Westminster Hall Sitting of 11 December 2001

The Great Lakes
Motion made, and Question proposed, That the sitting be now adjourned. —[Mr. McNulty.]
9.30 am
Ms Oona King: The issues relating to the region around the Great Lakes are incredibly important. A humanitarian catastrophe continues to unfold there, as it has for at least the past 10 years. In that region, it is difficult to draw the line between the end of one conflict and the beginning of another.
To put the debate into perspective, I shall explain some recent background. It is impossible to understand the conflict without considering the region as a whole. The present conflict in the Great Lakes began in the eastern part of the Democratic Republic of the Congo and dates back to 1998, since when 2.5 million people have died in it. That figure is staggering, but the fact that we rarely hear anything said about it is even more staggering. I am thus especially grateful to those hon. Members who have given their time and made the effort to be here this morning.
The war in the Congo is Africa's most complex war. It has been described as Africa's first world war and has dragged six foreign armies into the country. One of the biggest problems is the wealth of the Congo, which some people argue not only sustains but actively perpetuates the war. The recent history of the region shows the interplay between Rwanda, Burundi and the DRC. It is clear that the current conflict in the Congo stems from the wave of violence unleashed by the genocide in Rwanda in 1994.
We need to consider how British policy has changed and could perhaps change further in the future. In 1994, when the genocide in Rwanda occurred, the British ambassador to the United Nations cautioned against using the word "genocide". He rightly pointed out that if we used that word, we might be liable under our international treaty obligations to do something. As we all know, we did nothing. The international community did nothing until it was far too late.
I am still haunted by the genocide site in Rwanda that I visited with two of my colleagues from the Select Committee on International Development who are here this morning. What haunted me most was not the 5,000 or 10,000 corpses that we saw and stepped over in the school into which people had been herded and murdered over a 36-hour period, but the fact that many of the children's bodies had only one foot. Several of us could not understand why those small children had only one foot. When we asked, we were told that when the adults were escaping, the militia cut off one of each child's feet to stop them escaping. They killed the parents and then came back to finish off the children.
180WH
The vision of that classroom full of children with only one foot writhing around on the floor has never left me. That was one of the reasons why I set up the all-party group on the Great Lakes. I am extremely grateful that more than 100 Members of Parliament have joined it.
The second thing that has always haunted me was that in those classrooms the only sign of the international community was some plastic sheeting placed over the open windows on which was printed the UN logo. When I said to someone that that looked very strange—as though all that the UN did was to put up curtains after the genocide—they said, "Yes, that is basically what happened." Is not that an allegory for our modern times? The UN is doing the window dressing.
All of us who take an interest in the region—and even all those who take no interest in it—realise, post-11 September, that window dressing in areas of disaster, conflict and genocide will eventually return to haunt us. I am not saying that the conflict and the humanitarian disaster in the Great Lakes region—however tragic and all-consuming they are—will burst into our consciousness as the attacks in New York and Washington have done. That will not happen right now, but if we do not do something about the Great Lakes in particular and Africa in general, there is no doubt that, at some point, we shall pay the price for indifference that leaves millions of people to starve or be killed. Some of them are killed in the most brutal of ways, as I described. The deaths of others are equally brutal, but not so televisual: starving to death does not trigger many peacekeeping forces. It has not done so in the past.
We hope that that might change in the future, given what is happening in Afghanistan. I very much hope that as we consider the situation in the Great Lakes region, we might see there the germs of what has happened in other parts of world, so instead of waiting for a disaster—although some might argue that one has already happened—we might try to pre-empt it.
Mr. Hilton Dawson: Is not what my hon. Friend is saying exactly the message that the Prime Minister was giving in a tremendous speech to the Labour party conference in October? He pledged not to allow a Rwanda to occur again and to heal the scars of Africa. That shows a new way forward for the Government.
Ms King: I thank my hon. Friend for that intervention. I see consternation on the faces of some Opposition Members, but I hope that we can agree with the Prime Minister's words, wherever we are on the political spectrum. I cannot imagine that anyone could say that we would not take action if a Rwanda were to happen again and 1 million people were butchered. I know for a fact that at least three of the four Opposition Members present agree with those sentiments. Indeed, they have agreed with them.
Mr. Andrew Robathan: I had not planned on intervening in the debate, because I think that everyone will agree with the hon. Lady's sentiments. Opposition Members may, however, disagree with the political slant of some of the comments. As hon. Members may recall, the Prime Minister made a rather all-encompassing conference speech that included justifying early euro

181WH
entry on the basis of the 11 September attacks. Perhaps that is why there were looks of disagreement on Opposition Members' faces.
Ms King: I am sure that I would be ruled out of order were Ito outline the merits of early euro membership or link such membership to Britain's national security. Although I am certain that there is such a case, I shall leave it for another time.
I was trying to explain some of the background to the crisis in the Great Lakes region. Part of the background is elaborated in a truly startling and inspirational book, which I recommend that everyone read, entitled "King Leopold's Ghost". Although it traces the history of the Congo and the Great Lakes region back a couple of hundred years, it deals particularly with the 19th century. It is instructive to examine events in the Great Lakes region from 1870 until independence in the early 1960s.
I am not one of those black people who gets up and gives a speech on colonialism every five minutes regardless of the subject, and I think that my colleagues who know me will defend me on that point. However, I think that all the Select Committee members were truly startled by the extent to which the colonial era in that part of Africa has conditioned almost all subsequent events there. I shall give an example.
When the genocide began in Rwanda, everyone said, "These bloody Africans are hacking each other to death. It is a tribal conflict. It is what Africans do." I was astonished to discover that the Belgians had introduced a law that was essentially like apartheid in South Africa and made it illegal for Rwandans not to declare that they were either Hutu or Tutsi, thereby creating an ethnic construct. What do the terms Hutu and Tutsi mean? "Tutsi" simply means that one has cattle, and "Hutu" that one is an agricultural labourer working the land. Originally, the terms were not ethnic or tribal distinctions.
In that society, working with cattle was more highly valued than working the land. Those who had cattle had assets. Consequently, the Tutsis, who comprised only 15 per cent. of the population, became the more powerful group, and the Hutus, who comprised the majority and worked the land, became the less powerful. It is essentially a class structure, but the colonial power of the time found it useful to play one group off against the other, and so made it illegal for those Africans not to belong to one group or the other.
I asked some Rwandans whether they were Hutu or Tutsi. Although we may talk about political correctness in this country, in a country where a genocide has occurred, it is a deeply impolitic question. However, one Rwandan tried to explain to me that it was not really possible to answer the question. He said that his family were neither Hutu nor Tutsi as they neither had cattle nor worked the land. He said that their society was not that simplistic and that everyone could not be divided into a group that owned cattle or worked the land. However, he also said, "The Belgians just gave us a
182WH
stamp on our identity card and we became an ethnic group." The distinction was, literally and figuratively, a political construct. What does that mean for us today?
Dr. Jenny Tonge: I thank the hon. Lady for giving way in her fascinating speech. Will she not, however, give credit to Paul Kagame, the Rwandan leader? On taking control, he ensured that both groups were included in his Government. He also ensured that there was no reference to the two different groups in official literature. Whatever his faults, he has made great strides in that direction.
Ms King: I thank my hon. Friend—I call her that deliberately—for that intervention and could not agree more with those sentiments. President Kagame has lately come in for no little criticism. Although I certainly have some differences in respect of how the Rwandan Government are pursuing their legitimate desire to protect Rwanda's security, I believe that Paul Kagame is one of the leading inspirations in African politics. Although my greatest fear in making such a statement is that my words will come back to haunt me, if there was ever a man with integrity whom I trust not to make those words haunt me, it is President Kagame. The Select Committee and I—I have met him on several occasions—have been impressed by his dignity, resilience and thoughtfulness.
How has the Hutu-Tutsi divide affected the continuing conflict? The current conflict, dating from 1998, was unleashed by the wave of violence that followed the genocide. People in that region of Africa, which extends from eastern Congo to Rwanda and Burundi, have been on a dreadful, hellish merry-go-round whereby waves of internally displaced people are pushed from one country to the next. Such displacement occurred even before independence in the 1960s, when the first massacres occurred and Tutsis were displaced from, for example, Rwanda. Subsequently, some of them went to the Congo and Uganda, after which they returned to their own country and themselves displaced the genocidal regime. The Banyamulenge are a group of Rwandans who have been living in the Congo for hundreds of years.
Select Committee Members who visited the Congo this summer made one fascinating discovery. In 1994, Rwandans fleeing genocide arrived in the eastern DRC and helped to push the local economy past the point of no return. The economy was desperately stretched: all the remaining cattle, for example, were sold off and people were left with no means of survival. Tutsis went from one impoverished country to another to flee genocide, with catastrophic results.
Subsequently, relations between the Rwandan and Congolese Governments have deteriorated. As many hon. Members will be aware, President Kagame was initially an ally of the elder President Kabila, who turned out to be far less reliable than had been hoped and did not measure up to expectations in the west. He grievously disappointed his Rwandan and Ugandan allies, because the activities of those who committed the genocide continued in eastern DRC. The Rwandan Government continued to face attack from those who had committed the genocide and were committed to finishing it.

183WH
The all-party group's rather controversial view is that the Rwandan Government were justified in sending troops to the DRC when Interahamwe activity and that of the genocidiaires in eastern Congo was blatantly threatening Rwandan security; it continues, on occasion, to threaten it.
Then President Kabila died, and he was followed by his son, Joseph. Although many people have said that it is far too early to tell how the younger President Kabila will turn out, in my view he represents a far better hope than we had previously. I have met him twice and have been immensely impressed with his grasp of many issues, and not just those pertaining to his own region. However, the fact remains that the views of the Rwandan and Congolese Governments are light years apart.
I fully understand Rwanda's grievance—1 million Rwandans have been murdered, most of them Tutsi. Those who were responsible sought refuge in the DRC, whose Government are incapable of stopping, or unwilling to stop, their activity. The Rwandan Government therefore said that they would do it instead. I think that our Government would have done the same. Any Government who had the capacity would have done what the Rwandan Government did.
I also understand the DRC Government's point of view. They believe that they are being occupied by an invading force—the Rwandans and Ugandans—that has been in the DRC for more than three years. The DRC Government believe that if Rwanda wanted to neutralise the threat that exists, it could. That is debatable, but it is their view. They strongly believe that the Rwandans are using the threat as a pretext for mineral exploitation, and we have to consider the grave pillage of resources in the Congo.
Mr. Robathan: I spent more time abroad with the hon. Lady during the summer than I did with my wife. I found the trip to the Congo both fascinating and depressing.
The hon. Lady refers to the DRC Government, who are legally recognised. The Kabila Government have no more legitimacy than Onusumba in Goma or Bemba in the north-east. Does she agree that the three sides are not only equally illegitimate, but equally responsible for the pillage of the country and for its problems?
Ms King: It is true that in the Great Lakes region as a whole, particularly in the areas to which the hon. Gentleman referred, there is not the democratic accountability that we wish to see. In my view, there has been a failure of politics and politicians. I remember the president of the RCD, Mr. Onusumba, saying that the politicians had failed. We might think that we make a pig's ear of things in this country, but we rarely have to shoulder the burden that exists there. Until the three regions have some democratic accountability, the situation will not be resolved. That is why so much hope is pinned on the inter-Congolese dialogue, which is charged with bringing some democratic accountability, however tenuous, to the region.
The DRC Government believe that Rwanda and Uganda must withdraw before peace can be achieved. That is the nub of the problem with the Lusaka peace process. It is a bit like decommissioning in Northern
184WH
Ireland. The Rwandans say that they will not leave until their security is assured and they know that the people who started the genocide will not be able to finish it. They say that the Congolese Government are aiding, abetting and even continuing to arm the Interahamwe militia. The Congolese Government say, "You have invaded our country and until you leave, there will be no peace. In the meantime, you are raping and pillaging our country."
The questions of how to deal with the Interahamwe and the UN's role in that are of great importance. The all-party group that visited the Congo felt that it would be useful if the British Government could push for an expansion of personnel and resources available to MONUC, the United Nations Organisation Mission in the Democratic Republic of the Congo. A reply—I hesitate to use the term "the standard reply"—would be that MONUC's mandate is to keep the warring factions apart, which it is able to do at present. However, the Lusaka agreement says that MONUC's role is to deal with the Interahamwe. It is MONUC's responsibility to track down and disarm the groups that threaten to continue destabilising the region and to pour oil on troubled waters. The contradiction between MONUC's mandate and the aspirations for it in the Lusaka agreement remains unresolved.
Let me put this in the context of an area with which we are more familiar—Kosovo. Had we decided to put the same ratio of troops to land density in the DRC as we did in Kosovo, it would have required 10 million UN peacekeepers. That would be absurd, but it is the truth. No one is asking for 10 million UN peacekeepers, not least because the harsh facts of realpolitik are that Kosovo will always receive more attention, time and resources than the Congo. That may or may not be fair, but it is a fact. We are not asking for 10 million UN peacekeepers, but for a more realistic UN force than the current proposed deployment of 5,000. Ten million is not a realistic or helpful figure, but nor is 5,000 for a country the size of western Europe.
The all-party group also believes that a credible study should be carried out into the threat posed by the armed groups, especially the Interahamwe, that operate in the DRC. We would like the UN to put an embargo on arms exports in the region and the troops to be demobilised and resettled more quickly. It is important to highlight how much the British Government have done so far on the issue of demobilisation and resettlement, which is known as DDRRR in the Great Lakes lingo. I will not hazard a guess at filling in those initials, but the process involves demobilising soldiers who will otherwise have an interest in perpetuating armed conflict if for no other reason than that they have no other way to eat and earn a living.
Peter Bottomley: Does the hon. Lady agree that anyone interested in following this issue in detail could apply to the all-party group at the House of Commons for a copy of the useful booklet that covers the visit, which includes a glossary of the abbreviations, a map and all sorts of other useful information? A fair number of people who follow the debate will be interested in that report, and I hope that they will feel able to apply for a copy.
Ms King: I thank the hon. Gentleman for his exceptionally helpful remarks. As someone who is

185WH
allergic to acronyms, I certainly recommend appendix 5, on acronyms and names, of the all-party group's report. He guides me to the back of my own report, where I find the phrase, "disarmament, demobilisation, resettlement and reintegration", although an R remains missing—I think that it might stand for reinsertion, or something like that.
The continued activity of armed groups in the region can be linked to mineral exploitation, and it is inevitably in those groups' interests for the conflict to continue. The report sets out the alleged links between the various military groups and the region's mineral resources. As someone who has the greatest sympathy and respect for the Rwandan Government and, in particular, for individuals in that Government whom I regard as my friends, I have been disturbed by many of the reports that I have heard and many of the things that I have seen with my own eyes in the Congo.
Those activities were alleged to have happened at the behest of the Rwandan military. Unfortunately, I am not one of those people who can just pretend that I did not see or hear something happen. I did, and so did other Members of Parliament. We all have slightly different views on the matter. Some of us are more sympathetic towards the Congolese; others are more sympathetic towards the Rwandans, but we are all sympathetic towards what we perceive to be the truth. The truth of the matter is that the Congo is being raped and pillaged and that local people are not benefiting from the resources that are being taken out of their area. That is fuelling the war that is displacing those people, causing so much misery in that area.
My plea is that the British Government should be sensitive to the feelings of the people in eastern DRC, as we have been rightly sensitive to the appalling distress in Rwanda—words genuinely escape me, because it is impossible to express what happened there. We are sensitive to those events, and we have to be sensitive to the fact that virtually all the ordinary Congolese people to whom we spoke and even the ordinary representatives of the RCD—the eastern DRC group that is linked to Rwanda—told us that Rwandan soldiers were involved in removing resources from that area and also in many very unpleasant things that are being done to the civilian population there. We heard that again and again, and I cannot pretend that it was not so, but many people are displeased with me for saying that.
As I have said before, I have immense respect for President Paul Kagame, and I genuinely believe that he would not sanction all that is being done in the name of the Rwandan army, but he would say that those things are not happening. I have had many conversations with the Rwandan ambassador to this country, for whom I also have great respect, and she has pleaded with me to consider the Rwandan point of view. For example, has any hon. Member heard of coltan?
Mr. Alan Duncan: Yes.
Ms King: Even if hon. Members had not heard of coltan, everyone reading the report of this debate will have pressed it close to their ear because it is needed to
186WH
make mobile phones, as well as Gameboys and Playstations. That is an astonishing glimpse of globalisation in our times. Most people would tell me that nothing links the inner reaches of the Congo to Whitechapel, for example, in my constituency, yet all those teenagers in Tower Hamlets playing on their Gameboys are linked to that region, where people are forced to mine coltan in an incredibly exploitative manner.
The local economy has been severely destabilised because coltan is a volatile commodity. A tonne of it fetched $70 last year but it fetches only 50 cents this year. Hon. Members can imagine all that that implies. I hope that other hon. Members want to speak in this debate.
Mr. Duncan: Perhaps I can take that hint and discourage the hon. Lady. In no way do I wish to be rude, but she has taken up almost half the entire time allotted to the debate, and other hon. Members want to speak. So far, I detect no disagreement across this Chamber, but we would like a chance to make a small contribution.
Ms King: I thank the hon. Gentleman sincerely. It was whispered in my ear that I might be the only Member who wished to speak and therefore that I would have to talk at length. I should like to conclude by relaying the remarks of a 16-year-old.
Peter Bottomley: It is worth mentioning the efforts of ex-President Masire of Botswana in the inter-Congolese dialogue, so that the Minister can have time to think about them. The report shows that £43,000 has been provided and the Members of Parliament on the trip recommended doubling that figure. I am not certain whether anything less than a significant increase might be useful if those talks are to help to produce a working understanding between the groups.
Ms King: I thank the hon. Gentleman. The Government have already more than doubled the money for the facilitator, and I am sure that the Minister will outline exactly what they have done.
On the visit, I met a 16-year-old called Baraka and his story outlines the complexity of the problems involved. He told me:
"I left Rwanda in 1994. My family were moderate Hutus, but they were sympathising with the Tutsis. My aunt was a Tutsi, so we hid my aunt's family. I fled to DRC with my parents, but they died after we arrived. The Red Cross registered me and I went back to Rwanda. From an orphanage in Rwanda I was taken to Gisenyi. A member of my family was there but they chased me away, because they didn't want to look after me. So after that I went back to…DRC. One time I was in the market selling potatoes and the military…came and kidnapped me, they conscripted me. They took me to their military position, but I escaped. After that I was taken back to Rwanda, but the border-guards wouldn't let me enter because I have no family there anymore who will take me. Now I am back in DRC, but they don't want me here either. I ask you to find me a country of exile where I can live. That's all."
That is his request to us as politicians. I hope that we may be able to do something.
Several hon. Members rose—
Mr. David Amess (in the Chair): Order. I hope that the wind-ups will begin at 10.30. I would like to call all those hon. Members who wish to speak but it may be difficult now.
10.12 am
Peter Bottomley: I congratulate the hon. Member for Bethnal Green and Bow (Ms King) on securing the debate and on being the driving force in the House of Commons in bringing to public attention issues that are vital to those in central Africa. The so-called civilised western world has not been good at helping people in the DRC—formerly Zaire—to have disagreements over politics or to argue about the economy without the threat of death. The hon. Lady deserves credit for that, together with the aid agencies who facilitated the trip in August and the colleagues who accompanied her.
My contribution will be brief, both because I have to attend a Select Committee meeting and because of your remarks, Mr. Amess. However, no one minds the length at which the hon. Lady has spoken, because this important issue is not often a subject of debate. I was part of an all-party group visit to El Salvador, a far smaller country, some years ago and I know that progress is possible if people and their neighbours have the chance to work out their disagreements together instead of going into exile or taking up guns.
The hon. Lady rightly talked about the commercial interests that are helping to fund the different groups, and that will not stop instantly. In other parts of Africa, similar conflicts are continuing long past their sell-by date. There are some fashionable issues that get attention—rightly—but the unfashionable ones matter just as much. People from the DRC, Rwanda and Burundi who come to this country probably get much support and invigoration from people in Government and in Parliament being willing to listen to them, talk with them and maintain a continuing interest. People sometimes wonder whether all-party groups have a purpose, but they need only read the hon. Lady's report and they will understand why hon. Members choose to give some of their time to the interests of people overseas as well as those of their constituents.
10.14 am
Mr. Hilton Dawson: I wish to address the case of the smallest country in the Great Lakes region, Burundi. It is not the size of western Europe, but more the size of Wales, with 6.5 million people. My hon. Friend the Member for Bethnal Green and Bow (Ms King) will recall the trip that we made to Burundi with Unicef in 1998 and some of the remarkable people we met; people who work in the most difficult circumstances, in a civil war, in a country teetering on the brink of the sort of genocide that has been seen in Rwanda. In particular, she will recall our friend Luis Zuniga, the head of Unicef in Burundi, who was tragically murdered in the most appalling circumstances while visiting an internally displaced persons camp. He was doing his job and trying to protect children.
Burundi is beautiful though impoverished. It is a densely populated and extremely dangerous country which has been involved in civil war for some eight years. Now the war is over, and it is a remarkable tribute to Nelson Mandela that, after all that he has endured and achieved in his life, he has been able to help broker the peace deal that is beginning to operate in Burundi. The situation is fragile. The transitional Government
188WH
has been in place since 1 November with President Buyoya serving with Vice-President Ndatzetse, but due to hand over to a Hutu president in 18 months.
There is much more work to do to ensure that the peace agreement holds. We need to see the integration of armed forces from rebel groups into the Burundian army and continued efforts must be made to end the fighting that has continued in some areas. We need a comprehensive military and political agreement with the FDD and the other excluded armed movements that are still operating. We must support the efforts of UN special representative Berhanu Dinka and the implementation and monitoring committee to uphold the peace deal. We need to help that poor country, which is founded on subsistence agriculture—it has none of the mineral wealth of the DRC—and the export of coffee; whose vital infrastructure has been set back and undermined by war; and which has 1 million refugees outside its border and many hundreds of thousands of displaced people within. This country should respond to Nelson Mandela's call to double the $440 million of aid promised once the transitional power-sharing Government were installed. We should seize the moment to take the vital step of changing from humanitarian assistance to development aid.
Burundi is a small country in the middle of Africa, and a former Belgian colony. We might question its significance to our country, but we should recognise the integrated problems of all the Great Lakes countries and recall the statement to the Labour party conference that we need to do far more to heal the scars of Africa. This is a crucial moment for Burundi and perhaps for the Great Lakes area. I am sorry that I cannot stay past 10.30, because I have to attend a Standing Committee. I have offered my apologies to the Chair and I look forward to reading the report of the speech by my hon. Friend the Minister, which I hope will be positive.
10.19 am
Ann McKechin: As has been mentioned by my hon. Friends, the scale of death and human misery that has befallen the Great Lakes area is staggering and horrifying. Regretfully, we see no antiwar protest marches filled with indignant demonstrators outside Westminster, nor do we read angry letters in the press. Instead we have heard the deafening sound of silence and indifference to the ongoing misery from the international community in the past few years. My hon. Friend the Member for Bethnal Green and Bow (Ms King) mentioned the complex and baffling history and politics of the region, but they should not deter us from seeking peace and justice in the area and giving it the global priority that it undoubtedly deserves.
Last month, I was fortunate to be on the visit of the all-party group to Brussels and to the Belgian and European Union Parliaments. Clearly, the EU has a lead role to play in the international community, but there are differences of opinion between the Dutch and the United Kingdom, who tend to be seen as supporting the Rwandan Government, and the Belgian and French Governments who tend to be seen as supporting the DRC. If a growing inertia develops because the EU cannot develop a unified approach, a danger might creep in and affect the efforts to secure peace in the region.

189WH
As has been said, it is valid to argue that both sides have infringed the Lusaka agreement. The ceasefire has been violated in the east of the DRC, but it is the exploitation of the area's mineral wealth that gives me particular cause for concern. The size of the international peacekeeping forces is tiny in relation to the physical geography of the area and, while there is continuing conflict, the prospects of improving the lives of the ordinary people will be severely hindered. I strongly urge the Government to support an expansion of the international peacekeeping forces to ensure that the disarmament of armed groups can be accelerated and stability restored.
It is a sad irony that the Congo has more than 8 per cent. of the world's diamond reserves as well as plentiful supplies of other precious metals while the population suffers from widespread destitution. It is conservatively estimated that at least 18.5 million people in the area have no access to even basic health care and, in the eastern areas of the DRC, the infant mortality has reached the ghastly and horrifying figure of 41 per cent.
There is evidence of mineral exploitation by the Ugandan, Zimbabwean and Rwandan forces, with large sums of money flowing through those countries. Last year, Uganda made nearly as much money from gold exports as from coffee, despite it having hardly any reserves at home. Similarly Rwanda produced 83 tonnes of coltan but exported 603 tonnes. Although those figures strictly relate to sales rather than to production, the implication is clear. Such plunder must be actively discouraged to end the suffering that has escalated in areas of the DRC. Only when there is no market for these illegally obtained resources will there be a real incentive to end the civil war.
The United Nations has set up a certification scheme for diamonds and I understand that 32 countries have endorsed it. However, it requires strengthening and, in particular, legal sanctions are needed. I urge the United Kingdom Government and the EU to develop urgently concrete measures to counter the exploitation of the mineral reserves.
As my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson) pointed out, the Prime Minister commented earlier this year that the international community has failed the people of the Great Lakes for a long time. Now there is an opportunity to find peace and to restore basic human dignity. Just as in Afghanistan, we need to commit ourselves to staying the course and providing these long-suffering people with a permanent undertaking to help them to rebuild their lives and their country.
10.23 am
Dr. Jenny Tonge: I congratulate the hon. Member for Bethnal Green and Bow (Ms King) on securing this debate. She gave a fascinating and informative speech, although it was a trifle long.
I joined the hon. Lady in a Select Committee visit to the Great Lakes region but I was unfortunately unable to go on the one last August because of family problems. She told us graphically that more than 2 million people have already died in the region as a result of the conflict and we heard of the genocide that took place there. We
190WH
know that more than 30 per cent. of the children suffer from malnutrition and that there are 10,000 child soldiers.
I am a mother and a grandmother and one of the things that always slightly depresses me is people's perception that Africa is used to such problems and the view that there are always many deaths there because Africans are always killing each other. However, do people not realise that every mother, grandmother and father in Africa cares just as deeply about their family and their children as we do? That must be said, and John Donne put it succinctly many hundreds of years ago when he wrote that
"any man's death diminishes me…never send to know for whom the bell tolls".
I shall refer to the bell tolling at the end of my speech, but it is important that we understand that each of the African children who die in their hundreds and thousands on a weekly basis is someone's little child who is loved. It is important that we keep telling the world that.
Some progress has been made. I understand that agreement was reached only last weekend to establish inter-Congolese talks, but I ask the Minister to deal with the question of funding. Someone once said sarcastically to me that those involved in the negotiations want extra funding so that they can stay in five-star hotels. However, what western diplomat, Minister or Secretary of State would not stay in a five-star hotel when they go to an international conference? Let us not use that argument as an excuse for not providing proper funding. The area needs huge funding and help with representation, and the same applies to the Sudan, which the hon. Member for Lancaster and Wyre (Mr. Dawson) and I know very well. More effort and more money needs to be put into the talks that are trying to resolve such crises.
The hon. Gentleman also mentioned development aid. Can we get away from the notion that, if there is conflict in an area, development aid must never be provided? We have to get away from that view, because generations are growing up in Africa without receiving any basic education. That applies not just to 30 or 40 per cent. of the population, but to the entire population of the Sudan and much of the Great Lakes region. Although the countries may be in conflict, there are pockets of peace—often long-standing peace—where some form of education could be provided. It is vital to the future of the area that it should be available.
The hon. Member for Glasgow, Maryhill (Ann McKechin) referred to the problem of natural resources. Progress has been made on diamonds, and we have all heard about blood diamonds—we have had a debate in this Chamber on the subject—but it is strange that one of Uganda's biggest exports should be uncut diamonds when none are mined there. Clearly, at some stage, the international community must tackle the problem of the other countries in the Great Lakes region plundering the resources of the Congo. There must be agreement and that might result from the west imposing trade sanctions on illegally obtained goods.
One of the root causes of the conflict in the Congo is the exploitation of natural resources. Coltan has been mentioned, so I shall try to lighten the tone of the debate a little. An African told me last week that it was funny

191WH
that coltan is needed for mobile phones and that it can be obtained in the Great Lakes region, because Africans invented the mobile phone—it is called a drum.
Although this point has not been mentioned, we should commend the Secretary of State for International Development on her efforts to bring Rwanda and Uganda together. It is now inconceivable that that band of brothers—particularly Presidents Museveni and Kagame—should contemplate making war on each other. They have been through so much and they share many of the ideals that Africa needs, so it is inconceivable that their poor countries should make war on each other.
I know that time is short, so I shall conclude my remarks. The Prime Minister's moving conference speech has been mentioned and, if the war against terrorism has taught us anything, it has taught us that we have to address poverty and conflict wherever they are in the world. It is no coincidence that the al-Qaeda terrorist network found succour in Afghanistan and Somalia, two of the poorest countries in the world. If any good is to come out of 11 September, the western nations, especially the United States of America, have to realise that poverty in Africa and Asia is connected with events on that day. We are partly responsible for those. The poor and the dispossessed have been given a means of fighting back. We must heed the warning. I return to John Donne:
"never send to know for whom the bell tolls; it tolls for thee."
10.30 am
Mr. Alan Duncan: I congratulate the hon. Member for Bethnal Green and Bow (Ms King) on raising the debate. Every word she said was of value. It is right that we are discussing this issue. I apologise if I was a bit rough on her earlier, but it was only because we are all eager to contribute to the debate and believe, as she does, that the subject is important. I agree with the hon. Member for Richmond Park (Dr. Tonge) that too many people say that conflict happens all the time in Africa and that we can do nothing about it. We have to combine to reject that dismissive approach, because only then will something be done.
We need to take a tough and practical approach to the continent's politics, because only through its politics will we address the humanitarian problems that cause so much agony to us all. In that, I am realist. I am coldly practical in appreciating what needs to be done. I always try to cut through the emotion, which is why I winced slightly at the intraparty congratulations on the Prime Minister's speech in May. He said:
"I will make Africa a major personal priority"—
it is always personal—
"and a priority for the Labour Government".
My analysis of what is happening leads me to a simple view: soundbites feed headlines; soundbites do not feed babies. We have to confront a serious practical political problem and turn words into action. If the Minister can do that, through the Foreign Office and the power that Britain and our partners have, I assure the hon. Member for Bethnal Green and Bow that the applause will be well deserved and I, for one, will join in, no matter who it is who brings about improvement in Africa.
192WH
The hon. Lady was right to concentrate on the Democratic Republic of Congo and put it at the centre of the problem. It most clearly is. A single global statistic shows the plight of that country. The Congo can be lumped together with North Korea, Afghanistan and Iraq as the four countries with the highest percentage of undernourished people among their populations. That alone is enough to advertise the challenge that we all face in overcoming the largest problem, which is also the most ignored. Bearing in mind our history, it should be the issue of most concern.
I will do a quick canter through four major headline issues. I am sure that the Minister will join me in welcoming yesterday's report that the Government and the rebels in the Congo have achieved a major breakthrough in their meeting in Abuja. Representatives of President Joseph Kabila and the two main rebel movements have committed themselves to attend the talks in South Africa in January, and that is a sign of significant progress. We should send the message from this Chamber that we hope that President Kabila will attend. It is clear from events in Afghanistan that the principals need to be present. Representatives will never make as much progress as we need to be make at that meeting.
Zimbabwe is also a concern. Although the debate is not primarily about that country, it is part of the region. The interaction of politics and political influence is crucial to the chemistry of both. The United Nations published a report last month which accused Zimbabwe of prolonging the war in the DRC so that ruling party bosses could plunder the country's reserves of gold, diamonds, timber and coltan. It said that that was President Mugabe's policy. Mugabe rejected the report out of hand. His Foreign Minister said that it was a pack of lies invented by the British, but we had nothing to do with the report, so I do not know where he got that idea.
Will the Minister comment on Zimbabwe and its influence on the Congo? It is clear that almost everything President Mugabe is doing within his country, and to influence countries outside it, is increasingly malign. He is a pariah in and around Zimbabwe. Reports suggest that instability is being bred in Zimbabwe because of instability in the Great Lakes region. It was reported on 19 October, I think, that the DRC was assisting Zimbabwe in circumventing the international arms embargo by buying huge quantities of guns and bullets on its behalf. It will be interesting to hear whether there has there been a breach of the arms embargo.
On the Kimberley process, to what extent does the Minister think that the control of diamonds exports as a source of revenue has collapsed or is in danger of doing so? Perhaps he can comment on that process.
I want to leave as much time as possible for the Minister to respond. He is the expert on this subject and I know that he has been devoting much attention to it. Perhaps he can enlighten the House by giving us the latest information on diamonds, arms, Zimbabwe and the talks, which we hope will lead to a political resolution,
10.36 am
The Parliamentary Under-Secretary of State for International Development (Hilary Benn): I join all hon. Members in sincerely congratulating my hon. Friend the

193WH
Member for Bethnal Green and Bow (Ms King) both on securing the debate and on the manner in which she spoke. I know that those hon. Members who went on the trip take a real and close interest in the Democratic Republic of the Congo and the region. I also congratulate the all-party parliamentary group on producing, as the hon. Member for Worthing, West (Peter Bottomley) generously said, an excellent report. It is a model for Members of Parliament who make such visits because it is accessible and informative and has been followed up, not least by the recent meeting that my hon. Friend and others had with my right hon. Friend the Secretary of State for International Development. In addition, today's debate gives us the chance to follow up the insights and information that were gleaned during the visit. Moreover, our deliberations build on the debate initiated by my hon. Friend the Member for Tottenham (Mr. Lammy) in November last year.
My hon. Friend the Member for Bethnal Green and Bow spoke with insight and passion. I learned several things from the debate. I did not know about the origin of the artificial distinction between Hutus and Tutsis. It is a terrible warning to us all about the perils more generally of labelling people. The hon. Member for Richmond Park (Dr. Tonge) also spoke with passion. It is important that the sense of outrage, bewilderment and the sheer incomprehensibility of what went on is clung to because it motivates all of us who have an interest in making progress. We need to hold on to that so that we continue to drive forward. At the same time, the hon. Member for Rutland and Melton (Mr. Duncan) is right: practical measures are required to enable that progress to be secured. We have to keep the flame of outrage alive while applying ourselves to making practical progress.
Dr. Tonge: May I correct the Minister by saying that we are talking not about what went on but about what continues to go on?
Hilary Benn: I take that correction in the spirit in which it is offered. I did not mean to imply that the problems are all in the past. They continue. But I was reflecting on the genocide in Rwanda, which was on a scale that is difficult to comprehend.
I agree entirely with the hon. Member for Rutland and Melton (Mr. Duncan) that words must be turned into action. He spoke about the need to feed those in the world who go to bed hungry every night, and I am sure that he would be the first to acknowledge that on one measure, the size of the international aid budget, there has been an improvement. We inherited an annual budget of £2.2 billion when we were elected in 1997, and that figure will rise to £3.6 billion by 2003–04, which is the end of the current spending round.
A 45 per cent. increase in real terms is practical action, and although I am reluctant to bring a party political point into the discussion because the hon. Gentleman almost forswore such points in his contribution and in an intervention, I point out that it is in marked contrast to what happened previously, and the Government should be judged on their actions. I am sure that the hon. Gentleman will be generous enough to acknowledge the progress that we have been able to
194WH
make. He mentioned Zimbabwe—which I know, Mr. Amess, is not the subject of today's debate. I am sure that all hon. Members agree that Zimbabwe has enough problems of its own making without adding those of the Great Lakes region.
As we have heard, the conflict and instability in the region is probably Africa's most serious problem, and my hon. Friend the Member for Bethnal Green and Bow rightly referred to the failure of politics and of politicians. The wars in the Democratic Republic of the Congo and, indeed, in Burundi—about which my hon. Friend the Member for Lancaster and Wyre (Mr. Dawson), who is no longer here—spoke with his characteristic knowledge, have thrown both those countries into reverse. Millions of people have died, and most of those who survived have seen their livelihoods ruined and their country's chances of development destroyed.
As my hon. Friend the Member for Bethnal Green and Bow rightly pointed out, the DRC is potentially a very rich country, which is partly the reason for the exploitation of mineral resources to which she referred. As she said, 60 million people live in a country as large as western Europe. As we know, a much larger area has been dragged into the conflict, resulting in the destabilisation of countries in the region.
The first thing that we all agree on is the need for peace. It is very easy to say that, but in trying to understand how we can make progress, we all recognise that peace is a precondition. As we have acknowledged in other debates, conflict makes it difficult to make progress in achieving all the other developmental objectives that we share. Only with peace can the international community begin to help with the sustained long-term support that is required to deal with poverty in the region.
The prospects for peace are good but uncertain. In the DRC, the Lusaka peace process provides the right framework. In Burundi, as my hon. Friend the Member for Lancaster and Wyre pointed out, the Arusha peace agreement is beginning to bear fruit with the establishment of the transitional Government, and I pay tribute to Nelson Mandela for his role in that process. However, we must keep up the effort, and here the involvement of the international community is crucial. The UK Government have responded by giving great priority to supporting progress towards a solution to the Great Lakes conflicts.
That is a joint endeavour. The debate initiated by my hon. Friend the Member for Tottenham was responded to by one of my colleagues in the Foreign Office, which reflects the joint working between the Department for International Development, the Foreign and Commonwealth Office and the Ministry of Defence. One of the practical expressions of that co-operation is the resources now being made available through the Africa conflict pool, which is, I say to the hon. Member for Rutland and Melton, another practical measure to join up parts of Government and set up a single funding source to address different parts of the problem.
There is a sustained political and diplomatic effort. I would not want the opportunity of this debate to pass without paying tribute to the sterling efforts of my right hon. Friend the Secretary of State. As all Members will acknowledge, she has made this matter a personal

195WH
priority. As a relatively new Minister in the Department, I can say that she continues to devote a considerable amount of time and personal effort to enabling the peace process to advance. Members will know that she visited the area in August to urge progress in the Lusaka peace process. She has hosted and been personally involved in discussions between the participants. She plans to go to the DRC again in the new year with some of her EU ministerial colleagues. Of course, as hon. Members have mentioned, the Prime Minister has spoken of his concern about the need to find a solution to the conflict. We have also increased the resources available to tackle problems in the area, and I shall return to that.
We are trying to do three things. The first is to raise the profile of the region's problems. I was greatly struck by the comments of my hon. Friend the Member for Glasgow, Maryhill (Ann McKechin) about the earlier lack of international interest and of demonstrations and protests. That is a terrible indictment of us.
We live in an increasingly small and fragile world, in which we are more interdependent. We understand more now than at any time in our history that what happens in one country ultimately impacts on us all. The Prime Minister's speech and many other things that have taken place in the world in the past couple of months reveal that the world community is, in a stumbling and uncertain way, feeling its way towards an understanding that should such events, particularly the genocide in Rwanda, happen in future, we cannot stand on one side, and I regard that as a positive step. That does not mean that we have solved the problem or that we have a perfect mechanism for deciding when to intervene in every case. Hon. Members have mentioned realpolitik, and in some cases that will create difficulties, but at least we are having a discussion about whether we should intervene.
I have on a previous occasion made an analogy with domestic violence. Thirty years ago, the police would have been called to a household where a man was beating up his wife or partner, and they would have said that they could not intervene because the situation was domestic and internal to the family. Now, attitudes have been utterly revolutionised, and the police have a completely different approach. We can liken that to the way in which the international community regards what would in the past have been seen as civil wars within the borders of a particular country in which they could not intervene. That is progress. We have not completed the process, and it will be messy, but at least we are moving in the right direction. Raising the profile of the problem so that the world pays more attention to what is happening in the DRC is a worthy objective in itself. The work of the all-party group and this debate contribute to that process, and I congratulate all those involved.
The second priority is to work closely with our international partners, particularly, Belgium, France and the United States, because collaboration is key to ensuring that the Lusaka agreement is fully implemented. Thirdly, we must keep up pressure on the parties to keep to the Lusaka agreement to which they signed up. Again, that is simple to say, but if people have signed an agreement that requires them to do various things, we need constantly to remind them that they have accepted those obligations and must fulfil them. That means that there must be progress on the elements of the agreement, and I turn briefly to each of those.
196WH
The first is the disengagement of forces. The Lusaka accord called for the immediate withdrawal of all the foreign forces based in the DRC. There has been some progress, but not as much as we would like. It is necessary to remind all the countries involved that they should comply with the provisions of the agreement.
Hon. Members, including my hon. Friend the Member for Bethnal Green and Bow, have referred to the size of the MONUC force. As my hon. Friend will be aware, there is agreement in principle to increase the size of MONUC when all the foreign forces have been withdrawn. It is important to recognise that MONUC is there to oversee the peace process as it develops but not to enforce it; only the parties to the agreement can enforce the peace process on themselves. Only this week, the Secretary of State discussed this subject with a representation of the UN peacekeeping organisation. We would like MONUC to move faster into the east of the country to continue the good work that it has been doing in extremely challenging circumstances.
The second is DDRRR. I was grateful for the reminder of definitions in the useful report, which has a good index and guide to acronyms whose meaning we can easily forget because there are far too many of them, both generally and in the field of international development. The United Kingdom recognises the importance of moving forward on DDRRR. We are supportive of the establishment of all-encompassing DDRRR programmes led by the United Nations and the World Bank. We recognise the need in the interim for quick-start programmes so that, when opportunities arise, we can ensure that capacity exists to respond to combatants who, in the end, must want to disarm.
Again, it comes back to the participants in the fight; they have got to want DDRRR to happen. We can encourage and support them but, in the end, we cannot make people do things against their will: they must come from within. We have resources immediately available to commit to DDRRR in the DRC. My right hon. Friend the Secretary of State has made a public commitment to support DDRRR in the region. Officials from the Department attended a World Bank meeting in Kampala last week to discuss setting up a regional fund for that purpose. The UN operation is effective and we are ready to help with bilateral assistance to enable forces to make further progress in the east of the country.
The inter-Congolese dialogue is clearly an essential element in securing a lasting peace in the DRC. After a promising meeting in Gaborone, there was a disappointing meeting in Addis Ababa, followed by the breakthrough to which the hon. Member for Rutland and Melton referred. We are hopeful that progress will be made when the dialogue resumes in South Africa early next year. The hon. Member for Richmond Park asked about support for the dialogue. The UK is now one of the three largest contributors. We have contributed £500,000 to date and will actively consider further requests.
The issue of humanitarian support was raised in our debate. The humanitarian consequences are desperate and our humanitarian budget is spent where there is the greatest need. As the hon. Member for Richmond Park and others have said, some of the worst development and humanitarian indicators in the world are to be found in the DRC. The humanitarian situation remains

197WH
dire, although there have been few ceasefire violations. Access for non-governmental organisations working in the DRC has improved, but a recent UN report estimates that 2 million people have been displaced in the DRC by the conflict, and 16 million do not have secure access to supplies of food. Additionally, 2.5 million people have lost their lives in the country since the conflict began in 1996, which is an extraordinarily high number; there has been great human suffering.
Last year, the UK gave £3.3 million in humanitarian assistance to the DRC. Words should be matched by action, and this year that figure will be doubled. In addition, the UK contributes about a fifth of the European Union's humanitarian budget which, in 2001, will be 35 million euros. In effect, therefore, the total UK contribution is about £7 million plus 7 million euros. It is worth pointing out that EU support is increasing sharply. Last year, the contribution was only 7 million euros, but it will be 35 million euros this year—evidence of words being backed by practical action.
The UK provides humanitarian assistance through well established NGOs and assistance to the facilitator of the national dialogue. Our assistance focuses on health and nutrition; work with refugees; child soldiers and other vulnerable groups; food security; prison monitoring; and human rights work. To ensure that our support is fairly distributed throughout the DRC, which is not under the control of one authority, £4 million of this year's emergency humanitarian support is going to the Red Cross. In the circumstances, it is important that we are not seen to favour one participant in the dispute and conflict in the country. We are also developing a range of peace-building initiatives, such as projects to bring together different ethnic communities, and are providing information about the peace process to the Congolese population. For example, we are providing support for a radio infrastructure in the DRC so that people can hear about what is happening. It is important that the people at whom all the activity is directed should learn more about the progress of the peace process.
In Burundi, we are supporting the Arusha process—in particular by helping to support the South African-led protection force for returning politicians. We have provided £100,000 for the latest round of talks, bringing our total to just over £0.3 million. We have also
198WH
provided £50,000 for a project promoting political dialogue between the parties in Burundi. We are also supporting a major new programme in Burundi to tackle HIV/AIDS. Again, words are supported by practical action.
My hon. Friend the Member for Bethnal Green and Bow spoke with generosity and understanding about the problems that Rwanda is facing, given its history. It is one of the most traumatised societies, if not the most traumatised society, in Africa. We are the leading bilateral donor in Rwanda and are committed to offering it support because we think that it needs that to make progress on poverty reduction, meeting international development targets, security, reconciliation, economic growth and inclusive government. We have provided substantial support, although I know that some people say that, in the context of the region, it appears a bit unbalanced. However, given their history, the Rwandan Government—and I know that my right hon. Friend the Secretary of State is passionate about this—need all that practical help to try to make progress on establishing a safe and secure country for their people. Progress continues to be good in Rwanda which, in some ways, is becoming a developmental model for the region. The need for humanitarian assistance has decreased partly as a result of our support, but principally because the efforts of the Rwandan Government and their people are helping the country to get back on its feet.
We have had an excellent debate. These issues need to be aired, and the fact that an hour and a half of Westminster Hall time has been given to them is a modest contribution both to raising the profile of the DRC's problems and keeping the flame of interest burning. Resolving the humanitarian crisis and the conflict in the Great Lakes is a priority for the UK Government. I hope that the steps that we are taking are evidence of that. While the conflict continues, we will provide urgent humanitarian support to the best of our ability, but only when peace comes in the region will we get the chance to assist with the development needed for a secure, stable, prosperous DRC. I have spoken about the country's enormous potential and mineral wealth, and there is no doubt that a strong and thriving DRC could emerge from the war if its potential can be tapped. It is therefore important to take the opportunity to ensure that the peace process in Burundi holds and to make further progress on securing peace for the long-term, lasting benefit of the DRC.

Individual Learning Accounts
10.59 am
Mr. Richard Bacon: I am pleased to have the opportunity to introduce a debate on lifelong learning, following the closure of individual learning accounts. The subject is important to many people, including the students who were able to use the scheme until the Government suddenly cancelled it. Many of them were elderly, from ethnic minorities, unemployed or people who had missed out in one way or another on the chance for an education and who were seeking to do something about it. They suddenly found that the courses that they had hoped to do were denied to them.
The subject is also important to the training providers, who had done what the Government asked and set up community-based schemes to deliver to people from all groups the benefits of access to computer technology, only to find that the Government suddenly closed down the ILA scheme. The subject is of equal importance to all taxpayers, as there are indications that tens of millions of pounds of public money may have been wasted and that there may have been widespread fraud.
I shall quickly summarise the points that have led to the present position. After two years of pilot programmes and transitional arrangements, the Government introduced the individual learning account scheme in September 2000. Under the scheme, the Government offered £150 to help adults who were seeking training. The Government awarded a £50 million contract to Capita plc to run the scheme through the ILA agency. There were warnings even before the scheme started that the scheme as proposed was flawed and would be likely to lead to abuse.
There were many such warnings, perhaps most notably from Mr. James O'Brien of Pitman Training Group, one of the UK's leading training providers, who wrote to the then Secretary of State for Education and Employment on 20 September last year, before the scheme was launched. In his letter Mr. O'Brien stated:
"We have expressed our concern both to DfEE officials and to Capita plc that there was insufficient detail in the rules of the initiative. As a responsible training provider we worried that this lack of detail left the scheme open to abuse, which would not be helpful to either the initiative itself or the majority of the training sector."
The Government then introduced a cap on the value of the training at 80 per cent. of the first £250 of eligible training in any one year, although that did not seem to do much to stop the abuses that were going on.
There were repeated stories in the press about abuse of the scheme—in the News of the World, The Mirror and the regional press. None the less, the Government continued to trumpet the scheme as a success. At the time, according to the Government, there were signs neither of a huge fraud, nor of such a massive increase in the take-up that the scheme required a rethink.
On 20 July, the Under-Secretary of State for Education and Skills, the hon. Member for Wentworth (John Healey), issued a statement under the exciting headline "Individual Learning Accounts to continue into new era", which began:
"Adult skills minister John Healey today confirmed details of how the successful introduction of Individual Learning Accounts over the last year will be followed up."
200WH
I see the Minister smiling; I do not know how many times he has heard that quote. It does not seem consistent with what happened next.
Mr. Christopher Chope: Does my hon. Friend know that one of my constituents was summoned to a focus group meeting at the Department on 25 July, and at that meeting told Department officials what scams were occurring? Since then, nothing seems to have been done about his specific complaints.
Mr. Bacon: I did not know about my hon. Friend's constituent, although it does not surprise me that the Government invited the constituent to a focus group meeting. We all know the Government's great fondness for focus groups. It does not surprise me that my hon. Friend's constituent explained to the Department that scams were going on. As I mentioned, people were doing that even before the launch of the scheme.
The scheme which the Minister described on 20 July as leaping and bounding towards the future, and which was described by the Secretary of State on 24 October as a "great success", was to be suspended from 7 December. The reason, she said, was that
"the rapid growth of the programme has exceeded all expectations, causing us to think again about how best to target public funds in this area and secure value for money."
The Secretary of State also mentioned her concerns
"about the way some ILAs have been promoted and sold."
She stated:
"There is growing evidence that some companies are abusing the scheme by offering low value, poor quality learning."
My hon. Friend the Member for Christchurch (Mr. Chope) may be reassured to learn that the notion that something was amiss was starting to percolate, although the Secretary of State said no more than that some people were abusing the scheme and offering low value, poor quality learning. The possibility that they were offering no learning at all, but removing the funds from the individual learning accounts before the people whose accounts they were had the chance to use them, was not mentioned.
The Secretary of State continued by saying that in order
"to protect the interests of individual learners"
she had
"decided to prevent any further take-up of ILAs",
although learning begun by existing account holders would continue to be supported, provided it was booked by 7 December. The Secretary of State assured learning providers and account holders that
"the decision to end the programme has not been made lightly"—
a fairly terminal sentence which caused many training providers who had invested in the scheme a great deal of concern.
The scheme was thus closed to new applicants. That was an astonishing turn-about, considering what the Minister had been saying only in July and compared with three months previously, when it had seemed to be all systems go. However, the scheme did not close on 7 December, as the Secretary of State had announced. Suddenly, on 23 November, the Department put out an announcement that it had called in the police to

201WH
investigate fraud and theft involving individual learning accounts, and that the ILA programme was to be suspended immediately, two weeks earlier than had been announced.
One of the key questions which remains unanswered, to which I hope the Minister will provide an answer today, is what new evidence emerged to justify the sudden change. If the fraud was on a fairly small scale, as we had been led to believe, why did not the Government deal with it and let the rest of the scheme go on intact?
I shall examine the effect of the sequence of events that I described on the various groups involved—first, the students whom the scheme was designed to benefit. I have a letter from a constituent, Mrs. Marion Ford, of Harleston in South Norfolk. Mrs. Ford applied for and was eventually sent a card with a membership number. On receiving the card, she immediately went to a local computer training firm in Harleston, only to be told via the ILA centre in Darlington that there were no longer any funds in her account.
As Mrs. Ford wrote to me,
"Apparently, someone had registered me on Tuesday 13th November, but I only received my card on Wednesday 14th November".
Mrs. Ford had been registered by a different computer firm for a course that she did not know about. Her letter continued:
"How did they get my name? How did they know I wanted to do a course? How many details of me have they got, without my knowledge?"
The case of Mr. Philip Geggie, which has been brought to my attention, shows that even meeting the Government's new deadline did not necessarily help. Mr. Geggie applied for an ILA account before applications were shut down, but his ILA number took several weeks to arrive. After the number finally arrived, Mr. Geggie applied for and paid for his software on 19 November, four days before what became the new deadline, 23 November, only to find that the ILA centre was denying his training provider, Carrerra's, access to the Darlington computer; so he could not be registered, although the Department had said that it would honour only those who were registered.
In an e-mail to Mr. Nick Parry, an official in the workplace learning division of the Department for Education and Skills, Mr. Geggie wrote:
"What you should be doing is to honour those people who are in the system and who have been in the system from prior to 7th December and penalise those who are abusing the system."
Mr. Parry replied:
"There has been some comment that ILAs could have continued if we had taken action to remove from the scheme those learning providers who were abusing it. You can be assured that if there had been a reliable way of doing this immediately, this action would have been taken."
That prompts the question of why the Department did not listen to the advice that it was given in the first place about ensuring that learning providers had approval first, before they undertook training. We have a right to ask what will happen to the good people who have done nothing wrong and who have been denied training, simply because of the failure of the Government to promote a robust scheme.
202WH
I had another letter from a Mr. Granville Powell, a constituent of mine from Wortwell in south Norfolk. Mr. Powell signed up for a course at the Suffolk Learning and Resources centre, just over the county border in Bungay, Suffolk. He had already done two computer courses and wanted to study for the European computer driving licence, as he had decided that it would probably help him to get a job. On receiving a letter telling him about the 7 December deadline, Mr. Powell rushed to sign up quickly, only to be told that all funding had been stopped anyway by the ILA centre in Darlington. He writes that he knew about the alleged fraud from the newspapers. However, as he eloquently puts it:
"Why should the excellent teaching people at the brilliant Bungay Resources Centre be punished because not enough checks were put in place from the start?"
That brings me to the second group of people who are affected by this fiasco: the training providers. Pitman Training Group states in its document responding to the suspension of the ILA scheme that it had expressed its concerns to Ministers and officials on several occasions, since before the launch of the programme. It states:
"Without minimum standards, anyone has been able to set up business as a 'training provider' with the consequences that have become so apparent over the past few months".
My own view is that it is just about understandable that Ministers might seek to take a light-touch approach to potential students. That is arguable. One could also argue that the lack of any completion thresholds for students, and the tying of at least part of the payment to the learning provider to such thresholds, has made it much easier for unscrupulous operators to take the money without showing any care whatever for the individual's learning experience.
Indeed, Pitman Training Group advances precisely that argument in its response document. Whether or not one agrees with such a view, one can at least see that there is an argument to be put for a light-touch regulation for customers, especially as they may lack confidence because of negative experiences with more formal education or training, or may wrongly feel that it is too late in life for them to learn to use new technology. That is at least an argument to be advanced, but I find it utterly incomprehensible that one would apply such a light-touch regulation or criterion—perhaps the best description would be a no-touch criterion—to the providers of the learning. Such an approach has two very predictable effects, both of which are bad. First, it guarantees that the quick-buck merchants, who have absolutely no concern for the students and are interested only in taking the money, will come steaming in for the kill. At best, students will get from such people a pathetically inadequate course consisting of one booklet that they could have bought for five or 10 quid anyway. At worst, their individual learning account numbers may be stolen. Secondly, many good training providers who are genuinely working to respond to Government policy are tarred with the same brush as the bad ones, which is quite wrong.
I shall mention some of the allegations that have been flying around. I do not know whether they are true; it is for the Minister to reassure us that they are not correct or to confirm the situation if they are. It has been suggested that at least one training provider was doing

203WH
business of more than £1 million a week. Under the new £200 scheme rules, a provider would have to find 5,000 students each week—the equivalent of a small university—to generate such business. If that has been happening, one wonders what the paymaster in the Department was doing when he saw £200 going out of the door in one direction, £20,000 in another direction and more than £1 million in a third. Perhaps he did not know that that was happening, because it was all done by computer and nobody did anything but press buttons until it was too late.
Another allegation has been made by a banker who spotted an account that was set up in July and into which more than £2 million had since been paid. Apparently, that money came purely from the ILA scheme and there was no other source of income—not even the 20 per cent. of funds that one would have expected from the student contribution. It is alleged that, after the £2 million had dribbled in, the account holder requested that the sum be transferred to an offshore account. I have even heard it suggested that one dubious provider alone may have been responsible for busting the Department's budget, in so far as it appeared to have any budget or limit at all. Perhaps most horrible of all, is it possible that some of these tricksters kept just within the strict letter of the law, so that no action is possible against them?
Training providers have told me that they were approached by individuals attempting to buy large numbers of completed application forms. I assume that that was against the law. God help the Department if it managed to create a scheme in which even that was permissible.
Mr. Bill Wiggin: Jane Davidson of the Welsh Assembly noted that the Assembly foresaw at an early stage that ILAs would need to be closely managed to ensure that there was minimal opportunity for fraud. How can it be that the Welsh Assembly saw the potential for fraud, but the Department for Education and Skills did not?
Mr. Bacon: My hon. Friend makes an extremely good point. It is extraordinary that the Welsh Assembly, reputable training organisations such as Pitman Training Group, the press and even the Office of the e-Envoy, whose annual report, published a few days ago, refers to the need to look out for the potential for computer fraud and to provide safeguards against it, could see the problem and the need for safeguards, while the Department could not. Everybody—the world and its brother—could see that need. Indeed, I understand that the structuring of the scheme in Wales has been so successful that there has been no abuse and that it runs to this day. It is extraordinary that all the parties to which I have referred could recognise the threat—and where possible, as in Wales, do something about it—but that the Department could not. I share my hon. Friend's astonishment at that.
I referred to the scam in which completed application forms were being bought. It appears to have worked in the following way. Scammers—if I may call them that—sought to buy for £40 each completed application forms bearing the name and address of the student. When scammers succeeded in obtaining forms, they would copy the names and addresses on to their own database.
204WH
They would then send the forms to the ILA centre at Darlington. Three days later, they would know that, all other things being equal, the ILA centre computer would have generated an ILA account number. They might then have hacked into the ILA computer—assuming that there is no truth in the rumour that someone on the inside looked at the computer because they were already inside the premises—and obtained the ILA number using the name and address. They would then have put the number through one of the companies that they had set up. At that point, the student would still be waiting for an ILA number to arrive in the post, but the funds would already have gone. That would certainly explain how the funds of my constituent, Mrs. Ford, were used up the day before she even received her ILA account number.
There have been so many examples in which funds appear to have gone before clients received their account numbers—in some cases, fake registration occurred as much as one month before—that there appears to be something in the allegations. As I said, it has even been suggested that there may have been corruption among individuals inside the ILA centre, which is run by Capita. That is a most serious charge that deserves to be examined at once, so that the position can be made clear.
I look to the Minister to refute these allegations or to tell us what has been going on if there is any truth in any of them. The point is that the genuine trainers have had their good names besmirched by a breed of rogue providers.
Mr. Paul Goodman: On that point, does my hon. Friend agree that bona fide operators such as my constituent Stephen Good have been left in an impossible situation? Inter alia, Mr. Good writes:
"Should we, or should we not, continue to retain our employees? If so for how long can we continue to pay them when all payment due from DfES has been indefinitely suspended and monies properly due for payment to us remain overdue and unpaid?"
Mr. Bacon: My hon. Friend makes an excellent point. I spoke to another training provider who asked precisely the same question about whether he should hold on to his employees. He was a computer manufacturer who had branched out into training because he saw that it was a good fit in terms of his business. His employees are relatively lucky, as there is at least a possibility that he will be able to retain them. That is not the case with all the providers. Even the business man to whom I referred said that he wanted clarity above all. He wanted clear information about what would and would not happen so that he could begin to make decisions. I am sure that the same is true of my hon. Friend's constituent in Wycombe.
Genuine providers have been besmirched by rogue traders. The real providers are varied and include big and small businesses. Mr. Neil Avery, who is part of the Hairnet computer training network, wrote to me from Taverham, near Norwich. Since January, he has trained 33 people who have opened ILAs in the Norfolk area. His success stories include a 21-year-old hospital cleaner from Norwich who wanted to improve her employment prospects, a disabled elderly lady from Norwich who can now keep in touch with her extended family through e-mails and the internet, and, I am reliably informed, a

205WH
Norfolk county councillor who can better serve the community because she can now use computer technology.
The Internet Exchange was founded in 1994. It runs 38 stores throughout the country, from Glasgow to Southampton; from Cardiff and Bristol to Cambridge, as well as in London, where the company is concentrated. Many of the stores, especially in London, are in deprived areas. Indeed, of the 34 stores in England, 25 are located in wards that feature on the Department's list of the 2,000 most deprived English wards.
The Internet Exchange has invested in training and worked with organisations such as the British Computer Society and the Training Standards Council to ensure that its training is of the highest quality. It has a diverse customer base: 51 per cent. female, 49 per cent. male, 45 per cent. ethnic minorities, 15 per cent. lone parents, and 35 per cent. unemployed or looking for work.
Hon. Members may hear more this afternoon about Henley Community Online at a meeting in Portcullis house. It is a not-for-profit company that offers computer and internet access. Two hundred and twenty people currently participate in its courses. Like the constituent of my hon. Friend the Member for Wycombe (Mr. Goodman), the people who run Henley Community Online are worried about what will happen to them and their employees.
Carrerra's is part of the Digital Network group, which is based in the west midlands. Between 40 and 50 per cent. of its customers are either disabled, elderly or unable to train during the day. It has taken on an extra 40 staff and invested in training them in software at a new training centre, so that customers can have a high quality training experience.
All those people were doing the right thing; they were doing what the Government asked of them. The Government owe them tens—in some cases, hundreds—of thousands of pounds. What will happen to them? Will they go to the wall because the Government did not have the common sense to get rid of the rogue providers at the beginning? Must they put their staff on the streets and thus add to the Government's unemployment bill? Will they get the money that they are owed? Will a new Government scheme emerge? If so, when? In a nutshell, what steps are the Government planning to restore confidence in the training sector? We look to the Minister for clear, specific answers.
The Government have created an environment in which the genuine training providers distrust them, and the most vulnerable customers—those whom the Government are trying to help—are scared off by stories of rogue providers. Mr. James Golfar of the Internet Exchange wrote in his response to the closure of the ILA scheme that the Department's explanation to clients of the scheme's operation was poor. Many were unaware that the cards were issued by the Department, not learning providers. They thus wrongly blamed the learning providers for problems in their application process. Some, especially those for whom barriers to learning were high, became confused and disheartened as their applications were lost or rejected unfairly, or
206WH
when unscrupulous providers took advantage of them. Yet the scheme was designed to help those people above all.
The Minister and his colleagues should not underestimate the good will and trust that have been destroyed by the debacle. I hope that the Minister realises that the Government face a crisis of confidence among legitimate, community-based training providers and that warm words will not be enough. We need specific proposals from the Minister about the steps that he plans to take. The Government should be in no doubt that there is precious little hope of helping the most vulnerable people if they do not restore confidence among those who can do the most to help, namely, the legitimate training providers.
I must mention the taxpayer's plight. I am grateful to the Minister's office for supplying me with the figures yesterday. However, as a member of the Public Accounts Committee, I cannot say that they are pleasing. I have written to Sir John Bourn, the Comptroller and Auditor General, and to the Chairman of the PAC, asking for ILAs to be examined urgently.
According to the figures that the Minister supplied me with yesterday, the Department budgeted £202.1 million for the ILA scheme over the two years 2000–01 and 2001–02. That includes the Department's budget allocations and £115.1 million which has been recycled from training and enterprise council resources. Department records show that expenditure on the programme in 2000–01 and 2001–02 to 23 November totalled £260.9 million. That is an overspend of £58.8 million up to that point.
The Minister said in his communication to me that significant payments are due for claims that learning providers have already made, and for committed expenditure for learning that providers on the ILA centre system booked before it was shut down on 23 November. He also stated that the police investigation into abuse and fraud means that access to the ILA centre system is not available and it is therefore not possible to estimate the additional financial commitment. That is a scary remark.
The Government know about an overspend of approximately £60 million so far but do not know how much more is to come. They have ignored the warnings of experienced professionals before and since the scheme was launched. They have also ignored many warnings in the press, and lost the trust of the genuine training providers without whom they have no chance of achieving their goals. They have been reckless with taxpayers' money and the people who suffer most are ironically those whom the Government most want to help.
The Government have a lot of answering to do. I look forward to the Minister's reply.
11.27 am
Mr. Christopher Chope: The figures that my hon. Friend the Member for South Norfolk (Mr. Bacon) presented in his excellent speech give the lie to the suggestion that we are simply considering fraud. The Government have realised late in the day that they will not be able to balance their books. Whom do they blame? As always, the answer is: the ILA holders and the genuine learning providers. Whatever scams have

207WH
existed, they do not justify the Government breaking their contracts with ILA holders and providers, who have set up in business believing that they were part of a genuine scheme.
Like my hon. Friend, I have received several letters and visits to my constituency surgery from people who are adversely affected. Many people who are in genuine need have become ILA holders and find themselves in the soup. I have a letter, of which the Minister has a copy, from a lady in New Milton. It was copied to me because her tutor, Mr. Edwards, lives in my constituency. She used the ILA scheme to enable her to receive individual tuition at home on her computer. If she went on a course, she would be unable to get access to a computer with the magnification programme LunarPlus. She had the programme at home, and it meant that if Mr. Edwards or one of the other tutors went to her home, she could benefit from it.
The lady is a registered blind person, and she found the prospect of being able to get training enormously valuable. She signed up for her account and was sent a registration card. Her contribution was £50, but after she had received the first two lessons, the tutor was told that all funding had been cancelled, even though the scheme was only due to last until early December.
Will the Minister say what will happen in Mrs. Buckingham's case? Will she be given recompense for the money that she invested in the course as her contribution towards it? Will alternative provision be made available for her? What will happen to Mr. Edwards, her tutor, who took on the teaching commitment but is now being denied the funding initially promised by the Government?
I have passed on to the ombudsman another letter that I have received from a constituent. I suspect that the impact of the ILA scam, and the Government's massive maladministration of the scheme, will rival that of the Railtrack affair, and that it will make the Government even more unpopular than they are already.
With Railtrack, the Government took the view that, because matters were not working out to their satisfaction, they would penalise innocent shareholders and then say that they were fools to become shareholders in the first place. The Government seem to be applying the same principle to people who invested in becoming learning providers under the scheme, or who took out ILA accounts. The Government seem to be saying, "We can't guarantee to pay you anything now because there were a lot of fraudsters around." That cannot justify the course of action on which the Government are embarking.
My constituent Mr. Foskett wrote to me on 27 November, and his letter was copied to the chief executive of the ILA centre. He stated:
"As an unemployed person with a small income and no subsequent support from the state, I was in the final throws of selecting an education provider to improve my skill base when I read on your web site that you have suspended all ILA accounts 2 weeks early!!"
Mr. Foskett is an unemployed person who wants to gain access to lifelong learning. What will happen to him? I hope that the Minister will tell us when he responds to the debate. Will Mr. Foskett be able to use his ILA account in some other way? Will he get compensation? He is unemployed and cannot wait a long time, as he wants to improve his skill set so that he can get a job.
208WH
About a fortnight ago, I submitted a series of written questions to the Minister. The convention is that a Minister, knowing that a debate such as this is coming up, will answer as many outstanding questions as possible. However, there seems to be a clampdown on answering questions. I suspect that it is only the fact that my hon. Friend the Member for South Norfolk is a member of the Public Accounts Committee that allowed him to gain access to some of the relevant information.
Mr. Bacon: I ought to make it clear that I am grateful to the Minister, as his office sent me the figures that I quoted in the debate.
Mr. Chope: I am glad that the Minister and his staff are ingratiating themselves with a distinguished member of the PAC. I am sure that those responsible for the mess will need lots of help in the future when they are cross-examined by that Committee.
The figures made available to my hon. Friend yesterday are breathtaking, but similar figures must have been available four or six weeks ago. They must have been available when the Government announced that the scheme would be ended on 7 December, and when they decided to curtail it two weeks earlier than that.
I hope that the Minister will deal also with the position of large providers of learning. The Future Open Learning college in my constituency has about 283 account holders on its books. Because the computer system has been closed down, it has been unable to find out the number of accounts for which it will be paid. Some of the people registered with the college discovered that their account numbers had already been taken by other people—a problem referred to by my hon. Friend the Member for South Norfolk. The college had to lay staff off, because its management was not so foolish as to believe that the Government would meet their legal commitments.
The college is entitled to be paid. The people who run it want to know when the payments that have been curtailed will be resumed. I hope that the Minister will assure all learning providers that the weekly payments to which they were entitled, and which were suspended on 23 November, will be reinstated without delay.
The Department for Education and Skills is under a legal obligation to reinstate the payments. If the Minister does not do something about it, more and more cases will be referred to the ombudsman, to whom I advise my hon. Friends and others to send the cases about which they come to know. Only when he has seen those cases will the ombudsman be able to rule on this appalling episode of maladministration.
11.35 am
Angela Watkinson: No one would disagree that the idea of individual learning accounts was a good one, or deny that it was begun with good intentions. In May 1994, the then Conservative Government's White Paper on competitiveness contained a similar scheme, and a series of pilot schemes were introduced.
The intention was to reach people who would not normally access education beyond school age. Those people included those with low skill levels, those living

209WH
in areas of skill shortage, or people in small firms who found it hard to provide staff development schemes. The scheme was also intended to reach women returners—women whose children had just started school and who were therefore able to access education for the first time in many years because they had part of the day free.
The pilot schemes showed that the scheme was administratively complex, and that it was ineffective in reaching the groups for which it was intended. In fact, it often subsidised existing educational activity and was being accessed by people who already had good qualifications. I wonder whether the Government examined the lessons to be learned from the 1994 scheme, as some of the same problems have been encountered this time. Some of the same conclusions apply, too, although fraud was not evident in 1994.
In 1999, the evaluation of the 1994 schemes found that they were resource intensive. Although those schemes could have been examined and improved, the ILA scheme unfortunately turned out to be so lacking in detail that it was open to computer fraud. It was also open to theft: people on street corners sold ILA accounts to unsuspecting and innocent people, who thereby lost their entitlement to the scheme and were therefore unable to take advantage of it. Moreover, the fact that the website was not registered left it open to other advertisers to take advantage of the scheme.
Many people who wanted to take advantage of an ILA account have been sold schemes that were of poor quality or which did not even exist. They have therefore lost their entitlement. Many genuine providers, and especially the small ones, have been left in an extremely difficult position, as we have heard. They do not know whether to keep their staff, or whether it will be possible to resurrect the scheme in some way.
The investigation is under way, and we do not know how long it will take. In the meantime, I am sure that compensation claims will be submitted by firms that in good faith set up training courses and learning schemes for people with ILA accounts. Now that the accounts have come to an abrupt end, those firms have no idea how they are going to continue. Moreover, I understand that the firms were not consulted about the closure of the programme, and that they were given no warning; they have therefore been left high and dry.
I am sure that, like me, most other hon. Members will have received letters from constituents who were offered schemes and who pursued them in good faith, even though the schemes might not always have been in the right place or at the right times for them to access them. People who took up the scheme hoped to pick up some of the higher education that they had not been able to take advantage of before. However, many found that the scheme was available only in the neighbouring town, or that they could not reach it because there was no public transport, or that it was being held at an inconvenient time of day. When they eventually found something that they could take advantage of, the scheme had been suspended.
What is to happen to existing students, who might be in the first stage of a training course or qualification? What will happen to those students, even if they are able to complete the part of the qualification in which they
210WH
are currently involved? If that does not bring them to the end of their course or training, will they be able to access the next stage? Are we going to have to find new providers? Will there be a rescue scheme for those genuine providers who have been left high and dry by those who have fraudulently brought the scheme to an abrupt halt?
As yet, the total cost of the scheme to the taxpayer is unknown. Enormous costs have been incurred in contacting ILA holders, advertising the scheme and setting up the providers and in advertising in the national newspapers to announce that the scheme had come to an abrupt end.
I have been looking at some statistics on the scheme's users, and on the number of accounts opened and the number being used. The number of accounts opened appears to be double the number being operated. I may have misunderstood that, but on first examination it looks as though twice as many accounts have been opened as are being used; perhaps the Minister will clarify that.
The fact that the original target of 1 million users burgeoned to 2.5 million justifies the scheme and shows how popular it could be, if only it were run successfully. I understand, however, that targeting has been patchy, in terms of the sort of student that the scheme has attracted. Many types of account have lain dormant, while many other ILA learners already have higher education qualifications. Such people were not intended to be a target group for the scheme, or to be the beneficiaries of further subsidised schemes; the intended target group was the many people who have either no qualifications or low skills.
Employers with few staff may not be able to operate extensive staff development schemes and would be ideal participants in ILAs. Larger firms, however, may have been using the scheme as an alternative to staff development schemes that could and should be operated within their own businesses.
We should have had far tighter controls over eligibility for learners and for firms whose staff were accessing ILA schemes. There should also have been far tighter and more detailed control over those providers who have let the scheme down. As yet, we have no idea what the total cost will be, in terms of set-up costs, operating costs, closing-down costs and any compensation that might have to be paid to legitimate providers who have had to curtail their operations unexpectedly and who are uncertain whether to keep on their training staff.
If the eligibility criteria for students, the bona fides of providers and the security of computer programmes through which the public access information about ILAs were tightened up, the scheme could be resurrected. As larger numbers than anticipated wanted to take out ILAs, the total tax commitment was far higher than had been envisaged. If the total tax commitment per annum were stated so that people's expectations were not raised beyond the point at which they could be realised, the phoenix could rise from the ashes of this debacle, and we could have a successful scheme.
11.44 am
Paul Holmes: Lifelong learning is about three important things: addressing the needs of those who have been failed by the school system, equipping the workers that society and the economy need and allowing individuals to enrich their personal knowledge. Lifelong learning must, above all, bring adults who lack basic skills and qualifications back into a learning environment, on which the ILA system was supposed to be targeted.
A system of individual learning accounts based on the original Liberal Democrat proposals, rather than the version launched by the Government, would have provided good foundations for lifelong learning. Our ILAs would have allowed everyone access to an account from birth. They would have allowed parents, individuals, employers and the Government to contribute to an ILA throughout a person's lifetime, and allowed that individual to access their account to pay for any of their learning requirements.
The Liberal Democrats did, and still do, support the concept of ILAs, and the Government's mismanagement and scrapping of the scheme is serious because it undermines the very credibility of the system. The rapid dissolution of the ILA scheme has left large numbers of participants and providers disillusioned, confused and concerned. While people watch their businesses collapse around them, the Government remain almost silent about what they can offer those who have been caught up in this terrible mess.
I say "almost silent" because when I asked the Minister at the Select Committee on Education and Skills on 28 November whether any compensation would be available for the legitimate businesses that had invested huge amounts of time and money to make the scheme a success—some of which now face ruin—his answer was no. I then wrote, on the afternoon of 28 November, to the Secretary of State for Education and Skills, to clarify that issue and others. I am still waiting for an answer.
The Government's handling of ILAs has been a shambles. They set up a scheme with serious loopholes, allowing—it would appear—considerable fraud to take place, although Scotland and Wales appear to have managed the system better. The Government announced that they would terminate the scheme with effect from 7 December, but at 6.30 on a Friday evening they announced that they were going to close it two weeks early, with immediate effect.
On 24 October, the Secretary of State said that the ILA programme was to be suspended, as it had
"exceeded Government expectations and has quickly expanded beyond its capacity."
There was a footnote to that press release about concerns that some companies were providing poor value for money. Yet on 28 November the Under-Secretary of State told the Select Committee meeting that it was all to do with fraud, and not with exceeding capacity. He gave the Select Committee some figures on the cost of the scheme, and I was interested to hear the figures that the hon. Member for Upminster (Angela Watkinson) had obtained from the Department yesterday, because they are considerably larger than the ones that the Select Committee was given less than two weeks ago, on 28 November.
212WH
On 28 November, the Under-Secretary of State told the Select Committee that the ILA budget, which had been £56 million, had gone up to £71 million, but that that had been exceeded, although the Government had no idea by how much. The Under-Secretary could not even tell the Select Committee when the scheme, or a replacement for it, would be reintroduced, leaving all the providers and individual learners in limbo.
The Secretary of State for Education and Skills told Parliament on 6 November that the police had charged four providers and 30 individuals with fraud. The Under-Secretary told the Select Committee on 28 November that
"sustained and serious allegations of theft"
in County Durham justified the early closure of the scheme. Yet, according to The Times Educational Supplement last Friday—just five days ago—Durham police, when contacted, said that no criminal investigation was being conducted on their patch. The Department for Education and Skills spokesman has also had to correct the Secretary of State's statement to Parliament on 6 November, saying that she had been mistaken in telling Parliament that charges had been brought, as none had. It seems that the Government have not had a clue what they are doing from the beginning to the end of this scheme.
Apart from the taxpayers, the people being hurt by this are the legitimate companies and the legitimate users of the ILA scheme. As a member of the Select Committee, I have received representations from individuals and companies all over the country, but one from my constituency of Chesterfield is typical of all of them. Critical Skills for Excellence is a reputable firm based in a state-of-the-art, high-tech innovation centre in Chesterfield. It wrote to me last week to say:
"As a reputable training provider, we have been totally committed to the training development and encouragement of local people to enable them to develop their full potential. Our area, as you are more than aware, has been hit hard over the past few years by the decline in the steel, mining and manufacturing industries.
We have worked hard to encourage learning and addressing the skill deficiencies in our area, offering knowledge, skills and recognised qualifications that are of the highest quality, cost effective, timely and affordable.
We are devastated and embarrassed for the loss incurred by each learner and potential learner, who has suffered as a result of the decision made by the department for Education and Skills."
The firm sent me a petition, and the details of nearly 200 individual learners who had been badly affected by the decision.
The letter went on:
"Whilst we appreciate that it is to protect individual learners who are putting their own money alongside the Government's contribution, the fact that there were substantial loop holes in the system in the first instance to allow fraud to happen is not good enough and to add insult to injury the 'plug is pulled' on reputable centres with students eager to learn and fill gaps both locally and nationally. As regular taxpayers we (the providers and the students) hold the government responsible for ensuring that our money is invested wisely and accounted for, this has not happened in this instance."
Following the collapse of the ILAs, we must ask what the Government will do to widen participation in adult education in the future—a question to which they could give no answer on 28 November. If the Government implemented the scheme that they said they would

213WH
investigate in the pre-Budget report, we would welcome level 2 entitlement as a step towards reducing the unacceptably high number of adults lacking basic literacy and numeracy skills. The Government should go further, however, and extend the entitlement to level 3 qualifications. The Liberal Democrats have proposed that in the past. Why the Government could not have done it previously, when it was recommended by their own national skills taskforce or when we raised the idea, is beyond us.
What was the motivation behind the Government's change of heart? The Treasury view is summed up in the title of a chapter in the pre-Budget statement: "Meeting the productivity challenge". We infer from that that the Government see lifelong learning skills purely in terms of producing an army of technocrats ready to work in whichever sector the Government deem preferable. Other aspects of lifelong learning are equally important.
We need fast and decisive action from the Government now if we are not to see progress towards lifelong learning and entitlements to adult education slip back 10 years. I call on the Minister to give answers to the questions we are asking today, about the appalling catalogue of failures and confusion relating to the Government's failed ILA scheme and about what will replace it—and, equally important, when it will be replaced.
11.52 am
Alistair Burt: Let me begin with two brief expressions of sympathy for the Government.
First, I am sure that many people have already received excellent training via ILAs, and will have found it very valuable. The scheme's collapse, and our criticism of that, do not detract from our support for adult learning; if anything, they enhance our worry about the poor delivery to others. Secondly, I want to express my personal sympathy for the Minister. The ILA scheme was not his creation, but he finds himself engulfed in its failure. I have had a similar experience, so I know what he is going through. I must add, however, that if he was not the cause of the original problem, he is now closely involved in the success or otherwise of the solutions. That is his role in this wretched affair.
It is clear from what has been said this morning that we are only at a staging post in the bid to unravel the policy formerly known as individual learning accounts. In an excellent summary of the origins and history of the scheme, my hon. Friend the Member for South Norfolk (Mr. Bacon)—whom I congratulate on raising this important topic—told us what problems were evident from an early stage, how those problems grew to the incredulity of decent training providers working in the system, and what the impact of the problems has been.
I want to make five brief points, and to ask some questions. Let me go to the heart of the problem, which I see as a breach of trust on the Government's part. Individual learning accounts superseded a scheme operated by the previous Conservative Government, known as vocational training relief, with a monitoring system operated through the Inland Revenue. Many now compare that scheme favourably to the ILA
214WH
scheme. Individual learning accounts were designed to take the opportunity of education to those who might have missed the chance in the past, and for whom access by way of ILAs would constitute a fresh start.
A substantial amount of trust has been engendered by the scheme, first and foremost—as a number of Members have made clear—among individuals attracted to it. Mr. Marvin Ryder took his training skills to the working men's clubs and community centres of the north-east, seeking out those whose previous experience of education had been poor in order to give them another chance. The Minister could not have found a more passionate advocate of the scheme, or anyone more determined to identify a real target for it. Mr. Ryder, however, writes:
"Due to the decision to close it down we have had to suspend our plans and lay off two members of stall".
Mr. Ryder is far from being alone. We have heard from individual providers through my hon. Friends the Members for Christchurch (Mr. Chope) and for Upminster (Angela Watkinson); it is notable that no member of the Minister's party has felt moved to speak. The Association of Colleges has also written to me on behalf of further education colleges. It tells me that it
"conducted a quick postal survey of member colleges on 30 November to ascertain the effects of the early closure on colleges."
Sixty-three colleges had submitted returns by 10 December.
"Almost all were able to give figures for the number of ILA account holders for whom learning had been booked in the current academic year: The total was 28,532."
Forty-three colleges reported
"that they had been unable to book learning for ILA account holders because of the early closure of the ILA programme. Not all were able to give figures for the numbers involved, but the total for those who were able to quantify was 4,463."
Twelve colleges reported
"that they would suffer losses amounting to £68,245 from investment which had been made in anticipation of ILA holders becoming enrolled."
Forty-nine colleges reported
"that they expected to suffer a loss of income amounting in total to £695,414 as a result of the early closure of the ILA programme. Colleges generally expect to have to meet this loss of income in order to honour commitments to students."
This breach of trust—in that the scheme failed to live up to the commitment of those who are learning and those who are teaching them—is compounded by the Government's astonishing insensitivity to the problem. One provider wrote to the ILA website to express concern over the loss of business, and was told by the customer complaints manager in an e-mail:
"The Secretary of State has always had the power to withdraw the Individual Learning Accounts initiative at any stage. This was the situation all learning providers accepted when they registered for participation in the initiative. There is no contract of supply between providers and the DfES for ILAs, therefore unfortunately compensation is not available.
Once again please let me apologise for the difficulties that you have experienced."
Mr. Bacon: That quotation interests me. Does it not give one pause for thought? It makes one ask why any private sector organisation of any kind would ever wish

215WH
to co-operate with Government about anything, if that is the basis on which Government treat the private sector.
Alistair Burt: My hon. Friend goes to the root of the matter. The breach of trust will have widespread ramifications, because the expectations built up deliberately by the Government have now been deliberately deflated.
The Minister himself recently told the Select Committee:
"I have to say the decisions those learning providers took to use the ILAs as part of their business planning and their revenue streams was a decision entirely for them. Our principal concern has to be, first, for the public purse and, secondly, our responsibilities to the individual learning providers, and it is to them we owe the first duty. We are not a party to the business decisions any individual learning provider might make based on the ILA scheme."
In view of what the Minister has heard this morning from a variety of sources, let me ask him—before he is deluged by individuals' claims from the ombudsman, or turned over by the National Audit Office or other organisations—to reconsider.
The breach of trust leads me to my second point: that there is a complete lack of understanding of how that trust in Government was built up. The involvement—the business commitment—of so many providers was inevitable, because the introduction of the ILA system distorted the training market, leading to the creation of thousands of new companies providing training. For most existing providers, it was a question of involving themselves with ILAs or seeing their businesses disappear altogether. They had no choice. That is why the Minister cannot wash his hands of the matter at this stage.
Having become involved, providers naturally made plans based on what the Government said about the scheme. Had they read the Government publication "Education and Skills: Delivering Results A Strategy to 2006", published in early October this year, they would have seen pride of place given to the ILA scheme. Indeed, the only milestone target for the Department in 2001 is:
"Expand Individual Learning Accounts and set up a network of 6000 IT learning centres".
The public might have been forgiven for thinking that there was some solid basis on which to build hope for the future, and that is what they did, but that is also why their businesses face devastation.
That breach of trust is most crucially at issue in respect of the premature premature closing of the scheme overnight on 23 November. The Government decided and announced on 24 October the scheme's closure, giving 7 December as the date to complete registrations for learners already taken on by providers. Providers made plans to register, assuring students that all would be well with their applications, but many were unable to get their application on the web because it seemed unaccountably clogged. I wonder who was registering what.
The Government announced on 23 November that the scheme had been closed overnight due to fear of fraud. What of those who were unable to register their students by that date? The situation is totally confused
216WH
and it appears that the Government will cover only information already logged on the system by that date, so students who arranged to pay one sum for their course will be told that they must pay more, through no fault of theirs or their learning provider.
Depending on how far down the contractual road learners had travelled, they will either have their original expectation met by the provider at the provider's own cost or simply cancel if they cannot afford the new cost of training, again at the provider's cost. Can the Minister and the Government comprehend the sense of being let down and why the blame for that is being laid at their door?
Thirdly, I must draw attention to the sheer incompetence of the system. It failed to get resources to those who needed them most. In a recent Select Committee hearing, the Minister agreed with the estimate of the hon. Member for Bury, North (Mr. Chaytor) that up to £150 million may have gone in subsidy to those who did not have need of it. My hon. Friend the Member for Upminster (Angela Watkinson) made that point. In 1999, the Institute for Fiscal Studies examined the ILA system, saying:
"It is unclear how much of the £150 million subsidy to account holders will result in new training which would not have happened in the absence of the scheme, rather than just being a dead-weight transfer to people who would have done the training anyway."
Why was no account taken of that likelihood?
The system, unlike vocational training relief, seems to have been incapable of detecting unfeasibly large payments. Experienced providers and hon. Members this morning have told us of the attentions of the Inland Revenue when claims for £5,000 a week were registered under the old system—that would get the tax man round—but we have heard a number of stories suggesting that some claims approached £1 million a week.
As my hon. Friend the Member for South Norfolk said, that is an enrolment strike rate of 5,000 students a week. Such success in attracting people to education would normally result in an offer to run a failing school and a knighthood, but in this example all it resulted in was a large cheque with no questions asked. One is entitled to ask whether a suspicion has arisen through the payments that needs to be dispelled.
The system appears to have been wide open to fraud, from the alleged sale of ILA numbers direct from Capita—a serious matter reported in the papers at the weekend that must be addressed, one way or another—to setting up front companies for political extremists to draw down cash from the taxpayer, and virtually all points in between. The Government proudly tell us that this wonderful scheme far exceeded its targets, with 2.5 million account holders, but how on earth does the Minister know how many are genuine and how many are completely false?
Fourthly, under pressure, the Government panic and the rest of the country picks up the tab. The scheme was shut down suddenly in October, with the Government citing exceeded expectations rather than abuse. We asked if the shutdown was due to fraud, but we were told, in effect, no, because fraud allegations are such a tiny part of the picture. The scheme was then closed overnight, due to fraud.

217WH
Now, either the fraud was small scale, in which case why not attack it and leave the scheme alone, or the system was riddled with fraud, as providers allege, and should have been dealt with long ago. Of course, the scheme may have been running far beyond budget, so the Chancellor decided to close it down, which has become the most likely suggestion, but how can that be squared with the "expansion" mentioned in the Government's targets? Either way, the announced and then sudden closure has caused massive disruption, significant financial loss and, frankly, a horlicks of Department for Transport, Local Government and the Regions proportions. Truly, this is the people's cock-up.
A constituent of my hon. Friend the Member for Broxbourne (Mrs. Roe), who apologises for being unable to attend, writes:
"I am a local businesswoman, single with two small children who opened a commercial Internet centre in Waltham Cross. This centre opened in May 2001, using a £24k bank loan, which was guaranteed by my house.
I was responding to market signals, with the provision of training grants to the individual, by creating a learning environment with internationally recognised computer courses, as well as applying for and receiving accreditation to be a recognised exam centre for the ECDL. Many of my learners are mature women returning to work or seeking to change career.
The accreditation was received 1 week before the suspension of the ILAs. My investment in the necessary software, fees, accreditation fees, training for staff etc has been considerable, and on top of my initial investment.
Yes, my purpose is to repay my bank loan, but the service and facilities at my learning centre are second to none. I open 7 days a week, with late nights for those who work, provide a supportive and welcoming environment…and genuinely care about the achievements of my learners.
My investment, which was personally funded once again, is now a noose around my neck. The suspension of the ILA grants has meant no income flow for my investment, and my livelihood and my house are now in danger. I also have an obligation to my existing learners to be able to provide them with the access and facilities, as they have paid for their courses, but how do I do that with cash flow problems.
I myself complained to the local council and the BSC about the shady and underhand tactics being used by third party marketing companies who were obtaining ILA forms in the hundreds in my local shopping centre, but I do not fall into that category, and had a visit to the learning provider taken place prior to being granted learning provider status much of the fraud could have been avoided.
What now for me, and many centres like me, and what about my learners?"
Fifthly, the Government have not begun to understand the damage done to lifelong learning. Initiatives depend on trust and the public's willingness to get behind them, whether as individuals committing time and effort to a new future or as deliverers working in tandem with the Government to make something happen. If both lose confidence in the Government, how does the Minister expect to engage them again?
What lessons will be drawn from all this? The Government may offer a discount learning scheme to help people out, but it might be withdrawn virtually overnight. If people work with the Government to provide such schemes, the Government's overnight evacuation from responsibility may leave them high and dry, and facing substantial losses.
218WH
I have some questions. What have Scotland and Wales done that England did not do? Why is their scheme alive, well and flourishing? Why was the system so designed as to be incapable of stopping fraud and abuse? When problems were identified, no levers could be pulled to prevent the few from ruining it for the many. Having heard all that evidence, and there is much more to come, will the Minister reconsider his Department's responsibility to learning providers to ensure that future initiatives have credibility? What is the current state of criminal investigations? I tabled written parliamentary questions for answer yesterday, but I received a holding reply. How widespread is the fraud? Crucially, can he say anything about the allegations against Capita, which are most damaging of all?
Finally, who is going to pay? How much is all this costing? Following the Select Committee meeting—as my hon. Friend the Member for South Norfolk pointed out—the Minister has done his best to provide costings, which he currently estimates as £58 million prior to 23 November. How much more, and—crucially—where is it coming from?
In the Minister's letter of 30 November to the Chairman of the Select Committee, he tellingly used the phrase
"The overspend will be met from within the Department's existing resources".
We all know what that means: the Treasury has been round and has said, "The cock-up is yours. You sort it out—don't come to us". Which part of the education budget is to pick up the bill for the overspend? Will it be that for primary schools, secondary schools, teachers, new buildings, transport to schools, higher education or further education? Whose pocket will be picked to sort out the mess? The sum of £58 million represents 2,500 teachers—half the Government's commitment to new teachers over the next few years.
I am sure that colleagues on both sides of the Chamber can make their own calculations of what could be done with £58 million of the education budget: or will the Minister go to Queen Anne's Gate and hand the bill to the Home Secretary and ask for a modest contribution from the author of the scheme? Where do we go from this point? What will the new scheme be and when will it kick in? We have tabled written questions and we are now asking for an answer.
In my political experience, I have rarely seen a can as large as the one that the Minister now has to carry. I am intrigued as to how he will go about it and curious to hear what he will say in answer to all our questions.
12.11 pm
The Parliamentary Under-Secretary of State for Education and Skills(John Healey): I congratulate the hon. Member for South Norfolk (Mr. Bacon) on securing the debate. He gave a true reflection of his membership of the Public Accounts Committee in the forensic way that he introduced the subject. He is well placed to do so. I welcome his interest in the debate and in the Committee. It is a proper role for Parliament to examine exactly what the Government have done and what we plan to do to sort out the problems that we are uncovering.

219WH
The hon. Gentleman rightly stressed the importance of the issue to learners, to providers and also to taxpayers. However, although hindsight is a fine thing, proper scrutiny and accountability require accurate information and examination of the facts. It is not the case that the scheme was, as the hon. Gentleman maintained, riddled with scams before it started. I hope that the debate and, subsequently, the examination undertaken by the PAC will help accurately to consider the facts and set out the chronology, will look closely at the evidence for the problems and will make a judgment about the details of the action taken by me and my departmental colleagues.
Mr. Bacon: I do not recall using the phrase "riddled with scams from the outset"—the record will show whether I did. Does the Minister agree that the question is far from being merely one of hindsight and that there were people, such as Mr. James O'Brien from Pitman, who warned the Department? Warnings were issued, but they were wilfully ignored.
John Healey: The record will show that the hon. Gentleman talked about the fact that there were scams even before the start of the scheme.
As regards Mr. O'Brien's letter, he was one of several providers who took part in the design of the scheme—they participated in workshops and offered their views. It is true that Mr. O'Brien warned of possible abuse. He also pointed out that the cap to limit information and communications technology, ICT—80 per cent. Discounts—was far too low; he argued that it should be set at £5,000. That would clearly have led to the use of much more public money.
In the context of the debate, I recognise how the decisions taken by my colleagues and me have left the constituents referred to by the hon. Gentleman. I hope to explain that the decisions were right and were indeed the only ones that we could have taken in the circumstances.
Ian Stewart: I welcome the decisiveness shown by the Government. Having taken that decision, does my hon. Friend understand that my constituents—trade unions, non-governmental organisations and private training providers, whose hands are clean—want things to be moved on? They want a new scheme to be set up as soon as possible and they want the Government to consider transitional arrangements. Will the Minister refer to that during his speech?
John Healey: I shall indeed, and I thank my hon. Friend for his intervention. I shall cover compensation or transitional arrangements, as well as the work that we are undertaking to design and re-introduce a successor scheme.
The introduction of individual learning accounts was an important and innovative approach to getting people engaged in learning. When we introduced them, no one knew how they might work. They have far exceeded everyone's expectations. Our original aim was for 1 million ILA holders by March 2002. We beat that target by nearly a year. By July 2001, only 10 months after the national launch of the scheme, we had attracted 1.5 million account holders. At present, there are more than 2.6 million account holders in England alone.
220WH
The hon. Member for South Norfolk asked about the budget. He gave details of the information that I set out when I spent an hour and three quarters with the Select Committee on 28 November. At that stage I could not give all the information as we had not yet calculated it. However, on 30 November, I wrote to the Chairman—the letter cited by the hon. Gentleman—and shall ensure that the letter is placed in the Library.
In that letter, as the hon. Gentleman explained, I pointed out that we had spent more on the programme—and more quickly—than expected. The total budget over two years was £202.1 million, drawn from the annual budgets of the Department for Education and Skills and the resources of the training and enterprise council. By 23 November, the budget was committed to the tune of £260.9 million. That was not surprising as, in the context of a budget set to realise 1 million ILA holders by March 2002, 1.5 million accounts had been opened by the end of July 2001.
I appreciate the introductory comments made by the hon. Member for North-East Bedfordshire (Alistair Burt), and realise that as the Minister who became responsible for the Child Support Agency he has some experience of my situation. However, the assertion that the most likely explanation is that the Chancellor closed down the scheme is an argument that beggars belief. It would be a unique event for an educational programme to be wound up for being too successful. If the point were not so serious, it would be laughable to suggest that Ministers are using the police inquiries as a cloak in which to bury a good policy.
The hon. Member for Chesterfield (Paul Holmes) quoted from The Times Educational Supplement. That paper was briefed on the latest details of the police investigations before it went to press, but chose to construct the story from which the hon. Gentleman quoted. My advice to him is straightforward: take no notice of such risible and wretched reporting; take more notice and a good look at the updated information that—as soon as I can do so—I shall regularly give the Chairman of the Select Committee on Education and Skills.
Alistair Burt: I am slightly puzzled as to where the overspend occurs in a scheme that was planned to expand. I understand the Minister's point that if the scheme is successful but forms part of future planning, there is no overspend. However, the use of the word "overspend" suggests that something has gone wrong with the budget. Will be clarify that?
John Healey: Yes, of course. The overspend is against the budget. The budget was set to achieve 1 million ILAs by March 2002. As I explained, we achieved 1.5 million by June 2001 and 2.6 million by October this year.
ILAs aimed to attract people back into learning, especially those who had a poor experience of previous learning—memories of failure, low esteem and lack of opportunity. From the outset, the decision was taken that it was vital to design a user-friendly system that avoided excessive bureaucracy and was, of course, simple to use.
Problems began to emerge this summer, however. Until July we had received 2,365 complaints—only 0.18 per cent. of the then 1.3 million account holders. At

221WH
that time, one company was subject to a formal departmental investigation and no fraud was found to have taken place.
At the end of July, there was an increase in the number of complaints to 3,096. In particular, we had started to receive more complaints about misuse and mis-selling. We therefore took various steps to tighten up the operation and the rules of the programme, including new information for learners, a new provider agreement and a full re-registration process for learning providers. That resulted in 700 providers losing their ILA registration.
By the end of September, the number of complaints had increased to 6,053, which was equivalent to 0.25 per cent. of just under 2.4 million account holders. By then, we had also established a compliance unit to give us an additional resource to investigate the increasing volume of complaints; stopped the registration of new providers; withdrawn all the blank application forms distributed by learning providers; and required new ILA applicants to register themselves via the Capita website or the telephone helpline. All those moves sought to introduce a more robust procedure for people to open accounts and to control spending.
Within the terms of the programme, as it was designed, we were simply not able to stamp out the problem. By the end of October, the number of complaints had increased to 8,448, which was equivalent to 0.33 per cent. of the 2.5 million account holders.
Mr. Bacon: Will the Minister give way?
John Healey: I beg to be allowed to continue so that I can cover the points raised by the hon. Gentleman and other hon. Members and deal properly with the debate.
Overall numbers of complaints have always been low, but in a very short time they almost doubled as a proportion of the number of account holders. By the end of October, the number of providers about whom we had received at least one complaint was 404, which was about 5 per cent. of those registered as learning providers for the scheme. Therefore, the trend in those late summer and early autumn months was an increase in the number of complaints, an increase in the nature of more serious complaints, and, consequently, increasing concern felt by me as a Minister and by officials in the Department.
We therefore came to the conclusion that the ILA programme was in need of a radical overhaul. That is what led to the decision to withdraw the programme, which was announced on 24 October by the Secretary of State for Education and Skills. At that time she gave six weeks' notice that the programme would end in England on 7 December. The decision was difficult and not taken lightly. It was also reached bearing in mind the disappointment that it would cause to individual learners and the difficulties that it would inevitably cause to providers. I believe, however, that the decision has been vindicated by subsequent events: a continuing increase in the numbers of complaints and in the numbers of cases under investigation.
By 17 November, we had received 10,276 complaints, which was 0.39 per cent. of the number of ILA account holders. Of the 10,000-plus complaints that were logged
222WH
since the start of the national scheme in the previous September, about 4,000 were about providers not complying with the rules of the scheme, mis-selling or potential fraud. The rest included complaints about the service of the ILA centre, the discount levels available for particular courses, cessation of the 150 opening offer and requests to backdate membership. There were also other complaints.
The complaints that seriously concerned us at that point related to 565 providers, which was almost 7 per cent. of the 8,500 that were registered with the ILA centre. The hon. Member for South Norfolk has cited one of the worst examples of the problems that crept into the system in recent months and with which we have had to start to deal: individuals discovering when they attempt to draw down their learning account that their account has been used already. That is a serious example of the problems encountered. It can be described at best as sharp practice and in the worst cases as outright fraud. The first suspension of an ILA provider because of that type of complaint and that type of fraud occurred on 25 June. The Department received the first letter in relation to that case on 11 June.
By 17 November, the Department had received 3,252 complaints from individuals claiming that money had been drawn from their ILA account without their knowledge or consent. The complaints were collated by the Department and the ILA-Capita centre. Those complaints are under investigation but are not yet substantiated.
We have serious concerns about 86 of the 565 providers in the system about whom we have had complaints. Sixty have already been referred for investigation, 27 are being investigated in co-operation with police, and six police forces are involved. So far there have been 39 arrests, with one charge, all of which relate to four learning providers. However, on top of all that, a new problem arose.
Mr. Chope: Will the Minister give way?
John Healey: No, I shall not. I have five minutes left to reply. I could speak to the hon. Gentleman after the debate.
Acting on new information about serious and sustained allegations of fraud and theft, the Department for Education and Skills special investigations unit confirmed those allegations. Subsequently, the Secretary of State and I took the decision to shut down the programme with immediate effect, from 6.30 pm on 23 November. That decision was taken to minimise a serious risk to public funds, and we called in the police at the same time.
Mr. Bacon: I am grateful to the Minister for giving way, and I shall try to be brief. Is he aware that, on Monday, 19 November, individuals were going into training providers and saying, "You'd better buy these numbers that we're offering soon because they're closing the scheme this coming Friday", to which the training providers replied, "We know that they're closing it, but they're closing it on 7 December, as they announced", to

223WH
which those selling the numbers said, "No, trust me—they'll be closing it this Friday." It turned out that the sellers were right.
John Healey: That information is very surprising.
Mr. Bacon: I was given it by a training provider.
John Healey: It is surprising.
The relevant evidence was brought to the attention of the DFES investigations unit on the Wednesday of that week. On Thursday, investigators visited the individual concerned and verified and confirmed the strength of the allegations. On Friday, the investigators informed Ministers of the position. On Friday afternoon, the Secretary of State and I held a video conference, and we closed down the operation that evening.
I hope that hon. Members will understand that I cannot give full details of the allegations as police investigations into them are continuing. I can say, however, that a significant number of ILA numbers had been stolen and were being offered for sale, with the prospect that they would then be used to claim money fraudulently from the Department. The evidence that we were able to substantiate immediately was sufficiently convincing to make us conclude that there was a serious risk to large amounts of public money. That is why we closed the programme immediately.
Our subsequent investigations have confirmed that the ILA numbers had been extracted without authority from the Capita database system. I hope that the hon. Member for North-East Bedfordshire will therefore accept that the decision to close down the scheme immediately was not, as he described it, premature.
In reply to the point made by the hon. Member for Upminster (Angela Watkinson), it was simply not possible to consult training providers because of the need to take immediate action. I am well aware that the closure affects training providers, and we are currently assessing that impact. However, I do not want to give the impression that we are able to put in place provision to support the business and funding streams of learning providers who made a business decision to use ILAs as
224WH
an income source. Our principal concern has to be the public purse, and our principal responsibility has to be to individual learners. I therefore stand by my comments to the Select Committee.
The hon. Member for South Norfolk said that the reputation of good providers is being besmirched because of the bad ones. He is absolutely right that, so far, 60 providers are under investigation. Police are involved in 27 of those cases, and 47 providers have been suspended from the provider register. There may well be more suspensions as we work to get to the bottom of the abuse that the so-called learning providers have inflicted on the ILA system.
Mr. Boris Johnson: Will the Minister give way?
John Healey: I shall not.
Among those so-called learning providers are fraudsters who have burrowed their way into the learning system, acting like a cancer eating away at the opportunities that ILAs were creating for thousands of people. They are a minority seeking to milk the taxpayer with no regard to the deep harm that they were doing to individual learners and to the large number of decent learning providers who had seized on the ILA scheme to develop the support and services that they could offer to people from all walks of life in all parts of the country—
Mr. Bacon: What about the future?
John Healey: Make no mistake: where we confirm cases of fraud we shall pursue those providers for every penny that they have wrongly claimed from the public purse—[HON. MEMBERS: "What about the future?"]
As for the future, I have explained to the Select Committee the provision that we are putting in place. We are working hard on developing the design for a new scheme, and we shall re-introduce a scheme as soon as possible. The Secretary of State and I have given a cast-iron commitment that—
Mr. Peter L. Pike (in the Chair): Order. We must move on to the next debate.

Water Industry
12.30 pm
Linda Gilroy: I am very pleased to have secured this Adjournment debate. It gives me the opportunity not only to raise an issue of great interest to my constituents but to highlight a matter of importance to the public as a whole.
As well as speaking in my capacity as Labour and Cooperative Member of Parliament for Plymouth, Sutton, I speak as chair of PURGe—the Public Utility Reform Group, a loose coalition of stakeholders with an interest in regulatory issues. The aim of the organisation is to ensure that regulation achieves a fair balance between stakeholders—customers, employees, shareholders and those representing the interests of communities. The latter group is particularly important in respect of environmental issues and our responsibility to pass our country on to future generations in at least as good a state as we found it.
In the short time that I have, I intend to detail some specific and urgent problems facing many people who receive water services from South West Water plc. However, those problems highlight just some of the issues that need to be dealt with in the forthcoming Water Bill. The Bill has been delayed, which is regrettable, although I believe that we now have the chance to ensure that this important piece of legislation enables us fully to address the challenges that lie ahead. As I shall argue, it is my conclusion that a new settlement is required which will take our water industry into the next decade.
However, let us start at the beginning, and in the south-west. Ofwat has just allowed South West Water to increase the bills of constituents by more than £26 in real terms over the period 2001–02 to 2004–05, rather than the original determination of a £13.79 real-terms increase. As if that were not bad enough, it must be borne in mind that our bills are already the highest in the country. A typical South West Water unmeasured household water and sewerage bill in the south-west of England is £357 per annum—before these increases are applied. That represents about 2 per cent. of income for a household with an income of £ 18,500, but 7.5 per cent. of the minimum income guarantee for a single pensioner on £92.15 per week.
A typical metered bill for south-west England is £218—a saving of £139. It is little wonder, therefore, that so many households have moved to having a metered supply. Such customers are estimated to number 55,011 in the period to 2004–05, which is above the November 1999 assumption of 32,698.
The problem is made worse by two Government policies—or perhaps I should say lack of policies. There is no policy that addresses the fact that the south-west has 30 per cent. of the United Kingdom's beaches but only 3 per cent. of the population. So those 3 per cent. pay for the cleaning up and improvements—very welcome and necessary—from which the whole population and many tourists benefit. These are national—some would say international—assets, and what economists call national public goods. Some mechanism that acknowledges that that is not fair would be most welcome. Arguably, the green dowry at the time of privatisation provided such a mechanism,
226WH
but it grossly underestimated the value of our beaches and the costs associated with cleaning them up. Other mechanisms that come to mind are the energy efficiency and the fossil fuel levies. It has also been suggested that a mechanism that includes a cost benefit analysis of environmental improvements, similar to that required in respect of clean air standards, would help to achieve transparency.
There is another problem in the South West Water area—the growing number of people who are switching to water meters. That is not surprising, given that they can achieve savings on the scale outlined. I am pleased that our Water Industry Act 1999 removed the uncertainty of some as to whether they would benefit from a meter, by allowing them to change back at no cost. What about others such as the larger households, whose use does not allow them to benefit from a meter? Their bills are going up, not down, owing to water meters. We therefore have an iniquitous two-tier situation, with two different pricing mechanisms. While some poorer single households are benefiting and so are better-off single people, families who are far less well off are paying more.
The problem with meters in the south-west merely highlights a problem that must be addressed nationwide. The current system, under which non-metered customers pay according to the rateable value of their dwelling while metered customers pay according to usage, is inherently unstable across the country. As the take-up of metering continues, many households on low and medium incomes will lose out in terms of equity—not just the narrowly defined "vulnerable" group.
What, ultimately, are we to do? The absence of solutions and even debate, never mind policy, is alarming. I and others have serious doubts whether this problem—which is but one of a number of future or potential problems in the industry—would be containable within the current legal and regulatory framework. They are essentially political issues, and we should not lose the opportunity to answer them in the forthcoming Bill.
The Government have already made a series of significant, albeit piecemeal, changes with regard to the water industry, such as the very welcome ban on disconnections. While that was surely the right way to start, such changes, especially when combined with industry-inspired developments, eventually need to give way to a more all-embracing approach.
At the beginning of our second term, perhaps we should, with humility and caution, take heed of those who tell us that we may have responsibility for the nation's well-being for some time to come. In the case of the framework governing the water industry, this calls for a fundamental change of perspective. Whatever modifications were made during our first term to the system that we inherited, the challenge now is to create a system that will still function smoothly a decade or more hence.
Water privatisation was especially unpopular. After privatisation in 1989, prices rose by around 40 per cent. until 1999, since when they have fallen back by about 10 per cent., following the last price review. The number of employees has declined by almost a third since privatisation.

227WH
The balance of opinion seems to be that the regulatory system in water has delivered the investment to improve standards. That was, I understand, the major strategic objective at the time of privatisation. Of course, there have been some serious incidents—Camelford and the Yorkshire Water drought come to mind—and some serious criticism, over pay, for example. Nevertheless, the industry has by and large retained public confidence. It has not gone the way of Railtrack, and nor is it likely to do so. However, the structure of the industry and the way in which it operates have changed little since privatisation in 1989. On the whole, water companies continue as monopolies in their country, region or area. In most cases, they continue to own and operate the assets. The ban on taking one another over means that the biggest change has been the acquisition of the companies by foreign companies or domestic, non-water companies.
Beneath the surface, however, considerable pressures are building up, as detailed in a recent report by the New Policy Institute. I am grateful for its permission to draw at length on its report "Energy and Water: the Dangers Ahead". It identifies the following significant risks in the medium and long term. First, there is the long-term sustainability of continuing rises in environmental standards, price controls and the companies' continued reliance on borrowing to fund investment. The strains, which are significant in the south-west, are increasing and are likely to increase elsewhere, with no obvious mechanisms for resolving conflicting objectives. If the structure "gives", either the higher standards will not be achieved, or the companies will get into financial difficulties, or the price controls will have to be eased.
There need to be incentives for investment in infrastructure to maintain the current assets. Some incentives work in the opposite direction; in a short, five-year cycle of the price-setting process, within the regulatory system, investment is deferred where possible. There is an absence of immediate obvious problems if the replacement of ageing but functioning assets is postponed, but that may lead to serious and expensive problems over time. The concern here is more with the sewerage system. That is less discussed but it, rather than the clean water portion, is the larger part of the business and generates most of one's bill.
We also must factor in the balance between supply and demand. The potential for imbalances comes from changes in the climate and our use of water. In a nutshell, our use may go up—some say by as much as 75 per cent. in the next 25 years—yet there may be less rain as warmer weather continues.
The Environment Agency rightly takes a long-term view, but company actions depend on plans put forward to Ofwat within five-year planning cycles, which may be too short. Prolonged shortage—as well as, paradoxically, flooding—could become big political issues, and we must seize the day and, wherever possible, prevent and ameliorate those problems with new solutions. My right hon. Friend the Deputy Prime Minister made a huge contribution to getting companies and the regulator to recognise the scope and the need to tackle this issue through leakage reduction. That resulted in a commendable 27 per cent. reduction in the period to 2000, but that very success means that the further scope for that to contribute to companies' options and flexibility is limited.
228WH
The recent developments show that the industry is already trying to resolve some of its problems through various attempts—successful and unsuccessful—to restructure itself. Welsh Water, Glas Cymru, has managed to do so, and its assets and operations are now separated. Scotland is in the process of returning to one company after a brief, six-year experiment with three water boards. English companies are looking for ways to escape from the current industry structure, but there are dangers. Do we want yet more piecemeal change; or do we need an English solution, just as there are separate solutions in Wales, Scotland and Northern Ireland, where I understand water and sewerage services are paid from general taxation?
Is it not time at least to relax the prohibition on mergers, so that companies can work together for the benefit of all stakeholders? There are also other opportunities, and we should not be afraid to think more widely. For example, we could have some element of public stakeholding in the ownership, or we could free up the companies, so that they develop as international water operators.
Ms Candy Atherton: My hon. Friend is making a powerful argument, but does she agree that accountability is still a great issue in the water industry? Does she envisage a role for the regional development agencies or regional assemblies in forthcoming years?
Linda Gilroy: I thank my hon. Friend for that intelligent intervention; she took the words right out of my mouth. We should also examine what roles there may be for the RDAs, regional chambers or, indeed, regional government, and we look forward to the forthcoming White Paper in the new year. If we are to face a period of higher prices to finance improved standards, a model of greater, more open and transparent accountability than we have at present will almost certainly prove necessary.
There is also the matter of the introduction of competition in water. Although the NPI report does not examine that issue in detail, it does raise the question whether competition is the right big challenge with which to present the industry when other strategic issues clearly need to be addressed. Competition would certainly seem to have the potential to produce only a limited effect on the problems that I mention.
The report suggests that there is a sense in which the future of the water industry is uncertain in a way that it was not just five years ago. There are increasing challenges and questions that suggest that the settlement made at the time of privatisation no longer serves and ought to be revisited, and that a new settlement is needed. Besides clarifying the industry's public policy objectives, such a settlement would set out an intellectual framework to guide the resolution of conflicts between environmental, social and economic goals. It would also establish an institutional framework which, while allowing the industry room to develop of its own accord, could steer it as time passes and new circumstances arise.

229WH
Such a settlement could only be created following a review. The Government should take note of that analysis, and I urge them to initiate such a review in water. There is a clear opportunity, given that the new Water Bill is not due until the autumn of 2002. A water review needs to focus on the underlying conflicts now present and the intellectual framework needed to resolve them. In particular, it needs to focus on the tension between meeting environmental standards, the costs of financing the investment to achieve them and charging consumers fair and affordable prices. The instability and possible lack of sustainability in the current two-part pricing structure should also be addressed, as should the scope for new forms of ownership and organisation.
I mention the possible role for regional assemblies and the contribution that a new mutual structure for the industry might achieve, learning the lessons from Glas Cymru. On 16 November, Utility Week reported that efficiency savings at Welsh Water have generated savings of £41 million, which has been earmarked for extra investment. The developing technical and legal body of knowledge being amassed by the mutual sector and its new project "Communicate Mutuality", which I recommend to the Minister, will enable it to launch its new publishing arm, Mutuo, later this week. One of its first publications is entitled, "Ownership Matters—New Mutual Business Models", and has great relevance to today's debate.
A wide-ranging review would also help the Government decide whether competition is the right big issue to guide and shape the industry in the future. In addition, the review would need to address two issues: whether responsibility for driving forward the Government's social agenda for those industries could be vested in a separate institution devoted to the task; and how multiple regulators should take one another's concerns into account, as well as how conflicts between them should be resolved.
That is a lot of questions, but I conclude by reminding the Minister of the problem in the south-west. The challenge that we have faced and continue to face is perhaps a harbinger of things to come. It is clear that those questions need to be resolved by all the stakeholders, companies, unions, consumers and academics, as well as by local, regional and national government in the coming months. If in considering those questions we can perhaps find a solution to the unfairness that is the legacy of the Conservative privatisation programme with which we in the southwest in particular live, my constituents and those elsewhere would welcome it greatly.
12.46 pm
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): As you know, Mr. Pike, it is traditional to congratulate hon. Members on obtaining an Adjournment debate to raise an issue of their choice. I should like to place on record the fact that I think that my hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) has made a genuinely thoughtful and intellectual contribution to a very complicated issue. She has suggested a thoughtful way forward in relation
230WH
to the water and sewerage services that are provided in our country. I also very much welcome the intervention made by my hon. Friend the Member for Falmouth and Camborne (Ms Atherton), who also raised some important issues.
As a regular visitor to the west country, I am well aware of the concern that was felt post-privatisation. Privatisation was deeply unpopular, and a significant increase in prices took place at that time. Indeed, the people of the south-west now have to face that legacy, to which my hon. Friend the Member for Plymouth, Sutton has referred. As you will know, Mr. Pike, many years ago, I served on the Committee that considered the Water Act 1989, under which the water companies were privatised. Many of the issues to which my hon. Friend refers were raised at that time, and some of the problems that have arisen since then are no surprise. The question is where we go from here. That is what my hon. Friend the Member for Plymouth, Sutton focused on, and I congratulate her on doing so.
The Government have made much progress in relation to water provision since 1997. Leakage has been cut by a third. Drinking water is now the safest ever, and rivers and beaches are cleaner. There are improved metering rights, including the right to a free water meter, which is of particular interest in the south-west. Compulsory metering has been ended, which was a big issue in my constituency and other parts of the country. There is a scheme to help vulnerable groups with high water use and low incomes. All that is very important.
After privatisation in 1989, average household bills increased steadily, especially in the south-west. In 1999, a review was introduced, which caused water bills to be reduced, on average, by 12 per cent. across the country and by the 12.2 per cent. in the south-west, which was very much appreciated at the time, although it did not reflect the huge increase in prices that took place in 1998. I am glad to say that, by 31 March 2005, the average household bill will still be lower in real terms than in 1999, although that suggests that the price increase at that time was very large.
Ms Atherton: The problem with average bills is that we in the south-west are at the top end of the scale. If we were taken out of the equation, the average bill would be significantly lower. We are asking for special measures for the south-west to reduce the national average.
Mr. Morley: My hon. Friend is right. We have to be careful about averages, because the south-west is at the top end of average prices. The issue is how we can best address the particular problems that the west country faces.
My hon. Friend the Member for Plymouth, Sutton put forward some interesting suggestions and asked some pertinent questions, which I shall try to address. As she knows, prices are reviewed every five years. The reviews take account of quality improvements, asset maintenance, and savings made through improved efficiency. South West Water operates under the price limits that were set in 1999. Those imposed a sizeable cut in prices in 2000–01, followed by very small increases to 2004–05. The overall effect would be a decrease of £36 in the average annual household bill by 2004–05. We are back to the issue of averages.

231WH
It is important to be aware of what the bills are paying for. To be fair to South West Water, that includes modernising 5,500 km of drinking water mains and replacing old and rusting pipes which can lead to water becoming discoloured. The river quality objectives will be achieved for 93 per cent. of river length in the area by 2005, and that is good. At the same time, leakage has been reduced by 40 per cent. since 1995–96.
Water companies can apply for interim determinations to increase their price limits because of specified material changes in their circumstances. This year, South West Water appealed for an increase in price limits for four reasons. First, it had a higher than expected take-up of the free metering option. As my hon. Friend said, that was a popular option in the southwest, for understandable reasons.
Secondly, there was an increased spend to meet costs of monitoring cryptosporidium, following requirements placed on companies by the drinking water inspectorate. Thirdly, the company cited costs associated with the climate change levy and, fourthly, changes to the programmes to reduce lead in water. All those are desirable objectives, but they should all be included in the company's forward investment programme.
Ofwat scrutinises closely requests for a change in price limits. In its draft consultative response, Ofwat proposed to accept aspects of some of South West Water's points, but it has questioned and reassessed the costings made by South West Water. In the case of the costs associated with climate change levy, Ofwat proposes to reject that claim, because the costs should be neutral overall. The assessments are only preliminary, but Ofwat expects that the effect would be that the average household bill in the south-west would go up by £27 between 2001–02 and 2004–05—as my hon. Friend suggested. That is compared to the projected cost of £ 14 at the time of the 1999 periodic review. I accept that that is a significant increase, but the average household bill will still be less in 2004 than it was in 1999. However, I will bear in mind the point made about average costs. Having considered all the comments on its consultation, Ofwat will announce its final decision on South West Water's application by 14 December.
My hon. Friend also spoke about the more general future of the industry. As chair of the Public Utility Reform Group—PURGe—she takes a great interest in the future of water and energy utilities. She referred to the draft Water Bill, which already addresses a number of issues facing the industry, and many people look forward to its introduction.
Linda Gilroy: Will my hon. Friend acknowledge that a lot of water has gone under the bridge since the draft Bill, and that the changes taking place in the structure of the industry merit closer examination?
Mr. Morley: I agree, and I shall shortly address some of the detailed points that my hon. Friend made. One of the advantages of a major Bill such as a Water Bill, which we aim to introduce once we have parliamentary time, is the opportunity to consult on it and take into account issues such as the important ones raised by my hon. Friend. That consultation will influence the Government's thinking on the final shape of the Bill.
232WH
At the moment, the Water Bill will include measures aimed at reforming abstraction licensing and improving water management and conservation. That is important in the south-west, as it is all over the country. It will include measures to require water undertakers to prepare and maintain drought plans to address how a water undertaker might restrain demand for water in its area. Recently much of my time has been taken up with the opposite of drought, but we should not forget that parts of the country experienced severe droughts only a few years ago. We need to look ahead and take into account the rising demand for water for domestic, industrial and agricultural purposes. Those demands have to be balanced and managed thoughtfully. The Bill will also include proposals to create a consumer council for water, which will be independent of Ofwat. It will provide advice to customers and represent their interests. It will also include measures to improve accountability, including increasing the scope and availability of public information on water resources.
My hon. Friend referred to a recent report by the New Policy Institute. The report raised a number of points that are fundamental to the water and sewerage service in England and Wales. My hon. Friend mentioned the debate about the most appropriate structure for the water industry. Is it public ownership or private? Is there a role for mutual ownership? My hon. Friend gave some examples of mutual ownership, which were very interesting, and the mutual models could have a role to play in providing essential public sector infrastructure. Those areas are worthy of exploration. Other issues include the shift from equity to debt, the rising demand versus the effects of climate change, and the gradual shift from unmeasured to metered charging. That is a logical shift in relation to the most sustainable use of water resources.
I know that my hon. Friend wishes to discuss the NPI report and my right hon. Friend the Minister for the Environment would welcome a meeting with her—and with Ofwat—to discuss the issues and their relevance to future models. My hon. Friend will be aware that she raises fundamental questions that require some thought and discussion. I know that she will wish to be involved in that.
The Government are aware of the challenges facing the industry. We aim to produce a water industry strategy paper for consultation in the new year. Without being complacent, we must not forget the water industry's successes and the quality of drinking water and river and coastal waters that we enjoy as a result, and I know that my hon. Friend regards that as important. I have been pleased with the improvements that we have seen around our coastline, and that many of our beaches now meet the bathing water directive.
Linda Gilroy: I hope that in his consultation my hon. Friend will also address the problem that I raised of 3 per cent. of the population having to pay for the cleaning up of 30 per cent. of the coastline.
Mr. Morley: I understand the point that my hon. Friend makes. Our beaches, coastline, water quality and marine and river habitats are of national importance and interest. The Government inherited a structure that was not of our making and has those inherent weaknesses. To bring about changes in that structure,

233WH
we will need to address the fundamental issues that my hon. Friend raised in her thought-provoking speech. The issues will not be easy to resolve and I do not wish to give my hon. Friend a false impression. However, she has correctly identified serious issues that will face her region and her constituents. We will take seriously the issue of future structures for the water industry and I hope that the Water Bill will give us that opportunity.

Horse Racing
12.59 pm
Mr. Richard Page: I am delighted to have secured this Adjournment debate. As the Minister will appreciate, however, I did not choose its timing, so I apologise for the effect that it will have on his gastric juices.
Given the paranoia that the House has shown about the declaration of interests, I must declare my interest. I have had ponies and horses all my life and I have been fascinated by them. The financial arrangement involved has not been to my advantage; it has been a distinctly one-way trip. I have been fortunate enough to acquire a little bay colt yearling that will completely reverse all the losses of the past. Such dreams have kept owners going over the years and I look forward to a year or so of reflected glory starting in a few months' time.
I hope that the Minister will excuse me if I make a series of bullet points rather than develop my arguments. To give full justice to the financing of racing, we would need several hours.
The title of the debate is "Horse Racing", but perhaps I should have added the word "industry". Despite all the pleasure and sport involved, it is a huge industry that is much bigger than most of the industries that regularly attract the Government's collective eye. In common with many industries, horse racing will migrate if we do not get its financing right. The participants will go to where the grass is not just seen to be greener but is, in fact, greener.
I wish, for example, to draw attention to the tax regime for the stallion industry. Compared to southern Ireland, those running a stud in the UK are at a distinct financial disadvantage. Southern Ireland companies have been able to buy stallions and pay more for them. Buying better stallions means that more mares are sent to them, and revenue accrues from the travelling of those mares. If one has more mares, one has more foals; if one has more foals, one has more runners; and if one has more runners; one has more winners. It is a virtuous circle.
I am worried by the distinct decline that there has been in this country's stallion industry. This country is the birthplace of racing and I do not want that decline to continue. I do not expect the Minister to comment on the funding of the stallion regime—we can return to the subject at a later date—but I would be interested to hear his views if he has the relevant notes with him.
On the specifics, we must keep in mind the basis on which the whole industry rests—the owners. The returns forthcoming to owners in the UK show that they are among the worst treated. I will not run through the whole list, but the figures for total prize money compared with the total cost of keeping and training a horse show that, on average, a Japanese owner gets 80 per cent. of his expenses back. The second lowest return is found in Germany, with 36 per cent., but we are at the bottom, with 21 per cent. Those figures are not sustainable and will not provide our racing with a firm foundation on which to develop.
As I have said, racing is a huge leisure industry. It therefore needs money to help it to grow into the industry of the size and quality that we want it to be. The

235WH
salaries paid to the staff engaged by trainers are rather low, and they should be higher. Pension rights should be improved so that those caring for and training horses can follow a distinct career.
Some race courses in this country are fine. Brand new grandstands have been built and the improvements are to be commended. However, a huge number of race courses are very old and in urgent need of replacement. We also need funding to continue the veterinary research that is so important. I know that this issue is of great concern to the Royal Society for the Prevention of Cruelty to Animals.
It is not all bad news. Over the past few years, we have made tremendous progress and much credit should go to those involved in the industry, to the Government and to Mr. Peter Savill, who has been a driving force in taking steps to producing a sustainable basis for racing's future. The Government are to be congratulated on introducing a gross profit arrangement, rather than a general betting duty, for the bookmaking industry. That has been welcomed by all. It is particularly appreciated by the punters, and I fondly hope and believe that greater income will accrue to the industry and to the bookmaking industry.
The Government are also to be congratulated on the review that has been carried out by Sir Alan Budd. With one hiccup—the proposal to remove slot machines from clubs, which is a retrograde move—the thrust of the review has been positive. The bookmaking and gaming industry in this country has integrity and compares well with those elsewhere in the world. I do not see why it should not be allowed to expand and to produce more revenue for the Government as well as profit for those in the industry.
I hope that the VAT registration scheme that is available for owners will continue. If it does not, the type of migration that has resulted from the stallion regime will take place. If the scheme were to be removed, the effect on horse sales in this country would be catastrophic. I have bought horses in Ireland and the UK, but I would immediately be placed under pressure to buy horses in Ireland rather than at Tattersall's. That would be a crying shame.
The industry produces £500 million in tax revenue each year for the Government; it employs 60,000 people; and it affects every walk of life. If we add the 40,000 people who work in the betting industry, we can grasp the scale of the activities with which we are dealing.
We face some difficulties, however. I welcome the announcement that will determine the future structure and ownership of the Tote. I understand why the Government wish to introduce a new funding mechanism that is based on a direct commercial arrangement between the racing and betting industries and which will replace the commercial levy. I also understand why the Government wish to introduce all that in one Bill. However, the manner of the breakdown in the negotiations on the replacement of the levy is such that I doubt that the problem will be speedily resolved by normal negotiation.
I know that the Minister is aware of the problem, so it will come as no surprise to him when I enter the plea that legislation to determine the future of the Tote should be allowed to proceed without delay. A number of parliamentary mechanisms are available to speed
236WH
such legislation on its way. Not least is the private Bill procedure, and people will appreciate its use because that mechanism was responsible for the Tote's birth in the first place.
Like many in racing, I regret, although I am not surprised, that the racing and betting industries did not reach an agreement on the levy replacement. This is not the time or place to drag out a blow-by-blow account of what went wrong. I have seen the proposals, counterproposals and counter-counter-proposals and know that the problem has swung backwards and forwards. There is no benefit in regurgitating what went on, but the two sides are in a situation that is unacceptable for the long-term benefit of racing. It cannot be allowed to continue. The dispute is not in the best interest of the sport and must be resolved.
The matter is with the Minister for determination. I understand why he desperately wanted to avoid that, and he has my sympathy. However, he has to make the decision. I do not envy him his task. Faced with the instigation of an inquiry into the sport by the Office of Fair Trading, the appeal by William Hill on data rights and the difference between the two parties on the levy, it would be sensible to take some time out. That could be purchased by continuing the existing levy scheme, which has the advantage of being easily understood by all members and so would not require explanation or selling.
The Government have to take a greater and more proactive role. I leave it up to the Minister to decide whether he sets up a small group to hear both sides of the argument and to calculate the processes and procedures. There has to be an investigation, in some shape or form, based on independent research that looks abroad to see how other racing authorities are financed. On the raw data, it appears that Britain is low down the list when it comes to finance. We have to examine the figures to see what odds the bookmaking industry offers the punters on particular races and whether the return abroad is lower than it is in the United Kingdom. We need an equity and an understanding. It might be decided that the bookmakers can maintain the same level of profitability, but must slightly shave the odds so that they help to finance racing and it continues to be successful.
I am not going to develop my thoughts on that further. The facts and figures need to be in front of us and understood by both sides of the industry so that we know where we stand. The problem must be resolved. There has to be a replacement for the levy, because racing cannot develop and expand until its financial base is secure. The Minister might have a replacement scheme for the levy which he is ready to roll. If so, this is the ideal time and place to make that announcement, and I shall be delighted to hear it. If not, in my usual calm, collected and courteous fashion, and on bended knee, I ask him to consider my comments and I look forward to hearing his response.
1.14 pm
The Minister for Sport(Mr. Richard Caborn): I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on initiating the debate. It is time to take stock of the industry. The hon. Gentleman is well informed because he is joint chairman of the all

237WH
party racing and bloodstock industries group. I have had the privilege of addressing that group, which has an interesting mix of members.
On Budd, it is important to see the bigger picture. It is Government policy to modernise the gambling industry, which is a multi-billion pound concern. In the light of the development of information technology and the way in which gambling is changing, we thought it right to take stock because the Act that governs the vast majority of gambling was put on the statute book in the 1960s. Electronic gambling is coming into effect and we have to decide what role the British gambling industry will play in the international field. As Budd explained, that would need primary legislation.
We instituted the Budd inquiry and it produced a good report that sets the agenda for modernisation. We put it out to a consultation that closed towards the end of October, after three months. We are reflecting on that and I hope that we will give the Government's considered reply early in the new year. I am mindful that uncertainty is not good for business. The gambling industry is an expensive commodity and we want it to know how we will manage our decisions. Of course, we need to get time on the Floor of the House, but at least the industry will have some certainty.
I will deal with gaming machines in clubs. Of 2,000 responses, about 1,500 were on gaming machines in Conservative clubs, Labour clubs, Liberal clubs and working men's clubs. The consultation created quite a hoo-hah. Nevertheless, we will cover that and other important issues. I did not realise until I took responsibility for gambling that the integrity of the industry is internationally renowned and respected. We want to keep that important ingredient if we deregulate or modernise gambling. I hope to ensure also that we have a sustainable industry.
On the specific issues, yesterday I had the privilege of cutting the first sod at the residential block of the Northern Racing college in Doncaster. It is one of only two such colleges, Newmarket being the other. When it is built, the residential block will accommodate 40 to 50 young people who attend the college to learn about the arts of riding. Hopefully, it will produce our future jockeys. I could not agree more that we have to look carefully at how we invest in the human capital of the racing industry to ensure that it is of a high professional standard and is sustainable.
Yesterday I suggested that we have a meeting with the industry, probably in late spring or early summer next year. Perhaps the hon. Gentleman's all-party group can consider that, and I shall be pleased to talk to him about it. The industry should come together to consider how best to invest in its future through the young people whom I spoke to at the college. The social inclusion agenda has had a considerable impact. Young offenders who went on a 10-week course have been placed with owners around the country. Hopefully they will realise that it is better to earn a living through racing than through crime, and that is welcome.
The taxation system as it relates to the stallion regime and the industry is a matter for my right hon. Friend the Chancellor. No doubt he will consider that. He took a favourable approach to the gambling tax, which the industry welcomed.
238WH
I cannot say much about the levy because, as the hon. Gentleman pointed out, the matter has been referred to the Secretary of State and me for determination. Like the hon. Gentleman, I am sorry that the industry was unable to come together to find a solution to the problem. In the wider gambling industry of which horse racing is a part, genuine opportunities will arise as a result of the removal of the levy, and we are trying to open up a dialogue about that and about privatising the Tote. The Chancellor's action on the gambling tax demonstrated our belief that the industry was ready for growth and modernisation, so it was disappointing that, in such an atmosphere, the industry was unable to respond by setting the levy. However, that is life. We will have to come to conclusions on those matters, and I hope that we will do so sooner than later.
The industry's lack of confidence was disappointing. Battle lines had been drawn which reinforced a "them and us" approach. I hope that the industry can work together to agree on the highest, rather than the lowest, common denominator—the latter sometimes bedevils its progress. I think that it has a tremendous future and that this can be a win-win situation.
There are commercial negotiations for the sale of racing's media rights, which have been assumed to be a replacement for the levy, but that implies technical links that do not exist. The negotiations are separate. The levy was established some years ago to protect the industry and off-course betting, and we believe that it has now outlived its usefulness and it is right to remove it. We will then return to the marketplace. The sale of the media rights will also take place, but that is a commercial proposition that must be negotiated properly, as it would in any marketplace.
There have been major debates about what will replace the levy when it is eventually abolished. I respect what the hon. Gentleman has said, and I will take on board his remarks about what should replace the levy, but that is a matter for future discussions.
We would like to privatise the Tote sooner rather than later, and we would like to introduce that measure in a Bill that will also abolish the levy, but the timing of that is up to those who manage Parliament's business, and like Ministers in every Department, we are at their mercy. However, the Government's intention has been established, and the introduction of the legislation is only a matter of time. I do not agree with the hon. Gentleman's comments about a private Member's Bill. I think he knows that measures with financial implications are not usually introduced in such Bills.
I thank the hon. Gentleman for initiating this debate on horse racing, which is an important part of the wider gambling industry. It provides many jobs, it has integrity and it is loved by many throughout the country. That situation may be unique. In France, the number of those attending race meetings is considerably smaller than it is in the UK, and England in particular. Horse racing is a part of our heritage which I hope we can continue to develop and modernise. I am sure that if the industry is prepared to form a stronger partnership, this can be a win-win situation for everybody.
1.24 pm
Sitting suspended.

Office for National Statistics (Runcorn)
1.30 pm
Mr. Mike Hall: It is customary to start by saying that is a pleasure to have an Adjournment debate in Westminster Hall, but the topic of this debate does not give me or my hon. Friend the Member for Halton (Derek Twigg) any pleasure; we are here to record our dissatisfaction and discontent at the decision to close the Runcorn office of the Office for National Statistics. My hon. Friend and I act as a partnership and have spent a great deal of time in the past four or five years trying to make sure that we secure a future for the ONS in Runcorn. We are therefore disappointed at last month's decision.
To understand that decision, we must look at the history of the Runcorn operation. Just after the 1997 election, my hon. Friend and I went to see my right hon. Friend the Member for Airdrie and Shotts (Mrs. Liddell), who was then Economic Secretary to the Treasury, to impress on her the need to keep it running. A review of ONS operations concluded that there was no economic justification for closing the Runcorn office because the cost of redundancies at Runcorn would far outweigh savings that would be made by transferring the operation to Newport. My right hon. Friend therefore decided to keep the Runcorn office open, giving it a guaranteed future for five years. There was a proviso, however, because it was made clear to us that if the economic situation changed and the cost of redundancies went down, it might be economic to close the Runcorn office. The decision, therefore, was to be reviewed and revisited.
As we approached the end of the five-year review period, my hon. Friend the Member for Halton and I went to see the Economic Secretary to the Treasury, our hon. Friend the Member for Bolton, West (Ruth Kelly), to talk about the future of the Runcorn office. It was obvious that the economic arguments for closing the office had not been made. We tried to impress on her the fact that the ONS had made known its wish to close the Runcorn office for managerial convenience; it is a small office, and the ONS did not think that it had a future. Its preferred option was therefore to close the office.
We were certain that in 1997 the ONS had been given two opportunities to deal with the problem—to transfer work from any other part of the organisation to the Runcorn site, thereby offering the office a viable opportunity to survive and a sustainable future, or to move staff from the Runcorn office, reducing redundancy costs and making it economic to close the office. However, it did neither of those things, which surprised me; instead, it tried to allow the Runcorn office to wither on the vine. That is not good management, and it created a bad feeling among the work force, whose morale was low, having been poorly managed for four or five years as a direct result of the ONS decision to allow the office to wither on the vine.
When my hon. Friend and I went to see our hon. Friend the Economic Secretary, we gave her a straightforward message. We told her that we were not interested in any arguments about closing the Runcorn office for the convenience of ONS management. We said that the work force were loyal, had been there a long time and were committed to the ONS; we did not want
240WH
the office to be closed for the convenience of management. We wanted a comprehensive and transparent review of the whole ONS operation to take a proper look at what was going on in the ONS, recognise what it needed to do to meet the challenges of the 21st century and identify problem areas—clearly Runcorn is a problem for the ONS. We wanted the ONS to put all that together in a comprehensive review and come up with a blueprint for taking the organisation into the 21st century.
The ONS could have looked at the major problem of office space in London. It has expensive, overcrowded offices in London, where recruitment and retention are a problem; it could easily have tackled that by distributing work to Runcorn, where office accommodation is abundant and cheap. Employment costs are far lower in Runcorn than in the capital and retention and recruitment are far easier. Such a review could have taken place but, sadly, it did not. Instead, there was a review of the Runcorn office in isolation to see how the particular problem that had been found there could be tackled.
The National Statistician made an announcement on 13 November giving a number of less-than-convincing reasons for deciding to close the Runcorn office. He started by mentioning something that those of us interested in the ONS had known for some time: that integrating a small office in Runcorn with the major statistical centre at Newport was a long-term problem. In this day and age, that should not be a problem; with modern technology, we could have remote working. A range of information technology should mean that such working is not a problem for anybody—and certainly not for anybody with any imagination.
The National Statistician said the ONS wanted greater integration of statistical processes, and that its operations would be driven by new technologies. I do not see that that is a problem; if the ONS wants new technology, there is no reason whatsoever why it could not install it at Runcorn. The National Statistician also said:
"Staff will have to be re-skilled and work processes changed".
Again, there is no barrier to re-skilling the staff at Runcorn and changing the work processes, which could be connected by a remote link to those in Newport. The National Statistician then came up with a gem:
"Over the next 4/5 years ONS will employ fewer staff across all its sites."
Of course, in the next four or five years, the ONS will not employ fewer staff at Runcorn; it will not be employing any, but that is no reason to close the office. At the end of his statement, the National Statistician returns to an old chestnut:
"Runcorn does not fit into these plans because it is too small".
If Runcorn is too small, it is because it has been kept that way by the ONS, and that problem could have been tackled.
Almost as a throwaway, we were told:
"The move will make the Newport site more efficient and flexible and it will strengthen the statistical services it provides."
I do not disagree; the move may well achieve those aims. However, that is not a strong enough justification for the decision to close the Runcorn site.

241WH
The Runcorn decision appears to have been made in isolation; there was no full and comprehensive review of ONS operations, and the process has not been transparent. The ONS has provided a feeble excuse for closing Runcorn, which it is doing for the convenience of management. There is no strategic overview to the decisions and the ONS has not taken the opportunity to tackle the problems that it faces in the 21st century. Sadly, it has not shown any vision or the will to keep the Runcorn office open. The decision will cost up to £5 million in redundancy costs; that money could be used to strengthen ONS services elsewhere.
I shall conclude with a straightforward point. We would like the decision to be put on hold; we doubt very much that that will happen but we would like to press the Economic Secretary for a response. There should be a full, comprehensive and transparent review of what the ONS wants to do in the UK to meet the challenges of the 21st century. It should look at all ONS operations, not just the Runcorn problem in isolation, and should come up with a blueprint of what can be done in future. It would benefit my local community and be in the Government's interest to move work from the capital to Runcorn. Government always bring benefits, such as an economic benefit, because they spend a lot of money, employ a lot of people and do a lot of work, and we should share those benefits throughout the regions. That would be a great benefit to the borough of Halton. My hon. Friend the Member for Halton will elaborate on the fact that Halton is the 18th most deprived borough in the UK. We need more Government investment, not less. The work force need the Government to say that they are committed to the site in Runcorn and that the work force have a future. That is a challenge. It may take five or six months to carry out a review, but it should not be difficult.
If, at the end of the day, we still cannot make a case for keeping the Runcorn site open, we might have to accept its closure, but I am not convinced that the measures that we have asked for have been taken. The work force in Runcorn, who have given dedicated service in the employment of Government over a number of years, have not been treated fairly.
Even though there are still 12 months to go, the ONS has already made a decision to take work away from the Runcorn site. That is wrong and has left the work force feeling even more demoralised. I hope that my hon. Friend the Economic Secretary can give us some comfort and will undertake to reconsider the decision.
1.40 pm
Derek Twigg: I congratulate my hon. Friend the Member for Weaver Vale (Mr. Hall) on securing the debate, which is of great importance to us locally, and on his excellent contribution setting out the background and our concerns as local Members of Parliament. As colleagues, we work closely for the Halton borough and we have had many successes as a result of that partnership, but on the present issue we have not had the success that we hoped for. However, that does not detract from the need for a case to be made for keeping the Office for National Statistics at Runcorn and for questions to be asked about the decision that was taken.
242WH
It is worth pointing out the human aspect of the case. I have worked with a number of people who now work in the ONS. I know what a tragedy the decision is for people who previously worked in Runcorn at the Department for Education and Employment and at the ONS site. Many people have been there for well over a decade—16 years or more. The work force is well established and have given their loyalty and commitment to Government and to the need to provide a good service.
The loss of those jobs would be a loss to the local economy. They are good-quality jobs, requiring specific skills. As my hon. Friend mentioned, Halton is the 18th most disadvantaged borough in England and Wales, so any job loss is a blow. Only a few years ago, the work force numbered 120 to 140, but now only 80 to 90 people are employed at the ONS. You will know, Mr. Pike, of the various economic pressures in the north-west and the loss of jobs that is occurring. We want to avoid that.
The only positive aspect of the decision about the future of ONS Runcorn is the fact that a decision has been made. It has been outstanding for a number of years, which has had an effect on staff. Despite the decision, people who work at the site have told me that they still have not been given adequate information to justify the closure. They have suffered much frustration and stress over the years. As my hon. Friend noted, there was an argument about the business case four and a half years ago. We proved that there was no business case, and the then Minister accepted our argument. We were therefore surprised when the ONS outlined the reasons for the current decision, which in our view moves the goalposts.
One of the factors that has been mentioned in our discussions is investment in new technology and in the management systems for the ONS. Given that new technology can stretch out around countries and continents, I find it difficult to see that as an important argument for closing the office at Runcorn. On the contrary, it is probably an argument for keeping it open.
We accept that the Runcorn site is the smallest; it was part of a general Government office site in Runcorn. The efforts made by the Department for Education and Skills to ensure that exit jobs were created at the Runcorn site of its headquarters across the road from the ONS site have sustained and consolidated the Department's headquarters buildings there. ONS management did not seem to want to go down the same road, even though it has been proven that that can be done.
My hon. Friend outlined the argument for transferring jobs out of London, where there are hundreds of employees in a very expensive building. Some, if not all, of those jobs could be transferred to Runcorn, which has a higher level of unemployment, social stress and disadvantage. Not only would that be good for us in Halton, but it would be good for the Government. The cost of jobs and buildings in London is much higher, staff turnover is much greater, and keeping good-quality staff is much more difficult. None of those is a problem in Runcorn and Halton. I do not understand why ONS management did not consider that feasible.
The decision took a long time to be reached. That may be due partly to the representations made by us and others in favour of retaining the site at Runcorn. During

243WH
that time, management provided little information. I know that my hon. Friend the Economic Secretary has been in post for but a few months and I do not blame her or her predecessors. Management were lax about providing regular information to staff, which is part of the reason why such frustration has built up among staff, and why they would rather have even a negative decision than none at all. They have had enough of the way in which they have been treated. That illustrates how the ONS has been managed in recent times.
From speaking to members of staff and constituents at the Runcorn site, I know that they feel that they should have the opportunity to get another job locally or to take a redundancy package if that suits them. There is talk of avoiding compulsory redundancies. When managers went to the site to talk to staff on the day that the decision was made, they gave the impression that they did not expect any problem in finding jobs for staff or making available a proper redundancy package for those who wanted to take it. That is what some people want; they are keen to move on and find new careers. I want my hon. Friend the Economic Secretary to be aware of what staff were promised on the day that the meeting took place.
I should be interested to know what consultation took place with personnel managers in the Department for Education and Skills prior to the announcement and since. There is a rumour going around, which may not be true but which I should make public, that personnel managers in the DFES were surprised to learn that they were so closely involved in trying to find a solution. I could be wrong, but this is probably the right forum in which to mention the rumour. What response has been forthcoming from personnel managers in the DFES about providing help in finding new jobs?
There is concern among staff—which demonstrates their commitment—about whether ONS will be able to provide the same service post-Runcorn or even in the immediate future, or whether there are moves afoot to reduce the services that the ONS supplies to its customers and users.
I cannot stress enough how loyal the staff have been at the Runcorn site, and how hard working, how committed and how skilled they are. They would clearly prefer the decision to be reversed so that they could have a future and a career there. I shall not repeat the arguments that my hon. Friend the Member for Weaver Vale presented so coherently and succinctly about why we believe that the decision could still be reversed and the jobs saved.
I wonder whether part of the problem is the way in which the ONS has been managed. Again, I stress that my hon. Friend the Economic Secretary has been in the job for only a few months, but I am sure that she is aware of some of the shortcomings that have been mentioned. I believe that ONS management have let down the staff at Runcorn, have not managed the situation well for a number of years and are still not managing it well. I believe that some of the issues that have arisen in the ONS in the past year or two indicate poor management control and involvement. I want my hon. Friend to be aware of the concerns that have been expressed about those issues. I am sure that, being new in her job, she will consider them.
244WH
Finally, the closure of the Runcorn office is a loss to Halton and to the local economy. These are the sort of skills that we can ill afford to lose. I make it clear to my hon. Friend the Minister that there is still a great deal of anger about the decision. We feel that the jobs should still be saved and that jobs should be brought to Runcorn from the London headquarters of the ONS.
1.50 pm
The Economic Secretary to the Treasury(Ruth Kelly): It is a pleasure to be here under your chairmanship, Mr. Pike.
I must start by congratulating my hon. Friend the Member for Weaver Vale (Mr. Hall) on securing this debate, which deals with a very important issue. The closure of the Office for National Statistics in Runcorn is a matter of significant concern for his constituents, for the north-west and for me as the Minister who has departmental responsibility for the ONS. I know about the contribution that he and my hon. Friend the Member for Halton (Derek Twigg) have made on this subject and about their commitment to the welfare of their constituents.
Nobody likes to see offices close, and I should like to assure everyone that the decision to close Runcorn was not taken lightly. Before addressing the key matters in this debate, I should like to remind members that the Office for National Statistics operates from five sites: Newport, Titchfield and Runcorn, which deal with statistics, Southport, which deals with registration services and, of course, London. The Runcorn office is by far the smallest of those sites and employs fewer than 100 people on a permanent basis—all the other offices employ at least 600 people—and its work is very closely linked with that of Newport.
The ONS has been reviewing the future of Runcorn since 1996, as my hon. Friend the Member for Weaver Vale pointed out. In 1997, my predecessor agreed with the ONS that, in the longer term, Runcorn was not seen as having a strategic future as part of the ONS. However, a final decision was not taken at that time. Indeed, a commitment was given to staff that the site would not be closed before October 2002, unless that could be accomplished without a significant number of redundancies. As has been pointed out, uncertainly about the future of Runcorn has caused staff considerable concerns since that time. Morale is low, career opportunities are extremely limited and, although staff perform a much-valued role in very difficult circumstances, concern about the long-term future of the site has had an unwelcome impact. Indeed, the one key point that was made during the recent consultations on the future of the site was that a final decision one way or the other was seen as being at least as important as the decision itself, if not more so.
In order finally to settle the issue, further consideration was given to the future of the site, most recently by Len Cook, the new National Statistician. On taking office, he considered the matter as part of his reappraisal of the business and the development of a longer-term business strategy for the organisation as a whole. Part of that emerging strategy is concentration of the production of statistics on the two main sites of Newport and Titchfield. The Runcorn site was considered too small to remain viable in its own right,

245WH
especially as the work conducted there has very close links with that which is undertaken at Newport. Investment decisions always require priorities to be established. At a time when the ONS is facing considerable challenges in the development of the infrastructure to support national statistics, it decided that the maintenance of a small and remote site could not be justified. I shall explain why I have come to agree with that view.
Closing a site, no matter how small, is always a very difficult decision. It has become clear to me that this decision is not justified purely on the basis of financial costs in respect of redundancy and moving staff to another site. It rests fairly and squarely in the context of a much broader strategy for the ONS as a whole, which includes an accommodation strategy and a management strategy, as well as the modernisation of the ONS service itself. The ONS is implementing a challenging new business strategy agreed by Ministers earlier this year, which focuses on radically overhauling statistical infrastructure, investing in information technology to support the ONS in becoming an e-business, modernising the administrative systems and investing in staff to ensure that they have the skills, flexibility and so on that are needed under the new process.
The decision was certainly not taken in isolation from the other major strategic decisions concerning the ONS. I would never have taken a decision on that basis. In particular, as my hon. Friends the Members for Weaver Vale and for Halton know, I specifically asked the ONS to consider options such as the transferral of headquarters functions from London to the site at Runcorn. However, that option was also presented as non-viable in the context of wider strategic reforms and modernisation of ONS output. None the less, that option was explored in detail and presented to me for consideration.
Having considered the issue and asked for options to be explored, my conclusion is that the decision of the ONS and its new director on the closure of the Runcorn office is grounded in the overall business strategy of the ONS and will lead to improved efficiency for the organisation as a whole in the longer term. Maintaining the site would have required further investment in accommodation, in addition to the overheads of maintaining a fifth site, and would not have been optimal in the context of the overall business and investment strategy.
In supporting the decision of ONS management to close the Runcorn office, I have been especially mindful of the following key points. First, this is a business decision the ONS wishes to make—a fairly obvious point, but one that needs to be borne in mind. In terms of the overall business and strategy of the ONS, this consolidation offers the opportunity for all-important efficiency gains that would be difficult to achieve if its operations were more thinly spread. For example, small specialist teams are needed in Runcorn to support staff. Such support for computer systems, training or personnel will be available in Newport from bigger
246WH
teams and at lower costs. Costs for infrastructure such as computer networking or building maintenance will all be considerably lower following consolidation.
Regardless of the timing of the decision, even if it had been decided to keep Runcorn open for a little longer, its future was, given its size, always going to remain uncertain. Above all, it was certainty that all the staff wanted. The ONS plans to transfer the work with minimal disruption to the timeliness and quality of the affected outputs. Finally, I took into consideration the fact that the ONS would ensure that the consequence of the closure would be managed sensitively, taking account of the staff's wishes as far as was practicable. It is, of course, important that the ONS achieves that business transition efficiently, but it is an even higher priority that it achieves it with thoughtful regard to the staff in Runcorn—the people who are most affected by the decision. I completely agree with the points made by my hon. Friend the Member for Weaver Vale about the loyalty and commitment of the staff in Runcorn, who have been working in circumstances of considerable uncertainty for a long time.
The ONS will offer all staff the opportunity to work at other ONS sites. If they choose to do so, they will be reimbursed for any costs that they incur by transferring. Initial consultation with staff indicates that about a dozen people are considering that option. The ONS will also liaise with other Government Departments working in the region to ensure that ONS staff have maximum opportunity to continue working in the civil service. My understanding is that an agreement in principle has been reached with the Department for Education and Skills, which has said that it will consider ONS staff and try to accommodate them where possible. For those who do not continue in work, the ONS will offer full redundancy payments in accordance with the terms laid out in the civil service management code. In the meantime, it will continue to invest in its Runcorn work force in terms of training and development in the 15 months up to the final closure date. That will help not only to maintain the quality of ONS output throughout this period, but to prepare staff for new job opportunities, whether they are inside or outside the civil service.
In conclusion, this is an important issue, and as such, Len Cook, the director of the ONS, himself announced the decision to Runcorn staff. He took questions from them on the day and has supported initiatives to help in finding opportunities for alternative employment in the area. That has included the development of contacts at working level with the DFES. What is most important is that the uncertainty of the last few years is resolved and that staff know where they stand. The future of the Runcorn site has been under consideration for a long period and has been formally reviewed several times. I am convinced that the decision to close the Runcorn office is the right one for the longer-term business plan of the ONS. It is the only decision that brings the certainty that everyone wanted. The transfer of work from Runcorn to Newport will take place over a period from April 2002 to March 2003.
It being Two o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.