the number of children being looked after has increased by 15 per cent. Over the past year.
The Minister complimented the children's services provided by West Sussex. He knows what a great job our social services department does in almost impossible circumstances. That has been achieved at a cost—a great cost, because West Sussex now spends 10 per cent. More than its SSA on social services. In the past four years, the increase in service demands on West Sussex social services has cost us £48.8 million, but the increase in Government funding has been just £22.8 million. Over the past four years there has therefore been a shortfall in Government funding for social services of £26 million.
West Sussex realises that social services are a priority. By taking from other services and increasing council tax much more than we would have liked, it has agreed an

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£11 billion increase in this year's budget—£4 million more than we were allotted. This year we needed £12 million extra from the Government for social services in order to stand still and provide all the services that the authority currently provides and all the additional services that the Government require it to provide. In fact, we received £7 million, a shortfall of almost £5 million.
The Minister will no doubt cite in response Government grants for West Sussex and other, similar authorities. However, such grants are predominantly directed at new responsibilities and are intended to relieve pressure, supposedly, on health, especially winter pressures and mental health, and for children leaving care.
Demands on social services in West Sussex and in many other authorities throughout the country are at breaking point. Raiding the budgets of other departments or excessive increases in council tax are unsustainable measures. Nevertheless, West Sussex is doing an outstanding job in difficult circumstances. It is doing what the Government require of it and has also made efficiency savings of £14.3 million over the past four years.
The recent suggestion in the press that the Government may abolish the area cost adjustment—one of the few measures that recognises, although inadequately, those extra pressures—fills my county's social services department with absolute horror. That is one of the few measures that compensates for the extra pressures that we face.
I ask the Minister to recognise the state of social services in West Sussex, and to consider providing serious extra financial support for the specific problem of trafficking in children, in which West Sussex is playing an unwitting role as the warehouse for international criminals—a role that contributes £1 million to the cost of running social services.
Plainly, the law needs to be changed; we have a moral and international duty to stamp out that horrible business. It is absurd that we could catch criminals if they trafficked in drugs but cannot touch them because they are trafficking in human beings in those bizarre circumstances. That is an especially sinister abuse of the asylum system that again underlines the weakness of the United Kingdom regime and how we are seen by the international criminal fraternity as a soft touch. That obscene trade, which has no place in this century or the previous one, is profiting from that weakness. It is not fair or right that West Sussex has to bear the brunt of that.
There is one bit of good news, which is that so far this year, none of the girls in the care of West Sussex social services has been abducted. Long may that continue. I hope that raising the profile of the issue, as the media, West Sussex county council, Sussex police, colleagues from the county and I have done during recent months, has helped to get the message across to those criminals that we are on to them and will not tolerate such abuse of the system in our county. However, the risk remains that they may set up that obscene trade elsewhere in the United Kingdom—there is no reason why they could not do so. We must be aware of the problem across the
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country, not just in West Sussex. We need concerted help from the Home Office, the Foreign Office, the Secretary of State for International Development and, today, from the Minister responsible for social services, to prevent it in future. It is a truly complex problem that requires a properly joined-up approach from all those Departments to solve it. I hope that the Minister will recognise the seriousness of the issue and give those people working tirelessly within West Sussex social services and Sussex police some ray of hope that the problem will be addressed and will not rear its ugly head again in the future.
11.32 am
Mr. Howard Flight: I congratulate my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) on securing the debate. It is disgraceful that the problem should be occurring in this country in the 21st century and disappointing that the Home Office, in particular—although the problem covers the territory of other Departments—has declined to give attention and assistance to solve it. As my hon. Friend has pointed out, at the root of the problem is the need to change the law because the police, while aware of the problem and the culprits, have been unable to address the issue. I hope that the full airing of the facts given by my hon. Friend will cause the issue to be properly addressed.
I shall focus on the knock-on effects of the general underfunding of social services in West Sussex and especially of the increased child care obligations—although in many ways it is meaningless to separate the territory, much of the extra expense has been on child care. I repeat the tributes that have been paid to Councillor Barry Mack, the chairman of the social services committee, who has done a model job for the rest of the country, tackling major problems with inadequate resources, to John Dixon, the head of the department of social services in West Sussex, and to Lynne Chitty for her work on the particular problem of these poor girls. All three have played important roles in these problematic areas.
Social services funding fell by 7 per cent. In real terms in the six years from 1993–99. There has been a significant transfer of extra responsibilities from central Government to local government, especially in the area of child care, without the resources to finance it. There have been impressive efficiency savings, particularly in West Sussex, and transfers from other sources of funding. Part of the greater-than-desirable increase in council tax has gone to finance extra social services requirements.
In the past three years, however, services that formed part of the necessary care of the elderly in West Sussex and other local authorities have had to be withdrawn. The evidence is there to see. Residential homes are closing, which has a knock-on effect on acute hospitals and causes bed blocking. The Government have financed less than half the additional social security responsibilities placed on local authorities.
My hon. Friend the Member for East Worthing and Shoreham referred to the detailed report and survey undertaken by the Association of Directors of Social Services, the Local Government Association and the societies of county and municipal treasurers. Some

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146 of the 150 local authorities approached responded to that survey. The report shows that although local authorities provide, on average, 9 per cent. More than the standard spending assessment, the average overspend continues at 2.1 per cent. For the current year, the effective subsidy required by local authorities as a result of the absence of central funding will rise to 11 per cent., and that comes after 2 per cent. efficiency savings. Some 85 per cent. Of local authorities expect to be forced to overspend.
As a result of the extremely effective reorganisation undertaken by Councillor Barry Mack and John Dixon, West Sussex has made savings of £40 million over the past three years in terms of improved efficiency, but that has gone nowhere near far enough to match the additional burdens that the authority is required to finance. The survey also showed that most social security departments are restructuring and withdrawing services again, particularly for the elderly.
In the first three-year settlement in 1998, large sums were effectively taken away from many social services departments, particularly in the south—where, as my hon. Friend pointed out, we have the particular problem of an ageing population—and transferred to other authorities, particularly in the north. The Government have funded West Sussex social services for less than half its extra responsibilities. In addition, the human trafficking tragedy has resulted in costs of £1 million being incurred.
Other social services departments have similar problems. The survey shows that 64 per cent. Of local authorities are having to overspend, particularly on child care services. There is tangible, evidence of all that.
The Minister of State, Department of Health (Mr. John Hutton): I have listened carefully to the hon. Gentleman's arguments. He said that the Government have funded West Sussex for only half the extra statutory responsibilities that the authority has been given in relation to social services. I am completely lost as to what he is talking about. For the benefit of the Chamber, will he describe what he thinks those extra social services responsibilities are?
Mr. Flight: The additional responsibilities, to which I will come later, are largely in the area of child care. The Minister has the report from the Local Government Association and the societies of county and municipal treasurers, which sets out the territory. However, if the Minister will be patient, I shall focus towards the end of my remarks on particular additional responsibilities that have been imposed and answer his question specifically.
The Department of Health has said that it expects local authorities to develop new intermediate care services using funding included in next year's SSA and part of the £900 million that was announced for the purpose in the national health plan. From the available information, that represents about £110 million nationally from the SSA and £1.5 million specifically for West Sussex. There has been a reduction in the base promoting independence grant and there are new funding responsibilities in capital threshold, amounting to £18,500. The disregard of property for three months and responsibilities for top-up, preserved rights and
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residential care will cost another £1.2 million. There have been pressures for modernisation, including investment in IT and other infrastructure, but there has not been adequate funding through specific grants.
Mr. Hutton: Those are not new statutory responsibilities, which is how the hon. Gentleman described them. All those additional financial obligations, which we have required local authorities to meet next year, have been fully funded through their SSA or specific grants.
Mr. Flight: I do not think that the Minister's assertion is correct. He will be aware of strident correspondence between his Department and West Sussex social services on the issue. It is playing with words to ask whether "new" and "additional" mean the same thing. I accept the concept that the obligations are additional rather than new, but 15 per cent. Of the children involved are new and need to be cared for, and there is no extra money for them. However, I shall pull out the argument later, rather than citing the individual facts in specific responses.
Generally, on an entirely non-party political level, I am asking the Minister to listen to what the experts on the ground are saying. They are not making things up and do not seek to make political points. They are suffering an acute underfunding problem. Detailed figures have been produced, and I ask him to go through them, to go again to West Sussex and to understand clearly what people are saying. It is technical territory, as he is well aware. However, the reality of what people are saying is there to be witnessed.
To return to the general points, let me say that there is tangible evidence in other areas of rising vacancies for social workers, which is due in part to low pay and in part to the stress of the job. In addition, the number of residential nursing homes that provide home beds is collapsing, in part because social services cannot afford to pay economic rates and in part because of the additional regulatory burdens that are imposed on private sector home care, which results in the withdrawal of facilities.
The fabric of social care is in danger of breaking down with a potentially costly impact on acute services, in particular as regards bed blocking. As my hon. Friend the Member for East Worthing and Shoreham commented, it would be an extreme problem for us if the Government were intent on scrapping the area cost adjustment.
Since 1997, West Sussex social security essential requirements have increased by £49 million. Government funding towards that has increased by £23 million. Key measures and key problems have resulted from the 15 per cent. increase to which I referred in the number of children being looked after. There is also a 1 per cent. Compounding increase in the number of people over 75 to be looked after.
On the national health front, additional tasks are required in terms of social services care in liaison with the national health service and the Department of Health. The local authority is expected to develop new partnership services. Cost efficiency savings of some £5 million have been contributed by West Sussex. In addition, as a result of the lack of central funding, the

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subsidy from West Sussex county council has increased by 10 per cent., amounting to £10 million. For 2001–02, the figure worsens by a further £5 million. An extra £12 million is needed, but only an extra £7 million is being provided.
The most serious evidence of central underfunding is the rationing of services and its impact on the elderly. Those problems have been compounded by the difficulties experienced by private sector care homes as a result of the heavy-handed imposition of minimum regulatory standards. Many private sector homes have closed, causing a major loss of capacity, which has increased the burden on the local authority and acute hospitals. The lack of care facilities for the frail and elderly is becoming a serious problem in West Sussex. The Government are now proposing—desirably—full nursing care facilities for the elderly, but they have failed to make clear how that will be funded, or to say how a distinction will be drawn between nursing care that is funded and other aspects of personal care for the elderly.
The Government are supposed to be caring for social needs. It is unacceptable that funding for the elderly and the young should be inadequate, and that fundamental problems should be worsened by the fact that the local authority has been left to deal with the specific problem of human trafficking. There is some element of pork-barrel politics in transferring money from the north to the south, but the real issue is the need to provide adequate finance for a growing elderly population and for considerable growth in child care requirements.
I conclude by asking the Minister, first, to recognise the problem of human trafficking and, secondly, to go back to West Sussex and go through the figures, so that he will recognise that there is inadequate central funding for the growing requirements of local authorities in providing social services care.
11.47 am
Sandra Gidley: I congratulate the hon. Member for East Worthing and Shoreham (Mr. Loughton) on securing the debate. I must admit that when I was preparing for the debate, I wondered why it was a health matter, because, as has been outlined, it is a multi-departmental issue. I have been somewhat horrified to find that the very important subject of the trafficking of young girls has been superseded, to some extent, by party political broadcast and diatribe against the Government's funding of social services.
I am not here to stick up for the Government. I have slightly more respect for the hon. Member for Arundel and South Downs (Mr. Flight), who was honest when he said that the funding problem stemmed from 1993. Obviously, the blame cannot be laid completely at the door of one Government, so it is a shame that the debate has been used to make political points.
Mr. Loughton: That is slightly unfair. The first 80 per cent. of my speech related entirely to the problem of trafficking. The debate was brought home specifically to West Sussex because the problem, in this form, is unique to the area. It compounds a problem of which the
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Minister is only too well aware. It is entirely fair, and there is nothing party political about it. The problem is happening as we speak.
Sandra Gidley: I agree that the hon. Gentleman spent a good deal of time on the issue, but I still feel that the overall debate so far has been too heavily weighted towards the issue of social services funding. There are problems with social services funding, but this is not the time to discuss them.
I wish that the point about our being a soft touch for asylum seekers had not been made. Britain is not a particularly soft touch. On the radio this morning, evidence was provided for our being at exactly the same place in the league for numbers of asylum seekers entering the country as we were four years ago. It is a shame that another chance of a cheap political point has been taken.
Dr. Tonge: Does my hon. Friend agree that it is not being a very soft touch to receive unaccompanied, sometimes very young, children at a port of entry and to see that they are properly cared for and handed to social services?
Sandra Gidley: I thank my hon. Friend for that intervention, because I wanted next to refer to people who have been referred to as young women, whereas in fact the vast majority of those asylum seekers are children. I hope that I speak for everyone in the Chamber in wishing that those asylum seekers had stayed in this country. I hope that I shall never be quoted out of context on that point. The disappearance of those children means that they have had to go on to a life that no one here would wish for anyone.
The current state of affairs is a problem for West Sussex county council, which I congratulate on its thorough approach. Other councils may have similar problems, of which we are unaware, and may not have delved into them in such depth.
I pay particular tribute to Lynne Chitty. An article in Guardian Unlimited states:
"She and her family have been threatened. Disturbingly, half a dozen of the young people fitting the "profile" are working with the gangs, corrupted by money and power. Chitty knows, and they"—
the gangs—
"know she knows."
It is rare today for people to be so positive, and so determined to do something about a problem, that they put themselves and their families in danger.
The problem of trafficking generally is discussed by the Home Office in the document "Setting the Boundaries: Reforming the Law on Sex Offences". That document cites UK research estimating that between 142 and 1,420 women a year were trafficked into the United Kingdom to work in the sex industry. I consulted a wealth of newspaper cuttings before the debate and I would be surprised if the figure were not even higher. The problem is huge and it is up to all Departments to do something about it.
As has been mentioned, there is no specific law against trafficking, but relevant offences exist under a range of different laws. It has already been pointed out that it is

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difficult to get convictions and we should note that, on conviction, sentences are low—commonly 18 months. That is nothing if a large, international criminal organisation is involved. The law has few effective provisions on pimping or sexual exploitation of children, so there is a huge problem that needs to be tackled at several levels.
My worry is about how we can be sure that the problem affects only West Sussex. Yesterday in Southampton, a huge police exercise uncovered not asylum seekers but a great many illegal immigrants. I do not know whether there could have been, among that number of people, young children who disappeared. Social services simply did not know about those people and would not have been able to help. I believe that the problem is larger than has been highlighted. I should like the Minister to give an undertaking that he will liaise with the Home Office and the Foreign Office, because the problem should be attacked on number of levels. The Home Office should look at the legislation, which can be done fairly soon under "Setting the Boundaries—Reforming the Law on Sex Offences", and the Foreign Office needs to consider how public information can be developed in countries such as Nigeria, because young people do not know what it is that they are coming to.
In those countries, people approach girls from poor families with the promise of good jobs. The girls think that they are coming here to be maids, or even to reach the dizzy heights of a supermarket worker, and their families think that they are going to a safe place in a good country where they will have a good life. They do not know what their children are coming to. We need to ensure that that does not continue. We have an international responsibility, and I hope that the Minister will take a lead in co-ordinating our response.
11.56 am
Mrs. Caroline Spelman: This is a grave subject and it is good that we should debate it in Westminster Hall. All who have listened are grateful that my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) has managed to secure the debate, although horrified by what we have heard. The subject is clearly cross-departmental. As I was preparing for the debate, I was all too aware, as the Minister must be, that a range of departmental Ministers should be here because, if the problem is to be tackled effectively, they need to work together. There is no room for party politics in dealing with it. It is an appalling situation, and our country is on the butt of it. It is an iniquitous trade, unacceptable in this day and age, and we need to act effectively together to stop it.
It is important to place it in the context of social services because the authorities in certain counties, purely because of their location, are particularly affected. It is a problem for Kent, which bears a particular burden, and for West Sussex. Perhaps it is not such a problem for the Minister's constituency or for mine, but that could change. With an airport in one's constituency one might well find that one has the gateway to this kind of trade.
Dr. Tonge: It is a problem for my constituency, although not on the scale suffered by West Sussex. We
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are close to Heathrow and our social services budget has had to stretch to cater for an enormous number of unaccompanied children.
Mrs. Spelman: I thank the hon. Lady for that intervention. She demonstrates the point of having the debate. Circumstances are placing a burden on certain local authorities and the Government should respond for the sake of everyone—for the unfortunate women and children who are being brought in illegally and for those suffering the knock-on effect, whose services may be adversely affected, particularly the elderly of whom there are so many in West Sussex and in Kent. The logic is irrefutable. We are not dealing with hearsay. There is a clear pattern of trade. I invite the Minister to consider why Britain has been chosen as the gateway for a clearly established route of illegal trade that leads to Italy.
The shocking fact is that 2,500 young Nigerians are estimated to be working in prostitution in Turin. Sadly, Italy has turned into a capital destination for this trade.
Sandra Gidley: Will the hon. Lady give way?
Mrs. Spelman: I should like to proceed. We want to hear from the Minister, and the hon. Lady has had the opportunity to make her intervention. Our borders are not contiguous with Italy. If I were a criminal involved in this trade, why would I choose to come through Britain? It would make a great deal more sense, geographically, to go for a country whose border is contiguous with Italy.
It is difficult to get away from the common sense that tells us all that Britain is chosen because it is easier to enter.
Sandra Gidleyrose—
Mrs. Spelman: No, I will not give way. Such a fact needs to be addressed urgently and internationally. The route for the girls is through the gateway at Gatwick, through Belgium—for some reason, which needs to be established—and on to Italy. There is a clear case to work together and to shut down that route. The problem starts through a gateway in this country and the Government cannot ignore that fact.
The television documentary, "Lost Girls", which I urge the Minister to watch if he has not already had the opportunity to do so, shows clearly the intense frustration of West Sussex social services. Its officers work in the rapid response team at Gatwick with immigration officials, but find repeatedly that no effective legal instrument exists to tackle the problem. An example is shown of the rapid response team being alerted to a woman entering Gatwick with an 11-year-old child, who she claims is her daughter. Social services knew that the woman had entered the country months earlier with other children of similar age. However, the law is so weak on that point that, unless the 11-year-old denied that the woman was her mother, there was nothing that the immigration official could do. It is obvious to all of us that there needs urgently to be a change in the law. I accept that such a change applies to the Home Office, but perhaps the Minister can bring his influence to bear on a Department that so far seems not to be listening clearly to the voice of real concern that has been raised by my colleagues in West Sussex.

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The Minister should not underestimate the spiritual aspects of such cases. The girls really believe that they will die if they break their promises to the traffickers. As the documentary showed, it takes specialist counselling resources to help to tackle the beliefs of such young women, rather than the everyday resources of social services departments. I invite him to consider the cost of protecting the women in foster care and the patent failure to do that effectively. As far as we know, 40 young women have disappeared. The resources currently put into the protection process could be used more effectively if the Government were prepared to consider more secure accommodation for them.
Will the Minister think of the foster parents, for example? The documentary highlighted a case of a foster family who have twice had a young woman abducted from their home. It is clear that there is inadequate protection. If 40 young British women were abducted from foster homes in a local authority area, it would be a scandal and the problem would be tackled. Why are such vulnerable young African women offered such inadequate protection?
I know that the Minister has been to West Sussex. I commend him for that. He has heard evidence at first hand from those who are under pressure in social services. However, the assistance that has been offered to West Sussex social services is inadequate. That is why I support the request of my hon. Friend the Member for East Worthing and Shoreham. Kent and West Sussex are in a special position that requires particular attention because of the extra burden that they have to bear. If he or I had Gatwick airport in our constituency, with such clear evidence of such an iniquitous trade in young woman and such patent evidence of failure to protect them adequately, we would be asking no less of the Government. I urge him to respond specifically to the problems that face West Sussex social services.
12.4 pm
The Minister of State, Department of Health (Mr. John Hutton): I congratulate the hon. Member for East Worthing and Shoreham (Mr. Loughton), not only on securing this debate but on many of his points, with which all hon. Members would find it difficult to disagree. I especially agree with him that such exploitation of young people is a loathsome trade—it exploits the innocence and vulnerability of young people, which is deplorable, but it also strips them of their childhood, which is unforgivable. We need to tackle that evil trade, and I shall try to set out as clearly as possible the ways in which we are trying to do so.
I agree strongly with much of what the hon. Member for Romsey (Sandra Gidley) said about the need to address the problem not just as a social services responsibility—although, clearly, social services departments are in the front line—but as part of a co-ordinated programme of work across Governments and between Governments, which is an important element of tackling the problem. Unfortunately, it is not a new trade, and we are aware of certain patterns of development in the trade that we need to tackle. I hope to reassure her and other hon. Members about some of the measures that are being taken to tackle the problems that have been mentioned.
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Hon. Members who contributed to the debate also commented on the financing of social services departments. I wane to correct some inaccuracies, which were especially apparent in the contributions of the hon. Members for East Worthing and Shoreham and for Arundel and South Downs (Mr. Flight), about the Government's record on social services funding. I am afraid that some of their statements in that regard were simply not true.
I was surprised by what the hon. Member for Meriden (Mrs. Spelman) said about enhancing the security and well-being of children who come to this country as asylum seekers by detaining them in secure accommodation. I was taken aback that she was asking us to do that—but perhaps that was not what she was saying. I am aware that the Conservative party's policy is that asylum seekers should be detained in detention centres, but I did not realise that that applied to children, too. Will she clarify that position?
Mrs. Spelman: I should be happy to do so. It is clear that 40 young women have disappeared from foster homes. If they had been in secure reception centres, which might have the specialist skills to counsel them on spiritual aspects, they would have been safer.
Mr. Hutton: It seems that the hon. Lady is saying that young children who come as asylum seekers should all be detained in detention centres, which is not what I understood the Conservative position to be. That is an interesting issue, to which I am sure we shall return. If she is concerned about English children who might be vulnerable to such risks, presumably the same logic would apply to English children in care. Does she also want to clarify that position?
Mrs. Spelman: I think that the Minister would accept that, currently, there is a clear trade from Nigeria, through Britain, to Italy. Given the number of abductions, there is a special case for providing secure accommodation and appropriate counselling support to those young women, who are clearly not safe enough at present. There is a specific trade from west Africa to the continent of Europe.
Mr. Hutton: Yes, that is certainly the case. I want to say something about how West Sussex is dealing with those problems, which the hon. Lady and other hon. Members have identified. I take it that she is saying that young children who come here seeking asylum should be detained in detention centres—
Mr. Loughton: If there were secure reception centres, in which those children could be securely accommodated and helped with the various problems identified by my hon. Friend, does the Minister think that the trade would still be happening in this country, and if it were still happening, would those children be more at risk of being abducted? Surely he would agree that if such reception centres were introduced, the trade would disappear overnight.
Mr. Hutton: I agree that there is a strong case for looking at the security and well-being of unaccompanied asylum-seeking children in this country. However, I am not sure that the solution, on

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which the hon. Members have apparently agreed, is to build secure detention centres and keep young people, indefinitely, in those types of environments. If he is not saying that young children should be kept indefinitely in detention centres, he and I can probably agree that the best way to deal with those problems is to consider the security arrangements that apply to young people coming into care. I do not agree that the right way forward is to build new detention centres—
Mrs. Spelman: That is not what we said.
Mr. Hutton: It is what the hon. Members have been saying. It is the wrong thing to do.
Mr. Loughton rose—
Mr. Hutton: I will not give way again because I want to make further progress on the other issues that the hon. Gentleman has raised.
We must always keep in mind the children's welfare and well-being. The solutions that the hon. Gentleman and others have proposed would require changes in primary legislation, and I do not think that that is the best way to proceed. However, I accept that he has raised genuine concerns and I will try to address some of them.
The hon. Gentleman correctly made the link between child trafficking and young people in the care of West Sussex county council. West Sussex social services became aware of the pattern of young people going missing in 1997, and it was the first local authority to draw attention to the issue. It has long been a receiving authority for a significant number of asylum seekers, because of Gatwick airport. However, his statement that West Sussex is second only to Kent in terms of the number of unaccompanied asylum-seeking children for whom it cares is incorrect: about 10 other local authorities in the country care for more such children.
At present, West Sussex social services department is caring for 141 unaccompanied asylum-seeking children. Since 1990, 479 such children have been referred to it. As the hon. Gentleman said, in recent years, some children have gone missing. The first such disappearance was in 1995, and the second in 1996. Seven young people went missing in 1997, and 11 in 1998. The figure peaked at 23 in 1999, and last year there were 21 disappearances. He correctly stated that no unaccompanied asylum-seeking children have gone missing from West Sussex social services department this year.
The majority of young people who go missing are aged 16 or 17, although the two youngest were aged 12 years and five months and 13 years and nine months. There is no discernable pattern with regard to the length of time that they are resident in the United Kingdom before they go missing: their lengths of stay vary from one day to 145 days, although 65 par cent. arrived less than a month before they disappeared. There has also been an increasing trend for such young people to arrive and disappear in pairs or groups.
There appears to be a discrepancy between the children's country of origin and their reported country of origin. Until July 1999, the great majority of them reported their nationality as Nigerian. Since then, a
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similar majority is claiming to originate from Sierra Leone, but it has become evident that most of them are also Nigerian.
All of the children have been girls, except for a group of four Ghanaian boys who arrived and left between March and July 2000, and three Chinese who arrived and left between September and December 2000. It is believed that those groups of young people are the victims of organised crime, but there is no connection with the west African criminal network that appears to control the movements of the Nigerian girls.
Since 1990, 64 young people have gone missing out of a total of 479 who were referred to West Sussex social services as unaccompanied young asylum seekers. These disappearances are a cause of great concern. However, in West Sussex, no such young people have disappeared since December last year, and no west African young person has gone missing since October 2000.
I am sure that the hon. Gentleman is aware that social services can also face difficulties in determining the identity and age of such young people. It is probable that some of them had been given false identities to help them evade detection. It is also suspected that some of them had falsely claimed to be younger than 18 years of age so that they could receive care and assistance directly from local authorities. I also understand that there is hard and anecdotal evidence that some of the young people who go missing are being trafficked to mainland Europe to be sexually exploited. Some of them know that this is their intended destiny when they arrive in the UK, but tragically others believe that they are coming to the UK to work or receive training.
My concerns about the matter have led me to seek further information about the circumstances in which such young people go missing. I understand that they tend to be in their later teens, so it is inevitable that, once they are placed with foster carers, they have ample opportunity to disappear. Some of them might have been given contact numbers for people who will assist them in leaving. Others choose to go missing because they have made contact with members of their extended family who are already resident in the UK.
The suggestion that some of the young people go missing in suspicious circumstances is particularly worrying. West Sussex social services has, rightly, worked closely from the outset with Sussex police to try to prevent them from leaving care, and to ascertain their whereabouts when they have gone missing. It is because of the excellent work of West Sussex social services with the police and other agencies that the risks to the young people have become more apparent. The police have worked closely with Interpol, with other police forces in the United Kingdom and abroad and with the immigration services.
West Sussex social services, the police and the immigration services have built a profile of the characteristics of young people who are deemed to be at risk of going missing and who therefore require enhanced protection. In turn, the profile has helped the local authority to develop a safer system of care for asylum-seeking children—I think that was the point to which the hon. Member for Meriden referred.
Young people who are deemed to be at risk of disappearing are housed with foster families or in designated safe houses that are staffed 24 hours a day,

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and they receive added supervision and support from properly trained staff. Some foster families are specially recruited through an independent agency. The action to prevent young people from going missing begins by using profiling to identify those who are most at risk. It continues by using people with similar cultural backgrounds to assist in the reception of unaccompanied asylum-seeking children, by using safe houses that are staffed 24 hours a day for those who are thought to be most at risk and by avoiding isolated rural placements. That is a far cry from building new secure training centres.
Mr. Loughton: In the Minister's 11 minutes, he has quoted facts that have already been stated and that he could have gleaned from various briefs from the Home Office or West Sussex social services. Does he believe that the majority of the 40 girls from Nigeria who disappeared ended up in prostitution in north Italy? His comments make it sound like he does not believe that.
Mr. Hutton: I think that it is probable that a large number of the girls have ended up in the deplorable trade that the hon. Gentleman and others have described, although I would not like to say how many because I have no evidence—nor does he. He said that I was quoting facts that I could have gleaned from other sources, or that he has given. That is not so. I am trying to explain sensibly how West Sussex social services are trying to respond to the concerns. There is a way of targeting resources and protection measures towards the children who are most at risk. That is a sensible approach. Detaining all the young people in new, purpose-built secure detention centres, as the hon. Member for Meriden suggested, is not the correct way to deal with the matter.
I am sure that the hon. Gentleman will agree that, although every effort is made to ensure the safety and security of the young people, none of the foster care placements is secure, in that the young people do not have their freedom of movement substantially impaired. They are not prisoners or young offenders, and it would not be possible to place the young people in secure accommodation without the approval of the courts. In practice, if a young person decides to abscond and has an outside contact who is prepared to help to remove that person from the area, or the control and care of the local authority, it is difficult for the social services to prevent that.
We must understand the reasons why young people go missing, and we should do all we can to ensure that sex traffickers do not coerce them. Social services therefore work closely with Sussex police, immigration, the Refugee Council and the national missing persons helpline to establish protocols, to investigate the wider picture and to try to track down missing young people. Efforts to identify and to find younger people are hampered by poor or missing paperwork and the restricted ability of the country of origin to assist with inquiries. The hon. Member for Romsey is correct to say that the matter must be addressed internationally in order to make substantial progress.
I am impressed by the work of West Sussex social services to recognise the vulnerability of the young people and to ensure that those who are at risk of
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coercion by sex traffickers are given additional protection to ensure their safety as far as possible. My officials will take forward work to share learning and good practice and to ensure that the work that has been done by West Sussex social services is shared nationally with other authorities who look after asylum-seeking children in the same manner.
Although no west African young person has disappeared in recent months, West Sussex social services continue to provide additional care for children who fit the profile. The fact that there have been no further disappearances this year provides concrete evidence that the action taken by West Sussex social services and other agencies may have been effective in preventing young people from going missing. I am sure that the hon. Member for East Worthing and Shoreham will welcome that.
The hon. Members for East Worthing and Shoreham and for Arundel and South Downs advanced a substantial argument about funding and how central Government fund local authorities that accommodate many unaccompanied asylum-seeking children. The hon. Member for East Worthing and Shoreham mentioned the costs faced by local authorities. I must point out to him and to other Conservative Members that the previous Administration provided no additional resources for West Sussex county council to meet the extra costs associated with looking after unaccompanied asylum-seeking children—no additional support whatsoever.
Mr. Loughtonrose—
Mr. Hutton: No, I will not give way. The hon. Member for Arundel and South Downs had the good grace to recognise that the problem did not start on 1 April 1997. The hon. Member for East Worthing and Shoreham fell into the trap of assuming that all the funding problems started from that date—he was wrong.
Mr. Loughton: Will the Minister give way?
Mr. Hutton: No, I will not.
The situation has now substantially improved, thanks to the changes that the Government have made to the local government special grant system. West Sussex's 1998–99 claim for £587,000 for associated costs was met in full. In 1999–2000, central Government provided more than £1.1 million funding to West Sussex to meet in full—I stress that point—the claim that the county council submitted to the Department of Health. Awards for the financial year 2000–01 are being assessed, and I understand that the council has submitted a claim for more than £2 million As West Sussex social services is one of the authorities that supports on average more than 100 unaccompanied asylum-seeking children per week, it qualifies for the higher rate of central Government-funded financial support. This year, a total of £85 million has been made available to local authorities to help them meet the costs of looking after unaccompanied asylum-seeking children. So the hon. Gentleman's argument that the Government are

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somehow sitting on our hands and not responding to the financial pressure felt by West Sussex is completely and utterly false.
Mr. Loughton: Does not the Minister agree with the figure cited by West Sussex of at least £1 million for the additional cost of the problem? Will he therefore guarantee that that £1 million cost will be met in full, especially given his comments about the extra security features that are now, I am glad to hear, being added to social services department care homes for such children? There is an on-going and increasing cost. Will he guarantee that that amount will be met in full? If not, he is not even remotely funding the cost to social services of the problem, the existence of which he has admitted.
Mr. Hutton: Let us be clear. In the past two years, we have met West Sussex social service' claim for the cost of looking after unaccompanied asylum-seeking children in full. It claimed an amount; we paid it in full. I am not aware of the extra £1 million to which the hon. Gentleman refers, because West Sussex social services department has not sent me any request for £1 million in unspecified additional costs. There is a procedure for claiming under the unaccompanied asylum-seeking children's grant; the county council has gone through that process and submitted a claim for about £2 million. That grant is administered by the Home Office, so my colleagues in the Home Office will decide the appropriate level of payment. As I said, because of the large number of unaccompanied asylum-seeking children that the county council looks after, it qualifies for the enhanced level of grant.
Painful though it is for the hon. Gentleman, who has been going on about funding, he must confront the fact that when his party was in government, no additional resources at all were made available to West Sussex county council for the additional costs that it was then incurring looking after unaccompanied asylum-seeking children. With the greatest respect, the hon. Gentleman's point—that the Government are not doing as much as we can to support local authorities such as West Sussex—is completely and utterly fatuous.
Mr. Loughton: Will the Minister give way on that point?
Mr. Hutton: No. We are doing more than the Conservative Government did during their term of office.
I must also deal with the point about funding raised by the hon. Member for Arundel and South Downs. West Sussex personal social services' standard spending assessment has increased by more than 25 per cent. since we took office. The hon. Gentleman made the fair point that that may not be enough. We are getting extra resources into social services as quickly as we possibly can. Of course, that must be dependent on the general state of public finances and the health and well-being of the economy. The hon. Gentleman must understand that—I understand that he speaks for his party on finance matters. He and the hon Member for East Worthing and Shoreham spoke for half an hour about the need to spend more on social services. That is good. In that case, he should have a conversation with the hon. Member for Meriden. As he will know, his party has
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consistently refused to say that it will match the level of spending on social services that the Government are making available.
Mr. Loughton rose—
Mr. Hutton: No, I will not give way. It is time that the hon. Gentleman addressed the reality. I know that Conservative Members do not like it up them. [Interruption.] Everyone heard the hon. Gentleman's contribution. The hon. Member for Romsey, who did a very good job, would probably back me up if I asked her to. The hon. Gentleman said that the real problem was that we were not funding social services adequately. When Conservatives are confronted with their record on the issue, and their conspicuous failure even to match the present level of spending that this Government have committed to social services—
Mr. Loughton: Will the Minister give way?
Mr. Hutton: No.
Most people of good will would regard that as party political posturing, which devalues the other important issues that have been raised.
It is probably irrelevant to try to restore an element of consensus in this debate, because, having dispensed with the hon. Gentleman's false arguments about funding, we must now examine criminal law. He and the hon. Member for Romsey were right to say that trafficking is currently not a specific criminal offence under British law. Although he did not mention it, the hon. Gentleman will be aware that last year the Home Office issued a consultation paper examining ways in which to reform the range of offences that cover sex crimes—I am glad to see that he has it. One of the proposals was to establish a new criminal offence of trafficking. The consultation period on those proposals ended in March. The Home Office and my colleagues throughout Government are reviewing the responses, and we will introduce proposals in due course.
Is the hon. Gentleman aware that it is an offence under section 2 of the Child Abduction Act 1984 to remove a child under 16 from someone who has lawful control of that child? That provision would clearly extend to West Sussex social services as the corporate parent of the children in their care. The offence carries a maximum penalty of seven years, so, with respect, it is not the case that there are currently no criminal offences that might be committed in the circumstances that we have discussed.
I accept the hon. Gentleman's point that in all the cases that have been mentioned, a successful criminal prosecution would depend on the availability of credible and reliable evidence to sustain that prosecution and make it worthwhile to proceed, which may be a problem. There is a loophole. I accept his argument about trafficking, and we are consulting on proposals to deal with that problem. However, it is wrong to suggest—as he may have done inadvertently—that criminal law as it is currently constituted is completely powerless to deal with any of the dimensions of the problem that he has identified.
Mr. Loughton: The Minister knows that the Sexual Offences Act 1956 and the Child Abduction Act 1984

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are wholly inadequate. If they were not, why has not a single prosecution been brought to deal with the problem? Why do Sussex police and other police forces that deal with the problem believe that the law is woefully inadequate and incapable of bringing criminal charges against the traffickers?
Mr. Hutton: I acknowledge that point, and my colleagues in the Home Office have made it clear that we must revisit the area of law that covers sex offences. That is why there is a consultation proposal to establish the type of offence for which the hon. Gentleman and others are calling. We must weigh up the responses. Whether a particular prosecution is launched in any given set of circumstances is not a matter for Ministers to comment on, nor is it proper to speculate as to why prosecutions have not been brought. Those are matters for the prosecuting authorities. The hon. Gentleman is a mature individual—although he did not always show that today—and he knows that it is sometimes difficult for a prosecuting authority to pull together the substantial evidence necessary to support a prosecution. That is why we are consulting on how we can strengthen and improve criminal law in such cases.
We can have either a serious or a silly debate about this issue. I am afraid that the hon. Gentleman is repeating some rather silly points that have been acknowledged as being a problem and which we are trying to solve. He cannot have it both ways. I have acknowledged that there is a problem; we are trying to find ways to plug the loopholes that he and others have identified, and that is the sensible way to proceed. However, to suggest—as he did—that the Home Office is doing nothing to deal with the problems is wrong, and does not to advance our understanding of the arguments.
This is a serious issue. We are trying to deal with the problem. We are working closely with West Sussex social services to find a sensible way of enhancing the children's security. We are providing significant additional resources for social services, especially to deal with unaccompanied asylum-seeking children. A new grant of £85 million is being disbursed across local authorities this year. We are also trying to strengthen criminal law and work across international boundaries to enhance the safety and well being of the young people. They are at risk, and it is our responsibility to provide better levels of security. We are determined to do that.
Mr. Deputy Speaker (Mr. John McWilliam): I invite hon. Members who do not want to stay for the next debate to leave quickly and quietly.

Armed Service Pilots
12.29 pm
Dr. Gavin Strang: I am grateful for the opportunity to initiate this short debate on the recruitment, training and retention of pilots in our armed services. I am delighted that my right hon. Friend the Secretary of State is present to reply.
Our armed forces have a tremendous history of achievement. Members of Parliament from all parties are anxious that the standards of our forces are high and maintained. The people in the forces are vital in achieving that, as the Government acknowledged in their strategic defence review in 1998, which contained an entire chapter on policy for people. The Select Committee on Defence followed that up with an important report in February.
I shall discuss the people involved; military personnel, civil servants at the Ministry of Defence and civilian back-up people. They are the crucial element in our armed forces. In all our modern forces, people are extremely important. The Army requires many helicopter pilots, as does the Navy, which also requires fast jet pilots. The Royal Air Force, in particular, requires helicopter pilots, multi-engine aircraft pilots and fast jet pilots. I shall concentrate my remarks on the need to sustain an adequate supply of highly trained fast jet pilots. I shall rely a great deal on information published by the National Audit Office last September in a useful report entitled "Ministry of Defence: Training New Pilots".
The first point in the report was that the Government inherited a problem. There is no question that there was a shortage, but I shall not spend a lot of time on statistics. The NAO report contains many interesting statistics and graphs. The report covers the five years from 1994 to 1999, and makes the point that, over that period, the services required about 250 pilots. In fact, the number achieved on average fell short by 45 each year, or about 18 per cent. There was a significant shortfall in the availability of trained pilots over that period. The report refers to "an acute shortage" of fast jet pilots on the front line. I hope that we shall constructively deal with that matter in the short time available to us this morning.
The number of pilots available for operational service depends on recruitment, training and retention, and I shall say something about all three of those aspects. On recruitment, almost half the RAF trainee pilots come from university air squadrons. Others gained flying experience through the Air Training Corps. Most of us have probably had some contact with one or other of those organisations in our constituencies.
I am pleased to see the hon. Member for Grantham and Stamford (Mr. Davies) in his place. It is common ground that those organisations need to be supported, nourished and encouraged. They are important in attracting new recruits to the RAF. The NAO report pointed out that about 20 per cent. of trainee pilots had no previous flying experience.
Of the three aspects of recruitment, training and retention, recruitment has not been the major problem. I wish to toss a factor into the debate to give the

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Secretary of State a chance to comment on it if he wishes. Should more women be recruited to be trained as pilots? The Select Committee report published in February homed in on the whole matter of such a policy as set out in the strategic defence review, but I do not believe that recruitment is the main area where most action is needed.
The National Audit Office report went into training in some depth. It is obvious that the success rate must be an important factor. Being a fast jet pilot is a demanding profession. The report points out that, for every 100 new trainees, 48 will be expected to complete fast jet training. Some trainees who do not succeed in becoming operational fast jet pilots become pilots of helicopters and other aircraft. However, given such high and exacting standards—which no one would want to lower—it is inevitable that there will be a high wastage rate. I do not believe that a lot can be done in that area, although we should keep examining the training procedures and ensuring that they are as good as possible.
An interesting point came out of the National Audit Office report. It concluded that a major factor in the shortfall of pilots over the period that they studied was the time that it took to train them. The time usually allocated for training was about three years, but in practice it took five. That had the effect of reducing the number of operational pilots who became available each year. The report said that that also had the effect of reducing the time for which pilots were available for service. The time taken to train a pilot was an important factor in the shortfall.
To its credit, the Royal Air Force has been considering the matter. In his evidence to the Select Committee in November, Air Vice Marshal Ian Corbitt, the chief executive of the Royal Air Force Training Group Defence Agency, said that some of the difficulties with training courses that had resulted in the pilots taking five years rather than three were being dealt with. That is certainly good news.
My next point is slightly tangential, but like many hon. Members, over the years I have taken considerable interest in the development of the Eurofighter, not least because of the important industrial interest that Edinburgh has in it. We are on the threshold of a major historic change in respect of fast jet pilots. The Eurofighter will come into service next year, and over the next decade or probably longer, we shall see a transition to heavy dependence on it. I should welcome the Secretary of State commenting on the training for the Eurofighter.
Evidence, both from the report and from our experience of talking to people in the services, suggests that we should direct our attention towards retention. The major factor is the attraction of the growing civil aviation sector. That is a problem of success—the economy has been growing well, so people's living standards have been rising. Not only is the economy growing but air traffic of all kinds—commercial, passenger and holiday traffic—has been growing even faster. Commercial airlines therefore have a huge need for trained personnel.
Mr. Quentin Davies: I congratulate the right hon. Gentleman on raising that
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urgent and important issue. Is he aware that, two weeks ago, I asked the Secretary of State four questions? I asked him to set out the anticipated shortfalls in fast jet pilots and single seat fast jet pilots for each of the next five years. I asked him how many fast jet pilots in the RAF and the Royal Navy are combat ready. I asked what the current shortages are of trained pilots for the Sea Harrier, Harrier GR7, Tornado F3, Tornado GR1, Tornado GR4 and the Jaguar. I also asked what is the maximum output of fast jet pilots from RAF Valley. To each of those questions, I received, yesterday, the answer, "I will answer shortly."
Surely it would be a terrible indictment of the Government's fundamental competence if they did not know the answer to those questions and could not acquire them in two weeks. Therefore, should there not be much more than a suspicion that the present situation is a good deal more alarming than the right hon. Gentleman and I suspect? The Government may be trying to cover up the issue, without answering such vital questions, until after the election.
Dr. Strange Dr. Strange: I cannot accept that, but we are fortunate that the Secretary of State is present in this Chamber, and I am sure that he will try to thrown light on this matter.
However, all hon. Members agree that this is an important issue that needs to be addressed. One cannot wave a magic wand; whatever is done to address the matter will take time. I do not believe that there is any question of a cover-up; indeed, the National Audit Office report was useful. A great deal of evidence was presented to the Select Committee, which I am sure the hon. Gentleman has studied. That evidence relates to recruitment as whole, not just that of pilots, in depth.
Clearly, the pressure from commercial airlines will not go away. It will probably be there indefinitely. It is a challenge that must be addressed. Indeed, someone in the RAF said to me the other day that there is evidence that the exodus from the RAF, including that of pilots, mirrored recruitment by civil airlines and their policies at the time.
My other point on retention, which is an obvious and basic one, is that a trained fast jet pilot is a hugely valuable resource. I do not want to go into details on the figures, but it costs more than £million—perhaps as much as £million—to train a fast jet pilot to the point at which he is capable of operational service. On that ground alone, it is vital that we secure the maximum service from the individuals concerned as pilots.
To their credit, the Government have already started to address the issue. The announcement on pay a few months ago included a further two financial incentives. Some people say that, in terms of salary, the Government cannot compete with the commercial airlines, and that they should not try to do so. I do not accept that. Of course the commercial airlines will always be able to pay high salaries, but financial incentives have a part to play. I put it no stronger than that. I am not saying that the Government can pay the same money as the commercial airlines, and I congratulate the Government on having introduced several measures to address the problem. If one reads the Select Committee report, it suggests that the Government's response has been radical. Certainly, it is

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a start; it is too early to say what effect the incentives will have. If the Secretary of State has information on the matter, that would be helpful. The important point is that, to his credit, the Secretary of State has ensured that action is beginning to be taken to tackle the problem.
The Government's strategic defence review made it clear that our forces were more likely to be taking part in overseas deployments. Peacekeeping and humanitarian activities are facts of our modern world. Since the general election in 1997, we have seen such deployments in Bosnia, Kosovo, Sierra Leone, East Timor and northern and southern Iraq. There has been no shortage of challenges facing the Government in relation to the use and role of our armed services. It is clear that the shortage of pilots has not inhibited the Government from meeting such challenges. We are all proud of the role that our forces have played.
It is important to clarify that there is no evidence that the shortage of pilots has had an adverse effect on the quality of the contribution of our forces in such deployments. That is not to say, however, that there is not a problem. There has been a danger of overstretch. There is a worry that excessive demands could be made on our pilots. We must avoid that. The quality of life and the time between deployments are important factors to bear in mind. A shortage of pilots means that the time that they can spend with their families between deployments is much shorter. Let us face it: by definition, a fast jet pilot is at the peak of his productive ability. He would often have a young family, so it is important that we face the matter in the round and follow through the changes and initiatives that the Government have already taken. I congratulate them on that. We must create a climate in which we can retain the fast jet pilots for longer than we are doing at present. I suggest that securing a full complement of highly trained pilots is a challenge that has not only been faced by the present Government but will face the next Government after the election.
12.47 pm
The Secretary of State for Defence (Mr. Geoffrey Hoon): I am most grateful to my right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strange) for the opportunity to debate such an important issue. It is one in which I have taken a close personal interest.
The challenge of manning operational squadrons and the services' flying training organisations with sufficient pilots against the pool from the civilian airlines is not new. It goes back even before the constructive National Audit Office report to which my right hon. Friend referred. As long ago as 1988, the Armed Forces Pay Review Body drew attention to the issue. It is a problem that is facing most NATO air forces and many other air forces throughout the world. The situation has been deteriorating slowly for some time.
The current position is that on 1 March 2001 we had about 196 fewer pilots in the Royal Air Force and the Royal Navy than we would ideally like. That translates into about 79 empty cockpits at the front line in relation to 42 RAF fast jets, 22 support helicopters, five Sea Harriers and 10 Royal Navy helicopters. The Army had
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a surplus of 38 junior officer pilots and a small deficit of non-commissioned officer pilots. The figures change all the time and depend on the definitions that are used, which is why I can assure the hon. Member for Grantham and Stamford (Mr. Davies) that there has been no cover-up. His questions will be answered at 3.30 this afternoon.
The deficit is forecast to continue for several years, mainly because of the pressures of a global shortage of pilots arising from the sustained growth in the civilian airline sector. However, we are not complacent about the matter and have taken steps to address the problem across the complete spectrum of requirement, training and retention. Yet more work is in hand, and as recently as 13 March, as my right hon. Friend mentioned, the Minister for the Armed Forces informed the House that a comprehensive review of aircrew retention had been commissioned to report in the autumn. Three main factors must be in harmony if the services are to be manned with sufficient pilots with the right balance of experience. I will deal with each in turn. I begin with the requirement—that is, how many pilots do the services need?
The requirement for pilots is generated largely by the number of aircraft on the front line. It also reflects how those aircraft are expected to be employed to meet their operational task. Obviously, the more intensively we plan to fly the aircraft, the greater the pilot-aircraft ratio will need to be. Those factors were scrutinised carefully during the strategic defence review, and I am satisfied that we have the balance right.
Another factor that drives the requirement for pilots is the need to fill certain ground appointments with personnel who have had first-hand experience of flying aircraft and of air operations. Such posts include those in headquarters concerned with aspects of planning or commanding air operations, some flight safety appointments, and equipment capability appointments for procurement of new systems. Additionally, some personnel are required for training posts. Appointments which fall into that category have been rigorously scrutinised, and as a consequence about 500 RAF posts have been disestablished or will in future be filled by members of the operations support or other ground branches. We are therefore making the most effective use of our pilots' skills and training.
The next factor to be considered is the provision of an adequate flow of newly qualified pilots from the training organisations. I am delighted to say that recruitment is buoyant and that for the year ending 30 March 2001, the RAF met 100 per cent. of its pilot recruitment target. The Royal Navy and the Army achieved similar success rates. Military flying is especially challenging and the services rightly demand the highest standards of their pilots. To ensure that those standards can be met, careful selection is undertaken and appropriate training given. That is a lengthy and expensive process—as my right hon. Friend mentioned—but a vital one if our aircrew are to continue to operate successfully in demanding operational theatres.
The flying training pipeline is both long and complex. It varies depending on the background of the trainee— those who enter via university air squadrons, for example, will already have some basic flying experience; those who enter directly from school are likely to have none. I will describe the route followed by trainees

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destined to fly fast jets, because that is the most lengthy and demanding training profile, and the one on which my right hon. Friend concentrated.
All RAF student pilots start the training process at the RAF college at Cranwell. There they undertake a 24-week initial officer training course. The Navy undertakes similar training at the Britannia Royal Naval college at Dartmouth and the Army at Sandhurst for their officers—NCO pilots are recruited only from within the service. After successful completion of that course, flying training commences and all direct entrants undertake elementary flying training, except for recruits who have already completed that stage as members of a university air squadron. Elementary training involves 62 hours of flying and ground instruction, and gives the student the skills needed to fly safely.
Those students selected for training for fast jets then undertake basic fast jet training at RAF Linton-on-Ouse on the turbo-prop Tucano aircraft. The basic training includes 131 hours of flying and is a lead-in to the 107-hour advanced tactical training course. Following conversion flying on Hawk aircraft, students master advanced flying techniques, such as high-speed low-level flying, which is vital to the effective performance of operational tasks. Students are also trained in air tactics and undertake weapons training for the first time. That training is undertaken at RAF Valley in Anglesey but 20 students each year go to the NATO flying training school in Canada. During the advanced training phase, the successful students are awarded their wings.
Before the new fast jet pilot can he assessed as suitable for operations he—or, increasingly she, to respond directly to my right hon. Friend—needs to undertake a further period of training at one of the strike command operational conversion units or, in the case of Royal Navy pilots, the 899 Naval Air Squadron Sea Harrier conversion unit. There is an OCU for each fast jet type and at the OCU the pilot learns to fly and operate the specific aircraft type—not just the different flying characteristics of the aircraft and its unique equipment but the tactics particular to the type.
For example, a Tornado GR1 pilot will learn advanced evasion skills, automatic terrain following, electronic counter-measures and advanced air-to-ground weaponry techniques. The training for the more demanding and capable aircraft types, such as the Tornado GR1, typically takes just over four years and in their report last year on flying training, the National Audit Commission assessed the cost as about £6 million.
There is a limit on the number of newly qualified pilots who can be absorbed by the front line without impairing operational efficiency, and it is critical that the planned training output should be met, because it is almost impossible to increase output sharply in subsequent years to compensate for any shortfall. Even if output were to be increased, there would be the danger of swamping front-line squadrons with too many inexperienced pilots.
Additional resources have been provided to ensure that training targets are met, and that includes fully staffing the training systems by making additional flying instructors available at RAF Valley. Innovative means have also been adopted to maintain output and cope with the unexpected. For example, students are
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currently undertaking basic flying training with the Royal Australian Air Force, to cover the gap caused by the temporary grounding of the Tucano fleet last year.
My right hon. Friend asked about Eurofighter. We must get manning right so that the new aircraft can be brought into service in the planned numbers and within the planned time scales. That is a top priority. It is planned that the first conversion course for RAF pilots will begin in August 2004, which will be for experienced pilots. Training for novice pilots will begin in November 2004. Overall, Eurofighter will not generate substantial demand for pilots until 2006–07, whereas we expect the pilot shortage to ease from 2003 onwards.
For the future, we are conducting a study that is known as the United Kingdom military flying training system. That will lead to the development of a strategy to ensure that appropriate flying training, from start to finish, is in place for the latter part of the decade.
I shall deal with the third factor that I mentioned at the outset—retention. That is the most important factor, because it can be influenced relatively quickly. I have explained the considerable amount of training and the substantial associated cost that is necessary to produce combat-ready pilots. That makes it important that such pilots stay in substantial numbers and for long periods. That makes financial and operational sense.
Of course, such an argument applies equally to all our service personnel, which is why we have introduced a comprehensive programme to make service life more attractive with the aim of improving retention. I shall not discuss those measures, but I can let my right hon. Friend have the details.
Many general factors must be addressed but additional measures to improve air crew retention have been introduced, some very recently. The rate of flying pay has been improved substantially for more experienced pilots and, where particular shortages were identified, targeted financial incentives have been introduced. Such incentives are £50,000 for Royal Navy Sea Harrier pilots and £10,000 per annum for two years for pilots aged over 38. LINKUP, a scheme that helps air crew obtain civilian pilot's licences in exchange for a commitment to longer military service, has been introduced, and eligibility has subsequently been extended. Many pilots are taking advantage of the scheme, and it has been judged to be a success.
Service secretaries are offering extensions of service to pilots who wish to continue beyond normal retirement age, and that is helping to reduce pilot deficits. Attempts are underway to recruit younger pilots with the aim of increasing the return of service that is linked to the in-service degree. Additionally, amortisation periods are being reviewed, with the possibility of increasing the return of service following training.
The pull from civilian airlines is unlikely to diminish, and we must face that long-term problem. For that reason, we have set up a working group specifically to make recommendations on how we may improve air crew retention. The working group has been given wide-ranging terms of reference to examine all factors that influence the subject, and it has been directed to report by the autumn so that, where a financial response is appropriate, the Armed Forces Pay Review Body may take our reviews into account for its 2002 report. The working group, assisted by a specialist consultant and

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with Treasury representation, is collating the views of about 1,000 air crew to pinpoint what factors must be addressed.
In conclusion, I make no attempt to disguise that we have fewer pilots than we would ideally like for the Royal Navy and Royal Air Force. The main cause of that shortfall is a disappointing retention figure. However, such a situation is faced by virtually every air force in the world. I hope that I have made it clear that the Government are not complacent about the matter, and that we have taken, and will continue to take, vigorous steps to address the problem.

Sex Education
12.59 pm
Mr. Julian Brazier: I am grateful for the opportunity to speak about sex education in schools. Sadly, our country suffers from among the highest levels of under-age pregnancy and divorce in the developed world. The breakdown of our families has created a rising tide of misery for many young people. It has been rising, under all Governments, for a generation, and it laps at the doorsteps of most hon. Members' constituency surgeries. We see increases in drug-taking, alcoholism and youth homelessness and, sadly, the youngsters of our country have developed a Europe-wide reputation for yobbery, as so many of them have not experienced the disciplines of traditional structures. With regard to such matters, sex education in schools is an important factor—although by no means the most important—and I am therefore very pleased to have the opportunity to speak on the subject.
Sex education can help to develop moral attitudes about sexual activity' among young people, and it could play an important role in re-establishing the crucial link between sexual activity and child rearing. Sex should not be portrayed to our young people simply as a form of recreation, and should certainly not be so portrayed to those of primary school age.
Since they were elected, the Government's position has been that sex education should not be covered by statute, but merely by guidelines in circulars. In July 2000, the Department for Education and Employment's promised guidance on sex and relationship education was finally published, and it will play a pivotal role in my presentation.
My party has highlighted two statutory areas where force of law was important. First, with regard to the Learning and Skills Act 2000, many of my colleagues and I sought to press amendments to place a higher priority on marriage in sex education. Secondly, our debates on section 28 and the potential promotion of homosexuality in schools were widely publicised.
With regard to those issues, I will illustrate how badly things can go wrong by examining two groups of bureaucrats. The Minister does not have immediate responsibility for either of them: indeed, one of them is now outside the responsibilities of this Parliament. Most teachers take a sensible approach towards sex education, but certain sections of the education bureaucracy do not.
The two groups of bureaucrats to whom I am referring are the English health authorities and their sexual health promotion units, and the Scottish Executive. Scotland's recent experiences offer a terrible warning of what would happen south of the border if the Government's plan to repeal section 28 were successful.
In the debates on the Learning and Skills Act 2000, the House was given repeated assurances that marriage would play an important role. Those pledges were also made in the negotiations with the churches. That led most of the churches south of the border to sign up to the package. There are a number of positive features to the guidance published last July. There are references to the importance of love and care—not just recreation—in sex, and to the importance of linking sex

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with the responsibilities of parenthood, which I applaud. It also stresses the importance of sex education for boys as well as girls. However, overall, the document is lamentably and pathetically weak in restraining certain activities. Only three short, passing references are made to marriage, in each case closely linked to so-called stable relationships, one of the myths of the new era. An acquaintance of mine who is a general practitioner in the east end of London once told me that most of the young girls who come in, to see him tell him that they are in something that they call a common law marriage. Most young men who go to see him tell him that they are in a short-term sexual relationship.
Statistics show that a child has almost six times as good a chance of its parents staying together for 10 years or more if they are married than if they are in an allegedly stable relationship—Government statistics from 1997, provided by the Library. None of that makes any mark in what is being taught to our children in schools if Government guidelines ate being followed.
I cite two examples from English health authorities of the sort of material that is reaching schools. One that has been extensively discussed before is the video provided by Avon health authority, which invited 14-year-olds to act out roles such as a married man caught cottaging—having gay sex in a public lavatory. The same video featured a 13-year-old advising pupils to try both boys and girls until they found which they preferred.
In my own patch, East Kent health authority provided a presentation—we have one of the highest levels of under-age illegitimacy in the country—and the health promotion team made it abundantly clear that the word "marriage" would not figure in presentations provided in schools. Members of Parliament were not told that it was, incredibly, simultaneously issuing instructions that under-age children were to be furnished with morning after pills without even necessarily telling the parents, a decision that raises considerable clinical as well as moral issues. That circular had been issued without Kent county council, the education authority, being told about it. In an open letter, the leader of the council, Sandy Bruce-Lockhart, wrote to the chairman of the health authority, making it clear that he was disgusted that that liaison had not taken place. The document has failed miserably to put over to the bureaucracies with which we are dealing the importance of the pivotal role of marriage in sex education.
All that pales compared with the warnings from north of the border of what could happen here in England. I hope that you, Mr. Deputy Speaker, will not feel that I am getting at you personally, as a Scot who represents an English constituency, with the following examples. I am sorry that one or two of the examples may seem lurid beyond belief, but as they are being given to children in our schools in part of the United Kingdom, it is right to touch on them briefly.
On 19 January 2000, the Prime Minister made it clear, in answer to a question that was, ironically, asked by a Scottish Member of Parliament, that on both sides of the border, although he was referring to south of the border:
"That is not because we believe it right to promote homosexuality but because we believe it is right for school teachers and others to be able to explain to children properly the facts of life."— [Official Report, 19 January 2000: Vol. 342, c. 840.]
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I was so incredulous on reading material from the Christian Institute that I had to ask it to fax me copies of the documents involved. In the primary school document, the sex and relationships education pack, oral sex and masturbation are given the most graphic descriptions. In the same pack, primary school children are told at considerable length just how much fun is to be had out of sex. It is presented as a recreational activity, rather than something that has a role in a wider relationship, let alone marriage. In another package, which is aimed at 11 to 14-year-olds, there is a role-playing exercise in which children are expected to represent homosexuals coming out. That is despite the fact that, on 10 March, the Prime Minister pledged in a widely reported speech that
"no child is going to be forced to take part in homosexual role playing."
Technically, I suppose that children are not being forced to take part, but if their teacher tells them that it is a good idea, it is quite likely that they will do so.
In another pack for 11 to 14-year-olds, groups are to discuss sexual activities that two people can do together, including the
"use of sexual toys e.g. Vibrators or other items…sadism/or masochism—the use of pain…partner swapping".
That is for 11 to 14-year-olds. So much for even the alleged stable relationships.
Finally—you will be relieved to hear that this is the last example that I shall give, Mr. Deputy Speaker—there are activity cards for 15-year-olds. These are not from the Scottish Executive, but from one of the Scottish local authorities. I can show them to the Minister afterwards. They give the most lucid details on a variety of sexual practices, including very detailed material on how to maximise pleasure from anal intercourse.
In a remarkable text, the great Christian writer C. S. Lewis said that practising Christians should avoid at all costs' running about sounding as if they spend all their time trying to prevent people from having fun. However, we surely must have a better vision for the rising generation of children than the things that I have described. Surely, there are other activities that should grasp the imagination of young children—of primary school children—before those. Of course, children should be taught the facts of life. My parents taught me them very early, and sex lectures were provided at school when I was about 13. We should guide children in such activities through the difficulty period of puberty. We should teach them about the virtue—that is an old-fashioned word—of self-restraint. They should be taught that in a proper context. I unashamedly believe that marriage is the right context for sex. Children should at least be told the facts about how much more successful marriage is for child rearing than anything else that has been tried.
I have one last statistic. The largest ever survey on the issue was carried out by the United States Department of Health—not some right-wing think tank—in 1988. It showed that children from the poorest backgrounds in

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America, who were struggling to exist on less than $10,000 a year, had a lower rate of juvenile delinquency when their parents were married than children from the most prosperous families in America under every other marital arrangement that was considered.
I do not want to condemn anyone. The family of every one of us is touched in some way by family breakdown. All I ask is that in providing guidance to children in schools, we should aspire to give them something better and to achieve more than our generation did for our children.
1.13 pm
The Parliamentary Under-Secretary of State for Education and Employment (Jacqui Smith): I congratulate the hon. Member for Canterbury (Mr. Brazier) on gaining the opportunity to talk about what I think we both agree is an important issue.
I wholeheartedly agree with the hon. Gentleman that a successful sex and relationship education programme will help young people to respect themselves and others. It will enable them to make responsible and well-informed decisions about their lives and it will help them to move with confidence from childhood, through adolescence to adulthood. It will also help to achieve the Government's objective of As the hon. Gentleman said, we published our sex and relationships education guidance last July. Unlike the hon. Gentleman, I believe that it was a significant step forward. I will also talk about the legal background and the statutory nature of that guidance, because the hon. Gentleman was mistaken in suggesting that there is no legal force to what we proposed in our guidance or what we set out in the Learning and Skills Act 2000.
The guidance was a significant step forward. It is helping teachers to make a difference in the classroom; it is helping parents to have confidence in the education that their children are receiving; and it is helping our drive to tackle teenage pregnancies. It underlines our commitment to ensuring that our young people receive a good education in sex and relationships. We held broad consultations on the draft guidance and we received broad support—even though it was not from the hon. Gentleman. We had productive discussions with the Catholic Education Service and with the Church of England during the passage of the Bill that became the Learning and Skills Act 2000 through Parliament and during the compilation of our guidance. Many of those organisations' comments were taken on board.
There were positive comments from other church and faith groups on our guidance. For example, the Methodist Church said:
"In general, the Methodist Church welcomes this document as a valuable tool for governors, head teachers and parents as they develop policies on sex and relationship education, and for teachers as they put such policies into practice."
The Jewish Marriage Council said:
"Faith communities will all welcome the greater emphasis on relationship education, particularly the recognition of marriage and thereby couple relationships as being key building blocks of community and society."
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We have also had very positive feedback from teachers. They have told us that the new guidance is supporting them and helping them to deliver high-quality education in sex and relationships. People are telling us that they want to get on with their jobs and our guidance will enable them to do just that, in the sort of context that I believe is important for our children.
There are concerns, however, and we responded to them in our guidance and in our legislative framework. First, there is the issue of inappropriate teaching and materials. As often happens in these debates, the hon. Gentleman has reeled off a list of materials that he claims may be being used in schools. I have to say that our guidance makes it very clear, as does the Learning and Skills Act 2000, that children and young people should be protected from inappropriate teaching and materials. This is the first time that that has been set out in legislation.
Head teachers now have a legal responsibility to protect children from inappropriate teaching and materials in the classroom. Health authorities have to have regard to that guidance, and colleagues in the Department of Health have produced guidance and written to health authorities to make them aware of the fact that legally they must take our guidance into account.
Mr. Brazier: Will the Minister tell me when that guidance went out? The presentation that I referred to by East Kent health authority took place only at the end of last year. The guidance does not seem to have reached my health authority yet.
Jacqui Smith: I understand that the Department of Health sent out guidance at the end of last year alerting health authorities to the requirement to have regard to our guidance. Under the guidance, schools also have a legal responsibility—for the first time ever—to ensure that children are taught the importance of marriage. That provision was notably absent from the guidance issued by the previous Government and absent from the national curriculum before it was reviewed under this Government.
In the personal, social and health education framework that was first included in the national curriculum in September 2000, we made it clear that marriage had an important part to play and that children should be taught about it from seven to 16. That is now part of the framework of the national curriculum and that is reflected in our guidance. The guidance also recognises the central role that parents should play in developing a school's sex and relationship education policy, including their right to withdraw children from lessons should they wish so to do.
It is also worth reflecting on what the guidance replaced and on the improvements in the new guidance compared with the old circular 594. First—here, I agree with the hon. Gentleman—it is important that sex and relationship education is framed in such a way that it links into personal, social and health education, and into education on citizenship. For the first time, we have

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linked sex and relationship education into that framework, which helps pupils to develop the skills to tackle moral and social questions.
Secondly, our guidance emphasises the importance of the relationship aspect of sex and relationship education. The hon. Gentleman focused on, as he described them, lurid explanations of some of the more mechanical and biological aspects of sex. The Government and young people believe that we must place sex education in the context of relationships, which the Government's guidance does.
Thirdly, the guidance aims to ensure that sex and relationship education gives pupils the confidence to negotiate relationships and to delay sexual intercourse. Some people have argued that sex and relationship education should focus solely on avoiding sexual activity. Our view is that good sex and relationship education will encourage pupils to make well-informed decisions, and our guidance aims to achieve that. For example, we recommend that all pupils in secondary schools should have a clear understanding of the reasons for delaying sexual activity and resisting pressure. Research demonstrates that good comprehensive sex and relationship education, set in the context that I have outlined, does not make young people more likely to engage in sexual activity. Indeed, it can help them to learn the reasons for, and benefits to be gained from, delaying sex.
Mr. Brazier: The Minister referred to my objection to some of the more mechanical descriptions. I appreciate that she is not answerable for what happens north of the border, but from what is happening in my health authority, we can see that the Government's guidelines are simply not being followed. Following the removal of section 28 in Scotland, the following is a quotation from guidance for primary schools. Oral sex is defined as
"using the mouth and tongue to lick, kiss or suck a partner's genitals. Oral sex on a man involves his penis. Oral sex on a woman involves her clitoris."
Would the Minister welcome that being distributed in primary schools south of the border?
Jacqui Smith: I am not sure what the hon. Gentleman hoped to achieve by that intervention, apart from giving him another opportunity to read from materials that he may or may not consider to be inappropriate.
The hon. Gentleman says that he believes that teachers are responsible and professional people. So do the Government. That is why, within the guidance that we have given and the statutory framework that we have laid down for the first time, we trust teachers, governors and parents to develop the sort of education that is important for our young people. Given the guidance that we have provided, I believe that the professionals in our schools can recognise what is appropriate and inappropriate. I have more faith in our schools, governors and parents than he appears to have.
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There has been some success, and I am pleased that recent figures show—
Mr. Brazier: Will the Minister give way?
Jacqui Smith: No, I will not take another intervention from the hon. Gentleman.
Mr. Brazier: On a point of order, Mr. Deputy Speaker. The Minister refers to my attitude to teachers. I have made no attack on teachers. In fact, I defended them.
Mr. Deputy Speaker (Mr. John McWilliam): That is not a point of order.
Jacqui Smith: Thank you, Mr. McWilliam.
We are seeing some success in terms of a fall in teenage conception rates for both under-16s and under-18s. The conception rate for under-16s in England fell from 8.8 per 1,000 in 1998 to 8.2 per 1,000 in 1999—a 7 per cent. fall and the lowest rate in any year bar one since 1983. The conception rate for under-18s in England fell from 46.5 per 1,000 to 44.7 per 1,000 in 1999; a 4 per cent. fall. That is excellent news, but we cannot be complacent. We must continue to tackle sensitive issues and help young people to wait until they are ready before they have sex, and to protect themselves when they do.
I am pleased that the guidance has helped schools, but we need to do more to support teachers effectively if they are to provide good sex and relationship education. That is why I want to concentrate on two aspects of the Government's support for schools, the first of which is funding. For 2001–02, we shall make £15 million available to schools for support of personal, social, health and citizenship education. Schools will be able to decide how to spend that. It could include training for teachers, materials and resources, or paying the costs of an external speaker to support the relevant teaching.
I am also strongly aware of the need to provide other, more direct, training for teachers. That is why I am pleased that teachers are receiving training to support our guidance. Regional seminars have taken place for the key people involved in providing sex and relationship education. We also recognise that teachers need particular skills for that type of education, and we want to recognise those skills through a new system to accredit sex and relationship teaching.
The Government have, through the Learning and Skills Act 2000, provided for the first time a firm legal foundation for effective sex and relationship education. The new guidance provides a robust framework for use by heads, teachers and governors. We have tackled some of the issues that were raised today by the hon. Gentleman and during consultation. They include protecting young people from inappropriate materials while recognising the importance of depending on teachers' and governors' professionalism, as well as parents' roles in sex and relationship education in schools.
With our support through the standards fund and the extra training that we are providing, we are helping schools to provide high quality education in which teachers, governors, young people and parents can have confidence.

Igroup plc
1.27 pm
Dr. Brian Iddon: Shortly after the general election in 1997, I was contacted by my constituents, David and Pauline Spencer. In 1992, they had run into financial difficulties and were put in touch with Wilmslow Financial Services. They had intended to borrow £5,000 to pay off mortgage arrears, associated county court judgments and a sum of money to a friend who had helped them with previous mortgage arrears.
Mr. and Mrs. Spencer were visited by Mr. Phillip Jones, who persuaded them to borrow £10,000 on the grounds that they needed to renew some of the windows in their property, and to allow them a flexible sum of money to make it easier for them to pay off the loan at the beginning of the repayment scheme. In my view, the Spencers were not made aware of the detailed conditions of the contract that they eventually signed.
Because Mr. Spencer was self-employed, Mr. Jones, the agent, proposed that he also pay a double protected payment premium. That was unnecessary, since Mrs. Spencer was not working at the time. The cost was an additional £3,526 and brought the total borrowed to £13,526. Mr. Spencer is a market trader and had combined earnings then of far less than £1,500 per month, although he had achieved that total once in the preceding months. Mr. Jones put that highest figure on the mortgage application form. A contract was signed with J & J Securities on 1 April 1992 and repayments began.
The Spencers feel that the agent did not adequately consider their monthly expenditure or income, or its sustainability. They were never asked to provide documentation to prove the figures that Mr. Jones put on the application certificate. Mr. Spencer was asked to provide evidence that he was self-employed, but production of a business card was all that Mr. Jones required. Mr. and Mrs. Spencer felt pressurised throughout their contacts with that agent. They had asked whether he could secure a loan for them from a high street building society or another reputable mortgage provider, but he informed them that their poor credit history made that highly unlikely. Mr. Jones pointed out that their credit rating could be improved sufficiently to secure another loan by entering into the J & J Securities contract and keeping up the repayments. Since they wanted to secure a second mortgage from a high street provider, that proposition began to sound attractive. In the event, they were precluded from going down their preferred avenue, as I shall explain.
There was no mention of the excessive commission that brokers are normally paid for securing that type of loan. I do not know how much commission Mr. Jones secured, but I have been made aware of a similar loan, worth £23,000. The commission on that was a very high £4,300. Unfortunately, Mr. Spencer became ill shortly after the loan was granted, and was unable to work. The protected payment premium scheme should have protected the Spencers during his period of illness. Mr. Spencer duly wrote to Wilmslow Financial Services in May 1993 but received no response. While loans were usually made for 15 years, the premiums covered only the first five years. Hence, clients paid for a loan to cover the premium for three times as long as the premium was operative.
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Many of the mortgage deals negotiated by the companies seem to have been with the most financially vulnerable clients, with a view to repossession and resale of the properties. For example, one was with a pensioner couple living on stale benefits who wanted to buy their council house under the Government's right to buy scheme. The Spencers were told that it would cost them about £1,000 if they wished to settle the balance early. At that time the companies were applying the rule of 78—a complicated formula used to calculate redemption figures—for settlement of loans. Redemption figures are usually a considerable percentage of the loan and make it virtually impossible for clients to switch mortgages to high street lenders.
In June 1993, J & J Securities attempted to repossess the Spencers' house. The protected payment premium scheme, which had cost them £3,256 before interest, proved worthless. Fortunately, an agreement was reached in court between the Spencers and the company, which meant that they were not forced out of their home. They are still living there under duress. They have suffered a lot of stress as a result of having entered into the agreement and have had to endure numerous court proceedings. They are still under constant threat of losing the house.
The Spencers had been told by the agent that the interest rate would be 13.5 per cent. and that they would risk repossession of their property if they failed to make repayments. However, in the particulars of claim relating to the court case the Spencers found out the truth about the interest rates applied. Paragraph 2 of that claim states:
"The loan agreement provided that the loan was to be repaid, together with interest, at the monthly rate of 2.31 per cent. flat rate with an Annual Percentage Rate of 31.5 per cent. by monthly instalments of £3 17.66".
To show how financially punishing the agreement has been, I should like to put on record the most recent redemption statement that the Spencers have received, through their present solicitor, from CMR Loans Servicing Ltd., dated 15 March 2001. Before I quote the figures, I should explain that the loan has been rewritten since the court proceedings, but the APR, which is now 21.5 per cent., is still punishingly high. In March, the total charge for credit had reached a massive £44,579.40, including the original loan of £13,526. At that date, the Spencers had parted with £27,776.88 and the sum required to redeem the loan after all those charges was another £16,978.77. Some companies that have been operating such loans have used dual interest rates in their contracts. While regular payments are kept up, a concessionary interest rate operates. However, if even one payment is missed, a much higher interest rate kicks in. Fortunately, that does not apply in the Spencers' case.
While the original loan was secured with J & J Securities Ltd., the Spencers have dealt with a string of companies as their business has been handed down a chain: from J & J Securities Ltd. to City Mortgage Corporation—CMC —then, more recently, Ocwen Asset Investment UK LLC—OAI—and, now, igroup plc, which claims that it manages the Ocwen loans in the UK, of which there are approximately 10,000 in total. It is interesting to note that the Royal Bank of Scotland has a 49 per cent. share in igroup.

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Successive solicitors employed by the Spencers have found it difficult to keep track of the changing companies, which has also made legal actions complicated. Several solicitors are attempting court proceedings on behalf of thousands of clients, with little success to date. The National Association of Mortgage Victims has also tracked proceedings and offered advice to its members.
Since 1997, I have written to several Ministers in different Departments of State and approached different agencies in an attempt to help the Spencers, so far without success. Hence the need for this debate. The activities of these companies have been well documented in the press. On 8 April 2000, The Guardian published an article entitled "Turning screw on poor", which detailed the case of Trevor and Susan Reeves of Suffolk. They took out a loan with Homestead Financing, which was subsequently taken over by City Mortgage Corporation. They were treated in an unsatisfactory manner and faced the prospect of having their home repossessed. Articles in other newspapers, such as the News of the World, The Times and The Daily Telegraph, have also highlighted the unscrupulous nature of these dealings. However, despite such widespread uncomplimentary media coverage, companies are still trading in the market, largely unregulated.
In July 1997, the Director General of Fair Trading issued guidelines for lenders and brokers in the non-status lending market, which is also referred to as the sub-prime or impaired credit market. Those guidelines, which were revised in November 1997, highlighted some of the main practices in the market, which the Director General found to be
"deceitful or oppressive, or otherwise unfair or improper, within the meaning of Section 25(2)(d) of the Consumer Credit Act, and which would be likely to lead me to take regulatory action against those involved."
The report on the revised guidelines correctly indicates that the mortgage lending market is not subject to regulation under the Financial Services Act 1986. However, I have received indications that mortgages may become subject to regulation under that Act, and perhaps the Minister will say whether that is the case.
Nevertheless, a licence is required under the Consumer Credit Act 1974 from the Director General of Fair Trading to engage in a credit business or ancillary credit business. The fitness of licence holders can be brought into question by evidence of unfair business practices. City Mortgage Corporation gave undertakings to the Director General of Fair Trading in December 1997—as, subsequently, did Ocwen when it acquired the CMC business—in response to concerns arising under the Act and under the Unfair Terms in Consumer Contracts Regulations 1999. Ocwen was then the subject of a management buy-out—by igroup, I believe.
I quote from a letter of 3 March 1908, which I received from the Minister who was then responsible for competitiveness and consumer affairs at the Department of Trade and Industry. The letter states:
"CMC agreed to stop imposing the unfair penalties in all"—
and I underline all—
"its loan agreements, old and new."
Apparently, igroup has agreed to investigate any borrower's complaint referred to it by the Office of Fair Trading, a trading standards department or a citizens
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advice bureau, and to report on the outcome of its investigation. After the title of this debate was published, the National Association of Citizens Advice Bureaux contacted me to say that it receives a high proportion of complaints about this market. I received a letter from it this morning. It states:
"NACAB is receiving an increasing amount of evidence from citizens advice bureaux all over the country about the practices of Igroup, both concerning the loans they manage on behalf of Ocwen US and their own loans."
There are 50,000 such loans at present, and igroup continues to make them. The letter goes on to state:
"Our main concerns are as follows: interest rates on loans managed on behalf of Ocwen US… the actions and behaviour of some brokers selling Igroup loans";
and the way that arrears and possession cases are dealt with before court, in court and following court proceedings. I do not have the time to read the full list of complaints that has been forwarded to me by NACAB, but there is clearly still a lot of concern about the mortgage lending market, indeed about igroup as well as all the precursor companies that I have mentioned.
Ocwen and igroup are aware of the thousands of borrowers who, like the Spencers, borrowed money from the constituent companies that became City Mortgage Corporation prior to the Director General of Fair Trading becoming involved in these businesses in 1997. I would like to pose a question to igroup, the Royal Bank of Scotland, and to the Director General of Fair Trading. Why cannot people like the Spencers—at least 10,000 and possibly 50,000 people—be transferred to contracts and interest rates like those issued since 1 August 1997? Can we please have some of the unfair conditions attached to those contracts removed?
I look forward to a response to that important question. I challenge Ocwen, igroup and the Royal Bank of Scotland to end the misery of the Spencers and countless other borrowers like them. It should not be necessary for each of the individual borrowers to take separate legal action, when these companies know exactly who their customers are.
I hope that this debate has highlighted the desperate situation still faced by thousands of people in the mortgage market. Other right hon. and hon. Members have raised similar concerns in the past, both in correspondence with Ministers and on the Floor of the House. It is my strong opinion that Government action on the residual poor practices of these companies is long overdue, and I ask my hon. Friend to consider that. I look forward to his response.
1.43 pm
The Minister for Competition and Consumer Affairs (Dr. Kim Howells): I congratulate my hon. Friend the Member for Bolton, South-East (Dr Iddon) on securing this debate. I know, from previous conversations with him, that he has researched this issue with tremendous thoroughness on behalf of his constituents, and done an extremely good job of it. In doing so, he has contributed greatly to our thinking on how best we should move forward on issues such as this.
My hon. Friend has raised an issue that is of great concern to many consumers including those outside his constituency, and probably concerns consumers in the

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constituencies of all hon. Members. The Government recognise that the relative lack of choice available to borrowers who have a low credit rating or who have had credit problems in the past makes them potentially vulnerable to unscrupulous lenders and unfair lending practices. In the past, some non-status lenders have been associated with exploitative lending practices and it is vital that these people are protected effectively by our consumer legislation.
Mortgages and other loans, both secured on the home and unsecured, are already subject to regulation. Since taking office, as my hon. Friend has described to us, the Government have introduced legislation to increase the protection for borrowers. We plan further changes to increase that protection in the near future, and in response to some of the questions posed, I will try to describe some of them. I shall deal first with the consumer credit licensing system and the non-status guidelines of the Director General of Fair Trading.
The Consumer Credit Act 1974 already applies to many non-status loans and, under the Act, traders require consumer credit licences to lend to consumers. The Director General of Fair Trading administers the licensing system and must satisfy himself that traders are fit and proper persons to hold licences. He has powers to vary, suspend or revoke licences where he considers that that is justified. The Director General has also used his powers to introduce guidelines for lenders and brokers involved in the non-status sector.
The guidelines set out practices that the Director General of Fair Trading regards as deceitful or oppressive, or otherwise unfair or improper, whether unlawful or not, and which would be likely to lead him to take regulatory action against licence holders or to consider using his powers under the Unfair Terms in Consumer Contracts Regulations 1999. They also set out examples of good practice that the director general considers both lenders and brokers should adopt, and we have heard about some of them today.
The guidelines emphasise the need above all for transparency in lenders' and brokers' dealings with their customers. They state that there should be no high-pressure selling and that borrowers should be given ample opportunity to read and understand the loan conditions, and to seek independent advice, if necessary, before they commit themselves. Lenders should not cold call and their advertising and promotional material should be clear and not misleading.
The guidelines require that non-status lenders, like other lenders, should lend responsibly and that their underwriting decisions should be subject to a proper assessment of the borrower's ability to repay, taking full account of relevant factors. I noted from my hon. Friend's speech that information about his constituents' earning power and potential was completely distorted in the calculations about the loan—in favour of the lender, of course.
I believe that the guidelines have significantly improved practices in the non-status sector. Some of the worst practices of a few years back, such as penal increases in the interest rate, which could be triggered if a borrower's monthly repayment was a few days late, are no longer a problem for consumers. Nevertheless,
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the guidelines are almost four years old, and I am glad that the Office of Fair Trading intends to review them this year to ensure that they are comprehensive and adequately cover any changes in the market.
The Government are determined that lenders should not take advantage of mortgage borrowers when they may be vulnerable because they are focusing on a home purchase. We have decided that the Financial Services Authority should be given responsibility for regulating virtually all retail mortgages, regardless of who the lender is or why the loan is taken out. The mortgage loans to be regulated by the FSA will be loans of any size that are first legal charges on UK properties, where at least 40 per cent. of the property is for residential accommodation.
Mortgage lenders, like all other authorised firms, will need to meet the FSA's high standards on fitness and propriety to carry out the business in question. That will not be simply a requirement for obtaining authorisation. The lenders will need to maintain the standards if they are to continue to retain authorised status. I am very glad about that, because all too often in the past, lenders were not judged or monitored as closely as they should have been after obtaining licences. The FSA has recently consulted on its high-level approach to mortgage regulation, including the information that will have to be disclosed to borrowers. That will ensure that borrowers will be aware about both the mortgage product and their responsibilities. The FSA's recent consultation also suggested that it is minded to introduce rules on the treatment of those in arrears or facing repossession—for example, setting minimum standards as to the type and frequency of information supplied to consumers. The FSA's consultation paper explained that the OFT's guidelines on non-status lending, together with the Council of Mortgage Lenders' statement on handling arrears and possessions, will be taken into account when its detailed approach to mortgage regulation is formulated.
The FSA will shortly consult on detailed rules for mortgage regulation. My hon. Friend asked when mortgage regulation is likely to happen. We expect that it will come into force no later than August 2002, just over a year away. I am glad to see that the process will be that rapid.
My hon. Friend also referred to unfair contract terms. Under the Unfair Terms in Consumer Contracts Regulations 1999, consumers cannot be bound by contractual terms that are weighted unfairly in favour of the lender, such as terms that purport to give the lender the right to charge excessive early redemption penalties. However, as my hon. Friend has pointed out, it is one thing to be able to say that and another to get a court to agree with it. It is very difficult to provide the cast iron evidence needed to prove that such distortions have taken place, especially in cases that took place nine years ago.
The DGFT and every local authority trading standards department have the power to prevent the use of unfair contract terms, if necessary by seeking a court injunction. The Financial Services Authority will gain those powers on 1 May 2001. The regulations also give individuals the right to challenge unfair terms in contracts into which they have entered with lenders.

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There have been instances in which the courts have determined that the terms in non-status loan contracts are unfair and, therefore, unenforceable.
I recently made the "stop now" regulations, as we have named the injunctions directive that came from Europe. These regulations will come into force on 1 June 2001. They will give the Director General of Fair Trading and other consumer protection bodies the power to apply to the courts for "stop now" orders to stop traders in their tracks, so that they do not infringe a wide range of consumer protection legislation, including that on consumer credit. The powers can be used, for example, to stop lenders from failing to inform consumers of the total cost of credit. The regulations implement a European Union directive that will, for the first time, give UK consumer bodies the right to apply directly to the courts of other member states for injunctions to stop illegal practices that originate elsewhere in the community and that harm the collective interests of UK consumers.
We also plan to look at whether we should make changes to consumer credit legislation to complement the FSA's regulation of mortgages. The FSA will regulate those mortgages that are secured by a first legal charge. Often, that is not the critical issue, as my hon. Friend has said. It will not regulate those secured loans where the charge is not a first charge—for example, loans for double glazing. Because consumer credit legislation regulates only loans of up to £25,000, a significant rump of consumer loans will remain potentially unregulated. We need to consider whether to increase the upper financial limit for loans regulated by the legislation so that the majority of such loans will be protected.
The consumer credit legislation contains provisions that allow the courts to reopen extortionate credit bargains, so that justice can be done between the parties. Credit bargains are extortionate if they require the borrower to make payments that are grossly exorbitant or otherwise contravene ordinary principles of fair dealing. When the court is considering whether a credit bargain is extortionate, it can take, account of such factors as interest rates, whether the borrower was under financial pressure and his age and experience. If the court decides that the credit bargain is extortionate, its options include altering the terms of the agreement, requiring the lender to make repayments to the borrower and setting aside the whole or part of the borrower's obligations under the agreement.
The provisions have been used to re-open non-status credit agreements, but the Government recognise that they have not been used often, and they should be used more often. The Department of Trade and Industry commissioned research to examine the effectiveness of the provisions and make recommendations about how they could be changed to ensure that they provide the protection that was originally intended. We intend to introduce proposals for improving protection against extortionate credit and unfair lending practices in the near future.
Regulations under the Consumer Credit Act currently allow lenders to use the so-called rule of 78 when they work out the terms on which loans can be redeemed early. That method has been criticised as unfair and biased in favour of lenders, especially when it is applied to high-value, long-term loans such as
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those typically offered by non-status lenders. The Government intend to bring forward proposals to use a different method to calculate early settlement terms that would give a more balanced outcome. We also want to improve loan information, so that borrowers are aware of early settlement terms before they commit themselves to a particular loan offer. We believe that that will help those consumers who expect to redeem loans early to be able to identify the loan that offers the best overall deal.
I understand that igroup plc services loans that were previously owned by a company called Ocwen UK plc. Ocwen, in turn, had acquired the business and assets of the City Mortgage Corporation. The OFT obtained undertakings from the City Mortgage Corporation in 1997 that related to non-status loans that the company had. When Ocwen acquired its business and assets, it also gave undertakings to the OFT. As part of those undertakings, Ocwen agreed to investigate any borrower complaint referred to it by the OFT, a trading standards department or a citizens advice bureau and to report back to the OFT on the outcome of its investigation. When Ocwen found a complaint that was justified, it would consider in its undertaking providing an appropriate remedy for the borrower.
When Ocwen became igroup, igroup took on those undertakings. The OFT continues to monitor both the undertakings and igroup's compliance with them, especially in respect of borrower complaints. If my hon. Friend has information—which he clearly has—that is relevant to the undertakings or igroup's fitness to hold a consumer credit licence, I am sure that he will be willing to pass it to the OFT. That should be done as quickly as possible.
I do not want to condemn all non-status lending. Like my hon. Friends in the Chamber, all of us have constituents who need such lending from time to time. The higher interest rates charged by lenders in the sector are to some extent justified by the higher risks they take on. For some borrowers, obtaining a non-status loan is an important step towards re-establishing their credit worthiness. I am aware of borrowers who have taken out mortgages with non-status lenders and who, when they have shown that they are able to manage their debts, have been able to remortgage with lenders at more favourable rates.
It is important that as many of our citizens as possible have access to credit. Of that, I am convinced. However, non-status loans may be the only option for some of them. However, that lending must be on a responsible basis and the Government are determined to make sure that consumers are protected against the exploitative lending practices that my hon. Friend described. The changes that we have already made and those that we will introduce in the future will help to ensure that non-status borrowers, like other borrowers, get a fair deal. I thank my hon. Friend the Member for Bolton, South-East. He has made a significant contribution towards strengthening our determination as a Government to do whatever is required to bring fairness and protection for borrowers in the sort of situation that he has described and which has been experienced by his constituents. For that, we should all be grateful.
Question put and agreed to.
Adjourned accordingly at one minute to Two o'clock.